Stock Option Plan – Macrovision Corp.
MACROVISION CORPORATION
STOCK OPTION PLAN
As Adopted Effective September 9, 1988;
Amended September 22, 1988;
Amended September 13, 1990;
Amended and Restated February 6, 1992;
1. PURPOSE. The purpose of the MACROVISION CORPORATION STOCK OPTION PLAN
(the "Plan") is to grant to selected employees, directors, and consultants
of Macrovision Corporation, a California corporation (the "Company") and
its subsidiaries and affiliates, a favorable opportunity to acquire Common
Stock of the Company, thereby encouraging such persons to accept or continue
a qualifying relationship with the Company; increasing the interest of such
persons in the Company's welfare through participation in the growth and
value of the Common Stock; and furnishing such persons with an incentive to
improve operations and increase profits of the Company.
To accomplish the foregoing objectives, this Plan provides a means
whereby employees, directors, and consultants may receive options to purchase
Common Stock. Options granted under this Plan will be either nonstatutory
stock options (subject to federal income taxation upon exercise) or incentive
stock options (generally not subject to immediate federal income taxation
upon exercise).
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board"), or by a committee appointed by the
Board which shall not have less than two (2) members (in either case, the
"Administrator"). No option shall be granted to a director or officer of
the Company except (i) by the Board when all of its members are disinterested
persons, or (ii) by an Administrator other than the Board when the
Administrator is composed of two (2) or more directors having full authority
to act in the matter and each member of the Administrator is a disinterested
person. "Disinterested person", for this purpose, shall mean a person who,
at the time he exercises discretion in administering the Plan, has not at any
time within one (1) year prior thereto been granted or awarded selection as a
person to whom stock may be allocated or to whom stock options or stock
appreciation rights may be granted pursuant to the Plan or any other plan of
the Company or any of its affiliates entitling the participants therein to
acquire stock, stock options or stock appreciation rights of the Company or
any of its affiliates. The Administrator may delegate nondiscretionary
administrative duties to such employees of the Company as it deems proper.
Subject to the provisions of the Plan, the Administrator shall have the sole
authority, in its discretion:
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(a) to determine to which of the eligible individuals, and the time or
times at which, options to purchase Common Stock of the Company shall be
granted;
(b) to determine the number of shares of Common Stock to be subject to
options granted to each eligible individual;
(c) to determine the price to be paid for the shares of Common Stock
upon the exercise of each option;
(d) to determine the term and the exercise schedule of each option;
(e) to determine the terms and conditions of each stock option
agreement (which need not be identical) entered into between the Company and
any eligible individual to whom the Administrator has granted an option;
(f) to interpret the Plan;
(g) to accelerate the exercise date or schedule with respect to any
option granted under the Plan or, with the consent of the holder thereof,
to modify or amend any such option; and
(h) to make all determinations deemed necessary or advisable for the
administration of the Plan.
3. ELIGIBILITY. Every individual who at the date of grant is an
employee of the Company or of any parent or subsidiary of the Company (as
defined in Section 5.1(c) below) is eligible to receive incentive stock
options and nonstatutory stock options to purchase Common Stock under this
Plan. The term "employee" includes an officer or director who is an
employee of the Company or a parent or subsidiary of it, as well as a
non-officer, non-director employee of the Company or a parent or subsidiary
of it. Every individual who at the date of grant is a consultant to, or a
non-employee director of, the Company or of any affiliate of the Company (as
defined in Section 150 of California Corporations Code) is eligible to
receive nonstatutory stock options to purchase Common Stock under this Plan,
but shall not be eligible to receive incentive stock options. The term
"consultant" includes individuals employed by, or otherwise affiliated
with, a person providing consulting services to the Company. Notwithstanding
the above, neither A. Victor Farrow nor John O. Ryan shall be eligible to
receive any stock options under this Plan, and Eugene Eidenberg shall be
eligible to receive stock options under this Plan for eighty-three thousand
two hundred seventeen (83,217) shares (subject to adjustment as provided in
Section 7 hereof) only.
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4. COMMON STOCK SUBJECT TO PLAN.
(a) There shall be reserved for issue upon the
exercise of options granted under the Plan one million seven
hundred fifty thousand (1,750,000) shares of Common Stock,
subject to adjustment as provided in Section 7 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 Section 4(a) above.
5. TERMS OF OPTIONS. Each option granted under the Plan shall be
evidenced by a 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 an incentive stock option, a
nonstatutory stock option or in part an incentive stock option and in part a
nonstatutory stock option. Each such agreement shall be subject to the terms
and conditions set forth in Section 5.1, and to such other terms and
conditions not inconsistent herewith as the Administrator may deem
appropriate in each case. Incentive stock options shall be subject also to
the terms and conditions set forth in Section 5.2.
5.1 TERMS AND CONDITIONS TO WHICH ALL OPTIONS ARE SUBJECT. All options
granted under this Plan shall be subject to the following terms and
conditions:
(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, and such period or periods may be amended subsequently
only by written mutual agreement of the Company (at the direction of the
Administrator) and the optionee. In no event shall such period extend beyond
ten (10) years from the date the option is granted in the case of an
incentive stock option or ten (10) years and one (1) week from the date the
option is granted in the case of a nonstatutory stock option.
(b) EXERCISE PRICE. The price to be paid for each share of Common
Stock upon the exercise of an option shall be determined by the Administrator
at the time the option is granted, but shall in no event be less than
eighty-five percent (85%) in the case of a nonstatutory stock option, and one
hundred percent (100%) in the case of an incentive stock
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option, of the fair market value of a share of Common Stock on the date the
option is granted. For all purposes of this Plan, the fair market value of
the 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 mean of the closing bid and asked
prices 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.
(c) MORE THAN TEN PERCENT SHAREHOLDERS. No option shall be
granted to any individual who, at the time such option would be granted, owns
stock possessing more than ten percent (10%) of the total combined voting
power of all classes of outstanding capital stock of the Company, or of any
parent corporation or subsidiary corporation of the Company, unless the
exercise price (as provided in Section 5.1(b) hereof) is not less than one
hundred percent (100%) in the case of a nonstatutory stock option, one
hundred ten percent (110%) in the case of an incentive stock option, of the
fair market value of the Common Stock on the date the option is granted, and
in the case of an incentive stock option the period within which the option
may be exercised (as provided in Section 5.1(a) hereof) does not exceed five
(5) years from the date the option is granted. As used in this Plan, the
terms "parent corporation" and "subsidiary corporation" shall have the
meanings set forth in Sections 425(e) and (f), respectively, of the Internal
Revenue Code of 1986, as amended (the "Code"). For purposes of this
Section 5.1(c), in determining stock ownership, an optionee shall be
considered as owning the voting capital stock owned, directly or indirectly,
by or for his brothers and sisters, spouse, ancestors and lineal descendants.
Voting capital stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be considered as being owned
proportionately by or for its shareholders, partners or beneficiaries, as
applicable. Common Stock with respect to which any such optionee holds an
option shall not be counted. Additionally, for purposes of this Section
5.1(c), outstanding capital stock shall include all capital stock actually
issued and outstanding immediately after the grant of the option to the
optionee. Outstanding capital stock shall not include capital stock
authorized for issue under outstanding options held by the optionee or by any
other person.
(d) METHOD OF PAYMENT FOR COMMON STOCK. The exercise price for
each share of Common Stock purchased
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under an option shall be paid in full in cash at the time of purchase.
(e) NONTRANSFERABILITY. All options shall be nontransferable,
except by will or the laws of descent and distribution, and shall be
exercisable during the lifetime of the optionee only by the optionee.
(f) REPURCHASE OF STOCK. If provided in the stock option
agreement, at the discretion of the Administrator, the stock to be delivered
pursuant to the exercise of any option granted under this Plan may be subject
to a right of repurchase in favor of the Company with respect to any optionee
whose relationship with the Company is terminated. Such right of repurchase
shall be at the option exercise price and shall expire at such time or times
as set by the Administrator. Determination of the number of shares subject
to such right of repurchase shall be made as of the date the optionee's
relationship with the Company terminates.
(g) 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.
5.2 ADDITIONAL TERMS AND CONDITIONS TO WHICH INCENTIVE STOCK OPTIONS
ARE SUBJECT. Options granted under this Plan which are designated as
incentive stock options shall be subject to the following additional terms
and conditions:
(a) ANNUAL LIMITATION. The aggregate fair market value
(determined as of the date an incentive stock option is granted) of the stock
with respect to which incentive stock options granted are exercisable for the
first time by an employee during any one (1) calendar year (under this Plan
and under all other incentive stock option plans of the Company and of any
parent or subsidiary corporation) shall not exceed One Hundred Thousand
Dollars ($100,000).
(b) DEATH. Upon the death of an employee, any incentive stock
option which such employee holds may be exercised, within such period after
the date of death as the Administrator shall prescribe in the stock option
agreement, by the employee's representative or by the person entitled thereto
under the employee's will or the laws of intestate succession.
