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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PHOENIX TECHNOLOGIES LTD.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2685985
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
411 E. PLUMERIA DRIVE
SAN JOSE, CALIFORNIA 95134
(Address of principal executive offices)
1996 EQUITY INCENTIVE PLAN
(Full title of the plan)
ROBERT J. RIOPEL
VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER
PHOENIX TECHNOLOGIES LTD.
411 E. PLUMERIA DRIVE
SAN JOSE, CALIFORNIA 95134
(408) 570-1000
(Name, address and telephone number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Securities Amount Proposed Maximum Proposed Maximum Amount of
to be to be Offering Price Per Aggregate Offering Registration
Registered Registered Share (1) Price (1) Fee
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<S> <C> <C> <C> <C>
Common Stock,
$0.001 par value (2) 800,000 shares $16.00 $12,800,000 $3,878.79
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated as of January 23, 1997 pursuant to Rule 457(h)(i) solely for
the purpose of calculating the registration fee.
(2) Associated with the Common Stock are common stock purchase rights which
will not be exercisable or be evidenced separately from the Common Stock prior
to the occurrence of certain events.
The Index to Exhibits appears on sequentially numbered page 7.
<PAGE>
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference:
(a) The Registrant's annual report on Form 10-K for the fiscal
year ended September 30, 1996 filed pursuant to Section 13(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the
annual report or the prospectus referred to in (a) above.
(c) The description of the Registrant's Common Stock contained in
the Registrant's registration statement filed with the Commission
under Section 12 of the Exchange Act, including any amendment or
report filed for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment which indicates that all securities
registered hereby have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein
and to be a part hereof from the date of the filing of such documents.
The consolidated balance sheets as of September 30, 1996 and 1995,
and the consolidated statements of income, shareholders' equity and cash
flows for each of the three years in the period ended September 30, 1996
incorporated by reference herein and the related financial statement
schedules incorporated by reference herein have been included herein in
reliance on the reports of Ernst & Young LLP, independent auditors, and
Coopers & Lybrand L.L.P., independent accountants included as part of the
Form 10-K referred to in (a) of this Item.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
As to named experts, Item 5 is inapplicable. Scott C. Neely, who is
Vice President, General Counsel and Secretary of the Registrant and
whose opinion is included as Exhibit 5.1 hereto, is a holder of options
covering significantly less than one percent (1%) of the outstanding
shares of the outstanding Common Stock, $.001 par value per share,
of the Registrant.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law grants to each
corporation organized thereunder the power to indemnify its officers and
directors for certain acts. Article TENTH of the Registrant's Restated
Certificate of Incorporation sets forth the extent to which officers and
directors of the Registrant may be indemnified against any liabilities which
they may incur in their capacities as directors or officers of the
Registrant. Article TENTH provides, in part, that each person who was or is
made a party or is threatened to be made a party or is involved in any
action, suit or proceeding by reason of the fact that he or she is or
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was a director or officer of the Registrant or is or was serving at the
request of the Registrant as a director, officer, employee or agent of
another corporation or enterprise shall be indemnified and held harmless by
the Registrant, to the fullest extent authorized by the Delaware General
Corporation Law, against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection with such proceeding; provided, however, that if
the person seeking indemnification initiated the proceeding in respect to
which he or she is seeking indemnification from the Registrant, the
Registrant shall provide such indemnification only if such proceeding was
authorized by the Registrant's Board of Directors. The right to
indemnification includes the right to be paid expenses incurred in defending
any such proceeding in advance of its final disposition; provided, however,
that if the Delaware General Corporation Law so requires, the payment of such
expenses in advance of the final disposition of a proceeding shall be made
only upon delivery to the Registrant of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to
indemnification.
Article NINTH of the Registrant's Restated Certificate of
Incorporation eliminates the personal liability of the Registrant's
directors to the Registrant or its stockholders for monetary damages for
breach of a director's fiduciary duty, except for liability: (1) for
breach of a director's duty of loyalty to the Registrant or its
stockholders; (2) for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law; (3) under Section 174
of the Delaware General Corporation Law; or (4) for any transaction from
which the director derived an improper personal benefit.
ITEM 8. EXHIBITS.
The exhibits required by Item 601 of Regulation S-K are listed in the
Exhibit Index which follows the signature page for this Form S-8.
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(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;
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(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 (1)(i) and (1)(ii) above do not
apply if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions discussed in Item 6
hereof, or otherwise, the Registrant has been advised that in the opinion
of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered hereby, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual and corporation
whose signature appears below constitutes and appoints Jack Kay and Robert
J. Riopel, and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement on Form S-8, and
to file the same with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, 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 to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Jose, State of California, on
this 24th day of January, 1997.
PHOENIX TECHNOLOGIES LTD.
By: /S/JACK KAY
---------------------------------
Jack Kay
President and Chief Executive Officer
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Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
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SIGNATURE TITLE DATE
- ------------------ --------- --------
<S> <C> <C>
CHIEF EXECUTIVE OFFICER:
/s/Jack Kay President, Chief Executive January 24, 1997
- ------------------------------ Officer, and Director
Jack Kay
CHIEF FINANCIAL OFFICER:
/s/Robert J. Riopel Vice President, Finance, Chief January 24, 1997
- ------------------------------ Financial Officer and Treasurer
Robert J. Riopel
OTHER DIRECTORS:
/s/Charles Federman Director January 24, 1997
- ------------------------------
Charles Federman
/s/Lawrence G. Finch Director January 24, 1997
- ------------------------------
Lawrence G. Finch
/s/Ronald D. Fisher Chairman; Director January 24, 1997
- ------------------------------
Ronald D. Fisher
/s/Lance E. Hansche Director January 24, 1997
- ------------------------------
Lance E. Hansche
/s/Anthony P. Morris Director January 24, 1997
- ------------------------------
Anthony P. Morris
</TABLE>
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
3.1 Certificate of Incorporation of the Company, as amended - filed as
Exhibit 3.1 to the Company's Registration Statement on Form S-1,
Registration No. 33-21793 (the "S-1"), and incorporated herein by
this reference.
3.2 By-laws of the Registrant as amended through February 6, 1995
(incorporated herein by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-8, Registration No. 333-03065).
