0001012870-01-502347.txt : 20011026
0001012870-01-502347.hdr.sgml : 20011026
ACCESSION NUMBER: 0001012870-01-502347
CONFORMED SUBMISSION TYPE: SC TO-I
PUBLIC DOCUMENT COUNT: 12
FILED AS OF DATE: 20011018
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: AGILE SOFTWARE CORP
CENTRAL INDEX KEY: 0001088653
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372]
IRS NUMBER: 770397905
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0430
FILING VALUES:
FORM TYPE: SC TO-I
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-57997
FILM NUMBER: 1761453
BUSINESS ADDRESS:
STREET 1: ONE ALMADEN BOULEVARD
CITY: SAN JOSE
STATE: CA
ZIP: 95113
BUSINESS PHONE: 4089753900
MAIL ADDRESS:
STREET 1: ONE ALMADEN BOULEVARD
CITY: SAN JOSE
STATE: CA
ZIP: 95113
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: AGILE SOFTWARE CORP
CENTRAL INDEX KEY: 0001088653
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372]
IRS NUMBER: 770397905
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0430
FILING VALUES:
FORM TYPE: SC TO-I
BUSINESS ADDRESS:
STREET 1: ONE ALMADEN BOULEVARD
CITY: SAN JOSE
STATE: CA
ZIP: 95113
BUSINESS PHONE: 4089753900
MAIL ADDRESS:
STREET 1: ONE ALMADEN BOULEVARD
CITY: SAN JOSE
STATE: CA
ZIP: 95113
SC TO-I
1
dsctoi.txt
SCHEDULE TO-I
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
SCHEDULE TO
(Rule 13e-4)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
_____________________
AGILE SOFTWARE CORPORATION
(Name of Subject Company (Issuer) and Filing Person (Offeror))
_____________________
Certain Options to Purchase Common Stock, Par Value $0.001 Per Share
Having an Exercise Price of $15.00 or Greater
(Title of Class of Securities)
_____________________
00846X105
(CUSIP Number of Class of Securities)
(Underlying Common Stock)
_____________________
Bryan D. Stolle
President and Chief Executive Officer
Agile Software Corporation
One Almaden Boulevard, 12th Floor
San Jose, California 95113
(408) 975-3900
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Filing Person)
_____________________
Copies to:
Sally J. Rau, Esq.
Gray Cary Ware & Freidenrich LLP
400 Hamilton Avenue
Palo Alto, California 94301
(650) 833-2000
CALCULATION OF FILING FEE
=====================================================================================================================
Transaction Valuation** Amount of Filing Fee
---------------------------------------------------------------------------------------------------------------------
$58,209,476.12 $11,641.90
=====================================================================================================================
** Calculated solely for purposes of determining the filing fee. This amount
assumes that options to purchase 7,496,391 shares of common stock of Agile
Software Corporation having an aggregate value of $58,209,476.12 as of
October 11, 2001 will be exchanged pursuant to this offer. The aggregate
value of such options was calculated based on the Black-Scholes option
pricing model. The amount of the filing fee, calculated in accordance with
Rule 0-11(b) of the Securities Exchange Act of 1934, as amended, equals
1/50th of one percent of the value of the transaction.
[_] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not Applicable.
Form or Registration No.: Not Applicable.
Filing Party: Not Applicable.
Date Filed: Not Applicable.
[_] Check box if the filing relates solely to preliminary communications made
before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[_] third party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to Rule 13e-4.
[_] going-private transaction subject Rule 13e-3.
[_] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [_]
================================================================================
ITEM 1. Summary Term Sheet.
The information set forth under "Summary Term Sheet" in the Offer to
Exchange, dated October 18, 2001 (the "Offer to Exchange"), a copy of which is
attached hereto as Exhibit (a)(1), is incorporated herein by reference.
ITEM 2. Subject Company Information.
(a) The name of the issuer is Agile Software Corporation, a Delaware
corporation ("Agile" or the "Company"). The address of its principal executive
offices is One Almaden Boulevard, 12th Floor, San Jose, California 95113. The
telephone number at that address is (408) 975-3900. The information set forth in
the Offer to Exchange under Section 10 ("Information Concerning Agile Software
Corporation") is incorporated herein by reference.
(b) This Tender Offer Statement on Schedule TO relates to an offer by
the Company to eligible option holders to exchange certain eligible stock
options to purchase shares of the Company's common stock, par value $0.001 per
share, ("Option Shares"), outstanding under the Company's 1995 Stock Option Plan
(the "1995 Plan"), the 2000 Nonstatutory Stock Option Plan (the "2000 Plan") and
the Digital Market, Inc. 1995 Stock Plan (the "DMI Plan," and collectively with
the 1995 Plan and the 2000 Plan, the "Option Plans"), and which have an exercise
price of $15.00 per share or greater, for new options that will be granted under
the 1995 Plan (for all option holders who are executive officers of Agile) or
the 2000 Plan (for all option holders who are not executive officers of Agile)
(collectively, the "New Options"), upon the terms and subject to the conditions
set forth under "The Offer" in the Offer to Exchange and the related cover
letter and attached Summary of Terms. Employees are eligible to participate in
the offer if they are employees of Agile as of October 18, 2001 and remain
employees through the date on which the New Options are granted, but only if
they reside or work in the United States, Canada, France, Germany, Japan, Taiwan
or the United Kingdom. Executive officers are entitled to participate but
members of the Board of Directors of Agile, including our Chief Executive
Officer Bryan D. Stolle, are not eligible to participate in this offer.
The number of shares of common stock subject to the New Options will be
75% of the number of shares of common stock subject to the options that are
accepted for exchange and cancelled. Only options for all of the shares of
common stock subject to a particular option grant can be exchanged. The
information set forth in the Offer to Exchange under "Summary Term Sheet,"
"Introduction," Section 1 ("Eligibility"), Section 2 ("Number of Options;
Expiration Date"), Section 6 ("Acceptance of Options for Exchange and Issuance
of New Options") and Section 9 ("Source and Amount of Consideration; Terms of
New Options") is incorporated herein by reference.
(c) The information set forth in the Offer to Exchange under Section 8
("Price Range of Common Stock Underlying the Options") is incorporated herein by
reference.
ITEM 3. Identity and Background of Filing Person.
(a) The filing person is the issuer. The information set forth under
Item 2(a) above is incorporated herein by reference.
ITEM 4. Terms of the Transaction.
(a) The information set forth in the Offer to Exchange under "Summary
Term Sheet," Section 2 ("Number of Options; Expiration Date"), Section 4
("Procedures for Tendering Options"), Section 5 ("Withdrawal Rights and Change
of Election"), Section 6 ("Acceptance of Options for Exchange and Issuance of
New Options"), Section 7 ("Conditions of the Offer"), Section 9 ("Source and
Amount of Consideration; Terms of New Options"), Section 12 ("Status of Options
Acquired By Us in the Offer; Accounting Consequences of the Offer"), Section 13
("Legal Matters; Regulatory Approvals"), Section 14 ("Material U.S. Federal
Income Tax Consequences"), Section 15 ("Material Tax Consequences for Employees
Who are Tax Residents in Canada"), Section 16 ("Material Tax Consequences for
Employees Who are Tax Residents in France"), Section 17 ("Material Tax
Consequences for Employees Who are Tax Residents in Germany"), Section 18
("Material Tax Consequences for Employees Who are Tax Residents in Japan"),
Section 19 ("Material Tax Consequences for Employees Who are Tax Residents in
2
Taiwan"), Section 20 ("Material Tax Consequences for Employees Who are
Tax Residents in the United Kingdom"), and Section 21 ("Extension of Offer;
Termination; Amendment"), are incorporated herein by reference.
(b) The information set forth in the Offer to Exchange under Section 11
("Interests of Directors and Officers; Transactions and Arrangements Concerning
the Options") is incorporated herein by reference.
ITEM 5. Past Contacts, Transactions, Negotiations and Arrangements.
(e) The information set forth in the Offer to Exchange under Section 11
("Interests of Directors and Officers; Transactions and Arrangements Concerning
the Options") is incorporated herein by reference. The Agile Software
Corporation 1995 Stock Option Plan is incorporated herein by reference.
ITEM 6. Purposes of the Transaction and Plans or Proposals.
(a) The information set forth in the Offer to Exchange under Section 3
("Purpose of the Offer") is incorporated herein by reference.
(b) The information set forth in the Offer to Exchange under Section 6
("Acceptance of Options for Exchange and Issuance of New Options"), and Section
12 ("Status of Options Acquired By Us in the Offer; Accounting Consequences of
the Offer") is incorporated herein by reference.
(c) The information set forth in the Offer to Exchange under Section 3
("Purpose of the Offer") and in Section 11 ("Interests of Directors and
Officers; Transactions and Arrangements Concerning the Options") are
incorporated herein by reference.
ITEM 7. Source and Amount of Funds or Other Consideration.
(a) The information set forth in the Offer to Exchange under Section 9
("Source and Amount of Consideration; Terms of New Options") and Section 22
("Fees and Expenses") is incorporated herein by reference.
(b) Not applicable.
(d) Not applicable.
ITEM 8. Interest in Securities of the Subject Company.
(a) The information set forth in the Offer to Exchange under Section 11
("Interests of Directors and Officers; Transactions and Arrangements Concerning
the Options") is incorporated herein by reference.
(b) The information set forth in the Offer to Exchange under Section 11
("Interests of Directors and Officers; Transactions and Arrangements Concerning
the Options") is incorporated herein by reference.
ITEM 9. Person/Assets, Retained, Employed, Compensated or Used.
(a) Not applicable.
ITEM 10. Financial Statements.
(a) The information set forth in the Offer to Exchange under Section 10
("Information Concerning Agile Software Corporation") and Section 23
("Additional Information") and in the Company's (i) Annual Report on Form 10-K
for its fiscal year ended April 30, 2001, filed with the Securities and Exchange
Commission on July 25, 2001 and (ii) Quarterly Report on Form 10-Q for its
fiscal quarter ended July 31, 2001, filed with the Securities and Exchange
Commission on September 14, 2001, which contain Agile's financial statements, is
incorporated herein by reference. A copy of the Annual Report on Form 10-K and
the Quarterly Report on Form 10-Q can be accessed electronically on the
Securities and Exchange Commission's web site at www.sec.gov.
3
(b) Not applicable.
ITEM 11. Additional Information.
(a) The information set forth in the Offer to Exchange under Section 11
("Interests of Directors and Officers; Transactions and Arrangements Concerning
the Options"), and Section 13 ("Legal Matters; Regulatory Approvals") is
incorporated herein by reference.
(b) Not applicable.
ITEM 12. Exhibits.
(a) (1) Offer to Exchange Outstanding Options for New Options,
dated October 18, 2001.
(2) Press Release dated October 18, 2001.
(3) E-mail sent to employees of the Company on October 18, 2001.
(4) Form of Election Form.
(5) Form of Change of Election Form.
(6) Agile Software Corporation Annual Report on Form 10-K for
its fiscal year ended April 30, 2001, filed with the
Securities and Exchange Commission on July 25, 2001 and
incorporated herein by reference.
(7) Agile Software Corporation Quarterly Report on Form 10-Q for
its fiscal quarter ended July 31, 2001, filed with the
Securities and Exchange Commission on September 14, 2001 and
incorporated herein by reference.
(b) Not applicable.
(d) (1) Agile Software Corporation 1995 Stock Option Plan.
(2) Agile Software Corporation 1995 Stock Option Plan
Prospectus.
(3) Form of Option Agreement pursuant to the Agile Software
Corporation 1995 Stock Option Plan.
(4) Agile Software Corporation 2000 Nonstatutory Stock Option
Plan.
(5) Agile Software Corporation 2000 Nonstatutory Stock Option
Plan Prospectus.
(6) Form of Option Agreement pursuant to the Agile Software
Corporation 2000 Nonstatutory Stock Option Plan.
(g) Not applicable.
(h) Not applicable.
ITEM 13. Information Required by Schedule 13E-3.
(a) Not applicable.
4
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule TO is true, complete and
correct.
AGILE SOFTWARE CORPORATION
By: /S/ Bryan D. Stolle
----------------------------------------
Bryan D. Stolle
President and Chief Executive Officer
Date: October 18, 2001
5
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
-------------- ----------------------------------------------------------
(a)(1) Offer to Exchange All Outstanding Options for New
Options, dated October 18, 2001.
(a)(2) Press Release dated October 18, 2001.
(a)(3) E-Mail sent to employees of the Company on October 18, 2001.
(a)(4) Form of Election Form.
(a)(5) Form of Change of Election Form.
(a)(6) Agile Software Corporation Annual Report on Form 10-K for
its fiscal year ended April 30, 2001, filed with the
Securities and Exchange Commission on July 25, 2001 and
incorporated herein by reference.
