FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
(Mark One)
X Quarterly report pursuant to section 13 or 15(d) of the Securities
- -- Exchange Act of 1934
For the quarterly period ended DECEMBER 31, 1994.
- --
Transition report pursuant to Section 13 or 15(d) of the Securities
- -- Exchange Act of 1934
For the transition period from _________ to _________
Commission file number: 0-14025
SOFTWARE PUBLISHING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2707010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3165 KIFER ROAD
SANTA CLARA, CALIFORNIA 95051
(Address of principal executive offices, including zip code)
(408) 986-8000
(Registrant's telephone number, including area code)
------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:
Yes X No
----- ------
As of January 31, 1995 there were 12,479,240 shares of the Registrant's
Common Stock outstanding.
<PAGE>
SOFTWARE PUBLISHING CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Page no.
--------
Item 1. Financial Statements:
Consolidated Balance Sheets -
December 31, 1994 and September 30, 1994 3
Consolidated Statements of Operations -
Three months ended December 31, 1994 and 1993 4
Consolidated Statements of Cash Flows -
Three months ended December 31, 1994 and 1993 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Stockholders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2
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PART I. FINANCIAL INFORMATION
SOFTWARE PUBLISHING CORPORATION
CONSOLIDATED BALANCE SHEETS
(000's omitted, except share data; unaudited)
Dec. 31, Sept. 30,
1994 1994
---------- ---------
ASSETS
Current assets:
Cash & short term investments .................... $ 43,601 $ 47,559
Accounts receivable, net of allowance
for doubtful accounts of $997 and $1,009 ..... 12,068 12,770
Inventories ...................................... 1,329 1,286
Prepaid expenses and other current assets ........ 1,181 1,367
-------- --------
Total current assets .................................. 58,179 62,982
Property and equipment, net ........................... 3,682 3,796
Other assets .......................................... 853 841
-------- --------
Total assets .......................................... $ 62,714 $ 67,619
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable ........................... $ 6,615 $ 8,692
Income taxes payable ............................. 2,076 2,013
Other accrued liabilities ........................ 12,782 15,330
-------- --------
Total current liabilities ............................. 21,473 26,035
Accrued lease obligations ............................. 10,853 11,399
-------- --------
Total liabilities ..................................... 32,326 37,434
-------- --------
Stockholders' equity:
Common stock
Authorized: 30,000,000 shares,
$0.001 par value
Issued and outstanding:
12,479,240 and 12,441,042
shares, respectively ......................... 13 13
Capital in excess of par value.................... 19,799 19,664
Retained earnings ................................ 10,877 10,508
Net unrealized loss on securities ................ (301) 0
-------- --------
Total stockholders' equity
30,388 30,185
-------- --------
Total liabilities and stockholders' equity
$ 62,714 $ 67,619
======== ========
The accompanying notes are an integral part of these financial statements.
3
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SOFTWARE PUBLISHING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's omitted, except per share data; unaudited)
Three months ended
Dec. 31, Dec. 31,
1994 1993
--------- --------
Net revenues ......................................... $12,387 $22,703
Cost of revenues ..................................... 2,267 4,585
------- -------
Gross profit .................................... 10,120 18,118
------- -------
Operating expenses:
Marketing and sales ............................. 6,214 10,885
Research and development ........................ 2,811 5,051
General and administrative ...................... 1,035 1,861
------- -------
Total operating expenses ............................. 10,060 17,797
------- -------
Income from operations ............................... 60 321
Other income and expense ............................. 309 70
------- -------
Income before income taxes ........................... 369 391
Income tax provision ................................. -- --
------- -------
Net income ...................................... 369 391
Dividends on redeemable preferred stock .............. -- 29
------- -------
Net income available to common stockholders .......... $ 369 $ 362
======= =======
Net income per common share .......................... $ 0.03 $ 0.03
======= =======
Shares used in computing net income per share ........ 12,441 12,364
======= =======
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
SOFTWARE PUBLISHING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted, unaudited)
Three months ended
Dec. 31, 1994 Dec. 31, 1993
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 369 $ 391
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ....................................................... 680 1,498
Net change in operating assets and liabilities:
Accounts receivable ............................................................. 702 9,247
Other current assets ............................................................ 143 (307)
Trade accounts payable and other accrued liabilities ............................ (3,948) (10,075)
Income taxes receivable and payable ............................................. 63 404
Accrued restructuring and lease obligations ..................................... (868) (2,101)
----------- -----------
Net cash used by operating activities .................................................... (2,859) (943)
----------- -----------
Cash provided (used) by investing activites:
Acquisition of property and equipment ............................................... (922) (556)
Increase in other non-current assets ................................................ (11) 16
Decrease in short-term investments .................................................. 11,287 13,272
----------- -----------
Net cash provided (used) by investing activities ......................................... 10,354 12,732
----------- -----------
Cash provided (used) by financing activities:
Issuance of capital stock, net of repurchases ....................................... 135 322
Redemption of preferred stock and payment of dividends .............................. -- (2,076)
----------- -----------
Net cash provided (used) by financing activities ......................................... 135 (1,754)
----------- -----------
Net increase in cash and cash equivalents ................................................ 7,630 10,035
Cash and cash equivalents:
Beginning balance ................................................................... 18,320 2,039
----------- -----------
Ending balance ...................................................................... $ 25,950 $ 12,074
=========== ===========
Supplemental disclosure:
Income tax refunds, net of payments ................................................. $ 1 $ (404)
=========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
SOFTWARE PUBLISHING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(unaudited)
1. The unaudited financial information furnished herein reflects all
adjustments, consisting only of normal recurring adjustments, which in
the opinion of management are necessary to fairly state the Company's
and its subsidiaries' consolidated financial position, the results of
their operations, and their cash flows for the periods presented. This
Quarterly Report on Form 10-Q should be read in conjunction with the
Company's audited financial statements for the year ended September
30, 1994 included in the 1994 Annual Report to Stockholders. The
consolidated results of operations for the three month period ended
December 31, 1994 are not necessarily indicative of results to be
expected for the entire fiscal year ending September 30, 1995.
2. Investment Securities
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (FAS 115). The Company
adopted the provisions of FAS 115 effective October 1, 1994. Under the
provisions of FAS 115, the Company has classified its investments in
debt securities as "available-for-sale." Such investments are now
recorded at fair value, with unrealized gains and losses reported as a
separate component of shareholders' equity. Interest income is still
recorded using an effective interest rate, with the associated
discount or premium amortized to interest income.
The cost of securities sold is based on the specific identification
method. In accordance with the provisions of FAS 115, prior period
financial statements have not been restated to reflect the change in
accounting principle. The cumulative effect as of December 31, 1994 of
adopting FAS 115 was to decrease the opening balance of shareholders'
equity by $0.3 million to reflect the net unrealized loss on
investments classified as available-for-sale and previously recorded
at cost.
As of December 31, 1994, available-for-sale securities consisted of
the following (in thousands):
Fair
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-------- -------- -------- --------
U.S. Government securities .. $ 10,899 5 (248) $ 10,656
Municipal securities ........ 4,215 23 (1) 4,237
Mortgage backed securities .. 5,775 -- (34) 5,741
Corporate securities ........ 14,675 43 (89) 14,629
-------- -------- -------- --------
$ 35,564 71 (372) $ 35,263
======== ======== ======== ========
The cost and estimated fair value of these securities as of December
31, 1994, by contractual maturity, consisted of the following (in
thousands):
Amortized Fair
Cost Market Value
------- -------
Due in one year or less ..................... $29,134 $29,041
Due in one to three years ................... 6,430 6,222
------- -------
$35,564 $35,263
======= =======
6
<PAGE>
Cash and short term investments comprised (in thousands):
Dec. 31,1994 Sept. 30, 1994
------------- --------------
Cash and cash equivalents .............. $25,950 $18,320
Short term investments ................. 17,651 29,239
------- -------
$43,601 $47,559
======= =======
3. Other accrued liabilities comprised (in thousands):
Dec. 31, Sept. 30,
1994 1994
------- -------
Reserve for returns and exchanges ............ $ 3,112 $ 4,563
Current portion of lease obligations ......... 3,212 3,331
Rebates and channel marketing programs ....... 2,188 2,029
Accrued compensation and benefits ............ 1,494 1,176
Restructuring accruals ....................... 301 860
Other accrued liabilities .................... 2,475 3,371
------- -------
$12,782 $15,330
======= =======
4. Net income per common share has been computed using the weighted
average number of common and common equivalent shares (when dilutive)
outstanding during each period. Common equivalent shares consist of
the dilutive shares issuable upon the exercise of stock options using
the treasury stock or modified treasury stock method (whichever
applies). For the three months ended December 31, 1994, no common
equivalent shares were included in the computation as the effect of
using the modified treasury stock method was anti-dilutive.
(in thousands) Three months ended
Dec. 31, Sept. 30,
1994 1994
------ ------
Weighted average common shares outstanding ......... 12,441 12,334
Net effect of dilutive stock options ............... -- 30
------ ------
Shares used in computing net income per common and
common equivalent share ............................ 12,441 12,364
====== ======
7
<PAGE>
SOFTWARE PUBLISHING CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
North America and international net revenues for the three months ended
December 31, 1994 and 1993 and the three months ended September 30, 1994
and the percentage change of net revenues were as follows:
Three
months
Three months ended
(dollars in millions) ended Dec. 31, Percent Sept. 30, Percent
-------------- ------- -------- -------
1994 1993 Change 1994 Change
------ ----- ----- ----- ------
North America ............ $ 7.7 $15.7 (51)% $10.0 (23)%
International ............ 4.7 7.0 (33)% 4.5 5 %
------ ------ ----- ----- ------
Total net revenues ....... $12.4 $22.7 (45)% $14.5 (13)%
====== ====== ===== ====== ======
Net revenues in the first quarter of fiscal 1995 decreased an aggregate of
13% compared to the prior quarter and significantly declined an aggregate
of 45% compared to the first quarter of fiscal 1994. The decline in net
revenues in the first quarter of fiscal 1995, as compared to the prior
fiscal quarter was due to a significant decline in North America sales,
slightly offset by a $200,000 increase in net revenues from international
sales. The decrease in net revenues in the first quarter of fiscal 1995, as
compared to the prior fiscal quarter resulted primarily from decreased
sales of Harvard Graphics 3.0 for Windows, which began shipping in July
1994, and was at the peak of its version upgrade life cycle during the
fourth fiscal quarter of 1994. A continuing, significant decline in the
sales of Harvard Graphics DOS contributed to the decrease as well, while
the Company continues to experience an overall, ongoing decline in the DOS
market. Until the Company is able to introduce Harvard Graphics version
based on Microsoft Windows 95, which is now scheduled for release in the
fourth quarter of fiscal 1995, the Company expects continuing decreases in
its Harvard Graphics quarterly net revenues, at least through the second
and third quarters of fiscal 1995. The decline in net revenues in the first
quarter of fiscal 1995 as compared to the first quarter of fiscal 1994
resulted primarily from the decline in sales of Harvard Graphics 2.0 for
Windows, which was at the peak of its version upgrade life cycle during the
first quarter of fiscal 1994, without obtaining sufficient net revenue from
new products to offset such decline, including net revenues from the sale
Harvard Graphics 3.0 for Windows, which had experienced peak sales prior to
the first quarter of fiscal 1995. The continuing, significant decline in
sales of DOS products, including Harvard Graphics DOS and Professional
Write DOS, contributed as well to this decline in net revenues.
Additionally, the Company completed the sale of its Superbase product line
to Computer Concepts Corporation in June 1994, which resulted in further
declines in net revenues following June 30, 1994. Also contributing to
these declines was the continuing effects of intense competition worldwide,
particularly in the Windows market, and a soft economy in Europe. Although
international net revenues improved slightly in the first quarter of fiscal
1995, as compared to the fourth quarter of fiscal 1995, they remain
substantially below the levels of the first quarter of fiscal 1994.
International revenues in the second quarter of fiscal 1995 could be
adversely affected by channel inventory adjustments in the United Kingdom
due to the product mix.
Net revenues in first quarter of fiscal 1995, included net revenues from
the Company's three recently released products: Harvard Spotlight, which
began shipping in late June 1994, Harvard Chart XL which began shipping in
late September 1994 and OnFile which began shipping in late December 1994.
These products accounted for an aggregate of approximately 8% of the net
revenues in the first fiscal quarter of 1995.
The Harvard series of presentation graphics products represented 92% of
total net revenues in the first quarter of fiscal 1995, compared with 90%
in the fourth quarter of fiscal 1994 and 88% in the first quarter of fiscal
1994. Net revenues from sales of all products on the Windows platform
accounted for 85% of total net revenues compared to 78% in the fourth
quarter of fiscal 1994 and 76% in the first quarter of fiscal 1994.
Cost of revenues was $2.3 million or 18% of net revenues in the first
quarter of fiscal 1995 as compared to $2.9 million or 20% of net revenues
in the fourth quarter of fiscal 1994, and $4.6 million or 20% of net
revenues in the first quarter of fiscal 1994. Cost of revenues in the
8
<PAGE>
first quarter of fiscal 1995 in absolute dollars decreased as compared to
the fourth quarter of fiscal 1994 primarily because of reduced sales and
lower manufacturing overhead expenses. Cost of revenues as a percentage of
net revenue was favorably impacted by a large OEM sale in the first quarter
of fiscal 1995. As compared to the first quarter of fiscal 1994, cost of
revenues in the first quarter of fiscal 1995 decreased in absolute dollars
primarily because of decreased sales, as well as because of reductions in
overhead costs and an increase in sales of OEM units. Since April 1994, the
Company has experienced a positive impact of lower overhead and
employee-related costs resulting from the reorganization and reduction in
work force, but these savings have been more than offset by the unfavorable
impact of reduced revenues.
The Company's gross margins and operating income may be affected in
particular periods by the timing of product introductions and other
promotional pricing and rebate offers, as well as return privileges and
marketing promotions in connection with new product introductions and
upgrades. These promotions may have a negative influence on average selling
prices and gross margins. Gross margins have been, and will continue to be,
adversely affected by competitive pricing strategies in the industry as a
whole, including competitive upgrade pricing and alternative licensing
arrangements.
