As filed with the Securities and Exchange Commission on September 30, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
ELECTRONICS FOR IMAGING, INC.
(Exact name of registrant as specified in its charter)
----------------------
Delaware 94-3086355
(State of Incorporation) (I.R.S. Employer Identification No.)
303 Velocity Way
Foster City, California 94404-4803
(650) 357-3500
(Address of principal executive offices)
1999 Equity Incentive Plan, as amended and
Management Graphics, Inc.
1985 Nonqualified Stock Option Plan for Key Employees
(Full title of the plan)
Dan Avida
Chairman of the Board and Chief Executive Officer
Electronics For Imaging, Inc.
303 Velocity Way
Foster City, California 94404-4803
(650) 357-3500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------
Copies to:
Andrei M. Manoliu, Esq.
Brett D. White, Esq.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
(650) 843-5000
----------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
================================================================================================================================
============================= =================== ========================= ========================== =======================
Title of Securities to be Amount to be Proposed Maximum Proposed Maximum
Registered Registered Offering Price Per Aggregate Offering Price Amount of Registration
Share (1) (1) Fee
---------------------------- ------------------- ------------------------- -------------------------- ------------------------
<S> <C> <C> <C> <C>
Stock Options and Common
Stock (par value $.01) 4,534,168 $15.1352-$53.9375 $ 243,235,890 $67,619.58
============================ =================== ========================= ========================== ========================
================================================================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(h) under the
Securities Act of 1933, as amended. The offering price per share and aggregate offering price are based upon (a) the
average of the high and low prices of Company's Common Stock on September 28, 1999 as reported on the Nasdaq National
Market for shares reserved for future grant pursuant to Electronics For Imaging, Inc.'s (the "Company") 1999 Equity
Incentive Plan, as amended, and (b) the weighted average exercise price for options assumed by the Company under
Management Graphic, Inc.'s 1985 Nonqualified Stock Option Plan.
</FN>
</TABLE>
<PAGE>
<TABLE>
The chart below details the calculations of the registration fee:
<CAPTION>
- --------------------------------------- -------------------------------- ----------------------- --------------------
Offering Price Per Aggregate Offering
Securities Number of Shares Share Price
- --------------------------------------- -------------------------------- ----------------------- --------------------
<S> <C> <C> <C>
Shares issuable under the 1999 Equity
Incentive Plan, as amended 4,500,000 $53.9375 $242,718,750
- --------------------------------------- -------------------------------- ----------------------- --------------------
Shares issuable pursuant to assumed
options under Management Graphics,
Inc.'s 1985 Nonqualified Stock Option
Plan 34,168 $15.1352 $517,140
- --------------------------------------- -------------------------------- ----------------------- --------------------
</TABLE>
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Electronics For Imaging, Inc. (the
"Company") with the Securities and Exchange Commission are incorporated by
reference into this Registration Statement:
(a) The Company's latest annual report on Form 10-K filed pursuant to
Sections 13(a) or 15(d) of the Securities Act of 1934, as amended (the "Exchange
Act").
(b) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual report
referred to in (a) above.
(c) The description of the Company's Common Stock which is contained in
a registration statement filed under the Exchange Act, including any amendment
or report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company
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 offered
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 of this
registration statement from the date of the filing of such reports and
documents.
DESCRIPTION OF SECURITIES
Not Applicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law the Company
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933 (the "Securities Act"). The Company's Amended and Restated
Certificate of Incorporation requires the Company to indemnify its directors and
officers to the extent permitted by Delaware law. The Company's Amended and
Restated Bylaws require the Company to indemnify its directors, officers,
employees and agents, to the extent permitted by Delaware law as in effect on
the date the Bylaws were adopted. The Bylaws also permit the company to advance
expenses incurred in defending civil or criminal actions, suits or proceedings,
as authorized by the Board of Directors upon receipt of an undertaking by the
advanced party to repay such advances if it is ultimately determined that such
party is not entitled to indemnification.
The Company has entered into indemnity agreements with each of its
directors and executive officers. Such indemnity agreements contain provisions
which are in some respects broader than the specific indemnification provisions
contained in Delaware law.
EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
<PAGE>
EXHIBITS
Exhibit
Number
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1 Power of Attorney is contained on the signature pages.
99.1 The Company's 1999 Equity Incentive Plan, as amended.
99.2* Form of Stock Option Agreement under the 1999 Equity Incentive
Plan, as amended.
99.3 Management Graphics, Inc. 1985 Nonqualified Stock Option Plan
for Key Employees.
99.4 Form of Stock Option Agreement under the Management Graphics,
Inc. 1985 Nonqualified Stock Option Plan for Key Employees.
- -------------
* Documents incorporated by reference from the Company's Registration Statement
on Form S-8, (333-85861), filed with the SEC on August 25, 1999.
UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(b) 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 herein, 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 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 herein, 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 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling
<PAGE>
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Foster City, State of California on September 30,
1999.
ELECTRONICS FOR IMAGING, INC.
By: /s/ Dan Avida
--------------------------------------
Dan Avida
Chief Executive Officer and
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Dan Avida and Eric Saltzman and each or
any one of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, 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, and to file the same, with all
exhibits thereto, and other 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 connection therewith,
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 their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/ Dan Avida Chief Executive Officer September 30, 1999
- ------------------------- and Chairman of the Board
Dan Avida (Principal Executive
Officer)
/s/ Eric Saltzman Chief Financial Officer September 30, 1999
- ------------------------- (Principal Financial
Eric Saltzman Officer and Accounting
Officer)
/s/ Cill Cogan Director September 30, 1999
- -------------------------
Cill Cogan
/s/ Dan Maydan Director September 30, 1999
- -------------------------
Dan Maydan
<PAGE>
/s/ Jean-Louis Gassee Director September 30, 1999
- -------------------------
Jean-Louis Gassee
/s/ Thomas I. Unterberg Director September 30, 1999
- -------------------------
Thomas I. Unterberg
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1 Power of Attorney is contained on the signature pages.
