-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IugFUSInissVocjrlQc7pg1iCGGhmCoUvSKLTFJUCRcjfYC/ssEZPAnmYcBIDHpx C4/W87dBV2LPAWxf7yLQ2g== 0001002536-97-000052.txt : 19970912 0001002536-97-000052.hdr.sgml : 19970912 ACCESSION NUMBER: 0001002536-97-000052 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970815 DATE AS OF CHANGE: 19970903 EFFECTIVENESS DATE: 19970822 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INDIVIDUAL INC CENTRAL INDEX KEY: 0001002536 STANDARD INDUSTRIAL CLASSIFICATION: 7374 IRS NUMBER: 043036959 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-34141 FILM NUMBER: 97668181 BUSINESS ADDRESS: STREET 1: 8 NEW ENGLAND EXECUTIVE PARK WEST CITY: BURLINGTON STATE: MA ZIP: 01803 BUSINESS PHONE: 6172736000 MAIL ADDRESS: STREET 1: 8 NEW ENGLAND EXECUTIVE PK CITY: BURLINGTON STATE: MA ZIP: 01803 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on August 15, 1997 Registration No. 333-______ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________ FORM S-8 (Containing a Reoffer Prospectus on Form S-3) REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 __________________________ INDIVIDUAL, INC. (Exact name of registrant as specified in its charter)
Delaware . . . . . . . . . . . . 04-3036959 - - -------------------------------- ------------------------------------ (State or other jurisdiction of. (I.R.S. Employer Identification No.) incorporation or organization)
8 New England Executive Park West, Burlington, MA 01803 -------------------------------------------------------- (Address of principal executive offices) (Zip Code) AMENDED AND RESTATED 1989 STOCK OPTION PLAN SELLING OFFICER SHARES CLARINET 1995 INCENTIVE STOCK OPTION PLAN CLARINET 1996 STOCK OPTION PLAN (Full title of the plan) MICHAEL E. KOLOWICH Chairman of the Board, President and Chief Executive Officer INDIVIDUAL, INC. 8 New England Executive Park West Burlington, MA 01803 (617) 273-6000 (Name, address including zip code and telephone number, including area code, of agent for service) __________________________ Copy to: WILLIAM B. ASHER, JR. Testa, Hurwitz & Thibeault, LLP High Street Tower 125 High Street Boston, MA 02110 (617) 248-7000 ============== CALCULATION OF REGISTRATION FEE
Proposed Proposed Title of Maximum Maximum Securities Amount Offering Aggregate Amount of to be to be Price Per Offering Registration Registered Registered Share Price Fee - - ----------------------- ------------------ -------------- -------------- ------------ AMENDED AND RESTATED 1989 STOCK OPTION PLAN . . . . . . Common Stock, . . . . . 1,500,000 shares $ 3.50(1) $ 5,250,000(1) $ 1,590.91 $.01 par value CLARINET 1995 INCENTIVE STOCK OPTION PLAN Common Stock. . . . . . 60,705 $ 0.23(2) $ 13,962.15(2) $ 4.23 $.01 par value. . . . . 439 $ 0.46(2) $ 201.94(2) $ 0.06 CLARINET 1996 STOCK OPTION PLAN Common Stock $.01 par value. . . . . 23,250 $ 3.42(2) $ 79,515.00(2) $ 24.10 3,512 $ 3.87(2) $ 13,591.44(2) $ 4.12 18,112 $ 4.33(2) $ 78,424.96(2) $ 23.77 6,366 $ 4.78(2) $ 30,429.48(2) $ 9.22 26,582 $ 5.24(2) $139,289.68(2) $ 42.21 SELLING OFFICER SHARES Common Stock, $.01 par value. . . . . 100,000 shares $ 3.50(1) $ 363,000(1) $ 106.06 TOTAL:. . . . . . . . . 1,738,966 SHARES $5,955,414.65 $ 1,804.68 (1) The price of $3.50 per share, which is the average of the high and low prices reported on the Nasdaq National Market on August 12, 1997, is set forth solely for the purpose of calculating the filing fee pursuant to Rule 457(c) and is used only for those shares without a fixed exercise price. (2) Such shares are issuable upon the exercise of outstanding options with fixed exercise prices. Pursuant to Rule 457(h), the aggregate offering price and the fee have been computed upon the basis of the price at which the options may be exercised.
EXPLANATORY NOTE This Registration Statement has been prepared in accordance with the requirements of Form S-8 which relates to the Registrant's Common Stock offered pursuant to the Company's 1989 Stock Option Plan, ClariNet 1995 Incentive Stock Option Plan and ClariNet 1996 Stock Option Plan. This Registration Statement also includes a Prospectus prepared in accordance with the requirements of Part I of Form S-3 which relates to the reoffer and resale by a Selling Officer of the Registrant's Common Stock covered by the Prospectus prepared in accordance with the requirements of Form S-8. This Registration Statement registers additional securities of the same class as other securities for which a registration statement filed on this form relating to the 1989 Stock Option Plan of the Registrant is effective. Pursuant to General Instruction E, the Registrant incorporates by reference herein the information contained in the Registrant's Registration Statement on Form S-8 (Registration No. 333-07815). PROSPECTUS - - ---------- INDIVIDUAL, INC. ________________________ 100,000 SHARES COMMON STOCK $.01 PAR VALUE PER SHARE ________________________ This prospectus (the "Prospectus") relates to the reoffer and resale of 100,000 shares (the "Shares") of common stock, $.01 par value per share (the "Common Stock"), of Individual, Inc. (the "Company" or "Individual"). The Shares of Common Stock to which this Prospectus relates may be offered hereby from time to time, subject to certain restrictions, by the selling officer named herein (the "Selling Officer") for his own benefit. See "Plan of Distribution." The Company will not receive any proceeds from the sale of the Shares of Common Stock by the Selling Officer. The Company's Common Stock is quoted on the Nasdaq National Market under the symbol "INDV". ____________________ THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS". __________________ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ________________________ No person has been authorized to give any information or to make any representation other than those contained in this Prospectus in connection with the offering made hereby, and if given or made, such information or representation must not be relied upon as having been authorized by the Company or by any other person. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that information herein is correct as of any time subsequent to the date hereof. This Prospectus does not constitute an offer to sell or a solicitation of any offer to buy any security other than the securities covered by this Prospectus, nor does it constitute an offer to or solicitation of any person in any jurisdiction in which such offer or solicitation may not be lawfully made. _______________________ The date of this Prospectus is August 15, 1997. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information may be inspected and copied at prescribed rates at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the Commission located at Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The Commission maintains a World Wide Web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. The Common Stock of the Company is quoted on the Nasdaq National Market and such material may be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, upon written or oral request of such person, a copy of any and all of the information that has been incorporated by reference in this Prospectus and any registration statement containing this Prospectus (not including exhibits to the information that is incorporated by reference unless such exhibits are specifically incorporated by reference in the information that this Prospectus and any registration statement containing this Prospectus incorporates). Such requests should be made to Individual, Inc., 8 New England Executive Park West, Burlington, MA 01803 (telephone (617) 273-6000). THE COMPANY The Company's principal offices are located at 8 New England Executive Park West, Burlington, MA 01803, and its telephone number is (617) 273-6000. RISK FACTORS In addition to the other information in this Prospectus, the following risk factors should be considered carefully in evaluating the Company and its business before purchasing the Shares offered hereby. Certain statements set forth in this Prospectus may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties, and the Company's actual future results may differ materially from those stated in any such forward-looking statements. Factors that may causes such differences include, but are not limited to, those described in the following Risk Factors and in the other risk factors described from time to time in the Company's filings with the Securities and Exchange Commission. FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS In view of the Company's revenue growth in recent years and its limited operating history, period-to-period comparisons of its financial results are not necessarily meaningful and should not be relied upon as any indication of future performance. The Company's quarterly results of operations have fluctuated significantly in the past and will likely fluctuate in the future due to, among other factors, demand for its services and changes in service mix, the size and timing of new and renewal subscriptions from corporate customers, advertising revenue levels, the effects of new service announcements by the Company and its competitors, the ability of the Company to develop, market and introduce new and enhanced versions of its services on a timely basis and the level of product and price competition. A substantial portion of the Company's cost of revenue, which consists principally of fees payable to information providers, telecommunications costs and personnel expenses, is relatively fixed in nature. The Company's operating expense levels are based, in significant part, on the Company's expectations of future revenue. If quarterly revenues are below management's expectations, both gross margins and results of operations would be adversely affected because a relatively small amount of the Company's costs and expenses varies with its revenue in the short-term. The Company has incurred operating losses since inception and expects to continue to incur operating losses on both a quarterly and annual basis for the foreseeable future. There can be no assurance that the Company will sustain revenue growth or achieve profitability. EMERGING MARKET FOR CUSTOMIZED INFORMATION SERVICES The market for the Company's services has only recently begun to develop, is rapidly evolving and is characterized by increasing competition from a variety of companies, ranging from traditional news and media companies to Internet-based information services and including companies that may have significantly more resources. Although this market is growing at a substantial rate, the Company's ability to increase its revenue will depend upon its ability to expand its sales force, to sell larger subscription contracts with a broader solution set for its customers, and to integrate a full spectrum of product offerings under a single brand. In addition, continued growth of the Company's enterprise services will depend to a significant extent upon its ability to achieve high contract renewal rates, while continuing to migrate customers from fax and e-mail platforms to Lotus Notes and intranet-based services with larger reader bases. Although