The Company believes that end users are continuing to migrate from the DOS
to the Windows platform, but cannot predict the rate of this transition or
the degree to which it will affect net revenues or gross margins in the
future. The Company expects increased competition, including price
competition, in both the DOS and Windows markets in the future. Some of the
Company's competitors have introduced suites of products which include
products that directly compete with the Company's products which are
bundled with other office software programs by the same or multiple
competitors, and are sold at an all-inclusive price. The Company believes
these offerings of product suites have adversely affected the Company's net
revenues, and will continue to adversely affect the sales of Harvard
Graphics products in the future. The Company does not currently offer a
suite of products, but offers products that complement competitive suite
products. In order for the Company to increase its revenues, it must
introduce new marketing strategies and continue to develop and introduce
new technologies and products through strategic alliances, acquisitions or
internal development. Any delay in these planned strategies, difficulties
encountered in introducing new products or marketing programs, or failure
of the Company's products to compete successfully with products offered by
other vendors could materially and adversely affect net revenues and
profitability.
The Company believes that its revenues and the results of operations for
fiscal year 1995 will be adversely affected by the recently announced delay
in the introduction of Microsoft Windows 95 which is now scheduled for
release in the fourth quarter of fiscal 1995. This postponement will in
turn delay the upgrade cycle of the Company's products. The Company plans
to introduce alternative marketing programs to sustain demand for the
current version of Harvard Graphics for Windows. Although the Company
believes that revenue opportunities will be delayed due to the postponement
of Microsoft Windows 95, the Company expects to somewhat offset that with
the above mentioned alternative marketing programs.
The Company believes that its results of operations have been adversely
affected by the deteriorating economic conditions in the industry in
general, market uncertainties, increased price competition, offerings of
product suites by competitors, a decline in the DOS market and a relative
increase in the percentage of upgrade sales. In the future, the Company's
operating results could be adversely affected by these and other factors,
such as delays in new product introductions, the mix of product sales or
distribution channels, and customer choices regarding operating systems.
Total operating expenses in absolute dollars were higher in the first
quarter of fiscal 1995 compared to the fourth quarter of fiscal 1994, and
lower compared to the first fiscal quarter of 1994. Operating expenses in
the first quarter of fiscal 1995 included a reversal of $0.9 million which
resulted from the resolution of an operational legal dispute. Operating
expenses in the fourth quarter of fiscal 1994 included a $2.6 million
reversal of a reserve for facilities-related restructuring charges.
Excluding the above non-recurring items in the first quarter of fiscal 1995
and the fourth quarter of fiscal 1994, operating expenses decreased in the
first quarter of fiscal 1995 by $0.6 million or 5% as compared to the
fourth quarter of fiscal 1994. This decrease was principally attributable
to a reduction in facilities related expenses, as well as improved
operating expense management. The Company expects to continue to reduce its
overall cost structure in the future, although there can be no assurance
that it will succeed in its costs reduction efforts.
9
<PAGE>
Marketing and sales expenses were $6.2 million or 50% of net revenues in
the first fiscal quarter of 1995 as compared to $7.1 million or 49% of net
revenues in the fourth quarter of fiscal 1994 and $10.9 million or 48% of
net revenues in the first quarter of fiscal 1994. The decrease in absolute
dollars in the first quarter of fiscal 1994 was the result of reduced
employee related expenses because of the restructuring and related
reduction in work force, which included the closure of several sales
offices both in North America and International.
Research and development expenses were $2.8 million or 23% of net revenues
in the first quarter of fiscal 1995 as compared to $3.1 million or 22% of
net revenues in the fourth fiscal quarter of 1994 and $5.1 million or 22%
of net revenues in the first quarter of fiscal 1994. The decrease in
absolute dollars in the first quarter of fiscal 1994 was principally the
result of reduced employee and facilities related expenses resulting from
the restructuring and reduction in work force in the second quarter of
fiscal 1994. The Company believes that it is necessary to continue to
invest in research and development to remain competitive. However, as a
result of the restructuring actions taken by the Company in the fourth
quarter of fiscal 1993 and the second quarter of fiscal 1994, research and
development expenses are expected to be lower in absolute dollars in fiscal
1995 than in fiscal 1994. In future periods, the Company intends to
continue to acquire externally developed technology, explore strategic
alliances and other methods of acquiring technology, and continue to invest
in internal development projects. Because of the inherent uncertainties
associated with software development projects, there can be no assurance
that the Company's research and development efforts will result in
successful product introductions or increased revenues.
General and administrative expenses were $1.0 million or 8% of net revenues
in the first quarter of fiscal 1995 as compared to $1.3 million or 9% of
net revenues in the fourth quarter of fiscal 1994 and $1.9 million or 8% of
net revenues in the first quarter of fiscal 1994. General and
administrative expenses decreased in the first quarter of fiscal 1995 as a
result of $0.9 million reversal of reserves resulting from the resolution
of an operational legal dispute, partially offset by an increase in the
allocation of facilities related expenses to general and administrative
expense.
Other income and expense in the first quarter of fiscal 1995 was $0.3
million as compared to $0.7 million in the fourth quarter of fiscal 1994
and $0.1 million in the first quarter of fiscal 1994. These fluctuations
were the result of higher foreign exchange losses and lower interest income
as compared to the fourth quarter of fiscal 1994, and reduced foreign
exchange losses, as well as a modest increase in interest income as
compared to the first quarter of fiscal 1994.
The 0% effective tax rate for fiscal 1995 reflects the net effects of
United States federal, state and foreign taxes estimated for the full
fiscal year, subject to limitations on loss carry backs and a valuation
allowance established against deferred tax assets as provided under SFAS
No. 109.
On October 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115 (FAS 115). Accounting for Certain Investments in Debt and
Equity Securities (see note 2, "Investment Securities"). The effect of
adopting this new standard was not material to net income.
LIQUIDITY AND CAPITAL RESOURCES
For the first quarter of fiscal 1995, cash and short term investments
decreased $4.0 million to $43.6 million. This decrease resulted from cash
used by operating activities and purchase of capital equipment, offset in
part by the issuance of common stock. Management believes the existing cash
and short term investments, cash generated from operations and the
Company's potential borrowing ability will be sufficient to meet its
current anticipated liquidity and capital expenditure requirements.
However, cash flows in the second quarter of fiscal 1995 could be adversely
affected by the United Kingdom channel inventory adjustments.
In fiscal 1994, the Company invoiced approximately 27% of its total sales
in foreign currencies, and expects this practice to continue at about the
same rate in fiscal 1995. Although the Company does not currently engage in
hedging activities, the Company's exposure for foreign currency exchange
gains and losses is partially mitigated as the Company incurs operating
expenses in most of the currencies in which it invoices customers. The
Company's foreign exchange gains and losses will fluctuate from period to
period depending on the movement in exchange rates.
10
<PAGE>
SOFTWARE PUBLISHING CORPORATION
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Stockholders
The Company's Annual Meeting of Stockholders was held on January 25, 1995.
Proxies for the meeting were solicited pursuant to Regulation 14A. At the
meeting, the following proposals were adopted by the margins indicated:
(a) Election of the Board of Directors to hold office until
the next annual meeting of stockholders or until their
successors are elected and qualified.
Number of shares
For Withheld
---------- --------
Fred M. Gibbons 11,142,140 323,992
Mark A. Bertelsen 11,152,954 313,178
Deborah A. Coleman 11,154,354 311,778
Michael M. Gilbert 11,152,654 313,478
Irfan Salim 11,148,220 317,912
Bernee Storm 11,153,054 313,078
(b) Approval of amendments to the 1987, 1989 and 1991 stock
option plans to increase the number of shares subject to
automatic option grants to non-employee directors from
10,000 shares to 15,000 shares per option and to limit
the number of shares that may be granted to any one
employee thereunder.
For 8,980,792
Against 1,982,630
Abstain 273,857
Broker Non-Votes 228,853
(c) Ratification of the appointment of KPMG Peat Marwick, LLP
as independent accountants for the fiscal year ended
September 30, 1995.
For 11,295,807
Against 95,464
Abstain 74,861
Item 6. Exhibits & Reports on Form 8-K
(a) Exhibits. The following Exhibits are filed as part of, or
incorporated by reference into, this report:
10.1 1987 Incentive Stock Option Plan and forms of agreement
thereunder, as amended.
10.2 1989 Incentive Stock Option Plan and forms of agreement
thereunder, as amended.
10.3 1991 Incentive Stock Option Plan and forms of agreement
thereunder, as amended.
27 Financial Data Schedule
(b) The Company filed a report on Form 8-K on December 9,
1994, regarding a change in the Company's independent
accountants. No other reports on Form 8-K were filed
during the fiscal quarter ended December 31, 1994.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 14, 1995 SOFTWARE PUBLISHING CORPORATION
(Registrant)
/s/ MIRIAM K. FRAZER
-------------------------------------------
Miriam K. Frazer,
Vice President Finance,
Chief Financial Officer
(Principal Financial and Accounting Officer)
12
SOFTWARE PUBLISHING CORPORATION
1987 STOCK OPTION PLAN
(as amended through January 25, 1995)
1. Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Administrator and as
reflected in the terms of the written option agreement.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Committee" shall mean a Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan.
(e) "Common Stock" shall mean the Common Stock, $.001 par value, of
the Company.
(f) "Company" shall mean Software Publishing Corporation, a
Delaware corporation.
(g) "Consultant" shall mean any person who is engaged by the
Company or any Subsidiary to render consulting services and is compensated for
such consulting services; provided that for so long as the Company has any class
of any equity security registered pursuant to Section 12 of the Exchange Act,
the term Consultant shall not include Directors.
(h) "Continuous Status as an Employee, Consultant or Director"
shall mean the absence of any interruption or termination of service as an
Employee, Consultant or Director. Continuous Status as an Employee, Consultant
or Director shall not be considered interrupted in the case of sick leave,
military leave, or any other leave of absence approved by the Administrator;
provided that such leave is for a period of not more than 90 days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.
<PAGE>
(i) "Director" shall mean a member of the Board.
(j) "Disinterested Person" shall mean a "disinterested person" as
defined in Rule 16b-3 (or any comparable successor rule) promulgated under the
Exchange Act and as interpreted by the Securities and Exchange Commission.
(k) "Employee" shall mean any person, including officers and
directors, employed at least twenty (20) hours per week by the Company or any
Parent or Subsidiary of the Company. The payment of a director's fee by the
Company shall not be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(m) "Incentive Stock Option" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422A of the
Code.
(n) "Inside Director" shall mean a Director who is an Employee.
(o) "Nonstatutory Stock Option" shall mean an Option not intended
to qualify as an Incentive Stock Option.
(p) "Officer" shall mean an officer of the Company within the
meaning of the rules and regulations promulgated under Section 16 of the
Exchange Act.
(q) "Option" shall mean a stock option granted pursuant to the
Plan.
(r) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(s) "Optionee" shall mean an Employee or Consultant who receives an
Option.
(t) "Outside Director" shall mean a Director who is not an
Employee.
(u) "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(v) "Plan" shall mean this 1987 Stock Option Plan.
(w) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(x) "Subsidiary" shall mean a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 425(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is
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1,275,000 Shares of Common Stock. Of such Shares, the maximum aggregate number
which may be subject to Options granted to Outside Directors is 127,500 (the
"Pool"). The Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. Notwithstanding any other provision of the Plan,
Shares issued under the Plan and later repurchased by the Company shall not
become available for future grant or sale under the Plan.
4. Administration of the Plan.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3
promulgated under the Exchange Act or any successor rule thereto, as in effect
at the time that discretion is being exercised with respect to the Plan ("Rule
16b-3"), and by the legal requirements relating to the administration of
incentive stock option plans, if any, of applicable securities laws, Delaware
corporate law and the Code (collectively, the "Applicable Laws"), the Plan may
(but need not) be administered by different administrative bodies with respect
to Directors, Officers who are not Directors and Employees who are neither
Directors nor Officers.
(ii) Administration with Respect to Directors and Officers.
With respect to grants of Options to Employees or Consultants who are also
Officers or Directors of the Company, the Plan shall be administered by (A) the
Board, if the Board may administer the Plan in compliance with Rule 16b-3 as it
applies to a plan intended to qualify thereunder as a discretionary plan, or (B)
a Committee designated by the Board to administer the Plan, which Committee
shall be constituted (I) in such a manner as to permit the Plan to comply with
Rule 16b-3 as it applies to a plan intended to qualify thereunder as a
discretionary plan and (II) in such a manner as to satisfy the Applicable Laws.
(iii) Administration with Respect to Outside Directors. With
respect to grants of Options to Outside Directors of the Company, the Plan shall
be administered strictly in accordance with the provisions of Section 4(b).
(iv) Administration with Respect to Other Persons. With respect
to grants of Options to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board or (B)
a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws.
(v) General. Once a Committee has been appointed pursuant to
subsection (ii) or (iv) of this Section 4(a), such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may
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increase the size of any Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies (however caused) and remove all members of a Committee
and thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws and, in the case of a Committee appointed under subsection (ii),
to the extent permitted by Rule 16b-3 as it applies to a plan intended to
qualify thereunder as a discretionary plan.
(b) Automatic Grant Formula.
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an
Option to purchase 15,000 Shares (the "First Option") upon the later to occur of
(x) the effective date of this Plan, as determined in accordance with Section 6
hereof, or (y) the date on which a person first becomes a Director, whether
through election by the stockholders of the Company or appointment by the Board
of Directors to fill a vacancy; provided, however, that no such First Option
shall be granted to any Outside Director if such Outside Director has been or is
automatically granted an Option to purchase 15,000 Shares (a "1985 Plan Option")
during the same fiscal year of the Company pursuant to Section
4(a)(ii)(C)(II)(aa) of the Company's 1985 Incentive Stock Option Plan (the "1985
Option Plan").
(iii) After an Outside Director has been granted the First
Option or a 1985 Plan Option (as the case may be), such Outside Director shall
thereafter be automatically granted an Option to purchase 15,000 Shares (a
"Subsequent Option") on the first day of each fiscal year of the Company
occurring after the grant date of such Outside Director's First Option or 1985
Plan Option (as the case may be); provided, however, that if any Outside
Director has been or is automatically granted an Option to purchase Shares (a
"Subsequent 1985 Plan Option") on an automatic grant date pursuant to Section
4(a)(ii)(C)(II)(bb) of the 1985 Option Plan, then on such automatic grant date
such Outside Director shall be granted a Subsequent Option hereunder to purchase
that number of Shares determined by subtracting the number of Shares covered by
the Subsequent 1985 Plan Option from 15,000.
