As filed with the Securities and Exchange Commission on January 26, 2000
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NOVELL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 87-0393339
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
122 EAST 1700 SOUTH
PROVO UT 84606
(ADDRESS, INCLUDING ZIP CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
NOVELL, INC. 1991 STOCK PLAN
(FULL TITLE OF THE PLAN)
DAVID R. BRADFORD, ESQ.
SENIOR VICE PRESIDENT, GENERAL
COUNSEL AND CORPORATE SECRETARY
NOVELL, INC.
1555 NORTH TECHNOLOGY WAY
OREM, UT 84057
(801) 222-6000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
Copies to:
AARON J. ALTER, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
<TABLE>
CALCULATION OF REGISTRATION FEE
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========================================= ------------------------- ---------------------- ---------------------- ------------------
PROPOSED PROPOSED
TITLE OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO TO BE OFFERING PRICE AGGREGATE REGISTRATION
BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- ----------------------------------------- ------------------------- ---------------------- ---------------------- ------------------
Common Stock $0.10 par value
Upon exercise of options under 30,003,089(1) $33.656(2) $1,009,783,963(2) $266,582.97(3)
Novell, Inc. 1991 Stock Plan
========================================= ========================= ---------------------- ---------------------- ==================
</TABLE>
(1) The remaining 50,275,216 shares reserved for issuance under the Novell,
Inc. 1991 Stock Plan were registered under Form S-8 Registration Statements
previously filed with the Commission. Specifically, 31,591,818 shares were
registered under a Form S-8 Registration Statement filed with the
Commission on May 30, 1996 (File No. 333-04775) and 18,683,398 shares were
registered under a Form S-8 Registration Statement filed with the
Commission on June 5, 1992 (File No. 33-48395). Pursuant to Rule 429 under
the Securities Act of 1933, as amended, the prospectus relating hereto also
relates to shares registered under such Form S-8 Registration Statements.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457(c), on the basis of the average of
the high and low sale prices reported in the Nasdaq National Market System
on January 25, 2000, which average was $33.656.
(3) The registration fee is calculated solely on the basis of the additional
30,003,089 shares authorized for issuance under the Novell, Inc. 1991 Stock
Plan. Registrant has paid a filing fee for the remaining 50,275,216 shares
reserved for issuance under the Novell, Inc. 1991 Stock Plan. Specifically,
Registrant paid a filing fee of $160,682.52 in connection with the
registration of 31,591,818 shares under a Registration Statement on Form
S-8 filed with the Commission on May 30, 1996 (File No. 333-04775), and
paid a filing fee of $165,260 in connection with the registration of
18,683,398 shares under a Registration Statement on Form S-8 filed with the
Commission on June 5, 1992 (File No. 33-48395).
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
There are hereby incorporated by reference into this Registration
Statement the following documents and information heretofore filed with the
Securities and Exchange Commission (the "Commission"):
1. The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A dated April 3, 1985,
and the description of the Registrant's Preferred Shares Rights Plan
and the Series A Junior Participating Preferred Shares issuable
thereunder contained in the Registration Statement on Form 8-A dated
December 12, 1988, filed pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including any
amendment or report filed for the purpose of updating such
descriptions.
2. The Registrant's Annual Report on Form 10-K for the year ended October
31, 1998, filed pursuant to Section 13(a) of the Exchange Act.
3. The Registrant's Quarterly Reports on Form 10-Q for the quarters ended
January 31, 1999, April 30, 1999, and July 31,1999, filed pursuant to
Section 13 of the Exchange Act.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, after the date of this Registration
Statement and prior to the filing of a post-effective amendment indicating that
all securities offered have been sold or deregistering all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Counsel for the Registrant, Wilson Sonsini Goodrich & Rosati,
Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304, has
rendered an opinion to the effect that the Common Stock offered hereby will,
when issued in accordance with the Registrant's 1991 Stock Plan, be legally and
validly issued, fully paid and nonassessable. Larry W. Sonsini, a member of such
law firm, is a director of the Registrant and owns 6,600 shares of Registrant's
Common Stock plus options to purchase an additional 190,000 shares of
Registrant's Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court
to award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). Further, in accordance with the Delaware General Corporation Law, the
Registrant's Certificate of Incorporation eliminates the liability of a director
of the Registrant to the Registrant and its stockholders for monetary damages
for breaches of such director's fiduciary duty of care in certain instances. The
Registrant's Bylaws provides for indemnification of certain agents to the
maximum extent permitted by the Delaware General Corporation Law. Persons
covered by this indemnification provision include any current or former
directors, officers, employees and other agents of the Registrant, as well as
persons who serve at the request of the Registrant as directors, officers,
employees or agents of another enterprise.