the Company has recently taken steps to enhance its service offerings to enterprise customers, including establishing a content provider relationship with Dow Jones and Company and acquiring real-time alerting and archival capabilities with Hoover, there can be no assurance that it will be able to increase its enterprise customer base or achieve renewal rates that meet its objectives. The Company's financial results will also depend to a significant extent upon advertising revenues generated by NewsPage, its Web-based single-user service. Such revenues will depend, among other matters, on the acceptance of the Internet as a viable advertising medium, as well as on the Company's ability to generate a high level of pageviews through increased NewsPage readership and user activity, to build a direct sales force to sell advertising, to attract and retain information providers, and to develop a user base of a sufficient size and with appropriate demographics to attract advertisers. The Company relies in part on distribution alliances to increase readership of NewsPage and, in the fourth quarter of 1996, introduced the NewsPage Network, which is intended to enable the Company to supply daily news content to Web services sponsored by third parties, thereby extending the reach of its advertisers and expanding NewsPage readership, at a low cost of subscriber acquisition. Because the NewsPage Network has only recently been introduced, however, there can be no assurance that it will be successful in acquiring additional new users of NewsPage. If the Company is unable to attract and increase paid advertising sponsorship of NewsPage, the Company's business and results of operations will be materially and adversely affected. DEPENDENCE ON KEY PERSONNEL The Company hired Michael E. Kolowich as its President and Chief Executive Officer in September 1996. In addition to Mr. Kolowich, the Company's entire senior management team has joined the Company since January 1, 1996. The Company also depends, in significant part, upon the continued services of its key technical, editorial, sales and product development personnel, most of whom are not bound by employment agreements, and only certain of whom are bound by noncompetition agreements. There can be no assurance that Mr. Kolowich and the other new management personnel will be able to effectively manage the Company or that the Company will be able to retain its key personnel. DEPENDENCE ON INFORMATION PROVIDERS The Company's services currently offer approximately 600 news and information sources from more than 60 information providers. Termination of one or more significant information provider agreements would decrease the news and information which the Company offers its customers and could have a material adverse effect on the Company's business and results of operations. Also, an increase in the fees required to be paid by the Company to its information providers would have an adverse effect on the Company's gross margins and results of operations. Because the Company licenses the informational content included in its services from third parties, its exposure to copyright infringement actions may increase. Although the Company generally obtains representations as to the origins and ownership of such licensed content and generally obtains indemnification for any breach thereof, there can be no assurance that such representations will be accurate or that indemnification will adequately compensate the Company for any breach. RISKS ASSOCIATED WITH POSSIBLE ACQUISITIONS Management may from time to time consider acquisitions of assets or businesses that it believes may enable the Company to obtain complementary skills and capabilities, offer new products, expand its customer base or obtain other competitive advantages. Such acquisitions, including the Company's acquisition of Hoover in November 1996 and its acquisitions of CompanyLink and Clarinet in June 1997 involve potential risks, including difficulties in assimilating the acquired company's operations, technology, products and personnel, completing and integrating acquired in-process technology, diverting management's resources, uncertainties associated with operating in new markets and working with new employees and customers, and the potential loss of the acquired company's key employees. RAPID TECHNOLOGICAL CHANGE; NEW PRODUCT DELAYS; RISK OF SERVICE FAILURES The Company's future success will depend on its ability to enhance its existing services, to develop new products and services that address the needs of its customers and to respond to technological advances and emerging industry standards and practices, each on a timely basis. Services as complex as those offered by the Company entail significant technical risks, often encounter development delays and may result in service failures when first introduced or as new versions are released. Any such delays in development or failures that occur after commercial introduction of new or enhanced services may result in loss of or delay in market acceptance, which could have a material adverse effect upon the Company's business and results of operations. RISK OF SYSTEM FAILURE OR INADEQUACY The Company's operations are dependent on its ability to maintain its computer and telecommunications systems in effective working order and to protect its systems against damage from fire, natural disaster, power loss, telecommunications failure or similar events. The Company's principal computer and telecommunications equipment, including its processing operations, is located at its headquarters facility in Burlington, Massachusetts. Although the Company has limited back-up capability, this measure does not eliminate the significant risk to the Company's operations from a natural disaster or system failure at its principal site. In addition, any failure or delay in the timely transmission or receipt of feeds and computer downloads from its information providers, whether on account of system failure of the information providers, the public network or otherwise, could disrupt the Company's operations. DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISK OF THIRD PARTY CLAIMS FOR INFRINGEMENT; POSSIBLE TRADEMARK INFRINGEMENT CLAIMS The Company's success is dependent to a significant degree on its proprietary technology. The Company relies on a combination of trade secret, copyright and trademark laws, non-disclosure agreements with employees and third parties, and contractual provisions to establish and protect its proprietary rights. Despite these efforts, unauthorized parties may attempt to copy aspects of the Company's services or to obtain and use information that the Company regards as proprietary. There can be no assurance that the protective measures taken by the Company will be adequate or that the competitors will not independently develop technologies that are substantially equivalent or superior to those of the Company. The Company may also be subject to litigation to defend against claimed infringement of the intellectual property rights of others. Adverse determinations in such litigation could result in the loss of the Company's proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from third parties, and prevent the Company from selling its services, any one of which could have a material adverse effect on the Company's business and results of operations. DEPENDENCE ON STRATEGIC RELATIONSHIPS The Company has entered into certain cooperative marketing agreements and informal arrangements with software vendors, Web site sponsors and operators of on-line networks, including Microsoft, Netscape, Infoseek and NETCOM. These companies do not presently market services that compete directly with those of the Company. If the Company's marketing activities with such companies were terminated, reduced, curtailed, or otherwise modified, the Company may not be able to replace or supplement such efforts alone or with others. If these companies were to develop and market their own business information services or those of the Company's competitors, the Company's business and results of operations may be materially and adversely affected. RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION A key component of the Company's strategy is its planned expansion into international markets. To date, the Company has only limited experience in marketing, selling, and delivering its products and services internationally. There can be no assurance that the Company will be able to successfully market, sell, and deliver its products and services in international markets. RISKS ASSOCIATED WITH SECURITIES LITIGATION A class action shareholder suit has been filed against the Company, certain of its directors and officers and the underwriters of its initial public offering claiming that the defendants made misstatements, or failed to make statements, to the investing public in the IPO Prospectus and Registration Statement, as well as in subsequent public disclosures, relating to the alleged existence of disputes between Joseph A. Amram and the Company. The Company believes that the allegations contained in the complaint are without merit and intends to defend vigorously against the claims. However, the lawsuit is in its earliest stages, and no estimate of possible loss, if any, can currently be made. There can be no assurance that this litigation will ultimately be resolved on terms that are favorable to the Company and that the resolution of this litigation will not have a material adverse effect on the Company. Due to all of the foregoing factors, it is possible that in some future quarter the Company's results of operations will be below the expectations of public market analysts and investors. In such event, the price of the Company's Common Stock would likely be materially adversely affected. USE OF PROCEEDS The Company will not receive any of the proceeds from the sale of the Shares of Common Stock by the Selling Officer. THE SELLING OFFICER This Prospectus relates to possible sales by the Selling Officer of Shares received by the Selling Officer on September 18, 1996 pursuant to a written compensation contract between the Company and the Selling Officer. The following table shows the name of the Selling Officer, the number of outstanding Shares of Common Stock the Company beneficially owned by him, and the number of Shares available for resale hereunder. Because the Selling Officer may sell all or part of such Shares pursuant to this Prospectus, no estimate can be given as to the amount of Shares that will be held by the Selling Officer upon termination of this offering. SELLING SHAREHOLDER TABLE
NUMBER OF NUMBER OF SHARES SHARES AVAILABLE BENEFICIALLY FOR SALE NAME OWNED HEREUNDER - - ---------------------- ------------ ---------------- Michael E. Kolowich(1) 402,006 100,000 ______________________ (1) Mr. Kolowich is currently the Chairman of the Board, President and Chief Executive Officer. Mr. Kolowich is the beneficial owner of 2.45% of the Company's Common Stock. In the event of sale of all of the 100,000 shares of Common Stock offered hereby, Mr. Kolowich would beneficially own 1.84% of the Company's Common Stock.
