Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
ALLEGRO NEW MEDIA, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3270045
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3 Oak Road, Fairfield, NJ 07004
(Address of principal executive offices) (Zip Code)
SOFTWARE PUBLISHING CORPORATION 1987 STOCK OPTION PLAN
SOFTWARE PUBLISHING CORPORATION 1989 STOCK OPTION PLAN
SOFTWARE PUBLISHING CORPORATION 1991 STOCK OPTION PLAN
(Full title of the plan)
Barry A. Cinnamon, President
Allegro New Media, Inc.
3 Oak Road
Fairfield, New Jersey 07004
(Name and address of agent for service)
(201) 808-1992
(Telephone number, including area code, of agent for service)
copy to:
Neil M. Kaufman, Esq.
Moritt Hoch & Hamroff, LLP
400 Garden City Plaza
Garden City, New York 11530
(516) 873-2000
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed maximum
Title of securities Amount to be offering price per aggregate offering Amount of
to be registered registered security(1) price(1) registration fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,038,693 shs.(2) $4.3125 $4,479,364 $1,545
par value $.001
per share
- -----------------------------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of calculating the registration fee, based
upon the average of the high and low prices of Allegro New Media, Inc.'s Common
Stock reported on NASDAQ on January 8, 1997.
(2) The Registration Statement also covers an indeterminate number of
additional shares of Common Stock which may become issuable pursuant to
anti-dilution and adjustment provisions of the Plans.
</FN>
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Registrant hereby incorporates by reference into this Registration
Statement the documents listed in (a) through (c) below:
(a) The Registrant's Form 10-KSB and Form 10-KSB/A for the fiscal
year ended December 31, 1995;
(b) The Registrant's Forms 10-QSB for the quarters ended March 31,
1996, June 30, 1996 and September 30, 1996, Form 8-K dated July
31, 1996, Form 8-K/A dated October 15, 1996 and Form 8-K dated
December 27, 1996;
(c) The description of the class of securities to be offered which is
contained in the Registrant's registration statement on Form
8-A/A filed under Section 12 of the Securities Exchange Act of
1934, 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 Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all such securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and to be a part hereof from the date of filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Under the provisions of the Certificate of Incorporation and By-Laws of
Registrant, each person who is or was a director or officer of Registrant shall
be indemnified by Registrant as of right to the full extent permitted or
authorized by the General Corporation Law of Delaware.
Under such law, to the extent that such person is successful on the merits
of defense of a suit or proceeding brought against him by reason of the fact
that he is a director or officer of Registrant, he shall be indemnified against
expenses (including attorneys' fees) reasonably incurred in connection with such
action.
If unsuccessful in defense of a third-party civil suit or a criminal suit
is settled, such a person shall be indemnified under such law against both (1)
expenses (including attorneys' fees) and (2) judgments, fines and amounts paid
in settlement if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of Registrant, and with respect
to any criminal action, had no reasonable cause to believe his conduct was
unlawful.
If unsuccessful in defense of a suit brought by or in the right of
Registrant, or if such suit is settled, such a person shall be indemnified under
such law only against expenses (including attorneys' fees) incurred in the
defense or settlement of such suit if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of
Registrant except that if such a person is adjudicated to be liable in such suit
for negligence or misconduct in the performance of his duty to Registrant, he
cannot be made whole even for expenses unless the court determines that he is
fairly and reasonably entitled to be indemnified for such expenses.
<PAGE>
The officers and directors of the Company are covered by officers' and
directors' liability insurance. The policy coverage is $3,000,000, which
includes reimbursement for costs and fees. There is a maximum aggregate
deductible for each loss under the policy of $200,000. The Company has entered
into Indemnification Agreements with each of its officers and directors. The
Agreements provide for reimbursement for all direct and indirect costs of any
type or nature whatsoever (including attorneys' fees and related disbursements)
actually and reasonably incurred in connection with either the investigation,
defense or appeal of a Proceeding, as defined, including amounts paid in
settlement by or on behalf of an Indemnitee.
Item 7. Exemption from registration claimed.
Not applicable.
Item 8. Exhibits.
4.1 Software Publishing Corporation 1987 Stock Option Plan,
as amended
4.2 Software Publishing Corporation 1989 Stock Option Plan,
as amended
4.3 Software Publishing Corporation 1991 Stock Option Plan,
as amended
5 Opinion and consent of Blau, Kramer, Wactlar & Lieberman, P.C.
10 Instrument of Assumption
23.1 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. - included
in their opinion filed as Exhibit 5
23.2 Consent of Ernst & Young LLP
24 Powers of Attorney
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(l)(i) and (a)(l)(ii) do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
<PAGE>
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) 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 the time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 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 policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all
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 Fairfield, N.J. on the 26th day of December, 1996.
ALLEGRO NEW MEDIA, INC.
By: /s/ Barry A. Cinnamon
Barry A. Cinnamon
Chairman of the Board, President
and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on December 26, 1996 by the
following persons in the capacities indicated. Each person whose signature
appears below constitutes and appoints Barry A. Cinnamon, with full power of
substitution, our true and lawful attorneys-in-fact and agents to do any and all
acts and things in our name and on our behalf in our capacities indicated below
which they or either of them may deem necessary or advisable to enable Allegro
New Media, Inc. to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement including specifically, but not
limited to, power and authority to sign for us or any of us in our names in the
capacities stated below, any and all amendments (including post-effective
amendments) thereto, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in such connection, as fully to all intents and purposes as
we might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do
or cause to be done by virtue thereof.
Signature Title
/s/ Barry A. Cinnamon Chairman of the Board, President, Chief
Barry A. Cinnamon Executive Officer
(Principal Executive Officer)
/s/ Mark E. Leininger Vice President, Chief Operating Officer
Mark E. Leininger and Treasurer
(Principal Financial Officer)
/s/ Marc E. Jaffe Director
Marc E. Jaffe
/s/ Eng Chye Low Director
Eng Chye Low
/s/ George L. Lauro Director
George L. Lauro
/s/ Neil R. Austrian, Jr. Director
Neil R. Austrian, Jr.
/s/ Neil M. Kaufman Director
Neil M. Kaufman
/s/ Lori Kramer Cinnamon Director
Lori Kramer Cinnamon
________________________ Director
Norman Alexander
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Allegro New Media, Inc.
Form S-8 Registration Statement
E X H I B I T I N D E X
Exhibit
Number Exhibit Description
4.1 Software Publishing Corporation 1987 Stock Option Plan,
as amended
4.2 Software Publishing Corporation 1989 Stock Option Plan,
as amended
4.3 Software Publishing Corporation 1991 Stock Option Plan,
as amended
5 Opinion and Consent of Counsel
10 Instrument of Assumption
23.1 Consent of Counsel See Exhibit 5
23.2 Consent of Ernst & Young LLP
24 Powers of Attorney See signature page
SOFTWARE PUBLISHING CORPORATION
1987 STOCK OPTION PLAN
(as amended through December 27, 1996)
1. Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Administrator and as
reflected in the terms of the written option agreement.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the Board or any of its Committees appointed
pursuant to Section 4 of the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean a Committee appointed by the Board in accordance
with paragraph (a) of Section 4 of the Plan.
(e) "Common Stock" shall mean, prior to 12:00 noon on December 27, 1996,
the Common Stock, $.001 par value, of Software Publishing Corporation and
commencing at 12:00 noon on December 27, 1996 and thereafter, the Common Stock,
$.001 par value of Allegro New Media, Inc.
(f) "Company" shall mean, prior to 12:00 noon on December 27, 1996,
Software Publishing Corporation, a Delaware corporation and commencing at 12:00
noon on December 27, 1996 and thereafter, Allegro New Media, Inc., a Delaware
corporation.
(g) "Consultant" shall mean any person who is engaged by the Company or any
Parent or any Subsidiary to render consulting services and is compensated for
such consulting services; provided that for so long as the Company has any class
of any equity security registered pursuant to Section 12 of the Exchange Act,
the term Consultant shall not include Directors.
(h) "Continuous Status as an Employee, Consultant or Director" shall mean
the absence of any interruption or termination of service as an Employee,
Consultant or Director. Continuous Status as an Employee, Consultant or Director
shall not be considered interrupted in the case of sick leave, military leave,
or any other leave of absence approved by the Administrator; provided that such
leave is for a period of not more than 90 days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.
<PAGE>
(i) "Director" shall mean a member of the Board.
(j) "Disinterested Person" shall mean a "disinterested person" as defined
in Rule 16b-3 (or any comparable successor rule) promulgated under the Exchange
Act and as interpreted by the Securities and Exchange Commission.
(k) "Employee" shall mean any person, including officers and directors,
employed at least twenty (20) hours per week by the Company or any Parent or
Subsidiary of the Company. The payment of a director's fee by the Company shall
not be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Incentive Stock Option" shall mean an Option intended to qualify as an
incentive stock option within the meaning of Section 422A of the Code.
(n) "Inside Director" shall mean a Director who is an Employee.
(o) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(p) "Officer" shall mean an officer of the Company within the meaning of
the rules and regulations promulgated under Section 16 of the Exchange Act.
(q) "Option" shall mean a stock option granted pursuant to the Plan.
(r) "Optioned Stock" shall mean the Common Stock subject to an Option.
(s) "Optionee" shall mean an Employee or Consultant who receives an Option.
(t) "Outside Director" shall mean a Director who is not an Employee.
(u) "Parent" shall mean a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(v) "Plan" shall mean this 1987 Stock Option Plan.
(w) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(x) "Subsidiary" shall mean a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 425(f) of the Code.
<PAGE>
3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is, prior to 12:00 noon on December 27, 1996, 1,275,000 Shares of
Common Stock and, commencing at 12:00 noon on December 27, 1996 and thereafter,
341,763 Shares of Common Stock. Of such Shares, the maximum aggregate number
which may be subject to Options granted to Outside Directors is, prior to 12:00
noon on December 27, 1996, 127,500 Shares and, commencing at 12:00 noon on
December 27, 1996 and thereafter, 34,176 Shares (the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan. Notwithstanding any other provision of the Plan, Shares
issued under the Plan and later repurchased by the Company shall not become
available for future grant or sale under the Plan.
4. Administration of the Plan.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3 promulgated
under the Exchange Act or any successor rule thereto, as in effect at the time
that discretion is being exercised with respect to the Plan ("Rule 16b-3"), and
by the legal requirements relating to the administration of incentive stock
option plans, if any, of applicable securities laws, Delaware corporate law and
the Code (collectively, the "Applicable Laws"), the Plan may (but need not) be
administered by different administrative bodies with respect to Directors,
Officers who are not Directors and Employees who are neither Directors nor
Officers.
(ii) Administration with Respect to Directors and Officers. With respect to
grants of Options to Employees or Consultants who are also Officers or Directors
of the Company, the Plan shall be administered by (A) the Board, if the Board
may administer the Plan in compliance with Rule 16b-3 as it applies to a plan
intended to qualify thereunder as a discretionary plan, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted (I) in such a manner as to permit the Plan to comply with Rule 16b-3
as it applies to a plan intended to qualify thereunder as a discretionary plan
and (II) in such a manner as to satisfy the Applicable Laws.
(iii) Administration with Respect to Outside Directors. With respect to
grants of Options to Outside Directors of the Company, the Plan shall be
administered strictly in accordance with the provisions of Section 4(b).
(iv) Administration with Respect to Other Persons. With respect to grants
of Options to Employees or Consultants who are neither Directors nor Officers of
the Company, the Plan shall be administered by (A) the Board or (B) a Committee
designated by the Board, which Committee shall be constituted in such a manner
as to satisfy the Applicable Laws.
(v) General. Once a Committee has been appointed pursuant to subsection
(ii) or (iv) of this Section 4(a), such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of any Committee and appoint additional members
<PAGE>
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all members of
a Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws and, in the case of a Committee appointed under
subsection (ii), to the extent permitted by Rule 16b-3 as it applies to a plan
intended to qualify thereunder as a discretionary plan.
(b) Automatic Grant Formula.
(i) No person shall have any discretion to select which Outside Directors
shall be granted Options or to determine the number of Shares to be covered by
Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an Option to
purchase 15,000 Shares (the "First Option") upon the later to occur of (x) the
effective date of this Plan, as determined in accordance with Section 6 hereof,
or (y) the date on which a person first becomes a Director, whether through
election by the stockholders of the Company or appointment by the Board of
Directors to fill a vacancy; provided, however, that no such First Option shall
be granted to any Outside Director if such Outside Director has been or is
automatically granted an Option to purchase 15,000 Shares (a "1985 Plan Option")
during the same fiscal year of the Company pursuant to Section
4(a)(ii)(C)(II)(aa) of the Company's 1985 Incentive Stock Option Plan (the "1985
Option Plan").
