<PAGE>
As filed with the Securities and Exchange Commission on June 19, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
PLATINUM technology, inc.
(Exact name of registrant as specified in its charter)
Delaware 36-3509662
(State or other jurisdiction of (IRS Employer Identification
of incorporation or organization) Number)
1815 South Meyers Road, Oakbrook Terrace, Illinois 60181, (630) 620-5000
(Address of Principal Executive Offices including Zip Code)
Mastering, Inc. Amended and Restated 1995 Executive Stock Option Plan
Mastering, Inc. Amended and Restated 1995 Employee Stock Option Plan
Mastering, Inc. 1998 Non-Qualified Stock Option Agreement for Employees
Logic Works, Inc. 1995 Stock Option/Stock Issuance Plan
LBMS Executive Share Option Scheme
LBMS 1996 Equity Incentive Plan
VIVID Publishing, Inc. 1997 Stock Option Plan
VIVID Publishing, Inc. 1996 Stock Option Plan
(Full title of plans)
Andrew J. Filipowski
1815 South Meyers Road, Oakbrook Terrace, Illinois 60181, (630) 620-5000
(Name, address and telephone number of agent for service)
Copies to:
Matthew S. Brown, Esq.
Mark D. Wood, Esq.
Katten Muchin & Zavis
525 W. Monroe, Suite 1600
Chicago, IL 60661-3693
Fax Number: (312) 902-1061
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================================================
Proposed maximum Proposed maximum
offering price aggregate offering Amount of
Title of securities to be registered Amount to be registered(1) per share price registration fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value......... 2,193,219 shares(2) $15.38(2) $33,731,708(2) $ 9,951
- -----------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value......... 1,160,609 shares(3) $11.58(3) $13,439,852(3) $ 3,965
- -----------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value......... 100,945 shares(4) $19.46(4) $ 1,964,390(4) $ 580
- -----------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value......... 57,178 shares(5) $ 1.99 $ 113,784 $ 34
- ---------------------------------------=====================================================================-----------------
TOTAL 3,511,951 $49,249,734 $14,530
=============================================================================================================================
</TABLE>
(1) Includes an indeterminate number of shares of common stock, par value $.001
per share, of PLATINUM technology, inc. ("PLATINUM Common Stock") that may
be issuable by reason of stock splits, stock dividends or similar
transactions. Also includes associated rights (the "Rights") to purchase
1/100 of a share of Series A Participating Preferred Stock, par value $.01
per share, of PLATINUM technology, inc. The Rights initially attached to
and trade with PLATINUM Common Stock. The value attributable to such
Rights, if any, is reflected in the market price of the PLATINUM Common
Stock.
(2) Represents shares issuable upon exercise of outstanding options under the
Mastering, Inc. Amended and Restated 1995 Executive Stock Option Plan, the
Mastering, Inc. Amended and Restated 1995 Employee Stock Option Plan, and
the Mastering, Inc. 1998 Non-Qualified Stock Option Agreements for Employees
(the "Mastering Plans"). The dollar amounts are based upon the weighted
average exercise price of the shares subject to outstanding options under
the Mastering Plans.
(3) Represents shares issuable upon exercise of outstanding options under the
Logic Works, Inc. 1995 Stock Option/Stock Issuance Plan (the "Logic Works
Plan"). The dollar amounts are based upon the weighted average exercise
price of the shares subject to outstanding options under the Logic Works
Plan.
(4) Represents shares issuable upon exercise of outstanding options under the
LBMS Executive Share Option Scheme, and the LBMS 1996 Equity Incentive Plan
(the "LBMS Plans"). The dollar amounts are based upon the weighted average
exercise price of the shares subject to outstanding options under the LBMS
Plans.
(5) Represents shares issuable upon exercise of outstanding options under the
Vivid Publishing, Inc. 1997 Stock Option Plan and the Vivid Publishing, Inc.
1996 Stock Option Plan (the "Vivid Plans"). The dollar amounts are based
upon the weighted average exercise price of the shares subject to
outstanding options under the Vivid Plans.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE PROSPECTUS
The information called for in Part I of Form S-8 is currently included in:
(i) the prospectuses for the Mastering, Inc. Amended and Restated 1995 Executive
Stock Option Plan, the Mastering, Inc. Amended and Restated 1995 Employee Stock
Option Plan and the Mastering, Inc. 1998 Non-Qualified Stock Option Agreements
for Employees (the "Mastering Plans"); (ii) the prospectus for the Logic Works,
Inc. 1995 Stock Option/Stock Issuance Plan (the "Logic Works Plan"); (iii) the
prospectuses for the LBMS Executive Share Option Scheme and the LBMS 1996 Equity
Incentive Plan (the "LBMS Plans"); and (iv) the prospectuses for the Vivid
Publishing, Inc. 1997 Stock Option Plan and the Vivid Publishing, Inc. 1996
Stock Option Plan (the "Vivid Plans") and is not being filed with or included in
this Form S-8 in accordance with the rules and regulations of the Securities and
Exchange Commission (the "Commission").
The Mastering Plans were assumed by PLATINUM technology, inc. (the
"Company") pursuant to the Agreement and Plan of Merger, dated as of February
18, 1998, among the Company, PT Acquisition Corporation I and Mastering, Inc.
Options previously issued under the Mastering Plans converted into options to
purchase shares of the Company's Common Stock, $.001 par value per share
("Common Stock"). The Logic Works Plan was assumed by the Company pursuant to
the Agreement and Plan of Merger, dated as of March 14, 1998, among the Company,
PT Acquisition Corporation II and Logic Works, Inc. Options previously issued
under the Logic Works Plan converted into options to purchase shares of Common
Stock. The LBMS Plans were adopted by the Company in order to give effect to
certain provisions of the Agreement and Plan of Reorganization, dated January 2,
1998, by and between the Company and Learmonth & Burchett Management Systems
Plc. ("LBMS") as such provisions relate to unexercised options previously
granted by LBMS under The Learmonth & Burchett Management Systems Executive
Share Option Scheme and the Learmonth & Burchett Management Systems 1996 Equity
Incentive Plan. The Vivid Plans were assumed by the Company pursuant to the
Agreement and Plan of Reorganization by and among the Company, VSI Acquisition
Corp., Vivid Publishing, Inc. and certain of the shareholders of Vivid
Publishing, Inc., dated as of May 29, 1998. Options previously issued under the
Vivid Plans converted into options to purchase shares of Common Stock. No
additional options will be issued under the Mastering Plans, the Logic Works
Plan, the LBMS Plans, or the Vivid Plans.
2
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents have been filed by the Company with the Commission
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
are incorporated in this Registration Statement by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1997;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
3. The Company's Current Reports on Form 8-K dated January 27, 1998,
March 3, 1998, April 16, 1998, April 21, 1998 (as amended by the
Current Report on Form 8-K/A dated May 6, 1998) and May 28, 1998;
4. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed March 7, 1991 pursuant to
Section 12 of the Exchange Act and all amendments thereto and reports
filed for the purpose of updating such description; and
5. The description of the preferred stock purchase rights contained in
the Company's Registration Statement on Form 8-A filed December 26,
1995 pursuant to Section 12 of the Exchange Act and all amendments
thereto and reports filed for the purpose of updating such
description.
In addition, all documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, subsequent to the date hereof and prior
to the filing of a post-effective amendment indicating that all securities
offered pursuant to this Registration Statement have been sold or deregistering
all such securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Article Ten of the Company's Restated Certificate of Incorporation provides
that the Company shall indemnify its directors to the full extent permitted by
the Delaware General Corporation Law and may indemnify its officers to such
extent, except that the Company shall not be obligated to indemnify any such
person (i) with respect to proceedings, claims or actions initiated or brought
voluntarily by any such person and not by way of defense, or (ii) for any
amounts paid in settlement of an action indemnified against by the Company
without the prior written consent of the Company. With the approval of its
stockholders, the Company has entered into indemnity agreements with each of its
directors and certain of its officers. These agreements may require the Company,
among other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers, to advance expenses to them as they are incurred, provided that they
undertake to repay the amount advanced if it is ultimately determined by a court
that they are
3
<PAGE>
not entitled to indemnification, and to obtain directors' and officers'
liability insurance if available on reasonable terms.
In addition, Article Nine of the Company's Restated Certificate of
Incorporation provides that a director of the Company shall not be personally
liable to the Company or its stockholders for monetary damages for breach of his
or her fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derives an improper personal benefit.
Reference is made to Section 145 of the General Corporation Law of the
State of Delaware which provides for indemnification of directors and officers
in certain circumstances.
The Company has purchased an insurance policy under which it is entitled to
be reimbursed for certain indemnity payments it is required or permitted to make
to its directors and officers.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
4.1 Conformed copy of the Restated Certificate of Incorporation of the
Company, as amended (incorporated by reference to Exhibit 3.1(d) to
the Company's Registration Statement on Form S-1, Registration No.
333-07783).
4.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 to
the Company's Registration Statement on Form S-1, Registration No.
33-39233 (the "IPO S-1")).
4.3 Mastering, Inc. Amended and Restated 1995 Executive Stock Option Plan
(the "Mastering Executive Plan") (incorporated by reference to
Exhibit 4.7 to Mastering, Inc.'s Registration Statement on Form S-8,
Registration No. 333-42949 (the "Mastering S-8")).
4.4 Mastering, Inc. Amended and Restated 1995 Employee Stock Option Plan
(the "Mastering Employee Plan") (incorporated by reference to Exhibit
4.8 to the Mastering S-8).
4.5 Form of Mastering, Inc. 1998 Non-Qualified Stock Option Agreement For
Employees.
4.6 Form of Stock Option Agreement under the Mastering Executive Plan.
4.7 Form of Stock Option Agreement under the Mastering Employee Plan.
4.8 Logic Works, Inc. 1995 Stock Option/Stock Issuance Plan (the "Logic
Plan").
4.9 Form of Stock Option Agreement under the Logic Plan (incorporated by
reference to Exhibit 99.3 to Logic Works, Inc.'s Registration
Statement on Form S-8, Registration No. 33-98212 (the "Logic S-8").
4.10 Form of Automatic Stock Option Agreement under the Logic Plan
(incorporated by reference to Exhibit 99.8 to the Logic S-8).
4.11 LBMS Executive Share Option Scheme (the "LBMS Option Scheme").
4.12 LBMS 1996 Equity Incentive Plan (the "LBMS Incentive Plan").
4
<PAGE>
4.13 Vivid Publishing, Inc. 1997 Stock Option Plan.
4.14 Vivid Publishing, Inc. 1996 Stock Option Plan.
4.15 Form of Stock Option Agreement under the Vivid Publishing, Inc. 1997
Stock Option Plan.
4.16 Form of Stock Option Agreement under the Vivid Publishing, Inc.
1996 Stock Option Plan.
4.17 Specimen stock certificate representing Common Stock (incorporated
by reference to Exhibit 4.1 to the IPO S-1).
4.18 Rights Agreement dated as of December 21, 1995, between the Company
and Harris Trust and Savings Bank (incorporated by reference to
Exhibit 1 to the Company's Registration Statement on Form 8-A, filed
December 26, 1995).
5 Opinion of counsel as to legality of shares of Common Stock being
offered (including consent).
15 Acknowledgment of KPMG Peat Marwick LLP Regarding Independent
Auditors' Review Report.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Katten Muchin & Zavis (included in their opinion filed as
Exhibit 5 herein).
24 Power of Attorney (included on the signature page of this
Registration Statement).
Item 9. Undertakings.
1. The Company hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually, or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration
Statement.
5
<PAGE>
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) 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.
2. The Company hereby undertakes that, for the purpose of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13(a) or 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.
3. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company and affiliated companies pursuant to the provisions
described in Item 6 above, or otherwise, the Company has been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is therefore unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oakbrook Terrace, State of Illinois, on this 18th day
of June, 1998.
PLATINUM technology, inc.
By: /s/ ANDREW J. FILIPOWSKI
-------------------------------------
Andrew J. Filipowski
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Andrew J. Filipowski, Michael P. Cullinane, Larry S. Freedman and Matthew S.
Brown, and each of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution, to sign on his behalf, individually and in each
capacity stated below, all amendments and post-effective amendments to this
Registration Statement on Form S-8 and to file the same, with all exhibits
thereto and any other documents in connection therewith, with the Securities and
Exchange Commission under the Securities Act of 1933, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as each might or could do in
person, hereby ratifying and confirming each act that said attorneys-in-fact and
agents may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 18th day of June, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ ANDREW J. FILIPOWSKI President, Chief Executive Officer
- ----------------------------------- (Principal Executive Officer) and a
Andrew J. Filipowski Director
/s/ MICHAEL P. CULLINANE Executive Vice President, Chief Financial
- ----------------------------------- Officer (Principal Financial and Accounting
Michael P. Cullinane Officer) and a Director
/s/ PAUL L. HUMENANSKY Executive Vice President, Chief Operations
- ----------------------------------- Officer and a Director
Paul L. Humenansky
/s/ JAMES E. COWIE Director
- -----------------------------------
James E. Cowie
/s/ STEVEN D. DEVICK Director
- -----------------------------------
Steven D. Devick
/s/ ARTHUR P. FRIGO Director
- -----------------------------------
Arthur P. Frigo
Director
- -----------------------------------
Gian Fulgoni
</TABLE>
7
<PAGE>
Exhibit Description of Exhibit
Number ----------------------
------
4.5 Form of Mastering, Inc. 1998 Non-Qualified Stock Option Agreement
for Employees.
4.6 Form of Stock Option Agreement under the Mastering, Inc. Amended and
Restated 1995 Executive Stock Option Plan.
4.7 Form of Employee Stock Option Agreement under the Mastering, Inc.
Amended and Restated 1995 Employee Stock Option Plan.
4.8 Logic Works, Inc. 1995 Stock Option/Stock Issuance Plan (the "Logic
Plan").
4.11 LBMS Executive Share Option Scheme (the "LBMS Option Scheme").
4.12 LBMS 1996 Equity Incentive Plan (the "LBMS Incentive Plan").
4.13 Vivid Publishing, Inc. 1997 Stock Option Plan.
4.14 Vivid Publishing, Inc. 1996 Stock Option Plan.
4.15 Form of Stock Option Agreement under the Vivid Publishing, Inc. 1997
Stock Option Plan.
4.16 Form of Stock Option Agreement under the Vivid Publishing, Inc.
1996 Stock Option Plan.
5 Opinion of counsel as to legality of shares of Common Stock being
offered (including consent).
15 Acknowledgement of KPMG Peat Marwick LLP Regarding Independent
Auditors' Review Report.
23.1 Consent of KPMG Peat Marwick LLP with respect to the Company's
financial statements.
23.2 Consent of Katten Muchin & Zavis (included in their opinion filed as
Exhibit 5 herein).
24 Power of Attorney (included on the signature page of this
Registration Statement).
8
<PAGE>
EXHIBIT 4.5
MASTERING, INC.
1998 NON-QUALIFIED STOCK OPTION AGREEMENT
FOR EMPLOYEES
This 1998 Non-Qualified Stock Option Agreement (this "Agreement") is
entered into as of June __, 1998, effective as of __________, 1998 (the "Grant
Date"). Pursuant to this Agreement, Mastering, Inc., a Delaware corporation
(the "Corporation"), hereby grants to the undersigned optionee (the "Optionee"),
an employee or independent contractor of the Corporation, a non-qualified option
(the "Option") to purchase from the Corporation shares of its Common Stock, par
value $.001 per share ("Option Shares"), at the price set forth on the signature
page hereto, upon and subject to the terms and conditions set forth below.
1. Option Subject to Acceptance of Agreement. The Option shall be null
and void unless the Optionee shall accept this Agreement by executing it in the
space provided below and returning such original execution copy to the
Corporation. Capitalized terms not otherwise defined herein shall have the
meanings specified in Section 4.2.
2. Time and Manner of Exercise of Option
2.1 Maximum Term of Option. In no event may the Option be exercised, in
whole or in part, after _____________, 2008, being ten years following the Grant
Date (the "Option Term").
2.2 Exercise of Option. (a) Except as otherwise provided by Sections
2.2(b) and 2.2(c) hereof, the Option shall vest and become exercisable in
accordance with the following schedule: 25% of the Option Shares shall vest and
become exercisable on the first anniversary of the Grant Date; 25% of the Option
Shares shall vest and become exercisable on the second anniversary of the Grant
Date; 25% of the Option Shares shall vest and become exercisable on the third
anniversary of the Grant Date; and the remaining 25% of the Option Shares shall
vest and become exercisable on the fourth anniversary of the Grant Date.
(b) All or any part of any Option, to the extent unexercised, shall
terminate immediately if the Optionee ceases to be an employee of the
Corporation or (if applicable) ceases to be a consultant to the Corporation,
except that the Optionee shall have until the end of three (3) months
(extendible in the sole discretion of the Committee to the end of six (6)
months) following the date he or she ceases to be an employee of, or consultant
to, the Corporation to exercise any exercisable Option rights that he or she
could have exercised on the day on which such employment or service terminated;
provided, however, that such exercise must be accomplished prior to the
expiration of the Option Term. Notwithstanding the foregoing, if the Optionee
ceases to be an employee of, or a consultant to, the Corporation due to (i)
retirement on or after attaining the age of sixty-five (65) years (or such
earlier date as such person shall be permitted under the Corporation's
retirement plan), (ii) disability (as such term is defined in Section 422(c)(6)
of the Internal Revenue Code, the existence
<PAGE>
of which shall be conclusively determined by the Committee in its sole
discretion) or (iii) death, then the Optionee, or the Optionee's Legal
Representative, shall have the right to exercise the portion of the Option which
is then vested and exercisable at the time of such retirement, disability or
death, but, in each case, only to the extent that the portion of the Option
which is then exercisable is exercised (i) within three (3) months following the
Optionee's retirement (extendible in the discretion of the Committee to six (6)
months), (ii) within one (1) year following the Optionee's disability, or (iii)
within one (1) year following the Optionee's death, as the case may be;
provided, further, that such exercise must be accomplished prior to the
expiration of the Option Term. If the Optionee ceases to be an employee of, or
a consultant to, the Corporation because of the Optionee's violation of his or
her duties to the Corporation, the existence of such violation to be
conclusively determined by the Committee in its sole discretion, any unexercised
portion of the Option shall immediately terminate and the Optionee shall have no
right to exercise any unexercised portion of the Option he or she might have
exercised prior to the date he or she ceased to be an employee of, or a
consultant to, the Corporation. When the Optionee ceases to be an employee of,
or a consultant to, the Corporation, any portion of the Option held by the
Optionee which is not then exercisable shall immediately lapse and be canceled.
(c) Upon a Change in Control, the Option, to the extent outstanding and
not yet exercisable, shall become fully exercisable.
2.3 Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Corporation specifying the number of whole Option Shares to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the Corporation's satisfaction) either (i) in cash, (ii) by
delivery (either actual delivery or by attestation procedures established by the
Corporation) of previously owned whole shares of Common Stock (which the
Optionee has held for at lease six months prior to the delivery of such shares
or which the Optionee purchased on the open market and in each case for which
the Optionee has good title, free and clear of all liens and encumbrances)
having an aggregate Fair Market Value, determined as of the date of exercise,
equal to the aggregate purchase price payable pursuant to the Option by reason
of such exercise, (iii) in cash by a broker-dealer acceptable to the Corporation
to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a
combination of (i) and (ii), and (2) by executing such documents as the
Corporation may reasonably request. Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
2.4 Termination of Option. (a) In no event may the Option be exercised
after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2 at the expiration of the Option Term.
(b) In the event that rights to purchase all or a portion of the Option
Shares expire or are exercised, cancelled or forfeited, the Optionee shall, upon
the Corporation's request, promptly return this Agreement to the Corporation for
full or partial cancellation, as the case may be. Such cancellation shall be
effective regardless of whether the Optionee returns this Agreement. If the
Optionee continues to have rights to purchase Option Shares hereunder, the
Corporation shall, within
-2-
<PAGE>
10 days of the Optionee's delivery of this Agreement to the Corporation, either
(i) mark this Agreement to indicate the extent to which the Option has expired
or been exercised, cancelled or forfeited or (ii) issue to the Optionee a
substitute option agreement applicable to such rights, which agreement shall
otherwise be substantially similar to this Agreement in form and substance.
3. Additional Terms and Conditions of Option.
3.1 Nontransferability of Option. The Option may not be transferred by
the Optionee other than by will or the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the Corporation.
Except to the extent permitted by the foregoing sentence, during the Optionee's
lifetime the Option is exercisable only by the Optionee or the Optionee's Legal
Representative. Except to the extent permitted by the foregoing, this Agreement
shall not be assignable by the Optionee or the Optionee's Legal Representative.
3.2 Withholding Taxes. If the Corporation shall be required to withhold
any amounts by reason of federal, state or local tax laws, rules or regulations
in respect of the issuance of Option Shares pursuant to the exercise of the
Option, the Corporation shall be entitled to deduct and withhold such amounts
from any cash payments to be made to the Optionee. In any event, the Optionee
shall promptly pay to the Corporation, when requested by the Corporation,
sufficient funds to meet the requirements of such withholding, and the
Corporation shall be entitled to take such action and authorize such terms as it
may deem advisable in order to have such funds made available to the Corporation
from any funds or property due or to become due to the Optionee.
3.3 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Board without
an increase in the aggregate purchase price. If any adjustment would result in
a fractional security being subject to the Option, the Corporation shall pay the
Optionee, in connection with the first exercise of the Option occurring after
such adjustment, an amount in cash determined by multiplying (i) the fraction of
such security (rounded to the nearest hundredth) by (ii) the excess, if any, of
(A) the Fair Market Value on the exercise date over (B) the exercise price of
the Option. The decision of the Committee regarding any such adjustment shall
be final, binding and conclusive.
3.4 Required Registration and Consents. If at any time the Committee
shall determine, in its sole discretion, that (i) the listing, registration, or
qualification of the Option Shares upon any securities exchange or under any
state or federal law or (ii) the consent or approval of any governmental
regulatory body or (iii) obtaining an investment representation or other
undertaking from the Optionee is necessary or desirable as a condition of, or in
connection with, the exercise of the Option hereunder, the Option may not be
exercised in whole or in part unless and until such listing, registration,
qualification, consent, approval, representation or undertaking shall have been
effected or obtained free of any conditions not acceptable by the Committee.
3.5 Delivery of Certificates. Upon the exercise of the Option, in whole
or in part, the Corporation shall deliver or cause to be delivered one or more
certificates representing the number
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<PAGE>
of shares purchased against full payment therefor. The Corporation shall pay all
original issue or transfer taxes and all fees and expenses incident to such
delivery, except as otherwise provided in Section 3.2.
3.6 Option Confers No Rights as Stockholder. The Optionee shall not be
entitled to any privileges of ownership with respect to Option Shares unless
and until purchased and delivered upon the exercise of the Option, in whole or
in part, and the Optionee becomes a stockholder of record with respect to such
delivered shares; and the Optionee shall not be considered a stockholder of the
Corporation with respect to any such shares not so purchased and delivered.
3.7 Option Confers No Rights to Continued Employment or Consulting. In no
event shall the granting of the Option or its acceptance by the Optionee give or
be deemed to give the Optionee any right to continued employment by, or
continued status as a consultant to, the Corporation or any affiliate of the
Corporation.
3.8 Decisions of Board or Committee. The Board or the Committee shall
have the right to resolve all questions which may arise in connection with the
Option or its exercise. Any interpretation, determination or other action made
or taken by the Board or the Committee regarding this Agreement shall be final,
binding and conclusive.
3.9. Corporation to Reserve Shares. The Corporation shall at all times
prior to the expiration or termination of the Option reserve and keep available,
either in its treasury or out of its authorized and unissued shares of Common
Stock, the full number of shares subject to the Option from time to time.
4. Miscellaneous Provisions.
4.1. Designation as Nonqualified Stock Option. The Option is hereby
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. (a) As used herein, employment by the
Corporation shall include employment by an affiliate of the Corporation. In
addition, unless the context otherwise requests, references to the Corporation
include subsidiaries of the Corporation.
(b) As used herein, the following terms have the meanings set forth below:
"Board of Directors" or "Board" means the Board of Directors of the
Corporation as constituted at any time.
"Change in Control" shall be deemed to have occurred if (a) any
corporation, person or other entity (other than PLATINUM technology, inc.
("PLATINUM"), any majority-owned subsidiary of PLATINUM or any of their
respective subsidiaries, or an employee benefit plan (or related trust)
sponsored or maintained by PLATINUM or any of its subsidiaries), including
a "group" as defined in Section 13(d)(3) of the Securities Exchange
-4-
<PAGE>
Act of 1934, as amended, becomes the beneficial owner of stock representing
more than the greater of (i) twenty-five percent (25%) of the combined
Voting Power of PLATINUM's then outstanding securities or (ii) the
percentage of the combined Voting Power of PLATINUM's then outstanding
securities which equals (A) ten percent (10%) plus (B) the percentage of
the combined Voting Power of PLATINUM's outstanding securities held by such
corporation, person or entity on the Grant Date; (b)(i) the stockholders of
PLATINUM approve a definitive agreement to merge or consolidate PLATINUM
with or into another corporation other than a majority-owned subsidiary of
PLATINUM; or to sell or otherwise dispose of all or substantially all of
PLATINUM's assets, and (ii) the persons who were the members of the Board
of Directors of PLATINUM prior to such approval do not represent a majority
of the directors of the surviving, resulting or acquiring entity or the
parent thereof; (c) the stockholders of PLATINUM approve a plan of
liquidation of PLATINUM; or (d) within any period of 24 consecutive months,
persons who were members of the Board of Directors of PLATINUM immediately
prior to such 24-month period, together with any persons who were first
elected as directors (other than as a result of any settlement of a proxy
or consent solicitation contest or any action taken to avoid such a
contest) during such 24 month period by or upon the recommendation of
persons who were members of the Board of Directors of PLATINUM immediately
prior to such 24-month period and who constituted a majority of the Board
of Directors of PLATINUM at the time of such election, cease to constitute
a majority of the Board.
"Committee" means the Committee appointed by the Board to administer
this Agreement.
"Common Stock" means the common stock of the Corporation, par value
$.001 per share.
"Fair Market Value" on a specified date means (i) the closing (last
sale) price per share of a share of the Common Stock on such date (or, if
there is no sale on such date, then on the last previous day on which a
sale was reported) on the Nasdaq National Market or other national
securities market or exchange on which the Common Stock is then primarily
traded; or (ii) if shares of Common Stock are not so quoted or listed, then
the value of a share of Common Stock as determined by the Committee using
any reasonable method of valuation.
"Legal Representative" means an executor, administrator, legal
representative, guardian or similar person.
"Voting Power" means the voting power of any securities of the
Corporation then outstanding which are generally entitled to vote for the
election of directors of the Corporation.
4.3. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Corporation and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement.
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<PAGE>
4.4. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Corporation, to Mastering, Inc., 9201
E. Mountain View Road, Suite 200, Scottsdale, AZ 85258, Attention: Secretary,
and if to the Optionee, to the address of the Optionee in the records of the
Corporation. All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mails to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication sent to the
Corporation is not received during regular business hours, it shall be deemed to
be received on the next succeeding business day of the Corporation.
4.5. Acknowledgement. The parties acknowledge that this Agreement is
implementing the grant of the Option to the Optionee on the Grant Date. The
Optionee understands that the merger of PT Acquisition Corporation I ("PT Sub"),
a wholly-owned subsidiary of PLATINUM technology, inc. ("PLATINUM"), with and
into the Corporation on April 21, 1998 does not accelerate or otherwise affect
the vesting schedule set forth in Section 2.2(a). Pursuant to Section 5.19 of
the Agreement and Plan of Merger dated as of February 18, 1998, as amended (the
"Merger Agreement"), among PLATINUM, PT Sub and the Corporation, the Optionee
acknowledges that, effective as of April 21, 1998, the Option becomes an option
to purchase shares of common stock of PLATINUM on the terms set forth below.
4.6. Governing Law. This Agreement, the Option and all determinations
made and actions taken pursuant hereto and thereto, to the extent not
mandatorily governed by the laws of the United States or the Delaware General
Corporate Law, shall be governed by the laws of the State of Illinois and
construed in accordance therewith without giving effect to principles of
conflicts of laws.
4.7. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
MASTERING, INC.
By: __________________________________
Name:
Title:
OPTIONEE:
I. Terms of Original Grant
-----------------------
(a) Number of Original Option Shares:
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<PAGE>
(b) Original Issue Date:
(c) Original Option Price Per Share: $
II. Terms of Substitute Option to Purchase Shares of Common Stock of PLATINUM
-------------------------------------------------------------------------
(a) Number of current Option Shares:
(b) Current Option Price Per Share: $_______________
OPTIONEE ACKNOWLEDGMENT:
_______________________________
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<PAGE>
EXHIBIT 4.6
FORM OF
MASTERING, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made to be effective on ____________, between Mastering,
Inc., a Delaware corporation (the "Corporation"), and the undersigned
"Participant," an executive or independent contractor of the Corporation:
WITNESSETH:
WHEREAS, the Corporation has adopted the 1995 Executive Stock Option Plan
of Mastering, Inc. (the "Plan"), a copy of which is attached hereto as Exhibit A
and is hereby incorporated by reference with the same effect as if fully recited
herein;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Option. The Corporation hereby grants to Participant the
Option (this term, as well as all other capitalized terms used but not otherwise
defined herein shall have the meaning assigned in the Plan) to purchase all or
any part of the number of shares of Common Stock of the Corporation set forth on
the signature page hereto, on the terms and conditions set forth in the Plan and
herein, such number being subject to adjustment in accordance with the Plan (the
"Option Shares"). This Option shall be a non-qualified stock option within the
meaning of the Internal Revenue Code of 1986, as amended, or any successor
thereto.