In addition, the Registrant has entered into contractual agreements
with certain directors and officers of the Registrant designated by the Board to
indemnify such individuals to the full extent permitted by law. These agreements
also resolve certain procedural and substantive matters that are not covered, or
are covered in less detail, in the Bylaws or by the Delaware General Corporation
Law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
NUMBER DOCUMENT
4.1 Novell, Inc. 1991 Stock Plan, as amended through September
1997 and forms of agreement currently used thereunder.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati with respect to
the securities being registered.
23.1 Consent of Independent Auditors (Ernst & Young LLP).
23.2 Consent of Counsel (contained in Exhibit 5.1).
24.1 Power of Attorney (See page II-5).
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 6 hereof, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in San Jose, California, on January 26, 2000.
NOVELL, INC.
By: /S/ ERIC E. SCHMIDT
Eric E. Schmidt
Chairman of the Board, President,
Chief Executive Officer and Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Eric E. Schmidt and David R. Bradford,
jointly and severally, his or her attorneys-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendments
to this Registration Statement on Form S-8, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE
/S/ ERIC E. SCHMIDT Chairman of the Board, President, January 26, 2000
- -------------------------------------------------
Eric E. Schmidt Chief Executive Officer and Director
(Principal Executive Officer)
/S/ DENNIS R. RANEY Senior Vice President and Chief January 26, 2000
- ------------------------------------------------- Financial Officer (Principal Financial
Dennis R. Raney Officer and Principal Accounting
Officer)
/S/ JOHN A. YOUNG Vice Chairman of the Board and Director January 26, 2000
- -------------------------------------------------
John A. Young
/S/ ELAINE R. BOND Director January 26, 2000
- -------------------------------------------------
Elaine R. Bond
/S/ HANS-WERNER HECTOR Director January 26, 2000
- -------------------------------------------------
Hans-Werner Hector
/S/ REED E. HUNDT Director January 26, 2000
- -------------------------------------------------
Reed E. Hundt
Director January , 2000
William N. Joy
/S/ JACK L. MESSMAN Director January 26, 2000
- -------------------------------------------------
Jack L. Messman
/S/ RICHARD L. NOLAN Director January 26, 2000
- -------------------------------------------------
Richard L. Nolan
- ------------------------------------------------- Director January , 2000
Larry W. Sonsini
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
4.1 Novell, Inc. 1991 Stock Plan, as amended through
September 1997 and forms of agreement currently used
thereunder.
- --------------------------
5.1 Opinion of Wilson Sonsini Goodrich & Rosati with
respect to the securities being registered.
- --------------------------
23.1 Consent of Independent Auditors (Ernst & Young LLP).
- --------------------------
23.3 Consent of Counsel (contained in Exhibit 5.1).
- --------------------------
24.1 Power of Attorney (See page II-5).
<PAGE>
Exhibit 4.1
NOVELL, INC. 1991 STOCK PLAN
(As amended September 24, 1997)
1. PURPOSE OF THE PLAN. The purpose of the Novell, Inc. 1991 Stock Plan is
to enable Novell, Inc. to provide an incentive to eligible employees,
consultants and officers whose present and potential contributions are
important to the continued success of the Company, to afford these
individuals the opportunity to acquire a proprietary interest in the
Company, and to enable the Company to enlist and retain in its
employment the best available talent for the successful conduct of its
business. It is intended that this purpose will be effected through the
granting of (a) stock options, (b) stock purchase rights, (c) stock
appreciation rights, and (d) long-term performance awards.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or such of its Committees as shall
be administering the Plan, in accordance with Section 5 of the Plan.
(b) "APPLICABLE LAWS " means the legal requirements relating to the
administration of stock option plans under applicable securities laws,
Delaware corporate law 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 5 of the Plan.
(f) "COMMON STOCK" means the Common Stock, $.10 par value, of the
Company.
(g) "COMPANY" means Novell, Inc., a Delaware corporation.