99.1 The Company's 1999 Equity Incentive Plan, as amended.
99.2* Form of Stock Option Agreement under the 1999 Equity Incentive
Plan, as amended.
99.3 Management Graphics, Inc. 1985 Nonqualified Stock Option Plan
for Key Employees.
99.4 Form of Stock Option Agreement under the Management Graphics,
Inc. 1985 Nonqualified Stock Option Plan for Key Employees.
- -------------
* Documents incorporated by reference from the Company's Registration Statement
on Form S-8, (333-85861), filed with the SEC on August 25, 1999.
September 30, 1999 Exhibit 5.1
Electronics For Imaging, Inc.
303 Velocity Way
Foster City, CA 94404
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by MySoftware Company (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 4,534,168 shares of the
Company's Common Stock, $.001 par value (the "Shares"), with respect to its 1999
Equity Incentive Plan, as amended, and the Management Graphics, Inc. 1985
Nonqualified Stock Option Plan (the "Plans").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, the Company's Certificate of Incorporation and By-laws, and
such other documents, records, certificates, memoranda and other instruments as
we deem necessary as a basis for this opinion. We have assumed the genuineness
and authenticity of all documents submitted to us as originals, the conformity
to originals of all documents submitted to us as copies thereof, and the due
execution and delivery of all documents, where due execution and delivery are a
prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plans, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain deferred
payment arrangements, which will be fully paid and nonassessable when such
deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Andrei M. Manoliu
---------------------------
Andrei M. Manoliu
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 of our report dated January 20, 1999 relating to the
consolidated financial statements, which appears in the Annual Report on Form
10-K of Electronics For Imaging, Inc. for the year ended December 31, 1998. We
also consent to the incorporation by reference of our report on the Consolidated
Financial Statement Schedule, which also appears in the Annual Report on Form
10-K.
/s/PricewaterhouseCoopers LLP
San Jose, California
September 29, 1999
EXHIBIT 99.1
ELECTRONICS FOR IMAGING, INC.
1999 EQUITY INCENTIVE PLAN
Adopted March 29, 1999
Approved By Stockholders April ___, 1999
Amended July 28, 1999
Approved By Stockholders _______________, 1999
Termination Date: March 28, 2009
1. Purposes.
(a) Eligible Stock Award Recipients. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.
(b) Available Stock Awards. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock appreciation rights, (iv) stock bonuses and (v) rights to
acquire restricted stock.
(c) General Purpose. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. Definitions.
(a) "Affiliate" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board in accordance
with subsection 3(c).
(e) "Common Stock" means the common stock of the Company.
(f) "Company" means Electronics for Imaging, Inc., a Delaware
corporation.
(g) "Consultant" means any person, including an advisor, (1) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (2) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors of the Company who are not compensated by the Company for their
services as Directors or Directors of the Company who are merely paid a
director's fee by the Company for their services as Directors.
(h) "Continuous Service" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous
<PAGE>
Service shall not be deemed to have terminated merely because of a change in the
capacity in which the Participant renders service to the Company or an Affiliate
as an Employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant's Continuous Service. For example, a change in
status from an Employee of the Company to a Consultant of an Affiliate or a
Director of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.
(i) "Covered Employee" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(j) "Director" means a member of the Board of Directors of the Company.
(k) "Disability" means the inability of a person, in the opinion of a
qualified physician acceptable to the Company, to perform the major duties of
that person's position with the Company or an Affiliate of the Company because
of the sickness or injury of the person.
(l) "Employee" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the NASDAQ National Market or the NASDAQ SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
(o) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "Non-Employee Director" means a Director of the Company who either
(i) is not a current Employee or Officer of the Company or its parent or a
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), does not possess an interest
in any other transaction as to which disclosure would be required under Item
404(a) of Regulation S-K and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(q) "Nonstatutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.
2.
<PAGE>
(r) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(t) "Option Agreement" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(u) "Optionholder" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(v) "Outside Director" means a Director of the Company who either (i)
is not a current employee of the Company or an "affiliated corporation" (within
the meaning of Treasury Regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an "affiliated
corporation" at any time and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in any
capacity other than as a Director or (ii) is otherwise considered an "outside
director" for purposes of Section 162(m) of the Code.
(w) "Participant" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(x) "Plan" means this Electronics for Imaging, Inc. 1999 Equity
Incentive Plan.
(y) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(z) "Securities Act" means the Securities Act of 1933, as amended.
(aa) "Stock Award" means any right granted under the Plan, including an
Option, a stock appreciation right, a stock bonus and a right to acquire
restricted stock.
(bb) "Stock Award Agreement" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(cc) "Ten Percent Stockholder" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.
3. Administration.
(a) Administration by Board. The Board will administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) Powers of Board. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; what type or combination of types of
3.
<PAGE>
Stock Award shall be granted; the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be
permitted to receive stock pursuant to a Stock Award; and the number of shares
with respect to which a Stock Award shall be granted to each such person.
(ii) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan as provided in Section 12.
(iv) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.
(c) Delegation to Committee.