PLAN OF DISTRIBUTION The Shares offered hereby are being sold by the Selling Officer for his own account. The Company will not receive any of the proceeds from this offering. It is anticipated that the Selling Officer may from time to time make sales of all or part of the Shares of Common Stock covered by this Prospectus in the over-the-counter market, by block trading, in negotiated transactions or otherwise at prices then prevailing or in private transactions at negotiated prices. In addition to sales under this Prospectus, the Selling Officer may also effect sales of shares of Common Stock covered by this prospectus pursuant to Rule 144 promulgated under the Act. All the foregoing transactions will be made without payment of any underwriting commissions or discounts, other than the customary brokers' fees normally paid in connection with such transactions. The Selling Officer will have the right to withdraw the offered Shares prior to sale. There is no present plan of distribution. LEGAL MATTERS The validity of the issuance of the Shares offered hereby will be passed upon by Testa, Hurwitz & Thibeault, LLP, High Street Tower, 125 High Street, Boston, MA 02110. EXPERTS The consolidated financial statements of Individual, Inc., appearing in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 have been audited by Coopers & Lybrand L.L.P., independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents filed with the Commission are incorporated by reference in this Prospectus: (a) Registrant's Annual Report on Form 10-K for the year ended December 31, 1996. (b) Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997. (c) Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. (d) Registrant's Current Report on Form 8-K dated July 3, 1997. (e) The section entitled "Description of Registrant's Securities to be Registered" contained in the Registrant's Registration Statement on Form 8-A, filed pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on February 8, 1996; and (f) All documents subsequently filed with the Commission by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered herein have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing such documents. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Delaware General Corporation Law and the Registrant's Third Amended and Restated Certificate of Incorporation provide for indemnification of the Registrant's directors and officers for liabilities and expenses that they may incur in such capacity. In general, directors and officers are indemnified with respect to actions taken in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the Registrant, and with respect to any criminal action or proceeding, actions that the indemnitee had no reasonable cause to believe were unlawful. The Company maintains directors and officers liability insurance for the benefit of its directors and certain of its officers. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such issue. No dealer, salesperson or any other person has been authorized to give any information or to make any representations not contained in this Prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or the Selling Officer. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to sell, any securities other than the registered securities to which it relates, or an offer to or solicitation of any person in any jurisdiction where such an offer or solicitation would be unlawful. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create an implication that the information contained herein is correct as of any time subsequent to the date hereof. ____________________ TABLE OF CONTENTS Page ---- Available Information 2 The Company 3 Risk Factors 3 Use of Proceeds 6 The Selling Officer 6 Plan of Distribution 7 Legal Matters 7 Experts 7 Incorporation of Certain Information by Reference 8 Indemnification of Directors and Officers 8 100,000 SHARES INDIVIDUAL, INC. COMMON STOCK _______________ PROSPECTUS _______________ August 15, 1997 PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS ITEM 1. PLAN INFORMATION ----------------- The documents containing the information specified in this Item 1 will be sent or given to employees, directors or others as specified by Rule 428(b)(1). In accordance with the rules and regulations of the Securities and Exchange Commission (the "Commission") and the instructions to Form S-8, such documents are not being filed with the Commission either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424. ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION ----------------------------------------------------------------- The documents containing the information specified in this Item 2 will be sent or given to employees as specified by Rule 428(b)(1). In accordance with the rules and regulations of the Commission and the instructions to Form S-8, such documents are not being filed with the Commission either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. ------------------------------------------- The following documents filed with the Commission are incorporated by reference in this Registration Statement: (a) Registrant's Annual Report on Form 10-K for the year ended December 31, 1996. (b) Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997. (c) Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. (d) Registrant's Current Report on Form 8-K dated July 3, 1997. (e) The section entitled "Description of Registrant's Securities to be Registered" contained in the Registrant's Registration Statement on Form 8-A, filed pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on February 8, 1996; and (f) All documents subsequently filed with the Commission by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered herein have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing such documents. ITEM 8. EXHIBITS -------- EXHIBIT NO. DESCRIPTION OF EXHIBIT ------------ ------------------------ Exhibit 4.1 Specimen certificate representing the Common Stock of the Registrant (filed as Exhibit 4.1 to Registrant's Registration Statement on Form S-1 (File No. 333-00792) and incorporated herein by reference). Exhibit 4.2 Third Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.3 to Registrant's Registration Statement on Form S-1 (File No. 333-00792) and incorporated herein by reference). Exhibit 4.3 Amended and Restated By-laws of the Registrant (filed as Exhibit 3.5 to Registrant's Registration Statement on Form S-1 (File No. 333-00792) and incorporated herein by reference). Exhibit 4.4 1996 Employee Stock Purchase Plan (filed as Exhibit 10.3 to Registrant's Registration Statement on Form S-1 (File No. 333-00792) and incorporated herein by reference). Exhibit 4.5 1996 Employee Stock Purchase Plan Enrollment/Authorization Form (filed as Exhibit 4.5 to Registrant's Registration Statement on Form S-8 (File No. 333-2806) and incorporated herein by reference). Exhibit 4.6 Amended and Restated 1989 Stock Option Plan (originally filed as Exhibit 10.1 to Registrant's Registration Statement on Form S-1 (File No. 333-00792) and subsequently amended and filed as Exhibit 99 to Registrant's Proxy Statement on Schedule 14A dated April 17, 1997 and incorporated herein by reference). Exhibit 4.7 Form of Incentive Stock Option Agreement under the Amended and Restated 1989 Stock Option Plan (filed as Exhibit 4.7 to Registrant's Registration Statement on Form S-8 (File No. 333-07815) and incorporated herein by reference). Exhibit 4.8 Form of Non-Qualified Stock Option Agreement under the Amended and Restated 1989 Stock Option Plan (filed as Exhibit 4.8 to Registrant's Registration Statement on Form S-8 (File No. 333-07815) and incorporated herein by reference). Exhibit 4.9 1996 Non-Employee Director Stock Option Plan (filed as Exhibit 10.2 to Registrant's Registration Statement on Form S-1 (File No. 333-00792) and incorporated herein by reference). Exhibit 4.10 Form of Non-Qualified Stock Option Agreement under the 1996 Non-Employee Director Stock Option Plan (filed as Exhibit 4.10 to Registrant's Registration Statement on Form S-8 (File No. 333-07815) and incorporated herein by reference). Exhibit 4.11 FreeLoader Amended and Restated 1996 Stock Plan (filed as Exhibit 4.11 to Registrant's Registration Statement on Form S-8 (File No. 333-07815) and incorporated herein by reference). Exhibit 4.12 Form of Stock Option Agreement under the FreeLoader Amended and Restated 1996 Stock Plan (filed as Exhibit 4.12 to Registrant's Registration Statement on Form S-8 (File No. 333-07815) and incorporated herein by reference). Exhibit 4.13 ClariNet 1995 Incentive Stock Option Plan (filed herewith). Exhibit 4.14 Form of Stock Option Agreement under the ClariNet 1995 Incentive Stock Option Plan (filed herewith). Exhibit 4.15 ClariNet 1996 Stock Option Plan (filed herewith). Exhibit 4.16 Form of Stock Option Agreement under the ClariNet 1996 Stock Option Plan (filed herewith). Exhibit 5.1 Opinion of Testa, Hurwitz & Thibeault, LLP (filed herewith). Exhibit 23.1 Consent of Coopers & Lybrand L.L.P. (filed herewith). Exhibit 23.2 Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1). Exhibit 24.1 Power of Attorney (included as part of the signature page to this Registration Statement). ITEM 9. UNDERTAKINGS. ------------ (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 6, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the questions whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant, Individual, Inc., certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Burlington, Commonwealth of Massachusetts, on this 14th day of August, 1997. INDIVIDUAL, INC. By: /s/ Michael E. Kolowich ---------------------------- Michael E. Kolowich Chairman of the Board, President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose signature appears below constitutes and appoints, jointly and severally, Michael E. Kolowich and Robert L. Lentz his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Registration Statement on Form S-8 (including post-effective amendments), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - - -------------------------------------- --------------------------------- --------------- /s/ Michael E. Kolowich. . . . . . . . Chairman of the Board, President, August 14, 1997 - - -------------------------------------- Michael E. Kolowich. . . . . . . . . . Chief Executive Officer and Director (Principal Executive Officer) /s/ Robert L. Lentz. . . . . . . . . . Vice President, Finance and August 14, 1997 - - -------------------------------------- Robert L. Lentz. . . . . . . . . . . . Administration, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) /s/ Joseph A. Amram. . . . . . . . . . Director August 14, 1997 - - -------------------------------------- Joseph A. Amram /s/ James Daniell. . . . . . . . . . . Director August 14, 1997 - - -------------------------------------- James Daniell William A. Devereaux . . . . . . . . . Director August 14, 1997 - - -------------------------------------- William A. Devereaux /s/ Jeffery Galt . . . . . . . . . . . Director August 14, 1997 - - -------------------------------------- Jeffery Galt /s/ Elon Kohlberg. . . . . . . . . . . Director August 14, 1997 - - -------------------------------------- Elon Kohlberg /s/ Marino R. Polestra . . . . . . . . Director August 14, 1997 - - -------------------------------------- Marino R. Polestra /s/ Gregory S. Stanger . . . . . . . . Director August 14, 1997 - - -------------------------------------- Gregory S. Stanger
INDEX TO EXHIBITS
Exhibit Description of Exhibit - - ------------------------------------------------ --------------------------------------------------------------- Exhibit 4.1 . .. . . . . . . . . . . . . . . . . Specimen certificate representing the Common Stock of the Registrant (filed as Exhibit 4.1 to Registrant's Registration Statement on Form S-1 (File No. 333-00792) and incorporated herein by reference). Exhibit 4.2 . .. . . . . . . . . . . . . . . . . Third Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.3 to Registrant's Registration Statement on Form S-1 (File No. 333-00792) and incorporated herein by reference). Exhibit 4.3 . . . . . . . . . . . . . . .. . . . Amended and Restated By-laws of the Registrant (filed as Exhibit 3.5 to Registrant's Registration Statement on Form S-1 (File No. 333-00792) and incorporated herein by reference). Exhibit 4.4 . . . . . . . . . . . . . . .. . . . 1996 Employee Stock Purchase Plan (filed as Exhibit 10.3 to Registrant's Registration Statement on Form S-1 (File No. 333- 00792) and incorporated herein by reference). Exhibit 4.5 . . . . . . . . . . . . . . .. . . . 1996 Employee Stock Purchase Plan Enrollment/Authorization Form (filed as Exhibit 4.5 to Registrant's Registration Statement on Form S-8 (File No. 333-2806) and incorporated herein by reference). Exhibit 4.6 . . . . . . . . . . . . . . .. . . . Amended and Restated 1989 Stock Option Plan (originally filed as Exhibit 10.1 to Registrant's Registration Statement on Form S- 1 (File No. 333-00792) and subsequently amended and filed as Exhibit 99 to Registrant's Proxy Statement on Schedule 14A dated April 17, 1997 and incorporated herein by reference). Exhibit 4.7 . . . . . . . . . . . . . . . . . . Form of Incentive Stock Option Agreement under the Amended and Restated 1989 Stock Option Plan (filed as Exhibit 4.7 to Registrant's Registration Statement on Form S-8 (File No. 333- 07815) and incorporated herein by reference). Exhibit 4.8 . . . . . . . . . . . . . . . . . . Form of Non-Qualified Stock Option Agreement under the Amended and Restated 1989 Stock Option Plan (filed as Exhibit 4.8 to Registrant's Registration Statement on Form S-8 (File No. 333-07815) and incorporated herein by reference). Exhibit 4.9 . . . . . . . . . . . . . . . . . . 1996 Non-Employee Director Stock Option Plan (filed as Exhibit 10.2 to Registrant's Registration Statement on Form S-1 (File No. 333-00792) and incorporated herein by reference). Exhibit 4.10. . . . . . . . . . . . . . . . . . Form of Non-Qualified Stock Option Agreement under the 1996 Non-Employee Director Stock Option Plan (filed as Exhibit 4.10 to Registrant's Registration Statement on Form S-8 (File No. 333- 07815) and incorporated herein by reference). Exhibit 4.11. . . . . . . . . . . . . . . . . . FreeLoader Amended and Restated 1996 Stock Plan (filed as Exhibit 4.11 to Registrant's Registration Statement on Form S-8 (File No. 333-07815) and incorporated herein by reference). Exhibit 4.12. . . . . . . . . . . . . . . . . . Form of Stock Option Agreement under the FreeLoader Amended and Restated 1996 Stock Plan (filed as Exhibit 4.12 to Registrant's Registration Statement on Form S-8 (File No. 333- 07815) and incorporated herein by reference). Exhibit 4.13. . . . . . . . . . . . . . . . . . ClariNet 1995 Incentive Stock Option Plan (filed herewith). Exhibit 4.14. . . . . . . . . . . . . . . . . . Form of Stock Option Agreement under the ClariNet 1995 Incentive Stock Option Plan (filed herewith). Exhibit 4.15. . .. . . . . . . . . . . . . . . . ClariNet 1996 Stock Option Plan (filed herewith). Exhibit 4.16. . . . . . . . . . . . . . . . . . Form of Stock Option Agreement under the ClariNet 1996 Stock Option Plan (filed herewith). Exhibit 5.1 . . .. . . . . . . . . . . . . . . . Opinion of Testa, Hurwitz & Thibeault, LLP (filed herewith). Exhibit 23.1. . .. . . . . . . . . . . . . . . . Consent of Coopers & Lybrand L.L.P. (filed herewith). Exhibit 23.2. . .. . . . . . . . . . . . . . . . Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1). Exhibit 24.1. . .. . . . . . . . . . . . . . . . Power of Attorney (included as part of the signature page to this Registration Statement).