3.3 Certificate of Correction to the Company's Certificate of
Incorporation - filed as Exhibit 3.3 to Amendment No. 2 to the S-1
("Amendment No. 2") and incorporated herein by this reference.
3.4 Certificate of Amendment to the Company's Certificate of
Incorporation - filed as Exhibit 3.4 to Amendment No. 2 and
incorporated herein by this reference.
3.5 Certificate of Correction to the Company's Certificate of
Incorporation - filed as Exhibit 3.5 to the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 1988 (the "1988
Form 10-K") and incorporated herein by this reference.
3.6 Certificate of Correction to the Company's Certificate of
Incorporation - filed as Exhibit 3.7 to the 1988 Form 10-K and
incorporated herein by this reference.
3.7 Certificate of Designation of the Company's Series A Junior
Participating Preferred Stock - filed as Exhibit 4.1 to the Company's
Current Report on Form 8-K dated October 31, 1989 (the "October 31,
1989 Form 8-K"), and incorporated herein by this reference.
3.8 Certificate of Amendment of Restated Certificate of Incorporation
filed with the Delaware Secretary of State on April 18, 1996
(incorporated by reference to Exhibit 4.11 to the Registrant's
Registration Statement on Form S-8 relating to the Registrant's 1991
Employee Stock Purchase Plan (the "ESPP S-8").
3.9 Certificate of Increase of Shares Designated as Series A Junior
Participating Preferred Stock filed with the Delaware Secretary of
State on April 18, 1996 (incorporated by reference to Exhibit 4.12 to
the ESPP S-8).
4.1 1996 Equity Incentive Plan, as amended through December 12, 1996.
4.2 Form of Option Agreement for options granted under the 1996 Equity
Incentive Plan.
5.1 Opinion of Scott C. Neely, Esq., Vice President, General Counsel and
Secretary of the Company.
23.1 Consent of Scott C. Neely, Esq. (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Coopers & Lybrand L.L.P., Independent Accountants
24.1 Power of Attorney (see page 5)
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EXHIBIT 4.1
PHOENIX TECHNOLOGIES LTD.
1996 EQUITY INCENTIVE PLAN
(as amended through December 12, 1996)
1. PURPOSE
The purpose of the Plan is to provide incentives to attract, retain and
motivate eligible persons whose present and potential contributions are
important to the success of the Company and its Subsidiaries and
Affiliates, by offering them an opportunity to participate in the
Company's future performance through awards of Options and Restricted
Stock. Capitalized terms not defined in the text are defined in
Section 24.
2. SHARES SUBJECT TO THE PLAN
2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and 18, the total
number of Shares reserved and available for grant and issuance pursuant to
the Plan shall be 800,000 shares; provided, however, that the maximum
number of Shares that may be issued under the Plan to members of the Board
of Directors of the Company who are not also employees of the Company is
200,000 Shares. Subject to Sections 2.2 and 18, Shares shall again be
available for grant and issuance in connection with future Awards under
the Plan that: (a) are subject to issuance upon exercise of an Option but
cease to be subject to such Option for any reason other than exercise of
such Option, (b) are subject to an Award that otherwise terminates without
such Shares being issued and for which the participant did not receive any
benefits of ownership (other than voting rights), or (c) become available
for issuance under any other equity plans of the Company pursuant to the
terms of such plans.
2.2 ADJUSTMENT OF SHARES. In the event that the number of outstanding shares
of the Company's Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision,
combination, reclassification or similar change in the capital structure
of the Company without consideration, then (a) the number of Shares
reserved for issuance under the Plan, (b) the Exercise Prices of and
number of Shares subject to outstanding Options, and (c) the number of
Shares subject to other outstanding Awards shall be proportionately
adjusted, subject to any required action by the Board or the stockholders
of the Company and compliance with applicable securities laws; provided,
however, that fractions of a Share shall not be issued but shall either be
paid in cash at Fair Market Value or shall be rounded up to the nearest
Share, as determined by the Committee; and provided, further, that the
Exercise Price of any Option may not be decreased to below the par value
of the Shares.
3. ELIGIBILITY
3.1 ELIGIBILITY OF EMPLOYEES, CONSULTANTS AND INDEPENDENT CONTRACTORS. ISOs
(as defined in Section 5 below) may be granted only to employees
(including persons who are also officers and/or directors of the Company)
of the Company or of a Parent or Subsidiary of the Company. All other
Awards may be granted to employees, officers, consultants, independent
contractors and advisers of the Company or any Parent, Subsidiary or
Affiliate of the Company; provided, however, that such consultants,
contractors and advisers render bona fide services not in connection with
the offer and sale of securities in a capital-raising transaction. A
person may be granted more than one Award under the Plan. Each person is
eligible to receive up to an aggregate maximum of 400,000 Shares over the
term of the Plan.
3.2 ELIGIBILITY OF DIRECTORS. Each director who is not an employee shall be
granted an Option to purchase 10,000 Shares upon such director's initial
election to the Board of Directors. Upon the anniversary of such initial
election, each director shall receive an Option to purchase an additional
7,000 Shares of stock. Options granted to directors who are not employees
shall be NQSOs. Notwithstanding the foregoing, directors who are not
employees are eligible to receive only Options under the Plan. This
Section 3.2 and Sections 5.3 and 5.4
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(concerning director options) may not be amended more than once every six
months, other than to conform with changes required by law.
3.3 LIMITATIONS. Notwithstanding anything to the contrary in this Plan, no
person who is an officer of the Company or a member of the Board will be
eligible to receive a grant of any Award hereunder until such time as this
Plan is approved by stockholders of the Company.
4. ADMINISTRATION
4.1 COMMITTEE AUTHORITY. The Plan shall be administered by the Committee or
the Board acting as the Committee. Subject to the general purposes, terms
and conditions of the Plan, and to the direction of the Board, the
Committee shall have full power to implement and carry out the Plan.