(a)(7) Agile Software Corporation Quarterly Report on Form 10-Q
for its fiscal quarter ended July 31, 2001, filed with the
Securities and Exchange Commission on September 14, 2001 and
incorporated herein by reference.
(d)(1) Agile Software Corporation 1995 Stock Option Plan.
(d)(2) Agile Software Corporation 1995 Stock Option Plan
Prospectus.
(d)(3) Form of Option Agreement pursuant to the Agile Software
Corporation 1995 Stock Option Plan.
(d)(4) Agile Software Corporation 2000 Nonstatutory Stock Option
Plan.
(d)(5) Agile Software Corporation 2000 Nonstatutory Stock Option
Plan Prospectus.
(d)(6) Form of Option Agreement pursuant to the Agile Software
Corporation 2000 Nonstatutory Stock Option Plan.
EX-99.(A)(1)
3
dex99a1.txt
OFFER TO EXCHANGE ALL OUTSTANDING OPTIONS
EXHIBIT (a)(1)
================================================================================
____________________________
OFFER TO EXCHANGE CERTAIN OUTSTANDING OPTIONS FOR NEW OPTIONS
(THE "OFFER TO EXCHANGE")
____________________________
This Supplement Constitutes Part of the Section 10(a) Prospectus
Relating to the Agile Software Corporation 1995 Stock Option Plan and the
Section 10(a) Prospectus Relating to the Agile Software Corporation 2000
Nonstatutory Stock Option Plan
October 18, 2001
================================================================================
AGILE SOFTWARE CORPORATION
OFFER TO EXCHANGE CERTAIN OUTSTANDING OPTIONS HAVING AN
EXERCISE PRICE PER SHARE OF $15.00 OR MORE FOR NEW OPTIONS (THE
"OFFER TO EXCHANGE").
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
PACIFIC TIME, ON NOVEMBER 19, 2001 UNLESS THE OFFER IS EXTENDED.
Agile Software Corporation ("Agile" or the "Company") is offering certain
option holders who are current employees of Agile or our subsidiaries the
opportunity to exchange certain outstanding stock options originally granted
under our Agile Software Corporation 1995 Stock Option Plan (the "1995 Plan"),
our Agile Software Corporation 2000 Nonstatutory Stock Option Plan (the "2000
Plan"), or the Digital Market, Inc. 1995 Stock Option Plan (the "DMI Plan"),
that have an exercise price of $15.00 per share or more ("Eligible Options"),
for new options to purchase shares of our common stock ("New Options") that we
will grant under our 1995 Plan (with respect to returned options held by option
holders who are executive officers of Agile) or under our 2000 Plan (with
respect to returned options held by option holders who are not executive
officers of Agile). If you choose to return for exchange any Eligible Options,
you must also return for exchange all of the options granted to you since May
19, 2001, regardless of exercise price ("Required Options"). For each Eligible
Option or Required Option you return and we accept for exchange, you will
receive a New Option exercisable for 75% of the number of shares that were
subject to the option that was returned for exchange (rounded down to the
nearest whole share). For purposes of the Offer, "option" means a particular
option grant to purchase a certain number of shares of our common stock.
We are making the offer upon the terms and conditions described in this
Offer to Exchange (the "Offer to Exchange"), the related memorandum from Bryan
D. Stolle dated October 18, 2001, the Election Form and the Change of Election
Form (which together, as they may be amended from time to time, constitute the
"offer" or "program"). You are not required to accept the offer. If you choose
to accept the offer, then you may return for exchange any or all of your
Eligible Options. If you decide to return for exchange one or more of your
Eligible Options, then you must return for exchange the entire outstanding
unexercised portion of each option you want to have exchanged, together with all
Required Options. The offer is not conditioned on a minimum number of options
being tendered. The offer is subject to conditions that we describe in Section 7
("Conditions of the Offer") of this Offer to Exchange.
We will not accept partial tenders of options. If you tender any Eligible
Option, you must tender the entire unexercised portion of that option. EACH NEW
OPTION WILL BE EXERCISABLE FOR 75% OF THE NUMBER OF UNEXERCISED SHARES FOR WHICH
THE CORRESPONDING EXCHANGED OPTION WAS EXERCISABLE AT THE TIME IT WAS ACCEPTED
FOR EXCHANGE AND CANCELLED (ROUNDED DOWN TO THE NEAREST WHOLE SHARE).
We will grant you a New Option under the 2000 Plan (regardless of whether
your original option was granted under the 1995 Plan, the 2000 Plan or the DMI
Plan), except for New Options granted to our executive officers, which will be
granted under the 1995 Plan. The New Options will be granted on or promptly
after (but not later than 20 days after) the first trading day that is at least
six months and one day after the date the returned options are accepted for
exchange and cancelled. All tendered options accepted by us through the offer
will be cancelled as promptly as practicable after 5:00 p.m. Pacific Time on the
date the offer ends. The offer is currently scheduled to expire on November 19,
2001 (the "Expiration Date"), and we expect to cancel options on November 19,
2001, or as soon as possible thereafter (the "Cancellation Date").
You may participate in the offer if you are an eligible employee of Agile
or one of our subsidiaries. Members of our Board of Directors, including our
Chief Executive Officer Bryan D. Stolle, are not eligible to participate. In
order to receive a New Option pursuant to this offer, you must continue to be an
employee of Agile or one of our subsidiaries on the date on which the New
Options are granted, which will be at least six months and one day after the
Expiration Date, and is expected to be on or about May 20, 2002. If you cease to
be employed by Agile or any of our subsidiaries for any reason whatsoever after
we accept your returned options for exchange and cancellation and prior to the
grant date of the New Options, you will not receive any New Options, or any
other payment or consideration, in exchange for your returned options.
(i)
Each New Option granted will preserve the vesting schedule and the
vesting commencement date of the option it replaces, so that on the date the New
Option is granted and on any date thereafter, you will be vested in the New
Option to the same extent you would have been vested on that date had you
retained your option that was submitted for exchange (except that the number of
shares vested and the total number of shares exercisable under the New Option
will be 75% of those under the corresponding option that was returned for
exchange, rounded down to the nearest whole share). Additionally, although
certain earlier option agreements provided for full acceleration of unvested
shares if you were terminated without cause or resigned for good reason within
18 months after a corporate transaction, the New Option agreements provide for
only 18 months worth of accelerated vesting under the same circumstances.
Any Eligible Option that you do not return for exchange or that is not
accepted by us for exchange will remain outstanding and you will continue to
hold such option in accordance with its terms.
Unless otherwise stated, all monetary denominations referred to in this
offer are United States dollars.
As of October 8, 2001, options to purchase 4,724,881 shares of our
common stock were outstanding under our 1995 Plan, options to purchase
11,255,553 shares of our common stock were outstanding under our 2000 Plan, and
options to purchase 27,100 shares of our common stock were outstanding and
assumed by us under the DMI Plan.
Shares of Agile common stock are traded on the Nasdaq National Market
under the symbol "AGIL." On October 17, 2001, the closing price of our common
stock reported on the Nasdaq National Market was $10.40 per share. The New
Options will not be granted until a date that is on or promptly after (but not
more than 20 days after) the first trading day that is six months and one day
after returned options are accepted for exchange and cancelled. The exercise
price per share of the New Options will be equal to the last reported sale price
of our common stock reported by the Nasdaq National Market (or such other market
on which the shares are principally traded or quoted) on the date of grant of
the New Option. The exercise price of your New Option may be higher or lower
than the current price of our common stock, and may be higher or lower than the
exercise price of your Eligible Options or Required Options. The market price of
our common stock has declined substantially over the last year and has been
subject to high volatility. Our common stock may trade at prices below the
exercise price per share of the New Options. Depending on the exercise price of
your returned options and other factors, including the fact that fewer shares
will be purchasable under the New Options than under the options returned for
exchange, the New Options may be less valuable than the options you are
returning for exchange. We recommend that you evaluate current market quotes for
our common stock, among other factors, before deciding whether or not to tender
your options. At the same time, you should consider that the current market
price of our common stock may provide little or no basis for predicting what the
market price of our common stock will be on the grant date of the New Options or
at any time in the future. You should carefully consider these uncertainties
before deciding whether to accept the offer. You should also note that the
number of shares subject to the New Options will be less than the number of
shares subject to the returned options.
ALTHOUGH OUR BOARD OF DIRECTORS HAS APPROVED THE OFFER, NEITHER WE NOR
OUR BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO WHETHER YOU SHOULD TENDER
OR NOT TENDER YOUR OPTIONS FOR EXCHANGE. YOU MUST MAKE YOUR OWN DECISION WHETHER
OR NOT TO TENDER YOUR OPTIONS.
This offer to exchange has 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 the information contained in this Offer to
Exchange. Any representation to the contrary is a criminal offense.
You should direct questions about the offer or requests for assistance
or for additional copies of this Offer to Exchange, the memorandum from Bryan D.
Stolle dated October 18, 2001, the Election Form and the Change of Election Form
to Stock Administration at Agile Software Corporation, One Almaden Boulevard,
12th Floor, San Jose, CA 95113 (telephone: 408-975-3900).
ii
IMPORTANT
If you wish to tender your options for exchange, you must complete and
sign the Election Form in accordance with its instructions, and fax or hand
deliver it and any other required documents to Stock Administration at fax
number (408) 975-7836 before 5:00 p.m., Pacific Time, on November 19, 2001,
unless the offer is extended.
We are not making the offer to, and we will not accept any tender of
options from or on behalf of, option holders in any jurisdiction in which the
offer or the acceptance of any tender of options would not be in compliance with
the laws of that jurisdiction. However, we may, at our discretion, take any
actions necessary for us to make the offer to option holders in any of these
jurisdictions.
We have not authorized any person to make any recommendation on our
behalf as to whether you should tender or not tender your options through the
offer. You should rely only on the information in this document or to which we
have referred you. We have not authorized anyone to give you any information or
to make any representation in connection with the offer other than the
information and representations contained in this document and in the related
memorandum from Bryan D. Stolle dated October 18, 2001, Election Form and Change
of Election Form. If anyone makes any recommendation or representation to you or
gives you any information, you must not rely upon that recommendation,
representation or information as having been authorized by us.
iii
TABLE OF CONTENTS
Page
----
SUMMARY TERM SHEET ................................................................................................ 1
CERTAIN RISKS OF PARTICIPATING IN THE OFFER ....................................................................... 11
INTRODUCTION ...................................................................................................... 13
THE OFFER ......................................................................................................... 15
1. Eligibility ................................................................................................. 15
2. Number of Options; Expiration Date .......................................................................... 15
3. Purpose of the Offer ........................................................................................ 16
4. Procedures for Tendering Options ............................................................................ 18
5. Withdrawal Rights and Change of Election .................................................................... 19
6. Acceptance of Options for Exchange and Issuance of New Options .............................................. 20
7. Conditions of the Offer ..................................................................................... 22
8. Price Range of Our Common Stock Underlying the Options ...................................................... 24
9. Source and Amount of Consideration; Terms of New Options .................................................... 25
10. Information Concerning Agile Software Corporation ........................................................... 31
11. Interests of Directors and Officers; Transactions and Arrangements Concerning the Options ................... 32
12. Status of Options Acquired By Us in the Offer; Accounting Consequences of the Offer ......................... 33
13. Legal Matters; Regulatory Approvals ......................................................................... 33
14. Material U.S. Federal Income Tax Consequences ............................................................... 34
15. Material Tax Consequences for Employees Who are Tax Residents in Canada ..................................... 35
16. Material Tax Consequences for Employees Who are Tax Residents in France ..................................... 36
17. Material Tax Consequences for Employees Who are Tax Residents in Germany .................................... 38
18. Material Tax Consequences for Employees Who are Tax Residents in Japan ...................................... 39
19. Material Tax Consequences for Employees who are Tax Residents in Taiwan ..................................... 40
20. Material Tax Consequences for Employees who are Tax Residents in the United Kingdom ......................... 41
21. Extension of Offer; Termination; Amendment .................................................................. 42
22. Fees and Expenses ........................................................................................... 43
23. Additional Information ...................................................................................... 44
24. Miscellaneous ............................................................................................... 45
iv
SUMMARY TERM SHEET
The following are answers to some of the questions that you may have
about the offer. We urge you to read carefully the remainder of this Offer to
Exchange, the accompanying memorandum from Bryan D. Stolle dated October 18,
2001, the Election Form and the Change of Election Form. The information in this
summary is not complete, and additional important information is contained in
the remainder of this Offer to Exchange, the accompanying memorandum from Bryan
D. Stolle dated October 18, 2001, the Election Form and the Change of Election
Form. We have included page references to the remainder of this Offer to
Exchange where you can find a more complete description of the topics covered in
this summary.
General Questions About the Program
1. What securities is Agile offering to exchange?
We are offering to exchange your Eligible Options, and any options that
are required to be exchanged if you accept this offer, if any, for New Options.
