Exhibit 10.1
BLUESTONE SOFTWARE, INC.
1996 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
AS AMENDED AND RESTATED EFFECTIVE MARCH 11, 1999
TABLE OF CONTENTS
Page
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Section 1. Name and Purposes................................................................................... 1
Section 2. Definitions......................................................................................... 1
Section 3. Administration...................................................................................... 5
Section 4. Eligibility......................................................................................... 7
Section 5. Stock Subject to the Plan........................................................................... 7
Section 6. Terms and Conditions of Options..................................................................... 8
Section 7. Fair Market Value of Common Stock................................................................... 11
Section 8. Adjustments......................................................................................... 12
Section 9. Rights as a Stockholder............................................................................. 12
Section 10. Forfeiture.......................................................................................... 12
Section 11. Time of Granting Options............................................................................ 13
Section 12. Modification, Extension, Renewal of Option.......................................................... 13
Section 13. Transferability..................................................................................... 13
Section 14. Power of Board if Change of Control................................................................. 13
Section 15. Amendment or Termination of the Plan................................................................ 14
Section 16. Application of Funds................................................................................ 14
Section 17. No Obligation to Exercise Option.................................................................... 14
Section 18. Approval of Stockholders............................................................................ 14
Section 19. Conditions Upon Issuance of Shares.................................................................. 15
Section 20. Reservation of Shares............................................................................... 15
Section 21. Other Agreements.................................................................................... 16
Section 22. Taxes, Fees, Expenses and Withholding.............................................................. 16
Section 23. Notices............................................................................................ 16
Section 24. No Enlargement of Employee Rights.................................................................. 17
Section 25. Information to Optionees........................................................................... 17
Section 26. Availability of Plan............................................................................... 17
Section 27. Invalid Provisions................................................................................. 17
Section 28. Applicable Law..................................................................................... 17
Section 29. Board Action....................................................................................... 18
Section 30. Miscellaneous...................................................................................... 18
INCENTIVE STOCK OPTION AGREEMENT............................................................................ TAB 1
NON-QUALIFIED STOCK OPTION AGREEMENT......................................................................... TAB 2
STOCK PURCHASE AND RESTRICTION AGREEMENT..................................................................... TAB 3
BLUESTONE SOFTWARE, INC.
1996 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
Section 1. NAME AND PURPOSES OF THE PLAN.
(a) NAME. The Plan will be known as the Bluestone Software,
Inc. 1996 Incentive and Non-Qualified Stock Option Plan. The Plan was formerly
known as the Bluestone Consulting, Inc. 1996 Incentive and Non-Qualified Stock
Option Plan, but pursuant to a corporate transaction in which Bluestone
Consulting, Inc., a New Jersey corporation, merged into Bluestone Software,
Inc., a Delaware corporation, Bluestone Software, Inc. became the successor
sponsor of the Plan.
(b) PURPOSES. The purpose of the Plan is to provide key
Employees and Consultants with an opportunity to share in the capital
appreciation of the Common Stock of the Company. The Options granted pursuant to
the Plan are intended to constitute either Incentive Stock Options or
Non-Qualified Stock Options, as determined by the Administrator of the Plan at
the time of grant.
Section 2. DEFINITIONS. As used herein, the following
definitions shall apply:
(a) "ADMINISTRATOR" shall be the Board or a Committee
appointed by the Board pursuant to Section 3 of the Plan, which shall administer
the Plan.
(b) "AFFILIATE" shall mean, whether now or hereafter existing,
a person or entity that directly, or indirectly controls or is controlled by, or
is under common control with, the Company, except that when used in connection
with an Incentive Stock Option, "Affiliate" shall mean a Subsidiary.
(c) "BCI" shall mean Bluestone Consulting, Inc., a Delaware
corporation, that was spun off from the Company on April 17, 1997.
(d) "BOARD" shall mean the Board of Directors of the Company,
as constituted from time to time.
(e) "CHANGE OF CONTROL" shall mean the happening of an event
(excluding a Public Offering) that shall be deemed to have occurred upon the
earliest to occur of the following events:
(i) the date the stockholders of the Company (or
the Board, if stockholder action is not
required) approve a plan or other
arrangement pursuant to which the Company
will be dissolved or liquidated;
(ii) the date the stockholders of the Company (or
the Board, if stockholder action is not
required) approve a definitive agreement to
sell or otherwise dispose of all or
substantially all of the assets of the
Company, or
(iii) the date the stockholders of the Company (or
the Board, if stockholder action is not
required) and the stockholders of the other
constituent corporations (or their
respective boards of directors, if and to
the extent that stockholder action is not
required) have approved a definitive
agreement to merge or consolidate the
Company with or into another corporation,
other than, in either case, a merger or
consolidation of the Company in which
holders of shares of the Company's voting
capital stock immediately prior to the
merger or consolidation will have at least
fifty percent (50%) of the ownership of
voting capital stock of the surviving
corporation immediately after the merger or
consolidation (on a fully diluted basis),
which voting capital stock is to be held in
the same proportion (on a fully diluted
basis) as such holders' ownership of voting
capital stock of the Company immediately
before the merger or consolidation, or
(iv) the date any entity, person or group (within
the meaning of Section 13(d)(3) or Section
14(d)(2) of the Exchange Act), other than
(A) the Company, (B) any of its
Subsidiaries, (C) any of the holders of the
capital stock of the Company, as determined
on the date that this Plan is adopted by the
Board, (D) any employee benefit plan (or
related trust) sponsored or maintained by
the Company or any of its Subsidiaries or
(E) any Affiliate of any of the foregoing,
shall have acquired beneficial ownership of,
or shall have acquired voting control over
more than fifty percent (50%) of the
outstanding shares of the Company's voting
capital stock (on a fully diluted basis),
unless the transaction pursuant to which
such person, entity or group acquired such
beneficial ownership or control resulted
from the original issuance by the Company of
shares of its voting capital stock and was
approved by at least a majority of directors
who shall have been members of the Board for
at least twelve (12) months prior to the
date of such approval, or
(v) the first day after the date of this Plan
when directors are elected such that there
shall have been a change in the composition
of the Board such that a majority of the
Board shall have been members of the Board
for less than twelve (12) months, unless the
nomination for election of each new director
who was not a director at the beginning of
such twelve (12) month period was
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approved by a vote of at least sixty percent
(60%) of the directors then still in office
who were directors at the beginning of such
period, or
(vi) the date upon which the Board determines (in
its sole discretion) that based on then
current available information, the events
described in clause (iv) are reasonably
likely to occur.
(f) "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(g) "COMMITTEE" shall mean the Committee appointed by the
Board in accordance with Section 3(a) of the Plan, if one is appointed, in which
event the Committee shall possess the power and authority of the Board with
respect to the Plan as set forth in section 3(b) of the Plan.
(h) "COMMON STOCK" shall mean the common stock of the Company,
$.001 par value per share.
(i) "COMPANY" shall mean BLUESTONE SOFTWARE, INC., a Delaware
corporation, formerly known as Bluestone Consulting, Inc., a New Jersey
corporation, and any successor in interest that agrees to assume and maintain
the Plan.
(j) "CONSULTANT" shall mean (i) any person associated with the
Company who is engaged by the Company to render services and is compensated by
the Company for such services, including but not limited to, an advisor or
independent contractor; (ii) any director of the Company whether or not
compensated for such services in his capacity as a director; and (iii) solely
for purposes of the Plan, any person employed by BCI or any other company so
designated by the Board.
(k) "DISABILITY" or "DISABLED" with respect to an Optionee
shall mean (i) when the Optionee is determined to be disabled within the meaning
of any long-term disability policy or program sponsored by the Company or BCI
covering the Optionee, as in effect as of the date of such determination, or
(ii) if no such policy or program shall be in effect, when the Optionee is
unable to engage in any substantial gainful activity by reason of a physical or
mental impairment that can be expected to result in death or that has lasted or
can be expected to last for a continuous period of not less than twelve (12)
months. The determination of whether an Optionee is Disabled pursuant to
subparagraph (ii) shall be determined by the Board of Directors, whose
determination shall be conclusive; provided that, (iii) if an Optionee is bound
by the terms of an employment agreement between the Optionee and the Company or
Optionee and BCI, whether the Optionee is "Disabled" for purposes of the Plan
shall be determined in accordance with the procedures set forth in said
employment agreement, if such procedures are therein provided; and (iv) an
Optionee bound by such an employment agreement shall not be determined to be
Disabled under the Plan any earlier than he or she would be determined to be
disabled under his or her employment agreement.
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(l) "EMPLOYEE" shall mean any person, including but not
limited to, officers and directors, employed by the Company or any Subsidiary of
the Company. The payment of directors' fees by the Company shall not be
sufficient to constitute "employment" by the Company.
(m) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
(n) "FAIR MARKET VALUE" shall mean, as of any date, the fair
market value of a share of Common Stock as determined pursuant to Section 7
hereof.
(o) "INCENTIVE STOCK OPTION" shall mean any Option that is
intended to be and is designated as an Incentive Stock Option within the meaning
of Section 422 of the Code.
(p) "NON-EMPLOYEE DIRECTOR" shall have the meaning set forth
in Rule 16b- 3(b)(3)(i) promulgated by the Securities and Exchange Commission
under the Exchange Act, or any successor definition adopted by the Securities
and Exchange Commission; provided, however, that the Administrator may, in its
sole discretion, determine from time to time whether the rules and regulations
under Section 162(m) of the Code shall apply for purposes of determining which
individuals are "Non-Employee Directors."
(q) "NON-QUALIFIED STOCK OPTION" shall mean any Option that is
not intended to qualify as an Incentive Stock Option.
(r) "OPTION" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option as the case may be, granted pursuant to the Plan.
(s) "OPTION AGREEMENT" shall mean the written agreement by and
between the Company and an Optionee under which Optionee may purchase the Shares
pursuant to the exercise of an Option.
(t) "OPTIONEE" shall mean an Employee or Consultant to whom an
Option is granted.
(u) "PLAN" shall mean this Bluestone Software, Inc. 1996
Incentive and NonQualified Stock Option Plan, as amended from time to time.
(v) "PUBLIC OFFERING" shall mean the consummation of a firm
commitment underwritten public offering of equity securities of the Company
registered under the Securities Act.
(w) "SALE OF THE COMPANY" shall mean the earliest of: (i) the
closing of a sale, transfer or other disposition of all or substantially all of
the shares of the capital stock then outstanding of the Company (except if such
transferee is then an Affiliate); (ii) the closing of a sale, transfer or other
disposition of all or substantially all of the assets of the Company (except if
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such transferee is then an Affiliate); or (iii) the merger or consolidation of
the Company with or into another corporation (except an Affiliate), other than a
merger or consolidation of the Company in which the holders of shares of the
Company's voting capital stock outstanding immediately before such merger or
consolidation hold greater than fifty percent (50%) of the surviving entity's
voting capital stock after such consolidation or merger.
