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Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Progress Software Corporation
-----------------------------
(Exact Name of Registrant as Specified in Its Charter)
Massachusetts 04-2746201
------------- ----------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14 Oak Park, Bedford, Massachusetts 01730
----------------------------------- -----
(Address of Principal Executive Offices) (Zip code)
APPBUILDER CORPORATION 1996 STOCK PLAN
--------------------------------------
(Full Title of the Plan)
Joseph W. Alsop
President and Treasurer
Progress Software Corporation
14 Oak Park
Bedford, Massachusetts
----------------------
(Name and Address of Agent for Service)
(781) 280-4000
--------------
(Telephone Number, Including Area Code, of Agent For Service)
WITH COPIES TO:
Robert W. Sweet, Jr., Esquire
Foley, Hoag & Eliot LLP
One Post Office Square
Boston, Massachusetts 02109
(617) 832-1000
-------------------------------
CALCULATION OF REGISTRATION FEE
=======================================================================================================
Title of Proposed Proposed
Securities Amount Maximum Maximum Amount of
to be to be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
- -------------------------------------------------------------------------------------------------------
Common Stock,
$0.01 par value 31,504 shares $0.67(1) $21,107.68 $6.23
----- ---------- -----
=======================================================================================================
(1) Pursuant to Rule 457(h)(1), $0.67 represents the per share exercise
price of outstanding options.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated in this Registration Statement by reference:
(a) Progress Software Corporation's (the "Company's" or the
"Registrant's") Annual Report on Form 10-K for the fiscal year ended November
30, 1996 (file number 0-19417) as filed with the Commission on February 20,
1997;
(b) the Company's Quarterly Reports on Form 10-Q for the Quarterly Periods
ended February 28, 1997, May 31, 1997 and August
31, 1997 (file number 0-19417);
(c) the description of the Company's Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on July 22, 1991
under Section 12 of the Securities Exchange Act of 1934 (the "Exchange Act"),
including any amendment or description filed for the purpose of updating such
description; and
All 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 in this Registration Statement and to be part
hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the securities registered hereby is being passed upon for
the Company by Foley, Hoag & Eliot LLP, Boston, Massachusetts.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 6 of the Company's Restated Articles of Organization eliminates
the personal liability of a director to the Company or its stockholders for
monetary damages arising out of such director's breach of fiduciary duty as a
director of the Company to the maximum extent permitted by Massachusetts law.
Section 13(b)(1-1/2) of Chapter 156B of the Massachusetts Business Corporation
Law provides that the articles of organization of a corporation may state a
provision eliminating the personal liability of a director to a corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; provided, however, that such provision shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts of commission not in good
faith or which involve intentional misconduct or knowing violation of law, (iii)
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under section 61 or 62 of the Massachusetts Business Corporation Law dealing
with liability for unauthorized distributions and loans to insiders,
respectively, or (iv) for any transaction from which the director derived an
improper personal benefit.
Article VII of the Company's By-Laws provides that the Company shall
indemnify its officers and directors, and directors, officers, trustees,
employees and other agents of any organization in which the Company owns shares
or of which it is a creditor, against all liabilities and expenses reasonably
incurred by such officers, directors, employees and other agents in connection
with the defense or disposition of any action, suit or proceeding in which they
may be involved by reason of having been a director, officer of employee or
other agent, except with respect to any matter as to which they shall have been
adjudicated not to have acted in good faith and reasonably believe that their
action was in the best interests of the Company. Section 67 of the Massachusetts
Business Corporation Law authorizes a corporation to indemnify its directors,
officers, employees and other agents unless such person shall have been
adjudicated in any proceeding not to have acted in good faith in the reasonable
belief that such action was in the best interests of the corporation.
The effect of these provisions would be to permit such indemnification by
the Company for liabilities arising out of the Securities of 1933, as amended
(the "Securities Act").
The Company also maintains an officers and directors liability insurance
policy.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 AppBuilder Corporation 1996 Stock Plan
4.2 Form of Stock Option Agreement
5.1 Opinion of Counsel
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (contained on the signature page)
ITEM 9. UNDERTAKINGS.
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 this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at all time shall be deemed to be the initial bona
fide offering thereof.
2. The undersigned Registrant hereby undertakes that,
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(a) 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; 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;
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 with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference herein.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the 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.
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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 Town of Bedford, Commonwealth of Massachusetts, on the second
day of December, 1997.
Progress Software Corporation
By: /s/ JOSEPH W. ALSOP
-----------------------
Joseph W. Alsop,
President and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Joseph W. Alsop, Chadwick H. Carpenter,
Jr. and Norman R. Robertson, and each of them, true and lawful attorneys-in-fact
and agents with full power of substitution, for and in 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 all documents in connection therewith, with the
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 which
they, or any of them, may deem necessary or advisable to be done in connection
with this Registration Statement, as fully to all intents and purposes as he or
she might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or any substitute or substitutes
for him, any or all of them, 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 as of
the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ JOSEPH W. ALSOP President, Treasurer and December 2, 1997
- ------------------------ Director (Principal Executive
Joseph W. Alsop Officer)
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Signature Title Date
- --------- ----- ----
/s/ NORMAN R. ROBERTSON Vice President, Finance and Chief December 2, 1997
- ------------------------ Financial Officer (Principal
Norman R. Robertson Financial Officer)
/s/ DAVID H. BENTON, Jr. Corporate Controller December 2, 1997
- ------------------------ (Principal Accounting Officer)
David H. Benton, Jr.
/S/ LARRY R. HARRIS Director December 2, 1997
- ------------------------
Larry R. Harris
/s/ ROBERT J. LEPKOWSKI Director December 2, 1997
- ------------------------
Robert J. Lepkowski
/s/ MICHAEL L. MARK Director December 2, 1997
- ------------------------
Michael L. Mark
/s/ ARTHUR J. MARKS Director December 2, 1997
- ------------------------
Arthur J. Marks
/s/ AMRAM RASIEL Director December 2, 1997
- ------------------------
Amram Rasiel
/s/ JAMES W. STOREY Director December 2, 1997
- ------------------------
James W. Storey
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EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
4.1 AppBuilder Corporation 1996 Stock Plan
4.2 Form of Stock Option Agreement
5.1 Opinion of Counsel
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (contained on the signature page)
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Exhibit 4.1
AppBuilder Corporation 1996 Stock Plan
APPTIVITY CORPORATION
1996 STOCK PLAN
ADOPTED ON DECEMBER 20, 1996
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TABLE OF CONTENTS
PAGE NO.