(h) "CONSULTANT" means any person, including a Director or an advisor,
engaged by the Company or a parent or Subsidiary to render services and
who is compensated for such services.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
employment or consulting relationship is not interrupted or terminated
by the Company, any Parent or Subsidiary. Continuous Status as an
Employee or Consultant 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 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 sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such
system or exchange (or the exchange with the greatest volume
of trading in Common Stock) on the last market trading day
prior to 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 high bid and low asked
prices for the Common Stock on the last market trading day
prior to 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.
(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) "LONG-TERM PERFORMANCE AWARD" means an award under Section 9 below.
A Long-Term Performance Award shall permit the recipient to receive a
cash or stock bonus (as determined by the Administrator) upon
satisfaction of such performance factors as are set out in the
recipient's individual grant. Long-term Performance Awards will be
based upon the achievement of Company, Subsidiary and/or individual
performance factors or upon such other criteria as the Administrator
may deem appropriate.
(q) "LONG-TERM PERFORMANCE AWARD AGREEMENT" means a written agreement
between the Company and an Optionee evidencing the terms and conditions
of an individual Long-Term Performance Award grant. The Long-Term
Performance Award Agreement is subject to the terms and conditions of
the Plan.
(r) "NONSTATUTORY STOCK OPTION" means any Option that is not an
Incentive Stock Option.
(s) "NOTICE OF GRANT" means a written notice evidencing certain terms
and conditions of an individual Option, Stock Purchase Right, SAR or
Long-Term Performance Award grant. The Notice of Grant is part of the
Option Agreement, the SAR Agreement and the Long-Term Performance Award
Agreement.
(t) "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.
(u) "OPTION" means a stock option granted pursuant to the Plan.
(v) "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.
(w) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise
price.
(x) "OPTIONED STOCK" means the Common Stock subject to an Option or
Right.
(y) "OPTIONEE" means an Employee or Consultant who holds an outstanding
Option or Right.
(z) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(aa) "PLAN" means this 1991 Stock Plan.
(bb) "RESTRICTED STOCK" means shares of Common Stock subject to a
Restricted Stock Purchase Agreement acquired pursuant to a grant of
Stock Purchase Rights under Section 8 below.
(cc) "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.
(dd) "RIGHT" means and includes SARs, Long-Term Performance Awards and
Stock Purchase Rights granted pursuant to the Plan.
(ee) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor
rule thereto, as in effect when discretion is being exercised with
respect to the Plan.
(ff) "SAR" means a stock appreciation right granted pursuant to Section
7 of the Plan.
(gg) "SAR AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual SAR
grant. The SAR Agreement is subject to the terms and conditions of the
Plan.
(hh) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(ii) "STOCK PURCHASE RIGHT" means the right to purchase Common Stock
pursuant to Section 8 of the Plan, as evidenced by a Notice of Grant.
(jj) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. ELIGIBILITY. Nonstatutory Stock Options and Rights may be granted to
Employees and Consultants. Incentive Stock Options may be granted only
to Employees. If otherwise eligible, an Employee or Consultant who has
been granted an Option or Right may be granted additional Options or
Rights.
4. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the total number of Shares reserved and available for
issuance under the Plan is 80,278,305 Shares, which include increases
each November 1 from and including November 1, 1994 through and
including November 1, 1998 by a number of Shares equal to 2.9% of the
number of Shares outstanding as of the Company's immediately preceding
fiscal year end. The maximum number of Shares reserved and available
for issuance pursuant to Incentive Stock Options is 20,000,000 Shares.
Subject to Section 11 of the Plan, if any Shares that have been
optioned under an Option cease to be subject to such Option (other than
through exercise of the Option), or if any Option or Right granted
hereunder is forfeited, or any such award otherwise terminates prior to
the issuance of Common Stock to the participant, the Shares that were
subject to such Option or Right shall again be available for
distribution in connection with future Option or Right grants under the
Plan. Shares that have actually been issued under the Plan, whether
upon exercise of an Option or Right, shall not in any event be returned
to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are
repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan.
5. ADMINISTRATION.
(A) COMPOSITION OF ADMINISTRATOR.
(I) MULTIPLE ADMINISTRATIVE BODIES. The Plan may (but need
not) be administered by different administrative bodies with
respect to (A) Directors who are employees, (B) Officers who
are not Directors and (C) Employees who are neither Directors
nor Officers.
