<PAGE> 1
As filed with the Securities and Exchange Commission on April 9, 1997
Registration No. 33-___________
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MICRO FOCUS GROUP PLC
(Exact name of registrant as specified in its charter)
England and Wales Not Applicable
(State of incorporation) (I.R.S. employer identification no.)
The Lawn, Old Bath Road
Newbury, England RG14 1QN
(Address of principal executive offices)
1983-1984 Share Option Plan
1991 Share Option Plan
1994 Employee Benefit Trust
1996 Share Option Plan
(Full title of the plans)
Anthony R. Muller
Chief Financial Officer
Micro Focus Group plc
c/o Micro Focus Incorporated
2465 East Bayshore Road
Palo Alto, California 94303
(415) 856-4161
(Name, address and telephone number of agent for service)
Copies of Communications to:
Fritz K. Koehler
Corporate Attorney
Micro Focus Group plc
c/o Micro Focus Incorporated
2465 East Bayshore Road
Palo Alto, California 94303
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------- ---------------- ----------------------- -------------------------- ---------------
Amount Proposed Maximum Proposed Maximum Amount of
Title of Securities Being Offering Price Aggregate Offering Registration
Being Registered Registered Per Share Price Fee
- -------------------------------------- ---------------- ----------------------- -------------------------- ---------------
<S> <C> <C> <C> <C>
Ordinary Shares, GBP 0.10 par
value, or ADS's (1) 1,181,041(2) $19.16(3) $22,628,745.56 $ 6,857.20
Ordinary Shares, GBP 0.10 par value,
or ADS's (1) 26,136(4) $27.25(5) $ 712,206.00 $ 215.82
Ordinary Shares, GBP 0.10 par value,
or ADS's (1) 940,952(6) $28.44(5) $26,760,674.88 $ 8,109.30
Ordinary Shares, GBP 0.10 par value,
or ADS's (1) 616,100(7) $11.36(5) $ 6,998,896.00 $ 2,120.88
Ordinary Shares, GBP 0.10 par value,
or ADS's (1) 322,025(8) $17.29(5) $ 5,567,812.25 $ 1,687.22
--------- -------------- ----------
Total 3,086,254 $62,668,334.69 $18,990.42
- ------------------------------------- --------- -------------- ----------
</TABLE>
<PAGE> 2
(1) "ADS's" are American Depositary Shares which represent Ordinary Shares of
the Registrant, GBP 0.10 par value. A separate registration statement on
Form F-6 (File No. 33-34422) filed with the Securities and Exchange
Commission on April 18, 1990 has been declared effective with respect to
the American Depositary Shares represented by American Depositary Receipts
issuable on a one-for-one basis with the Ordinary Shares registered hereby
upon deposit of such Ordinary Shares.
(2) Shares available for issuance and not yet subject to outstanding options as
of April 7, 1997 under the 1994 Employee Benefit Trust and the 1996 Share
Option Plan.
(3) Estimated as of April 3, 1997 pursuant to Rule 457(c) solely for the
purpose of calculating the registration fee.
(4) Shares subject to outstanding options as of April 7, 1997 under the
1983-1984 Share Option Plan.
(5) Weighted average per share exercise price for such outstanding options
pursuant to Rule 457(h)(1). Converted to U.S. Dollars from G.B. Pound
on the basis of $1.63 per G.B. Pound.
(6) Shares subject to outstanding options as of April 7, 1997 under the 1991
Share Option Plan.
(7) Shares subject to outstanding options as of April 7, 1997 under the 1994
Employee Benefit Trust.
(8) Shares subject to outstanding options as of April 7, 1997 under the 1996
Share Option Plan.
2
<PAGE> 3
PART II
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 Form 20-F filed on June 3, 1996 with the Commission
(the "1996 Form 20-F") pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), that contains
audited financial statements for the fiscal year ended January 31,
1996.
(b) The financial statements for the Registrant's latest fiscal year
ended January 31, 1997 set forth on pages 7 through 56 of the
Registrants' 1996 Annual Report, which is contained in Registrant's
Form 6-K furnished on March 28, 1997 to the Commission pursuant to
Rule 13a-16 of the Exchange Act.
(c) The description of the Registrant's Ordinary Shares contained in the
1996 Form 20-F, 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 incorporated by reference herein and to be a part hereof from the date
of the filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
None.
Item 6. Indemnification of Directors and Officers.
The Registrant's Articles of Association contain a provision to the effect
that, so far as permitted by the statutory provisions of English law concerning
companies, the directors, other officers and auditor of Registrant shall be
indemnified by the Registrant against liabilities incurred by them in relation
to the exercise of their duties as directors, officers or the auditor of
Registrant, respectively. However, Section 310 of the Companies Act 1985 renders
any such indemnity ineffective to the extent it covers any negligence, default,
breach of duty or breach of trust of which the director, other director or
auditor may be guilty in relation to the Registrant, except to the extent that
it covers liabilities incurred by the director, other officer or auditor,
respectively, in respect of court proceedings in which judgment or relief is
given in his favor.
The Registrant's policy is to enter into indemnity agreements with each of
its directors and executive officers. In addition, Micro Focus Incorporated, a
subsidiary of Registrant incorporated under the laws of the State of California,
has also entered into indemnity agreements with certain of the Registrant's
directors and executive officers. The indemnity agreements provide that
directors and executive officers will be indemnified and held harmless to the
fullest possible extent permitted by law including against all expenses
(including attorneys' fee), judgments, fines and settlement amounts paid or
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<PAGE> 4
reasonably incurred by them in any action, suit or proceeding, including any
derivative action by or in the right of the Registrant, on account of their
services as directors, officers, employees or agents of the Registrant or as
directors, officers, employees or agents of any other company or enterprise when
they are serving in such capacities at the request of the Registrant. Neither
the Registrant nor Micro Focus Incorporated will be obligated pursuant to the
agreements to indemnify or advance expenses to an indemnified party with respect
to proceedings or claims: (i) initiated by the indemnified party and not by way
of defense, except with respect to a proceeding authorized by the Board of
Directors and successful proceedings brought to enforce a right to
indemnification under the indemnification agreements; (ii) for any amounts paid
in settlement of a proceeding unless the Registrant consents to such settlement;
(iii) on account of any suit in which judgment is rendered against the
indemnified party for an accounting of profits made from the purchase or sale by
the indemnified party of securities of the Registrant pursuant to the provisions
of Section 16(b) of the Exchange Act and related laws; (iv) on account of
conduct by an indemnified party that is finally adjudged to have not been honest
and reasonable under the circumstances; (v) on account of any criminal action or
proceeding arising out of conduct that the indemnified party had reasonable
cause to believe was unlawful; (vi) if the liabilities relating thereto are paid
to the indemnified party by an insurance carrier under a directors' and
officers' liability insurance policy maintained by the Registrant or Micro Focus
Incorporated; or (vii) if a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not lawful.
The indemnity agreements are not exclusive of any rights a director, other
officer or auditor may have under the Articles of Association, other agreements,
any majority-in-interest vote of the shareholders or vote of disinterested
directors, applicable law or otherwise.
The indemnification provision in the Articles of Association, and the
indemnity agreements, may be sufficiently broad to permit indemnification of the
Registrant's directors and executive officers for liabilities arising under the
Securities Act. In addition, the Registrant has directors' and officers'
liability insurance.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.01 Registrant's 1983-1984 Share Option Plan, as amended, and related
documents.
4.02 Registrant's 1991 Share Option Plan, as amended, and related
documents.
4.03 Registrant's 1994 Employee Benefit Trust and related documents.
4.04 Registrant's 1996 Share Option Plan and related documents.
5.01 Opinion of Memery Crystal.
23.01 Consent of Memery Crystal (included in Exhibit 5.01).
23.02 Consent of Ernst & Young.
24.01 Power of Attorney (see the section in this Registration Statement
entitled "Power of Attorney").
4
<PAGE> 5
Item 9. Undertakings.
The 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 of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the registrant pursuant to Section 13 or 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; and
(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 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 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 foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission, such indemnification is
5
<PAGE> 6
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
6
<PAGE> 7
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 Palo Alto, State of California, on the 9th day of
April, 1997.
MICRO FOCUS GROUP PLC
By: /s/ Anthony R. Muller
----------------------------------------------
Anthony R. Muller
Senior Vice President, Finance and
Administration, and Chief Financial Officer
7
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Marcelo Gumucio and Anthony R. Muller,
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 or it 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.
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Principal Executive Officer:
/s/ M.A. GUMUCIO Chief Executive Officer April 7, 1997
- --------------------------- and a Director
Marcelo Gumucio
Principal Financial and
Accounting Officer:
/s/ Anthony R. Muller Senior Vice President, April 7, 1997
- --------------------------- Finance and Administration,
Anthony R. Muller and Chief Financial Officer
Additional Directors:
- --------------------------- Director April ___, 1997
Harold Hughes
/s/ Michael Gullard Director April 9, 1997
- ---------------------------
Michael Gullard
Director April ___, 1997
- ---------------------------
Ron Forbes
/s/ Paul Adams Director April 7, 1997
- ---------------------------
Paul Adams
</TABLE>
8
<PAGE> 9
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
4.01 Registrant's 1983-1984 Share Option Plan, as amended, and related
documents.
4.02 Registrant's 1991 Share Option Plan, as amended, and related
documents.
4.03 Registrant's 1994 Employee Benefit Trust and related documents.
4.04 Registrant's 1996 Share Option Plan and related documents.
5.01 Opinion of Memery Crystal.
23.01 Consent of Memery Crystal (included in Exhibit 5.01).
23.02 Consent of Ernst & Young.
24.01 Power of Attorney (see the section in this Registration Statement
entitled "Power of Attorney").
</TABLE>
9
<PAGE> 1
EXHIBIT 4.01
1983-1984 MICRO FOCUS SHARE OPTION PLAN ("THE PLAN")
1. Definitions
In this Plan:
(a) "Board" means the board of directors of the Company;
(b) "Code" means the United States Internal Revenue Code of 1954 (as
amended);
(c) "The Company" means Micro Focus Group Public Limited Company
incorporated in England with number 1709998;
(d) "Eligible Person" means a person to whom an Option may be granted
as defined in clause 2 below;
(e) "Group" means the Company and every other company of which the
Company has direct or indirect control;
(f) "Incentive Stock Option" means an Option which qualifies as an
incentive stock option within the meaning of Section 422A of the
Code;
(g) "ISO Group" means the Company and any other company which is a
Parent Corporation or Subsidiary Corporation of the Company;
(h) "Option" means a right granted by the Company in accordance with
these Plans to subscribe for Shares;
(i) "Parent Corporation" means any corporation (other than the Employer
Corporation) in an unbroken chain of corporations ending with the
Employer Corporation if, at the Date of Grant, each of the
corporations other than the Employer Corporation owns stock (or
shares) possessing 50% or more of the total combined voting power of
all classes of stock (or shares) in one of the other corporations in
such chain;
(j) "Shares" means fully paid ordinary shares in the capital of the
Company;
(k) "Subsidiary Corporation" means any corporation (other than the
Employer Corporation) in an unbroken chain of corporations beginning
with the Employer Corporation if, at the Date of Grant, each of the
corporations other than the last corporation in the unbroken chain
owns stock (or shares) possessing 50% or more of the total combined
voting power of all classes of stock (or shares) in one of the other
corporations in such chain;
(l) "10% Shareholder" means a person who owns shares representing more
than 10% of the total combined voting power of all classes of shares
in any company which is a member of the ISO Group at the date of
grant of an Option;
(m) "fair market value" means the average of the middle market
quotations of a Share as derived from the Daily Official List of The
Stock Exchange on the three business days immediately preceding the
day on which the option is granted for UK eligible persons and as
ascertained in accordance with the provisions of the laws and
regulations of the relevant jurisdiction and taxation authority for
other eligible persons.
<PAGE> 2
2. Persons to whom Options may be granted
(a) Options may only be granted to persons who devote substantially the
whole of their working time to the business of the Group ("Eligible
Persons");
(b) Subject to clause 6 below Options may be granted to such Eligible
Persons as the Board from time to time and in its absolute
discretion may determine.
3. Non-transferability of Options
Options shall be personal to the person to whom they are granted and shall
lapse forthwith if they are transferred (otherwise than to personal
representatives upon death) assigned, mortgaged, charged or otherwise alienated
or if that person is adjudicated bankrupt or does or suffers any other act or
thing whereby he or she would or might be deprived of the legal or beneficial
ownership of the Options.
4. Number of Shares available to be put under option
Subject to clause 12 below (relating to variation in share capital) the
total number of Shares in respect of which Options may be granted in accordance
with this Plan and any other share option plan established by the Company
(inclusive of the 481,833 shares for which the grant of options was authorised
by the Company in general meeting on 9th December 1983, may not exceed 1,216,322
Shares (representing 10% of the issued share capital of the Company on 12th
August 1985) of which not more than 1% exclusive of options which have lapsed or
ceased to be exercisable under this Plan or any other share option plan
established by the Company and exclusive of Shares up to the said 1% not put
under Option in any earlier period of 12 months from 12th August 1985, may be
put under Option in any period of 12 months.
5. Maximum number of Shares in respect of which Options may be granted to
any person
Subject to clause 12 below the maximum number of Shares in respect of which
Options may be granted to any person in accordance with this and any other share
option plan established by the Company in the period of this authority shall be
121,632 Shares (being 10% of the total number of shares in respect of which
Options may be granted pursuant to this Plan).
6. Further restrictions on the grant of Incentive Stock Options
(a) Incentive Stock Options may only be granted to employees (as that
term is used in Section 422A of the Code) of any company which is a
member of the ISO Group at the date of grant of an Option;
(b) The aggregate fair market value (determined as at the time of grant)
of Shares in respect of which Incentive Stock Options are
exercisable for the first time by an employee during any calendar
year pursuant to this Plan (and under any other plan permitting the
granting of Incentive Stock Options which might hereafter be
established by any company in the ISO Group) may not exceed
US$100,000.
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<PAGE> 3
7. Payment for grant of Options
The amount, if any, payable in consideration of the grant of any Option
shall be as the Board may decide but in any event shall not be more than GBP 1,
which shall not be returnable.
8. Subscription Price
The subscription price payable for any Share to be subscribed upon the
exercise of any Option shall be not less than the fair market value of a Share
at the time the Option is granted save that:
(a) In the case of an Incentive Stock Option granted to a 10%
Shareholder the subscription price shall, in compliance with Section
422A (c)(6) of the Code, be not less than 110% of the fair market
value of a Share at the time the Option is granted; and
(b) in any event the subscription price shall be not less than the
nominal value of a Share.
9. Times at which Options may be granted
Options may only be granted:
(a) within the period of 30 days immediately following 17th June
1987; or
(b) within the period of 42 days immediately following (1) the date on
which the Company announces its interim or preliminary annual
trading results for any period to the press and The Stock Exchange
or, if later, (2) the date of a permit granted by the California
Commissioner of Corporations covering the granting of Options
(provided in respect of directors of the Company that such date does
not fall during the period of two months prior to the announcement
of interim or preliminary annual trading results); or
(c) to any person who commences employment with the Group for the first
time, within the period of 45 days immediately thereafter (provided
that in respect of directors of the Company such date does not fall
during the period of two months prior to the announcement of interim
or preliminary annual trading results).
10. Option Period
No Option shall be capable of being exercised later than 10 years after
the date on which it is granted or in the case of a 10% Shareholder five years
after the date on which it is granted.
11. Stock Exchange Listing
All Shares allotted upon the exercise of any Option shall rank pari passu
in all respects with the Shares then in issue and the Company shall apply to the
Council of The Stock Exchange for Shares allotted pursuant to any Option to be
admitted to the Official List. For those Options which are subject to the
California Corporate Securities Law of 1968 without exemption, the Company
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shall provide to each person who shall hold one or more of such Options, a copy
of the annual report of the Company as soon as reasonably practicable after it
is released by the Company.
12. Variation in share capital
(a) As provided for in the rules of The Stock Exchange, in the event of
any increase in the number of Shares issued by way of capitalisation
or rights issue, or any sub-division, consolidation or reduction
effected without receipt of consideration, the Board will make the
appropriate adjustment to:
(i) the restrictions imposed by clauses 4 and 5 above; and/or
(ii) the number of Shares which are subject to any Option; and/or
(iii) the subscription price payable for each Share under any
Option;
provided that the subscription price for any Share shall not be less
than the nominal value of such Share and no adjustment shall cause
an Option to be capable of being exercised later than as mentioned
in clause 10 above.
(b) As required by the rules of The Stock Exchange, except in the case
of a capitalisation issue no such adjustment shall be made without
the prior written confirmation of the auditors of the Company for
the time being that it is in their opinion fair and reasonable.
(c) Written notice of any adjustment shall be given to any person
granted an Option who is affected thereby.
13. Winding-up of the Company
Without prejudice to clause 10 above it shall be a term and condition of
any Option that in the event of notice being given to shareholders of a
resolution for the winding-up of the Company the Option shall be capable of
exercise within the period of six months commencing on the date on which the
resolution is passed and thereafter the Option shall lapse.
In the event the Company is succeeded by successor corporation, then for
those Options which are subject to the California Corporate Securities Law of
1968 without exemption, and which are outstanding as of the date of succession,
the successor corporation will have the opportunity to assume such outstanding
Options or to substitute substantially equivalent options. If the successor
corporation declines such opportunity, then any and all such outstanding Options
shall accelerate and become exercisable in full prior to such succession, at
such times and on such conditions as the Board shall determine. The aggregate
fair market value (determined at the time an Option is granted) of ISO's which
first become exercisable by an employee in the year of such succession cannot
exceed US$100,000. Any remaining accelerated Options shall be treated as
non-qualified Stock Options.
14. Alteration of the Plan
(a) Subject to sub-clause 14(b) below the Board may at any time alter or
add to all or any of the provisions of the Plan in any respect;
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<PAGE> 5
(b) Subject to sub-clause 14(c) below no alteration or addition shall be
made to the provisions of clauses 2(a), 3, 4, 5, 7, 8, 9, 10, 11,
12, 13, 15 and this clause 14 without the prior approval of
shareholders of the Company in general meeting;
(c) Sub-clause 14(b) above shall not apply to the extent that any
alteration or addition is necessary or desirable in order to comply
with the laws and regulations for the time being in force in the US
or the UK, to ensure and maintain treatment as Incentive Stock
Options of those Options intended to be treated as such or to obtain
or maintain approval of the Plan from any Government or other
regulatory or advisory body whether in the United Kingdom or the
United States of America or elsewhere provided that any such
alteration or addition shall not affect the basic principles of the
Plan.
15. Duration of the Plan
The Authority to grant Options under the Plan will expire on
12th August 1991.
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<PAGE> 6
1983-1984 MICRO FOCUS SHARE OPTION PLAN
CERTIFICATE OF SHARE OPTIONS GRANT
Date of Grant: ______ 198_
THIS IS TO CERTIFY THAT on the Date of Grant shown above_________________of____
____________________________________________________________________________WAS
GRANTED __________OPTIONS (numbered __________through__________), each such
option being a right granted by Micro Focus Group PLC reg. no. 1709998 ("the
Company") to subscribe for a fully-paid Ordinary share of 10p in the capital
of the Company at a price of pounds Sterling __________ per share; and
_________________OPTIONS (numbered ____________through__________), each such
option being a right granted by Micro Focus Nominees Limited reg. no. 1790073
("Nominees") to purchase from Nominees an existing fully-paid Ordinary share of
10p in the capital of the Company at a price of pounds Sterling ______* per
share.
The terms used in this Certificate and the attached Schedule are defined in the
Glossary on the back of this Certificate.
All options granted by the Company are granted pursuant to and are subject to
all the terms and conditions set out in the Micro Focus Share Option Plans for
the 1983 and 1984 which were approved and adopted by the shareholders of the
Company on 9th December 1983 and adopted by the Board on 6th January 1984, as
amended by resolutions of the Board dated 17th May 1984, 16th March 1985 and
23rd June 1985. All Options are granted subject to the terms and conditions set
out in this Certificate and are subject to:
o terms and conditions set by the Company (as set out in Part A of the
Schedule); and
o terms and conditions required by U.K. and U.S. corporate laws and
regulations (as set out in Part B of the Schedule); and
o in respect of ______ OPTIONS (numbered __________through ___________), the
additional terms and conditions required by U.S tax rules (as set out in
part C of the Schedule) in order that such Options will not be treated as
Approved Options under the Micro Focus Group Inland Revenue Approved Share
Option Scheme; and
o in respect of _____ OPTIONS (numbered ___________through ___________), the
additional terms and conditions required by U.K. tax rules (as set out in
Part E of the Schedule) in order that such Options are granted as Approved
Options under the Micro Focus Group Inland Revenue Approved Share Option
Scheme established by resolution of the Board on 15th December 1984, and
the additional terms and conditions required by U.S. tax rules (as set out
in part C of the Schedule) in order that such Options will qualify as
Incentive Stock Options; and
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<PAGE> 7
o in respect of _____ OPTIONS (numbered ___________through ____________),
the additional terms and conditions required by U.K. tax rules (as set out
in Part E of the Schedule) in order that such Options are granted as
Approved Options under the Micro Focus Group Inland Revenue Share Option
Scheme established by resolution of the Board on 15th December 1984, and
the additional terms and conditions (as set out in Part D of the Schedule)
to ensure that such Options will be treated as Non-Qualified Stock
Options; and
o in respect of ____ OPTIONS (numbered ___________through ____________), the
additional terms and conditions (as set out in Part D of the Schedule)
necessary to ensure that such Options will be treated as Non-Qualified
Stock Options, and the additional terms and conditions (as set out in Part
F of the Schedule) to ensure that such Options will not be treated as
Approved Options under the Micro Focus Group Inland Revenue Approved Share
Option Scheme.
Subject to the terms and conditions set out in the Schedule, the Options will be
exercisable in accordance with the following vesting Schedule:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
On or after Vesting Date: But Before Lapse Date: Number of options:
- ------------------------- ---------------------- ------------------
<S> <C> <C>
( ______ 198__) ( ___________ 199__ ) 20% of the Options
( ______ 198__) ( ___________ 199__ ) 20% of the Options
( ______ 198__) ( ___________ 199__ ) 20% of the Options
( ______ 198__) ( ___________ 199__ ) 20% of the Options
( ______ 199__) ( ___________ 199__ ) 20% of the Options
- -------------------------------------------------------------------------------
</TABLE>
These Options shall cease to be exercisable, as set out in Clause 3 of Part A of
the Schedule, if the Option-holder ceases to hold employment within the Group or
ceases to be party to a Consultancy agreement, unless by reason of disability or
death.
In consideration of these Options and as a condition of acceptance of these
Options by the Option-holder, the Option-holder hereby agrees with the Company
and Micro Focus Nominees Limited (reg. No. 1790073) to accept, and undertakes to
be bound by, the terms and conditions referred to above and as set out in the
Schedule.
Signed:._____________________________________
Option-Holder
Signed:_____________________________ Signed:________________________________
For and on behalf of Micro Focus For and on behalf of MF Nominees Limited
Group PLC
The Common Seal of Micro Focus The Common Seal of Micro Focus
Group PLC was attached hereto in the Nominees was attached hereto in the
presence of : presence of:
Signed: ____________________________ Signed: _______________________________
Authorised Signator Authorised Signator
Signed: ____________________________ Signed: _____________________________
Authorised Signator Authorised Signator
*Equivalent to ____ U.S. dollars at the Conversion Rate on the date of Grant
7
<PAGE> 8
GLOSSARY
In the Certificate and the attached Schedule:
<TABLE>
<S> <C>
"Account Day" means the day on which accounts for dealings on the
Stock Exchange in London in the previous "Account"
are presented for settlement;
"the Board" means the board of directors of the Company or a duly
authorised committee of the board of directors;
"Business Day" means any day between and including Monday through
Friday in any week, excluding any day which is a public
holiday in either England or California or is not a
dealing day of the Stock Exchange in London;
"the Certificate" means the certificate evidencing the grant of these
Options to the Option-holder;
"the Code" means The United States Internal Revenue Code of 1954
(as amended)
"a Consultancy means an agreement under which the Option-holder is
Agreement" obliged to provide services directly or indirectly to
any company within the Group;
"the Conversion Rate" means the average currency conversion rate quoted by the
Bank of America in London as the price for Pounds
Sterling purchased with U.S. Dollars;
"the Company" means Micro Focus Group Public Limited Company
(incorporated in England with reg. no. 1709998);
"the Date of Grant" means the date upon which these Options are granted
as recorded on the Certificate;
"the Employer means the company in which the Option-holder holds the
Corporation" office or employment by virtue of which he or she has
been granted these Options;
"Exercise Price" means the Pounds Sterling price payable on the
exercise of an Option as recorded on the face of the
Certificate together with any additional amount as
set out in Clause 2 of Part C of the Schedule which
might be required by the U.S. Internal Revenue
Service in order to preserve the status of Options as
Incentive Stock Options as defined in Clause 1(a) of
Part C of the Schedule;
"the Grantor" means in respect of any Option, the company
identified in the Certificate as having granted that
Option (i.e., the Company or Nominees);
"the Group" means the Company and every other company by which the
Company has direct or indirect control;
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C>
"Market Price" means, at any time, the price per share at which
shares could then be sold on the Stock Exchange in
London as advised to the Options Administrator by the
Company's stockbroker
"Nominees" means Micro Focus Nominees Limited (a company limited
by guarantee not having a share capital incorporated
in England with reg. No. 1790073);
"a Non-Qualified means an Option which is not intended to be an
Stock Option" Incentive Stock Option (as defined in Clause 1(a) of
Part C of the Schedule).