EX-4.13 2 1995 CLARINET STOCK OPTION PLAN Exhibit 4.13 1995 ---- INCENTIVE STOCK OPTION PLAN OF ---------------------------------- CLARINET COMMUNICATIONS CORP. ------------------------------- Purpose of Plan 1. The purpose of this Plan is to strengthen Clarinet Communications Corp. (hereafter "Corporation") by providing incentive stock options as a means to attract, retain and motivate corporate personnel. The Plan is hereby declared to be an "incentive stock option" plan pursuant to Section 422 of the Internal Revenue Code and the regulations promulgated thereunder. Administration of Plan 2. This Plan shall be administered by the Board of Directors. The Board shall have the power to make all determinations necessary for the administration of the Plan, subject to the restrictions on Board powers set forth in Corporations Code Section 311. Grant of Options 3. The Corporation is hereby authorized to grant incentive stock options as defined in Internal Revenue Code Section 422 to any full-time employee. Options may not be granted to employees who own stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Corporation, or of its parent or subsidiary, except pursuant to the restrictions set forth in paragraphs 5 and 6. Any option granted under this Plan shall be granted within ten years from the date this Plan is adopted, or the date this Plan is approved by the shareholders pursuant to paragraph 13, whichever is earlier. Each grant of options pursuant to this Plan is subject to ratification and approval by the Board of Directors. Stock Subject to Plan 4. The aggregate number of shares that may be issued pursuant to options granted under this Plan shall be ONE MILLION (1,000,000) shares of the Corporation's voting common stock, based on a capital structure of the Corporation authorizing a total of 10,000,000 (Ten Million) shares of voting common stock. Exercise of Option 5. Any option granted pursuant to this Plan shall contain provisions, established by the Board, setting forth the manner of exercising the option. However, no option granted under this Plan shall be exercisable by its terms after the expiration of ten years from the grant of the option, and no option granted to a person who owns stock possessing more than ten percent of the total combined voting power of all classes of the Corporation's stock shall be exercisable by its terms after the expiration of five years from the date of the grant. The option may be subject to earlier termination as provided in paragraphs 8 and 12. The options may not be exercised unless in accordance with the laws of the State of California and the Securities Act of 1993, as amended. Option Price 6. The price for a share of stock subject to an option granted pursuant to this Plan shall not be less than the fair market value for the stock at the time the option is granted, as determined in good faith by the Board at the time the option is granted. However, when an option is granted to a person who owns stock possessing more than ten percent of the total combined voting power of all classes of the Corporation's stock, the purchase price per share of the stock subject to the option shall not be less than one hundred ten percent of the fair market value of the stock at the time the option is granted, as determined by the Board in good faith at the time the option is granted. Options Nontransferable 7. The terms of any option granted under this Plan shall make the option nontransferable by the optionee except by will or the laws of descent and distribution, and exercisable only by the optionee during his or her lifetime. Termination of Employment 8. An optionee's option shall expire thirty days after termination of employment for reasons other than death or disability, subject to earlier termination pursuant to paragraph 5 of this Plan. An optionee's option shall expire twelve months after termination of employment due to permanent and total disability, as defined in Internal Revenue Code Section 22(e)(3), subject to earlier termination pursuant to paragraph 5 of this Plan. If an optionee should die while employed by the Corporation, or its parent, subsidiary, or successor as defined in Section 424 of the Internal Revenue Code, or within the three-month period after termination of employment, the person to whom the optionee's rights pass by will or the laws of descent and distribution may exercise the option for any of the shares not previously exercised during employee's lifetime, within one year after the optionee's death, subject to earlier termination pursuant to paragraph 5 of this Plan. Stock Subject to Option 9. The Corporation shall at all times during the term of this Plan reserve the stock designated in paragraph 4 to meet the requirements of this Plan, and shall pay all fees and expenses necessarily incurred by the Corporation in connection with the exercise of options under this Plan. In the event of a stock split, reverse stock split, stock dividend, combination, or reclassification of the Corporation's stock, an appropriate and proportionate adjustment shall be made in the number of shares to which stock options may be granted. A corresponding change shall be made to the number and kind of shares, and the exercise price per share, of unexercised options. This Plan shall be qualified by the Corporation as an exempt transaction under federal and state securities laws. Any failure by the Corporation to qualify for such exemption shall void this Plan. Merger, Consolidation, or Dissolution of the Corporation 10. Following the merger of one or more corporations in the Corporation, or any consolidation of the Corporation and one or more other corporations, the exercise of options under this Plan shall apply to the shares of the surviving Corporation in proportionate numbers of shares. Code Section 25102(f), including, but not limited to, the provision that the stock is for the optionee's own account and not with a view to or for sale in connection with the distribution of the stock. Any option granted pursuant to this Plan shall contain any other terms that the Board of Directors and/or the Corporation's legal counsel deems necessary. Restrictions on Transfer of Shares 12. All options and shares issued pursuant to this Plan shall be subject to the following restrictions: a. Neither the optionee nor the optionee's heirs, executors, or administrators shall sell, exchange, give, transfer, pledge, hypothecate, or otherwise dispose of any options or shares in the Corporation or any interest in the options or shares except as provided in this Plan. b. Upon termination of employment or death of optionee, the shares acquire by the optionee pursuant to this Plan shall be subject to a right of repurchase by the Corporation on the terms and conditions set forth Herein. c. Any sale or transfer of shares by the optionee shall be subject to a right by the Corporation to repurchase such shares at the greater of the price paid for such shares by the optionee or the purchase price determined by subparagraph (d). d. The repurchase price to be paid by the Corporation for the shares of an optionee shall be an amount equal to the number of shares of stock in the Corporation owned by that optionee on the Purchase Date multiplied by the greater of (1) the purchase price paid by the optionee, or (2) the book value of a single share of the Corporation's stock as determined hereunder. "Book value", for the purposes of repurchase of shares by the Corporation means the value of the capital stock of the Corporation as of the valuation date, after deducting the sum of all the Corporation's liabilities from the sum of all of the Corporation's assets and property as shown on the Corporation's books, except that the Corporation's capital stock shall not be deducted as a liability, nor shall any surplus or undivided profits be deducted. The book value of any single share of capital stock of the Corporation shall be its proportionate share of the book value of all the outstanding stock of the Corporation as of the valuation date. To determine book value, the inventory of the Corporation reflecting the property, assets and liabilities of the Corporation last compiled by the Corporation's accountant shall be used. Accounts receivables shall not be included. All other sums owed to the Corporation shall be valued as they are carried gross on the books. Furniture, fixtures, equipment and other fixed assets on hand shall be valued as they appear on the books of the Corporation, being original cost less depreciation. Goodwill and trade names shall be deemed of no value unless they have been acquired and paid for in cash, and in that event, the sum shall be computed at the amount paid for them. All state and other taxes and assessments that are unpaid shall be apportioned. The usual accounting practices employed by the accountant auditing the books of the Corporation shall be employed in the determination of the foregoing values. e. The restrictions on transfer of shares set forth herein shall not be applicable in the event of merger or acquisition of the Corporation by terms of which a general offer to purchase shares is extended to all shareholders of the Corporation. f. The restrictions on transfer of shares set forth herein shall not be applicable to the sale of shares by optionee to another shareholder of the Corporation, except that as to any such sale, the Corporation shall have a right of first refusal for a period of thirty (30) days following notice of any such proposed sale, upon substantially the same terms and conditions of such proposed sale. Effective Date of Plan 13. This Plan shall be effective on approval by the outstanding shares or unanimous written consent of the shareholders of the Corporation. Amendment and Termination of the Plan 14. The Board of Directors may at any time amend or terminate this Plan. No option may be granted after termination. The amendment or termination of the Plan shall not, however, alter any optionee's rights or obligations under an option previously granted, unless the optionee consents to that alteration. Financial Statements 15. Optionees under this Plan shall receive financial statements annually regarding the Corporation during the period the options are outstanding. The financial statements provided need not comply with Title 10, Section 260.613 of the California Code of Regulations. No Right of Employment 16. Nothing in this Plan or any grant made pursuant to this Plan shall confer on the optionee any right to continue in the employment of the Corporation, or limit in any way the right of the Corporation to terminate the optionee's employment or other relationship at any time, with or without cause. EX-4.14 3 STOCK OPTION AGREEMENT Exhibit 4.14 STOCK OPTION AGREEMENT ---------------------- [Incentive Stock Option Plan] THIS STOCK OPTION AGREEMENT is made as of the ______ day of _____, 19__, -- by and between CLARINET COMMUNICATIONS CORP. ("the Corporation") and (Name) ("Employee"). WITNESSETH ---------- WHEREAS, the Corporation has adopted the 1995 Incentive Stock Option Plan of Clarinet Communications Corp. (the "Plan"), pursuant to which the Corporation's Board of Directors ("the Board") has been authorized to grant one or more options to purchase shares of the Corporation's common stock to Employees of the Corporation as an inducement to serve as Employees of the Corporation and its subsidiaries; and WHEREAS, the Employee is an Employee of the Corporation whose services the Corporation wishes to retain; and WHEREAS, on (Grant Date), the Board awarded Employee an option under the Plan to purchase (Total Shares) shares of the Corporation's common stock, which option shall be subject to such terms and conditions as will permit it to qualify as an "incentive stock option" pursuant to Section 422 of the Internal Revenue Code; and WHEREAS, the parties desire to incorporate the terms and conditions of such stock option award into a formal agreement; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: 1. Grant of Options to Purchase Shares. ---------------------------------------- The Employee is hereby granted the option to (Total Shares) shares of the Corporation's common stock ("the Optioned stock") subject to the terms and conditions of the 1995 Incentive Stock Option Plan of Clarinet Communications Corp., and the following additional terms and conditions: a. Option Price. The purchase price of each share of common stock ------------- subject to an option granted under the Plan shall (Exercise Price) DOLLARS, the fair market value of each share of common stock on the date the option was granted, as determined by the Board. b. Vesting. The options subject to this grant shall vest over a period ------- of four (4) years from the date (Vest Date). One-fourth (1/4) of the total options granted shall vest after the first year, and annually thereafter in equal installments. The Employee may purchase shares subject to this option only after such shares have become vested. c. Term and Expiration of Option. The length of time for which the ----------------------------- option shall be outstanding (the Option Term) is TEN (10) years from the date of grant and shall therefore expire on (Expiration Date). 