As filed with the Securities and Exchange Commission on August 16, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MYSOFTWARE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 77-0195362
(State of Incorporation) (I.R.S. Employer Identification No.)
2197 East Bayshore Road
Palo Alto, California 94303
(650) 473-3600
(Address of principal executive offices)
1995 Equity Incentive Plan, as Amended
MarketHome 1997 Equity Incentive Plan
(Full title of the plan)
Gregory W. Slayton
Chief Executive Officer
2197 East Bayshore Road
Palo Alto, California 94303
(650) 473-3600
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
Julia L. Davidson, Esq.
Cooley Godward LLP
3000 El Camino Real
Five Palo Alto Square
Palo Alto, CA 94306
(650) 843-5000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed Maximum Proposed Maximum Amount
Secutrities Offering Price Aggregate of
to be Amount to Price Per Share Offering Price Registration
Registered be Registered (1) (1) Fee
- ---------- ------------- ----------------- ---------------- ------------
<C> <C> <C> <C> <C>
Stock Options 1,158,776 $0.1152-$12.375 $7,322,102 $2,665
and Common shares
Stock
(par value
$.001)
</TABLE>
[FN]
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) under the Securities Act of 1933, as
amended. The offering price per share and aggregate offering price are based
upon (a) the weighted average exercise price for shares subject to
outstanding options (i) granted pursuant to MySoftware Company's (the
"Company") 1995 Equity Incentive Plan, as Amended and (b) the average of the
high and low prices of Company's Common Stock on August 12, 1999 as reported
on the Nasdaq National Market.
<PAGE>
<TABLE>
The chart below details the calculations of the registration fee:
<CAPTION>
Securities Number Offering Price Aggregate Offering
of Shares Per Share Price
---------------------- ----------- ---------------- --------------------
<S> <C> <C> <C>
Shares issuable 677,437 $8.23 $5,575,628
pursuant to outstanding
options under the 1995
Equity Incentive Plan,
as Amended
Shares issuable 322,563 $12.375 $3,991,717
pursuant to unissued
options under the 1995
Equity Incentive Plan,
as Amended
Shares issuable 158,776 $0.11552 $18,342
pursuant to the
MarketHome 1997 Equity
Incentive Plan
</TABLE>
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by MySoftware Company (the "Company") with the
Securities and Exchange Commission are incorporated by reference into this
Registration Statement:
(a) The Company's latest annual report on Form 10-KSB filed pursuant to
Sections 13(a) or 15(d) of the Securities Act of 1934, as amended
(the "Exchange Act").
(b) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual
report referred to in (a) above.
(c) The description of the Company's Common Stock which is contained
in a registration statement filed under the Exchange Act, including any
amendment or report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a
part of this registration statement from the date of the filing of such
reports and documents.
DESCRIPTION OF SECURITIES
Not Applicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law the Company
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act. The Company's By-laws require the Company to indemnify its directors
and executive officers, and permit the Company to indemnify its other
officers, employees and other agents, to the extent permitted by Delaware
law. Under the Company's By-laws, indemnified parties are entitled to
indemnification for negligence, gross negligence and otherwise to the fullest
extent permitted by law. The By-laws also require the Company to advance
litigation expenses in the case of stockholder derivative actions or other
actions, against an undertaking by the indemnified party to repay such
advances if it is ultimately determined that the indemnified party is not
entitled to indemnification.
The Company has entered into indemnity agreements with each of its
directors and executive officers. Such indemnity agreements contain
provisions which are in some respects broader than the specific
indemnification provisions contained in Delaware law. The Company also
maintains an insurance policy for its directors and executive officers
insuring against certain liabilities arising in their capacities as such.
EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
<PAGE>
EXHIBITS
Exhibit
Number
4.1* Certificate of Incorporation of the Company.
4.2* Bylaws of the Company.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of KPMG Peat Marwick LLP, Independent Public Accountants.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit
24.1 Power of Attorney is contained on the signature pages.
99.1 1995 Equity Incentive Plan, as Amended.
99.2 Form of Incentive Stock Option Agreement under the 1995 Equity
Incentive Plan, as Amended.
99.3 Form of Nonstatutory Stock Option Agreement under the 1995 Equity
Incentive Plan, as Amended.
99.4 MarketHome 1997 Equity Incentive Plan
99.5 Form of Stock Option Agreement under the MarketHome 1997 Equity
Incentive Plan.
_____________
* Documents incorporated by reference from the Company's Registration
Statement on Form S-1, as amended (33-91898), filed with the SEC on May 4, 1995.
UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(d) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement, and
(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;
<PAGE>
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the issuer pursuant to
section 13 or section 15(d) of the Exchange Act that are incorporated by
reference herein.
(e) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(f) 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.
1. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
2. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Palo Alto, State of California on August 16, 1999.
MYSOFTWARE COMPANY
By: /s/ Gregory W. Slayton
----------------------
Gregory W. Slayton
Title: President and Chief Executive
Officer and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gregory W. Slayton and Sharon Chiu and
each or any one of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated.
Signature Title Date
/s/ Gregory W. Slayton President, Chief Executive Officer August 16, 1999
- ---------------------- and Director (Principal Executive
Gregory W. Slayton Officer)
/s/ Sharon Chiu Vice President, Chief Financial August 16, 1999
- ---------------------- Officer and Secretary (Principal
Sharon Chiu Financial Officer and Accounting
Officer)
/s/ David P. Mans Director August 16, 1999
- ----------------------
David P. Mans
<PAGE>
/s/ Grant M. Inman Director August 16, 1999
- ----------------------
Grant M. Inman
/s/ John K. Katsaros Director August 16, 1999
- ----------------------
John K. Katsaros
/s/ Donald F. Wood Director August 16, 1999
- ----------------------
Donald F. Wood
/s/ Emerick M. Woods Director August 16, 1999
- ----------------------
Emerick M. Woods
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Sequential Page Number
4.1* Certificate of Incorporation of the Company.
4.2* Bylaws of the Company.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of KPMG Peat Marwick LLP, Independent Public
Accountants.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney is contained on the signature pages.
99.1 1995 Equity Incentive Plan, as Amended.
99.2 Form of Incentive Stock Option Agreement under the 1995
Equity Incentive Plan, as Amended.
99.3 Form of Nonstatutory Stock Option Agreement under the 1995
Equity Incentive Plan, as Amended.
99.4 MarketHome 1997 Equity Incentive Plan
99.5 Form of Stock Option Agreement under the MarketHome 1997
Equity Incentive Plan.
_____________
* Documents incorporated by reference from the Company's Registration
Statement on Form S-1, as amended (33-91898), filed with the SEC on May 4, 1995.
<PAGE>
August 16, 1999 Exhibit 5.1
MySoftware Company
2197 East Bayshore Road
Palo Alto, California 94303
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by MySoftware Company (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 1,158,776 shares of the
Company's Common Stock, $.001 par value (the "Shares"), with respect to its
1995 Equity Incentive Plan, as amended, and the MarketHome 1997 Equity
Incentive Plan (the "Plans").
In connection with this opinion, we have examined the Registration Statement
and related Prospectus, the Company's Certificate of Incorporation and
By-laws, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a basis for this opinion. We have
assumed the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents, where
due execution and delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plans, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain
deferred payment arrangements, which will be fully paid and nonassessable
when such deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Julia L. Davidson
---------------------
Julia L. Davidson
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to incorporation by reference in the registration statement dated
August 16, 1999 on Form S-8 of MySoftware Company of our report dated February
5, 1999, relating to the balance sheets of MySoftware Company as of December
31, 1998, and 1997, and the related statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1998, which report appears in the December 31, 1998, annual report
on Form 10-KSB of MySoftware Company.
/S/ KPMG LLP
------------
KPMG LLP
Mountain View, California
August 16, 1999
<PAGE>
Exhibit 99.1
MYSOFTWARE COMPANY
1995 EQUITY INCENTIVE PLAN
Adopted by the Board of Directors on April 18, 1995
Approved by the Stockholders on April 18, 1995
As Amended through 1999
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its
Affiliates, may be given an opportunity to benefit from increases in
value of the stock of the Company through the granting of (i)
Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock
bonuses, (iv) rights to purchase restricted stock, and (v) stock
appreciation rights, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the
Company or its Affiliates, to secure and retain the services of new
Employees, Directors and Consultants, and to provide incentives for
such persons to exert maximum efforts for the success of the Company
and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which
responsibility for administration of the Plan has been delegated
pursuant to subsection 3(c), be either (i) Options granted pursuant to
Section 6 hereof, including Incentive Stock Options and Nonstatutory
Stock Options, (ii) stock bonuses or rights to purchase restricted
stock granted pursuant to Section 7 hereof, or (iii) stock
appreciation rights granted pursuant to Section 8 hereof. All Options
shall be separately designated Incentive Stock Options or Nonstatutory
Stock Options at the time of grant, and in such form as issued
pursuant to Section 6, and a separate certificate or certificates will
be issued for shares purchased on exercise of each type of Option.
3. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
<PAGE>
(e) Company" means MySoftware Company, a Delaware corporation.
(f) "Concurrent Stock Appreciation Right" or "Concurrent Right" means a
right granted pursuant to subsection 8(b)(2) of the Plan.
(g) "Consultant" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services (i) and who is
compensated for such services, provided that the term "Consultant"
shall not include Directors who are paid only a director's fee by the
Company or who are not compensated by the Company for their services
as Directors.
(h) "Continuous Status as an Employee, Director or Consultant" means the
employment or relationship as a Director or Consultant is not
interrupted or terminated. The Board, in its sole discretion, may
determine whether Continuous Status as an Employee, Director or
Consultant shall 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; or (ii) transfers between locations
of the Company or between the Company, Affiliates or their successors.
(j) "Covered Employee" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the
Exchange Act, as determined for purposes of Section 162(m) of the Code.
(j) "Director" means a member of the Board.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Affiliate 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.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Fair Market Value" means, as of any date, the value of the common
stock of the Company determined as follows:
(i) If the common stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National
Market, the Fair Market Value of a share of common stock shall be the
closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange
with the greatest volume of trading in common stock) on the day of
determination (or, if the day of determination is not a market trading
day, the last market trading day prior to the day of determination),
as reported in the Wall Street Journal or such other source as the
Board deems reliable;
(ii) If the common stock is quoted on the Nasdaq Stock Market (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 (or, if
the day of determination is not a market trading day, the last market
trading day prior to the day of determination), as reported in the
Wall Street Journal or such other source as the Board deems reliable;
<PAGE>
(iii) In the absence of an established market for the common stock, the Fair
Market Value shall be determined in good faith by the Board. (n)
"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.
(o) "Independent Stock Appreciation Right" or "Independent Right" means a
right granted pursuant to subsection 8(b)(3) of the Plan.
(p) "Non-Employee Director" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or
subsidiary, does not receive compensation (directly or indirectly)
from the Company or its parent or subsidiary for services rendered as a
consultant or in any capacity other than as a Director (except for an
amount as to which disclosure would not be required under Item 404(a)
of Regulation S-K promulgated pursuant to the Securities Act of 1933
("Regulation S-K"), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a)
of Regulation S-K, and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation
S-K; or (ii) is otherwise considered a "non-employee director" for
purposes of Rule 16b-3.
(q) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
(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. Each Option Agreement shall be subject to the terms and
conditions of the Plan.
(u) "Optionee" means an Employee, Director or Consultant who holds an
outstanding Option.
(v) "Outside Director" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the
meaning of Treasury regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated
corporation" receiving compensation for prior services (other than
benefits under a tax qualified pension plan), was not an officer of
the Company or an "affiliated corporation" at any time, and is not
<PAGE>
currently receiving direct or indirect remuneration from the Company
or an "affiliated corporation" for services in any capacity other than
as a Director, or (ii) is otherwise considered an "outside director"
for purposes of Section 162(m) of the Code.
