Exhibit (d)(3)
BRIO SOFTWARE
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STOCK OPTION AGREEMENT
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1. Grant of Option. Brio Software, a Delaware corporation (the
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"Company"), hereby grants to the Optionee named in the Notice of Stock Option
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Grant attached to this Agreement ("Optionee"), an option (the "Option") to
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purchase the total number of shares of Common Stock (the "Shares") set forth in
the Notice of Stock Option Grant, at the exercise price per share set forth in
the Notice of Stock Option Grant (the "Exercise Price") subject to the terms,
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definitions and provisions of the 1998 Stock Option Plan (the "Plan") adopted by
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the Company, which is incorporated in this Agreement by reference. In the event
of a conflict between the terms of the Plan and the terms of this Agreement, the
terms of the Plan shall govern. Unless otherwise defined in this Agreement, the
terms used in this Agreement shall have the meanings defined in the Plan.
To the extent designated an Incentive Stock Option in the
Notice of Stock Option Grant, this Option is intended to qualify as an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") and, to the extent not so designated, this Option is
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intended to be a Nonstatutory Stock Option.
2. Exercise of Option. This Option shall be exercisable during
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its term in accordance with the Vesting Schedule set out in the Notice of Stock
Option Grant and with the provisions of Sections 9 and 10 of the Plan as
follows:
(a) Right to Exercise.
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(i) This Option may not be exercised for a
fraction of a share.
(ii) In the event of Optionee's death, disability
or other termination of employment, the exercisability of the Option is governed
by Sections 6, 7 and 8 below, subject to the limitations contained in paragraphs
(iii) and (iv) below.
(iii) In no event may this Option be exercised
after the date of expiration of the term of this Option as set forth in the
Notice of Stock Option Grant.
(iv) If designated an Incentive Stock Option in
the Notice of Stock Option Grant, in the event that the Shares subject to this
Option (and all other Incentive Stock Options granted to Optionee by the Company
or any Parent or Subsidiary) that vest in any calendar year have an aggregate
fair market value (determined for each Share as of the Date of Grant of the
option covering such Share) in excess of $100,000, the Shares in excess of
$100,000 shall be treated as subject to a Nonstatutory Stock Option, in
accordance with Section 5 of the Plan.
(b) Method of Exercise.
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(i) This Option shall be exercisable by
delivering to the Company a written notice of exercise (in the form provided by
the Company) which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such Shares of Common Stock as may be
required by the Company pursuant to the provisions of the Plan. Such written
notice shall be signed by Optionee and shall be delivered in person or by
certified mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the Exercise Price. This Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied by the
Exercise Price.
(ii) As a condition to the exercise of this
Option, Optionee agrees to make adequate provision for federal, state or other
tax withholding obligations, if any, which arise upon the exercise of the Option
or disposition of Shares, whether by withholding, direct payment to the Company,
or otherwise.
(iii) No Shares will be issued pursuant to the
exercise of an Option unless such issuance and such exercise shall comply with
all relevant provisions of law and the requirements of any stock exchange upon
which the Shares may then be listed. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to Optionee on the date on
which the Option is exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable
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pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), at the time this
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Option is exercised, Optionee shall, if required by the Company, concurrently
with the exercise of all or any portion of this Option, deliver to the Company
an investment representation statement in customary form, a copy of which is
available for Optionee's review from the Company upon request.
4. Method of Payment. Payment of the Exercise Price shall be by any
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of the following, or a combination of the following, at the election of
Optionee: (a) cash; (b) check; (c) surrender of other Shares of Common Stock of
the Company that (i) either have been owned by Optionee for more than six (6)
months on the date of surrender or were not acquired, directly or indirectly,
from the Company, and (ii) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised; (d) if there is a public market for the Shares and they are
registered under the Securities Act, delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to deliver promptly to
the Company the amount of sale or loan proceeds required to pay the exercise
price.
5. Restrictions on Exercise. This Option may not be exercised until
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such time as the Plan has been approved by the stockholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
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promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
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6. Termination of Relationship. In the event of termination of
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Optionee's Continuous Status as an Employee or Consultant, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
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Date"), exercise this Option only within three (3) months from the date of
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termination of employment (but in no event later than the date of expiration of
the term of this Option as set forth in Section 10 below), exercise the Option
to the extent otherwise so entitled at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option (to the extent
otherwise so entitled) within the time specified in this Agreement, the Option
shall terminate.
7. Disability of Optionee. Notwithstanding the provisions of
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Section 6 above, in the event of termination of Optionee's Continuous Status as
an Employee or Consultant as a result of total and permanent disability (as
defined in Section 22(e)(3) of the Code), Optionee may, but only within six (6)
months from the date of termination of employment (but in no event later than
the date of expiration of the term of this Option as set forth in Section 10
below), exercise the Option to the extent otherwise so entitled at the date of
such termination. To the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if Optionee does not exercise such Option
(to the extent otherwise so entitled) within the time specified in this
Agreement, the Option shall terminate.