2 Incentive Stock Option Under Section 422 of the Internal Revenue Code. ---------------------------------------------------------------------- This option is hereby declared an "incentive stock option" pursuant to Section 422 of the Internal Revenue Code and the regulations promulgated thereunder. 3. Nontransferability of Option. ------------------------------ During the lifetime of the Employee, any option granted under the Plan shall be exercisable only by the Employee and shall not be assignable or transferable by the Employee other than by Will or the laws of descent and distribution. 4. Exercise of Option. -------------------- To exercise any option granted under the Plan, the Employee must, prior to the expiration of the Option Term, provide the Board with written notification of such exercise on such form as the Board shall deem appropriate. A copy of such form is attached hereto as Exhibit A. Within fifteen (15) days after such notification, payment in full of the option price for the acquired common stock must be made, either in cash or in the form of a certified check or bank draft. No option shall be exercisable while there is outstanding and unexercised any incentive stock option previously granted the Employee hereunder. 5. Effect of Termination of Employment. --------------------------------------- Should the Employee cease to be an Employee of the Corporation for any reason other than death, disability or termination of employment for cause, then the Employee shall have a thirty (30) day period (an "Accelerated Term") after such cessation of service in which to exercise any outstanding options granted the Employee under the Plan, but only to the extent such outstanding options were exercisable on the date of the Employee's cessation of service as an Employee and subject to the proviso that no such option shall be exercisable after the expiration of the option term applicable thereto. 6. Effect of Employee's Disability. ---------------------------------- Should the Employee cease to be employed by the Corporation by reason of the Employee's disability, then all outstanding options granted the Employee under the Plan which were fully exercisable on the date of the Employee's cessation of service may be exercised at any time within one (1) year thereafter (an Accelerated Term) subject to the proviso that no such option shall be exercisable after the expiration of the Option Term applicable thereto. Disability shall be defined as the permanent incapacity of a participant, by reason of physical or mental illness, to perform his or her usual duties for the Corporation or a subsidiary. Disability shall be determined by the Board, after consideration of such medical evidence as it may require. 7. Effect of Termination for Cause. ----------------------------------- Should the Employee's employment with the Corporation be terminated for cause, then any outstanding options held by the Employee by reason of grants made under the Plan shall terminate as of the date of the Employee's termination for cause. 8. Effect of Employee's Death. ----------------------------- If the Employee should die while in the Corporation's employ, or prior to the expiration of an Accelerated Term, then any outstanding options granted the Employee under the Plan which were fully exercisable on the date of the Employee's death may be exercised at any time within three (3) months after the Employee's death by the personal representative of the Employee's estate or by any person or persons to whom the option is transferred pursuant to the Employee's Will or in accordance with the laws of descent and distribution, subject to the proviso that no such option shall be exercisable by any person after the expiration of the Option Term or any Accelerated Term applicable thereto. 9. Other Option Terms. -------------------- The stock issued pursuant to this Plan is subject to restrictions on transfer of shares. The options may not be exercised by the Employee unless in accordance with the laws of the State of California and the Securities Act of 1933, as amended. Employee understands that the Corporation is under no obligation to register, list or qualify the shares to effect such a compliance. Any option granted pursuant to the Plan shall contain any other terms or conditions that the Board of Directors and/or the Corporation's legal counsel deem necessary. 10. Restrictions on Transfer of Shares. -------------------------------------- All options and shares issued pursuant to the Plan shall be subject to the following restrictions: a. Neither the optionee nor the optionee's heirs, executors, or administrators shall sell, exchange, give, transfer, pledge, hypothecate, or otherwise dispose of any options or shares in the Corporation or any interest in the options or shares except as provided in the Plan. b. Upon termination of employment or death of optionee, the unvested shares acquired by optionee pursuant to this Plan shall be subject to a right of repurchase by the Corporation on the terms and conditions as set forth for the right of first refusal below." c. Any purported sale or transfer of shares by the optionee shall be subject to a right by the Corporation to a right of first refusal to repurchase such shares at the greater of the price paid for such shares by the Optionee, book value, as determined by subparagraph d, below, or upon substantially the same terms and conditions of the proposed purchase by the purchaser. In the event optionee wishes to transfer some or all of optionee's fully-vested option shares, optionee must first disclose in writing all material terms of such transfer to the Corporation. The Corporation will then have the right to purchase from optionee, within the thirty (30)-day period following receipt of such written notice (or such longer period as may be agreed to by the Company and optionee), all (or any part of the shares with optionee's consent) of the shares acquired upon exercise of option on substantially the same terms and conditions as stated in the written notice. The right of first refusal shall terminate upon the date of the first registration of an equity security of the Company under Section 12 of the Exchange Act. d. For the purposes of the right of repurchase and right of first refusal, book value will be calculated as set forth in Paragraph 10.d of the 1995 Stock Option Plan. e. The restrictions on transfer of shares set forth herein shall not be applicable in the event of merger or acquisition of the Corporation by terms of which a general offer to purchase shares is extended to all shareholders of the Corporation. 11. Amendment and Termination of the Plan. ------------------------------------------ The Board of Directors may at any time amend or terminate the Plan. No option may be granted after termination. The amendment or termination of the Plan shall not, however, alter any optionee's rights or obligations under an option previously granted, unless the optionee consents to that alteration. 12. Accrual of Shareholder's Rights. ---------------------------------- The Employee shall have no rights as a stockholder with respect to the Optioned Stock until such time as the Employee shall have exercised the option in accordance with the terms of this Agreement, paid the required option price and received the stock certificate(s) representing the purchased shares of the Optioned Stock. 13. No Right of Employment. ------------------------- Nothing in this Plan or any grant made pursuant to this Plan shall confer on the Employee any right to continue in the employment of the Corporation, or limit in any way the right of the Corporation to terminate the Employee's employment or other relationship at any time, with or without cause. 14. Tax Consequences. ----------------- Exercise of stock options may have adverse tax consequences. Employee should consult a tax adviser before exercising any option or disposing of any shares. 15. Notices. ------- Any notice required or permitted to be given under this Agreement shall be valid and effective only if (i) actually delivered or sent by registered or certified mail, return receipt requested and postage prepaid, to the party to be notified, and (ii) the date of such delivery or mailing is on or before the due date for such notice. 16. Miscellaneous. ------------- This Agreement shall be governed in all respects by the laws of the State of California. Any modification of this Agreement must be in writing and signed by a duly authorized officer of the Corporation. In the event of a public offering of Clarinet stock, or of a merger of ClariNet with another firm with that firm's stock provided in payment for the ClariNet stock, the employee agrees to abide by any stock sale 'lockup' agreements negotiated by ClariNet as required terms of the deal IN WITNESS WHEREOF, the Corporation has caused its duly authorized officer to execute and deliver this Agreement and the Employee has executed this Agreement on (Date). EMPLOYEE CLARINET COMMUNICATIONS CORP. By Its TO: The Board of Directors, Clarinet Communications Corp. FROM: RE: Exercise of Stock Options The undersigned hereby exercises his/her option to purchase shares of the common stock of Clarinet Communications Corp., subject to the terms and conditions of the foregoing Stock Option Agreement. EMPLOYEE DATE EX-4.15 4 1996 CLARINET STOCK OPTION PLAN Exhibit 4.15 CLARINET COMMUNICATIONS CORPORATION 1996 STOCK OPTION PLAN ADOPTED SEPTEMBER 5, 1996 1. PURPOSES. (a) The purpose of the Plan is to provide a means by which selected Employees and Directors of and Consultants to the Company, and its Affiliates, may be given an opportunity to purchase stock of the Company. (b) The Company, by means of the Plan, seeks to retain the services of persons who are now Employees or Directors of or Consultants to the Company or its Affiliates, to secure and retain the services of new Employees, Directors and Consultants, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates. (c) The Company intends that the Options issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been delegated pursuant to subsection 3(c), be either Incentive Stock Options or Nonstatutory Stock Options. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and in such form as issued pursuant to Section 6, and a separate certificate or certificates will be issued for shares purchased on exercise of each type of Option. 2. DEFINITIONS. (a) "Affiliate" means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively, of the Code. (b) "Board" means the Board of Directors of the Company. (c) "Code" means the Internal Revenue Code of 1986, as amended. (d) "Committee" means a Committee appointed by the Board in accordance with subsection 3(c) of the Plan. (e) "Company" means ClariNet Communications Corporation, a California corporation. (f) "Consultant" means any person, including an advisor, engaged by the Company or an Affiliate to render consulting services and who is compensated for such services, provided that the term "Consultant" shall not include Directors who are paid only a director's fee by the Company or who are not compensated by the Company for their services as Directors. (g) "Continuous Status as an Employee, Director or Consultant" means that the service of an individual to the Company, whether as an Employee, Director or Consultant, is not interrupted or terminated. The Board or the chief executive officer of the Company may determine, in that party's sole discretion, whether Continuous Status as an Employee, Director or Consultant shall be considered interrupted in the case of: (i) any leave of absence approved by the Board or the chief executive officer of the Company, including sick leave, military leave, or any other personal leave; or (ii) transfers between the Company, Affiliates or their successors. (h) "Covered Employee" means the chief executive officer and the four (4) other highest compensated officers of the Company for whom total compensation is required to be reported to stockholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code. (i) "Director" means a member of the Board. (j) "Employee" means any person, including Officers and Directors, employed by the Company or any Affiliate of the Company. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. (k) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (l) "Fair Market Value" means the value of the common stock as determined in good faith by the Board and in a manner consistent with Section 260.140.50 of Title 10 of the California Code of Regulations. (m) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (n) "Listing Date" means the first date upon which any security of the Company is listed (or approved for listing) upon notice of issuance on any securities exchange, or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system if such securities exchange or interdealer quotation system has been certified in accordance with the provisions of Section 25100(o) of the California Corporate Securities Law of 1968. (o) "Non-Employee Director" means a Director who either (i) is not a current Employee or Officer of the Company or its parent or subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S K promulgated pursuant to the Securities Act ("Regulation S-K")), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3. (p) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. (q) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (r) "Option" means a stock option granted pursuant to the Plan. (s) "Option Agreement" means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. (t) "Optionee" means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option. (u) "Outside Director" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of the Treasury regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any time, and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director, or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code. (v) "Plan" means this 1996 Stock Option Plan. (w) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3 as in effect with respect to the Company at the time discretion is being exercised regarding the Plan. (x) "Securities Act" means the Securities Act of 1933, as amended. 3. ADMINISTRATION. (a) The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee, as provided in subsection 3(c). (b) The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan: (1) To determine from time to time which of the persons eligible under the Plan shall be granted Options; when and how each Option shall be granted; whether an Option will be an Incentive Stock Option or a Nonstatutory Stock Option; the provisions of each Option granted (which need not be identical), including the time or times such Option may be exercised in whole or in part; and the number of shares for which an Option shall be granted to each such person. (2) To construe and interpret the Plan and Options granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Option Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. (3) To amend the Plan or an Option as provided in Section 11. (4) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company. (c) The Board may delegate administration of the Plan to a committee of the Board composed of not fewer than two (2) members (the "Committee"), all of the members of which Committee may be, in the discretion of the Board, Non-Employee Directors and/or Outside Directors. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee of two (2) or more Outside Directors any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or such a subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. Additionally, prior to the Listing Date, and notwithstanding anything to the contrary contained herein, the Board may delegate administration of the Plan to any person or persons and the term "Committee" shall apply to any person or persons to whom such authority has been delegated. Notwithstanding anything in this Section 3 to the contrary, the Board or the Committee may delegate to a committee of one or more members of the Board the authority to grant Options to eligible persons who (1) are not then subject to Section 16 of the Exchange Act and/or (2) are either (i) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Option, or (ii) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code. 4. SHARES SUBJECT TO THE PLAN. (a) Subject to the provisions of Section 10 relating to adjustments upon changes in stock, the stock that may be sold pursuant to Options shall not exceed in the aggregate five hundred thousand (500,000) shares of the Company's common stock. If any Option shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the stock not purchased under such Option shall revert to and again become available for issuance under the Plan. (b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. 5. ELIGIBILITY. (a) Incentive Stock Options may be granted only to Employees. Nonstatutory Stock Options may be granted only to Employees, Directors or Consultants. (b) No person shall be eligible for the grant of an Option if, at the time of grant, such person owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of such stock at the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant. (c) Subject to the provisions of Section 10 relating to adjustments upon changes in stock, no person shall be eligible to be granted Options covering more than one hundred thousand (100,000) shares of the Company's common stock in any calendar year. This subsection 5(c) shall not apply prior to the Listing Date and, following the Listing Date, shall not apply until (i) the earliest of: (A) the first material modification of the Plan (including any increase to the number of shares reserved for issuance under the Plan in accordance with Section 4); (B) the issuance of all of the shares of common stock reserved for issuance under the Plan; (C) the expiration of the Plan; or (D) the first meeting of stockholders at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which occurred the first registration of an equity security under Section 12 of the Exchange Act; or (ii) such other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder. 6. OPTION PROVISIONS. Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions: (a) Term. No Option shall be exercisable after the expiration of ten (10) years from the date it was granted. (b) Price. The exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted; the exercise price of each Nonstatutory Stock Option shall be not less than eighty five percent (85%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code. (c) Consideration. The purchase price of stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised, or (ii) at the discretion of the Board or the Committee, at the time of the grant of the Option, (A) by delivery to the Company of other common stock of the Company, (B) according to a deferred payment or other arrangement (which may include, without limiting the generality of the foregoing, the use of other common stock of the Company) with the person to whom the Option is granted or to whom the Option is transferred pursuant to subsection 6(d), or (C) in any other form of legal consideration that may be acceptable to the Board. In the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement. (d) Transferability. An Option shall not be transferable except by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person. The person to whom the Option is granted may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option. (e) Vesting. The total number of shares of stock subject to an Option may, but need not, be allotted in periodic installments (which may, but need not, be equal). The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable ("vest") with respect to some or all of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary but, to the extent necessary under then applicable law, in each case will provide for vesting of at least twenty percent (20%) per year of the total number of shares subject to the Option. The provisions of this subsection 6(e) are subject to any Option provisions governing the minimum number of shares as to which an Option may be exercised. (f) Securities Law Compliance. The Company may require any Optionee, or any person to whom an Option is transferred under subsection 6(d), as a condition of exercising any such Option, (1) to give written assurances satisfactory to the Company as to the Optionee's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Option; and (2) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Option for such person's own account and not with any present intention of selling or otherwise distributing the stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise of the Option has been registered under a then currently effective registration statement under the Securities Act, or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may require the Optionee to provide such other representations, written assurances or information which the Company shall determine is necessary, desirable or appropriate to comply with applicable securities and other laws as a condition of granting an Option to such Optionee or permitting the Optionee to exercise such Option. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock. (g) Termination of Employment or Relationship as a Director or Consultant. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates (other than upon the Optionee's death or disability), the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionee's Continuous Status as an Employee, Director or Consultant, or such longer or shorter period, which shall not be less than thirty (30) days, specified in the Option Agreement, or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (h) Disability of Optionee. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates as a result of the Optionee's disability, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it as of the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period, which in no event shall be less than six (6) months, specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (i) Death of Optionee. In the event of the death of an Optionee during, or within a period specified in the Option Agreement after the termination of, the Optionee's Continuous Status as an Employee, Director or Consultant, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option as of the date of death) by the Optionee's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionee's death pursuant to subsection 6(d), but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period, which in no event shall be less than six (6) months, specified in the Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (j) Early Exercise. The Option may, but need not, include a provision whereby the Optionee may elect at any time while an Employee, Director or Consultant to exercise the Option as to any part or all of the shares subject to the Option prior to the full vesting of the Option. Any unvested shares so purchased shall be subject to a repurchase right in favor of the Company, with the repurchase price to be equal to the original purchase price of the stock, or to any other restriction the Board determines to be appropriate; provided, however, that (i) the right to repurchase at the original purchase price shall lapse at a minimum rate of twenty percent (20%) per year over five (5) years from the date the Option was granted, and (ii) such right shall be exercisable only within (A) the ninety (90) day period following the termination of employment or the relationship as a Director or Consultant, or (B) such longer period as may be agreed to by the Company and the Optionee (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code (regarding "qualified small business stock")), and (iii) such right shall be exercisable only for cash or cancellation of purchase money indebtedness for the shares. Should the right of repurchase be assigned by the Company, the assignee shall pay the Company cash equal to the difference between the original purchase