"Option" means option hereby granted to acquire a Share;
"Options" means options hereby granted to acquire one Share
each;
"the Options means the person appointed by the Grantor as
Administrator" the Options Administrator for the time being;
"Option-holder" means person to whom Options are granted (including
upon the death of such person and where the context
so requires, his or her personal representatives);
"Option Shares" means Shares acquired, or to be acquired, by the
Option-holder upon the exercise of Options including,
in the event of any reconstruction, amalgamation or
reorganisation of share capital in the Company,
shares representing such Shares and any additional
shares acquired by the Option-holder in consequence
of his or her holding of such Shares (other than
shares for which the Option- holder has given new
consideration);
"the Plans" means the Micro Focus Share Option Plans for 1984 and
1985 as set out in Appendix 1, to the Chairman's letter
to shareholders dated 23rd November 1983 (as altered or
added from time to time)
"the schedule" means the Schedule to the Certificate;
"Share" means a fully-paid Ordinary share of 10p in the
capital of the Company
"vested" means capable of being exercised in accordance with the
vesting schedule on the face of the Certificate.
</TABLE>
9
<PAGE> 10
1983-1984 MICRO FOCUS SHARE OPTION PLAN
SCHEDULE
PART A: TERMS AND CONDITIONS SET BY THE COMPANY
1. Vesting and Lapse of Options
(a) After being granted, an Option becomes vested upon being held by the
Option-holder until the Vesting Date for that Option set out in the
Certificate.
(b) An Option lapses and is no longer exercisable after the Lapse Date for
that Option set out in the Certificate.
2. Manner of Exercise of Option
(a) Options may be exercised on any occasion after becoming vested and before
they have lapsed by:
(i) the receipt of a notice by the Options Administrator given by the
Option-holder in the manner prescribed in Clause 8 of this Part
which identifies the Options that are to be exercised; and
(ii) the receipt by the Grantor of the aggregate Exercise Price in Pounds
Sterling in respect of such Options.
(b) Upon receipt of a notice of exercise served in accordance with Clause 2(a)
above the board of directors of the Grantor shall allot or transfer to the
Option-holder, as appropriate, the number of Shares in respect of which
such Options are duly exercised;
(c) If all Options represented by the Certificate are not exercised the board
of directors of the Grantor may, at its discretion, endorse the
Certificate so as to specify the number of Options which remain to be
exercised.
3. Cessation of Employment
(a) General rule: Subject to provisions (b) and (c) of this Clause, if the
Option-holder ceases to hold employment within the Group or ceases to
be party to a Consultancy Agreement for any reason then all Options,
that have become vested prior to the date of notice of termination by
either party of the employment relationship or Consultancy Agreement
will be exercisable by the Option-holder for a period of 30 days from
the date of such notice and will thereafter lapse. All Options that
have not become vested prior to the date of such notice will become
null and void as of the date of such notice.
(b) Disability: If the Option-holder ceases to hold employment within the
Group or ceases to be party to a Consultancy Agreement by reason of a
certified physical disability which makes it impossible to continue
gainful employment for the rest of his or her natural life
10
<PAGE> 11
then all Options which have not lapsed prior to the cessation date may be
exercised within the period of one year beginning with the date that the
Option-holder ceased to hold employment within the Group or ceased to be a
party to a Consultancy Agreement, regardless of whether such Options have
become vested.
(c) Death: If the Option-holder ceases to hold employment within the Group or
ceases to be a party to a Consultancy Agreement by reason of the
Option-holder's death, then all Options which have not lapsed prior to the
cessation date may be exercised by the personal representatives of the
Option-holder within the period of one year beginning with the date of
death, regardless of whether such Options have become vested.
4. Non-Transferability of Options
Options are personal to the Option-holder and may not be exercised by any other
person. An Option shall lapse forthwith if it is purportedly assigned,
mortgaged, charged or otherwise alienated or if the Option-holder is adjudicated
bankrupt or does or suffers any other act or thing whereby the Option-holder
would or might be deprived of the beneficial ownership of such Option.
5. Independence of Options
The statutory, contractual or other rights and obligations of the Option-holder
under the terms of any office, employment, contract or any other relationship
with Nominees, the Company or any other company in the Group (apart from these
Options) shall not be affected by the grant or existence of these Options or any
other right that the Option-holder might otherwise have to exercise these
Options and these Options shall not afford the Option-holder any additional
rights to continuation of, or to compensation or damages in consequence of the
termination of, any office, employment or other relationship for any reason
whatsoever.
6. Sale or Transfer of Option Shares
To avoid inadvertent breach of the United States securities laws, and to promote
the acquisition of shares by staff and other contributors to the Group, if the
Option-holder intends, at any time, to sell, assign or transfer any or all of
the Option Shares, Nominees will have the right of first refusal to purchase or
arrange the purchase, sale, assignment or transfer of those Option Shares. The
procedures to be adopted for the time being in the case of the Option-holder
wishing to sell Option Shares are as in Clauses 6(a) through 6(e) below:
(a) The Option-holder will give an Initial Sale Notice to the Options
Administrator stating the Option-holder's intent to sell, assign or
transfer the Option Shares. The Initial Sale Notice must be made in
writing by one of the methods in Clause 8 below and state:
(i) the number of Option Shares to be sold, and
(ii) the identification of the share certificate(s) representing the
Option Shares to be sold;
11
<PAGE> 12
Nominees may then exercise a right of first refusal by proceeding as in
Clauses 6(b), (c) and (d) below. If Nominees for any reason declines to
exercise this right of first refusal, then Clause 6(e) below will apply
instead.
(b) If Nominees exercises its right of first refusal, then the Options
Administrator will make all reasonable efforts to obtain a Market Price
quotation from the Company's stockbroker at The Stock Exchange in
London for the specified number of shares by the next dealing day of
The Stock Exchange in London and to inform the Option-holder of the
quoted price as soon as practicable. In the normal case, if the Initial
Sale Notice was received by 3:00 p.m. PST on a Business Day Nominees
will respond with the quoted price by 12:00 noon on the following
Business Day.
(c) After receiving the quotation referred to in Clause 6(b) above, if the
Option-holder decides to sell the Option Shares, the Option-holder must
give a Sale Confirmation Notice to the Options Administrator. The Sale
Confirmation Notice must be made in writing by one of the methods in
Clause 8 below.
The Sale Confirmation Notice must restate the quotation price and may also
state a lesser, minimum price below which the Option-holder wishes to
withdraw from the sale in the event that the minimum price or greater is
not achievable.
For the Sale Confirmation Notice to be valid and accepted and for the sale to
take place, Nominees must be in possession of the following:
(i) the share certificate(s) for the Option Shares, and
(ii) a blank form of Stock Transfer, acceptable to The Stock Exchange in
London, relating to such Option Shares and signed by the
Option-holder, or if a Power of Attorney has been granted to
Nominees, a statement authorizing use of the Power of Attorney in
executing the sale.
(d) Provided that the valid Sale Confirmation Notice is given by the
Option-holder to Nominees by 3:00 p.m. on the same Business Day as the
Market Price quotation was received, then Nominees will proceed either:
(i) to instruct the Company's stockbroker to sell through The Stock
Exchange in London the specified shares on behalf of the
Option-holder in such a way as will avoid contravention of U.S.
federal and state securities laws as soon as practicable and retain
a commission of 1/2% of the gross proceeds for Nominees' own
account; or
(ii) to purchase or arrange the purchase privately of the entire
specified number of Option Shares at the Market Price quotation and
will use its best efforts to so do in such a way as will avoid
contravention of U.S. federal and state securities laws as soon as
practicable and retain a commission for Nominees' own account
equivalent to the commission that would have been charged by the
Company's stockbroker on that occasion.
12
<PAGE> 13
If any of the actions required of the Option-holder described in Clause 6(a),
(c) and (d) above are not completed, Nominees may be unable to complete the sale
and in that event, should the Option-holder wish to proceed with a sale, he or
she must repeat the procedures in 6(a) through 6(d).
Nominees will pay the net proceeds of the sale to the Option-holder as soon as
is practicable, given the nature of the transactions involved.
The Company's stockbroker and Nominees will use all reasonable efforts to
achieve the purposes of these arrangements and will each attempt to achieve the
Market Price quoted but cannot guarantee it as the Stock Exchange market price
may shift between the quotation and the sale.
(e) If the Option-holder gives the Initial Sale Notice and Nominees does
not exercise its right of first refusal and either states this in
writing to the Option-holder or fails to obtain from the Company's
stockbroker the Market Price quotation referred to in 6(b) above by the
end of the Business Day following that in which the Options
Administrator received the Initial Sale Notice, then for the next five
Business Days, the Option-holder shall be at liberty, subject to
compliance with all applicable requirements of U.S. federal and state
laws, The Stock Exchange in London, and any government or other
regulatory or advisory body whether in the United Kingdom or The United
States of America, to sell, assign or transfer such Option Shares to
any person on any terms, provided that the Option-holder gives the
Options Administrator notice in writing of that sale, assignment or
transfer in accordance with Clause 8 within such five Business Days.
If the Option-holder does not sell, assign or transfer the Option Shares and
notify the Options Administrator of that sale, assignment or transfer in
accordance with Clause 8 below within such five Business Days, then when next
the Option-holder wishes to sell, assign or transfer any Option Shares he or she
must repeat the procedures set forth in Clause 6(a) through 6(d) above so that
Nominees may again utilize its right of first refusal.
(f) Nominees may expand or change these procedures to accommodate The Stock
Exchange or the Company's stockbroker's trading practice or to ensure
practicability of the administration of the procedures or to ensure an
effective service for the sale, assignment or transfer of the Option
Shares on behalf of the Option-holder and in the case of assignment or
transfer may add new procedures. Any such change will be notified to the
Option-holder.
7. Alteration of These Terms and Conditions
(a) The board of directors of the Grantor may at any time alter or add to the
terms and conditions of these Options in any respect, subject to the terms
and conditions of these Options in any respect, subject to, if necessary,
the approval of the shareholders of the Company and the various
legislations in effect at the time of such change;
(b) The board of directors of the Grantor shall give to the Option-holder
written notice on any such alteration or addition.
13
<PAGE> 14
(c) Nominees may assign the right of first refusal to any person or persons
and in that event:
(i) Nominees shall give notice in writing to the Option-holder; and
(ii) the provisions of Clause 6 shall be read and construed as if all
references to Nominees were references to the assignee.
8. Service of Notices
For the purposes of the notices to be given to the recipient under Clause 2(a),
6(a), 6(c) and 6(e) only, a notice must be sent, received and acknowledged as
follows:
(a) The notice must be given to the recipient using one or more of the
following five methods:
(i) by personal delivery in writing to the recipient or, in the case
of Options Administrator, his or her designee; or
(ii) by electronic mail to the recipient's identification code using
the Group's electronic mail system; or
(iii) by telex to the recipient using the correct answer back code; or
(iv) by facsimile to the recipient's FAX machine, which must be
compatible with those used by the Company; or
(v) by telephone conversation with the recipient, provided that, by
using this method, the Option-holder impliedly indemnifies and holds
the Company, Nominees and its officers, directors, employees and
agents harmless for any error in identification, transmission or
receipt.
(b) The notice must indicate one or more of the above methods by which it can
be acknowledged other than by method (v) .
(c) The notice must be received, and acknowledged by the recipient using any
of the above methods other than method (v) in order to be considered
given. The date and time of the giving of notice will be the date and time
the acknowledgment of the notice is sent.
(d) The recipient must make his or her best efforts to acknowledge receipt of
the notice as soon as reasonably practicable after actual receipt of the
notice. If the sender does not receive acknowledgment within one Business
Day after having sent the notice, the sender will re-send the notice.
9. Applicable Law
The rights and obligations of the Option-holder, the Company and Nominees under
the terms and conditions set out in this Certificate and the Schedule are
subject to all applicable requirements of U.S. federal and state laws and with
all applicable requirements of The Stock Exchange in London
14
<PAGE> 15
and any Government or other regulatory or advisory body whether in the United
Kingdom or United States of America.
10. Force Majeure
Notwithstanding any other provision of the Certificate or this Schedule, no
default, delay or failure to perform on the part of any party shall be
considered a breach of any term or condition of this Certificate or the Schedule
if such default, delay or failure to perform is shown to be due to causes beyond
the reasonable control of the party charged therewith, including, but not
limited to, causes such as strikes, lockouts or other labor disputes, riots,
civil disturbances, actions or inactions of governmental authorities or
suppliers, epidemics, war, embargoes or other acts of the public enemy, severe
weather, fire, earthquakes, acts of God, nuclear disasters, default of a common
carrier or failure of a communication system.
11. Disclaimer
Neither the Company, Nominees, their officers, directors, employees or agents
warrants any benefit or value from the holding of any Option or the acquisition,
holding or sale of any Share, nor guarantees any such benefits or value that
might be perceived by the Option-holder or by any other person, nor guarantees
the effect of any act contemplated herein.
PART B: TERMS AND CONDITIONS REQUIRED BY
THE CORPORATE LAWS AND REGULATIONS OF
THE UNITED KINGDOM AND THE UNITED STATES OF AMERICA
1. Shareholders' Circulars
As required by the California Commissioner of Corporations, the Option-holder
shall be sent copies of all documents (including the annual directors report and
accounts) , other than proxy or voting forms, sent to the holders of Shares.
2. Stock Exchange Listing
As required by The Stock Exchange in London to be drawn to the attention of the
Option-holder all Shares allotted upon the exercise of Options shall rank
equally in all respects with the Shares then in issue and the Company shall
apply to the Council of The Stock Exchange, in London for such Shares to be
admitted to the Official List of The Stock Exchange.
3. Restrictions Imposed Upon The Exercise of Options and The Disposal of
Shares
(a) Options may not in any event be exercised unless such exercise is in
compliance with the U.S. Securities Act of 1933 (as amended), if
applicable, and all applicable U.S. state securities laws, as they are
in effect at that time;
(b) In exercising Options the Option-holder shall have regard to the
provisions of the Model Code for Securities Transactions by Directors of
Listed Companies issued by The Stock
15
<PAGE> 16
Exchange, London, in April 1981, a copy of which may be obtained from the
Options Administrator;
(c) Unless sold outside of the United States of America in a manner which
removes the sale from the purview of the U.S. federal securities laws, all
Shares acquired upon the exercise of Options must be held indefinitely
unless they are registered under the Securities Act of 1933 or an
exemption from registration is available;
(d) The transfer of any Shares acquired upon the exercise of Options may be
restricted or affected by various state securities laws in the United
States of America;
(e) In disposing of any Shares acquired pursuant to the exercise of Options,
the Option-holder shall have regard to the provisions of Part V of the
U.K. Companies Act 1980 (Insider Dealing), a copy of which may be obtained
from the Options Administrator, and the Model Code referred to in Clause
3(b) above.
4. Reconstruction or Amalgamation
As required by the California Commissioner of Corporations, in the event that an
arrangement between the Company and any person holding Shares in the Company is
proposed for the purpose of or in connection with a scheme for reconstruction of
the Company or the amalgamation of the Company and any one or more other
companies (whether or not involving the subsequent winding-up of the Company)
and under the arrangement the Company will cease to be the holding company of
the Micro Focus group of companies then the Board shall give notice in writing
to the Option-holder either:
(a) that the Company shall, as a condition of the Company's agreement to
such arrangement require that the company which is to become the
holding company of the Micro Focus group of companies ("the New
Company") shall, subject to compliance with any applicable laws or
regulations for the time being in force in the United States of America
or the United Kingdom or any necessary consents or approvals from any
Government or other regulatory or advisory body whether in the United
Kingdom or the United States of America or elsewhere, procure the grant
to the Option-holder of a new option or options of equivalent value in
substitution for these Options, PROVIDED THAT upon the grant (or
substitution) of such new option (or options) the Option-holder
releases Nominees and the Company from all the obligations and
liabilities arising under or in connection with these Options with the
intent that all these Options shall then cease to be exercisable; or,
(b) that any Options not yet exercised on the date of such notice shall
accelerate and become exercisable in full prior to the reconstruction or
amalgamation of the Company at such times and on such conditions as the
Board shall determine.
5. Winding-up of the Company
As required by The Stock exchange in London to be drawn to the attention of the
Option-holder, the rights of the Option-holder in the event of notice being
given to shareholders of a resolution for the winding-up of the Company, are
that:
16
<PAGE> 17
(a) Options vested on the date of such notice may be exercised within the
period of 6 months beginning with the date on which such resolution is
passed and shall cease to be exercisable at the end of that period; and
(b) Options which are not vested on the date of such notice shall immediately
cease to be exercisable.
6. Variation in Share Capital
(a) As permitted by The Stock Exchange in London and to the extent required by
the California Commissioner of Corporations, in the event of any change in
the number of Shares in issue by way of a stock split, reverse stock
split, stock dividend, combination or reclassification of Shares, the
board of the Grantor will make the appropriate adjustment to:
(i) the number of Options; and/or
(ii) the Exercise Price payable upon the exercise of an Option;
provided that in accordance with U.K. company law, the Exercise Price in respect
of an Option granted by the Company shall not in any event be less than the
nominal value of a Share.
(b) Written notice of any such adjustment shall be given to the Option-holder.
7. Alteration of Terms and Conditions
As required by the California Commissioner of Corporations, no alteration or
addition shall be made pursuant to Clause 7 of Part A of the Schedule which
adversely affects the Option-holder without his or her written consent.
8. Withholding Taxes
If any withholding obligation of any company in the Group should arise with
respect to the Option-holder as the result of any transaction relating to the
Options or the Option Shares, the Option-holder will pay or make adequate
provision for any such withholding obligation.
9. Minimum Vesting Schedule
As required by the California Commissioner of Corporations, the vesting schedule
in the Certificate must be such that the Options will vest at no later than at a
rate of twenty percent (20%) per year for each full year that the Option-holder
remains continuously employed by the Group since the Date of Grant.
17
<PAGE> 18
PART C: ADDITIONAL TERNS AND CONDITIONS REQUIRED
BY U.S. TAX RULES IN THE CASE OF AN INCENTIVE STOCK OPTION
1. Definitions
In this Part of the Schedule:
(a) "Incentive Stock Option" means an incentive stock option within the
meaning of Section 422A of the Code;
(b) "the ISO Group" means the Company and any other company which is a
Parent Corporation or Subsidiary Corporation of the Company;
(c) "Parent Corporation" means any corporation (other than the Employer
Corporation) in an unbroken chain of corporations ending with the Employer
Corporation if, at the Date of Grant, each of the corporations other then
the Employer Corporation owns stock (or shares) possessing 50 percent or
more of the total combined voting power of all classes of stock (or
shares) in one of the other corporations in such chain;
(d) "Predecessor Corporation" means a corporation which was a party to a
transaction described in Section 425(a) of the Code (or which would be so
described if substitutions or assumption under such section had been
effective) with the Company, or a corporation which, at the Date of Grant,
is a related corporation of' the Company or a Predecessor Corporation of
any of such corporations;
(e) "Subsidiary Corporation" means any corporation (other than the Employer
Corporation) in an unbroken chain of corporations beginning with the
Employer Corporation if, at the Date of Grant, each of the corporations
other than the last corporation in the unbroken chain owns stock (or
shares) possessing 50 percent or more of the total combined voting power
of all classes of stock (or shares) in one of the other corporations in
such chain;
Words and phrases not otherwise defined have the same meetings as in the
Glossary on the back of the Certificate.
For the purpose of ensuring that an Option which is subject to these terms and
conditions will qualify as an Incentive Stock Option, the provisions of the
Certificate and Parts A and B of this Schedule insofar as they apply to any such
Option shall be read and construed as if all references to "the ISO Group" were
substituted for all reference to "the Group".
2. Currency Conversion
(a) If at the Date of Grant of an Option the Option-holder is in receipt of
"compensation": (as defined in Section 3231 (e) of the Code) in U.S.
dollars, then Clause 2(b) will apply to that Option, unless the
operation of Clause 2(c) has made Clause 2(b) inapplicable.
(b) If the Conversion Rate on the date of exercise of any Option has changed
such that a reduced number of dollars is required to purchase the number
of Pounds Sterling needed to
18
<PAGE> 19
make up the Exercise Price than would be so required at the Conversion
Rate that existed on the Date of Grant, then the Exercise Price (in Pounds
Sterling for that Option will be increased by the amount of such reduction
in dollars, converted into Pounds Sterling at the Conversion Rate on the
date of exercise.
(c) Clause 2(b) will not apply if, before the first date on which the
Option-holder exercises an Option granted under the circumstances in
Clause 2(a), the United States Internal Revenue Service has given a ruling
to the effect that the benefit of favorable tax treatment under Section
421 of the Code is available on exercise of that Option, even if the rate
of exchange between Pounds Sterling and the US Dollar has changed, as
described in Clause 2(b), since the Dace of Grant.
3. Sequential Exercise Rule
(a) In accordance with Section 422A (b)(7) of the Code an Option may not be
exercised at any time if there is then outstanding any other Incentive
Stock Option granted to the Option-holder before the Date of Grant to
acquire stock (or shares) in any company which, at the Date of Grant, was
a member of the ISO Group or a Predecessor Corporation of any such member
of the ISO Group.
(b) For these purposes, and in accordance with Section 422A (c)(7) of the
Code, an Incentive Stock Option shall be treated as outstanding until such
option is exercised in full or expires by reason of lapse of time.
4. Variation in Share Capital
No adjustment or addition shall be made pursuant to Clause 7 of Part A of the
Schedule or pursuant to Clause 7 of Part B of the Schedule which would give the
Option-holder additional benefits under any Incentive Stock Option as provided
in Section 425(h)(3) of the Code.
5. Notice of Disqualifying Disposition
To enable the Group to comply with any obligations, including withholding tax,
which it may have as the result of an early sale or disposition of the Option
Shares, if the Option-holder sells or otherwise disposes of any of the Option
Shares acquired subject to this Part C before the later of:
(a) the date two years after the Date of Grant of the Incentive Stock
Option by which the Option Shares were acquired; and
(b) the date one year after transfer of such Option Shares to the
Option-holder upon exercise of 'the Incentive Stock Option by which the
Option Shares were acquired;
then the Option-holder will immediately notify the Company in writing
of said disposition.
19
<PAGE> 20
PART D: TERM NECESSARY TO ENSURE THAT A
NON-QUALIFIED STOCK OPTION IS NOT TREATED AS AN
INCENTIVE STOCK OPTION
Options which are granted subject to this Part D of the Schedule are not
intended to be Incentive Stock Options within the meaning of Section 422A of the
Code.
These Options may be exercised at any time subject to the terms and conditions
of Parts A and B of the Schedule, even there is then outstanding any Incentive
Stock Option granted to the Option-holder before the Date of Grant to acquire
shares in any company which was a member of the ISO Group or Predecessor
Corporation of any such member of the ISO Group at the Date of Grant.
PART E: ADDITIONAL TERMS AND CONDITIONS REQUIRED BY U.K. TAX RULES IN
THE CASE OF AN OPTION GRANTED UNDER THE MICRO FOCUS GROUP INLAND REVENUE
APPROVED SHARE OPTION SCHEME
1. Definitions
In this Part of the Schedule:
(a) "Close Company" has the same meaning as in Chapter III of Part XI of the
Income and Corporation Taxes Act 1970 SAVE THAT in determining whether a
company is a Close Company for the purposes of the Scheme, sections
282(I)(a) and 283 of that Act shall be disregarded;
(b) "material interest" has the same meaning as in Chapter III of Part XI of
the Taxes Act SAVE THAT in determining for the purposes of this Scheme and
Schedule whether a person has or has had a material interest in a company,
section 285(6) and paragraph (ii) of the proviso to section 303(3) of that
Act shall have effect with the substitution for the references to 10 per
cent;
(C) "the Scheme" means the Micro Focus Inland Revenue Approved Share Option
Scheme established by the Company (by resolution of the Board dated 15th
December 1984) in accordance with the Plans;
Words and phrases not otherwise defined in this Part of the Schedule or Part A
or B of the Schedule have the same meaning as in section 38 and Schedule 10 of
the Finance Act 1984.
Words denoting the masculine gender shall include the feminine.
2. Applicability of this Part
An Option which is subject to this Part of the Schedule is granted in accordance
with the Micro Focus Group Inland Revenue Approved Share Option Scheme
established by resolution of the Board on 15th December 1984 (the "Approved
Scheme"). The board of directors of the Grantor will have the right to make
amendments or modifications to the Approved Scheme and/or any of
20
<PAGE> 21
the terms and conditions of the Certificate and all Parts of its Schedule to
which Approved Options are subject in order to ensure that Inland Revenue
approval is obtained.
3. Interest in Close Company
An Option which is subject to this Part of the Schedule may not be exercised at
any time when the Option-holder has, or has within the preceding 12 months, had
a material interest in a Close Company being either the Company or a company
which has control of the Company or is a member of a consortium which owns such
a company.
4. Alterations or Additions
After the Board of Inland Revenue has approved the Scheme pursuant to Schedule
10 of the Finance Act 1984, no alteration or addition shall be made to any term
or condition of any Option granted in accordance with the Scheme without the
prior approval of the Board of Inland Revenue.
PART F: ADDITIONAL TERMS AND CONDITIONS OF U.K. UNAPPROVED SHARE
OPTIONS
Options subject to this Part of the Schedule are not granted in accordance with
the Micro Focus Group Inland Revenue Approved Share 0ption Scheme and are not
intended to qualify for favourable U.K. tax treatment under the Finance Act
1984.