Eligible Options are all stock options held by current employees with an
exercise price per share of $15.00 or more that are outstanding under the 1995
Plan, the 2000 Plan or the DMI Plan (which were assumed by us in our acquisition
of Digital Market, Inc.) If you elect to exchange any of your Eligible Options,
you must also exchange all options granted to you since May 19, 2001, regardless
of the exercise price. By returning for exchange any of your Eligible Options,
you will automatically be deemed to have returned all of the options granted to
you since May 19, 2001, as well, for exchange and cancellation. We cannot
accept partial tenders of options. If you tender any Eligible Option, you must
tender the entire unexercised portion of that option. Options to purchase shares
of common stock of Agile that have an exercise price less than $15.00 per share
are not eligible to participate in the offer, unless required to be tendered as
detailed above and in Section 2 ("Number of Options; Expiration Date") of this
Offer to Exchange. (Page 15)
2. Who is eligible to participate?
Option holders are eligible to participate if they are employees of
Agile or one of Agile's subsidiaries as of the date the offer commences and as
of the date on which the tendered options are cancelled, but only if they reside
or work in the United States, Canada, France, Germany, Japan, Taiwan or the
United Kingdom. However, members of the Board of Directors, including our Chief
Executive Officer Bryan D. Stolle, are not eligible to participate. In order to
receive a New Option, you must remain an employee as of the date the New Options
are granted, which will be at least six months and one day after the Expiration
Date. If Agile does not extend the offer, the New Options will be granted on or
about May 20, 2002. (Page 15)
3. Are employees outside the United States eligible to participate?
Yes. Certain employees outside the United States located in Canada,
France, Germany, Japan, Taiwan, and the United Kingdom are eligible to
participate. Employees located in other jurisdictions are not eligible to
participate. Special considerations may apply to employees in jurisdictions
outside of the United States, due to certain taxation and securities rules
applicable in these countries. In some countries, the application of local rules
may have important consequences to those employees. We have distributed with
this Offer to Exchange short summaries of certain of these consequences and
additional terms and conditions with respect to some of the countries where our
non-U.S. employees are located. If you are an employee outside the United
States, please be sure to read Sections 15 through 20 of this Offer to Exchange,
which discuss the tax consequences of participating in the offer for employees
outside of the United States, and consult with your individual tax, legal and
investment advisors before deciding whether to accept the offer. (Page 35)
4. Why is Agile making the offer?
We believe that granting stock options motivates high levels of
performance and provides an effective means of recognizing employee
contributions to the success of our company. The offer provides an opportunity
for us to offer eligible employees a valuable incentive to stay with our company
and to achieve high levels of performance. Some of our outstanding options,
whether or not they are currently exercisable, have exercise prices
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that are significantly higher than the current market price of our shares. We
believe these options are unlikely to be exercised in the foreseeable future.
This program is voluntary and will allow employees to choose whether to keep
their current stock options at their current exercise price, or to cancel those
options in exchange for New Options to purchase 75% of the number of shares
covered by the cancelled option (rounded down to the nearest whole share). By
making this offer to exchange outstanding options for New Options that will have
an exercise price at least equal to the market value of the underlying shares on
the grant date, we intend to provide our eligible employees with the benefit of
owning options that over time may have a greater potential to increase in value,
create better performance incentives for eligible employees and thereby maximize
stockholder value. (Page 16)
5. May I tender shares I bought under the Employee Stock Purchase Plan?
No. The offer only pertains to options granted under the 1995 Plan, the
2000 Plan and those assumed by us under the DMI Plan. The shares bought under
the Employee Stock Purchase Plan are not outstanding options and cannot be
tendered. The offer has no effect on the prices at which a participant in the
Employee Stock Purchase Plan can buy stock.
6. How does the exchange work?
The Offer to Exchange will require an eligible option holder to make a
voluntary election that will become irrevocable by November 19, 2001 to cancel
outstanding stock options in exchange for a grant of new option shares equal to
75% of the number of shares subject to the cancelled options, to be granted no
earlier than six months and one day after the returned option is cancelled. The
exercise price will equal the closing market price of our common stock on the
Nasdaq National Market on the date of grant. The New Option will be a
nonstatutory option, and will maintain the vesting schedule of the returned
option. The New Option shall be granted under the 2000 Plan, if you are not an
executive officer of Agile, and under the 1995 Plan if you are an executive
officer of Agile. If you choose to participate, you must also exchange all stock
options granted on or after May 19, 2001.
7. What do I need to do to participate in the offer?
To participate, you must complete the Election Form, sign it and ensure
that our Stock Administration receives it no later than 5:00 p.m. Pacific Time
on November 19, 2001. You can return your form either by facsimile to fax #
408-975-7836, or by mail to Agile Stock Administration, One Almaden Boulevard,
12th Floor, San Jose, CA 95113 (telephone: 408-975-3900). (Page 18)
8. When does the offer expire? Can the offer be extended, and if so,
how will I be notified if it is extended?
The offer expires on November 19, 2001, at 5:00 p.m., Pacific Time,
unless it is extended by us. We may, in our discretion, extend the offer at any
time, but we cannot assure you that the offer will be extended or, if extended,
for how long. If the offer is extended, we will make a public announcement of
the extension no later than 9:00 a.m., Pacific Time, on the next business day
following the previously scheduled expiration of the offer period. If we extend
the offer beyond that time, you must deliver the documents before the expiration
of the offer. (Page 42)
We reserve the right to reject any or all options elected for exchange
that we determine are not in appropriate form or that we determine are unlawful
to accept. Otherwise, we will accept properly and timely elected options that
are not validly withdrawn. Subject to our rights to extend, terminate, and amend
the offer, we currently expect that we will accept all such properly elected
options promptly after expiration of the offer. (Page 18)
9. What will happen if I do not submit my Election Form by the deadline?
If you do not submit your election form by the deadline in the manner
described in the answer to the next question, then you will not participate in
the option exchange, and all stock options currently held by you will remain
intact at their original price and original terms. (Page 18)
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10. How do I exchange my options?
If you decide to tender your options, you must deliver, before 5:00
p.m., Pacific Time, on November 19, 2001 (or such later date and time as we may
extend the expiration of the offer), a properly completed and executed Election
Form and any other documents required by the Election Form via facsimile (fax #
408-975-7836) or by hand delivery to Agile Stock Administration, 12th floor, One
Almaden Boulevard, San Jose, California 95113. This is a one-time offer, and we
must strictly enforce the tender offer period. We cannot accept delivery of
the Election Form (or Change of Election Form) after the Expiration Date. We
reserve the right to reject any or all tenders of options that we determine are
not in appropriate form or that we determine are unlawful to accept. Subject to
our rights to extend, terminate and amend the offer, we currently expect that we
will accept all properly tendered options promptly after the expiration of the
offer. (Page 18)
11. Is this a repricing?
This is not a stock option repricing in the traditional sense. In a
repricing, the exercise price of an employee's current options would be adjusted
immediately to be equal to the closing price of our common stock on the date of
repricing. This would result in a variable stock accounting treatment of the
option. (Page 18)
12. If I participate, what will happen to my current options?
Options designated to be exchanged under this program will be cancelled
after 5:00 p.m. Pacific Time on November 19, 2001, and you will no longer have
those options available for exercise. (Page 20)
13. What are the conditions to the offer?
The offer is subject to a number of conditions, including the
conditions described in Section 7 ("Conditions of the Offer") of this Offer to
Exchange (Page 22). However, the offer is not conditioned on a minimum number of
options being tendered. Participation in the offer is completely voluntary.
14. Are there any eligibility requirements that I must satisfy after the
Expiration Date of the offer to receive the New Options?
To receive a grant of New Options through the offer, you must be
employed by Agile or one of its subsidiaries as of the date the offer expires
and as of the date that the New Options are granted.
As discussed below, subject to the terms of this offer, we will not
grant the New Options until on or about the first business day which is at least
six months and one day after the date we cancel the options accepted for
exchange (but not more than 20 days after). As the Cancellation Date is expected
to be November 19, 2001, we do not expect to grant New Options before May 20,
2002. If, for any reason, you do not remain an employee of Agile or one of its
subsidiaries through the date we grant the New Options, you will not receive any
New Options or other payment or consideration in exchange for your tendered
options that have been accepted for exchange and cancelled. This rule applies
regardless of the reason your employment terminated, whether as a result of
voluntary resignation, involuntary termination, death or disability. (Page 15)
You are reminded that unless expressly provided in your employment
agreement or by the applicable laws of a non-U.S. jurisdiction, your employment
with Agile or one of our subsidiaries, as the case may be, remains "at will" and
can be terminated by you or Agile, or one of our subsidiaries, at any time with
or without cause. If your employment terminates before the grant date of the New
Options, you will not receive any New Options, nor any payment or other
consideration for your returned options. (Page 21)
15. What if I am an employee of Agile when the offer expires, but not an
employee when the New Options are granted?
If you are not an employee of Agile on the date that the New Options
are granted (expected to be on or about May 20, 2002), you will not receive any
New Options or other consideration in exchange for your
3
tendered options that have been accepted for exchange, even if your tendered
options were partially or fully vested at the time of tender. As a result, if
your employment ends after the offer expires but before the New Options are
granted, you will not be able to exercise the tendered options, which will have
been cancelled, nor will you be granted New Options, nor will you receive a
payment or other consideration for the tendered and cancelled options. If you do
not accept the offer, when your employment with us ends, you generally will be
able to exercise your vested options, if any, during the limited period
specified in your option documents (usually three months), to the extent those
options are vested on the day your employment ends. However, if you accept the
offer, your returned options will be cancelled, and you will not be eligible to
receive New Options, if you are not employed by us on the grant date of the New
Options. (Page 15).
The offer does not change the nature of your "at-will" employment with
Agile, and does not create any obligation on the part of Agile or any of its
subsidiaries to continue your employment for any period. Agile employees are
employed "at will." Your employment may be terminated by us or by you at any
time, including prior to the grant date or vesting of the New Options, for any
reason, with or without cause.
16. Why doesn't Agile grant the New Options immediately after the
expiration date of the offer?
If we were to grant the New Options on any date which is earlier than
six months and one day after the date we cancel the options accepted for
exchange, we would be subject to onerous accounting treatment. We would be
required for financial reporting purposes to treat the New Options as variable
awards. This means that we would be required to record the non-cash accounting
impact of decreases and increases in the Company's share price as a compensation
expense for the New Options issued under this offer. We would have to continue
this variable accounting for these New Options until they were exercised,
forfeited or terminated. The higher the market value of our shares, the greater
the compensation expense we would have to record. By deferring the grant of the
New Options for at least six months and one day, we believe we will not have to
treat the New Options as variable awards.
17. If I tender options in the offer, will I be eligible to receive other
option grants before I receive my New Options?
No. If we accept options you tender in the offer, you will not receive
any other option grants before you receive your New Options. We will defer until
the grant date for your New Options the grant of other options, such as annual,
bonus or promotion-related options, for which you may otherwise become eligible
before the New Option grant date. If we were to grant you any options sooner
than six months and one day after canceling your returned options, we would be
required for financial reporting purposes to record a compensation expense
against our earnings. Therefore, any promotion or other merit grant that may be
approved for you would be delayed until the grant date for your New Options and
would have an exercise price equal to the market price of our common stock on
the date of grant. (Page 20)
If you do not tender for exchange any of your Eligible Options in the
offer, you may receive discretionary merit or promotion option grants prior to
the date New Options are granted to others if the Compensation Committee or
Board of Directors or their designee decides to make such grants (such options
would have an exercise price equal to the last reported closing price on the
date they are granted). As a result, participation in the option exchange offer
may affect the date, price and vesting of any promotion, merit or other
discretionary grants that may be approved for you in the future. (Page 20)
Specific Questions About the Cancelled Options
18. Which options can be cancelled?
An option holder can elect to cancel one or more options granted under
the 1995 Plan, the 2000 Plan or the DMI Plan, with an exercise price of $15.00
or greater. We will not accept partial tenders of options. If you choose to
participate, you must also exchange all stock options granted on or after May
19, 2001. (Page 15)
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19. May I exchange either vested or unvested options?
Yes. You may return for exchange any or all of your Eligible Options,
whether or not they are vested. But if you choose to accept the offer with
respect to any of your Eligible Options, you must return the entire Eligible
Option, vested or unvested. Moreover, if you choose to accept the offer with
respect to any of your Eligible Options, you must also exchange all of the
options that have been granted to you since May 19, 2001, regardless of the
exercise price of such options, whether or not they have vested.
20. With respect to each of my Eligible Options, do I have to return for
exchange the entire option, or may I decide to return for exchange only
a portion of the option?
You may choose to return for exchange one Eligible Option in its
entirety and not return for exchange another, subject to the qualifications of
the preceding question ("May I exchange either vested or unvested options?").