(iv) Notwithstanding the provisions of subparagraphs (ii) and
(iii) hereof, in the event that a grant would cause the number of Shares subject
to outstanding Options to Outside Directors plus Shares previously purchased
upon exercise of Options by Outside Directors to exceed the Pool (as defined in
Section 3 hereof), then each such automatic grant shall be for that number of
Shares determined by dividing the total number of Shares remaining available for
grant to Outside Directors by the number of Outside Directors on the automatic
grant date. Any further grants shall then be deferred until such time, if any,
as additional Shares become available for grant to Outside Directors through
action of the
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stockholders to increase the number of Shares which may be granted to Outside
Directors or through cancellation or expiration of Options previously granted to
Outside Directors hereunder.
(v) The terms of an Option granted to an Outside Director shall
be as follows:
(A) the term of the Option shall be seven (7) years.
(B) the Option shall be exercisable only while the Director
remains a Director of the Company, except as set forth in Sections 9(c) and 9(d)
hereof.
(C) the exercise price per Share shall comply with Section
8(a) hereof, but shall in no event be less than 100% of the fair market value
per Share on the date of grant of the Option.
(D) the Option shall be exercisable cumulatively to the
extent of 1/8 (12.5%) of the Shares subject to the Option at the end of each
six-month period which has expired after the commencement of vesting date of the
Option. Such date is determined by the Administrator and stated in each
Optionee's agreement.
(c) Powers of the Administrator. Subject to the provisions of the
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such a Committee, the Administrator shall have the authority, in its
discretion: (i) to grant Incentive Stock Options or Nonstatutory Stock Options;
(ii) to determine, upon review of relevant information and in accordance with
Section 8(b) of the Plan, the fair market value of the Common Stock; (iii) to
determine the exercise price per Share of Options to be granted, which exercise
price shall be determined in accordance with Section 8(a) of the Plan; (iv) to
determine the Employees or Consultants to whom, and the time or times at which,
Options shall be granted and the number of Shares to be represented by each
Option; (v) to interpret the Plan; (vi) to prescribe, amend and rescind rules
and regulations relating to the Plan; (vii) to determine the terms and
provisions of each Option granted (which need not be identical) and, with the
consent of the holder thereof, modify or amend each Option; (viii) to accelerate
or defer (with the consent of the Optionee) the exercise date of any Option,
consistent with the provisions of Section 5 of the Plan; (ix) to authorize any
person to execute on behalf of the Company any instrument required to effectuate
the grant of an Option previously granted by the Administrator; and (x) to make
all other determinations deemed necessary or advisable for the administration of
the Plan.
(d) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options granted under the
Plan.
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5. Eligibility.
(a) Nonstatutory Stock Options may be granted only to Employees,
Consultants and Directors. Incentive Stock Options may be granted only to
Employees. An Employee, Consultant or Director who has been granted an Option
may, if he is otherwise eligible, be granted an additional Option or Options.
(b) No Incentive Stock Option may be granted to an Employee which,
when aggregated with all other incentive stock options granted to such Employee
by the Company or any Parent or Subsidiary, would result in Shares having an
aggregate fair market value (determined for each Share as of the date of grant
of the Option covering such Share) in excess of $100,000 becoming first
available for purchase upon exercise of one or more incentive stock options
during any calendar year.
(c) Section 5(b) of the Plan shall apply only to an Incentive Stock
Option evidenced by an "Incentive Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall qualify as an
incentive stock option. Section 5(b) of the Plan shall not apply to any Option
evidenced by a "Nonstatutory Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall be a
Nonstatutory Stock Option.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment or consulting relationship at any time.
(e) Notwithstanding the above, the number of Shares subject to an
Option granted to an Outside Director and the terms thereof shall be subject to
the limitations set forth in Section 4(b) hereof.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of November 16, 1987 or its approval by the stockholders of the Company as
described in Section 17 of the Plan. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 13 of the Plan.
7. Term of Option. The term of each Incentive Stock Option shall be
five (5) years from the date of grant thereof or such other term not exceeding
ten (10) years as may be provided in the Incentive Stock Option Agreement. The
term of each Nonstatutory Stock Option shall be five (5) years from the date of
grant thereof or such other term not exceeding ten (10) years and one (1) day as
may be provided in the Nonstatutory Stock Option Agreement. However, in the case
of an Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock
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of the Company or any Parent or Subsidiary, (a) if the Option is an Incentive
Stock Option, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter time as may be provided in the Incentive Stock
Option Agreement, or (b) if the Option is a Nonstatutory Stock Option, the term
of the Option shall be five (5) years and one (1) day from the date of grant
thereof or such shorter term as may be provided in the Nonstatutory Stock Option
Agreement.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be such price as is determined
by the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the fair
market value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the fair market value per Share on the date of
grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the fair market value per
Share on the date of the grant.
(B) granted to an Outside Director, the per Share exercise
price shall be no less than 100% of the fair market value per Share on the date
of grant.
(C) granted to any person, the per Share exercise price
shall be no less than 50% of the fair market value per Share on the date of
grant.
(b) Fair Market Value. The fair market value shall be determined by
the Administrator in its discretion; provided, however, that where there is a
public market for the Common Stock, the fair market value per Share shall be the
mean of the bid and asked prices of the Common Stock for the date of grant, as
reported in the Wall Street Journal (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) System) or, in the event the Common Stock is traded on the NASDAQ
National Market System or listed on a stock exchange, the fair market value per
Share shall be
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the closing price on such system or exchange on the date of grant of the Option,
as reported in the Wall Street Journal.
(c) Form of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator and may consist entirely of cash,
check, promissory note, other Shares of Common Stock having a fair market value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised, or any combination of such methods of
payment, or such other consideration and method of payment for the issuance of
Shares to the extent permitted under Sections 152 and 153 of the Delaware
General Corporation Law. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company (Section 143 of
the Delaware General Corporation Law).
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 17 hereof is
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Notwithstanding the provisions of the foregoing paragraph, subject
to the consent of the Company, an Option having a per Share exercise price which
is below the fair market value per Share on the date of exercise may be
exercised by delivery to the Company in accordance with the terms of the Option
of a written notice of such exercise and written
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instructions to the Company to sell the Shares with respect to which the Option
is exercised and to retain all or a portion of the proceeds of such sale in full
payment for such Shares.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee, Consultant or Director.
In the event of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), such Optionee may, but only within thirty (30)
days (or such other period of time not exceeding three (3) months in the case of
an Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of grant of the Option)
after the date of such termination (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement),
exercise his Option to the extent that he was entitled to exercise it at the
date of such termination. To the extent that he was not entitled to exercise the
Option at the date of such termination, or if he does not exercise such Option
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate. Options granted to Outside Directors shall terminate
immediately upon cessation of service as a Director.
(c) Disability of Optionee. Notwithstanding the provisions of
Section 9(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee, Consultant or Director as a result of his total and
permanent disability (as defined in Section 22(e)(3) of the Code), he may, but
only within six (6) months (or such other period of time not exceeding twelve
(12) months as is determined by the Administrator, with such determination in
the case of an Incentive Stock Option being made at the time of grant of the
Option) from the date of such termination (but in no event later than the date
of expiration of the term of such Option as set forth in the Option Agreement),
exercise his Option to the extent he was entitled to exercise it at the date of
such termination. To the extent that he was not entitled to exercise the Option
at the date of termination, or if he does not exercise such Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his
death an Employee, Consultant or Director of the Company and who shall have been
in Continuous Status as an Employee, Consultant or Director since the date of
grant of the Option, the Option may be exercised, at any time within six (6)
months following the date of death (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement), by
the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise that would have accrued had the Optionee continued living and remained
in Continuous Status as an Employee, Consultant or
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Director six (6) months after the date of death, subject to the limitation set
forth in Section 5(b); or
(ii) if an Employee or Consultant, within thirty (30) days (or
such other period of time not exceeding three (3) months as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) after the termination of
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within six (6) months following the date of death (but in no event
later than the date of expiration of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.
(e) Leaves of Absence. In the event a leave of absence of thirty
days or fewer is taken by an Optionee, vesting on any Options held by such
Optionee will continue as if the Optionee had remained at work with the Company
during such period. In the event of a leave of absence of more than thirty days
is taken by an Optionee, vesting on any Options held by such Optionee shall
cease as of the thirty-first day of such leave of absence and shall recommence
at the time of such Optionee's return to work at the Company, unless
specifically provided otherwise in the Option Agreement or by the Administrator
in its discretion.
(f) Rule 16b-3. Options granted to persons subject to Section 16(b)
of the Exchange Act must comply with the applicable provisions of Rule 16b-3 and
the stock option agreements relating to such options shall contain such
additional conditions or restrictions as may be required to be contained in such
agreements to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
(g) Stock Withholding to Satisfy Withholding Tax Obligation. When
an Optionee incurs tax liability in connection with the exercise of an Option,
which tax liability is subject to tax withholding under applicable tax laws, and
is obligated to pay the Company an amount required to be withheld under
applicable tax laws, the Optionee may satisfy the withholding tax obligation by
electing to have the Company withhold from the Shares to be issued upon exercise
of the Option that number of Shares having a fair market value equal to the
amount required to be withheld. The fair market value of the Shares to be
withheld shall be the closing price of the Common Stock on the NASDAQ National
Market System or a stock exchange on the date that the amount of tax to be
withheld is to be determined (the "Tax Date"), as reported in the Wall Street
Journal.
All elections by Optionees to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Company and shall be
subject to the following restrictions:
(i) the election must be made on or prior to the applicable Tax
Date;
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(ii) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;
(iii) all elections shall be subject to the consent or
disapproval of the Administrator;
(iv) if the Optionee is an Officer, Director or other person
whose transactions in the Company's Common Stock are subject to Section 16(b) of
the Exchange Act (collectively "Insiders"), the election may not be made within
six months of the date of grant of the Option; provided, however, that this
limitation shall not apply in the event that death or disability of the Optionee
occurs prior to the expiration of the six-month period; and
(v) if the Optionee is an Insider, the election must be made
either six months prior to the Tax Date (as determined in accordance with
Section 83 of the Code) or in the 10-day period beginning on the third day
following the release of the Company's quarterly or annual summary statement of
sales and earnings.
In the event the election to have Shares withheld is made by an
Optionee who is an Insider and the Tax Date is deferred until six months after
exercise of the Option because no election is filed under Section 83(b) of the
Code, the Optionee shall receive the full number of Shares with respect to which
the Option is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.
10. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder. The
designation of a beneficiary by an Optionee does not constitute a transfer. An
Option may be exercised, during the lifetime of the Optionee, only by the
Optionee or a transferee permitted by this Section 10.
11. Adjustments Upon Changes in Capitalization or Merger.
(a) Change in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the
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Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. 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 of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to exercise his or her
Option as to all or any part of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to the provisions of paragraph (d)
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of all or substantially all of the assets of the
Company, each outstanding Option shall be assumed or an equivalent option or
right shall be substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation does not agree to assume the Option or to substitute an equivalent
option, the Administrator shall, in lieu of such assumption or substitution,
provide for the Optionee to have the right to exercise the Option as to all of
the Optioned Stock, including Shares as to which it would not otherwise be
exercisable. If the Administrator makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option will terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets was not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation and the participant, provide for
the consideration to be received upon the exercise of the Option, for each Share
of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
(d) Change of Control. In the event of a "Change in Control" of the
Company, as defined in paragraph (e) below, either or both or neither of (i) or
(ii) of the acceleration and
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valuation provisions that follow shall apply, as the Board, in its discretion,
shall determine prior to such Change of Control. Neither the Board nor any
person shall have any discretion with respect to the application of (iii):
(i) Any Options outstanding as of the date such Change in Control
is determined to have occurred that are not yet exercisable and vested on such
date shall become fully exercisable and vested;
(ii) To the extent that they are exercisable and vested, all
outstanding Options, unless otherwise determined by the Board at or after grant,
shall be terminated in exchange for a cash payment at the Change in Control
Price, reduced by the exercise price applicable to such Options. These cash
proceeds shall be paid to the Optionee or, in the event of death of an Optionee
prior to payment, to the estate of the Optionee or to a person who acquired the
right to exercise the Option by bequest or inheritance.
(iii) In the case of Options granted to Outside Directors pursuant
to Section 4(a)(C), the provisions of (d)(i) and (d)(ii) of this section shall
apply to such Options.
(e) Definition of "Change in Control". For purposes of this Section
11, a "Change in Control" means the happening of any of the following:
(i) When any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) The occurrence of a transaction requiring stockholder
approval, and involving the sale of all or substantially all of the assets of
the Company or the merger of the Company with or into another corporation.
(f) Change in Control Price. For purposes of this Section 11, "Change
in Control Price" shall be, as determined by the Board, (i) the highest closing
sale price of a Share of Common Stock as reported by the NASDAQ National Market
System and as appearing in the Wall Street Journal (or, in the event the Common
Stock is listed on a stock exchange, the highest closing price as reported in
the Wall Street Journal or such other source of composite quotations as the
Board deems reliable), at any time within the 60 day period immediately
preceding the date of determination of the Change in Control Price by the Board
(the "60-Day Period"), or (ii) the highest price paid or offered, as determined
by the Board, in any bona fide transaction or bona fide offer related to the
Change in Control of the Company, at any time within the 60-Day Period, or (iii)
some lower price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a share of Common Stock.
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12. Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the determination
granting such Option; provided, however, that the date of grant of automatic
grants of Options to Outside Directors shall be the date determined in
accordance with Section 4(b)(ii) or (iii) hereof. Notice of the determination
shall be given to each Employee or Consultant to whom an Option is so granted
within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the stockholders of the Company in the manner described in Section 17 of the
Plan:
(i) any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 11 of the Plan;
(ii) any change in the designation of the class of persons
eligible to be granted Options; or
(iii) if the Company has a class of equity securities
registered under Section 12 of the Exchange Act at the time of such revision or
amendment, any material increase in the benefits accruing to participants under
the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act or with Section 422 of the Code (or any
successor rule or statute or other applicable law, rule or regulation, including
the requirements of any exchange or quotation system on which the Common Stock
is listed or quoted). Such stockholder approval, if required, shall be obtained
in such a manner and to such a degree as is required by the applicable law, rule
or regulation.
(c) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the Optionee
and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
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<PAGE>
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
15. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
16. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Administrator shall approve.