(x) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(y) "SECURITIES BROKER" means a registered securities broker
acceptable to the Board who agrees to effect the cashless exercise of an Option.
(z) "SHARE" or "SHARES" shall mean a share or shares of Common
Stock, as adjusted in accordance with Section 8 of the Plan, that is allocated
to the Plan.
(aa) "STOCK PURCHASE AND RESTRICTION AGREEMENT" shall mean an
agreement in such form or forms as the Board (subject to the terms and
conditions of this Plan) may from time to time approve, which an Optionee shall
be required to execute as a condition of purchasing Shares upon the exercise of
an Option.
(bb) "SUBSIDIARY" shall mean, whether now or hereafter
existing, a subsidiary or parent corporation of the Company as such term is
defined in Sections 424(e), (f) and (g) of the Code.
(cc) "TRANSFER" or "TRANSFERRED" shall mean the transfer of
employment or other engagement from the Company to BCI, or from BCI to the
Company.
Section 3. ADMINISTRATION.
(a) PROCEDURE. The Plan shall be administered by the Board or
a Committee consisting of not less than two persons appointed by the Board (in
either case, the "Administrator"). Members of the Board or the Committee who are
eligible for Options or who have been granted Options may vote on any matters
affecting the administration of the Plan or the grant of any Options pursuant to
the Plan, except that no such member shall act upon the granting of an Option to
himself or herself, but any such member may be counted in determining the
existence of a quorum at any meeting of the Board or the Committee during which
action is taken with respect to the granting of Options to such member.
In the event the Company has a class of equity securities
registered under Section 12 of the Exchange Act, the Plan shall be administered
either by the Board, or by a Committee, appointed in the same manner and subject
to the same terms as provided in the preceding sentence of this subsection 3(a),
provided that said Committee shall consist of not less than two (2) persons,
each of whom is a Non-Employee Director.
(b) COMMITTEE. If a Committee is appointed by the Board, then
the Committee shall possess the power and authority of the Board in
administering the Plan on
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behalf of the Board, subject to the terms and conditions as the Board may
prescribe. Members of the Committee may or may not be members of the Board and
shall serve for such period of time as the Board may determine. From time to
time, the Board may increase the size of the Committee and appoint additional
members thereto, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies however caused, or remove all members
of the Committee and thereafter directly administer the Plan.
(c) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan (and, in the case of the Committee, the specific duties delegated by
the Board to such Committee), the Administrator shall have the authority, in its
sole discretion:
(i) to determine whether and to what extent Options
are granted hereunder;
(ii) to determine the Fair Market Value of the Common
Stock based upon review of relevant information and in accordance with Section 7
of the Plan;
(iii) to determine the exercise price of the Options
in accordance with Section 6(b) of the Plan;
(iv) to select the Optionees to whom Options may from
time to time be granted;
(v) to determine the number of Shares to be subject
to each Option granted hereunder;
(vi) to prescribe, amend and rescind rules and
regulations relating to the Plan;
(vii) to determine the terms and provisions of each
Option granted under the Plan, each Option Agreement and each other agreement
that in the sole discretion of the Administrator may be required (all of which
agreements need not be identical with the terms of other Options, Option
Agreements or other agreements);
(viii) to determine the circumstances under which the
vesting or exercise date of an Option will be accelerated;
(ix) to interpret the Plan or any agreement entered
into with respect to the grant or exercise of Options;
(x) to authorize any person to execute on behalf of
the Company any instrument required to effectuate the grant of an Option
previously granted by the Board or to take such other actions as may be
necessary or appropriate with respect to the Company's rights pursuant to
Options or agreements relating to the granting or exercise thereof;
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(xi) to determine whether and under what
circumstances an Option may be exercised without a payment of cash under Section
6(c) hereof;
(xii) to terminate the Plan in the event of a Change
of Control;
(xiii) to determine whether or not a Transfer has
occurred; and
(xiv) to make such other determinations and establish
such other procedures as it deems necessary or advisable for the administration
of the Plan.
(d) EFFECT OF THE ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator pursuant to the
provisions of the Plan shall be final and binding on all Optionees and any other
holders of Options.
(e) LIMITATION OF LIABILITY. Notwithstanding anything herein
to the contrary, no member of the Board or the Committee shall be liable for any
good faith determination, act or failure to act in connection with the Plan or
any Option awarded hereunder.
Section 4. ELIGIBILITY.
(a) ELIGIBLE PERSONS. Options may be granted at any time and
from time to time to any Employee or Consultant who shall be selected by the
Administrator. Any grant of Options may include or exclude any Employee or
Consultant as the Administrator shall determine in its sole discretion.
Consultants who are not also Employees of the Company are eligible to be granted
Non-Qualified Stock Options under the Plan but are not eligible to be granted
Incentive Stock Options under the Plan.
(b) VESTING OF OPTIONS. Subject to the provisions of Section 6
hereof and except to the extent the Board provides otherwise, each Option shall
vest at a rate of twenty-five percent (25%) of the Shares subject to the Option
per year (the total number of Shares so vested being the "Vested Amount") during
the consecutive four (4) year period commencing on the date of grant. Options
that are not vested may not be exercised.
(c) EFFECT UPON ENGAGEMENT. The Plan will not confer upon any
Optionee any right with respect to the continuation of any employment,
consulting or any other relationship with the Company or BCI nor will it
interfere in any way with such Optionee's right or the Company's or BCI's right
to terminate that Optionee's employment, consulting or other relationship with
the Company or BCI at any time, whether with or without cause.
Section 5. STOCK SUBJECT TO THE PLAN.
(a) MAXIMUM NUMBER OF SHARES. Subject to the provisions of
Section 8 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is Nine Million Four Hundred Twenty Nine
Thousand Forty Nine (9,429,049) Shares. The Shares may be authorized, but
unissued or reacquired, Common Stock. Notwithstanding the
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foregoing, no individual shall receive, over the term of the Plan, awards for
more than an aggregate of Two Million Five Hundred Thousand (2,500,000) Shares
authorized for grant under the Plan.
(b) RETURN OF SHARES TO THE PLAN. If an Option expires, is
terminated or become unexercisable for any reason without having been exercised
in full, then the unpurchased Shares subject thereto shall, unless the Plan
shall have been terminated, return to the Plan and become available for future
grant under the Plan.
Section 6. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted under the Plan shall be authorized by the
Board and shall be evidenced by an Option Agreement which shall state or
incorporate by reference all other terms and conditions of the Plan including,
without limitation, the following terms and conditions:
(a) NUMBER OF SHARES. The Option Agreement shall state the
number of Shares subject to the Option.
(b) OPTION EXERCISE PRICE. The per Share exercise price for
the Shares to be issued pursuant to the exercise of an Incentive Stock Option
shall be stated in the Option Agreement and shall be no less than the Fair
Market Value per share of the Common Stock on the date such Option is granted,
without regard to any restriction other than a restriction that by its terms
will never lapse; provided, however, that any Incentive Stock Option granted
under this Plan to an Employee who, at the time such Option is granted, owns
more than ten percent (10%) of the current total combined voting power of all
classes of the capital stock of the Company, shall have an exercise price per
Share of not less than one hundred ten percent (110%) of the Fair Market Value
of the Common Stock on the date such Option is granted. The per Share exercise
price for the Shares to be issued pursuant to the exercise of a Non-Qualified
Stock Option shall be stated in the Option Agreement and shall be determined by
the Administrator but shall be at least $.01 per Share.
(c) CONSIDERATION. The consideration to be paid for the Shares
to be issued upon the exercise of an Option, including the method of payment,
shall be determined by the Administrator and may consist entirely of: (i) cash;
(ii) check; (iii) authorization from the Company to retain from the total number
of Shares as to which the Option is exercised that number of Shares having a
Fair Market Value on the date of exercise equal to the exercise price for the
total Shares as to which the Option is exercised; (iv) to the extent permitted
under the Exchange Act, the delivery of a properly executed exercise notice
together with irrevocable instructions to a Securities Broker to promptly
deliver to the Company the amount of sale or loan proceeds required to pay the
exercise price; or (v) such other consideration and method of payment as the
Administrator may from time to time determine. In making its determination as to
the type of consideration to accept, the Administrator shall consider if the
acceptance of such consideration may be reasonably expected to benefit the
Company.
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(d) FORM OF OPTION. The Option Agreement shall state whether
the Option granted thereunder is intended to be an Incentive Stock Option or a
Non-Qualified Stock Option and shall, subject to the terms of the Option
Agreement, constitute a binding determination as to the form of Option granted
thereunder.
(e) EXERCISE OF AN OPTION.
(i) Unless otherwise provided by the Board, any
Option granted hereunder shall be exercisable, in whole or in part, in
accordance with the vesting schedule set forth in Section 4(b) hereof and shall
be exercisable at such times and under such further conditions as may be
determined by the Board and as set forth in the Option Agreement.
(ii) An Option may not be exercised for a fraction of
a Share. In the event of a "cashless exercise" as permitted under Section 6(c)
hereof, the Company shall issue shares for, the whole number of shares acquired
through such cashless exercise and cash for the value of any fractional share.
(iii) An Option may not be exercised after the date
of expiration of its term as shall be set forth in the Option Agreement.
(iv) An Option shall be deemed to be exercised when
written notice of such exercise has been received by the Company at its
principal executive office in accordance with the terms of the Option Agreement
by the person entitled to exercise the Option, and full payment for the Shares
with respect to which the Option is exercised has been received by the Company,
accompanied by an executed Stock Purchase and Restriction Agreement and any
other agreements required by the Administrator or the terms of the Plan and/or
Option Agreement. An Optionee shall have no right to vote or receive dividends
and shall have no other rights as a stockholder with respect to the Shares,
notwithstanding the exercise of the Option, until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares.
No adjustment shall be made for a dividend or other right for which the record
date is prior to the date a stock certificate with respect to the Shares is
issued.
(v) As soon as practicable after the proper exercise
of an Option in accordance with the provisions of the Plan, the Company shall,
without transfer or issue tax to the Optionee, deliver to the Optionee at the
principal executive office of the Company or such other place as shall be
mutually agreed upon between the Company and the Optionee, a certificate or
certificates representing the Shares for which the Option shall have been
exercised. The time of issuance and delivery of the certificate(s) representing
the Shares for which the Option shall have been exercised may be postponed by
the Company for such period as may be required by the Company, with reasonable
diligence, to comply with any applicable listing requirements of any national or
regional securities exchange or any law or regulation applicable to the issuance
or delivery of such Shares.