You may not return for exchange less than all of a particular outstanding
option. For example, if you have received two Eligible Options, you may choose
to return for exchange neither option, both options or one option. However, if
you wish to exchange an Eligible Option, you may not return for exchange
anything less than that entire option to the extent outstanding. If you have
exercised an Eligible Option in part, the option is outstanding only to the
extent of the unexercised portion of the option.
21. If I choose to tender an option which is eligible for exchange, do I
have to tender all the unexercised shares under that option?
Yes. We are not accepting partial tenders of options. However, you may
tender the remaining portion of an option which you have partially exercised.
Accordingly, you may tender one or more of your options, but for each option you
must tender all of the unexercised shares subject to that option or none of
those shares. For example, and except as otherwise described below, if you held
(i) an option to purchase 1,000 shares at $15.00 per share, 700 of which you
have already exercised, (ii) an unexercised option to purchase 1,000 shares at
an exercise price of $20.00 per share and (iii) an unexercised option to
purchase 2,000 shares at an exercise price of $40.00 per share, you would be
permitted to tender:
. none of your options,
. your first option with respect to the 300 remaining unexercised
shares,
. your second option with respect to all 1,000 unexercised shares,
. your third option with respect to all 2,000 unexercised shares, or
. any combination of the foregoing alternatives.
You would not be permitted to tender options with respect to only 150
shares (or any other partial amount) under the first option or less than all of
the shares under the second and third options. (Page 21)
Also, if you decide to tender any of your options, then you must tender
all of your options that were granted to you during the six month period prior
to the cancellation of any tendered options. For example, if you were granted an
option in January 2001 and a second option in June 2001 and you want to tender
your January 2001 option, you would also be required to tender your June 2001
option. (Page 15)
22. May I tender options that I have already exercised?
No. The offer only pertains to outstanding options, and does not apply
in any way to shares purchased, whether upon the exercise of options or
otherwise, whether or not you have vested in those shares. If you have exercised
an Eligible Option in its entirety, that option is no longer outstanding and is
therefore not subject to the offer. If you have exercised an Eligible Option in
part, the remaining unexercised portion of that option is outstanding and may be
tendered for exchange pursuant to the offer. Options for which you have properly
submitted
5
an exercise notice prior to the date the offer expires will be considered
exercised to that extent, whether or not you have received confirmation of
exercise for the shares purchased.
Specific Questions About the New Options
23. How many New Options will I receive in exchange for my returned
options?
For each Eligible Option or Required Option that you return and that we
accept for exchange, you will receive a New Option exercisable for 75% of the
number of shares that were subject to the returned option at the time it was
cancelled (rounded down to the nearest whole share). Thus, for every four (4)
shares of common stock that are purchasable under an exchanged option, you will
receive the right to purchase three (3) shares of common stock under the
corresponding New Option. For example, if you exchanged an option to purchase
400 shares of common stock, you will receive a New Option to purchase 300 shares
of common stock.
All returned options that we accept for exchange will be cancelled,
along with the corresponding stock option agreement and right to purchase common
stock, and will cease to exist. The New Options will be granted under our 1995
Plan (with respect to those options returned by option holders who are executive
officers of Agile) or under our 2000 Plan (with respect to those options
returned by option holders who are not executive officers of Agile), and will be
subject to the terms and conditions of the 1995 Plan or 2000 Plan, as
applicable, and a new stock option agreement between you and us. (Page 15)
24. What will be the exercise price of the New Options?
The exercise price per share of the New Options will be equal to the
last reported sale price of our common stock on the Nasdaq National Market (or
such other market on which the shares are principally traded or quoted) on the
date we grant the New Options (expected to be after May 20, 2002). Accordingly,
we cannot predict the exercise price of the New Options. The last reported sale
price per share of our common stock on the Nasdaq National Market on October 17,
2001 was $10.40. Because we will not grant New Options until on or promptly
after (but not later than 20 days after) the first trading day that is at least
six months and one day after the date we accept and cancel the options returned
for exchange, the New Options may have a higher exercise price than some or all
of your returned options. In addition, after the grant of the New Options, our
common stock may trade at a price below the exercise price per share of those
options. Depending on the exercise price of your returned options and other
factors, including the fact that fewer shares will be purchasable under the New
Options than under the options returned for exchange, the New Options may be
less valuable than the options you are returning for exchange. We recommend that
you obtain current market quotations for our common stock before deciding
whether to exchange your options. However, you should also consider that the
current market price of our common stock may provide little or no basis for
predicting what the market price of our common stock will be on the grant date
of the New Options or at any time in the future. (Page 24)
25. When will I receive my New Options?
We will not grant the New Options until on or promptly after (but not
later than 20 days after) the first trading day which is at least six months and
one day after the date we cancel the options accepted for exchange. Our Board of
Directors will select the actual grant date for the New Options. If we cancel
tendered options on November 19, 2001, which is the scheduled date for the
cancellation of the options (the day following the expiration date of the
offer), the New Options will not be granted until on or promptly after (but not
more than 20 days after) May 20, 2002. You must be an employee of Agile or one
of its subsidiaries on the date we grant the New Options in order to be eligible
to receive them. (Page 15). Note that our stock administration department will
require additional time after the New Option grant date in which to prepare and
deliver to you for signature your new stock option agreements, and thus we
estimate that you will not be able to exercise even vested portions of your New
Options for a short period of time following the grant date. (Page 20)
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26. Will I be required to give up all my rights to the cancelled options?
Yes. Once we have accepted options tendered by you, your exchanged
options will be cancelled and you will no longer have any rights under those
options. (Page 20)
27. When will the New Options vest?
The vesting schedule for each New Option will be measured from the same
vesting commencement date and will be based upon the same vesting schedule as
the applicable corresponding Eligible Option or Required Option that was
returned for exchange (except that the number of shares vesting each month will
be adjusted for the fact that the New Options will be exercisable for three (3)
shares for every four (4) shares for which the corresponding returned option was
exercisable). You will receive credit for vesting accrued prior to the
cancellation of the tendered options and will receive credit for the period
between the cancellation of the tendered options and the grant of the New
Options.
For example, suppose you exchange an option (i) that is exercisable for
a total of 6,000 shares (none of which have been previously exercised), (ii)
that vests over 60 months at the rate of 100 shares per month starting from
January 5, 2000 and ending on January 5, 2005, and (iii) that you would have
been vested with respect to 2,700 shares on the date the New Options are granted
(assuming for this example that New Options are granted on May 20, 2002), then
you would be granted a New Option that (a) covers 4,500 shares (i.e., 75% of the
6,000 unexercised shares subject to the cancelled option), (b) is vested on the
date of grant for 2,025 shares (i.e., 75% of the 2,700 shares that would have
been vested and exercisable under the tendered option), (c) that will vest on
the 5th of each month at the rate of 75 shares per month (i.e., 75% of 100
shares per month), and (d) that will be vested in full on January 5, 2005 (60
months after the original vesting commencement date). (Page 16)
28. After the grant of the New Options, what will happen if I again end up
with underwater options?
We are conducting this offer only at this time, considering the unusual
stock market conditions that have affected many companies throughout the
country. This is a one-time offer, and we do not expect to make this or a
similar offer again in the future. As your stock options are valid for ten years
from the date of grant, subject to continued employment, the price of our common
stock may appreciate over the long term even if your options are underwater for
some period of time after the grant date of the New Options. However, we can
provide no assurance as to the price of our common stock at any time in the
future.
29. Will the New Options be different from my tendered options?
The New Options granted in exchange for the tendered options will have
substantially the same terms and conditions as the tendered options, except for
the reduced number of shares, the new exercise price and a new ten-year term. In
addition, all New Options will be nonstatutory options for U.S. tax purposes,
regardless of whether the options returned for exchange were incentive stock
options. In addition, some tendered options originally granted under the 1995
Plan or the DMI Plan will be exchanged for New Options granted under the 2000
Plan instead. Furthermore, while certain earlier option agreements provided for
full acceleration of unvested shares if you were terminated without cause or
resigned for good reason within 18 months after a corporate transaction, the New
Option agreements provide for only 18 months worth of accelerated vesting under
the same circumstances.
30. If my current options are incentive stock options, will my New Options
be incentive stock options?
No. All New Options will be granted as nonstatutory stock options
regardless of whether your tendered options were incentive stock options or
nonstatutory stock options. For a comparison of the U.S. federal income tax
treatment of incentive stock options and nonstatutory stock options, see page
35.
31. When will New Options expire?
New Options will expire ten years from the grant date of your New
Options, or earlier if your employment with Agile terminates. (Page 26)
7
32. What happens if Agile merges into or is acquired by another company?
It is possible that, prior to the grant of New Options, we might effect or
enter into an agreement such as a merger or other similar transaction.
In the event that there is a sale of all or substantially all of our assets
or stock, or we merge with another corporation, before the Expiration Date, you
may withdraw your returned options and have all the rights afforded you to
acquire our common stock under the existing agreements evidencing those options.
Further, if Agile is acquired prior to the Expiration Date, we reserve the right
to withdraw the Offer, in which case your old options and your rights under them
will remain intact, but you will receive no replacement options.
In the event that there is a sale of all or substantially all of our assets
or stock, or we merge with another corporation, after your returned options are
accepted for exchange and cancelled but before the New Options are granted, our
obligations in connection with the offer would not be automatically assumed by
the acquiring corporation. Whether or not the obligation to grant the New
Options is assumed would depend on the terms of the acquisition agreement. While
we would seek to make provision for tendering options holders in the acquisition
agreement, we cannot guarantee what, if any, provision would be made. As a
result, we cannot guarantee that any New Options would be granted by the
acquiror in the event of such an acquisition. Therefore, it is possible that you
could give up your Eligible Options or other Required Options and not receive
any New Options from the acquiring corporation.
In the event that there is a sale of all or substantially all of our assets
or stock, or we merge with another corporation, after your New Options have been
granted, your New Options will be assumed or replaced with new options of the
successor corporation. If the successor corporation does not assume or
substitute your New Options, the New Options will automatically become fully
vested and exercisable immediately prior to the effective date of such a
transaction. Agile will use its best efforts to provide at least 20 days prior
written notice of the occurrence of any such transaction in which the successor
corporation does not intend to assume or substitute for your New Options. In
addition, if the successor corporation assumes or substitutes for outstanding
New Options, an option will become exercisable and will be credited with an
additional 18 months of vesting if your service is terminated by the successor
corporation (other than for cause) or you resign for good reason within 18
months after the such a transaction has occurred.
We are also reserving the right, in the event of a merger or similar
transaction, to take any actions we deem necessary or appropriate to complete a
transaction that our Board of Directors believes is in the best interest of our
company and our stockholders. This could include terminating your right to
receive New Options under this Offer to Exchange. If we were to terminate your
right to receive New Options under this offer in connection with such a
transaction, employees who have tendered options for cancellation pursuant to
this offer might not receive options to purchase securities of the acquiror or
any other consideration for their tendered options. (Page 17)
33. Are there circumstances where I would not be granted New Options?
Yes. Even if we accept your tendered options, we will not grant New Options
to you if we are prohibited by applicable law or regulations from doing so. We
will use reasonable efforts to avoid the prohibition, but if it is applicable
throughout the period from the first business day that is at least six months
and one day after we cancel the options accepted for exchange and continuing
thereafter, you will not be granted a New Option. (Page 34)
If you are no longer an employee of Agile or one of its subsidiaries on the
date we grant New Options, you will not receive any New Options. (Page 15)
Also, as described in answer to the preceding question, you may not be
granted New Options if the Board of Directors determines that this is necessary
or appropriate to complete a transaction that is in the best interests of Agile
and its stockholders.
8
34. What happens to options that I choose not to tender or that are not
accepted for exchange?
Nothing. Options that you choose not to tender for exchange or that we do
not accept for exchange remain outstanding until they expire by their terms and
retain their current exercise price and current vesting schedule.
35. Will I have to pay taxes if I exchange my options in the offer?
If you exchange your current options for New Options, you should not be
required under current law to recognize income for U.S. federal income tax
purposes at the time of the exchange or upon our acceptance and cancellation of
the options. Further, at the grant date of the New Options, you will not be
required under current law to recognize income for U.S. federal income tax
purposes.
All option holders, including those subject to taxation in a foreign
jurisdiction, whether by reason of their nationality, residence or otherwise,
should consult their own personal tax advisors as to the tax consequences of
their participation in the offer. Tax consequences may vary depending on each
individual participant's circumstances. We have distributed with this Offer to
Exchange short summaries of some of those consequences with respect to some of
the countries where our non-U.S. employees are located. If you are an employee
located outside of the United States, we recommend that you consult with your
own tax advisor to determine the tax and social insurance consequences of the
offer under the laws of the country in which you live and work before deciding
whether or not to participate in the offer. (Page 35)
36. Can I withdraw previously tendered options?
You may withdraw your tendered options at any time before the offer expires
at 5:00 p.m., Pacific Time, on November 19, 2001. If we extend the offer beyond
that time, you may withdraw your tendered options at any time until the extended
expiration of the offer. In addition, although we currently intend to accept
validly tendered options promptly after the expiration of this offer, if we have
not accepted your tendered options by November 19, 2001, you may withdraw your
tendered options at any time after November 19, 2001. To withdraw tendered
options, you must deliver to us via facsimile (fax # 408-975-7836) or by hand
delivery to Agile's Stock Administrator, a signed Change of Election Form or a
written notice of withdrawal, or a facsimile thereof, with the required
information while you still have the right to withdraw the tendered options.