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SECTION 1. ESTABLISHMENT AND PURPOSE.........................................1
SECTION 2. ADMINISTRATION....................................................1
(a) Committees of the Board of Directors..................................1
(b) Authority of the Board of Directors...................................1
SECTION 3. ELIGIBILITY.......................................................1
(a) General Rule..........................................................1
(b) Ten-Percent Shareholders..............................................1
SECTION 4. STOCK SUBJECT TO PLAN.............................................2
(a) Basic Limitation......................................................2
(b) Additional Shares.....................................................2
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES...........................2
(a) Stock Purchase Agreement..............................................2
(b) Duration of Offers and Nontransferability of Rights...................2
(c) Purchase Price........................................................2
(d) Withholding Taxes.....................................................3
(e) Restrictions on Transfer of Shares....................................3
(f) Accelerated Vesting...................................................3
SECTION 6. TERMS AND CONDITIONS OF OPTIONS...................................3
(a) Stock Option Agreement................................................3
(b) Number of Shares......................................................3
(c) Exercise Price........................................................4
(d) Withholding Taxes.....................................................4
(e) Exercisability........................................................4
(f) Accelerated Exercisability............................................4
(g) Term..................................................................4
(h) Nontransferability....................................................5
(i) Termination of Service (Except by Death)..............................5
(j) Leaves of Absence.....................................................5
(k) Death of Optionee.....................................................5
(l) No Rights as a Shareholder............................................6
(m) Modification, Extension and Assumption of Options.....................6
(n) Restrictions on Transfer of Shares and Minimum Vesting................6
(o) Accelerated Vesting...................................................6
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SECTION 7. PAYMENT FOR SHARES................................................7
(a) General Rule..........................................................7
(b) Surrender of Stock....................................................7
(c) Services Rendered.....................................................7
(d) Promissory Note.......................................................7
(e) Exercise/Sale.........................................................7
(f) Exercise/Pledge.......................................................7
SECTION 8. ADJUSTMENT OF SHARES..............................................8
(a) General...............................................................8
(b) Mergers and Consolidations............................................8
(c) Reservation of Rights.................................................8
SECTION 9. SECURITIES LAWS REQUIREMENTS......................................8
(a) General...............................................................8
(b) Financial Reports.....................................................9
SECTION 10. NO RETENTION RIGHTS...............................................9
SECTION 11. DURATION AND AMENDMENTS...........................................9
(a) Term of the Plan......................................................9
(b) Right to Amend or Terminate the Plan..................................9
(c) Effect of Amendment or Termination....................................9
SECTION 12. DEFINITIONS......................................................10
SECTION 13. EXECUTION........................................................12
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APPTIVITY CORPORATION 1996 STOCK PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
The purpose of the Plan is to offer selected individuals an opportunity
to acquire a proprietary interest in the success of the Company, or to increase
such interest, by purchasing Shares of the Company's Stock. The Plan provides
both for the direct award or sale of Shares and for the grant of Options to
purchase Shares. Options granted under the Plan may include Nonstatutory Options
as well as ISOs intended to qualify under Section 422 of the Code.
Capitalized terms are defined in Section 12.
SECTION 2. ADMINISTRATION.
(a) COMMITTEES OF THE BOARD OF DIRECTORS. The Plan may be administered
by one or more Committees. Each Committee shall consist of two or more members
of the Board of Directors who have been appointed by the Board of Directors.
Each Committee shall have such authority and be responsible for such functions
as the Board of Directors has assigned to it. If no Committee has been
appointed, the entire Board of Directors shall administer the Plan. Any
reference to the Board of Directors in the Plan shall be construed as a
reference to the Committee (if any) to whom the Board of Directors has assigned
a particular function.
(b) AUTHORITY OF THE BOARD OF DIRECTORS. Subject to the provisions of
the Plan, the Board of Directors shall have full authority and discretion to
take any actions it deems necessary or advisable for the administration of the
Plan. All decisions, interpretations and other actions of the Board of Directors
shall be final and binding on all Purchasers, all Optionees and all persons
deriving their rights from a Purchaser or Optionee.
SECTION 3. ELIGIBILITY.
(a) GENERAL RULE. Only Employees, Outside Directors and Consultants
shall be eligible for the grant of Options or the direct award or sale of
Shares. Only Employees shall be eligible for the grant of ISOs.
(b) TEN-PERCENT SHAREHOLDERS. An individual who owns more than 10% of
the total combined voting power of all classes of outstanding stock of the
Company, its Parent or any of its Subsidiaries shall not be eligible for
designation as an Optionee or Purchaser unless (i) the Exercise Price is at
least 110% of the Fair Market Value of a Share on the date of grant, (ii) the
Purchase Price (if any) is at least 100% of the Fair Market Value of a Share and
(iii) in the case of an ISO, such ISO by its terms is not exercisable after the
expiration of five years from the date of grant. For purposes of this Subsection
(b), in determining stock ownership, the attribution rules of Section 424(d) of
the Code shall be applied.
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SECTION 4. STOCK SUBJECT TO PLAN.
(a) BASIC LIMITATION. The aggregate number of Shares that may be issued
under the Plan (upon exercise of Options or other rights to acquire Shares)
shall not exceed 2,175,000 Shares, subject to adjustment pursuant to Section 8.
The number of Shares that are subject to Options or other rights outstanding at
any time under the Plan shall not exceed the number of Shares that then remain
available for issuance under the Plan. The Company, during the term of the Plan,
shall at all times reserve and keep available sufficient Shares to satisfy the
requirements of the Plan.
(b) ADDITIONAL SHARES. In the event that any outstanding Option or other
right for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option or other right shall again
be available for the purposes of the Plan. In the event that Shares issued under
the Plan are reacquired by the Company pursuant to any forfeiture provision,
right of repurchase or right of first refusal, such Shares shall again be
available for the purposes of the Plan, except that the aggregate number of
Shares which may be issued upon the exercise of ISOs shall in no event exceed
2,175,000 Shares (subject to adjustment pursuant to Section 8).
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) STOCK PURCHASE AGREEMENT. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Purchaser and the Company. Such award or sale
shall be subject to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions which are not inconsistent with the
Plan and which the Board of Directors deems appropriate for inclusion in a Stock
Purchase Agreement. The provisions of the various Stock Purchase Agreements
entered into under the Plan need not be identical.
(b) DURATION OF OFFERS AND NONTRANSFERABILITY OF RIGHTS. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Purchaser within 30 days after the grant of such right
was communicated to the Purchaser by the Company. Such right shall not be
transferable and shall be exercisable only by the Purchaser to whom such right
was granted.
(c) PURCHASE PRICE. The Purchase Price of Shares to be offered under the
Plan shall not be less than 85% of the Fair Market Value of such Shares, and a
higher percentage may be required by Section 3(b). Subject to the preceding
sentence, the Purchase Price shall be determined by the Board of Directors at
its sole discretion. The Purchase Price shall be payable in a form described in
Section 7.
(d) WITHHOLDING TAXES. As a condition to the purchase of Shares, the
Purchaser shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such purchase.