(iii) After an Outside Director has been granted the First Option or a 1985
Plan Option (as the case may be), such Outside Director shall thereafter be
automatically granted an Option to purchase 15,000 Shares (a "Subsequent
Option") on the first day of each fiscal year of the Company occurring after the
grant date of such Outside Director's First Option or 1985 Plan Option (as the
case may be); provided, however, that if any Outside Director has been or is
automatically granted an Option to purchase Shares (a "Subsequent 1985 Plan
Option") on an automatic grant date pursuant to Section 4(a)(ii)(C)(II)(bb) of
the 1985 Option Plan, then on such automatic grant date such Outside Director
shall be granted a Subsequent Option hereunder to purchase that number of Shares
determined by subtracting the number of Shares covered by the Subsequent 1985
Plan Option from 15,000.
(iv) Notwithstanding the provisions of subparagraphs (ii) and (iii) hereof,
in the event that a grant would cause the number of Shares subject to
outstanding Options to Outside Directors plus Shares previously purchased upon
exercise of Options by Outside Directors to exceed the Pool (as defined in
Section 3 hereof), then each such automatic grant shall be for that number of
Shares determined by dividing the total number of Shares remaining available for
grant to Outside Directors by the number of Outside Directors on the automatic
grant date. Any further grants shall then be deferred until such time, if any,
as additional Shares become available for grant to Outside Directors through
action of the stockholders to increase the number of Shares which may be granted
to Outside Directors or through cancellation or expiration of Options previously
granted to Outside Directors hereunder.
(v) The terms of an Option granted to an Outside Director shall be as
follows:
(A) the term of the Option shall be seven (7) years.
<PAGE>
(B) the Option shall be exercisable only while the Director remains a
Director of the Company, except as set forth in Sections 9(c) and 9(d) hereof.
(C) the exercise price per Share shall comply with Section 8(a) hereof, but
shall in no event be less than 100% of the fair market value per Share on the
date of grant of the Option.
(D) the Option shall be exercisable cumulatively to the extent of 1/8
(12.5%) of the Shares subject to the Option at the end of each six-month period
which has expired after the commencement of vesting date of the Option. Such
date is determined by the Administrator and stated in each Optionee's agreement.
(vi) Effective at 12:00 noon on December 27, 1996, the provisions of this
Section 4(b) shall terminate and no further grants shall be made hereunder.
(c) Powers of the Administrator. Subject to the provisions of the Plan and,
in the case of a Committee, the specific duties delegated by the Board to such a
Committee, the Administrator shall have the authority, in its discretion: (i) to
grant Incentive Stock Options or Nonstatutory Stock Options; (ii) to determine,
upon review of relevant information and in accordance with Section 8(b) of the
Plan, the fair market value of the Common Stock; (iii) to determine the exercise
price per Share of Options to be granted, which exercise price shall be
determined in accordance with Section 8(a) of the Plan; (iv) to determine the
Employees or Consultants to whom, and the time or times at which, Options shall
be granted and the number of Shares to be represented by each Option; (v) to
interpret the Plan; (vi) to prescribe, amend and rescind rules and regulations
relating to the Plan; (vii) to determine the terms and provisions of each Option
granted (which need not be identical) and, with the consent of the holder
thereof, modify or amend each Option; (viii) to accelerate or defer (with the
consent of the Optionee) the exercise date of any Option, consistent with the
provisions of Section 5 of the Plan; (ix) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option previously granted by the Administrator; and (x) to make all other
determinations deemed necessary or advisable for the administration of the Plan.
(d) Effect of Administrator's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options granted under the Plan.
5. Eligibility.
(a) Nonstatutory Stock Options may be granted only to Employees,
Consultants and Directors. Incentive Stock Options may be granted only to
Employees. An Employee, Consultant or Director who has been granted an Option
may, if he is otherwise eligible, be granted an additional Option or Options.
(b) No Incentive Stock Option may be granted to an Employee which, when
aggregated with all other incentive stock options granted to such Employee by
the Company or any Parent or Subsidiary, would result in Shares having an
aggregate fair market value (determined for each Share as of the date of grant
of the Option covering such Share) in excess of $100,000 becoming first
available for purchase upon exercise of one or more incentive stock options
during any calendar year.
<PAGE>
(c) Section 5(b) of the Plan shall apply only to an Incentive Stock Option
evidenced by an "Incentive Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall qualify as an
incentive stock option. Section 5(b) of the Plan shall not apply to any Option
evidenced by a "Nonstatutory Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall be a
Nonstatutory Stock Option.
(d) The Plan shall not confer upon any Optionee any right with respect to
continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time.
(e) Notwithstanding the above, the number of Shares subject to an Option
granted to an Outside Director and the terms thereof shall be subject to the
limitations set forth in Section 4(b) hereof.
6. Term of Plan. The Plan shall become effective upon the earlier to occur
of November 16, 1987 or its approval by the stockholders of the Company as
described in Section 17 of the Plan. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 13 of the Plan.
7. Term of Option. The term of each Incentive Stock Option shall be five
(5) years from the date of grant thereof or such other term not exceeding ten
(10) years as may be provided in the Incentive Stock Option Agreement. The term
of each Nonstatutory Stock Option shall be five (5) years from the date of grant
thereof or such other term not exceeding ten (10) years and one (1) day as may
be provided in the Nonstatutory Stock Option Agreement. However, in the case of
an Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, (a) if the Option
is an Incentive Stock Option, the term of the Option shall be five (5) years
from the date of grant thereof or such shorter time as may be provided in the
Incentive Stock Option Agreement, or (b) if the Option is a Nonstatutory Stock
Option, the term of the Option shall be five (5) years and one (1) day from the
date of grant thereof or such shorter term as may be provided in the
Nonstatutory Stock Option Agreement.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of such Incentive
Stock Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the fair market value per
Share on the date of grant.
<PAGE>
(B) granted to any Employee, the per Share exercise price shall be no less
than 100% of the fair market value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who at the time of the grant of such Option, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the fair market value per Share on
the date of the grant.
(B) granted to an Outside Director, the per Share exercise price shall be
no less than 100% of the fair market value per Share on the date of grant.
(C) granted to any person, the per Share exercise price shall be no less
than 50% of the fair market value per Share on the date of grant.
(b) Fair Market Value. The fair market value shall be determined by the
Administrator in its discretion; provided, however, that where there is a public
market for the Common Stock, the fair market value per Share shall be the mean
of the bid and asked prices of the Common Stock for the date of grant, as
reported in the Wall Street Journal (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) System) or, in the event the Common Stock is traded on the NASDAQ
National Market System or listed on a stock exchange, the fair market value per
Share shall be the closing price on such system or exchange on the date of grant
of the Option, as reported in the Wall Street Journal.
(c) Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator and may consist entirely of cash, check,
promissory note, other Shares of Common Stock having a fair market value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, or any combination of such methods of
payment, or such other consideration and method of payment for the issuance of
Shares to the extent permitted under Sections 152 and 153 of the Delaware
General Corporation Law. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company (Section 143 of
the Delaware General Corporation Law).
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Administrator, including performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 17 hereof is
obtained.
An Option may not be exercised for a fraction of a Share.
<PAGE>
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Notwithstanding the provisions of the foregoing paragraph, subject to the
consent of the Company, an Option having a per Share exercise price which is
below the fair market value per Share on the date of exercise may be exercised
by delivery to the Company in accordance with the terms of the Option of a
written notice of such exercise and written instructions to the Company to sell
the Shares with respect to which the Option is exercised and to retain all or a
portion of the proceeds of such sale in full payment for such Shares.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee, Consultant or Director. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), such Optionee may, but only within thirty (30)
days (or such other period of time not exceeding three (3) months in the case of
an Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of grant of the Option)
after the date of such termination (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement),
exercise his Option to the extent that he was entitled to exercise it at the
date of such termination. To the extent that he was not entitled to exercise the
Option at the date of such termination, or if he does not exercise such Option
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate. Options granted to Outside Directors shall terminate
immediately upon cessation of service as a Director.
(c) Disability of Optionee. Notwithstanding the provisions of Section 9(b)
above, in the event of termination of an Optionee's Continuous Status as an
Employee, Consultant or Director as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), he may, but only within
six (6) months (or such other period of time not exceeding twelve (12) months as
is determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) from the
date of such termination (but in no event later than the date of expiration of
the term of such Option as set forth in the Option Agreement), exercise his
Option to the extent he was entitled to exercise it at the date of such
<PAGE>
termination. To the extent that he was not entitled to exercise the Option at
the date of termination, or if he does not exercise such Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his death an
Employee, Consultant or Director of the Company and who shall have been in
Continuous Status as an Employee, Consultant or Director since the date of grant
of the Option, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
would have accrued had the Optionee continued living and remained in Continuous
Status as an Employee, Consultant or Director six (6) months after the date of
death, subject to the limitation set forth in Section 5(b); or
(ii) if an Employee or Consultant, within thirty (30) days (or such other
period of time not exceeding three (3) months as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) after the termination of
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within six (6) months following the date of death (but in no event
later than the date of expiration of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.
(e) Leaves of Absence. In the event a leave of absence of thirty days or
fewer is taken by an Optionee, vesting on any Options held by such Optionee will
continue as if the Optionee had remained at work with the Company during such
period. In the event of a leave of absence of more than thirty days is taken by
an Optionee, vesting on any Options held by such Optionee shall cease as of the
thirty-first day of such leave of absence and shall recommence at the time of
such Optionee's return to work at the Company, unless specifically provided
otherwise in the Option Agreement or by the Administrator in its discretion.
(f) Rule 16b-3. Options granted to persons subject to Section 16(b) of the
Exchange Act must comply with the applicable provisions of Rule 16b-3 and the
stock option agreements relating to such options shall contain such additional
conditions or restrictions as may be required to be contained in such agreements
to qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
(g) Stock Withholding to Satisfy Withholding Tax Obligation. When an
Optionee incurs tax liability in connection with the exercise of an Option,
which tax liability is subject to tax withholding under applicable tax laws, and
is obligated to pay the Company an amount required to be withheld under
applicable tax laws, the Optionee may satisfy the withholding tax obligation by
electing to have the Company withhold from the Shares to be issued upon exercise
of the Option that number of Shares having a fair market value equal to the
amount required to be withheld. The fair market value of the Shares to be
<PAGE>
withheld shall be the closing price of the Common Stock on the NASDAQ National
Market System or a stock exchange on the date that the amount of tax to be
withheld is to be determined (the "Tax Date"), as reported in the Wall Street
Journal.
All elections by Optionees to have Shares withheld for this purpose shall
be made in writing in a form acceptable to the Company and shall be subject to
the following restrictions:
(i) the election must be made on or prior to the applicable Tax Date;
(ii) once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made;
(iii) all elections shall be subject to the consent or disapproval of the
Administrator;
(iv) if the Optionee is an Officer, Director or other person whose
transactions in the Company's Common Stock are subject to Section 16(b) of the
Exchange Act (collectively "Insiders"), the election may not be made within six
months of the date of grant of the Option; provided, however, that this
limitation shall not apply in the event that death or disability of the Optionee
occurs prior to the expiration of the six-month period; and
(v) if the Optionee is an Insider, the election must be made either six
months prior to the Tax Date (as determined in accordance with Section 83 of the
Code) or in the 10-day period beginning on the third day following the release
of the Company's quarterly or annual summary statement of sales and earnings.
In the event the election to have Shares withheld is made by an Optionee
who is an Insider and the Tax Date is deferred until six months after exercise
of the Option because no election is filed under Section 83(b) of the Code, the
Optionee shall receive the full number of Shares with respect to which the
Option is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.
10. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder. The designation of a
beneficiary by an Optionee does not constitute a transfer. An Option may be
exercised, during the lifetime of the Optionee, only by the Optionee or a
transferee permitted by this Section 10.
11. Adjustments Upon Changes in Capitalization or Merger.
(a) Change in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
<PAGE>
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option has not been previously
exercised, it will terminate immediately prior to the consummation of such
proposed action. The Board may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of a date fixed by the
Board and give each Optionee the right to exercise his or her Option as to all
or any part of the Optioned Stock, including Shares as to which the Option would
not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to the provisions of paragraph (d)
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of all or substantially all of the assets of the
Company, each outstanding Option shall be assumed or an equivalent option or
right shall be substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation does not agree to assume the Option or to substitute an equivalent
option, the Administrator shall, in lieu of such assumption or substitution,
provide for the Optionee to have the right to exercise the Option as to all of
the Optioned Stock, including Shares as to which it would not otherwise be
exercisable. If the Administrator makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option will terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets was not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation and the participant, provide for
the consideration to be received upon the exercise of the Option, for each Share
of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
<PAGE>
(d) Change of Control. In the event of a "Change in Control" of the
Company, as defined in paragraph (e) below, either or both or neither of (i) or
(ii) of the acceleration and valuation provisions that follow shall apply, as
the Board, in its discretion, shall determine prior to such Change of Control.