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(vi) The exercise of an Option in any manner shall
result in a decrease in the number of Shares that thereafter may be available
both for purposes of the Plan and for sale under the Option by the number of
Shares as to which the Option is exercised.
(f) TERMINATION OF OPTIONS.
(i) TERMINATION IN GENERAL. Unless sooner terminated
as provided in this Plan, each Option shall be exercisable for the period of
time as shall be determined by the Administrator and set forth in the Option
Agreement and shall be void and unexercisable thereafter.
(ii) TERMINATION OF RELATIONSHIP WITH THE COMPANY.
Unless sooner terminated as provided in this Plan, in the event of the
termination of an Optionee's employment or consulting relationship with the
Company (as the case may be), including termination of employment or consulting
relationship with BCI, for any reason other than the death or Disability of the
Optionee, such Optionee may, within three (3) months (or such other period of
time as is determined by the Board) from the date of such termination (but in no
event later than the expiration date of the term of such Option as set forth in
the Option Agreement), exercise the Option up to the Vested Amount as of the
date of termination provided that the Optionee was entitled to exercise the
Option on the date of such termination; provided, however, that an Optionee who
has Transferred shall not be considered to have terminated his relationship with
the Company. To the extent the Optionee was not entitled to exercise the Option
on the date of such termination, or if the Optionee does not exercise such
Option to the extent so entitled within the time specified herein, the Option
will terminate.
(iii) DEATH OR DISABILITY. Unless sooner terminated
as provided in this Plan, in the event of the death or Disability of an Optionee
while employed or engaged by the Company (as the case may be), including
termination of employment or service with BCI, due to death or Disability,
Options held by such Optionee that are exercisable on the date of Disability or
death shall be exercisable up to the Vested Amount as of the date of Disability
or death for a period of twelve (12) months commencing on the date of the
Optionee's Disability or death. Such Options may be exercisable by the Optionee
or his or her legal guardian or representative or, in the case of death, by his
or her executor(s) or administrator(s); provided, however, if such disabled
Optionee shall commence any employment or engagement during such twelve (12)
month period with or by a competitor of the Company (INCLUDING, but not limited
to, full or part-time employment or independent consulting work, but EXCLUDING
any employment or engagement by BCI), as determined solely in the judgment of
the Administrator, then all Options held by such Optionee that have not yet been
exercised shall terminate immediately upon the commencement thereof.
(iv) AGREEMENT TO TERMINATE. Options may be
terminated at any time by agreement between the Company and the Optionee.
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(g) OTHER PROVISIONS.
(i) Notwithstanding any provision in this Plan or an
Option Agreement to the contrary, no Option granted to any Optionee under this
Plan shall be treated as an Incentive Stock Option to the extent that such
Option would cause the aggregate Fair Market Value of all Shares with respect to
which Incentive Stock Options are exercisable by such Optionee for the first
time during any calendar year (determined as of the date of grant of each such
Option) to exceed $100,000. For purposes of determining whether an Incentive
Stock Option granted to an Optionee would cause the aggregate Fair Market Value
to exceed the $100,000 limitation, such Incentive Stock Options shall be taken
into account in the order granted. For purposes of this subsection, Incentive
Stock Options granted to an Optionee shall include all incentive stock options
under all plans of the Company that are incentive stock option plans within the
meaning of Section 422 of the Code. Options may be exercised in any order
elected by the Optionee, whether or not the Optionee holds any unexercised
Options under this Plan or any other plan of the Company.
(ii) Notwithstanding any other provision of this Plan
or an Option Agreement to the contrary, no Option shall be (A) granted under
this Plan after ten (10) years from the date on which this Plan is adopted by
the Board, or (B) exercisable more than ten (10) years from the date of grant;
provided that if an Incentive Stock Option shall be granted under this Plan to
any Employee who, at the time of the grant of such Option, owns stock possessing
more than ten percent (10%) of the total combined voting power for all classes
of the Company's capital stock, the foregoing clause (B) shall be deemed
modified by substituting the term "five (5) years" for the term "ten (10) years"
that appears therein.
Section 7. FAIR MARKET VALUE OF COMMON STOCK.
The Fair Market Value of a Share of Common Stock, as of any
date, shall be determined as follows:
(a) If the Shares of Common Stock are listed on a national or
regional securities exchange or traded through NASDAQ/NMS, then the Fair Market
Value of a share of Common Stock shall be the closing price for a share of
Common Stock on the exchange or on NASDAQ/NMS, as reported in THE WALL STREET
JOURNAL or such other source as the Administrator deems reliable on the relevant
valuation date, or if there is no trading on that date, on the next trading
date.
(b) If the Shares of Common Stock are traded in the
over-the-counter market, then the Fair Market Value of a share of Common Stock
shall be the mean of the bid and asked prices for a share of Common Stock on the
relevant valuation date as reported in THE WALL STREET JOURNAL or other source
the Administrator deems reliable (or, if not so reported, as otherwise reported
by the National Association of Securities Dealers Automated Quotations
("NASDAQ") System or the NASD OTC Bulletin Board), or if there is no trading on
such date, on the next trading date.
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(c) In the absence of an established market for the Common
Stock, the Fair Market Value of a share of Common Stock shall be determined by
the Board in its sole discretion.
Section 8. ADJUSTMENTS.
(a) ADJUSTMENTS. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares that have been authorized for issuance under the
Plan but as to which no Options have yet been granted or that have been returned
to the Plan upon cancellation or expiration of an Option, and the price per
Share of the Common Stock covered by an Option will each be proportionately
adjusted for any increase or decrease in the number of outstanding shares of
Common Stock resulting from stock splits, reverse stock splits, stock dividends,
reclassifications and recapitalizations. Such adjustment shall be made by the
Board whose determination in that respect will be final, binding and conclusive.
Except as provided herein, no issuance by the Company of shares of stock of any
class or securities convertible into shares of stock of any class, will affect,
and no adjustment by reason thereof will be made with respect to, the number or
price of shares of Common Stock subject to an Option.
(b) NO FRACTIONAL SHARES. No fractional Shares shall be
issuable on account of any action aforesaid, and the aggregate number of Shares
into which Shares then covered by the Option, when changed as the result of such
action, shall be reduced to the number of whole Shares resulting from such
action, unless the Board, in its sole discretion, shall determine to issue scrip
certificates in respect to any fractional Shares, which scrip certificates shall
be in a form and have such terms and conditions as the Board in its discretion
shall prescribe.
Section 9. RIGHTS AS A STOCKHOLDER.
An Optionee shall have no rights as a stockholder of the
Company and shall not have the right to vote nor receive dividends with respect
to any Shares subject to an Option until such Option has been exercised and a
stock certificate with respect to the Shares purchased upon such exercise of the
Option has been issued to Optionee as set forth in Section 6(e)(iv) and (v)
hereof.
Section 10. FORFEITURE.
Notwithstanding any other provision of this Plan, if an
Optionee's employment or consulting relationship with the Company (as the case
may be) is terminated by the Company or BCI and the Board makes a determination
that the Optionee (i) has engaged in any type of disloyalty to the Company or
BCI, including without limitation, fraud, embezzlement, theft, or dishonesty in
the course of Optionee's employment or consulting relationship, (ii) has been
convicted of a felony or other crime involving a breach of trust or fiduciary
duty owed to the Company or BCI, (iii) has made an unauthorized disclosure of
trade secrets or confidential information of the Company or BCI, or (iv) has
breached any confidentiality agreement or non-competition agreement with the
Company or BCI in any material respect, then, at the election of
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the Board, all unexercised Options held by the Optionee (whether or not then
exercisable) shall terminate. In the event of such an election by the Board, in
addition to immediate termination of all unexercised Options, the Optionee shall
forfeit all Shares for which the Company has not yet delivered stock
certificates to the Optionee and the Company shall refund to the Optionee the
exercise price paid to it upon exercise of the Option with respect to such
Shares. Notwithstanding anything herein to the contrary, the Company may
withhold delivery of stock certificates pending the resolution of any inquiry
that could lead to a finding resulting in forfeiture.
Section 11. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be the
date on which the Administrator makes the determination to grant the Option or
such other date as is determined by the Administrator. Notice of the
determination shall be given to each Optionee to whom an Option is so granted
within a reasonable time after the date of such grant.
Section 12. MODIFICATION, EXTENSION, RENEWAL OF OPTION.
Subject to the terms and conditions of the Plan, the Board may
modify, extend or renew an Option, or accept the surrender of an Option (to the
extent not theretofore exercised); provided that no Incentive Stock Option may
be modified, extended or renewed if such action would cause such Option to cease
to be an "incentive stock option" within the meaning of Section 422 of the Code.
Section 13. TRANSFERABILITY.
No Option may be sold, pledged, assigned, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution. During the lifetime of the Optionee, his or her Options shall be
exercisable only by the Optionee, or, in the event of his or her legal
incapacity or Disability, by the legal guardian or representative of the
Optionee.
Section 14. POWER OF BOARD IF CHANGE OF CONTROL.
Notwithstanding anything to the contrary set forth in this
Plan, in the event of a Sale of the Company, fifty percent (50%) of all Options
that have not vested as of the date of a Sale of the Company shall become
immediately vested and exercisable. All remaining unvested Options shall vest in
accordance with the vesting schedule set forth in the applicable Option
Agreement. Notwithstanding the preceding, the Board shall have the right, in its
sole discretion, to accelerate the vesting of all Options that have not vested
as of the date of the Change of Control and/or to establish an earlier date for
the expiration of the exercise of an Option (notwithstanding a later expiration
of exercisability set forth in an Option Agreement). In addition, in the event
of a Change of Control of the Company, the Board shall have the right, in its
sole discretion, subject to and conditioned upon a Sale of the Company: (i) to
arrange for the successor company (or other entity) to assume all of the rights
and obligations of the Company under this Plan; or (ii) to terminate this Plan
and (A) to pay to all Optionees cash with respect to
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those Options that are vested as of the date of the Sale of the Company in an
amount equal to the difference between the Option Price and the Fair Market
Value of a Share of Common Stock (determined as of the date the Plan is
terminated) multiplied by the number of Options that are vested as of the date
of the Sale of the Company which are held by the Optionee as of the date of the
Sale of the Company, or (B) to arrange for the exchange of all Options for
options to purchase common stock in the successor corporation, or (C) to
distribute to each Optionee other property in an amount equal to and in the same
form as the Optionee would have received from the successor corporation if the
Optionee had owned the Shares subject to Options that are vested as of the date
of the Sale of the Company rather than the Option at the time of the Sale of the
Company. The form of payment or distribution to the Optionee pursuant to this
Section shall be determined by the Board in its sole discretion.
Section 15. AMENDMENT OR TERMINATION OF THE PLAN.