Except as otherwise provided pursuant to Sections 3.2 or 5, the Committee
shall have the authority to:
(a) construe and interpret the Plan, any Award Agreement and any other
agreement or document executed pursuant to the Plan;
(b) prescribe, amend and rescind rules and regulations relating to the
Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject to
Awards;
(f) determine whether Awards will be granted singly, in combination or in
tandem with, in replacement of, or as alternatives to, other Awards
under the Plan or any other incentive or compensation plan of the
Company or any Parent, Subsidiary or Affiliate of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of the Plan.
4.2 COMMITTEE DISCRETION. Any determination made by the Committee with
respect to any Award shall be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of the
Plan or Award, at any later time, and such determination shall be final
and binding on the Company and all persons having an interest in any Award
under the Plan. The Committee may delegate to one or more officers of the
Company the authority to grant Awards under the Plan to Participants who
are not Insiders of the Company.
4.3 EXCHANGE ACT REQUIREMENTS. If two or more members of the Board are
Outside Directors, the Committee shall be comprised of at least two
members of the Board, all of whom are Outside Directors and Disinterested
Persons. The Company will take appropriate steps to comply with the
disinterested director requirements of Section 16(b) of the Exchange Act,
including but not limited to, the appointment by the Board of a Committee
consisting of not less than two persons (who are members of the Board),
each of whom is a Disinterested Person. It is the intent of the Company
that the Plan and Awards hereunder satisfy and be interpreted in a manner,
that, in the case of Participants who are or may be Insiders, satisfies
the applicable requirements of Rule 16b-3 (or its successor) of the
Exchange Act. If any provision of the Plan or of any Award would
otherwise conflict with the intent expressed in this Section 4.3, that
provision to the extent possible shall be interpreted and deemed amended
so as to avoid such conflict.
5. OPTIONS
Except as otherwise provided in this Section 5, the Committee may grant
Options to eligible persons and shall determine whether such Options shall
be Incentive Stock Options within the meaning of the Code ("ISOs") or
Nonqualified Stock Options ("NQSOs"), the number of Shares subject to the
Option, the Exercise Price of the Option, the period during which the
Option may be exercised, and all other terms and conditions of the Option,
subject to the following:
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5.1 FORM OF OPTION GRANT. Each Option granted under the Plan shall be
evidenced by an Award Agreement which shall expressly identify the Option
as an ISO or NQSO ("Stock Option Agreement"), and be in such form and
contain such provisions (which need not be the same for each Participant
receiving an Award pursuant to Section 3.1) as the Committee shall from
time to time approve, and which shall comply with and be subject to the
terms and conditions of the Plan.
5.2 DATE OF GRANT. The date of grant of an Option shall be the date on which
the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee; provided, however, that Options
granted to directors who are not employees shall be granted on the date
specified in Section 3.2. The Stock Option Agreement and a copy of the
Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 EXERCISE PERIOD. Options shall be exercisable within the times or upon
the events determined by the Committee as set forth in the Stock Option
Agreement; provided, however, that no Option shall be exercisable after
the expiration of ten (10) years from the date the Option is granted; and
provided further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary
of the Company ("Ten Percent Stockholder") shall be exercisable after the
expiration of five (5) years from the date the Option is granted; and
provided further that Options held by directors who are not employees will
be exercisable as follows: (i) with respect to the first Option granted,
it will become exercisable on a cumulative basis as to one-quarter of the
Shares subject to the Option on the first anniversary of the grant date
and as to the balance of the Shares subject to the Option in 12 equal
quarterly installments every three months after such first anniversary;
and (ii) with respect to any Option subsequently granted, it will become
exercisable on a cumulative basis as to one-sixteenth of the Shares
subject to the Option, on a quarterly basis, commencing three months after
the date of grant of such Option. Except as otherwise specifically set
forth in the preceding sentence with respect to directors who are not
employees, the Committee may provide for Options to become exercisable at
any time or from time to time, periodically or otherwise, in such number
or percentage as the Committee determines.
5.4 EXERCISE PRICE. The Exercise Price shall be determined by the Committee
when the Option is granted and may be not less than 85% of the Fair Market
Value of the Shares on the date of grant; provided, however, that (i) the
Exercise Price of an ISO shall be not less than 100% of the Fair Market
Value of the Shares on the date of grant and (ii) the Exercise Price of
any ISO granted to a Ten Percent Stockholder shall not be less than 110%
of the Fair Market Value of the Shares on the date of grant; and provided
further, that the Exercise Price of Options granted to directors who are
not employees shall be 100% of the Fair Market Value of the Shares on the
date of grant. Payment for the Shares purchased may be made in accordance
with Section 8 of the Plan.
5.5 METHOD OF EXERCISE. Options may be exercised only by delivery to the
Company of a written stock option exercise agreement (the "Exercise
Agreement") in a form approved by the Committee (which need not be the
same for each Participant receiving an Award pursuant to the Plan),
stating the number of Shares being purchased, the restrictions imposed on
the Shares, if any, and such representations and agreements regarding
Participant's investment intent, access to information and other matters,
if any, as may be required or desirable by the Company to comply with
applicable securities laws, together with payment in full of the Exercise
Price for the number of Shares being purchased.
5.6 TERMINATION. Notwithstanding the exercise periods set forth in the Stock
Option Agreement, exercise of an Option shall always be subject to the
following:
(a) If the Participant is Terminated for any reason except death or
Disability, then Participant may exercise such Participant's Options,
only to the extent that such Options would have been exercisable upon
the Termination Date, no later than ninety (90) days after the
Termination Date, but in any event, no later than the expiration date
of the Options.
(b) If the Participant is terminated because of death or Disability, then
Participant's Options may be exercised, only to the extent that such
Options would have been exercisable by Participant on the Termination
Date, and must be exercised by Participant (or Participant's legal
representative or
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authorized assignee) no later than one hundred eighty (180) days after
the Termination Date, but in any event no later than the expiration
date of the Options.
5.7 LIMITATIONS ON EXERCISE. The Committee may specify a reasonable minimum
number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 LIMITATIONS ON ISOS. The aggregate Fair Market Value (determined as of
the date of grant) of Shares with respect to which ISOs are exercisable
for the first time by a Participant during any calendar year (under the
Plan or under any other incentive stock option plan of the Company or any
Affiliate, Parent or Subsidiary of the Company) shall not exceed $100,000.