(i) General. The Board may delegate administration of the Plan
to a Committee or Committees of one or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
(ii) Committee Composition when Common Stock is Publicly
Traded. At such time as the Common Stock is publicly traded, in the discretion
of the Board, a Committee may consist solely of two or more Outside Directors,
in accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (i) delegate to a committee of one or
more members of the Board who are not Outside Directors, the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (ii)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act.
(d) Effect of Administrator's Decision. All determinations,
interpretations and constructions made by the Board or Committee in good faith
shall not be subject to review by anyone and shall be final, binding and
conclusive on all Participants.
4. Shares Subject to the Plan.
(a) Share Reserve. Subject to the provisions of Section 11 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate five million one hundred thousand
(5,100,000) shares of Common Stock.
(b) Share Limitation for Stock Bonuses and Restricted Stock Awards.
Subject to the provisions of Section 11 relating to adjustments upon changes in
stock, the stock that may be issued pursuant to stock bonuses and restricted
stock awards shall not exceed in the aggregate ten percent (10%) of the
aggregate shares reserved for issuance under subsection 4(a).
4.
<PAGE>
(c) Reversion of Shares to the Share Reserve. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full (or vested in the case of Restricted Stock), the
stock not acquired under such Stock Award shall revert to and again become
available for issuance under the Plan. Shares subject to stock appreciation
rights exercised in accordance with the Plan shall not be available for
subsequent issuance under the Plan. If any Common Stock acquired pursuant to the
exercise of an Option shall for any reason be repurchased by the Company under
an unvested share repurchase option provided under the Plan, the stock
repurchased by the Company under such repurchase option shall not revert to and
again become available for issuance under the Plan.
(d) Source of Shares. The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
5. Eligibility.
(a) Eligibility for Specific Stock Awards. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.
(b) Ten Percent Stockholders. No Ten Percent Stockholder shall be
eligible for the grant of an Incentive Stock Option unless the exercise price of
such Option is at least one hundred ten percent (110%) of the Fair Market Value
of the Common Stock at the date of grant and the Option is not exercisable after
the expiration of five (5) years from the date of grant.
(c) Section 162(m) Limitation. Subject to the provisions of Section 11
relating to adjustments upon changes in stock, no Employee shall be eligible to
be granted Options and/or stock appreciation rights covering more than two
million (2,000,000) shares of the Common Stock during any fiscal year of the
Company with respect to options granted to any Employee in connection with his
or her initial employment with the Company or one million (1,000,000) shares of
the Common Stock during any fiscal year of the Company with respect to options
granted to Employees for all other purposes.
6. Option Provisions.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option. The provisions of separate Options
need not be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each
of the following provisions:
(a) Term. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) Exercise Price of an Incentive Stock Option. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option
may be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
(c) Exercise Price of a Nonstatutory Stock Option. The exercise price
of each Nonstatutory Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with
5.
<PAGE>
an exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.
(d) Consideration. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) by delivery to the
Company of other Common Stock, according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other Common Stock) with the Participant or in any other
form of legal consideration that may be acceptable to the Board; provided,
however, that at any time that the Company is incorporated in Delaware, payment
of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(e) Transferability of an Incentive Stock Option. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing provisions of this
subsection 6(e), the Optionholder may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in
the event of the death of the Optionholder, shall thereafter be entitled to
exercise the Option.
(f) Transferability of a Nonstatutory Stock Option. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing provisions of this subsection 6(f), the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.
(g) Vesting Generally. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments which may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.
(h) Termination of Continuous Service. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder's Continuous Service (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder does not exercise his or her Option within
the time specified in the Option Agreement, the Option shall terminate.
(i) Extension of Termination Date. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in subsection 6(a) or (ii) the expiration of a period of
three (3) months after the termination of the Optionholder's Continuous Service
during which the exercise of the Option would not be in violation of such
registration requirements.
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(j) Disability of Optionholder. In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period specified in the
Option Agreement) or (ii) the expiration of the term of the Option as set forth
in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.
(k) Death of Optionholder. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise the Option as of the date of death) by the
Optionholder's estate, by a person who acquired the right to exercise the Option
by bequest or inheritance or by a person designated to exercise the option upon
the Optionholder's death pursuant to subsection 6(e) or 6(f), but only within
the period ending on the earlier of (1) the date eighteen (18) months following
the date of death (or such longer or shorter period specified in the Option
Agreement) or (2) the expiration of the term of such Option as set forth in the
Option Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.
(l) Early Exercise. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares subject to the Option prior to the full vesting of the Option. Any
unvested shares so purchased may be subject to an unvested share repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate.
(m) Re-Load Options. Without in any way limiting the authority of the
Board to make or not to make grants of Options hereunder, the Board shall have
the authority (but not an obligation) to include as part of any Option Agreement
a provision entitling the Optionholder to a further Option (a "Re-Load Option")
in the event the Optionholder exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option Agreement.
Any such Re-Load Option shall (i) provide for a number of shares equal to the
number of shares surrendered as part or all of the exercise price of such
Option; (ii) have an expiration date which is the same as the expiration date of
the Option the exercise of which gave rise to such Re-Load Option; and (iii)
have an exercise price which is equal to one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option. Notwithstanding the foregoing, a Re-Load Option
shall be subject to the same exercise price and term provisions heretofore
described for Options under the Plan.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollars ($100,000) annual limitation on exercisability of Incentive Stock
Options described in subsection 10(d) and in Section 422(d) of the Code. There
shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall
be subject to the availability of sufficient shares under subsection 4(a) and
the "Section 162(m) Limitation" on the grants of Options under subsection 5(c)
and shall be subject to such other terms and conditions as the Board may
determine which are not inconsistent with the express provisions of the Plan
regarding the terms of Options.