Neither the Board nor any person shall have any discretion with respect to the
application of (iii):
(i) Any Options outstanding as of the date such Change in Control is
determined to have occurred that are not yet exercisable and vested on such date
shall become fully exercisable and vested;
(ii) To the extent that they are exercisable and vested, all outstanding
Options, unless otherwise determined by the Board at or after grant, shall be
terminated in exchange for a cash payment at the Change in Control Price,
reduced by the exercise price applicable to such Options. These cash proceeds
shall be paid to the Optionee or, in the event of death of an Optionee prior to
payment, to the estate of the Optionee or to a person who acquired the right to
exercise the Option by bequest or inheritance.
(iii) In the case of Options granted to Outside Directors pursuant to
Section 4(b), the provisions of (d)(i) and (d)(ii) of this section shall apply
to such Options.
(e) Definition of "Change in Control". For purposes of this Section 11, a
"Change in Control" means the happening of any of the following:
(i) When any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company, a Subsidiary or a Company employee
benefit plan, including any trustee of such plan acting as trustee) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) The occurrence of a transaction requiring stockholder approval, and
involving the sale of all or substantially all of the assets of the Company or
the merger of the Company with or into another corporation.
(f) Change in Control Price. For purposes of this Section 11, "Change in
Control Price" shall be, as determined by the Board, (i) the highest closing
sale price of a Share of Common Stock as reported by the NASDAQ National Market
System and as appearing in the Wall Street Journal (or, in the event the Common
Stock is listed on a stock exchange, the highest closing price as reported in
the Wall Street Journal or such other source of composite quotations as the
Board deems reliable), at any time within the 60 day period immediately
preceding the date of determination of the Change in Control Price by the Board
(the "60-Day Period"), or (ii) the highest price paid or offered, as determined
by the Board, in any bona fide transaction or bona fide offer related to the
Change in Control of the Company, at any time within the 60-Day Period, or (iii)
some lower price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a share of Common Stock.
<PAGE>
12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option; provided, however, that the date of grant of automatic
grants of Options to Outside Directors shall be the date determined in
accordance with Section 4(b)(ii) or (iii) hereof. Notice of the determination
shall be given to each Employee or Consultant to whom an Option is so granted
within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable; provided
that, the following revisions or amendments shall require approval of the
stockholders of the Company in the manner described in Section 17 of the Plan:
(i) any increase in the number of Shares subject to the Plan, other than in
connection with an adjustment under Section 11 of the Plan;
(ii) any change in the designation of the class of persons eligible to be
granted Options; or
(iii) if the Company has a class of equity securities registered under
Section 12 of the Exchange Act at the time of such revision or amendment, any
material increase in the benefits accruing to participants under the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder approval of
any Plan amendment to the extent necessary and desirable to comply with Rule
16b-3 under the Exchange Act or with Section 422 of the Code (or any successor
rule or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock is
listed or quoted). Such stockholder approval, if required, shall be obtained in
such a manner and to such a degree as is required by the applicable law, rule or
regulation.
(c) Effect of Amendment or Termination. Any such amendment or termination
of the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
<PAGE>
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
15. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
16. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Administrator shall approve.
17. Stockholder Approval.
(a) Continuance of the Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted. If such stockholder approval is obtained at a duly held
stockholders' meeting, it must be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company, or if such
stockholder approval is obtained by written consent, it must be obtained by the
unanimous written consent of all stockholders of the Company; provided, however,
that approval at a meeting or by written consent may be obtained by a lesser
degree of stockholder approval if the Board determines, in its discretion after
consultation with the Company's legal counsel, that such a lesser degree of
stockholder approval will comply with all applicable laws and will not adversely
affect the qualification of the Plan under Section 422A of the Code.
(b) If and in the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the stockholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
(c) If any required approval by the stockholders of the Plan itself or of
any amendment thereto is solicited at any time otherwise than in the manner
described in Section 17(b) hereof, then the Company shall, at or prior to the
first annual meeting of stockholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
officer or director after such registration, do the following:
<PAGE>
(i) furnish in writing to the holders entitled to vote for the Plan
substantially the same information which would be required (if proxies to be
voted with respect to approval or disapproval of the Plan or amendment were then
being solicited) by the rules and regulations in effect under Section 14(a) of
the Exchange Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and Exchange
Commission four copies of the written information referred to in subsection (i)
hereof not later than the date on which such information is first sent or given
to stockholders.
18. Information to Optionees. The Company shall provide to each Optionee,
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information which are provided to all
stockholders of the Company. The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.
19. Additional Restrictions of Rule 16b-3. The terms and conditions of
Options granted hereunder to, and of the purchase of Shares upon exercise of
Options by, Officers and Directors shall comply with the applicable provisions
of Rule 16b-3 with respect to discretionary plans to the extent that such
provisions are required to be contained in the Plan or the stock option
agreements. This Plan shall be deemed to contain, and the stock option
agreements relating to such Options shall contain, and the Shares issued upon
exercise thereof shall be subject to, such additional conditions and
restrictions (if any) as may be required by Rule 16b-3 (as it applies to
discretionary plans) to be contained in the Plan or such agreements in order to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
20. Limitation on Options Granted to Employees. The following limitations
shall apply to grants of Options to Employees:
(i) In any fiscal year of the Company, no Employee shall be granted, prior
to 12:00 noon on December 27, 1996, Options to purchase more than 250,000 Shares
and, commencing at 12:00 noon on December 27, 1996 and thereafter, Options to
purchase more than 67,012 Shares.
(ii) In connection with his or her initial employment prior to 12:00 noon
on December 27, 1996, an Employee may be granted Options to purchase up to an
additional 250,000 Shares and, in connection with such employment commencing at
12:00 noon on December 27, 1996 and thereafter, Options to purchase up to an
additional 67,012 Shares, which Options shall not count against the limit set
forth in Section 20(i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 11 hereof.
(iv) If an Option is cancelled (other than in connection with a transaction
described in Section 11 hereof), the cancelled Option will be counted against
the limit set forth in this Section 20. For this purpose, if the exercise price
of an Option is reduced, the transaction will be treated as a cancellation of
the Option and the grant of a new Option.
SOFTWARE PUBLISHING CORPORATION
1989 STOCK PLAN
(as amended through December 27, 1996)
1. Purposes of the Plan. The purposes of this 1989 Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
It is intended that these purposes will be effected through the granting of
(a) stock options, (b) incentive stock rights, (c) stock appreciation rights,
(d) stock purchase rights and (e) long-term performance awards. Options granted
hereunder may be either Incentive Stock Options or Nonstatutory Stock Options,
at the discretion of the Administrator and as reflected in the terms of the
written option agreement.
2 Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the Board or any of its Committees appointed
pursuant to Section 4 of the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(d) "Committee" shall mean a Committee appointed by the Board in accordance
with paragraph (a) of Section 4 of the Plan, if one is appointed.
(e) "Common Stock" shall mean, prior to 12:00 noon on December 27, 1996,
the Common Stock, $.001 par value, of Software Publishing Corporation and,
commencing at 12:00 noon on December 27, 1996 and thereafter, the Common Stock,
$.001 par value, of Allegro New Media, Inc.
(f) "Company" shall mean, prior to 12:00 noon on December 17, 1996,
Software Publishing Corporation, a Delaware corporation, and, commencing at
12:00 noon on December 27, 1996 and thereafter, Allegro New Media, Inc., a
Delaware Corporation, or any successor corporation.
(g) "Consultant" shall mean any person who is engaged by the Company or any
Parent or Subsidiary to render consulting services and is compensated for such
consulting services; provided that for so long as the Company has any class of
any equity security registered pursuant to Section 12 of the Exchange Act, the
term Consultant shall not include Directors.
(h) "Continuous Status as an Employee, Consultant or Director" shall mean
the absence of any interruption or termination of service as an Employee,
Consultant or Director. Continuous Status as an Employee, Consultant or Director
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Administrator, provided that such
leave is for a period of not more than ninety (90) days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.
<PAGE>
(i) "Director" shall mean a member of the Board.
(j) "Disinterested Person" shall mean a "disinterested person" as defined
in Rule 16b-3 (or any comparable successor rule) promulgated under the Exchange
Act and as interpreted by the Securities and Exchange Commission.
(k) "Employee" shall mean any person, including Officers and Directors,
employed for at least twenty (20) hours per week by the Company or any Parent or
Subsidiary of the Company. The payment of a director's fee by the Company shall
not be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Incentive Stock Option" shall mean an Option intended to qualify as
and designated as an incentive stock option within the meaning of Section 422A
of the Code.
(n) "Incentive Stock Right" shall mean an award granted pursuant to Section
20 of the Plan that is valued in whole or in part on the achievement of the
Company or individual performance factors or criteria as the Administrator may
deem appropriate.
(o) "Inside Director" shall mean a Director who is an Employee.
(p) "Insider" shall mean an Officer, Director or other person whose
transactions in the Common Stock are subject to Section 16(b) of the Exchange
Act.
(q) "Long-Term Performance Award" shall mean an award granted pursuant to
Section 23 of the Plan that is valued in whole or in part based on the
achievement of the Company or individual performance factors or criteria as the
Administrator may deem appropriate.
(r) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(s) "Officer" shall mean an officer of the Company within the meaning of
the rules and regulations promulgated under Section 16 of the Exchange Act.
(t) "Option" shall mean a stock option granted pursuant to the Plan.
(u) "Optioned Stock" shall mean the Common Stock subject to an Option.
<PAGE>
(v) "Optionee" shall mean an Employee, Consultant or Director who receives
an Option.
(w) "Outside Director" shall mean a Director who is not an Employee.
(x) "Parent" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(y) "Plan" shall mean this 1989 Stock Plan, as hereinafter amended from
time to time.
(z) "Restricted Stock" shall mean shares of Common Stock acquired pursuant
to a grant of Stock Purchase Rights under Section 22 of the Plan.
(aa) "Right" shall mean and include Incentive Stock Rights, Stock
Appreciation Rights and Stock Purchase Rights granted pursuant to the Plan.
(bb) "Stock Appreciation Right" shall mean an award made pursuant to
Section 21 of the Plan.
(cc) "Stock Purchase Right" shall mean the right to purchase Common Stock
pursuant to Section 22 of the Plan.
(dd) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(ee) "Subsidiary" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
In addition, the term "Pool," the terms "First Option," "1985/1987 Plan
Option," "1985 Option Plan," "1987 Option Plan," "Subsequent Option,"
"Subsequent 1985/1987 Plan Option" and "Disinterested Committee," the term "Just
Cause," the term "Performance Period," the term "Tax Date," and the terms
"Change of Control," "Potential Change of Control," "Change of Control Price"
and "60-Day Period" shall have the meanings set forth in Sections 3, 4(a), 9(b),
10, 23(a) and 24 of the Plan, respectively.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be optioned, sold or
awarded under the Plan is, prior to 12:00 noon on December 27, 1996, 1,000,000
Shares of Common Stock and, commencing at 12:00 noon on December 27, 1996 and
thereafter, 268,050 shares of Common Stock. Of such Shares, the maximum
aggregate number which may be subject to Options granted to Outside Directors
is, prior to 12:00 noon on December 27, 1996, 125,000 Shares and, commencing at
12:00 noon on December 27, 1996 and thereafter, 33,506 Shares (the "Pool"). The
Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option or Right should expire or become unexercisable for any reason
without having been exercised in full, or if any portion of an Option should be
surrendered unexercised upon the exercise of a Stock Appreciation Right pursuant
to Section 21(a)(i) hereof, the unpurchased Shares which were subject thereto
<PAGE>
shall, unless the Plan shall have been terminated, become available for future
grants of Options or other awards under the Plan. In addition, if any Shares of
Restricted Stock or Shares that are subject to any Incentive Stock Right, Stock
Purchase Right or Long-Term Performance Award granted hereunder are forfeited or
any such award otherwise terminates without a payment being made to a
participant in the form of Common Stock, then in each such case such Shares
shall be returned to the Plan and shall be available for future grants of
Options or other awards under the Plan.
4. Administration of the Plan.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3 promulgated
under the Exchange Act or any successor rule thereto, as in effect at the time
that discretion is being exercised with respect to the Plan ("Rule 16b-3"), and
by the legal requirements relating to the administration of incentive stock
option plans, if any, of applicable securities laws, Delaware corporate law and
the Code (collectively, the "Applicable Laws"), the Plan may (but need not) be
administered by different administrative bodies with respect to Directors,
Officers who are not Directors and Employees who are neither Directors nor
Officers.
(ii) Administration With Respect to Directors and Officers. With respect to
grants of Options to Employees or Consultants who are also Officers or Directors
of the Company, the Plan shall be administered by (A) the Board, if the Board
may administer the Plan in compliance with Rule 16b-3 as it applies to a plan
intended to qualify thereunder as a discretionary plan, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted (I) in such a manner as to permit the Plan to comply with Rule 16b-3
as it applies to a plan intended to qualify thereunder as a discretionary plan
and (II) in such a manner as to satisfy the Applicable Laws.