(c) DISABILITY. Upon the permanent and total disability of an
employee (as defined in Section 105(d)(4) of the Code), any incentive stock
option which the employee holds may be exercised by the employee within such
period after the date of termination of employment resulting from such
disability (not to exceed twelve (12) months) as the Administrator shall
prescribe in the stock option agreement. The option shall terminate upon the
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expiration of such prescribed period, unless the employee dies prior thereto,
in which event the provisions of Section 5.2(b) hereof shall apply.
(d) RETIREMENT. Upon the voluntary retirement of an employee at
or after reaching sixty-five (65) years of age, an incentive stock option may
be exercised by such employee with respect to all or any portion of the
balance of the Common Stock subject thereto within such period after the date
of retirement (not to exceed three (3) months) as the Administrator shall
prescribe in the stock option agreement. The option shall terminate upon the
expiration of such prescribed period, unless the employee dies prior thereto,
in which event the provisions of Section 5.2(b) hereof shall apply.
(e) TRANSFER TO RELATED CORPORATION. In the event that an
employee leaves the employ of the Company to become an employee of any parent
or subsidiary corporation of the Company, or if the employee leaves the
employ of any such parent or subsidiary corporation to become an employee of
the Company or of another parent or subsidiary corporation, such employee
shall be deemed to continue as an employee of the Company for all purposes of
this Plan.
(f) OTHER SEVERANCE. In the event an employee leaves the employ
of the Company for any reason other than as set forth in subsections (b)
through (e), above, any incentive stock option which such employee holds may
be exercised by such employee with respect to all or any portion of the
balance of the Common Stock subject thereto within such period after the date
of severance (not to exceed three (3) months) as the Administrator shall
prescribe in the stock option agreement.
(g) DISQUALIFYING DISPOSITIONS. If Common Stock acquired by
exercise of an incentive stock option granted pursuant to this Plan is
disposed of within two (2) years from the date of grant of the option or
within one (1) year after the transfer of the Common Stock to the optionee,
the holder of the Common Stock immediately prior to the disposition shall
promptly notify the Company in writing of the date and terms of the
disposition and shall provide such other information regarding the
disposition as the Company may reasonably require.
6. STOCK ISSUANCE AND RIGHTS AS SHAREHOLDER. Notwithstanding any other
provisions of the Plan, no optionee shall have any of the rights of a
shareholder (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.
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7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Subject to any required action by the Company's shareholders,
the number of shares of Common Stock covered by this Plan as provided in
Section 4, 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 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) Subject to any required action by the Company's shareholders,
if the Company shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain and apply to the
securities to which a holder of the number of shares subject to the option
would have been entitled. A dissolution or liquidation of the Company or a
merger or consolidation in which the Company is not the surviving corporation
shall cause each outstanding option to terminate, unless the surviving
corporation in the case of a merger or consolidation assumes outstanding
options or replaces then with substitute options having substantially similar
terms and conditions; provided, however, that if an outstanding option is to
terminate upon any such event, the Administrator on such terms and conditions
as it deems appropriate, shall provide either by the terms of the stock
option agreement or by a resolution adopted prior to the occurrence of any
such event, that, for some period of time prior to such event, such option
shall be exercisable as to all of the shares covered by the portion of the
option that previously has not lapsed, terminated, or been exercised,
notwithstanding any exercise schedule provided in the stock option agreement.
(c) To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
(d) Except as hereinabove expressly provided in this Section 7, 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
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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.
8. 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 and the Securities Exchange Act of 1934; (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.
9. AMENDMENT. The Board may terminate the Plan or amend the Plan from
time to time in such respects as the Board may deem advisable, except that,
without the approval of the Company's shareholders in compliance with the
requirements of applicable law, no such revision or amendment shall:
(a) increase the number of shares of Common Stock reserved under
Section 4 hereof for issue under the Plan, except as provided in Section 7
hereof;
(b) change the class of persons eligible to participate in the
Plan under Section 3 hereof;
(c) extend the term of the Plan under Section 10 hereof; or
(d) amend this Section 9 to defeat its purpose.
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10. TERMINATION. The Plan shall terminate automatically on August 31,
1998, and may be terminated at any earlier date by the Board. No option
shall be granted hereunder after termination of the Plan, but such
termination shall not affect the validity of any option then outstanding.
11. 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.
12. 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.
13. EFFECTIVE DATE. This Plan was adopted by the Board of Directors of
the Company on September 9, 1988, and shall be effective on said date,
provided the Plan is approved within twelve (12) months of said date by the
shareholders of the Company in accordance with the requirements of the Code
and the California General Corporation Law. Options may be granted, but may
not be exercised, prior to the date of such shareholder approval.
14. COMPANY FINANCIAL INFORMATION. The Company shall provide all
optionees on an annual basis with the balance sheet and income statement for
the then ending financial year to the same extent such information is made
available to shareholders of the Company.
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MACROVISION CORPORATION
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
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(DATE OF GRANT)
MACROVISION CORPORATION, a California corporation (the "Company"),
does hereby grant to _____________ (the "Employee") a non-transferable
option to purchase an aggregate of _______ shares of the Company's Common
Stock, without par value, at the price of _________________ ($_____) per
share, upon the following terms and conditions:
1. TERM OF OPTION. Notwithstanding any other provision of this
Agreement, the option granted hereby and all rights of the Employee to
purchase Common Stock hereunder shall expire with respect to all of the
shares subject hereto on (10 YEARS) (the "Expiration Date"); provided,
however that this option shall be subject to termination prior to the
Expiration Date in accordance with the provisions of Sections 2, 4, and 10
hereof.
2. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, the option shall be exercisable in accordance with the following
schedule:
(1/6) shares on or after (1 year from date of grant or employment)
(1/3) additional shares on or after (2 years from date of grant or
employ)
(1/2) additional shares on or after (3 years from date of grant or
employ)
The dates appearing in the above schedule refer to the earliest dates on
which the option may be exercised with respect to the number of shares set
forth therein, and the option may be exercised with respect to all or any
part of such shares at any time (prior to the Expiration Date or earlier
termination of this option) on or after such dates. The Employee must be and
remain in the employ of the Company, or of any parent corporation or
subsidiary corporation of the Company (as defined in Internal Revenue Code
Sections 424(e) and (f), during the entire period commencing with the date of
grant of this option and ending with each of the dates appearing in the above
schedule in order to exercise the option with respect to the number of shares
set forth next to each such date.
3. ACCELERATED EXERCISE. The Company and University National Bank & Trust Company, Trustee (the "Purchaser") are parties to a Stock and
Convertible Note Purchase Agreement dated May 24, 1991 (the "Purchase
Agreement"). In the event that the Purchaser makes an offer pursuant to
Section 8.4 of the Purchase Agreement to purchase all of the shares of Common
Stock covered by the option granted hereby, then, notwithstanding Section 2
hereof, options granted hereunder that have not lapsed, terminated or been
exercised prior to the date of such offer shall be fully
exercisable as of the date such offer is made and may be exercised with
respect to all or any part of such shares at any time (prior to the
Expiration Date or earlier termination of this option) on or after such date.
4. RIGHTS ON TERMINATION OF EMPLOYMENT. Upon the termination of the
Employee's employment with the Company or with any parent or subsidiary
corporation of the Company, the Employee's right to exercise this option, to
the extent it is otherwise then exercisable pursuant to Section 2 hereof,
shall be limited in the following manner:
(a) DEATH. If the Employee's employment is terminated by death, the
Employee's estate shall have the right, for a period of twelve (12) months
following the date of the Employee's death, to exercise the option to the
extent it was exercisable by the Employee on the date of death. The
Employee's estate shall mean the Employee's legal representative upon death
or any person who acquires the right to exercise the option by reason of such
death under the Employee's will or the laws of intestate succession.
(b) RETIREMENT. If the Employee's employment is terminated by
voluntary retirement at or after reaching sixty-five (65) years of age, the
Employee may, within three (3) months following such termination, exercise
the option to the extent it was exercisable by the Employee on the date of
such termination. The option shall terminate upon the expiration of such
three (3) month period unless the Employee dies prior thereto, in which event
the Employee shall be treated as though the Employee had died on the date of
retirement and the provisions of Section 4(a) shall apply.
(c) DISABILITY. If the Employee's employment is terminated because of
a permanent and total disability (as defined in Internal Revenue Code Section
22 (e)(3)), the Employee or the Employees estate may, within twelve (12)
months following such termination, exercise the option to the extent it was
exercisable by the Employee on the date of such termination.
(d) OTHER TERMINATION. If the Employee's employment is terminated for
any reason other than those provided in subsection (a), (b) and (c) above,
the Employee may, within three (3) months following such termination,
exercise the option to the extent it was exercisable by the Employee on the
date of such termination. The option shall terminate upon the expiration of
such three (3) month period.
(e) TRANSFER TO RELATED CORPORATION. In the event the Employee leaves
the employ of the Company to become an employee of any parent or subsidiary
corporation of the Company or if the Employee leaves the employ of any such
parent or subsidiary corporation to become an employee of the Company or of
another parent or
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subsidiary corporation, the Employee shall be deemed to continue as
an employee of the Company for all purposes of this Agreement.
5. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Subject to any required action by the Company's shareholders, the
number of shares of Common Stock covered by the option granted hereby 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
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) Subject to any required action by the Company's shareholders, if
the Company shall be the surviving corporation in any merger or
consolidation, the option granted hereby shall pertain and apply to the
securities to which a holder of the number of shares subject to the
unexercised portion of this option would have been entitled. A dissolution
or liquidation of the Company or a merger or consolidation involving the
Company in which the Company is not the surviving corporation shall cause
this option to terminate on the effective date of any such event, unless the
surviving corporation in the case of a merger or consolidation assumes
outstanding options or replaces them with substitute options having
substantially similar terms and conditions. Notwithstanding Section 2
hereof, options granted hereunder that have not lapsed, terminated, or been
exercised prior to the date of dissolution or liquidation of the Company or
of a merger or consolidation involving the Company in which the Company is
not the surviving corporation shall be fully exercisable for a period of ten
(10) days prior to the effective date of any such liquidation, dissolution
merger or consolidation unless such options are assumed or substituted by the
continuing or surviving corporation.
(c) To the extent that the foregoing adjustments relate to stock or
securities of the company, such adjustments shall be made by the Company's
Board of Directors ("Board"), whose determination in that respect shall be
final, binding and conclusive. The Company agrees to give notice of any such
adjustment to the Employee, provided, however, that any such adjustment shall
be effective and binding for all purpose hereof whether or not such notice is
given or received.
(d) Except as hereinabove expressly provided in this Section 5, the
Employee shall have no 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
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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 exercise price of shares subject to the option
granted hereunder.
(e) The grant of the option hereby 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.
6. MANNER OF EXERCISE. The option granted hereby shall be exercised
by the Employee by giving written notice to the Company, in substantially the
form attached hereto as Exhibit A, which notice shall specify the number of
shares of Common Stock which the Employee elects to purchase. Additionally,
the Employee shall execute and deliver an Investment Representation Letter,
in the form of Exhibit B attached hereto. Upon receipt of such notice of
exercise and of payment of the purchase price, the Company shall, as soon as
reasonably possible and subject to all other provisions hereof, deliver
certificates for the shares of Common Stock so purchased, registered in the
Employee's name or in the name of his legal representative. Payment of the
purchase price upon any exercise of the option granted hereby shall be made
by check or in cash.
7. NON-TRANSFERABLE. During the lifetime of the Employee, the option
granted to the Employee hereunder shall be exercisable only by the Employee
and shall not be transferable or assignable by the Employee in whole or in
part otherwise than by will or the laws of descent and distribution. If the
Employee shall make any purported transfer or assignment of the Employee's
option hereunder, such assignment shall be null and void and of no force or
effect whatsoever and the Company shall have the right to terminate this
Agreement as of the date of any such purported transfer or assignment.
8. COMPLIANCE WITH SECURITIES AND OTHER LAWS. As a condition to the
exercise in whole or in part of the option granted hereby, each notice of
exercise shall include a representation by the purchaser that such purchaser
intends to acquire the shares of Common Stock specified therein for
investment, for such purchaser's own account and not with a view to, or for
sale in connection with, any distribution of such shares. The Company shall
not be obligated to deliver any shares of Common Stock hereunder for such
period as may reasonably be required for it to comply with any applicable
requirements of: (i) the Securities Act of 1933; (ii) the Securities
Exchange Act of 1934; (iii) applicable state securities laws; (iv) any
applicable listing requirement of any stock exchange on which the Company's
Common Stock is then listed; and (v)
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any other law or regulation applicable to the issuance of such shares.
Shares of Common Stock issued pursuant to exercise of this option shall
include the following legends and such other legends as in the opinion of the
Company's counsel may be required by the securities laws of any state in
which the Employee resides:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER, PLEDGE OR
OTHER DISPOSITION THEREOF MAY BE MADE ONLY (i) IN A TRANSACTION
REGISTERED UNDER SAID ACT OR (ii) IF AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT IS AVAILABLE AND IS ESTABLISHED TO THE SATISFACTION OF
THE ISSUER.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATION OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
9. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in this
Agreement shall: (i) confer upon the Employee any right with respect to the
continuance of employment by the Company or by any parent or subsidiary
corporation of the Company; or (ii) limit in any way the right of the Company
or of any parent or subsidiary corporation to terminate the Employee's
employment at any time.
10. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provision
hereof, this Agreement and the option granted hereby are governed by, and
subject to the terms and conditions of, the Macrovision Corporation Stock
Option Plan, as adopted effective September 9, 1988, as amended (the
"Plan"). The Employee acknowledges receipt of a copy of the Plan (a copy
of which is attached hereto as Exhibit C). The Employee represents that he
is familiar with the terms and conditions of the Plan, and hereby accepts the
option granted hereby subject to all of the terms and conditions thereof,
which terms and conditions shall control to the extent inconsistent in any
respect with the provisions of this Agreement. The Employee hereby agrees to
accept as binding, conclusive and final all decisions and interpretations of
the Board, or other administrator of the Plan, as to any questions arising
under the Plan or under this Agreement. This Agreement, as supplemented by
the Plan, shall bind and inure to the benefit of the Company and its
successors and assigns, and the Employee and the Employee's estate in the
event of death.
11. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party
5
hereto in connection with this Agreement shall be in writing and may be
delivered by personal service or by registered or certified mail, return
receipt requested, deposited in the United States mail with the postage
thereon fully prepaid, addressed to the parties at the addresses indicated on
the signature page hereof. Service of any such notice or other communication
so made by mail shall be deemed complete on the date of actual delivery as
shown by the addressee's registry or certification receipt or at the
expiration of the third (3rd) business day after the date of mailing,
whichever is earlier in time. Either party may from time to time by notice
in writing served upon the other as aforesaid, designate a different mailing
address or a different person to which such notices or other communications
are thereafter to be addressed or delivered.
12. INDEPENDENT TAX ADVICE. The Employee agrees that Employee has or
will obtain the advice of independent tax counsel regarding the federal and
state income tax consequences of the receipt and exercise of the option
granted hereby and of the disposition of Common Stock acquired upon exercise
hereof, including advice regarding the imposition of the alternative minimum
tax on tax preferences generated by exercise of stock options and regarding
any holding period requirements for preferential tax treatment. The Employee
acknowledges that he has not relied and will not rely upon any advice or
representations by the Company or by its employees or representatives with
respect to the tax treatment of options granted hereunder.
Date of Grant
-----------------
MACROVISION CORPORATION
1341 Orleans Drive
Sunnyvale, California 94089
By:
--------------------------
William A. Krepick, President
AGREED TO AND ACCEPTED:
-----------------------------
Employee
-----------------------------
(printed name and address)
6
EXHIBIT A
FORM OF NOTICE OF EXERCISE
OF MACROVISION CORPORATION
INCENTIVE STOCK OPTION
MACROVISION CORPORATION
1341 Orleans Drive
Sunnyvale, California 94089
Gentlemen:
I hereby exercise the right to purchase __________ shares of Common
Stock, without par value, of MACROVISION CORPORATION, under the terms of the
option granted to me on _____________________, 19____ pursuant to the
Employee Incentive Stock Option Agreement, dated as of said grant date. This
exercise of said option and the purchase and delivery of said shares shall be
subject to all the terms and conditions of such Employee Incentive Stock
Option Agreement.
I enclose my check for $________________ in full payment of the purchase
price of said shares. Please register said shares in my name.
I hereby represent and agree that I am purchasing the shares for my own
account and not with a view to, or for sale in connection with, any
distribution of the shares, and that I will not sell the shares without
registration under the Securities Act of 1933 or an exemption therefrom and
in compliance with applicable state securities laws.
Dated: _______________________, 19____
-----------------------------
(signature)
-----------------------------
-----------------------------
-----------------------------
(print name and home address)
7
EXHIBIT B
INVESTMENT REPRESENTATION LETTER
Macrovision Corporation
1341 Orleans Drive
Sunnyvale, California 94089
Gentlemen:
In connection with the exercise by me of a stock option to purchase
____________ shares of the Common Stock (the "Shares") of Macrovision
Corporation (the "Company"), I hereby represent to you the following:
1. I understand that the Shares are highly speculative and that there
can be no assurance as to what return, if any, there may be on my investment.
I have evaluated the risks of making this investment in the Shares, have
determined that such investment is consistent with my investment objectives,
have the ability to bear the economic risk of such investment and can afford
a complete loss of the purchase price of the Shares.
2. I have made an informed, independent judgment with respect to the
desirability of purchasing the Shares from the Company. I have,
independently and without reliance upon the Company or any representations or
statements made by the Company or its representatives, made my own analysis
and decision to purchase the Shares. Neither the Company nor any of its
representatives have made any representations or warranties to me, and no
prior or future acts by the Company or its representatives shall be deemed to
constitute representations or warranties by the Company.
3. I am acquiring the Shares for my own account for investment purposes
only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as
amended (the "Act").
4. I understand that the Shares must be held INDEFINITELY unless
subsequently registered under the Act and qualified under applicable state
securities laws or unless an exemption from such registration and
qualification is applicable to any subsequent transfer. I hereby agree that
the Shares will not be sold without registration under the Act and
qualification under applicable state securities laws or exemption therefrom.