If the Fair Market Value of Shares on the date of grant with respect to
which ISOs are exercisable for the first time by a Participant during any
calendar year exceeds $100,000, the Options for the first $100,000 worth
of Shares to become exercisable in such calendar year shall be ISOs and
the Options for the amount in excess of $100,000 that become exercisable
in that calendar year shall be NQSOs. In the event that the Code or the
regulations promulgated thereunder are amended after the Effective Date of
the Plan to provide for a different limit on the Fair Market Value of
Shares permitted to be subject to ISOs, such different limit shall be
automatically incorporated herein and shall apply to any Options granted
after the effective date of such amendment.
5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee may modify, extend or
renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is
modified, extended, renewed or otherwise altered shall be treated in
accordance with Section 424(h) of the Code. The Committee may reduce the
Exercise Price of outstanding Options without the consent of Participants
affected by a written notice to them; provided, however, that the Exercise
Price may not be reduced below the minimum Exercise Price that would be
permitted under Section 5.4 of the Plan for Options granted on the date
the action is taken to reduce the Exercise Price; provided, further, that
the Exercise Price shall not be reduced below the par value of the Shares.
5.10 NO DISQUALIFICATION. Notwithstanding any other provision in the Plan, no
term of the Plan relating to ISOs shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO
under Section 422 of the Code.
6. RESTRICTED STOCK
A Restricted Stock Award is an offer by the Company to sell to an eligible
person Shares that are subject to restrictions. The Committee shall
determine to whom an offer will be made, the number of Shares the person
may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares shall be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 FORM OF RESTRICTED STOCK AWARD. All purchases under a Restricted Stock
Award made pursuant to the Plan shall be evidenced by an Award Agreement
("Restricted Stock Purchase Agreement") that shall be in such form (which
need not be the same for each Participant) as the Committee shall from
time to time approve, and shall comply with and be subject to the terms
and conditions of the Plan. The offer of Restricted Stock shall be
accepted by the Participant's execution and delivery of the Restricted
Stock Purchase Agreement and full payment for the Shares to the Company
within thirty (30) days from the date the Restricted Stock Purchase
Agreement is delivered to the Participant. If such Participant does not
execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then
the offer shall terminate, unless otherwise determined by the Committee.
6.2 PURCHASE PRICE. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award shall be determined by the Committee and shall be
at least 85% of the Fair Market Value of the Shares on the date the
Restricted Stock Award is granted. Payment of the Purchase Price may be
made in accordance with Section 8 of the Plan.
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6.3 TERMS OF RESTRICTED STOCK AWARDS. Restricted Stock Awards shall be
subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years
of service with the Company or upon completion of the performance goals as
set out in advance in the Participant's Restricted Stock Purchase
Agreement. Restricted Stock Awards may vary from Participant to
Participant and between groups of Participants. Prior to the grant of a
Restricted Stock Award, the Committee shall: (a) determine the nature,
length and starting date of any Performance Period for the Restricted
Stock Award; (b) select from among the Performance Factors to be used to
measure performance goals, if any; and (c) determine the number of Shares
that may be awarded to the Participant. Prior to the payment of any
Restricted Stock Award, the Committee shall determine the extent to which
such Restricted Stock Award has been earned. Performance Periods may
overlap and Participants may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods
and having different performance goals and other criteria; PROVIDED,
HOWEVER that the maximum Restricted Stock Award for each Participant with
respect to any Performance Period shall be thirty percent (30%) of the
Shares reserved for issuance under this Plan.
7. THIS SECTION INTENTIONALLY LEFT BLANK.
8. PAYMENT FOR SHARE PURCHASES
8.1 PAYMENT. Payment for Shares purchased pursuant to the Plan may be made in
cash (by check) or, where expressly approved by the Committee and
permitted by law by:
(a) cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares of the Company's Common Stock that either: (1)
have been owned by Participant for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares); or (2) were
obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms as may
be approved by the Committee bearing interest at a rate sufficient to
avoid imputation of income under Sections 483 and 1274 of the Code,
provided, however, that Participants who are not employees of the
Company shall not be entitled to purchase Shares with a promissory
note unless the note is adequately secured by collateral other than
the Shares; and provided, further, that the portion of the Purchase
Price equal to the par value of the shares must be paid in cash.
(d) by waiver of compensation due or accrued to Participant for services
rendered;
(e) by tender of property;
(f) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD Dealer") whereby the Participant
irrevocably elects to exercise the Option and to sell a portion
of the Shares so purchased in order to pay the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Exercise Price directly to the
Company; or
(2) through a "margin" commitment from the Participant and an NASD
Dealer whereby the Participant irrevocably elects to exercise
the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or
(g) by any combination of the foregoing.
Notwithstanding the foregoing, the Exercise Price of an Option held by a
director who is not an employee shall be paid in cash or pursuant to
subsection (f) of this Section 8.1.
9. WITHHOLDING TAXES
9.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued in satisfaction
of Awards granted under the Plan, the Company may require the Participant
to remit to the Company an amount sufficient to satisfy federal, state and
local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares.
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Whenever, under the Plan, payments in satisfaction of Awards are to be made
in cash, such payment shall be net of an amount sufficient to satisfy
federal, state, and local withholding tax requirements.
