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EXHIBIT 4.2
BRODERBUND SOFTWARE, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into as of ___________ (the "Date of Grant") by and between Broderbund
Software, Inc., a Delaware corporation (the "Company"), and ____________
("Optionee").
NOW THEREFORE, subject to the terms and conditions of this Agreement, the
parties agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee, an option (the
"Option") to purchase a total of ____________ shares of Common Stock (the
"Shares"), subject to the terms and conditions of this Agreement and the 1996
Employee and Consultant Stock Option Plan (the "Plan") adopted by the Company,
which is incorporated herein by reference. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings herein.
2. NATURE OF THE OPTION. This Option is intended to qualify as an
Incentive Stock Option ("ISO") as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section
422(d), this Option shall be treated as a nonqualified option.
3. EXERCISE PRICE. The exercise price is _____________ for each share of
Common Stock (the "Exercise Price"), which price is not less than the fair
market value per share of Common Stock on the date of grant, as determined by
the Administrator.
4. EXERCISE OF OPTION. This Option shall be exercisable during its term in
accordance with the provisions of Section 6 of the Plan as follows:
(a) RIGHT TO EXERCISE.
(i) Subject to subsections 4(a)(ii), (iii) and (iv) below,
one-fifth (1/5th) of the total number of shares subject to this Option shall
become exercisable on each one year anniversary following the Date of Grant
until all of such shares are exercisable.
(ii) This Option may not be exercised for a fraction of a share.
(iii) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Section 7 below, subject to the limitation contained in subsection 4(a)(iv).
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(iv) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in Section 8 below.
(b) METHOD OF EXERCISE. Subject to the terms and conditions of this
Agreement (including without limitation Section 6) and the Plan, Optionee may
exercise this Option by delivery to the Secretary of the Company at the
Company's principal executive offices written notice (in the form attached as
Exhibit A) which shall state the election to exercise the Option and the number
of Shares in respect of which the Option is being exercised. Such written notice
shall be signed by the Optionee and shall be delivered in person or by certified
mail. The written notice shall be accompanied by payment of the Exercise Price
and such other representations and agreements of the holder as may be required
by the Company pursuant to Section 6 of this Agreement. This Option shall be
deemed to be exercised upon receipt by the Company of such written notice, such
representations and agreements as are required by the Company and payment of the
Exercise Price.
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 the Optionee on the date on which the Option is
exercised with respect to such Shares.
5. METHOD OF PAYMENT. Payment of the Exercise Price shall be made by cash or
check.
6. RESTRICTIONS ON EXERCISE; DAMAGES. This Option may not be exercised 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, in the opinion of the
Company and the Company's counsel including any rule under Part 207 of Title 12
of the Code of Federal Regulations ("Regulation G") as 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. Optionee shall
be liable to the Company for all costs and damages, including incidental and
consequential damages, resulting from a disposition of Shares that is not in
conformity with the provisions of this Option.
7. TERMINATION OF EMPLOYMENT. In the event Optionee ceases to be an employee
of the Company, Optionee may, but only within three months after the date of
such termination (but in no event later than the date of expiration of the term
of this Option as set forth in Section 8 below), exercise this Option to the
extent that Optionee was entitled to exercise it at the date of such
termination. Notwithstanding the foregoing, if termination of employment is due
to the disability or death of Optionee, Optionee, or Optionee's personal
representative or any other person who acquires the right to exercise this
Option from Optionee by will or the applicable laws of descent and distribution,
may within twelve months after the termination of employment exercise this
Option to the extent Optionee was entitled to exercise it at the date of the
termination.
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8. TERM OF OPTION. This Option shall terminate ten (10) years from the Date
of Grant unless terminated sooner pursuant to the terms of this Agreement or the
Plan, and may be exercised during such term only in accordance with the terms of
this Agreement and the Plan. Notwithstanding the preceding sentence, in the
event that Optionee is a Ten Percent Holder as defined in Section 6.3.2 of the
Plan, this Option shall terminate five (5) years from the Date of Grant, unless
terminated sooner pursuant to the terms of this Agreement or the Plan.
9. RIGHTS AS STOCKHOLDER. Subject to the terms and conditions of this
Agreement, Optionee shall have all of the rights of a stockholder of the Company
with respect to the Shares from and after the date that Optionee delivers full
payment of the Exercise Price until such time as Optionee disposes of the
Shares. The Company and its transfer agent, if any, shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Option or (ii) to treat as owner of
such Shares or to accord the right to vote or pay dividends to any purchaser or
other transferee to whom such Shares shall have been so transferred. Optionee
agrees that, in order to ensure compliance with the restrictions referred to
herein, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any, and that, if the Company transfers its own securities,
it may make appropriate notations to the same effect in its own records.