17. Stockholder Approval.
(a) Continuance of the Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted. If such stockholder approval is obtained at a duly held
stockholders' meeting, it must be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company, or if such
stockholder approval is obtained by written consent, it must be obtained by the
unanimous written consent of all stockholders of the Company; provided, however,
that approval at a meeting or by written consent may be obtained by a lesser
degree of stockholder approval if the Board determines, in its discretion after
consultation with the Company's legal counsel, that such a lesser degree of
stockholder approval will comply with all applicable laws and will not adversely
affect the qualification of the Plan under Section 422A of the Code.
(b) If and in the event that the Company registers any class of
equity securities pursuant to Section 12 of the Exchange Act, any required
approval of the stockholders of the Company obtained after such registration
shall be solicited substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder.
(c) If any required approval by the stockholders of the Plan itself
or of any amendment thereto is solicited at any time otherwise than in the
manner described in Section 17(b) hereof, then the Company shall, at or prior to
the first annual meeting of
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<PAGE>
stockholders held subsequent to the later of (1) the first registration of any
class of equity securities of the Company under Section 12 of the Exchange Act
or (2) the granting of an Option hereunder to an officer or director after such
registration, do the following:
(i) furnish in writing to the holders entitled to vote for the
Plan substantially the same information which would be required (if proxies to
be voted with respect to approval or disapproval of the Plan or amendment were
then being solicited) by the rules and regulations in effect under Section 14(a)
of the Exchange Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information is first
sent or given to stockholders.
18. Information to Optionees. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
provided to all stockholders of the Company. The Company shall not be required
to provide such information if the issuance of Options under the Plan is limited
to key employees whose duties in connection with the Company assure their access
to equivalent information.
19. Additional Restrictions of Rule 16b-3. The terms and conditions of
Options granted hereunder to, and of the purchase of Shares upon exercise of
Options by, Officers and Directors shall comply with the applicable provisions
of Rule 16b-3 with respect to discretionary plans to the extent that such
provisions are required to be contained in the Plan or the stock option
agreements. This Plan shall be deemed to contain, and the stock option
agreements relating to such Options shall contain, and the Shares issued upon
exercise thereof shall be subject to, such additional conditions and
restrictions (if any) as may be required by Rule 16b-3 (as it applies to
discretionary plans) to be contained in the Plan or such agreements in order to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
20. Limitation on Options Granted to Employees. The following
limitations shall apply to grants of Options to Employees:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 250,000 Shares.
(ii) In connection with his or her initial employment, an Employee
may be granted Options to purchase up to an additional 250,000 Shares which
shall not count against the limit set forth in Section 20(i) above.
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<PAGE>
(iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 11 hereof.
(iv) If an Option is cancelled (other than in connection with a
transaction described in Section 11 hereof), the cancelled Option will be
counted against the limit set forth in this Section 20. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
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SOFTWARE PUBLISHING CORPORATION
1989 STOCK PLAN
(as amended through January 25, 1995)
1. Purposes of the Plan. The purposes of this 1989 Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
It is intended that these purposes will be effected through the
granting of (a) stock options, (b) incentive stock rights, (c) stock
appreciation rights, (d) stock purchase rights and (e) long-term performance
awards. Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Administrator and as
reflected in the terms of the written option agreement.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
(d) "Committee" shall mean a Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan, if one is appointed.
(e) "Common Stock" shall mean the Common Stock, $.001 par value, of the
Company.
(f) "Company" shall mean Software Publishing Corporation, a Delaware
corporation, or any successor corporation.
(g) "Consultant" shall mean any person who is engaged by the Company or
any Parent or Subsidiary to render consulting services and is compensated for
such consulting services; provided that for so long as the Company has any class
of any equity security registered pursuant to Section 12 of the Exchange Act,
the term Consultant shall not include Directors.
(h) "Continuous Status as an Employee, Consultant or Director" shall
mean the absence of any interruption or termination of service as an Employee,
Consultant or Director. Continuous Status as an Employee, Consultant or Director
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by
<PAGE>
the Administrator, provided that such leave is for a period of not more than
ninety (90) days or reemployment upon the expiration of such leave is guaranteed
by contract or statute.
(i) "Director" shall mean a member of the Board.
(j) "Disinterested Person" shall mean a "disinterested person" as
defined in Rule 16b-3 (or any comparable successor rule) promulgated under the
Exchange Act and as interpreted by the Securities and Exchange Commission.
(k) "Employee" shall mean any person, including Officers and Directors,
employed for at least twenty (20) hours per week by the Company or any Parent or
Subsidiary of the Company. The payment of a director's fee by the Company shall
not be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Incentive Stock Option" shall mean an Option intended to qualify
as and designated as an incentive stock option within the meaning of Section
422A of the Code.
(n) "Incentive Stock Right" shall mean an award granted pursuant to
Section 20 of the Plan that is valued in whole or in part on the achievement of
the Company or individual performance factors or criteria as the Administrator
may deem appropriate.
(o) "Inside Director" shall mean a Director who is an Employee.
(p) "Insider" shall mean an Officer, Director or other person whose
transactions in the Common Stock are subject to Section 16(b) of the Exchange
Act.
(q) "Long-Term Performance Award" shall mean an award granted pursuant
to Section 23 of the Plan that is valued in whole or in part based on the
achievement of the Company or individual performance factors or criteria as the
Administrator may deem appropriate.
(r) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(s) "Officer" shall mean an officer of the Company within the meaning
of the rules and regulations promulgated under Section 16 of the Exchange Act.
(t) "Option" shall mean a stock option granted pursuant to the Plan.
(u) "Optioned Stock" shall mean the Common Stock subject to an Option.
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<PAGE>
(v) "Optionee" shall mean an Employee, Consultant or Director who
receives an Option.
(w) "Outside Director" shall mean a Director who is not an Employee.
(x) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(y) "Plan" shall mean this 1989 Stock Plan, as hereinafter amended from
time to time.
(z) "Restricted Stock" shall mean shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 22 of the Plan.
(aa) "Right" shall mean and include Incentive Stock Rights, Stock
Appreciation Rights and Stock Purchase Rights granted pursuant to the Plan.
(ab) "Stock Appreciation Right" shall mean an award made pursuant to
Section 21 of the Plan.
(aa) "Stock Purchase Right" shall mean the right to purchase Common
Stock pursuant to Section 22 of the Plan.
(bb) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(cc) "Subsidiary" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
In addition, the term "Pool," the terms "First Option," "1985/1987 Plan
Option," "1985 Option Plan," "1987 Option Plan," "Subsequent Option,"
"Subsequent 1985/1987 Plan Option" and "Disinterested Committee," the term "Just
Cause," the term "Performance Period," the term "Tax Date," and the terms
"Change of Control," "Potential Change of Control," "Change of Control Price"
and "60-Day Period" shall have the meanings set forth in Sections 3, 4(a), 9(b),
10, 23(a) and 24 of the Plan, respectively.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the
Plan, the maximum aggregate number of Shares which may be optioned, sold or
awarded under the Plan is 1,000,000 Shares of Common Stock. Of such Shares, the
maximum aggregate number which may be subject to Options granted to Outside
Directors is 125,000 (the "Pool"). The Shares may be authorized, but unissued,
or reacquired Common Stock.
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<PAGE>
If an Option or Right should expire or become unexercisable for any
reason without having been exercised in full, or if any portion of an Option
should be surrendered unexercised upon the exercise of a Stock Appreciation
Right pursuant to Section 21(a)(i) hereof, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grants of Options or other awards under the Plan. In
addition, if any Shares of Restricted Stock or Shares that are subject to any
Incentive Stock Right, Stock Purchase Right or Long-Term Performance Award
granted hereunder are forfeited or any such award otherwise terminates without a
payment being made to a participant in the form of Common Stock, then in each
such case such Shares shall be returned to the Plan and shall be available for
future grants of Options or other awards under the Plan.
4. Administration of the Plan.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3
promulgated under the Exchange Act or any successor rule thereto, as in effect
at the time that discretion is being exercised with respect to the Plan ("Rule
16b-3"), and by the legal requirements relating to the administration of
incentive stock option plans, if any, of applicable securities laws, Delaware
corporate law and the Code (collectively, the "Applicable Laws"), the Plan may
(but need not) be administered by different administrative bodies with respect
to Directors, Officers who are not Directors and Employees who are neither
Directors nor Officers.
(ii) Administration With Respect to Directors and Officers. With
respect to grants of Options to Employees or Consultants who are also Officers
or Directors of the Company, the Plan shall be administered by (A) the Board, if
the Board may administer the Plan in compliance with Rule 16b-3 as it applies to
a plan intended to qualify thereunder as a discretionary plan, or (B) a
Committee designated by the Board to administer the Plan, which Committee shall
be constituted (I) in such a manner as to permit the Plan to comply with Rule
16b-3 as it applies to a plan intended to qualify thereunder as a discretionary
plan and (II) in such a manner as to satisfy the Applicable Laws.
(iii) Administration With Respect to Outside Directors. With
respect to grants of Options to Outside Directors of the Company, the Plan shall
be administered strictly in accordance with the provisions of Section 4(b).
(iv) Administration With Respect to Other Persons. With respect to
grants of Options to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board or (B)
a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws.
(v) General. Once a Committee has been appointed pursuant to
subsection (ii) or (iv) of this Section 4(a), such Committee shall continue to
serve in its
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<PAGE>
designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of any Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all members of
a Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws and, in the case of a Committee appointed under
subsection (ii), to the extent permitted by Rule 16b-3 as it applies to a plan
intended to qualify thereunder as a discretionary plan.
(b) Automatic Grant Formula.
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an Option
to purchase 15,000 Shares (the "First Option") upon the later to occur of (x)
the effective date of this Plan, as determined in accordance with Section 6
hereof, or (y) the date on which a person first becomes a Director, whether
through election by the stockholders of the Company or appointment by the Board
of Directors to fill a vacancy; provided, however, that no such First Option
shall be granted to any Outside Director if such Outside Director has been or is
automatically granted an Option to purchase 15,000 Shares (a "1985/1987 Plan
Option") during the same fiscal year of the Company pursuant to Section
4(a)(ii)(C)(II)(aa) of the Company's 1985 Incentive Stock Option Plan (the "1985
Option Plan") or Section 4(b)(ii) of the Company's 1987 Stock Option Plan (the
"1987 Option Plan").
(iii) After an Outside Director has been granted the First Option
or a 1985/1987 Plan Option (as the case may be), such Outside Director shall
thereafter be automatically granted an Option to purchase 15,000 Shares (a
"Subsequent Option") on the first day of each fiscal year of the Company
occurring after the grant date of such Outside Director's First Option or
1985/1987 Plan Option (as the case may be); provided, however, that if any
Outside Director has been or is automatically granted an Option to purchase
Shares (a "Subsequent 1985/1987 Plan Option") on an automatic grant date
pursuant to Section 4(a)(ii)(C)(II)(bb) of the 1985 Option Plan or Section
4(b)(iii) of the 1987 Option Plan, then on such automatic grant date such
Outside Director shall be granted a Subsequent Option hereunder to purchase that
number of Shares determined by subtracting the number of Shares covered by the
Subsequent 1985 Plan Option from 15,000.
(iv) Notwithstanding the provisions of subparagraphs (ii) and (iii)
hereof, in the event that a grant would cause the number of Shares subject to
outstanding Options to Outside Directors plus Shares previously purchased upon
exercise of Options by Outside Directors to exceed the Pool (as defined in
Section 3 hereof), then each such automatic grant shall be for that number of
Shares determined by dividing the total number of Shares remaining available for
grant to Outside Directors by the number of Outside Directors on the
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<PAGE>
automatic grant date. Any further grants shall then be deferred until such time,
if any, as additional Shares become available for grant to Outside Directors
through action of the stockholders to increase the number of Shares which may be
granted to Outside Directors or through cancellation or expiration of Options
previously granted to Outside Directors hereunder.
(v) The terms of an Option granted to an Outside Director shall be
as follows:
(A) the term of the Option shall be seven (7) years.
(B) the Option shall be exercisable only while the Director
remains a Director of the Company, except as set forth in Sections 9(c) and 9(d)
hereof.
(C) the exercise price per Share shall comply with Section 8(a)
hereof, but shall in no event be less than 100% of the fair market value per
Share on the date of grant of the Option.
(D) the Option shall be exercisable cumulatively to the extent
of 1/8 (12.5%) of the Shares subject to the Option at the end of each six-month
period which has expired after the commencement of vesting date of the Option.
Such date is determined by the Administrator and stated in each Optionee's
agreement.
(c) Powers of the Administrator. Subject to the provisions of the Plan
and, in the case of a Committee, the specific duties delegated by the Board to
such a Committee, the Administrator shall have the authority, in its discretion:
(i) to grant Incentive Stock Options, Nonstatutory Stock Options, Incentive
Stock Rights, Stock Appreciation Rights, Stock Purchase Rights or Long-Term
Performance Awards; (ii) to determine, upon review of relevant information and
in accordance with Section 8(b) of the Plan, the fair market value of the Common
Stock; (iii) to determine the exercise price or value per Share of Options or
Rights to be granted, which price or value shall be determined in accordance
with Section 8(a), 21(a)(i), 21(b)(i) or 22(a) of the Plan; (iv) to determine
the Employees or Consultants to whom, and the time or times at which, Options,
Rights or Long-Term Performance Awards shall be granted and the number of Shares
to be represented by or the dollar value of each Option, Right or Long-Term
Performance Award; (v) to interpret the Plan; (vi) to prescribe, amend and
rescind rules and regulations relating to the Plan; (vii) to determine the terms
and provisions of each Option, Right or Long-Term Performance Award granted
(which need not be identical) and, with the consent of the holder thereof,
modify or amend each Option, Right or Long-Term Performance Award; (viii) to
accelerate or defer (with the consent of the Holder) the exercise date of any
Option, Right or Long-Term Performance Award consistent with the provisions of
Section 5 of the Plan; (ix) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option, Right or
Long-Term Performance Award previously granted by the Administrator; (x) to
approve forms of agreement for use under the Plan; (xi) to determine whether, to
what extent and under what circumstances Common
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<PAGE>
Stock and other amounts payable with respect to an award under this Plan shall
be deferred either automatically or at the election of the participant
(including providing for and determining the amount, if any, of any deemed
earnings or any deferred amount during any deferral period); (xii) to reduce the
exercise price of any Option to the then current fair market value of the Common
Stock if the fair market value of the Shares covered by such Option shall have
declined since the date the Option was granted; and (xiii) to make all other
determinations deemed necessary or advisable for the administration of the Plan.