Agile's Stock Administration office is located on the 12th floor at One Almaden
Boulevard, San Jose, California 95113. Once you have withdrawn options, you may
re-tender options only by again submitting another Election Form prior to the
Expiration Date. (Page 19)
37. Can I change my election regarding particular tendered options?
Yes. You may change your election regarding particular tendered options at
any time before the offer expires at 5:00 p.m., Pacific Time, on November 19,
2001. If we extend the offer beyond that time, you may change your election
regarding particular tendered options at any time until the extended expiration
of the offer. In order to change your election, you must deliver to us via
facsimile (fax # 408-975-7836) or by hand delivery to Agile's Stock
Administrator a new Election Form, which includes the information regarding your
new election, and is clearly dated after your original Election Form. Agile's
Stock Administration office is located on the 12th floor at One Almaden
Boulevard, San Jose, California 95113. (Page 19)
38. What does Agile think of the offer?
Although our Board of Directors has approved the offer, neither we nor our
Board of Directors makes any recommendation as to whether you should tender or
not tender your options. You must make your own decision whether or not to
tender options taking into account your own personal circumstances and
preferences. Our executive officers are eligible to participate in this offer.
For questions regarding tax implications or other investment-related questions,
you should talk to your own legal counsel, accountant and/or financial advisor.
9
39. Whom can I talk to if I have questions about the offer?
For additional information or assistance, you should contact:
Stock Administrator
Agile Software Corporation
One Almaden Boulevard, 12th Floor
San Jose, CA 95113
telephone: (408) 975-3900
fax: (408) 975-7836
We have not authorized anyone to give you any information or to make any
representation in connection with this offer other than the information and
representations contained in this document or in the related election form. If
anyone makes any representation or gives you any information different from the
representations or information contained herein, you must not rely upon that
representation or information as having been authorized by us. We have not
authorized any person to make any recommendation on our behalf as to whether you
should return for exchange or refrain from returning for exchange your options
pursuant to this offer. If anyone makes any recommendation to you, you must not
rely upon that recommendation as having been authorized by us. You should rely
only on the representations and information contained in this document or to
which we have referred you.
10
CERTAIN RISKS OF PARTICIPATING IN THE OFFER
Participation in the offer involves a number of potential risks, including
those described below. This section briefly highlights some of the risks and is
necessarily incomplete, and should be read together with the "Risk Factors" in
Agile's annual report on Form 10-K for the fiscal year ended April 30, 2001
filed with the Securities and Exchange Commission (the "SEC") on July 25, 2001
and in Agile's quarterly report on Form 10-Q filed with the SEC on September 14,
2001. Eligible participants should carefully consider these and other risks and
are encouraged to speak with an investment and tax advisor as necessary before
deciding to participate in the offer. In addition, we strongly urge you to read
the rest of this Offer to Exchange, along with the memorandum from Bryan D.
Stolle dated October 18, 2001, the Election Form and the Change of Election
Notice before deciding to participate in the exchange offer. The list of risks
does not include certain risks that may apply to employees who live and work
outside of the United States, and we urge those employees to read the sections
in this Offer to Exchange discussing tax consequences in various countries, as
well as the other documents listed above, and to consult with an investment and
tax advisor as necessary before deciding to participate in this exchange offer.
Economic Risks
If your employment terminates prior to the grant of the New Options, you will
receive neither a New Option nor the return of your cancelled option.
Once your option is cancelled, it cannot be restored, and you will not be
granted a New Option if you are not an employee of Agile or one of its
subsidiaries on the date the New Options are granted. Accordingly, if your
employment terminates for any reason prior to the grant of the New Options, you
will have the benefit of neither the cancelled option nor the New Option.
If our stock price increases after the date your tendered options are cancelled,
your cancelled options might have been worth more than the New Options that you
have received in exchange for them.
For example, if you tender for cancellation options with a $35.00 exercise
price, and Agile's stock appreciates to $50.00 when the New Options are granted,
your New Option will have a higher exercise price than the cancelled option.
Participation in the offer will make you ineligible to receive any option grants
until May 20, 2002, at the earliest.
Employees are generally eligible to receive option grants at any time that
the Board of Directors or Compensation Committee chooses to make them. However,
if you participate in the offer, you will not be eligible to receive any option
grants until May 20, 2002, at the earliest.
If we enter into a merger or other similar transaction, either before or after
the expected date of grant of the New Options, you might receive New Options
with limited potential for future value or no New Options at all.
If our shares are acquired in a cash merger, your New Option exercise price
may be close to the cash price being paid for our shares, resulting in very
limited future price appreciation potential. Furthermore, the Board of Directors
has reserved the right to not grant the New Options if that were to become
necessary or appropriate to complete a transaction that the Board believes to be
in the best interests of the Company and our stockholders.
Tax-Related Risks for U.S. Residents
Your New Option will be a nonstatutory stock option, whereas your cancelled
option may have been an incentive stock option.
Even if your cancelled option was an incentive stock option, your New
Option will be a nonstatutory stock option. In general, nonstatutory stock
options are less favorable to you from a tax perspective. For more detailed
information, please read the rest of the Offer to Exchange, and see the tax
disclosures set forth in the prospectuses
11
for the Agile Software Corporation 1995 Stock Option Plan and the Agile Software
Corporation 2000 Nonstatutory Stock Option Plan.
Even if you elect not to participate in the option exchange program, your
incentive stock options may be affected.
We believe that you will not be subject to current U.S. federal income tax
as a result of not electing to participate in the option exchange program. We
also believe that the option exchange program will not change the U.S. federal
income tax treatment of subsequent exercises of your outstanding incentive stock
options (and sales of shares acquired upon exercise of such options) if you do
not participate in the option exchange program. However, the IRS may
characterize the option exchange program as a "modification" of those incentive
stock options, even if you decline to participate. A successful assertion by the
IRS of this position could extend the options' holding period to qualify for
favorable tax treatment and cause a portion of your incentive stock options to
be treated as nonstatutory stock options.
Tax-Related Risks for Non-U.S. Residents
We believe that you will not be subject to additional tax solely by virtue
of your participation in the offer and your tender of Eligible Options for
replacement with New Options. However, the tax legislation in most of the
countries outside of the United States does not specifically address the tax
consequences of the tender of Eligible Options for replacement with New Options.
Consequently, although it appears that you will not be subject to any additional
tax liability if you participate in the offer, we cannot be certain of this
result. It is possible that you may be subject to tax on the value of the New
Options upon grant or on some other basis or that you may lose the ability to
claim preferential tax treatment in connection with your New Options. We
therefore strongly recommend that you consult with your tax advisor as to the
tax consequences of participating in the offer. Please also be sure to read the
disclosure applicable to the country in which you live and work, found in
Sections 15 through 20 of this Offer to Exchange.
If you are eligible for this replacement because you are an employee living
or working in the United States, Canada, France, Germany, Japan, Taiwan or the
United Kingdom, but are also subject to the tax laws in another country, you
should be aware that there may be other tax and social insurance consequences
which may apply to you. You should be certain to consult your own tax advisors
to discuss these consequences.
Additional tax considerations for residents in the United Kingdom.
If you were granted options before 6 April 1999, you will not be subject to
National Insurance Contributions ("NICs") on the option spread at exercise of
your old options. However, any New Options that you receive pursuant to the
offer will be subject to NICs. In addition, if you tender your Eligible Options
for replacement with New Options, you may be required to agree to enter into a
joint election (once the form of election is approved by the Inland Revenue)
which will provide that you will pay the employer's portion of the NIC liability
arising on the exercise of any New Options granted to you. The amount of the
employer's liability is currently 11.9% of the option spread at exercise; it is
our understanding that you will be entitled to deduct the employer's portion of
the NIC payments that you make for the purposes of calculating the amount of the
gain subject to income tax on the exercise of the New Options.
Business-Related Risks
For a description of risks related to Agile's business, please see Section
24 of this Offer to Exchange.
12
INTRODUCTION
Agile Software Corporation ("Agile" or the "Company") is offering certain
option holders who are current employees of Agile or our subsidiaries the
opportunity to exchange certain outstanding stock options originally granted
under our Agile Software Corporation 1995 Stock Option Plan (the "1995 Plan"),
our Agile Software Corporation 2000 Nonstatutory Stock Option Plan (the "2000
Plan"), or the Digital Market, Inc. 1995 Stock Option Plan (the "DMI Plan"),
with an exercise price of $15.00 or more ("Eligible Options"), for new options
to purchase shares of our common stock ("New Options") that we will grant under
our 1995 Plan (with respect to returned options held by option holders who are
executive officers of Agile) or under our 2000 Plan (with respect to returned
options held by option holders who are not executive officers of Agile). If you
choose to return for exchange any Eligible Options, you must also return for
exchange all of the options granted to you since May 19, 2001 ("Required
Options"), regardless of exercise price. For each Eligible Option or Required
Option you return and we accept for exchange, you will receive a New Option
exercisable for 75% of the number of shares that were subject to the option that
was returned for exchange (rounded down to the nearest whole share). For
purposes of the offer, "option" means a particular option grant to purchase a
certain number of shares of our common stock.
We are making the offer upon the terms and conditions described in this
Offer to Exchange (the "Offer to Exchange"), the related memorandum from Bryan
D. Stolle dated October 18, 2001, the Election Form and the Change of Election
Form (which together, as they may be amended from time to time, constitute the
"offer" or "program"). You are not required to accept the offer. If you choose
to accept the offer, then you may return for exchange any or all of your
Eligible Options. If you decide to return for exchange one or more of your
Eligible Options, then you must return for exchange the entire outstanding
unexercised portion of each option you want to have exchanged. The offer is not
conditioned on a minimum number of options being tendered. The offer is subject
to conditions that we describe in section 7 of this Offer to Exchange.
We will not accept partial tenders of options. If you tender any Eligible
Option, you must tender the entire unexercised portion of that option. EACH NEW
OPTION WILL BE EXERCISABLE FOR 75% OF THE NUMBER OF SHARES FOR WHICH THE
CORRESPONDING EXCHANGED OPTION WAS EXERCISABLE AT THE TIME IT WAS ACCEPTED FOR
EXCHANGE AND CANCELLED (ROUNDED DOWN TO THE NEAREST WHOLE SHARE).
We will grant you a New Option under the 2000 Plan (regardless of whether
your original option was granted under the 1995 Plan, the 2000 Plan or the DMI
Plan), except that New Options granted to our executive officers will be granted
under the 1995 Plan. The New Options will be granted on or promptly after (but
not later than 20 days after) the first trading day that is at least six months
and one day after the date the returned options are accepted for exchange and
cancelled. All tendered options accepted by us through the offer will be
cancelled as promptly as practicable after 5:00 p.m. Pacific Time on the date
the offer ends. The offer is currently scheduled to expire on November 19, 2001
(the "Expiration Date"), and we expect to cancel options on November 19, 2001,
or as soon as possible thereafter (the "Cancellation Date"). If you tender any
option grant for exchange, you will be required to also tender all options that
you received during the six month period prior to the Cancellation Date, even if
those options have an exercise price equal to or less than $15.00 per share.
Since we currently expect to cancel all tendered options on November 19, 2001,
this means that if you participate in the offer, you will be required to tender
all options granted to you since May 19, 2001.
You may participate in the offer if you are an eligible employee of Agile
or one of our subsidiaries. Members of our Board of Directors, including our
Chief Executive Officer Bryan D. Stolle, are not eligible to participate. In
order to receive a New Option pursuant to this offer, you must continue to be an
employee of Agile or one of our subsidiaries on the date on which the New
Options are granted, which will be at least six months and one day after the
Expiration Date, and is expected to be on or about May 20, 2002. If you cease to
be employed by Agile or any of our subsidiaries for any reason whatsoever after
we accept your returned options for exchange and cancellation and prior to the
grant date of the New Options, you will not receive any New Options, or any
other payment or consideration, in exchange for your returned options.
Each New Option granted will preserve the vesting schedule and the vesting
commencement date of the option it replaces, so that on the date the New Option
is granted and on any date thereafter, you will be vested in the New Option to
the same extent you would have been vested on that date had you retained your
option that was
13
submitted for exchange (except that the number of shares vested and the total
number of shares exercisable under the New Option will be 75% of those under the
corresponding option that was returned for exchange rounded down to the nearest
whole share).