Insofar as permitted by law and the Plan, the Board may at any
time suspend, terminate, discontinue, alter or amend the Plan in any respect
whatsoever; provided, however, that without prior approval of at least a
majority of the stockholders entitled to vote thereon, no such revision or
amendment may change the aggregate number of Shares for which Options may be
granted hereunder, change the designation of the class of Optionees eligible to
receive Options or decrease the price at which Options may be granted. Any other
provision of this Section notwithstanding, the Board specifically is authorized
to adopt any amendment to this Plan deemed by the Board to be necessary or
advisable to assure that the Incentive Stock Options or the Non-Qualified Stock
Options available under the Plan continue to be treated as such, respectively,
under all applicable laws.
Section 16. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Shares
pursuant to the exercise of Options shall be used for general corporate
purposes.
Section 17. NO OBLIGATION TO EXERCISE OPTION.
The granting of an Option shall impose no obligation upon the
Optionee to exercise such Option.
Section 18. APPROVAL OF STOCKHOLDERS.
This Plan shall become effective on the date that it is
adopted by the Board; provided that it shall become limited to a non-qualified
stock option plan if it is not approved by the stockholders of a majority of the
Company's outstanding voting stock within one year (365 days) of its adoption by
the Board. The Board may grant Options hereunder prior to approval of the Plan,
or any material amendments thereto, by the holders of a majority of the
Company's outstanding voting stock; provided that any and all Options so granted
shall be converted into non-qualified stock options if the Plan, or a material
amendment, is not approved by such stockholders within 365 days of its adoption
or material amendment.
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Section 19. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Options granted under the Plan are conditioned upon the
Company obtaining any required permit or order from appropriate governmental
agencies, authorizing the Company to issue such Options and Shares issuable upon
the exercise thereof.
(b) Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
(c) As a condition to the exercise of an Option, the Board may
require the person exercising such Option to execute an agreement with, and/or
may require the person exercising such Option to make any representation and/or
warranty to, the Company as may be, in the judgment of counsel to the Company,
required under applicable law or regulation, including but not limited to, a
representation and warranty that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation and
warranty is appropriate under any of the aforementioned relevant provisions of
law.
Section 20. RESERVATION OF SHARES.
(a) The Company, during the term of this Plan, shall at all
times reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
(b) The Company, during the term of this Plan, shall use its
best efforts to seek to obtain from appropriate regulatory agencies any
requisite authorization in order to issue and sell such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. The inability of
the Company to obtain from any such regulatory agency having jurisdiction the
requisite authorization(s) deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any Shares hereunder, or the inability of the
Company to confirm to its satisfaction that any issuance and sale of any Shares
hereunder will meet applicable legal requirements, shall relieve the Company of
any liability in respect to the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
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Section 21. OTHER AGREEMENTS.
Options shall be evidenced by an Option Agreement in such form
or forms as the Board (subject to the terms and conditions of this Plan) may
from time to time approve, which Option Agreement shall evidence and reflect the
terms and conditions of an Option as set forth in Section 6 hereof. Upon
exercise of an Option, the Optionee shall execute and deliver to the Company a
Stock Purchase and Restriction Agreement in such form or forms as the Board
shall approve from time to time. The Administrator may, from time to time,
require such other agreements in connection with the Option as it, in its sole
discretion, deems advisable. The Option Agreement and the Stock Purchase and
Restriction Agreement and any other agreement required by the Plan or the Option
Agreement, as determined by the Board, may contain such other provisions as the
Board in its discretion deems advisable and that are not inconsistent with the
provisions of this Plan, including, without limitation, restrictions upon or
conditions precedent to the exercise of the Option.
Section 22. TAXES, FEES, EXPENSES AND WITHHOLDING.
(a) The Company shall pay all original issue and transfer
taxes (but not income taxes, if any) with respect to the grant of an Option
and/or the issue and transfer of Shares pursuant to the exercise thereof, and
all other fees and expenses necessarily incurred by the Company in connection
therewith, and will, from time to time, use its best efforts to comply with all
laws and regulations that, in the opinion of counsel for the Company, shall be
applicable thereto.
(b) The granting of Options hereunder and the issuance of
Shares pursuant to the exercise thereof is conditioned upon the Company's
reservation of the right to withhold in accordance with any applicable law, from
any compensation or other amounts payable to the Optionee, any taxes required to
be withheld under federal, state or local law as a result of the grant or
exercise of such Option or the sale of the Shares issued upon exercise thereof.
To the extent that compensation or other amounts, if any, payable to the
Optionee is insufficient to pay any taxes required to be so withheld, the
Company may, in its sole discretion, require the Optionee (or such other person
entitled herein to exercise the Option), as a condition to the exercise of an
Option, to pay in cash to the Company an amount sufficient to cover such tax
liability or otherwise to make adequate provision for the Company's satisfaction
of its withholding obligations under federal, state and local law.
Section 23. NOTICES.
Any notice to be given to the Company pursuant to the
provisions of this Plan shall be addressed to the Company in care of its
Secretary (or such other person as the Company may designate from time to time)
at its principal executive office, and any notice to be given to an Optionee
shall be delivered personally or addressed to the Optionee at the address given
beneath the signature of the Optionee on his or her Option Agreement, or at such
other address as such Optionee or his or her permitted transferee (upon the
transfer of the Shares) may hereafter designate in writing to the Company. Any
such notice shall be deemed duly given when
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enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
registered or certified, and deposited, postage and registry or certification
fee prepaid, in a post office or branch post office regularly maintained by the
United States Postal Service. It shall be the obligation of each Optionee and
each permitted transferee holding Shares purchased upon exercise of an Option to
provide the Secretary of the Company, by letter mailed as provided herein, with
written notice of his or her direct mailing address.
Section 24. NO ENLARGEMENT OF RIGHTS.
This Plan is purely voluntary on the part of the Company, and
the continuance of the Plan shall not be deemed to constitute a contract between
the Company and any Employee or Consultant, or to be consideration for or a
condition of the employment or service of any Employee or Consultant as the case
may be. Nothing contained in this Plan shall be deemed to give any Employee or
Consultant the right to be retained in the employ or service of the Company or
BCI, or to interfere with the right of the Company or BCI to discharge or retire
any Employee or Consultant thereof at any time. No Employee or Consultant shall
have any right to or interest in Options authorized hereunder prior to the grant
thereof to such Employee or Consultant, and upon such grant such Employee or
Consultant shall have only such rights and interests as are expressly provided
herein, subject, however, to all applicable provisions of the Company's
Certificate of Incorporation, as the same may be amended from time to time.
Section 25. INFORMATION TO OPTIONEES.
The Company, upon request, shall provide without charge to
each Optionee copies of such annual and periodic reports as are provided by the
Company to its stockholders generally.
Section 26. AVAILABILITY OF PLAN.
A copy of this Plan shall be delivered to the Secretary of the
Company and shall be shown to any eligible person making reasonable inquiry
concerning it.
Section 27. INVALID PROVISIONS.
In the event that any provision of this Plan is found to be
invalid or otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions
shall be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
Section 28. APPLICABLE LAW.
This Plan shall be governed by and construed in accordance
with the laws of the State of New Jersey.
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Section 29. BOARD ACTION.
Notwithstanding anything to the contrary set forth in this
Plan, any and all actions of the Board or Committee, as the case may be, taken
under or in connection with this Plan and any agreements, instruments,
documents, certificates or other writings entered into, executed, granted,
issued and/or delivered pursuant to the terms hereof, shall be subject to and
limited by any and all votes, consents, approvals, waivers or other actions of
all or certain stockholders of the Company or other persons required pursuant to
(a) the Company's Certificate of Incorporation (as the same may be amended
and/or restated from time to time), (b) the Company's Bylaws (as the same may be
amended and/or restated from time to time), and (c) any other agreement,
instrument, document or writing now or hereafter existing, between or among the
Company and its stockholders or other persons (as the same may be amended from
time to time).
Section 30. MISCELLANEOUS.
This Plan is intended to comply with the conditions and
requirements for employee benefit plans under Rule 16b-3, as promulgated under
Section 16 of the Exchange Act, such that Options granted pursuant to the Plan
will be exempted from the provisions of Section 16(b) thereof. To the extent
that any provision of the Plan would cause a conflict with such requirements,
such provision shall be deemed null and void to the extent permitted by
applicable law. This section shall not be applicable if no class of the
Company's equity securities is then registered pursuant to Section 12 of the
Exchange Act.
PLAN HISTORY
ADOPTION AND APPROVAL OF PLAN AND ANY AMENDMENTS
Date Plan adopted by Board: February 17, 1996
Date Plan approved by Stockholders: February 28, 1996
Original Effective Date of Plan: March 1, 1996
Amended and Restated: April 17, 1997
Amended and Restated: July 2, 1998
Amended: January 21, 1999
Amended and Restated: March 11, 1999
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BLUESTONE SOFTWARE, INC.
1996 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
BLUESTONE SOFTWARE, INC., a Delaware corporation (the
"Company"), hereby grants to ____________________________ (the "Optionee") an
option (the "Option") to purchase a total of ______________ (___) shares of
Common Stock (the "Shares") of the Company, at the price and on the terms set
forth herein, and in all respects subject to the terms and provisions of the
BLUESTONE SOFTWARE, INC. 1996 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN (the
"Plan") applicable to incentive stock options, which terms and provisions are
incorporated herein by reference. Capitalized terms used but not otherwise
defined herein shall have the meanings given to them in the Plan.
1. NATURE OF THE OPTION. The Option is intended by the Company
and the Optionee to be an incentive stock option within the meaning of Section
422 of the Code.
2. DATE OF GRANT; TERM OF OPTION. The Option is granted this
____ day of ____________, ____, and it may not be exercised later than 5:00 p.m.
on the ____ day of
______________, ____.
3. OPTION EXERCISE PRICE. The Option exercise price is $_____
per Share which price is the Fair Market Value per Share on the date hereof; or
$________ per Share if Optionee, at the time of grant, owns stock possessing
more than 10% of the current total combined voting power of all classes of the
Company's capital stock, which price represents a price per Share equal to no
less than 110% of the Fair Market Value of the Common Stock on the date the
Option is granted.
4. EXERCISE OF OPTION. Except as otherwise provided herein,
the Option shall be exercisable during its term only in accordance with the
terms and provisions of the Plan and this Option Agreement as follows:
(A) VESTING. The Option shall vest at a rate of
twenty-five percent (25%) of the total number of Shares subject to the Option
per year (the total number of shares so vested being the "Vested Amount") on
each consecutive anniversary of the date of this Option Agreement, commencing on
the date of this Option Agreement.
(B) RIGHT TO EXERCISE.
(i) Options that have not yet vested may not
be exercised.