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(e) RESTRICTIONS ON TRANSFER OF SHARES AND MINIMUM VESTING. Any Shares
awarded or sold under the Plan shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be
set forth in the applicable Stock Purchase Agreement and shall apply in addition
to any restrictions that may apply to holders of Shares generally. Any right to
repurchase a Purchaser's Shares at the original Purchase Price (if any) upon
termination of the Purchaser's Service shall lapse at least as rapidly as the
following schedule:
Anniversary of Date Percentage of
of Sale or Award Shares Vested
------------------- -------------
First 20%
Second 40%
Third 60%
Fourth 80%
Fifth 100%
Any such repurchase right may be exercised only within 90 days after the
termination of the Purchaser's Service for cash or for cancellation of
indebtedness incurred in purchasing the Shares.
(f) ACCELERATED VESTING. Unless the applicable Stock Purchase Agreement
provides otherwise, any right to repurchase a Purchaser's Shares at the original
Purchase Price (if any) upon termination of the Purchaser's Service shall lapse
and all of such Shares shall become vested if (i) the Company is subject to a
Change in Control and (ii) the repurchase right is not assigned to the entity
that employs the Purchaser immediately after the Change in Control or to its
parent or subsidiary.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Board of Directors deems appropriate for inclusion
in a Stock Option Agreement. The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical.
(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the
Fair Market Value of a Share on the date of grant, and a higher percentage may
be required by Section 3(b). The Exercise Price of a Nonstatutory Option shall
not be less than 85% of the Fair Market Value of a Share on the date of grant,
and a higher percentage may be required by Section 3(b). Subject to the
preceding two
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sentences, the Exercise Price under any Option shall be determined by the Board
of Directors at its sole discretion. The Exercise Price shall be payable in a
form described in Section 7.
(d) WITHHOLDING TAXES. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such exercise. The Optionee shall
also make such arrangements as the Board of Directors may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with the disposition of Shares acquired by
exercising an Option.
(e) EXERCISABILITY. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. An Option
shall become exercisable at least as rapidly as set forth in the following
schedule:
Anniversary of Percentage of Shares
Date of Option Grant Exercisable
-------------------- --------------------
First 20%
Second 40%
Third 60%
Fourth 80%
Fifth 100%
Subject to the preceding sentence, the exercisability provisions of any Stock
Option Agreement shall be determined by the Board of Directors at its sole
discretion.
(f) ACCELERATED EXERCISABILITY. Unless the applicable Stock Option
Agreement provides otherwise, all of an Optionee's Options shall become
exercisable in full if (i) the Company is subject to a Change in Control, (ii)
such Options do not remain outstanding, (iii) such Options are not assumed by
the surviving corporation or its parent and (iv) the surviving corporation or
its parent does not substitute options with substantially the same terms for
such Options.
(g) BASIC TERM. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed 10 years from the date of grant, and a shorter
term may be required by Section 3(b). Subject to the preceding sentence, the
Board of Directors at its sole discretion shall determine when an Option is to
expire.
(h) NONTRANSFERABILITY. No Option shall be transferable by the Optionee
other than by beneficiary designation, will or the laws of descent and
distribution. An Option may be exercised during the lifetime of the Optionee
only by the Optionee or by the Optionee's guardian or legal representative. No
Option or interest therein may be transferred, assigned, pledged or hypothecated
by the Optionee during the Optionee's lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process.
(i) TERMINATION OF SERVICE (EXCEPT BY DEATH). If an Optionee's Service
terminates for any reason other than the Optionee's death, then the Optionee's
Options shall expire on the earliest of the following occasions:
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(i) The expiration date determined pursuant to Subsection (g)
above;
(ii) The date three months after the termination of the
Optionee's Service for any reason other than Disability; or
(iii) The date six months after the termination of the Optionee's
Service by reason of Disability.
The Optionee may exercise all or part of the Optionee's Options at any time
before the expiration of such Options under the preceding sentence, but only to
the extent that such Options had become exercisable before the Optionee's
Service terminated (or became exercisable as a result of the termination) and
the underlying Shares had vested before the Optionee's Service terminated (or
vested as a result of the termination). The balance of such Options shall lapse
when the Optionee's Service terminates. In the event that the Optionee dies
after the termination of the Optionee's Service but before the expiration of the
Optionee's Options, all or part of such Options may be exercised (prior to
expiration) by the executors or administrators of the Optionee's estate or by
any person who has acquired such Options directly from the Optionee by
beneficiary designation, bequest or inheritance, but only to the extent that
such Options had become exercisable before the Optionee's Service terminated (or
became exercisable as a result of the termination) and the underlying Shares had
vested before the Optionee's Service terminated (or vested as a result of the
termination).
(j) LEAVES OF ABSENCE. For purposes of Subsection (i) above, Service
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, if such leave was approved by the Company in writing and if continued
crediting of Service for this purpose is expressly required by the terms of such
leave or by applicable law (as determined by the Company).
(k) DEATH OF OPTIONEE. If an Optionee dies while the Optionee is in
Service, then the Optionee's Options shall expire on the earlier of the
following dates:
(i) The expiration date determined pursuant to Subsection (g)
above; or
(ii) The date 12 months after the Optionee's death.
All or part of the Optionee's Options may be exercised at any time before the
expiration of such Options under the preceding sentence by the executors or
administrators of the Optionee's estate or by any person who has acquired such
Options directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that such Options had become exercisable
before the Optionee's death or became exercisable as a result of the death. The
balance of such Options shall lapse when the Optionee dies.
(l) NO RIGHTS AS A SHAREHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by the Optionee's Option until such person becomes entitled to receive
such Shares by filing a notice of exercise and paying the Exercise Price
pursuant to the terms of such Option.
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(m) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Board of Directors may modify, extend or assume
outstanding Options or may accept the cancellation of outstanding Options
(whether granted by the Company or another issuer) in return for the grant of
new Options for the same or a different number of Shares and at the same or a
different Exercise Price. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, impair the Optionee's rights
or increase the Optionee's obligations under such Option.
(n) RESTRICTIONS ON TRANSFER OF SHARES AND MINIMUM VESTING. Any Shares
issued upon exercise of an Option shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be
set forth in the applicable Stock Option Agreement and shall apply in addition
to any restrictions that may apply to holders of Shares generally. Any right to
repurchase an Optionee's Shares at the original Exercise Price upon termination
of the Optionee's Service shall lapse at least as rapidly as the schedule set
forth in Subsection (e) above. Any such repurchase right may be exercised only
within 90 days after the termination of the Optionee's Service for cash or for
cancellation of indebtedness incurred in purchasing the Shares.
(o) ACCELERATED VESTING. Unless the applicable Stock Option Agreement
provides otherwise, any right to repurchase an Optionee's Shares at the original
Exercise Price upon termination of the Optionee's Service shall lapse and all of
such Shares shall become vested if (i) the Company is subject to a Change in
Control and (ii) the repurchase right is not assigned to the entity that employs
the Optionee immediately after the Change in Control or to its parent or
subsidiary.
SECTION 7. PAYMENT FOR SHARES.
(a) GENERAL RULE. The entire Purchase Price or Exercise Price of Shares
issued under the Plan shall be payable in cash or cash equivalents at the time
when such Shares are purchased, except as otherwise provided in this Section 7.