2. Purchase Price. The purchase price of the Option Shares shall be set
forth on the signature page herein.
3. Term of Option. The term of the Option (the "Option Term") shall be
for a period of ten (10) years from the date hereof, subject to earlier
termination as provided in the Plan. In no event shall the Option be exercised
after the Option Term.
4. Exercise of Option. Within the foregoing limitation provided herein
and in the Plan, the Option shall vest and become exercisable as provided in
this Section 4. Participant shall exercise his or her right to purchase Option
Shares by delivering written notice to the Corporation in accordance with
Section 5 hereof, together with this Agreement and payment for such shares in
accordance with Section 11 of the Plan.
(a) Vesting of Option. The Option shall vest and become exercisable
in accordance with the following schedule: 25% of the Option Shares shall vest
on the first anniversary
<PAGE>
of the Issue Date; 25% of the Option Shares shall vest on the second anniversary
of the Issue Date; 25% of the Option Shares shall vest on the third anniversary
of the Issue Date; and the remaining 25% of the Option Shares shall vest on the
fourth Anniversary of the Issue Date.
(b) Required Registrations and Consents. If at any time the Committee
shall determine, in its sole discretion, that (i) the listing, registration, or
qualification of the Option Shares upon any securities exchange or under any
state or federal law or (ii) the consent or approval of any governmental
regulatory body, or (iii) obtaining an investment intent representation or other
undertaking from Participant is necessary or desirable as a condition of, or in
connection with, the exercise of the Option hereunder, the Option may not be
exercised in whole or in part unless and until such listing, registration,
qualification, consent, approval, representation or undertaking shall have been
effected or obtained free of any conditions not acceptable by the Committee.
5. Method of Exercising Option.
(a) Subject to the terms and conditions of this Agreement and the
Plan, the Option must be exercised by delivering notice to the Corporation,
which notice must be in writing and personally delivered or sent by registered
or certified mail, return receipt requested, to the Secretary of the Corporation
at Mastering, Inc., 9201 E. Mountain View Road, Suite 200, Scottsdale, AZ
85258 (or to the address of the principal office of the Corporation, if
different from the address set forth herein). The notice shall be deemed to be
made when the Corporation or its successor in interest receives the letter or
within three (3) days after it is sent by certified or registered mail, return
receipt requested, wherever is earlier.
(b) Such notice shall state the election to exercise the Option, the
number of Option Shares in respect of which it is being exercised, and the name
or names of the person or persons in whose name or names the stock certificates
are to be issued. The notice shall be signed by the person or persons
exercising the Option and shall include each such person's address for receipt
of a certificate representing such shares. The notice shall be accompanied by a
photocopy of this Agreement and payment of the full exercise price of such
shares.
(c) In the event the Option shall be exercised by any person or
persons other than Participant, such notice shall be accompanied by appropriate
proof, as determined by the Committee in its sole discretion, of the right of
such person or persons to exercise the Option.
(d) All shares that shall be purchased upon the exercise of the
Option, as provided herein, shall be fully paid and non-assessable.
6. Interpretation of Agreement and Plan.
(a) All determinations and interpretations made by the Committee,with
regard to any questions arising hereunder or under the Plan, shall be binding
and conclusive on Participant, and his or her successors, legal representatives
and beneficiaries.
(b) The Option is subject to:
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<PAGE>
(i) All terms and conditions of the Plan, as it is now or
hereafter in effect; and
(ii) All terms and conditions of this Agreement, now in effect or
hereafter amended at the sole discretion of the Committee,
which conform with the terms and conditions of the Plan, as
it is now or hereafter in effect.
(c) Participant acknowledges receipt of a copy of the Plan, represents
and warrants that he or she has read the Plan and agrees that the Option shall
be subject to all of the terms and conditions of this Agreement and the Plan, as
it is now or hereafter in effect.
7. Binding on Successors and Assigns; Non-transferability. This
Agreement shall bind and inure to the benefit of the successors and assigns of
the Corporation. Except to the extent permitted under the Plan, as amended from
time to time, the rights of Participant under this Agreement shall not be
transferable and all Options may be exercised during the lifetime of Participant
only by Participant.
8. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original and both of which constitute one and
the same document.
9. Assignment. This Agreement shall not be assignable by Participant or
his executors, administrators, successors and heirs.
10. Section Headings. The Section headings of this Agreement are inserted
for convenience of reference only and shall not be deemed to be a part thereof
or used in the construction or interpretation thereof.
11. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without violating the remainder of
this Agreement.
12. Governing Law. The validity, meaning and effect of this Agreement
shall be determined in accordance with the laws of the State of Delaware.
13. Final Agreement. This Agreement constitutes the final agreement of
the parties concerning the matters referred to herein and supersedes all prior
agreements and understandings.
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<PAGE>
IN WITNESS WHEREOF, the Corporation and Participant have executed this
Stock Option Agreement as of the day and year below written.
MASTERING, INC.
By: _______________________________
Its: _______________________________
PARTICIPANT:
Number of Option Shares:
Issue Date:
Option Price Per Share:
PARTICIPANT ACKNOWLEDGMENT:
______________________
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<PAGE>
EXHIBIT 4.7
FORM OF
MASTERING, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made to be effective on ____________, between Mastering,
Inc., a Delaware corporation (the "Corporation"), and the undersigned
"Participant," an employee or independent contractor of the Corporation:
WITNESSETH:
WHEREAS, the Corporation has adopted the 1995 Employee Stock Option Plan of
Mastering, Inc. (the "Plan"), a copy of which is attached hereto as Exhibit A
and is hereby incorporated by reference with the same effect as if fully recited
herein;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Option. The Corporation hereby grants to Participant the
Option (this term, as well as all other capitalized terms used but not otherwise
defined herein shall have the meaning assigned in the Plan) to purchase all or
any part of the number of shares of Common Stock of the Corporation set forth on
the signature page hereto, on the terms and conditions set forth in the Plan and
herein, such number being subject to adjustment in accordance with the Plan (the
"Option Shares"). This Option shall be a non-qualified stock option within the
meaning of the Internal Revenue Code of 1986, as amended, or any successor
thereto.
2. Purchase Price. The purchase price of the Option Shares shall be set
forth on the signature page herein.
3. Term of Option. The term of the Option (the "Option Term") shall be
for a period of ten (10) years from the date hereof, subject to earlier
termination as provided in the Plan. In no event shall the Option be exercised
after the Option Term.
4. Exercise of Option. Within the foregoing limitation provided herein
and in the Plan, the Option shall vest and become exercisable as provided in
this Section 4. Participant shall exercise his or her right to purchase Option
Shares by delivering written notice to the Corporation in accordance with
Section 5 hereof, together with this Agreement and payment for such shares in
accordance with Section 11 of the Plan.
(a) Vesting of Option. The Option shall vest and become exercisable
in accordance with the following schedule: 25% of the Option Shares shall vest
on the first anniversary
<PAGE>
of the Issue Date; 25% of the Option Shares shall vest on the second anniversary
of the Issue Date; 25% of the Option Shares shall vest on the third anniversary
of the Issue Date; and the remaining 25% of the Option Shares shall vest on the
fourth Anniversary of the Issue Date.
(b) Required Registrations and Consents. If at any time the Committee
shall determine, in its sole discretion, that (i) the listing, registration, or
qualification of the Option Shares upon any securities exchange or under any
state or federal law or (ii) the consent or approval of any governmental
regulatory body, or (iii) obtaining an investment intent representation or other
undertaking from Participant is necessary or desirable as a condition of, or in
connection with, the exercise of the Option hereunder, the Option may not be
exercised in whole or in part unless and until such listing, registration,
qualification, consent, approval, representation or undertaking shall have been
effected or obtained free of any conditions not acceptable by the Committee.
5. Method of Exercising Option.
(a) Subject to the terms and conditions of this Agreement and the
Plan, the Option must be exercised by delivering notice to the Corporation,
which notice must be in writing and personally delivered or sent by registered
or certified mail, return receipt requested, to the Secretary of the Corporation
at Mastering, Inc., 9201 E. Mountain View Road, Suite 200, Scottsdale, AZ
85258 (or to the address of the principal office of the Corporation, if
different from the address set forth herein). The notice shall be deemed to be
made when the Corporation or its successor in interest receives the letter or
within three (3) days after it is sent by certified or registered mail, return
receipt requested, wherever is earlier.
(b) Such notice shall state the election to exercise the Option, the
number of Option Shares in respect of which it is being exercised, and the name
or names of the person or persons in whose name or names the stock certificates
are to be issued. The notice shall be signed by the person or persons
exercising the Option and shall include each such person's address for receipt
of a certificate representing such shares. The notice shall be accompanied by a
photocopy of this Agreement and payment of the full exercise price of such
shares.
(c) In the event the Option shall be exercised by any person or
persons other than Participant, such notice shall be accompanied by appropriate
proof, as determined by the Committee in its sole discretion, of the right of
such person or persons to exercise the Option.
(d) All shares that shall be purchased upon the exercise of the
Option, as provided herein, shall be fully paid and non-assessable.
6. Interpretation of Agreement and Plan.
(a) All determinations and interpretations made by the Committee,with
regard to any questions arising hereunder or under the Plan, shall be binding
and conclusive on Participant, and his or her successors, legal representatives
and beneficiaries.
(b) The Option is subject to:
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<PAGE>
(i) All terms and conditions of the Plan, as it is now or
hereafter in effect; and
(ii) All terms and conditions of this Agreement, now in effect or
hereafter amended at the sole discretion of the Committee,
which conform with the terms and conditions of the Plan, as
it is now or hereafter in effect.
(c) Participant acknowledges receipt of a copy of the Plan, represents
and warrants that he or she has read the Plan and agrees that the Option shall
be subject to all of the terms and conditions of this Agreement and the Plan, as
it is now or hereafter in effect.
7. Binding on Successors and Assigns; Non-transferability. This
Agreement shall bind and inure to the benefit of the successors and assigns of
the Corporation. Except to the extent permitted under the Plan, as amended from
time to time, the rights of Participant under this Agreement shall not be
transferable and all Options may be exercised during the lifetime of Participant
only by Participant.
8. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original and both of which constitute one and
the same document.
9. Assignment. This Agreement shall not be assignable by Participant or
his executors, administrators, successors and heirs.
10. Section Headings. The Section headings of this Agreement are inserted
for convenience of reference only and shall not be deemed to be a part thereof
or used in the construction or interpretation thereof.
11. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without violating the remainder of
this Agreement.
12. Governing Law. The validity, meaning and effect of this Agreement
shall be determined in accordance with the laws of the State of Delaware.
13. Final Agreement. This Agreement constitutes the final agreement of
the parties concerning the matters referred to herein and supersedes all prior
agreements and understandings.
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<PAGE>
IN WITNESS WHEREOF, the Corporation and Participant have executed this
Stock Option Agreement as of the day and year below written.
MASTERING, INC.
By: _________________________________
Its: _________________________________
PARTICIPANT:
Number of Option Shares:
Issue Date:
Option Price Per Share:
PARTICIPANT ACKNOWLEDGMENT:
_____________________
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<PAGE>
Exhibit 4.8
LOGIC WORKS, INC.
1995 STOCK OPTION/STOCK ISSUANCE PLAN
-------------------------------------
(As Amended and Restated Through December 17, 1997)
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1995 Stock Option/Stock Issuance Plan is intended to promote the
interests of Logic Works, Inc., a Delaware corporation, by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to remain in the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into four separate equity programs:
(i) the Discretionary Option Grant Program under which eligible
persons may, at the discretion of the Plan Administrator, be granted
options to purchase shares of Common Stock,
(ii) the Salary Investment Option Grant Program under which eligible
employees may elect to have a portion of their base salary invested each
year in options to purchase shares of Common Stock,
(iii) the Stock Issuance Program under which eligible persons may, at
the discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a
bonus for services rendered the Corporation (or any Parent or Subsidiary),
and
(iv) the Automatic Option Grant Program under which Eligible
Directors shall automatically receive option grants at periodic intervals
to purchase shares of Common Stock.
B. The provisions of Articles One and Six shall apply to all equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.
<PAGE>
III. ADMINISTRATION OF THE PLAN
A. The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant, Salary Investment Option Grant and
Stock Issuance Programs with respect to Section 16 Insiders.
B. Administration of the Discretionary Option Grant, Salary Investment
Option Grant and Stock Issuance Programs with respect to all other persons
eligible to participate in those programs may, at the Board's discretion, be
vested in the Primary Committee or a Secondary Committee, or the Board may
retain the power to administer those programs with respect to such persons.
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
D. Each Plan Administrator shall, within the scope of its administrative
functions under the Plan, have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Discretionary Option Grant, Salary
Investment Option Grant and Stock Issuance Programs and to make such
determinations under, and issue such interpretations of, the provisions of such
programs and any outstanding options or stock issuances thereunder as it may
deem necessary or advisable. Decisions of the Plan Administrator within the
scope of its administrative functions under the Plan shall be final and binding
on all parties who have an interest in the Discretionary Option Grant, Salary
Investment Option Grant or Stock Issuance Program under its jurisdiction or any
option or stock issuance thereunder.
E. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.
F. Administration of the Automatic Option Grant Program shall be self-
executing in accordance with the terms of that program, and no Plan
Administrator shall exercise any discretionary functions with respect to option
grants made thereunder.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option Grant
and Stock Issuance Programs are as follows:
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<PAGE>
(i) Employees,
(ii) non-employee members of the Board or the board of directors of
any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary).
B. Only Employees shall be eligible to participate in the Salary
Investment Option Grant Program.
C. Each Plan Administrator shall, within the scope of its administrative
jurisdiction under the Plan, have full authority to determine, (i) with respect
to the option grants under the Discretionary Option Grant and Salary Investment
Option Grant Programs, which eligible persons are to receive option grants, the
time or times when such option grants are to be made, the number of shares to be
covered by each such grant, the status of the granted option as either an
Incentive Option or a Non-Statutory Option, the time or times at which each
option is to become exercisable, the vesting schedule (if any) applicable to the
option shares and the maximum term for which the option is to remain outstanding
and (ii) with respect to stock issuances under the Stock Issuance Program, which
eligible persons are to receive stock issuances, the time or times when such
issuances are to be made, the number of shares to be issued to each Participant,
the vesting schedule (if any) applicable to the issued shares and the
consideration to be paid by the Participant for such shares.
D. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Discretionary Option Grant and/or Salary
Investment Option Grant Program or to effect stock issuances in accordance with
the Stock Issuance Program.
E. The individuals eligible to participate in the Automatic Option Grant
Program shall be those individuals who first become non-employee Board members
after the Automatic Option Grant Program Effective Date, whether through
appointment by the Board or election by the Corporation's stockholders, and
those individuals who continue to serve as non-employee Board members after the
Automatic Option Grant Program Effective Date. A non-employee Board member who
has previously been in the employ of the Corporation (or any Parent or
Subsidiary) shall not be eligible to receive an option grant under the Automatic
Option Grant Program at the time he or she first becomes a non-employee Board
member, but such individual shall be eligible to receive periodic option grants
under the Automatic Option Grant Program upon his or her continued service as a
non-employee Board member at one or more Annual Stockholders Meetings.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan
-3-
<PAGE>
shall not exceed 4,933,630 shares. Such authorized share reserve is comprised of
(i) the number of shares which remained available for issuance, as of the Plan
Effective Date, under the Predecessor Plan as last approved by the Corporation's
stockholders, including the shares subject to the outstanding options
incorporated into the Plan and any other shares which would have been available
for future option grants under the Predecessor Plan, plus (ii) 1,284,860 shares
authorized by the Board prior to the Plan Effective Date and (iii) an additional
1,000,000 shares authorized by the Board, subject to stockholder approval.
B. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than 350,000 shares of Common Stock per calendar year.
C. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
(including any options incorporated from the Predecessor Plan) expire or
terminate for any reason prior to exercise in full or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan (including shares issued upon exercise of
options incorporated from the Predecessor Plan) and subsequently repurchased by
the Corporation, at the option exercise price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for subsequent issuance under the Plan and
shall accordingly be available for reissuance through one or more subsequent
option grants or direct stock issuances under the Plan. However, should the
exercise price of an option under the Plan (including any option incorporated
from the Predecessor Plan) be paid with shares of Common Stock or should shares
of Common Stock otherwise issuable under the Plan be withheld by the Corporation
in satisfaction of the withholding taxes incurred in connection with the
exercise of an option or the vesting of a stock issuance under the Plan, then
the number of shares of Common Stock available for issuance under the Plan shall
be reduced by the gross number of shares for which the option is exercised or
which vest under the stock issuance, and not by the net number of shares of
Common Stock issued to the holder of such option or stock issuance.
D. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities for which any one person may be
granted options, separately exercisable stock appreciation rights and direct
stock issuances per calendar year, (iii) the number and/or class of securities
for which automatic option grants are to be subsequently made per Eligible
Director under the Automatic Option Grant Program and (iv) the number and/or
class of securities and the exercise price per share in effect under each
outstanding option (including any option incorporated from the Predecessor Plan)
in order to prevent the dilution or enlargement of benefits thereunder. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
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I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than the Fair Market Value per share of
Common Stock on the option grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section I of Article Six
and the documents evidencing the option, be payable in one or more of the
forms specified below:
(i) cash or check made payable to the Corporation.
(ii) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or
(iii) to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable written instructions
to (a) a Corporation-designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased shares
plus all applicable Federal, state and local income and employment
taxes required to be withheld by the Corporation by reason of such
exercise and (b) the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete
the sale transaction.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at such
time or times, during such period and for such number of shares as shall be
determined by the Plan
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Administrator and set forth in the documents evidencing the option. However, no
option shall have a term in excess of ten (10) years measured from the option
grant date.
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise of any options
held by the Optionee at the time of cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option,
but no such option shall be exercisable after the expiration of the
option term.
(ii) Any option exercisable in whole or in part by the Optionee
at the time of death may be subsequently exercised by the personal
representative of the Optionee's estate or by the person or persons to
whom the option is transferred pursuant to the Optionee's will or in
accordance with the laws of descent and distribution.
(iii) During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number
of vested shares for which the option is exercisable on the date of
the Optionee's cessation of Service. Upon the expiration of the
applicable exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding
for any vested shares for which the option has not been exercised.
However, the option shall, immediately upon the Optionee's cessation
of Service, terminate and cease to be outstanding to the extent it is
not otherwise at that time exercisable for vested shares.
(iv) Should the Optionee's Service be terminated for Misconduct,
then all outstanding options held by the Optionee shall terminate
immediately and cease to be outstanding.
(v) In the event of an Involuntary Termination following a
Corporate Transaction,the provisions of Section III of this Article
Two shall govern the period for which the outstanding options are to
remain exercisable following the Optionee's cessation of Service and
shall supersede any provisions to the contrary in this Section.
2. The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option
remains outstanding, to:
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(i) extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service from the
period otherwise in effect for that option to such greater period of
time as the Plan Administrator shall deem appropriate, but in no event
beyond the expiration of the option term, and/or
(ii) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of
vested shares of Common Stock for which such option is exercisable at
the time of the Optionee's cessation of Service but also with respect
to one or more additional installments in which the Optionee would
have vested under the option had the Optionee continued in Service.
D. Stockholder Rights. The holder of an option shall have no stockholder
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the discretion to
grant options which are exercisable for unvested shares of Common Stock. Should
the Optionee cease Service while holding such unvested shares, the Corporation
shall have the right to repurchase, at the exercise price paid per share, any or
all of those unvested shares. The terms upon which such repurchase right shall
be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by
the Plan Administrator and set forth in the document evidencing such repurchase
right.
F. Limited Transferability of Options. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, a Non-Statutory Option
may, in connection with the Optionee's estate plan, be assigned in whole or in
part during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for the benefit of one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Six shall be applicable to Incentive Options. Options
which are specifically designated as Non-Statutory Options when issued under the
Plan shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
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B. Dollar Limitation. The aggregate Fair Market Value (determined as
of the respective date or dates of grant) of the shares of Common Stock for
which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for
the first time become exercisable as Incentive Options during any one (1)
calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or more such options
which become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such options as Incentive
Options shall be applied on the basis of the order in which such options
are granted.
C. 10% Stockholder. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not
be less than one hundred ten percent (110%) of the Fair Market Value per
share of Common Stock on the option grant date, and the option term shall
not exceed five (5) years measured from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each outstanding option
shall automatically accelerate so that each such option shall, immediately prior
to the effective date of the Corporate Transaction, become fully exercisable for
all of the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
However, an outstanding option shall not so accelerate if and to the extent: (i)
such option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation (or parent thereof) or to be replaced with
a comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof), (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the spread
existing on the unvested option shares at the time of the Corporate Transaction
and provides for subsequent payout in accordance with the same vesting schedule
applicable to such option or (iii) the acceleration of such option is subject to
other limitations imposed by the Plan Administrator at the time of the option
grant. The determination of option comparability under clause (i) above shall be
made by the Plan Administrator, and its determination shall be final, binding
and conclusive.
B. All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).
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D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan on both an aggregate and per
individual basis following the consummation of such Corporate Transaction and
(ii) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same.
E. Any options which are assumed or replaced in the Corporate Transaction
and do not otherwise accelerate at that time shall automatically accelerate (and
any of the Corporation's outstanding repurchase rights which do not otherwise
terminate at the time of the Corporate Transaction shall automatically terminate
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full) in the event the Optionee's Service should
subsequently terminate by reason of an Involuntary Termination within eighteen
(18) months following the effective date of such Corporate Transaction. Any
options so accelerated shall remain exercisable for fully-vested shares until
the earlier of (i) the expiration of the option term or (ii) the expiration of
the one (1)-year period measured from the effective date of the Involuntary
Termination.
F. Each outstanding option shall automatically accelerate (and any
outstanding repurchase rights shall automatically terminate and the shares of
Common Stock subject to those terminated rights shall immediately vest in full)
in the event the Optionee's Service should terminate by reason of an Involuntary
Termination within eighteen (18) months following the effective date of a Change
in Control. Any options so accelerated shall remain exercisable for fully-vested
shares until the earlier of (i) the expiration of the option term (ii) the
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination.
G. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.
H. The grant of options under the Discretionary Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time and
from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options
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under the Discretionary Option Grant Program (including outstanding options
incorporated from the Predecessor Plan) and to grant in substitution new options
covering the same or different number of shares of Common Stock but with an
exercise price per share based on the Fair Market Value per share of Common
Stock on the new option grant date.
V. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority to grant to
selected Optionees tandem stock appreciation rights and/or limited stock
appreciation rights.
B. The following terms shall govern the grant and exercise of tandem
stock appreciation rights:
(i) One or more Optionees may be granted the right, exercisable upon
such terms as the Plan Administrator may establish, to elect between the
exercise of the underlying option for shares of Common Stock and the
surrender of that option in exchange for a distribution from the
Corporation in an amount equal to the excess of (a) the Fair Market Value
(on the option surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (b) the aggregate exercise price payable for such
shares.
(ii) No such option surrender shall be effective unless it is
approved by the Plan Administrator. If the surrender is so approved, then
the distribution to which the Optionee shall be entitled may be made in
shares of Common Stock valued at Fair Market Value on the option surrender
date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
(iii) If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee
had under the surrendered option (or surrendered portion thereof) on the
option surrender date and may exercise such rights at any time prior to the
later of (a) five (5) business days after the receipt of the rejection
notice or (b) the last day on which the option is otherwise exercisable in
accordance with the terms of the documents evidencing such option, but in
no event may such rights be exercised more than ten (10) years after the
option grant date.
C. The following terms shall govern the grant and exercise of limited
stock appreciation rights:
(i) One or more Section 16 Insiders may be granted limited stock
appreciation rights with respect to their outstanding options.
(ii) Upon the occurrence of a Hostile Take-Over, each such individual
holding one or more options with such a limited stock appreciation right in
effect shall have the
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unconditional right (exercisable for a thirty (30)-day period following
such Hostile Take-Over) to surrender each such option to the Corporation,
to the extent the option is at the time exercisable for vested shares of
Common Stock. In return for the surrendered option, the Optionee shall
receive a cash distribution from the Corporation in an amount equal to the
excess of (a) the Take-Over Price of the shares of Common Stock which are
at the time vested under each surrendered option (or surrendered portion
thereof) over (b) the aggregate exercise price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
option surrender date.
(iii) Neither the approval of the Plan Administrator nor the consent
of the Board shall be required in connection with such option surrender and
cash distribution.
(iv) The balance of the option (if any) shall continue in full force
and effect in accordance with the documents evidencing such option.
ARTICLE THREE
SALARY INVESTMENT OPTION GRANT PROGRAM
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I. OPTION GRANTS
The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years (if any) for which the Salary Investment
Option Program is to be in effect and to select the Employees eligible to
participate in the Salary Investment Option Grant Program for those calendar
year or years. Each selected Employee who elects to participate in the Salary
Investment Option Grant Program must, prior to the start of each calendar year
of participation, file with the Plan Administrator (or its designate) an
irrevocable authorization directing the Corporation to reduce his or her base
salary for that calendar year by a designated multiple of one percent (1%).
However, the amount of such salary reduction must be not less than Five Thousand
Dollars ($5,000.00) and must not be more than the lesser of (i) twenty percent
(20%) of his or her rate of base salary for the calendar year or (ii) Twenty
Thousand Dollars ($20,000.00). Each individual who files a proper salary
reduction authorization shall automatically be granted an option under this
Salary Investment Option Grant Program on the first trading day in January of
the calendar year for which that salary reduction is to be in effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
that each such document shall comply with the terms specified below.
A. Exercise Price.
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1. The exercise price per share shall be thirty-three and one-third
percent (33-1/3%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock subject
to the option shall be determined pursuant to the following formula (rounded
down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the Optionee's base salary reduction for the
calendar year, and
B is the Fair Market Value per share of Common Stock on the option
grant date.
C. Exercise and Term of Options. The option shall become exercisable in
a series of twelve (12) successive equal monthly installments upon the
Optionee's completion of each calendar month of Service in the calendar year for
which the salary reduction is in effect. Each option shall have a maximum term
of ten (10) years measured from the option grant date.
D. Effect of Termination of Service. Should the Optionee cease Service
for any reason while holding one or more options under this Article Three, then
each such option shall remain exercisable, for any or all of the shares for
which the option is exercisable at the time of such cessation of Service, until
the earlier of (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the two (2)-year period measured from the date of such cessation
of Service. Should the Optionee die while holding one or more options under
this Article Three, then each such option may be exercised, for any or all of
the shares for which the option is exercisable at the time of the Optionee's
cessation of Service (less any shares subsequently purchased by the Optionee
prior to death), by the personal representative of the Optionee's estate or by
the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution. Such
right of exercise shall lapse, and the option shall terminate, upon the earlier
of (i) the expiration of the ten (10)-year option term or (ii) the two (2)-year
period measured from the date of the Optionee's cessation of Service. However,
the option shall, immediately upon the Optionee's cessation of Service for any
reason, terminate and cease to remain outstanding with respect to any and all
shares of Common Stock for which the option is not otherwise at that time
exercisable.
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III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction while the Optionee remains
in Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to such option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. Each such outstanding option
shall be assumed by the successor corporation (or parent thereof) in the
Corporate Transaction and shall remain exercisable for the fully-vested shares
until the earlier of (i) the expiration of the option term or (ii) the
expiration of the two (2)-year period measured from the date of Optionee's
cessation of Service.
B. In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall immediately become fully exercisable for all of the shares of
Common Stock at the time subject to such option and may be exercised for any or
all of such shares as fully-vested shares of Common Stock. The option shall
remain so exercisable until the earlier of (i) the expiration of the option term
or (ii) the expiration of the two (2)-year period measured from the date of
Optionee's cessation of Service.
C. The grant of options under the Salary Investment Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
III. REMAINING TERMS
The remaining terms of each option granted under the Salary Investment
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
ARTICLE FOUR
STOCK ISSUANCE PROGRAM
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I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.
A. Purchase Price.
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1. The purchase price per share shall be fixed by the Plan
Administrator, but shall not be less than the Fair Market Value per share
of Common Stock on the stock issuance date.
2. Subject to the provisions of Section I of Article Six shares of
Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any Parent or
Subsidiary).