(iii) Administration With Respect to Outside Directors. With respect to
grants of Options to Outside Directors of the Company, the Plan shall be
administered strictly in accordance with the provisions of Section 4(b).
(iv) Administration With Respect to Other Persons. With respect to grants
of Options to Employees or Consultants who are neither Directors nor Officers of
the Company, the Plan shall be administered by (A) the Board or (B) a Committee
designated by the Board, which Committee shall be constituted in such a manner
as to satisfy the Applicable Laws.
(v) General. Once a Committee has been appointed pursuant to subsection
(ii) or (iv) of this Section 4(a), such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of any Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all members of
a Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws and, in the case of a Committee appointed under
subsection (ii), to the extent permitted by Rule 16b-3 as it applies to a plan
intended to qualify thereunder as a discretionary plan.
<PAGE>
(b) Automatic Grant Formula.
(i) No person shall have any discretion to select which Outside Directors
shall be granted Options or to determine the number of Shares to be covered by
Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an Option to
purchase 15,000 Shares (the "First Option") upon the later to occur of (x) the
effective date of this Plan, as determined in accordance with Section 6 hereof,
or (y) the date on which a person first becomes a Director, whether through
election by the stockholders of the Company or appointment by the Board of
Directors to fill a vacancy; provided, however, that no such First Option shall
be granted to any Outside Director if such Outside Director has been or is
automatically granted an Option to purchase 15,000 Shares (a "1985/1987 Plan
Option") during the same fiscal year of the Company pursuant to Section
4(a)(ii)(C)(II)(aa) of the Company's 1985 Incentive Stock Option Plan (the "1985
Option Plan") or Section 4(b)(ii) of the Company's 1987 Stock Option Plan (the
"1987 Option Plan").
(iii) After an Outside Director has been granted the First Option or a
1985/1987 Plan Option (as the case may be), such Outside Director shall
thereafter be automatically granted an Option to purchase 15,000 Shares (a
"Subsequent Option") on the first day of each fiscal year of the Company
occurring after the grant date of such Outside Director's First Option or
1985/1987 Plan Option (as the case may be); provided, however, that if any
Outside Director has been or is automatically granted an Option to purchase
Shares (a "Subsequent 1985/1987 Plan Option") on an automatic grant date
pursuant to Section 4(a)(ii)(C)(II)(bb) of the 1985 Option Plan or Section
4(b)(iii) of the 1987 Option Plan, then on such automatic grant date such
Outside Director shall be granted a Subsequent Option hereunder to purchase that
number of Shares determined by subtracting the number of Shares covered by the
Subsequent 1985 Plan Option from 15,000.
(iv) Notwithstanding the provisions of subparagraphs (ii) and (iii) hereof,
in the event that a grant would cause the number of Shares subject to
outstanding Options to Outside Directors plus Shares previously purchased upon
exercise of Options by Outside Directors to exceed the Pool (as defined in
Section 3 hereof), then each such automatic grant shall be for that number of
Shares determined by dividing the total number of Shares remaining available for
grant to Outside Directors by the number of Outside Directors on the automatic
grant date. Any further grants shall then be deferred until such time, if any,
as additional Shares become available for grant to Outside Directors through
action of the stockholders to increase the number of Shares which may be granted
to Outside Directors or through cancellation or expiration of Options previously
granted to Outside Directors hereunder.
(v) The terms of an Option granted to an Outside Director shall be as
follows:
(A) the term of the Option shall be seven (7) years.
(B) the Option shall be exercisable only while the Director remains a
Director of the Company, except as set forth in Sections 9(c) and 9(d) hereof.
<PAGE>
(C) the exercise price per Share shall comply with Section 8(a) hereof, but
shall in no event be less than 100% of the fair market value per Share on the
date of grant of the Option.
(D) the Option shall be exercisable cumulatively to the extent of 1/8
(12.5%) of the Shares subject to the Option at the end of each six-month period
which has expired after the commencement of vesting date of the Option. Such
date is determined by the Administrator and stated in each Optionee's agreement.
(vi) Effective at 12:00 noon on December 27, 1996, the provisions of this
Section 4(b) shall terminate and no further grants shall be made hereunder.
(c) Powers of the Administrator. Subject to the provisions of the Plan and,
in the case of a Committee, the specific duties delegated by the Board to such a
Committee, the Administrator shall have the authority, in its discretion: (i) to
grant Incentive Stock Options, Nonstatutory Stock Options, Incentive Stock
Rights, Stock Appreciation Rights, Stock Purchase Rights or Long-Term
Performance Awards; (ii) to determine, upon review of relevant information and
in accordance with Section 8(b) of the Plan, the fair market value of the Common
Stock; (iii) to determine the exercise price or value per Share of Options or
Rights to be granted, which price or value shall be determined in accordance
with Section 8(a), 21(a)(i), 21(b)(i) or 22(a) of the Plan; (iv) to determine
the Employees or Consultants to whom, and the time or times at which, Options,
Rights or Long-Term Performance Awards shall be granted and the number of Shares
to be represented by or the dollar value of each Option, Right or Long-Term
Performance Award; (v) to interpret the Plan; (vi) to prescribe, amend and
rescind rules and regulations relating to the Plan; (vii) to determine the terms
and provisions of each Option, Right or Long-Term Performance Award granted
(which need not be identical) and, with the consent of the holder thereof,
modify or amend each Option, Right or Long-Term Performance Award; (viii) to
accelerate or defer (with the consent of the Holder) the exercise date of any
Option, Right or Long-Term Performance Award consistent with the provisions of
Section 5 of the Plan; (ix) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option, Right or
Long-Term Performance Award previously granted by the Administrator; (x) to
approve forms of agreement for use under the Plan; (xi) to determine whether, to
what extent and under what circumstances Common Stock and other amounts payable
with respect to an award under this Plan shall be deferred either automatically
or at the election of the participant (including providing for and determining
the amount, if any, of any deemed earnings or any deferred amount during any
deferral period); (xii) to reduce the exercise price of any Option to the then
current fair market value of the Common Stock if the fair market value of the
Shares covered by such Option shall have declined since the date the Option was
granted; and (xiii) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(d) Effect of Administrator Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
participants and any other holders of any Options, Rights or Long-Term
Performance Awards granted under the Plan.
5. Eligibility.
(a) Nonstatutory Stock Options, Incentive Stock Rights, Stock Appreciation
Rights, Restricted Stock Rights and Long-Term Performance Awards may be granted
only to Employees, Consultants and Directors. Options intended to qualify as
Incentive Stock Options may be granted only to Employees. An Employee,
<PAGE>
Consultant or Director who has been granted an Option, Right or Long-Term
Performance Award may, if he is otherwise eligible, be granted one or more
additional Options, Rights or Long-Term Performance Awards.
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Non-statutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate fair market
value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Options shall be taken into account in
the order in which they were granted, and the fair market value of the Shares
shall be determined as of the time the Option with respect to such Shares is
granted.
(d) The Plan shall not confer upon any participant any right with respect
to continuation of his employment or consulting relationship with the Company,
nor shall it interfere in any way with his right or the Company's right to
terminate his employment or consulting relationship at any time, with or without
cause.
(e) Notwithstanding the foregoing, the number of Shares subject to an
Option granted to an Outside Director and the terms thereof shall be subject to
the limitations set forth in Section 4(b) hereof.
6. Term of Plan. The Plan shall become effective upon the earlier to occur
of October 16, 1989 or its approval by the stockholders of the Company as
described in Section 18 of the Plan. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 14 of the Plan.
7. Term of Option. At the time an Option is granted, the Administrator
shall specify the period within which the Option may be exercised, provided that
the term of each Incentive Stock Option shall not exceed ten (10) years.
However, in the case of an Incentive Stock Option granted to an Optionee who, at
the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter time as may be provided in the Incentive Stock
Option Agreement.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Administrator, but shall be subject to the following:
(vi) In the case of an Incentive Stock Option
<PAGE>
(A) granted to an Employee who, at the time of the grant of such Incentive
Stock Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the fair market value per
Share on the date of grant.
(B) granted to any other Employee, the per Share exercise price shall be no
less than 100% of the fair market value per Share on the date of grant.
(vii) In the case of a Nonstatutory Stock Option
(A) granted to a person who at the time of the grant of such Option, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the fair market value per Share on
the date of the grant.
(B) granted to an Outside Director, the per Share exercise price shall be
no less than 100% of the fair market value per Share on the date of grant.
(C) granted to any person, the per Share exercise price shall be no less
than 50% of the fair market value per Share on the date of grant.
(viii) Notwithstanding the foregoing, in the event that the fair market
value of the Shares covered by any Option shall have declined since the date
such Option was granted, the Administrator shall have the authority, in its sole
discretion, to reduce the per Shares exercise price of such Option to the then
current fair market value per share.
(b) Fair Market Value. The fair market value shall be determined by the
Administrator in its discretion; provided, however, that where there is a public
market for the Common Stock, the fair market value per Share shall be the mean
of the bid and asked prices of the Common Stock for the date of grant, as
reported in the Wall Street Journal (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) System) or, in the event the Common Stock is traded on the NASDAQ
National Market System or listed on a stock exchange, the fair market value per
Share shall be the closing price on such system or exchange on the date of grant
of the Option, as reported in the Wall Street Journal.
(c) Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant of the Option) and may consist entirely
of:
(i) cash;
(ii) check;
<PAGE>
(iii) promissory note;
(ix) other Shares of Common Stock which (A) either have been owned by the
Optionee for more than six (6) months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (B) have a fair market
value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised; for purposes of this
subparagraph (ix), shares acquired pursuant to any stock option, stock purchase,
stock bonus or other employee benefit plan of the Company shall be deemed to
have been acquired from the Company;
(x) authorization for the Company to retain from the total number of Shares
as to which the Option is exercised that number of Shares having a fair market
value on the date of exercise equal to the exercise price for the total number
of Shares as to which the Option is exercised;
(xi) delivery of a properly executed exercise notice together with
irrevocable written instructions to the Company to sell the Shares as to which
the Option is being exercised and to retain all or a portion of the proceeds to
pay the exercise price;
(xii) if the Optionee is an Insider, delivery of an irrevocable
subscription agreement for the Shares as to which the Option is being exercised
which obligates the Optionee to take and pay for such Shares within one (1) year
of the date of delivery of such subscription agreement;
(xiii) any combination of such methods of payment; or
(xiv) such other consideration and method of payment for the issuance of
Shares to the extent permitted under Sections 152 and 153 of the Delaware
General Corporation Law.
In making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company (Section 143 of the Delaware General
Corporation Law).
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Administrator, including performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 18 hereof is
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
<PAGE>
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. In the
event that the exercise of an Option is treated in part as the exercise of an
Incentive Stock Option and in part as the exercise of a Nonstatutory Stock
Option pursuant to Section 5(b), the Company shall issue a separate stock
certificate evidencing the Shares treated as acquired upon exercise of an
Incentive Stock Option and a separate stock certificate evidencing the Shares
treated as acquired upon exercise of a Nonstatutory Stock Option, and shall
identify each such certificate accordingly in its stock transfer records. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Notwithstanding the provisions of the foregoing paragraph, subject to the
consent of the Administrator, an Option having a per Share exercise price which
is below the fair market value per Share on the date of exercise may be
exercised by delivery to the Company in accordance with the terms of the Option
of a written notice of such exercise and written instructions to the Company to
sell the Shares with respect to which the Option is exercised and to retain all
or a portion of the proceeds of such sale in full payment for such Shares.
In the event that an Option is exercised in the manner described in the
preceding paragraph, no stock certificate shall be issued to evidence the Shares
with respect to which the Option is exercised. In the event that an Option is
exercised using the "net exercise" method described in Section 8(c)(V), no stock
certificate shall be issued to evidence the Shares retained by the Company to
pay the exercise price for the Shares as to which the Option is exercised.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee, Consultant or Director. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), such Optionee may, but only within thirty (30)
days (or such other period of time not exceeding three (3) months in the case of
an Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of grant of the Option)
after the date of such termination (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement),
exercise his Option to the extent that he was entitled to exercise it at the
date of such termination. To the extent that he was not entitled to exercise the
Option at the date of such termination, or if he does not exercise such Option
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate. Options granted to Outside Directors shall terminate
immediately upon cessation of service as a Director.
