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EXHIBIT 99.2
DATAWORKS CORPORATION
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED SEPTEMBER 13, 1995
AS AMENDED MAY 23, 1996, APRIL 17, 1997 AND JANUARY 27, 1998
1. PURPOSE.
(A) The purpose of the 1995 Non-Employee Directors' Stock Option Plan
(the "Plan") is to provide a means by which certain directors of DataWorks
Corporation (the "Company") who are not otherwise employees of the Company or of
any Affiliate of the Company (a "Non-Employee Director") will be given an
opportunity to purchase stock of the Company.
(B) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(C) The Company, by means of the Plan, seeks to retain the services of
certain persons now serving as Non-Employee Directors of the Company, to secure
and retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
2. ADMINISTRATION.
(A) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(b).
(B) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(A) Subject to the provisions of paragraph 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate three hundred thousand
(300,000) shares of the Company's common stock. If any option granted under the
Plan shall for any reason expire or otherwise terminate without having been
exercised in full, the stock not purchased under such option shall again become
available for the Plan.
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(B) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY.
(A) Options shall be granted only to Non-Employee Directors of the
Company who are Eligible Directors, as defined in subparagraph 4(b).
(B) Notwithstanding any other provision hereof, "Eligible Directors"
shall mean all Non-Employee Directors of the Company serving as members of the
Board from time to time after the effectiveness of the Company's initial public
offering of common stock (the "Effective Date"); provided, however, that any
Non-Employee Director whose membership on the Board commenced prior to the
Effective Date pursuant to a capital investment in the Company by an entity
which such Non-Employee Director represents shall become an Eligible Director
only if and when he or she is elected as a Non-Employee Director by the
shareholders of the Company after the Effective Date, which shall be treated as
such person's initial election to be a Non-Employee Director for purposes of the
Plan (including, but not limited to subparagraph 5(a) hereof).
5. NON-DISCRETIONARY GRANTS.
(A) Each person who, after the Effective Date, for the first time
becomes an Eligible Director automatically shall be granted, upon the date of
his or her initial election to be a Non-Employee Director by the Board or
shareholders of the Company, an option to purchase twenty thousand (20,000)
shares of common stock of the Company on the terms and conditions set forth
herein.
(B) On the date of each annual meeting of the shareholders of the
Company after the Effective Date, each person who is then an Eligible Director
and continues on the Board thereafter (other than a person who receives a grant
under subparagraph 5(a) on such date) automatically shall be granted an option
to purchase five thousand (5,000) shares of common stock of the Company on the
terms and conditions set forth herein.
(C) In addition to the foregoing, on the date of the 1998 annual
meeting of the shareholders of the Company, each person who is then an Eligible
Director and continues on the Board thereafter (other than a person who receives
a grant under subparagraph 5(a) on such date) automatically shall be granted an
option to purchase ten thousand (10,000) shares of common stock of the Company
on the terms and conditions set forth herein.
6. OPTION PROVISIONS.
Each option shall be subject to the following terms and conditions:
(A) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ten (10) years
from the date of grant (the "Expiration Date"). If the optionee's service as a
Non-Employee Director or employee of or consultant to the Company or any
Affiliate terminates for any reason or for no reason, the option shall terminate
on the earlier of the Expiration Date or the date twelve (12) months following
the
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date of termination of all such service; provided, however, that if such
termination of service is due to the optionee's death, the option shall
terminate on the earlier of the Expiration Date or eighteen (18) months
following the date of the optionee's death. In any and all circumstances, an
option may be exercised following termination of the optionee's service as a
Non-Employee Director or employee of or consultant to the Company or any
Affiliate only as to that number of shares as to which it was exercisable under
the provisions of subparagraph 6(e) on the date of termination of all such
service.
(B) The exercise price of each option shall be one hundred percent
(100%) of the fair market value of the stock subject to such option on the date
such option is granted.
(C) The optionee may elect to make payment of the exercise price under
one of the following alternatives:
(I) In cash (or check) at the time of exercise;
(II) Provided that at the time of exercise the Company's common
stock is publicly traded and quoted regularly in The Wall Street Journal,
payment by delivery of shares of common stock of the Company already owned by
the optionee, held for the period required to avoid a charge to the Company's
reported earnings, and owned free and clear of any liens, claims, encumbrances
or security interest, which common stock shall be valued at its Fair Market
Value on the date immediately preceding the date of exercise;
(III) Provided that at the time of exercise the Company's common
stock is publicly traded and quoted regularly in The Wall Street Journal,
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash (or check) by the Company
either prior to the issuance of the shares of the Company's common stock or
pursuant to the terms of irrevocable instructions issued by the optionee prior
to the issuance of shares of the Company's common stock;
(IV) Payment by a combination of the methods of payment specified
in subparagraphs 6(c)(i) through 6(c)(iii) above.