B. Vesting Provisions.
1. Shares of Common Stock issued under the Stock Issuance Program
may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program, namely:
(i) the Service period to be completed by the Participant or
the performance objectives to be attained,
(ii) the number of installments in which the shares are to vest,
(iii) the interval or intervals (if any) which are to lapse
between installments, and
(iv) the effect which death, Permanent Disability or other event
designated by the Plan Administrator is to have upon the vesting
schedule,
shall be determined by the Plan Administrator and incorporated into
the Stock Issuance Agreement.
2. Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock
split, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the
same vesting requirements applicable
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to the Participant's unvested shares of Common Stock and (ii) such escrow
arrangements as the Plan Administrator shall deem appropriate.
3. The Participant shall have full stockholder rights with respect
to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares
is vested. Accordingly, the Participant shall have the right to vote such
shares and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be attained with respect
to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and
the Participant shall have no further stockholder rights with respect to
those shares. To the extent the surrendered shares were previously issued
to the Participant for consideration paid in cash or cash equivalent
(including the Participant's purchase-money indebtedness), the Corporation
shall repay to the Participant the cash consideration paid for the
surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to such
surrendered shares.
5. The Plan Administrator may in its discretion waive the surrender
and cancellation of one or more unvested shares of Common Stock (or other
assets attributable thereto) which would otherwise occur upon the cessation
of the Participant's Service or the non-completion of the vesting schedule
applicable to such shares. Such waiver shall result in the immediate
vesting of the Participant's interest in the shares of Common Stock as to
which the waiver applies. Such waiver may be effected at any time, whether
before or after the Participant's cessation of Service or the attainment or
non-attainment of the applicable performance objectives.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. All of the outstanding repurchase rights under the Stock Issuance
Program shall terminate automatically, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
of any Corporate Transaction, except to the extent (i) those repurchase rights
are assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction or (ii) such accelerated vesting is precluded by
other limitations imposed in the Stock Issuance Agreement.
B. Any repurchase rights that are assigned in the Corporate Transaction
shall automatically terminate, and all the shares of Common Stock subject to
those terminated rights shall immediately vest in full, in the event the
Participant's Service should subsequently terminate by reason of an Involuntary
Termination within eighteen (18) months following the effective date of such
Corporate Transaction.
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C. All of the outstanding repurchase rights under the Stock Issuance
Program shall terminate automatically, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
the Optionee's service should terminate by reason of an Involuntary Termination
within eighteen (18) months following the effective date of a Change in Control.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares vests
or may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.
ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
I. OPTION TERMS
A. Grant Dates. Option grants shall be made on the dates specified below:
1. Each Eligible Director who is first elected or appointed as a
non-employee Board member after the Automatic Option Grant Program
Effective Date shall automatically be granted, on the date of such initial
election or appointment, a Non-Statutory Option to purchase 25,000 shares
of Common Stock.
2. On the date of each Annual Stockholders Meeting, beginning with
the 1996 Annual Meeting, each individual who is to continue to serve as an
Eligible Director shall automatically be granted a Non-Statutory Option to
purchase an additional 2,500 shares of Common Stock, provided such
individual has served as a non-employee Board member for at least six (6)
months. There shall be no limit on the number of such 2,500-share option
grants any one Eligible Director may receive over his or her period of
Board service.
B. Exercise Price.
1. The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder
is utilized, payment of the exercise price for the purchased shares must be
made on the Exercise Date.
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C. Option Term. Each option shall have a term of ten (10) years measured
from the option grant date.
D. Exercise and Vesting of Options. Each option shall be immediately
exercisable for any or all of the option shares. However, any shares purchased
under the option shall be subject to repurchase by the Corporation, at the
exercise price paid per share, upon the Optionee's cessation of Board service
prior to vesting in those shares. Each initial grant shall vest, and the
Corporation's repurchase right shall lapse, in a series of four (4) equal and
successive annual installments over the Optionee's period of continued service
as a Board member, with the first such installment to vest upon the Optionee's
completion of one (1) year of Board service measured from the option grant date.
Each annual grant shall vest, and the Corporation's repurchase right shall
lapse, upon the Optionee's completion of one (1) year of Board service measured
from the option grant date.
E. Effect of Termination of Board Service. The following provisions shall
govern the exercise of any options held by the Optionee at the time the Optionee
ceases to serve as a Board member:
(i) Should the Optionee cease to serve as a Board member for any
reason (other than death or Permanent Disability), then the Optionee shall
have a six (6)-month period following the date of such cessation of Board
service in which to exercise each such option.
(ii) Should the Optionee die while the option is outstanding, then
the personal representative of the Optionee's estate or the person or
persons to whom the option is transferred pursuant to the Optionee's will
or in accordance with the laws of descent and distribution shall have a
twelve (12)-month period following the date of the Optionee's cessation of
Board service in which to exercise each such option.
(iii) During the limited post-service exercise period, the option may
not be exercised in the aggregate for more than the number of vested shares
for which the option is exercisable at the time of the Optionee's cessation
of Board service.
(iv) Should the Optionee cease to serve as a Board member by reason
of death or Permanent Disability, then all shares at the time subject to
the option shall immediately vest so that such option may, during the
twelve (12)-month exercise period following the Optionee's death or
Permanent Disability, be exercised for all or any portion of such shares as
fully-vested shares of Common Stock.
(v) In no event shall the option remain exercisable after the
expiration of the option term. Upon the expiration of the limited post-
service exercise period or (if earlier) upon the expiration of the option
term, the option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Board service,
terminate and cease to be outstanding to the extent it is not otherwise at
that time exercisable for vested shares.
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II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, the shares of Common Stock
at the time subject to each outstanding option but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to
the effective date of the Corporate Transaction, become fully exercisable for
all of the shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares as fully-vested shares of Common
Stock. Immediately following the consummation of the Corporate Transaction, each
automatic option grant shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).
B. In connection with any Change in Control, the shares of Common Stock
at the time subject to each outstanding option but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to
the effective date of the Change in Control, become fully exercisable for all of
the shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares as fully-vested shares of Common
Stock. Each such option shall remain exercisable for such fully-vested option
shares until the expiration or sooner termination of the option term or the
surrender of the option in connection with a Hostile Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each automatic
option held by him or her. The Optionee shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the shares of Common Stock at the time subject to the
surrendered option (whether or not the Optionee is otherwise at the time vested
in those shares) over (ii) the aggregate exercise price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation. No approval or consent of the Board
shall be required in connection with such option surrender and cash
distribution.
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same.
E. The grant of options under the Automatic Option Grant Program shall in
no way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
III. REMAINING TERMS
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The remaining terms of each option granted under the Automatic Option Grant
Program shall be the same as the terms in effect for option grants made under
the Discretionary Option Grant Program.
ARTICLE SIX
MISCELLANEOUS
I. FINANCING
A. The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Discretionary Option Grant Program or the
purchase price for shares issued under the Stock Issuance Program by delivering
a promissory note payable in one or more installments. The terms of any such
promissory note (including the interest rate and the terms of repayment) shall
be established by the Plan Administrator in its sole discretion. Promissory
notes may be authorized with or without security or collateral. In no event may
the maximum credit available to the Optionee or Participant exceed the sum of
(i) the aggregate option exercise price or purchase price payable for the
purchased shares plus (ii) any Federal, state and local income and employment
tax liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.
B. The Plan Administrator may, in its discretion, determine that one or
more such promissory notes shall be subject to forgiveness by the Corporation in
whole or in part upon such terms as the Plan Administrator may deem appropriate.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options or stock appreciation rights or upon the issuance or
vesting of such shares under the Plan shall be subject to the satisfaction of
all applicable Federal, state and local income and employment tax withholding
requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan (other than the options granted or the shares issued under the Automatic
Option Grant Program) with the right to use shares of Common Stock in
satisfaction of all or part of the Taxes incurred by such holders in connection
with the exercise of their options or the vesting of their shares. Such right
may be provided to any such holder in either or both of the following formats:
(i) Stock Withholding: The election to have the Corporation withhold,
from the shares of Common Stock otherwise issuable upon the exercise of
such Non-Statutory Option
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<PAGE>
or the vesting of such shares, a portion of those shares with an aggregate
Fair Market Value equal to the percentage of the Taxes (not to exceed one
hundred percent (100%)) designated by the holder.
(ii) Stock Delivery: The election to deliver to the Corporation, at
the time the Non-Statutory Option is exercised or the shares vest, one or
more shares of Common Stock previously acquired by such holder (other than
in connection with the option exercise or share vesting triggering the
Taxes) with an aggregate Fair Market Value equal to the percentage of the
Taxes (not to exceed one hundred percent (100%)) designated by the holder.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Discretionary Option Grant, Salary Investment Option Grant and
Stock Issuance Programs became effective immediately on the Plan Effective Date,
and options may be granted under the Discretionary Option Grant and the Salary
Investment Option Grant Programs from and after the Plan Effective Date. The
Automatic Option Grant Program became effective immediately on the Automatic
Option Grant Program Effective Date. On January 21, 1997, the Plan was amended
to (i) increase the number of shares of Common Stock available for issuance
under the Plan by 1,000,000 shares, (ii) eliminate the restriction that the
individuals who serve as Plan Administrator may not receive any discretionary
option grants or direct stock issuances from the Company while serving as Plan
Administrator or during the twelve month period preceding appointment as Plan
Administrator, (iii) require stockholder approval of future amendments to the
1995 Plan only to the extent necessary to satisfy applicable laws or
regulations, (iv) eliminate both the six month holding period requirement and
the ten business day "window" period requirement for the exercise of any stock
appreciation rights granted under the 1995 Plan and (v) allow the shares issued
under the 1995 Plan which are subsequently reacquired by the Company pursuant to
the Company's exercise of its repurchase rights to be added back to the share
reserve available for future issuance under the 1995 Plan. However, no options
granted under the Plan based on the share increase may be exercised, and no
shares shall be issued under the Plan, until the amendment to the Plan is
approved by the Corporation's stockholders at the 1997 Annual Stockholders
Meeting. On December 17, 1997, the Board amended the Plan to provide that a
secondary committee could be comprised of one (1) rather than two (2) or more
non-employee Board members.
B. The Plan shall serve as the successor to the Predecessor Plan, and no
further option grants shall be made under the Predecessor Plan after the Plan
Effective Date. All options outstanding under the Predecessor Plan on such date
shall, immediately upon approval of the Plan by the Corporations's stockholders,
be incorporated into the Plan and treated as outstanding options under the Plan.
However, each outstanding option so incorporated shall continue to be governed
solely by the terms of the documents evidencing such option, and no provision of
the Plan shall be deemed to affect or otherwise modify the rights or obligations
of the holders of such incorporated options with respect to their acquisition of
shares of Common Stock.
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<PAGE>
C. One or more provisions of the Plan, including (without limitation) the
option/vesting acceleration provisions of Article Two applicable to Corporate
Transactions and Changes in Control, may, in the Plan Administrator's
discretion, be extended to one or more options incorporated from the Predecessor
Plan which do not otherwise contain such provisions.
D. The Plan shall terminate upon the earliest of (i) June 30, 2005, (ii)
the date on which all shares available for issuance under the Plan shall have
been issued pursuant to the exercise of the options or the issuance of shares
(whether vested or unvested) under the Plan or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. Upon a clause
(i) termination, all options and unvested stock issuances outstanding on such
date shall thereafter continue to have force and effect in accordance with the
provisions of the documents evidencing such options or issuances.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, (i) no such amendment
or modification shall adversely affect the rights and obligations with respect
to options, stock appreciation rights or unvested stock issuances at the time
outstanding under the Plan unless the Optionee or the Participant consents to
such amendment or modification. In addition, certain amendments may require
stockholder approval pursuant to applicable laws and regulations.
B. Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant and Salary Investment Option Grant Programs and
shares of Common Stock may be issued under the Stock Issuance Program that are
in each instance in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under those programs
are held in escrow until there is obtained stockholder approval of an amendment
sufficiently increasing the number of shares of Common Stock available for
issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.
VI. REGULATORY APPROVALS
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<PAGE>
A. The implementation of the Plan, the granting of any option or stock
appreciation right under the Plan and the issuance of any shares of Common Stock
(i) upon the exercise of any option or stock appreciation right or (ii) under
the Stock Issuance Program shall be subject to the Corporation's procurement of
all approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options and stock appreciation rights granted under it and
the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining such person) or of the Optionee or
the Participant, which rights are hereby expressly reserved by each, to
terminate such person's Service at any time for any reason, with or without
cause.
APPENDIX
The following definitions shall be in effect under the Plan:
A. Automatic Option Grant Program shall mean the automatic option grant
program in effect under the Plan.
B. Automatic Option Grant Program Effective Date shall mean the date on
which the Underwriting Agreement is executed and the initial public offering
price of the Common Stock is established.
C. Board shall mean the Corporation's Board of Directors.
D. Change in Control shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to
accept, or
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<PAGE>
(ii) a change in the composition of the Board over a period of thirty-
six (36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been
elected or nominated for election as Board members during such period by at
least a majority of the Board members described in clause (A) who were
still in office at the time the Board approved such election or nomination.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
F. Common Stock shall mean the Corporation's common stock.
G. Corporate Transaction shall mean either of the following stockholder-
approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those immediately prior to such
transaction; or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation.
H. Corporation shall mean Logic Works, Inc., a Delaware corporation.
I. Discretionary Option Grant Program shall mean the discretionary option
grant program in effect under the Plan.
J. Eligible Director shall mean a non-employee Board member eligible to
participate in the Automatic Option Grant Program in accordance with the
eligibility provisions of Article One.
K. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
L. Exercise Date shall mean the date on which the Corporation shall have
received written notice of the option exercise.
M. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as such price is reported by
the National Association of Securities Dealers on the Nasdaq National
Market or any successor system. If there is no closing selling
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<PAGE>
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by
the Plan Administrator to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions on
such exchange. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any Stock
Exchange nor traded on the Nasdaq National Market, then the Fair Market
Value shall be determined by the Plan Administrator after taking into
account such factors as the Plan Administrator shall deem appropriate.
N. Hostile Take-Over shall mean the acquisition, directly or indirectly,
by any person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept.
O. Incentive Option shall mean an option which satisfies the requirements
of Code Section 422.
P. Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a change in
his or her position with the Corporation which materially reduces his or
her level of responsibility, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and any non-
discretionary and objective-standard incentive payment or bonus award) by
more than fifteen percent (15%) or (C) a relocation of such individual's
place of employment by more than fifty (50) miles, provided and only if
such change, reduction or relocation is effected by the Corporation without
the individual's consent.
Q. Misconduct shall mean the commission of any act of fraud, embezzlement
or dishonesty by the Optionee or Participant, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by such
person adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
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<PAGE>
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee, Participant or other person in the Service of the Corporation
(or any Parent or Subsidiary).
R. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
S. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
T. Optionee shall mean any person to whom an option is granted under the
Discretionary Option Grant, Automatic Option Grant or Salary Investment Option
Grant Program.
U. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Participant shall mean any person who is issued shares of Common Stock
under the Stock Issuance Program.
W. Permanent Disability or Permanently Disabled shall mean the inability
of the Optionee or the Participant to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more. However, solely for the purposes of the Automatic Option Grant Program,
Permanent Disability or Permanently Disabled shall mean the inability of the
non-employee Board member to perform his or her usual duties as a Board member
by reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more.
X. Plan shall mean the Corporation's 1995 Stock Option/Stock Issuance
Plan, as set forth in this document.
Y. Plan Administrator shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant, Salary Investment Option Grant and
Stock Issuance Programs with respect to one or more classes of eligible persons,
to the extent such entity is carrying out its administrative functions under
those programs with respect to the persons under its jurisdiction.
Z. Plan Effective Date shall mean July 26, 1995, the date on which the
Plan was adopted by the Board.
AA. Predecessor Plan shall mean the Corporation's 1993 Stock Option Plan.
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<PAGE>
AB. Primary Committee shall mean the committee of two (2) or more non-
employee Board members appointed by the Board to administer the Discretionary
Option Grant, Salary Investment Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders.
AC. Salary Investment Option Grant Program shall mean the salary
investment option grant program in effect under the Plan.
AD. Secondary Committee shall mean a committee of one (1) or more Board
members appointed by the Board to administer the Discretionary Option Grant,
Salary Investment Option Grant and Stock Issuance Programs with respect to
eligible persons other than Section 16 Insiders.
AE. Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
AF. Service shall mean the provision of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.
AG. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
AH. Stock Issuance Agreement shall mean the agreement entered into by the
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
AI. Stock Issuance Program shall mean the stock issuance program in effect
under the Plan.
AJ. Subsidiary shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
AK. Take-Over Price shall mean the greater of (i) the Fair Market Value
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.
AL. Taxes shall mean the Federal, state and local income and employment
tax liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of such holder's options
or the vesting of his or her shares.
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<PAGE>
AM. 10% Stockholder shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
AN. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
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<PAGE>
Exhibit 4.11
RULES OF THE LEARMONTH & BURCHETT MANAGEMENT SYSTEMS PLC
EXECUTIVE SHARE OPTION SCHEME
THE LEARMONTH & BURCHETT MANAGEMENT SYSTEMS
-------------------------------------------
EXECUTIVE SHARE OPTION SCHEME
-----------------------------
(incorporating amendments
made on 12th April 1995,
25th April 1995 and 1st May 1995)
<PAGE>
INDEX
-----
Page
----
Clause 1 Definitions and Interpretation
Part A
------
Clause 2 Grant of Type A Options
Clause 3 Limits
Clause 4 Exercise of Type A Options
Clause 5 Takeover, Reconstruction and Winding-up
Clause 6 Variation of Capital
Clause 7 Alterations
Clause 8 Miscellaneous
Part B
------
Clause 9 Grant of Type B Options
Clause 10 Limits
Clause 11 Exercise of Type B Options
Clause 12 Takeover, Reconstruction and Winding-up
Clause 13 Variation of Capital
Clause 14 Alterations
Clause 15 Miscellaneous
<PAGE>
THE LEARMONTH & BURCHETT MANAGEMENT SYSTEMS
EXECUTIVE SHARE OPTION SCHEME
-----------------------------
(as amended)
1. Definitions and Interpretations
-------------------------------
(1) In this Scheme, unless the context otherwise requires:-
(a) "Approved Scheme" means the Scheme (other than Part B) and any
other share option scheme of the Company (or any associated
company of the Company) approved by the Board of the Inland
Revenue under Schedule 9;
(b) "the Board" means the board of directors of the Company or a
committee appointed by such board of directors;
(c) "the Company" means Learmonth & Burchett Management Systems Plc
(registered in England No. 1294569);
(d) "Date of Listing" means the date on which permission was first
granted for the Shares to be traded on the Unlisted Securities
Market, being 24th June 1987;
(e) "Executive" means a full-time director or qualifying employee of
a Participating Company;
(f) "the Grant Date" in relation to an Option means the date on which
the option was or is treated as having been granted;
(g) "Option" means a right to acquire Shares under the Scheme;
(h) "Participant" means a person who has subsisting rights under an
Option or the personal representatives of a person who had such
subsisting rights immediately prior to his death;
(i) "Participating Company" means the Company and any Subsidiary to
which the Board has resolved that the Scheme shall for the time
being extend;
(j) "Relevant Securities Market" means the Unlisted Securities Market
and/or such other stock exchange or securities market on which
the ordinary shares of the Company are then listed, quoted or
dealt in;
(k) "Schedule 9" means Schedule 9 to the Income and Corporation Taxes
Act 1988;
(l) "the Scheme" means the Learmonth & Burchett Management Systems
Executive Share Option Scheme as herein set out but subject to
any alterations or additions made under Clauses 7 and 14 below;
<PAGE>
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(m) "Share" means an ordinary share in the capital of the Company
which satisfies the conditions set out in paragraphs 10 to 14
inclusive of Schedule 9;
(n) "Subsidiary" means a body corporate which is a subsidiary of the
Company within the meaning of section 736 of the Companies Act
1985 and is under the control of the Company within the meaning
of section 840 of the Income and Corporation Taxes Act 1988;
(o) "Super-Option" means an option to subscribe for Shares which may
not, except in limited circumstances, be exercised within five
years of the Grant Date and which is except in limited
circumstances subject to exercise conditions requiring either top
quarter financial performance by the Company or performance which
the Board considers is equivalent thereto;
(p) "Type A Option" means an Option which is designated as such and
is granted subject to the provisions of Part A of the Scheme;
(q) "Type B Option" means an Option which is designated as such and
is granted subject to the provisions of Part B of the Scheme;
and expressions not otherwise defined herein have the same meanings as
they have in Schedule 9.
(2) For the purposes of sub-clause (1)(e) above:-
(a) a person shall be treated as a full-time director of a company if
he is obliged to devote the whole or substantially the whole of
his working time, and in any event not less than 25 hours a week
to the performance of the duties of his office or employment with
the company (or with the company and any other company which is a
Participating Company);
(b) a qualifying employee, in relation go a company, is an employee
of the company (other than one who is a director of a
Participating Company) who is required, under the terms of his
employment, to work for the company (or for the company and any
other company which is a Participating Company) for the whole or
substantially the whole of his working time and in any event for
at least 20 hours a week.
(3) Any reference in the Scheme to any enactment includes a reference to
that enactment as from time to time modified extended or re-enacted.
(4) Any reference in the Scheme to the masculine includes a reference to
the feminine.
<PAGE>
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Part A
------
(As approved by the Inland Revenue under Schedule 9)
<PAGE>
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2. Grant of Type A Options
-----------------------
(1) Subject to sub-clauses (2), (6) and (7) below and to Clause 3 below,
the board may at any time prior to the tenth anniversary of the Date
of Listing grant Type A Options to any Executive.
(2) Type A Options may only be granted under the Scheme:
(a) within the period of 6 weeks beginning with the dealing day next
following the date on which the Company announces its annual,
half yearly or quarterly results; or
(b) within the period of 3 weeks immediately following the
extraordinary general meeting of the shareholders of the Company
held on 12th April 1995.
(3) There shall be no monetary consideration for the grant of any Type A
Option, and accordingly any such Option shall be granted by way of a
certificate executed by the Company as a deed.
(4) Each such certificate shall:-
(a) specify the number of Shares which are subject to the Option;
(b) specify the price at which any Share may be acquired by the
exercise of the Option which shall be determined by the Board but
shall be not less than the higher of:
(i) the market value (within the meaning of Part VIII of the
Taxation of Chargeable Gains Act 1992) of a Share as agreed
in advance for the purposes of the Scheme with the Shares
Valuation Division of the Inland Revenue, on the Grant Date;
and
(ii) the nominal value of a Share;
(c) specify the Grant Date;
(d) specify that it is a Type A Option;
(e) specify whether the Option is granted as a Super-Option;
(f) specify the objective exercise conditions applicable to the
Option;
(g) refer the Executive to all the provisions of the Scheme; and
(h) subject as aforesaid, be given in such form and manner as the
Board may from time to time prescribe.
<PAGE>
-5-
(5) No conditions imposed on the grant of any Type A Option pursuant to
sub-clause (4) above may subsequently be waived or varied unless the
board, in its reasonable opinion, considers that such conditions are
no longer a fair measure of the performance of the Participant and
only then in a manner of which, in the reasonable opinion of the
Board;
(a) would cause such conditions to be a fairer measure of the
performance of the Participant; and
(b) would not cause such conditions to be more difficult to satisfy
than the original conditions were when the same were first set.
(6) No Type A Option shall be granted if such grant would contravene the
rules of any Relevant Securities Market or the provisions of any
applicable regulation or enactment.
(7) No Type A Option shall be granted to an Executive;
(a) who is not eligible to participate in the Scheme by virtue of
paragraph 8 of Schedule 9; or
(b) who is within the 2 years (or, in the case of Super-Options, the
4 years) immediately preceding the date on which he is bound to
retire in accordance with the terms of his contract of
employment.
(8) Subject to Clause 4(4) below, a Type A Option granted under the Scheme
to any person shall not be capable of being transferred by him and
shall lapse forthwith if it is so transferred or if he is adjudicated
bankrupt.
(9) Any Executive to whom a Type A Option is granted may by notice in
writing to the Secretary of the company within 14 days of the Grant
Date disclaim in whole or in part his rights thereunder, and in such
case the Option shall pro tanto be deemed never to have been granted
hereunder. No consideration shall be payable for any such disclaimer.
3. Limits
------
(1) The number of Shares over which Type A Options may be granted under
the Scheme (other than Super-Options) on any day shall not, when added
to the aggregate of:-
(a) the number of Shares which immediately prior to that day shall
have been or remained to be issued on the exercise of Options
granted under the Scheme (other than Super-Options) in the period
of 10 years immediately preceding that day; and
<PAGE>
-6-
(b) the number of Shares which immediately prior to that day shall
have been or remained to be issued on the exercise of options
(other than Super-Options) granted in that period under any other
executive share option scheme adopted by the Company;
exceed such number as represents 5 per cent of the ordinary share
capital of the Company in issue immediately prior to that day.
(2) The number of Shares over which Type A Options may be granted under
the Scheme on any day shall not, when added to the aggregate of:-
(a) the number of Shares which immediately prior to that day shall
have been or remained to be issued on the exercise of Options
granted under the Scheme (including Type B Options) in the period
of 10 years immediately preceding that day, and
(b) the number of Shares which immediately prior to that day shall
have been or remained to be issued on the exercise of options
granted in that period, or shall have been issued in that period
otherwise than on the exercise of options, under any other
employees' share scheme adopted by the Company;
exceed such number as represents 10 per cent of the ordinary share
capital of the Company in issue immediately prior to that day.
(3) The aggregate number of Shares over which Options may be granted under
the Scheme from and including 12th April 1995 shall not exceed
5,000,000 (subject to any adjustments pursuant to clause 6(2)(e)).
(4) No Type A Option shall be granted under the Scheme to any person on
any day if such grant would have the result that the aggregate market
value of Shares the subject of all Options granted to that person
under the Scheme, when added to the aggregate market value of Shares
the subject of any other options granted to that person under any
other share option scheme (other than an SAYE scheme) of the Company,
in each case within the 10 years preceding that date, and including
(for the avoidance of doubt) any Shares the subject of options which
have lapsed (for whatever reason), but excluding any Shares the
subject of options which:
(i) have been exercised; or
(ii) are or were Super-Options;
would exceed an amount equal to four times his relevant annual
emoluments as at that day.
<PAGE>
-7-
(5) No Type A Option shall be granted as a Super-Option under the Scheme
to any person if such grant would have the result that the aggregate
market value of Shares the subject of all Options granted to that
person under the Scheme case when added to the market value of any
Shares put under option under any other share option scheme (other
than an SAYE scheme) of the Company, in each within the ten years
preceding that day, and, including (for the avoidance of doubt) any
Shares the subject of options which have lapsed (for whatever reason),
would exceed an amount equal to eight times his relevant annual
emoluments as at that day.
(6) For the purposes of sub-clauses (1), (2), (4) and (5) above, no
account shall be taken of any Shares issued or remaining issuable
pursuant to options which were granted under any share option scheme
of the Company prior to the Date of Listing or of any options to be
satisfied by the transfer of existing Shares.
(7) Notwithstanding sub-clauses (4) and (5) above, no person shall be
granted Type A Options under the Scheme which would, at the time they
are granted, cause the aggregate market value of the Shares which he
may acquire in pursuance of options granted under the Scheme (other
than Type B Options) or under any other Approved Scheme (and not
exercised) to exceed or further exceed the highest of:-
(a) (Pounds)100,000;
(b) subject to sub-clause (9) below, four times the amount of the
relevant emoluments for the current or preceding year of
assessment (whichever of those years gives the greater amount);
and
(c) the maximum amount for the time being permitted under Schedule 9.
(8) For the purpose of sub-clauses (4) to (7) above:-
(a) relevant emoluments are such of the emoluments of the office or
employment by virtue of which the person in question is eligible
to participate in the Scheme and of any other office or
employment held by him with the Company and any other
Participating Company as are liable to be paid under deduction of
tax pursuant to section 203 of the Taxes Act (pay-as you-earn),
after deducting from them amounts included by virtue of Chapter
II of Part V of the Taxes Act 1988;
(b) relevant annual emoluments of any person as at any day are the
higher of such relevant emoluments as would be payable to him in
respect of a full year's service (calculated at the rate at which
relevant emoluments are then payable to him) and the relevant
emoluments paid to him in the period of 12 months immediately
preceding that day; and
<PAGE>
-8-
(c) the market value of Shares shall be calculated as at the time
when the option relating to those Shares was granted or, in a
case where an agreement relating to them has been made under
paragraph 29 of Schedule 9, such earlier time or times as may be
provided in the agreement.
(9) In the event that an Executive does not at any time have any relevant
emoluments for the preceding year of assessment, sub-clause (7) above
shall apply at that time with the following paragraph substituted for
paragraph (b):-
"(b) four times the amount of the relevant emoluments for the period
of twelve months beginning with the first day during the current
year of assessment in respect of which there are relevant
emoluments."
4. Exercise of Type A Options
--------------------------
(1) The exercise of any Type A Option shall be effected by a notice which
shall:-
(a) specify the number of Shares in respect of which the Option is
exercised in accordance with sub-clause (2) below, and
(b) be accompanied by payment to the Company of an amount equal to
the price at which the number of Shares so specified may be
acquired by the exercise of the Option, and
(c) unless the Board otherwise permits, be accompanied by the
certificate issued in respect of the Option, and
(d) subject as aforesaid, be given in such form and manner as the
Board may from time to time prescribe.