Any Eligible Option that you do not return for exchange or that is not
accepted by us for exchange will remain outstanding and you will continue to
hold such option in accordance with its terms.
As of October 8, 2001, options to purchase 4,724,881 shares of our common
stock were outstanding under our 1995 Plan, options to purchase 11,255,553 share
of our common stock were outstanding under our 2000 Plan, and options to
purchase 27,100 shares of our common stock were outstanding and assumed by us
under the DMI Plan.
Shares of Agile common stock are traded on the Nasdaq National Market under
the symbol "AGIL." On October 8, 2001, the closing price of our common stock
reported on the Nasdaq National Market was $8.20 per share. The New Options will
not be granted until a date that is on or promptly after (but not more than 20
days after) the first trading day that is six months and one day after returned
options are accepted for exchange and cancelled. The exercise price per share of
the New Options will be equal to the last reported sale price of our common
stock reported by the Nasdaq National Market (or such other market on which the
shares are principally traded or quoted) on the date of grant of the New Option.
The exercise price of your New Option may be higher or lower than the current
price of our common stock, and may be higher or lower than the exercise price of
your Eligible Options. The market price of our common stock has declined
substantially over the last year and has been subject to high volatility. Our
common stock may trade at prices below the exercise price per share of the New
Options. Depending on the exercise price of your returned options and other
factors, including the fact that fewer shares will be purchasable under the New
Options than under the options returned for exchange, the New Options may be
less valuable than the options you are returning for exchange. We recommend that
you evaluate current market quotes for our common stock, among other factors,
before deciding whether or not to tender your options. At the same time, you
should consider that the current market price of our common stock may provide
little or no basis for predicting what the market price of our common stock will
be on the grant date of the New Options or at any time in the future. You should
carefully consider these uncertainties before deciding whether to accept the
offer. You should also note that the number of shares subject to the New Option
will be less than the number of shares subject to the returned options.
14
THE OFFER
1. Eligibility.
Employees are "eligible employees" if they are employees of Agile or one of
our subsidiaries as of the date the offer commences, as of the date on which the
tendered options are cancelled, and as of the date that the New Options are
granted; provided however, that members of the Board of Directors are not
eligible to participate in the offer. Executive officers of the Company are
entitled to participate in this offer.
In order to receive a New Option, you must remain an employee as of the
date the New Options are granted, which will be at least six months and one day
after the Expiration Date. If Agile does not extend the offer, the New Options
will be granted on or after (but not more than 20 days after) May 20, 2002.
2. Number of Options; Expiration Date.
Upon the terms and subject to the conditions of the offer, we will exchange
for New Options to purchase common stock under the 2000 Plan (if you are not an
executive officer of Agile) or under the 1995 Plan (if you are an executive
officer of Agile), all Eligible Options, and all Required Options, that are
properly tendered and not validly withdrawn in accordance with Section 5 before
the Expiration Date. We will not accept partial tenders of options for any
portion less than all of the unexercised shares subject to an individual option.
Therefore, you may tender options for all or none of the unexercised shares
subject to each of your Eligible Options. You must tender all of the Required
Options if you tender any Eligible Options.
Eligible Options are all options held by current employees of Agile or our
subsidiaries with an exercise price per share of $15.00 or more that are
outstanding under the 1995 Plan, the 2000 Plan or the DMI Plan. In addition, if
you tender any option for exchange, you will be required to also tender all
options that you received during the six month period prior to the date the
tendered option was cancelled. We currently expect to cancel all tendered
options on November 19, 2001, which means that if you participate in the offer,
you will be required to tender all options granted to you since May 19, 2001. By
exchanging any Eligible Option pursuant to the offer, you will automatically be
deemed to have returned all of your options granted to you since May 19, 2001
for exchange and cancellation.
If your Eligible Options are properly tendered and accepted for exchange,
the options will be cancelled and, subject to the terms of this offer, you will
be entitled to receive, in exchange for each tendered option, a New Option for
75% of the number of unexercised shares that were subject to the corresponding
returned option (rounded down to the nearest whole share). Thus, for every four
(4) shares of common stock that are purchasable under an Eligible Option or
Required Option returned for exchange, you will receive the right to purchase
three (3) shares of common stock under the New Option. The New Options will be
granted on or promptly after (but not more than 20 days after) the first trading
day that is at least six months and one day after the date returned options are
accepted for exchange and cancelled. All New Options will be nonstatutory
options for U.S. tax purposes, even if the returned options were incentive stock
options.
If, for any reason, you do not remain an employee of Agile or our
subsidiaries through the date we grant the New Options, you will not receive any
New Options or other consideration in exchange for your tendered options that
have been accepted for exchange. This means that if you retire, quit, with or
without a good reason, resign due to disability or die or we terminate your
employment, with or without cause, prior to the date we grant the New Options,
you will not receive anything for the options that you tendered and we
cancelled. Furthermore, your cancelled options will not be reinstated.
If you return any of your Eligible Options or any Required Options for
exchange and we accept such options for exchange, we will grant you New Options
under the 2000 Plan (if you are not an executive officer of Agile) or under the
1995 Plan (if you are an executive officer of Agile), pursuant to a new stock
option agreement, regardless of whether the options submitted for exchange were
originally granted under the 1995 Plan, the 2000 Plan or the DMI Plan. The
exercise price of the New Options will be equal to the last reported sale price
of our common stock on the Nasdaq National Market (or such other market on which
our shares are traded or quoted) on the date of
15
grant, expected to be after May 20, 2002. The returned options which we accept
for exchange pursuant to the offer will be cancelled, and you will have no
further right or entitlement to purchase shares of our common stock pursuant to
those cancelled options.
The vesting schedule for each New Option will be measured from the same
vesting commencement date and will be based upon the same vesting schedule as
was applicable to the corresponding Eligible Option or Required Option that was
returned for exchange (except that the number of shares vesting each month will
be adjusted for the fact that the New Options will cover three (3) shares for
every four (4) shares covered by the returned options). There will be a new
exercise price, new ten-year maximum term and the status of the option will be a
nonstatutory stock option for U.S. tax purposes. Additionally, although certain
earlier option agreements provided for full acceleration of unvested shares if
you were terminated without cause or resigned for good reason within 18 months
after a corporate transaction, the New Option agreements provide for only 18
months worth of accelerated vesting under the same circumstances.
The Expiration Date is 5:00 p.m., Pacific Time, on November 19, 2001,
unless and until we, in our discretion, have extended the period of time during
which the offer will remain open, in which event the term "Expiration Date"
refers to the latest time and date at which the offer, as so extended, expires.
See Section 23 of this Offer to Exchange for a description of our rights to
extend, delay, terminate and amend the offer.
If we decide to take any of the following actions, we will publish notice
or otherwise inform you in writing of such action:
. we increase or decrease the amount of consideration offered for the
options,
. we decrease the number of options eligible to be tendered in the
offer, or
. we increase the number of options eligible to be tendered in the offer
by an amount that exceeds 2% of the shares issuable upon exercise of
the options that are subject to the offer immediately prior to the
increase.
If the offer is scheduled to expire at any time earlier than the tenth
business day from, and including, the date that notice of the increase or
decrease is first published, sent or given in the manner specified in Section 21
of this Offer to Exchange, we will extend the offer so that the offer is open at
least ten business days following the publication, sending or giving of notice.
We will also notify you of any other material change in the information
contained in this Offer to Exchange.
For purposes of the offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, Eastern Time, and a "trading day" means any
business day on which a last sale price of our common stock is reported on the
Nasdaq National Market (or other market or exchange on which our stock is quoted
or traded).
3. Purpose of the Offer.
We issued the options currently outstanding to:
. provide our eligible employees with additional incentive and to
promote the success of our business, and
. encourage our eligible employees to continue their employment with us.
One of the keys to our continued growth and success is the retention of our
most valuable asset, our employees. The offer provides an opportunity for us to
offer our eligible employees a valuable incentive to stay with Agile. Many of
our outstanding options, whether or not they are currently exercisable, have
exercise prices that
16
are significantly higher than the current market price of our shares. We believe
that these underwater options are unlikely to be exercised in the foreseeable
future. By making this offer to exchange outstanding options for New Options
that will have an exercise price at least equal to the market value of their
underlying shares on the grant date, we intend to provide our eligible employees
with the benefit of owning options that over time may have a greater potential
to increase in value, create better performance incentives for employees and
thereby maximize stockholder value. Because we will not grant New Options until
at least six months and one day after the date we cancel the options accepted
for exchange, the New Options may have a higher exercise price than some or all
of our currently outstanding options. Because of the large number of underwater
options currently outstanding, a total re-grant of new options would have a
severe negative impact on our dilution and outstanding shares. Additionally, we
have a limited pool of options that we are allowed to grant per calendar year
without stockholder approval, and we must therefore conserve our current
available options for new hires and on-going grants.
Considering the ever-present risks associated with a volatile and
unpredictable stock market, and our industry in particular, there is no
guarantee that the market price at the time of the new option grant (and thus
the exercise price of your own option) will be less than or equal to the
exercise price of your existing option, or that your New Option will increase in
value over time.
From time to time we engage in strategic transactions with business
partners, customers and other third parties. We may engage in transactions in
the future with these or other companies which could significantly change our
structure, ownership, organization or management or the make-up of our Board of
Directors, and which could significantly affect the price of our shares. If we
engage in such a transaction or transactions before the date we grant the New
Options, our shares could increase (or decrease) in value, and the exercise
price of the New Options could be higher (or lower) than the exercise price of
options you elect to have cancelled as part of this offer. As is outlined in
Section 9, the exercise price of any New Options granted to you in return for
your tendered options will be the fair market value of the underlying shares on
the date of grant, as determined by the closing price reported by the Nasdaq
National Market on the date of grant. You will be at risk of any such increase
in our share price before the grant date of the New Options for these or any
other reasons.
We are also reserving the right, in the event of a merger or similar
transaction, to take any actions we deem necessary or appropriate to complete a
transaction that our Board of Directors believes is in the best interest of our
company and our stockholders. This could include terminating your right to
receive New Options under this offer to Exchange. If we were to terminate your
right to receive New Options under this offer in connection with such a
transaction, employees who have tendered options for cancellation pursuant to
this offer would not receive options to purchase securities of the acquiror or
any other consideration for their tendered options. Subject to the foregoing, we
presently have no plans or proposals that relate to or would result in:
(a) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving our company;
(b) any purchase, sale or transfer of a material amount of our assets;
(c) any material change in our present dividend rate or policy, or our
indebtedness or capitalization;
(d) any change in our present Board of Directors or management, including
a change in the number or term of directors, however we may fill our
existing Board and officer vacancies, hire for new officer positions,
including a Chief Financial Officer, or change any executive officer's
material terms of employment;
(e) any other material change in our corporate structure or business;
(f) our common stock not being authorized for quotation in an automated
quotation system operated by a national securities association;
(g) our common stock becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act;
17
(h) the suspension of our obligation to file reports pursuant to Section
15(d) of the Securities Exchange Act;
(i) the acquisition by any person of any of our securities or the
disposition of any of our securities; or
(j) any changes in our certificate of incorporation, bylaws, other
governing instruments or any actions that could impede the acquisition
of control of us by any person.
Neither we nor our Board of Directors makes any recommendation as to
whether you should tender or not tender your options, nor have we authorized any
person to make any such recommendation. You are urged to evaluate carefully all
of the information in this Offer to Exchange and to consult your own investment
and tax advisors. You must make your own decision whether or not to tender your
options for exchange.
4. Procedures for Tendering Options.
Proper Tender of Options.
To validly tender your options through the offer, you must, in accordance
with the terms of the Election Form, properly complete, execute and deliver the
Election Form to us via facsimile (fax # 408-975-7836) or hand delivery to the
Agile Stock Administrator, One Almaden Boulevard, 12th Floor, San Jose,
California 95113, along with any other required documents. The Stock
Administrator must receive all of the required documents before the Expiration
Date. The Expiration Date is 5:00 p.m. Pacific Time on November 19, 2001.
If you do not turn in your election form by the deadline, then you will not
be able to participate in the option exchange, and all stock options currently
held by you will remain unchanged at their original price and terms. If the
offer is extended by us, you must deliver these documents before the extended
Expiration Date. We will not accept delivery of any Election Form or Change of
Election Form after expiration of the offer. If you deliver an Election Form and
then decide to return additional Eligible Options, you must properly complete,
duly execute and deliver to us a Change of Election Form before the Expiration
Date.
Except in accordance with the next sentence, an Election Form, or Change of
Election Form must be executed by the appropriate option holder. If the
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or another person acting in a fiduciary or
representative capacity, the signer's full title and proper evidence of
authority of such person to act in such a representative capacity must be
indicated on the Election Form or Change of Election Form.