7. Provisions of Stock Awards other than Options.
(a) Stock Bonus Awards. No Employee, Director or Consultant shall be
eligible to receive a stock bonus award under the Plan with respect to the
achievement of periodic (e.g., annual) performance targets if such Employee,
Director or Consultant receives a cash bonus from the Company for the
achievement of performance targets with respect to the same period. In addition,
a stock bonus that is awarded to any Participant under the Plan for the
achievement of periodic performance targets shall be in lieu of any cash bonus
that such Participant would have been eligible to receive for the performance
period with respect to which the stock bonus was awarded. Each
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stock bonus agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of
stock bonus agreements may change from time to time, and the terms and
conditions of separate stock bonus agreements need not be identical, but each
stock bonus agreement shall include (through incorporation of provisions hereof
by reference in the agreement or otherwise) the substance of each of the
following provisions:
(i) Consideration. A stock bonus shall be awarded in
consideration for past services actually rendered to the Company for its
benefit.
(ii) Vesting. Shares of Common Stock awarded under the stock
bonus agreement may, but need not, be subject to a share reacquisition option in
favor of the Company in accordance with a vesting schedule to be determined by
the Board.
(iii) Termination of Participant's Continuous Service. In the
event a Participant's Continuous Service terminates, the Company may reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the stock bonus
agreement.
(iv) Transferability. Rights to acquire shares under the stock
bonus agreement shall be transferable by the Participant only upon such terms
and conditions as are set forth in the stock bonus agreement, as the Board shall
determine in its discretion, so long as stock awarded under the stock bonus
agreement remains subject to the terms of the stock bonus agreement.
(b) Restricted Stock Awards. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:
(i) Restriction on Transfer or Sale of Stock.
(1) Stock acquired pursuant to each restricted stock
purchase award shall be issued and registered in the name of the Participant to
whom such restricted stock award was granted; provided, however, that such stock
shall be held by the Company or its agent for the account of such Participant
during the applicable Restricted Period as set forth below (the "Restricted
Stock"). As a condition to the receipt of any certificates representing the
grant of a restricted stock award, each Participant shall deliver to the Company
stock powers duly endorsed in blank by the Participant. None of the Restricted
Stock may be sold, exchanged, transferred, assigned, pledged or otherwise
encumbered or disposed of by the Participant during the Restricted Period. None
of the Restricted Stock may vest during the Restricted Period. Except with
respect to any share repurchase option in favor of the Company in accordance
with a vesting schedule or any Restricted Stock serving as security for
indebtedness of the Participant to the Company under the terms of a pledge
agreement (as may be applicable), at the end of the applicable Restricted Period
with respect to any shares of Restricted Stock, or at such earlier time as
otherwise provided for herein, all restrictions with respect to such Restricted
Stock shall terminate, and the appropriate number of shares of Common Stock
shall be transferred as soon as practicable to the Participant or the
Participant's beneficiary or estate, as the case may be.
(2) The term "Restricted Period" shall mean either
(a) one (1) year in the case of a restricted stock award subject to a vesting
schedule that is based upon the achievement of specified performance goals by
the Participant or (b) three (3) years in the case of a restricted stock award
absent such performance-based vesting. Notwithstanding any other provision of
this Plan to the contrary, the Restricted Period shall expire immediately upon
the occurrence of a Change in Control.
(ii) Purchase Price. The purchase price under each restricted
stock purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. The
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purchase price shall not be less than fifty percent (50%) of the stock's Fair
Market Value on the date such award is made or at the time the purchase is
consummated.
(iii) Consideration. The purchase price of stock acquired
pursuant to the restricted stock purchase agreement shall be paid either: (i) in
cash at the time of purchase; (ii) at the discretion of the Board, according to
a deferred payment or other arrangement with the Participant; or (iii) in any
other form of legal consideration that may be acceptable to the Board in its
discretion; provided, however, that at any time that the Company is incorporated
in Delaware, payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall not be made by deferred payment.
(iv) Vesting. Shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.
(v) Termination of Participant's Continuous Service. In the
event a Participant's Continuous Service terminates, the Company may repurchase
or otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.
(vi) Transferability of Rights to Acquire Stock. Rights to
acquire shares under the restricted stock purchase agreement shall be
transferable by the Participant only upon such terms and conditions as are set
forth in the restricted stock purchase agreement, as the Board shall determine
in its discretion, so long as stock awarded under the restricted stock purchase
agreement remains subject to the terms of the restricted stock purchase
agreement.
(c) Stock Appreciation Rights.
(i) Authorized Rights. The following three types of stock
appreciation rights shall be authorized for issuance under the Plan:
(1) Tandem Rights. A "Tandem Right" means a stock
appreciation right granted appurtenant to an Option which is subject to the same
terms and conditions applicable to the particular Option grant to which it
pertains with the following exceptions: The Tandem Right shall require the
holder to elect between the exercise of the underlying Option for shares of
Common Stock and the surrender, in whole or in part, of such Option for an
appreciation distribution. The appreciation distribution payable on the
exercised Tandem Right shall be in cash (or, if so provided, in an equivalent
number of shares of Common Stock based on Fair Market Value on the date of the
Option surrender) in an amount up to the excess of (A) the Fair Market Value (on
the date of the Option surrender) of the number of shares of Common Stock
covered by that portion of the surrendered Option in which the Optionholder is
vested over (B) the aggregate exercise price payable for such vested shares.