(II) SECTION 162(M). To the extent that the Administrator
determines it to be desirable to qualify Options or Rights
hereunder as "performance-based compensation" within the
meaning of Section 162(m) of the Code, the Plan shall be
administered by a Committee of two or more "outside directors"
within the meaning of Section 162(m) of the Code.
(III) RULE 16B-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the
transactions contemplated hereunder shall be structured to
satisfy the requirements for exemption under Rule 16b-3.
(IV) OTHER ADMINISTRATION. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a
Committee, which Committee shall be constituted to satisfy
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 Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and
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 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 include, but are not limited to, the
exercise price, the time or times when Options or 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 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 construe and interpret the terms of the Plan;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(ix) to determine whether and under what circumstances an
Option or Right may be settled in cash instead of Common Stock
or Common Stock instead of cash;
(x) to reduce the exercise price of any Option or Right;
(xi) to modify or amend each Option or Right (subject to
Section 13 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 Right previously granted by the Administrator;
(xiii) to institute an Option Exchange Program;
(xiv) to determine the terms and restrictions applicable to
Options and Rights and any Restricted Stock; and
(xv) 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 Rights.
6. DURATION OF THE PLAN. The Plan shall remain in effect until terminated
by the Board under the terms of the Plan, provided that in no event may
Incentive Stock Options be granted under the Plan later than 10 years
from the date the Plan was adopted by the Board.
7. OPTIONS AND SARS.
(A) OPTIONS. The Administrator, in its discretion, may grant Options to
eligible participants and shall determine whether such Options shall be
Incentive Stock Options or Nonstatutory Stock Options. Each Option
shall be evidenced by a Notice of Grant which shall expressly identify
the Options as Incentive Stock Options or as Nonstatutory Stock
Options, and be in such form and contain such provisions as the
Administrator shall from time to time deem appropriate. Without
limiting the foregoing, the Administrator may at any time authorize the
Company, with the consent of the respective recipients, to issue new
Options or Rights in exchange for the surrender and cancellation of
outstanding Options or Rights. Option agreements shall contain the
following terms and conditions:
(I) EXERCISE PRICE; NUMBER OF SHARES. The per Share exercise
price for the Shares issuable pursuant to an Option shall be
such price as is determined by the Administrator; provided,
however, that in the case of an Incentive Stock Option, the
price shall be no less than 100% of the Fair Market Value of
the Common Stock on the date the Option is granted, subject to
any additional conditions set out in Section 7(a)(iv) below.
The Notice of Grant shall specify the number of Shares to
which it pertains.
(II) WAITING PERIOD AND EXERCISE DATES. At the time an Option
is granted, the Administrator will determine the terms and
conditions to be satisfied before Shares may be purchased,
including the dates on which Shares subject to the Option may
first be purchased. The Administrator may specify that an
Option may not be exercised until the completion of the
service period specified at the time of grant. (Any such
period is referred to herein as the "waiting period.") At the
time an Option is granted, the Administrator shall fix the
period within which the Option may be exercised, which shall
not be earlier than the end of the waiting period, if any,
nor, in the case of an Incentive Stock Option, later than ten
(10) years, from the date of grant.
(III) FORM OF PAYMENT. 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) and may consist entirely of:
(1) cash;
(2) check;
(3) promissory note;
(4) other Shares which (1) 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 (2) have a Fair Market Value on the
date of surrender not greater than the aggregate
exercise price of the Shares as to which said Option
shall be exercised;
(5) delivery of a properly executed exercise notice
together with such other documentation as the
Administrator and the broker, if applicable, shall
require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds
required to pay the exercise price;
(6) any combination of the foregoing methods of
payment; or
(7) such other consideration and method of payment
for the issuance of Shares to the extent permitted by
Applicable Laws.
(IV) SPECIAL INCENTIVE STOCK OPTION PROVISIONS. In addition to
the foregoing, Options granted under the Plan which are
intended to be Incentive Stock Options under Section 422 of
the Code shall be subject to the following terms and
conditions:
(1) DOLLAR LIMITATION. To the extent that the
aggregate Fair Market Value of (a) the Shares with
respect to which Options designated as Incentive
Stock Options plus (b) the shares of stock of the
Company, Parent and any Subsidiary with respect to
which other incentive stock options are exercisable
for the first time by an Optionee during any calendar
year under all plans of the Company and any Parent
and Subsidiary exceeds $100,000, such Options shall
be treated as Nonstatutory Stock Options. For
purposes of the preceding sentence, (a) Options shall
be taken into account in the order in which they were
granted, and (b) the Fair Market Value of the Shares
shall be determined as of the time the Option or
other incentive stock option is granted.