(b) SURRENDER OF STOCK. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares owned by the Optionee
or the Optionee's representative. Such Shares shall be surrendered to the
Company in good form for transfer and shall be valued at their Fair Market Value
on the date when the Option is exercised. This Subsection (b) shall not apply to
the extent that acceptance of Shares in payment of the Exercise Price would
cause the Company to recognize compensation expense with respect to the Option
for financial reporting purposes.
(c) SERVICES RENDERED. At the discretion of the Board of Directors,
Shares may be awarded under the Plan in consideration of services rendered to
the Company, a Parent or a Subsidiary prior to the award.
(d) PROMISSORY NOTE. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, all or a portion of the Exercise Price or
Purchase Price (as the case may be) of Shares issued under the Plan may be paid
with a full-recourse promissory note. The Shares
10
shall be pledged as security for payment of the principal amount of the
promissory note and interest thereon. The interest rate payable under the terms
of the promissory note shall not be less than the minimum rate (if any) required
to avoid the imputation of additional interest under the Code. Subject to the
foregoing, the Board of Directors (at its sole discretion) shall specify the
term, interest rate, amortization requirements (if any) and other provisions of
such note.
(e) EXERCISE/SALE. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to a securities broker approved by the Company to sell Shares and to deliver all
or part of the sales proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
(f) EXERCISE/PLEDGE. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to pledge Shares to a securities broker or lender approved by the Company, as
security for a loan, and to deliver all or part of the loan proceeds to the
Company in payment of all or part of the Exercise Price and any withholding
taxes.
SECTION 8. ADJUSTMENT OF SHARES.
(a) GENERAL. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of an extraordinary
dividend payable in a form other than Shares in an amount that has a material
effect on the Fair Market Value of the Stock, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of Shares
available for future grants under Section 4, (ii) the number of Shares covered
by each outstanding Option or (iii) the Exercise Price under each outstanding
Option.
(b) MERGERS AND CONSOLIDATIONS. In the event that the Company is a party
to a merger or consolidation, outstanding Options shall be subject to the
agreement of merger or consolidation. Such agreement, without the Optionees'
consent, may provide for:
(i) The continuation of such outstanding Options by the Company
(if the Company is the surviving corporation);
(ii) The assumption of the Plan and such outstanding Options by
the surviving corporation or its parent;
(iii) The substitution by the surviving corporation or its parent
of options with substantially the same terms for such outstanding
Options; or
(iv) The cancellation of such outstanding Options without payment
of any consideration.
11
(c) RESERVATION OF RIGHTS. Except as provided in this Section 8, an
Optionee or Purchaser shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
SECTION 9. SECURITIES LAW REQUIREMENTS.
(a) GENERAL. Shares shall not be issued under the Plan unless the
issuance and delivery of such Shares comply with (or are exempt from) all
applicable requirements of law, including (without limitation) the Securities
Act of 1933, as amended, the rules and regulations promulgated thereunder, state
securities laws and regulations, and the regulations of any stock exchange or
other securities market on which the Company's securities may then be traded.
(b) FINANCIAL REPORTS. The Company each year shall furnish to Optionees,
Purchasers and shareholders who have received Stock under the Plan its balance
sheet and income statement, unless such Optionees, Purchasers or shareholders
are key Employees whose duties with the Company assure them access to equivalent
information. Such balance sheet and income statement need not be audited.
SECTION 10. NO RETENTION RIGHTS.
Nothing in the Plan or in any right or Option granted under the Plan
shall confer upon the Purchaser or Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Company (or any Parent or Subsidiary employing or
retaining the Purchaser or Optionee) or of the Purchaser or Optionee, which
rights are hereby expressly reserved by each, to terminate his or her Service at
any time and for any reason, with or without cause.
SECTION 11. DURATION AND AMENDMENTS.
(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. In the event that the shareholders fail
to approve the Plan within 12 months after its adoption by the Board of
Directors, any grants of Options or sales or awards of Shares that have already
occurred shall be rescinded, and no additional grants, sales or awards shall be
made thereafter under the Plan. The Plan shall terminate automatically 10 years
after its adoption by the Board of Directors and may be terminated on any
earlier date pursuant to Subsection (b) below.
12
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may
amend, suspend or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which increases the number of Shares
available for issuance under the Plan (except as provided in Section 8), or
which materially changes the class of persons who are eligible for the grant of
ISOs, shall be subject to the approval of the Company's shareholders.
Shareholder approval shall not be required for any other amendment of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Share previously issued or any Option
previously granted under the Plan.
SECTION 12. DEFINITIONS.
(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "CHANGE IN CONTROL" shall mean:
(i) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization, if
more than 50% of the combined voting power of the continuing or
surviving entity's securities outstanding immediately after such merger,
consolidation or other reorganization is owned by persons who were not
shareholders of the Company immediately prior to such merger,
consolidation or other reorganization; or
(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
(c) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 2(a).
(e) "COMPANY" shall mean Apptivity Corporation, a California
corporation.
(f) "CONSULTANT" shall mean an individual who performs bona fide
services for the Company, a Parent or a Subsidiary as a consultant or advisor,
excluding Employees and Outside Directors.
(g) "DISABILITY" shall mean that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.
13
(h) "EMPLOYEE" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.
(i) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Board of Directors in
the applicable Stock Option Agreement.
(j) "FAIR MARKET VALUE" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.
(k) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.
(l) "NONSTATUTORY OPTION" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.
(m) "OPTION" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(n) "OPTIONEE" shall mean an individual who holds an Option.
(o) "OUTSIDE DIRECTOR" shall mean a member of the Board of Directors who
is not an Employee.
(p) "PARENT" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
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. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.
(q) "PLAN" shall mean this Apptivity Corporation 1996 Stock Plan.
(R) "PURCHASE PRICE" shall mean the consideration for which one Share
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Board of Directors.
(s) "PURCHASER" shall mean an individual to whom the Board of Directors
has offered the right to acquire Shares under the Plan (other than upon exercise
of an Option).
(t) "SERVICE" shall mean service as an Employee, Outside Director or
Consultant.
(u) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).
(v) "STOCK" shall mean the Common Stock of the Company.
14
(w) "STOCK OPTION AGREEMENT" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to the Optionee's Option.
(x) "STOCK PURCHASE AGREEMENT" shall mean the agreement between the
Company and a Purchaser who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(y) "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. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
SECTION 13. EXECUTION.
To record the adoption of the Plan by the Board of Directors, the
Company has caused its authorized officer to execute the same.
APPTIVITY CORPORATION
By:
------------------------------------
Title:
---------------------------------
1
Exhibit 4.2
Form of Stock Option Agreement
APPTIVITY CORPORATION 1996 STOCK PLAN
NOTICE OF STOCK OPTION GRANT
You have been granted the following option to purchase Common Stock of
Apptivity Corporation (the "Company"):
Name of Optionee: <>
Total Number of Shares Granted: <>
Type of Option: <> Incentive Stock Option
<> Nonstatutory Stock Option
Exercise Price Per Share: $<>
Date of Grant: <>
Date Exercisable: This option may be exercised, in
whole or in part, for 100% of the
Shares subject to this option at
any time after the Date of Grant.