1. Rule 4(2) shall be amended in respect of Options granted after the date
when the Board of Inland Revenue approves this amendment so that it reads
as follows:
"(2) Subject to sub-clauses (4) and (7) below and to Clause 5 below, a
notice exercising a Type A Option may not be given before the vesting
date(s) specified in the certificate issued in respect of the Option."
exercising a Type A Option may not be given unless the objective
exercise conditions relating to that Option have been satisfied.
(4) (a) If any Participant ceases to be an Executive by reason of:
(i) injury;
<PAGE>
-9-
(ii) disability;
(iii) redundancy (within the meaning of the Employment
Protection (Consolidation) Act 1978); or
(iv) retirement;
the Participant shall, subject always to sub-clause (3), be
entitled to exercise a percentage of each Type A Option then held
by him calculated as follows:
(i) where the cessation occurs within 2 years of the Grant Date,
nil;
(ii) where the cessation occurs thereafter, 40 per cent, plus an
additional 5 per cent for each 3 months which has elapsed
between the second anniversary of the Grant Date and the
date of such cessation,
provided that any notice exercising a Type A Option in such
circumstances must (if at all) be given within 6 months of his
ceasing to be an Executive, or if later, 42 months after the
Grant Date (in the case of a Type A Option granted other than as
a Super-Option) and 66 months after the Grant Date (in the case
of a Type A Option granted as a Super-Option) and all other Type
A Options then held by him shall lapse.
(4) (b) If any Participant ceases to be an Executive for any reason other
than one of those set out in sub-clause 4(a) above, all Type A
Options then held by him shall lapse, except insofar as the Board
(in its absolute discretion) shall approve otherwise. If the
Board does give such approval, then subject always to sub-clause
(3), the Participant shall be entitled to exercise such of his
Type A Options as the Board shall have approved, provided that
any notice exercising a Type A option in such circumstances must
(if at all) be given within 6 months of his ceasing to be an
Executive, or if later, 42 months after the Grant Date (in the
case of a Type A Option granted other than as a Super-Option) and
66 months after the Grant Date (in the case of a Type A Option
granted as a Super-option).
(5) A Participant shall not be treated for the purposes of sub-clause (4)
above as ceasing to be an Executive until he ceases to be a full-time
director or qualifying employee of the Company or any Subsidiary, and
a Participant (being a woman) who ceases to be an Executive by reason
of pregnancy or confinement and who exercises her right to return to
work under section 45 of the Employment Protection (Consolidation) Act
1978 (or any similar right under the law governing her
<PAGE>
-10-
employment contract) before exercising an option under the Scheme
shall be treated for those purposes as not having ceased to be an
Executive.
(6) Notwithstanding any other provision of the Scheme, a notice exercising
a Type A option granted under the Scheme may not be given later than
10 years after the Grant Date.
(7) A Participant shall not be eligible to give a notice exercising a Type
A option under the Scheme at any time:-
(a) unless, subject to sub-clause (4) above, he is at that time an
Executive, and
(b) if he is not at that time eligible to participate in the Scheme
by virtue of paragraph 8 of Schedule 9.
(8) Subject to sub-clause (10) below, within 30 days after a notice
exercising a Type A Option under the Scheme has been received by the
Company the Board on behalf of the Company shall allot to the
Participant or procure the transfer to him of the number of Shares
specified in the notice.
(9) As soon as reasonably practicable after allotting any Shares under the
Scheme, the Board on behalf of the Company shall:-
(a) issue to the participant a definitive share certificate in
respect of the Shares so allotted,
(b) apply for such Shares to be admitted to listing, quotation or
dealing (as the case may be) on any Relevant Securities Market,
and
(c) if the Option remains partially unexercised, either amend the
certificate issued to the Participant pursuant to Clause 2(4)
above so as to indicate the number of Shares in respect of which
the Option may still be exercised, or issue to him a new
certificate which shall contain all the information which would
have been contained in such an amended certificate.
(10) All Shares allotted or transferred pursuant to the exercise of a Type
A Option shall:-
(a) rank pari passu in all respects with the Shares for the time
being in issue (save, in the case of allotted shares, as regards
any rights attaching to such Shares by reference to a record date
prior to the date of such exercise), and
(b) satisfy the requirements of paragraphs 10 to 14 of Schedule 9.
<PAGE>
-11-
5. Takeover, Reconstruction and Winding-up
---------------------------------------
(1) If any person obtains control Of the Company (within the meaning of
section 840 of the Income and Corporation Taxes Act 1988) as a result
of making an Offer to acquire Shares, the Board shall within 7 days of
becoming aware thereof notify every Participant thereof and, subject
to sub-clauses (4) and (6) of Clause 4 above, a notice exercising an
option granted under the Scheme may be given within one month (or such
longer period as the Board may permit) of such notification.
(2) For the purposes of sub-clause (1) above, a person shall be deemed to
have obtained control of the Company if he and others acting in
concert with him have together obtained control of it.
(3) If any person becomes bound or entitled to acquire Shares under
sections 428 to 43OF of the Companies Act 1985, or if under section
425 of that Act the court sanctions a compromise or arrangement
proposed for the purposes of or in connection with a scheme for the
reconstruction of the Company or its amalgamation with any other
company or companies, or if the Company passes a resolution for
voluntary winding up or if an order is made for the compulsory winding
up of the Company, the Board shall forthwith notify every Participant
thereof and, in relation to any Type A Option granted under the
Scheme:-
(a) subject to sub-clauses (4) and (6) of Clause 4 above, a notice
exercising the Option may be given within one month of such
notification, but
(b) if no such notice is given within that period, the Option shall
(notwithstanding any other provision of the Scheme) lapse on the
expiration thereof.
(4) If any company ("the acquiring company"):-
(a) obtains control of the Company as a result of making -
(i) a general offer to acquire the whole of the issued ordinary
share capital of the Company which is made on a condition
such that if it is satisfied the person making the offer
will have control of the Company, or
(ii) a general offer to acquire all the shares in the Company
which are of the same class as the shares which may be
acquired by the exercise of Type A Options granted under the
Scheme, or
(b) obtains control of the Company in pursuance of a compromise or
arrangement sanctioned by the court under Section 425 of the
Companies Act 1985, or
<PAGE>
-12-
(c) becomes bound or entitled to acquire shares in the Company under
Sections 428 to 43OF of that Act,
any Participant may at any time within the appropriate period (which
expression shall be construed in accordance with paragraph 15 of
Schedule 9), by agreement with the acquiring company, release any Type
A Option granted under the Scheme which has not lapsed ("the old
option") in consideration of the grant to him of an option ("the new
option") which is equivalent to the old option but relates to shares
in a different company falling within paragraph (b) or (c) of
paragraph 10 of Schedule 9.
(5) The new option shall not be regarded for the purposes of sub-clause
(4) above as equivalent to the old option unless the conditions set
out in paragraph 15(3) of Schedule 9 are satisfied, but so that the
provisions of this Scheme shall for this purpose be construed as if:-
(a) the new option were an option granted under the Scheme at the same
time as the old option;
(b) the references to "the Company", "the Board" and "Shares" in
Clauses 4(1), 4(8), 4(9), 4(11), 5, 6 and 8(1) were references to
the different company mentioned in sub-clause (4) above, the
Board of the different company, and an ordinary share in the
capital of the different company respectively.
(6) In the event that any acquiring company obtains control of the
Company, or becomes bound or entitled to acquire shares in the
Company, in circumstances falling within sub-clauses 5(4)(a) to (c)
above:
(a) sub-clause 4(2) as set out herein shall cease to apply to any
Type A Option then held by a Participant and shall be replaced as
follows:
"Without prejudice to Clause 5 but subject always to sub-
clauses 4(4) and 4(7), a Type A Option may be exercised in
part as follows:
(i) as to 40 per cent, at any time after the second
anniversary of the Grant Date; and
(ii) as to a further 5 per cent, at the end of each quarter
following the second anniversary of the Grant Date to
the intent that the Type A Option shall be exerciseable
in full on the fifth anniversary of the Grant Date"
<PAGE>
-13-
or at such other times and/or in such other proportions as
the Board (acting fairly and reasonably) may determine; and
(b) sub-clause 4(3) shall cease to apply.
6. Variation of Capital
--------------------
(1) In the event of any increase or variation of the share capital of the
Company (whenever effected) by way of capitalisation or rights issue,
or sub-division, consolidation or reduction, the Board may make such
adjustments as it considers appropriate under sub-clause (2) below.
(2) An adjustment made under this sub-clause shall be to one or more of
the following:-
(a) the number of Shares in respect of which any Type A Option
granted under the Scheme may be exercised;
(b) the price at which Shares may be acquired by the exercise of any
such option;
(c) subject to sub-clause (5) below, any other term of any such
Option;
(d) where any such Option has been exercised but no Shares have been
allotted or transferred pursuant to such exercise, the number of
Shares which may be so allotted or transferred and the price at
which they may be acquired; or
(e) the maximum aggregate number of Shares over which Options may be
granted pursuant to Clause 3(3).
(3) Except in the case of a capitalisation issue, no adjustment under sub-
clause (2) above shall be made without the prior confirmation in
writing by the auditors for the time being of the Company that it is
in their opinion fair and reasonable.
(4) Art adjustment under sub-clause (2) above may have the effect of
reducing the price at which each Share may be acquired by the exercise
of a Type A Option to less than the nominal value of such Share, but
only if and to the extent that the Board shall be authorised by the
members of the Company to capitalise from the reserves of the Company
a sum equal to the amount by which the nominal value of each Share in
respect of which the Option is exercised and which is to be allotted
pursuant to such exercise exceeds the price at which the same may be
subscribed for and to apply such sum in paying up such amount on such
Share; and so that on exercise of any Option in respect of
<PAGE>
-14-
which such a reduction shall have been made the Board shall capitalise
such sum (if any) and apply the same in paying up such amount as
aforesaid.
(5) No adjustment shall be made under paragraph (c) of sub-clause (2)
above without the prior approval of the Inland Revenue.
(6) As soon as reasonably practicable after making any adjustment under
sub-clause (2) above, the Board shall give notice in writing thereof
to any Participant affected thereby.
7. Alterations
-----------
(1) Subject to sub-clauses (2) and (4) below, the Board may at any time
alter or add to all or any of the provisions of the Scheme (other than
Part B), or the terms of any Type A Option granted under it, in any
respect (having regard to the fact that, if such an alteration or
addition is made at a time when the Scheme is approved by the Inland
Revenue under Schedule 9, the approval will not thereafter have effect
unless the Inland Revenue have approved the alteration or addition).
(2) No alteration or addition shall be made under sub-clause (1) above to
the provisions of Clauses 1, 2(1), 2(2), 2(3), 2(4)(b), 2(5), 3, 4(2)
4(3), 4(4), 4(5), 4(6), 4(10), 5, 6(1), 6(2), 6(3) and 6(5) above, or
of this Clause, without the prior approval by ordinary resolution of
the members of the Company in general meeting.
(3) Sub-clause (2) above shall not apply to any alteration or addition
which:-
(a) is necessary or desirable in order to obtain or maintain Inland
Revenue approval of the Scheme under Schedule 9 or any other
enactment, or to comply with or take account of the provisions of
any proposed or existing legislation, or to take account of the
occurrence of any of the events mentioned in Clause 5 above, or
to obtain or maintain favourable taxation treatment of any
Participating Company or any Participant under the laws of any
relevant jurisdiction, and
(b) does not affect the basic principles of the Scheme.
(4) No alteration or addition to any of the provisions of the Scheme may
materially affect any Option granted prior to the date on which such
amendment takes effect.
<PAGE>
-15-
8. Miscellaneous
-------------
(1) The Company shall at all times keep available such number of
authorised but unissued Shares as the Board may consider sufficient
for the purposes of the Scheme.
(2) The rights and obligations of any individual under the terms of his
office or employment with the Company or a Subsidiary shall not be
affected by his participation in the Scheme or any right which he may
have to participate therein and an individual who participates therein
shall waive any and all rights to compensation or damages in
consequence of the termination of his office or employment for any
reason whatsoever insofar as those rights arise or may arise from his
ceasing to have rights under or be entitled to exercise any option
under the Scheme as a result of such termination.
(3) The Board may from time to time vary such rules and regulations not
inconsistent herewith and establish such procedures and trusts and
trust Companies for administration and implementation of the Scheme as
it thinks fit, and in the event of any dispute or disagreement as to
the interpretation of the Scheme, or of any such rule, regulation or
procedure, or as to any question or right arising from or related to
the Scheme, the decision of the Board shall be final and binding upon
all persons.
(4) In any matter in which they are required to act under the Scheme, the
auditors of the Company shall be deemed to be acting as experts and
not as arbitrators and the Arbitration Acts 1950 to 1979 shall not
apply hereto.
(5) It is hereby certified that the grant of any option under the Scheme
shall not constitute a transaction forming part of a larger
transaction or series of transactions in respect of which the amount
or value, or aggregate amount or value, of the consideration exceeds
(Pounds)30,000.
(6) Any notice or other communication under or in connection with the
Scheme may be given by personal delivery or by sending the same by
post, in the case of a company to its registered office, and in the
case of an individual to his last known address, or, where he is a
director or employee of the Company or a Subsidiary, either to his
last known address or to the address of the place of business at which
he performs the whole or substantially the whole of the duties of his
office or employment, and where a notice or other communication is
given by first-class post, it shall be deemed to have been received 48
hours after it was put into the post properly addressed and stamped.
<PAGE>
-16-
PART B
------
(No Inland Revenue Approval under Schedule 9)
<PAGE>
-17-
9. Grant of Type B Options
-----------------------
(1) Subject to sub-clauses (2), (6) and (7) below and to Clause 10 below,
the Board may at any time prior to the tenth anniversary of the Date
of Listing grant Type B Options to any Executive.
(2) Type B options may only be granted under the Scheme:
(a) within the period of 6 weeks beginning with the dealing day next
following the date on which the Company announces its annual,
half yearly or quarterly results; or
(b) within the period of 3 weeks immediately following the date of
the extraordinary general meeting of the shareholders of the
Company held on the 12th April 1995.
(3) There shall be no monetary consideration for the grant of any Type B
Option under the Scheme, and accordingly any such Option shall be
granted by way of a certificate executed by the Company as a deed.
(4) Each such certificate shall:-
(a) specify the number of Shares which are subject to the Option;
(b) specify the price at which any Share may be acquired by the
exercise of the Option which shall be determined by the Board but
shall be not less than the higher of:
(i) the market value (within the meaning of Part VIII of the
Taxation of Chargeable Gains Act 1992) of a Share, on the
Grant Date; and
(ii) the nominal value of a Share;
(c) specify the Grant Date;
(d) specify that it is a Type B option;
(e) specify whether the Option is granted as a Super-Option;
(f) specify the objective exercise conditions applicable to the
Option;
(g) refer the Executive to all the provisions of the Scheme; and
(h) subject as aforesaid, be given in such form and manner as the
Board may from time to time prescribe.
<PAGE>
-18-
(5) No conditions imposed on the grant of any Type B Option pursuant to
sub-clause (4) above may subsequently be varied or waived unless the
Board, in its reasonable opinion, considers that such conditions are
no longer a fair measure of the performance of the Participant and
only then in a manner which, in the reasonable opinion of the Board:
(a) would cause such conditions to be a fairer measure of the
performance of the Participant; and
(b) would not cause such conditions to be more difficult to satisfy
than the original conditions were when the same were first set.
(6) No Type B Option shall be granted if such grant would contravene the
rules of any Relevant Securities Market or the provisions of any
applicable regulation or enactment.
(7) No Type B Option shall be granted to an Executive who is within the 2
years (or in the case of Super-Options, the 4 years) immediately
preceding the date on which he is bound to retire in accordance with
the terms of his contract of employment.
(8) Subject to Clause 11(4) below, a Type B Option granted under the
Scheme to any person shall not be capable of being transferred by him
and shall lapse forthwith if it is so transferred or if he is
adjudicated bankrupt.
(9) Any Executive to whom a Type B Option is granted may by notice in
writing to the Secretary of the Company within 14 days of the Grant
Date disclaim in whole or in part his rights thereunder, and in such
cast the Option shall pro tanto be deemed never to have been granted
hereunder. No consideration shall be payable for any such disclaimer.
10. Limits
------
(1) The number of Shares over which Type B Options may be granted under
the Scheme (other than Super-Options) on any day shall not, when added
to the aggregate of:-
(a) the number of Shares which immediately prior to that day shall
have been or remained to be issued on the exercise of Options
granted under the Scheme (other than Super-Options) in the period
of 10 years immediately preceding that day, and
(b) the number of Shares which immediately prior to that day shall
have been or remained to be issued on the exercise of options
(other than Super-Options) granted in that period under any other
executive share option scheme adopted by the Company;
<PAGE>
-19-
exceed such number as represents 5 per cent of the ordinary share
capital of the Company in issue immediately prior to that day.
(2) The number of Shares over which Type B Options may be granted under
the Scheme on any day shall not, when added to the aggregate of:-
(a) the number of Shares which immediately prior to that day shall
have been or remained to be issued on the exercise of Options
granted under the Scheme (including Type A Options) in the period
of 10 years immediately preceding that day, and
(b) the number of Shares which immediately prior to that day shall
have been or remained to be issued on the exercise of options
granted in that period, or shall have been issued in that period
otherwise than on the exercise of options, under any other
employees' share scheme adopted by the Company;
exceed such number as represents 10 per cent of the ordinary share
capital of the Company in issue immediately prior to that day.
(3) The aggregate number of Shares ________ __________ Options may be
granted under the Scheme from and including 12th April 1995 shall not
exceed 5,000,000 (subject to any adjustments pursuant to clause
13(2)(e)).
(4) No Type B Option shall be granted under the Scheme to any person on
any day if such grant would have the result that the aggregate market
value of Shares the subject of all Options granted to that person
under the Scheme, when added to the aggregate market value of Shares
the subject of any other options granted to that person under any
other share option scheme (other than an SAYE scheme) of the Company,
in each case within the 10 years preceding that date, and including
(for the avoidance of doubt) any Shares the subject of options which
have lapsed (for whatever reason), but excluding any Shares the
subject of options which:
(i) have been exercised; or
(ii) are or were Super-Options,
would exceed an amount equal to four times his relevant annual
emoluments as at that day.
(5) No Type B Option shall be granted as a Super-Option under the Scheme
to any person if such grant would have the result that the aggregate
market value of Shares the subject of all Options granted to that
person under the Scheme when aggregated with the market value of any
Shares put under option under any other
<PAGE>
-20-
share option scheme (other than an SAYE scheme) of the Company, in
each case within the ten years preceding that day and including (for
the avoidance of doubt) any Shares the subject of options which have
lapsed (for whatever reason), would exceed an amount equal to eight
times his relevant annual emoluments as at that day.
(6) For the purposes of sub-clauses (1), (2), (4) and (5) above, no
account shall be taken of any Shares issued or remaining issuable
pursuant to options which were granted under any share option scheme
of the Company prior to the Date of Listing or of any options to be
satisfied by the transfer of existing Shares.
(7) For the purpose of sub-clauses (4) and (5) above:-
(a) relevant annual emoluments of any person as at any day are the
higher of such relevant emoluments (as defined in sub-paragraph
(b) below) as would be payable to him in respect of a full year's
service (calculated at the rate at which relevant emoluments are
then payable to him) and the relevant emoluments paid to him in
the period of 12 months immediately preceding that day;
(b) relevant emoluments are such of the emoluments of the office or
employment by virtue of which the person in question is eligible
to participate in the Scheme and of any other office or
employment held by him with the Company and any other
Participating Company as are liable to be paid under deduction of
tax pursuant to section 203 of the Taxes Act (pay-as-you-earn),
after deducting from them amounts included by virtue of Chapter
II of Part V of the Taxes Act 1998; and
(c) the market value of Shares shall be calculated as at the time
when the option relating to those Shares was granted or, in a
case where an agreement relating to them has been made under
paragraph 29 of Schedule 9, such earlier time or times as may be
provided in the agreement.
(8) In the event that an Executive is not chargeable to tax under Case I
of Schedule E, sub-clause (7) shall apply with the following paragraph
substituted for paragraph (a):
"(a) relevant annual emoluments are such of the emoluments of
the office or employment by virtue of which the person in
question is eligible to participate in the Scheme and of any
other office or employment held by him with the Company and
any other Participating Company, excluding the value of any
benefits and after deducting any pension contributions made
by that person, and calculated in respect of a full year's
service and by reference to the rate then payable to him;
and"
<PAGE>
-21-
(9) No Type B Option shall be granted under the Scheme to any person who
is a resident of the United States of America ("US") if, following
such grant, the aggregate exercise price of all outstanding options
held by Participants who are residents of the US, plus the aggregate
purchase price of Shares issued in the 12 months preceding such grant
upon exercise of options held by Participants who are U.S. residents,
exceeds the limits set forth in paragraph (b)(5) of Rule 701 under the
U.S. Securities Act of 1933, as amended (the "Act"). In determining
the foregoing calculation, options granted and Shares issued to U.S.
residents for which the Board has determined that there is available
an exemption from registration under the Act other than Rule 701,
shall not be counted.
11. Exercise of Type B Options
--------------------------
(1) The exercise of any Type B Option shall be effected by a notice which
shall:-
(a) specify the number of Shares in respect of which the Option is
exercised in accordance with sub-clause (2) below, and
(b) be accompanied by payment to the Company of an amount equal to
the price at which the number of Shares so specified may be
acquired by the exercise of the Option, and
(c) unless the Board otherwise permits, be accompanied by the
certificate issued in respect of the Option, and
(d) subject as aforesaid, be given in such form and manner as the
Board may from time to time prescribe.
3. Rule 11(2) shall be amended in respect of any Options granted on or after
April 12, 1995 to read as follows:
"(2) Subject to sub-clauses (4) and (7) below and to Clause 12 below, a
notice exercising a Type B Option may not be given before the vesting
date(s) specified in the certificate issued in respect of the Option."
exercising a Type B Option may not be given unless the objective
exercise conditions relating to that Option have been satisfied.
(4) If any Participant ceases to be an Executive, all Type B Options then
held by him shall lapse, except insofar as the Board (in its absolute
discretion) shall approve otherwise. If the Board does give such
approval, then subject always to Sub-Clause (3), the Participant shall
be entitled to exercise such of his Type B Options as the Board shall
have approved, provided that:
<PAGE>
-22-
(a) any notice exercising a Type B Option in such circumstances must
(if at all) be given within 6 months of his ceasing to be an
Executive, or if later, 42 months after the Grant Date (in the
case of a Type B Option granted other than as a Super-Option) and
66 months after the Grant Date (in the case of a Type B Option
granted as a Super-Option); and
(b) any such exercise shall be subject to such other conditions (if
any) as may be imposed by the Board.
(5) A Participant shall not be treated for the purposes of sub-clause (4)
above as ceasing to be an Executive until he ceases to be a full-time
director or qualifying employee of the Company or any Subsidiary, and
a Participant (being a woman) who ceases to be an Executive by reason
of pregnancy or confinement and who:
(a) exercises her right to return to work under section 45 of the
Employment Protection (Consolidation) Act 1978 (or any similar
right under the law governing her employment contract); or
(b) otherwise returns to work in circumstances approved for this
purpose by the Board;
before exercising an Option under the Scheme shall be treated for
those purposes as not having ceased to be an Executive.
(6) Notwithstanding any other provision of the Scheme, a notice exercising
a Type B Option granted under the Scheme may not be given later than
10 years after the Grant Date.
(7) A Participant shall not be eligible to give a notice exercising a Type B
option under the Scheme at any time unless, subject to sub-clause (4)
above, he is at that time an Executive.
(8) Subject to sub-clause (10) below, within 30 days after a notice
exercising an Option under the Scheme has been received by the Company
the Board on behalf of the Company shall allot to the Participant or
procure the transfer to him of the number of Shares specified in the
notice.
(9) As soon as reasonably practicable after allotting any Shares under the
Scheme, the Board on behalf of the Company shall:-
(a) issue to the participant a definitive share certificate in
respect of the Shares so allotted,
(b) apply for such Shares to be admitted to listing, quotation or
dealing (as the case may be) on any Relevant Securities Market,
and
<PAGE>
-23-
(c) if the Option remits partially unexercised, either amend the
certificate issued to the Participant pursuant to Clause 9(4)
above so as to indicate the number of Shares in respect of which
the option may still be exercised, or issue to him a new
certificate which shall contain all the information which would
have been contained in such an amended certificate.
(10) All Shares allotted or transferred pursuant to the exercise of Type B
Options shall rank pari passu in all respects with the Shares for the
time being in issue (save, in the case of allotted shares, as regards
any rights attaching to such Shares by reference to a record date
prior to the date of such exercise).
12. Takeover, Reconstruction and Winding-up
---------------------------------------
6. Rule 12(1) is amended to read in full as follows:
(1) In the event of a Change in Control, all outstanding Type B Options
shall become immediately exercisable in full. For the purposes of this
plan, a "Change in Control" shall mean any of the following:
(a) any Person or "group" (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934), other than the Company or
any of its Affiliates, becomes a beneficial owner (within the meaning of
Rule 13d-3 as promulgated under the U.S. Securities Exchange Act of 1934),
directly or indirectly, of securities representing thirty percent (30%) or
more of the total number of votes that may be case for the election of
directors of the Company;
(b) there occurs any sale of all or substantially all of the assets of the
Company;
(c) within eighteen months after a tender offer or exchange offer for
voting securities of the Company (other than by the Company) individuals
who were directors of the Company immediately prior thereto shall cease to
constitute a majority of the Board;
(d) proxies soliciting voting securities of the Company by persons other
than the Company or its Board and within eighteen months thereafter
individuals who were directors of the Company immediately prior to such
transaction cease to constitute a majority of the Board;
(e) any Person or "group", other than the Company or any of its
Affiliates, obtains control of the Company in pursuance of a compromise or
arrangement sanctioned by the court under Section 425 of the Companies Act
1985; or
(f) any Person or "group", other than the Company or any of its
Affiliates, acquires all or the major part of the undertaking of the
Company pursuant to a reorganization under Section 110 of the Insolvency
Act of 1986.
(g) "Change in Control" shall not include a change in legal domicile or
any sale, reorganization, compromise or arrangement or other transaction
which the Board determines in its discretion acting in good faith to be
effected in order to change the legal domicile of the Company or the
holding company of the Company's group of companies and which leaves
control of the Company substantially unaffected or control of the holding
company in the same hands as control of the Company prior to such
transaction.
<PAGE>
-24-
For the purposes of this sub-clause 12(2) a new option shall be
treated as equivalent if:
7. A new Rule 12(2) is hereby added reading in full as follows:
(2) If a Participant ceases to be an employee or director following a
"Change in Control (as defined above), and if the Company's ordinary shares
or ADSs are, following such change in control, traded on a major stock
exchange or inter-dealer quotation system in the United States or
elsewhere, any Options that were exercisable immediately before such
cessation will continue to be exercisable for the full period during which
they could be exercised in the absence of such cessation, except in the
case of a sale of all or substantially all of the assets of the Company. In
the event of the sale of all or substantially all of the assets of the
Company, all outstanding Type B Options shall remain exercisable for a
period of six months following such sale, or for such shorter period (but
in no event less than 30 days), as may be provided in any arrangement for
the liquidation of the Company.
body corporate ("the Acquiring Company"), any Participant may at any time
during the period of six months following the date of the Change in Control
by agreement with the Acquiring Company release any Type B Option granted
under the Scheme which has not lapsed ("the Old Option") in consideration
of the grant to him of an option ("the New Option") which is equivalent (as
defined below) to the Old Option but relates to shares in the Acquiring
Company.
For the purposes of this sub-clause 12(3), the New Option shall be regarded
as equivalent to the Old Option if the date of grant is deemed to be the
same date as the Date of Grant of the Old Option; and (save as provided in
the Rules and save for the number and description of the shares subject to
the New Option) the other rights and terms attaching to the New Option are
as nearly as practicable the same as those attaching to the Old Option.
If the Option Holder does not release or exercise his Old Option pursuant
to the provisions of this Rule 12 then all Old Options held by him shall
lapse.
With effect from the date on which an Option Holder releases the Old Option
in consideration of the grant to him of the New Option, Rules
11(1)(8)(9)(10), 12, 13 and 15(1) shall, in relation to the New Option, be
construed for the purposes of that New Option as if references directly or
indirectly to "the Company", "the Board" and "Shares" were references to
the Acquiring Company, the board of directors of the Acquiring Company and
shares in the capital of the Acquiring Company.
If, in accordance with this sub-clause, an Old Option is released and a New
Option granted, the New Option shall not be exercisable by virtue of the
Change in Control but shall be exercisable from the date on which the Old
Option would otherwise have become exercisable in accordance with these
Rules if there had been no Change in Control until the day when the Old
Option would otherwise have lapsed in accordance with these Rules if there
had been no Change in Control.