(2) 10% STOCKHOLDER. If any Optionee to whom an
Incentive Stock Option is to be granted pursuant to
the provisions of the Plan is, on the date of grant,
the owner of Common Stock (as determined under
Section 424(d) of the Code) possessing more than 10%
of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary of
the Company, then the following special provisions
shall be applicable to the Option granted to such
individual:
(A) The per Share Option price of Shares
subject to such Incentive Stock Option shall
not be less than 110% of the Fair Market
Value of Common Stock on the date of grant;
and
(B) The Option shall not have a term in
excess of five (5) years from the date of
grant.
Except as modified by the preceding
provisions of this subsection 7(a)(iv) and
except as otherwise limited by Section 422
of the Code, all of the provisions of the
Plan shall be applicable to the Incentive
Stock Options granted hereunder.
(V) Other Provisions. Each Option granted under the Plan may
contain such other terms, provisions, and conditions not
inconsistent with the Plan as may be determined by the
Administrator.
(VI) Buyout Provisions. The Administrator may at any time
offer to buy out for a payment in cash or Shares, an Option
previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee
at the time that such offer is made.
(B) SARS.
(I) IN CONNECTION WITH OPTIONS. At the sole discretion of the
Administrator, SARs 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 SARs that are
granted in connection with Options:
(1) The SAR shall entitle the Optionee to exercise
the SAR by surrendering to the Company unexercised a
portion of the related Option. The Optionee shall
receive in Exchange from the Company an amount equal
to the excess of (1) the Fair Market Value on the
date of exercise of the SAR of the Common Stock
covered by the surrendered portion of the related
Option over (2) the exercise price of the Common
Stock covered by the surrendered portion of the
related Option. Notwithstanding the foregoing, the
Administrator may place limits on the amount that may
be paid upon exercise of an SAR; PROVIDED, however,
that such limit shall not restrict the exercisability
of the related Option.
(2) When an SAR is exercised, the related Option, to
the extent surrendered, shall cease to be
exercisable.
(3) An SAR shall be exercisable only when and to the
extent that the related Option is exercisable and
shall expire no later than the date on which the
related Option expires.
(4) An SAR may only be exercised at a time when the
Fair Market Value of the Common Stock covered by the
related Option exceeds the exercise price of the
Common Stock covered by the related Option.
(II) INDEPENDENT OF OPTIONS. At the sole discretion of the
Administrator, SARs may be granted without related Options.
The following provisions apply to SARs that are not granted in
connection with Options:
(1) The SAR shall entitle the Optionee, by exercising
the SAR, to receive from the Company an amount equal
to the excess of (1) the Fair Market Value of the
Common Stock covered by the exercised portion of the
SAR, as of the date of such exercise, over (2) the
Fair Market Value of the Common Stock covered by the
exercised portion of the SAR, as of the last market
trading date prior to the date on which the SAR was
granted; provided, however, that the Administrator
may place limits on the aggregate amount that may be
paid upon exercise of an SAR.
(2) SARs shall be exercisable, in whole or in part,
at such times as the Administrator shall specify in
the Optionee's SAR agreement.
(III) FORM OF PAYMENT. The Company's obligation arising upon
the exercise of an SAR 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
issued upon the exercise of an SAR shall be valued at their
Fair Market Value as of the date of exercise.
(C) PERFORMANCE-BASED COMPENSATION LIMITATIONS. No Employee shall be
granted, in any fiscal year of the Company, Options or SARs to receive
more than 500,000 Shares of Common Stock, provided that the Company may
make an additional one-time grant of up to 1,000,000 Shares to
newly-hired Employees. The foregoing limitations shall adjust
proportionately in connection with any change in the Company's
recapitalization as described in Section 11(a).
(D) METHOD OF EXERCISE.
(I) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any
Option or SAR granted hereunder shall be exercisable at such
times and under such conditions as determined by the
Administrator and as shall be permissible under the terms of
the Plan.
An Option may not be exercised for a fraction of a Share.
An Option or SAR 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 or SAR by the person
entitled to exercise the Option or SAR 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 (and, in the case of an Incentive Stock
Option, determined at the time of grant) and permitted by the
Option Agreement consist of any consideration and method of
payment allowable under subsection 7(a)(iii) 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. 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.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter shall 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.