<PAGE>
Notwithstanding the foregoing, if the Administrator determines that an
Optionee has been terminated from his employment or consulting relationship with
the Company for Just Cause (as defined below), all unexercised portions of any
Option held by such Optionee shall expire as of the date of such termination and
such Optionee shall thereafter have no rights under the Plan or any Option
granted to him thereunder with respect to any unexercised portion of any such
Option, whether or not vested. For purposes of this Section 9(b), "Just Cause"
means that the termination of the employment or consulting relationship of an
Employee or Consultant has taken place as a result of (i) an act or acts of
dishonesty taken by such Employee or Consultant and intended to result in
substantial gain or personal enrichment of the Employee or Consultant at the
expense of the Company, (ii) persistent failure to perform the duties and
obligations of such Employee's or Consultant's employment or consulting
relationship which are demonstrably willful and deliberate on the Employee's or
Consultant's part and which are not remedied in a reasonable period of time
after receipt of written notice from the Company, or (iii) the conviction of
such Employee or Consultant of a felony.
(c) Disability of Optionee. Notwithstanding the provisions of Section 9(b)
above, in the event of termination of an Optionee's Continuous Status as an
Employee, Consultant or Director as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), he may, but only within
six (6) months (or such other period of time not exceeding twelve (12) months as
is determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) from the
date of such termination (but in no event later than the date of expiration of
the term of such Option as set forth in the Option Agreement), exercise his
Option to the extent he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of termination, or if he does not exercise such Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. Notwithstanding the provisions of Section 9(b)
above, in the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his death an
Employee, Consultant or Director of the Company and who shall have been in
Continuous Status as an Employee, Consultant or Director since the date of grant
of the Option, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
would have accrued had the Optionee continued living and remained in Continuous
Status as an Employee, Consultant or Director six (6) months after the date of
death; or
(ii) if an Employee or Consultant, within thirty (30) days (or such other
period of time not exceeding three (3) months as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) after the termination of
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within six (6) months following the date of death (but in no event
later than the date of expiration of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who acquired the
<PAGE>
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.
(e) Leaves of Absence. In the event a leave of absence of thirty days or
fewer is taken by an Optionee, vesting on any Options held by such Optionee will
continue as if the Optionee had remained at work with the Company during such
period. In the event of a leave of absence of more than thirty days is taken by
an Optionee, vesting on any Options held by such Optionee shall cease as of the
thirty-first day of such leave of absence and shall recommence at the time of
such Optionee's return to work at the Company, unless specifically provided
otherwise in the Option Agreement or by the Administrator in its discretion.
(f) Rule 16b-3. Options granted to persons subject to Section 16(b) of the
Exchange Act must comply with the applicable provisions of Rule 16b-3 and the
stock option agreements relating to such options shall contain such additional
conditions or restrictions as may be required to be contained in such agreements
to qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
10. Stock Withholding to Satisfy Withholding Tax Obligation. When a
participant incurs tax liability in connection with the exercise of an Option,
or the receipt of shares pursuant to an Incentive Stock Right or a Long-Term
Performance Award, which tax liability is subject to tax withholding under
applicable tax laws, and the participant is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the participant may
satisfy the withholding tax obligation by making an election to have the Company
withhold from the shares of Common Stock or other securities of the Company to
be issued that number of shares having a fair market value equal to the amount
required to be withheld or to tender to the Company at the time of exercise of
the Option or the receipt of shares pursuant to the Incentive Stock Right or the
Long-Term Performance Award that number of other shares of Common Stock or other
securities of the Company owned the participant having such fair market value.
The fair market value of the Shares so withheld or tendered shall be the closing
price of the Common Stock on the NASDAQ National Market System or a stock
exchange on the date that the amount of tax to be withheld is to be determined
(the "Tax Date"), as reported in the Wall Street Journal.
All elections by participants to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Company and shall be
subject to the following limitations:
(i) the election must be made on or prior to the applicable Tax Date;
(ii) once made, the election shall be irrevocable as to the particular
Shares as to which the election is made;
(iii) all elections shall be subject to the consent or disapproval of the
Board or its Committee at any time;
(iv) if the participant is an Insider, the election may not be made within
six (6) months of the date of grant of the Option, Incentive Stock Right or
Long-Term Performance Award; provided, however, that this limitation shall not
<PAGE>
apply in the event of death or disability of the participant occurring prior to
the expiration of the six-month period; and
(v) if the participant is an Insider, the election must be made either (A)
six (6) months prior the Tax Date (as determined in accordance with Section 83
of the Code) or (B) in any 10-day period beginning on the third business day
following the date of release by the Company for publication of quarterly or
annual summary statements of the Company's sales and earnings.
In the event the election to have Shares withheld is made by a participant
who is an Insider and the Tax Date is deferred until six (6) months after
exercise of the Option or receipt of shares pursuant to an Incentive Stock Right
or a Long-Term Performance Award because no election is filed under Section
83(b) of the Code, the participant shall receive the full number of Shares with
respect to which the Option is exercised or the full number of Shares to be
issued under the Incentive Stock Right or the Long-Term Performance Award, but
such participant shall be unconditionally obligated to tender back to the
Company the proper number of Shares on the Tax Date.
11. Non-Transferability of Options, Rights and Awards. Options, Rights and
Long-Term Performance Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent or distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder. The designation of a beneficiary by an Optionee does
not constitute a transfer. An Option may be exercised, during the lifetime of
the recipient, only by the recipient or a transferee permitted by this Section
11.
12. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, Right or Long-Term Performance
Award, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options, Rights or Long-Term
Performance Awards have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Right or upon the occurrence of
any of the other events specified in Section 3 of the Plan, as well as the price
per share of Common Stock covered by each such outstanding Option, Right or
Long-Term Performance Award shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option,
Right or Long-Term Performance Award.
<PAGE>
In the event of the proposed dissolution or liquidation of the Company,
each outstanding Option, Right or Long-Term Performance Award will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Administrator. The Administrator may, in the exercise of its
sole discretion in such instances, declare that any Option, Right or Long-Term
Performance Award shall terminate as of a date fixed by the Administrator and
give each recipient the right to exercise his Option or Right as to all or any
part of the Shares covered thereby, including Shares as to which the Option or
Right would not otherwise be exercisable.
In the event of a proposed sale of all or substantially all of the assets
of the Company, or the merger of the Company with or into another corporation,
each outstanding Option, Right or Long-Term Performance Award shall be assumed
or an equivalent option or award shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless such
successor corporation does not agree to assume the Option, Right or Long-Term
Performance Award or to substitute an equivalent option or award, in which case
the Administrator shall, in lieu of such assumption or substitution, provide for
the Optionee to have the right to exercise the Option or Right as to all of the
Shares covered thereby, including Shares as to which the Option or Right would
not otherwise be exercisable. The Option, Right or Long-Term Performance Award
shall be deemed to be assumed if, following the sale of assets or merger, the
Option, Right or Long-Term Performance Award confers the right to purchase, or
receive for each Share subject to the Option, Right or Long-Term Performance
immediately prior to the sale of assets or merger, the consideration (whether
stock, cash or other securities or property) received in the sale of assets or
merger by holders of Common Stock for each share of Common stock held on the
effective date of transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of Common Stock); provided, however, that if such
consideration received in the sale of assets or merger was not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation and the holder of the Option, Right or
Long-Term Performance Award, provide for the consideration to be received upon
exercise of the Option, Right or Long-Term Performance Award to be solely common
stock of the successor corporation or its parent equal in fair market value to
the per share consideration received by holders of Common Stock in the sole of
assets or merger. If the Administrator makes an Option or Right fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the recipient that the Option or
Right shall be fully exercisable for a period of thirty (30) days from the date
of such notice, and the Option will terminate upon the expiration of such
period.
13. Time of Granting Options, Rights and Awards. The date of grant of an
Option, Right or Long-Term Performance Award shall, for all purposes, be the
date on which the Administrator makes the determination granting such Option,
Right or Long-Term Performance Award; provided, however, that the date of grant
of automatic grants of Options to Outside Directors shall be the date determined
in accordance with Section 4(b)(ii) or (iii) hereof. Written notice of the
determination shall be given to each Employee or Consultant to whom an Option,
Right or Long-Term Performance Award is so granted within a reasonable time
after the date of such grant.
<PAGE>
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable; provided
that the following revisions or amendments shall require approval of the
stockholders of the Company in the manner described in Section 18 of the Plan:
(i) any increase in the number of Shares subject to the Plan, other than in
connection with an adjustment under Section 12 of the Plan;
(ii) any change in the designation of the class of persons eligible to be
granted Options, Rights or Long-Term Performance Awards; or
(iii) if the Company has a class of equity securities registered under
Section 12 of the Exchange Act at the time of such revision or amendment, any
revision or amendment that would constitute an amendment for which stockholder
approval is required in order to comply with Rule 16b-3 (or any successor rule)
promulgated under the Exchange Act.
(b) Stockholder Approval. The Company shall obtain stockholder approval of
any Plan amendment to the extent necessary and desirable to comply with Rule
16b-3 under the Exchange Act or with Section 422 of the Code (or any successor
rule or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock is
listed or quoted). Such stockholder approval, if required, shall be obtained in
such a manner and to such a degree as is required by the applicable law, rule or
regulation.
(c) Effect of Amendment or Termination. Any such amendment or termination
of the Plan shall not affect Options, Rights or Long-Term Performance Awards
already granted and such Options, Rights or Long-Term Performance Awards shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the recipient and the
Administrator, which agreement must be in writing and signed by the recipient
and the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to an award under the Plan or the exercise of an Option or Right unless such
award or the exercise of such Option or Right and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the receipt of an award under the Plan or exercise of an
Option or Right, the Company may require the person receiving such award or
exercising such Option or Right to represent and warrant at the time of any such
receipt or exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
<PAGE>
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
16. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
17. Option, Right and Award Agreements. Options, Rights and Long-Term
Performance Awards shall be evidenced by written option, right or award
agreements in such form as the Administrator shall approve.
18. Stockholder Approval.
(a) Continuance of the Plan shall be subject to approval by the
stockholders of the Company in accordance with applicable state law within
twelve (12) months before or after the date the Plan is adopted.
(b) If and in the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the stockholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
(c) If any required approval by the stockholders of the Plan itself or of
any amendment thereto is solicited at any time otherwise than in the manner
described in Section 18(b) hereof, then the Company shall, at or prior to the
first annual meeting of stockholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
officer or director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote for the Plan
substantially the same information which would be required (if proxies to be
voted with respect to approval or disapproval of the Plan or amendment were then
being solicited) by the rules and regulations in effect under Section 14(a) of
the Exchange Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and Exchange
Commission four copies of the written information referred to in subsection (i)
hereof not later than the date on which such information is first sent or given
to stockholders.
<PAGE>
19. Information to Recipients of Options, Rights and Long-Term Performance
Awards. The Company shall provide to each recipient of an Option, Right or
Long-Term Performance Award, during the period for which such recipient has one
or more Options, Rights or Long-Term Performance Awards outstanding, copies of
all annual reports and other information which are provided to all stockholders
of the Company. The Company shall not be required to provide such information if
the issuance of Options, Rights and Long-Term Performance Awards under the Plan
is limited to key employees whose duties in connection with the Company assure
their access to equivalent information.
20. Additional Restrictions of Rule 16b-3. The terms and conditions of
Options granted hereunder to, and of the purchase of Shares upon exercise of
Options by, Officers and Directors shall comply with the applicable provisions
of Rule 16b-3 with respect to discretionary plans to the extent that such
provisions are required to be contained in the Plan or the stock option
agreements. This Plan shall be deemed to contain, and the stock option
agreements relating to such Options shall contain, and the Shares issued upon
exercise thereof shall be subject to, such additional conditions and
restrictions (if any) as may be required by Rule 16b-3 (as it applies to
discretionary plans) to be contained in the Plan or such agreements in order to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
21. Incentive Stock Rights.
(a) Procedure. The Administrator, in its discretion, may grant to eligible
participants Incentive Stock Rights composed of incentive stock units. Incentive
Stock Rights shall be evidenced by Incentive Stock Right agreements in such form
and not inconsistent with the Plan as the Administrator shall approve from time
to time, which agreements shall contain in substance the following terms and
conditions:
(i) Incentive Stock Units. An Incentive Stock Right agreement shall specify
the number of incentive stock units to which it pertains. Each incentive stock
unit shall be equivalent to one Share of Common Stock, and shall entitle the
holder to receive, without payment of cash to the Company, one Share of Common
Stock or, in the discretion of the Administrator, the cash equivalent of one
Share of Common Stock, in consideration for services performed for the Company
or for its benefit by the person receiving the Right subject to the lapse of the
incentive periods (as defined in subparagraph (ii) hereof). An incentive stock
unit that becomes payable may be paid currently or on a deferred basis with such
interest or earnings equivalent as may be determined by the Administrator.
(ii) Incentive Period. The holder of Incentive Stock Rights shall be
entitled to receive Shares of Common Stock only after the lapse of such
incentive periods, and in such manner, as shall be fixed by the Administrator at
the time of grant of Incentive Stock Rights. (Such period or periods so fixed is
or are herein referred to as the "incentive period.") To the extent the holder
of Incentive Stock Rights receives Shares of Common Stock on the lapse of the
incentive period, an equivalent number of incentive stock units subject to such
Rights shall be deemed to have been discharged.