(4) The Board shall as soon as practicable after becoming aware of a
Change in Control notify all Participants of the Change in Control and of
any offer made or likely to be made by the Acquiring Company under sub-
clause (3) above or otherwise.
<PAGE>
-25-
13. Variation of Capital
--------------------
(1) In the event of any increase or variation of the share capital of the
Company (whenever effected) by way of capitalisation or rights issue,
or subdivision, consolidation or reduction, the Board may make such
adjustments as it considers appropriate under sub-clause (2) below.
(2) An adjustment made under this sub-clause shall be to one or more of
the follows:-
(a) the number of Shares in respect of which any Type B Option
granted under the Scheme may be exercised;
(b) the price at which Shares may be acquired by the exercise of any
such Option;
(c) subject to sub-clause (5) below, any other term of any such
Option;
(d) where any such Option has been exercised but no Shares have been
allotted or transferred pursuant to such exercise, the number of
Shares which may be so allotted or transferred and the price at
which they may be acquired; or
(e) the aggregate number of Shares over which Options may be granted
pursuant to Clause 10(3).
(3) Except in the case of a capitalisation issue, no adjustment under sub-
clause (2) above shall be made without the prior confirmation in
writing by the auditors for the time being of the Company that it is
in their opinion fair and reasonable.
(4) An adjustment under sub-clause (2) above may have the effect of
reducing the price at which each Share may be acquired by the exercise
of a Type B Option to less than the nominal value of such Share, but
only if and to the extent that the Board shall be authorised by the
members of the Company to capitalise from the reserves of the Company
a sum equal to the amount by which the nominal value of each Share in
respect of which the Option is exercised and which is to be allotted
pursuant to such exercise exceeds the price at which the same may be
subscribed for and to apply such sum in paying up such amount on such
Share; and so that on exercise of any Option in respect of which such
a reduction shall have been made the Board shall capitalise such sum
(if any) and apply the same in paying up such amount as aforesaid.
(5) As soon as reasonably practicable after making any adjustment under
sub-clause (2) above, the Board shall give notice in writing thereof
to any Participant affected thereby.
<PAGE>
-26-
14. Alterations
-----------
(1) Subject to sub-clause (2) and (3) below, the Board may at any time
alter or add to all or any of the provisions of this Part B, the
Scheme, or the terms of any Type B Option granted under it, in any
respect.
(2) No alteration or addition (other than an alteration or addition which
would, if made in respect of Part A of the Scheme, fall within clause
7(3) above) shall be made under sub-clause (1) above to the provisions
of Clauses 9(1), 9(2), 9(3), 9(4)(b), 9(5), 10, 11(2), 11(3), 11(4),
11(5), 11(6), 12, 13(1), 13(2), 13(3) and 13(5) above, or of this
Clause, without the prior approval by ordinary resolution of the
members of the Company in general meeting.
(3) No alteration or addition to the disadvantage of any Participant shall
be made under sub-clause (1) above unless:-
(a) the Board shall have invited every such Participant to give an
indication as to whether or not he approves the alteration or
addition; and
(b) the alteration or addition is approved by a majority of those
Participants who have given such an indication.
(4) As soon as reasonably practicable after making any alteration or
addition under sub-clause (1) above, the Board shall give notice in
writing thereof to any Participant affected thereby.
15. Miscellaneous
-------------
(1) The Company shall at all times keep available such number of
authorised but unissued Shares as the Board may consider sufficient
for the purposes of the Scheme.
(2) The rights and obligations of any individual under the terms of his
office or employment with the Company or a Subsidiary shall not be
affected by his participation in the Scheme or any right which he may
have to participate therein and an individual who participates therein
shall waive any and all rights to compensation or damages in
consequence of the termination of his office or employment for any
reason whatsoever insofar as those rights arise or may arise from his
ceasing to have rights under or be entitled to exercise any option
under the Scheme as a result of such termination.
(3) The Board may from time to time vary such rules and regulations not
inconsistent herewith and establish such procedures and trusts and
trust companies for administration and implementation of the Scheme as
it thinks fit, and in the event of any dispute or disagreement as to
the interpretation of the Scheme, or of any such rule, regulation or
procedure, or as to
<PAGE>
-27-
any question or right arising from or related to the Scheme, the
decision of the Board shall be final and binding upon all persons.
(4) In any matter in which they are required to act under the Scheme, the
auditors of the Company shall be deemed to be acting as experts and
not as arbitrators and the Arbitration Acts 1950 to 1979 shall not
apply hereto.
(5) It is hereby certified that the grant of any option under the Scheme
shall not constitute a transaction forming part of a larger
transaction or series of transactions in respect of which the amount
or value, or aggregate amount or value, of the consideration exceeds
(Pounds)30,000.
(6) Any notice or other communication under or in connection with the
Scheme may be given by personal delivery or by sending the same by
post, in the case of a company to its registered office, and in the
case of an individual to his last known address, or, where he is a
director or employee of the Company or a Subsidiary, either to his
last known address or to the address of the place of business at which
he performs the whole or substantially the whole of the duties of his
office or employment, and where a notice or other communication is
given by first-class post, it shall be deemed to have been received 48
hours after it was put into the post properly addressed and stamped.
<PAGE>
Exhibit 4.12
LEARMONTH BURCHETT MANAGEMENT SYSTEMS PLC
1996 Equity Incentive Plan
1. PURPOSE
The purpose of this Equity Incentive Plan (the "Plan") is to advance the
interests of Learmonth & Burchett Management Systems Plc (the "Company") by
enhancing its ability to attract and retain employees who are in a position to
make significant contributions to the success of the Company and its
subsidiaries through ownership of the Company's ordinary shares or American
Depositary Shares ("ADSs" and, collectively, "Shares").
The Plan is intended to accomplish these goals by enabling the Company to
grant awards in the form of Options ("Awards"), as more fully described below.
2. ADMINISTRATION
The Plan will be administered by a Committee (the "Committee") of the Board
of Directors of the Company (the "Board") which shall consist of at least two
directors. Each of the Committee members shall be a "Non-employee Director"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). A majority of the members of the Committee shall
constitute a quorum, and all determinations of the Committee shall be made by a
majority of its members. Any determination of the Committee under the Plan may
be made without notice or meeting of the Committee by a writing signed by a
majority of the Committee members.
The Committee will have authority, not inconsistent with the express
provisions of the Plan and in addition to other authority granted under the
Plan, to (a) grant Awards at such time or times as it may choose (subject to
Section 3); (b) determine the size of each Award, including the number of Shares
subject to the Award; (c) determine the type or types of each Award (subject to
Section 9); (d) determine the terms and conditions of each Award; (e) waive
compliance by a Participant (as defined below) with any obligations to be
performed by the Participant under an Award and waive any term or condition of
an Award (subject to Section 9); (f) amend or cancel an existing Award in whole
or in part (and if an Award is canceled, grant another Award in its place on
such terms as the Committee shall specify), or settle any Award by paying the
cash value of the Shares otherwise issuable, except that the Committee may not,
without the consent of the holder of an Award, take any action under this clause
with respect to such Award if such action would adversely affect the rights of
such holder; (g) prescribe the form or forms of instruments that are required or
deemed appropriate under the Plan, including any written notices and elections
required of Participants, and change such forms from time to time; (h) adopt,
amend and rescind rules and regulations for the administration of the Plan
(subject to Section 9); and (i) interpret the Plan and decide any questions and
settle all controversies and disputes that may arise in connection
<PAGE>
with the Plan. Such determinations and actions of the Committee, and all other
determinations and actions of the Committee made or taken under authority
granted by any provision of the Plan, will be conclusive and will bind all
parties. Nothing in this paragraph shall be construed as limiting the power of
the Committee to make adjustments under Section 8.6.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective on the date on which it is approved by the
shareholders of the Company. Grant of Awards under the Plan may be made prior
to that date (but after board adoption of the Plan), subject to such approval of
the Plan.
No Award of an incentive stock option may be granted under the Plan after
ten years from the date of shareholder approval but Awards previously granted
may extend beyond that date. Furthermore, no Award may be granted under the
Plan at a time when such grant would be prohibited by any applicable
legislation, rules or regulations or by any code adopted by the Company
governing dealings in Company shares or by United Kingdom insider dealing
legislation.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 8.6 below, the aggregate
number of Shares reserved and available for Awards made under the Plan shall be
2,500,000 shares plus that number of Shares as may become available by reason of
forfeiture of options outstanding as of August 2, 1996 under the Company's
Executive Share Option Scheme. If any Award requiring exercise by the
Participant for delivery of Shares terminates without having been exercised in
full, the number of Shares as to which such Award was not exercised will be
available for future grants.
Shares delivered under the Plan will be authorized but unissued Shares. No
fractional shares will be delivered under the Plan.
The Committee may grant Awards exercisable for ordinary shares or ADSs as
it may determine. Each ADS is equivalent to two (2) ordinary shares. Where an
Award is exercisable for ADSs, references in the Plan to "Shares" shall refer to
ADSs, except that any reference to a number of Shares shall refer to Ordinary
Shares. The Committee may grant Awards to Participants who are residents of the
United States of America only for ADSs.
5. ELIGIBILITY AND PARTICIPATION
Those eligible to receive Awards under the Plan ("Participants") will be
persons currently or formerly in the employ of the Company or any of its
subsidiaries ("Employees") and members of their families (except without
limitation non-Employee (non-Executive) directors of the Company or a subsidiary
of the Company) who, in the opinion of the Committee, made a significant
contribution to the success of the Company or its subsidiaries or are in a
position to do so. A "subsidiary" for purposes of the Plan will be a corporation
in which the Company owns, directly or indirectly, stock or shares possessing
50% or more of the total combined voting power of all
<PAGE>
classes of stock or shares.
6. TYPES OF AWARDS
6.1 OPTIONS
(a) Nature of Options. An Option is an Award entitling the recipient on
exercise thereof to purchase Shares at a specified exercise price.
Both "incentive stock options," as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") (any Option intended to qualify as
an incentive stock option being hereinafter referred to as an "ISO"), and
Options that are not incentive stock options, may be granted under the Plan.
ISOs shall be awarded only to Employees.
(b) Exercise Price. The exercise price of an Option will be determined by
the Committee subject to the following:
(1) The exercise price of an ISO shall not be less than 100% (110% in
the case of an ISO granted to a ten-percent shareholder) of the fair market
value/1/ of the Shares subject to the Option, determined as of the time the
Option is granted. A "ten-percent shareholder" is any person who at the
time of grant owns, directly or indirectly, or is deemed to own by reason
of the attribution rules of Section 424(d) of the Code, Shares possession
more than 10% of the total combined voting power of all classes of Shares
of the Company or of its parent or subsidiary corporation.
(2) In no case may the exercise price paid for Shares which is part of
an original issue of authorized Shares be less than the par value per
Share.
(3) The Committee may not reduce the exercise price of an Option at
any time after the time of grant unless the duration of such Option were
limited to seven years.
(c) Duration of Options. The latest date on which an Option may be
exercised will be the tenth anniversary (fifth anniversary, in the case of an
ISO granted to a ten-percent shareholder) of the day immediately preceding the
date the Option was granted, or such earlier date as may have been specified by
the Committee at the time the Option was granted.
(d) Exercise of Options. An Option will become exercisable at such time or
times, and on
- ----------------
/1/ "Fair market value" is generally understood to mean the price that an asset
would bring by bona fide bargaining between well-informed buyers and
sellers at the date of acquisition. Usually the fair market price would be
the price at which bona fide sales have been consummated for assets of like
type, quality, and quantity in a particular market at the time of
acquisition.
<PAGE>
such conditions, as the Committee may specify. The Committee may at any time and
from time to time accelerate the time at which all or any part of the Option may
be exercised.
Any exercise of an Option must be in writing, signed by the proper person
and delivered or mailed to the Company, accompanied by (1) any documents
required by the Committee and (2) pay in full in accordance with paragraph (e)
below for the number of Shares for which the Option is exercised.
(e) Payment for Shares. Shares purchased on exercise of an Option must be
paid for as follows: (1) in cash or by check (acceptable to the Company in
accordance with guidelines established for this purpose), bank draft or money
order payable to the order of the Company, or (2) by delivery of an
unconditional and irrevocable undertaking by a broker to deliver promptly to the
Company sufficient funds to pay the exercise price, or (3) if so permitted by
the instrument evidencing the Option (or in the case of an Option which is not
an ISO, by the Committee on or after grant of the Option), by delivery of a
promissory note of the Option holder to the Company, payable on such terms as
are specified by the Committee, or (4) by any combination of the permissible
forms of payment; provided that at least so much of the exercise price as
represents the par value of such Shares must be paid other than by the Option
holder's promissory note or personal check.
(f) Discretionary Payments. If the market price of Shares subject to an
Option exceeds the exercise price of the Option at the time of its exercise, the
Committee may cancel the Option and cause the Company to pay in cash or in
Shares (at a price per share equal to the fair market value per share) to the
person exercising the Option an amount equal to the difference between the fair
market value of the Shares which would have been purchased pursuant to the
exercise (determined on the date the Option is canceled) and the aggregate
exercise price which would have been paid. The Committee may exercise its
discretion to take such action only if it has received a written request from
the person exercising the Option, but such a request will not be binding on the
Committee.
6.2 Loans and Supplemental Grants.
(a) Loans. The Company may make a loan to any Participant other than a
Director of a U.K. Group Company ("Loan"), either on the date of or after the
grant of any Award to such Participant. A Loan may be made either in connection
with the purchase of Shares under the Award or with the payment of any Federal,
state and local income tax with respect to income recognized as a result of the
Award. The Committee will have full authority to decide whether to make a Loan
and to determine the amount, terms and conditions of the Loan, including the
interest rate (which may be zero), whether the Loan is to be secured or
unsecured or with or without recourse against the borrower, the terms on which
the Loan is to be repaid and the conditions, if any, under which it may be
forgiven. However, no Loan may have a term (including extensions) exceeding ten
years in duration.
(b) Supplemental Grants. In connection with any Award, Learmonth &
Burchett
<PAGE>
Management Systems, Inc. may at the time such Award is made or at a later date,
provide for and grant a cash award to any employee who is a non-director
Participant ("Supplemental Grant") not to exceed an amount equal to (1) the
amount of any Federal, state and local income tax on ordinary income for which
the Participant may be liable with respect to the Award, determined by assuming
taxation at the highest marginal rate, plus (2) an additional amount on a
grossed-up basis intended to make the Participant whole on or after-tax basis
after discharging all the Participant's income tax liabilities arising from all
payments under this Section 6. Any payments under this subsection (b) will be
made at the time the Participant incurs Federal income tax liability with
respect to the Award.
7. EVENTS AFFECTING OUTSTANDING AWARDS
7.1 Death.
If a Participant dies, the following will apply:
(a) All Options held by the Participant immediately prior to death, to the
extent then exercisable, may be exercised by the Participant's executor or
administrator or, if the Shareholder is not a citizen of the United Kingdom, by
the person or persons to whom the Option is transferred by will or the
applicable laws of descent and distribution, at any time within the one year
period ending with the first anniversary of the Participant's death (or such
shorter or longer period as the Board may determine), and shall thereupon
terminate. In no event, however, shall an Option remain exercisable beyond the
latest date on which it could have been exercised without regard to this Section
7. Except as otherwise determined by the Committee, all Options held by a
Participant immediately prior to death that are not then exercisable shall
terminate at death.
(b) Any payment or benefit under a Supplemental Grant to which the
Participant was not irrevocably entitled prior to death will be forfeited and
the Award canceled as of the time of death, unless otherwise determined by the
Committee.
7.2 Termination of Service (Other Than By Death).
If a Participant who is an Employee ceases to be an Employee for nay reason
other than death (such termination of the employment being herein referred to as
a "Status Change"), the following will apply:
(a) Except as otherwise determined by the Committee, and except as provided
below, all Options held by the Participant that were not exercisable immediately
prior to the Status Change shall terminate at the time of the Status Change. Any
Options that were exercisable immediately prior to the Status Change will
continue to be exercisable for a period of three months (or such longer period
as the Committee may determine), and shall thereupon terminate, unless the Award
provides by its terms for immediate termination in the event of a Status Change
or unless the Status Change results from a discharge for cause which in the
opinion of the Committee casts such discredit on the Participant as to justify
immediate termination of the Award. In no event,
<PAGE>
however, shall an Option remain exercisable beyond the latest date on which it
could have been exercised without regard to this Section 7. For purposes of this
paragraph, a Status Change shall not be deemed to have resulted by reason of (i)
a sick leave or other bona fide leave of absence approved for purposes of the
Plan by the Committee, so long as the Employee's right to reemployment is
guaranteed either by statute or by contract, or (ii) a transfer of employment
between the Company and a subsidiary or between subsidiaries, or to the
employment of a corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming an option in a transaction to which section
424(a) of the Code applies.
(b) Any payment or benefit under a Supplemental Grant to which the
Participant was not irrevocably entitled prior to the Status Change will be
forfeited and the Award canceled as of the date of such Status Change unless
otherwise determined by the Committee.
(c) If a Status Change occurs following a "Change in Control" (as defined
in Section 7.3), and if the Company's ordinary shares or ADSs are, following
such change in control, traded on a major stock exchange or inter-dealer
quotation system in the United Kingdom or United States (including the Nasdaq),
any Options that were exercisable immediately before the Status Change will
continue to be exercisable for the full period during which they could be
exercised set forth in Section 6.1(c), except in the case of a sale of all or
substantially all of the assets of the Company as set forth in Section 7.4
7.3 Change of Control.
In the event of a Change of Control, all outstanding Options shall become
immediately exercisable in full. For the purposes of this plan, a "Change in
Control" shall mean any of the following:
(a) any Person or "group" (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934), other than the Company or any
of its Affiliates, becomes a beneficial owner (within the meaning of Rule 13d-3
as promulgated under the Securities Exchange Act of 1934), directly or
indirectly, of securities representing thirty percent (30%) or more of the total
number of votes that may be cast for the election of directors of the Company;
(b) there occurs any sale of all or substantially all of the assets of the
Company;
(c) within eighteen months after a tender offer or exchange offer for
voting securities of the Company (other than by the Company) individuals who
were directors of the Company immediately prior thereto shall cease to
constitute a majority of the Board;
(d) proxies are solicited for voting securities of the Company by persons
other than the Company or its Board and,within eighteen months thereafter,
individuals who were directors of the Company immediately prior to such
transaction cease to constitute a majority of the Board;
(e) any Person or "group," other than the Company or any of its affiliates,
obtains control
<PAGE>
of the Company in pursuance of a compromise or arrangement sanctioned by the
court under Section 425 of the Companies Act 1985; or
(f) any Person or "group," other than the Company or any of its affiliates,
acquires all or the major part of the undertaking of the Company pursuant to a
reorganization under Section 110 of the Insolvency Act 1986.
(g) "Change in Control" shall not include a change in legal domicile or any
sale, reorganization, compromise or arrangement or other transaction which the
Board determines in its discretion acting in good faith to be effected in order
to change the legal domicile of the Company or the holding company of the
Company's group of companies and which leaves control of the Company
substantially unaffected or control of the holding company in the same hands as
control of the Company prior to such transaction.
7.4 Sale of Assets.
In the event of the sale of all or substantially all of the assets of the
Company, all outstanding Options shall remain exercisable for a period of six
months following such sale, or for such shorter period (but in no event less
than 30 days) as may be provided in any plan of liquidation of the Company.
8. GENERAL PROVISIONS
8.1 Documentation of Awards.
Awards will be evidence by such written instruments, if any, as may be
prescribed by the Committee from time to time. Such instruments may be in the
form of agreements to be executed by both the Participant and the Company, or
certificates, letters or similar instruments, which need not be executed by the
Participant but acceptance of which will evidence agreement to the terms
thereof.
8.2 Rights as a Shareholder, Dividend Equivalents.
Except as specifically provided by the Plan, the receipt of an Award will
not give a Participant rights as a Shareholder; the Participant will obtain such
rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, upon actual receipt of Shares. However, the Committee
may, on such conditions as it deems appropriate, provide that a Participant will
receive a benefit in lieu of cash dividends that would have been payable on any
or all Shares subject to the Participant's Award had such Shares been
outstanding. Without limitation, the Committee may provide for payment to the
Participant of amounts representing such dividends, either currently or in the
future, or for the investment of such amounts on behalf of the Participant.
<PAGE>
8.3 Conditions on Delivery of Shares
The Company will not be obligated to deliver any Shares pursuant to the
Plan or to remove restrictions from Shares previously delivered under the Plan
(a) until all conditions of the Award have been satisfied or removed, (b) until,
in the opinion of the Company's counsel, all applicable Federal and state laws
and regulations have been complied with, (c) if the outstanding Shares are at
the time listed on any Shares exchange, until the Shares to be delivered have
been listed or authorized to be listed on any such exchange upon official notice
of notice of issuance, and (d) until all other legal matters in connection with
the issuance and delivery of such Shares have been approved by the Company's
counsel. If the sale of Shares has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition of exercise of the
Award, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Shares bear an appropriate legend restricting
transfer.
If an Award is exercised by the Participant's legal representative, the
Company will be under no obligation to deliver Shares pursuant to such exercise
until the Company is satisfied as to the authority of such representative.
8.4 Tax Withholding.
The Company will withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all Federal, state and local withholding tax
requirements (the "withholding requirements").
In the case of an Award pursuant to which Shares may be delivered, the
Committee will have the right to require that the Participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery of any Shares.
If and to the extent that such withholding is require, the Committee may permit
the Participant or such other person to elect at such time and in such manner as
the Committee provides to have the Company hold back from the Shares to be
delivered, or to deliver t the Company, Shares having a value calculated to
satisfy the withholding requirements.
If at the time an ISO is exercised the Committee determines that the
Company could be liable for withholding requirements with respect to a
disposition of the Shares received upon exercise, the Committee may require as a
condition of exercise that the person exercising the ISO agree (a) to inform the
Company promptly of any disposition (within the meaning of section 424(c) of the
Code) of Shares received upon exercise, and (b) to give such security as the
Committee deems adequate to meet the potential liability of the Company for the
withholding requirements and to augment such security from time to time in any
amount reasonably deemed necessary by the Committee to preserve the adequacy of
such security.
<PAGE>
8.5 Nontransferability of Awards.
No Award may be transferred except by a non-U.K. Shareholder by will or by
the laws of descent and distribution. During a Participant's lifetime, an Award
requiring exercise may be exercised only by him or her (or in the event of the
Participant's incapacity, the person or persons legally appointed to act on the
Participant's behalf).
8.6 Adjustments in the Event of Certain Transactions.
(a) In the event of a Shares dividend, Shares split or combination of
Shares, recapitalization or other change in the Company's capitalization, or
other distribution to ordinary Shareholders other than normal cash dividends,
after the effective date of the Plan, the Board will make any appropriate
adjustments to the maximum number of Shares that may be delivered under the Plan
under Section 4 above.
(b) In any event referred to in paragraph (a), the Board will also make any
appropriate adjustments to the number, class and denomination of Shares or
securities subject to Awards then outstanding or subsequently granted, any
exercise prices relating to awards and any other provision of Awards affected by
such change. The Board may also make such adjustments to take in account
material changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions or similar corporate transactions, or
any other event, if it is determined by the Board that adjustments are
appropriate to avoid distortion in the operation of the Plan.
(c) An adjustment under paragraph (a) may have the effect of reducing the
exercise price paid for Shares to less than the par value of such Share, but
only if and to the extent that the Committee shall be authorized by the board to
capitalise from the reserves of the Company a sum equal to the amount by which
the par value of each Share in respect of which the Option is exercised and
which is to be allotted pursuant to such exercise exceeds the price at which the
same may be subscribed for and to apply such sum in paying up such amount on
such Share; and so that on exercise of any Option in respect of which such a
reduction shall have been made the Committee shall capitalise such sum (if any)
and apply the same in paying up such amount as aforesaid.
8.7 Employment Rights, Etc.
Neither the adoption of the Plan nor the grant of Awards will confer upon
any person any right to continued retention by the Company or any subsidiary as
an Employee or otherwise, or affect in any way the right of the Company or
subsidiary to terminate an employment, service or similar relationship at any
time. Except as specifically provided by the Board in any particular case, the
loss of existing or potential profit in Awards granted under the Plan will not
constitute an element of damages in the event of termination of an employment,
service or similar relationship even if the termination is in violation of an
obligation of the Company to the Participant.
<PAGE>
8.8 Deferral of Payments
The Board may agree at any time, upon request of the Participant, to deter
the date on which any payment under an Award will be made.
8.9 Past Services as Consideration.
Where a Participant purchases Shares under an Award for a price equal to
the par value of the Shares, the Board may determine that such price has been
satisfied by past services rendered by the Participant.
9. EFFECT, DISCONTINUANCE, CANCELLATIONS, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of awards to a Participant will
affect the Company's right to grant to such Participant Awards that are not
subject to the Plan or to adopt other plans or arrangements under which Shares
are issued to Employees.
The Board may at any time or times amend the Plan or any outstanding Award
for any purpose which may at the time be permitted by law, or may at any time
terminate the Plan as to any further grants of Awards, provided that (except to
the extent expressly required or permitted by the Plan) no such amendment will,
without the approval of the Shareholders of the Company, effectuate a change for
which Shareholder approval is required under the United Kingdom listing rules or
in order for the Plan to continue to qualify for the award of ISOs under Section
422 of the Code and to continue to qualify under Rule 16b-3 promulgated under
Section 16 of the 1934 Act. Among other matters, such amendment restrictions
pertain to the identity of Participants, the limits on Shares available under
the Plan, the individual limits on Shares available for any one Participant, the
basis for determining a Participant's entitlement to and the terms of any
benefit to be provided and the adjustment of such benefits to take account of
variations in share capital. Shareholder approval would not be required for
minor amendments to benefit the administration of the Plan or to take into
account a change in legislation or to obtain or maintain favorable tax, exchange
control or regulatory treatment for Participants or the Company.
<PAGE>
Exhibit 4.13
VIVID PUBLISHING, INC.
1997 STOCK OPTION PLAN
(Effective as of Aug 31, 1997)
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. PURPOSE.......................................................... 1
SECTION 2. DEFINITIONS...................................................... 1
(a) "Board of Directors".................................................... 1
(b) "Code".................................................................. 1
(c) "Committee"............................................................. 1
(d) "Company"............................................................... 1
(e) "Disability"............................................................ 1
(f) "Employee............................................................... 2
(g) "Exercise Price"........................................................ 2
(h) "Fair Market Value"..................................................... 2
(i) "ISO"................................................................... 2
(j) "Nonstatutory Option"................................................... 2
(k) "Option"................................................................ 2
(l) "Optionee".............................................................. 2
(m) "Plan".................................................................. 2
(n) "Service"............................................................... 2
(o) "Share"................................................................. 2
(p) "Stock"................................................................. 2
(q) "Stock Option Agreement"................................................ 2
(r) "Subsidiary"............................................................ 3
SECTION 3. ADMINISTRATION................................................... 3
(a) Committee Membership.................................................... 3
(b) Committee Procedures.................................................... 3
(c) Committee Responsibilities.............................................. 3
(d) Financial Reports....................................................... 4
SECTION 4. ELIGIBILITY...................................................... 5
(a) General Rule............................................................ 5
(b) Ten-Percent Shareholders................................................ 5
(c) Attribution Rules....................................................... 5
(d) Outstanding Stock....................................................... 5
SECTION 5. STOCK SUBJECT TO PLAN............................................ 5
(a) Basic Limitation........................................................ 5
(b) Additional Shares....................................................... 6
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.................................. 6
(a) Stock Option Agreement.................................................. 6
(b) Number of Shares........................................................ 6
(c) Exercice Price.......................................................... 6
(d) Withholding Taxes....................................................... 7
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Page
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(e) Exercisability................................................. 7
(f) Term........................................................... 7
(g) Nontransferability............................................. 7
(h) Exercise of Options on Termination of Service.................. 8
(i) No Rights as a Shareholder..................................... 8
(j) Modification, Extension and Assumption of Options.............. 8
(k) Restrictions on Transfer of Shares............................. 8
SECTION 7. PAYMENT FOR SHARES........................................... 9
(a) General Rule................................................... 9
(b) Surrender of Stock............................................. 9
(c) Promissory Notes............................................... 9
(d) Cashless Exercise.............................................. 9
SECTION 8. ADJUSTMENT OF SHARES......................................... 10
(a) General........................................................ 10
(b) Reorganizations................................................ 10
(c) Reservation of Rights.......................................... 10
SECTION 9. LEGAL REQUIREMENTS........................................... 11
SECTION 10. NO EMPLOYMENT RIGHTS........................................ 11
SECTION 11. DURATION AND AMENDMENTS..................................... 11
(a) Term of the Plan............................................... 11
(b) Right to Amend or Terminate the Plan........................... 11
(c) Effect of Amendment or Termination............................. 12
SECTION 12. EXECUTION................................................... 12
-ii-
<PAGE>
VIVID PUBLISHING, INC.
1997 STOCK OPTION PLAN
(Effective as of Aug. 31, 1997)
SECTION 1. PURPOSE.