I understand that the Company has no present plans for registration or
qualification of
8
the Shares and that it has no obligation to register or to qualify the Shares
for any future sale thereof by me.
5. I understand that the certificates evidencing the Shares to be held
by me will bear the legends set forth below and may bear certain additional
legends required under applicable state securities law:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION
THEREOF MAY BE MADE ONLY (i) IN A TRANSACTION REGISTERED UNDER SAID ACT OR
(ii) IF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE AND IS
ESTABLISHED TO THE SATISFACTION OF THE ISSUER.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
6. I further understand that there is no market for the Shares and
there may never be a market for the Shares, and that even if a market
develops for the Shares, as a result of the foregoing restrictions on
transfer and the representations and warranties hereunder, I may not be able
to sell or dispose of the Shares, and that I may thus have to bear the risk
of my investment in the Shares for a substantial period of time, or forever.
7. I acknowledge that no one is acting as my representative in this
purchase.
8. I agree that the Company may note upon its stock transfer records a
"stop transfer order" with respect to the Shares in order to enforce the
restrictions on transfer hereinabove described. I understand and agree that
any and all share certificates issued by the Company to me in connection with
the proposed purchase may bear the restrictive legends hereinabove described.
I further agree that the Company shall not be liable for any refusal to
transfer the Shares upon the books of the Company, except in compliance with
the terms and conditions of such restrictions.
9. I agree to indemnify and save and hold harmless the Company, its
successors and assigns, and their officers, directors and controlling
persons, if any, against any loss, claim, damage, liability, cost and expense
arising out of a breach by the undersigned of any of the foregoing
representations, warranties and covenants,
9
whether under the Act, as the same may be amended from time to time, the
securities laws of any state, or otherwise. Finally, I agree that the terms
and conditions of this letter shall also bind upon my heirs, assigns and
legal representatives.
10. I am a resident of _______________________, County and am
purchasing the Shares in the State of California.
Executed this _______ day of __________________, 199__ at _____________
______________, California.
-----------------------------
Signature
Address:
-------------------------------
-------------------------------
10
EXHIBIT C
MACROVISION CORPORATION
STOCK OPTION PLAN
As Adopted Effective September 9, 1988;
Amended September 22, 1988:
Amended September 13, 1990;
Amended and Restated February 6, 1992;
1. PURPOSE. The purpose of the MACROVISION CORPORATION STOCK OPTION PLAN
(the "Plan") is to grant to selected employees, directors, and consultants
of Macrovision Corporation, a California corporation (the "Company") and
its subsidiaries and affiliates, a favorable opportunity to acquire Common
Stock of the Company, thereby encouraging such persons to accept or continue
a qualifying relationship with the Company; increasing the interest of such
persons in the Company's welfare through participation in the growth and
value of the Common Stock; and furnishing such persons with an incentive to
improve operations and increase profits of the Company.
To accomplish the foregoing objectives, this Plan provides a means
whereby employees, directors, and consultants may receive options to purchase
Common Stock. Options granted under this Plan will be either nonstatutory
stock options (subject to federal income taxation upon exercise) or incentive
stock options (generally not subject to immediate federal income taxation
upon exercise).
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board"), or by a committee appointed by the
Board which shall not have less than two (2) members (in either case, the
"Administrator"). No option shall be granted to a director or officer of
the Company except (i) by the Board when all of its members are disinterested
persons, or (ii) by an Administrator other than the Board when the
Administrator is composed of two (2) or more directors having full authority
to act in the matter and each member of the Administrator is a disinterested
person. "Disinterested person", for this purpose, shall mean a person who,
at the time he exercises discretion in administering the Plan, has not at any
time within one (1) year prior thereto been granted or awarded selection as a
person to whom stock may be allocated or to whom stock options or stock
appreciation rights may be granted pursuant to the Plan or any other plan of
the Company or any of its affiliates entitling the participants therein to
acquire stock, stock options or stock appreciation rights of the Company or
any of its affiliates. The Administrator may delegate nondiscretionary
administrative
11
duties to such employees of the Company as it deems proper. Subject to the
provisions of the Plan, the Administrator shall have the sole authority, in
its discretion:
(a) to determine to which of the eligible individuals, and the time
or times at which, options to purchase Common Stock of the Company shall be
granted;
(b) to determine the number of shares of Common Stock to be subject
to options granted to each eligible individual;
(c) to determine the price to be paid for the shares of Common
Stock upon the exercise of each option;
(d) to determine the term and the exercise schedule of each option;
(e) to determine the terms and conditions of each stock option
agreement (which need not be identical) entered into between the Company and
any eligible individual to whom the Administrator has granted an option;
(f) to interpret the Plan;
(g) to accelerate the exercise date or schedule with respect to any
option granted under the Plan or, with the consent of the holder thereof, to
modify or amend any such option; and
(h) to make all determinations deemed necessary or advisable for
the administration of the Plan.
3. ELIGIBILITY. Every individual who at the date of grant is an employee
of the Company or of any parent or subsidiary of the Company (as defined in
Section 5.1(c) below) is eligible to receive incentive stock options and
nonstatutory stock options to purchase Common Stock under this Plan. The term
"employee" includes an officer or director who is an employee of the
Company or a parent or subsidiary of it, as well as a non-officer,
non-director employee of the Company or a parent or subsidiary of it. Every
individual who at the date of grant is a consultant to, or a non-employee
director of, the Company or of any affiliate of the Company (as defined in
Section 150 of California Corporations Code) is eligible to receive
nonstatutory stock options to purchase Common Stock under this Plan, but
shall not be eligible to receive incentive stock options. The term
"consultant" includes individuals employed by, or otherwise affiliated
with, a person providing consulting services to the Company. Notwithstanding
the above, neither A. Victor Farrow nor John O. Ryan shall be eligible to
receive any stock options under this Plan, and Eugene Eidenberg shall be
eligible to receive stock options under this Plan for eighty-three
12
thousand two hundred seventeen (83,217) shares (subject to adjustment as
provided in Section 7 hereof) only.
4. COMMON STOCK SUBIECT TO PLAN.
(a) There shall be reserved for issue upon the exercise of options
granted under the Plan one million seven hundred fifty thousand
(1,750,000) shares of Common Stock, subject to adjustment as provided
in Section 7 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 Section 4(a) above.
5. TERMS OF OPTIONS. Each option granted under the Plan shall be
evidenced by a 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 an incentive stock option, a
nonstatutory stock option or in part an incentive stock option and in part a
nonstatutory stock option. Each such agreement shall be subject to the terms
and conditions set forth in Section 5.1, and to such other terms and
conditions not inconsistent therewith as the Administrator may deem
appropriate in each case. Incentive stock options shall be subject also to
the terms and conditions set forth in Section 5.2.
5.1 TERMS AND CONDITIONS TO WHICH ALL OPTIONS ARE SUBJECT. All options
granted under this Plan shall be subject to the following terms and
conditions:
(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, and such period or periods may be amended
subsequently only by written mutual agreement of the Company (at the
direction of the Administrator) and the optionee. In no event shall
such period extend beyond ten (10) years from the date the option is
granted in the case of an incentive stock option or ten (10) years and
one (1) week from the date the option is granted in the case of a
nonstatutory stock option.
(b) EXERCISE PRICE. The price to be paid for each share of Common
Stock upon the exercise of an option shall be determined by the
Administrator at the time the option is granted, but shall in no event
be less than eighty-five percent (85%) in the case of a nonstatutory
stock option, and one hundred percent (100%) in the case of an
incentive stock option, of the fair market value of a share of Common
Stock on the date the option
13
is granted. For all purposes of this Plan,
the fair market value of the 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 mean of the closing bid and asked prices 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.
(c) MORE THAN TEN PERCENT SHAREHOLDERS. No option shall be granted to
any individual who, at the time such option would be granted, owns
stock possessing more than ten percent (10%) of the total combined
voting power of all classes of outstanding capital stock of the
Company, or of any parent corporation or subsidiary corporation of the
Company, unless the exercise price (as provided in Section 5.1(b)
hereof) is not less than one hundred percent (100%) in the case of a
nonstatutory stock option, one hundred ten percent (110%) in the case
of an incentive stock option, of the fair market value of the Common
Stock on the date the option is granted, and in the case of an
incentive stock option the period within which the option may be
exercised (as provided in Section 5.1(a) hereof) does not exceed five
(5) years from the date the option is granted. As used in this Plan,
the terms "parent corporation" and "subsidiary corporation" shall
have the meanings set forth in Sections 425(e) and (f), respectively,
of the Internal Revenue Code of 1986, as amended (the "Code"). For
purposes of this Section 5.1(c), in determining stock ownership, an
optionee shall be considered as owning the voting capital stock owned,
directly or indirectly, by or for his brothers and sisters, spouse,
ancestors and lineal descendants. Voting capital stock owned, directly
or indirectly, by or for a corporation, partnership, estate or trust
shall be considered as being owned proportionately by or for its
shareholders, partners or beneficiaries, as applicable. Common Stock
with respect to which any such optionee holds an option shall not be
counted. Additionally, for purposes of this Section 5.1(c), outstanding
capital stock shall include all capital stock actually issued and
outstanding immediately after the grant of the option to the optionee.