(ii) The Option may not be exercised for a
fraction of a Share.
(iii) In the event of Optionee's death,
Disability or other termination of service, the exercisability shall be governed
by this Section 4, Sections 6 and 7 hereof, and the provisions of the Plan.
(iv) In no event may the Option be exercised
after the date of expiration of the term of the Option, as set forth in Section
2 hereof.
(C) METHOD OF EXERCISE. The Option shall be
exercisable by written notice that shall state the election to exercise the
Option, the number of Shares in respect to which the Option is being exercised
and such other representations and agreements as to the Optionee's investment
intent with respect to such Shares as may be required by the Company hereunder
or pursuant to the provisions of the Plan. Such written notice shall be signed
by the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company or such other person as may be designated by the
Company. The written notice shall be accompanied by payment of the purchase
price, an executed Stock Purchase and Restriction Agreement and any other
agreements required by the Administrator, the terms of the Plan and/or this
Option Agreement. The Option will be deemed to be exercised upon the receipt by
the Company of such written notice, payment of the purchase price, the Stock
Purchase and Restriction Agreement and any other agreements required by the
Administrator, the terms of the Plan and/or this Option Agreement. The Optionee
will have no right to vote or receive dividends and will have not other rights
as a stockholder with respect to such Shares notwithstanding the exercise of the
Option, until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing the Shares that are being issued upon exercise of
the Option. The Company will issue (or cause to be issued) such stock
certificates promptly following the exercise of the Option. The certificate or
certificates for the Shares as to which the Option shall be exercised shall be
registered in the name of the Optionee and shall contain any legend as may be
required under the Plan, the Stock Purchase and Restriction Agreement, any other
agreements required by the Administrator and/or applicable law.
(D) METHOD OF PAYMENT. The method of payment of the
purchase price shall be determined by the Administrator and may consist entirely
of cash, check or any combination of such methods of payment, or such other
consideration or method of payment as may be authorized by the Administrator and
permitted under the Plan.
-2-
(E) RESTRICTIONS ON EXERCISE. The Option may not be
exercised if the issuance of the Shares upon such exercise would constitute a
violation of any applicable federal or state securities laws or other laws or
regulations. As a condition to the exercise of the Option, the Company may
require the Optionee to make any representations and warranties to the Company
as may be required by any applicable law or regulation.
5. INVESTMENT REPRESENTATIONS. Unless the Shares have been
registered under the Securities Act, in connection with the grant of the Option,
the Optionee represents and warrants as follows:
(a) The Optionee is acquiring the Option, and upon
exercise of the Option, the Optionee will be acquiring the Shares for investment
for his or her own account, not as a nominee or agent, and not with a view to,
or for resale in connection with, any distribution thereof.
(b) The Optionee is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Shares. The Optionee has received all information as the Optionee deems
necessary and appropriate to enable him or her to evaluate the financial risk
inherent in making an investment in the Shares and has received satisfactory and
complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof.
6. TERMINATION OF EMPLOYMENT WITH COMPANY. Subject to the
provisions of Section 8 hereof, upon termination of the Optionee's employment
with the Company for any reason other than death or Disability, the Optionee
shall have the right to exercise the Option at any time within the three (3)
month period after the date of such termination to the extent that the Optionee
was entitled to exercise the Option at the date of such termination; provided,
however, that if the Optionee Transfers, then to the extent the Option is not
exercised within such three (3) month period, the unexercised portion of the
Option shall automatically convert into a non-qualified stock option and shall
continue to be exercisable up to the earlier of the expiration of the Option as
set forth in Section 2 hereof or three (3) months after termination of service
with both the Company and BCI.
7. DEATH OR DISABILITY OF OPTIONEE. Upon the death or
Disability of the Optionee while in the employ of the Company, the Option may be
exercised at any time within twelve (12) months after the date of death or
termination due to Disability, in the case of death, by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, or, in the case of Disability, by the Optionee or his legal
guardian or representative, but in any case only to the extent the Optionee was
entitled to exercise the Option at such date; provided, however, that if such
disabled Optionee shall commence any employment
-3-
or engagement during such twelve (12) month period with or by a competitor of
the Company (INCLUDING, but not limited to, full or part-time employment or
independent consulting work, but EXCLUDING any employment or engagement by BCI),
as determined solely in the judgment of the Board, the Option shall terminate
immediately upon the commencement thereof. In the event the Optionee Transfers
and such Option converts to a non-qualified option as provided in Section 6
hereof, in the event of death or Disability while in the service of BCI (or the
Company, in the event of a subsequent Transfer), the Option may be exercised by
the Optionee's estate, legal guardian, or representative within the twelve (12)
month period after termination of service due to death or Disability. To the
extent that the Optionee was not entitled to exercise the Option at the date of
termination, or to the extent the Option is not exercised within the time
specified herein, the Option shall terminate. Notwithstanding the foregoing, the
Option shall not be exercisable after the expiration of the term set forth in
Section 2 hereof.
8. FORFEITURE OF OPTION. Notwithstanding any other provision
of the Option Agreement, if the Optionee's employment is terminated and the
Board makes a determination that the Optionee (i) has engaged in any type of
disloyalty to the Company, including without limitation, fraud, embezzlement,
theft, or dishonesty in the course of his employment, (ii) has been convicted of
a felony or other crime involving a breach of trust or other fiduciary duty owed
to the Company, (iii) has disclosed trade secrets or confidential information of
the Company, (iv) has breached any agreement with the Company in respect of
confidentiality, non-disclosure, non-competition or otherwise, then, at the
election of the Board, all unexercised Options shall terminate. In the event of
such an election by the Board, in addition to immediate termination of all
unexercised Options, the Optionee shall forfeit all Shares for which the Company
has not yet delivered share certificates to the Optionee and the Company shall
refund to the Optionee the Option price paid to the Company with respect to
those Shares. Notwithstanding anything herein to the contrary, the Company may
withhold delivery of share certificates pending the resolution of any inquiry
that could lead to a determination resulting in forfeiture. In the event the
Optionee's employment with the Company terminates, but the Optionee Transfers,
the preceding forfeiture provisions shall apply in the event Optionee's service
is terminated by BCI for any of the reasons stated in the immediately preceding
subsections (1) through (iv) hereof; provided that "BCI" shall be substituted
for "the Company" where it appears in such preceding subsections.
9. NON-TRANSFERABILITY OF OPTION. The Option may not be sold,
pledged, assigned, hypothecated, gifted, transferred or disposed of in any
manner either voluntarily or involuntarily by operation of law, other than by
will or by the laws of descent or distribution, and may be exercised during the
lifetime of the Optionee only by such Optionee. Subject to the foregoing and the
terms of the Plan, the terms of the Option Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.
-4-
10. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this
Option Agreement shall confer upon any Optionee any right to continue in the
employment of the Company, or BCI in the event of Transfer, or limit in any
respect the right of the Company or BCI to discharge or release the Optionee at
any time, with or without cause and with or without notice.
11. WITHHOLDING. The Company reserves the right to withhold,
in accordance with any applicable laws, from any consideration payable to
Optionee any taxes required to be withheld by federal, state or local law as a
result of the grant or exercise of the Option or the sale or other disposition
of the Shares issued upon exercise of the Option. If the amount of any
consideration payable to the Optionee is insufficient to pay such taxes or if no
consideration is payable to the Optionee, then upon the request of the Company,
the Optionee (or such other person entitled to exercise the Option pursuant to
Section 7 hereof) shall pay to the Company an amount sufficient for the Company
to satisfy any federal, state or local tax withholding requirements the Company
may incur, as a result of the grant or exercise of the Option or the sale or
other disposition of the Shares issued upon the exercise of the Option.
12. THE PLAN. The Option is subject to, and the Company and
the Optionee agree to be bound by, all of the terms and conditions of the Plan
as such Plan may be amended from time to time in accordance with the terms
thereof. Pursuant to the Plan, the Board is authorized to adopt rules and
regulations not inconsistent with the Plan as it shall deem appropriate and
proper. A copy of the Plan in its present form is available for inspection
during business hours by the Optionee or the persons entitled to exercise the
Option at the Company's principal office.
13. CONVERSION TO NON-QUALIFIED OPTION. Notwithstanding
anything to the contrary set forth herein, this Option is being granted subject
to the condition that in the event the Plan is not approved by the stockholders
of the Company within 365 days of the date that the Plan was adopted by the
Board, this Option shall automatically be converted into a non-qualified stock
option.
14. EARLY DISPOSITION OF STOCK. Subject to the fulfillment by
the Optionee of any conditions upon the disposition of Shares received under the
Option, the Optionee hereby agrees that if he or she disposes of any Shares
received under the Option within two (2) years from date of grant or one (1)
year after such Shares were transferred to him or her upon exercise of the
Option, he or she will notify the Company in writing within thirty (30) days
after the date of such disposition. The Optionee acknowledges that disposition
by him or her within two years from the date of grant and one year from the date
of exercise of the Option would disqualify him or her from capital gain
treatment for any gain realized upon such disposition.
-5-
15. ENTIRE AGREEMENT. The Option, together with the Plan and
the other exhibits attached thereto or hereto, represents the entire agreement
between the parties.
16. GOVERNING LAW. This Option shall be construed in
accordance with the laws of the State of New Jersey.
17. AMENDMENT. Subject to the provisions of the Plan, this
Option Agreement may only be amended by a writing signed by each of the parties
hereto.
Date: BLUESTONE SOFTWARE, INC.
--------------------------
By:
----------------------------
Title:
-------------------------
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ACKNOWLEDGMENT
The Optionee acknowledges receipt of a copy of the Plan, a
copy of which is attached hereto, and represents that he or she has read and is
familiar with the terms and provisions thereof, and hereby accepts the Option
subject to all of the terms and provisions thereof. The Optionee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Administrator upon any questions arising under the Plan.
Date:
---------------------------- -------------------------
Signature of Optionee
-------------------------
Address
-------------------------
City, State, Zip
THE OPTION AND THE SECURITIES THAT MAY BE PURCHASED UPON
EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO,
OR IN CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE,
TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THE OPTION
MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AND
RESTRICTION AGREEMENT TO BE ENTERED INTO BETWEEN THE HOLDER OF THE OPTION AND
THE COMPANY UPON EXERCISE OF THIS OPTION, A COPY OF WHICH AGREEMENT IS ON FILE
WITH THE SECRETARY OF THE COMPANY.
-7-
BLUESTONE SOFTWARE, INC.