(II) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In
the event an Optionee's Continuous Status as an Employee or
Consultant terminates (other than upon the Optionee's death or
Disability), the Optionee may exercise his or her Option or
SAR, but only within such period of time as is determined by
the Administrator at the time of grant, not to exceed six (6)
months (three (3) months in the case of an Incentive Stock
Option) from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it at the
date of such termination (but in no event later than the
expiration of the term of such Option or SAR as set forth in
the Option or SAR Agreement). To the extent that Optionee was
not entitled to exercise an Option or SAR at the date of such
termination, and to the extent that the Optionee does not
exercise such Option or SAR (to the extent otherwise so
entitled) within the time specified herein, the Option or SAR
shall terminate.
(III) DISABILITY OF OPTIONEE. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates as a
result of the Optionee's Disability, the Optionee may exercise
his or her Option or SAR, but only within twelve (12) months
from the date of such termination, and only to the extent that
the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the
term of such Option or SAR as set forth in the Option or SAR
Agreement). To the extent that Optionee was not entitled to
exercise an Option or SAR at the date of such termination, and
to the extent that the Optionee does not exercise such Option
or SAR (to the extent otherwise so entitled) within the time
specified herein, the Option or SAR shall terminate.
(IV) DEATH OF OPTIONEE. In the event of an Optionee's death,
the Optionee's estate or a person who acquired the right to
exercise the deceased Optionee's Option or SAR by bequest or
inheritance may exercise the Option or SAR, but only within
twelve (12) months following the date of death, and only to
the extent that the Optionee was entitled to exercise it at
the date of death (but in no event later than the expiration
of the term of such Option or SAR as set forth in the Option
or SAR Agreement). To the extent that Optionee was not
entitled to exercise an Option or SAR at the date of death,
and to the extent that the Optionee's estate or a person who
acquired the right to exercise such Option does not exercise
such Option or SAR (to the extent otherwise so entitled)
within the time specified herein, the Option or SAR shall
terminate.
8. 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 that the offeree shall be entitled to purchase, the price to
be paid, and the time within which the offeree must accept such offer,
which shall in no event exceed thirty (30) days 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 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 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 11 of the Plan.
(E) WITHHOLDING TAXES. In accordance with any applicable administrative
guidelines it establishes, the Committee may allow a purchaser to pay
the amount of taxes required by law to be withheld as a result of a
purchase of Shares or a lapse of restrictions in connection with Shares
purchased pursuant to a Stock Purchase Right, by withholding from any
payment of Common Stock due as a result of such purchase or lapse of
restrictions, or by permitting the purchaser to deliver to the Company,
Shares having a Fair Market Value, as determined by the Committee,
equal to the amount of such required withholding taxes.
9. LONG-TERM PERFORMANCE AWARDS.
(A) ADMINISTRATION. Long-Term Performance Awards are cash or stock
bonus awards that may be granted either alone or in addition to other
awards granted under the Plan. Such awards shall be granted for no cash
consideration. The Administrator shall determine the nature, length and
starting date of any performance period (the "Performance Period") for
each Long-Term Performance Award, and shall determine the performance
or employment factors, if any, to be used in the determination of
Long-Term Performance Awards and the extent to which such Long-Term
Performance Awards are valued or have been earned. Long-Term
Performance Awards may vary from participant to participant and between
groups of participants and shall be based upon the achievement of
Company, Subsidiary, Parent and/or individual performance factors or
upon such other 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 may
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
factors applicable to the Long-Term Performance Awards to take into
account changes in legal, 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.
10. NON-TRANSFERABILITY OF OPTIONS. Options and Rights 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.
11. 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 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 Rights have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an
Option or Right, as well as the price per share of Common Stock covered
by each such outstanding Option or 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 Right.