(d) Effect of Administrator Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
participants and any other holders of any Options, Rights or Long-Term
Performance Awards granted under the Plan.
5. Eligibility.
(a) Nonstatutory Stock Options, Incentive Stock Rights, Stock
Appreciation Rights, Restricted Stock Rights and Long-Term Performance Awards
may be granted only to Employees, Consultants and Directors. Options intended to
qualify as Incentive Stock Options may be granted only to Employees. An
Employee, Consultant or Director who has been granted an Option, Right or
Long-Term Performance Award may, if he is otherwise eligible, be granted one or
more additional Options, Rights or Long-Term Performance Awards.
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Non-statutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate fair market
value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Options shall be taken into account
in the order in which they were granted, and the fair market value of the Shares
shall be determined as of the time the Option with respect to such Shares is
granted.
(d) The Plan shall not confer upon any participant any right with
respect to continuation of his employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment or consulting relationship at any time, with or
without cause.
(e) Notwithstanding the foregoing, the number of Shares subject to an
Option granted to an Outside Director and the terms thereof shall be subject to
the limitations set forth in Section 4(b) hereof.
6. Term of Plan. The Plan shall become effective upon the earlier to occur
of October 16, 1989 or its approval by the stockholders of the Company as
described in Section 18
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of the Plan. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 14 of the Plan.
7. Term of Option. At the time an Option is granted, the Administrator
shall specify the period within which the Option may be exercised, provided that
the term of each Incentive Stock Option shall not exceed ten (10) years.
However, in the case of an Incentive Stock Option granted to an Optionee who, at
the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter time as may be provided in the Incentive Stock
Option Agreement.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the fair
market value per Share on the date of grant.
(B) granted to any other Employee, the per Share exercise price
shall be no less than 100% of the fair market value per Share on the date of
grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who at the time of the grant of such
Option, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the per
Share exercise price shall be no less than 110% of the fair market value per
Share on the date of the grant.
(B) granted to an Outside Director, the per Share exercise
price shall be no less than 100% of the fair market value per Share on the date
of grant.
(C) granted to any person, the per Share exercise price shall
be no less than 50% of the fair market value per Share on the date of grant.
(iii) Notwithstanding the foregoing, in the event that the fair
market value of the Shares covered by any Option shall have declined since the
date such Option was
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<PAGE>
granted, the Administrator shall have the authority, in its sole discretion, to
reduce the per Shares exercise price of such Option to the then current fair
market value per share.
(b) Fair Market Value. The fair market value shall be determined by
the Administrator in its discretion; provided, however, that where there is a
public market for the Common Stock, the fair market value per Share shall be the
mean of the bid and asked prices of the Common Stock for the date of grant, as
reported in the Wall Street Journal (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) System) or, in the event the Common Stock is traded on the NASDAQ
National Market System or listed on a stock exchange, the fair market value per
Share shall be the closing price on such system or exchange on the date of grant
of the Option, as reported in the Wall Street Journal.
(c) Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant of the Option) and may consist
entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares of Common Stock which (A) either have been owned
by the Optionee for more than six (6) months on the date of surrender or were
not acquired, directly or indirectly, from the Company, and (B) have a fair
market value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised; for purposes of this
subparagraph (iv), shares acquired pursuant to any stock option, stock purchase,
stock bonus or other employee benefit plan of the Company shall be deemed to
have been acquired from the Company;
(v) authorization for the Company to retain from the total number
of Shares as to which the Option is exercised that number of Shares having a
fair market value on the date of exercise equal to the exercise price for the
total number of Shares as to which the Option is exercised;
(vi) delivery of a properly executed exercise notice together with
irrevocable written instructions to the Company to sell the Shares as to which
the Option is being exercised and to retain all or a portion of the proceeds to
pay the exercise price;
(vii) if the Optionee is an Insider, delivery of an irrevocable
subscription agreement for the Shares as to which the Option is being exercised
which obligates the Optionee
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<PAGE>
to take and pay for such Shares within one (1) year of the date of delivery of
such subscription agreement;
(viii) any combination of such methods of payment; or
(ix) such other consideration and method of payment for the
issuance of Shares to the extent permitted under Sections 152 and 153 of the
Delaware General Corporation Law.
In making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company (Section 143 of the Delaware General
Corporation Law).
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 18 hereof is
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. In the
event that the exercise of an Option is treated in part as the exercise of an
Incentive Stock Option and in part as the exercise of a Nonstatutory Stock
Option pursuant to Section 5(b), the Company shall issue a separate stock
certificate evidencing the Shares treated as acquired upon exercise of an
Incentive Stock Option and a separate stock certificate evidencing the Shares
treated as acquired upon exercise of a Nonstatutory Stock Option, and shall
identify each such certificate accordingly in its stock transfer records. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
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Notwithstanding the provisions of the foregoing paragraph, subject to
the consent of the Administrator, an Option having a per Share exercise price
which is below the fair market value per Share on the date of exercise may be
exercised by delivery to the Company in accordance with the terms of the Option
of a written notice of such exercise and written instructions to the Company to
sell the Shares with respect to which the Option is exercised and to retain all
or a portion of the proceeds of such sale in full payment for such Shares.
In the event that an Option is exercised in the manner described in
the preceding paragraph, no stock certificate shall be issued to evidence the
Shares with respect to which the Option is exercised. In the event that an
Option is exercised using the "net exercise" method described in Section
8(c)(V), no stock certificate shall be issued to evidence the Shares retained by
the Company to pay the exercise price for the Shares as to which the Option is
exercised.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee, Consultant or Director. In
the event of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), such Optionee may, but only within thirty (30)
days (or such other period of time not exceeding three (3) months in the case of
an Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of grant of the Option)
after the date of such termination (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement),
exercise his Option to the extent that he was entitled to exercise it at the
date of such termination. To the extent that he was not entitled to exercise the
Option at the date of such termination, or if he does not exercise such Option
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate. Options granted to Outside Directors shall terminate
immediately upon cessation of service as a Director.
Notwithstanding the foregoing, if the Administrator determines that an
Optionee has been terminated from his employment or consulting relationship with
the Company for Just Cause (as defined below), all unexercised portions of any
Option held by such Optionee shall expire as of the date of such termination and
such Optionee shall thereafter have no rights under the Plan or any Option
granted to him thereunder with respect to any unexercised portion of any such
Option, whether or not vested. For purposes of this Section 9(b), "Just Cause"
means that the termination of the employment or consulting relationship of an
Employee or Consultant has taken place as a result of (i) an act or acts of
dishonesty taken by such Employee or Consultant and intended to result in
substantial gain or personal enrichment of the Employee or Consultant at the
expense of the Company, (ii) persistent failure to perform the duties and
obligations of such Employee's or Consultant's employment or consulting
relationship which are demonstrably willful and deliberate on the Employee's or
Consultant's part and which are not remedied in a
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reasonable period of time after receipt of written notice from the Company, or
(iii) the conviction of such Employee or Consultant of a felony.
(c) Disability of Optionee. Notwithstanding the provisions of Section
9(b) above, in the event of termination of an Optionee's Continuous Status as an
Employee, Consultant or Director as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), he may, but only within
six (6) months (or such other period of time not exceeding twelve (12) months as
is determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) from the
date of such termination (but in no event later than the date of expiration of
the term of such Option as set forth in the Option Agreement), exercise his
Option to the extent he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of termination, or if he does not exercise such Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. Notwithstanding the provisions of Section 9(b)
above, in the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his death
an Employee, Consultant or Director of the Company and who shall have been in
Continuous Status as an Employee, Consultant or Director since the date of grant
of the Option, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
would have accrued had the Optionee continued living and remained in Continuous
Status as an Employee, Consultant or Director six (6) months after the date of
death; or
(ii) if an Employee or Consultant, within thirty (30) days (or such
other period of time not exceeding three (3) months as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) after the termination of
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within six (6) months following the date of death (but in no event
later than the date of expiration of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.
(e) Leaves of Absence. In the event a leave of absence of thirty days
or fewer is taken by an Optionee, vesting on any Options held by such Optionee
will continue as if the Optionee had remained at work with the Company during
such period. In the event of a leave of absence of more than thirty days is
taken by an Optionee, vesting on any Options held by such Optionee shall cease
as of the thirty-first day of such leave of absence and shall
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recommence at the time of such Optionee's return to work at the Company, unless
specifically provided otherwise in the Option Agreement or by the Administrator
in its discretion.
(f) Rule 16b-3. Options granted to persons subject to Section 16(b) of
the Exchange Act must comply with the applicable provisions of Rule 16b-3 and
the stock option agreements relating to such options shall contain such
additional conditions or restrictions as may be required to be contained in such
agreements to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
10. Stock Withholding to Satisfy Withholding Tax Obligation. When a
participant incurs tax liability in connection with the exercise of an Option,
or the receipt of shares pursuant to an Incentive Stock Right or a Long-Term
Performance Award, which tax liability is subject to tax withholding under
applicable tax laws, and the participant is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the participant may
satisfy the withholding tax obligation by making an election to have the Company
withhold from the shares of Common Stock or other securities of the Company to
be issued that number of shares having a fair market value equal to the amount
required to be withheld or to tender to the Company at the time of exercise of
the Option or the receipt of shares pursuant to the Incentive Stock Right or the
Long-Term Performance Award that number of other shares of Common Stock or other
securities of the Company owned the participant having such fair market value.
The fair market value of the Shares so withheld or tendered shall be the closing
price of the Common Stock on the NASDAQ National Market System or a stock
exchange on the date that the amount of tax to be withheld is to be determined
(the "Tax Date"), as reported in the Wall Street Journal.
All elections by participants to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Company and shall be
subject to the following limitations:
(i) the election must be made on or prior to the applicable Tax Date;
(ii) once made, the election shall be irrevocable as to the particular
Shares as to which the election is made;
(iii) all elections shall be subject to the consent or disapproval of
the Board or its Committee at any time;
(iv) if the participant is an Insider, the election may not be made
within six (6) months of the date of grant of the Option, Incentive Stock Right
or Long-Term Performance Award; provided, however, that this limitation shall
not apply in the event of death or disability of the participant occurring prior
to the expiration of the six-month period; and
(v) if the participant is an Insider, the election must be made either
(A) six (6) months prior the Tax Date (as determined in accordance with Section
83 of the Code)
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or (B) in any 10-day period beginning on the third business day following the
date of release by the Company for publication of quarterly or annual summary
statements of the Company's sales and earnings.
In the event the election to have Shares withheld is made by a
participant who is an Insider and the Tax Date is deferred until six (6) months
after exercise of the Option or receipt of shares pursuant to an Incentive Stock
Right or a Long-Term Performance Award because no election is filed under
Section 83(b) of the Code, the participant shall receive the full number of
Shares with respect to which the Option is exercised or the full number of
Shares to be issued under the Incentive Stock Right or the Long-Term Performance
Award, but such participant shall be unconditionally obligated to tender back to
the Company the proper number of Shares on the Tax Date.
11. Non-Transferability of Options, Rights and Awards. Options, Rights and
Long-Term Performance Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent or distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder. The designation of a beneficiary by an Optionee does
not constitute a transfer. An Option may be exercised, during the lifetime of
the recipient, only by the recipient or a transferee permitted by this Section
11.
12. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, Right or Long-Term Performance
Award, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options, Rights or Long-Term
Performance Awards have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Right or upon the occurrence of
any of the other events specified in Section 3 of the Plan, as well as the price
per share of Common Stock covered by each such outstanding Option, Right or
Long-Term Performance Award shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. 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 of Common Stock subject to an Option,
Right or Long-Term Performance Award.
In the event of the proposed dissolution or liquidation of the Company,
each outstanding Option, Right or Long-Term Performance Award will terminate
immediately prior to
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the consummation of such proposed action, unless otherwise provided by the
Administrator. The Administrator may, in the exercise of its sole discretion in
such instances, declare that any Option, Right or Long-Term Performance Award
shall terminate as of a date fixed by the Administrator and give each recipient
the right to exercise his Option or Right as to all or any part of the Shares
covered thereby, including Shares as to which the Option or Right would not
otherwise be exercisable.
In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, each outstanding Option, Right or Long-Term Performance Award shall
be assumed or an equivalent option or award shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless such successor corporation does not agree to assume the Option, Right or
Long-Term Performance Award or to substitute an equivalent option or award, in
which case the Administrator shall, in lieu of such assumption or substitution,
provide for the Optionee to have the right to exercise the Option or Right as to
all of the Shares covered thereby, including Shares as to which the Option or
Right would not otherwise be exercisable. The Option, Right or Long-Term
Performance Award shall be deemed to be assumed if, following the sale of assets
or merger, the Option, Right or Long-Term Performance Award confers the right to
purchase, or receive for each Share subject to the Option, Right or Long-Term
Performance immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in the sale of
assets or merger by holders of Common Stock for each share of Common stock held
on the effective date of transaction (and if such holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding shares of Common Stock); provided, however, that if such
consideration received in the sale of assets or merger was not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation and the holder of the Option, Right or
Long-Term Performance Award, provide for the consideration to be received upon
exercise of the Option, Right or Long-Term Performance Award to be solely common
stock of the successor corporation or its parent equal in fair market value to
the per share consideration received by holders of Common Stock in the sole of
assets or merger. If the Administrator makes an Option or Right fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the recipient that the Option or
Right shall be fully exercisable for a period of thirty (30) days from the date
of such notice, and the Option will terminate upon the expiration of such
period.
13. Time of Granting Options, Rights and Awards. The date of grant of an
Option, Right or Long-Term Performance Award shall, for all purposes, be the
date on which the Administrator makes the determination granting such Option,
Right or Long-Term Performance Award; provided, however, that the date of grant
of automatic grants of Options to Outside Directors shall be the date determined
in accordance with Section 4(b)(ii) or (iii) hereof. Written notice of the
determination shall be given to each Employee or Consultant to whom an
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Option, Right or Long-Term Performance Award is so granted within a reasonable
time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that the following revisions or amendments shall require approval of
the stockholders of the Company in the manner described in Section 18 of the
Plan:
(i) any increase in the number of Shares subject to the Plan, other
than in connection with an adjustment under Section 12 of the Plan;
(ii) any change in the designation of the class of persons
eligible to be granted Options, Rights or Long-Term Performance Awards; or
(iii) if the Company has a class of equity securities registered
under Section 12 of the Exchange Act at the time of such revision or amendment,
any revision or amendment that would constitute an amendment for which
stockholder approval is required in order to comply with Rule 16b-3 (or any
successor rule) promulgated under the Exchange Act.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act or with Section 422 of the Code (or any
successor rule or statute or other applicable law, rule or regulation, including
the requirements of any exchange or quotation system on which the Common Stock
is listed or quoted). Such stockholder approval, if required, shall be obtained
in such a manner and to such a degree as is required by the applicable law, rule
or regulation.