(w) "Plan" means this MySoftware Company 1995 Equity Incentive Plan.
(x) "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.
(y) "Stock Appreciation Right" means any of the various types of rights
which may be granted under Section 8 of the Plan.
(z) "Stock Award" means any right granted under the Plan, including any
Option, any stock bonus, any right to purchase restricted stock, and any
Stock Appreciation Right.
(aa) "Stock Award Agreement" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and
conditions of an individual Stock Award grant. Each Stock Award
Agreement shall be subject to the terms and conditions of the Plan.
(bb) "Tandem Stock Appreciation Right" or "Tandem Right" means a right
granted pursuant to subsection 8(b)(1) of the Plan.
4. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible under the
Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Incentive Stock
Option, a Nonstatutory Stock Option, a stock bonus, a right to
purchase restricted stock, a Stock Appreciation Right, or a
combination of the foregoing; the provisions of each Stock Award
granted (which need not be identical), including the time or times
when a person shall be permitted to receive stock pursuant to a Stock
Award; whether a person shall be permitted to receive stock upon
exercise of an Independent Stock Appreciation Right; and the number of
shares with respect to which a Stock Award shall be granted to each
such person.
(ii) To construe and interpret the Plan and Stock Awards granted under it,
and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct
any defect, omission or inconsistency in the Plan or in any Stock
Award Agreement, in a manner and to the extent it shall deem necessary
or expedient to make the Plan fully effective.
<PAGE>
(iii) To amend the Plan or a Stock Award as provided in Section 14.
(iv) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of
the Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"). In the
discretion of the Board, a Committee may consist solely of two or more
Outside Directors, in accordance with Code Section 162(m), or solely
of two or more Non-Employee Directors, in accordance with Rule
16(b)-3. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board (and references in this Plan
to the Board shall thereafter be to the Committee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the
administration of the Plan. Notwithstanding anything in this Section 3
to the contrary, the Board or the Committee may delegate to a
committee of one or more members of the Board the authority to grant
Stock Awards to eligible persons who (1) are not then subject to
Section 16 of the Exchange Act and/or (2) are either (i) not then
Covered Employees and are not expected to be Covered Employees at the
time of recognition of income resulting from such Stock Award, or (ii)
not persons with respect to whom the Company wishes to avoid the
application of Section 162(m) of the Code.
5. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 13 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock
Awards shall not exceed in the aggregate one million six hundred
thousand (1,600,000) shares of the Company's common stock. If any
Stock Award shall for any reason expire or otherwise terminate, in
whole or in part, without having been exercised in full (or vested
in the case of Restricted Stock), the stock not acquired under such
Stock Award shall revert to and again become available for issuance
under the Plan. Shares subject to Stock Appreciation Rights exercised
in accordance with Section 8 of the Plan shall not be available for
subsequent issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
6. ELIGIBILITY.
(a) Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees. Stock Awards other than
Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees, Directors or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all
<PAGE>
classes of stock of the Company or of any of its Affiliates unless
the exercise price of such Incentive Stock Option is at least one
hundred ten percent (110%) of the Fair Market Value of such stock
at the date of grant and the Incentive Stock Option is not exercisable
after the expiration of five (5) years from the date of grant.
<PAGE>
(c) Subject to the provisions of Section 13 relating to adjustments
upon changes in stock, no person shall be eligible to be granted
Options and Stock Appreciation Rights covering more than two hundred
ten thousand nine hundred twenty six (210,926) shares of the Company's
common stock in any calendar year.
7. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
(a) Term. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) Price. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted. The
exercise price of each Nonstatutory Stock Option shall be not less
than eighty-five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted.
Notwithstanding the foregoing, an Option may be granted with an
exercise price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a)
of the Code.
(c) Consideration. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes
and regulations, either (i) in cash at the time the Option is
exercised, or (ii) at the discretion of the Board or the Committee, at
the time of the grant of the Option, (A) by delivery to the Company of
other common stock of the Company, (B) according to a deferred payment
or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other common stock of the
Company) with the person to whom the Option is granted or to whom the
Option is transferred pursuant to subsection 6(d), or (C) in any other
form of legal consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any
applicable provisions of the Code, of any amounts other than amounts
stated to be interest under the deferred payment arrangement.
(d) Transferability. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall
be exercisable during the lifetime of the person to whom the Incentive
<PAGE>
Stock Option is granted only by such person. A Nonstatutory Stock
Option shall not be transferable except by will or by the laws of
descent and distribution or pursuant to a domestic relations order
satisfying the requirements of Rule 16b-3 and any administrative
interpretations or pronouncements thereunder, and shall be exercisable
during the lifetime of the person to whom the Option is granted only
by such person or any pursuant to the domestic relations order
transferee; provided that a Nonstatutory Stock Option shall be
transferable if the Option Agreement so provides. Notwithstanding the
foregoing, the person to whom the Option is granted may, by delivering
written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the
Optionee, shall thereafter be entitled to exercise the Option.
(e) Vesting. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may,
but need not, be equal). The Option Agreement may provide that from
time to time during each of such installment periods, the Option may
become exercisable ("vest") with respect to some or all of the shares
allotted to that period, and may be exercised with respect to some or
all of the shares allotted to such period and/or any prior period as
to which the Option became vested but was not fully exercised. The
Option may be subject to such other terms and conditions on the time
or times when it may be exercised (which may be based on performance
or other criteria) as the Board may deem appropriate. The provisions
of this subsection 6(e) are subject to any Option provisions governing
the minimum number of shares as to which an Option may be exercised.
(f) Termination of Employment or Relationship as a Director or Consultant.
In the event an Optionee's Continuous Status as an Employee, Director
or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it at the date of
termination) but only within such period of time ending on the earlier
of (i) the date thirty (30) days after the termination of the Optionee's
Continuous Status as an Employee, Director or Consultant (or such
longer or shorter period specified in the Option Agreement), or (ii)
the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionee does not exercise his
or her Option within the time specified in the Option Agreement, the
Option shall terminate, and the shares covered by such Option shall
revert to and again become available for issuance under the Plan.
(g) Disability of Optionee. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or her Option (to
the extent that the Optionee was entitled to exercise it at the date
of termination), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination
(or such longer or shorter period specified in the Option Agreement),
or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by
the unexercisable portion of the Option shall revert to and again
become available for issuance under the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the shares covered
<PAGE>
by such Option shall revert to and again become available for issuance
under the Plan.
(h) Death of Optionee. In the event of the death of an Optionee during,
or within a period specified in the Option after the termination of,
the Optionee's Continuous Status as an Employee, Director or
Consultant, the Option may be exercised (to the extent the Optionee
was entitled to exercise the Option at the date of death) by the
Optionee's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise
the option upon the Optionee's death pursuant to subsection 6(d), but
only within the period ending on the earlier of (i) the date twelve
(12) months following the date of death (or such longer or shorter
period specified in the Option Agreement), or (ii) the expiration of
the term of such Option as set forth in the Option Agreement. If, at
the time of death, the Optionee was not entitled to exercise his or
her entire Option, the shares covered by the unexercisable portion of
the Option shall revert to and again become available for issuance
under the Plan. If, after death, the Option is not exercised within
the time specified herein, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for
issuance under the Plan.
(i) Early Exercise. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director
or Consultant to exercise the Option as to any part or all of the
shares subject to the Option prior to the full vesting of the Option.
Any unvested shares so purchased may be subject to a repurchase right
in favor of the Company or to any other restriction the Board
determines to be appropriate.
(j) Re-Load Options. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder,
the Board or Committee shall have the authority (but not an
obligation) to include as part of any Option Agreement a provision
entitling the Optionee to a further Option (a "Re-Load Option") in the
event the Optionee exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of Common
Stock in accordance with this Plan and the terms and conditions of the
Option Agreement. Any such Re-Load Option (i) shall be for a number
of shares equal to the number of shares surrendered as part or all of
the exercise price of such Option; (ii) shall have an expiration date
which is the same as the expiration date of the Option the exercise of
which gave rise to such Re-Load Option; and (iii) shall have an
exercise price which is equal to one hundred percent (100%) of the
Fair Market Value of the Common Stock subject to the Re-Load Option on
the date of exercise of the original Option or, in the case of a
Re-Load Option which is an Incentive Stock Option and which is granted
to a 10% stockholder (as described in subsection 5(b)), shall have an
exercise price which is equal to one hundred ten percent (110%)
of the Fair Market Value of the stock subject to the Re-Load Option
on the date of exercise of the original Option.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the
time of the grant of the original Option; provided, however, that the
designation of any Re-Load Option as an Incentive Stock Option shall be
<PAGE>
subject to the one hundred thousand dollar ($100,000) annual limitation on
exercisability of Incentive Stock Options described in subsection 12(d) of
the Plan and in Section 422(d) of the Code. There shall be no Re-Load
Options on a Re-Load Option. Any such Re-Load Option shall be subject to the
availability of sufficient shares under subsection 4(a) and shall be subject to
such other terms and conditions as the Board or Committee may determine.
8. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the
terms and conditions of separate agreements need not be identical, but each
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions as appropriate:
(a) Purchase Price. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee
shall determine and designate in such agreement, but in no event shall
the purchase price be less than eighty-five percent (85%) of the
stock's Fair Market Value on the date such ward is made.
Notwithstanding the foregoing, the Board or the Committee may
determine that eligible participants in the Plan may be awarded stock
pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company or for its benefit.
(b) Transferability. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the
laws of descent and distribution or pursuant to a domestic
relations order satisfying the requirements of Rule 16b-3 and any
administrative interpretations or pronouncements thereunder, so
long as stock awarded under such agreement remains subject to the
terms of the agreement.
(c) Consideration. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the
time of purchase; (ii) at the discretion of the Board or the
Committee, according to a deferred payment or other arrangement with
the person to whom the stock is sold; or (iii) in any other form of
legal consideration that may be acceptable to the Board or the
Committee in their discretion. Notwithstanding the foregoing, the
Board or the Committee to which administration of the Plan has been
delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or
for its benefit.
(d) Vesting. Shares of stock sold or awarded under the Plan may, but need
not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or
the Committee.
(e) Termination of Employment or Relationship as a Director or Consultant.
In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or
<PAGE>
otherwise reacquire any or all of the shares of stock held by that
person which have not vested as of the date of termination under the
terms of the stock bonus or restricted stock purchase agreement
between the Company and such person.
9. STOCK APPRECIATION RIGHTS.
(a) The Board or Committee shall have full power and authority,
exercisable in its sole discretion, to grant Stock Appreciation
Rights under the Plan to Employees or Directors of or Consultants
to, the Company or its Affiliates. To exercise any outstanding
Stock Appreciation Right, the holder must provide written notice
of exercise to the Company in compliance with the provisions of the
Stock Award Agreement evidencing such right. Except as provided in
subsection 5(c), no limitation shall exist on the aggregate amount
of cash payments the Company may make under the Plan in connection
with the exercise of a Stock Appreciation Right.
(b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:
(i) Tandem Stock Appreciation Rights. Tandem Stock Appreciation
Rights will be granted appurtenant to an Option, and shall,
except as specifically set forth in this Section 8, be subject
to the same terms and conditions applicable to the particular
Option grant to which it pertains. Tandem Stock Appreciation
Rights will require the holder to elect between the exercise of
the underlying Option for shares of stock and the surrender, in
whole or in part, of such Option for an appreciation distribution.
The appreciation distribution payable on the exercised Tandem Right
shall be in cash (or, if so provided, in an equivalent number of
shares of stock based on Fair Market Value on the date of the Option
surrender) in an amount up to the excess of (A) the Fair Market
Value (on the date of the Option surrender) of the number of shares
of stock covered by that portion of the surrendered Option in which
the Optionee is vested over (B) the aggregate exercise price payable
for such vested shares.
