MACROVISION CORPORATION
1996 DIRECTORS STOCK OPTION PLAN
As Adopted by the Board of Directors on
December 3, 1996 Restated for Merger
effective February 14, 1997
Restated for Reverse Stock Split effective February 26, 1997
Restated for Amendment Adopted April 23, 1999
1. Purpose. The purpose of the Macrovision Corporation 1996 Directors Stock
Option Plan (the 'Plan') is to grant to non-employee members of the Company's
Board of Directors ('Outside Directors') of Macrovision Corporation, a Delaware
corporation (the 'Company') the opportunity to acquire Common Stock of the
Company, thereby encouraging such persons to accept or continue their service on
the Company's Board of Directors; to align the interests of such persons with
those of the Company's stockholders through stock ownership; and to furnish such
persons an additional incentive to improve operations and increase profits of
the Company.
To accomplish the foregoing objectives, this Plan provides a means whereby
Outside Directors may receive options to purchase Common Stock. Options granted
under this Plan will be nonstatutory (nonqualified) stock options.
2. Administration. The Plan shall be administered by the Company's Board of
Directors (the 'Administrator'), which shall have the power and authority to
grant stock options consistent with the terms of the Plan, including the power
and authority:
(a) to determine the terms and conditions of the stock option
agreements entered into between the Company and any Outside
Director;
(b) to interpret the Plan;
(c) to modify or amend any such option; and
(d) to make all determinations necessary or advisable for the
administration of the Plan.
29
3. Eligibility; Number.
(a) Each Outside Director who first becomes a member of the Company's Board
of Directors after the effective date of the Registration Statement on Form SB-2
for the initial public offering of the Company's Common Stock (the 'IPO Date')
shall be granted options to purchase shares of the Company's Common Stock
effective as of the date he or she first becomes a member of the Company's Board
of Directors (the 'Initial Grant Date'). The number of shares of the Company's
Common Stock subject to options granted to each such Outside Director on his or
her Initial Grant Date shall be five thousand (5,000) shares if the Initial
Grant Date is on or before April 22, 1999, and shall be ten thousand (10,000)
shares if the Initial Grant Date is on or after April 23, 1999 (each such number
of shares is after taking into account the reverse split of the Common Stock
effected February 26, 1997).
(b) Each Outside Director who first becomes a member of the Company's Board
of Directors after the IPO Date shall be granted options to purchase additional
shares of the Company's Common Stock annually on each successive anniversary of
the Initial Grant Date commencing on the one (1) year anniversary of the Initial
Grant Date, provided that such Outside Director continues to serve on the
Company's Board of Directors on such dates. Each Outside Director who is serving
as a member of the Company's Board of Directors on the IPO Date will be granted
an option to purchase shares of the Company's Common Stock annually on each
successive anniversary of the IPO Date commencing on the one (1) year
anniversary of the IPO Date, provided that such Outside Director continues to
serve on the Company's Board of Directors on such dates. Each employee member of
the Company's Board of Directors who becomes an Outside Director as a result of
ceasing to be an employee of the Company will be granted an option to purchase
shares of the Company's Common Stock annually on each successive anniversary of
the IPO Date commencing on the first anniversary of the IPO Date on which such
individual serves as an Outside Director, provided that such individual
continues to serve as an Outside Director on the Company's Board of Directors on
such dates, but such an individual will not receive any initial grant of an
option to purchase shares of the Company's Common Stock under Subsection 3(a)
above. The number of shares of the Company's Common Stock subject to options
granted to each Outside Director annually under this Subsection 3(b) shall be
three thousand (3,000) shares for options granted on or before April 22, 1999,
and shall be seven thousand five hundred (7,500) shares for options granted on
or after April 23, 1999 (each such number of shares is after taking into account
the reverse split of the Common Stock effected February 26, 1997).
4. Exercise Price. The exercise price of each option to purchase a share of
the Company's Common Stock shall be the fair market value of a share of the
Company's Common Stock on the date on which such option is granted. For all
purposes of this Plan, the fair market value of the Company's Common Stock on
any particular date shall be the closing price on the trading day next preceding
that date on the principal securities exchange on which the Company's Common
Stock is listed, or, if such Common Stock is not then listed on any securities
exchange, then the fair market value of the Common Stock on such date shall be
the closing price as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System ('NASDAQ') on the trading day next preceding
such date. In the event that the Company's Common Stock is neither listed on a
securities exchange nor quoted by NASDAQ, then the Administrator shall determine
the fair market value of the Company's Common Stock on such date.
5. Common Stock Subject to Plan.
(a) There shall be reserved for issue upon the exercise of options granted
under the Plan sixty thousand (60,000) shares of Common Stock (which number is
after taking into account the reverse split of the Common Stock effected
February 26, 1997), subject to adjustment as provided in Section 9 hereof. If an
option granted under the Plan shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares subject thereto shall
again be available for the purposes of the Plan.