1996 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
BLUESTONE SOFTWARE, INC., a Delaware corporation (the
"Company"), hereby grants to ____________________________ (the "Optionee") an
option (the "Option") to purchase a total of ______________ (___) shares of
Common Stock (the "Shares") of the Company, at the price and on the terms set
forth herein, and in all respects subject to the terms and provisions of the
BLUESTONE SOFTWARE, INC. 1996 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN (the
"Plan") applicable to non-qualified stock options, which terms and provisions
are incorporated by reference herein. Unless otherwise defined herein,
capitalized terms used but not defined herein shall have the meanings given to
them in the Plan.
1. NATURE OF THE OPTION. The Option is intended to be a
nonstatutory stock option and is NOT intended to be an incentive stock option
within the meaning of Section 422 of the Code, or to otherwise qualify for any
special tax benefits to the Optionee.
2. DATE OF GRANT; TERM OF OPTION. The Option is granted this
____ day of ____________, ____, and it may not be exercised later than 5:00 p.m.
on the ____ day of
______________ , _____.
3. OPTION EXERCISE PRICE. The Option exercise price is
______________ ($_____) per Share.
4. EXERCISE OF OPTION. Except as otherwise provided herein,
the Option shall be exercisable during its term only in accordance with the
terms and provisions of the Plan and this Option Agreement as follows:
(A) VESTING. The Option shall vest at a rate of
twenty-five percent (25%) of the total number of Shares subject to the Option
per year (the total number of Shares so vested being the "Vested Amount") on
each consecutive anniversary of the date of this Option Agreement, commencing on
the date of this Option Agreement.
(B) RIGHT TO EXERCISE.
(i) Options that have not yet vested may not
be exercised.
(ii) The Option may not be exercised for a
fraction of a Share.
(iii) In the event of Optionee's death,
Disability or other termination of service, the exercisability shall be governed
by this Section 4, Sections 6 and 7 hereof, and the provisions of the Plan.
(iv) In no event may the Option be exercised
after the date of expiration of the term of the Option, as set forth in Section
2 hereof.
(C) METHOD OF EXERCISE. The Option shall be
exercisable by written notice that shall state the election to exercise the
Option, the number of Shares in respect to which the Option is being exercised
and such other representations and agreements as to the Optionee's investment
intent with respect to such Shares as may be required by the Administrator or
pursuant to the provisions of the Plan. Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company or such other person as may be designated by the
Company. The written notice shall be accompanied by payment of the purchase
price, an executed Stock Purchase and Restriction Agreement and any other
agreements required by the Administrator, the terms of the Plan and/or this
Option Agreement. The Option will be deemed to be exercised upon the receipt by
the Company of such written notice, payment of the purchase price, the Stock
Purchase and Restriction Agreement and any other agreements required by the
Administrator, the terms of the Plan and/or this Option Agreement. The Optionee
shall have no right to vote or receive dividends and shall have no other rights
as a stockholder with respect to such Shares, notwithstanding the exercise of
the Option, until the issuance by the Company (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing the Shares that are being issued
upon exercise of the Option. The Company will issue (or cause to be issued) such
stock certificates promptly following the exercise of the Option. The
certificate or certificates for the Shares as to which the Option shall be
exercised shall be registered in the name of the Optionee and shall contain any
legend as may be required under the Plan, the Stock Purchase and Restriction
Agreement, any other agreements required by the Administrator and/or applicable
law.
(D) METHOD OF PAYMENT. The method of payment of the
purchase price shall be determined by the Administrator and may consist entirely
of cash, check or any combination of such methods of payment, or such other
consideration or method of payment as may be authorized by the Administrator and
permitted under the Plan.
(E) RESTRICTIONS ON EXERCISE. The Option may not be
exercised if the issuance of the Shares upon such exercise would constitute a
violation of any applicable federal or state securities laws or other laws or
regulations. As a condition to the exercise of the Option,
-2-
the Company may require the Optionee to make any representations and warranties
to the Company as may be required by any applicable law or regulation.
5. INVESTMENT REPRESENTATIONS. Unless the Shares have been
registered under the Securities Act, in connection with the acquisition of the
Option, the Optionee represents and warrants as follows:
(A) The Optionee is acquiring the Option, and upon
exercise of the Option, Optionee will be acquiring the Shares for investment for
his or her own account, not as a nominee or agent, and not with a view to, or
for resale in connection with, any distribution thereof.
(B) The Optionee is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Shares. The Optionee has received all such information as the Optionee deems
necessary and appropriate to enable him or her to evaluate the financial risk
inherent in making an investment in the Shares and has received satisfactory and
complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof.
6. TERMINATION OF RELATIONSHIP WITH THE COMPANY. Subject to
the provisions of Section 8 hereof, upon termination of the Optionee's service
with the Company, including termination of service with BCI, for any reason
other than death or Disability, the Optionee shall have the right to exercise
this Option up to the Vested Amount as of the date of termination for a period
of three (3) months from the date of such termination, provided that the
Optionee may only exercise the Option to the extent that the Optionee was
entitled to exercise the Option at the date of such termination; provided,
however, that the Optionee shall not be considered to have terminated his
relationship with the Company if he Transfers.
7. DEATH OR DISABILITY OF OPTIONEE. Upon the death or
Disability of the Optionee while in the service of the Company, including
termination of service with BCI, the Option may be exercised up to the Vested
Amount at any time within twelve (12) months after the date of death or
termination due to Disability provided the Optionee was entitled to exercise the
Option at the date of his or her death or termination due to Disability. In the
case of death, the Option may be exercised by the Optionee's estate or by a
person who acquired the right to exercise this Option by bequest or inheritance.
In the case of Disability, the Option may be exercised by the Optionee or his or
her legal guardian or representative, but in any case, the Option may be
exercised only to the extent that the Optionee was entitled to exercise the
Option at such date; provided, however, that if such disabled Optionee shall
commence any employment or engagement during such twelve (12) month period with
or by a competitor of the Company (INCLUDING, but not limited to, full or
part-time employment or independent consulting work, but EXCLUDING any
employment or engagement by BCI), as determined solely in the judgment of the
Board, the Option shall terminate immediately upon the commencement thereof. To
the extent that the Optionee was not entitled to exercise the Option at the date
of termination, or to the extent the Option is not exercised within the time
specified herein, the Option shall terminate.
-3-
Notwithstanding the foregoing, the Option shall not be exercisable after the
expiration of the term set forth in Section 2 hereof.
8. FORFEITURE OF OPTION. Notwithstanding any other provision
of this Option Agreement, if the Optionee's service with the Company or BCI is
terminated and the Board makes a determination that the Optionee (i) has engaged
in any type of disloyalty to the Company or BCI, including without limitation,
fraud, embezzlement, theft, or dishonesty in the course of his employment or
engagement, (ii) has been convicted of a felony or other crime involving a
breach of trust or other fiduciary duty owed to the Company or BCI, (iii) has
disclosed trade secrets or confidential information of the Company or BCI, or
(iv) has breached any agreement with the Company or BCI in respect of
confidentiality, non-disclosure, non-competition or otherwise, then, at the
election of the Board, all unexercised Options shall terminate. In the event of
such an election by the Board, in addition to immediate termination of all
unexercised Options, the Optionee shall forfeit all Shares for which the Company
has not yet delivered share certificates to the Optionee and the Company shall
refund to the Optionee the Option price paid to the Company with respect to
those Shares. Notwithstanding anything herein to the contrary, the Company may
withhold delivery of share certificates pending the resolution of any inquiry
that could lead to a determination resulting in forfeiture.
9. NON-TRANSFERABILITY OF OPTION. The Option may not be sold,
pledged, assigned, hypothecated, gifted, transferred or disposed of in any
manner either voluntarily or involuntarily by operation of law, other than by
will or by the laws of descent or distribution, and may be exercised during the
lifetime of the Optionee only by such Optionee. Subject to the foregoing and the
terms of the Plan, the terms of this Option Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.
10. CONTINUATION OF EMPLOYMENT OR ENGAGEMENT. Neither the Plan
nor this Option Agreement shall confer upon any Optionee any right to continue
in the service of the Company or BCI or limit, in any respect, the right of the
Company or BCI to discharge or release the Optionee at any time, with or without
cause and with or without notice.
11. WITHHOLDING. The Company reserves the right to withhold,
in accordance with any applicable laws, from any consideration payable to the
Optionee any taxes required to be withheld by federal, state or local law as a
result of the grant or exercise of the Option or the sale or other disposition
of the Shares issued upon exercise of the Option. If the amount of any
consideration payable to the Optionee is insufficient to pay such taxes or if no
consideration is payable to the Optionee, then upon the request of the Company,
the Optionee (or such other person entitled to exercise the Option pursuant to
Section 7 hereof) shall pay to the Company an amount sufficient for the Company
to satisfy any federal, state or local tax withholding requirements the Company
may incur as a result of the grant or exercise of the Option or the sale or
other disposition of the Shares issued upon the exercise of the Option.
12. THE PLAN. This Option Agreement is subject to, and the
Company and the Optionee agree to be bound by, all of the terms and conditions
of the Plan as such Plan may be amended from time to time in accordance with the
terms thereof. Pursuant to the Plan, the Board
-4-
is authorized to adopt rules and regulations not inconsistent with the Plan as
it shall deem appropriate and proper. A copy of the Plan in its present form is
available for inspection during business hours by the Optionee or the persons
entitled to exercise the Option at the Company's principal office.
13. ENTIRE AGREEMENT. This Option Agreement, together with the
Plan, and any other and the other exhibits attached thereto or hereto,
represents the entire agreement between the parties.
14. GOVERNING LAW. This Option Agreement shall be construed in
accordance with the laws of the State of New Jersey.
15. AMENDMENT. Subject to the provisions of the Plan, this
Option Agreement may only be amended by a writing signed by each of the parties
hereto.
Date: BLUESTONE SOFTWARE, INC.
-------------------------
By:
-----------------------
Title:
---------------------
-5-
ACKNOWLEDGMENT
The Optionee acknowledges receipt of a copy of the Plan, a
copy of which is attached hereto, and represents that he or she has read and is
familiar with the terms and provisions thereof, and hereby accepts the Option
subject to all of the terms and provisions thereof. The Optionee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Administrator upon any questions arising under the Plan.
Date:
--------------------------- ---------------------------
Signature of Optionee
-------------------------
Address
-------------------------
City, State, Zip
THE OPTION AND THE SECURITIES THAT MAY BE PURCHASED UPON
EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO,
OR IN CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE,
TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THE OPTION
MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AND
RESTRICTION AGREEMENT TO BE ENTERED INTO BETWEEN THE HOLDER OF THE OPTION AND
THE COMPANY UPON EXERCISE OF THE OPTION, A COPY OF WHICH AGREEMENT IS ON FILE
WITH THE SECRETARY OF THE COMPANY.
-6-
BLUESTONE SOFTWARE, INC.