<PAGE>
(iii) Termination of Status as an Employee or Consultant by Reason of Death
or Disability. In the event that any person to whom Incentive Stock Rights have
been issued under the Plan terminates his Continuous Status as an Employee or
Consultant (as the case may be) due to death or total and permanent disability
(as defined in Section 22(e)(3) of the Code), each incentive period established
pursuant to Section 21(a)(ii) shall lapse on the date of such termination as to
the number of full incentive stock units determined by multiplying the total
number of incentive stock units applicable to such incentive period by a
fraction, the numerator of which shall be the number of full calendar months
between the date of grant of the Incentive Stock Right and the date of such
termination and the denominator of which shall be the number of full calendar
months between the date of grant of the Incentive Stock Rights and the date such
incentive period for such units would, but for such termination, have lapsed.
Units for which the incentive period does not lapse pursuant to the foregoing
sentence shall terminate on the termination date of the holder's employment or
consulting relationship (as the case may be).
(iv) Termination of Status as an Employee or Consultant for any Other
Reason. In the event that any person to whom Incentive Stock Rights have been
issued under the Plan terminates his Continuous Status as an Employee or
Consultant (as the case may be) for any reason (including dismissal by the
Company with or without cause), other than death or total and permanent
disability, such Incentive Stock Rights as to which the incentive period has not
lapsed shall terminate on the termination date of the holder's employment or
consulting relationship (as the case may be).
(v) Leaves of Absence. In the event of any leave of absence taken by any
person to whom Incentive Stock Rights have been issued, the Administrator may
make such provision respecting continuance of the Incentive Stock Right during
the leave of absence as it may deem appropriate.
(vi) Issuance of Shares. With respect to Incentive Stock Rights payable in
Common Stock, upon the lapse of an incentive period, the Company shall, without
transfer or issue tax to the person entitled to receive the Shares, deliver to
such person a certificate or certificates for a number of Shares equal to the
number of incentive stock units as to which an incentive period has lapsed.
(b) Dividend Equivalents. The holder of an Incentive Stock Right shall be
entitled to receive from the Company cash payments at the same time and in the
same amounts that a holder of record of the number of Shares of Common Stock
equal to the number of incentive stock units covered by such Right would be
entitled to receive as dividends on such Common Stock. Such right to cash
payment on an incentive stock unit shall apply to all dividends the record date
for which occurs at any time during the period commencing on the date the
Incentive Stock Right is granted and ending on the date that the holder of such
Right becomes a stockholder of record with respect to such incentive stock unit
as a result of the lapse of an incentive period or the date the Incentive Stock
Right otherwise terminates, whichever occurs first.
22. Stock Appreciation Rights.
(a) Grants With Options. At the sole discretion of the Administrator, Stock
Appreciation Rights may be granted in connection with all or any part of an
Option, either concurrently with the grant of the Option or at any time
<PAGE>
thereafter during the term of the Option. The following provisions apply to
Stock Appreciation Rights that are granted in connection with Options:
(i) The Stock Appreciation Right shall entitle the Optionee to exercise the
rights by surrendering to the Company unexercised a portion of the underlying
Option. The Optionee shall receive in exchange from the Company an amount equal
to the excess of (x) the fair market value on the date of exercise of the Shares
covered by the surrendered portion of the underlying Option (as determined in
accordance with subparagraph (e) hereof) over (y) the exercise price of the
Shares covered by the surrendered portion of the underlying Option.
Notwithstanding the foregoing, the Administrator may place limits on the amount
that may be paid upon exercise of an Stock Appreciation Right; provided,
however, that such limit shall not restrict the exercisability of the underlying
Option.
(ii) When a Stock Appreciation Right is exercised, the underlying Option,
to the extent surrendered, shall no longer be exercisable.
(iii) A Stock Appreciation Right shall be exercisable only when and to the
extent that the underlying Option is exercisable and shall expire no later than
the date on which the underlying Option expires.
(iv) A Stock Appreciation Right may only be exercised at a time when the
fair market value of the Shares covered by the underlying Option (as determined
in accordance with subparagraph (e) hereof) exceeds the exercise price of the
Shares covered by the underlying Option. Notwithstanding the foregoing, neither
a Stock Appreciation Right nor any related Option shall be exercisable within
the first six (6) months of their respective terms; provided, however, that this
limitation shall not apply in the event that death or disability of the Optionee
occurs prior to the expiration of the six-month period.
(v) In the event that a Stock Appreciation Right is granted that relates to
an Incentive Stock Option, such Right shall contain such additional or different
terms as may be necessary under applicable regulations to preserve treatment of
the Incentive Stock Option under Section 422A of the Code.
(b) Grants Without Options. At the sole discretion of the Administrator,
Stock Appreciation Rights may be granted without related Options. The following
provisions apply to Stock Appreciation Rights that are not granted in connection
with Options:
(i) The Stock Appreciation Right shall entitle the holder, by exercising
the Stock Appreciation Right, to receive from the Company an amount equal to the
excess of (x) the fair market value of the Shares covered by the exercised
portion of the Stock Appreciation Right, as of the date of such exercise (as
determined in accordance with subparagraph (e) hereof), over (y) the fair market
value of the Shares covered by the exercised portion of the Stock Appreciation
Right, as of the date on which the Stock Appreciation Right was granted (as
determined in accordance with subparagraph (e) hereof); provided, however, that
the Administrator may place limits on the amount that may be paid upon exercise
of a Stock Appreciation Right.
<PAGE>
(ii) Stock Appreciation Rights shall be exercisable, in whole or in part,
at such times as the Administrator shall specify in the holder's Stock
Appreciation Right agreement. Notwithstanding the foregoing, a Stock
Appreciation Right shall not be exercisable within the first six (6) months of
its term; provided, however, that this limitation shall not apply in the event
that death or disability of the holder occurs prior to the expiration of the
six-month period.
(c) Form of Payment. The Company's obligation arising upon the exercise of
a Stock Appreciation Right may be paid currently or on a deferred basis with
such interest or earnings equivalent as may be determined by the Administrator,
and may be paid in Common Stock or in cash, or in any combination of Common
Stock and cash, as the Administrator, in its sole discretion, may determine.
Shares of Common Stock issued upon the exercise of a Stock Appreciation Right
shall be valued at their fair market value as of the date of exercise (as
determined in accordance with subparagraph (e) hereof).
(d) Compliance With Section 16(b). Insiders may only exercise a Stock
Appreciation Right during the period beginning on the third business day and
ending on the twelfth business day following the release for publication of
quarterly or annual summary statements of the Company's sales and earnings. This
condition shall be deemed to be satisfied if the selected financial data (i)
appears on a wire service, (ii) appears in a financial news service, (iii)
appears in a newspaper of general circulation, or (iv) is otherwise made
publicly available.
(e) Fair Market Value. For purposes of this Section 22, the fair market
value of Shares shall be the closing price of the Common Stock on the NASDAQ
National Market System or a stock exchange on the date of exercise or the date
of grant (as the case may be) of the Stock Appreciation Right, as reported in
the Wall Street Journal.
23. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either alone,
in addition to or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. After the Administrator determines that it will
offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares of Common Stock that such person shall be
entitled to purchase, the price to be paid (which price shall not be less than
50% of the fair market value of the Shares as of the date of the offer) and the
time within which such person must accept such offer, which shall in no event
exceed thirty (30) days from the date of the Administrator's determination to
grant the Stock Purchase Right. For purposes of this Section 23(a), the fair
market value of Shares shall be the closing price of the Common Stock on the
NASDAQ National Market System or a stock exchange on the date of offer of the
Stock Purchase Right, as reported in the Wall Street Journal. The offer shall be
accepted by execution of a Restricted Stock purchase agreement in the form
determined by the Administrator. Shares purchased pursuant to the grant of a
Stock Purchase Right shall be referred to herein as "Restricted Stock."
(b) Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock purchase agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment or consulting relationship with the Company for any reason (including
<PAGE>
death or disability). The purchase price for shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine.
(c) Other Provisions. The Restricted Stock purchase agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Administrator in its sole discretion. In addition, the
provisions of Restricted Stock purchase agreements need not be the same with
respect to each purchaser.
(d) Rights as a Stockholder. Once the Stock Purchase Right is exercised,
the purchaser shall have the rights equivalent to those of a stockholder, and
shall be a stockholder when his purchase is entered upon the records of the duly
authorized transfer agent of the Company. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the Stock
Purchase Right is exercised, except as provided in Section 12 of the Plan.
24. Long-Term Performance Awards.
(a) Administration. Long-Term Performance Awards may be granted either
alone or in addition to other awards granted under the Plan. The Administrator
shall determine the nature, length and starting date of the performance period
(the "Performance Period") for each Long-Term Performance Award, and shall
determine the performance objectives to be used in the valuation of Long-Term
Performance Awards and the extent to which such Long-Term Performance Awards
have been earned. Performance objectives may vary from participant to
participant and between groups of participants and shall be based upon such
Company, Subsidiary or individual performance factors or criteria as the
Administrator may deem appropriate. Performance Periods may overlap and
participants may participate simultaneously with respect to Long-Term
Performance Awards that are subject to different Performance Periods and
different performance factors and criteria. Long-Term Performance Awards shall
be confirmed by, and be subject to the terms of, a Long-Term Performance Award
agreement. The terms of such awards need not be the same with respect to each
participant.
At the beginning of each Performance Period, the Administrator shall
determine for each Long-Term Performance Award subject to such Performance
Period the range of dollar values or number of shares of Common Stock to be
awarded to the participant at the end of the Performance Period if and to the
extent that the relevant measures of performance for such Long-Term Performance
Award are met. Such dollar values or number of shares of Common Stock may be
fixed or may vary in accordance with such performance or other criteria as may
be determined by the Administrator.
(b) Adjustment of Awards. The Administrator may adjust the performance
goals and measurements applicable to the Long-Term Performance Awards to take
into account changes in law and accounting and tax rules and to make such
adjustments as the Administrator deems necessary or appropriate to reflect the
inclusion or exclusion of the impact of extraordinary or unusual items, events
or circumstances in order to avoid windfalls or hardships.
<PAGE>
(c) Termination. Subject to Section 25 of the Plan and unless otherwise
provided in the applicable Long-Term Performance Award agreement, if a
participant terminates his Continuous Status as an Employee or Consultant during
a Performance Period because of death or disability, such participant shall be
entitled to a payment with respect to each outstanding Long-Term Performance
Award at the end of the applicable Performance Period:
(i) based, to the extent relevant under the terms of the award, upon the
participant's performance for the portion of such Performance Period ending on
the date of termination and the performance of the Company or any applicable
business unit for the entire Performance Period, and
(ii) prorated for the portion of the Performance Period during which the
participant was employed by the Company,
all as determined by the Administrator. The Administrator may provide for an
earlier payment in settlement of such award in such amount and under such terms
and conditions as the Administrator deems appropriate.
Subject to Section 25 of the Plan and except as otherwise provided in the
applicable Long-Term Performance Award agreement, if a participant terminates
his Continuous Status as an Employee or Consultant during a Performance Period
for any other reason, then such participant shall not be entitled to any payment
with respect to the Long-Term Performance Award subject to such Performance
Period, unless the Administrator shall otherwise determine.
(d) Form of Payment. The earned portion of a Long-Term Performance Award
may be paid currently or on a deferred basis with such interest or earnings
equivalent as may be determined by the Administrator. Payment shall be made in
the form of cash or whole Shares of Common Stock, including Restricted Stock, or
a combination thereof, either in a lump sum payment or in annual installments,
all as the Administrator shall determine. If and to the extent a Long-Term
Performance Award is payable in Common Stock and the full amount thereof is not
paid in Common Stock, then the shares of Common Stock representing the portion
of the value of the Long-Term Performance Award not paid in Common Stock shall
again become available for award under the Plan.
25. Change of Control.
(a) Impact of Event. In the event of a "Change of Control" as defined in
paragraph (e) below, any or all or none of (i), (ii), (iii) or (iv) of the
acceleration and valuation provisions that follow shall apply, as the Board, in
its discretion, shall determine prior to such Change of Control. Neither the
Board nor any person shall have any discretion with respect to the application
of (v):
(i) Any Options and Stock Appreciation Rights outstanding as of the date of
such Change in Control is determined to have occurred that are not yet
exercisable and vested on such date, shall become fully exercisable and vested.
<PAGE>
(ii) The restrictions and deferral limitations applicable to any
outstanding Incentive Stock Rights, Stock Purchase Rights and Long-Term
Performance Awards, in each case to the extent not already vested, shall lapse
and such Rights and awards shall become fully vested.
(iii) Any outstanding Long-Term Performance Awards shall become fully
vested and shall be paid out on a pro rata basis, based on the target values of
each award and the number of months completed in the Performance Period,
compared to the total number of months.