(b) Notwithstanding any other provisions of this Plan, the aggregate number
of shares of Common Stock subject to outstanding options granted under this
Plan, plus the aggregate number of shares issued upon the exercise of all
options granted under this Plan, shall never be permitted to exceed the number
of shares specified in the first sentence of Subsection 5(a) above.
6. Terms of Options. Each option granted under the Plan shall be evidenced
by a nonstatutory stock option agreement between the individual to whom the
option is granted (the 'optionee') and the Company. Each such agreement shall
designate the option thereby granted as a nonstatutory stock option. Each such
agreement shall be subject to the terms and conditions set forth in this Section
6, and to such other terms and conditions not inconsistent herewith as the
Administrator may deem appropriate in each case. All options granted under this
Plan shall be subject to the following terms and conditions:
30
(a) Term of Options. The period or periods within which an option may be
exercised shall be determined by the Administrator at the time the option is
granted, but in no event shall such period extend beyond ten (10) years from the
date the option is granted.
(b) Method of Payment for Common Stock. Payment for stock purchased upon
any exercise of an option granted under this Plan shall be made in full
concurrently with such exercise by any one of the following methods: (i) in
cash; (ii) if and to the extent the instrument evidencing the option so provides
and if the Company is not then prohibited from purchasing or acquiring shares of
such stock, with shares of the same class of stock as are subject to the option
that have been held by the optionee for the requisite period necessary to avoid
a charge to the Company's earnings for financial reporting purposes, delivered
in lieu of cash, with the shares so delivered to be valued on the basis of the
fair market value of the stock (determined in a manner specified in the
instrument evidencing the option) on the date of exercise; (iii) through a 'same
day sale' commitment from the optionee and a broker-dealer that is a member of
the National Association of Securities Dealers (the 'NASD Dealer') whereby the
optionee 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; (iv) through a 'margin' commitment from the optionee
and a NASD Dealer whereby the optionee 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 (v) any combination of
the foregoing.
(c) Vesting. Options granted under this Plan on or before April 22, 1999,
shall become first exercisable ratably over a four (4) year period such that
each option shall become first exercisable as to one forty-eighth (1/48) of the
option shares on the last day of each month, beginning with the first full month
following the date of grant, provided that the optionee continues to serve on
the Company's Board of Directors on such dates. Options granted under this Plan
on or after April 23, 1999, shall become first exercisable ratably over a three
(3) year period such that each option shall become first exercisable as to one
thirty-sixth (1/36) of the option shares on the last day of each month,
beginning with the first full month following the date of grant, provided that
the optionee continues to serve on the Company's Board of Directors on such
dates. Notwithstanding the foregoing, all options granted to an optionee under
this Plan will become exercisable immediately upon the optionee's death or
disability while serving on the Company's Board of Directors.
(d) Death; Disability; Resignation. In the event of an optionee's death or
disability while serving on the Company's Board of Directors, all options
granted to that optionee under this Plan may be exercised by the optionee or the
optionee's estate for a period of one (1) year after the date on which the
optionee ceases to serve on the Company's Board and will terminate if not
exercised during such period, subject to termination on the expiration of the
stated term of the option, if earlier. If an optionee resigns from the Company's
Board of Directors or declines to stand for reelection, options that have become
exercisable through the last date on which the optionee serves on the Company's
Board may be exercised for a period of three (3) months thereafter and will
terminate if not exercised during such period, subject to termination on the
expiration of the stated term of the option, if earlier. If an optionee is
removed from the Board by action of the Company's Stockholders or Board of
Directors, options that have become exercisable through the date of such removal
may be exercised for a period of one (1) week thereafter and will terminate if
not exercised during such period, subject to termination on the expiration of
the stated term of the option, if earlier. The 'optionee's estate' shall mean
the duly authorized conservator or guardian of the estate of the optionee or the
executor of the optionee's last will or the duly authorized administrator or
special administrator of the optionee's probate estate or any other legal
representative of the optionee's estate duly appointed as a result of the
optionee's death or incapacity or any person who acquires the right to exercise
this option by reason of the optionee's death under the optionee's will or the
laws of intestate succession.
(e) Withholding and Employment Taxes. At the time of exercise of an option,
the optionee shall remit to the Company in cash the amount of any and all
applicable federal and state withholding and employment taxes.
31
7. Stock Issuance and Rights as Stockholder. Notwithstanding any other
provisions of the Plan, no optionee shall have any of the rights of a
stockholder (including the right to vote and receive dividends) of the Company,
by reason of the provisions of this Plan or any action taken hereunder, until
the date such optionee shall both have paid the exercise price for the Common
Stock and shall have been issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) the
stock certificate evidencing such shares.
8. Non-Transferability of Options. No option shall be transferable by the
optionee otherwise than by will or by the laws of descent and distribution and
all options shall be exercisable, during the optionee's lifetime, only by the
optionee. Notwithstanding the foregoing, the Administrator may provide in any
option agreement that the optionee may transfer, without consideration for the
transfer, such option to members of his immediate family, to trusts for the
benefit of such family members, to partnerships in which such family members are
the only partners, or to charitable organizations, provided that the transferee
agrees in writing with the Company to be bound by all of the terms and
conditions of the Plan and the applicable option agreement.