If you return for exchange any Eligible Option, you will automatically be
deemed to have returned all of your Required Options for exchange and
cancellation, although you must still properly complete the Election Form. The
delivery of all documents, including election forms, and any notices to change
your election and any other required document, is at your own risk. If delivery
is by mail, we recommend that you use registered mail with return receipt
requested and properly insure your package. In all cases, you should allow
sufficient time to ensure timely delivery.
Determination of Validity; Rejection of Options; Waiver of Defects; No
Obligation to Give Notice of Defects.
We will determine, in our discretion, all questions as to the form of
documents and the validity, form, eligibility, including time of receipt, and
acceptance of any tender of options and all questions as to number of shares
subject to Eligible Options or Required Options or to be subject to New Options.
Our determination of these matters will be final and binding on all parties. We
reserve the right to reject any or all tenders of options that we determine are
not in appropriate form or that we determine are unlawful to accept. Otherwise,
we will accept properly and timely tendered options that are not validly
withdrawn. We also reserve the right to waive any of the conditions of the offer
or any defect or irregularity in any tender of any particular options or for any
particular option holder. No tender of options will be deemed to have been
properly made until all defects or irregularities have been cured by the
tendering option holder or waived by us. Neither we nor any other person is
obligated to give notice of any defects or irregularities in tenders, nor will
anyone incur any liability for failure to give any
18
notice. This is a one-time offer, and we will strictly enforce the offer period,
subject only to an extension which we may grant in our sole discretion.
Our Acceptance Constitutes an Agreement.
Your tender of options pursuant to the procedures described above
constitutes your acceptance of the terms and conditions of the offer, subject to
your right to withdraw from the offer period to the Expiration Date. Our
acceptance for exchange of your options tendered by you through the offer will
constitute a binding agreement between us and you upon the terms and subject to
the conditions of the offer. This agreement will survive your death or
incapacity and all of your obligations pursuant to this offer will be binding
upon your heirs, personal representatives, successors and assigns.
Subject to our rights to extend, terminate and amend the offer, we
currently expect that we will accept promptly after the expiration of the offer
all properly tendered options that have not been validly withdrawn.
5. Withdrawal Rights and Change of Election.
You may only withdraw your tendered options or change your election in
accordance with the provisions of this Section 5. If your employment with us
terminates prior to the Expiration Date, your returned options will
automatically be withdrawn. If automatically withdrawn, you may exercise those
options to the extent they are vested at the time of your termination, but only
during the limited period for which those options remain exercisable following
your termination.
You may withdraw your tendered options at any time before 5:00 p.m.,
Pacific Time, on November 19, 2001. If we extend the offer beyond that time, you
may withdraw your tendered options at any time until the extended Expiration
Date. In addition, if we have not accepted your tendered options for exchange by
5:00 p.m., Pacific Time, on November 19, 2001, you may withdraw your tendered
options at any time after November 19, 2001.
To validly withdraw tendered options, you must deliver to us at One Almaden
Boulevard, 12th Floor, San Jose, California 95113, Attention: Agile Stock
Administrator, via facsimile (fax # 408-975-7836) or hand delivery, a properly
completed and executed Change of Election Form or a written notice of
withdrawal, or a facsimile thereof, with the required information, while you
still have the right to withdraw the returned options. If you deliver a written
notice of withdrawal, rather than a Change of Election Form, the notice of
withdrawal must specify the name of the option holder who returned the options
to be withdrawn, the grant date, exercise price, and the number of shares
subject to the option to be withdrawn. We will not accept delivery of a Change
of Election Form or notice of withdrawal by e-mail.
Although you may withdraw some, but not all, of your Eligible Options, you
may not withdraw only a portion of a particular returned option. In addition,
you may not withdraw any Required Options unless you withdraw all of your
Eligible Options.
To validly change your election regarding the tender of particular options,
you must deliver a properly completed and executed Change of Election Form or
new Election Form, properly signed, completed and later dated, to the Agile
Stock Administrator, One Almaden Boulevard, 12th Floor, San Jose, California
95113, via facsimile (408) 975-7836 or hand delivery, prior to the Expiration
Date. If you deliver a new Election Form or Change of Election Form that is
properly signed and dated, it will replace any previously submitted Election
Form or Change of Election Form, which will be disregarded.
Except as described in the next sentence, a Change of Election Form or
written notice of withdrawal and any new or amended Election Form must be
executed by the option holder who tendered the options to be withdrawn exactly
as the option holder's name appears on the option agreement or agreements
evidencing such options. If the signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or another
person acting in a fiduciary or representative capacity, the signer's full title
and proper evidence of the authority of such person to act in that capacity must
be indicated on the notice of withdrawal.
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You may not rescind any withdrawal, and any options you withdraw will
thereafter be deemed not properly tendered for purposes of the offer, unless you
properly re-tender those options by delivering a properly completed and executed
Change of Election Form before the Expiration Date by following the procedures
described in Section 4.
Neither Agile nor any other person is obligated to give notice of any
defects or irregularities in any notice of withdrawal, Change of Election Form
or any new or amended Election Form, nor will anyone incur any liability for
failure to give any notice. We will determine, in our discretion, all questions
as to the form and validity, including time of receipt, of Change of Election
Form and new or amended Election Forms. Our determination of these matters will
be final and binding.
6. Acceptance of Options for Exchange and Issuance of New Options.
Upon the terms and conditions of the offer and as promptly as practicable
following the Expiration Date, we will accept for exchange and cancellation all
options properly tendered and not validly withdrawn before the Expiration Date.
Once the options are cancelled, you will no longer have any rights with respect
to those options. Subject to the terms and conditions of this offer, if your
options are properly tendered and accepted for exchange, these options will be
cancelled as of the date of our acceptance, which we anticipate to be November
19, 2001, and you will be granted New Options on or promptly after (but not more
than 20 days after) the first business day that is at least six months and one
day after the date we cancel the options accepted for exchange. All newly
granted options will be nonstatutory stock options. Thus, subject to the terms
and conditions of this offer, if your options are properly tendered by November
19, 2001, the scheduled expiration date of the offer, and accepted for exchange
and cancelled on November 19, 2001 you will be granted New Options on or
promptly after (but not more than 20 days after) May 20, 2002. If we accept and
cancel options properly tendered for exchange after November 19, 2001, or if we
extend the date by which we must accept and cancel options properly elected for
exchange, the period in which the New Options will be granted will be similarly
delayed. Only options with an exercise price of $15.00 per share or higher are
Eligible Options.
If we accept for exchange any of the options you tender in the offer, you
will not be granted any other options, such as annual, bonus or
promotion-related options, for which you may be eligible, before the grant date
of the New Options, so that you will be granted no new options for any reason
until at least six months and one day after any of your tendered options have
been cancelled. We will defer the grant to you of these other options in order
to avoid incurring compensation expense against our earnings as a result of
accounting rules that could apply to these interim option grants as a result of
the offer. Any such grant of these other options is in the discretion of our
Board of Directors or Compensation Committee and subject to compliance with law
and market prices for our stock prevailing at the time of the grants. On the
other hand, if you do not return for exchange any of your Eligible Options in
the offer, you may receive discretionary merit or promotion option grants prior
to the date New Options are granted to others. As a result, participation in the
offer may affect the grant date, price and vesting of any promotion, merit or
other discretionary grants that may have otherwise been approved for you in the
future.
If you return options for exchange, you will receive, in exchange for each
Eligible Option and Required Option that you return and we accept for exchange
and cancellation, a New Option exercisable for 75% of the number of shares that
were subject to the corresponding returned option (rounded down to the nearest
whole share). Thus, for every four (4) shares of common stock that are
purchasable under a returned option, you will receive the right to purchase
three (3) shares of common stock under the New Option. All New Options will be
granted under our 2000 Plan (if you are not an executive officer of Agile) or
under our 1995 Plan (if you are an executive officer of Agile), regardless of
whether the returned options were originally granted under the 2000 Plan, 1995
Plan or DMI Plan, and will be subject to the terms and conditions of the 2000
Plan or the 1995 Plan, as applicable, and a new stock option agreement between
you and us. The New Option will be a nonstatutory stock option for U.S. tax
purposes, even if the returned option was an incentive stock option.
Additionally, although certain earlier option agreements provided for full
acceleration of unvested shares if you were terminated without cause or resigned
for good reason within 18 months after a corporate transaction, the New Option
agreements provide for only 18 months worth of accelerated vesting under the
same circumstances.
If you do not remain an employee of Agile or one of our subsidiaries from
the date you return your options for exchange through the date we grant the New
Options, you will not receive any New Options, or any other
20
payment or consideration in exchange for your returned options that have been
accepted for exchange and cancelled, regardless of how or why your employment
terminated. The offer does not change the "at-will" nature of your employment
with us, and your employment may be terminated by us or you at any time,
including prior to the grant date or vesting of the New Options, for any reason
with or without cause.
Consequences of Agile Being Acquired.
It is possible that, prior to the grant of New Options, we might effect or
enter into an agreement such as a merger or other similar transaction.
In the event that there is a sale of all or substantially all of our assets
or stock, or we merge with another corporation, before the Expiration Date, you
may withdraw your returned options and have all the rights afforded you to
acquire our common stock under the existing agreements evidencing those options.
Further, if Agile is acquired prior to the Expiration Date, we reserve the right
to withdraw the offer, in which case your old options and your rights under them
will remain intact, but you will receive no replacement options.
In the event that there is a sale of all or substantially all of our assets
or stock, or we merge with another corporation, after your returned options are
accepted for exchange and cancelled but before the New Options are granted, our
obligations in connection with the offer would not be automatically assumed by
the acquiring corporation. Whether or not the obligation to grant the New
Options is assumed would depend on the terms of the acquisition agreement. While
we would seek to make provision for tendering options holders in the acquisition
agreement, we cannot guarantee what, if any, provision would be made. As a
result, we cannot guarantee that any New Options would be granted by the
acquiror in the event of such an acquisition. Therefore, it is possible that you
could give up your Eligible Options or other Required Options and not receive
any New Options from the acquiring corporation.
In the event that there is a sale of all or substantially all of our assets
or stock, or we merge with another corporation, after your New Options have been
granted, your New Options will be assumed or replaced with new options of the
successor corporation. If the successor corporation does not assume or
substitute your New Options, the New Options will automatically become fully
vested and exercisable immediately prior to the effective date of such a
transaction. Agile will use its best efforts to provide at least 20 days prior
written notice of the occurrence of any such transaction in which the successor
corporation does not intend to assume or substitute your New Options. In
addition, if the successor corporation assumes or substitutes for outstanding
New Options, that option will become exercisable and will be credited with an
additional 18 months of vesting if your service is terminated by the successor
corporation (other than for cause) or you resign for good reason within 18
months after such a transaction has occurred.
We are also reserving the right, in the event of a merger or similar
transaction, to take any actions we deem necessary or appropriate to complete a
transaction that our Board of Directors believes is in the best interest of our
company and our stockholders. This could include terminating your right to
receive New Options under this Offer to Exchange. If we were to terminate your
right to receive New Options under this offer in connection with such a
transaction, employees who have tendered options for cancellation pursuant to
this offer might not receive options to purchase securities of the acquiror or
any other consideration for their tendered options.
Partial Tenders.
We will not accept partial tenders of your Eligible Options or Required
Options. However, you may tender the remaining portion of an option which you
have partially exercised. You may choose to exchange one option and not exchange
another, but you may not exchange less than all of a particular option.
Accordingly, you may tender one or more of your options, but you may only tender
all of the unexercised shares subject to any given option or none of those
shares. In addition, if you tender any option for exchange, you will be required
to also tender all options that were granted to you during the six month period
prior to the cancellation of your tendered options. If you return for exchange
any Eligible Options pursuant to the offer, you will automatically be deemed to
have returned all of your Required Options for exchange and cancellation. This
does not change your responsibility to properly complete and return the Election
Form. We currently expect to cancel all tendered options on November
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19, 2001, which means that if you participate in the offer, you will be required
to tender all options granted to you since May 19, 2001.
Acceptance of Options Returned for Exchange.
For purposes of the offer, we will be deemed to have accepted options that
are validly returned for exchange and are not properly withdrawn when we give
oral or written notice to the option holders of our acceptance for exchange of
such options. We currently intend to provide such notice by e-mail. Subject to
our rights to extend, terminate and amend the offer, we currently expect that we
will accept promptly after the expiration of the offer all properly tendered
options that are not validly withdrawn. When we accept your tendered options for
exchange and we cancel those options, you will have no further rights with
respect to those options or under their corresponding stock option agreements.
By returning options, you agree that the applicable stock option agreements will
terminate upon our cancellation of your returned options. After we accept and
cancel returned options, we will send each participating option holder a notice
indicating the number of shares subject to the options that we have accepted and
cancelled, the number of shares that will be subject to the New Options and the
expected grant date of the New Options.