(2) Concurrent Rights. A "Concurrent Right" means a
stock appreciation right granted appurtenant to an Option which applies to all
or a portion of the shares of Common Stock subject to the underlying Option and
which is subject to the same terms and conditions applicable to the particular
Option grant to which it pertains with the following exceptions: A Concurrent
Right shall be exercised automatically at the same time the underlying Option is
exercised with respect to the particular shares of Common Stock to which the
Concurrent Right pertains. The appreciation distribution payable on an exercised
Concurrent Right shall be in cash (or, if so provided, in an equivalent number
of shares of Common Stock based on Fair Market Value on the date of the exercise
of the Concurrent Right) in an amount equal to such portion as determined by the
Board at the time of the grant of the excess of (A) the aggregate Fair Market
Value (on the date of the exercise of the Concurrent Right) of the vested shares
of Common Stock purchased under the underlying Option which have Concurrent
Rights appurtenant to them over (B) the aggregate exercise price paid for such
shares.
(3) Independent Rights. An "Independent Right" means
a stock appreciation right granted independently of any Option but which is
subject to the same terms and conditions applicable to a
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Nonstatutory Stock Option with the following exceptions: An Independent Right
shall be denominated in share equivalents. The appreciation distribution payable
on the exercised Independent Right shall be not greater than an amount equal to
the excess of (a) the aggregate Fair Market Value (on the date of the exercise
of the Independent Right) of a number of shares of Company stock equal to the
number of share equivalents in which the holder is vested under such Independent
Right, and with respect to which the holder is exercising the Independent Right
on such date, over (b) the aggregate Fair Market Value (on the date of the grant
of the Independent Right) of such number of shares of Company stock. The
appreciation distribution payable on the exercised Independent Right shall be in
cash or, if so provided, in an equivalent number of shares of Common Stock based
on Fair Market Value on the date of the exercise of the Independent Right.
(ii) Relationship to Options. Stock appreciation rights
appurtenant to Incentive Stock Options may be granted only to Employees. The
"Section 162(m) Limitation" provided in subsection 5(c) and any authority to
reprice Options shall apply as well to the grant of stock appreciation rights.
(iii) Exercise. To exercise any outstanding stock appreciation
right, the holder shall provide written notice of exercise to the Company in
compliance with the provisions of the Stock Award Agreement evidencing such
right. Except as provided in subsection 5(c) regarding the "Section 162(m)
Limitation," no limitation shall exist on the aggregate amount of cash payments
that the Company may make under the Plan in connection with the exercise of a
stock appreciation right.
8. Covenants of the Company.
(a) Availability of Shares. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
(b) Securities Law Compliance. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any stock issued or issuable pursuant to any such
Stock Award. If, after reasonable efforts, the Company is unable to obtain from
any such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell stock upon exercise of such Stock Awards unless and until such authority is
obtained.
9. Use of Proceeds from Stock.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. Miscellaneous.
(a) Acceleration of Exercisability and Vesting. The Board shall have
the power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.
(b) Stockholder Rights. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Stock Award unless and until such Participant has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.
(c) No Employment or other Service Rights. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant or other holder of Stock Awards any right to continue to serve
the Company or an Affiliate in the capacity in effect at the time the Stock
Award was granted or shall affect the right of the Company or an Affiliate to
terminate (i) the employment of an Employee with or without
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notice and with or without cause, (ii) the service of a Consultant pursuant to
the terms of such Consultant's agreement with the Company or an Affiliate or
(iii) the service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may be.
(d) Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(e) Investment Assurances. The Company may require a Participant, as a
condition of exercising or acquiring stock under any Stock Award, (i) to give
written assurances satisfactory to the Company as to the Participant's knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Participant is acquiring the stock
subject to the Stock Award for the Participant's own account and not with any
present intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (iii) the issuance of the shares upon the exercise or acquisition
of stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act or (iv) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.
(f) Withholding Obligations. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means (in addition to the Company's
right to withhold from any compensation paid to the Participant by the Company)
or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares from the shares of the Common Stock
otherwise issuable to the participant as a result of the exercise or acquisition
of stock under the Stock Award; or (iii) delivering to the Company owned and
unencumbered shares of the Common Stock.
11. Adjustments upon Changes in Stock.
(a) Capitalization Adjustments. If any change is made in the stock
subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of stock subject to such outstanding Stock Awards. Such
adjustments shall be made by the Board, the determination of which shall be
final, binding and conclusive. (The conversion of any convertible securities of
the Company shall not be treated as a transaction "without receipt of
consideration" by the Company.)
(b) Dissolution or Liquidation. In the event of a dissolution or
liquidation of the Company, then such Stock Awards shall be terminated if not
exercised (if applicable) prior to such event.
(c) Change in Control--Asset Sale, Merger, Consolidation or Reverse
Merger. In the event of (1) a sale of substantially all of the assets of the
Company, (2) a merger or consolidation in which the Company is not
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the surviving corporation or (3) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then any surviving
corporation or acquiring corporation shall assume or continue any Stock Awards
outstanding under the Plan or shall substitute similar stock awards (including
an award to acquire the same consideration paid to the stockholders in the
transaction described in this subsection 11(c)) for those outstanding under the
Plan. In the event any surviving corporation or acquiring corporation refuses to
assume or continue such Stock Awards or to substitute similar stock awards for
those outstanding under the Plan, then with respect to Stock Awards held by
Participants whose Continuous Service has not terminated, the vesting of such
Stock Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated in full, and the Stock Awards shall terminate if
not exercised (if applicable) by a time established by the Board at or following
the occurrence of such event. With respect to any other Stock Awards outstanding
under the Plan, such Stock Awards shall terminate if not exercised (if
applicable) at or prior to such event.