21
<PAGE> 1
EXHIBIT 4.02
1991 MICRO FOCUS SHARE OPTION PLAN ("THE PLAN")
1. Definitions
In this Plan:
(a) "Board" means the board of directors of the Company;
(b) "Code" means the United States Internal Revenue Code of 1954 (as
amended);
(c) "The Company" means Micro Focus Group Public Limited Company
incorporated in England with number 1709998;
(d) "Eligible Person" means a person to whom an Option may be granted
as defined in clause 2 below;
(e) "Group" means the Company and every other company of which the
Company has direct or indirect control;
(f) "Incentive Stock Option" means an Option which qualifies as an
incentive stock option within the meaning of Section 422A of the
Code;
(g) "ISO Group" means the Company and any other Company which is a
Parent Corporation or Subsidiary Corporation of the Company;
(h) "Option" means a right granted by the Company in accordance with
these Plans to subscribe for Shares;
(i) "Parent Corporation" means any corporation (other than the Employer
Corporation) in an unbroken chain of corporations ending with the
Employer Corporation if, at the Date of Grant, each of the
corporations other than the Employer Corporation owns stock (or
shares) possessing 50% or more of the total combined voting power of
all classes of stock (or shares) in one of the other corporations in
such chain;
(j) "Shares" means fully paid ordinary shares in the capital of the
Company;
(k) "Subsidiary Corporation" means any corporation (other than the
Employer Corporation) in an unbroken chain of corporations beginning
with the Employer Corporation if, at the Date of Grant, each of the
corporations other than the last corporation in the unbroken chain
owns stock (or shares) possessing 50% or more of the total combined
voting power of all classes of stock (or shares) in one of the other
corporations in such chain;
(l) "10% Shareholder" means a person who owns shares representing more
than 10% of the total combined voting power of all classes of shares
in any company which is a member of the ISO Group at the date of
grant of an Option;
(m) "fair market value" means the average of the middle market
quotations of a share as derived from the Daily Official List of The
Stock Exchange on the three business days immediately preceding the
day on which the option is granted for UK eligible persons and as
ascertained in accordance with the provisions of the laws and
regulations of the relevant jurisdiction and taxation authority for
other eligible persons.
<PAGE> 2
2. Persons to whom Options may be granted
(a) Options may only be granted to persons who devote substantially the
whole of their working time to the business of the Group ("Eligible
Persons");
(b) Subject to clause 6 below Options may be granted to such Eligible
Persons as the Board from time to time and in its absolute
discretion may determine.
3. Non-transferability of Options
Options shall be personal to the person to whom they are granted and shall
lapse forthwith if they are transferred (otherwise than to personal
representatives upon death) assigned, mortgaged, charged or otherwise alienated
or if that person is adjudicated bankrupt or does or suffers any other act or
thing whereby he or she would or might be deprived of the legal or beneficial
ownership of the Options.
4. Number of Shares available to be put under option
Subject to clause 12 below (relating to variation in share capital) the
total number of Shares in respect of which Option may be granted after 11th June
1991 in accordance with this Plan and any other share option plan established by
the Company, may not exceed 1,295,423 Shares (representing 10% of the issued
share capital of the Company on 23rd May 1991) exclusive of options which have
lapsed or ceases to be exercisable under this Plan, any former plan or any other
share option plan established by the Company, of which not more than 3%,
exclusive as aforesaid, may be put under Option in any period of 12 months
starting 11th June. Options which lapse or cease to be exercisable under this
Plan or any other share option plan established by the Company may be regranted.
5. Maximum number of Shares in respect of which Options may be granted to
any person
Subject to clause 12 below the maximum number of shares in respect of
which Options may be granted to any person in accordance with this and any other
share option plan established by the Company in the period of this authority
shall be 129,542 Shares (being 10% of the total number of shares in respect of
which Options may be granted pursuant to this Plan).
6. Further restrictions on the grant of Incentive Stock Options
(a) Incentive Stock Options may only be granted to employees (as that
term is used in Section 422A of the Code) of any company which is a
member of the ISO Group at the date of grant of an Option;
(b) The aggregate fair market value (determined as at the time of grant)
of Shares in respect of which Incentive Stock Options are
exercisable for the first time by an employee during any calendar
year pursuant to this Plan (and under any other plan permitting the
granting of Incentive Stock Options which might hereafter be
established by any company in the ISO Group) may not exceed
US$100,000.
2
<PAGE> 3
7. Payment for grant of Options
The amount, if any, payable in consideration of the grant of any Option
shall be as the Board may decide but in any event shall not be more than GBP 1,
which shall not be returnable.
8. Subscription Price
The subscription price payable for any Share to be subscribed upon the
exercise of any Option shall be not less than the fair market value of a Share
at the time the Option is granted save that:
(a) In the case of an Incentive Stock Option granted to a 10%
Shareholder the subscription price shall, in compliance with Section
422A (c)(6) of the Code, be not less than 110% of the fair market
value of a Share at the time the Option is granted; and
(b) in any event the subscription price shall be not less than the
nominal value of a Share.
9. Times at which Options may be granted
Options may only be granted:
(a) within the period of 30 days immediately following 11th June
1991; or
(b) within the period of 42 days immediately following (1) the date
on which the Company announces its interim or preliminary annual
trading results for any period to the press and The Stock
Exchange or, if later, (2) the date of a permit granted by the
California Commissioner of Corporations covering the granting of
Options (provided in respect of directors of the Company that
such date does not fall during the period of two months prior to
the announcement of interim or preliminary annual trading
results); or
(c) to any person who commences employment with the Group for the first
time, within the period of 45 days immediately thereafter (provided
that in respect of directors of the Company such date does not fall
during the period of two months prior to the announcement of interim
or preliminary annual trading results).
10. Option Period
No Option shall be capable of being exercised later than 10 years after
the date on which it is granted or in the case of a 10% Shareholder five years
after the date on which it is granted.
11. Stock Exchange Listing
All Shares allotted upon the exercise of any Option shall rank pari passu
in all respects with the Shares then in issue and the Company shall apply to the
Council of The Stock Exchange for
3
<PAGE> 4
Shares allotted pursuant to any Option to be admitted to the Official List. For
those Options which are subject to the California Corporate Securities Law of
1968 without exemption, the Company shall provide, to each person who shall hold
one or more of such Options, a copy of the annual report of the Company as soon
as reasonably practicable after it is released by the Company.
12. Variation in share capital
(a) As provided for in the rules of The Stock Exchange, in the event of
any increase in the number of Shares issued by way of capitalisation
or rights issue, or any sub-division, consolidation or reduction
effected without receipt of consideration, the Board will make the
appropriate adjustment to:
(i) the restrictions imposed by clauses 4 and 5 above; and/or
(ii) the number of Shares which are subject to any Option; and/or
(iii) the subscription price payable for each Share under any
Option;
provided that the subscription price for any Share shall not be less
than the nominal value of such Share and no adjustment shall cause
an Option to be capable of being exercised later than as mentioned
in clause 10 above.
(b) As required by the rules of The Stock Exchange, except in the case
of a capitalisation issue no such adjustment shall be made without
the prior written confirmation of the auditors of the Company for
the time being that it is in their opinion fair and reasonable.
(c) Written notice of any adjustment shall be given to any person
granted an Option who is affected thereby.
13. Winding-up of the Company
Without prejudice to clause 10 above it shall be a term and condition of
any Option that in the event of notice being given to shareholders of a
resolution for the winding-up of the Company the Option shall be capable of
exercise within the period of six months commencing on the date on which the
resolution is passed and thereafter the Option shall lapse.
In the event the Company is succeeded by a successor corporation, then for
those Options which are subject to the California Corporate Securities Law of
1968 without exemption, and which are outstanding as of the date of succession,
the successor corporation will have the opportunity to assume such outstanding
Options or to substitute substantially equivalent options. If the successor
corporation declines such opportunity, then any and all such outstanding Options
shall accelerate and become exercisable in full prior to such succession, at
such times and on such conditions as the Board shall determine. The aggregate
fair market value (determined at the time an Option is granted) of ISO's which
first become exercisable by an employee in the year of such succession cannot
exceed US$100,000. Any remaining accelerated Options shall be treated as
non-qualified Stock Options.
4
<PAGE> 5
14. Alteration of the Plan
(a) Subject to sub-clause 14(b) below the Board may at any time alter
or add to all or any of the provisions of the Plan in any respect;
(b) Subject to sub-clause 14(c) below no alterations or addition shall
be made to the provisions of clause 2(a), 3, 4, 5, 7, 8, 9, 10, 11,
12, 13, 15 and this clause 14 without the prior approval of
shareholders of the Company in general meeting;
(c) Sub-clause 14(b) above shall not apply to the extent that any
alteration or addition is necessary or desirable in order to
comply with the laws and regulations for the time being in force
in the US or the UK, to ensure and maintain treatment as
Incentive Stock Options of those Options intended to be treated
as such or to obtain or maintain approval of the Plan from any
Government or other regulatory or advisory body whether in the
United Kingdom or the United States of America or elsewhere
provided that any such alteration or addition shall not affect
the basic principles of the Plan.
15. Duration of the Plan
The Authority to grant Options under the Plan will expire on 11th June
1996.
5
<PAGE> 6
1991 MICRO FOCUS SHARE OPTION PLAN
CERTIFICATE OF SHARE OPTIONS GRANT
Date of Grant:_______ 199__
THIS IS TO CERTIFY THAT on the Date of Grant shown above [Firstname] [Lastname]
WAS GRANTED [AMOUNT] OPTIONS, each such option being a right granted by Micro
Focus Group PLC reg. No. 1709998 ("the Company") to subscribe for a fully-paid
Ordinary share of 10p in the capital of the Company at a price of pounds
Sterling GBP_____ per share.
The terms used in this Certificate and the attached Schedule are defined in the
Glossary on the back of this Certificate.
All options granted by the company are granted pursuant to and are subject to
all the terms and conditions set out in the Micro Focus Share Option Plan for
1987 which was adopted by the board on 23 April 1987 and approved and adopted by
the shareholders and the Company on 17th June 1987. All Options are granted
subject to the terms and conditions set out in this Certificate and are subject
to:
o terms and conditions set by the Company (as set out in Part A of the
Schedule); and
o terms and conditions required by U.K. and U.S. corporate laws and
regulations (as set out in Part B of the Schedule); and
o in respect of ____ OPTIONS, the additional terms and conditions required
by U.S. tax rules (as set out in part C of the Schedule) in order that
such Options will not be treated as Approved Options under the Micro Focus
Group Inland Revenue Approved Share Option Scheme; and
o in respect of ____ OPTIONS, the additional terms and conditions required
by U.K. tax rules (as set out in Part E of the Schedule) in order that
such Options are granted as Approved Options under the Micro Focus Group
Inland Revenue Approved Share Option Scheme established by resolution of
the board on 23rd April 1987, and the additional terms and conditions
required by U.S. tax rules (as set out in part C of the Schedule) in order
that such Options will qualify as Incentive Stock Options; and
o in respect of ______OPTIONS, the additional terms and conditions required
by U.K. tax rules (as set out in Part D of the Schedule) in order that
such Options are granted as Approved Options under the Micro Focus Group
Inland Revenue Share Option Scheme established by resolution of the Board
on 23rd April 1987, and the additional terms and conditions (as set out in
Part D of the Schedule) in order that such Options will be treated as
Non-Qualified Stock Options; and
6
<PAGE> 7
o in respect of ______ OPTIONS, the additional terms and conditions (as set
out in Part D of the Schedule) necessary to ensure that such Options will
be treated as Non-Qualified Stock Options, and the additional terms and
conditions (as set out in Part F of the Schedule) to ensure that such
Options will not be treated as Approved Options under the Micro Focus
Group Inland Revenue Approved Share Option Scheme.
Subject to the terms and conditions set out in the Schedule, the Options will be
exercisable in accordance with the following vesting Schedule:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
On or after Vesting Date: But Before Lapse Date: Number of options:
- ------------------------- ---------------------- ------------------
<S> <C> <C>
(________, 19__) (________, 20__) 20% of the Options
(________, 19__) (________, 20__) 20% of the Options
(________, 19__) (________, 20__) 20% of the Options
(________, 19__) (________, 20__) 20% of the Options
(________, 19__) (________, 20__) 20% of the Options
- -------------------------------------------------------------------------------
</TABLE>
These Options shall cease to be exercisable, as set out in Clause 3 of Part A of
the Schedule, if the Option-holder ceases to hold employment within the Group or
ceases to be party to a Consultancy agreement, unless by reason of disability or
death.
In consideration of these Options and as a condition of acceptance of these
Options by the Option Holder, the Option Holder hereby agrees with the Company a
Micro Focus Nominees Limited (reg. No. 1790073) to accept, and undertake to be
bound by, the terms and conditions referred to above and as set out in the
Schedule.
Signed:____________________________
Option-Holder
The Common Seal of Micro Focus The Common Seal of Micro Focus
Group PLC was attached Nominees Limited was attached
hereto in the presence of: hereto in the presence of:
Signed:_________________________________ Signed: ___________________________
For and behalf of Micro Focus Group PLC For and behalf of Micro Focus
Nominees Limited
*Equivalent to ____ U.S. dollars at the Conversion Rate on the date of the Grant
7
<PAGE> 8
GLOSSARY
In the Certificate and the attached Schedule:
<TABLE>
<S> <C>
"Account Day" dealings on the Stock Exchange in London in the
previous `account' are presented for settlement;
"the board" means the board of directors of the Company or a duly
authorised committee of the board of directors;
"Business Day" means any day between and including Monday through
Friday in any week, excluding any day which is a public
holiday in either England or California or is not a
dealing day of the Stock Exchange in London;
"the Certificate" means the certificate evidencing the grant of
these options to the Option-holder;
"the Code" means The United States Internal Revenue Code of 1954
(as amended)
"a Consultancy
Agreement" means an agreement under which the
Option-holder is obliged to provide services directly
or indirectly to any company within the Group;
"the Conversion Rate" means the average currency conversion rate quoted by
the Bank of America in London as the price
for Pounds Sterling purchased with U.S. Dollars;
"the Company" means Micro Focus Group Public Limited Company
(incorporated in England with reg. no. 1709998);
"the Date of Grant" means the date upon which these Options are granted
as recorded on the Certificate;
"the Employer means the company in which the Option-holder holds the
Corporation office or employment by virtue of which he or she has
been granted these Options;
"Exercise Price" means the Pounds Sterling price payable on the
exercise of an Option as recorded on the face of the
Certificate together with any additional amount as
set out in Clause 2 of Part C of the Schedule which
might be required by the U.S. Internal Revenue
Service in order to preserve the status of Options as
Incentive Stock Options as defined in Clause 1(a) of
Part C of the Schedule;
"the Grantor" means in respect of any Option, the company
identified in the Certificate as having granted that
Option (i.e., the Company or Nominees);
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C>
"the Group" means the Company and every other company by which the
Company has direct or indirect control;
"Market Price" means, at any time, the price per share at which
shares could then be sold on the Stock Exchange in
London as advised to the Options Administrator by the
Company's stockbroker
"a Non-Qualified
Stock Option" means an Option which is not intended to be an
Incentive Stock Option (as defined in Clause 1(a) of
Part C of the Schedule).
"Option" means option hereby granted to acquire a Share;
"Options" means options hereby granted to acquire one Share
each;
"the Options
Administrator" means the person appointed by the Grantor as
the Options Administrator for the time being;
"Option-holder" means person to whom Options are granted
(including upon the death of such person and where
the context so requires, his or her personal
representatives);
"Option Shares" means Shares acquired, or to be acquired, by
the Option-holder upon the exercise of Options
including, in the event of any reconstruction,
amalgamation or reorganisation of share capital in
the Company, shares representing such Shares and any
additional shares acquired by the Option-holder in
consequence of his or her holding of such Shares
(other than shares for which the Option- holder has
given new consideration);
"the Plans" means the Micro Focus Share Option Plans for 1983
and 1984 (as set out in Appendix 1, to the Chairman's
letter to shareholders dated as amended from time to
time)
"the schedule" means the Schedule to the Certificate;
"Share" means a fully-paid Ordinary share of 10p in the
capital of the Company
"vested" means capable of being exercised in accordance with the
vesting schedule on the face of the Certificate.
</TABLE>
9
<PAGE> 10
1991 MICRO FOCUS SHARE OPTION PLAN
SCHEDULE
PART A: TERMS AND CONDITIONS SET BY THE COMPANY
1. Vesting and lapse of options
(a) After being granted, an option becomes vested upon being held by the
Option-holder until the Vesting Date for that Option set out in the
Certificate.
(b) An Option lapses and is no longer exercisable after the Lapse Date for
that Option set out in the Certificate.
2. Manner of exercise of option
(a) Options may be exercised on any occasion after becoming vested and before
they have lapsed by:
(i) the receipt of a notice by the Options Administrator given by the
Option-holder in the manner prescribed in Clause 8 of this Part which
identifies the Options that are to be exercised; and
(ii) the receipt by the Grantor of the aggregate Exercise Price in Pound
Sterling in respect of such Options.
(b) Upon receipt of a notice of exercise served in accordance with Clause 2(a)
above the board of directors of the Grantor shall allot or transfer to the
Option-holder, as appropriate, the number of Shares in respect of which
such options are duly exercised;
(c) If all Options represented by the Certificate are not exercised the board
of directors of the Grantor may, at its discretion, endorse the
Certificate so as to specify the number of Options which remain to be
exercised.
3. Cessation of employment
(a) General rule: Subject to provisions (b) and (c) of this Clause, if the
Option-holder ceases to hold employment within the Group or ceases to
be party to a Consultancy Agreement for any reason then all Options,
that have become vested prior to the date of notice of termination by
either party of the employment relationship or Consultancy Agreement
will be exercisable by the Option-holder for a period of 90 days from
the date of much notice and will thereafter lapse. All options that
have not become vested prior to the date of such notice will become
null and void as of the date of such notice.
10
<PAGE> 11
(b) Disability: If the Option-holder ceases to hold employment within the
Group or ceases to be party to a Consultancy Agreement by reason of a
certified physical disability which makes it impossible to continue
gainful employment for the rest of his or her natural life then all
Options which have not lapsed prior to the cessation date may be
exercised within the period of one year beginning with the date that
the Option-holder ceased to hold employment within the Group or ceased
to be a party to a Consultancy Agreement, regardless of whether such
options have become vested.
(c) Death: If the Option-holder ceases to hold employment within the Group or
ceases to be a party to a Consultancy Agreement by reason of the
Option-holder's death, then all options which have not lapsed prior to the
cessation date may be exercised by the personal representatives of the
Option-holder within the period of one year beginning with the date of
death, regardless of whether such Options have become vested.
4. Non-transferability of options
Options are personal to the Option-holder and may not be exercised by any other
person. An Option shall lapse forthwith if it is purportedly assigned,
mortgaged, charged or otherwise alienated or if the Option-holder is adjudicated
bankrupt or does or suffers any other act or thing whereby the Option-holder
would or might be deprived of the beneficial ownership of such Option.
5. Independence of options
The statutory, contractual or other rights and obligations of the Option-holder
under the terms of any office, employment, contract or any other relationship
with Nominees, the Company or any other Company in the Group apart from these
Options; shall not be affected by the grant or existence of these Options or any
other right that the Option-holder might otherwise have to exercise these
Options and these Options shall not afford the Option-holder any additional
rights to continuation of, or to compensation or damages in consequence of the
termination of, any office, employment or other relationship for any reason
whatsoever.
6. Sale or transfer of option shares
To avoid inadvertent breach of the United States securities laws, and to promote
the acquisition of shares by staff and other contributors to the Group, if the
Option-holder intends, at any time, to sell, assign or transfer any or all of
the Option Shares, Nominees will have the right of first refusal to purchase or
arrange the purchase, sale, assignment or transfer of those Option Shares. The
procedures to be adopted for the time being in the case of the Option-holder
wishing to sell Option Shares are as in Clauses 6(a) through 6(e) below:
(a) the Option-Holder will give an Initial Sale Notice to the Options
Administrator stating the Option-holder's intent to sell, assign or
transfer the Option Shares. The Initial Sale Notice must be made in
writing by one of the methods in Clause 8 below and state:
11
<PAGE> 12
(i) the number of Option Shares to be sold, and
(ii) the identification of the share certificate(s) representing the
Option Shares to be sold by quoting the grant date;
Nominees may then exercise a right of first refusal by proceeding as in
clauses 6(b), (c) and (d) below. If Nominees for any reason declines to
exercise this right of first refusal, then Clause 6(e) below will apply
instead.
(b) If Nominees exercises its right of first refusal, then the Options
Administrator will make all reasonable efforts to obtain a Market Price
quotation from the Company's stockbroker at The Stock Exchange in London
for the specified number of shares by the next dealing day of The Stock
Exchange in London and to inform the Option-holder of the quoted price as
soon as practicable, in any event, within 48 hours.
(c) After receiving the quotation referred to in Clause 6(b) above, if the
Option-holder decides to sell the Option Shares, the Option-holder must
give a Sale Confirmation Notice to the Options Administrator. The Sale
Confirmation Notice must be made in writing by one of the methods in
Clause 8 below.
The Sale Confirmation Notice must restate the quotation price and may also
state a lesser, minimum price below which the Option-holder wishes to
withdraw from the sale in the event that the minimum price or greater is
not achievable.
For the Sale Confirmation Notice to be valid and accepted and for the sale
to take place, Nominees must be in possession of the following:
(i) the share certificate(s) for the Option Shares; and
(ii) a blank form of Stock Transfer, acceptable to The Stock Exchange in
London, relating to such Option Shares and signed by the Option-holder, or
if a Power of Attorney has been granted to Nominees, a statement
authorizing use of the Power of Attorney in executing the sale.
(d) Provided that the valid Sale Confirmation Notice is given by the
Option-holder to Nominees, then Nominees will proceed as soon as
practicable, either:
(i) to instruct the Company's stockbroker to sell through The Stock
Exchange in London the specified shares on behalf of the Option-holder in
such a way as will avoid contravention of U.S. federal and state
securities laws as soon as practicable and retain a commission of 1/2% of
the gross proceeds for Nominees' own account; or
(ii) to purchase or arrange the purchase privately of the entire specified
number of Option Shares at the Market Price quotation and will use its
best efforts to so do in such a way as will avoid contravention of U.S.
federal and state securities laws as soon as
12
<PAGE> 13
practicable and retain a commission for Nominees' own account equivalent
to the commission that would have been charged by the Company's
stockbroker on that occasion.
If any of the actions required of the Option-holder described in Clause
6(a), (c) and (d) above are not completed, Nominees may be unable to
complete the sale and in that event, should the Option-holder wish to
proceed with a sale, he or she must repeat the procedures in 6(a) through
6(d).
Nominees will pay the net proceeds of the sale to the Option-holder as
soon as is practicable, given the nature of the transactions involved.
The Company's stockbroker and Nominees will use all reasonable efforts to
achieve the purposes of these arrangements and will each attempt to
achieve the Market Price quoted but cannot guarantee it as the Stock
Exchange Market Price may shift between the quotation and the sale.
(e) If the Shareholder gives the Initial Sale Notice and Nominees does not
exercise its right of first refusal and either states this in writing
to the Option-holder or fails to obtain from the Company's stockbroker
the Market Price quotation referred to in 6(d) above by the end of the
Business Day following that in which the Options Administrator received
the Initial Sale Notice, then for the next five Business Days, the
Option-holder shall be at liberty subject to compliance with all
applicable requirements of U.S. federal and state laws, The Stock
Exchange in London, and any government or other regulatory or advisory
body whether in the United Kingdom or the United States of America, to
sell, assign or transfer such Option Shares to any person on any terms,
provided that the Option-holder gives the Options Administrator notice
in writing of that sale, assignment or transfer in accordance with
Clause 8 within such five Business Days.
If the Shareholder does sell, assign or transfer the Option Shares and
notify the Options Administrator of that sale, assignment or transfer in
accordance with Clause 8 below within such five Business Days, then when
next the Option-holder wishes to sell, assign or transfer any Option
Shares he or she must repeat the procedures set forth in Clause 6(a)
through 6(d) above so that Nominees may again utilize its rights of first
refusal.
(f) Nominees may expand or change these procedures to accommodate The Stock
Exchange or the Company's stockbroker's trading practice or to ensure
practicability of the administration of the procedures or to ensure an
effective service for the sale, assignment, or transfer of the Option
Shares on behalf of the Option-holder and in the case of assignment or
transfer may add new procedures. Any such change will be notified to the
Option-holder.
7. Alteration of these Terms and Conditions
(a) The board of directors of the Grantor may at any time alter or add to the
terms and conditions of these Options in any respect, subject to, if
necessary, the approval of the
13
<PAGE> 14
shareholders of the Company and the various legislation in effect at the
time of such change;
(b) The board of directors of the Grantor shall give to the Option-holder
written notice of any such alteration or addition;
(c) Nominees may assign the right of first refusal to any person or persons
and in that event:
(i) Nominees shall give notice in writing to the Option-holder; and
(ii) the provisions of Clause 6 shall be read and construed as if all
references to Nominees were references to the assignee.
8. Service of Notices
For the purposes of the notices to be given to the recipient under Clause 2(a),
6(a), 6(c), and 6(e) only, a notice must be sent, received and acknowledged as
follows:
(a) The notice must be given to the recipient using one or more of the following
five methods:
(i) by personal delivery in writing to the recipient or, in the case
of Options Administrator, his or her designee; or
(ii) by electronic mail to the recipient's identification code
"OPTIONS" using the Group's electronic mail system; or
(iii) by telex to the recipient using the correct answer back code; or
(iv) by facsimile to the recipient's FAX machine, which must be compatible
with those used by the company.