10. TAX CONSEQUENCES. Set forth below is a brief summary as of the date of
this Option of some of the federal and California tax consequences of exercise
of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(a) EXERCISE OF ISO. There will be no regular federal income tax
liability or California 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 adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(b) DISPOSITION OF SHARES. If Shares transferred pursuant to this
Option are held for at least one year after exercise and are disposed of at
least two years after the date of this Option, any gain realized on disposition
of the Shares will also be treated as long-term capital gain for federal and
California income tax purposes. If Shares purchased under an ISO are disposed of
within such one-year period or within two years after the Date of Grant, 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, equal to
the lesser of (i) the fair market value of the Shares acquired on the date of
exercise less the aggregate Exercise Price or (ii) the sale price of the Shares
less the Exercise Price.
(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If any of the
Shares acquired by exercise of this Option are disposed of within two years from
the Date of Grant of this Option or within one year after the transfer of the
stock to Optionee, the holder of the stock immediately prior to
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the disposition shall promptly notify the Company in writing of the date and
terms of the disposition and shall provide such other information regarding the
disposition as the Company may reasonably require. Such holder agrees to pay to
the Company any withholding and employment taxes which the Company in its sole
discretion deems applicable to such disposition. The Company may instruct its
stock transfer agent by appropriate means, including placement of legends on
stock certificates, not to transfer stock acquired by exercise of an ISO unless
it has been advised by the Company that the requirements of this Section 12(c)
have been satisfied.
11. SUCCESSORS AND ASSIGNS; NONTRANSFERABILITY OF OPTION. The Company may
assign any of its rights under this Option to single or multiple assignees, and
this Option shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this Option
shall be binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns. This Option may not be transferred by Optionee in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
12. INTERPRETATION. Any dispute regarding the interpretation of this Option
shall be submitted by Optionee or by the Company forthwith to the Administrator,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Administrator shall be final and binding on the Company
and on Optionee.
13. GOVERNING LAW; SEVERABILITY. This Option shall be governed by and
construed in accordance with the laws of the State of California, excluding that
body of law pertaining to conflicts of law. Should any provision of this Option
be determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
14. NOTICES. All notices and other communications under this Agreement shall
be in writing. Unless and until Optionee is notified in writing to the contrary,
all notices, communications and documents directed to the Company and related to
the Agreement, if not delivered by hand, shall be mailed, addressed as follows:
Broderbund Software, Inc.
000 Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Unless and until the Company is notified in writing to the contrary, all
notices, communications and documents intended for Optionee and related to this
Agreement, if not delivered by hand, shall be mailed to Optionee's last known
address as shown on the Company's books. Notices and communications shall be
mailed by first class mail, postage prepaid; documents shall be mailed by
registered mail, return receipt requested, postage prepaid. All mailings and
deliveries related to this Agreement shall be deemed received only when actually
received.
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15. ENTIRE AGREEMENT. The Plan is incorporated herein by reference. This
Agreement and the Plan constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof.
BRODERBUND SOFTWARE, INC.
A DELAWARE CORPORATION
By:_____________________________
Title:__________________________
Address:
000 Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
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OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY
(NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING
SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
AGREEMENT, NOR IN THE COMPANY'S PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE,
SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT
BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT
CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that
Optionee is familiar with the terms and provisions of the Plan, and accepts this
Option subject to all of the terms and provisions thereof. Optionee has reviewed
the Plan and this Agreement in their entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Agreement and fully understands
all provisions of the Agreement. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under the Plan. Optionee acknowledges that Optionee's
spouse, if any, has signed the consent of spouse attached as Attachment 1.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
Dated: _______________ ______________________________
Optionee
Address: _____________________
_____________________
_____________________
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ATTACHMENT 1
CONSENT OF SPOUSE
As the undersigned spouse of the Optionee, I hereby represent that I have
read and approve the foregoing Agreement. I hereby agree to be irrevocably bound
by the provisions of the Agreement insofar as I may have any rights under such
Agreement or in any Shares issued pursuant thereto, and I further agree that any
rights that I may have with respect to such Agreement and/or such Shares
pursuant to the community property laws of the State of California or similar
laws relating to marital property as of the date of the Agreement shall be
similarly bound. I appoint my spouse as my attorney-in-fact with respect to any
amendment or the exercise of any rights under the Agreement.
Dated: __________________
_________________________________
Print name: _____________________
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EXHIBIT A
EXERCISE NOTICE
BRODERBUND SOFTWARE, INC.
000 Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: President
Effective as of today, ___________, 19__, the undersigned ("Optionee")
hereby elects to exercise Optionee's option to purchase _________ shares of the
Common Stock (the "Shares") of BRODERBUND SOFTWARE, INC. (the "Company") at
$_____ per share (total exercise price of $_______) under and pursuant to the
Company's 1996 Employee and Consultant Stock Option Plan (the "Plan") and the
Incentive Stock Option Agreement dated ___________, 19___ (the "Agreement").
Optionee acknowledges that Optionee has received, read and understood the
Plan and the Agreement and agrees to abide by and be bound by their terms and
conditions.
Please prepare the stock certificate in the following name(s).
______________________
______________________
Sincerely,
______________________________
(Signature)
______________________________
(Print or Type Name)
Notice and consideration received
by Broderbund Software, Inc. on
________________, 19__.
By: _________________________