12. Amendment of the Plan and Stock Awards.
(a) Amendment of Plan. The Board at any time, and from time to time,
may amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any NASDAQ or securities exchange listing requirements. In addition, to the
extent that the Board determines that any amendment to the Plan would materially
and negatively affect the rights of stockholders of the Company and/or
materially and negatively affect the value of shares of Common Stock held by
stockholders, then the Board shall submit such an amendment for approval by the
stockholders of the Company.
(b) Stockholder Approval. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(c) Contemplated Amendments. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.
(d) No Impairment of Rights. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.
13. Termination or Suspension of the Plan.
(a) Plan Term. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) No Impairment of Rights. Rights and obligations under any Stock
Award granted while the Plan is in effect shall not be impaired by suspension or
termination of the Plan, except with the written consent of the Participant.
14. Effective Date of Plan.
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The Plan shall become effective as determined by the Board, but no
Stock Award shall be exercised (or, in the case of a stock bonus, shall be
granted) unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
13.
EXHIBIT 99.3
MANAGEMENT GRAPHICS, INC.
NONQUALIFIED STOCK OPTION PLAN
FOR KEY EMPLOYEES
I. Purpose. The purpose of this Nonqualified Stock Option Plan (the
"Plan") is to promote the interests of Management Graphics, Inc. (the
"Corporation"), and its shareholders by providing a method to encourage
key employees of the Corporation and its subsidiaries (if any) to
invest in the Corporation's common stock on reasonable terms and
thereby increase their proprietary interest in the Corporation's
business, to encourage such key employees to remain in the employment
of the Corporation and to increase their personal interest in its
continued success and progress.
II. Administration.
(a) The Plan shall be administered by the Board of Directors
who may from time to time issue orders or adopt resolutions, not inconsistent
with the provisions of the Plan, to interpret the provisions and supervise the
administration of the Plan. All determinations shall be made by the Board of
Directors in accordance with the Minnesota Business Corporation Act (the "Act").
A majority of the Directors acting on any matter involving the interpretation or
administration of the Plan shall not be eligible to participate in the Plan.
Subject to the foregoing, the Corporation's Bylaws and any applicable provisions
of the Act, all decisions made by the directors in selecting optionees,
establishing the number of shares and terms applicable to each option, and In
construing the provisions of the Plan shall be final, conclusive and binding an
all persons, including the Corporation, shareholders, employees and optionees.
(b) The Board of Directors may from time to time appoint a
Stock Option Plan Committee (the "Committee"), consisting of not less than three
(3) directors, none of whom shall be eligible to participate in the Plan while a
member of the Committee. The board of Directors may delegate to the Committee
power to select the particular employees who are to receive options and to
determine the number of shares to be optioned to each such employee.
(c) Each option shall be evidenced by ark option agreement
substantially in the form of the option agreement which is attached to the Plan
as an Exhibit. The day on which the Board of Directors or the Committee approves
the granting of an option shall be considered the date on which such option is
granted.
(d) if the laws relating to nonqualifed stock options are
changed during the term of the Plan, the Board of Directors shall have the power
to alter the Plan in accordance with section 13 hereof, to conform to such
changes in the law.
III. Eligibility. Options shall be granted only to key employees, in the
Judgement of the Board of Directors (or the Committee) who, at the time
of the grant, are employees of the Corporation or any subsidiary. The
term "employees" means employees of the Corporation or any subsidiary,
including salaried officers of the Corporation.
IV. Shares Subject to Plan. The Board of Directors (or the Committee) may
from time to time provide for the option and sale in the aggregate of
up to 350,000 shares of the Corporation's Class A common stock, $0.01
par value, under the Plan subject to adjustments required by section 10
of the Plan. Shares may be authorized unissued or reacquired shares of
common stock. The Corporation shall not be required, upon the exercise
of any option, to issue or deliver any shares of stock prior to the
completion of such registration or other qualification of such shares
under any state or federal law, rule or regulation as the Corporation
shall determine to be necessary or desirable.
<PAGE>
V. Price. The purchase price of the stock under each option shall be
determined by the Board of Directors. The purchase price of each share
on the exercise of any option shall be paid in full in cash at the time
of exercise or, at the discretion of the Board of Directors or the
Committee, by the surrender of other shares of stock of the Corporation
having a fair market value equal to the purchase price, and a
certificate representing shares so purchased shall be delivered to the
person entitled thereto.
VI. Duration of Option. The option period shall not be more than fifteen
(15) years from the date the option is granted.
VII. Exercise of Option. The Board of Directors shall have full and complete
authority to determine, at the time of granting of any option, whether
the option will be exercisable in full at any time or from time to time
during the term of the option, or to provide for the exercise, thereof
in such installments and at such times during the term of the option,
or upon the satisfaction of such conditions, as the Board of Directors
may determine.
VIII. Nontransferability of Option. Each option granted under the Plan shall
by its terms be nontransferable by the optionee other than by will or
the laws of descent and distribution and shall be exercisable during
his lifetime only by the optionee.
IX. Other Terms and Conditions. The Board of Directors shall have power,
subject to the limitations contained herein, to fix any terms and
conditions for the granting or exercise of any option under the Plan.
Nothing contained in the Plan, or in any option granted pursuant co the
Plan, shall confer upon any optionee any right to continued employment
by the Corporation, nor limit in any way the right of the Corporation
to terminate the optionee's employment at any time.