(ii) Concurrent Stock Appreciation Rights. Concurrent Rights will
be granted appurtenant to an Option and may apply to all or any
portion of the shares of stock subject to the underlying Option
and shall, except as specifically set forth in this Section 8, be
subject to the same terms and conditions applicable to the particular
Option grant to which it pertains. A Concurrent Right shall be
exercised automatically at the same time the underlying Option is
exercised with respect to the particular shares of stock to which
the Concurrent Right pertains. The appreciation distribution payable
on an exercised Concurrent Right shall be in cash (or, if so
provided, in an equivalent number of shares of stock based on Fair
Market Value on the date of the exercise of the Concurrent Right)
in an amount equal to such portion as shall be determined by the
Board or the Committee at the time of the grant of the excess of
(A) the aggregate Fair Market Value (on the date of the exercise
of the Concurrent Right) of the vested shares of stock purchased
under the underlying Option which have Concurrent Rights
appurtenant to them over (B) the aggregate exercise price paid for
such shares.
<PAGE>
(iii) Independent Stock Appreciation Rights. Independent Rights will
be granted independently of any Option and shall, except as
specifically set forth in this Section 8, be subject to the same
terms and conditions applicable to Nonstatutory Stock Options as
set forth in Section 6. They shall be denominated in share
equivalents. The appreciation distribution payable on the
exercised Independent Right shall be not greater than an amount
equal to the excess of (A) the aggregate Fair Market Value (on
the date of the exercise of the Independent Right) of a number of
shares of Company stock equal to the number of share equivalents in
which the holder is vested under such Independent Right, and with
respect to which the holder is exercising the Independent Right on
such date, over (B) the aggregate Fair Market Value (on the date of
the grant of the Independent Right) of such number of shares of
Company stock. The appreciation distribution payable on the
exercised Independent Right shall be in cash or, if so provided,
in an equivalent number of shares of stock based on Fair Market
Value on the date of the exercise of the Independent Right.
10. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) The Board or the Committee shall have the authority to effect,
at any time and from time to time, (i) the repricing of any
outstanding Options and/or any Stock Appreciation Rights under
the Plan and/or (ii) with the consent of the affected holders of
Options and/or Stock Appreciation Rights, the cancellation of any
outstanding Options and/or any Stock Appreciation Rights under the
Plan and the grant in substitution therefor of new Options and/or
Stock Appreciation Rights under the Plan covering the same or
different numbers of shares of stock, but having an exercise price
per share not less than eighty-five percent (85%) of the Fair Market
Value (one hundred percent (100%) of the Fair Market Value in the
case of an Incentive Stock Option or, in the case of an Incentive
Stock Option of a 10% stockholder (as described in subsection 5(b)),
not less than one hundred ten percent (110%) of the Fair Market
Value) per share of stock on the new grant date. Notwithstanding
the foregoing, the Board or the Committee may grant an Option or
Stock Appreciation Right with an exercise price lower than that
set forth above if such Option or Stock Appreciation Right is
granted as part of a transaction to which section 424(a) of the
Code applies.
(b) Shares subject to an Option or Stock Appreciation Right canceled
under this Section 9 shall continue to be counted against the
maximum award of Options and Stock Appreciation Rights permitted
to be granted pursuant to subsection 5(c) of the Plan. The
repricing of an Option and/or Stock Appreciation Right under
this Section 9, resulting in a reduction of the exercise price,
shall be deemed to be a cancellation of the original Option and/or
Stock Appreciation Right and the grant of a substitute Option and/or
Stock Appreciation Right; in the event of such repricing, both the
original and the substituted Options and Stock Appreciation Rights
shall be counted against the maximum awards of Options and Stock
Appreciation Rights permitted to be granted pursuant to subsection
5(c) of the Plan. The provisions of this subsection 9(b) shall be
applicable only to the extent required by Section 162(m) of the Code.
11. COVENANTS OF THE COMPANY.
<PAGE>
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to
satisfy such Stock Awards.
(b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may
be required to issue and sell shares of stock upon exercise of the
Stock Award; provided, however, that this undertaking shall not
require the Company to register under the Securities Act either
the Plan, any Stock Award or any stock issued or issuable pursuant
to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue
and sell stock upon exercise of such Stock Awards unless and until
such authority is obtained.
12. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.
13. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a
Stock Award or any part thereof will vest pursuant to subsection
6(e), 7(d) or 8(b), notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the
time during which it will vest.
(b) Neither an Employee, Director or Consultant nor any person to whom
a Stock Award is transferred under subsection 6(d), 7(b), or 8(b)
shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares subject to such Stock
Award unless and until such person has satisfied all requirements
for exercise of the Stock Award pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee,
Director, Consultant or other holder of Stock Awards any right
to continue in the employ of the Company or any Affiliate (or
to continue acting as a Director or Consultant) or shall affect
the right of the Company or any Affiliate to terminate the
employment or relationship as a Director or Consultant of any
Employee, Director, Consultant or other holder of Stock Awards
with or without cause.
(d) To the extent that the aggregate Fair Market Value (determined
at the time of grant) of stock with respect to which Incentive
Stock Options granted after 1986 are exercisable for the first
time by any Optionee during any calendar year under all plans
of the Company and its Affiliates exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof which exceed
such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.
<PAGE>
(e) The Company may require any person to whom a Stock Award is
granted, or any person to whom a Stock Award is transferred
pursuant to subsection 6(d), 7(b) or 8(b), as a condition of
exercising or acquiring stock under any Stock Award, (1) to
give written assurances satisfactory to the Company as to
such person's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced
in financial and business matters, and that he or she is capable
of evaluating, alone or together with the purchaser representative,
the merits and risks of exercising the Stock Award; and (2) to
give written assurances satisfactory to the Company stating that
such person is acquiring the stock subject to the Stock Award
for such person's own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements,
shall be in operative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been
registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act")
or (ii) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in
the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends
on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends
restricting the transfer of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under a Stock Award by any of the following
means or by a combination of such means: (1) tendering a cash
payment; (2) authorizing the Company to withhold shares from the
shares of the common stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the
Stock Award; or (3) delivering to the Company owned and
unencumbered shares of the common stock of the Company.
14. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any Stock Award (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan will be appropriately adjusted
in the class(es) and maximum number of shares subject to the Plan
pursuant to subsection 4(a) and the maximum number of shares
subject to award to any person during any calendar year pursuant
to subsection 5(c), and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of shares
and price per share of stock subject to such outstanding Stock
Awards.
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or
consolidation in which the Company is not the surviving corporation;
or (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock
outstanding immediately preceding the merger are converted by
<PAGE>
virtue of the merger into other property, whether in the form
of securities, cash or otherwise, then to the extent permitted
by applicable law: (i) any surviving corporation shall assume
any Stock Awards outstanding under the Plan or shall substitute
similar Stock Awards for those outstanding under the Plan, or
(ii) such Stock Awards shall continue in full force and effect.
In the event any surviving corporation refuses to assume or
continue such Stock Awards, or to substitute similar options for
those outstanding under the Plan, then, with respect to Stock
Awards held by persons then performing services as Employees,
Directors or Consultants, the time during which such Stock Awards
may be exercised shall be accelerated and the Stock Awards
terminated if not exercised prior to such event.
15. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 13 relating to adjustments
upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent
stockholder approval is necessary for the Plan to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq
or securities exchange listing requirements.
(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations promulgated
thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide
eligible Employees, Directors or Consultants with the maximum
benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to
Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(d) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of
the Plan unless (i) the Company requests the consent of the person
to whom the Stock Award was granted and (ii) such person consents
in writing.
(e) The Board at any time, and from time to time, may amend the
terms of any one or more Stock Award; provided, however, that
the rights and obligations under any Stock Award shall not
be impaired by any such amendment unless (i) the Company
requests the consent of the person to whom the Stock Award was
granted and (ii) such person consents in writing.
16. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on April 17, 2005,
which shall be within ten (10) years from the date the Plan is
adopted by the Board or approved by the stockholders of the
Company, whichever is earlier. No Stock Awards may be granted
<PAGE>
under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any Stock Award granted while
the Plan is in effect shall not be impaired by suspension or
termination of the Plan, except with the consent of the person
to whom the Stock Award was granted.
17. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Stock
Awards granted under the Plan shall be exercised unless and until the Plan
has been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board.
<PAGE>
Exhibit 99.2
INCENTIVE STOCK OPTION
______________, Optionee:
MySoftware Company (the "Company"), pursuant to its 1995 Equity Incentive
Plan (the "Plan") has this day granted to you, the optionee named above, an
option to purchase shares of the common stock of the Company
("Common Stock"). This option is intended to qualify as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's
employees (including officers), directors or consultants.
Definition of terms:
Number of Option Shares: ________________
Exercise Price per Share: ________________
Vesting Start Date: ________________
Option Grant Date: ________________
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
equal to the Option Shares. Subject to the limitations contained
herein, this option shall be exercisable with respect to each
installment shown below on or after the date of vesting applicable to
such installment, as follows: Twelve and half percent (12.5%) of the
Option Shares shall vest on [date] and thereafter shall vest monthly
at a rate of 1/48th (2.08%) per month such that the option shall be
one hundred percent (100%) vested forty-eight (48) months from [date].
2. (a) The exercise price of this option is equal to the Exercise Price
Per Share, being not less than the fair market value of the Common
Stock on the date of grant of this option.
(b) Payment of the exercise price per share is due in full upon
exercise of all or any part of each installment which has accrued
to you. You may elect, to the extent permitted by applicable
statutes and regulations, to make payment of the exercise price
under one of the following alternatives:
(i) payment of the exercise price per share in cash (including
check) at the time of exercise;
<PAGE>
(ii) payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which results in the
receipt of cash (or check) by the Company prior to the issuance
of Common Stock;
(iii) provided that at the time of exercise the Company's Common Stock
is publicly traded and quoted regularly in the Wall Street
Journal, payment by delivery of already-owned shares of Common
Stock, held for the period required to avoid a charge to the
Company's reported earnings, and owned free and clear of any
liens, claims, encumbrances or security interests, which
Common Stock shall be valued at its fair market value on the date
of exercise; or
(iv) payment by a combination of the methods of payment permitted by
subparagraph 2(b)(i) through 2(b)(iii) above.
3. This option may not be exercised for any number of shares which would
require the issuance of anything other than whole shares. Moreover, to the
extent that the aggregate fair market value (determined at the time of
grant) of the shares of Common Stock with respect to which this option plus
all other incentive stock options you hold are exercisable for the first time
by you during any calendar year under all plans of the Company and its
affiliates (as defined in the Plan) exceeds one hundred thousand dollars
($100,000), your option(s) or portions thereof that exceed such limit
(according to the order in which they were granted) shall be treated as
nonstatutory stock options.
4. Notwithstanding anything to the contrary contained herein, this option may
not be exercised unless the shares issuable upon exercise of this option are
then registered under the Securities Act of 1933, as amended (the "Act"),
or, if such shares are not then so registered, the Company has determined that
such exercise and issuance would be exempt from the registration requirements
of the Act.
5. The term of this option commences on the Option Grant Date, and, unless
sooner terminated as set forth below or in the Plan, terminates on [date]
(which date shall be no more than ten (10) years from the date this
option is granted). In no event may this option be exercised on or after the
date on which it terminates. This option shall terminate prior to the
expiration of its term as follows: three (3) months after the termination of
your employment with the Company or an affiliate of the Company (as defined in
the Plan) for any reason or for no reason unless:
(a) such termination of employment is due to your permanent and total disability
(within the meaning of Section 422(c)(6) of the Code), in which event
the option shall terminate on the earlier of the termination date set forth
above or twelve (12) months following such termination of employment; or
<PAGE>
(b) such termination of employment is due to your death, in which event the
option shall terminate on the earlier of the termination date set forth
above or eighteen (18) months after your death; or
(c) during any part of such three (3) month period the option is not exercisable
solely because of the condition set forth in paragraph 4 above, in which event
the option shall not terminate until the earlier of the termination date set
forth above or until it shall have been exercisable for an aggregate period of
three (3) months after the termination of employment; or
(d) exercise of the option within three (3) months after termination of your
employment with the Company or with an affiliate would result in liability
under section 16(b) of the Securities Exchange Act of 1934, as amended, in which
case the option will terminate on the earlier of (i) the termination date
set forth above, (ii) the tenth (10th) day after the last date upon which
exercise would result in such liability or (iii) six (6) months and ten (10)
days after the termination of your employment with the Company or an affiliate.