price and the stock's Fair Market Value if the original purchase price is less than the stock's Fair Market Value. (k) Right of Repurchase. The Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to repurchase all or any part of the vested shares exercised pursuant to the Option; provided, however, that (i) such repurchase right shall be exercisable only within (A) the ninety (90) day period following the termination of employment or the relationship as a Director or Consultant, or (B) such longer period as may be agreed to by the Company and the Optionee (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code (regarding "qualified small business stock")), (ii) such repurchase right shall be exercisable for less than all of the vested shares only with the Optionee's consent, and (iii) such right shall be exercisable only for cash or cancellation of purchase money indebtedness for the shares at a repurchase price equal to the greater of (A) the stock's Fair Market Value at the time of such termination or (B) the original purchase price paid for such shares by the Optionee. Should the right of repurchase be assigned by the Company, the assignee shall pay the Company cash equal to the difference between the original purchase price and the stock's Fair Market Value if the original purchase price is less than the stock's Fair Market Value. (l) Right of First Refusal. The Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to exercise a right of first refusal following receipt of notice from the Optionee of the intent to transfer all or any part of the shares exercised pursuant to the Option. (m) Withholding. To the extent provided by the terms of an Option Agreement, the Optionee may satisfy any federal, state or local tax withholding obligation relating to the exercise of such Option by any of the following means or by a combination of such means: (1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares of the common stock otherwise issuable to the Optionee as a result of the exercise of the Option; or (3) delivering to the Company owned and unencumbered shares of the common stock of the Company. 7. COVENANTS OF THE COMPANY. (a) During the terms of the Options, the Company shall keep available at all times the number of shares of stock required to satisfy such Options. (b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the Options; provided, however, that this undertaking shall not require the Company to register under the Securities Act either the Plan, any Option or any stock issued or issuable pursuant to any such Option. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such Options unless and until such authority is obtained. 8. USE OF PROCEEDS FROM STOCK. Proceeds from the sale of stock pursuant to Options shall constitute general funds of the Company. 9. MISCELLANEOUS. (a) Subject to any applicable provisions of the California Corporate Securities Law of 1968 and related regulations relied upon as a condition of issuing securities pursuant to the Plan, the Board shall have the power to accelerate the time at which an Option may first be exercised or the time during which an Option or any part thereof will vest pursuant to subsection 6(e), notwithstanding the provisions in the Option stating the time at which it may first be exercised or the time during which it will vest. (b) Neither an Optionee nor any person to whom an Option is transferred under subsection 6(d) shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such Option unless and until such person has satisfied all requirements for exercise of the Option pursuant to its terms. (c) Throughout the term of any Option, the Company shall deliver to the holder of such Option, not later than one hundred twenty (120) days after the close of each of the Company's fiscal years during the Option term, a balance sheet and an income statement. This section shall not apply (i) after the Listing Date, or (ii) when issuance is limited to key employees whose duties in connection with the Company assure them access to equivalent information. (d) Nothing in the Plan or any instrument executed or Option granted pursuant thereto shall confer upon any Employee, Director, Consultant or Optionee any right to continue in the employ of the Company or any Affiliate (or to continue acting as a Director or Consultant or shall affect the right of the Company or any Affiliate to terminate the employment of any Employee, with or without cause, to remove any Director as provided in the Company's By-Laws and the provisions of the General Corporation Law of the State of California, or to terminate the relationship of any Consultant subject to the terms of that Consultant's agreement with the Company or Affiliate to which such Consultant is providing services. (e) To the extent that the aggregate Fair Market Value (determined at the time of grant) of stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year under all plans of the Company and its Affiliates exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options. (f) (1) The Board or the Committee shall have the authority to effect, at any time and from time to time (i) the repricing of any outstanding Options under the Plan and/or (ii) with the consent of the affected holders of Options, the cancellation of any outstanding Options and the grant in substitution therefor of new Options under the Plan covering the same or different numbers of shares of common stock, but having an exercise price per share not less than eighty-five percent (85%) of the Fair Market Value (one hundred percent (100%) of the Fair Market Value in the case of an Incentive Stock Option or, in the case of a ten percent (10%) stockholder (as defined in subsection 5(b)), not less than one hundred and ten percent (110%) of the Fair Market Value) per share of common stock on the new grant date. (2) Shares subject to an Option canceled under this subsection 9(f) shall continue to be counted, for the applicable period in which it was granted, against the maximum award of Options permitted to be granted pursuant to subsection 5(c) of the Plan. The repricing of an Option under this subsection 9(f), resulting in a reduction of the exercise price, shall be deemed to be a cancellation of the original Option and the grant of a substitute Option; in the event of such repricing, both the original and the substituted Options shall be counted for the applicable period against the maximum awards of Options permitted to be granted pursuant to subsection 5(c) of the Plan. The provisions of this subsection 9(f)(2) shall be applicable only to the extent required by Section 162(m) of the Code. 10. ADJUSTMENTS UPON CHANGES IN STOCK. (a) If any change is made in the stock subject to the Plan, or subject to any Option (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the type(s) and maximum number of securities subject to the Plan pursuant to subsection 4(a) and the maximum number of securities subject to award to any person during any calendar year pursuant to subsection 5(c), and the outstanding Options will be appropriately adjusted in the type(s) and number of securities and price per share of stock subject to such outstanding Options. Such adjustments shall be made by the Board or Committee, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a "transaction not involving the receipt of consideration by the Company.") (b) In the event of: (1) a dissolution, liquidation, or sale of all or substantially all of the assets of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation; or (3) a reverse merger in which the Company is the surviving corporation but the shares of the Company's common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then: (i) any surviving or acquiring corporation shall assume Options outstanding under the Plan or shall substitute similar options (including an option to acquire the same consideration paid to stockholders in the transaction described in this Subsection 10(b)) for those outstanding under the Plan, or (ii) in the event any surviving or acquiring corporation refuses to assume such Options or to substitute similar options for those outstanding under the Plan, (A) with respect to Options held by persons then performing services as Employees, Directors or Consultants and subject to any applicable provisions of the California Corporate Securities Law of 1968 and related regulations relied upon as a condition of issuing securities pursuant to the Plan, the vesting of such Options and the time during which such Options may be exercised shall be accelerated prior to such event and the Options terminated if not exercised after such acceleration and at or prior to such event, and (B) with respect to any other Options outstanding under the Plan, such Options shall be terminated if not exercised prior to such event. 11. AMENDMENT OF THE PLAN AND OPTIONS. (a) The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 10 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company within twelve (12) months before or after the adoption of the amendment, where the amendment will: (1) Increase the number of shares reserved for Options under the Plan; (2) Modify the requirements as to eligibility for participation in the Plan (to the extent such modification requires stockholder approval in order for the Plan to satisfy the requirements of Section 422 of the Code); or (3) Modify the Plan in any other way if such modification requires stockholder approval in order for the Plan to satisfy the requirements of Section 422 of the Code or to comply with the requirements of Rule 16b 3. (b) The Board may in its sole discretion submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations promulgated thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers. (c) It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide Optionees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. (d) Rights and obligations under any Option granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the person to whom the Option was granted and (ii) such person consents in writing. (e) The Board at any time, and from time to time, may amend the terms of any one or more Options; provided, however, that the rights and obligations under any Option shall not be impaired by any such amendment unless (i) the Company requests the consent of the person to whom the Option was granted and (ii) such person consents in writing. 12. TERMINATION OR SUSPENSION OF THE PLAN. (a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on September 4, 2006, which shall be within ten (10) years from the date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No Options may be granted under the Plan while the Plan is suspended or after it is terminated. (b) Rights and obligations under any Option granted while the Plan is in effect shall not be impaired by suspension or termination of the Plan, except with the written consent of the person to whom the Option was granted. 