(b) The notice must be received by the recipient using any of the above
methods, in order to be considered given.
(c) The recipient must make his or her best efforts to act upon the notice as
soon as reasonably practicable after actual receipt of the notice.
9. Applicable law
The rights and obligations of the Option-holder, the Company and Nominees under
the terms and conditions set out in this Certificate and the Schedule are
subject to all applicable requirements of U.S. federal and state laws and with
all applicable requirements of The Stock Exchange in London and any Government
or other regulatory or advisory body whether in the United Kingdom or the United
States of America.
14
<PAGE> 15
10. Force Majeure
Notwithstanding any other provision of the Certificate of this Schedule, no
default, delay or failure to perform on the part of any party shall be
considered a breach of any term or condition of this Certificate or the Schedule
if such default, delay or failure to perform is shown to be due to causes beyond
the reasonable control of the party charged therewith, including, but not
limited to, causes such as strikes, lockouts or other labor disputes, riots,
civil disturbances, actions or inactions of governmental authorities or
suppliers, epidemics, war, embargoes or other acts of the public enemy, severe
weather, fire, earthquakes, acts of God, nuclear disasters, default of a common
carrier or failure of a communication system.
11. Disclaimer
Neither the Company, Nominees, their officers, directors, employees or agents
warrants any benefit or value from the holding of any Option or the acquisition,
holding or sale of any Share, nor guarantees any such benefits or value that
might be perceived by the Option-holder or by any other person, nor guarantees
the effect of any act contemplated herein.
PART B: TERMS AND CONDITIONS REQUIRED BY THE CORPORATE LAW AND REGULATIONS OF
THE UNITED KINGDOM AND THE UNITED STATES OF AMERICA
1. Shareholders' circulars
As required by the California Commissioner of Corporations, the Option-holder
shall be sent copies of all documents (including the annual directors report and
accounts), other than proxy or voting forms, sent to the holders of Shares.
2. Stock Exchange listing
As required by The Stock Exchange in London to be drawn to the attention of the
Option-holder all Shares allotted upon the exercise of Options shall rank
equally in all respects with the Shares then in issue and the Company shall
apply to the Council of The Stock Exchange, in London for such Shares to be
admitted to the Official List of The Stock Exchange.
3. Restrictions imposed upon the exercise of options and the disposal of
shares
(a) Options may not in any event be exercised unless such exercise is in
compliance with the U.S. Securities Act of 1933 (as amended), if
applicable, and all applicable, U.S. state securities laws, as they are
in effect at that time;
(b) In exercising Options the Option-holder shall have regard to the
provisions of the Model Code for Securities Transactions by Directors of
Listed Companies issued by The Stock Exchange, London, in April 1981, a
copy of which may be obtained from the Options Administrator;
15
<PAGE> 16
(c) Unless sold outside of the United States of America in a manner which
removes the sale from the purview of the U.S. federal securities laws, all
Shares acquired upon the exercise of Options must be held indefinitely
unless they are registered under the Securities Act of 1933 or an
exemption from registration is available;
(d) The transfer of any Shares acquired upon the exercise of Options may be
restricted or affected by various state securities laws in the United
States of America.
(e) In disposing of any shares acquired pursuant to the exercise of Options,
the Option-holder shall have regard to the provisions of the U.K. Company
Securities (Insider Dealing) Act 1985, a copy of which may be obtained
from the Options Administrator, and the Model Code referred to in Clause
3(b) above.
4. Reconstruction or amalgamation
As required by the California Commissioner of Corporations, in the event that an
arrangement between the Company and any person holding Shares in the Company is
proposed for the purpose of or in connection with a schemes for the
reconstruction of the Company or the amalgamation of the Company and any one or
more other companies (whether or not involving the subsequent winding-up of the
Company) and under the arrangement the Company will cease to be the holding
company of the Micro Focus group of companies then the Board shall give notice
in writing to the Option-holder either;
(a) that the Company shall, as a condition of the Company's agreement to
such arrangement require that the company which is to become the
holding company of the Micro Focus group of companies ("the New
Company") shall, subject to compliance with any applicable laws or
regulations for the time being in force in the United States of America
or the United Kingdom or any necessary consents or approvals from any
Government or other regulatory or advisory body whether in the United
Kingdom or the United States of America or elsewhere, procure the grant
to the Option-holder of a new option or options of equivalent value in
substitution for these Options, PROVIDED THAT upon the grant (or
substitution) of such new option (or options) the Option-holder
releases Nominees and the Company from all the obligations and
liabilities arising under or in connection with these Options with the
intent that all these Options shall thereupon cease to be exercisable;
or
(b) that any Options not yet exercised on the date of such notice shall
accelerate and become exercisable in full prior to the reconstruction or
amalgamation of the Company at such times and on such conditions as the
Board shall determine.
5. Winding up of the Company
As required by The Stock Exchange in London to be drawn to the attention of the
Option-holder, the rights of the Option-holder in the event of notice being
given to shareholders of a resolution for the winding-up of the Company, are
that;
16
<PAGE> 17
(a) Options vested on the date of such notice may be exercised within the
period of 6 months beginning with the date on which such resolution is
passed and shall cease to be exercisable at the end of that period; and
(b) Options which are not vested on the date of such notice shall immediately
cease to be exercisable.
6. Variation in share capital
(a) As permitted by The Stock Exchange in London and to the extent required by
the California Commissioner of Corporations, in the event of any change in
the number of Shares in issue by way of a stock split, reverse stock
split, stock dividend, combination or reclassification of Shares, the
board of the Grantor will make the appropriate adjustment to:
(i) the number of Options; and/or
(ii) the Exercise price payable upon the exercise of an option;
provided that in accordance with U.K. company law, the Exercise Price in
respect of an Option granted by the Company shall not in any event be less
than the nominal value of a Share.
(b) Written notice of any such adjustment shall be given to the Option-holder.
7. Alteration of terms and conditions
As required by the California Commissioner of Corporations, no alteration or
addition shall be made pursuant to Clause 7 of Part A of the Schedule which
adversely affects the Option-holder without his or her written consent.
8. Withholding taxes
If any withholding obligation of any company in the Group should arise with
respect to the Option-holder as the result of any transaction relating to the
Options or the Option Shares, the Option-holder will pay or make adequate
provision for any such withholding obligation.
9. Minimum vesting schedule
As required by the California Commission of Corporations, the vesting schedule
in the Certificate must be such that the Options will vest at no later than at a
rate of twenty percent (20%) per year for each full year that the Option-holder
remains continuously employed by the Group since the Date of Grant.
17
<PAGE> 18
PART C: ADDITIONAL TERMS AND CONDITIONS REQUIRED BY U.S. TAX RULES IN THE
CASE OF AN INCENTIVE STOCK OPTION
1. Definitions
In this part of the schedule:
(a) "Incentive Stock Option" means an incentive stock option within the
meaning of Section 422A of the Code;
(b) "the ISO Group" means the Company and any other company which is a
Parent Corporation or subsidiary Corporation of the Company;
(c) "Parent Corporation" means any corporation (other than the Employer
Corporation) in an unbroken chain of corporations ending with the Employer
Corporation if, at the Date of Grant, each of the corporations other than
the Employer Corporation owns stock (or shares) possessing 50% or more of
the total combined voting power of all classes of stock (or shares) in one
of the other corporations in such chain;
(d) "Predecessor Corporation" means a corporation which was a party to a
transaction described in section 425(a) of the Code (or which would be so
described if substitutions or assumption under such section had been
effective) with the Company, or a corporation which, at the Date of Grant,
is a related corporation of the Company or a Predecessor Corporation of
any of such corporations;
(e) "Subsidiary Corporation" means any corporation (other than the Employer
Corporation) in an unbroken chain of corporations beginning with the
Employer Corporation if, at the Date of Grant, each of the corporations
other than the last corporation in the unbroken chain owns stock (or
shares) possessing 50% or more of the total combined voting power of all
classes of stock (or shares) in one of the other corporations in such
chains.
Words and phrases not otherwise defined have the same meanings as in the
Glossary on the reverse of the Certificate.
For the purpose of ensuring that an Option which is subject to these terms
and conditions will qualify as an Incentive Stock Option, the provisions
of the Certificate and Parts A and B of this Schedule insofar as they
apply to any such Option shall be read and construed as if all references
to "the ISO Group" were substituted for all reference to "the Group".
2. Currency conversion
(a) If at the date of grant of an Option the Option-holder is in receipt of
"compensation" (as defined in section 3231 (e) of the Code) in US dollars,
then Clause 2(b) will apply to that Option, unless the operation of Clause
2(c) has made Clause 2(b) inapplicable.
18
<PAGE> 19
(b) If the conversion rate on the date of exercise of any Option has changed
such that a reduced number of dollars is required to purchase the number
of Pounds Sterling needed to make up the Exercise Price than would be so
required at the Conversion Rate that existed on the Date of Grant, then
the Exercise Price (in Pounds Sterling) for that Option will be increased
by the amount of such reduction in dollars, converted into Pounds Sterling
at the Conversion Rate on the date of exercise.
(c) Clause 2(b) will not apply if, before the first date on which the
option-holder exercises an Option granted under the circumstances in
Clause 2(a), the United States Internal Revenue Service has given a ruling
to the effect that the benefit of favourable tax treatment under section
421 of the Code is available on exercise of that Option, even if the rate
of exchange between Pounds Sterling and the US Dollar has changed, as
described in Clause 2(b), since the Date of Grant.
3. Variation in share capital
No adjustment or addition shall be made pursuant to Clause 7 of Part A of the
Schedule or pursuant to Clause 7 of Part B of the Schedule which would give the
Option-holder additional benefits under any Incentive Stock Option as provided
in section 425(h)(3) of the Code.
4. Notice of disqualifying disposition
To enable the Group to comply with any obligations, including withholding tax,
which it may have as the result of an early sale or disposition of the Option
Shares, if the Option-holder sells or otherwise disposes of any of the Option
Shares acquired subject to this Part C before the later of:
(a) the date two years after the Date of Grant of the Incentive Stock
Option by which the Option Shares were acquired; and
(b) the date one year after transfer of such Option Shares to the
Option-holder upon exercise of the Incentive Stock Option by which the
Option Shares were acquired;
then the Option-holder will immediately notify the Company in writing
of said disposition.
PART D: TERM NECESSARY TO ENSURE THAT A NON-QUALIFIED STOCK OPTION IS NOT
TREATED AS AN INCENTIVE STOCK OPTION
Options which are granted subject to this Part D of the Schedule are not
intended to be Incentive Stock Options within the meaning of Section 422A of the
Code. These Options may be exercised at any time subject to the terms and
conditions of Parts A and B of the Schedule.
19
<PAGE> 20
PART E: ADDITIONAL TERMS AND CONDITIONS REQUIRED BY UK
TAX RULES IN THE CASE OF AN OPTION GRANTED UNDER THE
MICRO FOCUS GROUP INLAND REVENUE APPROVED SHARE OPTION
SCHEME
1. Definitions
In this Part of the Schedule:
(a) "Close Company" has the same meaning as in Chapter III of Part XI of the
Income and Corporation Taxes Act 1970 SAVE THAT in determining whether a
company is a Close Company for the purposes of the Scheme, sections 282(1)
(a) and 283 of that Act shall be disregarded;
(b) "material interest" has the same meaning as in Chapter III of Part XI of
the Taxes Act SAVE THAT in determining for the purposes of this Scheme and
Schedule whether a person has or has had a material interest in a company,
section 285(6) and paragraph (ii) of the provision to section 303(3) of
that Act shall have effect with the substitution for the references to
10%;
(c) "the Scheme" means the Micro Focus Inland Revenue Approved Share option
scheme established by the Company (by resolution of the Board dated 23rd
April 1987) in accordance with the Plan.
Words and phrases not otherwise defined in this Part of the Schedule or
Part A or B of the Schedule have the same meaning as in section 38 and
Schedule 10 of the Finance Act 1984.
Words denoting the masculine gender shall include the feminine.
2. Applicability of this Part
An Option which is subject to this Part of the Schedule is granted in accordance
with the Micro Focus Group Inland Revenue Approved Share Option Scheme
established by resolution of the Board on 23rd April 1987 (the "Approved
Scheme"). The board of Directors of the Grantor will have the right to make
amendments or modifications to the Approved Scheme and/or any of the terms and
conditions of the Certificate and all Parts of its Schedule to which Approved
Options are subject in order to ensure that Inland Revenue approval is obtained.
3. Interest in Close Company
An Option which is subject to this Part of the Schedule may not be exercised
at any time when the Option-holder has, or has within the preceding twelve
months, had a material interest in a Close Company being either the Company
or a company which has control of the Company or is a member of a consortium
which owns such a company.
20
<PAGE> 21
4. Alterations or Additions
After the Board of Inland Revenue has approved the Scheme pursuant to Schedule
10 of the Finance Act 1984, no alteration or addition shall be made to any term
or condition of any Option granted in accordance with the Scheme without the
prior approval of the Board of Inland Revenue.
PART F: ADDITIONAL TERMS AND CONDITIONS OF UK
UNAPPROVED SHARE OPTIONS
Options subject to this Part of the Schedule are not granted in accordance with
the Micro Focus Group Inland Revenue Approved Share Option Scheme and are not
intended to qualify for favourable UK tax treatment under the Finance Act 1984.
21
<PAGE> 1
EXHIBIT 4.03
DATED 10 June 1994
MICRO FOCUS GROUP PLC
- and -
MICRO FOCUS TRUSTEES LIMITED
--------------------------------
DEED
constituting
EMPLOYEE BENEFIT TRUST 1994
--------------------------------
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Clause Heading Clause Number Page Number
- -------------- ------------- -----------
<S> <C> <C>
INTERPRETATION 1 1
Definition 1.l 1
Statutory References 1.2 2
Clause Headings 1.3 3
References to clauses l.4 3
References to persons 1.5 3
Each Gender 1.6 3
TITLE 2 3
CONSTITUTION OF TRUSTS AND POWER TO ACCEPT
ADDITIONAL ASSETS 3 3
PRIMARY TRUSTS 4 3
Trusts 4.1 3
Trust Appointments 4.2 4
Employees' Share Schemes 4.3 4
Appointments not affecting
prior payments 4.4 4
Expiration of Trust Period 4.5 4
Dividend Waiver 4.6 5
TRUSTS IN DEFAULT OF APPOINTMENT 5 5
Application of Trust Fund 5.1 5
Accumulation of Income 5.2 5
ULTIMATE TRUSTS 6 5
REQUESTS BY THE BOARD 7 5
Board Requests 7.1 5
Obligations of the Trustees 7.2 6
POWERS, PROTECTION AND REMUNERATION
OF THE TRUSTEES 8 6
Powers 8.1 6
Protection 8.2 6
Remuneration 8.3 7
Corporate Trustees 8.4 7
Professional Trustees 8.5 7
Connected Persons 8.6 7
Commission 8.7 7
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
APPOINTMENT, REMOVAL AND RETIREMENT
OF TRUSTEES 9 7
Appointment 9.1 7
Minimum Number 9.2 7
Termination 9.3 8
Retirement 9.4 8
Removal 9.5 8
Transfer of Trust Fund 9.6 8
ADMINISTRATION 10 8
VARIATION AND RECTIFICATION 11 8
PROPER LAW 12 8
Proper Law and Jurisdiction 12.1 8
Forum 12.2 9
Change of Proper Law 12.3 9
EXCLUSION OF THE COMPANY 13 9
THE FIRST SCHEDULE 10
Sub-Clause 8.1: Trustees' Powers
THE SECOND SCHEDULE 15
Sub-Clause 8.2: Trustees' Protection
THE THIRD SCHEDULE 17
Clause 10: Administration
</TABLE>
<PAGE> 4
THIS DEED is made the 10th day of June 1994 [50p Stamp]
BETWEEN:
(1) MICRO FOCUS GROUP PLC whose registered office is at 26 West Street
Berkshire RG13 1JT ("the Company"); and
(2) MICRO FOCUS TRUSTEES LIMITED whose registered office is at Le Gallaise
Chambers 54 Bath Street St Helier Jersey JE4 8YD Channel Islands ("the
Trustees" which expression shall where the context so admits include the
trustee or trustees for the time being hereof)
WHEREAS
(A) The Board has resolved that in order to enhance the profitability of the
Company's trade it is desirable to provide incentives related to the
holding of shares in the capital of the Company
(B) Accordingly, with the intention of encouraging or facilitating the holding
of shares in the Company for the purpose of enabling such incentives to be
provided, the Board has resolved to create the trusts established below
(C) The Company has paid or is about to pay to the Trustees the sum of GBP 100
(by way of gift) and it is anticipated that further monies may hereafter
be provided to the Trustees (whether by way of gift or otherwise) by the
Group Companies (as defined below)
NOW THE DEED IRREVOCABLY WITNESSETH as follows:
1. INTERPRETATION
1.1 Definitions: In this Deed:
"Beneficiary" means any individual (including an executive
director but excluding any Participator) who for
the time being is:
(a) a bona fide employee or former employee of any
Group Company; or
(b) the wife, husband, widow or widower or a child
or stepchild under the age of eighteen of any such
employee or former employee
"Board" means the Board of Directors for the time being of
the Company or a duly constituted committee
thereof or duly constituted thereby;
"Employees'
share scheme" means any scheme within the definition
contained in section 743 Companies Act 1985;
1
<PAGE> 5
"Group" means the group of companies which for the time being
comprises the Company and any body corporate which is
for the time being within the same group as the Company
within the meaning of section 207(1) Financial Services
Act 1986;
"Group company" means a company which is for the time being a member
of the Group;
"Interest in means any interest in Shares less than full
Shares" beneficial ownership (including without limitation an
interest in the proceeds of sale of any Shares, an
option or a right of pre-emption) and any entitlement in
respect of or right over dividends or voting rights
attached to any Shares;
"Participator" means any person in relation to the trusts established
by this Deed who for the time being falls within the
definition of "participator" for the purposes of section
13 and Part IV of the Inheritance Tax Act 1984, or any
person deemed to be a "settlor" hereof for the purposes
of Part XV of the Income and Corporation Taxes Act 1988
or the spouse of any such person or persons;
"Shares" means shares or debentures within the meaning of
paragraph 20(4) of Schedule 1 to the Financial Services
Act 1986 of or issued by any Group Company and (for the
avoidance of any doubt) shall include such shares as may
be, appropriate for the purposes of any employees' share
scheme of the Group or any Group Company from time to
time as the result of any takeover reconstruction
amalgamation or other event affecting the Group and its
shares;
"This Deed" means this trust deed as amended from time to time;
"the Trust Fund" means all Shares and monies transferred or
paid to and accepted by the Trustees as subject to the
trusts hereof and all additions thereto by way of
income, capital accretion or otherwise and the monies
for the time being representing such Shares, monies and
additions or any part or parts thereof;
"the Trust
Period" means the period of eighty years less one day commencing
with the date hereof (which period and no other shall be
the applicable perpetuity period) or such other date as
the Trustees shall by deed specify (not being a date
earlier than the date of execution of such deed Provided
That the Trust Period shall not in any event exceed the
day which is eighty years less one day after the date
hereof)
2
1.2 Statutory References: Any reference to any provision of any Act
of Parliament or Statutory Instrument shall constitute a reference to the
same as modified re-enacted or extended from time to time.
1.3 Clause Headings: shall be ignored in interpretation.
<PAGE> 6
1.4 References to clauses sub-classes paragraphs and schedules are to
clauses sub-clauses paragraphs and schedules of this Deed.
1.5 References to persons shall include references to corporations
and to unincorporated associations.
1.6 Each Gender includes each other gender.
2. TITLE
The trusts hereby constituted shall be entitled and referred to as "The
Micro Focus Group Employee Benefit Trust 1994" or such other name as the
Company and the Trustees may from time to time agree in writing between
them.
3. CONSTITUTION OF TRUSTS AND POWER TO ACCEPT ADDITIONAL ASSETS
The Trustees shall stand possessed of the Trust Fund upon, with and
subject to the trusts, powers and provisions of this Deed or imposed by
law on and concerning the same and the Trustees shall have the right at
any time during the Trust Period to accept such additional money as the
Company may in its absolute discretion pay or arrange for any of the Group
to pay directly or indirectly to the Trustees.
4. PRIMARY TRUSTS
4.1 Trusts: The Trustees shall hold the Trust Fund and the income thereof:
(a) upon trust to establish, facilitate, assist, participate in
and otherwise for the purposes of any one or more
employees' share scheme(s) for the benefit of all or any
one or more, exclusive of the other or others, of the
Beneficiaries as the Trustees from time to time in their
absolute discretion determine, including (without limiting
the foregoing) acquiring, disposing of and granting rights
over Shares and Interests in Shares for the purposes of any
such scheme or schemes (whether immediately or at some
future time) in such manner and on such terms as the
Trustees from time to time think fit;
(b) subject to the preceding paragraph 4.1(a) upon such trusts
for the benefit of all or any one or more, exclusive of the
other or others, of the Beneficiaries in such shares or
proportions and at such time or times and subject to such
conditions, provisions, limitations and restrictions and
generally in such mariner in all respects as the Trustees
may in their absolute discretion at any time during the
Trust Period revocably or irrevocably decide to appoint but
so that any revocable appointment if not revoked before the
date of expiration of the Trust Period, shall become
irrevocable at that date.
3
4.2 Trust Appointments: In any such appointment the Trustees may declare
that the whole or any part or parts of the capitol or the income of
the Trust Fund shall be held upon such
<PAGE> 7
trusts for any one or more of the Beneficiaries and subject to such
powers and provisions and generally inn such manner as the Trustees
shall think fit with power to appoint separate trustees of the
property of which trusts shall be so declared and to provide in such
declaration for the appointment of new or additional such separate
trustees
AND PROVIDED THAT:-
(a) all interests so created shall vest (it at all) not later
than the date of expiration of the Trust Period; and
(b) the Trustees shall be discharged from any further
responsibility for any part of the Trust Fund transferred to
any of the Beneficiaries or to such separate trustees; and
(c) such declaration may be revocable or irrevocable; and
(d) such trusts, powers and provisions may be similar or
dissimilar to those contained herein and may include,
without limitation, provisions for the accumulation of
income for any fixed, terminable or other period permitted
by law and the reservation or delegation to the Trustees or
any person or persons of the like discretions as to the
dispositions of the capital and income of that part of the
Trust Fund in respect of which any such declaration shall
be made in favour of the objects thereof as are conferred
upon the Trustees in relation to the Beneficiaries
hereunder.
4.3 Employees' Share Schemes: Without limiting the powers and
discretions of the Trustees or the provisions of this Deed, the
Trustees may make such provisions and arrangements and enter into
such agreements (in particular option agreements and agreements with
any Group Company or other person or persons in relation to any
option agreements) and otherwise conduct themselves in relation to
any Shares or other part of the Trust Fund as they in their absolute
discretion shall consider appropriate to further the objectives of
any employees' share scheme established by or at the instigation of
any Group Company for or in respect of any or all of the
Beneficiaries.
4.4 Appointments not affecting prior payments: Appointments made under
sub-clause 4.2 shall not affect any payment or application of all or
any part of the Trust Fund or the income thereof previously made
under any other power conferred by this Deed or by law.
4.5 Expiration of Trust Period: After the expiration of the Trust Period
the Trustees shall not offer any further Shares or loans to
Beneficiaries nor subscribe for or purchase any further Shares for
issue, re-sale or gift to Beneficiaries save to acquire such Shares
as are necessary to satisfy either any options over Shares
previously granted by them to Beneficiaries or any obligations
relating to any options over Shares previously granted by any Group
Company or other person or persons to Beneficiaries.
4
4.6 Dividend Waiver: The Trustees shall waive their rights to receive
all but 0.001p of any dividend accruing to any Shares.
<PAGE> 8
5. TRUSTS IN DEFAULT OF APPOINTMENT
5.1 Application of Trust Fund: During the Trust Period until, subject to
and in default of any such appointment under clause 4 the Trustees
may at any time pay or apply all or any part of the capital or the
income of the Trust Fund to or for the benefit of all or any one or
more, exclusive of the other or others, of the Beneficiaries and in
such shares and proportions if more than one and in such manner
generally as the Trustees shall in their discretion think fit.
5.2 Accumulation of Income: Notwithstanding the provisions of sub-clause
5.1, at any time during the Trust Period the Trustees at their
discretion may accumulate the whole or any part of the income of the
Trust Fund by way of compound interest investing it and the
resultant income thereof in the acquisition of any investments or
other property authorised hereunder and all accumulations of income
so made shall be held as additions to the capital of the Trust Fund
for all purposes.
6. ULTIMATE TRUSTS
Subject to and in default of any appointment, payment or application
thereof and so far as not wholly disposed of for any reason whatever, at
the expiration of the Trust Period the Trustees shall stand possessed of
the Trust Fund and the income thereof UPON TRUST for all or any one or
more, exclusive of the other or others, of the Beneficiaries in such
shares and proportions if more than one and generally in such manner as,
prior to expiration of the Trust Period, the Trustees in their absolute
discretion may decide and in default of and subject to such determination
UPON TRUST for such Beneficiaries as shall be living at the expiration of
the Trust Period in equal shares absolutely and if there shall be no such
Beneficiaries then living UPON TRUST for such charitable purposes as the
Trustees shall in their absolute discretion determine.