(B) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option
or 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 Right shall terminate as of a date fixed by
the Board and give each Optionee the right to exercise his or her
Option or Right as to all or any part of the Optioned Stock, including
Shares as to which the Option or 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 Right shall be assumed or an
equivalent Option or Right 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 or Right as to all or a portion of the
Optioned Stock, including Shares as to which it would not otherwise be
exercisable. If the Administrator makes an Option or Right 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 Right shall be exercisable for a period of fifteen (15) days from
the date of such notice, and the Option or Right will terminate upon
the expiration of such period. For the purposes of this paragraph, the
Option or Right shall be considered assumed if, immediately 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
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 Right,
for each Share of Optioned Stock subject to the Option or 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 IN CONTROL. In the event of a "Change in Control" of the
Company, as defined in paragraph (e) below, then the following
acceleration and valuation provisions shall apply:
(I) Except as otherwise determined by the Board, in its
discretion, prior to the occurrence of a Change in Control,
any Options and Rights outstanding on 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) Except as otherwise determined by the Board, in its
discretion, prior to the occurrence of a Change in Control,
all outstanding Options and Rights, to the extent they are
exercisable and vested (including Options and Rights that
shall become exercisable and vested pursuant to subparagraph
(i) above), shall be terminated in exchange for a cash payment
equal to the Change in Control Price, (reduced by the exercise
price, if any, applicable to such Options or 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 Right by bequest or inheritance.
(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 entitled to vote generally in the election of
directors; or
(II) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) at least fifty percent (50%) of the
total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of the
Company approve an agreement for the sale or disposition by
the Company of all or substantially all the Company's assets;
or
(III) A change in the composition of the Board of Directors of
the Company, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall
mean directors who either (A) are directors of the Company as
of the date the Plan is approved by the stockholders, or (B)
are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at
least a majority of the Incumbent Directors at the time of
such election or nomination (but shall not include an
individual whose election or nomination is in connection with
an actual or threatened proxy contest relating to the election
of directors to the Company).
(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
Fair Market Value of a Share 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 per Share, 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) such lower
price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a Share.
12. DATE OF GRANT. The date of grant of an Option or Right shall be, for
all purposes, the date on which the Administrator makes the
determination granting such Option or 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.
13. 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.
14. CONDITIONS UPON ISSUANCE OF SHARES.
(A) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option or Right unless the exercise of such Option or
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 Right, the Company may require the person exercising such
Option or 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.
15. 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 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 Right 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 13(b) of the Plan.
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.
17. 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.
<PAGE>
-5-
NOVELL, INC. 1991 STOCK PLAN
NONSTATUTORY STOCK OPTION
EXERCISE NOTICE
Novell, Inc.
Attention: Shareholder Services Department
EXERCISE OF OPTION. Effective as of today, , 199, the undersigned
("Purchaser") hereby elects to purchase shares (the "Shares") of the Common
Stock of Novell, Inc. (the "Company") under and pursuant to the Novell, Inc.
1991 Stock Plan (the "Plan") and the Stock Option Agreement dated (the "Option
Agreement").
DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the full
purchase price for the Shares and any and all required taxes.
REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
RIGHTS AS STOCKHOLDER. Subject to the terms and conditions of this
Agreement, Purchaser shall have all of the rights of a stockholder of the
Company with respect to the Shares from and after the date 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.
TAX CONSULTATION. Purchaser understands that Purchaser may suffer adverse
tax consequences as a result of Purchaser's purchase or disposition of the
Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the Company and Purchaser with
respect to the subject matter hereof, and such agreement is governed by Delaware
law except for that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
NOVELL, INC.
By:
Signature of Purchaser
Title:
Printed Name
Social Security Number
Mailing Address:
<PAGE>
NOVELL, INC. 1991 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Novell, Inc. 1991
Stock Plan (the "Plan") shall have the same defined meanings in this Option
Agreement.
I. NOTICE OF STOCK OPTION GRANT
Employee ID:
Name:
Address:
You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Grant Number:
Date of Grant:
Exercise Price per Share:
Total Number of Shares Granted:
Type of Option:
Term/Expiration Date:
VESTING SCHEDULE: This Option will vest over four (4) years with 25%
vesting one year from grant date and thereafter
-----------------
6.25% per quarter.
TERMINATION PERIOD: This Option may be exercised for 60 days after
termination of Optionee's employment or consulting relationship, or
such longer period as may be applicable upon death or Disability of
Optionee as provided in the Plan, but in no event later than the
Term/Expiration Date as provided above.
II. AGREEMENT
1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares set forth in the Notice of Grant at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Novell, Inc. 1991 Stock Plan, which is incorporated herein by
reference. Subject to Section 13(c) of the Plan, in the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Option Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option under Section 422 of
the Code.