Outstanding capital stock shall not include capital stock authorized
for issue under outstanding options held by the optionee or by any
other person.
(d) METHOD OF PAYMENT FOR COMMON STOCK. The exercise price for each
share of Common Stock purchased under an option shall be paid in full
in cash at the time of purchase.
14
(e) NONTRANSFERABILITY. All options shall be nontransferable, except by
will or the laws of descent and distribution, and shall be exercisable
during the lifetime of the optionee only by the optionee.
(f) REPURCHASE OF STOCK. If provided in the stock option agreement, at
the discretion of the Administrator, the stock to be delivered pursuant
to the exercise of any option granted under this Plan may be subject to
a right of repurchase in favor of the Company with respect to any
optionee whose relationship with the Company is terminated. Such right
of repurchase shall be at the option exercise price and shall expire at
such time or times as set by the Administrator. Determination of the
number of shares subject to such right of repurchase shall be made as
of the date the optionee's relationship with the Company terminates.
(g) 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.
5.2 ADDITIONAL TERMS AND CONDITIONS TO WHICH INCENTIVE STOCK OPTIONS ARE
SUBIECT. Options granted under this Plan which are designated as incentive stock
options shall be subject to the following additional terms and conditions:
(a) ANNUAL LIMITATION. The aggregate fair market value (determined as
of the date an incentive stock option is granted) of the stock with
respect to which incentive stock options granted are exercisable for
the first time by an employee during any one (1) calendar year (under
this Plan and under all other incentive stock option plans of the
Company and of any parent or subsidiary corporation) shall not exceed
One Hundred Thousand Dollars ($100,000).
(b) DEATH. Upon the death of an employee, any incentive stock option
which such employee holds may be exercised, within such period after
the date of death as the Administrator shall prescribe in the stock
option agreement, by the employee's representative or by the person
entitled thereto under the employee's will or the laws of intestate
succession.
(c) DISABILITY. Upon the permanent and total disability of an employee
(as defined in Section 105(d)(4) of the Code), any incentive stock
option which the employee holds may be exercised by the employee within
such period after the date of termination of employment resulting from
such disability (not to exceed twelve (12) months) as the Administrator
shall prescribe in the stock option agreement. The option shall
terminate upon the expiration of such prescribed period, unless the
employee dies prior thereto, in which event the provisions of Section
5.2(b) hereof shall apply.
15
(d) RETIREMENT. Upon the voluntary retirement of an employee at or
after reaching sixty-five (65) years of age, an incentive stock option
may be exercised by such employee with respect to all or any portion of
the balance of the Common Stock subject thereto within such period
after the date of retirement (not to exceed three (3) months) as the
Administrator shall prescribe in the stock option agreement. The
option shall terminate upon the expiration of such prescribed period,
unless the employee dies prior thereto, in which event the provisions
of Section 5.2(b) hereof shall apply.
(e) TRANSFER TO RELATED CORPORATION. In the event that an employee
leaves the employ of the Company to become an employee of any parent or
subsidiary corporation of the Company, or if the employee leaves the
employ of any such parent or subsidiary corporation to become an
employee of the Company or of another parent or subsidiary corporation,
such employee shall be deemed to continue as an employee of the Company
for all purposes of this Plan.
(f) OTHER SEVERANCE. In the event an employee leaves the employ of the
Company for any reason other than as set forth in subsections (b)
through (e), above, any incentive stock option which such employee
holds may be exercised by such employee with respect to all or any
portion of the balance of the Common Stock subject thereto within such
period after the date of severance (not to exceed three (3) months) as
the Administrator shall prescribe in the stock option agreement.
(g) DISQUALIFYINQ DISPOSITIONS. If Common stock acquired by exercise of
an incentive stock option granted pursuant to this Plan is disposed of
within two (2) years from the date of grant of the option or within one
(1) year after the transfer of the Common Stock to the optionee, the
holder of the Common Stock immediately prior to the disposition shall
promptly notify the Company in writing of the date and terms of the
disposition and shall provide such other information regarding the
disposition as the Company may reasonably require.
6. STOCK ISSUANCE AND RIQHTS AS SHAREHOLDER. Notwithstanding any other
provisions of the Plan, no optionee shall have any of the rights of a
shareholder (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.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
16
(a) Subject to any required action by the Company's shareholders, the
number of shares of Common Stock covered by this Plan as provided in
Section 4, 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 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) Subject to any required action by the Company's shareholders, if
the Company shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain and apply to the
securities to which a holder of the number of shares subject to the
option would have been entitled. A dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not the
surviving corporation shall cause each outstanding option to terminate,
unless the surviving corporation in the case of a merger or
consolidation assumes outstanding options or replaces them with
substitute options having substantially similar terms and conditions;
provided, however, that if an outstanding option is to terminate upon
any such event, the Administrator on such terms and conditions as it
deems appropriate, shall provide either by the terms of the stock
option agreement or by a resolution adopted prior to the occurrence of
any such event, that, for some period of time prior to such event, such
option shall be exercisable as to all of the shares covered by the
portion of the option that previously has not lapsed, terminated, or
been exercised, notwithstanding any exercise schedule provided in the
stock option agreement.
(c) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive.
(d) Except as hereinabove expressly provided in this Section 7, 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
17
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.
8. 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 and the Securities Exchange Act of 1934; (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.
9. AMENDMENT. The Board may terminate the Plan or amend the Plan from time
to time in such respects as the Board may deem advisable, except that, without
the approval of the Company's shareholders in compliance with the requirements
of applicable law, no such revision or amendment shall:
(a) increase the number of shares of Common Stock reserved under
Section 4 hereof for issue under the Plan, except as provided in
Section 7 hereof;
(b) change the class of persons eligible to participate in the Plan
under Section 3 hereof;
(c) extend the term of the Plan under Section 10 hereof; or
(d) amend this Section 9 to defeat its purpose.
10. TERMINATION. The Plan shall terminate automatically on August 31,
1998, and may be terminated at any earlier date by the Board. No option shall
be granted hereunder after termination of the Plan, but such termination
shall not affect the validity of any option then outstanding.
11. 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.
18
12. 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.
13. EFFECTIVE DATE. This Plan was adopted by the Board of Directors of
the Company on September 9, 1988, and shall be effective on said date,
provided the Plan is approved within twelve (12) months of said date by the
shareholders of the Company in accordance with the requirements of the Code
and the California General Corporation Law. Options may be granted, but may
not be exercised, prior to the date of such shareholder approval.
14. COMPANY FINANCIAL INFORMATION. The Company shall provide all
optionees on an annual basis with the balance sheet and income statement for
the then ending financial year to the same extent such information is made
available to shareholders of the Company.
19
MACROVISION CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT
-------------------
(DATE OF GRANT)
MACROVISION CORPORATION, a California corporation (the "Company"),
does hereby grant to _____________ (the "Optionee") a non-transferable
option to purchase an aggregate of _______ shares of the Company's Common
Stock, without par value, at the price of _________________ ($_____) per
share, upon the following terms and conditions:
1. TERM OF OPTION. Notwithstanding any other provision of this
Agreement, the option granted hereby and all rights of the Optionee to
purchase Common Stock hereunder shall expire with respect to all of the
shares subject hereto on (10 YEARS) (the "Expiration Date"); provided,
however that this option shall be subject to termination prior to the
Expiration Date in accordance with the provisions of Sections 2, 4, and 10
hereof.
2. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, the option shall be exercisable in accordance with the following
schedule:
on or after
-------------- ----------------
The dates appearing in the above schedule refer to the earliest dates on
which the option may be exercised with respect to the number of shares set
forth therein, and the option may be exercised with respect to all or any
part of such shares at any time (prior to the Expiration Date or earlier
termination of this option) on or after such dates. The Optionee must be and
remain in the employ of the Company, or of any parent corporation or
subsidiary corporation of the Company (as defined in Internal Revenue Code
Sections 424(e) and (f), during the entire period commencing with the date of
grant of this option and ending with each of the dates appearing in the above
schedule in order to exercise the option with respect to the number of shares
set forth next to each such date.
3. ACCELERATED EXERCISE. The Company and University National Bank & Trust Company, Trustee (the "Purchaser") are parties to a Stock and
Convertible Note Purchase Agreement dated May 24, 1991 (the "Purchase
Agreement"). In the event that the Purchaser makes an offer pursuant to
Section 8.4 of the Purchase Agreement to purchase all of the shares of Common
Stock covered by the option granted hereby, then, notwithstanding Section 2
hereof, options granted hereunder that have not lapsed, terminated or been
exercised prior to the date of such offer shall be fully exercisable as of
the date such offer is made and may be exercised with respect to all or any
part of such shares at any time (prior to the Expiration Date or earlier
termination of this option) on or after such date.