13. EFFECTIVE DATE OF PLAN. The Plan shall become effective as determined by the Board, but no Options granted under the Plan shall be exercised unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board. EX-4.16 5 INCENTIVE STOCK OPTION Exhibit 4.16 INCENTIVE STOCK OPTION (Name)_, Optionee: ClariNet Communications Corp. (the "Company"), pursuant to its 1996 Stock Option Plan (the "Plan"), has granted to you, the optionee named above, an option to purchase shares of the Company's common stock ("Common Stock"). This option is intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The grant hereunder is in connection with and in furtherance of the Company's compensatory benefit plan for participation of the Company's employees (including officers), directors or consultants and is intended to comply with the provisions of (i) Rule 701 promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act") and (ii) Section 25102(o) of the California Corporations Code. Defined terms not explicitly defined in this agreement but defined in the Plan shall have the same definitions as in the Plan. The details of your option are as follows: Total Number Of Shares Subject To This Option. The total number of shares of Common Stock subject to this option is _(Total Shares)__. Vesting. Subject to the limitations contained herein,(Vest Percent)% of the option shares will vest (become exercisable) on (Vest Date), 19 (Vest Year) with the remaining shares vesting in equal increments, each year, on this date over the next _three_ ( 3) years thereafter until either (i) you cease to provide services to the Company for any reason, or (ii) this option becomes fully vested. Exercise Price And Method Of Payment. Exercise Price. The exercise price of this option is (Exercise Price) DOLLARS ($___) per share, being not less than the Fair Market Value of the Common Stock on the date of grant of this option. Method of Payment. Payment of the exercise price per share is due in full upon exercise of all or any part of each installment which has accrued to you. You may elect, to the extent permitted by applicable statutes and regulations, to make payment of the exercise price under one of the following alternatives: Payment of the exercise price per share in cash (including check) at the time of exercise; Payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds; Provided that at the time of exercise the Company's Common Stock is publicly traded and quoted regularly in the Wall Street Journal, payment by delivery of already-owned shares of Common Stock, held for the period required to avoid a charge to the Company's reported earnings, and owned free and clear of any liens, claims, encumbrances or security interests, which Common Stock shall be valued at its fair market value on the date of exercise; or Payment by a combination of the methods of payment permitted by subparagraphs 3(b)(i) through 3(b)(iii) above. Whole Shares. This option may only be exercised for whole shares. Securities Law Compliance. Notwithstanding anything to the contrary contained herein, this option may not be exercised unless the shares issuable upon exercise of this option are then registered under the Securities Act or, if such shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. Term. The term of this option commences on (Grant Date), 19__, the date of grant, and expires on (Expiration Date) (the "Expiration Date"), which date shall be no more than ten (10) years from date this option is granted, unless this option expires sooner as set forth below or in the Plan. In no event may this option be exercised on or after the Expiration Date. This option shall terminate prior to the Expiration Date as follows: thirty (30) days after the termination of your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company unless one of the following circumstances exists: Your termination of Continuous Status as an Employee is due to your disability. This option will then expire on the earlier of the Expiration Date set forth above or twelve (12) months following such termination of Continuous Status as an Employee. You should be aware that if your disability is not considered a permanent and total disability within the meaning of Section 422(c)(6) of the Code, and you exercise this option more than three (3) months following the date of your termination of employment, your exercise will be treated for tax purposes as the exercise of a "nonstatutory stock option" instead of an "incentive stock option" under the federal tax laws. Your termination of Continuous Status as an Employee, Director or Consultant is due to your death or your death occurs within thirty (30) days following your termination of Continuous Status as an Employee, Director or Consultant for any other reason. This option will then expire on the earlier of the Expiration Date set forth above or twelve (12) months after your death. If during any part of such thirty (30) day period you may not exercise your option solely because of the condition set forth in paragraph 5 above, then your option will not expire until the earlier of the Expiration Date set forth above or until this option shall have been exercisable for an aggregate period of thirty (30) days after your termination of Continuous Status as an Employee, Director or Consultant. If your exercise of the option within thirty (30) days after termination of your Continuous Status as an Employee, Director or Consultant with the Company or with an Affiliate of the Company would result in liability under Section 16(b) of the Securities Exchange Act of 1934, as amended, then your option will expire on the earlier of (i) the Expiration Date set forth above, (ii) the tenth (10th) day after the last date upon which exercise would result in such liability or (iii) six (6) months and ten (10) days after the termination of your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company. However, this option may be exercised following termination of Continuous Status as an Employee only as to that number of shares as to which it was exercisable on the date of termination of Continuous Status as an Employee under the provisions of paragraph 2 of this option. In order to obtain the federal income tax advantages associated with an "incentive stock option," the Code requires that at all times beginning on the date of grant of the option and ending on the day three (3) before the date of the option's exercise, you must be an employee of the Company or an Affiliate of the Company, except in the event of your death or permanent and total disability. The Company has provided for continued vesting or extended exerciseability of your option under certain circumstances for your benefit, but cannot guarantee that your option will necessarily be treated as an "incentive stock option" if you provide services to the Company or an Affiliate of the Company as a consultant or exercise your option more than three (3) months after the date your employment with the Company and all Affiliates of the Company terminates. Exercise. This option may be exercised, to the extent specified above, by delivering a notice of exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require pursuant to subsection 6(f) of the Plan. By exercising this option you agree that: as a precondition to the completion of any exercise of this option, the Company may require you to enter an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of this option; (2) the lapse of any substantial risk of forfeiture to which the shares are subject at the time of exercise; or (3) the disposition of shares acquired upon such exercise; you will notify the Company in writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of this option that occurs within two (2) years after the date of this option grant or within one (1) year after such shares of Common Stock are transferred upon exercise of this option; and the Company (or a representative of the underwriters) may, in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, require that you not sell or otherwise transfer or dispose of any shares of Common Stock or other securities of the Company during such period (not to exceed one hundred eighty (180) days) following the effective date (the "Effective Date") of the registration statement of the Company filed under the Securities Act as may be requested by the Company or the representative of the underwriters. You further agree that the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period. Transferability. This option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise this option. Option Not a Service Contract. This option is not an employment contract and nothing in this option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company, or of the Company to continue your employment with the Company. In addition, nothing in this option shall obligate the Company or any Affiliate of the Company, or their respective stockholders, Board of Directors, officers or employees to continue any relationship which you might have as a Director or Consultant for the Company or Affiliate of the Company. Notices. Any notices provided for in this option or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the address specified below or at such other address as you hereafter designate by written notice to the Company. Governing Plan Document. This option is subject to all the provisions of the Plan, a copy of which is attached hereto and its provisions are hereby made a part of this option, including without limitation the provisions of Section 6 of the Plan relating to option provisions, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this option and those of the Plan, the provisions of the Plan shall control. Right of First Refusal. The shares acquired upon exercise of this option shall be subject to the Right of First Refusal which the Company may exercise upon any purported transfer of the shares. In the event you wish to transfer some or all of your fully-vested option shares, you must first disclose in writing all material terms of such transfer to the Company. The Company will then have the right to purchase from you, within the thirty (30)-day period following receipt of such written notice (or such longer period as may be agreed to by the Company and you), all (or any part of the shares with your consent) of the shares acquired upon exercise of this option on substantially the same terms and conditions as stated in the written notice. The Right of First Refusal shall terminate upon the date of the first registration of an equity security of the Company under Section 12 of the Exchange Act. Dated the___ day of ____, 19__. Very truly yours, ClariNet Communications Corp. By Duly authorized on behalf of the Board of Directors ATTACHMENTS: 1996 Stock Option Plan Notice of Exercise The undersigned acknowledges receipt of the foregoing option and the attachments referenced therein and understands that all rights and liabilities with respect to this option are set forth in the option and the Plan. OPTIONEE Address: EX-5.1 6 ATTORNEY OPINION Exhibit 5.1 August 14, 1997 Individual, Inc. 8 New England Executive Park West Burlington, MA 01803 Re: Registration Statement on Form S-8 (including Reoffer Prospectus on Form S-3) Relating to the Amended and Restated 1989 Stock Option Plan, ClariNet 1995 Incentive Stock Option Plan, and ClariNet 1996 Stock Option Plan (collectively, the "Plans"), and the Selling Officer Shares of Individual, Inc. (the "Company") - - ----------------------------------------------------------------------------- Dear Sir or Madam: Reference is made to the above-captioned Registration Statement on Form S-8 (including Reoffer Prospectus on Form S-3) (the "Registration Statement") filed by the Company on or about August 14, 1997 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, relating to an aggregate of 1,738,966 shares of Common Stock, $.01 par value per share, of the Company issuable pursuant to the Plans (the "Shares"). We have examined, are familiar with, and have relied as to factual matters solely upon copies of the Plans, the Third Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws of the Company, the minute books and stock records of the Company and originals of such other documents, certificates and proceedings as we have deemed necessary for the purpose of rendering this opinion. Based on the foregoing, we are of the opinion that the Shares have been duly authorized and, when issued and paid for in accordance with the terms of the respective Plans, the terms of any option or purchase right grant thereunder duly authorized by the Company's Board of Directors or Compensation Committee and/or any related agreements with the Company, will be validly issued, fully paid and nonassessable. We consent to the use of this opinion as an exhibit to the Registration Statement, and further consent to the use of our name wherever appearing in the Registration Statement and any amendments thereto. Very truly yours, /s/ Testa, Hurwitz & Thibeault, LLP TESTA, HURWITZ & THIBEAULT, LLP EX-23.1 7 AUDITOR CONSENT Exhibit 23.1 Consent of Independent Accountants ---------------------------------- The Board of Directors Individual, Inc.: We consent to the incorporation by reference in the registration statement of Individual, Inc. on Form S-8 (containing a Reoffer Prospectus on Form S-3) of our report dated February 15, 1997, on our audits of the consolidated financial statements of Individual, Inc. as of December 31, 1996 and 1995 and for the years ended December 31, 1996, 1995 and 1994, which report is incorporated by reference in the Annual Report on Form 10-K of Individual, Inc. for the year ended December 31, 1996. We also consent to the reference to our firm under the caption "Experts." /s/ Coopers & Lybrand L.L.P. COOPERS & LYBRAND L.L.P. Boston, Massachusetts August 13, 1997 288LAG4525/1.364093-1 -----END PRIVACY-ENHANCED MESSAGE-----