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice in the form attached as Exhibit A (the "Exercise Notice") which
shall state the election to exercise the Option, the number of Shares as to
which the Option is being exercised (the "Exercised Shares") and such other
representations and agreements as may be required by the Company pursuant to the
provisions of the Plan. The Exercise Notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Shareholder Services
Department of the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price and any required
withholding tax.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares are then
listed. Assuming such compliance, for income tax purposes the Exercised Shares
shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed Exercise Notice together with such
other documentation as the Administrator and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price; or
(d) surrender of other Shares which (I) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
(6) months on the date of surrender, and (ii)have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised Shares.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. TERM OF OPTION. This Option will expire ten (10) years from the date
of its grant.
6. TAX CONSEQUENCES. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) EXERCISING THE OPTION.
(I) NONQUALIFIED STOCK OPTION ("NSO"). If this Option does not qualify
as an ISO, the Optionee may incur regular federal income tax liability upon
exercise. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the fair
market value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an employee or a former employee,
the Company will be required to withhold from his or her compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
(ii) INCENTIVE STOCK OPTION ("ISO"). If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the fair market value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to the alternative minimum tax for federal tax purposes
and may subject the Optionee to alternative minimum tax in the year of exercise.
(b) DISPOSITION OF SHARES.
(I) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one
year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the fair market value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price.
(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on
or before the later of (I) two years after the grant date, or (ii) one year
after the exercise date, the Optionee shall immediately notify the Company in
writing of such disposition. The Optionee agrees that he or she may be subject
to income tax withholding by the Company on the compensation income recognized
from such early disposition of ISO Shares by payment in cash or out of the
current earnings paid to the Optionee.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. It is agreed that this Option Agreement shall be
interpreted and construed in accordance with the laws of that jurisdiction in
which enforcement is sought. Should any portion of this Agreement be judicially
held to be invalid, unenforceable or void, such holding shall not have the
effect of invalidating the remainder of this Agreement or any other part
thereof, the parties hereby agreeing that the portion so held to be invalid,
unenforceable, or void shall, if possible, be deemed amended or reduced in
scope. This Option Agreement shall supersede the terms of any prior agreement or
understanding between Optionee and the Company regarding the subject matter
hereof, and constitutes the full and entire understanding and agreement between
Optionee and the Company regarding the subject matter hereof. This Option
Agreement may be modified or amended only in writing signed by an officer of the
Company and by Optionee. Optionee agrees and acknowledges the Company's "at
will" employment policy, which is that the Company reserves the right to
discontinue Optionee's employment at any time for any reason or no reason
without notice, and that the Company accords Optionee the right to discontinue
employment at any time for any reason or no reason without notice. The Company
agrees and acknowledges that it's "at will" employment policy may not be
enforceable in the jurisdiction in which Optionee is domiciled. Optionee agrees
that nothing in this Agreement shall be construed as a limitation of the rights
of the Company to terminate Optionee's employment with the Company at any time
for any reason or no reason without notice.
OPTIONEE: NOVELL, INC.:
By:
Signature David R. Bradford
Title: Sr. V.P., General Counsel
Print Name & Corporate Secretary
Mailing Address:
<PAGE>
EXHIBIT 5.1
Wilson, Sonsini, Goodrich and Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
January 25, 2000
Novell, Inc.
122 East 1700 South
Provo, Utah, 84606
RE: NOVELL, INC. 1991 STOCK PLAN
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about January 25, 2000, in
connection with the registration under the Securities Act of 1933, as amended,
of 30,003,089 shares of your Common Stock (the "Shares") reserved for issuance
under the Novell, Inc. 1991 Stock Plan (the "Plan"). As your legal counsel, we
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the sale and issuance of said
Shares.
It is our opinion that, the Shares, when issued and sold in the manner
referred to in the Plan and the agreements that accompany the Plan, and in
accordance with the Company's Restated Certificate of Incorporation, will be
legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to said
Registration Statement and further consent to the use of our name wherever
appearing in said Registration Statement, including the Prospectus constituting
a part thereof, and amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/WILSON SONSINI GOODRICH & ROSATI, P.C.
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the 1991 Stock Plan of Novell, Inc. of our
report dated November 23, 1998, with respect to the consolidated financial
statements and schedule of Novell, Inc. included in its Annual Report (Form
10-K) for the year ended October 31, 1998, filed with the Securities and
Exchange Commission.
/S/ERNST & YOUNG LLP
ERNST & YOUNG LLP
San Jose, California
January 25, 2000