(c) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options, Rights or Long-Term
Performance Awards already granted and such Options, Rights or Long-Term
Performance Awards shall remain in full force and effect as if this Plan had not
been amended or terminated, unless mutually agreed otherwise between the
recipient and the Administrator, which agreement must be in writing and signed
by the recipient and the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to an award under the Plan or the exercise of an Option or Right unless such
award or the exercise of such Option or Right and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
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As a condition to the receipt of an award under the Plan or exercise
of an Option or Right, the Company may require the person receiving such award
or exercising such Option or Right to represent and warrant at the time of any
such receipt or exercise that the Shares are being purchased only for investment
and without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
16. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
17. Option, Right and Award Agreements. Options, Rights and Long-Term
Performance Awards shall be evidenced by written option, right or award
agreements in such form as the Administrator shall approve.
18. Stockholder Approval.
(a) Continuance of the Plan shall be subject to approval by the
stockholders of the Company in accordance with applicable state law within
twelve (12) months before or after the date the Plan is adopted.
(b) If and in the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the stockholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
(c) If any required approval by the stockholders of the Plan itself or
of any amendment thereto is solicited at any time otherwise than in the manner
described in Section 18(b) hereof, then the Company shall, at or prior to the
first annual meeting of stockholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
officer or director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote for the Plan
substantially the same information which would be required (if proxies to be
voted with respect to approval or disapproval of the Plan or amendment were then
being solicited) by the rules and
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regulations in effect under Section 14(a) of the Exchange Act at the time such
information is furnished; and
(ii) file with, or mail for filing to, the Securities and Exchange
Commission four copies of the written information referred to in subsection (i)
hereof not later than the date on which such information is first sent or given
to stockholders.
19. Information to Recipients of Options, Rights and Long-Term Performance
Awards. The Company shall provide to each recipient of an Option, Right or
Long-Term Performance Award, during the period for which such recipient has one
or more Options, Rights or Long-Term Performance Awards outstanding, copies of
all annual reports and other information which are provided to all stockholders
of the Company. The Company shall not be required to provide such information if
the issuance of Options, Rights and Long-Term Performance Awards under the Plan
is limited to key employees whose duties in connection with the Company assure
their access to equivalent information.
20. Additional Restrictions of Rule 16b-3. The terms and conditions of
Options granted hereunder to, and of the purchase of Shares upon exercise of
Options by, Officers and Directors shall comply with the applicable provisions
of Rule 16b-3 with respect to discretionary plans to the extent that such
provisions are required to be contained in the Plan or the stock option
agreements. This Plan shall be deemed to contain, and the stock option
agreements relating to such Options shall contain, and the Shares issued upon
exercise thereof shall be subject to, such additional conditions and
restrictions (if any) as may be required by Rule 16b-3 (as it applies to
discretionary plans) to be contained in the Plan or such agreements in order to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
21. Incentive Stock Rights.
(a) Procedure. The Administrator, in its discretion, may grant to
eligible participants Incentive Stock Rights composed of incentive stock units.
Incentive Stock Rights shall be evidenced by Incentive Stock Right agreements in
such form and not inconsistent with the Plan as the Administrator shall approve
from time to time, which agreements shall contain in substance the following
terms and conditions:
(i) Incentive Stock Units. An Incentive Stock Right agreement shall
specify the number of incentive stock units to which it pertains. Each incentive
stock unit shall be equivalent to one Share of Common Stock, and shall entitle
the holder to receive, without payment of cash to the Company, one Share of
Common Stock or, in the discretion of the Administrator, the cash equivalent of
one Share of Common Stock, in consideration for services performed for the
Company or for its benefit by the person receiving the Right subject to the
lapse of the incentive periods (as defined in subparagraph (ii) hereof). An
incentive stock unit
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that becomes payable may be paid currently or on a deferred basis with such
interest or earnings equivalent as may be determined by the Administrator.
(ii) Incentive Period. The holder of Incentive Stock Rights shall
be entitled to receive Shares of Common Stock only after the lapse of such
incentive periods, and in such manner, as shall be fixed by the Administrator at
the time of grant of Incentive Stock Rights. (Such period or periods so fixed is
or are herein referred to as the "incentive period.") To the extent the holder
of Incentive Stock Rights receives Shares of Common Stock on the lapse of the
incentive period, an equivalent number of incentive stock units subject to such
Rights shall be deemed to have been discharged.
(iii) Termination of Status as an Employee or Consultant by Reason
of Death or Disability. In the event that any person to whom Incentive Stock
Rights have been issued under the Plan terminates his Continuous Status as an
Employee or Consultant (as the case may be) due to death or total and permanent
disability (as defined in Section 22(e)(3) of the Code), each incentive period
established pursuant to Section 21(a)(ii) shall lapse on the date of such
termination as to the number of full incentive stock units determined by
multiplying the total number of incentive stock units applicable to such
incentive period by a fraction, the numerator of which shall be the number of
full calendar months between the date of grant of the Incentive Stock Right and
the date of such termination and the denominator of which shall be the number of
full calendar months between the date of grant of the Incentive Stock Rights and
the date such incentive period for such units would, but for such termination,
have lapsed. Units for which the incentive period does not lapse pursuant to the
foregoing sentence shall terminate on the termination date of the holder's
employment or consulting relationship (as the case may be).
(iv) Termination of Status as an Employee or Consultant for any
Other Reason. In the event that any person to whom Incentive Stock Rights have
been issued under the Plan terminates his Continuous Status as an Employee or
Consultant (as the case may be) for any reason (including dismissal by the
Company with or without cause), other than death or total and permanent
disability, such Incentive Stock Rights as to which the incentive period has not
lapsed shall terminate on the termination date of the holder's employment or
consulting relationship (as the case may be).
(v) Leaves of Absence. In the event of any leave of absence taken
by any person to whom Incentive Stock Rights have been issued, the Administrator
may make such provision respecting continuance of the Incentive Stock Right
during the leave of absence as it may deem appropriate.
(vi) Issuance of Shares. With respect to Incentive Stock Rights
payable in Common Stock, upon the lapse of an incentive period, the Company
shall, without transfer or issue tax to the person entitled to receive the
Shares, deliver to such person a certificate or certificates for a number of
Shares equal to the number of incentive stock units as to which an incentive
period has lapsed.
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(b) Dividend Equivalents. The holder of an Incentive Stock Right shall
be entitled to receive from the Company cash payments at the same time and in
the same amounts that a holder of record of the number of Shares of Common Stock
equal to the number of incentive stock units covered by such Right would be
entitled to receive as dividends on such Common Stock. Such right to cash
payment on an incentive stock unit shall apply to all dividends the record date
for which occurs at any time during the period commencing on the date the
Incentive Stock Right is granted and ending on the date that the holder of such
Right becomes a stockholder of record with respect to such incentive stock unit
as a result of the lapse of an incentive period or the date the Incentive Stock
Right otherwise terminates, whichever occurs first.
22. Stock Appreciation Rights.
(a) Grants With Options. At the sole discretion of the Administrator,
Stock Appreciation Rights may be granted in connection with all or any part of
an Option, either concurrently with the grant of the Option or at any time
thereafter during the term of the Option. The following provisions apply to
Stock Appreciation Rights that are granted in connection with Options:
(i) The Stock Appreciation Right shall entitle the Optionee to
exercise the rights by surrendering to the Company unexercised a portion of the
underlying Option. The Optionee shall receive in exchange from the Company an
amount equal to the excess of (x) the fair market value on the date of exercise
of the Shares covered by the surrendered portion of the underlying Option (as
determined in accordance with subparagraph (e) hereof) over (y) the exercise
price of the Shares covered by the surrendered portion of the underlying Option.
Notwithstanding the foregoing, the Administrator may place limits on the amount
that may be paid upon exercise of an Stock Appreciation Right; provided,
however, that such limit shall not restrict the exercisability of the underlying
Option.
(ii) When a Stock Appreciation Right is exercised, the underlying
Option, to the extent surrendered, shall no longer be exercisable.
(iii) A Stock Appreciation Right shall be exercisable only when and
to the extent that the underlying Option is exercisable and shall expire no
later than the date on which the underlying Option expires.
(iv) A Stock Appreciation Right may only be exercised at a time
when the fair market value of the Shares covered by the underlying Option (as
determined in accordance with subparagraph (e) hereof) exceeds the exercise
price of the Shares covered by the underlying Option. Notwithstanding the
foregoing, neither a Stock Appreciation Right nor any related Option shall be
exercisable within the first six (6) months of their respective terms; provided,
however, that this limitation shall not apply in the event that death or
disability of the Optionee occurs prior to the expiration of the six-month
period.
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(v) In the event that a Stock Appreciation Right is granted that
relates to an Incentive Stock Option, such Right shall contain such additional
or different terms as may be necessary under applicable regulations to preserve
treatment of the Incentive Stock Option under Section 422A of the Code.
(b) Grants Without Options. At the sole discretion of the
Administrator, Stock Appreciation Rights may be granted without related Options.
The following provisions apply to Stock Appreciation Rights that are not granted
in connection with Options:
(i) The Stock Appreciation Right shall entitle the holder, by
exercising the Stock Appreciation Right, to receive from the Company an amount
equal to the excess of (x) the fair market value of the Shares covered by the
exercised portion of the Stock Appreciation Right, as of the date of such
exercise (as determined in accordance with subparagraph (e) hereof), over (y)
the fair market value of the Shares covered by the exercised portion of the
Stock Appreciation Right, as of the date on which the Stock Appreciation Right
was granted (as determined in accordance with subparagraph (e) hereof);
provided, however, that the Administrator may place limits on the amount that
may be paid upon exercise of a Stock Appreciation Right.
(ii) Stock Appreciation Rights shall be exercisable, in whole or in
part, at such times as the Administrator shall specify in the holder's Stock
Appreciation Right agreement. Notwithstanding the foregoing, a Stock
Appreciation Right shall not be exercisable within the first six (6) months of
its term; provided, however, that this limitation shall not apply in the event
that death or disability of the holder occurs prior to the expiration of the
six-month period.
(c) Form of Payment. The Company's obligation arising upon the
exercise of a Stock Appreciation Right may be paid currently or on a deferred
basis with such interest or earnings equivalent as may be determined by the
Administrator, and may be paid in Common Stock or in cash, or in any combination
of Common Stock and cash, as the Administrator, in its sole discretion, may
determine. Shares of Common Stock issued upon the exercise of a Stock
Appreciation Right shall be valued at their fair market value as of the date of
exercise (as determined in accordance with subparagraph (e) hereof).
(d) Compliance With Section 16(b). Insiders may only exercise a Stock
Appreciation Right during the period beginning on the third business day and
ending on the twelfth business day following the release for publication of
quarterly or annual summary statements of the Company's sales and earnings. This
condition shall be deemed to be satisfied if the selected financial data (i)
appears on a wire service, (ii) appears in a financial news service, (iii)
appears in a newspaper of general circulation, or (iv) is otherwise made
publicly available.
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<PAGE>
(e) Fair Market Value. For purposes of this Section 22, the fair
market value of Shares shall be the closing price of the Common Stock on the
NASDAQ National Market System or a stock exchange on the date of exercise or the
date of grant (as the case may be) of the Stock Appreciation Right, as reported
in the Wall Street Journal.
23. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares of Common Stock that such person shall be
entitled to purchase, the price to be paid (which price shall not be less than
50% of the fair market value of the Shares as of the date of the offer) and the
time within which such person must accept such offer, which shall in no event
exceed thirty (30) days from the date of the Administrator's determination to
grant the Stock Purchase Right. For purposes of this Section 23(a), the fair
market value of Shares shall be the closing price of the Common Stock on the
NASDAQ National Market System or a stock exchange on the date of offer of the
Stock Purchase Right, as reported in the Wall Street Journal. The offer shall be
accepted by execution of a Restricted Stock purchase agreement in the form
determined by the Administrator. Shares purchased pursuant to the grant of a
Stock Purchase Right shall be referred to herein as "Restricted Stock."
(b) Repurchase Option. Unless the Administrator determines otherwise,
the Restricted Stock purchase agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's employment or consulting relationship with the Company for any
reason (including death or disability). The purchase price for shares
repurchased pursuant to the Restricted Stock purchase agreement shall be the
original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse
at such rate as the Administrator may determine.
(c) Other Provisions. The Restricted Stock purchase agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his purchase is entered upon the
records of the duly authorized transfer agent of the Company. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.
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24. Long-Term Performance Awards.
(a) Administration. Long-Term Performance Awards may be granted either
alone or in addition to other awards granted under the Plan. The Administrator
shall determine the nature, length and starting date of the performance period
(the "Performance Period") for each Long-Term Performance Award, and shall
determine the performance objectives to be used in the valuation of Long-Term
Performance Awards and the extent to which such Long-Term Performance Awards
have been earned. Performance objectives may vary from participant to
participant and between groups of participants and shall be based upon such
Company, Subsidiary or individual performance factors or criteria as the
Administrator may deem appropriate. Performance Periods may overlap and
participants may participate simultaneously with respect to Long-Term
Performance Awards that are subject to different Performance Periods and
different performance factors and criteria. Long-Term Performance Awards shall
be confirmed by, and be subject to the terms of, a Long-Term Performance Award
agreement. The terms of such awards need not be the same with respect to each
participant.
At the beginning of each Performance Period, the Administrator
shall determine for each Long-Term Performance Award subject to such Performance
Period the range of dollar values or number of shares of Common Stock to be
awarded to the participant at the end of the Performance Period if and to the
extent that the relevant measures of performance for such Long-Term Performance
Award are met. Such dollar values or number of shares of Common Stock may be
fixed or may vary in accordance with such performance or other criteria as may
be determined by the Administrator.