9.2 STOCK WITHHOLDING. When, under applicable tax laws, a Participant incurs
tax liability in connection with the exercise or vesting of any Award that
is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Participant (other than a
Participant receiving an Award under Section 3.2) may satisfy the minimum
withholding tax obligation by electing to have the Company withhold from
the Shares to be issued that number of Shares having a Fair Market Value
equal to the minimum amount required to be withheld, determined on the
date that the amount of tax to be withheld is to be determined (the "Tax
Date"). All elections by a Participant to have Shares withheld for this
purpose shall be made in writing in a form acceptable to the Committee and
shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, the election shall be irrevocable as to the particular
Shares as to which the election is made, except as provided in
paragraph (d) below;
(c) all elections shall be subject to the consent or disapproval of the
Committee;
(d) if the Participant is an Insider and if the Company is subject to
Section 16(b) of the Exchange Act: (1) the election may not be made
within six (6) months of the date of grant of the Award, except as
otherwise permitted by SEC Rule 16b-3(e) under the Exchange Act, and
(2) either (A) the election to use stock withholding must be
irrevocably made at least six (6) months prior to the Tax Date
(although such election may be revoked at any time at least six (6)
months prior to the Tax Date) or (B) the exercise of the Option or
election to use stock withholding must be made in the ten (10) day
period beginning on the third day following the release of the
Company's quarterly or annual summary statement of sales or earnings;
and
(e) in the event that the Tax Date is deferred until six (6) months after
the delivery of Shares under Section 83(b) of the Code, the
Participant shall receive the full number of Shares with respect to
which the exercise occurs, but such Participant shall be
unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP
10.1 VOTING AND DIVIDENDS. No Participant shall have any of the rights of a
stockholder with respect to any Shares until the Shares are issued to the
Participant. After Shares are issued to the Participant, the Participant
shall be a stockholder and have all the rights of a stockholder with
respect to such Shares, including the right to vote and receive all
dividends or other distributions made or paid with respect to such Shares;
provided, however, that if such Shares are Restricted Stock, then any new,
additional or different securities that the Participant may become
entitled to receive with respect to such Shares by virtue of a stock
dividend, stock split or any other change in the corporate or capital
structure of the Company shall be subject to the same restrictions as the
Restricted Stock; provided further, that the Participant shall have no
right to retain such dividends or distributions with respect to Shares
that are repurchased pursuant to Section 12.
10.2 FINANCIAL STATEMENTS. The Company shall provide financial statements to
each Participant annually during the period such Participant has Awards
outstanding; provided, however, that the Company shall not be required to
provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY
Awards granted under the Plan, and any interest therein, shall not be
transferable or assignable by Participant, and may not be made subject to
execution, attachment or similar process, otherwise than by will or by the
laws of descent and distribution or as consistent with the specific Plan
and Award Agreement provisions relating thereto. During the lifetime of
the Participant an Award shall be exercisable only by the Participant, and
any elections with respect to an Award, may be made only by the
Participant.
12. RESTRICTIONS ON SHARES
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At the discretion of the Committee, the Company may reserve to itself
and/or its assignee(s) in the Award Agreement a right to repurchase a
portion of or all Shares held by a Participant following such
Participant's Termination at any time within ninety (90) days after the
later of Participant's Termination Date and the date Participant purchases
Shares under the Plan, for cash or cancellation of purchase money
indebtedness, with respect to Shares that are not "Vested" (as defined in
the Award Agreement), at the Participant's original Purchase Price.
13. CERTIFICATES
All certificates for Shares or other securities delivered under the Plan
shall be subject to such stock transfer orders, legends and other
restrictions as the Committee may deem necessary or advisable, including
restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any
stock exchange or automated quotation system upon which the Shares may be
listed.
14. ESCROW; PLEDGE OF SHARES
To enforce any restrictions on a Participant's Shares, the Committee may
require the Participant to deposit all certificates representing Shares,
together with stock powers or other instruments of transfer approved by
the Committee, appropriately endorsed in blank, with the Company or an
agent designated by the Company to hold in escrow until such restrictions
have lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates. Any
Participant who is permitted to execute a promissory note as partial or
full consideration for the purchase of Shares under the Plan shall be
required to pledge and deposit with the Company all or part of the Shares
so purchased as collateral to secure the payment of Participant's
obligation to the Company under the promissory note; provided, however,
that the Committee may require or accept other or additional forms of
collateral to secure the payment of such obligation and, in any event, the
Company shall have full recourse against the Participant under the
promissory note notwithstanding any pledge of the Participant's Shares or
other collateral. In connection with any pledge of the Shares,
Participant shall be required to execute and deliver a written pledge
agreement in such form as the Committee shall from time to time approve.
The Shares purchased with the promissory note may be released from the
pledge on a prorata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS
The Committee may, at any time or from time to time, authorize the
Company, with the consent of the respective Participants, to issue new
Awards in exchange for the surrender and cancellation of any or all
outstanding Awards (other than Awards granted to directors pursuant to
Section 3.2). The Committee may at any time buy from a Participant an
Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and
conditions as the Committee and the Participant shall agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE
An Award shall not be effective unless such Award is in compliance with
all applicable federal and state securities laws, rules and regulations of
any governmental body, and the requirements of any stock exchange or
automated quotation system upon which the Shares may then be listed, as
they are in effect on the date of grant of the Award and also on the date
of exercise or other issuance. Notwithstanding any other provision in the
Plan, the Company shall have no obligation to issue or deliver
certificates for Shares under the Plan prior to (a) obtaining any
approvals from governmental agencies that the Company determines are
necessary or advisable, and/or (b) completion of any registration or other
qualification of such Shares under any state or federal law or ruling of
any governmental body that the Company determines to be necessary or
advisable. The Company shall be under no obligation to register the
Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company shall have no
liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY
Nothing in the Plan or any Award granted under the Plan shall confer or be
deemed to confer on any Participant any right to continue in the employ
of, or to continue any other relationship with, the Company or any Parent,
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Subsidiary or Affiliate of the Company or limit in any way the right of
the Company or any Parent, Subsidiary or Affiliate of the Company to
terminate Participant's employment or other relationship at any time, with
or without cause.
18. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE
18.1 PROVISIONS APPLICABLE TO ALL AWARDS. The existence of outstanding
Awards shall not affect in any way the right or power of the Company or
its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of the
Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any other corporate act or
proceeding, whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of its Common Stock
outstanding, without receiving compensation therefor in money, services or
property, then (i) the number, class, and per share price of Shares
subject to outstanding Awards hereunder shall be appropriately adjusted in
such a manner as to entitle a Participant to receive upon exercise thereof
(and, if relevant, for the same aggregate cash consideration), the same
total number and class of shares as such Participant would have received
had such Participant exercised such Award in full immediately prior to
such event; and (ii) the number and class of shares with respect to which
Awards may be granted under the Plan shall be adjusted by substituting for
the total number of shares of Common Stock then reserved that number and
class of shares of stock that would have been received by the owner of an
equal number of outstanding shares of Common Stock as the result of the
event requiring the adjustment (a similar adjustment shall be made to the
numbers of Shares specified in Section 3.2 of the Plan). For purposes of
this Section 18, the "exercise" of an Award shall mean: (a) with respect
to an Option, the exercise of such Option; and (b) with respect to a
Restricted Stock Award, payment for the Shares by the Participant.