X. Adjustment of Shares Subject to Option. In the event there 15 any
change in the common stock of the Corporation through the declaration
of stock dividends, or through recapitalization resulting in stock
split-ups, or combinations or exchanges of shares, or otherwise, the
number of shares available for option and the shares subject to any
option and exercise price thereof shall be appropriately adjusted. The
Corporation shall give notice of such adjustment to each holder of an
option under the Plan, and such adjustment shall be effective and
binding on the optionee. In the event of the proposed dissolution or
liquidation of the Corporation, or in the event of a proposed sale of
substantially all of the assets of the Corporation, the board of
Directors may declare that each option granted under the Plan shall
terminate as of a date to be fixed by the Board of Directors; provided
that not less than thirty (30) days' written notice of the date so
fixed shall be given to each optionee, and each optionee shall have the
right, during the period of thirty (30) days preceding such
termination, to exercise any options owned by such optionee as to all
or any part of the shares covered thereby, including shares as to which
such option would not otherwise be exercisable.
XI. Death of Optionee. If an optionee dies while an employee of the
Corporation or of any subsidiary or within ninety (90) days after the
termination of such employment, any option may be exercised without
regard to the restrictions an exercise set forth in section 7 within
twelve (12) months after the optionee's death by the optionee's
personal representative or the person or persons to whom the optionee's
rights under the option shall pass by the optionee's will or by the
applicable laws of descent and distribution; provided, however, that no
such option may be exercised after the expiration date specified
therein.
XII. Termination of Employment; Retirement and Disability. If an optionee
shall cease to be employed by the Corporation for any reason (including
retirement and disability and, with respect to an optionee under an
option, death) after the optionee has continuously been so employed for
one (1) year from the date of granting of the option, the optionee, or
the optionee's personal representative or legatees, as the case may be,
may, but only within the three (3) month period immediately following
such termination of employment and in no event later than the
expiration date specified in the option, exercise the optionee's option
to the extent the optionee was entitled to exercise it at the date of
such termination.
2.
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XIII. Modification of Plan. The board of Directors may amend, suspend or
discontinue the Plan, at any time, by the act of the Board of
Directors. No such action may prejudice the right of any employee who
has prior thereto been granted an option or options of the Plan.
XIV. Termination of Plan. The Plan shall terminate on December 31, 1990.
Options may be granted under the Plan at any time and from time to time
prior to its termination. Any option outstanding under the Plan, at the
time of its termination, shall remain in affect until the option shall
have been exercised or shall have expired.
XV. Effective Date of Plan. The effective date of the Plan is November 26,
1985, the date on which the Plan was adopted by the Board of Directors
of the Corporation.
3.
Exhibit 99.4
MANAGEMENT GRAPHICS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
(as revised July 13, 1992)
NONQUALIFIED STOCK OPTION AGREEMENT, made and entered into this _____
day of __________, 19___, between MANAGEMENT GRAPHICS, INC., a Minnesota
Corporation (the "Company"), and ______________________________ ("OPTIONEE").
WHEREAS, the Company has adopted the 1985 Employee Nonqualified Stock
Option Plan (the "Plan") which permits issuance of stock options for the
purchase of shares of the Company's Class A common stock, and the Company has
taken all necessary actions to grant the following option pursuant and subject
to the terms of the Plan; and
WHEREAS, Optionee is currently employed by the Company, and the Company
wishes to make available to Optionee the right to acquire shares of the
Company's Class A common stock pursuant to the Plan as an incentive to Optionee
to render employment services that will increase the value of the Company for
the mutual benefit of Optionee and the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and Optionee hereby agree
as follows:
1. Grant of Option. As a matter of separate agreement and not in lieu of
salary or other compensation for services rendered, the Company hereby grants
Optionee the irrevocable right and option (hereinafter called the "Option") to
purchase all or any part of an aggregate of _____ shares of the Company's Class
A common stock, at the option price of __________ dollars (_____) per share on
the terms and conditions set forth in this Agreement and in the Plan.
2. Vesting of Option Rights. Except as otherwise provided in Section 3(b)
of this Agreement, the Option may only be exercised by Optionee if Optionee
remains in the employ of the Company or subsidiary of the Company for one (1)
year from the date of this Agreement. Except as otherwise provided in Section 3
of this Agreement, the Option may be exercised by Optionee in accordance with
the following schedule, although the Company may, in its discretion, accelerate
such exercise schedule upon the satisfaction of financial or other performance
criteria established by the Company:
Percent of Option Shares
Date for Which Option Is Exercisable
---- -------------------------------
After _______________ ____________________________
After _______________ ____________________________
After _______________ ____________________________
After _______________ ____________________________
The Option shall terminate at the close of business on __________, or
such shorter period as is prescribed herein. Optionee shall not have any of the
rights of a shareholder with respect to the shares subject to the Option until
such shares shall be issued to him upon the due exercise of the Option. In the
event that the Company determines that registration or qualification of the
shares issuable upon the exercise of the Option is necessary or desirable under
any state or federal law, rule or regulation, the Company shall not be required
to issue any such shares, upon the exercise of the Option, prior to completion
of such registration or qualification.