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such selected persons to
remain in the employ of the Company and to attract new employees with
outstanding qualifications by purchasing Shares of the Company's Common Stock.
The Plan provides for the grant of Options to purchase Shares. Options granted
under the Plan may include Nonstatutory Options as well as incentive stock
options intended to qualify under section 422 of the Internal Revenue Code.
SECTION 2. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of the Company,
as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee of the Board of Directors which is
authorized to administer the Plan under Section 3. The Committee shall have
membership composition which enables the Plan to qualify under Rule 16b-3 with
regard to the grant of Options to persons who are subject to Section 16 of the
Securities Exchange Act of 1934.
(d) "Company" shall mean Vivid Publishing, Inc., a California corporation.
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<PAGE>
(e) "Disability" shall mean that an Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.
(f) "Employee" shall mean (i) any individual who is a common-law employee
of the Company or of a Subsidiary, (ii) a member of the Board of Directors, or
(iii) a consultant who performs services for the Company or a Subsidiary.
Service as a member of the Board of Directors or as a consultant shall be
considered employment for all purposes of the Plan except the second sentence of
Section 4(a).
(g) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(h) "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(i) "ISO" shall mean an employee incentive stock option described in Code
section 422(b).
(j) "Nonstatutory Option" shall mean an employee stock option that is not
an ISO.
(k) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(l) "Optionee" shall mean an individual who holds an Option.
(m) "Plan" shall mean this Vivid Publishing, Inc. 1997 Stock Option Plan.
(n) "Service" shall mean service as an Employee.
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<PAGE>
(o) "Share" shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).
(p) "Stock" shall mean the common stock of the Company.
(q) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her Option.
(r) "Subsidiary" shall mean any corporation, of which the Company and/or
one or more other Subsidiaries own not less than 50 percent of the total
combined voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
SECTION 3. ADMINISTRATION.
(a) Committee Membership. The Plan shall be administered by the Committee,
which shall consist of members of the Board of Directors. The Committee may be
the Compensation Committee of the Company if so designated by the Board of
Directors. The members of the Committee shall be appointed by the Board of
Directors. If no Committee has been appointed, the entire Board of Directors
shall constitute the Committee.
(b) Committee Procedures. The Board of Directors shall designate one of
the members of the Committee as chairperson. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
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<PAGE>
(c) Committee Responsibilities. Subject to the provisions of the Plan, the
Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
(vi) To determine the number of Shares to be made subject to each
Option;
(vii) To prescribe the terms and conditions of each Option, including
(without limitation) the Exercise Price, to determine whether such Option
is to be classified as an ISO or as a Nonstatutory Option, and to specify
the provisions of the Stock Option Agreement relating to such Option;
(viii) To amend or terminate any outstanding Stock Option Agreement;
(ix) To determine the disposition of an Option in the event of an
Optionee's divorce or dissolution of marriage;
(x) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and any Option;
(xi) To prescribe the consideration for the grant of each Option
under the Plan and to determine the sufficiency of such consideration; and
(xii) To take any other actions deemed necessary or advisable for the
administration of the Plan.
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<PAGE>
All decisions, interpretations and other actions of the Committee shall be
final and binding on all Optionees, and all persons deriving their rights from
an Optionee. No member of the Committee shall be liable for any action that he
or she has taken or has failed to take in good faith with respect to the Plan or
any Option.
(d) Financial Reports.(d) Financial Reports. To the extent required by
applicable law, and not less often than annually, the Company shall furnish to
Optionees Company financial statements including a balance sheet regarding the
Company's financial condition and results of operations, unless such Optionees
have duties with the Company that assure them access to equivalent information.
Such financial statements need not be audited.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only Employees, as defined in Section 2(f), shall be
eligible for designation as Optionees by the Committee. In addition, only
individuals who are employed as common-law employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.
(b) Ten-Percent Shareholders. An Employee who owns more than l0 percent of
the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for designation as an
Optionee unless (i) the Exercise Price for an ISO (and a NSO to the extent
required by applicable law) is at least 110 percent of the Fair Market Value of
a Share on the date of grant, and (ii) in the case of an ISO, such ISO by its
terms is not exercisable after the expiration of five years from the date of
grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or
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<PAGE>
indirectly, by or for his brothers, sisters, spouse, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be deemed to be owned proportionately by or
for its shareholders, partners or beneficiaries. Stock with respect to which
such Employee holds an option shall not be counted.
(d) Outstanding Stock. For purposes of Subsection (b) above, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares offered under the Plan shall be authorized but
unissued Shares. The aggregate number of Shares which may be issued under the
Plan (upon exercise of Options) shall not exceed three hundred and fifty
thousand (350,000) Shares, subject to adjustment pursuant to Section 8. The
number of Shares which are subject to Options outstanding at any time under the
Plan shall not exceed the number of Shares which then remain available for
issuance under the Plan. The Company, during the term of the Plan, shall at all
times reserve and keep available sufficient Shares to satisfy the requirements
of the Plan.
(b) Additional Shares. In the event that any outstanding Option for any
reason expires or is canceled or otherwise terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for the purposes
of the Plan.
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<PAGE>
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the number
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 8. The Stock Option Agreement shall also
specify whether the Option is an ISO or a Nonstatutory Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
Price. The Exercise Price of an ISO shall not be less than one hundred percent
(100%) of the Fair Market Value of a Share on the date of grant. To the extent
required by applicable law, the Exercise Price of a Nonstatutory Option shall
not be less than eighty-five percent (85%) of the Fair Market Value of a Share
on the date of grant. Subject to the preceding two sentences, the Exercise Price
under any Option shall be determined by the Committee in its sole discretion.
The Exercise Price shall be payable in a form described in Section 7.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Com-
-7-
<PAGE>
mittee may require for the satisfaction of any federal, state, local or foreign
withholding tax obligations that may arise in connection with the disposition of
Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date when
all or any installment of the Option is to become exercisable. To the extent
required by applicable law, an Option shall become exercisable no less rapidly
than the rate of 20% per year for each of the first five years from the date of
grant. Subject to the preceding sentence, the exercisability of any Option shall
be determined by the Committee in its sole discretion.
(f) Term. The Stock Option Agreement shall specify the term of the Option.
The term shall not exceed ten (10) years from the date of grant, except as
otherwise provided in Section 4(b). Subject to the preceding sentence, the
Committee at its sole discretion shall determine when an Option is to expire.
(g) Nontransferability. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by him or by his guardian or
legal representative. No Option or interest therein may be transferred,
assigned, pledged or hypothecated by the Optionee during his lifetime, whether
by operation of law or otherwise, or be made subject to execution, attachment or
similar process.
(h) Exercise of Options on Termination of Service. Each Option shall set
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the
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<PAGE>
foregoing, and to the extent required by applicable law, each Option shall
provide that the Optionee shall have the right to exercise the vested portion of
any Option held at termination for at least 30 days following termination of
service with the Company for any reason, and that the Optionee shall have the
right to exercise the Option for at least six months if the Optionee's service
terminates due to death or Disability.
(i) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(j) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price or for other consideration.
(k) Restrictions on Transfer of Shares. Any Shares issued upon exercise of
an Option shall be subject to such rights of repurchase, rights of first refusal
and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Option Agreement and
shall apply in addition to any restrictions that may apply to holders of Shares
generally.
SECTION 7. PAYMENT FOR SHARES.
(a) General Rule. The entire Exercise Price of Shares issued under the Plan
shall be payable in lawful money of the United States of America at the time
when such Shares are purchased, except as provided in Subsections (b), (c) and
(d) below.
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<PAGE>
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for any time period
specified by the Committee and which are surrendered to the Company in good form
for transfer. Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the Plan.
(c) Promissory Notes. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with a full recourse promissory
note executed by the Optionee. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may require
that the Optionee pledge his or her Shares to the Company for the purpose of
securing the payment of such note. In no event shall the stock certificate(s)
representing such Shares be released to the Optionee until such note is paid in
full.
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
provides and a public market for the Shares exists, payment may be made all or
in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.
SECTION 8. ADJUSTMENT OF SHARES.
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a
-10-
<PAGE>
reclassification or a similar occurrence, the Committee shall make appropriate
adjustments in one or more of (i) the number of Shares available for future
grants under Section 5, (ii) the number of Shares covered by each outstanding
Option or (iii) the Exercise Price under each outstanding Option.
(b) Reorganizations. In the event that the Company is a party to a merger
or reorganization, outstanding Options shall be subject to the agreement of
merger or reorganization.
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares
subject to an Option. The grant of an Option pursuant to the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
SECTION 9. LEGAL REQUIREMENTS.
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange on which the Company's
securities may then be listed.
-11-
<PAGE>
SECTION 10. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any Option granted under the Plan, shall be
construed to give any person any right to become, to be treated as, or to remain
an Employee. The Company and its Subsidiaries reserve the right to terminate any
person's Service at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. In the event that the shareholders fail
to approve the Plan within twelve (12) months after its adoption by the Board of
Directors, any Option grants already made shall be null and void, and no
additional Option grants shall be made after such date. The Plan shall terminate
automatically ten (10) years after its adoption by the Board of Directors and
may be terminated on any earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may amend
the Plan at any time and from time to time. Rights and obligations under any
Option granted before amendment of the Plan shall not be materially altered, or
impaired adversely, by such amendment, except with consent of the person to whom
the Option was granted. An amendment of the Plan shall be subject to the
approval of the Company's stockholders only to the extent required by applicable
laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise
-12-
<PAGE>
of an Option granted prior to such termination. The termination of the Plan, or
any amendment thereof, shall not affect any Option previously granted under the
Plan.
SECTION 12. EXECUTION.
To record the adoption of the Plan by the Board of Directors, the Company
has caused its authorized officer to execute the same as of August 31, 1997.
VIVID PUBLISHING, INC.
By
---------------------------------
As Its
-----------------------------
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<PAGE>
Exhibit 4.14
VIVID PUBLISHING, INC.
1996 STOCK OPTION PLAN
(Effective as of May 31, 1996)
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. PURPOSE.......................................................... 1
SECTION 2. DEFINITIONS...................................................... 1
(a) "Board of Directors".................................................... 1
(b) "Code".................................................................. 1
(c) "Committee"............................................................. 1
(d) "Company"............................................................... 1
(e) "Disability"............................................................ 1
(f) "Employee............................................................... 1
(g) "Exercise Price"........................................................ 2
(h) "Fair Market Value"..................................................... 2
(i) "ISO"................................................................... 2
(j) "Nonstatutory Option"................................................... 2
(k) "Option"................................................................ 2
(l) "Optionee".............................................................. 2
(m) "Plan".................................................................. 2
(n) "Service"............................................................... 2
(o) "Share"................................................................. 2
(p) "Stock"................................................................. 2
(q) "Stock Option Agreement"................................................ 2
(r) "Subsidiary"............................................................ 2
SECTION 3. ADMINISTRATION................................................... 2
(a) Committee Membership.................................................... 2
(b) Committee Procedures.................................................... 3
(c) Committee Responsibilities.............................................. 3
(d) Financial Reports....................................................... 4
SECTION 4. ELIGIBILITY...................................................... 4
(a) General Rule............................................................ 4
(b) Ten-Percent Shareholders................................................ 4
(c) Attribution Rules....................................................... 4
(d) Outstanding Stock....................................................... 4
SECTION 5. STOCK SUBJECT TO PLAN............................................ 5
(a) Basic Limitation........................................................ 5
(b) Additional Shares....................................................... 5
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.................................. 6
(a) Stock Option Agreement.................................................. 6
(b) Number of Shares........................................................ 6
(c) Exercise Price.......................................................... 6
(d) Withholding Taxes....................................................... 6
(e) Exercisability.......................................................... 6
(f) Term.................................................................... 6
(g) Nontransferability...................................................... 6
</TABLE>
<PAGE>
Page
----
(h) Exercise of Options on Termination of Service.................. 7
(i) No Rights as a Shareholder..................................... 7
(j) Modification, Extension and Assumption of Options.............. 7
(k) Restrictions on Transfer of Shares............................. 7
SECTION 7. PAYMENT FOR SHARES........................................... 7
(a) General Rule................................................... 7
(b) Surrender of Stock............................................. 7
(c) Promissory Notes............................................... 7
(d) Cashless Exercise.............................................. 8
SECTION 8. ADJUSTMENT OF SHARES......................................... 8
(a) General........................................................ 8
(b) Reorganizations................................................ 8
(c) Reservation of Rights.......................................... 8
SECTION 9. LEGAL REQUIREMENTS........................................... 9
SECTION 10. NO EMPLOYMENT RIGHTS........................................ 9
SECTION 11. DURATION AND AMENDMENTS..................................... 9
(a) Term of the Plan............................................... 9
(b) Right to Amend or Terminate the Plan........................... 9
(c) Effect of Amendment or Termination............................. 10
SECTION 12. EXECUTION................................................... 10
<PAGE>
VIVID PUBLISHING, INC.
1996 STOCK PLAN
(Effective as of May 31, 1996)
SECTION 1. PURPOSE.
- -------------------
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, to increase such interest, to encourage such selected persons to
remain in the employ of the Company and to attract new employees with
outstanding qualifications by purchasing Shares of the Company's common stock.
The Plan provides for the grant of Options to purchase Shares. Options granted
under the Plan may include Nonstatutory Options as well as incentive stock
options intended to qualify under section 422 of the Internal Revenue Code.
SECTION 2. DEFINITIONS.
- -----------------------
(a) "Board of Directors" shall mean the Board of Directors of the Company,
as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee of the Board of Directors which is
authorized to administer the Plan under Section 3. The Committee shall have
membership composition which enables the Plan to qualify under Rule 16b-3 with
regard to the grant of Options to persons who are subject to Section 16 of the
Securities Exchange Act of 1934.
(d) "Company" shall mean Vivid Publishing, Inc., a California corporation.
(e) "Disability" shall mean that an Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.
(f) "Employee" shall mean (i) any individual who is a common-law employee
of the Company or of a Subsidiary, (ii) a member of the Board of Directors, or
(iii) a consultant who performs services for the Company or a Subsidiary.
Service as a member of the Board of Directors or as a consultant shall be
considered employment for all purposes of the Plan except the second sentence of
Section 4(a).
l
<PAGE>
(g) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(h) "Fair Market Value" shall mean the fair market value of a Share
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(i) "ISO" shall mean an employee incentive stock option described in Code
section 422(b).
(j) "Nonstatutory Option" shall mean an employee stock option that is not
an ISO.
(k) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(1) "Optionee" shall mean an individual who holds an Option.
(m) "Plan" shall mean this Vivid Publishing, Inc. 1996 Stock Plan.
(n) "Service" shall mean service as an Employee.
(o) "Share" shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).
(p) "Stock" shall mean the common stock of the Company.
(q) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her Option.
(r) "Subsidiary" shall mean any corporation, of which the Company and/or
one or more other Subsidiaries own not less than 50 percent of the total
combined voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
SECTION 3. ADMINISTRATION.
- --------------------------
(a) Committee Membership. The Plan shall be administered by the Committee,
which shall consist of members of the Board of Directors. The members of the
Committee shall be
2
<PAGE>
appointed by the Board of Directors. If no Committee has been appointed, the
entire Board of Directors shall constitute the Committee.
(b) Committee Procedures. The Board of Directors shall designate one of the
members of the Committee as chairperson. The Committee may hold meetings at such
times and places as it shall determine. The acts of a majority of the Committee
members present at meetings at which a quorum exists, or acts reduced to or
approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan, the
Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
(vi) To determine the number of Shares to be made subject to each
Option;
(vii) To prescribe the terms and conditions of each Option, including
(without limitation) the Exercise Price, to determine whether such Option
is to be classified as an ISO or as a Nonstatutory Option, and to specify
the provisions of the Stock Option Agreement relating to such Option;
(viii) To amend or terminate any outstanding Stock Option Agreement;
(ix) To determine the disposition of an Option in the event of an
Optionee's divorce or dissolution of marriage;
(x) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and any Option;
(xi) To prescribe the consideration for the grant of each Option under
the Plan and to determine the sufficiency of such consideration; and
(xii) To take any other actions deemed necessary or advisable for the
administration of the Plan.
3
<PAGE>
All decisions, interpretations and other actions of the Committee shall be
final and binding on all Optionees, and all persons deriving their rights from
an Optionee. No member of the Committee shall be liable for any action that he
or she has taken or has failed to take in good faith with respect to the Plan or
any Option.
(d) Financial Reports. To the extent required by applicable law, and not
less often than annually, the Company shall furnish to Optionees Company
financial statements including a balance sheet regarding the Company's financial
condition and results of operations, unless such Optionees have duties with the
Company that assure them access to equivalent information. Such financial
statements need not be audited.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only Employees, as defined in Section 2(f), shall be
eligible for designation as Optionees by the Committee. In addition, only
individuals who are employed as common-law employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.
(b) Ten-Percent Shareholders. An Employee who owns more than 10 percent of
the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for designation as an
Optionee unless (i) the Exercise Price for an ISO (and a NSO to the extent
required by applicable law) is at least 110 percent of the Fair Market Value of
a Share on the date of grant, and (ii) in the case of an ISO, such ISO by its
terms is not exercisable after the expiration of five years from the date of
grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in determining
stock ownership, an Employee shall be deemed to own the stock owned, directly or
indirectly, by or for his brothers, sisters, spouse, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be deemed to be owned proportionately by or
for its shareholders, partners or beneficiaries. Stock with respect to which
such Employee holds an option shall not be counted.
(d) Outstanding Stock. For purposes of Subsection (b) above, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant.
4
<PAGE>
"Outstanding stock" shall not include Shares authorized for issuance under
outstanding options held by the Employee or by any other person.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares offered under the Plan shall be authorized
but unissued Shares. The aggregate number of Shares which may be issued under
the Plan (upon exercise of Options) shall not exceed one million (1,000,000)
Shares, subject to adjustment pursuant to Section 8. The number of Shares which
are subject to Options outstanding at any time under the Plan shall not exceed
the number of Shares which then remain available for issuance under the Plan.
The Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option for any
reason expires or is canceled or otherwise terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for the purposes
of the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the number
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 8. The Stock Option Agreement shall also
specify whether the Option is an ISO or a Nonstatutory Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
Price. The Exercise Price of an ISO shall not be less than one hundred percent
(100%) of the Fair Market Value of a Share on the date of grant. To the extent
required by applicable law, the
5
<PAGE>
Exercise Price of a Nonstatutory Option shall not be less than eighty-five
percent (85%) of the Fair Market Value of a Share on the date of grant. Subject
to the preceding two sentences, the Exercise Price under any Option shall be
determined by the Committee in its sole discretion. The Exercise Price shall be
payable in a form described in Section 7.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of 20% per year for each of the first five years from the
date of grant. Subject to the preceding sentence, the exercisability of any
Option shall be determined by the Committee in its sole discretion.
(f) Term. The Stock Option Agreement shall specify the term of the Option.
The term shall not exceed ten (10) years from the date of grant, except as
otherwise provided in Section 4(b). Subject to the preceding sentence, the
Committee at its sole discretion shall determine when an Option is to expire.
(g) Nontransferability. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by him or by his guardian or
legal representative. No Option or interest therein may be transferred,
assigned, pledged or hypothecated by the Optionee during his lifetime, whether
by operation of law or otherwise, or be made subject to execution, attachment or
similar process.
(h) Exercise of Options on Termination of Service. Each Option shall set
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options
6
<PAGE>
issued pursuant to the Plan, and may reflect distinctions based on the reasons
for termination of employment. Notwithstanding the foregoing, and to the extent
required by applicable law, each Option shall provide that the Optionee shall
have the right to exercise the vested portion of any Option held at termination
for at least 30 days following termination of service with the Company for any
reason, and that the Optionee shall have the right to exercise the Option for at
least six months if the Optionee's service terminates due to death or
Disability.
(j) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(k) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price or for other consideration.
(1) Restrictions on Transfer of Shares. Any Shares issued upon exercise of
an Option may be subject to such rights of repurchase, rights of first refusal
and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Option Agreement and
shall apply in addition to any restrictions that may apply to holders of Shares
generally.
SECTION 7. PAYMENT FOR SHARES.
(a) General Rule. The entire Exercise Price of Shares optioned under the
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Subsections (b), (c)
and (d) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for any time period
specified by the Committee and which are surrendered to the Company in good form
for transfer. Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the Plan.
7
<PAGE>
(c) Promissory Notes. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with a full recourse promissory
note executed by the Optionee. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may require
that the Optionee pledge his or her Shares to the Company for the purpose of
securing the payment of such note. In no event shall the stock certificate(s)
representing such Shares be released to the Optionee until any note is paid in
full.
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
provides and a public market for the Shares exists, payment may be made all or
in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.
SECTION 8. ADJUSTMENT OF SHARES.
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 5, (ii) the
number of Shares covered by each outstanding Option, or (iii) the Exercise Price
under each outstanding Option.
(b) Reorganization. In the event that the Company is a party to a merger
or reorganization, outstanding Options shall be subject to the agreement of
merger or reorganization.
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares
subject to an
8
<PAGE>
Option. The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 9. LEGAL REQUIREMENTS.
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange on which the Company's
securities may then be listed.
SECTION 10. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any Option granted under the Plan, shall be
construed to give any person any right to become, to be treated as, or to remain
an Employee. The Company and its Subsidiaries reserve the right to terminate any
person's Service at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. In the event that the shareholders fail
to approve the Plan within twelve (12) months after its adoption by the Board of
Directors, any Option grants already made shall be null and void, and no
additional Option grants shall be made after such date. The Plan shall terminate
automatically ten (10) years after its adoption by the Board of Directors and
may be terminated on any earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may amend
the Plan at any time and from time to time. Rights and obligations under any
Option granted before amendment of the Plan shall not be materially altered, or
impaired adversely, by such
9
<PAGE>
amendment, except with consent of the person to whom the Option was granted. An
amendment of the Plan shall be subject to the approval of the Company's
stockholders only to the extent required by applicable laws, regulations or
rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Option previously granted under the Plan.
SECTION 12. EXECUTION.
To record the adoption of the Plan by the Board of Directors, the Company
has caused its authorized officer to execute the same as of May 31, 1996.
VIVID PUBLISHING, INC.
By
----------------------------
As Its
------------------------
10
<PAGE>
Exhibit 4.15
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
VIVID PUBLISHING, INC.
1997 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
(Four Year Vesting with 90-Day Cliff)
Vivid Publishing, Inc., a California corporation (the "Company"), hereby
grants an option to purchase Shares of its common stock to the optionee named
below. The terms and conditions of the option are set forth in this cover sheet,
in the attachment and in the Company's 1997 Stock Option Plan (the "Plan").
Date of Option Grant:
--------------------------------------
Name of Optionee:
--------------------------------------
Optionee's Social Security Number:
--------------------------------------
Number of Shares of
Common Stock Covered by Option:
--------------------------------------
Exercise Price per Share: $
--------------------------------------
Vesting Start Date:
--------------------------------------
By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is
also enclosed.
Optionee:
---------------------------------------------------------------
(Signature)
Company:
---------------------------------------------------------------
(Signature)
-1-
<PAGE>
Title:
-----------------------------------------------------------
Attachment
- ----------
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE,
AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
VIVID PUBLISHING, INC.
1997 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
(Four Year Vesting with 90-Day Cliff)
Incentive Stock Option This option is intended to be an incentive
stock option under section 422 of the Internal
Revenue Code and will be interpreted
accordingly.
Vesting Your right to exercise this option vests
monthly beginning on the Vesting Start Date,
as shown on the cover sheet, provided,
however, no portion of this option may be
exercised prior to the expiration of ninety
(90 days) from the Date of Grant, as shown on
the cover sheet. The number of Shares which
may be purchased under this option by you at
the Purchase Price shall be equal to the
difference between (i) the product (rounded to
the nearest integer) of the number of full
months of your continuous employment with the
Company (including all days of any approved
leaves of absence) from the Vesting Starting
Date times the number of Shares covered by
this option times .02083333, minus (ii) the
number of Shares purchased pursuant to this
Option prior to such exercise. The resulting
number of Shares will be rounded to the
nearest whole number. No additional Shares
will vest after your Company service has
terminated for any reason.
Notwithstanding anything to the contrary in
this Agreement, the vesting of this option is
conditioned upon the Company obtaining a
written waiver from the Leap Group ("Leap") of
any anti-dilution provisions in Leap's favor
set forth in the promissory note of the
Company issued to Leap on February 8, 1997,
which provisions might otherwise be triggered
by this option. In the event that Leap refuses
in writing to provide such waiver, or
otherwise attempts to assert such anti-
dilution rights, this option
-3-
<PAGE>
will automatically and immediately become
rescinded, null and void.
Term Your option will expire in any event at the
close of business at Company headquarters on
the day before the 10th anniversary of the
Date of Grant, as shown on the cover sheet.
(It will expire earlier if your Company
service terminates, as described below.)
Regular Termination If your service as an employee of the Company
(or any subsidiary) terminates for any reason
except death or Disability, then your option
will expire at the close of business at
Company headquarters on the 90th day after
your termination date.
Death If you die as an employee of the Company (or
any subsidiary), then your option will expire
at the close of business at Company
headquarters on the date 6 months after the
date of death. During that 6-month period,
your estate or heirs may exercise the vested
portion of your option.
Disability If your service as an employee of the Company
(or any subsidiary) terminates because of your
Disability, then your option will expire at
the close of business at Company headquarters
on the date 6 months after your termination
date.
"Disability" means that you are unable to
engage in any substantial gainful activity by
reason of any medically determinable physical
or mental impairment.
Leaves of Absence For purposes of this option, your service does
not terminate when you go on a bona fide leave
of absence that was approved by the Company in
writing, if the terms of the leave provide for
continued service crediting, or when continued
service crediting is required by applicable
law. However, for purposes of determining
whether your option is entitled to ISO status,
your service will be treated as terminating 90
days after you went on leave, unless your
right to return to active work is guaranteed
by law or by a contract. Your service
terminates in any event when the approved
leave ends unless you immediately return to
active work.
The Company determines which leaves count for
this purpose, and when your service terminates
for all purposes under the Plan.
-4-
<PAGE>
Restrictions on Exercise The Company will not permit you to exercise
this option if the issuance of Shares at that
time would violate any law or regulation.
Notice of Exercise When you wish to exercise this option, you
must notify the Company by filing the proper
"Notice of Exercise" form at the address given
on the form. Your notice must specify how many
Shares you wish to purchase. Your notice must
also specify how your Shares should be
registered (in your name only or in your and
your spouse's names as community property or
as joint tenants with right of survivorship).
The notice will be effective when it is
received by the Company.
If someone else wants to exercise this option
after your death, that person must prove to
the Company's satisfaction that he or she is
entitled to do so.
Periods of Nonexercisability Any other provision of this Agreement
notwithstanding, the Company shall have the
right to designate one or more periods of
time, each of which shall not exceed 180 days
in length, during which this option shall not
be exercisable if the Company determines (in
its sole discretion) that such limitation on
exercise could in any way facilitate a
lessening of any restriction on transfer
pursuant to the Securities Act of 1933, as
amended (the "Securities Act") or any state
securities laws with respect to any issuance
of securities by the Company, facilitate the
registration or qualification of any
securities by the Company under the Securities
Act or any state securities laws, or
facilitate the perfection of any exemption
from the registration or qualification
requirements of the Securities Act or any
applicable state securities laws for the
issuance or transfer of any securities. Such
limitation on exercise shall not alter the
vesting schedule set forth in this Agreement
other than to limit the periods during which
this option shall be exercisable.
Form of Payment When you submit your notice of exercise, you
must include payment of the option price for
the Shares you are purchasing. Payment may be
made in one (or a combination) of the
following forms:
- Your personal check, a cashier's check or a
money order.
-5-
<PAGE>
- Common Shares which have already been owned
by you for any time period specified by the
Committee and which are surrendered to the
Company. The value of the Shares, determined
as of the effective date of the option
exercise, will be applied to the option price.
- To the extent that a public market for the
Shares exists as determined by the Company, by
delivery (on a form prescribed by the
Committee) of an irrevocable direction to a
securities broker to sell Shares and to
deliver all or part of the sale proceeds to
the Company in payment of the aggregate
Exercise Price.
Withholding Taxes You will not be allowed to exercise this
option unless you make acceptable arrangements
to pay any withholding or other taxes that may
be due as a result of the option exercise or
the sale of shares acquired upon exercise of
this option and the sale of the shares.
Restrictions on Resale By signing this Agreement, you agree not to
sell any option Shares at a time when
applicable laws, regulations or Company or
underwriter trading policies prohibit a sale.
In connection with any underwritten public
offering by the Company of its equity
securities pursuant to an effective
registration statement filed under the
Securities Act, including the Company's
initial public offering, you agree not to
sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer
for value or agree to engage in any of the
foregoing transactions with respect to any
shares without the prior written consent of
the Company or its underwriters, for such
period of time after the effective date of
such registration statement as may be
requested by the Company or such underwriters.
In order to enforce the provisions of this
paragraph, the Company may impose stop-
transfer instructions with respect to the
shares until the end of the applicable stand-
off period.