(iv) To the extent that they are exercisable and vested, all outstanding
Options, Incentive Stock Rights, Stock Appreciation Rights and Long-Term
Performance Awards, unless otherwise determined by the Board at or after grant,
shall be terminated in exchange for a cash payment at the Change of Control
Price, reduced by the exercise price applicable to such Options, Incentive Stock
Rights, Stock Appreciation Rights and Long-Term Performance Awards. These cash
proceeds shall be paid to the Optionee or, in the event of death of an Optionee
prior to payment, to the estate of the Optionee or to a person who acquired the
right to exercise the Option, Incentive Stock Rights, Stock Appreciation Right
or Long-Term Performance Award by bequest or inheritance.
(v) In the case of Options granted to Outside Directors pursuant to Section
4(b), the provisions of (a)(i) and (a)(ii) of this section shall apply to such
Option.
(b) Definition of "Change of Control". For purposes of this Section 25, a
"Change of Control" means the happening of any of the following:
(i) When any person, as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company, a Subsidiary or a Company employee
benefit plan, including any trustee of such plan acting as trustee) is or
becomes "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company's then outstanding
securities; or
(ii) The occurrence of a transaction requiring stockholder approval, or
involving the sale of all or substantially all of the assets of the Company or
the merger of the Company with or into another corporation.
(c) Change of Control Price. For purposes of this Section 25, the "Change
of Control Price" shall be, as determined by the Board, (i) the highest closing
sale price of a share of the Common Stock as reported by the NASDAQ National
Market System, as reported in the Wall Street Journal (or, in the event the
Common Stock is listed on a stock exchange, the highest closing price on such
exchange as reported in the Wall Street Journal or such other source of
composite quotations as the Board deems reliable), at any time within the 60-day
period immediately preceding the date of determination of the Change of Control
Price by the Board (the "60-Day Period"), or (ii) the highest price paid or
offered, as determined by the Board, in any bona fide transaction or bona fide
offer related to the Change of Control of the Company, at any time within the
60-Day Period, or (iii) some lower price as the Board, in its discretion,
determines to be a reasonable estimate of the fair market value of a share of
Common Stock.
<PAGE>
26. Participation by Foreign Nationals and Others. In order to fulfill the
purposes of this Plan and without amending the Plan, the Administrator may
modify grants to participants who are foreign nationals or who reside or are
employed outside the United States to recognize differences in local law, tax
policy or custom.
27. Limitation on Options Granted to Employees. The following limitations
shall apply to grants of Options to Employees:
(i) In any fiscal year of the Company, no Employee shall be granted, prior
to 12:00 noon on December 27, 1996, Options to purchase more than 250,000 Shares
and, commencing at 12:00 noon on December 27, 1996 and thereafter, Options to
purchase more than 67,012 Shares.
(ii) In connection with his or her initial employment prior to 12:00 noon
on December 27, 1996, an Employee may be granted Options to purchase up to an
additional 250,000 Shares and, in connection with such employment commencing at
12:00 noon on December 27, 1996 and thereafter, Options to purchase up to an
additional 67,012 Shares, which Options shall not count against the limit set
forth in Section 27(i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 12 hereof.
(iv) If an Option is cancelled (other than in connection with a transaction
described in Section 12 hereof), the cancelled Option will be counted against
the limit set forth in this Section 27. For this purpose, if the exercise price
of an Option is reduced, the transaction will be treated as a cancellation of
the Option and the grant of a new Option.
SOFTWARE PUBLISHING CORPORATION
1991 STOCK OPTION PLAN
(as amended through December 27, 1996)
1. Purposes of the Plan. The purposes of this Stock Option Plan are:
to attract and retain the best available personnel for positions of
substantial responsibility,
to provide additional incentive to Employees, Consultants and Directors,
and
to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2 Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under state corporate and securities laws
and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in accordance with
Section 4 of the Plan.
(f) "Common Stock" means, prior to 12:00 noon on December 27, 1996, the
Common Stock, $.001 par value, of Software Publishing Corporation and,
commencing at 12:00 noon on December 27, 1996 and thereafter, the Common Stock,
$.001 par value, of Allegro New Media, Inc.
(g) "Company" means, prior to 12:00 noon on December 27, 1996, Software
Publishing Corporation, a Delaware corporation and, commencing at 12:00 noon on
December 27, 1996 and thereafter, Allegro New Media, Inc., a Delaware
corporation.
(h) "Consultant" means any person, including advisors and any non-employee
Directors of the Company, engaged by the Company or a Parent or Subsidiary to
render services and who is compensated for such services.
(i) "Continuous Status as an Employee, Consultant or Director" means that
the employment, consulting or director relationship is not interrupted or
terminated by the Company, any Parent or Subsidiary. Continuous Status as an
Employee, Consultant or Director shall not be considered interrupted in the case
of: (i) any leave of absence approved by the Board, including sick leave,
military leave, or any other personal leave; provided, however, that for
<PAGE>
purposes of Incentive Stock Options, any such leave may not exceed ninety (90)
days, unless reemployment upon the expiration of such leave is guaranteed by
contract (including certain Company policies) or statute; or (ii) transfers
between locations of the Company or between the Company, its Parent, its
Subsidiaries or its successor.
(j) "Director" means a member of the Board of Directors of the Company.
(k) "Disability" means total and permanent disability as defined in Section
22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors, employed
for at least twenty (20) hours per week by the Company or any Parent or
Subsidiary of the Company. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(n) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the National Market of The
Nasdaq Stock Market, Inc. ("Nasdaq"), the Fair Market Value of a Share of Common
Stock shall be the closing price for such stock as quoted on such system or
exchange (or the exchange with the greatest volume of trading in Common Stock)
on the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on Nasdaq (but not on the National
Market thereof) or is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the bid and asked prices for the Common Stock on
the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common Stock, the
Fair Market Value shall be determined in good faith by the Administrator.
(o) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
(q) "Notice of Grant" means a written notice evidencing certain terms and
conditions of an individual Option or Stock Purchase Right grant. The Notice of
Grant is part of the Option Agreement.
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(r) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
(t) "Option Agreement" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(u) "Optioned Stock" means the Common Stock subject to an Option or Stock
Purchase Right.
(v) "Optionee" means an Employee, Consultant or Director who holds an
outstanding Option or Stock Purchase Right.
(w) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this 1991 Stock Option Plan.
(y) "Restricted Stock" means shares of Common Stock acquired pursuant to a
grant of a Stock Purchase Right under Section 11 below.
(aa) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
(bb) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
(cc) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 14 of the Plan.
(dd) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ee) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is, prior to 12:00 noon on December 27, 1996, 1,600,000 Shares of
Common Stock and, commencing at 12:00 noon on December 27, 1996 and thereafter,
428,880 Shares of Common Stock (the "Pool"). The Shares may be authorized, but
unissued, or reacquired Common Stock. However, should the Company reacquire
Shares which were issued
<PAGE>
pursuant to the exercise of an Option or Stock Purchase Right, such Shares shall
not become available for future grant under the Plan.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, the unpurchased Shares which were subject
thereto shall become available for future grant under the Plan (unless the Plan
has terminated).
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered by
different bodies with respect to Directors, Officers who are not Directors, and
Employees who are neither Directors nor Officers.
(ii) Section 162(m). To the extent that the Administrator determines it to
be desirable to qualify Options granted hereunder as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more "outside directors" within the
meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder
as exempt under Rule 16b-3, the transactions contemplated hereunder shall be
structured to satisfy the requirements for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the Plan shall be
administered by (A) the Board or (B) a Committee, which committee shall be
constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan, and
in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common Stock, in accordance
with Section 2(n) of the Plan;
(ii) to select the Consultants, Employees and Directors to whom Options and
Stock Purchase Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and Stock Purchase
Rights or any combination thereof, are granted hereunder;
<PAGE>
(iv) to determine the number of shares of Common Stock to be covered by
each Option and Stock Purchase Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any award granted hereunder. Such terms and conditions may
include, but are not limited to, the exercise price, the time or times when
Options or Stock Purchase Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Stock
Purchase Right or the shares of Common Stock relating thereto, based in each
case on such factors as the Administrator, in its sole discretion, shall
determine;
(vii) to determine whether, to what extent and under what circumstances
Common Stock and other amounts payable with respect to an award under this Plan
shall be deferred either automatically or at the election of the participant
(including providing for and determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral period);
(viii) to reduce the exercise price of any Option or Stock Purchase Right
to the then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option or Stock Purchase Right shall have declined since
the date the Option was granted;
(ix) to construe and interpret the terms of the Plan;
(x) to prescribe, amend and rescind rules and regulations relating to the
Plan;
(xi) to modify or amend each Option or Stock Purchase Right (subject to
Section 15(c) of the Plan);
(xii) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;
(xiii) to determine the terms and restrictions applicable to Options and
Stock Purchase Rights and any Restricted Stock; and
(xiv) to make all other determinations deemed necessary or advisable for
administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.
<PAGE>
5. Eligibility. Options may be granted to Employees, Consultants and
Directors, provided that Incentive Stock Options may only be granted to
Employees. Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. An Optionee who
has been granted an Option may, if such Optionee is otherwise eligible, be
granted additional Option(s).
6. Limitations.
(a) Each Option shall be designated in the Notice of Grant as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designations, to the extent that the aggregate Fair Market Value:
(i) of Shares subject to an Optionee's Incentive Stock Options granted by
the Company, any Parent or Subsidiary, which (ii) become exercisable for the
first time during any calendar year (under all plans of the Company or any
Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares shall be determined as of the time of grant.
(b) Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee's employment
or consulting relationship with the Company, nor shall they interfere in any way
with the Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
effective upon the earlier to occur of its adoption by the Board or its approval
by the stockholders of the Company as described in Section 19 of the Plan. It
shall continue in effect for a term of ten (10) years unless terminated earlier
under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Notice of
Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. However, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
<PAGE>
(A) granted to an Employee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the per
Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant.
(B) granted to any Employee, the per Share exercise price shall be no less
than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share exercise
price shall be no less than 85% of the Fair Market Value per Share on the date
of grant.
(b) Waiting Period and Exercise Dates. At the time an Option is granted,
the Administrator shall fix the period within which the Option may be exercised
and shall determine any conditions which must be satisfied before the Option may
be exercised. In so doing, the Administrator may specify that an Option may not
be exercised until the completion of a service period.
(c) Form of Consideration. The Administrator shall determine the acceptable
form of consideration for exercising an Option, including the method of payment.
In the case of an Incentive Stock Option, the Administrator shall determine the
acceptable form of consideration at the time of grant. Such consideration may
consist of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon exercise of
an option, have been owned by the Optionee for more than six months on the date
of surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which said Option shall be
exercised;
(v) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price;
(vi) any combination of the foregoing methods of payment; or
(vii) such other consideration and method of payment for the issuance of
Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
<PAGE>
(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when (i) the Company receives written
notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) the Company receives full payment for
the Shares with respect to which the Option is exercised or, in the case of an
option exercise pursuant to Section 9(c)(v) above (a "Same Day Sale"), Optionee
delivers irrevocable instructions to Optionee's broker to effect a Same Day Sale
of the Optioned Stock. Full payment may consist of any consideration and method
of payment authorized by the Administrator and permitted by the Option Agreement
and the Plan. Until the stock certificate evidencing such Shares is issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such stock certificate promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 14 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Status as an Employee, Consultant or Director. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant, such Optionee may, but only within thirty (30) days (or such other
period of time not exceeding three (3) months in the case of an Incentive Stock
Option or six (6) months in the case of a Nonstatutory Stock Option, as is
determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) after the
date of such termination (but in no event later than the date of expiration of
the term of such Option as set forth in the Notice of Grant), exercise the
Option to the extent that Optionee was entitled to exercise it at the date of
such termination. To the extent that Optionee was not entitled to exercise the
Option at the date of such termination, or if Optionee does not exercise such
Option (which Optionee was entitled to exercise) within the time specified
herein, the Option shall terminate and the Shares covered by the unexercisable
and unexercised portions of the Option shall revert to the Plan. Notwithstanding
the foregoing, with respect to an Employee or Consultant who is also a Director,
such Optionee shall be entitled, after the date of such termination (but in no
event later than the date of expiration of the term of such Option as set forth
in the Notice of Grant), to exercise the Option as to all of the Optioned Stock
in accordance with the Vesting Schedule set forth in the Notice of Grant.
Notwithstanding the foregoing, if the Administrator determines that an
Optionee has been terminated from Optionee's employment or consulting
relationship with the Company for Just Cause (as defined below), all unexercised
portions of any Option held by such Optionee shall expire as of the date of such
termination and such Optionee shall thereafter have no rights under the Plan or
any Option granted to him or her thereunder with respect to any unexercised
<PAGE>
portion of any such Option, whether or not vested. For purposes of this Section
10(b), "Just Cause" means that the termination of the employment or consulting
relationship of an Employee or Consultant has taken place as a result of (i) an
act or acts of dishonesty taken by such Employee or Consultant and intended to
result in substantial gain or personal enrichment of the Employee or Consultant
at the expense of the Company, (ii) persistent failure to perform the duties and
obligations of such Employee's or Consultant's employment or consulting
relationship which are demonstrably willful and deliberate on the Employee's or
Consultant's part and which are not remedied in a reasonable period of time
after receipt of written notice from the Company, or (iii) the conviction of
such Employee or Consultant of a felony.