However, this option may be exercised following termination of employment only
as to that number of shares as to which it was exercisable on the date of
termination of your employment under the provisions of paragraph 1 of this
option.
In order to obtain the federal income tax advantages associated with an
"incentive stock option," the Code requires that at all times beginning on the
date of grant of the option and ending on the day three (3) months before the
date of the option's exercise, you must be an employee of the Company or an
affiliate of the Company, except in the event of your death or permanent
and total disability. The Company has provided for continued vesting or
extended exercisability of your option under certain circumstances for your
benefit, but cannot guarantee that your option will necessarily be treated as
an "incentive stock option" if you provide services to the Company or an
affiliate of the Company as a consultant or exercise your option more than three
months after the date your employment with the Company and all affiliates of
the Company terminates.
6. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together
with such additional documents as the Company may then require pursuant to any
provisions of the Plan.
(b) By exercising this option you agree that:
(i) The Company may require you to enter an arrangement providing for the
payment by you to the Company of any tax withholding obligation of the Company
arising by reason of (1) the exercise of this option; (2) the lapse of any
substantial risk of forfeiture to which the shares are subject at the time of
exercise; or (3) the disposition of shares acquired upon such exercise.
<PAGE>
(ii) You will notify the Company in writing within fifteen (15) days after
the date of any disposition of any of the shares of the Common Stock issued upon
exercise of this option that occurs within two (2)years after the date of this
option grant or within one (1) year after such shares of Common Stock are
transferred upon exercise of this option.
7. This option is not transferable, except by will or by the laws of descent and
distribution, and is exercisable during your life only by you. By delivering
written notice to the Company, in a form satisfactory to the Company, you may
designate a third party who, in the event of your death, shall thereafter
be entitled to exercise this option.
8. This option is not an employment contract and nothing in this option shall be
deemed to create in any way whatsoever any obligation on your part to continue
in the employ of the Company, or of the Company to continue your employment with
the Company.
9. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
10. This option is subject to all the provisions of the Plan, a copy of which
is attached hereto and its provisions are hereby made a part of this option,
including without limitation the provisions of paragraph 6 of the Plan relating
to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated the ____ day of __________________, 19__.
Very truly yours,
MYSOFTWARE COMPANY
By_________________
Duly authorized on behalf of the Board of Directors
ATTACHMENTS:
1995 Equity Incentive Plan
Notice of Exercise
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments referenced
therein and understands that all rights and liabilities with respect to this
option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets forth
the entire understanding between the undersigned optionee and the Company and
its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the
undersigned under stock option plans of the Company, and (ii) the following
agreements only:
NONE___________
(Initial)
OTHER______________
______________
______________
______________
[Name], OPTIONEE
Address:_______________
<PAGE>
Exhibit 99.3
NONSTATUORY STOCK OPTION
________________, Optionee:
MySoftware Company (the "Company"), pursuant to its 1995
Equity Incentive Plan (the "Plan") has this day granted to you,
the optionee named above, an option to purchase shares of the
common stock of the Company ("Common Stock"). This option is
not intended to qualify and will not be treated as an "incentive
stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance
of the Company's compensatory benefit plan for participation of
the Company's employees (including officers), directors or
consultants.
Definition of terms:
Number of Option Shares: ____________________
Exercise Price per Share: ____________________
Vesting Start Date: ____________________
Option Grant Date: ____________________
The details of your option are as follows:
1. The total number of shares of Common Stock subject to
this option is equal to the Option Shares. Subject to the
limitations contained herein, this option shall be exercisable
with respect to each installment shown below on or after the
date of vesting applicable to such installment, as follows:
Twelve and half percent (12.5%) of the Option Shares shall
vest on [date] and thereafter shall vest monthly at a rate
of 1/48th (2.08%) per month such that the option shall be
one hundred percent (100%) vested forty-eight (48) months
from [date].
2. (a) The exercise price of this option is equal to
the Exercise Price Per Share, being not less than 85% of the fair
market value of the Common Stock on the date of grant of this option.
(b) Payment of the exercise price per share is due in
full upon exercise of all or any part of each installment
which has accrued to you. You may elect, to the extent
permitted by applicable statutes and regulations, to make
payment of the exercise price under one of the following
alternatives:
(i) payment of the exercise price per share in cash (including check) at the
time of exercise;
<PAGE>
(ii) payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which results in the receipt
of cash (or check) by the Company prior to the issuance of Common Stock;
(iii) provided that at the time of exercise the Company's Common Stock
is publicly traded and quoted regularly in the Wall Street Journal, payment by
delivery of already-owned shares of Common Stock, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interests, which
Common Stock shall be valued at its fair market value on the date of exercise;
or
(iv) payment by a combination of the methods of payment permitted by
subparagraph 2(b)(i) through 2(b) (iii) above.
3. This option may not be exercised for any number of shares which would
require the issuance of anything other than whole shares.
4. Notwithstanding anything to the contrary contained
herein, this option may not be exercised unless the
shares issuable upon exercise of this option are then
registered under the Securities Act of 1933, as amended
(the "Act") or, if such shares are not then so registered,
the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the
Act.
5. The term of this option commences on the Option Grant
Date, and, unless sooner terminated as set forth below or
in the Plan, terminates on [date] (which date shall be no
more than ten (10) years from the date this option is granted).
In no event may this option be exercised on or after the date on
which it terminates. This option shall terminate prior to the
expiration of its term as follows: three (3) months after the
termination of your employment with the Company or an affiliate
of the Company (as defined in the Plan) for any reason or for n
reason unless:
(a) such termination of employment is due to your
permanent and total disability (within the meaning of
Section 422(c)(6) of the Code), in which event the
option shall terminate on the earlier of the termination
date set forth above or twelve (12) months following
such termination; or
(b) such termination of employment is due to your
death, in which event the option shall terminate on
the earlier of the termination date set forth above
or eighteen (18) months after your death; or
(c) during any part of such three (3) month period
the option is not exercisable solely because of the
condition set forth in paragraph 4 above, in which
event the option shall not terminate until the earlier
of the termination date set forth above or until it shall
<PAGE>
have been exercisable for an aggregate period of three (3)
months after the termination of your employment; or
(d) exercise of the option within three (3) months
after termination of your employment with the Company or
with an affiliate would result in liability under section
16(b) of the Securities Exchange Act of 1934, as amended,
in which case the option will terminate on the earlier of
(i) the termination date set forth above, (ii) the tenth
(10th) day after the last date upon which exercise would
result in such liability or (iii) six (6) months and ten
(10) days after the termination of your employment with
the Company or an affiliate.
However, this option may be exercised following termination of your
employment only as to that number of shares as to which it was
exercisable on the date of termination of your employment under
the provisions of paragraph 1 of this option.
6. (a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the
Company) together with the exercise price to the Secretary of the
Company, or to such other person as the Company may designate, during
regular business hours, together with such additional documents as the
Company may then require pursuant to any provisions of the Plan.
(b) By exercising this option you agree that the Company may
require you to enter an arrangement providing for the payment by you to
the Company of any tax withholding obligation of the Company arising by
reason of (1) the exercise of this option; (2) the lapse of any substantial
risk of forfeiture to which the shares are subject at the time of exercise;
or (2) the disposition of shares acquired upon such exercise.
7. This option is not transferable, except by will or by the laws
of descent and distribution or pursuant to a qualified domestic
relations order as defined in the Code or Title I of the Employee Retirement
Income Security Act (a "QDRO"), and is exercisable during your life only by
you or a transfer pursuant to a QDRO. By delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise this
option.
8. This option is not an employment contract and nothing in
this option shall be deemed to create in any way whatsoever any
obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In
the event that this option is granted to you in connection with
the performance of services as a consultant or director, references
to employment, employee and similar terms shall be deemed to
include the performance of services as a consultant or a director,
as the case may be; provided, however, that no rights as an employee
shall arise by reason of the use of such terms.
9. Any notices provided for in this option or the Plan shall
be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by the Company to
you, five (5) days after deposit in the United States mail,
postage prepaid, addressed to you at the address specified below
<PAGE>
or at such other address as you hereafter designate by written
notice to the Company.
10. This option is subject to all the provisions of the Plan,
a copy of which is attached hereto and its provisions are hereby
made a part of this option, including without limitation the
provisions of paragraph 6 of the Plan relating to option
provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event
of any conflict between the provisions of this option and those
of the Plan, the provisions of the Plan shall control.
Dated the ____ day of __________________, 19__.
Very truly yours,
MYSOFTWARE COMPANY
By _____________
Duly authorized on behalf ofthe
Board of Directors
ATTACHMENTS:
1995 Equity Incentive Plan
Notice of Exercise
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights
and liabilities with respect to this option are set forth in
the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option,
it sets forth the entire understanding between the undersigned
optionee and the Company and its affiliates regarding the
acquisition of stock in the Company and supersedes all prior
oral and written agreements on that subject with the exception
of (i) the options previously granted and delivered to the
undersigned under stock option plans of the Company, and (ii)
the following agreements only:
None____________
(Initial)
OTHER______________
______________
______________
__________________
[Name], OPTIONEE
Address:________________
________________
<PAGE>
Exhibit 99.4
MARKETHOME
1997 EQUITY INCENTIVE PLAN
As Adopted by the Board of Directors
September 11, 1997
As Amended March 19, 1999
1. PURPOSE. The purpose of this Plan is to provide
incentives to attract, retain and motivate eligible persons whose
present and potential contributions are important to the success
of the Company, its Parent and Subsidiaries, by offering them an opportunity
to participate in the Company's future performance
through awards of Options and Restricted Stock. Capitalized terms
not defined in the text are defined in Section 22. This Plan is
intended to be a written compensatory benefit plan within the
meaning of Rule 701 promulgated under the Securities Act.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2
and 17, the total number of Shares reserved and available
for grant and issuance pursuant to this Plan will be Four
Million Six Hundred Thousand (4,600,000) Shares or such
lesser number of Shares as permitted under Section
260.140.45 of Title 10 of the California Code of Regulations.
Subject to Sections 2.2 and 17, Shares will again be
available for grant and issuance in connection with future
Awards under this Plan that: (a) are subject to issuance
upon exercise of an Option but cease to be subject to such
Option for any reason other than exercise of such Option
or (b) are subject to an Award that otherwise terminates
without Shares being issued. At all times the Company
will reserve and keep available a sufficient number of
Shares as will be required to satisfy the requirements
of all Awards granted under this Plan.
2.2 Adjustment of Shares. In the event that the
number of outstanding shares of the Company's Common
Stock is changed by a stock dividend, recapitalization,
stock split, reverse stock split, subdivision, combination, reclassification
or similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan,
(b)the Exercise Prices of and number of Shares subject to outstanding Options,
and (c) the Purchase Prices of and number of Shares subject to other outstanding
Awards will be proportionately adjusted, subject to any required action by the
Board or the shareholders of the Company and compliance with
applicable securities laws; provided, however, that fractions of
a Share will not be issued but will either be paid in cash at Fair
Market Value of such fraction of a Share or will be rounded down
to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be
granted only to employees (including officers and directors who
are also employees) of the Company or of a Parent or Subsidiary
of the Company. All other Awards may be granted to employees,
officers, directors and consultants of the Company or any Parent
or Subsidiary of the Company; provided such consultants render
bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction. A person may be
granted more than one Award under this Plan.