4. RIGHTS ON TERMINATION OF EMPLOYMENT. If the Optionee ceases to be
an employee of the Company or of any affiliate of the Company prior to
exercise in full, lapse or termination of this option, the Optionee's right
to exercise this option, to the extent it is otherwise then exercisable
pursuant to Section 2 hereof, shall be limited in the following manner:
(a) DEATH. If the Optionee's employment is terminated by death, the
Optionee's estate shall have the right, for a period of twelve (12) months
following the date of the Optionee's death, to exercise the option to the
extent it was exercisable by the Optionee on the date of death. The
Optionee's estate shall mean the Optionee's legal representative upon death
or any person who acquires the right to exercise the option by reason of such
death under the Optionee's will or the laws of intestate succession.
(b) RETIREMENT. If the Optionee's employment is terminated by
voluntary retirement at or after reaching sixty-five (65) years of age, the
Optionee may, within three (3) months following such termination, exercise
the option to the extent it was exercisable by the Optionee on the date of
such termination. The option shall terminate upon the expiration of such
three (3) month period unless the Optionee dies prior thereto, in which event
the Optionee shall be treated as though the Optionee had died on the date of
retirement and the provisions of Section 4(a) shall apply.
(c) DISABILITY. If the Optionee's employment is terminated because of
a permanent and total disability (as defined in Internal Revenue Code Section
22 (e)(3)), the Optionee or the Optionee's estate may, within twelve (12)
months following such termination, exercise the option to the extent it was
exercisable by the Optionee on the date of such termination.
(d) OTHER TERMINATION. If the Optionee ceases to be an employee for
any reason other than those provided in subsections (a), (b) or (c) above,
the option shall terminate on the date the Optionee ceases to be an employee.
(e) TRANSFER TO RELATED CORPORATION. In the event the Optionee ceases
to be an employee of the Company in order to become an employee of any parent
or subsidiary corporation of the Company or if the Optionee leaves the employ
of any such parent or subsidiary corporation to become an employee of the
Company or of another parent or subsidiary corporation, the Optionee shall be
deemed to continue as an employee of the Company for all purposes of this
Agreement.
5. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Subject to any required action by the Company's shareholders, the
number of shares of Common Stock covered by the option granted hereby and the
exercise price thereof shall be proportionately adjusted for any increase or
decrease in
2
the number of issued shares of Common Stock resulting from a 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) Subject to any required action by the Company's shareholders, if
the Company shall be the surviving corporation in any merger or
consolidation, the option granted hereby shall pertain and apply to the
securities to which a holder of the number of shares subject to the
unexercised portion of this option would have been entitled. A dissolution
or liquidation of the Company or a merger or consolidation involving the
Company in which the Company is not the surviving corporation shall cause
this option to terminate on the effective date of any such event, unless the
surviving corporation in the case of a merger or consolidation assumes
outstanding options or replaces them with substitute options having
substantially similar terms and conditions. Notwithstanding Section 2
hereof, options granted hereunder that have not lapsed, terminated, or been
exercised prior to the date of dissolution or liquidation of the Company or
of a merger or consolidation involving the Company in which the Company is
not the surviving corporation shall be fully exercisable for a period of ten
(10) days prior to the effective date of any such liquidation, dissolution
merger or consolidation unless such options are assumed or substituted by the
continuing or surviving corporation.
(c) To the extent that the foregoing adjustments relate to stock or
securities of the company, such adjustments shall be made by the Company's
Board of Directors ("Board"), whose determination in that respect shall be
final, binding and conclusive. The Company agrees to give notice of any such
adjustment to the Optionee, provided, however, that any such adjustment shall
be effective and binding for all purpose hereof whether or not such notice is
given or received.
(d) Except as hereinabove expressly provided in this Section 5, the
Optionee shall have no 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 exercise price of shares
subject to the option granted hereunder.
(e) The grant of the option hereby shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or
3
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.
6. MANNER OF EXERCISE. The option granted hereby shall be exercised
by the Optionee by giving written notice to the Company, in substantially the
form attached hereto as Exhibit A, which notice shall specify the number of
shares of Common Stock which the Optionee elects to purchase. Additionally,
the Optionee shall execute and deliver an Investment Representation Letter,
in the form of Exhibit B attached hereto. Upon receipt of such notice of
exercise and of payment of the purchase price, the Company shall, as soon as
reasonably possible and subject to all other provisions hereof, deliver
certificates for the shares of Common Stock so purchased, registered in the
Optionee's name or in the name of his legal representative. Payment of the
purchase price upon any exercise of the option granted hereby shall be made
by check or in cash.
7. NON-TRANSFERABLE. During the lifetime of the Optionee, the option
granted to the Optionee hereunder shall be exercisable only by the Optionee
and shall not be transferable or assignable by the Optionee in whole or in
part otherwise than by will or the laws of descent and distribution. If the
Optionee shall make any purported transfer or assignment of the Optionee's
option hereunder, such assignment shall be null and void and of no force or
effect whatsoever and the Company shall have the right to terminate this
Agreement as of the date of any such purported transfer or assignment.
8. COMPLIANCE WITH SECURITIES AND OTHER LAWS. As a condition to the
exercise in whole or in part of the option granted hereby, each notice of
exercise shall include a representation by the purchaser that such purchaser
intends to acquire the shares of Common Stock specified therein for
investment, for such purchaser's own account and not with a view to, or for
sale in connection with, any distribution of such shares. The Company shall
not be obligated to deliver any shares of Common Stock hereunder for such
period as may reasonably be required for it to comply with any applicable
requirements of: (i) the Securities Act of 1933; (ii) the Securities
Exchange Act of 1934; (iii) applicable state securities laws; (iv) any
applicable listing requirement of any stock exchange on which the Company's
Common Stock is then listed; and (v) any other law or regulation applicable
to the issuance of such shares. Shares of Common Stock issued pursuant to
exercise of this option shall include the following legends and such other
legends as in the opinion of the Company's counsel may be required by the
securities laws of any state in which the Optionee resides:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION
THEREOF MAY BE MADE ONLY (i) IN A TRANSACTION REGISTERED UNDER SAID ACT OR
(ii) IF AN
4
EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE AND IS
ESTABLISHED TO THE SATISFACTION OF THE ISSUER.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATION OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
9. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in this
Agreement shall: (i) confer upon the Optionee any right with respect
to the continuance of employment by the Company or by any parent or
subsidiary corporation of the Company; or (ii) limit in any way the
right of the Company or of any parent or subsidiary corporation to
terminate the Optionee's employment at any time.
10. OPTION SUBJECT TO TERMS OF PLAN. In addition to the
provision hereof, this Agreement and the option granted hereby are
governed by, and subject to the terms and conditions of, the
Macrovision Corporation Stock Option Plan, as adopted effective
September 9, 1988, as amended (the "Plan"). The Optionee
acknowledges receipt of a copy of the Plan (a copy of which is attached
hereto as Exhibit C). The Optionee represents that he is familiar with
the terms and conditions of the Plan, and hereby accepts the option
granted hereby subject to all of the terms and conditions thereof,
which terms and conditions shall control to the extent inconsistent in
any respect with the provisions of this Agreement. The Optionee hereby
agrees to accept as binding, conclusive and final all decisions and
interpretations of the Board, or other administrator of the Plan, as to
any questions arising under the Plan or under this Agreement. This
Agreement, as supplemented by the Plan, shall bind and inure to the
benefit of the Company and its successors and assigns, and the Optionee
and the Optionee's estate in the event of death.
11. NOTICES. All notices and other communications of any kind
which either party to this Agreement may be required or may desire to
serve on the other party hereto in connection with this Agreement shall
be in writing and may be delivered by personal service or by registered
or certified mail, return receipt requested, deposited in the United
States mail with the postage thereon fully prepaid, addressed to the
parties at the addresses indicated on the signature page hereof.
Service of any such notice or other communication so made by mail shall
be deemed complete on the date of actual delivery as shown by the
addressee's registry or certification receipt or at the expiration of
the third (3rd) business day after the date of mailing, whichever is
earlier in time. Either party may from time to time by notice in
writing served upon the other as aforesaid, designate a different
mailing address or a different person to which such notices or other
communications are thereafter to be addressed or delivered.
5
12. WITHHOLDING AND EMPLOYMENT TAXES. Upon exercise of any
option granted hereunder, the Optionee shall remit to the Company in
cash the amount of any and all applicable federal and state withholding
and employment taxes.
13. INDEPENDENT TAX ADVICE. The Optionee agrees that Optionee
has or will obtain the advice of independent tax counsel regarding the
federal and state income tax consequences of the receipt and exercise
of the option granted hereby and of the disposition of Common Stock
acquired upon exercise hereof. The Optionee acknowledges that he has
not relied and will not rely upon any advice or representations by the
Company or by its employees or representatives with respect to the tax
treatment of options granted hereunder.
14. NOT INCENTIVE STOCK OPTION. This option shall not be
treated as an Incentive Stock Option.
Date of Grant
---------------
MACROVISION CORPORATION
1341 Orleans Drive
Sunnyvale, California 94089
By:
----------------------------
William A. Krepick, President
AGREED TO AND ACCEPTED:
-------------------------------
Optionee
-------------------------------
-------------------------------
(printed name and address)
6
EXHIBIT A
FORM OF NOTICE OF EXERCISE
OF MACROVISION CORPORATION
NONSTATUTORY STOCK OPTION
MACROVISION CORPORATION
1341 Orleans Drive
Sunnyvale, California 94089
Gentlemen:
I hereby exercise the right to purchase __________ shares of
Common Stock, without par value, of MACROVISION CORPORATION, under the
terms of the option granted to me on _____________________, 19____
pursuant to the Nonstatutory Stock Option Agreement, dated as of said
grant date. This exercise of said option and the purchase and delivery
of said shares shall be subject to all the terms and conditions of such
Nonstatutory Stock Option Agreement.