You represent and agree that the Shares to be
acquired upon exercising this option will be
acquired for investment, and not with a view
to the sale or distribution thereof.
In the event that the sale of Shares under the
Plan is not registered under the Securities
Act but an exemption is available which
-6-
<PAGE>
requires an investment representation or other
representation, you shall represent and agree
at the time of exercise that the Shares being
acquired upon exercising this option are being
acquired for investment, and not with a view
to the sale or distribution thereof, and shall
make such other representations as are deemed
necessary or appropriate by the Company and
its counsel.
The Company's In the event that you propose to sell, pledge
Right of First Refusal or otherwise transfer to a third party any
Shares acquired under this Agreement, or any
interest in such Shares, the Company shall
have the "Right of First Refusal" with respect
to all (and not less than all) of such Shares.
If you desire to transfer Shares acquired
under this Agreement, you must give a written
"Transfer Notice" to the Company describing
fully the proposed transfer, including the
number of Shares proposed to be transferred,
the proposed transfer price and the name and
address of the proposed transferee. The
Transfer Notice shall be signed both by you
and by the proposed new transferee and must
constitute a binding commitment of both
parties to the transfer of the Shares. The
Company shall have the right to purchase all,
and not less than all, of the Shares on the
terms of the proposal described in the
Transfer Notice (subject, however, to any
change in such terms permitted in the next
paragraph) by delivery of a notice of exercise
of the Right of First Refusal within 30 days
after the date when the Transfer Notice was
received by the Company. The Company's rights
under this Subsection shall be freely
assignable, in whole or in part.
If the Company fails to exercise its Right of
First Refusal within 30 days after the date
when it received the Transfer Notice, you may,
not later than 90 days following receipt of
the Transfer Notice by the Company, conclude a
transfer of the Shares subject to the Transfer
Notice on the terms and conditions described
in the Transfer Notice. Any proposed transfer
on terms and conditions different from those
described in the Transfer Notice, as well as
any subsequent proposed transfer by you, shall
again be subject to the Right of First Refusal
and shall require compliance with the
procedure described in the paragraph above. If
the Company exercises its Right of First
Refusal, the parties shall consummate the sale
of the Shares on the terms set forth in the
Transfer Notice within 60 days after the date
when the Company received the Transfer Notice
(or within such longer period as may have been
specified in the Transfer Notice); provided,
however, that in the event the Transfer Notice
provided that payment for the Shares was to be
made in a form other than lawful money paid at
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<PAGE>
the time of transfer, the Company shall have
the option of paying for the Shares with
lawful money equal to the present value of the
consideration described in the Transfer
Notice.
The Company's Right of First Refusal shall
inure to the benefit of its successors and
assigns and shall be binding upon any
transferee of the Shares.
The Company's Right of First Refusal shall
terminate in the event that Stock is listed on
an established stock exchange or is quoted
regularly on the Nasdaq National Market.
Right of Repurchase Following termination of your employment for
any reason, the Company shall have the right
to purchase all of those Shares that you have
or will acquire under this option. If the
Company fails to provide you with written
notice of its intention to purchase such
Shares before or within 30 days of the date
the Company receives written notice from you
of your termination of employment, the
Company's right to purchase such Shares shall
terminate. If the Company exercises its right
to purchase such Shares, the Company will
consummate the purchase of such Shares within
60 days of the date of its written notice to
you. The purchase price for any Shares
repurchased shall be the higher of the Fair
Market Value of those Shares on the date of
purchase or the aggregate Exercise Price for
those Shares and shall be paid in cash. The
Company's right of repurchase shall terminate
in the event that Stock is listed on an
established stock exchange or is quoted
regularly on the Nasdaq National Market.
Transfer of Option Prior to your death, only you may exercise
this option. You cannot transfer or assign
this option. For instance, you may not sell
this option or use it as security for a loan.
If you attempt to do any of these things, this
option will immediately become invalid. You
may, however, dispose of this option in your
will.
Regardless of any marital property settlement
agreement, the Company is not obligated to
honor a notice of exercise from your spouse or
former spouse, nor is the Company obligated to
recognize such individual's interest in your
option in any other way.
Retention Rights Your option or this Agreement do not give you
the right to be retained by the Company (or
any subsidiaries) in any capacity. The Company
(and any subsidiaries) reserve the right to
terminate your service at any time and for any
reason.
-8-
<PAGE>
Shareholder Rights You, or your estate or heirs, have no rights
as a shareholder of the Company until a
certificate for your option Shares has been
issued. No adjustments are made for dividends
or other rights if the applicable record date
occurs before your stock certificate is
issued, except as described in the Plan.
Adjustments In the event of a stock split, a stock
dividend or a similar change in the Company
stock, the number of Shares covered by this
option and the exercise price per share may be
adjusted pursuant to the Plan. Your option
shall be subject to the terms of the agreement
of merger, liquidation or reorganization in
the event the Company is subject to such
corporate activity.
Legends All certificates representing the Shares
issued upon exercise of this option shall,
where applicable, have endorsed thereon the
following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES
SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY
AND THE REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY AND WILL BE FURNISHED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE
COMPANY BY THE HOLDER OF RECORD OF THE SHARES
REPRESENTED BY THIS CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR AN
OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED."
Applicable Law This Agreement will be interpreted and
enforced under the laws of the State of
California.
The Plan and Other The text of the Plan is incorporated in this
Agreement by reference.
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<PAGE>
Agreements Certain capitalized terms used in this
Agreement are defined in the Plan.
This Agreement and the Plan constitute the
entire understanding between you and the
Company regarding this option. Any prior
agreements, commitments or negotiations
concerning this option are superseded.
By signing the cover sheet of this Agreement, you agree to all of the
terms and conditions described above and in the Plan.
-10-
<PAGE>
Exhibit 4.16
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE,
AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
VIVID PUBLISHING, INC.
1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Four-Year Vesting with One Year Cliff
Vivid Publishing, Inc., a California corporation (the "Company"), hereby
grants an option to purchase shares of its Common Stock (the "Shares") to the
optionee named below. The terms and conditions of the option are set forth in
this cover sheet, in the attachment and in the Company's 1996 Stock Option Plan
(the "Plan").
Date of Option Grant: _________, 199_
Name of Optionee:_______________________________________________________________
Optionee's Social Security Number: ______-______-______
Number of Shares of Common Stock Covered by Option:_____________________________
Exercise Price per Share: $_____________________________________________________
Vesting Start Date:_________________, 199__
_____Check here if Optionee is a 10% owner (so that exercise price must be 110%
of fair market value and the Option term will not exceed 5 years).
By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is
also enclosed.
Optionee:_______________________________________________________________________
(Signature)
Company:________________________________________________________________________
(Signature)
Title:__________________________________________________________________
Attachment
- ----------
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<PAGE>
VIVID PUBLISHING, INC.
1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Four-Year Vesting with One Year Cliff
Incentive Stock This option is intended to be an incentive stock option
Option under section 422 of the Internal Revenue Code and will be
interpreted accordingly.
Exercise and Vesting This option may be exercised to the extent that Shares
have been vested. Beginning on the Vesting Start Date as
shown on the cover sheet, the Shares under this option
will vest over a four (4) year period at the rate of
1/48th per month, in accordance with the vesting schedule
indicated below:
Portion of
Shares Vested
-------------
From the Vesting Start Date until None
12 months thereafter
At the end of 12 months from the 25%
Vesting Start Date
For each additional full month of your 1/48th
Service to the Company thereafter
On the fourth anniversary of the 100%
Vesting Start Date
Term Your option will expire in any event at the close of
business at Company headquarters on the day before the
10th anniversary of the Date of Option Grant, as shown on
the cover sheet. (It will expire earlier if your Service
to the Company terminates, as described below.)
Regular If your Service to the Company terminates for any reason
Termination except death or Disability, then your option will expire
at the close of business at Company headquarters on the
90th day after your termination date.
Death In the event of your death while in Service, then your
option will expire at the close of business at Company
headquarters on the date six (6) months after the date of
death. During that six (6) month period, your estate or
heirs may exercise your option.
-2-
<PAGE>
Disability If your Service terminates because of your Disability, then
your option will expire at the close of business at Company
headquarters on the date six (6) months after your
termination date.
However, for purposes of determining whether your option is
entitled to ISO status, unless your Disability satisfies
the definition set forth in section 22(e)(3) of the Code (as
cited below), ISO status will terminate three (3) months
after your termination date.
"Disability" means that you are unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment.
Leaves of Absence For purposes of this option, your Service does not terminate
when you go on a bona fide leave of absence, that was
approved by the Company in writing, if the terms of the
leave provide for continued service crediting, or when
continued service crediting is required by applicable law.
However, for purposes of determining whether your option is
entitled to ISO status, your Service will be treated as
terminating ninety (90) days after you went on leave, unless
your right to return to active work is guaranteed by law or
a contract. Your Service terminates in any event when the
approved leave ends, unless you immediately return to active
work.
The Company determines which leaves count for this purpose,
and when your Service terminates for all purposes under the
Plan.
Restrictions on The Company will not permit you to exercise this option if
Exercise the issuance of Shares at that time would violate any law or
regulation.
-3-
<PAGE>
Notice of Exercise When you wish to exercise this option, you must notify the
Company by filing the proper notice of exercise form at
the address given on the form, a copy of which is attached
hereto. Your notice must specify how many Shares you wish
to purchase. Your notice must also specify how your Shares
should be registered (in your name only or in your and
your spouse's names as community property or as joint
tenants with right of survivorship). The notice will be
effective when it is received by the Company.
If someone else wants to exercise this option after your
death, that person must prove to the Company's
satisfaction that he or she is entitled to do so.
Periods of Any other provision of this Agreement notwithstanding, the
Nonexercisability Company shall have the right to designate one or more
periods of time, each of which shall not exceed one
hundred eighty (180) days in length, during which this
option shall not be exercisable if the Company determines
(in its sole discretion) that such limitation on exercise
could in any way facilitate a lessening of any restriction
on transfer pursuant to the Securities Act of 1933, as
amended (the "Securities Act") or any state securities
laws with respect to any issuance of securities by the
Company, facilitate the registration or qualification of
any securities by the Company under the Securities Act or
any state securities laws, or facilitate the perfection of
any exemption from the registration or qualification
requirements of the Securities Act or any applicable state
securities laws for the issuance or transfer of any
securities. Such limitation on exercise shall not alter
the vesting schedule set forth in this Agreement other
than to limit the periods during which this option shall
be exercisable.
-4-
<PAGE>
Form of Payment When you submit your notice of exercise, you must include
payment of the option price for the Shares you are
purchasing. Payment may be made in one (or a combination)
of the following forms:
. Your personal check, a cashier's check or a money
order.
. Common Stock which has already been owned by you for
any time period specified by the Committee and which is
surrendered to the Company. The value of the Stock,
determined as of the effective date of the option
exercise, will be applied to the option price.
. To the extent that a public market for the Shares
exists as determined by the Company, by delivery (on a
form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to
deliver all or part of the sale proceeds to the Company
in payment of the aggregate Exercise Price.
Withholding Taxes You will not be allowed to exercise this option unless you
make acceptable arrangements to pay any withholding or
other taxes that may be due as a result of the option
exercise or the sale of Shares acquired upon exercise of
this option.
Market Stand-Off In connection with any underwritten public offering by the
Agreement Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act,
including the Company's initial public offering, you shall
not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise
dispose or transfer for value or agree to engage in any of
the foregoing transactions with respect to any Shares
without the prior written consent of the Company or its
underwriters, for such period of time after the effective
date of such registration statement, not to exceed one
hundred eighty (180) days as may be requested by the
Company or such underwriters.
In order to enforce the provisions of this paragraph, the
Company may impose stop-transfer instructions with respect
to the Shares until the end of the applicable stand-off
period.
-5-
<PAGE>
Restrictions on By signing this Agreement, you agree not to sell any option
Resale Shares at a time when applicable laws, regulations or
Company or underwriter trading policies prohibit a sale.
You represent and agree that the Shares to be acquired upon
exercising this option will be acquired for investment, and
not with a view to the sale or distribution thereof.
In the event that the sale of Shares under the Plan is not
registered under the Securities Act but an exemption is
available which requires an investment representation or
other representation, you shall represent and agree at the
time of exercise to make such representations as are deemed
necessary or appropriate by the Company and its counsel as
a condition of issuance of the Shares to you by the
Company.
-6-
<PAGE>
The Company's In the event that you propose to sell, pledge or otherwise
Right of First transfer to a third party any vested Shares acquired under
Refusal this Agreement, or any interest in such Shares, the
Company shall have the "Right of First Refusal" with
respect to all (and not less than all) of such Shares. If
you desire to transfer vested Shares acquired under this
Agreement, you must give a written notice to the Company
describing fully the proposed transfer, including the
number of Shares proposed to be transferred, the proposed
transfer price and the name and address of the proposed
transferee (the "Transfer Notice"). The Transfer Notice
shall be signed both by you and by the proposed new
transferee and must constitute a binding commitment of
both parties to the transfer of the Shares. The Company
shall have the right to purchase all, and not less than
all, of the Shares on the terms of the proposal described
in the Transfer Notice (subject, however, to any change in
such terms permitted in the next paragraph) by delivery of
a notice of exercise of the Right of First Refusal within
thirty (30) days after the date when the Transfer Notice
was received by the Company.
If the Company fails to exercise its Right of First
Refusal before or within thirty (30) days after the date
when it received the Transfer Notice, you may, not later
than ninety (90) days following receipt of the Transfer
Notice by the Company, conclude a transfer of the Shares
subject to the Transfer Notice on the terms and conditions
described in the Transfer Notice. Any proposed transfer on
terms and conditions different from those described in the
Transfer Notice, as well as any subsequent proposed
transfer by you, shall again be subject to the Right of
First Refusal and shall require compliance with the
procedure described in the paragraph above. If the Company
exercises its Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set forth
in the Transfer Notice within sixty (60) days after the
date when the Company received the Transfer Notice (or
within such longer period as may have been specified in
the Transfer Notice); provided, however, that in the event
the Transfer Notice provided that payment for the Shares
was to be made in a form other than lawful money paid at
the time of transfer, the Company shall have the option of
paying for the Shares with lawful money equal to the
present value of the consideration described in the
Transfer Notice.
The Company's Right of First Refusal shall inure to the
benefit of its successors and assigns, shall be freely
assignable in whole or in part and shall be binding upon
any transferee of the Shares.
The Company's Right of First Refusal shall terminate in
the event that Stock is listed on an established stock
exchange or is quoted regularly on the Nasdaq Stock
Market.
-7-
<PAGE>
Transfer of Option Prior to your death, only you may exercise this option.
You cannot transfer or assign this option. For instance,
you may not sell this option or use it as security for a
loan. If you attempt to do any of these things, this
option will immediately become invalid. You may, however,
dispose of this option in your will, or you may designate
a beneficiary to exercise this option.
Regardless of any marital property settlement agreement,
the Company is not obligated to honor a notice of exercise
from your spouse or former spouse, nor is the Company
obligated to recognize such individual's interest in your
option in any other way.
No Retention Rights Your option or this Agreement do not give you the right to
be retained by the Company (or any subsidiaries) in any
capacity. The Company (and any subsidiaries) reserve the
right to terminate your Service at any time and for any
reason.
Shareholder Rights You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for your
option Shares has been issued. No adjustments are made for
dividends or other rights if the applicable record date
occurs before your stock certificate is issued, except as
described in the Plan.
Adjustments In the event of a stock split, a stock dividend or a
similar change in the Company stock, the number of Shares
covered by this option and the exercise price per share
may be adjusted pursuant to the Plan. Your option shall be
subject to the terms of the agreement of merger,
liquidation or reorganization in the event the Company is
subject to such corporate activity.
-8-
<PAGE>
Legends All certificates representing the Shares issued upon
exercise of this option shall, where applicable, have
endorsed thereon the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE SOLD, TRANSFERRED, ENCUMBERED OR IN ANY
MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND
THE INITIAL HOLDER HEREOF. SUCH AGREEMENT PROVIDES
FOR CERTAIN TRANSFER RESTRICTIONS, INCLUDING RIGHTS
OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE
SECURITIES. THE SECRETARY OF THE COMPANY WILL UPON
WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT
TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF
REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF
THE COMPANY IS PROVIDED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS
ARE NOT REQUIRED."
Applicable Law This Agreement will be interpreted and enforced under the
laws of the State of California without regard to
conflicts of laws provisions thereof.
-9-
<PAGE>
The Plan and Other The text of the Plan is incorporated in this Agreement by
Agreements reference. Certain capitalized terms used in this
Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire
understanding between you and the Company regarding this
option. Any prior agreements, commitments or negotiations
concerning this option are superseded.
By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.
-10-
<PAGE>
NOTICE OF EXERCISE OF STOCK OPTION
Vivid Publishing, Inc.
510 Third Street, Suite 200
San Francisco, CA 94107-1814
Attn: Chief Financial Officer
Re: Exercise of Stock Option to Purchase Shares of Company Stock
Ladies and Gentlemen:
Pursuant to the Stock Option Agreement dated ________________ , 199_ (the
"Stock Option Agreement"), between Vivid Publishing, Inc., a California
corporation (the "Company"), and the undersigned, I hereby elect to purchase
______________ shares of the common stock of the Company (the "Shares"), at the
price of $ _____________ per Share. My check in the amount of $ _________ is
enclosed. The Shares are to be issued in __________ certificate(s) and
registered in the name(s) of:
-----------------------------
-----------------------------
The undersigned understands there may be tax consequences as a result of
the purchase or disposition of the Shares. The undersigned represents that
he/she has received and reviewed the Plan's federal income tax information and
consulted with any tax consultants he/she deems advisable in connection with the
purchase or disposition of the Shares and the undersigned is not relying on the
Company for any tax advice.
The undersigned acknowledges that he/she has received, read and understood
the Stock Option Agreement and agrees to abide by and be bound by their terms
and conditions. The undersigned represents that the Shares are being acquired
soley for his/her own account and not as a nominee for any other party, or for
investment, and that the undersigned purchaser will not offer, sell or otherwise
dispose of any such Shares except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws.
Dated:
----------------------
----------------------------------------
(Signature)
----------------------------------------
(Please Print Name)
Social Security No.
---------------------
----------------------------------------
----------------------------------------
<PAGE>
(Full Address)
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<PAGE>
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
VIVID PUBLISHING, INC.
1996 STOCK PLAN
INCENTIVE STOCK OPTION AGREEMENT
(Monthly Vesting over Four Years with 90-Day Cliff)
VIVID PUBLISHING, INC., a California corporation (the "Company"), hereby grants
an option to purchase Shares of its common stock to the optionee named below.
The terms and conditions of the option are set forth in this cover sheet, in the
attachment and in the Company's 1996 Stock Plan (the "Plan").
Date of Option Grant:
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Name of Optionee:
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Optionee's Social Security Number:
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Number of Shares of
Common Stock Covered by Option:
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Exercise Price per Share:
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Vesting Start Date:
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Vesting Schedule: Subject to the terms set forth in the
attached Agreement, your right to exercise
this option vests monthly beginning on the
Vesting Start Date, as shown above;
provided, however, no portion of this
option may be exercised prior to the
expiration of 90 days from the Date of
Grant, as shown on this cover sheet. The
number of Shares which may be purchased
under this option by you at the Purchase
Price shall be equal to the difference
between (i) the product (rounded to the
nearest integer) of the number of full
months of your continuous employment with
the Company (including all days of any
approved leaves of absence) from the
Vesting Starting Date times the number of
Shares covered by this option times
.020833333333, minus (ii) the number of
Shares purchased pursuant to this Option
prior to such exercise. The resulting
number of Shares will be rounded to the
nearest whole number. No additional Shares
will vest after your Company service has
terminated for any reason.
By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is also
enclosed.
Optionee:
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(Signature)
Company:
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(Signature)
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(Title)
Attachment
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE,
AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED
VIVID PUBLISHING, INC.
1996 STOCK PLAN
INCENTIVE STOCK OPTION AGREEMENT
Incentive Stock Option
This option is intended to be an incentive stock option under section 422 of the
Internal Revenue Code and will be interpreted accordingly.
Vesting
Your right to exercise this option vests according to the schedule on the cover
sheet. Notwithstanding anything to the contrary in this Agreement, the vesting
of this option is conditioned upon the Company obtaining a written waiver from
the Leap Group ("Leap") of any anti-dilution provisions in Leap's favor set
forth in the promissory note of the Company issued to Leap on February 8, 1997,
which provisions might otherwise be triggered by this option. In the event that
Leap refuses in writing to provide such waiver, or otherwise attempts to assert
such anti-dilution rights, this option will automatically and immediately become
rescinded, null and void.
Term
Your option will expire in any event at the close of business at Company
headquarters on the day before the 10th anniversary of the Date of Grant, as
shown on the cover sheet. (It will expire earlier if your Company service
terminates, as described below.)
Termination
If your service as an employee of the Company (or any subsidiary) is terminated
without cause, then your option will expire at the close of business at Company
headquarters on the 60th day after your termination date. If your service as an
employee of the Company (or any subsidiary) is Terminated for Cause, then your
option, including the vested portion of your option, if any, will terminate
immediately. Notwithstanding anything else in this Agreement to the contrary, in
the event that you cease to be employed by the Company within one year from the
Date of Grant for any reason all rights to purchase shares under this option
shall immediately terminate.
Death
If you die as an employee of the Company (or any subsidiary), then your option
will expire at the close of business at Company headquarters on the date 12
months after the date of death. During that 12 month period, your estate or
heirs may exercise the vested portion of your option.
Disability
If your service as an employee of the Company (or any subsidiary) terminates
because of your Disability, then your option will expire at the close of
business at Company headquarters on the date 6 months after your termination
date.
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"Disability" means that you are unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment.
Leaves of Absence
For purposes of this option, your service does not terminate when you go on a
bona fide leave of absence that was approved by the Company in writing, if the
terms of the leave provide for continued service crediting, or when continued
service crediting is required by applicable law. However, for purposes of
determining whether your option is entitled to ISO status, your serve will be
treated as terminating 90 days after you went on leave, unless your right to
return to active work is guaranteed by law or by a contract. Your service
terminates in any event when the approved leave ends unless you immediately
return to active work.
The Company determines which leaves count for this purpose, and when your
service terminates for all purposes under the Plan.
Restrictions on Exercise
The Company will not permit you to exercise this option if the issuance of
Shares at that time would violate any law or regulation.
Notice of Exercise
When you wish to exercise this option, you must notify the Company by filing the
proper "Notice of Exercise" form at the address given on the form. Your notice
must specify how many Shares you wish to purchase. Your notice must also specify
how your Shares should be registered (in your name only or in your and your
spouse's names as community property or as joint tenants with right of
survivorship). The notice will be effective when it is received by the Company.
If someone else wants to exercise this option after your death, that person must
prove to the Company's satisfaction that he or she is entitled to do so.
Periods of Nonexercisability
Any other provision of this Agreement notwithstanding, the Company shall have
the right to designate one or more periods of time, each of which shall not
exceed 180 days in length, during which this option shall not be exercisable if
the Company determines (in its sole discretion) that such limitation on exercise
could in any way facilitate a lessening of any restriction on transfer pursuant
to the Securities Act or any state securities laws with respect to any issuance
of securities by the Company, facilitate the registration or qualification of
any securities by the Company under the Securities Act or any state securities
laws, or facilitate the perfection of any exemption from the registration or
qualification requirements of the Securities Act or any applicable state
securities laws for the issuance or transfer of any securities. Such limitation
on exercise shall not alter the vesting schedule set forth in this Agreement
other than to limit the periods during which this option shall be exercisable.
Form of Payment
When you submit your notice of exercise, you must include payment of the option
price for the Shares you are purchasing. Payment may be made in one (or a
combination) of the following forms:
(i) Your personal check, a cashier's check or a money order.
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(ii) common Shares which have already been owned by you for any time
period specified by the Committee and which are surrendered to the
Company. The value of the Shares determined as of the effective date
of the option exercise, will be applied to the option price.
(iii) To the extent that a public market for the Shares exists as
determined by the Company by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker to
sell Shares and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
Withholding Taxes
You will not be allowed to exercise this option unless you make acceptable
arrangements to pay any withholding or other taxes that may be due as a result
of the option exercise or the sale of shares acquired upon exercise of this
option and the sale of the shares.
Restrictions on Resale
By signing this Agreement, you agree not to sell any option Shares at a time
when applicable laws, regulations or Company or underwriter trading policies
prohibit a sale. You represent and agree that the Shares to be acquired upon
exercising this option will be acquired for investment, and not with a view to
the sale or distribution thereof. In the event that the sale of Shares under the
Plan is not registered under the Securities Act of 1933 but an exemption is
available which requires an investment representation or other representation,
you shall represent and agree al the time of exercise that the Shares being
acquired upon exercising this option are being acquired for investment, and not
with a view to the sale or distribution thereof, and shall make such other
representations as are deemed necessary or appropriate by the Company and its
counsel.
The Company's Right of First Refusal
In the event that you propose to sell, pledge or otherwise transfer to a third
party any Shares acquired under this Agreement, or any interest in such Shares,
the Company shall have the "Right of First Refusal" with respect to all (and not
less than all) of such Shares. If you desire to transfer Shares acquired under
this Agreement, you must give a written "Transfer Notice" to the Company
describing fully the proposed transfer, including the number of Shares proposed
to be transferred, the proposed transfer price and the name and address of the
proposed transferee. The Transfer Notice shall be signed both by you and by the
proposed new transferee and must constitute a binding commitment of both parties
to the transfer of the Shares. The Company shall have the right to purchase all,
and not less than all, of the Shares on the terms of the proposal described in
the Transfer Notice (subject, however, to any change in such terms permitted in
the next paragraph) by delivery of a notice of exercise of the Right of First
Refusal within 30 days after the date when the Transfer Notice was received by
the Company. The Company's rights under this Subsection shall be freely
assignable, in whole or in part. If the Company fails to exercise its Right of
First Refusal within 30 days after the date when it received the Transfer
Notice, you may, not later than 90 days following receipt of the Transfer Notice
by the Company, conclude a transfer of the Shares subject to the Transfer Notice
on the terms and conditions described in the Transfer Notice. Any proposed
transfer on terms and conditions different from those described in the Transfer
Notice, as well as any subsequent proposed transfer by you, shall again be
subject to the Right of First Refusal and shall require compliance with the
procedure described in the paragraph above. If the Company exercises its Right
of First Refusal, the parties shall consummate the sale of the Shares on the
terms set forth in the Transfer Notice within 60 days after the date when the
Company received the Transfer Notice (or within such longer period as may have
been specified in the Transfer Notice); provided, however, that in the event the
Transfer Notice provided that payment for the Shares was to be made in a form
other than lawful money paid at the time of transfer, the Company shall have the
option of paying for the Shares with lawful money equal to the present value of
the consideration described in the Transfer Notice.
The Company's Right of first Refusal shall inure to the benefit of its
successors and assigns and shall be binding upon any transferee of the Shares.
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The Company's Right of First Refusal shall terminate in the event that Stock is
listed on an established stock exchange or is quoted regularly on the Nasdaq
National Market.
Transfer of Option
Prior to your death, only you may exercise this option. You cannot transfer or
assign this option. For instance, you may not sell this option or use it as
security for a loan. If you attempt to do any of these things, this option will
immediately become invalid. You may, however, dispose of this option in your
will.
Regardless of any marital property settlement agreement, the Company is not
obligated to honor a notice of exercise from your spouse or former spouse, nor
is the Company obligated to recognize such individual's interest in your option
in any other way.
Retention Rights
Your option or this Agreement do not give you the right to be retained by the
Company (or any subsidiaries) in any capacity. The Company (and any
subsidiaries) reserve the right to terminate your service at any time and for
any reason.
Shareholder Rights
You, or your estate or heirs, have no rights as a shareholder of the Company
until a certificate for your option Shares has been issued. No adjustments are
made for dividends or other rights if the applicable record date occurs before
your stock certificate is issued, except as described in the Plan.
Adjustments
In the event of a stock split, a stock dividend or a similar change in the
Company stock, the number of Shares covered by this option and the exercise
price per share may be adjusted pursuant to the Plan. Your option shall be
subject to the terms of the agreement of merger, liquidation or reorganization
in the event the Company is subject to such corporate activity.
Legends
All certificates representing the Shares issued upon exercise of this option
shall, where applicable, have endorsed thereon the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN
AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST
TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES
REPRESENTED BY THIS CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
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You agree that in order to ensure compliance with the restrictions referred to
above, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of
any of the provisions of this agreement or (ii) to treat as owner of such Shares
or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.
Lock-Up Agreement
You agree, in connection with the Company's initial underwritten public offering
of the Company's securities, (1) not to sell, make short sale of, loan, grant
any options for the purchase of, or otherwise dispose of any shares of Common
Stock of the Company held by me (other than those shares included in the
registration) without the prior written consent of the Company or the
underwriters managing such initial underwritten public offering of the Company's
securities for one hundred eighty (180) days from the effective date of such
registration, and (2) you further agree to execute any agreement reflecting (1)
above as may be requested by the underwriters at the time of the public
offering; provided however that the officers and directors of the Company who
own the stock of the Company also agree to such restrictions.