<PAGE>
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the Committee or
the Board acting as the Committee. Subject to the general purposes, terms
and conditions of this Plan, and to the direction of the Board, the Committee
will have full power to implement and carry out this Plan. Without limitation,
the Committee will have the authority to:
(a) construe and interpret this Plan, any Award
Agreement and any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to this Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject to Awards;
(f) determine whether Awards will be granted singly,
in combination with, in tandem with, in replacement of, or as alternatives to,
other Awards under this Plan or awards under any other incentive or compensation
plan of the Company or any Parent or Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission, or reconcile any inconsistency
in this Plan, any Award, any Award Agreement, any Exercise Agreement or any
Restricted Stock Purchase Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the administration
of this Plan.
4.2 Committee Discretion. Any determination made
by the Committee with respect to any Award will be
made in its sole discretion at the time of grant of
the Award or, unless in contravention of any express
term of this Plan or Award, and subject to Section 5.9,
at any later time, and such determination will be final
and binding on the Company and on all persons having an
interest in any Award under this Plan. The Committee
may delegate to one or more officers of the Company the
authority to grant an Award under this Plan.
5. OPTIONS. The Committee may grant Options to eligible
persons and will determine whether such Options will be
Incentive Stock Options within the meaning of the Code
<PAGE>
("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the
Option, the period during which the Option may be exercised,
and all other terms and conditions of the Option, subject to
the following:
5.1 Form of Option Grant. Each Option granted under
this Plan will be evidenced by an Award Agreement which
will expressly identify the Option as an ISO or an NQSO
("Stock Option Agreement"), and will be in such form and
contain such provisions (which need not be the same for
each Participant) as the Committee may from time to time
approve, and which will comply with and be subject to the
terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will
be the date on which the Committee makes the determination
to grant such Option, unless otherwise specified by the
Committee. The Stock Option Agreement and a copy of this
Plan will be delivered to the Participant within a reasonable
time after the granting of the Option.
5.3 Exercise Period. Options may be exercisable
immediately (subject to repurchase pursuant to Section 11
of this Plan) or may be exercisable within the times or upon
the events determined by the Committee as set forth in the
Stock Option Agreement governing such Option; provided,
however, that no Option will be exercisable after the
expiration of ten (10) years from the date the Option is
granted; and provided further that no ISO granted to a
person who directly or by attribution owns more than ten
percent (10%) of the total combined voting power of all
classes of stock of the Company or of any Parent or
Subsidiary of the Company ("Ten Percent Shareholder")
will be exercisable after the expiration of five (5) years
from the date the ISO is granted. The Committee also may
provide for Options to become exercisable at one time or
from time to time, periodically or otherwise, in such number
of Shares or percentage of Shares as the Committee determines.
Subject to earlier termination of the Option as provided
herein, each Participant who is not an officer, director
or consultant of the Company or of a Parent or Subsidiary
of the Company shall have the right to exercise an Option
granted hereunder at the rate of at least twenty percent
(20%) per year over five (5) years from the date such
Option is granted.
5.4 Exercise Price. The Exercise Price of an Option
will be determined by the Committee when the Option is
granted and may not be less than 85% of the Fair Market
Value of the Shares on the date of grant; provided that
(i) the Exercise Price of an ISO will not be less than
100% of the Fair Market Value of the Shares on the date
of grant and (ii) the Exercise Price of any Option granted
to a Ten Percent Shareholder will not be less than 110% of
the Fair Market Value of the Shares on the date of grant.
Payment for the Shares purchased must be made in accordance
with Section 7 of this Plan.
5.5 Method of Exercise. Options may be exercised only
by delivery to the Company of a written stock option
exercise agreement (the "Exercise Agreement") in a form
approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being
purchased, the restrictions imposed on the Shares purchased
under such Exercise Agreement, if any, and such representations
and agreements regarding Participant's investment intent and
access to information and other matters, if any, as may be
required or desirable by the Company to comply with applicable securities
laws, together with payment in full of the Exercise Price, and any applicable
taxes, for the number of Shares being purchased.
<PAGE>
5.6 Termination. Subject to earlier termination pursuant
to Sections 17 and 18 and notwithstanding the exercise periods
set forth in the Stock Option Agreement, exercise of an
Option will always be subject to the following:
(a) If the Participant is Terminated for any reason except death,
Disability or for Cause, then the Participant may exercise such
Participant's Options only to the extent that such Options are
exercisable upon the Termination Date no later than three (3) months
after the Termination Date (or within such shorter time period, not
less than thirty (30) days, or within such longer time period, not
exceeding five (5) years, after the Termination Date as may be determined
by the Committee, with any exercise beyond three (3) months after
the Termination Date deemed to be an NQSO) but in any event, no
later than the expiration date of the Options.
(b) If the Participant is Terminated because of Participant's death
or Disability (or the Participant dies within three (3) months after
a Termination other than because of Participant's Disability or Cause),
then Participant's Options may be exercised only to the extent that
such Options are exercisable by Participant on the Termination Date
and must be exercised by Participant (or Participant's legal representative
or authorized assignee) no later than twelve (12) months after the
Termination Date (or within such shorter time period, not less than
six (6) months, or within such longer time period, not exceeding five
(5) years, after the Termination Date as may be determined by the
Committee, with any exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Section 22(e)(3)
of the Code, or (b) twelve (12) months after the Termination Date when
the Termination is for Participant's disability, within the meaning of
Section 22(e)(3) of the Code, deemed to be an NQSO) but in any event no
later than the expiration date of the Options.
(c) If the Participant is terminated for Cause, then Participant's
Options shall expire on such Participant's Termination Date, or
at such later time and on such conditions as are determined by the
Committee.
5.7 Limitations on Exercise. The Committee may
specify a reasonable minimum number of Shares that may
be purchased on any exercise of an Option, provided that
such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for
which it is then exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market
Value (determined as of the date of grant) of Shares with
respect to which ISOs are exercisable for the first time
by a Participant during any calendar year (under this Plan
or under any other incentive stock option plan of the
Company or any Parent or Subsidiary of the Company) will
not exceed $100,000. If the Fair Market Value of Shares
on the date of grant with respect to which ISOs are
exercisable for the first time by a Participant during
any calendar year exceeds $100,000, then the Options for
the first $100,000 worth of Shares to become exercisable
<PAGE>
in such calendar year will be ISOs and the Options for
the amount in excess of $100,000 that become exercisable
in that calendar year will be NQSOs. In the event that
the Code or the regulations promulgated thereunder are
amended after the Effective Date (as defined in Section
18 below) to provide for a different limit on the Fair
Market Value of Shares permitted to be subject to ISOs,
then such different limit will be automatically incorporated
herein and will apply to any Options granted after the
effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee
may modify, extend or renew outstanding Options and
authorize the grant of new Options in substitution therefor, provided
that any such action may not, without the written
consent of a Participant, impair any of such Participant's
rights under any Option previously granted. Any outstanding
ISO that is modified, extended, renewed or otherwise altered
will be treated in accordance with Section 424(h) of the
Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants
affected by a written notice to them; provided, however,
that the Exercise Price may not be reduced below the
minimum Exercise Price that would be permitted under Section
5.4 of this Plan for Options granted on the date the action
is taken to reduce the Exercise Price.
5.10 No Disqualification. Notwithstanding any other
provision in this Plan, no term of this Plan relating
to ISOs will be interpreted, amended or altered, nor
will any discretion or authority granted under this
Plan be exercised, so as to disqualify this Plan under
Section 422 of the Code or, without the consent of the
Participant affected, to disqualify any ISO under Section
422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer
by the Company to sell to an eligible person Shares that are
subject to restrictions. The Committee will determine to whom
an offer will be made, the number of Shares the person may
purchase, the Purchase Price, the restrictions to which the
Shares will be subject, and all other terms and conditions of
the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases
under a Restricted Stock Award made pursuant to this
Plan will be evidenced by an Award Agreement ("Restricted
Stock Purchase Agreement") that will be in such form
(which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this
Plan. The Restricted Stock Award will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days
from the date the Restricted Stock Purchase Agreement is delivered to
the person. If such person does not execute and deliver the Restricted
Stock Purchase Agreement along with full payment for the
Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the
Committee.
6.2 Purchase Price. The Purchase Price of Shares sold
pursuant to a Restricted Stock Award will be determined
by the Committee and will be at least 85% of the Fair Market
Value of the Shares on the date the Restricted Stock Award
is granted or at the time the purchase is consummated,
except in the case of a sale to a Ten Percent Shareholder,
in which case the Purchase Price will be 100% of the Fair
Market Value on the date the Restricted Stock Award is
granted or at the time the purchase is consummated. Payment
of the Purchase Price must be made in accordance with
Section 7 of this Plan.
<PAGE>
6.3 Restrictions. Restricted Stock Awards may be subject
to the restrictions set forth in Section 11 of this Plan
or such other restrictions not inconsistent with Section
25102(o) of the California Corporations Code.
7. PAYMENT FOR SHARE PURCHASES.
7.1 Payment. Payment for Shares purchased pursuant to
this Plan may be made in cash (by check) or, where expressly approved
for the Participant by the Committee and where
permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned
by Participant for more than six (6) months and have been paid
for within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note
has been fully paid with respect to such shares); or (2) were
obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing interest
at a rate sufficient to avoid imputation of income under
Sections 483 and 1274 of the Code; provided, however, that
Participants who are not employees or directors of the Company
will not be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other than
the Shares.
(d) by waiver of compensation due or accrued to the Participant
for services rendered;
(e) with respect only to purchases upon exercise of an Option,
and provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant
and a broker-dealer that is a member of the National Association
of Securities Dealers (an "NASD Dealer") whereby the Participant
irrevocably elects to exercise the Option and to sell a portion
of the Shares so purchased to pay for the Exercise Price, and
whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the Company; or
(2) through a "margin" commitment from the Participant and an
NASD Dealer whereby the Participant irrevocably elects to exercise
the Option and to pledge the Shares so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer in
the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the
Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
<PAGE>
7.2 Loan Guarantees. The Committee may help the
Participant pay for Shares purchased under this Plan
by authorizing a guarantee by the Company of a third-party
loan to the Participant.
8. WITHHOLDING TAXES.
8.1 Withholding Generally. Whenever Shares are to
be issued in satisfaction of Awards granted under this
Plan, the Company may require the Participant to remit
to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to
the delivery of any certificate or certificates for such
Shares. Whenever, under this Plan, payments in
satisfaction of Awards are to be made in cash, such
payment will be net of an amount sufficient to satisfy
federal, state, and local withholding tax requirements.
8.2 Stock Withholding. When, under applicable tax
laws, a Participant incurs tax liability in connection
with the exercise or vesting of any Award that is subject
to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the
Committee may in its sole discretion allow the Participant
to satisfy the minimum withholding tax obligation by
electing to have the Company withhold from the Shares
to be issued that number of Shares having a Fair Market
Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to
withheld is to be determined. All elections by a
Participant to have Shares withheld for this purpose
will be made in accordance with the requirements
established by the Committee for such elections and
be in writing in a form acceptable to the Committee.
9. PRIVILEGES OF STOCK OWNERSHIP.
9.1 Voting and Dividends. No Participant will have
any of the rights of a shareholder with respect to
any Shares until the Shares are issued to the Participant.
After Shares are issued to the Participant, the Participant
will be a shareholder and have all the rights of a
shareholder with respect to such Shares, including the
right to vote and receive all dividends or other distributions
made or paid with respect to such Shares; provided, that
if such Shares are Restricted Stock, then any new,
additional or different securities the Participant may
become entitled to receive with respect to such Shares
by virtue of a stock dividend, stock split or any other
change in the corporate or capital structure of the
Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant
will have no right to retain such stock dividends or
stock distributions with respect to Unvested Shares that
are repurchased pursuant to Section 11. The Company will
comply with Section 260.140.1 of Title 10 of the California
Code of Regulations with respect to the voting rights of
Common Stock.