(b) Adjustment of Awards. The Administrator may adjust the performance
goals and measurements applicable to the Long-Term Performance Awards to take
into account changes in law and accounting and tax rules and to make such
adjustments as the Administrator deems necessary or appropriate to reflect the
inclusion or exclusion of the impact of extraordinary or unusual items, events
or circumstances in order to avoid windfalls or hardships.
(c) Termination. Subject to Section 25 of the Plan and unless
otherwise provided in the applicable Long-Term Performance Award agreement, if a
participant terminates his Continuous Status as an Employee or Consultant during
a Performance Period because of death or disability, such participant shall be
entitled to a payment with respect to each outstanding Long-Term Performance
Award at the end of the applicable Performance Period:
(i) based, to the extent relevant under the terms of the award,
upon the participant's performance for the portion of such Performance Period
ending on the date of termination and the performance of the Company or any
applicable business unit for the entire Performance Period, and
(ii) prorated for the portion of the Performance Period during
which the participant was employed by the Company,
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<PAGE>
all as determined by the Administrator. The Administrator may provide for an
earlier payment in settlement of such award in such amount and under such terms
and conditions as the Administrator deems appropriate.
Subject to Section 25 of the Plan and except as otherwise
provided in the applicable Long-Term Performance Award agreement, if a
participant terminates his Continuous Status as an Employee or Consultant during
a Performance Period for any other reason, then such participant shall not be
entitled to any payment with respect to the Long-Term Performance Award subject
to such Performance Period, unless the Administrator shall otherwise determine.
(d) Form of Payment. The earned portion of a Long-Term Performance
Award may be paid currently or on a deferred basis with such interest or
earnings equivalent as may be determined by the Administrator. Payment shall be
made in the form of cash or whole Shares of Common Stock, including Restricted
Stock, or a combination thereof, either in a lump sum payment or in annual
installments, all as the Administrator shall determine. If and to the extent a
Long-Term Performance Award is payable in Common Stock and the full amount
thereof is not paid in Common Stock, then the shares of Common Stock
representing the portion of the value of the Long-Term Performance Award not
paid in Common Stock shall again become available for award under the Plan.
25. Change of Control.
(a) Impact of Event. In the event of a "Change of Control" as defined
in paragraph (e) below, any or all or none of (i), (ii), (iii) or (iv) of the
acceleration and valuation provisions that follow shall apply, as the Board, in
its discretion, shall determine prior to such Change of Control. Neither the
Board nor any person shall have any discretion with respect to the application
of (v):
(i) Any Options and Stock Appreciation Rights outstanding as of the
date of such Change in Control is determined to have occurred that are not yet
exercisable and vested on such date, shall become fully exercisable and vested.
(ii) The restrictions and deferral limitations applicable to any
outstanding Incentive Stock Rights, Stock Purchase Rights and Long-Term
Performance Awards, in each case to the extent not already vested, shall lapse
and such Rights and awards shall become fully vested.
(iii) Any outstanding Long-Term Performance Awards shall become
fully vested and shall be paid out on a pro rata basis, based on the target
values of each award and the number of months completed in the Performance
Period, compared to the total number of months.
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<PAGE>
(iv) To the extent that they are exercisable and vested, all
outstanding Options, Incentive Stock Rights, Stock Appreciation Rights and
Long-Term Performance Awards, unless otherwise determined by the Board at or
after grant, shall be terminated in exchange for a cash payment at the Change of
Control Price, reduced by the exercise price applicable to such Options,
Incentive Stock Rights, Stock Appreciation Rights and Long-Term Performance
Awards. These cash proceeds shall be paid to the Optionee or, in the event of
death of an Optionee prior to payment, to the estate of the Optionee or to a
person who acquired the right to exercise the Option, Incentive Stock Rights,
Stock Appreciation Right or Long-Term Performance Award by bequest or
inheritance.
(v) In the case of Options granted to Outside Directors pursuant to
Section 4(b), the provisions of (a)(i) and (a)(ii) of this section shall apply
to such Option.
(b) Definition of "Change of Control". For purposes of this Section
25, a "Change of Control" means the happening of any of the following:
(i) When any person, as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company's then outstanding
securities; or
(ii) The occurrence of a transaction requiring stockholder
approval, or involving the sale of all or substantially all of the assets of the
Company or the merger of the Company with or into another corporation.
(c) Change of Control Price. For purposes of this Section 25, the
"Change of Control Price" shall be, as determined by the Board, (i) the highest
closing sale price of a share of the Common Stock as reported by the NASDAQ
National Market System, as reported in the Wall Street Journal (or, in the event
the Common Stock is listed on a stock exchange, the highest closing price on
such exchange as reported in the Wall Street Journal or such other source of
composite quotations as the Board deems reliable), at any time within the 60-day
period immediately preceding the date of determination of the Change of Control
Price by the Board (the "60-Day Period"), or (ii) the highest price paid or
offered, as determined by the Board, in any bona fide transaction or bona fide
offer related to the Change of Control of the Company, at any time within the
60-Day Period, or (iii) some lower price as the Board, in its discretion,
determines to be a reasonable estimate of the fair market value of a share of
Common Stock.
26. Participation by Foreign Nationals and Others. In order to fulfill the
purposes of this Plan and without amending the Plan, the Administrator may
modify grants to participants who are foreign nationals or who reside or are
employed outside the United States to recognize differences in local law, tax
policy or custom.
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<PAGE>
27. Limitation on Options Granted to Employees. The following limitations
shall apply to grants of Options to Employees:
(i) No Employee shall be granted, in any fiscal year of the Company,
Options to purchase more than 250,000 Shares.
(ii) In connection with his or her initial employment, an Employee may
be granted Options to purchase up to an additional 250,000 Shares which shall
not count against the limit set forth in Section 27(i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 12 hereof.
(iv) If an Option is cancelled (other than in connection with a
transaction described in Section 12 hereof), the cancelled Option will be
counted against the limit set forth in this Section 27. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
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SOFTWARE PUBLISHING CORPORATION
1991 STOCK OPTION PLAN
(as amended through January 25, 1995)
1. Purposes of the Plan. The purposes of this Stock Option Plan are:
o to attract and retain the best available personnel for positions of
substantial responsibility,
o to provide additional incentive to Employees, Consultants and Outside
Directors, and
o to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant. Stock
Purchase Rights may also be granted under the Plan. The Plan also provides for
automatic grants of Nonstatutory Stock Options to Outside Directors.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under state corporate and securities laws
and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in accordance
with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Software Publishing Corporation, a Delaware
corporation.
(h) "Consultant" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
<PAGE>
(i) "Continuous Status as an Employee, Consultant or Director" means
that the employment, consulting or Outside Director relationship is not
interrupted or terminated by the Company, any Parent or Subsidiary. Continuous
Status as an Employee, Consultant or Director shall not be considered
interrupted in the case of: (i) any leave of absence approved by the Board,
including sick leave, military leave, or any other personal leave; provided,
however, that for purposes of Incentive Stock Options, any such leave may not
exceed ninety (90) days, unless reemployment upon the expiration of such leave
is guaranteed by contract (including certain Company policies) or statute; or
(ii) transfers between locations of the Company or between the Company, its
Parent, its Subsidiaries or its successor.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
employed for at least twenty (20) hours per week by the Company or any Parent or
Subsidiary of the Company. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock
shall be the closing price for such stock as quoted on such system or exchange
(or the exchange with the greatest volume of trading in Common Stock) on the day
of determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not on
the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the bid and asked prices for
the Common Stock on the day of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the Administrator.
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<PAGE>
(o) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "Nonstatutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.
(q) "Notice of Grant" means a written notice evidencing certain terms
and conditions of an individual Option or Stock Purchase Right grant. The Notice
of Grant is part of the Option Agreement.
(r) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
(t) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(u) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.
(v) "Optionee" means an Employee or Consultant who holds an outstanding
Option or Stock Purchase Right.
(w) "Outside Director" means a member of the Board of Directors of the
Company who is not an Employee or a Consultant.
(x) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 1991 Stock Option Plan.
(z) "Restricted Stock" means shares of Common Stock acquired pursuant
to a grant of Stock Purchase Rights under Section 11 below.
(aa) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
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<PAGE>
(bb) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect to
the Plan.
(cc) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.
(dd) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ee) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is One Million Six Hundred Thousand (1,600,000) Shares of Common
Stock. Of such Shares, the maximum aggregate number which may be subject to
Options granted to Outside Directors is Eighty-Thousand (80,000) (the "Pool").
The Shares may be authorized, but unissued, or reacquired Common Stock. However,
should the Company reacquire Shares which were issued pursuant to the exercise
of an Option or Stock Purchase Right, such Shares shall not become available for
future grant under the Plan.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, the unpurchased Shares which were subject
thereto shall become available for future grant under the Plan (unless the Plan
has terminated).
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3, the
Plan may be administered by different bodies with respect to Directors, Officers
who are not Directors, and Employees who are neither Directors nor Officers.
(ii) Administration With Respect to Directors and Officers Subject
to Section 16(b). With respect to Option or Stock Purchase Right grants made to
Employees who are also Officers or Directors subject to Section 16(b) of the
Exchange Act, the Plan shall be administered by (A) the Board, if the Board may
administer the Plan in compliance with the rules governing a plan intended to
qualify as a discretionary plan under Rule 16b-3, or (B) a Committee designated
by the Board to administer the Plan, which Committee shall be constituted to
comply with the rules governing a plan intended to qualify as a discretionary
plan under Rule 16b-3. Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of the Committee and appoint additional members,
remove members (with or without cause) and
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<PAGE>
substitute new members, fill vacancies (however caused), and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules governing a plan intended to qualify as a discretionary
plan under Rule 16b-3.
(iii) Administration With Respect to Other Persons. With respect to
Option or Stock Purchase Right grants made to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted to satisfy Applicable Laws. Once appointed, such Committee shall
serve in its designated capacity until otherwise directed by the Board. The
Board may increase the size of the Committee and appoint additional members,
remove members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom Options and
Stock Purchase Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and conditions
may include, but are not limited to, the exercise price, the time or times when
Options or Stock Purchase Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Stock
Purchase Right or the shares of Common Stock relating thereto, based in each
case on such factors as the Administrator, in its sole discretion, shall
determine;
(vii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant (including providing for and
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<PAGE>
determining the amount (if any) of any deemed earnings on any deferred
amount during any deferral period);
(viii) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by such Option or Stock Purchase Right shall have declined
since the date the Option was granted;
(ix) to construe and interpret the terms of the Plan;
(x) to prescribe, amend and rescind rules and regulations relating
to the Plan;
(xi) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan);
(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;
(xiii) to determine the terms and restrictions applicable to
Options and Stock Purchase Rights and any Restricted Stock; and
(xiv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.
5. Eligibility.
(a) Options may be granted to Employees, Consultants and Outside
Directors provided that (i) Incentive Stock Options may only be granted to
Employees and (ii) Options may only be granted to Outside Directors in
accordance with the provisions of Section 5(b) hereof. Each Option shall be
designated in the written option agreement as either an Incentive Stock Option
or a Nonstatutory Stock Option. Subject to Section 5(b) with respect to Outside
Directors, an Employee, Consultant or Outside Director who has been granted an
option may, if such Employee, Consultant or Outside Director is otherwise
eligible, be granted additional Option(s).
(b) The provisions set forth in this Section 5(b) shall not be amended
more than once every six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder. All grants of
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<PAGE>
Options to Outside Directors under this Plan shall be automatic and
non-discretionary and shall be made strictly in accordance with the following
provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of shares to be
covered by Options granted to Outside Directors; provided, however, that nothing
in this Plan shall be construed to prevent an Outside Director from declining to
receive an Option under this Plan.
(ii) Each Outside Director shall be automatically granted an Option
to purchase 15,000 Shares (the "First Option") upon the later to occur of (x)
the effective date of this Plan, as determined in accordance with Section 7
hereof, or (y) the date on which a person first becomes a Director, whether
through election by the stockholders of the Company or appointment by the Board
of Directors to fill a vacancy; provided, however, that no such First Option
shall be granted to any Outside Director if such Outside Director has been or is
automatically granted an Option to purchase 15,000 Shares (a "1987/1989 Plan
Option") during the same fiscal year of the Company pursuant to Section
4(a)(ii)(C)(II) of the Company's 1987 Stock Option Plan (the "1987 Option Plan")
or Section 4(a)(ii)(B)(II) of the Company's 1989 Stock Plan (the "1989 Stock
Plan").
(iii) After an Outside Director has been granted the First Option
or a 1987/1989 Plan Option (as the case may be), such Outside Director shall
thereafter be automatically granted an Option to purchase 15,000 Shares (a
"Subsequent Option") on the first market day of each fiscal year of the Company
occurring after the grant date of such Outside Director's First Option or
1987/1989 Plan Option (as the case may be); provided, however, that if any
Outside Director has been or is automatically granted an Option to purchase
Shares (a "Subsequent 1987/1989 Plan Option") on an automatic grant date
pursuant to Section 4(a)(ii)(C)(III) of the 1987 Option Plan or Section
4(a)(ii)(B)(III) of the 1989 Stock Plan, then on such automatic grant date such
Outside Director shall be granted a Subsequent Option hereunder to purchase that
number of Shares determined by subtracting the number of Shares covered by the
Subsequent 1987/1989 Plan Option from 15,000.
(iv) Notwithstanding the provisions of subparagraphs (ii) and (iii)
hereof, in the event that a grant would cause the number of Shares subject to
outstanding Options to Outside Directors plus Shares previously purchased upon
exercise of Options by Outside Directors to exceed the Pool (as defined in
Section 3 hereof), then each such automatic grant shall be for that number of
Shares determined by dividing the total number of Shares remaining available for
grant to Outside Directors by the number of Outside Directors on the automatic
grant date. Any further grants shall then be deferred until such time, if any,
as additional Shares become available for grant to Outside Directors through
action of the stockholders to increase the number of Shares which may be granted
to Outside Directors or through cancellation or expiration of Options previously
granted to Outside Directors hereunder.