Vesting Commencement Date: <>
Vesting Schedule: The Right of Repurchase shall lapse
with respect to the first
<> of the Shares subject
to this option upon the Optionee's
completion of <> of
Service from the Vesting
Commencement Date and an additional
<> of the Shares on the
<> day of each month
thereafter.
Expiration Date: <>
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1996 Stock Plan and the Stock Option Agreement, both
of which are attached to and made a part of this document.
OPTIONEE: APPTIVITY CORPORATION
By:
- ---------------------------------- -------------------------------
Title:
- ---------------------------------- ----------------------------
Print Name
2
THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
APPTIVITY CORPORATION 1996 STOCK PLAN:
STOCK OPTION AGREEMENT
GRANT OF OPTION.
OPTION. On the terms and conditions set forth in the Notice of Stock
Option Grant and this Agreement, the Company grants to the Optionee on the Date
of Grant the option to purchase at the Exercise Price the number of Shares set
forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at
least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair
Market Value if Section 3(b) of the Plan applies). This option is intended to be
an ISO or a Nonstatutory Option, as provided in the Notice of Stock Option
Grant.
STOCK PLAN AND DEFINED TERMS. This option is granted pursuant to the
Plan, a copy of which the Optionee acknowledges having received. The provisions
of the Plan are incorporated into this Agreement by this reference. Capitalized
terms are defined in Section 14 of this Agreement.
RIGHT TO EXERCISE.
EXERCISABILITY. Subject to Subsections (b) and (c) below and the other
conditions set forth in this Agreement, all or part of this option may be
exercised prior to its expiration at the time or times set forth in the Notice
of Stock Option Grant. Shares purchased by exercising this option may be subject
to the Right of Repurchase under Section 7.
$100,000 LIMITATION. If this Option is designated as an ISO in the
Notice of Stock Option Grant, then the Optionee's right to exercise this option
shall be deferred to the extent (and only to the extent) that this option
otherwise would not be treated as an ISO by reason of the $100,000 annual
limitation under Section 422(d) of the Code, except that:
The Optionee's right to exercise this option shall not be
deferred with respect to that portion of the Shares subject to this
option whose Fair Market Value as of the Date of Grant exceeds $500,000;
and
3
The Optionee's right to exercise this option shall no longer be
deferred in the event that (A) a Change in Control occurs, (B) this
option is not assumed by the surviving corporation or its parent and
(C) the surviving corporation or its parent does not substitute its own
option for this option.
SHAREHOLDER APPROVAL. Any other provision of this Agreement
notwithstanding, no portion of this option shall be exercisable at any time
prior to the approval of the Plan by the Company's shareholders.
NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement, this option and
the rights and privileges conferred hereby shall not be sold, pledged or
otherwise transferred (whether by operation of law or otherwise) and shall not
be subject to sale under execution, attachment, levy or similar process.
EXERCISE PROCEDURES.
NOTICE OF EXERCISE. The Optionee or the Optionee's representative may
exercise this option by giving written notice to the Company pursuant to Section
13(c). The notice shall specify the election to exercise this option, the number
of Shares for which it is being exercised and the form of payment. The notice
shall be signed by the person exercising this option. In the event that this
option is being exercised by the representative of the Optionee, the notice
shall be accompanied by proof (satisfactory to the Company) of the
representative's right to exercise this option. The Optionee or the Optionee's
representative shall deliver to the Company, at the time of giving the notice,
payment in a form permissible under Section 5 for the full amount of the
Purchase Price.
ISSUANCE OF SHARES. After receiving a proper notice of exercise, the
Company shall cause to be issued a certificate or certificates for the Shares as
to which this option has been exercised, registered in the name of the person
exercising this option (or in the names of such person and his or her spouse as
community property or as joint tenants with right of survivorship). The Company
shall cause such certificate or certificates to be deposited in escrow or
delivered to or upon the order of the person exercising this option.
WITHHOLDING TAXES. In the event that the Company determines that it is
required to withhold any tax as a result of the exercise of this option, the
Optionee, as a condition to the exercise of this option, shall make arrangements
satisfactory to the Company to enable it to satisfy all withholding
requirements. The Optionee shall also make arrangements satisfactory to the
Company to enable it to satisfy any withholding requirements that may arise in
connection with the vesting or disposition of Shares purchased by exercising
this option.
4
PAYMENT FOR STOCK.
CASH. All or part of the Purchase Price may be paid in cash or cash
equivalents.
SURRENDER OF STOCK. All or part of the Purchase Price may be paid by the
surrender of Shares in good form for transfer. Such Shares must have a fair
market value (as determined by the Board of Directors) on the date of exercise
of this option which, together with any amount paid in another form permissible
under this Section 5, is equal to the Purchase Price. The Optionee shall not
surrender Shares in payment of the Exercise Price if such surrender would cause
the Company to recognize compensation expense with respect to the option for
financial reporting purposes.
EXERCISE/SALE. If Stock is publicly traded, all or part of the Purchase
Price and any withholding taxes may be paid by the delivery (on a form
prescribed by the Company) of an irrevocable direction to a securities broker
approved by the Company to sell Shares and to deliver all or part of the sales
proceeds to the Company.
EXERCISE/PLEDGE. If Stock is publicly traded, all or part of the
Purchase Price and any withholding taxes may be paid by the delivery (on a form
prescribed by the Company) of an irrevocable direction to pledge Shares to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.
TERM AND EXPIRATION.
BASIC TERM. This option shall in any event expire on the expiration date
set forth in the Notice of Stock Option Grant, which date is 10 years after the
Date of Grant (five years after the Date of Grant if this option is designated
as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan
applies).
TERMINATION OF SERVICE (EXCEPT BY DEATH). If the Optionee's Service
terminates for any reason other than death, then this option shall expire on the
earliest of the following occasions:
The expiration date determined pursuant to Subsection (a) above;
The date three months after the termination of the Optionee's
Service for any reason other than Disability; or
The date six months after the termination of the Optionee's
Service by reason of Disability.
The Optionee may exercise all or part of this option at any time before its
expiration under the preceding sentence, but only to the extent that this option
had become exercisable before the Optionee's Service terminated. When the
Optionee's Service terminates, this option shall expire immediately with respect
to the number of Shares for which this option is not yet exercisable and with
respect to any Restricted Shares. In the event that the Optionee dies after
termination of Service but before the expiration of this option, all or part of
this option may be exercised (prior to
5
expiration) by the executors or administrators of the Optionee's estate or by
any person who has acquired this option directly from the Optionee by
beneficiary designation, bequest or inheritance, but only to the extent that
this option had become exercisable before the Optionee's Service terminated.
DEATH OF THE OPTIONEE. If the Optionee dies while in Service, then this
option shall expire on the earlier of the following dates:
The expiration date determined pursuant to Subsection (a) above;
or
The date 12 months after the Optionee's death.