9.2 Financial Statements. The Company will provide
financial statements to each Participant prior to such
Participant's purchase of Shares under this Plan, and
to each Participant annually during the period such
Participant has Awards outstanding, or as otherwise
required or permitted under Section 260.140.46 of Title
of the California Code of Regulations. Notwithstanding 10
the foregoing, the Company will not be required to provide such
financial statements to key employees whose services in connection
with the Company assure them access to equivalent information.
10. TRANSFERABILITY. Awards granted under this Plan, and
any interest therein, will not be transferable or assignable
by Participant, and may not be made subject to execution,
attachment or similar process, otherwise than by will or by
the laws of descent and distribution. During the lifetime of
<PAGE>
the Participant an Award will be exercisable only by the
Participant or Participant's legal representative and any
elections with respect to an Award, may be made only by the
Participant or Participant's legal representative.
11. RESTRICTIONS ON SHARES.
11.1 Right of First Refusal. At the discretion of the
Committee, the Company may reserve to itself and/or its
assignee(s) in the Award Agreement a right of first
refusal to purchase all Shares that a Participant (or
a subsequent transferee) may propose to transfer to a
third party, unless otherwise not permitted by Section
25102(o) of the California Corporations Code, provided,
that such right of first refusal terminates upon the
Company's initial public offering of Common Stock pursuant
an effective registration statement filed under the
Securities Act.
11.2 Right of Repurchase. At the discretion of the
Committee, the Company may reserve to itself and.or its
assignee(s) in the Award Agreement a right to repurchase
Shares held by a Participant for cash and/or cancellation
of purchase money indebtedness following such Participant's
Termination at any time within the later of ninety (90)
days after the Participant's Termination Date and the
date the Participant purchases Shares under the Plan at:
(A) with respect to Vested Shares, the Fair Market Value
of such Shares on Participant's Termination Date, provided,
that such right of repurchase terminates when the Company's
securities become publicly traded; or (B) with respect to
Unvested Shares, the Participant's Exercise Price or
Purchase Price, as the case may be, provided, that unless
the Participant is an officer, director or consultant of
the Company or of a Parent or Subsidiary of the Company,
such right of repurchase at the Exercise Price or Purchase
Price, as the case may be, lapses at the rate of at least
twenty percent (20%) per year over five (5) years from: (i)
the date of grant of the Option or (ii) in the case of
Restricted Stock, the date the Participant purchases the
Shares.
12. CERTIFICATES. All certificates for Shares or other
securities delivered under this Plan will be subject to such
stock transfer orders, legends and other restrictions as the
Committee may deem necessary or advisable, including restrictions
under any applicable federal, state or foreign securities law,
or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the
Shares may be listed or quoted.
13. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on
a Participant's Shares, the Committee may require the Participant
to deposit all certificates representing Shares, together with
stock powers or other instruments of transfer approved by the
Committee, appropriately endorsed in blank, with the Company or
an agent designated by the Company to hold in escrow until such
restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be
placed on the certificates. Any Participant who is permitted to
execute a promissory note as partial or full consideration for the
purchase of Shares under this Plan will be required to pledge and
deposit with the Company all or part of the Shares so purchased as
collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the
Committee may require or accept other or additional forms of
collateral to secure the payment of such obligation and, in any
event, the Company will have full recourse against the Participant
under the promissory note notwithstanding any pledge of the
Participant's Shares or other collateral. In connection with any
pledge of the Shares, Participant will be required to execute and
deliver a written pledge agreement in such form as the Committee
will from time to time approve. The Shares purchased with the
promissory note may be released from the pledge on a pro rata basis
as the promissory note is paid.
<PAGE>
14. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time
or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the
surrender and cancellation of any or all outstanding Awards. The
Committee may at any time buy from a Participant an Award
previously granted with payment in cash, shares of Common Stock
of the Company (including restricted stock) or other consideration,
based on such terms and conditions as the Committee and the
Participant may agree.
15. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. This Plan
is intended to comply with Section 25102(o) of the California
Corporations Code. Any provision of this Plan which is inconsistent
with Section 25102(o) shall, without further act or amendment by
the Company or the Board, be reformed to comply with the
requirements of Section 25102(o). An Award will not be effective
unless such Award is in compliance with all applicable federal
and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated
quotation system upon which the Shares may then be listed or
quoted, as they are in effect on the date of grant of the Award
and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company
will have no obligation to issue or deliver certificates for
Shares under this Plan prior to (a) obtaining any approvals from
governmental agencies that the Company determines are necessary
or advisable, and/or (b) compliance with any exemption, completion
of any registration or other qualification of such Shares under any
state or federal law or ruling of any governmental body that the
Company determines to be necessary or advisable. The Company will
be under no obligation to register the Shares with the SEC or to
effect compliance with the exemption, registration, qualification
or listing requirements of any state securities laws, stock exchange
or automated quotation system, and the Company will have no liability
for any inability or failure to do so.
16. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award
granted under this Plan will confer or be deemed to confer on
any Participant any right to continue in the employ of, or to continue
any other relationship with, the Company or any Parent or
Subsidiary of the Company or limit in any way the right of the
Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with
or without Cause.
17. CORPORATE TRANSACTIONS.
17.1 Assumption or Replacement of Awards by Successor.
In the event of (a) a dissolution or liquidation of the
Company, (b) a merger or consolidation in which the Company
is not the surviving corporation other than a merger or consolidation
with a wholly-owned subsidiary, a reincorporation of the Company in
a different jurisdiction, or other transaction in which there
is no substantial change in the shareholders of the
Company or their relative stock holdings and the Awards granted
under this Plan are assumed, converted or replaced by the successor corporation,
which assumption, conversion or replacement will be
binding on all Participants, (c) a merger in which the
Company is the surviving corporation but after which the shareholders
of the Company immediately prior to such merger
(other than any shareholder which merges with the Company
in such merger, or which owns or controls another
corporation which merges, with the Company in such merger)
cease to own their shares or other equity interests in the
Company, or (d) the sale of all or substantially all of the
assets of the Company, any or all outstanding Awards may be
assumed, converted or replaced by the successor corporation
(if any), which assumption, conversion or replacement will
be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Awards
or provide substantially similar consideration to Participants as was
provided to shareholders (after taking into account the
existing provisions of the Awards). The successor corporation
<PAGE>
may also issue, in place of outstanding Shares of the Company
held by the Participant, substantially similar shares or
other property subject to repurchase restrictions and other
provisions no less favorable to the Participant than those
which applied to such outstanding Shares immediately prior
to such transaction described in this Subsection 17.1. In
the event such successor corporation (if any) does not assume
or substitute Awards, as provided above, pursuant to a
transaction described in this Subsection 17.1, then
notwithstanding any other provision in this Plan to the
contrary, the vesting of such Awards will accelerate and
the Options will become exercisable in full prior to the
consummation of such event at such times and on such
conditions as the Committee determines, and if such Options
are not exercised prior to the consummation of
the corporate transaction, they shall terminate in accordance with the
provisions of this Plan.
17.2 Other Treatment of Awards. Subject to any greater
rights granted to Participants under the foregoing
provisions of this Section 17, in the event of the
occurrence of any transaction described in Section 17.1,
any outstanding Awards will be treated as provided in the
applicable agreement or plan of merger, consolidation,
dissolution, liquidation or sale of assets.
17.3 Assumption of Awards by the Company. The Company,
from time to time, also may substitute or assume outstanding
awards granted by another company, whether in connection
with an acquisition of such other company or otherwise, by
either (a) granting an Award under this Plan in
substitution of such other company's award or (b) assuming
such award as if it had been granted under this Plan if the
terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption
will be permissible if the holder of the substituted or
assumed award would have been eligible to be granted an
Award under this Plan if the other company had applied the
rules of this Plan to such grant. In the event the
Company assumes an award granted by another company, the
terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature
of shares issuable upon exercise of any such option will
be adjusted appropriately pursuant to Section 424(a) of the
Code). In the event the Company elects to grant a new Option
rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.
18. ADOPTION AND SHAREHOLDER APPROVAL. This Plan will become
effective on the date that it is adopted by the Board (the
"Effective Date"). This Plan will be approved by the shareholders
of the Company (excluding Shares issued pursuant to this Plan),
consistent with applicable laws, within twelve (12) months before
or after the Effective Date. Upon the Effective Date, the Board
may grant Awards pursuant to this Plan; provided, however, that:
(a) no Option may be exercised prior to initial shareholder approval
of this Plan; (b) no Option granted pursuant to an increase in the
number of Shares approved by the Board shall be exercised prior to
the time such increase has been approved by the shareholders of
the Company; (c) in the event that initial shareholder approval
is not obtained within the time period provided herein, all Awards
granted hereunder shall be canceled, any Shares issued pursuant
to any Award shall be canceled and any purchase of Shares issued
hereunder shall be rescinded; and (d) Awards granted pursuant to
an increase in the number of Shares approved by the Board which
increase is not timely approved by shareholders shall be canceled,
any Shares issued pursuant to any such Awards shall be canceled,
and any purchase of Shares subject to any such Award shall be
rescinded. In the event that initial shareholder approval is not
obtained within twelve (12) months before or after the date this
Plan is adopted by the Board, all Awards granted hereunder will
be canceled, any Shares issued pursuant to any Award will be
canceled and any purchase of Shares hereunder will be rescinded.
19. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as
provided herein, this Plan will terminate ten (10) years from
the Effective Date or, if earlier, the date of shareholder
<PAGE>
approval. This Plan and all agreements hereunder shall be
governed by and construed in accordance with the laws of the
State of California.
20. AMENDMENT OR TERMINATION OF PLAN. Subject to Section 5.9,
the Board may at any time terminate or amend this Plan in any
respect, including without limitation amendment of any form of
Award Agreement or instrument to be executed pursuant to this
Plan; provided, however, that the Board will not, without the
approval of the shareholders of the Company, amend this Plan in
any manner that requires such shareholder approval pursuant to
Section 25102(o) of the California Corporations Code or the Code
or the regulations promulgated thereunder as such provisions
apply to ISO plans.
21. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this
plan by the Board, the submission of this Plan to the shareholders
of the Company for approval, nor any provision of this Plan will be
construed as creating any limitations on the power of the Board to
adopt such additional compensation arrangements as it may deem
desirable, including, without limitation, the granting of stock options and
other equity awards otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only
in specific cases.
22. DEFINITIONS. As used in this Plan, the following terms will
have the following meanings:
"Award" means any award under this Plan, including any
Option or Restricted Stock Award.
"Award Agreement" means, with respect to each Award,
the signed written agreement between the Company and the Participant
setting forth the terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Cause" means Termination because of (i) any willful
material violation by the Participant of any law or regulation
applicable to the business of the Company or a Parent or Subsidiary
of the Company, the Participant's conviction for, or guilty plea to,
a felony or a crime involving moral turpitude, any willful
perpetration by the Participant of a common law fraud, (ii) the
Participant's commission of an act of personal dishonesty which
involves personal profit in connection with the Company or any other
entity having a business relationship with the Company, (iii) any
material breach by the Participant of any provision of any agreement
or understanding between the Company or any Parent or Subsidiary of
the Company and the Participant regarding the terms of the Participant's
service as an employee, director or consultant to the Company or a
Parent or Subsidiary of the Company, including without limitation, the
willful and continued failure or refusal of the Participant to perform
the material duties required of such Participant as an employee, director
or consultant of the Company or a Parent or Subsidiary of the Company,
other than as a result of having a Disability, or a breach of any
applicable invention assignment and confidentiality agreement or
similar agreement between the Company and the Participant, (iv) Participant's
disregard of the policies of the Company or any Parent or Subsidiary of
the Company so as to cause loss, damage or injury to the property,
reputation or employees of the Company or a Parent or Subsidiary of the
Company, or (v) any other misconduct by the Participant which is materially
injurious to the financial condition or business reputation of, or
is otherwise materially injurious to, the Company or a Parent or Subsidiary of
the Company.