After a merger of one or more corporations into the Company, or after a
consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, each holder of an outstanding
Award shall, at no additional cost, be entitled to receive upon exercise
of such Award (subject to any required action by stockholders of the
Company) in lieu of the number of Shares as to which such Award shall then
be so exercisable, the number and class of shares of stock or other
securities to which such holder would have been entitled pursuant to the
terms of the agreement of merger or consolidation if, immediately prior to
such merger or consolidation, such holder had been the holder of record of
a number of shares of Common Stock equal to the number of shares as to
which such Award shall be so exercised.
If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or
if the Company is liquidated, or sells or otherwise disposes of
substantially all its assets to another corporation while unexercised
Awards remain outstanding under the Plan, (i) subject to the provisions of
clause (ii) below, after the effective date of such merger, consolidation
or sale, as the case may be, each holder of an outstanding Award shall be
entitled to receive upon exercise of such Award, in lieu of shares of
Common Stock, shares of such stock or other securities, cash or property
as the holders of shares of Common Stock received pursuant to the terms of
the merger, consolidation or sale; or (ii) all outstanding Awards may be
canceled by the Board as of the effective date of any such merger,
consolidation, liquidation or sale provided that (x) notice of such
cancellation shall be given to each holder of an Award and (y) each holder
of an Award shall have the right to exercise such Award to the extent that
the same is then exercisable or, if the Board shall have accelerated the
time for exercise of all unexercised and unexpired Awards, in full during
the 30-day period preceding the effective date of such merger,
consolidation, liquidation or sale.
Except as expressly provided above, the issue by the Company of shares of
stock of any class, securities convertible into shares of stock of any
class, for cash, property or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion
of shares or obligations of the Company convertible into such shares or
other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares then subject
to outstanding Awards.
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18.2 PROVISIONS APPLICABLE TO DIRECTOR OPTIONS. Notwithstanding any other
provision to the contrary in Section 18.1 or any other section of this
Plan, in the event of a Change of Control (as defined below), all Options
granted to directors who are not employees pursuant to Section 3.2 and
outstanding as of the date such Change in Control occurs shall become
exercisable in full, whether or not exercisable in accordance with their
terms. A "Change in Control" shall occur or be deemed to have occurred
only if any of the following events occur: (i) any "person." as such term
is used in Section 13(d) and 14(d) of the Exchange Act (other than the
Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any corporation owned directly or
indirectly by stockholders of the Company in substantially the same
proportion as their ownership of stock of the Company) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding
securities; (ii) individuals who, as of august 31, 1996, constitute the
Board of Directors of the Company (as of the date thereof, the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to the date
thereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose" initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the
Incumbent Board; (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 80% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (B) a merger
or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no "person" (as hereinabove defined)
acquires more than 30% of the combined voting power of the Company's then
outstanding securities; or (iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the Company's
assets.
19. ADOPTION AND STOCKHOLDER APPROVAL
The Plan shall become effective on the date that it is adopted by the
Board (the "Effective Date"). The Company may submit the Plan for
approval by the stockholders of the Company at the next annual meeting of
stockholders of the Company to obtain the advantages under NASD, IRS,
Securities and Exchange Commission and other regulations that approval of
stockholders may bestow; however, options granted under the Plan shall not
be affected if stockholders do not approve the Plan, except that any
Options which are granted as ISOs will be treated as NQSOs.
20. TERM OF PLAN
The Plan will terminate ten (l0) years from the Effective Date.
21. AMENDMENT OR TERMINATION OF PLAN
The Board may at any time terminate or amend the Plan in any respect,
including without limitation amendment of any form of Award Agreement or
instrument to be executed pursuant to the Plan; provided, however, that
the Board shall not, without the approval of the stockholders of the
Company, amend the Plan in any manner that requires such stockholder
approval pursuant to the Code or the regulations promulgated thereunder as
such provisions apply to ISO plans or pursuant to the Exchange Act or Rule
16b-3 (or its successor), as amended, thereunder.
22. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board, the submission of the Plan
to the stockholders of the Company for approval, nor any provision of the
Plan shall be construed as creating any limitations on the power of the
Board to adopt such additional compensation arrangements as it may deem
desirable, including, without limitation, the
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granting of stock options and bonuses otherwise than under the Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.
23. GOVERNING LAW
The Plan and all agreements, documents and instruments entered into
pursuant to the Plan shall be governed by and construed in accordance with
the internal laws of the State of Delaware, excluding that body of law
pertaining to conflict of laws.
24. DEFINITIONS
As used in the Plan, the following terms shall have the following
meanings:
"AFFILIATE" means any corporation that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common
control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with" means the possession,
direct or indirect, of the power to cause the direction of the management
and policies of the corporation, whether through the ownership of voting
securities, by contract or otherwise.
"AWARD" means any award under the Plan, including any Option or Restricted
Stock award.
"AWARD AGREEMENT" means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms
and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to administer the
Plan, or if no committee is appointed, the Board.
"COMPANY" means Phoenix Technologies Ltd., a corporation organized under
the laws of the State of Delaware, or any successor corporation.
"DISABILITY" means a disability, whether temporary or permanent, partial
or total, within the meaning of Section 22(e)(3) of the Code, as
determined by the Committee.
"DISINTERESTED PERSON" means a director who has not, during the period
that person is a member of the Committee and for one year prior to service
as a member of the Committee, been granted or awarded equity securities
pursuant to the Plan or any other plan of the Company or any Parent,
Subsidiary or Affiliate of the Company, except in accordance with the
requirements set forth in Rule 16b-3(c)(2)(i) (and any successor
regulation thereto) as promulgated by the SEC under Section 16(b) of the
Exchange Act, as such rule is amended from time to time and as interpreted
by the SEC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National Market
System, its last reported sale price on the Nasdaq National Market or, if
no such reported sale takes place on such date, the average of the closing
bid and asked prices;
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(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, the last reported sale price or, if no such
reported sale takes place on such date, the average of the closing bid and
asked prices on the principal national securities exchange on which the
Common Stock is listed or admitted to trading;
(c) if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on
such date, as reported by The Wall Street Journal, for the over-the-
counter market; or
(d) if none of the foregoing is applicable, by the Board of Directors of
the Company in good faith.