1996 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
STOCK PURCHASE AND RESTRICTION AGREEMENT
This STOCK PURCHASE AND RESTRICTION AGREEMENT is made this
_____ day of ____________, 19__, by and between BLUESTONE SOFTWARE, INC., a
Delaware corporation (the "Company"), and ("Optionee").
R E C I T A L S:
1. Optionee was granted an Option (the "Option") on
________________, 19___ pursuant to the BLUESTONE SOFTWARE, INC. 1996 INCENTIVE
AND NONQUALIFIED STOCK OPTION PLAN (the "Plan"), the terms and conditions of
which are incorporated herein by reference. In addition, capitalized terms used
but not otherwise defined herein shall have the meanings given to them in the
Plan.
2. Pursuant to the Option, Optionee was granted the right to
purchase _____________ (____) shares of the Company's Common Stock, as adjusted
in accordance with the Plan (the "Optioned Shares").
3. Optionee has elected to exercise the Option to purchase
________________ (_____) of such Optioned Shares (herein referred to as the
"Shares") under the Stock Option Agreement evidencing the Option (the "Option
Agreement").
4. As required by the Plan and the Option Agreement, as a
condition to Optionee's exercise of the Option, Optionee is required to execute
this Agreement which gives the Company certain rights, including, but not
limited to, transfer restrictions with respect to the Shares, rights of
repurchase and first refusal upon a proposed sale or transfer of the Shares and
other rights to repurchase the Shares being issued pursuant to the terms hereof.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
1. EXERCISE OF OPTION. Subject to the terms and conditions
hereof, Optionee shall exercise his or her Option or a portion thereof to
purchase ___________________ Shares at an exercise price of $_________ per
Share, subject to and in accordance with the terms set forth in this Agreement,
payable in accordance with the terms and provisions of the Option Agreement.
2. TRANSFER RESTRICTIONS.
(a) The Optionee shall not sell, assign, transfer,
pledge, hypothecate, mortgage, encumber or otherwise dispose of all or any of
his or her Shares except as otherwise expressly provided in this Agreement.
(b) Notwithstanding anything to the contrary
contained herein, the Optionee may transfer all or any of his or her Shares (i)
by way of gift to his or her spouse, parents, siblings, or lineal descendants of
the Optionee or to any trust for the exclusive benefit of any such family member
or the Optionee, provided that any such transferee shall agree in writing with
the Company, prior to, and as a condition precedent to such transfer, to be
bound by all of the provisions of this Agreement to the same extent as if such
transferee were the Optionee, or (ii) by will or the laws of descent and
distribution, in which event each such transferee shall be bound by all of the
provisions of this Agreement to the same extent as if such transferee were the
Optionee.
(c) Any purported transfer in violation of the
provisions of this Agreement shall be void AB INITIO.
3. TERMINATION OF EMPLOYMENT OR ENGAGEMENT.
(a) In the event of the termination of the employment
or engagement (or other relationship) of the Optionee for any reason, including
termination of employment or engagement with BCI, the Company (which term, for
purposes of this Section 3, shall include the designees of the Company) shall
have the right to purchase from, and if the Company exercises its option
pursuant to subparagraphs (d), (e) and (f) below, the Optionee shall sell to the
Company upon the exercise of such right at a purchase price per Share equal to
the Fair Market Value per share as at the date of termination, all of the Shares
owned by the Optionee.
(b) In the event the Optionee does not exercise the
Option until after the Optionee's termination of employment or other engagement
with the Company or BCI, the Company shall have the right to purchase from, and
if the Company exercises its option pursuant to subparagraphs (d), (e) and (f)
below, the Optionee shall sell to the Company upon the exercise of such right at
a purchase price per Share equal to the Fair Market Value per share as at the
date of exercise, all of the Shares owned by the Optionee.
(c) The number of Shares subject to repurchase
pursuant to Sections 3(a) and 3(b) shall be adjusted to give effect to any stock
dividend, or other distribution of stock made on or in respect of such Shares,
or any subdivision, combination or reclassification of the outstanding capital
stock of the Company or received in exchange for the Shares.
(d) In order to exercise the option to purchase
Optionee's Shares under this Section 3, the Company shall deliver a written
notice to the stockholder indicating its election to purchase the Shares and
specifying the number of Shares which the Company elects to purchase and the
purchase price therefor.
-2-
(e) If the Company elects not to exercise its rights
pursuant to this Section 3 or if the Company is legally prohibited from or
unable to repurchase the Shares during the period referred to below, then the
Company shall notify the Optionee and each designee of the Company, if any,
within the 60-day period following (i) with respect to a repurchase pursuant to
Section 3(a), the termination of employment or engagement of the Optionee or
(ii) with respect to a repurchase pursuant to Section 3(b), the date of exercise
of the Option. In such event, the designees shall have the right, during the
30-day period following the Company's notice, to purchase such number of Shares
as the Company shall designate, on the same terms and conditions as were
applicable to the Company, which right shall be exercised by giving written
notice of acceptance to the Company specifying the number of Shares which such
designee elects to purchase and the purchase price therefor.
(f) The repurchase of Shares hereunder shall be made
on a date selected by the Company, within 120 days after (i) with respect to a
repurchase pursuant to Section 3(a), the termination of employment or engagement
or (ii) with respect to a repurchase pursuant to Section 3(b), the date of
exercise of the Option, by delivery of payment to the Optionee, by check or wire
transfer, against receipt of one or more certificates, properly endorsed,
evidencing the Optionee's Shares to be so repurchased.
(g) Anything contained herein to the contrary
notwithstanding, at the option of the Company, any purchaser of Shares pursuant
to Section 3 which is not the Company shall agree in writing, in advance, to be
bound by and comply with all applicable provisions of this Agreement.
4. RIGHT OF FIRST REFUSAL ON DISPOSITIONS.
(a) If at any time the Optionee desires to sell all
or any part of his or her Shares pursuant to a bona fide offer from a third
party (the "Proposed Transferee"), then the Optionee shall submit a written
offer (the "Offer") to sell such Shares (the "Offered Shares") to the Company or
any entity or person designated by the Company ("designee"), on terms and
conditions, including price, not less favorable to the Company or its designee
than those on which the Optionee proposes to sell such Offered Shares to the
Proposed Transferee. The Offer shall disclose the identity of the Proposed
Transferee, the number of Offered Shares proposed to be sold, the total number
of Shares owned by the Optionee, the terms and conditions, including price, of
the proposed sale, and any other material facts relating to the proposed sale.
The Offer shall further state that the Company or its designee may acquire, in
accordance with the provisions of this Agreement, all or any portion of the
Offered Shares for the price and upon the other terms and conditions set forth
therein.
(b) If the Company (or its designee, if one exists)
desires to purchase all or any part of the Offered Shares, then the Company or
its designee shall communicate in writing its election to purchase (an
"Acceptance") to the Optionee, which Acceptance shall state the number of
Offered Shares the Company or its designee desires to purchase and shall be
given to the Optionee within thirty (30) days after the date the Offer was made
to the Company. The Acceptance shall, when taken in conjunction with the Offer,
be deemed to constitute a valid,
-3-
legally binding and enforceable agreement for the sale and purchase of such
Offered Shares. Sales of the Offered Shares to be sold to the Company or its
designee pursuant to this Section 4 shall be made at the offices of the Company
on the 45th day following the date the Offer was made (or if such 45th day is
not a business day, then on the next succeeding business day). Such sales shall
be effected by the Optionee's delivery to the Company a certificate or
certificates evidencing the Offered Shares to be purchased by the Company or its
designee, duly endorsed for transfer to the Company or its designee, as the case
may be, which Shares shall be delivered free and clear of all liens, charges,
claims, and encumbrances of any nature whatsoever, against payment to the
Optionee of the purchase price therefor by the Company or its designee, as the
case may be.
(c) If the Company or its designee does not purchase
all of the Offered Shares, then the Offered Shares not so purchased may be sold
by the Optionee at any time within 90 days after the date the Offer was made to
the Company. Any such sale shall be to the Proposed Transferee, at not less than
the price and upon other terms and conditions, if any, not more favorable to the
Proposed Transferee than those specified in the Offer. Any Offered Shares not
sold within such 90-day period shall continue to be subject to the requirements
of a prior offer pursuant to this Section 4.
5. FAILURE TO DELIVER SHARES. If the Optionee becomes
obligated to sell any Shares to the Company or its designee under this Agreement
and fails to deliver such Shares in accordance with the terms of this Agreement,
then the Company or its designee may, at its option, in addition to all other
remedies it may have, send to the Optionee the purchase price for such Shares as
is herein specified. Thereupon, the Company upon written notice to the Optionee,
(a) shall cancel on its books the certificate or certificates representing the
Shares to be sold and (b) in the case of a designee, shall issue, in lieu
thereof, in the name of such designee, a new certificate or certificates
representing such Shares, and thereupon all of the Optionee's rights in and to
such Shares shall terminate.
6. FURTHER LIMITATION AS TO TRANSFERS BY THE STOCKHOLDER. In
addition to the other restrictions provided in this Agreement or otherwise, if
requested by the Company or its underwriters for a public offering of securities
of the Company, the Optionee shall not sell or otherwise transfer or dispose of
any Shares or other securities of the Company held by such Optionee during the
period of fourteen (14) days before, and one hundred eighty (180) days
following, the effective date of a registration statement filed by the Company
with the Securities and Exchange Commission relating to such offering (other
than a registration statement on Form S-8 or Form S-4, or their successors, or
any other comparable form for similarly limited purposes promulgated after the
date hereof, or any registration statement covering only securities proposed to
be issued in exchange for securities or assets of another corporation).
7. REMEDIES.
(a) The Optionee expressly agrees that the Company or
its designee, as the case may be, will be irreparably damaged if this Agreement
is not specifically enforced. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have
-4-
been breached by the Optionee, the Company or its designee (as the case may be)
may proceed to protect and enforce their rights either by suit in equity and/or
by action at law, including, but not limited to, an action for damages as a
result of any such breach; and/or an action for specific performance of any such
covenant or agreement contained in this Agreement and/or a temporary or
permanent injunction, in any case without showing any actual damage. The rights,
powers and remedies of the parties under this Agreement are cumulative and not
exclusive of any other right, power or remedy which such parties may have under
any other agreement or law. No single or partial assertion or exercise of any
right, power or remedy of a party hereunder shall preclude any other or further
assertion or exercise thereof.
(b) The Optionee agrees that, until a public market
for the Shares exists, the Shares cannot be readily purchased, sold, or
evaluated in the open market, that they have a unique and special value, and
that the Company and its stockholders would be irreparably damaged if the terms
of this Agreement were not capable of being specifically enforced, and for this
reason, among others, the Company shall be entitled to a decree of specific
performance of the terms hereof or an injunction restraining violation of this
Agreement, said right to be in addition to any other remedies of the Company.