All or part of this option may be exercised at any time before its expiration
under the preceding sentence by the executors or administrators of the
Optionee's estate or by any person who has acquired this option directly from
the Optionee by beneficiary designation, bequest or inheritance, but only to the
extent that this option had become exercisable before the Optionee's death. When
the Optionee dies, this option shall expire immediately with respect to the
number of Shares for which this option is not yet exercisable and with respect
to any Restricted Shares.
LEAVES OF ABSENCE. For any purpose under this Agreement, Service shall
be deemed to continue while the Optionee is on a bona fide leave of absence, if
such leave was approved by the Company in writing and if continued crediting of
Service for such purpose is expressly required by the terms of such leave or by
applicable law (as determined by the Company).
NOTICE CONCERNING ISO TREATMENT. If this option is designated as an ISO
in the Notice of Stock Option Grant, it ceases to qualify for favorable tax
treatment as an ISO to the extent it is exercised (i) more than three months
after the date the Optionee ceases to be an Employee for any reason other than
death or permanent and total disability (as defined in Section 22(e)(3) of the
Code), (ii) more than 12 months after the date the Optionee ceases to be an
Employee by reason of such permanent and total disability or (iii) after the
Optionee has been on a leave of absence for more than 90 days, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
RIGHT OF REPURCHASE.
SCOPE OF REPURCHASE RIGHT. Unless they have become vested in accordance
with the Notice of Stock Option Grant and Subsection (c) below, the Shares
acquired under this Agreement initially shall be Restricted Shares and shall be
subject to a right (but not an obligation) of repurchase by the Company. The
Optionee shall not transfer, assign, encumber or otherwise dispose of any
Restricted Shares, except as provided in the following sentence. The Optionee
may transfer Restricted Shares (i) by beneficiary designation, will or intestate
succession or (ii) to the Optionee's spouse, children or grandchildren or to a
trust established by the Optionee for the benefit of the Optionee or the
Optionee's spouse, children or grandchildren, provided in either case that the
Transferee agrees in writing on a form prescribed by the Company to be bound by
all provisions of this Agreement. If the Optionee transfers any Restricted
Shares, then this Section 7 shall apply to the Transferee to the same extent as
to the Optionee.
6
CONDITION PRECEDENT TO EXERCISE. The Right of Repurchase shall be
exercisable only during the 60-day period next following the later of:
The date when the Optionee's Service terminates for any reason,
with or without cause, including (without limitation) death or
disability; or
The date when this option was exercised by the Optionee, the
executors or administrators of the Optionee's estate or any person who
has acquired this option directly from the Optionee by bequest,
inheritance or beneficiary designation.
LAPSE OF REPURCHASE RIGHT. The Right of Repurchase shall lapse with
respect to the Shares subject to this option in accordance with the vesting
schedule set forth in the Notice of Stock Option Grant. The Right of Repurchase
shall lapse and all of the remaining Restricted Shares shall become vested if
(i) the Company is subject to a Change in Control and (ii) the Right of
Repurchase is not assigned to the entity that employs the Optionee immediately
after the Change in Control or to its parent or subsidiary.
REPURCHASE COST. If the Company exercises the Right of Repurchase, it
shall pay the Optionee an amount equal to the Exercise Price for each of the
Restricted Shares being repurchased.
EXERCISE OF REPURCHASE RIGHT. The Right of Repurchase shall be
exercisable only by written notice delivered to the Optionee prior to the
expiration of the 60-day period specified in Subsection (b) above. The notice
shall set forth the date on which the repurchase is to be effected. Such date
shall not be more than 30 days after the date of the notice. The certificate(s)
representing the Restricted Shares to be repurchased shall, prior to the close
of business on the date specified for the repurchase, be delivered to the
Company properly endorsed for transfer. The Company shall, concurrently with the
receipt of such certificate(s), pay to the Optionee the purchase price
determined according to Subsection (d) above. Payment shall be made in cash or
cash equivalents or by canceling indebtedness to the Company incurred by the
Optionee in the purchase of the Restricted Shares. The Right of Repurchase shall
terminate with respect to any Restricted Shares for which it has not been timely
exercised pursuant to this Subsection (e).
ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Restricted Shares or into which such Restricted
Shares thereby become convertible shall immediately be subject to the Right of
Repurchase. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the
Restricted Shares. Appropriate adjustments shall also, after each such
transaction, be made to the price per share to be paid upon the exercise of the
Right of Repurchase in order to reflect any
7
change in the Company's outstanding securities effected without receipt of
consideration therefor; provided, however, that the aggregate purchase price
payable for the Restricted Shares shall remain the same.
TERMINATION OF RIGHTS AS SHAREHOLDER. If the Company makes available, at
the time and place and in the amount and form provided in this Agreement, the
consideration for the Restricted Shares to be repurchased in accordance with
this Section 7, then after such time the person from whom such Restricted Shares
are to be repurchased shall no longer have any rights as a holder of such
Restricted Shares (other than the right to receive payment of such consideration
in accordance with this Agreement). Such Restricted Shares shall be deemed to
have been repurchased in accordance with the applicable provisions hereof,
whether or not the certificate(s) therefor have been delivered as required by
this Agreement.
ESCROW. Upon issuance, the certificates for Restricted Shares shall be
deposited in escrow with the Company to be held in accordance with the
provisions of this Agreement. Any new, substituted or additional securities or
other property described in Subsection (f) above shall immediately be delivered
to the Company to be held in escrow, but only to the extent the Shares are at
the time Restricted Shares. All regular cash dividends on Restricted Shares (or
other securities at the time held in escrow) shall be paid directly to the
Optionee and shall not be held in escrow. Restricted Shares, together with any
other assets or securities held in escrow hereunder, shall be (i) surrendered to
the Company for repurchase and cancellation upon the Company's exercise of its
Right of Repurchase or Right of First Refusal or (ii) released to the Optionee
upon the Optionee's request to the extent the Shares are no longer Restricted
Shares (but not more frequently than once every six months). In any event, all
Shares which have vested (and any other vested assets and securities
attributable thereto) shall be released within 60 days after the earlier of (i)
the Optionee's cessation of Service or (ii) the lapse of the Right of First
Refusal.
RIGHT OF FIRST REFUSAL.
RIGHT OF FIRST REFUSAL. In the event that the Optionee proposes to sell,
pledge or otherwise transfer to a third party any Shares acquired under this
Agreement, or any interest in such Shares, the Company shall have the Right of
First Refusal with respect to all (and not less than all) of such Shares. If the
Optionee desires to transfer Shares acquired under this Agreement, the Optionee
shall give a written Transfer Notice to the Company describing fully the
proposed transfer, including the number of Shares proposed to be transferred,
the proposed transfer price, the name and address of the proposed Transferee and
proof satisfactory to the Company that the proposed sale or transfer will not
violate any applicable federal or state securities laws. The Transfer Notice
shall be signed both by the Optionee and by the proposed Transferee and must
constitute a binding commitment of both parties to the transfer of the Shares.