I enclose my check for $________________ in full payment of the
purchase price of said shares. Please register said shares in my name.
I hereby represent and agree that I am purchasing the shares for
my own account and not with a view to, or for sale in connection with,
any distribution of the shares, and that I will not sell the shares
without registration under the Securities Act of 1933 or an exemption
therefrom and in compliance with applicable state securities laws.
Dated: _______________________, 19____
------------------------------
(signature)
------------------------------
------------------------------
------------------------------
(print name and home address)
7
EXHIBIT B
INVESTMENT REPRESENTATION LETTER
Macrovision Corporation
1341 Orleans Drive
Sunnyvale, California 94089
Gentlemen:
In connection with the exercise by me of a stock option to purchase
____________ shares of the Common Stock (the "Shares") of Macrovision
Corporation (the "Company"), I hereby represent to you the following:
1. I understand that the Shares are highly speculative and that there
can be no assurance as to what return, if any, there may be on my investment.
I have evaluated the risks of making this investment in the Shares, have
determined that such investment is consistent with my investment objectives,
have the ability to bear the economic risk of such investment and can afford
a complete loss of the purchase price of the Shares.
2. I have made an informed, independent judgment with respect to the
desirability of purchasing the Shares from the Company. I have,
independently and without reliance upon the Company or any representations or
statements made by the Company or its representatives, made my own analysis
and decision to purchase the Shares. Neither the Company nor any of its
representatives have made any representations or warranties to me, and no
prior or future acts by the Company or its representatives shall be deemed to
constitute representations or warranties by the Company.
3. I am acquiring the Shares for my own account for investment purposes
only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as
amended (the "Act").
4. I understand that the Shares must be held INDEFINITELY unless
subsequently registered under the Act and qualified under applicable state
securities laws or unless an exemption from such registration and
qualification is applicable to any subsequent transfer. I hereby agree that
the Shares will not be sold without registration under the Act and
qualification under applicable state securities laws or exemption therefrom.
I understand that the Company has no present plans for registration or
qualification of the Shares and that it has no obligation to register or to
qualify the Shares for any future sale thereof by me.
8
5. I understand that the certificates evidencing the Shares to be held
by me will bear the legends set forth below and may bear certain additional
legends required under applicable state securities law:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION
THEREOF MAY BE MADE ONLY (i) IN A TRANSACTION REGISTERED UNDER SAID ACT
OR (ii) IF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE
AND IS ESTABLISHED TO THE SATISFACTION OF THE ISSUER.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
6. I further understand that there is no market for the Shares and
there may never be a market for the Shares, and that even if a market
develops for the Shares, as a result of the foregoing restrictions on
transfer and the representations and warranties hereunder, I may not be able
to sell or dispose of the Shares, and that I may thus have to bear the risk
of my investment in the Shares for a substantial period of time, or forever.
7. I acknowledge that no one is acting as my representative in this
purchase.
8. I agree that the Company may note upon its stock transfer records a
"stop transfer order" with respect to the Shares in order to enforce the
restrictions on transfer hereinabove described. I understand and agree that
any and all share certificates issued by the Company to me in connection with
the proposed purchase may bear the restrictive legends hereinabove described.
I further agree that the Company shall not be liable for any refusal to
transfer the Shares upon the books of the Company, except in compliance with
the terms and conditions of such restrictions.
9. I agree to indemnify and save and hold harmless the Company, its
successors and assigns, and their officers, directors and controlling
persons, if any, against any loss, claim, damage, liability, cost and expense
arising out of a breach by the undersigned of any of the foregoing
representations, warranties and covenants, whether under the Act, as the same
may be amended from time to time, the securities laws of any state, or
otherwise. Finally, I agree that the terms and conditions of this letter
shall also bind upon my heirs, assigns and legal representatives.
9
10. I am a resident of _______________________, County and am
purchasing the Shares in the State of California.
Executed this _______ day of __________________, 199__ at _____________
______________, California.
------------------------------
Signature
Address:
-------------------------------
-------------------------------
10
EXHIBIT C
MACROVISION CORPORATION
STOCK OPTION PLAN
As Adopted Effective September 9, 1988;
Amended September 22, 1988:
Amended September 13, 1990;
Amended and Restated February 6, 1992;
1. PURPOSE. The purpose of the MACROVISION CORPORATION STOCK OPTION PLAN
(the "Plan") is to grant to selected employees, directors, and consultants
of Macrovision Corporation, a California corporation (the "Company") and
its subsidiaries and affiliates, a favorable opportunity to acquire Common
Stock of the Company, thereby encouraging such persons to accept or continue
a qualifying relationship with the Company; increasing the interest of such
persons in the Company's welfare through participation in the growth and
value of the Common Stock; and furnishing such persons with an incentive to
improve operations and increase profits of the Company.
To accomplish the foregoing objectives, this Plan provides a means whereby
employees, directors, and consultants may receive options to purchase Common
Stock. Options granted under this Plan will be either nonstatutory stock
options (subject to federal income taxation upon exercise) or incentive stock
options (generally not subject to immediate federal income taxation upon
exercise).
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board"), or by a committee appointed by the
Board which shall not have less than two (2) members (in either case, the
"Administrator"). No option shall be granted to a director or officer of
the Company except (i) by the Board when all of its members are disinterested
persons, or (ii) by an Administrator other than the Board when the
Administrator is composed of two (2) or more directors having full authority
to act in the matter and each member of the Administrator is a disinterested
person. "Disinterested person", for this purpose, shall mean a person who,
at the time he exercises discretion in administering the Plan, has not at any
time within one (1) year prior thereto been granted or awarded selection as a
person to whom stock may be allocated or to whom stock options or stock
appreciation rights may be granted pursuant to the Plan or any other plan of
the Company or any of its affiliates entitling the participants therein to
acquire stock, stock options or stock appreciation rights of the Company or
any of its affiliates. The Administrator may delegate nondiscretionary
administrative
11
duties to such employees of the Company as it deems proper. Subject to the
provisions of the Plan, the Administrator shall have the sole authority, in
its discretion:
(a) to determine to which of the eligible individuals, and the time or
times at which, options to purchase Common Stock of the Company shall
be granted;
(b) to determine the number of shares of Common Stock to be subject to
options granted to each eligible individual;
(c) to determine the price to be paid for the shares of Common Stock
upon the exercise of each option;
(d) to determine the term and the exercise schedule of each option;
(e) to determine the terms and conditions of each stock option
agreement (which need not be identical) entered into between the
Company and any eligible individual to whom the Administrator has
granted an option;
(f) to interpret the Plan;
(g) to accelerate the exercise date or schedule with respect to any
option granted under the Plan or, with the consent of the holder
thereof, to modify or amend any such option; and
(h) to make all determinations deemed necessary or advisable for the
administration of the Plan.
3. ELIGIBILITY. Every individual who at the date of grant is an employee
of the Company or of any parent or subsidiary of the Company (as defined in
Section 5.1(c) below) is eligible to receive incentive stock options and
nonstatutory stock options to purchase Common Stock under this Plan. The term
"employee" includes an officer or director who is an employee of the
Company or a parent or subsidiary of it, as well as a non-officer,
non-director employee of the Company or a parent or subsidiary of it. Every
individual who at the date of grant is a consultant to, or a non-employee
director of, the Company or of any affiliate of the Company (as defined in
Section 150 of California Corporations Code) is eligible to receive
nonstatutory stock options to purchase Common Stock under this Plan, but
shall not be eligible to receive incentive stock options. The term
"consultant" includes individuals employed by, or otherwise affiliated
with, a person providing consulting services to the Company. Notwithstanding
the above, neither A. Victor Farrow nor John O. Ryan shall be eligible to
receive any stock options under this Plan, and Eugene Eidenberg shall be
eligible to receive stock options under this Plan for eighty-three thousand
two hundred seventeen (83,217) shares (subject to adjustment as provided in
Section 7 hereof) only.
12
4. COMMON STOCK SUBIECT TO PLAN.
(a) There shall be reserved for issue upon the exercise of options
granted under the Plan one million seven hundred fifty thousand
(1,750,000) shares of Common Stock, subject to adjustment as provided
in Section 7 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 Section 4(a) above.
5. TERMS OF OPTIONS. Each option granted under the Plan shall be
evidenced by a 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 an incentive stock option, a
nonstatutory stock option or in part an incentive stock option and in part a
nonstatutory stock option. Each such agreement shall be subject to the terms
and conditions set forth in Section 5.1, and to such other terms and
conditions not inconsistent therewith as the Administrator may deem
appropriate in each case. Incentive stock options shall be subject also to
the terms and conditions set forth in Section 5.2.