"INSIDER" means an officer or director of the Company or any other person
whose transactions in the Company's Common Stock are subject to Section l6
of the Exchange Act.
"OPTION" means an award of an option to purchase Shares pursuant to
Section 5.
"OUTSIDE DIRECTOR" means any outside director as defined in Section 162(m)
of the Code and the regulations issued thereunder.
"PARENT" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if at the time of the
granting of an Award under the Plan, each of such corporations other than
the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
"PARTICIPANT" means a person who receives an Award under the Plan.
"PERFORMANCE FACTORS" means the factors selected by the Committee from
among the following measures to determine whether the performance goals
established by the Committee and applicable to Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b) Earnings before income taxes and amortization and/or
earnings before income taxes and amortization growth;
(c) Operating income and/or operating income growth;
(d) Net income and/or net income growth;
(e) Earnings per share and/or earnings per share growth;
(f) Total shareholder return and/or total shareholder return
growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
(j) Economic value added; and
(k) Individual confidential business objectives.
"PERFORMANCE PERIOD" means the period of service determined by the
Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards.
"PLAN" means this Phoenix Technologies Ltd. 1994 Equity Incentive Plan,
as amended from time to time.
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"RESTRICTED STOCK AWARD" means an award of Shares pursuant to Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock, $0.001 par value,
reserved for issuance under the Plan, as adjusted pursuant to Sections 2
and 18, and any security issued in respect thereto or in replacement
therefor.
"SUBSIDIARY" means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of
granting of the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of the Plan with respect
to a Participant, that the Participant has ceased to provide services as
an employee, director, consultant, independent contractor or adviser, to
the Company or a Parent, Subsidiary or Affiliate of the Company, except in
the case of sick leave, military leave, or any other leave of absence
approved by the Committee, provided, that such leave is for a period of
not more than ninety (90) days, or reinstatement upon the expiration of
such leave is guaranteed by contract or statute. The Committee shall have
sole discretion to determine whether a Participant has ceased to provide
services and the effective date on which the Participant ceased to provide
services (the "Termination Date").
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PHOENIX TECHNOLOGIES LTD.
1996 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered into as of the
date of grant set forth below (the "DATE OF GRANT") by and between Phoenix
Technologies Ltd., a Delaware corporation (the "COMPANY"), and the
participant named below ("PARTICIPANT"). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Company's 1996 Equity
Incentive Plan (the "PLAN").
PARTICIPANT: _________________________________
SOCIAL SECURITY NUMBER: _________________________________
ADDRESS: _________________________________
_________________________________
TOTAL SHARES: _________________________________
EXERCISE PRICE PER SHARE: _________________________________
DATE OF GRANT: _________________________________
FIRST VESTING DATE: _________________________________
EXPIRATION DATE: _________________________________
TYPE OF STOCK OPTION:
(Check one): [ ] INCENTIVE STOCK OPTION [ ] NONQUALIFIED STOCK
OPTION
1. GRANT OF OPTION. The Company hereby grants to Participant an
option (the "OPTION") to purchase the total number of shares of Common Stock
$0.001 par value, of the Company set forth above (the "SHARES") at the
Exercise Price Per Share set forth above (the "EXERCISE PRICE"), subject to
all of the terms and conditions of this Agreement and the Plan. If
designated as an Incentive Stock Option above, the Option is intended to
qualify as an "incentive stock option" ("ISO") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "CODE").
2. EXERCISE PERIOD.
2.1 VESTING SCHEDULE. Provided Participant continues to provide
services to the Company or any Subsidiary, Parent or Affiliate of the Company
throughout the specified period, the Option shall become exercisable as to
portions of the Shares as follows:
DATE NUMBER OF SHARES
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2.2 EXPIRATION. The Option shall expire on the Expiration Date
set forth above and must be exercised, if at all, on or before the
Expiration Date.
3. TERMINATION.
3.1 TERMINATION FOR ANY REASON EXCEPT DEATH OR DISABILITY. If
Participant is Terminated for any reason, except death or Disability, the
Option, to the extent (and only to the extent) that it would have been
exercisable by Participant on the date of Termination, may be exercised by
Participant no later than ninety (90) days after the date of Termination, but
in any event no later than the Expiration Date.
3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant is
Terminated because of death or Disability of Participant, the Option, to the
extent that it is exercisable by Participant on the date of Termination, may
be exercised by Participant (or Participant's legal representative) no later
than one hundred and eighty (180) days after the date of Termination, but in
any event no later than the Expiration Date.
3.3 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this
Agreement shall confer on Participant any right to continue in the employ of,
or other relationship with, the Company or any Parent, Subsidiary or
Affiliate of the Company, or limit in any way the right of the Company or any
Parent, Subsidiary or Affiliate of the Company to terminate Participant's
employment or other relationship at any time, with or without cause.
4. MANNER OF EXERCISE.
4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
Participant (or in the case of exercise after Participant's death,
Participant's executor, administrator, heir or legatee, as the case may be)
must deliver to the Company an executed stock option exercise agreement in
such form as may be approved by the Company from time to time (the "EXERCISE
AGREEMENT"), which shall set forth, INTER ALIA, Participant's election to
exercise the Option, the number of Shares being purchased, any restrictions
imposed on the Shares and any representations, warranties and agreements
regarding Participant's investment intent and access to information as may be
required by the Company to comply with applicable securities laws. If
someone other than Participant exercises the Option, then such person must
submit documentation reasonably acceptable to the Company that such person
has the right to exercise the Option.
4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. The Option
may not be exercised as to fewer than 100 Shares unless it is exercised as to
all Shares as to which the Option is then exercisable.