<PAGE>
"Code" means the Internal Revenue Code of 1986, as
amended.
"Committee" means the committee appointed by the Board
to administer this Plan, or if no committee is appointed, the Board.
"Company" means MarketHome, or any successor corporation.
"Disability" means a disability, whether temporary or
permanent, partial or total, as determined by the Committee.
"Exercise Price" means the price at which a holder of
an Option may purchase the Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of
a share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the date of
determination as reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then listed on
a national securities exchange, its closing price on the date of
determination on the principal national securities exchange on which
the Common Stock is listed or admitted to trading as reported in The
Wall Street Journal;
(c) if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and asked
prices on the date of determination as reported by The Wall Street
Journal (or, if not so reported, as otherwise reported by any newspaper
or other source as the Board may determine); or
(d) if none of the foregoing is applicable, by the Committee in
good faith.
"Option" means an award of an option to purchase Shares
pursuant to Section 5.
"Parent" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if each of
such corporations other than the Company owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
"Participant" means a person who receives an Award under
this Plan.
"Plan" means this MarketHome 1997 Equity Incentive Plan,
as amended from time to time.
"Purchase Price" the price at which a Participant may
purchase Restricted Stock.
"Restricted Stock" means Shares purchased pursuant to a
Restricted Stock Award.
<PAGE>
"Restricted Stock Award" means an award of Shares pursuant
to Section 6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shares" means shares of the Company's Common Stock
reserved for issuance under this Plan, as adjusted pursuant to
Sections 2 and 17, and any successor security.
"Subsidiary" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations
in such chain.
"Termination" or "Terminated" means, for purposes of this
Plan with respect to a Participant, that the Participant has for any
reason ceased to provide services as an employee, officer, director
or consultant to the Company or a Parent or Subsidiary of the Company.
A Participant will not be deemed to have ceased to provide services in
the case of (i) sick leave, (ii) military leave, or (iii) any other
leave of absence approved by the Committee, provided that such leave
is for a period of not more than ninety (90) days unless reinstatement
(or, in the case of an employee with an ISO, reemployment) upon the
expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise pursuant to formal policy adopted from time
to time by the Company and issued and promulgated in writing. In the
case of any Participant on (i) sick leave, (ii) military leave or (iii)
an approved leave of absence, the Committee may make such provisions
respecting suspension of vesting of the Award while on leave from the
Company or a Parent or Subsidiary of the Company as it may deem
appropriate, except that in no event may an Option be exercised
after the expiration of the term set forth in the Stock Option Agreement.
The Committee will have sole discretion to determine whether a Participant
has ceased to provide services and the effective date on which the Participant
ceased to provide services (the "Termination Date").
"Unvested Shares" means "Unvested Shares" as defined in the
Award Agreement.
"Vested Shares" means "Vested Shares" as defined in the
Award Agreement
<PAGE>
Exhibit 99.5
MARKETHOME
1997 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made and entered into
as of the date of grant set forth below (the "Date of Grant") by
between MARKETHOME, a California corporation (the "Company"), and
the participant named below ("Participant"). Capitalized terms not
defined herein shall have the meaning ascribed to them in the Company's
1997 Equity Incentive Plan (the "Plan").
Participant:
Social Security Number:
Address:
Total Option Shares:
Exercise Price Per Share:
Date of Grant:
First Vesting Date:
Expiration Date:
(unless earlier terminated under Section 3 below)
Type of Stock Option
(Check one): [ ] Incentive Stock Option
[ ] Nonqualified Stock Option
1. GRANT OF OPTION. The Company hereby grants to Participant an option
(this "Option") to purchase the total number of shares of Common Stock of
the Company set forth above as Total Option Shares (the "Shares") at the
Exercise Price Per Share set forth above (the "Exercise Price"), subject to
all of the terms and conditions of this Agreement and the Plan. If
designated as an Incentive Stock Option above, the Option is intended to
qualify as an "incentive stock option" ("ISO") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
2. EXERCISE PERIOD.
2.1 Exercise Period of Option. Provided Participant continues to
provide services to the Company or any Subsidiary or Parent of
the Company, the Option will become vested and exercisable as to
portions of the Shares as follows: (a) This Option shall not vest
nor be exercisable with respect to any of the Shares until _______,
199__ (the "First Vesting Date"); (b) on the First Vesting Date the
Option will become vested and exercisable as to twenty-five percent
(25%) of the Shares; and (c) thereafter at the end of each full
succeeding month the Option will become vested and exercisable as
to one thirty-six (1/36) of the Shares. If application of the
vesting percentage causes a fractional share, such share shall be
rounded down to the nearest whole share.
2.2 Vesting of Orations. Shares that are vested pursuant to the schedule
set forth in Section 2.1 are "Vested Shares." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "Unvested
Shares." Unvested Shares may not be sold or otherwise transferred
by Participant without the Company's prior written consent.
2.3 Expiration. The Option shall expire on the Expiration Date set forth
above or earlier as provided in Section 3 below.
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or Cause. If
Participant is Terminated for any reason, except death, Disability or for
Cause, the Option, to the extent (and only to the extent) that it would
have been exercisable by Participant on the Termination Date, may be
exercised by Participant no later than three (3) months after the Termination
Date, but in any event no later than the Expiation Date.
3.2 Termination Because of Death or Disability. If Participant is Terminated
because of death or Disability of Participant (or Participant dies within
three (3) months of Termination other than because of Participant's Disability
or for Cause), the Option, to the extent that it is exercisable by Participant
on the Termination Date, may be exercised by Participant (or Participant's
legal representative) no later than twelve (12) months after the Termination
Date, but in any event no later than the Expiration Date. Any exercise
beyond (a) three (3) months after the Termination Date when the Termination
is for any reason other than the Participant's death or disability, within
the meaning of Section 22(e)(3) of the Code; or (b) twelve (12) months after
the Termination Date when the termination is for Participant's disability,
within the meaning of Section 22(e)(3) of the Code, is deemed to be an NQSO.
3.3 Termination for Cause. If Participant is Terminated for Cause, then
the Option will expire on Participant's Termination Date, or at such later
time and on such conditions as are determined by the Committee.
3.4 No Obligation to Employ. Nothing in the Plan or this Agreement shall
confer on Participant any right to continue in the employ of, or other
<PAGE>
relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of
the Company to terminate Participant's employment or other relationship at
any time, with or without Cause.
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this Option,
Participant (or in the case of exercise after Participant's death or
incapacity, Participant's executor, administrator, heir or legatee, as
the case may be) must deliver to the Company an executed stock option
exercise agreement in the form attached hereto as Exhibit A, or in such
other form as may be approved by the Company from time to time (the
"Exercise Agreement"), which shall set forth, inter alia, Participant's
election to exercise the Option, the number of Shares being purchased,
any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent
and access to information as may be required by the Company to comply
with applicable securities laws. If someone other than Participant
exercises the Option, then such person must submit documentation
reasonably acceptable to the Company that such person has the right to
exercise the Option.
4.2 Limitations on Exercise. The Option may not be exercised unless
such exercise is in compliance with all applicable federal
and state securities laws, as they are in effect on the
date of exercise. The Option may not be exercised as to
fewer than one hundred (100) Shares unless it is exercised
as to all Shares as to which the Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied
by full payment of the Exercise Price for the shares being
purchased in cash (by check), or where permitted by law:
(a) by cancellation of indebtedness of the Company to the Participant:
(b) by surrender of shares of the Company's Common Stock that (1)
either (A) have been owned by Participant for more than six (6)
months and have been paid for within the meaning of SEC Rule 144
(and, if such shares were purchased from the Company by use of a
promissory note, such note has been fully paid with respect to
such shares); or (B) were obtained by Participant in the open
public market; and (2) are clear of all liens, claims, encumbrances
or security interests;
(c) by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and
1274 of the Code; provided, however, that Participants who are not
employees or directors of the Company shall not be entitled to
purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to Participant for
services rendered;
<PAGE>
(e) provided that a public market for the Company's stock exists, (1)
through a "same day sale" commitment from Participant and a broker-dealer
that is a member of the National Association of Securities Dealers
(an "NASD Dealer") whereby Participant irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise Price
directly to the Company, or (2) through a "margin" commitment from
Participant and an NASD Dealer whereby Participant irrevocably
elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from
the NASD Dealer in the amount of the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares
to forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise
of the Option, Participant must pay or provide for any applicable federal,
state and local withholding obligations of the Company.
If the Committee permits, Participant may provide for payment
of withholding taxes upon exercise of the Option by requesting
that the Company retain Shares with a Fair Market Value equal
to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Participant by deducting
the Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement and payment
are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or
Participant's legal representative, and shall deliver
certificates representing the Shares with the appropriate
legends affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option is
an ISO, and if Participant sells or otherwise disposes of any of
the Shares acquired pursuant to thc ISO on or before the later of
(a) the date two (2) years after the Date of Grant, and (b) the date
one (1) year after transfer of such Shares to Participant upon exercise
of the Option, Participant shall immediately notify the Company in
writing of such disposition. Participant agrees that Participant may
be subject to income tax withholding by the Company on the compensation
income recognized by Participant from the early disposition by payment
in cash or out of the current wages or other compensation payable to
Participant.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this
Agreement are intended to comply with Section 25102(o) of the
California Corporations Code. Any provision of this Agreement
which is inconsistent with Section 25102(o) shall, without further
act or amendment by the Company or the Board, be
reformed to comply with the requirements of Section 25102(o).
The exercise of the Option and the issuance and transfer of Shares shall
be subject to compliance by the Company and Participant with all applicable
<PAGE>
requirements of federal and state securities laws and with
all applicable requirements of any stock exchange on which the
Company's Common Stock may be listed at the time of such issuance
or transfer. Participant understands that the Company is under no
obligation to register or qualify the Shares with the SEC, any
state securities commission or any stock exchange to effect such compliance.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred
in any manner other than by will or by the laws of descent and distribution
and may be exercised during the lifetime of Participant
only by Participant or in the event of, Participant's incapacity, by
Participant's legal representative. The terms of the Option shall be
binding upon the executors, administrators, successors and assigns of
Participant.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company,
or its assignee, shall have the option to repurchase Participant's
Unvested Shares (as defined in Section 2.2 of this Agreement) on the terms and
conditions set forth in the Exercise Agreement (the "Repurchase
Option") if Participant is Terminated (as defined in the Plan) for
any reason, or no reason, including without limitation Participant's
death, Disability (as defined in the Plan), voluntary resignation
or termination by the Company with or without Cause. Notwithstanding
the foregoing, the Company shall retain the Repurchase Option for
Unvested Shares only as to that number of Unvested Shares (whether
or not exercised) that exceeds the number of shares which remain exercisable.
8.1 Termination and Termination Date. in case of any dispute as to
whether Participant is Terminated, the Committee shall have discretion
to determine whether Participant has been Terminated and the effective
date of such Termination (the "Termination Date").
8.2 Exercise of Repurchase Option. At any time within
ninety (90) days after the Participant's Termination
Date (or, in the case of securities issued upon exercise
of an Option after the Participant's Termination Date,
within 90 days after the date of such exercise), the
Company, or its assignee, may elect to repurchase the
Participant's Unvested Shares by giving Participant
written notice of exercise of the Repurchase Option.
8.3 Calculation of Repurchase Price for Unvested Shares.
The Company or its assignee shall have the option to
repurchase from Participant (or from Participant's
personal representative as the case maybe) the Unvested
Shares at the Participant's Exercise Price,
proportionately adjusted for any stock split or similar
change in the capital structure of the Company as set
forth in Section 2.2 of the Plan.