8. Death of Optionee. In the event of the death of Optionee:
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(a) during the term of this Option and while an Employee of
the Company and having been in Continuous Status as an Employee or Consultant
since the date of grant of the Option, the Option may be exercised, at any time
within six (6) months following the date of death (but in no event later than
the date of expiration of the term of this Option as set forth in Section 10
below), by Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent of the right to
exercise that would have accrued had Optionee continued living and remained in
Continuous Status as an Employee or Consultant three (3) months after the date
of death, subject to the limitation contained in Section 2(i)(d) above in the
case of an Incentive Stock Option; or
(b) within thirty (30) days after the termination of
Optionee's Continuous Status as an Employee or Consultant, the Option may be
exercised, at any time within six (6) months following the date of death (but in
no event later than the date of expiration of the term of this Option as set
forth in Section 10 below), by Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.
9. Non-Transferability of Option. This Option may not be
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transferred in any manner otherwise than by will or by the laws of descent or
distribution. The designation of a beneficiary does not constitute a transfer.
An Option may be exercised during the lifetime of Optionee only by Optionee or a
transferee permitted by this section. The terms of this Option shall be binding
upon the executors, administrators, heirs, successors and assigns of Optionee.
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10. Term of Option. This Option may be exercised only within the
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term set out in the Notice of Stock Option Grant, and may be exercised during
such term only in accordance with the Plan and the terms of this Option.
11. No Additional Employment Rights. Optionee understands and agrees
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that the vesting of Shares pursuant to the Vesting Schedule is earned only by
continuing as an Employee or Consultant at the will of the Company (not through
the act of being hired, being granted this Option or acquiring Shares under this
Agreement). Optionee further acknowledges and agrees that nothing in this
Agreement, nor in the Plan which is incorporated in this Agreement by reference,
shall confer upon Optionee any right with respect to continuation as an Employee
or Consultant with the Company, nor shall it interfere in any way with his or
her right or the Company's right to terminate his or her employment or
consulting relationship at any time, with or without cause.
12. Tax Consequences. Optionee acknowledges that he or she has read
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the brief summary set forth below of certain federal tax consequences of
exercise of this Option and disposition of the Shares under the law in effect as
of the date of grant. OPTIONEE UNDERSTANDS THAT THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercise of Incentive Stock Option. If this Option is an
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Incentive Stock Option, there will be no regular federal income tax liability
upon the exercise of the Option, although the excess, if any, of the fair market
value of the Shares on the date of exercise over the Exercise Price will be
treated as an item of alternative minimum taxable income for federal tax
purposes and may subject Optionee to the alternative minimum tax in the year of
exercise.
(b) Exercise of Nonstatutory Stock Option. If this Option
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does not qualify as an Incentive Stock Option, Optionee may incur regular
federal income tax liability upon the exercise of the Option. Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the fair market value of the Shares on
the date of exercise over the Exercise Price. In addition, if Optionee is an
employee of the Company, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
(c) Disposition of Shares. If this Option is an Incentive
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Stock Option and if Shares transferred pursuant to the Option are held for more
than one year after exercise and more than two years after the Date of Grant,
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an
Incentive Stock Option are disposed of before the end of either of such two
holding periods, then any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the lesser of (i) the fair market value of the Shares on the
date of exercise, or (ii) the sales proceeds, over the Exercise Price. If this
Option is a Nonstatutory Stock Option, then gain realized on the disposition of
Shares will be treated as
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long-term or short-term capital gain depending on whether or not the disposition
occurs more than one year after the exercise date. In the case of either an
Incentive Stock Option or a Nonstatutory Stock Option, the long-term capital
gain will be taxed for federal income tax and alternative minimum tax purposes
at a maximum rate of 20% if the Shares are held more than one year.
(d) Notice of Disqualifying Disposition. If the Option
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granted to Optionee in this Agreement is an Incentive Stock Option, and if
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
the Incentive Stock Option on or before the later of (i) the date two years
after the Date of Grant, or (ii) the date one year after transfer of such Shares
to Optionee upon exercise of the Incentive Stock Option, Optionee shall notify
the Company in writing within thirty (30) days after the date of any such
disposition. Optionee agrees that Optionee may be subject to income tax
withholding by the Company on the compensation income recognized by Optionee
from the early disposition by payment in cash or out of the current earnings
paid to Optionee.
13. Signature. This Stock Option Agreement shall be deemed
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executed by the Company and Optionee upon execution by such parties of the
Notice of Stock Option Grant attached to this Stock Option Agreement.
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