The Company shall have the right to purchase all, and not less than all, of the
Shares on the terms of the proposal described in the Transfer Notice (subject,
however, to any change in such terms permitted under Subsection (b) below) by
delivery of a notice of exercise of the Right of First
8
Refusal within 30 days after the date when the Transfer Notice was received by
the Company. The Company's rights under this Subsection (a) shall be freely
assignable, in whole or in part.
TRANSFER OF SHARES. If the Company fails to exercise its Right of First
Refusal within 30 days after the date when it received the Transfer Notice, the
Optionee may, not later than 90 days following receipt of the Transfer Notice by
the Company, conclude a transfer of the Shares subject to the Transfer Notice on
the terms and conditions described in the Transfer Notice, provided that any
such sale is made in compliance with applicable federal and state securities
laws and not in violation of any other contractual restrictions to which the
Optionee is bound. Any proposed transfer on terms and conditions different from
those described in the Transfer Notice, as well as any subsequent proposed
transfer by the Optionee, shall again be subject to the Right of First Refusal
and shall require compliance with the procedure described in Subsection (a)
above. If the Company exercises its Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set forth in the Transfer Notice
within 60 days after the date when the Company received the Transfer Notice (or
within such longer period as may have been specified in the Transfer Notice);
provided, however, that in the event the Transfer Notice provided that payment
for the Shares was to be made in a form other than cash or cash equivalents paid
at the time of transfer, the Company shall have the option of paying for the
Shares with cash or cash equivalents equal to the present value of the
consideration described in the Transfer Notice.
ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Shares subject to this Section 8 or into which
such Shares thereby become convertible shall immediately be subject to this
Section 8. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the Shares
subject to this Section 8.
TERMINATION OF RIGHT OF FIRST REFUSAL. Any other provision of this
Section 8 notwithstanding, in the event that the Stock is readily tradable on an
established securities market when the Optionee desires to transfer Shares, the
Company shall have no Right of First Refusal, and the Optionee shall have no
obligation to comply with the procedures prescribed by Subsections (a) and (b)
above.
PERMITTED TRANSFERS. This Section 8 shall not apply to (i) a transfer by
beneficiary designation, will or intestate succession or (ii) a transfer to the
Optionee's spouse, children or to a trust established by the Optionee for the
benefit of the Optionee or the Optionee's spouse, children or grandchildren,
provided in either case that the Transferee agrees in writing on a form
prescribed by the Company to be bound by all provisions of this Agreement. If
the Optionee
9
transfers any Shares acquired under this Agreement, either under this Subsection
(e) or after the Company has failed to exercise the Right of First Refusal, then
this Section 8 shall apply to the Transferee to the same extent as to the
Optionee.
TERMINATION OF RIGHTS AS SHAREHOLDER. If the Company makes available, at
the time and place and in the amount and form provided in this Agreement, the
consideration for the Shares to be purchased in accordance with this Section 8,
then after such time the person from whom such Shares are to be purchased shall
no longer have any rights as a holder of such Shares (other than the right to
receive payment of such consideration in accordance with this Agreement). Such
Shares shall be deemed to have been purchased in accordance with the applicable
provisions hereof, whether or not the certificate(s) therefor have been
delivered as required by this Agreement.
LEGALITY OF INITIAL ISSUANCE.
No Shares shall be issued upon the exercise of this option unless
and until the Company has determined that:
It and the Optionee have taken any actions required to register the
Shares under the Securities Act or to perfect an exemption from the registration
requirements thereof;
Any applicable listing requirement of any stock exchange on which Stock
is listed has been satisfied; and
Any other applicable provision of state or federal law has been
satisfied.
NO REGISTRATION RIGHTS.
The Company may, but shall not be obligated to, register or
qualify the sale of Shares under the Securities Act or any other applicable law.
The Company shall not be obligated to take any affirmative action in order to
cause the sale of Shares under this Agreement to comply with any law.
RESTRICTIONS ON TRANSFER.
SECURITIES LAW RESTRICTIONS. Regardless of whether the offering and sale
of Shares under the Plan have been registered under the Securities Act or have
been registered or qualified under the securities laws of any state, the Company
at its discretion may impose restrictions upon the sale, pledge or other
transfer of such Shares (including the placement of appropriate legends on stock
certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act, the securities laws of any state
or any other law.
10
MARKET STAND-OFF. In connection with any underwritten public offering by
the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act, including the Company's initial public
offering, the Optionee shall not directly or indirectly sell, make any short
sale of, loan, hypothecate, pledge, offer, grant or sell any option or other
contract for the purchase of, purchase any option or other contract for the sale
of, or otherwise dispose of or transfer, or agree to engage in any of the
foregoing transactions with respect to, any Shares acquired under this Agreement
without the prior written consent of the Company or its underwriters. Such
restriction (the "Market Stand-Off") shall be in effect for such period of time
following the date of the final prospectus for the offering as may be requested
by the Company or such underwriters. In no event, however, shall such period
exceed 180 days. The Market Stand-Off shall in any event terminate two years
after the date of the Company's initial public offering. In the event of the
declaration of a stock dividend, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities which are by reason of such transaction
distributed with respect to any Shares subject to the Market Stand-Off, or into
which such Shares thereby become convertible, shall immediately be subject to
the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may
impose stop-transfer instructions with respect to the Shares acquired under this
Agreement until the end of the applicable stand-off period. The Company's
underwriters shall be beneficiaries of the agreement set forth in this
Subsection (b). This Subsection (b) shall not apply to Shares registered in the
public offering under the Securities Act, and the Optionee shall be subject to
this Subsection (b) only if the directors and officers of the Company are
subject to similar arrangements.
INVESTMENT INTENT AT GRANT. The Optionee represents and agrees that the
Shares to be acquired upon exercising this option will be acquired for
investment, and not with a view to the sale or distribution thereof.
INVESTMENT INTENT AT EXERCISE. In the event that the sale of Shares
under the Plan is not registered under the Securities Act but an exemption is
available which requires an investment representation or other representation,
the Optionee shall represent and agree at the time of exercise that the Shares
being acquired upon exercising this option are being acquired for investment,
and not with a view to the sale or distribution thereof, and shall make such
other representations as are deemed necessary or appropriate by the Company and
its counsel.
LEGENDS. All certificates evidencing Shares purchased under this
Agreement shall bear the following legend:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES).
SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL
UPON AN ATTEMPTED TRANSFER OF THE SHARES AND CERTAIN REPURCHASE RIGHTS
UPON TERMINATION OF SERVICE WITH THE COMPANY. THE SECRETARY OF THE
COMPANY WILL UPON WRITTEN REQUEST
11
FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
All certificates evidencing Shares purchased under this Agreement in an
unregistered transaction shall bear the following legend (and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law):
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
REMOVAL OF LEGENDS. If, in the opinion of the Company and its counsel,
any legend placed on a stock certificate representing Shares sold under this
Agreement is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.