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<PAGE>
(v) The terms of an Option granted pursuant to this Section 5(b)
shall be as follows:
(A) the term of the Option shall be seven (7) years;
(B) except as provided in Section 10 of this Plan, the Option
shall be exercisable only while the Outside Director remains a director;
(C) the exercise price per share of Common Stock shall be 100%
of the Fair Market Value on the date of grant of the Option;
(D) the Option shall become exercisable in installments
cumulatively with respect to 1/8 (12.5%) of the Optioned Stock at the end of
each six-month period which has expired after the commencement of vesting date
of the Option. Such date is determined by the Board and stated in each
Optionee's agreement, so that one hundred percent (100%) of the Optioned Stock
shall be exercisable four years after the date of grant; provided, however, that
in no event shall any Option be exercisable prior to obtaining stockholder
approval of the Plan.
6. Limitations.
(a) Each Option shall be designated in the Notice of Grant as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designations, to the extent that the aggregate Fair Market Value:
(i) of Shares subject to an Optionee's incentive stock options
granted by the Company, any Parent or Subsidiary, which (ii) become
exercisable for the first time during any calendar year (under all
plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 6(a), incentive stock options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time of grant.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
employment or consulting relationship with the Company, nor shall they interfere
in any way with the Optionee's right or the Company's right to terminate such
employment or consulting relationship at any time, with or without cause.
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<PAGE>
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
effective upon the earlier to occur of its adoption by the Board or its approval
by the stockholders of the Company as described in Section 19 of the Plan. It
shall continue in effect for a term of ten (10) years unless terminated earlier
under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Notice of
Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. However, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist of:
-9-
<PAGE>
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price;
(vi) any combination of the foregoing methods of payment; or
(vii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when (i) the Company receives
written notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, and (ii) the Company receives full
payment for the Shares with respect to which the Option is exercised or, in the
case of an option exercise pursuant to Section 9(c)(v) above (a "Same Day
Sale"), Optionee delivers irrevocable instructions to Optionee's broker to
effect a Same Day Sale of the Optioned Stock. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Until the stock certificate
evidencing such Shares is issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 14 of the Plan.
-10-
<PAGE>
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Status as an Employee, Consultant or Director. In
the event of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), such Optionee may, but only within thirty (30)
days (or such other period of time not exceeding three (3) months in the case of
an Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of grant of the Option)
after the date of such termination (but in no event later than the date of
expiration of the term of such Option as set forth in the Notice of Grant),
exercise the Option to the extent that Optionee was entitled to exercise it at
the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of such termination, or if Optionee does not
exercise such Option (which Optionee was entitled to exercise) within the time
specified herein, the Option shall terminate and the Shares covered by the
unexercisable and unexercised portions of the Option shall revert to the Plan.
Options granted to Outside Directors shall terminate immediately upon cessation
of service as a Director, and the Shares covered by the unexercised portion of
the Option shall revert to the Plan.
Notwithstanding the foregoing, if the Administrator determines that an
Optionee has been terminated from Optionee's employment or consulting
relationship with the Company for Just Cause (as defined below), all unexercised
portions of any Option held by such Optionee shall expire as of the date of such
termination and such Optionee shall thereafter have no rights under the Plan or
any Option granted to him or her thereunder with respect to any unexercised
portion of any such Option, whether or not vested. For purposes of this Section
10(b), "Just Cause" means that the termination of the employment or consulting
relationship of an Employee or Consultant has taken place as a result of (i) an
act or acts of dishonesty taken by such Employee or Consultant and intended to
result in substantial gain or personal enrichment of the Employee or Consultant
at the expense of the Company, (ii) persistent failure to perform the duties and
obligations of such Employee's or Consultant's employment or consulting
relationship which are demonstrably willful and deliberate on the Employee's or
Consultant's part and which are not remedied in a reasonable period of time
after receipt of written notice from the Company, or (iii) the conviction of
such Employee or Consultant of a felony.
(c) Disability of Optionee. Notwithstanding the provisions of Section
10(b) above, in the event of termination of an Optionee's Continuous Status as
an Employee, Consultant or Director as a result of Optionee's Disability,
Optionee may, but only within six (6) months (or such other period of time not
exceeding twelve (12) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) from the date of such termination (but in no event later
than the date of expiration of the term of such Option as set forth in the
Notice of Grant), exercise the Option to the extent Optionee was entitled to
exercise it at the date of such termination. To the
-11-
<PAGE>
extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option (which Optionee was
entitled to exercise) within the time specified herein, the Option shall
terminate and the Shares covered by the unexercisable and unexercised portions
of the Option still revert to the Plan.
(d) Death of Optionee. Notwithstanding the provisions of Section 10(b)
above, in the event of the death of Optionee:
(i) during the term of the Option who is at the time of death an
Employee, Consultant or Director of the Company and who shall have been in
Continuous Status as an Employee, Consultant or Director since the date of grant
of the Option, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Notice of Grant), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
would have accrued had the Optionee continued living and remained in Continuous
Status as an Employee, Consultant or Director six (6) months after the date of
death; or
(ii) if an Employee or Consultant, within thirty (30) days (or such
other period of time not exceeding three (3) months as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) after the termination of
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within six (6) months following the date of death (but in no event
later than the date of expiration of the term of such Option as set forth in the
Notice of Grant), by the Optionee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the date of termination.
(e) Leave of Absence. In the event a leave of absence of thirty days or
fewer is taken by an Optionee, vesting on any Options held by such Optionee will
continue as if the Optionee had remained at work with the Company during such
period. In the event a leave of absence of more than thirty days is taken by an
Optionee, vesting on any Options held by such Optionee shall cease as of the
thirty-first day of such leave of absence and shall recommence at the time of
such Optionee's return to work at the Company, unless specifically provided
otherwise in the Option Agreement or by the Board in its discretion.
(f) Rule 16b-3. Options granted to persons subject to Section 16(b) of
the Exchange Act must comply with the applicable provisions of Rule 16b-3 and
the stock option agreements relating to such options shall contain such
additional conditions or restrictions as may be required to be contained in such
agreements to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
-12-
<PAGE>
(g) Stock Withholding to Satisfy Withholding Tax Obligation. When a
participant incurs tax liability in connection with the exercise of an Option,
which tax liability is subject to tax withholding under applicable tax laws, and
the participant is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the participant may satisfy the withholding
tax obligation by making an election to have the Company withhold from the
shares of Common Stock or other securities of the Company to be issued that
number of shares having a fair market value equal to the amount required to be
withheld or to tender to the Company at the time of exercise of the Option that
number of other shares of Common Stock or other securities of the Company owned
by the participant having such fair market value. The fair market value of the
Shares so withheld or tendered shall be the closing price of the Common Stock on
the NASDAQ National Market System or a stock exchange on the date that the
amount of tax to be withheld is to be determined (the "Tax Date"), as reported
in the Wall Street Journal. Shares withheld or tendered pursuant to this Section
10(g) shall be retired by the Company and shall not become available for future
grant under the Plan.
All elections by participants to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Company and shall be
subject to the following limitations:
(i) the election must be made on or prior to the applicable Tax Date;
(ii) once made, the election shall be irrevocable as to the particular
Shares as to which the election is made;
(iii) all elections shall be subject to the consent or disapproval of
the Administrator at any time;
(iv) if the participant is an Officer, Director or other person whose
transactions in the Common Stock are subject to Section 16(b) of the Exchange
Act (an "Insider"), the election may not be made within six (6) months of the
date of grant of the Option; provided, however, that this limitation shall not
apply in the event of death or disability of the participant occurring prior to
the expiration of the six-month period; and
(v) if the participant is an Insider, the election must be made either
(A) six (6) months prior the Tax Date (as determined in accordance with Section
83 of the Code) or (B) in any 10-day period beginning on the third business day
following the date of release by the Company for publication of quarterly or
annual summary statements of the Company's sales and earnings.
In the event the election to have Shares withheld is made by a participant
who is an Insider and the Tax Date is deferred until six (6) months after
exercise of the Option because no election is filed under Section 83(b) of the
Code, the participant shall receive the full number of Shares with respect to
which the Option is exercised, but such participant shall be
-13-
<PAGE>
unconditionally obligated to tender back to the Company the proper number of
Shares on the Tax Date.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing, by means of a Notice of Grant, of the terms, conditions and
restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid (which price shall
not be less than 85% of the Fair Market Value of the Shares as of the date of
the offer), and the time within which the offeree must accept such offer, which
shall in no event exceed six (6) months from the date upon which the
Administrator made the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a Restricted Stock Purchase Agreement in
the form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines otherwise,
the Restricted Stock Purchase Agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.
12. Date of Grant. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
-14-
<PAGE>
13. Non-Transferability of Options and Stock Purchase Rights. An Option or
Stock Purchase Right may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
14. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
Sale or Change of Control.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
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 of Common Stock subject to an Option or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or Stock
Purchase Right has not been previously exercised, it will terminate immediately
prior to the consummation of such proposed action. The Board may, in the
exercise of its sole discretion in such instances, declare that any Option or
Stock Purchase Right shall terminate as of a date fixed by the Board and give
each Optionee the right to exercise his or her Option or Stock Purchase Right as
to all or any part of the Optioned Stock, including Shares as to which the
Option or Stock Purchase Right would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to the provisions of paragraph (d)
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option and Stock Purchase Right shall be assumed or an equivalent
option or right shall be substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation does not agree to assume the Option or Stock Purchase Right or to
substitute an equivalent option or right, the Administrator shall, in lieu of
such assumption or
-15-
<PAGE>
substitution, provide for the Optionee to have the right to exercise the Option
or Stock Purchase Right as to all of the Optioned Stock, including Shares as to
which it would not otherwise be exercisable. If the Administrator makes an
Option or Stock Purchase Right fully exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee that the Option or Stock Purchase Right shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right will terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets was not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation and the participant, provide for
the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in Fair Market Value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
(d) Change of Control. In the event of a "Change in Control" of the
Company, as defined in paragraph (e) below, either or both or neither of (i) or
(ii) of the acceleration and valuation provisions that follow shall apply, as
the Board, in its discretion, shall determine prior to such Change of Control.
Neither the Board nor any person shall have any discretion with respect to the
application of (iii):
(i) Any Options and Stock Purchase Rights outstanding as of the
date such Change in Control is determined to have occurred that are not yet
exercisable and vested on such date shall become fully exercisable and vested;
(ii) To the extent that they are exercisable and vested, all
outstanding Options and Stock Purchase Rights, unless otherwise determined by
the Board at or after grant, shall be terminated in exchange for a cash payment
at the Change in Control Price, reduced by the exercise price applicable to such
Options or Stock Purchase Rights. These cash proceeds shall be paid to the
Optionee or, in the event of death of an Optionee prior to payment, to the
estate of the Optionee or to a person who acquired the right to exercise the
Option or Stock Purchase Right by bequest or inheritance.
(iii) In the case of Options granted to Outside Directors pursuant
to Section 5(b), the provisions of (d)(i) and (d)(ii) of this section shall
apply to such Options.
-16-
<PAGE>
(e) Definition of "Change in Control". For purposes of this Section 14,
a "Change in Control" means the happening of any of the following:
(i) When any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) The occurrence of a transaction requiring stockholder
approval, and involving the sale of all or substantially all of the assets of
the Company or the merger of the Company with or into another corporation.
(f) Change in Control Price. For purposes of this Section 14, "Change
in Control Price" shall be, as determined by the Board, (i) the highest closing
sale price of a Share of Common Stock as reported by the NASDAQ National Market
System and as appearing in the Wall Street Journal (or, in the event the Common
Stock is listed on a stock exchange, the highest closing price as reported in
the Wall Street Journal or such other source of composite quotations as the
Board deems reliable), at any time within the 60 day period immediately
preceding the date of determination of the Change in Control Price by the Board
(the "60-Day Period"), or (ii) the highest price paid or offered, as determined
by the Board, in any bona fide transaction or bona fide offer related to the
Change in Control of the Company, at any time within the 60-Day Period, or (iii)
some lower price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a share of Common Stock.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder approval
of any Plan amendment to the extent necessary and desirable to comply with Rule
16b-3 or with Section 422 of the Code (or any successor rule or statute or other
applicable law, rule or regulation, including the requirements of any exchange
or quotation system on which the Common Stock is listed or quoted). Such
stockholder approval, if required, shall be obtained in such a manner and to
such a degree as is required by the applicable law, rule or regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
-17-
<PAGE>
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, Applicable Laws, and the requirements of any stock
exchange or quotation system upon which the Shares may then be listed or quoted,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by
an Option or Stock Purchase Right exceeds, as of the date of grant, the number
of Shares which may be issued under the Plan without additional stockholder
approval, such Option or Stock Purchase shall be void with respect to such
excess Optioned Stock, unless stockholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained in
accordance with Section 15(b) of the Plan.
18. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such stockholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
20. Information to Optionees. The Company shall provide each Optionee,
while such Optionee has one or more Options or Stock Purchase Rights
outstanding, with copies of all
-18-
<PAGE>
annual reports and other information which are provided to all stockholders of
the Company. The Company shall not be required to provide such information if
the issuance of Options or Stock Purchase Rights under the Plan is limited to
key employees whose duties in connection with the Company assure their access to
equivalent information.
21. Limitation on Options Granted to Employees. The following limitations
shall apply to grants of Options to Employees:
(i) No Employee shall be granted, in any fiscal year of the Company,
Options to purchase more than 250,000 Shares.
(ii) In connection with his or her initial employment, an Employee may
be granted Options to purchase up to an additional 250,000 Shares which shall
not count against the limit set forth in Section 21(i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 14 hereof.
(iv) If an Option is cancelled (other than in connection with a
transaction described in Section 14 hereof), the cancelled Option will be
counted against the limit set forth in this Section 21. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
-19-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
IN THOUSANDS (EXCEPT EPS)
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US-DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 25950
<SECURITIES> 17651
<RECEIVABLES> 13065
<ALLOWANCES> 997
<INVENTORY> 1329
<CURRENT-ASSETS> 1181
<PP&E> 3682
<DEPRECIATION> 0
<TOTAL-ASSETS> 62714
<CURRENT-LIABILITIES> 21473
<BONDS> 0
<COMMON> 13
0
0
<OTHER-SE> 30375
<TOTAL-LIABILITY-AND-EQUITY> 62714
<SALES> 12387
<TOTAL-REVENUES> 12387
<CGS> 2267
<TOTAL-COSTS> 2267
<OTHER-EXPENSES> 2811
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 369
<INCOME-TAX> 0
<INCOME-CONTINUING> 369
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 369
<EPS-PRIMARY> .03
<EPS-DILUTED> 0
</TABLE>