<PAGE>
3. Exercise of Option after Death or Termination of Employment. The Option
shall terminate and may no longer be exercised if the Optionee ceases to be
employed by the Company or its subsidiaries, except that:
(a) If Optionee's employment shall be terminated for any reason,
voluntary or involuntary, other than death, Optionee may at any time within a
period of three (3) months after such termination, exercise the option to the
extent the Option was exercisable by Optionee on the date of the termination of
his employment; and
(b) If Optionee dies in the employ of the Company or a subsidiary of
within ninety (90) days after the termination of such employment, the Option
may, within one year after Optionee's death, be exercised to the extent that
Optionee's was entitled to exercise the Option on the date of his death by the
person or persons to whom Optionee's rights under the Option pass by will or by
the application laws of descent and distribution; provided, however, that the
Option may not be exercised to any extent by anyone after the termination date
of the Option.
4. Investment Representation. Optionee hereby represents and agrees that
any shares of stock which he may acquire pursuant to the exercise of the Option
will be acquired for long-term investment purposes and not with the view toward
the distribution or sale thereof. Optionee acknowledges that at the time of
acquisition, such shares will not be registered under either the federal or
applicable state securities laws and that the Company will be relying upon the
foregoing investment representation in agreeing to issue such shares to
Optionee. Optionee acknowledges that the transferability of such shares will be
subject to restriction imposed by all applicable federal and state securities
laws and agrees that the certificates evidencing such shares may be imprinted
with an appropriate legend setting forth these restrictions on transferability.
5. Method of Exercise of Option. Subject to the foregoing, the Option may
be exercised in whole or in part from time to time by serving written notice of
exercise on the Company at its principal office in Minneapolis, Minnesota,
accompanied by payment of the purchase price. Payment of the purchase price
shall be made by certified or bank cashier's check made payable to the Company.
6. Restriction on Transfer of Shares, Repurchase Option. In addition to
the restrictions on transferability which are set forth in Section 4, Optionee
shall not sell, transfer, exchange or otherwise dispose of any of the shares of
Company stock which he has acquired pursuant to the exercise of the Option
unless he shall first offer to sell such shares to the Company in accordance
with the terms of this Section 6. If Optionee wishes to dispose of or encumber
any of such shares, he shall deliver a written notice to the Company, which
notice shall specify the person to whom the shares are to be disposed of or
encumbered, the purchase price or other consideration to be received by Optionee
of such shares, and the terms upon which such purchase price or their
consideration to be received is to be paid. The delivery of such written notice
to the Company shall constitute an irrevocable offer by Optionee to sell the
shares described in such notice to the Company upon the same conditions as are
specified in the notice. The Company may accept such offer by delivering a
written acceptance to Optionee within thirty (30) days after receipt of the
written notice from Optionee. If the Company elects to accept such offer, the
purchase of such shares shall be closed within thirty (30) days upon the same
terms as are specified in the Optionee's written notice or upon such other terms
as are mutually acceptable to the parties. If the Company elects not to exercise
such offer or if the Company allows such offer to expire without being accepted,
Optionee shall be able to transfer such shares on the terms specified in the
written notice to the Company to the person identified therein. If such
transaction is not consummated within sixty (60) days, such shares shall again
be subject to the restrictions and the purchase options described in this
Section 6.
The Company shall also have the irrevocable right and option to
repurchase all, but not less than all, of the shares acquired by Optionee
pursuant to the exercise of the Option and still owned by Optionee in the event
of the termination of his employment with the Company, whether such termination
is for cause or without cause. The purchase price for any of the shares
repurchased by the Company pursuant to this paragraph shall be the fair market
value of such shares. The Company shall exercise its repurchase right under this
paragraph, if at all, by delivery of a written notice of exercise to Optionee
within sixty (60) days after the date of termination of Optionee's employment
with the Company. In the event that Optionee and the Company are unable to agree
upon the fair market value of such shares within a period of thirty (30) days
after the date of such written notice, the determination of fair market value
shall be made by a mutually acceptable appraiser, whose determination shall be
binding upon both the Company and Optionee. The fees charged by such appraiser
shall be paid by Optionee. The closing of the
2.
<PAGE>
repurchase of the shares of company stock owned by Optionee shall take place
within thirty (30) days after the determination of the purchase price is made,
and at the closing, the Company shall make payment of the purchase price for the
shares in cash against tender by Optionee of the certificates evidencing such
shares, which certificates shall be duly endorsed in blank.
The repurchase rights and options contained in this Section 6 shall
terminate at such time as the Company makes any sale of shares of its capital
stock in an offering which is registered under the applicable provisions of the
Federal Securities Act of 1933.
7. Miscellaneous.
(a) This Agreement shall not confer on Optionee any right with respect
to continued employment with the Company or any subsidiary of the Company, nor
shall this Agreement limit in any way the right of the Company to terminate such
employment at any time. Neither Optionee nor his legal representative, legatees
or distributes, as the case may be, will be or will be deemed to be the holder
of any shares subject to this Option unless and until this Option has been
exercised and the purchase price of the shares purchased has been paid.
(b) The Option may not be transferred, except by will or the laws of
descent and distribution to the extent provided in subsection 3(b), and during
Optionee's lifetime, the Option is exercisable only by Optionee.
(c) If there shall be any change in the stock subject to the Option
through merger, consolidation, reorganization, recapitalization, stock dividend,
stock split or other change in the corporate structure of the Company,
appropriate adjustment shall be made by the Company in the number of shares and
the price per share of the shares subject to the Option in order to prevent
dilution or enlargement of the option rights granted hereunder.
(d) The Company shall at all times during the term of the Option,
reserve and keep available such number of shares of the Company's Class A common
stock as will be sufficient to satisfy the requirements of this Agreement
IN WITNESS WHEREOF, the Company and Optionee have executed this
Agreement on the date set forth in the first paragraph.
MANAGEMENT GRAPHICS, INC.
By: ____________________________________
(Company)
_________________________________________
3.