ADMINISTRATION. Any determination by the Company and its counsel in
connection with any of the matters set forth in this Section 11 shall be
conclusive and binding on the Optionee and all other persons.
ADJUSTMENT OF SHARES.
In the event of any transaction described in Section 8(a) of the
Plan, the terms of this option (including, without limitation, the number and
kind of Shares subject to this option and the Exercise Price) shall be adjusted
as set forth in Section 8(a) of the Plan. In the event that the Company is a
party to a merger or consolidation, this option shall be subject to the
agreement of merger or consolidation, as provided in Section 8(b) of the Plan.
MISCELLANEOUS PROVISIONS.
RIGHTS AS A SHAREHOLDER. Neither the Optionee nor the Optionee's
representative shall have any rights as a shareholder with respect to any Shares
subject to this option until the Optionee or the Optionee's representative
becomes entitled to receive such Shares by filing a notice of exercise and
paying the Purchase Price pursuant to Sections 4 and 5.
NO RETENTION RIGHTS. Nothing in this option or in the Plan shall confer
upon the Optionee any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Company (or any Parent or Subsidiary employing or retaining the Optionee) or of
the Optionee, which rights are hereby expressly reserved by each, to terminate
his or her Service at any time and for any reason, with or without cause.
12
NOTICE. Any notice required by the terms of this Agreement shall be
given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to the Optionee at the address that he or she
most recently provided to the Company.
ENTIRE AGREEMENT. The Notice of Stock Option Grant, this Agreement and
the Plan constitute the entire contract between the parties hereto with regard
to the subject matter hereof. They supersede any other agreements,
representations or understandings (whether oral or written and whether express
or implied) which relate to the subject matter hereof.
CHOICE OF 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 contracts entered into and performed in such State.
DEFINITIONS.
"AGREEMENT" shall mean this Stock Option Agreement.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Company,
as constituted from time to time or, if a Committee has been appointed, such
Committee.
"CHANGE IN CONTROL" shall mean:
The consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if more
than 50% of the combined voting power of the continuing or surviving
entity's securities outstanding immediately after such merger,
consolidation or other reorganization is owned by persons who were not
shareholders of the Company immediately prior to such merger,
consolidation or other reorganization; or
The sale, transfer or other disposition of all or substantially
all of the Company's assets.
A transaction shall not constitute a Change in Control if its
sole purpose is to change the state of the Company's incorporation or to create
a holding company that will be owned in substantially the same proportions by
the persons who held the Company's securities immediately before such
transaction.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 2 of the Plan.
13
"COMPANY" shall mean Apptivity Corporation, a California corporation.
"CONSULTANT" shall mean an individual who performs bona fide services
for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.
"DATE OF GRANT" shall mean the date specified in the Notice of Stock
Option Grant, which date shall be the later of (i) the date on which the Board
of Directors resolved to grant this option or (ii) the first day of the
Optionee's Service.
"DISABILITY" shall mean that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.
"EMPLOYEE" shall mean any individual who is a common-law employee of the
Company, a Parent or a Subsidiary.
"EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of this option, as specified in the Notice of Stock
Option Grant.
"FAIR MARKET VALUE" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.
"ISO" shall mean an employee incentive stock option described in Section
422(b) of the Code.
"NONSTATUTORY OPTION" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.
"NOTICE OF STOCK OPTION GRANT" shall mean the document so entitled to
which this Agreement is attached.
"OPTIONEE" shall mean the individual named in the Notice of Stock Option
Grant.
"OUTSIDE DIRECTOR" shall mean a member of the Board of Directors who is
not an Employee.
"PARENT" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
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.
"PLAN" shall mean the Apptivity Corporation 1996 Stock Plan, as in
effect on the Date of Grant.
14
"PURCHASE PRICE" shall mean the Exercise Price multiplied by the number
of Shares with respect to which this option is being exercised.
"RESTRICTED SHARE" shall mean a Share that is subject to the Right of
Repurchase.
"RIGHT OF FIRST REFUSAL" shall mean the Company's right of first refusal
described in Section 8.
"RIGHT OF REPURCHASE" shall mean the Company's right of repurchase
described in Section 7.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERVICE" shall mean service as an Employee, Outside Director or
Consultant.
"SHARE" shall mean one share of Stock, as adjusted in accordance with
Section 8 of the Plan (if applicable).
"STOCK" shall mean the Common Stock of the Company.
"SUBSIDIARY" shall mean 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.
"TRANSFEREE" shall mean any person to whom the Optionee has directly or
indirectly transferred any Share acquired under this Agreement.
"TRANSFER NOTICE" shall mean the notice of a proposed transfer of Shares
described in Section 8.
1
Exhibit 5.1
---------
Opinion of Counsel
[FOLEY, HOAG & ELIOT LLP LETTERHEAD]
November 24, 1997
Progress Software Corporation
14 Oak Park
Bedford, MA 01730
Ladies and Gentlemen:
We have acted as counsel for Progress Software Corporation, a
Massachusetts corporation (the "Company"), in connection with the preparation
and filing with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, of a Registration Statement on Form S-8 (the "Registration
Statement") relating to the offering of up to 31,504 shares (the "Shares") of
the Company's common stock, $.01 par value ("Common Stock"), issuable under
options currently issued and outstanding pursuant to the AppBuilder Corporation
1996 Stock Plan (the "Plan"), which options were assumed by the Company in
connection with the acquisition by the Company of Apptivity Corporation, a
California corporation ("Apptivity").
In arriving at the opinions expressed below, we have examined and relied
on the following documents:
(i) the Registration Statement;
(ii) the Plan;
(iii) the Restated Articles of Organization of the Company, as amended
as of the date hereof;
(iv) the By-Laws of the Company, as amended as of the date hereof;
(v) the Agreement and Plan of Merger among the Company, Apptivity and
certain other
2
parties pursuant to which the options under the Plan were assumed
by the Company; and
(vi) the records of meetings and consents of the Board of Directors
and stockholders of the Company provided to us by the Company.
In addition, we have examined and relied on the originals or copies certified or
otherwise identified to our satisfaction of all such other records, documents
and instruments of the Company and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis for the opinions
expressed below. We have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the original documents of all documents submitted to us as certified or
photostatic copies.
We express no opinion other than as to the laws of The Commonwealth of
Massachusetts.
Based upon the foregoing, we are of the opinion that the Company has the
corporate power necessary for the issuance of the Shares under the Plan, as
contemplated by the Registration Statement. The Shares have been duly authorized
and, when issued against payment of the agreed consideration therefor in
accordance with the respective exercise prices therefor as described in the
awards relating thereto and the Plan, will be validly issued, fully paid and
non-assessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
FOLEY, HOAG & ELIOT LLP
By /s/ Robert W. Sweet, Jr.
--------------------------------
A Partner
1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Progress Software Corporation on Form S-8 of our report dated December 20, 1996,
appearing in the Annual Report on Form 10-K of Progress Software Corporation for
the year ended November 30, 1996.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
Boston, Massachusetts
December 2, 1997