8. ASSIGNMENT. The Company may assign its rights under this
Agreement to one or more persons or entities, who shall have the right to so
exercise such rights in his, her or its own name and for his, her or its own
account. If the exercise of any such right requires the consent of any state or
other regulatory authority, then the Optionee shall cooperate with the Company
in requesting such consent.
9. ADJUSTMENT. The number of Shares subject to the terms and
provisions of this Agreement during the term of this Agreement shall be adjusted
to give effect to any stock dividend or liquidating dividend of cash and/or
property, stock split or other change or reclassification of the outstanding
securities of the Company. In such event, any and all new, substituted or
additional securities or other property to which the Optionee is entitled by
reason of his or her ownership of Shares shall be immediately subject to the
terms of this Agreement, and be included in the term "Shares" for all purposes
with the same force and effect as the Shares presently subject to such rights
and restrictions.
10. LEGENDS. All certificates representing any Shares of the
Company subject to the provisions of this Agreement shall have endorsed thereon
the following legend in substantially the following form unless in the opinion
of counsel such legend is no longer necessary:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
APPLICABLE STATE SECURITIES LAWS. THESE SHARES HAVE NOT BEEN
ACQUIRED WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE
SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OR
-5-
OTHERWISE TRANSFERRED OR DISPOSED OF, BY GIFT OR OTHERWISE, OR
IN ANY WAY ENCUMBERED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL SATISFACTORY TO BLUESTONE SOFTWARE, INC.
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS. MOREOVER, THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND RESTRICTED
BY THE PROVISIONS OF A CERTAIN STOCK PURCHASE AND RESTRICTION
AGREEMENT BETWEEN BLUESTONE SOFTWARE, INC. AND THE
STOCKHOLDER, A COPY OF WHICH AGREEMENT WILL BE FURNISHED BY
BLUESTONE SOFTWARE, INC. UPON WRITTEN REQUEST AND WITHOUT
CHARGE, AND ALL OF THE PROVISIONS OF SUCH AGREEMENT ARE
INCORPORATED BY REFERENCE IN THIS CERTIFICATE.
11. INVESTMENT REPRESENTATIONS. Unless the Shares have been
registered under the Securities Act of 1933, as amended (the "Act"), in which
event the Company will so advise Optionee in writing, Optionee acknowledges,
agrees, represents and warrants, in connection with the proposed purchase of the
Shares, as follows:
(a) The Optionee is purchasing the Shares solely for
his or her own account for investment and not with a view to, or for resale in
connection with any distribution thereof within the meaning of the Act. The
Optionee further represents that he or she does not have any present intention
of selling, offering to sell or otherwise disposing of or distributing the
Shares or any portion thereof; and that the entire legal and beneficial interest
of the Shares he or she is purchasing is being purchased for, and will be held
for the account of, the Optionee only and neither in whole nor in part for any
other person.
(b) The Optionee is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Shares. The Optionee has a preexisting personal or business relationship with
the officers and directors of the Company and that the Optionee has such
knowledge and experience in business and financial matters to enable him or her
to evaluate the risks of the prospective investment and to make an informed
investment decision with respect thereto and that the Optionee has the capacity
to protect his or her own interests in connection with the purchase of the
Shares. The Optionee has discussed the Company and its plans, operations and
financial condition with its officers, has received all such information as the
Optionee deems necessary and appropriate to enable him or her to evaluate the
financial risk inherent in making an investment in the Shares and has received
satisfactory and
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complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof.
(c) The Optionee realizes that his or her purchase of
the Shares will be a speculative investment and that Optionee is able, without
impairing his or her financial condition, to hold the Shares for an indefinite
period of time and to suffer a complete loss on the investment.
(d) The Company has disclosed in writing that: (i)
the sale of the Shares has not been registered under the Act, and the Shares
must be held indefinitely unless a transfer of them is subsequently registered
under the Act or an exemption from such registration is available, and the
Company is under no obligation to register the Shares; and (ii) the Company
shall make a notation in its records of the aforementioned restrictions on
transfer and legends.
(e) The Optionee is aware of the provisions of Rule
144, promulgated under the Act, which, in substance, permits limited public
resale of "restricted securities" acquired, directly or indirectly, from the
issuer thereof (or an affiliate of such issuer) in a non-public offering subject
to the satisfaction of certain conditions, including among other things: the
resale occurring not less than one (1) year from the date Optionee has purchased
and paid for the Shares; the availability of certain public information
concerning the Company; the sale being through a broker in an unsolicited
"brokers' transaction" or in a transaction directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934, as amended); and that
any sale of the Shares may be made by Optionee, if Optionee is an affiliate of
the Company, only in limited amounts during any three-month period not exceeding
specified limitations. The Optionee understands that at the time Optionee wishes
to sell the Shares there may be no public market upon which to make such a sale,
and that, even if such public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144, and that, in
such event, Optionee would be precluded from selling the Shares under Rule 144
even if the one-year minimum holding period had been satisfied. The Optionee
understands that in the event all of the requirements of Rule 144 are not
satisfied, registration under the Act, compliance with Regulation A, or some
other registration exemption will be required; and that, notwithstanding the
fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its
opinion that persons proposing to sell private placement securities other than
in a registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and such persons and their respective
brokers who participate in such transactions do so at their own risk.
(f) Without in any way limiting the Optionee's
representations and warranties set forth herein, the Optionee shall in no event
make any disposition of all or any portion of the Shares that he or she is
purchasing unless and until:
(i) there is then in effect a Registration
Statement under the Act covering such proposed disposition and such disposition
is made in accordance with said Registration Statement; or
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(ii) the Optionee shall have (a) notified
the Company of the proposed disposition and furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and (b) furnished the Company with an opinion of Optionee's own counsel
(satisfactory to the Company) to the effect that such disposition will not
require registration of such shares under the Act, and such opinion of the
Optionee's counsel shall have been concurred in by counsel for the Company and
the Company shall have advised the Optionee of such concurrence.
12. ESCROW. As security for the Optionee's faithful
performance of the terms of this Agreement and to insure the availability for
delivery of the Optionee's Shares upon exercise, under this Agreement, of the
rights of the Company and the rights of the other beneficiaries to this
Agreement, the Optionee shall, if requested in writing by the Company, deliver
to and deposit with the Chief Financial Officer of the Company or his nominee
(the "Escrow Agent"), as Escrow Agent in this transaction, two Stock Assignments
duly endorsed (with date and number of shares blank) in the form attached hereto
as ATTACHMENT A, together with the certificate or certificates evidencing the
Shares; such documents are to be held by the Escrow Agent and delivered to said
Escrow Agent pursuant to the Joint Escrow Instructions of the Company and
Optionee set forth in ATTACHMENT B attached hereto and incorporated herein by
this reference, which instructions shall also be delivered to the Escrow Agent
at the closing hereunder.
13. RESTRICTION ON ALIENATION. The Optionee shall not sell,
transfer, gift, pledge, hypothecate, assign or otherwise dispose of any of the
Shares or any right or interest therein, whether voluntary, by operation of law
or otherwise, without the prior written consent of the Company, except a
transfer which meets the requirements of this Agreement. Any sale, transfer,
gift, pledge, hypothecation, assignment or disposition or purported sale,
transfer or other disposition of such Shares by Optionee shall be null and void
AB INITIO unless the terms, conditions and provisions of this Agreement are
strictly observed.
14. TERM. Except for Sections 3, 4 and 5 hereof, which shall
terminate upon the consummation of a Public Offering of shares of the Company's
equity capital, this Agreement shall continue in full force and effect until
such time as the Optionee has transferred all of the Shares (other than pursuant
to Section 2(b)) in accordance with the terms of this Agreement.
15. MISCELLANEOUS.
(a) The Company shall not be required (i) to
transfer on its books any Shares that shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement, or (ii) to treat
as owner of such Shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such Shares shall have been so transferred.
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(b) Subject to the provisions of this Agreement,
Optionee shall, during the term of this Agreement, exercise all rights and
privileges of a stockholder of the Company with respect to the Shares.
(c) The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
(d) Any notice, consent or other communication
required or permitted hereunder shall be given in writing and shall be deemed
effectively given: (a) upon personal delivery; (b) two (2) business days after
day of deposit if sent by regular mail; (c) one (1) business day after the
business day of deposit with a carrier if sent by Federal Express, Express Mail
or other express service (receipt requested), in each case to the appropriate
addresses, telex numbers and telecopier numbers set forth below (or at such
other address or numbers as such party may designate by ten (10) days' advance
written notice to the other party hereto):
(i) To the Optionee:
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-------------------
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(ii) To the Company:
Bluestone Software, Inc.
1000 Briggs Road
Mount Laurel, NJ 08054
Attn: President
(e) This Agreement shall inure to the benefit of the
successors and assigns of the Company and, subject to all compliance with the
restrictions on transfer herein set forth, be binding upon Optionee, his heirs,
executors, administrators, and permitted successors and assigns.
(f) This Agreement shall be construed under the laws
of the State of New Jersey and constitutes the entire Agreement of the parties
with respect to the subject matter hereof, superseding all prior written or oral
agreements with respect thereto, and no amendment or addition hereto shall be
deemed effective unless agreed to in writing by the parties hereto.
(g) If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, then the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way and shall be construed in
accordance with the purposes and tenor and effect of this Agreement.
-9-
(h) Nothing in this Agreement shall be deemed to
create any term of employment or engagement or affect in any manner whatsoever
the right or power of the Company or BCI to terminate Optionee's employment or
engagement.
(i) Notwithstanding (i) the execution and delivery of
this Agreement by the parties hereto or (ii) anything to the contrary contained
herein, if the Optionee's employment or engagement with the Company or BCI (as
the case may be) is terminated and the Board makes a determination that the
Optionee (A) has engaged in any type of disloyalty to the Company or BCI,
including without limitation, fraud, embezzlement, theft, or dishonesty in the
course of his or her employment or engagement, (B) has been convicted of a
felony, (C) has disclosed trade secrets or confidential information of the
Company or BCI, or (D) has breached any agreement with the Company or BCI in
respect of confidentiality, non-disclosure, non-competition or otherwise, then,
at the election of the Board, the Optionee shall forfeit all shares for which
the Company has not yet delivered share certificates to the Optionee or Escrow
Agent, as the case may be, and the Company shall refund to the Optionee the
Option purchase price paid to the Company upon exercise of the Option with
respect to those Shares. In addition, the Company may withhold delivery of share
certificates pending the resolution of any inquiry that could lead to a
determination resulting in forfeiture.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above-written.
BLUESTONE SOFTWARE, INC.
By:
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Title:
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OPTIONEE:
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(Signature)
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(Print Name)
Address:
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