5.1 TERMS AND CONDITIONS TO WHICH ALL OPTIONS ARE SUBJECT. All options
granted under this Plan shall be subject to the following terms and
conditions:
(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, and such period or periods may be amended
subsequently only by written mutual agreement of the Company (at the
direction of the Administrator) and the optionee. In no event shall
such period extend beyond ten (10) years from the date the option is
granted in the case of an incentive stock option or ten (10) years and
one (1) week from the date the option is granted in the case of a
nonstatutory stock option.
(b) EXERCISE PRICE. The price to be paid for each share of Common Stock
upon the exercise of an option shall be determined by the Administrator
at the time the option is granted, but shall in no event be less than
eighty-five percent (85%) in the case of a nonstatutory stock option,
and one hundred percent (100%) in the case of an incentive stock
option, of the fair market value of a share of Common Stock on the date
the option is granted. For all purposes of this Plan, the fair market
value of the 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
13
market value of the Common Stock on such date shall be the mean of the
closing bid and asked prices 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.
(c) MORE THAN TEN PERCENT SHAREHOLDERS. No option shall be granted to
any individual who, at the time such option would be granted, owns
stock possessing more than ten percent (10%) of the total combined
voting power of all classes of outstanding capital stock of the
Company, or of any parent corporation or subsidiary corporation of the
Company, unless the exercise price (as provided in Section 5.1(b)
hereof) is not less than one hundred percent (100%) in the case of a
nonstatutory stock option, one hundred ten percent (110%) in the case
of an incentive stock option, of the fair market value of the Common
Stock on the date the option is granted, and in the case of an
incentive stock option the period within which the option may be
exercised (as provided in Section 5.1(a) hereof) does not exceed five
(5) years from the date the option is granted. As used in this Plan,
the terms "parent corporation" and "subsidiary corporation" shall
have the meanings set forth in Sections 425(e) and (f), respectively,
of the Internal Revenue Code of 1986, as amended (the "Code"). For
purposes of this Section 5.1(c), in determining stock ownership, an
optionee shall be considered as owning the voting capital stock owned,
directly or indirectly, by or for his brothers and sisters, spouse,
ancestors and lineal descendants. Voting capital stock owned, directly
or indirectly, by or for a corporation, partnership, estate or trust
shall be considered as being owned proportionately by or for its
shareholders, partners or beneficiaries, as applicable. Common Stock
with respect to which any such optionee holds an option shall not be
counted. Additionally, for purposes of this Section 5.1(c), outstanding
capital stock shall include all capital stock actually issued and
outstanding immediately after the grant of the option to the optionee.
Outstanding capital stock shall not include capital stock authorized
for issue under outstanding options held by the optionee or by any
other person.
(d) METHOD OF PAYMENT FOR COMMON STOCK. The exercise price for each
share of Common Stock purchased under an option shall be paid in full
in cash at the time of purchase.
(e) NONTRANSFERABILITY. All options shall be nontransferable, except by
will or the laws of descent and distribution, and shall be exercisable
during the lifetime of the optionee only by the optionee.
(f) REPURCHASE OF STOCK. If provided in the stock option agreement, at
the discretion of the Administrator, the stock to be delivered pursuant
to the exercise of any option granted under this Plan may be subject to
a right of repurchase in favor of the Company
14
with respect to any optionee whose relationship with the Company is
terminated. Such right of repurchase shall be at the option exercise
price and shall expire at such time or times as set by the
Administrator. Determination of the number of shares subject to such
right of repurchase shall be made as of the date the Optionee's
relationship with the Company terminates.
(g) 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.
5.2 ADDITIONAL TERMS AND CONDITIONS TO WHICH INCENTIVE STOCK OPTIONS ARE
SUBIECT. Options granted under this Plan which are designated as incentive stock
options shall be subject to the following additional terms and conditions:
(a) ANNUAL LIMITATION. The aggregate fair market value (determined as
of the date an incentive stock option is granted) of the stock with
respect to which incentive stock options granted are exercisable for
the first time by an employee during any one (1) calendar year (under
this Plan and under all other incentive stock option plans of the
Company and of any parent or subsidiary corporation) shall not exceed
One Hundred Thousand Dollars ($100,000).
(b) DEATH. Upon the death of an employee, any incentive stock option
which such employee holds may be exercised, within such period after
the date of death as the Administrator shall prescribe in the stock
option agreement, by the employee's representative or by the person
entitled thereto under the employee's will or the laws of intestate
succession.
(c) DISABILITY. Upon the permanent and total disability of an employee
(as defined in Section 105(d)(4) of the Code), any incentive stock
option which the employee holds may be exercised by the employee within
such period after the date of termination of employment resulting from
such disability (not to exceed twelve (12) months) as the Administrator
shall prescribe in the stock option agreement. The option shall
terminate upon the expiration of such prescribed period, unless the
employee dies prior thereto, in which event the provisions of Section
5.2(b) hereof shall apply.
(d) RETIREMENT. Upon the voluntary retirement of an employee at or
after reaching sixty-five (65) years of age, an incentive stock option
may be exercised by such employee with respect to all or any portion of
the balance of the Common Stock subject thereto within such period
after the date of retirement (not to exceed three (3) months) as the
Administrator shall prescribe in the stock option agreement. The
option shall terminate upon the expiration of such prescribed period,
unless the employee dies prior thereto, in which event the provisions
of Section 5.2(b) hereof shall apply.
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(e) TRANSFER TO RELATED CORPORATION. In the event that an employee
leaves the employ of the Company to become an employee of any parent or
subsidiary corporation of the Company, or if the employee leaves the
employ of any such parent or subsidiary corporation to become an
employee of the Company or of another parent or subsidiary corporation,
such employee shall be deemed to continue as an employee of the Company
for all purposes of this Plan.
(f) OTHER SEVERANCE. In the event an employee leaves the employ of the
Company for any reason other than as set forth in subsections (b)
through (e), above, any incentive stock option which such employee
holds may be exercised by such employee with respect to all or any
portion of the balance of the Common Stock subject thereto within such
period after the date of severance (not to exceed three (3) months) as
the Administrator shall prescribe in the stock option agreement.
(g) DISQUALIFYINQ DISPOSITIONS. If Common stock acquired by exercise of
an incentive stock option granted pursuant to this Plan is disposed of
within two (2) years from the date of grant of the option or within one
(1) year after the transfer of the Common Stock to the optionee, the
holder of the Common Stock immediately prior to the disposition shall
promptly notify the Company in writing of the date and terms of the
disposition and shall provide such other information regarding the
disposition as the Company may reasonably require.
6. STOCK ISSUANCE AND RIQHTS AS SHAREHOLDER. Notwithstanding any other
provisions of the Plan, no optionee shall have any of the rights of a
shareholder (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.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Subject to any required action by the Company's shareholders, the
number of shares of Common Stock covered by this Plan as provided in
Section 4, 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 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."
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(b) Subject to any required action by the Company's shareholders, if
the Company shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain and apply to the
securities to which a holder of the number of shares subject to the
option would have been entitled. A dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not the
surviving corporation shall cause each outstanding option to terminate,
unless the surviving corporation in the case of a merger or
consolidation assumes outstanding options or replaces them with
substitute options having substantially similar terms and conditions;
provided, however, that if an outstanding option is to terminate upon
any such event, the Administrator on such terms and conditions as it
deems appropriate, shall provide either by the terms of the stock
option agreement or by a resolution adopted prior to the occurrence of
any such event, that, for some period of time prior to such event, such
option shall be exercisable as to all of the shares covered by the
portion of the option that previously has not lapsed, terminated, or
been exercised, notwithstanding any exercise schedule provided in the
stock option agreement.
(c) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive.
(d) Except as hereinabove expressly provided in this Section 7, 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.
8. 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.
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(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 and the Securities Exchange Act of
1934; (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.
9. AMENDMENT. The Board may terminate the Plan or amend the Plan from time
to time in such respects as the Board may deem advisable, except that, without
the approval of the Company's shareholders in compliance with the requirements
of applicable law, no such revision or amendment shall:
(a) increase the number of shares of Common Stock reserved under
Section 4 hereof for issue under the Plan, except as provided in
Section 7 hereof;
(b) change the class of persons eligible to participate in the Plan
under Section 3 hereof;
(c) extend the term of the Plan under Section 10 hereof; or
(d) amend this Section 9 to defeat its purpose.
10. TERMINATION. The Plan shall terminate automatically on August 31,
1998, and may be terminated at any earlier date by the Board. No option shall
be granted hereunder after termination of the Plan, but such termination
shall not affect the validity of any option then outstanding.
11. 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.
12. 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.
13. EFFECTIVE DATE. This Plan was adopted by the Board of Directors of
the Company on September 9, 1988, and shall be effective on said date,
provided the Plan is approved within twelve (12) months of said date by the
shareholders of the Company in accordance with the requirements of the Code
and the California General Corporation Law. Options may be granted, but may
not be exercised, prior to the date of such shareholder approval.
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14. COMPANY FINANCIAL INFORMATION. The Company shall provide all
Optionees on an annual basis with the balance sheet and income statement for
the then ending financial year to the same extent such information is made
available to shareholders of the Company.
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