Applicable Law
This Agreement will be interpreted and enforced under the laws of the State of
California.
The Plan and Other Agreements
The text of the Plan is incorporated in this Agreement by reference. Certain
capitalized teens used in this Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this option. Any prior agreements, commitments or
negotiations concerning this option are superseded.
By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE,
AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
VIVID PUBLISHING, INC.
1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
30 Day Cliff
Vivid Publishing, Inc., a California corporation (the "Company"), hereby
grants an option to purchase shares of its Common Stock (the "Shares") to the
optionee named below. The terms and conditions of the option are set forth in
this cover sheet, in the attachment and in the Company's 1996 Stock Option Plan
(the "Plan").
Date of Option Grant: _________, 199_
Name of Optionee:_______________________________________________________________
Optionee's Social Security Number: ______-______-______
Number of Shares of Common Stock Covered by Option:_____________________________
Exercise Price per Share: $_____________________________________________________
Vesting Start Date:_________________, 199__
_____Check here if Optionee is a 10% owner (so that exercise price must be 110%
of fair market value and the Option term will not exceed 5 years).
By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is
also enclosed.
Optionee:_______________________________________________________________________
(Signature)
Company:________________________________________________________________________
(Signature)
Title:__________________________________________________________________
Attachment
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VIVID PUBLISHING, INC.
1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Four-Year Vesting with One Year Cliff
Incentive Stock This option is intended to be an incentive stock option
Option under section 422 of the Internal Revenue Code and will
be interpreted accordingly.
Exercise and Vesting This option may be exercised only to the extent that
Shares have been vested. The Shares under this option
will vest in their entirety thirty (30) days following
the Vesting Start Date as shown on the cover sheet, in
accordance with the vesting schedule indicated below:
Portion of
Shares Vested
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From the Vesting Start Date until 30 None
days thereafter
At the end of 30 days from the Vesting 100%
Start Date
Term Your option will expire in any event at the close of
business at Company headquarters on the day before
the 10th anniversary of the Date of Option Grant, as
shown on the cover sheet. (It will expire earlier if
your Service to the Company terminates, as described
below.)
Regular If your Service to the Company terminates for any
Termination reason except death or Disability, then your option
will expire at the close of business at Company
headquarters on the 90th day after your termination
date.
Death In the event of your death while in Service, then your
option will expire at the close of business at Company
headquarters on the date six (6) months after the date
of death. During that six (6) month period, your estate
or heirs may exercise your option.
Disability If your Service terminates because of your Disability,
then your option will expire at the close of business
at Company headquarters on the date six (6) months
after your termination date.
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However, for purposes of determining whether your
option is entitled to ISO status, unless your
Disability satisfies the definition set forth in
section 22(e)(3) of the Code (as cited below), ISO
status will terminate three (3) months after your
termination date.
"Disability" means that you are unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment.
Leaves of Absence For purposes of this option, your Service does not
terminate when you go on a bona fide leave of absence,
that was approved by the Company in writing, if the
terms of the leave provide for continued service
crediting, or when continued service crediting is
required by applicable law. However, for purposes of
determining whether your option is entitled to ISO
status, your Service will be treated as terminating
ninety (90) days after you went on leave, unless your
right to return to active work is guaranteed by law or
a contract. Your Service terminates in any event when
the approved leave ends, unless you immediately return
to active work.
The Company determines which leaves count for this
purpose, and when your Service terminates for all
purposes under the Plan.
Restrictions on The Company will not permit you to exercise this option
Exercise if the issuance of Shares at that time would violate
any law or regulation.
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Notice of Exercise When you wish to exercise this option, you must notify
the Company by filing the proper notice of exercise
form at the address given on the form, a copy of which
is attached hereto. Your notice must specify how many
Shares you wish to purchase. Your notice must also
specify how your Shares should be registered (in your
name only or in your and your spouse's names as
community property or as joint tenants with right of
survivorship). The notice will be effective when it is
received by the Company.
If someone else wants to exercise this option after
your death, that person must prove to the Company's
satisfaction that he or she is entitled to do so.
Periods of Any other provision of this Agreement notwithstanding,
Nonexercisability the Company shall have the right to designate one or
more periods of time, each of which shall not exceed
one hundred eighty (180) days in length, during which
this option shall not be exercisable if the Company
determines (in its sole discretion) that such
limitation on exercise could in any way facilitate a
lessening of any restriction on transfer pursuant to
the Securities Act of 1933, as amended (the "Securities
Act") or any state securities laws with respect to any
issuance of securities by the Company, facilitate the
registration or qualification of any securities by the
Company under the Securities Act or any state
securities laws, or facilitate the perfection of any
exemption from the registration or qualification
requirements of the Securities Act or any applicable
state securities laws for the issuance or transfer of
any securities. Such limitation on exercise shall not
alter the vesting schedule set forth in this Agreement
other than to limit the periods during which this
option shall be exercisable.
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Form of Payment When you submit your notice of exercise, you must
include payment of the option price for the Shares you
are purchasing. Payment may be made in one (or a
combination) of the following forms:
. Your personal check, a cashier's check or a money
order.
. Common Stock which has already been owned by you for
any time period specified by the Committee and which
is surrendered to the Company. The value of the
Stock, determined as of the effective date of the
option exercise, will be applied to the option
price.
. To the extent that a public market for the Shares
exists as determined by the Company, by delivery (on
a form prescribed by the Committee) of an
irrevocable direction to a securities broker to sell
Shares and to deliver all or part of the sale
proceeds to the Company in payment of the aggregate
Exercise Price.
Withholding Taxes You will not be allowed to exercise this option unless
you make acceptable arrangements to pay any withholding
or other taxes that may be due as a result of the
option exercise or the sale of Shares acquired upon
exercise of this option.
Market Stand-Off In connection with any underwritten public offering by
Agreement the Company of its equity securities pursuant to an
effective registration statement filed under the
Securities Act, including the Company's initial public
offering, you shall not sell, make any short sale of,
loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value
or agree to engage in any of the foregoing transactions
with respect to any Shares without the prior written
consent of the Company or its underwriters, for such
period of time after the effective date of such
registration statement, not to exceed one hundred
eighty (180) days as may be requested by the Company or
such underwriters.
In order to enforce the provisions of this paragraph,
the Company may impose stop-transfer instructions with
respect to the Shares until the end of the applicable
stand-off period.
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Restrictions on By signing this Agreement, you agree not to sell any
Resale option Shares at a time when applicable laws,
regulations or Company or underwriter trading policies
prohibit a sale.
You represent and agree that the Shares to be acquired
upon exercising this option will be acquired for
investment, and not with a view to the sale or
distribution thereof.
In the event that the sale of Shares under the Plan is
not registered under the Securities Act but an
exemption is available which requires an investment
representation or other representation, you shall
represent and agree at the time of exercise to make
such representations as are deemed necessary or
appropriate by the Company and its counsel as a
condition of issuance of the Shares to you by the
Company.
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The Company's In the event that you propose to sell, pledge or
Right of First otherwise transfer to a third party any vested Shares
Refusal acquired under this Agreement, or any interest in such
Shares, the Company shall have the "Right of First
Refusal" with respect to all (and not less than all) of
such Shares. If you desire to transfer vested Shares
acquired under this Agreement, you must give a written
notice to the Company describing fully the proposed
transfer, including the number of Shares proposed to be
transferred, the proposed transfer price and the name
and address of the proposed transferee (the "Transfer
Notice"). The Transfer Notice shall be signed both by
you and by the proposed new transferee and must
constitute a binding commitment of both parties to the
transfer of the Shares. The Company shall have the
right to purchase all, and not less than all, of the
Shares on the terms of the proposal described in the
Transfer Notice (subject, however, to any change in
such terms permitted in the next paragraph) by delivery
of a notice of exercise of the Right of First Refusal
within thirty (30) days after the date when the
Transfer Notice was received by the Company.
If the Company fails to exercise its Right of First
Refusal before or within thirty (30) days after the
date when it received the Transfer Notice, you may, not
later than ninety (90) days following receipt of the
Transfer Notice by the Company, conclude a transfer of
the Shares subject to the Transfer Notice on the terms
and conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions different
from those described in the Transfer Notice, as well as
any subsequent proposed transfer by you, shall again be
subject to the Right of First Refusal and shall require
compliance with the procedure described in the
paragraph above. If the Company exercises its Right of
First Refusal, the parties shall consummate the sale of
the Shares on the terms set forth in the Transfer
Notice within sixty (60) days after the date when the
Company received the Transfer Notice (or within such
longer period as may have been specified in the
Transfer Notice); provided, however, that in the event
the Transfer Notice provided that payment for the
Shares was to be made in a form other than lawful money
paid at the time of transfer, the Company shall have
the option of paying for the Shares with lawful money
equal to the present value of the consideration
described in the Transfer Notice.
The Company's Right of First Refusal shall inure to the
benefit of its successors and assigns, shall be freely
assignable in whole or in part and shall be binding
upon any transferee of the Shares.
The Company's Right of First Refusal shall terminate in
the event that Stock is listed on an established stock
exchange or is quoted regularly on the Nasdaq Stock
Market.
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Transfer of Option Prior to your death, only you may exercise this option.
You cannot transfer or assign this option. For
instance, you may not sell this option or use it as
security for a loan. If you attempt to do any of these
things, this option will immediately become invalid.
You may, however, dispose of this option in your will,
or you may designate a beneficiary to exercise this
option.
Regardless of any marital property settlement
agreement, the Company is not obligated to honor a
notice of exercise from your spouse or former spouse,
nor is the Company obligated to recognize such
individual's interest in your option in any other way.
No Retention Rights Your option or this Agreement do not give you the right
to be retained by the Company (or any subsidiaries) in
any capacity. The Company (and any subsidiaries)
reserve the right to terminate your Service at any time
and for any reason.
Shareholder Rights You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for your
option Shares has been issued. No adjustments are made
for dividends or other rights if the applicable record
date occurs before your stock certificate is issued,
except as described in the Plan.
Adjustments In the event of a stock split, a stock dividend or a
similar change in the Company stock, the number of
Shares covered by this option and the exercise price
per share may be adjusted pursuant to the Plan. Your
option shall be subject to the terms of the agreement
of merger, liquidation or reorganization in the event
the Company is subject to such corporate activity.
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Legends All certificates representing the Shares issued upon
exercise of this option shall, where applicable, have
endorsed thereon the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD, TRANSFERRED, ENCUMBERED OR IN
ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH
THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE
COMPANY AND THE INITIAL HOLDER HEREOF. SUCH
AGREEMENT PROVIDES FOR CERTAIN TRANSFER
RESTRICTIONS, INCLUDING RIGHTS OF FIRST REFUSAL
UPON AN ATTEMPTED TRANSFER OF THE SECURITIES. THE
SECRETARY OF THE COMPANY WILL UPON WRITTEN
REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE
HOLDER HEREOF WITHOUT CHARGE."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED
AND SOLD ONLY IF REGISTERED AND QUALIFIED
PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL
AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION AND QUALIFICATION
UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT
REQUIRED."
Applicable Law This Agreement will be interpreted and enforced under
the laws of the State of California without regard to
conflicts of laws provisions thereof.
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The Plan and Other The text of the Plan is incorporated in this Agreement
Agreements by reference. Certain capitalized terms used in this
Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire
understanding between you and the Company regarding
this option. Any prior agreements, commitments or
negotiations concerning this option are superseded.
By signing the cover sheet of this Agreement, you agree to all of the terms
and conditions described above and in the Plan.
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NOTICE OF EXERCISE OF STOCK OPTION
Vivid Publishing, Inc.
510 Third Street, Suite 200
San Francisco, CA 94107-1814
Attn: Chief Financial Officer
Re: Exercise of Stock Option to Purchase Shares of Company Stock
Ladies and Gentlemen:
Pursuant to the Stock Option Agreement dated________, 199_ (the "Stock
Option Agreement"), between Vivid Publishing, Inc., a California corporation
(the "Company"), and the undersigned, I hereby elect to purchase________shares
of the common stock of the Company (the "Shares"), at the price of $________ per
Share. My check in the amount of $___________ is enclosed. The Shares are to be
issued in _____ certificate(s) and registered in the name(s) of:
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The undersigned understands there may be tax consequences as a result of
the purchase or disposition of the Shares. The undersigned represents that
he/she has received and reviewed the Plan's federal income tax information and
consulted with any tax consultants he/she deems advisable in connection with the
purchase or disposition of the Shares and the undersigned is not relying on
the Company for any tax advice.
The undersigned acknowledges that he/she has received, read and understood
the Stock Option Agreement and agrees to abide by and be bound by their terms
and conditions. The undersigned represents that the Shares are being acquired
solely for his/her own account and not as a nominee for any other party, or for
investment, and that the undersigned purchaser will not offer, sell or otherwise
dispose of any such Shares except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws.
Dated:_______________________
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(Signature)
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(Please Print Name)
Social Security No.
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(Full Address)
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IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
VIVID PUBLISHING, INC.
1996 STOCK PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
(Fully Vested)
VIVID PUBLISHING, INC., a California corporation (the "Company"), hereby grants
an option to purchase Shares of its common stock to the optionee named below.
The terms and conditions of the option are set forth in this cover sheet, in the
attachment and in the Company's 1996 Stock Plan (the "Plan").
Date of Option Grant: __
Name of Optionee: __
Optionee's Social Security Number:
Number of Shares of
Common Stock Covered by Option: __
Exercise Price per Share: __
Vesting Schedule: Subject to the terms set forth in the
attached Agreement, your right to
exercise this option is fully vested as
of the Date of Option Grant.
By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is also
enclosed.
Optionee:
(Signature)
Company:
(Signature)
(Title)
Attachment
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE,
AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED
VIVID PUBLISHING, INC.
1996 STOCK PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
Nonstatutory Stock Option
This option is not intended to be an incentive stock option under section 422 of
the Internal Revenue Code and will be interpreted accordingly.
Vesting
Your right to exercise this option is fully vested as of the Date of Option
Grant as shown on the cover sheet. However, notwithstanding anything to the
contrary in this Agreement, the vesting of this option is conditioned upon the
Company obtaining a written waiver from the Leap Group ("Leap") of any anti-
dilution provisions in Leap's favor set forth in the promissory note of the
Company issued to Leap on February 8, 1997, which provisions might otherwise be
triggered by this option. In the event that Leap refuses in writing to provide
such waiver, or otherwise attempts to assert such anti-dilution rights, this
option will automatically and immediately become rescinded, null and void.
Term
Your option will expire in any event at the close of business at Company
headquarters on the day before the 10th anniversary of the Date of Grant, as
shown on the cover sheet. (It will expire earlier if your Company service
terminates, as described below.)
Termination
If your service as an employee of the Company (or any subsidiary) is terminated
without cause, then your option will expire on the later of the close of
business at Company headquarters on the 60th day (i) after your termination date
or (ii) after the Company has obtained the written waiver from Leap described in
"Vesting" above. If your service as an employee of the Company (or any
subsidiary) is Terminated for Cause, then your option, including the vested
portion of your option, if any, will terminate immediately. Notwithstanding
anything else in this Agreement to the contrary, in the event that you cease to
be employed by the Company within one year from the Date of Grant for any reason
all rights to purchase shares under this option shall immediately terminate.
Death
If you die as an employee of the Company (or any subsidiary), then your option
will expire at the close of business at Company headquarters on the date 12
months after the date of death. During that 12 month period, your estate or
heirs may exercise the vested portion of your option.
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Disability
If your service as an employee of the Company (or any subsidiary) terminates
because of your Disability, then your option will expire at the close of
business at Company headquarters on the date 6 months after your termination
date.
"Disability" means that you are unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment.
Leaves of Absence
For purposes of this option, your service does not terminate when you go on a
bona fide leave of absence that was approved by the Company in writing, if the
terms of the leave provide for continued service crediting, or when continued
service crediting is required by applicable law. However, for purposes of
determining whether your option is entitled to ISO status, your service will be
treated as terminating 90 days after you went on leave, unless your right to
return to active work is guaranteed by law or by a contract. Your service
terminates in any event when the approved leave ends unless you immediately
return to active work.
The Company determines which leaves count for this purpose, and when your
service terminates for all purposes under the Plan.
Restrictions on Exercise
The Company will not permit you to exercise this option if the issuance of
Shares at that time would violate any law or regulation.
Notice of Exercise
When you wish to exercise this option, you must notify the Company by filing the
proper "Notice of Exercise" form at the address given on the form. Your notice
must specify how many Shares you wish to purchase. Your notice must also
specify how your Shares should be registered (in your name only or in your and
your spouse's names as community property or as joint tenants with right of
survivorship). The notice will be effective when it is received by the Company.
If someone else wants to exercise this option after your death, that person must
prove to the Company's satisfaction that he or she is entitled to do so.
Periods of Nonexercisability
Any other provision of this Agreement notwithstanding, the Company shall have
the right to designate one or more periods of time, each of which shall not
exceed 180 days in length, during which this option shall not be exercisable if
the Company determines (in its sole discretion) that such limitation on exercise
could in any way facilitate a lessening of any restriction on transfer pursuant
to the Securities Act or any state securities laws with respect to any issuance
of securities by the Company, facilitate the registration or qualification of
any securities by the Company under the Securities Act or any state securities
laws, or facilitate the perfection of any exemption from the registration or
qualification requirements of the Securities Act or any applicable state
securities laws for the issuance or transfer of any securities. Such limitation
on exercise shall not alter the vesting schedule set forth in this Agreement
other than to limit the periods during which this option shall be exercisable.
<PAGE>
Form of Payment
When you submit your notice of exercise, you must include payment of the option
price for the Shares you are purchasing. Payment may be made in one (or a
combination) of the following forms:
(i) Your personal check, a cashier's check or a money order.
(ii) common Shares which have already been owned by you for any time
period specified by the Committee and which are surrendered to the
Company. The value of the Shares determined as of the effective date
of the option exercise, will be applied to the option price.
(iii) To the extent that a public market for the Shares exists as
determined by the Company by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker to
sell Shares and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
Withholding Taxes
You will not be allowed to exercise this option unless you make acceptable
arrangements to pay any withholding or other taxes that may be due as a result
of the option exercise or the sale of shares acquired upon exercise of this
option and the sale of the shares.
Restrictions on Resale
By signing this Agreement, you agree not to sell any option Shares at a time
when applicable laws, regulations or Company or underwriter trading policies
prohibit a sale. You represent and agree that the Shares to be acquired upon
exercising this option will be acquired for investment, and not with a view to
the sale or distribution thereof. In the event that the sale of Shares under
the Plan is not registered under the Securities Act of 1933 but an exemption is
available which requires an investment representation or other representation,
you shall represent and agree at the time of exercise that the Shares being
acquired upon exercising this option are being acquired for investment, and not
with a view to the sale or distribution thereof, and shall make such other
representations as are deemed necessary or appropriate by the Company and its
counsel.
The Company's Right of First Refusal
In the event that you propose to sell, pledge or otherwise transfer to a third
party any Shares acquired under this Agreement, or any interest in such Shares,
the Company shall have the "Right of First Refusal" with respect to all (and not
less than all) of such Shares. If you desire to transfer Shares acquired under
this Agreement, you must give a written "Transfer Notice" to the Company
describing fully the proposed transfer, including the number of Shares proposed
to be transferred, the proposed transfer price and the name and address of the
proposed transferee. The Transfer Notice shall be signed both by you and by the
proposed new transferee and must constitute a binding commitment of both parties
to the transfer of the Shares. The Company shall have the right to purchase
all, and not less than all, of the Shares on the terms of the proposal described
in the Transfer Notice (subject, however, to any change in such terms permitted
in the next paragraph) by delivery of a notice of exercise of the Right of First
Refusal within 30 days after the date when the Transfer Notice was received by
the Company. The Company's rights under this Subsection shall be freely
assignable, in whole or in part. If the Company fails to exercise its Right of
First Refusal within 30 days after the date when it received the Transfer
Notice, you may, not later than 90 days following
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receipt of the Transfer Notice by the Company, conclude a transfer of the Shares
subject to the Transfer Notice on the terms and conditions described in the
Transfer Notice. Any proposed transfer on terms and conditions different from
those described in the Transfer Notice, as well as any subsequent proposed
transfer by you, shall again be subject to the Right of First Refusal and shall
require compliance with the procedure described in the paragraph above. If the
Company exercises its Right of First Refusal, the parties shall consummate the
sale of the Shares on the terms set forth in the Transfer Notice within 60 days
after the date when the Company received the Transfer Notice (or within such
longer period as may have been specified in the Transfer Notice); provided,
however, that in the event the Transfer Notice provided that payment for the
Shares was to be made in a form other than lawful money paid at the time of
transfer, the Company shall have the option of paying for the Shares with lawful
money equal to the present value of the consideration described in the Transfer
Notice.
The Company's Right of First Refusal shall inure to the benefit of its
successors and assigns and shall be binding upon any transferee of the Shares.
The Company's Right of First Refusal shall terminate in the event that Stock is
listed on an established stock exchange or is quoted regularly on the Nasdaq
National Market.
Transfer of Option
Prior to your death, only you may exercise this option. You cannot transfer or
assign this option. For instance, you may not sell this option or use it as
security for a loan. If you attempt to do any of these things, this option will
immediately become invalid. You may, however, dispose of this option in your
will.
Regardless of any marital property settlement agreement, the Company is not
obligated to honor a notice of exercise from your spouse or former spouse, nor
is the Company obligated to recognize such individual's interest in your option
in any other way.
Retention Rights
Your option or this Agreement do not give you the right to be retained by the
Company (or any subsidiaries) in any capacity. The Company (and any
subsidiaries) reserve the right to terminate your service at any time and for
any reason.
Shareholder Rights
You, or your estate or heirs, have no rights as a shareholder of the Company
until a certificate for your option Shares has been issued. No adjustments are
made for dividends or other rights if the applicable record date occurs before
your stock certificate is issued, except as described in the Plan.
Adjustments
In the event of a stock split, a stock dividend or a similar change in the
Company stock, the number of Shares covered by this option and the exercise
price per share may be adjusted pursuant to the Plan. Your option shall be
subject to the terms of the agreement of merger, liquidation or reorganization
in the event the Company is subject to such corporate activity.
Legends
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All certificates representing the Shares issued upon exercise of this option
shall, where applicable, have endorsed thereon the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN
AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST
TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES
REPRESENTED BY THIS CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
You agree that, in order to ensure compliance with the restrictions referred to
above, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any. The Company shall not be required (i) to transfer on
its books any Shares that have been sold or otherwise transferred in violation
of any of the provisions of this agreement or (ii) to treat as owner of such
Shares or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.
Lock-Up Agreement
You agree, in connection with the Company's initial underwritten public offering
of the Company's securities, (1) not to sell, make short sale of, loan, grant
any options for the purchase of, or otherwise dispose of any shares of Common
Stock of the Company held by me (other than those shares included in the
registration) without the prior written consent of the Company or the
underwriters managing such initial underwritten public offering of the Company's
securities for one hundred eighty (180) days from the effective date of such
registration, and (2) you further agree to execute any agreement reflecting (1)
above as may be requested by the underwriters at the time of the public
offering; provided however that the officers and directors of the Company who
own the stock of the Company also agree to such restrictions.
Applicable Law
This Agreement will be interpreted and enforced under the laws of the State of
California.
The Plan and Other Agreements
The text of the Plan is incorporated in this Agreement by reference. Certain
capitalized terms used in this Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this option. Any prior agreements, commitments or
negotiations concerning this option are superseded.
By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.
<PAGE>
Exhibit 5
PLATINUM technology, inc.
June 18, 1998
Page 1
June 18, 1998
PLATINUM technology, inc.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Re: Registration Statement on Form S-8
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Ladies and Gentlemen:
We have acted as counsel for PLATINUM technology, inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing of a
Registration Statement on Form S-8 (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"). The Registration Statement relates to 3,511,951 shares of the
Company's Common Stock, $.001 par value (the "Common Stock"), issuable upon
exercise of options granted under (i) the Mastering, Inc. Amended and Restated
1995 Executive Stock Option Plan, the Mastering, Inc. Amended and Restated 1995
Employee Stock Option Plan and the Mastering, Inc. 1998 Non-Qualified Stock
Option Agreement for Employees (the "Mastering Plans"); (ii) the Logic Works,
Inc. 1995 Stock Option/Stock Issuance Plan (the "Logic Works Plan"); (iii) the
LBMS Executive Share Option Scheme and the LBMS 1996 Equity Incentive Plan (the
"LBMS Plans"); and (iv) the prospectuses for the Vivid Publishing, Inc. 1997
Stock Option Plan and the Vivid Publishing, Inc. 1996 Stock Option Plan (the
"Vivid Plans"). The Mastering Plans were assumed by the Company in connection
with the Company's acquisition of Mastering, Inc. ("Mastering"), pursuant to the
Agreement and Plan of Merger, dated as of February 18, 1998 (the "Mastering
Agreement"), by and among the Company, Mastering and PT Acquisition Corporation
I, the Logic Works Plan was assumed by the Company in connection with the
Company's acquisition of Logic Works, Inc. ("Logic Works"), pursuant to the
Agreement and Plan of Merger, dated as of March 14, 1998 (the "Logic Works
Agreement"), by and among the Company, Logic Works and PT Acquisition
Corporation II and the Vivid Plans were assumed by the Company in connection
with the Company's acquisition of Vivid Publishing, Inc. ("Vivid"), pursuant to
the Agreement and Plan of Reorganization dated as of May 29, 1998 (the "Vivid
Agreement") by and among the Company, Vivid, VSI Acquisition Corp. and certain
of the shareholders of Vivid. Pursuant to the Mastering Agreement, the Logic
Works Agreement and the Vivid Agreement, the options previously issued under the
Mastering Plans, the Logic Works Plan and the Vivid Plans were converted into
options to purchase Common Stock. The LBMS Plans were adopted by the Company in
order to give effect to certain provisions of the Agreement and Plan of
Reorganization, dated as of January 2, 1998 (the "LBMS Agreement") by and
between the Company and Learmonth & Burchett Management Systems Plc. ("LBMS") as
such provisions relate to unexercised options previously granted by LBMS under
the Learmonth & Burchett Management Systems Executive Share Option Scheme and
the Learmonth & Burchett Management Systems 1996 Equity Incentive Plan.
<PAGE>
PLATINUM technology, inc.
June 18, 1998
Page 2
In connection with this opinion, we have relied as to matters of fact,
without investigation, upon certificates of public officials and others and upon
affidavits, certificates and written statements of directors, officers and
employees of, and the accountants for, the Company. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such instruments, documents and records as we have deemed relevant and necessary
to examine for the purpose of this opinion, including the following:
1. The Registration Statement;
2. The Restated Certificate of Incorporation of the Company, as
amended;
3. The Bylaws of the Company;
4. Records of proceedings and actions of the Company's Board of
Directors and Stockholders;
5. The Mastering Plans, the Logic Works Plan, the LBMS Plans and the
Vivid Plans (collectively, the "Plans"); and
6. The Mastering Agreement, the Logic Works Agreement, the LBMS
Agreement and the Vivid Agreement.
In connection with this opinion, we have assumed the accuracy and
completeness of all documents and records that we have reviewed, the genuineness
of all signatures, the authenticity of the documents submitted to us as
originals and the conformity to authentic original documents of all documents
submitted to us as certified, conformed or reproduced copies.
Based upon and subject to the foregoing, we are of the opinion that the
3,511,951 shares of Common Stock covered by the Registration Statement, when
issued and delivered by the Company, will be validly issued, fully paid and
nonassessable shares of Common Stock.
Our opinion expressed above is limited to the General Corporation Law of
the State of Delaware, and we do not express any opinion herein concerning any
other laws. This opinion is solely for the information of the addressee hereof
and is not to be quoted in full or in part or otherwise referred to, nor is it
to be filed with any governmental agency or any other person without our prior
written consent. This opinion is given as of the date hereof, and we assume no
obligation to advise you of changes that may hereafter be brought to our
attention.
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PLATINUM technology, inc.
June 18, 1998
Page 3
We hereby consent to the use of this opinion for filing as Exhibit 5 to the
Registration Statement. In giving this consent, we do not thereby admit that we
are included in the category of persons whose consent is required under Section
7 of the Act or the related rules and regulations thereunder.
Very truly yours,
/S/ KATTEN MUCHIN & ZAVIS
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EXHIBIT 15
PLATINUM technology, inc.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
The Board of Directors:
With respect to the registration statement on Form S-8, we acknowledge our
awareness of the use of our report dated April 14, 1998 incorporated herein by
reference related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
June 17, 1998
<PAGE>
EXHIBIT 23.1
The Board of Directors
PLATINUM technology, inc.:
We consent to the use of our audit reports dated February 9, 1998, except for
Note 18, which is as of March 14, 1998, on the consolidated financial statements
of PLATINUM technology, inc. and subsidiaries as of December 31, 1997 and 1996,
and for each of the years in the three-year period then ended, and related
financial statement schedule, incorporated herein by reference.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
June 17, 1998