9. Adjustments Upon Changes in Capitalization or Merger.
(a) Subject to any required action by the Company's stockholders, the
number of shares of Common Stock covered by this Plan as provided in Section 5,
the number of shares covered by each outstanding option granted hereunder and
the exercise price thereof shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a split,
reverse split, subdivision or consolidation of such shares or the payment of a
stock dividend (but only on the Common Stock) or any other increase or decrease
in the number of such outstanding shares of Common Stock effected without the
receipt of consideration by the Company; provided, however, that the conversion
of any convertible securities of the Company shall not be deemed to have been
'effected without receipt of consideration.'
(b) In the event of (i) a dissolution or liquidation of the Company; (ii) a
merger or consolidation in which the Company is the 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 stockholders of
the Company or their relative stock holdings and the options granted under this
Plan are assumed, converted or replaced by the successor corporation, which
assumption will be binding on all optionees); (iii) a merger in which the
Company is the surviving corporation but after which the stockholders of the
Company (other than any stockholder which merges (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; (iv) the sale of
substantially all of the assets of the Company; or (v) any other transaction
which qualifies as a 'corporate transaction' under Section 424(a) of the
Internal Revenue Code of 1986, as amended, wherein the stockholders of the
Company give up all of their equity interest in the Company (except for the
acquisition, sale or transfer of all or substantially all of the outstanding
shares of the Company from or by the stockholders of the Company), any and all
outstanding options under this Plan shall become fully exercisable,
notwithstanding any other provision of this Plan and without regard to any
vesting provisions contained in the options, for a reasonable period of time
prior to the consummation of such event. Upon any such event, the successor
corporation (if any) may assume, convert or replace any outstanding options that
are not exercised prior to the consummation of the event or may substitute
equivalent options or provide substantially similar consideration to the
optionees as was provided to the stockholders (after taking into account the
existing provisions of the option grants). In the event such successor
corporation (if any) does not assume or substitute options, as provided above,
upon an event described in this Subsection 9(b), such options will terminate on
the consummation of such event at such time and on such conditions as the
Company's Board of Directors shall determine.
(c) To the extent that any adjustments described in this Section 9 relate
to stock or securities of the Company, such adjustments shall be made by the
Company's Board of Directors, whose determination in that respect shall be
final, binding and conclusive.
(d) Except as expressly provided in this Section 9, no optionee shall have
any rights by reason of any subdivision or consolidation of shares of the
capital stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or stock
of another corporation, and any issue by the Company of shares of stock of any
class or of 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 price of shares subject to any option granted hereunder.
(e) The grant of an option pursuant to this 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 or to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
32
10. Securities Law Requirements.
(a) The Administrator may require an individual as a condition of the grant
and of the exercise of an option, to represent and establish to the satisfaction
of the Administrator that all shares of Common Stock to be acquired upon the
exercise of such option will be acquired for investment and not for resale. The
Administrator shall cause such legends to be placed on certificates evidencing
shares of Common Stock issued upon exercise of an option as, in the opinion of
the Company's counsel, may be required by federal and applicable state
securities laws.
(b) No shares of Common Stock shall be issued upon the exercise of any
option unless and until counsel for the Company determines that: (i) the Company
and the optionee have satisfied all applicable requirements under the Securities
Act of 1933, as amended (the 'Securities Act') and the Exchange Act; (ii) any
applicable listing requirement of any stock exchange on which the Company's
Common Stock is listed has been satisfied; and (iii) all other applicable
provisions of state and federal law have been satisfied.
11. Financial Assistance. The Company shall have the authority under this
Plan to assist any Outside Director to whom an option is granted hereunder in
the payment of the purchase price payable on exercise of that option, by lending
the amount of such purchase price to such Outside Director on such terms and at
such rates of interest and upon such security as shall have been authorized by
or under authority of the Company's Board of Directors.
12. Amendment. The Company's Board of Directors may terminate the Plan or
amend the Plan from time to time in such respects as the Board may deem
advisable.
13. Termination. The Plan shall terminate automatically on December 1,
2006, and may be terminated at any earlier date by the Company's Board of
Directors. No option shall be granted hereunder after termination of the Plan,
but such termination shall not affect the validity of any option then
outstanding.
14. Time of Granting Options. The date of grant of an option hereunder
shall, for all purposes, be the date on which the Administrator makes the
determination granting such option.
15. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of shares of its Common
Stock as shall be sufficient to satisfy the requirements of the Plan.
16. Effective Date. This Plan was adopted by the Company's Board of
Directors on December 3, 1996, and was approved by the stockholders of the
Company on February 25, 1997. However, no options shall be granted under the
Plan prior to the IPO Date.
33