7. REQUESTS BY THE BOARD
7.1 Board Requests: In the exercise of their powers and discretions the
Trustees shall give due consideration to, and (without limiting any
power otherwise available to them) shall have express power to act
or refrain from acting in compliance with, any request or
recommendation to them by the Board that they:
(a) offer to sell such number of Shares on such terms as the Board
requests to any Beneficiary or other person whom the Board
shall select;
(b) offer to sell such number of Shares on such terms as the Board
requests to the trustees of any other employees' share scheme
established by the Company or by any other Group Company or by
any other member of another group of companies of which the
Group for the time being forms part;
(c) offer to grant an Interest in Shares in such number of Shares
on such terms as the Board may request to any Beneficiary whom
the Board may select;
5
<PAGE> 9
(d) transfer by way of gift such number of Shares as the Board may
from time to time request to any Beneficiary whom the Board
may select;
(e) transfer to any Beneficiary any number of Shares in respect of
which that Beneficiary has exercised any option granted to him
by any Group Company under any employee share scheme
established or operated by any Group Company, against payment
to the Trustees of the purchase price for those Shares payable
by that Beneficiary pursuant to exercise of such option;
(f) purchase any Shares held by a Beneficiary whether pursuant to
any option to purchase the same from him granted by any person
under any such employees' share scheme or otherwise:
(g) offer to lend money or guarantee a loan on such terms as the
Board may specify to any Beneficiary whom the Board may select
for the purposes of enabling him to acquire any Shares which
may be offered to him pursuant to paragraph 7.1(a) or
otherwise;
(h) waive in whole or in part any dividend or interest which would
otherwise be or become payable upon any Shares held by the
Trustees;
(i) enter into any agreement (including any option agreement which
may require the Trustees to purchase or sell Shares) providing
for any of the foregoing.
7.2 Obligations of the Trustees: If the Board makes any request to
the Trustees as referred to in the preceding sub-clause:
(a) the Trustees shall not be obliged to comply with any such
request from the Board but if in their unfettered discretion
they do so comply they shall be deemed to have acted in
compliance with a duty imposed upon them by this Deed and not
simply in exercise or a power conferred upon them;
(b) the Trustees may transfer any Shares pursuant to this clause
only in accordance with the relevant Articles of Association
for the time being;
(c) the Trustees may transfer Shares to the trustees of any other
employees' share scheme only if such Shares are to be held on
behalf of or acquired by the transferees upon trust
exclusively for persons who include the Beneficiaries unless
such transfer is for full value;
(d) the Trustees shall incur no liability nor have any
responsibility for any loss directly or indirectly suffered by
the Trust Fund or by a Beneficiary or other person as a direct
or indirect result of complying with any such request by the
Board with which it is within the power of the Trustees to
comply.
8. POWERS, PROTECTION AND REMUNERATION OF THE TRUSTEES
8.1 Powers: The Trustees shall have the powers set out in the First
Schedule, the provisions of which shall effect as if contained
herein.
<PAGE> 10
8.2 Protection: The Trustees shall have the benefit of the protections
set out in the Second Schedule, the provisions of which shall have
effect as if contained herein.
6
8.3 Remuneration: Any Trustee shall be entitled to receive and retain as
remuneration for his services hereunder such reasonable sum or sums
having regard to his duties and responsibilities notwithstanding
that he may also be an officer or employee of the Company or of any
other Group Company.
8.4 Corporate Trustees: Any corporate Trustee shall be entitled to act
as a Trustee on its usual terms and conditions in force from time to
time including (in addition to reimbursement of such company's
proper expenses, costs and other liabilities) the right to
remuneration and the incidence thereof and in addition such company
or any person connected with such company being a banker, broker,
investment adviser or engaged in any other profession, business or
trade may act in such capacity without accounting for any resultant
profit and may perform any service on behalf of the Trustees and on
the same terms as with a customer.
8.5 Professional Trustees: Any Trustee or person connected with a
Trustee who is a solicitor, accountant, stockbroker or other person
engaged in any profession, business or trade shall be entitled to
charge, be reimbursed and be paid out of the Trust Fund his usual
professional or other charges for work or business done or
transacted or time expended by him or his firm or any employee or
partner of his in the execution or otherwise in relation to the
trusts hereof, including acts which a Trustee not being in that or
any profession business or trade could have done.
8.6 Connected Persons: Nothing in this Deed shall prevent any Trustee or
any person connected with a Trustee from contracting or entering
into any financial, banking or other transaction with the Trustees
or any company or body any of whose shares or securities form part
of the Trust Fund or from being interested in any such contract or
transaction and the Trustees shall not be liable to account to any
person interested hereunder for any profit or benefit made or
derived by the Trustees thereby or in connection therewith.
8.7 Commission: None or the Trustees or any person connected with a
Trustee shall be liable to account for any commission remuneration
or other profits received by him notwithstanding that such
commission, remuneration or other profit is payable as a direct or
indirect result of any dealing with property subject to the trusts
hereof or of the exercise by him or by the Trustees of voting rights
attached to securities held by them or by any abstention from
exercising such voting rights.
9. APPOINTMENT, REMOVAL AND RETIREMENT OF TRUSTEES
9.1 Appointment: The power of appointing new or additional trustees
shall be vested in the Company and the Company may appoint a new or
additional Trustee who may be a director of the Company or which may
be a company of which the directors are also directors of the
Company. For the avoidance of doubt any person wheresoever resident
may be appointed as a Trustee.
<PAGE> 11
9.2 Minimum Number: There shall be no requirement that there be more
than one Trustee.
7
9.3 Termination: The office of a Trustee shall be ipso facto determined
and vacated if such Trustee being an individual shall be found to be
of unsound mind or if he shall became subject to any proceedings
under any bankruptcy or insolvency laws applicable to him or if such
Trustee being a company shall enter into liquidation or dissolution
whether compulsory or voluntary (not being merely a voluntary
liquidation for the purposes of amalgamation or reconstruction).
9.4 Retirement: A Trustee may retire at any time upon giving to the
Company not less than one month's written notice (or such shorter
period as the Company may accept) without assigning any reason
therefor and without being responsible for any costs occasioned by
such retirement.
9.5 Removal: The Company may at any time by resolution of the Board
remove any person from the office of trustee without assigning any
reason therefor.
9.6 Transfer of Trust Fund: Upon any appointment of a new Trustee or new
Trustees all monies and investments representing the Trust Fund
shall be paid or transferred to or placed under the control of such
new Trustee or new Trustees with the other Trustee or Trustees
hereof for the time being and all acts deeds and things necessary
for such purposes shall be done and executed and all costs of and
incidental thereto shall be paid by the Trustees out of the Trust
Fund as they shall in their absolute discretion from time to time
decide.
10. ADMINISTRATION
The provisions of the Third Schedule shall have effect as if herein set
out at length.
11. VARIATION AND RECTIFICATION
The Trustees (with the consent of the Company) shall have power from time
to time in such manner in all respects (but subject as hereinafter
provided) as the Trustees may consider expedient by deed to alter or add
to any of the provisions of this Deed Provided That no such alteration or
addition shall be effective if as a result:
(a) this Trust would cease to be an employees' share scheme; or
(b) this Trust would cease to be a trust which satisfies the conditions
set out in section 86 of the Inheritance Tax Act 1984; or
(c) any Group Company could be a Beneficiary under this Trust; or
(d) the Trust Period would extend beyond the end of the perpetuity
period specified in this Deed.
<PAGE> 12
12. PROPER LAW
12.1 Proper Law and Jurisdiction: Subject to sub-clause 12.3, this Deed
shall be governed and construed in all respects in accordance with
the laws of England and subject to the non-exclusive jurisdiction of
the English Courts to which the Trustees hereby submit.
8
12.2 Forum: The English Courts shall be the forum for the
administration of the trusts hereof.
12.3 Change of Proper Law: Notwithstanding anything contained in this
Deed the Trustees may from time to time declare in writing that the
trusts hereby constituted shall from the date of such declaration
take effect in accordance with the law of some other place in any
part of the world and as from the date of such declaration the law
of the place name therein shall be the law applicable hereto but
subject to the power conferred by this clause and until any further
declaration be made thereunder PROVIDED ALWAYS that so often as any
such declaration as aforesaid shall be made the Trustees may make
such consequential alterations or additions in or to the trusts,
powers and provisions of this Deed as the Trustees may consider
necessary or desirable to ensure that such trusts, powers and
provisions shall (mutatis mutandis) be as valid and effective as
they are under the laws of England.
13. EXCLUSION OF THE COMPANY
Notwithstanding any other provision contained in this Deed the Trustees
shall not pay or transfer to or apply for the benefit of any Group Company
any part of the Trust Fund.
IN WITNESS whereof the Company and the Trustees have caused this Deed to be
executed as a deed on the date first above written.
9
THE FIRST SCHEDULE
Sub-Clause 8.1 'Trustees' Powers
Express Powers: In addition and without prejudice to all other powers from time
to time available to them under statute or in law generally or otherwise the
Trustees shall have the following powers PROVIDED THAT the Trustees shall not
exercise any of their powers so as to conflict with the beneficial provisions of
this Deed:
1. Dealings in Shares: To acquire by subscription, purchase or otherwise and
retain or sell or otherwise dispose of any Shares or any Interest in
Shares from or to any person and without limitation to transfer, grant or
otherwise dispose of to any Beneficiary any Shares or any Interest in
Shares or any right to acquire Shares pursuant to the terms of any
employees' share scheme or otherwise (and in particular but without
limitation to satisfy any option granted to any Beneficiary by any Group
Company in the course of or pursuant to any employees' share scheme) on
such terms as the Trustees think fit and whether or not at full value.
<PAGE> 13
2. Application of Trust Fund: Prior to the investment of any monies for
the time being forming part of the Trust Fund in the purchase of Shares
or Interests in Shares:
(a) To retain any of the same in an interest bearing account for so
long as the Trustees may think fit;
(b) To lend any of the same to any Group Company against the issue of a
loan note or other security for the same in such form and upon such
terms as to repayment, interest, security or otherwise as the
Trustees from time to time think fit; and
(c) To lend any of the same to any Beneficiary upon such terms as to
repayment, interest, security or otherwise as the Trustees from time
to time think fit.
PROVIDED THAT
(i) no loan shall be made upon terms that repayment may be made
after the expiration of the Trust Period;
(ii) no monies shall be lent to any Group Company other than upon
arm's length commercial terms without any element of bounty;
(iii) in so far as any monies for the time being lent by any Group
Company to the Trust Fund are lent by the Trustees to a
Beneficiary then in so far as the Trustees receive interest
thereon a sum equivalent thereto shall be paid by way of
interest by the Trustees to such Group Company;
(iv) the Trustees shall not be entitled to exercise the powers
afforded to them by these paragraphs (a), (b) and (c) in so
far as such exercise would mean that the trusts hereby created
constitute a "collective investment scheme" as defined by
section 75 of the Financial Services Act 1986 for so long as
the same is unlawful pursuant to the said Act; and
10
(v) the Trustees shall give consideration to such other
requirements of the Financial Services Act 1986 and
requirements of law for the time being applicable before and
upon exercising such powers.
3. Maintenance and Accumulation: To apply income for maintenance and to
accumulate surplus income in either case as provided by Section 31
Trustee Act 1925 which shall apply as if:
(a) the words "may, in all the circumstances, be reasonable" had been
omitted from paragraph (i) of subsection (1) thereof and the words
"the Trustees may think fit" had been substituted therefor; and
(b) the proviso at the end of subsection (1) thereof had been omitted
therefrom.
<PAGE> 14
4. Advancement: To pay or apply any money securities or other assets
comprised in the Trust Fund or any part thereof as provided by Section 32
of the Trustee Act 1925 which shall apply as if the words "one half of"
were omitted from proviso (a) of subsection (i) thereof.
5. Borrowing: To borrow money on such terms and conditions as to interest,
repayment and otherwise as they may think fit and whether upon the
security of the whole or any part or parts of the Trust Fund or upon the
personal covenant of the Trustees (subject to such restrictions in that
behalf as the Trustees think fit) and to apply such borrowed monies for
such of those purposes for which the Trustees are permitted to use or
apply the Trust Fund.
6. Exclusion of Beneficiaries: With the written consent of the Board, to
declare by deed or deeds revocable or irrevocable that any person or
persons or class or classes of person who is or could become one of the
Beneficiaries shall cease to be or (as the case may be) shall be incapable
of becoming one of the Beneficiaries or of receiving any or any further
benefit hereunder (whether at all or to the extent so declared by the
Trustees) PROVIDED THAT:
(a) the exercise of this power shall not prejudice, modify or affect
any appointment of capital or income then already made; and
(b) this power shall not be exercised so that the Beneficiaries shall
cease to comprise most of the individuals who are for the time being
employed by the Company or so that this Deed ceases to be an
employees' share scheme.
7. Corporate Nominees: To allow or cause any part or parts of the Trust
Fund to be or become vested in and held and administered by any person
or persons approved by the Board as nominee for the Trustees.
8. Grant of Rights: To grant any option or rights of pre-emption and to enter
into and execute any pre-emption or other arrangements, dealings,
dispositions and dedications whatsoever and to do all other actions or
things which the Trustees in their absolute discretion may think expedient
in the interests of any one or more of the Beneficiaries.
9. Compromise of Rights: To enter into any compromise or arrangement with
respect to or to release or forbear to exercise or to alter or join in
altering all or any of the rights as shareholders,
11
debenture homers, debenture stockholders. creditors or stockholders of any
company (including the Company) and whether in connection with a scheme of
reconstruction or amalgamation or otherwise howsoever and notwithstanding
that such compromise, arrangement or alteration may impose on the Trustees
increased or new liabilities or obligations and. with full power to accept
in or towards satisfaction of all or any of such rights such consideration
as they shall in their discretion think fit.
10. Waive Dividends: Without limiting the power conferred by the preceding
paragraph 9 but subject to sub-clause 4.6, to waive in whole or in part
any entitlement to receive all or any dividends, interest, distribution or
other income or capital entitlement attached to or derived from any Shares
or other securities of any company for the time being held by the Trustees
and whether or not in return for any consideration or benefit.
<PAGE> 15
11. Dealings with Related Trusts: In execution of any of the trusts hereof or
in exercise of any of the powers hereby or by law given to the Trustees,
to settle appoint or otherwise transfer the Trust Fund or any part thereof
or buy or sell property or borrow from or lend money to or carry out any
other transaction with the trustees of any other trust or the executors or
administrators of any estate, notwithstanding that the Trustees are the
same persons as those trustees executors or administrators or any of them,
and where the Trustees are the same persons as those trustees executors or
administrators the transaction shall be binding on all persons then or
thereafter interested hereunder even if effected and evidenced only by an
entry in the accounts of the Trustees.
12. Entry into Binding Agreements: To enter into and execute any binding
arrangements, agreements, dealings, dispositions and dedications
whatsoever and to all the other actions and things which the Trustees may
in their absolute discretion think expedient in the interests of any one
or more of the Beneficiaries.
13. Voting Rights: The Trustees may exercise or agree to exercise all
voting rights appertaining to any investments (including Shares) for
the time being forming part of the Trust Fund in as full. free and
absolute a manner as if they were absolute owners of such investment
and in particular may:
(a) exercise such voting rights either by voting or by abstaining from
voting so as to ensure or further the appointment or reappointment
of any one or more of their number to be directors, secretaries or
employees of any company in which any part of the Trust Fund may for
the time being be invested or of any subsidiary of any such company;
(b) enter into agreement with any Beneficiary or other person to
exercise or refrain from exercising the voting rights attached to
any Shares for the time being held by the Trustees in such manner as
the Beneficiary may direct and whether in all or only in certain
circumstances.
14. Appropriation: To appropriate any investment or property from time to time
forming part of the Trust Fund in its actual state of investment in or
towards satisfaction of any beneficial interest in the Trust Fund as the
Trustees think fit without the necessity of obtaining any consent.
12
15. To Pay Tax:
(a) To pay any duties or taxes or other fiscal impositions (together
with any related interest or penalties or other surcharges) in
connection with the trusts hereof for which the Trustees may
become liable in any part of the world and to make and file all
returns and disclosures therewith notwithstanding that such
liability or disclosure as aforesaid may not be enforceable
through the courts of the place where the trusts declared in this
Deed are for the time being administered and to have complete
discretion as to the time and manner in which such duties taxes
and fiscal impositions shall be paid and no person interested
under this Trust shall be entitled to make any claim whatsoever
against the Trustees by reason of their making such payment or
disclosure;
<PAGE> 16
(b) To apply all or any part of the Trust Fund or all or any part of the
income of the Trust Fund in paying any stamp duty or stamp duty
reserve tax payable in respect of any transfer of or agreement to
transfer Shares to a Beneficiary.
16. To Deduct Tax:
(a) To deduct or withhold from the sums of money paid or credited to the
Trustees by any Group Company or from or in respect of amounts paid
or property transferred by the Trustees to any of the Beneficiaries
any amounts for which the Trustees may as trustees be accountable to
any third party;
(b) To arrange for any Group Company to account to the Inland Revenue or
other authority concerned for any amounts deducted or withheld from
the sums money paid or credited to the Trustees or any Group Company
or from or in respect of any amounts paid or property transferred by
the Trustees to any of the Beneficiaries in respect of income tax or
any other deductions or withholding required by law.
17. Payments and Receipts: To pay any payment to any Beneficiary into such
Beneficiary's bank account and the Trustees shall be discharged from
obtaining a receipt or considering, dealing with or otherwise acting in
respect of the application of such payment.
18. Infant Beneficiaries and Receipts: To pay to any parent or guardian of
any minor any sum or sums of money due to such minor under this Deed
and the receipt of any such person shall be a good discharge to the
Trustees.
19. Apportionment: To treat all income received by the Trustees as income at
the date of receipt irrespective of the period for which the income is
payable.
20. Insurance: To effect insurance of any property or any part or parts
thereof forming part or parts thereof forming part of the Trust Fund
against such risks and for such values as the Trustees may in their
discretion determine.
13
21. Trustees' Interests: To enter into any transaction (including a sale,
purchase, lease or loan) notwithstanding that at one or more of their
number may have some other interest therein whether in a personal or
fiduciary capacity PROVIDED THAT (a) at least one of their number has no
such other interest or (b) a duly qualified independent valuer or adviser
has advised that the transaction is a fair and reasonable one for the
Trustees to enter into having regard either to the interests of all the
Beneficiaries or one or more of them but a purchaser shall not be
concerned to see that the foregoing provisos have been complied with.
14
THE SECOND SCHEDULE
Sub-Clause 8.2: Trustees' Protection
1. Reliance upon Information and Advice: The Trustees shall be entitled to
rely without further enquiry on all information supplied to it by the
Company or any other Group Company and further
<PAGE> 17
may act on the formal advice or considered opinion of any solicitor,
broker, actuary, accountant or other professional person whether such
advice was obtained by the Trustees or by the Company or other member of
the Group and shall not be responsible for any loss so occasioned by their
so acting.
2. Indemnity: In the absence of willful or individual fraud or dishonesty on
the part of the Trustee (or Trustees) or on the part of the officer(s) of
any corporate trustee who is (or are) to be made liable, the Trustees and
the officers of any corporate trustee shall be fully indemnified against
any actions, claims, demands and liabilities of whatsoever nature arising
out of anything properly done or caused to be done by them in exercise of
the powers and discretions vested in them by this Deed or otherwise
arising out or in connection with the trusts hereof in any manner
whatsoever or which is done at the request of the Company (including
without limitation to the foregoing taxation and any other fiscal
obligation to the state) and in addition the Trustees and their officers
as aforesaid shall have the benefit of all the powers, privileges and
immunities conferred upon gratuitous trustees by statute or by common law
and such indemnity shall be out of the Trust Fund.
3. Delegation: The Trustees may employ at the expense of the income or
capital of the Trust Fund any agent or agents to transact all or any
business or to do any act of whatsoever nature required to be transacted
or done in the execution of the trusts hereof or in the exercise of the
powers hereof including the receipt and payment of monies and the
execution of documents and if they act reasonably and with due care in the
exercise of such powers the Trustees shall not be responsible for the
default of or any loss caused by any such agent or agents.
4. Acting by Proper Officer: Every Trustee which is a corporation or company
may exercise or concur in exercising any discretion or power conferred on
the Trustees by a resolution of such corporation or company or by a
resolution of its board of directors or governing body or may delegate the
right and power to exercise or concur in exercising any discretion or
power to one or more members of its board of directors or governing body
or one or more of its officers or employees duly authorised for that
purpose notwithstanding that such director, employee or proper officers
have a personal or beneficial interest therein.
5. Non-Intervention: The Trustees shall not be required to interfere in the
management or conduct of the business of any company wherever resident or
incorporated in which the Trust is interested, even if holding the whole
or a majority of the shares carrying the control of such company and so
long as the Trustees have no notice of any act of dishonesty or
misappropriation or money on the part of the directors having the
management of such company the Trustees may leave the conduct of its
business (including the payment or non-payment of dividends) wholly to its
directors and no Beneficiary shall be entitled to require the distribution
of any dividend by a company wherever incorporated or resident in which
the Trustees may be interested or require the Trustees to exercise any
powers they may have of compelling any such distribution.
15
6. Liability of Co-Trustees: A Trustee shall be liable only for losses
arising from his own willful default or willful wrongdoing and shall not
be responsible for any act, neglect or default of his fellow Trustee or
Trustees to which he was not a party and a Trustee who shall pay or
transfer to his fellow Trustee or Trustees or do or omit to do any act or
thing thereby enabling such fellow Trustees to receive sums of money or
other property for the purposes of the trusts hereof shall not be bound to
see to their due application.
<PAGE> 18
7. Breach of Trust: In the administration of the trusts hereof the
Trustees shall consider the requirements of:
(a) section 86 of the Inheritance Tax Act 1984; and
(b) any Rules of Good Practice published by any institutional investment
committee
for so long as such requirements are relevant but shall not be liable for
any breach of trust if such requirements are not observed thereby causing
any loss, whether by exemption from any taxation or otherwise.
16
THE THIRD SCHEDULE
Clause 10: Administration
1. Accounts: The Trustees shall cause to be prepared accounts for the Trust
Fund and transactions relating thereto for each successive financial year
(and without limiting their obligations in respect of the same shall
maintain records within such accounts showing separately the contributions
received from each Group Company and the persons for the benefit of whom
such contributions are applied) and shall produce the same to the Company
duly audited by a chartered accountant within [six months] of the end of
the financial year to which they relate.
2. Information: The Trustees shall at the request of the Board provide all
such information relating to the Trust Fund as the Board may from time to
time request and shall permit the Board and its representatives to inspect
all securities, accounts, minutes, records, documents and other papers
relating to the Trust Fund or the trusts of this Deed.
3. Acts of the Trustees: Unless there is for the time being a sole
trustee of this Trust:
3.1 Decisions: The Trustees may exercise any power or discretion
held or exercisable by them by a majority and need not be
unanimous.
3.2 Meetings: The Trustees may meet together for the dispatch of
business, adjourn and otherwise regulate their meetings as they
think fit. Unless the Trustees be a corporate sole trustee the
quorum for any meeting of the Trustees shall be two and any meeting
of the Trustees at which a quorum is present shall be competent to
exercise all the powers and discretions exercisable by the Trustees
generally. The Trustees shall elect a chairman of their meetings and
questions arising shall be decided by a majority of votes and in
case of equality of votes the chairman or if there is no permanent
chairman or if he be not present the chairman of the meeting (who
shall be elected by the meeting) shall have a second or casting
vote.
3.3 Written Resolutions: A resolution in writing signed by all the
Trustees for the time being shall be as valid and effectual as a
resolution passed at a meeting of the Trustees. Such resolution may
be contained in one document or in several documents in like form
each signed by one or more of the Trustees for the time being and
such resolutions shall be entered in the minute book referred to in
sub-paragraph 3.4.
<PAGE> 19
3.4 Minutes: The Trustees shall cause proper minutes to be kept and
entered in a book provided for the purpose of all their resolutions
and proceedings and any such minutes of any meeting of the Trustees
if purported to be signed by the chairman of such meeting or by the
chairman of a subsequent meeting shall be admissible as prima facie
evidence of the manners stated in such minutes.
3.5 Receipts: Valid and effectual receipts and discharges for any monies
or other property payable transferable or deliverable to the
Trustees or any of them may be given by any one Trustee or by any
person from time to time authorised in writing for the purpose of
the Trustees.
3.6 Delegation: The Trustees may from time to time delegate any
business to any one or more of their number.
17
3.7 Trustees' Interests:
(a) A Trustee shall not be disqualified from voting or taking
part in any decision of the Trustees on any matter by virtue
of any personal or beneficial interest (actual or prospective)
therein; and
(b) any Trustee or director secretary or employee of a Trustee who
is or may become a Beneficiary may exercise his powers and
execute his duties as such trustee notwithstanding that he is
or may become a Beneficiary; and
(c) no decision shall be invalidated or questioned on the ground
that any Trustee or director, secretary or employee of a
Trustee had a direct or other personal interest in the mode or
result of such decision or of exercising such power or
discretion
PROVIDED THAT a Trustee or director, secretary or employee of a
Trustee may not vote upon any decision affecting him personally
either as a potential or existing Beneficiary but this prohibition
shall not apply to any amendment to the provisions of this Deed
3.8 Separation of Resolutions: Where proposals are under consideration
concerning the provision of benefits to any Beneficiaries who are
Trustees or are officers of a corporate Trustee (including any
variation of the same), such proposals may be divided and considered
in relation to each such person separately and in such cases each of
such persons concerned shall be entitled to vote (and be counted in
the quorum) in respect of each resolution except that concerning
himself.