(D) An option shall be transferable only to the extent specifically
provided in the option agreement; provided, however, that if the option
agreement does not specifically provide for the transferability of an option,
then the option shall not be transferable except by will or by the laws of
descent and distribution, or pursuant to a domestic relations order, and shall
be exercisable during the lifetime of the person to whom the option is granted
only by such person (or by his or her guardian or legal representative) or
transferee pursuant to such an order. Notwithstanding the foregoing, the
optionee may, by delivering written notice to the Company in a form satisfactory
to the Company, designate a third party who, in the event of the death of the
optionee, shall thereafter be entitled to exercise the option.
(E) The option shall become exercisable in installments over a period
of three years from the date of grant as follows: one twelfth (1/12) of the
shares shall vest on the date three months after the date of grant and one
thirty-sixth (1/36) of the shares shall vest each month thereafter, provided
that the optionee has, during the entire period prior to such vesting date,
continuously served as a Non-Employee Director or employee of or consultant to
the Company
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or any Affiliate of the Company, whereupon such option shall become fully
exercisable in accordance with its terms with respect to that portion of the
shares represented by that installment.
(F) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising any
such option: (i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then-currently-effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii), as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then-applicable securities laws.
(G) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.
7. COVENANTS OF THE COMPANY.
(A) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(B) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
9. MISCELLANEOUS.
(A) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
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(B) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Eligible Director any right to continue in the service of
the Company or any Affiliate or shall affect any right of the Company, its Board
or shareholders or any Affiliate to terminate the service of any Eligible
Director with or without cause.
(C) No Eligible Director, individually or as a member of a group, and
no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of common stock, if any, as shall have been
reserved for him pursuant to an option granted to him.
(D) In connection with each option granted pursuant to the Plan, it
shall be a condition precedent to the Company's obligation to issue or transfer
shares to an Eligible Director, or to evidence the removal or lapse of any
restrictions on transfer, that such Eligible Director make arrangements
satisfactory to the Company to insure that the amount of any federal or other
withholding tax required to be withheld with respect to such sale or transfer,
or such removal or lapse, is made available to the Company for timely payment of
such tax.
(E) As used in this Plan, "fair market value" means, as of any date,
the value of the common stock of the Company determined as follows:
(I) If the common stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market, the fair market value of a share of common stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in common stock) on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable;
(II) If the common stock is quoted on Nasdaq (but not on the
National Market thereof) or is regularly quoted by a recognized securities
dealer but selling prices are not reported, the fair market value of a share of
common stock shall be the mean between the bid and asked prices for the common
stock on the last market trading day prior to the day of determination, as
reported in the Wall Street Journal or such other source as the Board deems
reliable;
(III) In the absence of an established market for the common stock,
the fair market value shall be determined in good faith by the Board.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(A) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding options will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding options. Such adjustments shall be made by the Board, the
determination of which shall be final, binding and conclusive.
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(The conversion of any convertible securities of the Company shall not be
treated as a "transaction not involving the receipt of consideration by the
Company.")
(B) In the event of: (1) a merger or consolidation in which the Company
is not the surviving corporation, (2) a reverse merger in which the Company is
the surviving corporation but the shares of the Company's common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, (3) a sale of all or substantially all of the Company's assets, (4)
any other capital reorganization in which the beneficial ownership of more than
fifty percent (50%) of the shares of the Company entitled to vote changes, or
(5) the acquisition by any person, entity or group (excluding any employee
benefit plan, or related trust, sponsored or maintained by the Company or any
subsidiary of the Company) of the beneficial ownership, directly or indirectly,
of securities of the Company representing more than fifty percent (50%) of the
combined voting in the election of directors of the Company, then the time
during which options outstanding under the Plan may be exercised shall be
accelerated to permit the optionee to exercise all such options in full prior to
such event, and the options shall terminate if not exercised prior to such
event.
11. AMENDMENT OF THE PLAN.
(A) The Board at any time, and from time to time, may amend the Plan
and/or some or all outstanding options granted under the Plan. Except as
provided in paragraph 10 relating to adjustments upon changes in stock, no
amendment shall be effective unless approved by the shareholders of the Company
within twelve (12) months before or after the adoption of the amendment, where
the amendment will:
(I) Increase the number of shares which may be issued under the
Plan; or
(II) Modify the Plan in any other way if such modification requires
shareholder approval in order for the Plan to comply with the requirements of
Section 162(m) of the Code. (B) Rights and obligations under any option granted
before any amendment of the Plan shall not be impaired by such amendment unless
(i) the Company requests the consent of the person to whom the option was
granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(A) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on the date that is ten years after
the Effective Date. No options may be granted under the Plan while the Plan is
suspended or after it is terminated.
(B) Rights and obligations under any option granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom the option was granted.
(C) The Plan shall terminate upon the occurrence of any of the events
described in Section 10(b) above.
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13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(A) The Plan shall become effective on the Effective Date (as defined
in subparagraph 4(b)), subject to the condition that the Plan be approved by the
shareholders of the Company.
(B) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.
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