8.4 Payment of Repurchase Price. The repurchase price
shall be payable, at the option of the Company or its
assignee, by check or by cancellation of all or a portion
of any outstanding indebtedness of Participant to the
Company or such assignee, or by any combination thereof.
The repurchase price shall be paid without interest within
sixty (60) days after exercise of the Repurchase Option.
8.5 Right of Termination Unaffected. Nothing in this Agreement shall
be construed to limit or otherwise affect in any manner
whatsoever the right or power of the Company (or any
<PAGE>
Parent or Subsidiary of the Company) to terminate
Participant's employment or other relationship with
Company (or the Parent or Subsidiary of the Company)
at any time, for any reason or no reason, with or without
cause.
9. COMPANY'S REPURCHASE OPTION FOR VESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Participant's Vested
Shares (as defined in Section 2.2 of this Agreement) on the terms
and conditions set forth in this Section (the "Repurchase Option")
if Participant is Terminated (as defined in the Plan) for any
reason, or no reason, including without limitation Participant's
death, Disability (as defined in the Plan), voluntary resignation
or termination by the Company with or without Cause.
9.1 Termination and Termination Date. In case of any dispute as to
whether Participant is Terminated, the Committee shall have discretion
to determine whether Participant has been Terminated and the effective
date of such Termination (the "Termination Date").
9.2 Exercise of Repurchase Option. At any time within
ninety (90) days after the Termination Date (or, in the
case of securities issued upon exercise of an Option after
the Participant's Termination Date, within 90 days after the
date of such exercise), the Company, or its assignee, may
elect to repurchase the Participant's Vested Shares by
giving Participant written notice of exercise of the
Repurchase Option.
9.3 Calculation of Repurchase Price for Vested Shares. The
Company or its assignee shall have the option to repurchase
from Participant (or from Participant's personal representative
as the case may be) the Vested Shares ,at the Fair Market
Value of such Shares on the Participant's Termination Date.
9.4 Payment of Repurchase Price. The repurchase price
shall be payable, at the option of the Company or its assignee,
by check or by cancellation of all or a portion of any
outstanding indebtedness of Participant to the Company
or such assignee, or by any combination thereof. The
repurchase price shall be paid without interest within
sixty (60) days after exercise of the Repurchase Option.
9.5 Right of Termination Unaffected. Nothing in this Agreement
shall be construed to limit or otherwise affect in any
manner whatsoever the right or power of the Company (or
any Parent or Subsidiary of the Company) to terminate
Participant's employment or other relationship with
Company (or the Parent or Subsidiary of the Company)
at any time, for any reason or no reason, with or without Cause.
9.6 Termination of Repurchase Option. The Company's
Repurchase Option for Vested Shares will terminate
when the Company's securities become publicly traded.
10. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be
sold or otherwise transferred by Participant without the Company's
prior written consent. Before any Vested Shares held by
Participant or any transferee of such Vested Shares (either
<PAGE>
being sometimes referred to herein as the "Holder") may be
sold or otherwise transferred (including without limitation
a transfer by gift or operation of law), the Company and/or
its assignee(s) shall have an assignable right of first
refusal to purchase the Vested Shares to be sold or transferred
(the "Offered Shares") on the terms and conditions set forth
in this Section (the "Right of First Refusal").
10.1 Notice of Proposed Transfer. The Holder of the Offered Shares
shall deliver to the Company a written notice (the "Notice")
stating: (i) the Holder's bona fide intention to sell or otherwise
transfer the Offered Shares; (ii) the name of each proposed
bona fide purchaser or other transferee ("Proposed Transferee");
(iii) the number of Offered Shares to be transferred to each
Proposed Transferee; (iv) the bona fide cash price or other consideration for
which the Holder proposes to transfer the
Offered Shares (the "Offered Price"); and (v) that the
Holder will offer to sell the Offered Shares to the Company
and/or its assignee(s) at the Offered Price as provided in
this Section.
10.2 Exercise of Right of First Refusal. At any time within thirty
(30) days after the date of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect
to purchase the Offered Shares proposed to be transferred to
any one or more of the Proposed Transferees named in the Notice,
at the purchase price determined as specified below.
10.3 Purchase Price. The purchase price for the Offered Shares
Purchased under this Section will be-the Offered Price. If the
Offered Price includes consideration other than cash, then the
cash equivalent value of the non-cash consideration shall
conclusively be deemed to be the value of such non-cash
consideration as determined in good faith by the Company's
Board of Directors.
10.4 Payment. Payment of the purchase price for Offered Shares
will be payable, at the option of the Company and/or its assignee(s)
(as applicable), by check or by cancellation of all or a portion of
any outstanding indebtedness of the Holder to the Company (or to
such assignee, in the case of a purchase of Offered Shares by
such assignee) or by any combination thereof. The purchase price
will be paid without interest within sixty (60) days after the
Company's receipt of the Notice, or, at the option of the Company
and/or its assignee(s), in the manner and at the time(s) set forth
in the Notice.
10.5 Holder's Right to Transfer. If all of the Offered Shares proposed
in thc Notice to be transferred to a given Proposed Transferee are
not purchased by the Company and/or its assignee(s) as provided in
this Section, then the Holder may sell or otherwise transfer such
Offered Shares to that Proposed Transferee at the Offered Price or
at a higher price, provided that such sale or other transfer is consummated
within 120 days after the date of the Notice, and
provided further, that (i) any such sale or other transfer is
effected in compliance with all applicable securities laws and
(ii) the Proposed Transferee agrees in writing that the provisions
of this Section will continue to apply to the Offered Shares
in the hands of such Proposed Transferee. If the Offered
Shares described in the Notice are not transferred to the
<PAGE>
Proposed Transferee within such 120 day period, then a new
Notice must be given to the Company, and the Company will
again be offered the Right of First Refusal before any Shares
held by the Holder may be sold or otherwise transferred.
10.6 Exempt Transfers. Notwithstanding anything to the contrary
in this Section, the following transfers of Vested Shares will
be exempt from the Right of First Refusal: (i) the transfer
of any or all of the Vested Shares during Participant's lifetime
by gift or on Participant's death by will or intestacy to
Participant's "immediate family" (as defined below) or to a
trust for the benefit of Participant or Participant's immediate
family, provided that each transferee or other recipient agrees
in a writing satisfactory to the Company that the provisions
of this Section will continue to apply to the transferred Vested
Shares in the hands of such transferee or other recipient; (ii)
any transfer of Vested Shares made pursuant to a statutory merger
or Statutory consolidation of the Company with or into another
corporation or corporations (except that the Right of First
Refusal and Repurchase Option will continue to apply thereafter
to such Vested' Shares, in which case the surviving corporation
of such merger or consolidation shall succeed to the rights of the
Company under this Section unless the agreement of merger or
consolidation expressly otherwise provides); or (iii) any transfer
of Vested Shares pursuant to the winding up and dissolution of
the Company. As used herein, the term "immediate family" will
mean Participant's spouse, the lineal descendant or antecedent,
father, mother, brother or sister, adopted child or grandchild of
the Participant or the Participant's spouse, or the spouse of any
child, adopted child, grandchild or adopted grandchild of Participant
or the Participant's spouse.
10.7 Termination of Right of First Refusal. The Company's Right of
First Refusal will terminate when the Company's securities become
publicly traded.
11. TAX CONSEQUENCES. Set forth below is a brief summary as of the
Effective Date of the Plan of some of the federal and California tax
consequences of exercise of the Option and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS
AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
11.1 Exercise of ISO. If the Option qualifies as an ISO, there will be
no regular federal or California income tax liability upon the exercise
of the Option, although the excess, if any, of the Fair Market Value of
the Shares on the date of exercise over the Exercise Price will be
treated as a tax preference item for federal alternative minimum tax
purposes and may subject the Participant to the alternative minimum
tax in the year of exercise.
11.2 Exercise of Nonqualified Stock Option. If the Option does not
qualify as art ISO, there may be a regular federal and
California income tax liability upon the exercise of the Option.
Participant will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any,
of the Fair Market Value of the Shares on the date of exercise over
the Exercise Price. If Participant is a current or former employee
<PAGE>
of the Company, the Company may be required to withhold from
Participant's compensation or collect from Participant and pay to
the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.
11.3 Disposition of Shares. If the Shares are held for more than
one (1) year after the date of the transfer of the Shares
pursuant to the exercise of the Option for Vested Shares or for
more than one (1) year after the date of transfer of the Shares
pursuant to the exercise of an Option for Unvested Shares for which
a Section 83(b) election has been made, and, in the case of an ISO,
are disposed of more than two (2) years after thc Date of Grant,
any gain realized on disposition of the Shares will be treated as
long term capital gain for federal and California income tax purposes.
If Shares purchased under an ISO are disposed of within the applicable
one (l) year or two (2) year period, any gain realized on such
disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the excess, if any, of the
Fair Market Value of the Shares on the date of exercise over the
Exercise Price. The Company may be required to withhold from
Participant's compensation or collect from Participant and pay to
the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.
11.4 Section 83(b) Election for Unvested Shares. With respect to
Unvested Shares, which are subject to the Repurchase Option, unless
an election is filed by the Participant with the Internal Revenue
Service (and, if necessary, the proper state taxing authorities),
within 30 days of the purchase of the Unvested Shares, electing
pursuant to Section 83(b) of the Internal Revenue Code (and similar
state tax provisions, if applicable) to be taxed currently on any difference
between the Exercise Price of the Unvested Shares and
their Fair Market Value on the date of purchase, there may be a
recognition of taxable income (including, where applicable,
alternative minimum taxable income) to the Participant, measured
by the excess, if any, of the Fair Market Value of the Unvested
Shares at the time they cease to be Unvested Shares, over the
Exercise Price of the Unvested Shares.
12. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have
any of the rights of a shareholder with respect to any Shares until
the Shares are issued to Participant.
13. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee
for review. The resolution of such a dispute by the
Committee shall be final and binding on the Company and
Participant.
14. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement of the
parties and supersede all prior undertakings and agreements with
respect to the subject matter hereof.
15. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed
to the Corporate Secretary of the Company at its principal corporate offices.
Any notice required to be given or delivered to Participant shall be in
writing and addressed to Participant at the address indicated above or to
<PAGE>
such other address as such party may designate in writing from time to time to
the Company. All notices shall be deemed to have been given or delivered upon
personal delivery; three (3) days after deposit in the United
States mail by certified or registered mail (return receipt
requested); one (1) business day after deposit with any return
receipt express courier (prepaid); or one (1) business day after
transmission by facsimile, rapifax or telecopier.
16. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement including its rights to repurchase Shares under
the Repurchase Option and the Right of First Refusal. This Agreement
shall be binding upon and inure to the benefit of the successors and
assigns of the Company. Subject to the restrictions on transfer set
forth herein, this Agreement shall be binding upon Participant and
Participant's heirs, executors, administrators, legal representatives,
successors and assigns.
17. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California as such laws are
applied to agreements between California residents entered into and
to be performed entirely within California. If any provision of this
Agreement is determined by a court of law to be illegal or unenforceable,
then such provision will be enforced to the maximum extent possible
and the other provisions w-ill remain fully effective and enforceable.
18. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of the
Plan and this Agreement. Participant has read and understands the
terms and provisions thereof, and accepts the Option subject to all
the terms and conditions of the Plan and this Agreement. Participant
acknowledges that there may be adverse tax consequences upon exercise
of the Option or disposition of the Shares and that Participant
should consult a tax adviser prior to such exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in triplicate by its duly authorized representative and Participant has
executed this Agreement in triplicate as of the Date of Grant.
MARKETHOME PARTICIPANT
By:___________ ____________
(Signature)
_________________ ____________________
(Please print name) (Please print name)
_____________________
(Please print title)
<PAGE>