<TABLE>
<CAPTION>
<S> <C>
The COMMON SEAL of the ) Director /s/ R. H. Forbes
Company was hereto affixed ) Assistant Secretary /s/ J.P. Davies
- ------------------------------------------
[Corporate Seal]
- ------------------------------------------
</TABLE>
<PAGE> 20
EXECUTED AS A DEED and )
DELIVERED on the )
date hereof for and on behalf of the) Director
Trustees in the presence of: ) Director /s/ A.O. DART
- ------------------------------------------
- ------------------------------------------
18
<PAGE> 21
1994 MICRO FOCUS EMPLOYEE BENEFIT TRUST
CERTIFICATE OF SHARE OPTIONS GRANT
Date of Grant: _________, 199_
THIS IS TO CERTIFY THAT on the Date of Grant shown above [Firstname] [Lastname]
WAS GRANTED [AMOUNT] OPTIONS, each such option being a right granted by Micro
Focus Group Trustees Limited, Reg. No. 58902 ("the Grantor") to purchase a
fully-paid Ordinary share of 10p in the capital of Micro Focus Group plc (the
"Company") at a price of pounds Sterling ______ per share exclusive of stamp
duty.
The terms used in this Certificate and the attached Schedule are defined in the
Glossary on the back of this Certificate.
All options are granted subject to the terms and conditions set out in this
Certificate and the Schedule hereto.
Subject to the terms and conditions set out in the Schedule, the Options will be
exercisable in accordance with the following vesting Schedule:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
On or after Vesting Date: But Before Lapse Date: Number of options:
- ------------------------- ---------------------- ------------------
<S> <C> <C>
(________, 19__) (________, 20__) 20% of the Options
(________, 19__) (________, 20__) 20% of the Options
(________, 19__) (________, 20__) 20% of the Options
(________, 20__) (________, 20__) 20% of the Options
(________, 20__) (________, 20__) 20% of the Options
- --------------------------------------------------------------------------------
</TABLE>
In consideration of these Options and as a condition of acceptance of these
Options by the Option Holder, the Option Holder hereby agrees with the Grantor
to grant the rights to the Grantor and to accept, and undertake to be bound by,
the terms and conditions referred to above and as set out in the Schedule.
SIGNED AND DELIVERED as a Deed by Micro Focus Trustee Limited acting by R.A.
Connors
-----------------------------
DIRECTOR
Signed:
---------------------------------
Option-Holder
<PAGE> 22
GLOSSARY
In the Certificate and the attached Schedule:
<TABLE>
<S> <C>
"the Appendix" mean the Appendix to the Schedule;
"the board" means the board of directors of the Grantor or
a duly authorized committee of the board of directors;
"Business Day" means any day between and including Monday and
Friday in any week, excluding any day which is a public
holiday in either England or California or is not a
dealing day of the Stock Exchange in London;
"the Certificate" means the certificate evidencing the
grant of these options to the Option-holder;
"the Company" means Micro Focus Group Public Limited Company
(incorporated in England with reg. no. 1709998);
"the Date of Grant" means the date upon which these Options are
granted as recorded on the Certificate;
"the Employer means the company in which the Option-holder holds the
Corporation" office or employment by virtue of which he or she has
been granted these Options;
"EPS" means earnings per Share before exceptional items;
"Exercise Price" means the Pounds Sterling price payable
on the exercise of an Option as recorded on the face
of the Certificate;
"the Grantor" means the Micro Focus Trustees Limited
incorporated in Jersey with Reg. No. 58902;
"the Group" means the Company and every other company by
which the Company has direct or indirect control;
"Market Price" means, at any time, the price per share at which
shares could then be sold on the Stock Exchange in
London as advised to the Options Administrator by the
Company's stockbroker;
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
"Option" means option hereby granted to acquire a Share;
"the Options
Administrator" means the Grantor or other person appointed by
the Grantor as the Options Administrator for the time
being;
"Option-holder" means person to whom Options are granted
(including upon the death of such person and where
the context so requires, his or her personal
representatives);
"Option Shares" means Shares acquired, or to be acquired,
by the Option-holder upon the exercise of Options
including, in the event of any reconstruction,
amalgamation or reorganisation of share capital in
the Company, shares representing such Shares and any
additional shares acquired by the Option-holder in
consequence of his or her holding of such Shares
(other than shares for which the Option- holder has
given new consideration);
"the Performance
Criteria" means the matters set out in the Appendix;
"the schedule" means the Schedule to the Certificate;
"Share" means a fully-paid Ordinary share of 10p in the
capital of the Company;
"vested" means capable of being exercised in accordance with the
vesting schedule on the face of the Certificate.
</TABLE>
<PAGE> 24
1994 MICRO FOCUS EMPLOYEE BENEFIT TRUST
SCHEDULE
Part A: TERMS AND CONDITIONS SET BY THE GRANTOR
1. Vesting and Lapse of Options
(a) After being granted, an Option becomes vested upon being held by
the Option-Holder until the Vesting Date for that Option set out in
the Certificate.
(b) An Option lapses and is no longer exercisable after the Lapse Date
for that Option set out in the Certificate or the date on which the
relevant Performance Criteria shall have failed to be met, if
earlier.
2. Manner of exercise of Option
(a) Options may be exercised on any occasion after becoming vested and
before they have lapsed by:
(i)the receipt of a notice by the Grantor given by the Option-
Holder in the manner prescribed in clause 9 of this Part which
identifies the Options that are to be exercised; and
(ii) the receipt by the Grantor of the aggregate Exercise Price and
applicable stamp duty in each case in Pounds Sterling in respect of
such Options.
(b) Upon receipt of a notice of exercise served in accordance with
Clause 2(a) above and a remittance for the appropriate Exercise
Price the Board of the Grantor shall deliver to the Option-Holder,
as appropriate, a duly executed Stock Transfer Form for the number
of Shares in respect of which such Options are duly exercised,
together with a Share Certificate in respect thereof in the name of
the Grantor;
(c) If all Options represented by the Certificate are not exercised the
Board may, at its discretion, endorse the Certificate so as to
specify the number of Options which remain to be exercised and
require the Option-Holder to deliver the Option Certificate to the
Grantor for such purpose.
(d) Shares transferred pursuant to exercise of Options shall be sold by
the Grantor free of all liens, charges or encumbrances and with all
rights attaching thereto at the date of receipt of a notice of
exercise served in accordance with Clause 2(a) above.
3. Cessation of employment
(a) General Rule: Subject to provisions (b) and (c) of this clause, if
the Option-Holder ceases to hold employment within the Group for
any reason then all Options that
<PAGE> 25
have vested prior to the date of notice of termination by either
party of the employment relationship will be exercisable by the
Option-Holder until the date the Option-Holder ceases to hold
employment and will thereafter lapse. All Options that have not
become vested prior to the date of such notice will become null and
void as of the date of such notice.
(b) Disability: If the Option-Holder ceases to hold employment within
the Group by reason of a certified physical or mental disability
which makes it impossible to continue gainful employment for the
rest of his or her natural life then all Options which have vested
and not lapsed prior to the cessation date may be exercised within
the period of one year beginning with the date that the
Option-Holder ceased to hold employment within the Group.
(c) Death: If the Option-Holder ceases to hold employment within the
Group by reason of the Option-Holder's death, then all Option which
may have vested and not lapsed prior to the cessation date may be
exercised by the personal representatives of the Option-Holder
within the period of one year beginning with the date of death.
4. Non-transferability of Options
Options are personal to the Option-Holder save as set out in Clauses 3(b)
and 3(c) above, and may not be exercised by any other person. An Option
shall lapse forthwith if it is purportedly assigned, mortgaged, charged or
otherwise alienated of if the Option-Holder is adjudicated bankrupt or
does or suffers any other act or thing whereby the Option-Holder would or
might be deprived of the beneficial ownership of such Option.
5. Independence of Options
The statutory, contractual or other rights and obligations of the
Option-Holder under the terms of any office, employment, contract or any
other relationship with the Company or any other Company in the Group
apart from the Options, shall not be affected by the grant or existence of
these Options or any other right that the Option-Holder might otherwise
have to exercise the Options and these Options shall not afford the
Option-Holder any additional rights to continuation of, or to compensation
or damages in consequence of the termination of, any office, employment or
other relationship for any reason whatsoever.
6. Sale or transfer of Option Shares
To avoid inadvertent breach of the United States securities laws, and to
promote the acquisition of shares by employees of companies within the
Group, if the Option-Holder intends, at any time, to sell, assign or
transfer any or all of the Option Shares, the Grantor will have the right
of first refusal to purchase or arrange the purchase, sale, assignment or
transfer of those Option Shares. The procedures to be adopted for the time
being in the case of the Option-Holder wishing to sell Option Shares are
as in Clauses 6(a) to 6(e) below:
<PAGE> 26
(a) The Option-Holder will give notice ("the Initial Sale Notice") to
the Options Administrator stating the Option-Holder's intent to
sell, assign or transfer the exercised Option Shares. The Initial
Sale Notice must be made in writing be given by one of the methods
in clause 9 below and state:
(i) the number of shares to be sold, and
(ii) the identification of the Option representing the Shares to be
sold by quoting the grant date;
the Options Administrator may then exercise a right of first
refusal by proceeding as in Clauses 6(b), (c) or (d) below. If the
Options Administrator for any reason declines to exercise this
right of first refusal, then Clause 6(e) below will apply instead.
(b) If the Grantor exercises its right of first refusal then the
Options Administrator will make all reasonable efforts to obtain a
Market Price quotation from the Company's stockbroker at The Stock
Exchange in London for the specified number of Shares by the next
dealing day of The Stock Exchange in London and to inform the
Option-Holder of the quoted price as soon as practicable, in any
event, within 48 hours.
(c) After receiving the quotation referred to in Clause 6(b) above, if
the Option-Holder decides to sell the Option Shares, the
Option-Holder must give a notice ("the Sale Confirmation Notice")
to the Options Administrator. The Sales Confirmation Notice must be
made in writing by one of the methods in Clause 9 below.
The Sale Confirmation Notice must restate the quotation price and
may also state a lesser, minimum price below which the
Option-Holder wishes to withdraw from the sale in the event that
the minimum price or greater is not achievable.
For the Sale Confirmation Notice to be valid and accepted and for
the sale to take place, the Grantor must be in possession of the
following;
(i) the share certificate(s) for the Option Shares, and
(ii) a blank form of Stock Transfer, acceptable to The Stock
Exchange in London, relating to such Option Shares and signed by
the Option-Holder.
(d) Provided that a valid Sale Confirmation Notice is given by the
Option-Holder to the Grantor, then the Grantor will proceed as soon
as practicable, either:
(i) to instruct the Company's stockbroker to sell through The Stock
Exchange in London the specified shares on behalf of the
Option-Holder in such a way as will
<PAGE> 27
avoid contravention of U.S. federal and state security laws as soon
as practicable and retain a commission of 1/2% of the gross
proceeds for the Grantor's own account; or
(ii) to purchase or arrange the purchase of the entire specified
number of Option Shares at the Market Price quotation and will use
its best efforts to do so in such a way as will avoid contravention
of the U.S. federal and state securities laws as soon as is
practicable and retain a commission for the Grantor's own account
equivalent to the commission that would have been charged by the
Company's stockbroker on that occasion.
If any of the actions required of the Option-Holder described in
Clauses 6(a), (c) and (d) above are not completed, the Grantor may
be unable to complete the sale and in that event, should the
Option-Holder wish to proceed with a sale, he or she must repeat
the procedures in Clauses 6(a) to 6(d).
The Grantor will pay the net proceeds of sale to the Option-Holder
as soon as is practicable, given the nature of the transactions
involved.
The Company's stockbroker and the Grantor will use all reasonable
efforts to achieve the purposes of these arrangements and will each
attempt to achieve the Market Price quoted but cannot guarantee it
as the Stock Exchange Market Price may shift between the quotation
and the sale.
(e) If the Option-Holder gives the Initial Sale Notice and the Options
Administrator does not exercise its right of first refusal and
either states this in writing to the Option-Holder or fails to
obtain from the Company's stockbroker the Market Price quotation
referred to in Clause 6(d) above by the end of the Business Day
following that in which the Options Administrator received the
Initial Sale Notice, then for the next five Business Days, the
Option-Holder shall be at liberty subject to compliance with all
applicable requirements of U.S. federal and state securities laws,
The Stock Exchange in London, and any other government or other
regulatory or advisory body whether in the United Kingdom or United
States of America, to sell, assign or transfer such Option Shares
to any person on any terms, provided that the Option-Holder gives
the Options Administrator notice in writing of that sale,
assignment or transfer in accordance with Clause 9 within such five
Business Days.
If the Shareholder does sell, assign or transfer the Option Shares
and notify the Options Administrator of that sale, assignment or
transfer in accordance with Clause 9 below within such five
Business Days, then when next the Option-Holder wishes to sell,
assign or transfer any Option Shares he or she must repeat the
procedures set forth in Clause 6(a) to 6(d) above so that the
Grantor may again utilise its right of first refusal.
<PAGE> 28
(f) The Grantor may expand or change these procedures to accommodate
The Stock Exchange in London or the Company's Stockbroker's trading
practice or to ensure practicability of the administration
procedures or to ensure an effective service for the sale,
assignment or transfer of the Option Shares on behalf of the
Option-Holder and in the case of assignment or transfer may add new
procedures. Any such change will be notified to the Option-Holder.
7. Alteration of these Terms and Conditions
(a) The Grantor may at any time alter or add to the terms and
conditions of these Options in any respect, subject to, if
necessary, the approval of the Shareholders of the Company and the
various legislation in effect at the time of the change;
(b) The Board of Directors of the Grantor shall give to the
Option-Holder written notice of any such alteration or addition.
8. Right of First Refusal
The Grantor may assign the right of first person or persons and in that
event
(i) the Grantor shall give notice in writing to the Option-Holder,
and
(ii) the provisions of Clause 6 shall be read and construed as if
all references to "the Grantor" or "the Options Administrator" were
references to the assignee.
9. Service of Notices
For the purposes of the notices to be given to the recipient under Clauses
2(a), 6(a), 6(c) and 6(e) only, a notice must be sent, received and
acknowledged as follows-
(a) the notice must be given to the recipient using one or more of the
following methods
(i) by personal delivery in writing to the recipient, or in the
case of Options Administrator, his or her designee; or
(ii) by electronic mail to the recipient's identification code
"OPTIONS" using the Group's electronic mail system; or
(iii) by facsimile to the recipient's FAX machine, which must be
compatible with those used by the Grantor.
(b) The notice must be received by the recipient using any of the above
methods, in order to be considered given
<PAGE> 29
(c) The recipient must make his or her best efforts to act upon the
notice as soon as reasonably practicable after actual receipt of
the notice.
10. Applicable law
The rights and obligations of the Option-Holder and the Grantor under the
terms and conditions set out in this Certificate, the Schedule and the
Appendix are subject to all applicable requirements of U.S. federal and
state laws and with all applicable requirements of The Stock Exchange in
London and any government or other regulatory or advisory body whether in
the United Kingdom or the United States of America. Save as aforesaid this
certificate, the schedule and the appendix shall be governed by and
construed in accordance with the laws of England
11. Force Majeure
Notwithstanding any other provision of the Certificate this Schedule or of
the Appendix, no default, delay or failure to perform on the part of any
party shall be considered a breach of any term or condition of this
Certificate or the Schedule if such default, delay or failure to perform
is shown to be due to causes beyond the reasonable control of the party
charged therewith, including, but not limited to, causes such as strikes,
lockouts or other labour disputes, riots, civil disturbances, actions or
inactions of governmental authorities or suppliers, epidemics, war,
embargoes or other acts of the public enemy, nuclear disasters, default of
a common carrier or failure of a communication system
12. Disclaimer
Neither the Company nor, the Grantor, their officers, directors, employees
or agents warrants any benefit or value from the holding or sale of any
option or the acquisition, holding or sale of any share, nor guarantees
any such benefits or value that might be perceived by the option-Holder or
by any other person, nor guarantees the effect of any act contemplated
herein.
PART B : REGULATORY REQUIREMENTS
13. Shareholders' circulars
The option-Holder shall be sent copies of all documents (including the
annual directors' report and accounts), other than proxy or voting forms,
sent to the holders of Shares
14. Stock Exchange listing
As required by The Stock Exchange in London to be drawn to the attention
of the Option-holder all Shares allotted upon the exercise of Options
shall rank equally in all respects with the Shares then in issue and the
Company shall apply to the Council of The Stock Exchange, in London for
such Shares to be admitted to the Official List of The Stock Exchange.
<PAGE> 30
Restrictions imposed upon the exercise of options and the disposal of
shares
(a) Options may not in any event be exercised unless such exercise is
in compliance with the U.S. Securities Act of 1933 (as amended), if
applicable, and all applicable, U.S state securities laws, as they
are in effect at that time;
(b) In exercising Options the Option-holder shall have regard to the
provisions of the Model Code for Securities Transactions by
Directors of Listed Companies issued by The Stock Exchange, London,
in April 1981, a copy of which may be obtained from the Options
Administrator;
(c) Unless sold outside of the United States of America in a manner
which removes the sale from the purview of the U.S. federal
securities laws, all Shares acquired upon the exercise of Options
must be held indefinitely unless they are registered under the
Securities Act of 1933 or an exemption from registration is
available;
(d) The transfer of any Shares acquired upon the exercise of Options
may be restricted or affected by various state securities laws in
the United States of America.
(e) In disposing of any Shares acquired pursuant to the exercise of
Options, the Option-Holder shall have regard to the provisions of
the U.K. Company Securities (Insider Dealing) Act 1985, a copy of
which may be obtained from the Options Administrator, and the Model
Code referred to in clause 14(b) above.
15. Restrictions imposed upon the exercise of options and the disposal of
shares
(a) Options may not in any event be exercised unless such exercise is
in compliance with the U.S. Securities Act of 1933 (as amended), if
applicable, and all applicable U.S. state securities laws, as they
are in effect at that time;
(b) in exercising Options the option-Holder shall have regard to the
provisions of the Model Code for Securities Transactions by
Directors of Listed Companies issued by The Stock Exchange in
London, a copy of which may be obtained from the Options
Administrator;
(c) unless sold outside the United States of America in a manner which
removes the sale from the purview of the U.S. federal securities
laws, all Shares acquired upon the exercise of Options must be held
indefinitely unless they are registered under the Securities Act of
1933 or an exemption from registration is available
(d) the transfer of any Shares acquired upon the exercise of Options
may be restricted or affected by various state securities laws in
the United States of America
(e) in disposing of any Shares acquired pursuant to the exercise of
Options, the Option-Holder shall (inter alia) have regard to the
provisions relating to Insider
<PAGE> 31
Dealing set out in the U.K. Criminal Justice Act 1993, a copy of
which may be obtained from the Options Administrator, and the Model
Code referred to in Clause 2(b) above
16. Reconstruction or amalgamation
If an arrangement between the Company and any person holding shares in the
Company is proposed for the purpose of or in connection with a scheme for
the reconstruction of the Company or the amalgamation of the Company and
any one or more other companies (whether or not involving the subsequent
winding-up of the Company) and under the arrangement the Company will
cease to be the holding company of the Micro Focus group of companies then
the Board shall give notice in writing to the Option-Holder either:
(a) that the Company shall as a condition of the Company's agreement to
such arrangement require that the company which is to become the
holding company of the Micro Focus group of companies ("the New
Company") shall, subject to compliance with any applicable laws or
regulations for the time being in force in the United States of
America or the United Kingdom or any necessary consents or
approvals from any government or other regulatory or advisory body
whether in the United Kingdom or the United States of America or
elsewhere, procure the grant to the Option-Holder of a new option
or options of equivalent value in substitution for these Options,
PROVIDED THAT upon the grant (or substitution) of such new option
(or options) the Option-Holder releases the Grantor from all the
obligations and liabilities arising under or in connection with
these Options with the intent that all these Options shall
thereupon cease to be exercisable, or
(b) that the Options not yet exercised on the date of such Notice shall
accelerate and become exercisable in full prior to the
reconstruction or amalgamation of the Company at such times and on
such occasions as the Board shall determine.
17. Winding Up of the Company
In the event of notice being given to shareholders of a resolution for
the winding-up of the Company
(a) Options vested on the date of such notice may be exercised within
the period of 6 months beginning with the date on which such
resolution is passed and shall cease to be exercisable at the end
of that period, and
(b) Options which are not vested on the date of such notice shall
immediately cease to be exercisable
<PAGE> 32
18. Variation in Share Capital
(a) As permitted by The Stock Exchange in London, in the event of any
change in the number of Shares in issue by way of a stock split,
reverse stock split, stock dividend, combination or
reclassification of Shares, the board of the Grantor will make the
appropriate adjustment to
(i) the number of Options; and/or
(ii) the Exercise Price payable upon the exercise of an Option;
and
(b) written notice of any such adjustment shall be given to the
Option-Holder.
19. Alteration of terms and conditions
As required by the California Commissioner of Corporations, no alteration
or addition shall be made pursuant to Clause 7 of Part A of the schedule
which adversely affects the Option-Holder without his or her written
consent.
20. Withholding Taxes
If any withholding obligation of any company in the Group shall arise with
respect to the Option-Holder as the result of my transaction relating to
the Options or the Option Shares, the option-Holder will pay or make
adequate provision for any such withholding obligation.
21. Minimum vesting schedule
As required by the California Commission of Corporations, the vesting
schedule in the Certificate must be such that the Options will vest at no
later than at a rate of twenty percent (20%) per year for each full year
that the Option-holder remains continuously employed by the Group since
the Date of Grant.
PART C: ADDITIONAL TERMS AND CONDITIONS REOUIREr) BY U.S. TAX RULES IN THE
CASE OF AN INCENTIVE STOCK OPTION
1. Definitions
In this part of the schedule:
(a) Incentive Stock means an incentive stock option within
Option the meaning of section 422A of the Code;
<PAGE> 33
(b) the ISO Group means the Company and any other company
which is a Parent Corporation or
Subsidiary Corporation of the Company;
(c) Parent Corporation means any corporation (other than the
Employer Corporation) in an unbroken
chain of corporations ending with the
Employer Corporation it, at the Date of
Grant, each of the corporations other
than the Employer Corporation owns stock
(or shares) possessing 50% or more of the
total combined voting power of all
classes of stock (or shares) in one of
the other corporations in such chain;
(d) Predecessor means a corporation which was a party to
Corporation a transaction described in section 425(a)
of the Code (or which would be so described if
substitutions or assumption under such section
had been effective) with the Company, or a
corporation which, at the Date of Grant, is a
related corporation of the Company or a
Predecessor Corporation of any of such
corporations;
(e) Subsidiary means any corporation (other than the
corporation Employer Corporation) in an unbroken
chain of corporations beginning with the Employer
Corporation if, at the Date of Grant, each of the
corporations other than the last corporation in
the unbroken chain owns stock (or shares)
possessing 50% or more of the total combined
voting power of all classes of stock (or shares)
in one of the other corporations in such chains.
Words and phrases not otherwise defined have the same meanings as in the
Glossary on the reverse of the Certificate.
For the purpose of ensuring that an Option which is subject to these terms
and conditions will qualify as an Incentive Stock Option, the provisions
of the Certificate and Parts A and B C of this Schedule insofar as they
apply to any such Option shall be read and construed as if all references
to "the ISO Group" were substituted for all reference to "the Group".
2. Currency conversion
(a) If at the date of grant of an Option the Option-holder is in
receipt of "compensation (as defined in section 3231 (e) of the
Code) in US dollars, then
<PAGE> 34
Clause 2(b) will apply to that Option, unless the operation of
Clause 2(c) has made Clause 2(b) inapplicable.
(b) If the conversion rate on the date of exercise of any Option has
changed such that a reduced number of dollars is required to
purchase the number of Pounds Sterling needed to make up the
Exercise Price than would be so required at the Conversion Rate
that existed on the Date of Grant, then the Exercise Price (in
Pounds Sterling) for that Option will be increased by the amount of
such reduction in dollars, converted into Pounds Sterling at the
Conversion Rate on the date of exercise.
(c) Clause 2(b) will not apply if, before the first date on which the
Option-holder exercises an Option granted under the circumstances
in Clause 2(a), the United States Internal Revenue Service has
given a ruling to the effect that the benefit of favourable tax
treatment under section 421 of the Code is available on exercise of
that Option, even if the rate of exchange between Pounds Sterling
and the US Dollar has changed, as described in Clause 2(b), since
the Date of Grant.
3. Variation in share capital
No adjustment or addition shall be made pursuant to Clause 7 of Part A of
the Schedule or pursuant to Clause 7 of Part B of the Schedule which would
give the Option-holder additional benefits under any Incentive Stock
Option as provided in section 425(h) (3) of the Code.
4. Notice of disqualifying disposition
To enable the Group to comply with any obligations, including withholding
tax, which it may have as the result of an early sale or disposition of
the Option Shares, if the Option-holder sells or otherwise disposes of any
of the Option Shares acquired subject to this Part C before the later of:
(a) the date two years after the Date of Grant of the Incentive Stock
Option by which the Option Shares were acquired; and
(b) the date one year after transfer of such Option Shares to the
Option-holder upon exercise of the Incentive Stock Option by which
the Option Shares were acquired;
then the Option-holder will immediately notify the Company in
writing of said disposition.
PART D: TERM NECESSARY TO ENSURE THAT A NON-OUALIFIED STOCK OPTION IS NOT
TREATED AS AN INCENTIVE STOCK OPTION
Options which are granted subject to this Part D of the Schedule are not
intended to be incentive Stock Options within the meaning of Section 422A
of the Code. These Options
<PAGE> 35
may be exercised at any time subject to the terms and conditions of Parts
A and H of the Schedule.