(c) Disability of Optionee. Notwithstanding the provisions of Section 10(b)
above, in the event of termination of an Optionee's Continuous Status as an
Employee, Consultant or Director as a result of Optionee's Disability, Optionee
may, but only within six (6) months (or such other period of time not exceeding
twelve (12) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) from the date of such termination (but in no event later
than the date of expiration of the term of such Option as set forth in the
Notice of Grant), exercise the Option to the extent Optionee was entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option (which Optionee was entitled to exercise) within the
time specified herein, the Option shall terminate and the Shares covered by the
unexercisable and unexercised portions of the Option still revert to the Plan.
Notwithstanding the foregoing, with respect to an Employee or Consultant who is
also a Director, such Optionee shall be entitled, after the date of such
termination (but in no event later than the date of expiration of the term of
such Option as set forth in the Notice of Grant), to exercise the Option as to
all of the Optioned Stock in accordance with the Vesting Schedule set forth in
the Notice of Grant.
(d) Death of Optionee. Notwithstanding the provisions of Section 10(b)
above, in the event of the death of Optionee during the term of the Option who
is at the time of death an Employee, Consultant or Director of the Company and
who shall have been in Continuous Status as an Employee, Consultant or Director
since the date of grant of the Option, the Option may be exercised, at any time
within six (6) months following the date of death (but in no event later than
the date of expiration of the term of such Option as set forth in the Notice of
Grant), by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that would have accrued had the Optionee continued living and
remained in Continuous Status as an Employee, Consultant or Director six (6)
months after the date of death.
(e) Leave of Absence. In the event a leave of absence of thirty days or
fewer is taken by an Optionee, vesting on any Options held by such Optionee will
continue as if the Optionee had remained at work with the Company during such
period. In the event a leave of absence of more than thirty days is taken by an
Optionee, vesting on any Options held by such Optionee shall cease as of the
thirty-first day of such leave of absence and shall recommence at the time of
such Optionee's return to work at the Company, unless specifically provided
otherwise in the Option Agreement or by the Board in its discretion.
(f) Stock Withholding to Satisfy Withholding Tax Obligation. When a
participant incurs tax liability in connection with the exercise of an Option,
<PAGE>
which tax liability is subject to tax withholding under applicable tax laws, and
the participant is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the participant may satisfy the withholding
tax obligation by making an election to have the Company withhold from the
shares of Common Stock or other securities of the Company to be issued that
number of shares having a fair market value equal to the amount required to be
withheld or to tender to the Company at the time of exercise of the Option that
number of other shares of Common Stock or other securities of the Company owned
by the participant having such fair market value. The fair market value of the
Shares so withheld or tendered shall be the closing price of the Common Stock on
the NASDAQ National Market System or a stock exchange on the date that the
amount of tax to be withheld is to be determined (the "Tax Date"), as reported
in the Wall Street Journal. Shares withheld or tendered pursuant to this Section
10(g) shall be retired by the Company and shall not become available for future
grant under the Plan.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either alone,
in addition to, or in tandem with other awards granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing, by means of a Notice of Grant, of the terms, conditions and
restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid (which price shall
not be less than 85% of the Fair Market Value of the Shares as of the date of
the offer), and the time within which the offeree must accept such offer, which
shall in no event exceed six (6) months from the date upon which the
Administrator made the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a Restricted Stock Purchase Agreement in
the form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock purchase
agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at a rate determined by the Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Administrator in its sole discretion. In addition, the
provisions of Restricted Stock Purchase Agreements need not be the same with
respect to each purchaser.
(d) Rights as a Stockholder. Once the Stock Purchase Right is exercised,
the purchaser shall have the rights equivalent to those of a stockholder, and
shall be a stockholder when his or her purchase is entered upon the records of
the duly authorized transfer agent of the Company. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 14 of the Plan.
<PAGE>
12. Date of Grant. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
13. Non-Transferability of Options and Stock Purchase Rights. An Option or
Stock Purchase Right may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
14. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
Sale or Change of Control.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option or Stock Purchase Right
has not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option or Stock Purchase Right
shall terminate as of a date fixed by the Board and give each Optionee the right
to exercise his or her Option or Stock Purchase Right as to all or any part of
the Optioned Stock, including Shares as to which the Option or Stock Purchase
Right would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to the provisions of paragraph (d)
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option and Stock Purchase Right shall be assumed or an equivalent
option or right shall be substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation does not agree to assume the Option or Stock Purchase Right or to
substitute an equivalent option or right, the Administrator shall, in lieu of
such assumption or substitution, provide for the Optionee to have the right to
<PAGE>
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be exercisable. If the
Administrator makes an Option or Stock Purchase Right fully exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option or Stock Purchase Right
shall be fully exercisable for a period of fifteen (15) days from the date of
such notice, and the Option or Stock Purchase Right will terminate upon the
expiration of such period. For the purposes of this paragraph, the Option or
Stock Purchase Right shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase, for each
Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon the exercise of
the Option or Stock Purchase Right, for each Share of Optioned Stock subject to
the Option or Stock Purchase Right, to be solely common stock of the successor
corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
(d) Change of Control. In the event of a "Change in Control" of the
Company, as defined in paragraph (e) below, either or both or neither of (i) or
(ii) of the acceleration and valuation provisions that follow shall apply, as
the Board, in its discretion, shall determine prior to such Change of Control.
(i) Any Options and Stock Purchase Rights outstanding as of the date such
Change in Control is determined to have occurred that are not yet exercisable
and vested on such date shall become fully exercisable and vested;
(ii) To the extent that they are exercisable and vested, all outstanding
Options and Stock Purchase Rights, unless otherwise determined by the Board at
or after grant, shall be terminated in exchange for a cash payment at the Change
in Control Price, reduced by the exercise price applicable to such Options or
Stock Purchase Rights. These cash proceeds shall be paid to the Optionee or, in
the event of death of an Optionee prior to payment, to the estate of the
Optionee or to a person who acquired the right to exercise the Option or Stock
Purchase Right by bequest or inheritance.
(e) Definition of "Change in Control". For purposes of this Section 14, a
"Change in Control" means the happening of any of the following:
(i) When any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company, a Subsidiary or a Company employee
benefit plan, including any trustee of such plan acting as trustee) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities; or
<PAGE>
(ii) The occurrence of a transaction requiring stockholder approval, and
involving the sale of all or substantially all of the assets of the Company or
the merger of the Company with or into another corporation.
(f) Change in Control Price. For purposes of this Section 14, "Change in
Control Price" shall be, as determined by the Board, (i) the highest closing
sale price of a Share of Common Stock as reported on the Nasdaq National Market
and as appearing in the Wall Street Journal (or, in the event the Common Stock
is listed on a stock exchange, the highest closing price as reported in the Wall
Street Journal or such other source of composite quotations as the Board deems
reliable), at any time within the 60 day period immediately preceding the date
of determination of the Change in Control Price by the Board (the "60-Day
Period"), or (ii) the highest price paid or offered, as determined by the Board,
in any bona fide transaction or bona fide offer related to the Change in Control
of the Company, at any time within the 60-Day Period, or (iii) some lower price
as the Board, in its discretion, determines to be a reasonable estimate of the
fair market value of a share of Common Stock.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder approval of
any Plan amendment to the extent necessary and desirable to comply with Rule
16b-3 or with Section 422 of the Code (or any successor rule or statute or other
applicable law, rule or regulation, including the requirements of any exchange
or quotation system on which the Common Stock is listed or quoted). Such
stockholder approval, if required, shall be obtained in such a manner and to
such a degree as is required by the applicable law, rule or regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the exercise
of an Option or Stock Purchase Right unless the exercise of such Option or Stock
Purchase Right and the issuance and delivery of such Shares shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, Applicable Laws, and the requirements of any stock exchange or
quotation system upon which the Shares may then be listed or quoted, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.
(b) Investment Representations. As a condition to the exercise of an Option
or Stock Purchase Right, the Company may require the person exercising such
Option or Stock Purchase Right to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
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present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required.
17. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an
Option or Stock Purchase Right exceeds, as of the date of grant, the number of
Shares which may be issued under the Plan without additional stockholder
approval, such Option or Stock Purchase shall be void with respect to such
excess Optioned Stock, unless stockholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained in
accordance with Section 15(b) of the Plan.
18. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such stockholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
20. Limitation on Options Granted to Employees. The following limitations
shall apply to grants of Options to Employees:
(i) In any fiscal year of the Company, no Employee shall be granted, prior
to 12:00 noon on December 27, 1996, Options to purchase more than 250,000 Shares
and, commencing at 12:00 noon on December 27, 1996 and thereafter, Options to
purchase more than 67,012 Shares.
(ii) In connection with his or her initial employment prior to 12:00 noon
on December 27, 1996, an Employee may be granted Options to purchase up to an
additional 250,000 Shares and in connection with such employment commencing at
12:00 noon on December 27, 1996 and thereafter, Options to purchase up to an
additional 67,012 Shares, which Options shall not count against the limit set
forth in Section 21(i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 14 hereof.
(iv) If an Option is cancelled (other than in connection with a transaction
described in Section 14 hereof), the cancelled Option will be counted against
the limit set forth in this Section 21. For this purpose, if the exercise price
of an Option is reduced, the transaction will be treated as a cancellation of
the Option and the grant of a new Option.
December 27, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Allegro New Media, Inc.
Registration Statement on Form S-8
Gentlemen:
Reference is made to the filing by Allegro New Media, Inc. (the
"Corporation") of a Registration Statement on Form S-8 with the Securities and
Exchange Commission pursuant to the provisions of the Securities Act of 1933, as
amended, covering the registration of 341,763 shares of the Corporation's Common
Stock, $.001 par value per share ("Allegro Common Stock"), in connection with
the 1987 Stock Option Plan of Software Publishing Corporation ("SPC"), a
wholly-owned subsidiary of the Corporation, 268,050 shares of Allegro Common
Stock in connection with the 1989 Stock Option Plan of SPC and 428,880 shares of
Allegro Common Stock in connection with the 1991 Stock Option Plan of SPC
(collectively the "Plans").
As counsel for the Corporation, we have examined its corporate records,
including its Certificate of Incorporation, as amended, By-Laws, its corporate
minutes, the form of its Common Stock certificate, the Plans, related documents
under the Plan and such other documents as we have deemed necessary or relevant
under the circumstances.
Based upon our examination, we are of the opinion that:
1. The Corporation is duly organized and validly existing under the laws of
the State of Delaware.
2. There have been reserved for issuance by the Board of Directors of the
Corporation an aggregate 1,038,693 shares of Allegro Common Stock for issuance
under the Plans. The shares of Allegro Common Stock, when issued pursuant to the
Plans, will be validly authorized, legally issued, fully paid and
non-assessable.
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Securities and Exchange Commission
December 27, 1996
Page Two
We hereby consent to be named in the Registration Statement and in the
Prospectus which constitutes a part thereof as counsel of the Corporation, and
we hereby consent to the filing of this opinion as Exhibit 5 to the Registration
Statement.
Very truly yours,
BLAU, KRAMER, WACTLAR &
LIEBERMAN, P.C.
INSTRUMENT OF ASSUMPTION
ALLEGRO NEW MEDIA, INC., a Delaware corporation ("Allegro"), pursuant to
the Agreement and Plan of Reorganization dated as of October 1, 1996 (the
"Agreement") by and among Allegro, Software Publishing Corporation ("SPC") and
SPC Acquisition Corporation, hereby assumes and agrees to perform the
obligations of SPC in, to and under each of the option agreements listed on
Schedule A hereto.
IN WITNESS WHEREOF, Allegro has caused this Instrument of Assumption to be
duly executed on its behalf by its duly authorized representative this 20th day
of December, 1996, effective as of December 27, 1996.
ALLEGRO NEW MEDIA, INC.
By: /s/Barry A. Cinnamon
Barry A. Cinnamon
Chairman of the Board, President
and Chief Executive Officer
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Software Publishing Corporation 1987 Stock Option
Plan, the Software Publishing Corporation 1989 Stock Option Plan and the
Software Publishing Corporation 1991 Stock Option Plan of Allegro New Media,
Inc. of our report dated March 29, 1996, with respect to the financial
statements of Allegro New Media, Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 1995, filed with the Securities and Exchange
Commission.
/s/Ernst & Young LLP
Ernst & Young LLP
Hackensack, New Jersey
December 26, 1996