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4.3 PAYMENT. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the Shares being purchased in cash (by
check), or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares of the Company's Common Stock that
either: (1) have been owned by Participant for more than six (6)
months and have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a
promissory note, such note has been fully paid with respect to
such shares); or (2) were obtained by Participant in the open
public market; and (3) are clear of all liens, claims,
encumbrances or security interests;
(c) by waiver of compensation due or accrued to Participant for
services rendered;
(d) provided that a public market for the Company's stock exists,
(1) through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby Participant
irrevocably elects to exercise the Option and to sell a portion of
the Shares so purchased to pay for the exercise price and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company, OR (2) through
a "margin" commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount
of the exercise price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the exercise price
directly to the Company; or
(e) by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal or state withholding obligations of the Company. If the Committee
permits, Participant may provide for payment of withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a
Fair Market Value equal to the minimum amount of taxes required to be
withheld. In such case, the Company shall issue the net number of Shares
to the Participant by deducting the Shares retained from the Shares
issuable upon exercise.
4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement
and payment are in form and substance satisfactory to counsel for the
Company, the Company shall issue the Shares registered in the name of
Participant, Participant's authorized assignee, or Participant's legal
representative, and shall deliver certificates representing the Shares
with the appropriate legends affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the
Option is an ISO, and if Participant sells or otherwise disposes of any of
the
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Shares acquired pursuant to the ISO on or before the later of (1) the date
two years after the Date of Grant, and (2) the date one year after transfer
of such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the
Company on the compensation income recognized by Participant from the early
disposition by payment in cash or out of the current wages or other
compensation payable to Participant.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance
or transfer.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred
in any manner other than by will or by the laws of descent and distribution
and may be exercised during the lifetime of Participant only by Participant.
The terms of the Option shall be binding upon the executors, administrators,
successors and assigns of Participant.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of the
Date of Grant of some of the federal and California tax consequences of
exercise of the Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE
OPTION OR DISPOSING OF THE SHARES.
8.1 EXERCISE OF ISO. If the Option qualifies as an ISO, there
will be no regular federal or state income tax liability upon the exercise of
the Option, although the excess, if any, of the fair market value of the
Shares on the date of exercise over the Exercise Price will be treated as a
tax preference item for federal income tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.
8.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
qualify as an ISO, there may be a regular federal and state income tax
liability upon the exercise of the Option. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the fair market value of the Shares on the
date of exercise over the Exercise Price. The Company will be required to
withhold from Participant's compensation or collect from Participant and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
8.3 DISPOSITION OF SHARES. If the Shares are held for more than
twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of the Option (and, in the case of an ISO, are disposed of more
than two years after the Date of Grant), any gain realized on disposition of
the Shares will be treated as long term capital gain for federal and
California income tax
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purposes. If Shares purchased under an ISO are disposed of within one year
of exercise or within two years after the Date of Grant, any gain realized on
such disposition will be treated as compensation income (taxable at ordinary
income rates) to the extent of the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. The Company
will be required to withhold from Participant's compensation or collect from
Participant and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
9. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of
the rights of a shareholder with respect to any Shares until Participant
exercises the Option and pays the Exercise Price.
10. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee
for review. The resolution of such a dispute by the Committee shall be final
and binding on the Company and Participant.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement of the parties
and supersede all prior undertakings and agreements with respect to the
subject matter hereof.
12. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed
to the Corporate Secretary of the Company at its principal corporate offices.
Any notice required to be given or delivered to Participant shall be in
writing and addressed to Participant at the address indicated above or to
such other address as such party may designate in writing from time to time
to the Company. All notices shall be deemed to have been given or delivered
upon: personal delivery; three (3) days after deposit in the United States
mail by certified or registered mail (return receipt requested); one (1)
business day after deposit with any return receipt express courier (prepaid);
or one (1) business day after transmission by rapifax or telecopier.
13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
15. ACCEPTANCE. Participant hereby acknowledges receipt of a copy
of the Plan and this Agreement. Participant has read and understands the
terms
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and provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that
there may be adverse tax consequences upon exercise of the Option or
disposition of the Shares and that Participant should consult a tax adviser
prior to such exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Participant
has executed this Agreement in duplicate as of the Effective Date.
PHOENIX TECHNOLOGIES LTD.: PARTICIPANT:
By:________________________ ________________________
(Signature)
___________________________ ________________________
(Please print name) (Please print name)
___________________________
(Please print title)
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EXHIBIT 5.1
January 24, 1997
Phoenix Technologies Ltd.
2770 De La Cruz Boulevard
Santa Clara, California 95050
Ladies and Gentlemen:
I have been asked by you to examine the Registration Statement on Form S-8
(the "Registration Statement") to be filed by you with the Securities and
Exchange Commission on January 24, 1997 in connection with the registration
under the Securities Act of 1933, as amended, of 800,000 shares of your Common
Stock, par value $.001 per share (the "Stock"), that may be sold by you
pursuant to your 1996 Equity Incentive Plan (the "Plan").
As Vice President, General Counsel and Secretary of the Company, I have
examined the proceedings taken by the Board of Directors in connection with the
Plan.
It is my opinion that the 800,000 shares of Stock that may be issued and
sold by you pursuant to the Plan will, when issued and sold in the manner
referred to in the prospectus associated with the Registration Statement and
the related agreements pursuant to which awards are made under the Plan, be
legally issued, fully-paid and nonassessable.
I consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to me, if any, in the
Registration Statement and any amendments thereto.
Very truly yours,
/s/Scott C. Neely
Scott C. Neely
Vice President, General Counsel and Secretary
SCN:me
<PAGE>
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statement on
Form S-8 pertaining to the 1996 Equity Incentive Plan of Phoenix Technologies
Ltd. of our report dated October 29, 1996, with respect to the consolidated
financial statements and schedule of Phoenix Technologies Ltd. Included in its
Annual Report (Form 10-K) for the year ended September 30, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Palo Alto, California
January 24, 1996
-21-
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Phoenix Technologies Ltd. on Form S-8 of our our report dated October 27,
1995, on our audits of the consolidated financial statements and financial
statement schedule of Phoenix Technologies Ltd. as of September 30, 1995 and
for the years ended September 30, 1995 and 1994, which report is included in
the Annual Report of Phoenix Technologies Ltd. on Form 10-K for the year
ended September 30, 1996.
/s/Coopers & Lybrand, L.L.P.
COOPERS & LYBRAND, L.L.P.
San Jose, California
January 24, 1997