PART E: ADDITIONAL TERMS AND CONDITIONS REOUIRED BY UK TAX RULES IN THE CASE
OF AN OPTION GRANTED UNDER THE MICRO FOCUS GROUP INLAND REVENUE APPROVED
SHARE OPTION SCHEME
1. Definitions
In this Part of the Schedule:
(a) "Close Company" has the same meaning as in Chapter III
of Part XI of the Income and Corporation Taxes Act 1970
SAVE THAT in determining whether a company is a Close
Company for the purposes of the Scheme, sections 282(1)
(a) and 283 of that Act shall be disregarded;
(b) "material has the same meaning as in Chapter III of Part
interest" XI of the Taxes Act SAVE THAT in determining
for the purposes of this Scheme and Schedule whether a
person has or has had a material interest in a company,
section 285(6) and paragraph (ii) of the proviso to
section 303(3) of that Act shall have effect with the
substitution for the references to 10%;
(c) "the Scheme" means the Micro Focus Inland Revenue Approved Share
Option Scheme established by the Company (by
resolution) of the Board dated 23rd April 1987) in
accordance with the Plan.
Words and phrases not otherwise defined in this Part of the Schedule or
Part A or B of the Schedule have the same meaning as in section 38 and
Schedule 10 of the Finance Act 1984.
Words denoting the masculine gender shall include the feminine.
2. Applicability of this Part
An Option which is subject to this Part of the Schedule is granted in
accordance with the Micro Focus Group Inland Revenue Approved Share Option
Scheme established by resolution of the Board on 23rd April 1987 (the
"Approved Scheme"). The board of Directors of the Grantor will have the
right to make amendments or modifications to the Approved Scheme and/or
any of the terms and conditions of the Certificate and all Parts of its
Schedule to which Approved Options are subject in order to ensure that
Inland Revenue approval is obtained.
<PAGE> 36
3. Interest in Close Company
An Option which is subject to this Part of the Schedule may not be
exercised at any time when the Option-holder has, or has within the
preceding twelve months, had a material interest in a Close Company being
either the Company or a company which has control of the Company or is a
member of a consortium which owns such a company.
4. Alterations or Additions
After the Board of Inland Revenue has approved the Scheme pursuant to
Schedule 10 of the Finance Act 1984, no alteration or addition shall be
made to any term or condition of any Option granted in accordance with the
Scheme without the prior approval of the Board of Inland Revenue.
PART F: ADDITIONAL TERMS AND CONDITIONS OF UK UNAPPROVED SHARE OPTIONS
Options subject to this Part of the Schedule are not granted in accordance
with the Micro Focus Group Inland Revenue Approved Share Option Scheme and
are not intended to qualify for favourable UK tax treatment under the
Finance Act 1984.
<PAGE> 1
EXHIBIT 4.04
1996 MICRO FOCUS SHARE OPTION PLAN ("THE PLAN")
1. Definitions
In this Plan:
(a) "Board" means the board of directors of the Company;
(b) "Code" means the United States Internal Revenue Code of 1986 (as
amended);
(c) "The Company" means Micro Focus Group Public Limited Company
incorporated in England with number 1709998;
(d) "Date of Grant" means in relation to any Option, the date on which
such option is granted in accordance with Rule 9;
(e) "Eligible Person" means a person to whom an Option may be granted
as defined in Rule 2 below;
(f) "Group" means the Company and every other company of which the
Company has direct or indirect control;
(g) "Incentive Stock Option" means an Option which qualifies as an
incentive stock option within the meaning of Section 422 of the
Code;
(h) "ISO Group" means the Company and any other Company which is a
Parent Corporation or Subsidiary Corporation of the Company;
(i) "Option" means a right granted by the Company in accordance with
these Plans to subscribe for Shares;
(j) "Parent Corporation" means any corporation (other than the Employer
Corporation) in an unbroken chain of corporations ending with the
Employer Corporation if, at the Date of Grant, each of the
corporations other than the Employer Corporation owns stock (or
shares) possessing 50% or more of the total combined voting power of
all classes of stock (or shares) in one of the other corporations in
such chain;
(k) "Shares" means fully paid ordinary shares in the capital of the
Company;
(l) "Subsidiary Corporation" means any corporation (other than the
Employer Corporation) in an unbroken chain of corporations beginning
with the Employer Corporation if, at the Date of Grant, each of the
corporations other than the last corporation in the unbroken chain
owns stock (or shares) possessing 50% or more of the total combined
voting power of all classes of stock (or shares) in one of the other
corporations in such chain;
(m) "10% Shareholder" means a person who owns shares representing more
than 10% of the total combined voting power of all classes of shares
in any company which is a member of the ISO Group at the date of
grant of an Option;
(n) "fair market value" means the average of the middle market
quotations of a share as derived from the Daily Official List of The
London Stock Exchange on the three business days immediately
preceding the day on which the option is granted for UK eligible
persons and as ascertained in accordance with the provisions of the
laws and regulations of the relevant jurisdiction and taxation
authority for other eligible persons.
<PAGE> 2
2. Persons to whom Options may be granted
(a) Options may only be granted to persons who devote substantially the
whole of their working time to the business of the Group ("Eligible
Persons");
(b) Subject to Rule 6 below Options may be granted to such Eligible
Persons as the Board from time to time and in its absolute
discretion may determine.
3. Non-transferability of Options
Options shall be personal to the person to whom they are granted and shall lapse
forthwith if they are transferred (otherwise than to personal representatives
upon death) assigned, mortgaged, charged or otherwise alienated or if that
person is adjudicated bankrupt or does or suffers any other act or thing whereby
he or she would or might be deprived of the legal or beneficial ownership of the
Options.
4. Number of Shares available to be put under option
Subject to Rule 13 below (relating to variation in share capital) the total
number of Shares in respect of which Options may be granted in the period of
three years commencing June 19 1996 in accordance with this Plan may not exceed
757,369 Shares (representing 5% of the issued share capital of the Company on
May 3 1996) exclusive of options which have lapsed or ceased to be exercisable
under this Plan, any former plan or any other share option plan established by
the Company, of which not more than 3%, exclusive as aforesaid, may be put under
Option in any period of 12 months starting June 19 1996. Options which lapse or
cease to be exercisable under this Plan or any other share option plan
established by the Company may be regranted.
5. Maximum number of Shares in respect of which Options may be granted to
any person
Subject to Rule 13 below the maximum number of Shares in respect of which
Options may be granted to any person in accordance with this Plan in the period
of this authority shall be 75,736 Shares (being 10% of the total number of
shares in respect of which Options may be granted pursuant to this Plan). Save
that any person who commences employment for the first time (whether before or
after the adoption of this Plan) with the Company or a subsidiary shall be
eligible to be granted Options in respect of up to 362,500 Shares in the period
of 12 months after the commencement of his employment.
6. Further restrictions on the grant of Incentive Stock Options
(a) Incentive Stock Options may only be granted to employees (as that
term is used in Section 422 of the Code) of any company which is a
member of the ISO Group at the date of grant of an Option;
(b) The aggregate fair market value (determined as at the time of
grant) of Shares in respect of which Incentive Stock Options are
exercisable for the first time by an employee during any calendar
year pursuant to this Plan (and under any other plan permitting
the granting of Incentive Stock Options which might hereafter be
established by any company in the ISO Group) may not exceed
US$100,000. If the
2
<PAGE> 3
fair market value of shares on the date of grant in respect of which
Incentive Stock Options are exercisable for the first time by an
employee during any calendar year exceeds US$100,000, then the
Options for the first US$100,000 worth of shares to become
exercisable in such calendar year will be Incentive Stock Option and
the Options for the amount in excess of US$100,000 that become
exercisable in that calendar year will not be Incentive Stock
Options.
7. Payment for grant of Options
The amount, if any, payable in consideration of the grant of any Options shall
be as the Board may decide but in any event shall not be more than GBP 1, which
shall not be returnable.
8. Subscription Price
The subscription price payable for any Share to be subscribed upon the exercise
of any Option shall be not less than the fair market value of a Share at the
time the Option is granted save that:
(a) In the case of an Option granted to a 10% Shareholder the
subscription price shall, be not less than 110% of the fair market
value of a Share at the time the Option is granted; and
(b) in any event the subscription price shall be not less than the
nominal value of a Share.
9. Times at which Options may be granted
Options may only be granted:
(a) within the period of 30 days immediately following June 19 1996;
or
(b) within the period of 42 days immediately following (1) the date
on which the Company announces its interim or preliminary annual
trading results for any period to the press and The London Stock
Exchange or, if later, (2) the date of a permit granted by the
California Commissioner of Corporations covering the granting of
Options (provided in respect of directors of the Company that
such date does not fall during the period of two months prior to
the announcement of interim or preliminary annual trading results
or, if shorter, the period from the relevant financial period end
up to and including the time of the announcement; or
(c) to any person who commences employment with the Group for the first
time, within the period of 45 days immediately thereafter (provided
that in respect of directors of the Company such date does not fall
during the period of two months prior to the announcement of interim
or preliminary annual trading results or, if shorter, the period
from the relevant financial period end up to and including the time
of the announcement);
(d) notwithstanding the provisions of Rules 9 (a) (b) and (c) above the
Directors may grant Options outside the periods specified in these
Rules in circumstances which the
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<PAGE> 4
Directors in their absolute discretion deem sufficiently exceptional
to justify the grant of Options at that time.
10. Performance Targets
10.1 The exercise of any Option may by its terms be conditional upon the
attainment of an objective Performance Target. The terms of each
Performance Target shall themselves be determined by the Executive
Remuneration Committee of the Board in their discretion and shall be
specified to the relevant Eligible Person at the same time as the Date of
Grant to such Eligible Person.
10.2 Where an issue or reorganisation by the Company or any of its Subsidiary
Corporations, including, without limitation, any issue of shares or
securities or any reduction of capital or sub-division or consolidation of
shares) or any other event or circumstance (including a change in
accounting policies or practice or a change in the length of the Company's
accounting period) causes the Executive Remuneration Committee reasonably
to consider that a different performance target (including in the case of
Rules 11(b) and 14 an appropriate reduction in the period for achieving
such a target) would be a more appropriate measure of performance and that
the different target will be a fairer measure of such performance or that
any amended performance target will provide a more effective incentive to
the holders of Options, the Executive Remuneration Committee after due
consultation with the auditors of the Company may determine that a new
Performance Target shall be substituted for the existing Performance
Target applicable to such Option or Options.
10.3 Where the Executive Remuneration Committee has imposed a Performance
Target under Rule 10.1 upon the grant of an Option, that Option may not be
exercised except in accordance with any such Performance Target, as from
time to time varied in accordance with Rule 10.2.
11. Option Period
(a) No Option shall be capable of being exercised later than 10 years after
the Date of Grant or in the case of a 10% Shareholder 5 years after the
Date of Grant.
(b) Exercise of an Option shall always be subject to the following
additional provisions: (i) if the option holder's employment is
terminated for any reason except the option holder's death or
disability (whether such disability is temporary or permanent, partial
or total, within the meaning of Section 22(e)(3) of the Code, as
determined by the Board), then the option holder may exercise such
option holder's Options only to the extent that such Options would have
been exercisable upon the effective date of such termination no later
than three months after the effective date of such termination (or such
shorter time period as may be specified in the Option), but in any
event, no later than the expiration date of the Options; and (ii) if
the option holder's employment is terminated because of death or
disability (or the option holder dies within three months of such
termination) then the option holder's Options may be exercised only to
the extent that such Options would have been exercisable by the option
holder on the effective date of such termination and must be exercised
by the option holder (or the option holder's legal representative or
authorised assignee) no later than 12 months
4
<PAGE> 5
after the effective date of such termination (or such shorter time period
as may be specified in the Option), but in any event no later than the
expiration date of the Options.
(c) Options shall become exercisable at such times and in such increments as
shall be determined by the Board. Nevertheless, Options granted to an
option holder who is not a director or officer of any Company in the Group
shall become exercisable at a rate of at least as fast as 20% per year
over a period of 5 years.
12. Stock Exchange Listing
All Shares allotted upon the exercise of any Option shall rank pari passu in all
respects with the Shares then in issue and the Company shall apply to the
Council of The London Stock Exchange for Shares allotted pursuant to any Option
to be admitted to the Official List. For those Options which are subject to the
California Corporate Securities Law of 1968 without exemption, the Company shall
provide to each person who shall hold one or more of such Options, a copy of the
annual report of the Company as soon as reasonably practicable after it is
released by the Company.
13. Variation in share capital
(a) As provided for in the rules of The London Stock Exchange, in the
event of any increase in the number of Shares issued by way of
capitalisation or rights issue, or any sub-division, consolidation
or reduction effected without receipt of consideration, the Board
will make the appropriate adjustment to:-
(i) the restrictions imposed by Rules 4 and 5 above; and/or
(ii) the number of Shares which are subject to any Option;
and/or
(iii) the subscription price payable for each Shares under any
Option;
provided that the subscription price for any Share shall not be less
than the nominal value of such Share and no adjustment shall cause
an Option to be capable of being exercised later than as mentioned
in Rule 11 above.
(b) As required by the rules of The London Stock Exchange, except in the
case of a capitalisation issue no such adjustment shall be made
without the prior written confirmation of the auditors of the
Company for the time being that it is in their opinion fair and
reasonable.
(c) Written notice of any adjustment shall be given to any person
granted an Option who is affected thereby.
14. Winding-up of the Company and change of control
(a) Notwithstanding Rule 11 above it shall be a term and condition of any
Option that in the event of notice being given to shareholders of a
resolution for the winding-up of the Company the Option shall be capable
of exercise within the period of six months commencing on the date on
which the resolution is passed and thereafter the Option shall lapse.
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<PAGE> 6
(b) If the Company is succeeded by a successor corporation, or if any
person ("the Offeror") obtains control of the Company then the
successor corporation or Offeror may assume, convert or replace any or
all outstanding Options, which action will be binding on all option
holders. In the alternative, the successor corporation or Offeror may
substitute equivalent options or provide substantially similar
consideration to option holders as was provided to shareholders (after
taking into account the existing provisions of the Options). If such
successor corporation or Offeror refuses to assume or substitute
Options, such Options shall accelerate and become exercisable in full
on such conditions as the Board shall determine prior to such
succession or change of control. Any Options not so replaced or
exercised shall lapse and cease to be exercisable.
15. Alteration of the Plan
(a) Subject to Rule 15(b) below the Board may at any time alter or
add to all or any of the provisions of the Plan in any respect;
(b) Subject to Rule 15(c) below no alterations or addition shall be made
to the advantage of Eligible Persons or to the provisions of Rules
2(a), 3, 4, 5, 7, 8, 9, 11, 12, 13, 14, 17 and this Rule 15 without
the prior approval of shareholders of the Company in general
meeting;
(c) Rule 15(b) above shall not apply to the extent that any
alteration or addition is necessary or desirable in order to
comply with the laws and regulations for the time being in force
in the United Kingdom or the United States of America, to ensure
and maintain treatment as Incentive Stock Options of those
Options intended to be treated as such or to obtain or maintain
approval of the Plan from any Government or other regulatory or
advisory body whether in the United Kingdom or the United States
of America or elsewhere provided that any such alteration or
addition shall not affect the basic principles of the Plan.
16. Financial Statements
The Company shall provide financial statements to each option holder prior to
such option holder's purchase of Shares under the Plan, and to each option
holder annually during the period such option holder has Options outstanding;
provided however, the Company shall not be required to provide such financial
statements to option holders whose services in connection with the Company
assure them access to equivalent information.
17. Duration of the Plan
The authority to grant Options under the Plan will expire on June 18 1999.
6
<PAGE> 7
MICRO FOCUS 1996 SHARE OPTION PLAN
CERTIFICATE OF SHARE OPTIONS GRANT
Date of Grant: _____________199_
THIS IS TO CERTIFY THAT on the Date of Grant shown above [Firstname] [Lastname]
WAS GRANTED [AMOUNT] OPTIONS, each such option being a right granted by Micro
Focus Group PLC reg. No. 1709998 ("the Company") to subscribe for a fully-paid
Ordinary share of 10p in the capital of the Company at a price of pounds
Sterling _______ per share.
The terms used in this Certificate and the attached Schedule are defined in the
Glossary on the back of this Certificate.
All options granted by the company are granted pursuant to and are subject to
all the terms and conditions set out in the Micro Focus Share Option Plan which
was approved and adopted by the shareholders of the Company on 19th June 1996.
All Options are granted subject to the terms and conditions set out in this
Certificate and are subject to: o terms and conditions set by the Company (as
set out in Part A of the Schedule); and
o terms and conditions required by U.K. and U.S. corporate laws and
regulations (as set out in Part B of the Schedule); and
o in respect of ______ OPTIONS, the additional terms and conditions required
by U.S tax rules (as set out in part C of the Schedule) in order that such
Options will not be treated as Approved Options under the Micro Focus
Group Inland Revenue Approved Share Option Scheme; and
o in respect of ______OPTIONS, the additional terms and conditions
required by U.K. tax rules (as set out in Part E of the Schedule) in
order that such Options are granted as Approved Options under the
Micro Focus Group Inland Revenue Approved Share Option Scheme
established by resolution of the board on 20th April 1996, and the
additional terms and conditions required by U.S. tax rules (as set
out in part C of the Schedule) in order that such Options will
qualify as Incentive Stock Options; and
o in respect of ______ OPTIONS, the additional terms and conditions required
by U.K. tax rules (as set out in Part E of the Schedule) in order that
such Options are granted as Approved Options under the Micro Focus Group
Inland Revenue Share Option Scheme established by resolution of the Board
on 20th April 1996, and the additional terms and conditions (as set out in
Part D of the Schedule) in order that such Options will be treated as
Non-Qualified Stock Options; and
7
<PAGE> 8
o in respect of ______ OPTIONS, the additional terms and conditions (as set
out in Part D of the Schedule) necessary to ensure that such Options will
be treated as Non-Qualified Stock Options, and the additional terms and
conditions (as set out in Part F of the Schedule) to ensure that such
Options will not be treated as Approved Options under the Micro Focus
Group Inland Revenue Approved Share Option Scheme.
Subject to the terms and conditions set out in the Schedule, the Options will be
exercisable in accordance with the following vesting Schedule:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
On or after Vesting Date: But Before Lapse Date: Number of options:
- ------------------------- ---------------------- ------------------
<S> <C> <C>
( _________ 19__ ) ( _________ 20__ ) 20% of the Options
( _________ 19__ ) ( _________ 20__ ) 20% of the Options
( _________ 20__ ) ( _________ 20__ ) 20% of the Options
( _________ 20__ ) ( _________ 20__ ) 20% of the Options
( _________ 20__ ) ( _________ 20__ ) 20% of the Options
- -------------------------------------------------------------------------------
</TABLE>
These Options shall cease to be exercisable, as set out in Clause 3 of Part A of
the Schedule, if the Option-holder ceases to hold employment within the Group or
ceases to be party to a Consultancy agreement, unless by reason of disability or
death.
In consideration of these Options and as a condition of acceptance of these
Options by the Option Holder, the Option Holder hereby agrees with the Company
to accept, and undertake to be bound by, the terms and conditions referred to
above and as set out in the Schedule.
Signed:
----------------------------
Option-Holder
Signed for and behalf of Micro Focus Group PLC by
-------------------------------------------
Director
8
<PAGE> 9
GLOSSARY
In the Certificate and the attached Schedule:
<TABLE>
<S> <C>
"Account Day" means the day on which dealings on the London Stock
Exchange are presented for settlement;
"the board" means the board of directors of the Company or a duly
authorised committee of the board of directors;
"Business Day" means any day between and including Monday through
Friday in any week, excluding any day which is a public
holiday in either England or California or is not a
dealing day of the Stock Exchange in London;
"the Certificate" means the certificate evidencing the grant of these
options to the Option-holder;
"the Code" means The United States Internal Revenue Code of 1986
(as amended)
"a Consultancy
Agreement" means an agreement under which the Option-holder is
obliged to provide services directly or indirectly to
any company within the Group;
"the Conversion Rate" means the average currency conversion rate quoted by
the Bank of America in London as the price for Pounds
Sterling purchased with U.S. Dollars;
"the Company" means Micro Focus Group Public Limited Company
(incorporated in England with reg. no. 1709998);
"the Date of Grant" means the date upon which these Options are granted
as recorded on the Certificate;
"the Employer
Corporation" means the company in which the Option- holder holds the
office or employment by virtue of which he or she has
been granted these Options;
"Exercise Price" means the Pounds Sterling price payable on the
exercise of an Option as recorded on the face of the
Certificate together with any additional amount as
set out in Clause 2 of Part C of the Schedule which
might be required by the U.S. Internal Revenue
Service in order to preserve the status of Options as
Incentive Stock Options as defined in Clause 1(a) of
Part C of the Schedule;
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C>
"the Grantor" means in respect of any Option, the company
identified in the Certificate as having granted that
Option (i.e., the Company or Nominees);
"the Group" means the Company and every other company by which the
Company has direct or indirect control;
"Market Price" means, at any time, the price per share at which
shares could then be sold on the Stock Exchange in
London as advised to the Options Administrator by the
Company's stockbroker
"a Non-Qualified
Stock Option" means an Option which is not intended to be an
Incentive Stock Option (as defined in Clause 1(a) of
Part C of the Schedule).
"Option" means option hereby granted to acquire a Share;
"Options" means options hereby granted to acquire one Share each;
"the Options
Administrator" means the person appointed by the Grantor as the Options
Administrator for the time being;
"Option-holder" means person to whom Options are granted (including
upon the death of such person and where the context
so requires, his or her personal representatives);
"Option Shares" means Shares acquired, or to be acquired, by the
Option-holder upon the exercise of Options including,
in the event of any reconstruction, amalgamation or
reorganisation of share capital in the Company,
shares representing such Shares and any additional
shares acquired by the Option-holder in consequence
of his or her holding of such Shares (other than
shares for which the Option- holder has given new
consideration);
"the Plans" means the Micro Focus Share Option Plan (as set out in
Appendix 1, to the Chairman's letter to shareholders
dated 14 February 1997 as amended from time to time)
"the schedule" means the Schedule to the Certificate;
"Share" means a fully-paid Ordinary share of 10p in the
capital of the Company
"vested" means capable of being exercised in accordance with
the vesting schedule on the face of the Certificate.
</TABLE>
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<PAGE> 11
1996 MICRO FOCUS SHARE OPTION PLAN
SCHEDULE
Part A: TERMS AND CONDITIONS SET BY THE GRANTOR
1. Vesting and Lapse of Options
(a)After being granted, an Option becomes vested upon being held by the
Option-Holder until the Vesting Date for that Option set out in the
Certificate.
(b)An Option lapses and is no longer exercisable after the Lapse Date for
that Option set out in the Certificate or the date on which the relevant
Performance Criteria shall have failed to be met, if earlier.
2. Manner of exercise of Option
(a)Options may be exercised on any occasion after becoming vested and
before they have lapsed by:
(i)the receipt of a notice by the Grantor given by the Option-Holder in
the manner prescribed in clause 9 of this Part which identifies the
Options that are to be exercised; and
(ii)the receipt by the Grantor of the aggregate Exercise Price and
applicable stamp duty in each case in Pounds Sterling in respect of
such Options.
(b)Upon receipt of a notice of exercise served in accordance with Clause
2(a) above and a remittance for the appropriate Exercise Price the Board
of the Grantor shall deliver to the Option-Holder, as appropriate, a
duly executed Stock Transfer Form for the number of Shares in respect of
which such Options are duly exercised, together with a Share Certificate
in respect thereof in the name of the Grantor;
(c)If all Options represented by the Certificate are not exercised the
Board may, at its discretion, endorse the Certificate so as to specify
the number of Options which remain to be exercised and require the
Option-Holder to deliver the Option Certificate to the Grantor for such
purpose.
(d)Shares transferred pursuant to exercise of Options shall be sold by the
Grantor free of all liens, charges or encumbrances and with all rights
attaching thereto at the date of receipt of a notice of exercise served
in accordance with Clause 2(a) above.
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<PAGE> 12
3. Cessation of employment and change of control
(a)General Rule: Subject to provisions (b) and (c) of this clause, if the
Option-Holder ceases to hold employment within the Group for any reason
then all Options that have vested prior to the date of notice of
termination by either party of the employment relationship will be
exercisable by the Option-Holder until the date the Option-Holder ceases
to hold employment and will thereafter lapse. All Options that have not
become vested prior to the date of such notice will become null and void
as of the date of such notice.
(b)Disability: If the Option-Holder ceases to hold employment within the
Group by reason of a certified physical or mental disability which makes
it impossible to continue gainful employment for the rest of his or her
natural life then all Options which have vested and not lapsed prior to
the cessation date may be exercised within the period of one year
beginning with the date that the Option-Holder ceased to hold employment
within the Group.
(c)Death: If the Option-Holder ceases to hold employment within the Group
by reason of the Option-Holder's death, then all Option which may have
vested and not lapsed prior to the cessation date may be exercised by
the personal representatives of the Option-Holder within the period of
one year beginning with the date of death.
Change of Control
(d)if any person obtains control of the Company as a result of making a
general offer to acquire the whole of the issued ordinary share capital
of the Company, an Option-Holder shall be entitled to exercise any
Options then held by him within 6 months of the change of control
following which any Options not so exercised shall lapse and cease to be
exercisable.
4. Non-transferability of Options
Options are personal to the Option-Holder save as set out in Clauses 3(b)
and 3(c) above, and may not be exercised by any other person. An Option
shall lapse forthwith if it is purportedly assigned, mortgaged, charged or
otherwise alienated or if the Option-Holder is adjudicated bankrupt or does
or suffers any other act or thing whereby the Option-Holder would or might
be deprived of the beneficial ownership of such Option.
5. Independence of Options
The statutory, contractual or other rights and obligations of the
Option-Holder under the terms of any office, employment, contract or any
other relationship with the Company or any other Company in the Group apart
from the Options, shall not be affected by the grant or existence of these
Options or any other right that the Option-Holder might otherwise have to
exercise the Options and these Options shall not afford the Option-Holder
any additional
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<PAGE> 13
rights to continuation of, or to compensation or damages in consequence of
the termination of, any office, employment or other relationship for any
reason whatsoever.
6. Sale or transfer of Option Shares
To avoid inadvertent breach of the United States securities laws, and to
promote the acquisition of shares by employees of companies within the
Group, if the Option-Holder intends, at any time, to sell, assign or
transfer any or all of the Option Shares, the Grantor will have the right
of first refusal to purchase or arrange the purchase, sale, assignment or
transfer of those Option Shares. The procedures to be adopted for the time
being in the case of the Option-Holder wishing to sell Option Shares are as
in Clauses 6(a) to 6(e) below:
(a)The Option-Holder will give notice ("the Initial Sale Notice") to the
Options Administrator stating the Option-Holder's intent to sell, assign
or transfer the exercised Option Shares. The Initial Sale Notice must be
made in writing be given by one of the methods in clause 9 below and
state:
(i) the number of shares to be sold, and
(ii)the identification of the Option representing the Shares to be
sold by quoting the grant date;
the Options Administrator may then exercise a right of first refusal by
proceeding as in Clauses 6(b), (c) or (d) below. If the Options
Administrator for any reason declines to exercise this right of first
refusal, then Clause 6(e) below will apply instead.
(b)If the Grantor exercises its right of first refusal then the Options
Administrator will make all reasonable efforts to obtain a Market Price
quotation from the Company's stockbroker at The London Stock Exchange
for the specified number of Shares by the next dealing day of The London
Stock Exchange and to inform the Option-Holder of the quoted price as
soon as practicable, in any event, within 48 hours.
(c)After receiving the quotation referred to in Clause 6(b) above, if the
Option-Holder decides to sell the Option Shares, the Option-Holder must
give a notice ("the Sale Confirmation Notice") to the Options
Administrator. The Sales Confirmation Notice must be made in writing by
one of the methods in Clause 9 below.
The Sale Confirmation Notice must restate the quotation price and may
also state a lesser, minimum price below which the Option-Holder wishes
to withdraw from the sale in the event that the minimum price or greater
is not achievable.
For the Sale Confirmation Notice to be valid and accepted and for the
sale to take place, the Grantor must be in possession of the following;
(i)the share certificate(s) for the Option Shares or equivalent in
non material form, and
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<PAGE> 14
(ii)a blank form of Stock Transfer, acceptable to The London Stock
Exchange, relating to such Option Shares and signed by the
Option-Holder.
(d)Provided that a valid Sale Confirmation Notice is given by the
Option-Holder to the Grantor, then the Grantor will proceed as soon as
practicable, either:
(i)to instruct the Company's stockbroker to sell through The London
Stock Exchange the specified shares on behalf of the Option-Holder in
such a way as will avoid contravention of U.S. federal and state
security laws as soon as practicable and retain a commission of 1/2%
of the gross proceeds for the Grantor's own account; or
(ii)to purchase or arrange the purchase of the entire specified number
of Option Shares at the Market Price quotation and will use its best
efforts to do so in such a way as will avoid contravention of the
U.S. federal and state securities laws as soon as is practicable and
retain a commission for the Grantor's own account equivalent to the
commission that would have been charged by the Company's stockbroker
on that occasion.
If any of the actions required of the Option-Holder described in Clauses
6(a), (c) and (d) above are not completed, the Grantor may be unable to
complete the sale and in that event, should the Option-Holder wish to
proceed with a sale, he or she must repeat the procedures in Clauses
6(a) to 6(d).
The Grantor will pay the net proceeds of sale to the Option-Holder as
soon as is practicable, given the nature of the transactions involved.
The Company's stockbroker and the Grantor will use all reasonable
efforts to achieve the purposes of these arrangements and will each
attempt to achieve the Market Price quoted but cannot guarantee it as
the Stock Exchange Market Price may shift between the quotation and the
sale.
(e)If the Option-Holder gives the Initial Sale Notice and the Options
Administrator does not exercise its right of first refusal and either
states this in writing to the Option-Holder or fails to obtain from the
Company's stockbroker the Market Price quotation referred to in Clause
6(d) above by the end of the Business Day following that in which the
Options Administrator received the Initial Sale Notice, then for the
next five Business Days, the Option-Holder shall be at liberty subject
to compliance with all applicable requirements of U.S. federal and state
securities laws, The London Stock Exchange, and any other government or
other regulatory or advisory body whether in the United Kingdom or
United States of America, to sell, assign or transfer such Option Shares
to any person on any terms, provided that the Option-Holder gives the
Options Administrator notice in writing of that sale, assignment or
transfer in accordance with Clause 9 within such five Business Days.
If the Shareholder does sell, assign or transfer the Option Shares and
notify the Options Administrator of that sale, assignment or transfer in
accordance with Clause 9 below
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<PAGE> 15
within such five Business Days, then when next the Option-Holder wishes
to sell, assign or transfer any Option Shares he or she must repeat the
procedures set forth in Clause 6(a) to 6(d) above so that the Grantor
may again utilise its right of first refusal.
(f)The Grantor may expand or change these procedures to accommodate The
London Stock Exchange's or the Company's Stockbroker's trading practice
or to ensure practicability of the administration procedures or to
ensure an effective service for the sale, assignment or transfer of the
Option Shares on behalf of the Option-Holder and in the case of
assignment or transfer may add new procedures. Any such change will be
notified to the Option-Holder.
7. Alteration of these Terms and Conditions
(a)Subject to clause (b) below, the Grantor may at any time alter or add
to the terms and conditions of these Options in any respect.
(b) After the Board of Inland Revenue has approved this Scheme, no
alteration or addition shall be made which would affect its approval
without the prior approval of the Board of Inland Revenue and no
alteration or addition shall be made to the advantage of participants
without the prior approval of the Company in general meeting save to the
extent that any alteration or addition is necessary or desirable in
order to comply with applicable laws and regulations for the time being
in force in England, the USA or elsewhere, or to obtain or maintain
approval of this Scheme from the Board of Inland Revenue.
8. Right of First Refusal
The Grantor may assign the right of first person or persons and in that
event
(i) the Grantor shall give notice in writing to the Option-Holder, and
(ii) the provisions of Clause 6 shall be read and construed as if all
references to "the Grantor" or "the Options Administrator" were
references to the assignee.
9. Service of Notices
For the purposes of the notices to be given to the recipient under Clauses
2(a), 6(a), 6(c) and 6(e) only, a notice must be sent, received and
acknowledged as follows-
(a) the notice must be given to the recipient using one or more of the
following methods
(i) by personal delivery in writing to the recipient, or in the case
of Options Administrator, his or her designee; or
(ii)by electronic mail to the recipient's identification code
"OPTIONS" using the Group's electronic mail system; or
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(iii)by facsimile to the recipient's FAX machine, which must be
compatible with those used by the Grantor.
(b) The notice must be received by the recipient using any of the above
methods, in order to be considered given
(c) The recipient must make his or her best efforts to act upon the notice
as soon as reasonably practicable after actual receipt of the notice.
10. Applicable law
The rights and obligations of the Option-Holder and the Grantor under the
terms and conditions set out in this Certificate, the Schedule and the
Appendix are subject to all applicable requirements of U.S. federal and
state laws and with all applicable requirements of The London Stock
Exchange and any government or other regulatory or advisory body whether in
the United Kingdom or the United States of America. Save as aforesaid this
certificate, the schedule and the appendix shall be governed by and
construed in accordance with the laws of England
11. Force Majeure
Notwithstanding any other provision of the Certificate this Schedule or of
the Appendix, no default, delay or failure to perform on the part of any
party shall be considered a breach of any term or condition of this
Certificate or the Schedule if such default, delay or failure to perform is
shown to be due to causes beyond the reasonable control of the party
charged therewith, including, but not limited to, causes such as strikes,
lockouts or other labour disputes, riots, civil disturbances, actions or
inactions of governmental authorities or suppliers, epidemics, war,
embargoes or other acts of the public enemy, nuclear disasters, default of
a common carrier or failure of a communication system
12. Disclaimer
Neither the Company nor, the Grantor, their officers, directors, employees
or agents warrants any benefit or value from the holding or sale of any
option or the acquisition, holding or sale of any share, nor guarantees any
such benefits or value that might be perceived by the option-Holder or by
any other person, nor guarantees the effect of any act contemplated herein.
PART B : REGULATORY REQUIREMENTS
13. Shareholders' circulars
The option-Holder shall be sent copies of all documents (including the
annual directors' report and accounts), other than proxy or voting forms,
sent to the holders of Shares
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14. Stock Exchange listing
As required by The London Stock Exchange to be drawn to the attention of
the Option-holder all Shares allotted upon the exercise of Options shall
rank equally in all respects with the Shares then in issue and the Company
shall apply to the Council of The London Stock Exchange for such Shares to
be admitted to the Official List of The London Stock Exchange.
Restrictions imposed upon the exercise of options and the disposal of
shares
(a)Options may not in any event be exercised unless such exercise is in
compliance with the U.S. Securities Act of 1933 (as amended), if
applicable, and all applicable, U.S state securities laws, as they are
in effect at that time;
(b)In exercising Options the Option-holder shall have regard to the
provisions of the Model Code for Securities Transactions by Directors of
Listed Companies issued by The London Stock Exchange, a copy of which
may be obtained from the Options Administrator;
(c)Unless sold outside of the United States of America in a manner which
removes the sale from the purview of the U.S. federal securities laws,
all Shares acquired upon the exercise of Options must be held
indefinitely unless they are registered under the Securities Act of 1933
or an exemption from registration is available;
(d)The transfer of any Shares acquired upon the exercise of Options may be
restricted or affected by various state securities laws in the United
States of America.
(e)In disposing of any Shares acquired pursuant to the exercise of
Options, the Option-Holder shall have regard to the provisions of the
U.K. Company Securities (Insider Dealing) Act 1985, a copy of which may
be obtained from the Options Administrator, and the Model Code referred
to in clause 14(b) above.
15. Restrictions imposed upon the exercise of options and the disposal of
shares
(a)Options may not in any event be exercised unless such exercise is
in compliance with the U.S. Securities Act of 1933 (as amended), if
applicable, and all applicable U.S. state securities laws, as they
are in effect at that time;
(b)in exercising Options the option-Holder shall have regard to the
provisions of the Model Code for Securities Transactions by Directors of
Listed Companies issued by The London Stock Exchange, a copy of which
may be obtained from the Options Administrator;
(c)unless sold outside the United States of America in a manner which
removes the sale from the purview of the U.S. federal securities laws,
all Shares acquired upon the
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exercise of Options must be held indefinitely unless they are registered
under the Securities Act of 1933 or an exemption from registration is
available
(d)the transfer of any Shares acquired upon the exercise of Options may be
restricted or affected by various state securities laws in the United
States of America
(e)in disposing of any Shares acquired pursuant to the exercise of
Options, the Option-Holder shall (inter alia) have regard to the
provisions relating to Insider Dealing set out in the U.K. Criminal
Justice Act 1993, a copy of which may be obtained from the Options
Administrator, and the Model Code referred to in Clause 15(b) above
16. Reconstruction or amalgamation
If an arrangement between the Company and any person holding shares in the
Company is proposed for the purpose of or in connection with a scheme for
the reconstruction of the Company or the amalgamation of the Company and
any one or more other companies (whether or not involving the subsequent
winding-up of the Company) and under the arrangement the Company will cease
to be the holding company of the Micro Focus group of companies then the
Board shall give notice in writing to the Option-Holder either:
(a)that the Company shall as a condition of the Company's agreement to
such arrangement require that the company which is to become the holding
company of the Micro Focus group of companies ("the New Company") shall,
subject to compliance with any applicable laws or regulations for the
time being in force in the United States of America or the United
Kingdom or any necessary consents or approvals from any government or
other regulatory or advisory body whether in the United Kingdom or the
United States of America or elsewhere, procure the grant to the
Option-Holder of a new option or options of equivalent value in
substitution for these Options, PROVIDED THAT upon the grant (or
substitution) of such new option (or options) the Option-Holder releases
the Grantor from all the obligations and liabilities arising under or in
connection with these Options with the intent that all these Options
shall thereupon cease to be exercisable, or
(b)that the Options not yet exercised on the date of such Notice shall
accelerate and become exercisable in full prior to the reconstruction or
amalgamation of the Company .
17. Winding up of the Company
In the event of notice being given to shareholders of a resolution for the
voluntary winding up of the Company Options may be exercised within the
period of 6months beginning with the date on which such resolution is
passed and shall cease to be exercisable at the end of that period.
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18. Variation in Share Capital
(a)As permitted by The London Stock Exchange, in the event of any change
in the number of Shares in issue by way of a stock split, reverse stock
split, stock dividend, combination or reclassification of Shares, the
board of the Grantor will make the appropriate adjustment to
(i) the number of Options; and/or
(ii)the Exercise Price payable upon the exercise of an Option; and
(b)written notice of any such adjustment shall be given to the
Option-Holder.
19. Alteration of terms and conditions
As required by the California Commissioner of Corporations, no alteration
or addition shall be made pursuant to Clause 7 of Part A of the schedule
which adversely affects the Option-Holder without his or her written
consent.
20. Withholding Taxes
If any withholding obligation of any company in the Group shall arise with
respect to the Option-Holder as the result of my transaction relating to
the Options or the Option Shares, the option-Holder will pay or make
adequate provision for any such withholding obligation.
21. Minimum vesting schedule
As required by the California Commission of Corporations, the vesting
schedule in the Certificate must be such that the Options will vest at no
later than at a rate of twenty percent (20%) per year for each full year
that the Option-holder remains continuously employed by the Group since the
Date of Grant.
PART C: ADDITIONAL TERMS AND CONDITIONS REQUIRED) BY U.S. TAX RULES IN THE
CASE OF AN INCENTIVE STOCK OPTION
1. Definitions
In this part of the schedule:
(a) Incentive Stock means an incentive stock option within
Option the meaning of section 422A of the Code;
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(b) the ISO Group means the Company and any other company
which is a Parent Corporation or
Subsidiary Corporation of the Company;
(c) Parent Corporation means any corporation (other than the
Employer Corporation) in an unbroken chain of
corporations ending with the Employer Corporation
it, at the Date of Grant, each of the
corporations other than the Employer Corporation
owns stock (or shares) possessing 50% or more of
the total combined voting power of all classes of
stock (or shares) in one of the other
corporations in such chain;
(d) Predecessor means a corporation which was a party to
Corporation a transaction described in section 425(a)
of the Code (or which would be so described if
substitutions or assumption under such section
had been effective) with the Company, or a
corporation which, at the Date of Grant, is a
related corporation of the Company or a
Predecessor Corporation of any of such
corporations;
(e) Subsidiary means any corporation (other than the
corporation Employer Corporation) in an unbroken chain of
corporations beginning with the Employer
Corporation if, at the Date of Grant, each of the
corporations other than the last corporation in
the unbroken chain owns stock (or shares)
possessing 50% or more of the total combined
voting power of all classes of stock (or shares)
in one of the other corporations in such chains.
Words and phrases not otherwise defined have the same meanings as in the
Glossary on the reverse of the Certificate.
For the purpose of ensuring that an Option which is subject to these terms
and conditions will qualify as an Incentive Stock Option, the provisions of
the Certificate and Parts A and B C of this Schedule insofar as they apply
to any such Option shall be read and construed as if all references to "the
ISO Group" were substituted for all reference to "the Group".
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2. Currency conversion
(a)If at the date of grant of an Option the Option-holder is in receipt of
"compensation (as defined in section 3231 (e) of the Code) in US
dollars, then Clause 2(b) will apply to that Option, unless the
operation of Clause 2(c) has made Clause 2(b) inapplicable.
(b)If the conversion rate on the date of exercise of any Option has
changed such that a reduced number of dollars is required to purchase
the number of Pounds Sterling needed to make up the Exercise Price than
would be so required at the Conversion Rate that existed on the Date of
Grant, then the Exercise Price (in Pounds Sterling) for that Option will
be increased by the amount of such reduction in dollars, converted into
Pounds Sterling at the Conversion Rate on the date of exercise.
(c)Clause 2(b) will not apply if, before the first date on which the
Option-holder exercises an Option granted under the circumstances in
Clause 2(a), the United States Internal Revenue Service has given a
ruling to the effect that the benefit of favourable tax treatment under
section 421 of the Code is available on exercise of that Option, even if
the rate of exchange between Pounds Sterling and the US Dollar has
changed, as described in Clause 2(b), since the Date of Grant.
3. Variation in share capital
No adjustment or addition shall be made pursuant to Clause 7 of Part A of
the Schedule or pursuant to Clause 7 of Part B of the Schedule which would
give the Option-holder additional benefits under any Incentive Stock Option
as provided in section 425(h) (3) of the Code.
4. Notice of disqualifying disposition
To enable the Group to comply with any obligations, including withholding
tax, which it may have as the result of an early sale or disposition of the
Option Shares, if the Option-holder sells or otherwise disposes of any of
the Option Shares acquired subject to this Part C before the later of:
(a)the date two years after the Date of Grant of the Incentive Stock
Option by which the Option Shares were acquired; and
(b)the date one year after transfer of such Option Shares to the
Option-holder upon exercise of the Incentive Stock Option by which the
Option Shares were acquired;
then the Option-holder will immediately notify the Company in writing of
said disposition.
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PART D: TERM NECESSARY TO ENSURE THAT A NON-OUALIFIED STOCK OPTION IS NOT
TREATED AS AN INCENTIVE STOCK OPTION
Options which are granted subject to this Part D of the Schedule are not
intended to be incentive Stock Options within the meaning of Section 422A
of the Code. These Options may be exercised at any time subject to the
terms and conditions of Parts A of the Schedule.
PART E: ADDITIONAL TERMS AND CONDITIONS REOUIRED BY UK TAX RULES IN THE CASE
OF AN OPTION GRANTED UNDER THE MICRO FOCUS GROUP INLAND REVENUE APPROVED
SHARE OPTION SCHEME
1. Definitions
In this Part of the Schedule:
(a) "Close Company" has the same meaning as in Chapter I of
Part XI of the Income and Corporation Taxes Act 1988
SAVE THAT in determining whether a company is a Close
Company for the purposes of the Scheme, sections 414(1)
(a) and 415 of that Act shall be disregarded;
(b) "material has the same meaning as in Chapter I of Part XI
interest" of the Taxes Act SAVE THAT in determining for
the purposes of this Scheme and Schedule whether a
person has or has had a material interest in a company,
section 187(3) of that Act shall have effect with
references to 10%;
(c) "the Scheme" means the Micro Focus Inland Revenue Approved Share
Option Scheme established by the Company
(by resolution of the Board dated April 1996) in
accordance with the Plan.
Words and phrases not otherwise defined in this Part of the Schedule or
Part A or B of the Schedule have the same meaning as in section 187 and
Schedule 9 of the Taxes Act 1988.
Words denoting the masculine gender shall include the feminine.
2. Applicability of this Part
An Option which is subject to this Part of the Schedule is granted in
accordance with the Micro Focus Group Inland Revenue Approved Share Option
Scheme established by resolution of the Board on 20th April 1996 (the
"Approved Scheme"). The board of
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<PAGE> 23
Directors of the Grantor will have the right to make amendments or
modifications to the Approved Scheme and/or any of the terms and conditions
of the Certificate and all Parts of its Schedule to which Approved Options
are subject in order to ensure that Inland Revenue approval is obtained.
3. Interest in Close Company
An Option which is subject to this Part of the Schedule may not be
exercised at any time when the Option-holder has, or has within the
preceding twelve months, had a material interest in a Close Company being
either the Company or a company which has control of the Company or is a
member of a consortium which owns such a company.
4. Alterations or Additions
After the Board of Inland Revenue has approved the Scheme pursuant to
Schedule 9 of the Income and Corporation Taxes Act 1988, no alteration or
addition shall be made to any term or condition of any Option granted in
accordance with the Scheme without the prior approval of the Board of
Inland Revenue.
PART F: ADDITIONAL TERMS AND CONDITIONS OF UK UNAPPROVED SHARE
OPTIONS
Options subject to this Part of the Schedule are not granted in accordance
with the Micro Focus Group Inland Revenue Approved Share Option Scheme and
are not intended to qualify for favourable UK tax treatment under the
Income and Corporation Taxes Act 1988.
PART G: PERFORMANCE TARGETS (if any)
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<PAGE> 1
EXHIBIT 5.01
April 9, 1997
Micro Focus Group plc MEMERY CRYSTAL
The Lawn Solicitors
Old Bath Road 31 Southampton Row
Newbury London WC1B 5HT
Berkshire RG14 1QN Telephone: +44(0) 171-242 5905
LDE No. 156 Chancery Lane
E-mail: [email protected]
Fax: +44(0) 171-242 5905
Group 4 Fax: +44(0) 171-242 5905
Dear Sirs,
Registration Statement on Form S-8
- ----------------------------------
1. This opinion is given in connection with the registration under the
U.S. Securities Act of 1933, as amended ("the Securities Act"), of
ordinary shares of 10p nominal value each (each a "Share" and plurally
referred to as the "Shares") in Micro Focus Group plc ("the Company"),
which:
(a) may be issued pursuant to the Company's Share Option Plan
1983-1984, as amended ("the 1983-1984 Plan"), Share Option Plan
1991, as amended ("the 1991 Plan") and Share Option Plan 1996
("the 1996 Plan"); and
(b) are presently issued and outstanding and may be transferred
pursuant to the Company's Employee Benefit Trust 1994 ("the Trust
1994").
2. We have acted as English legal advisors to the Company in connection
with the foregoing. In so acting, we have examined such certificates of
the Company and directors and/or officers thereof and originals or
copies of all such corporate documents and records of the Company and
all such other documents as we have deemed relevant and necessary as a
basis for our opinion hereinafter set forth. We have, with your
consent, relied upon such certificates of directors and/or officers of
the Company and upon statements and information furnished by directors
and/or officers of the Company with respect to their authority and the
accuracy of all factual matters contained therein which we have not
independently established. We have also assumed the genuineness of all
signatures thereon or on the originals of documents referred to
therein.
3. This opinion is limited to English law as at the date hereof applicable
and as currently applied by the English Courts and is given on the
basis that it will be governed by and be construed in accordance with
current English law. We have
<PAGE> 2
Micro Focus Group plc
9th April 1997
accordingly not made any investigations of the laws of any
jurisdictions other than England.
4. You have confirmed to us that all necessary proceedings have been taken
by you in connection with the adoption of the 1983-1984 Plan, the 1991
Plan, the 1996 Plan and the Trust 1994, and we have therefore assumed
such in giving the option contained herein.
5. It is our opinion that the Shares that may be issued upon the exercise
of options granted or to be granted under the 1983-1984 Plan, the 1991
Plan and the 1996 Plan when issued in accordance with the applicable
plan or scheme and options or purchase rights duly granted thereunder
and the Company's Memorandum and Articles of Association, and in the
manner referred to in the relevant prospectus associated with the
Registration Statement S-8 to be filed by the Company on or around 9
April 1997 ("the Registration Statement") will be legally issued, fully
paid and non-assessable.
6. It is our opinion that the Shares that may be transferred upon exercise
of options granted or to be granted under the Trust 1994 when
transferred in accordance with the Trust 1994 and options or purchase
rights duly granted thereunder and the Company's Memorandum and
Articles of Association, and in the manner referred to in the relevant
prospectus associated with the Registration Statement will be legally
issued, fully paid and non-assemble.
7. For the purpose of this opinion, we have assumed that the term
"non-assemble" in relation to the Shares means under English law that
holders of such Shares, having fully paid up all amounts due on such
Shares as to the nominal amount and any premium thereon, are under no
further personal liability to contribute to the assets or liabilities
of the Company in their capacities purely as holders of such Shares.
This opinion is strictly limited to the matters stated herein and is not to be
read as extending by implication to any other matter whatsoever.
This opinion is given to you solely for your benefit and for the purpose of the
Registration Statement. It is not to be transmitted to any other person nor is
it to be relied upon by any other person or for any purpose or quoted or
referred to in any public document without our prior written consent except that
we consent to the use of this Opinion as an exhibit to the Registration
Statement and further consent to the references to us in the Registration
Statement. In giving the consent, we do not admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations thereunder.
Yours faithfully,
<PAGE> 3
Micro Focus Group plc
9th April 1997
/s/ Memery Crystal
MEMERY CRYSTAL
<PAGE> 1
EXHIBIT 23.02
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the employee share plans named on the facing sheet thereof of
our report dated March 13, 1996 with respect to the consolidated financial
statements and schedule of Micro Focus Group Public Limited Company for the year
ended January 31, 1996 included in its Annual Report (Form 20-F) for the year
ended January 31, 1996, filed with the Securities and Exchange Commission on
June 3, 1996 and our reports dated March 6, 1997 with respect to the
consolidated financial statements of Micro Focus Group Public Limited Company
for the year ended January 31, 1997 including in its 1996 Annual Report and
furnished to the Securities and Exchange Commission pursuant to a Report of
Foreign Issuer (Form 6-K) on March 28, 1997.
/s/ Ernst & Young
ERNST & YOUNG
Chartered Accountants
Reading, England
April 9, 1997