7. Conditions of the Offer.
Notwithstanding any other provision of the offer, we will not be required
to accept any options tendered for exchange, and we may terminate or amend the
offer, or postpone our acceptance and cancellation of any options tendered for
exchange, in each case, subject to Rule 13e-4(f)(5) under the Securities
Exchange Act of 1934, as amended, if at any time on or after November 19, 2001,
and prior to the Expiration Date, any of the following events has occurred, or
has been determined by us to have occurred, and, in our reasonable judgment in
any case and regardless of the circumstances giving rise to the event, including
any action or omission to act by us, the occurrence of such event or events
makes it inadvisable for us to proceed with the offer or with such acceptance
and cancellation of options tendered for exchange:
(a) there shall have been threatened or instituted or be pending any
action or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal that directly or
indirectly challenges the making of the offer, the acquisition of some
or all of the tendered options pursuant to the offer, or the issuance
of New Options, or otherwise relates in any manner to the offer, or
that, in our reasonable judgment, could materially and adversely
affect our business, condition (financial or other), income,
operations or prospects of Agile or our subsidiaries or materially
impair in any way the contemplated future conduct of our business or
the business of any of our subsidiaries or materially impair the
contemplated benefits of the offer to Agile;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order
or injunction threatened, proposed, sought, promulgated, enacted,
entered, amended, enforced or deemed to be applicable to the offer or
Agile or any of our subsidiaries, by any court or any authority,
agency or tribunal that, in our reasonable judgment, would or might
directly or indirectly:
(i) make the acceptance for exchange of, or issuance of New
Options for, some or all of the tendered options illegal or
otherwise restrict or prohibit consummation of the offer or
that otherwise relates in any manner to the offer;
(ii) delay or restrict our ability, or render us unable, to accept
for exchange, or issue New Options for, some or all of the
tendered options;
(iii) materially impair the contemplated benefits we hope to receive
as a result of the offer; or
(iv) materially and adversely affect Agile's business, condition
(financial or other), income, operations or prospects or
otherwise materially impair in any way the contemplated
22
future conduct of our business or the business of any of our
subsidiaries or materially impair the contemplated benefits of
the offer to Agile;
(c) there shall have occurred:
(i) any general suspension of trading in, or limitation on prices
for, securities on any national securities exchange or in the
over-the-counter market;
(ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, whether or
not mandatory;
(iii) the commencement of a war, armed hostilities or other
international or national crisis directly or indirectly
involving the United States;
(iv) any limitation, whether or not mandatory, by any governmental,
regulatory or administrative agency or authority on, or any
event that in our reasonable judgment might affect, the
extension of credit by banks or other lending institutions in
the United States;
(v) any significant decrease in the market price of the shares of
our common stock or any change in the general political,
market, economic or financial conditions in the United States
or abroad that could, in our reasonable judgment, have a
material adverse effect on the business, condition (financial
or other), operations or prospects of Agile or our
subsidiaries or on the trading of our common stock;
(vi) in the case of any of the foregoing existing at the time of
the commencement of the offer, a material acceleration or
worsening thereof;
(vii) any decline in either the Dow Jones Industrial Average, the
Nasdaq National Market or the Standard and Poor's Index of 500
Companies by an amount in excess of 10% measured during any
time period after the close of business on October 18, 2001,
at which time we would promptly notify option holders if we
waive this condition or terminate the offer;
(d) there has occurred any change in generally accepted accounting
standards or the application or interpretation thereof that could or
would require us for financial reporting purposes to record
compensation expense against our earnings in connection with the
offer;
(e) a tender or exchange offer with respect to some or all of our common
stock, or a merger or acquisition proposal for Agile, shall have been
proposed, announced or made by another person or entity or shall have
been publicly disclosed, or we shall have learned that:
(i) any person, entity or "group" within the meaning of Section
13(d)(3) of the Securities Exchange Act, shall have acquired
or proposed to acquire beneficial ownership of more than 5% of
the outstanding shares of our common stock, or any new group
shall have been formed that beneficially owns more than 5% of
the outstanding shares of our common stock, other than any
such person, entity or group that has filed a Schedule 13D or
Schedule 13G with the Securities and Exchange Commission on or
before November 19, 2001;
(ii) any such person, entity or group that has filed a Schedule 13D
or Schedule 13G with the SEC on or before November 19, 2001
shall have acquired or proposed to acquire beneficial
ownership of an additional 2% or more of the outstanding
shares of our common stock;
23
(iii) any person, entity or group shall have filed a Notification
and Report Form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, or made a public
announcement reflecting an intent to acquire us or any of our
subsidiaries or any of the assets or securities of us or any
of our subsidiaries; or
(f) any change or changes shall have occurred in Agile's business,
condition (financial or other), assets, income, operations, prospects
or stock ownership that, in our reasonable judgment, is or may be
material to Agile or may materially impair the contemplated benefits
of the offer to Agile.
The conditions to the offer are for Agile's benefit. We may assert them in
our discretion regardless of the circumstances giving rise to them before the
expiration date. We may waive them, in whole or in part, at any time and from
time to time prior to the expiration date, in our discretion, whether or not we
waive any other condition to the offer. Our failure at any time to exercise any
of these rights will not be deemed a waiver of any such rights. The waiver of
any of these rights with respect to particular facts and circumstances will not
be deemed a waiver with respect to any other facts and circumstances. Any
determination we make concerning the events described in this Section 7 will be
final and binding upon all persons.
8. Price Range of Our Common Stock Underlying the Options.
Our common stock is quoted on the Nasdaq National Market under the symbol
"AGIL". The following table shows the high and low sales prices per share of our
common stock as reported by the Nasdaq National Market for each of our fiscal
quarters since our initial public offering in August 1999. The prices in this
table have been retroactively adjusted to reflect the two-for-one stock split of
our common stock effected on March 16, 2000.
High Low
-------- -------
Fiscal 2000:
Quarter Ended October 31, 1999 ........................... $ 49.00 $ 18.53
Quarter Ended January 31, 2000 ........................... $ 108.62 $ 52.13
Quarter Ended April 30, 2000 ............................. $ 89.50 $ 20.69
Fiscal 2001:
Quarter Ended July 31, 2000 .............................. $ 75.00 $ 35.25
Quarter Ended October 31, 2000 ........................... $ 92.00 $ 50.50
Quarter Ended January 31, 2001 ........................... $ 84.13 $ 29.00
Quarter Ended April 30, 2001 ............................. $ 48.05 $ 10.31
Fiscal 2002
Quarter Ended July 31, 2001 .............................. $ 24.50 $ 12.04
Quarter Ended October 31, 2001 (through October 17,
2001) ................................................. $ 12.65 $ 8.00
As of October 17, 2001, the last reported sale price during regular trading
hours of our common stock, as reported by the Nasdaq National Market, was $10.40
per share.
WE RECOMMEND THAT YOU EVALUATE CURRENT MARKET QUOTES FOR OUR COMMON STOCK,
AMONG OTHER FACTORS, BEFORE DECIDING WHETHER OR NOT TO TENDER YOUR OPTIONS.
Our stock price has been, and in the future may be, highly volatile and
could continue to decline. Our stock price could also rise prior to the grant of
the New Options and thereafter fall. The trading price of our common stock has
fluctuated widely in the past and is expected to continue to do so in the
future, as a result of a number of factors, many of which are outside our
control. In addition, the stock market has experienced extreme price and volume
fluctuations that have affected the market prices of many technology companies,
including software companies, and that have often been unrelated or
disproportionate to the operating performance of these companies. The New
Options will not be granted until a trading date that is at least six months and
one day after (but not later than 20 days after) the date your returned options
are accepted and cancelled. The exercise price of the New Options will be the
last reported sale price of our common stock reported on the Nasdaq National
Market (or such
24
other market on which our shares are principally traded or quoted) on the date
they are granted. The exercise price of the New Options may be higher than the
exercise price of your returned options. In addition, our common stock may
thereafter trade at prices below the exercise price of the New Options.
Depending on the exercise price of your returned options and other factors,
including the fact that fewer shares will be purchasable under the New Options
than under the options returned for exchange, your New Options may be less
valuable than your returned options.
9. Source and Amount of Consideration; Terms of New Options.
Consideration.
The New Options to be issued in exchange for Eligible Options and Required
Options properly returned and accepted for exchange and cancelled by us will be
issued under our 2000 Plan (with respect to options returned for exchange by all
employees who are not executive officers of Agile) or under our 1995 Plan (with
respect to all options that are returned for exchange by executive officers of
Agile), regardless of the stock option plan under which the returned options
were originally granted. For every four (4) shares of common stock purchasable
under an exchanged option, you will receive a New Option to purchase three (3)
shares of common stock (rounded down to the nearest whole share).
If we receive and accept for exchange all Eligible Options and Required
Options outstanding as of October 18, 2001, we will grant New Options to
purchase approximately 5,622,293 shares of our common stock. If all Eligible
Options and Required Options are properly returned and accepted for exchange and
cancelled, the common stock issuable upon exercise of the New Options granted in
exchange will equal approximately 12% of the total shares of our common stock
outstanding as of October 8, 2001. The shares of common stock subject to
returned options originally granted under the 2000 Plan or the 1995 Plan (but
not under the DMI Plan) that are accepted for exchange and cancelled will, after
such cancellation, be available for regrant and reissuance under the 2000 Plan
and 1995 Plan, as applicable, and will provide some or all of the shares needed
for the grants of New Options that will be made under the 2000 Plan and 1995
Plan with the offer.
Terms of New Options.
The New Options will be granted under our 2000 Plan (with respect to
options returned for exchange by all employees who are not executive officers of
Agile), or under our 1995 Plan (with respect to all options that are returned
for exchange by executive officers of Agile), regardless of the stock option
plan under which the tendered options were originally granted. A new option
agreement will be entered into between Agile and each option holder who has
tendered options in the offer for every New Option granted. The terms and
conditions of the New Options may vary from the terms and conditions of the
options tendered for exchange. Although certain earlier option agreements
provided for full acceleration of unvested shares if you were terminated without
cause or resigned for good reason within 18 months after a corporate
transaction, the New Option agreements provide for only 18 months worth of
accelerated vesting under the same circumstances. Additionally, all New Options
will be nonstatutory stock options for U.S. tax purposes, including those
granted in replacement of incentive stock options. When those nonstatutory stock
options are subsequently exercised, you will recognize taxable income equal to
the excess of (i) the fair market value of the purchased shares at the time of
exercise over (ii) the exercise price paid for those shares, and you must
satisfy the applicable withholding taxes with respect to such income. See
Section 14 for a comparison of the U.S. federal income tax treatment of
incentive stock options and nonstatutory stock options. Because we will not
grant New Options until at least six months and one day after the date we cancel
the options accepted for exchange, the New Options may have a higher exercise
price than some or all of the options that are tendered, including as a result
of a significant corporate event. The following description summarizes the
material terms of our 2000 Plan and the options granted under the 2000 Plan, as
well as the material terms of our 1995 Plan and the options granted under the
1995 Plan.
The following description of the 2000 Plan and the 1995 Plan is a summary
of the principal provisions of those documents but is not complete. The
description is subject to, and qualified in its entirety by reference to, all
provisions of the respective plan and the form of stock option agreement. The
complete 2000 Plan document, as most recently amended, is filed as Exhibit
(d)(4) to this Schedule TO. The complete 1995 Plan document, as most recently
amended, is filed as Exhibit (d)(1) to this Schedule TO. Please contact us at
One Almaden Boulevard, 12th Floor, San Jose, California 95113, Attention: Stock
Administrator, (408) 975-3900, to receive a copy of the
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2000 Plan, the 1995 Plan, the plan prospectus, or the form of stock option
agreements. We will promptly furnish you copies of these documents at our
expense.
2000 Nonstatutory Stock Option Plan.
The maximum number of shares available for issuance through the exercise of
options granted under our 2000 Plan is 14,500,000, adjusted for a two-for-one
stock split which occurred on March 16, 2000. Our 2000 Plan permits us to grant
only options that do not qualify as incentive stock options, referred to as
nonstatutory stock options.
Administration.
The 2000 Plan is administered by the Board of Directors or a committee
appointed by the Board of Directors (the "Administrator"). Subject to the other
provisions of the 2000 Plan, the Administrator has the power to determine the
terms and conditions of the options granted, including the exercise price, type
of consideration to be paid upon exercise of the option, the number of shares
subject to the option and the exercisability and vesting of the options.
Term.
Options generally have a term of ten years and it is expected that all New
Options will have a new term of ten years measured from the grant date.
Termination.
Except as your option agreement otherwise provides, your New Options will
terminate following the termination of your employment, unless the options are
exercised, to the extent that they were exercisable immediately before such
termination, within the time frame permitted by your stock option agreement or,
if no time period is specified in your option agreement, within three months
following your termination. In the event that the termination of your employment
is by reason of permanent or total disability or death, you, or your executors,
administrators, legatees or distributees of your estate, may exercise any option
held by you on the date of your employment termination, to the extent that it
was exercisable immediately before such termination, within the time frame
specified in your option agreement or, if no time is specified, for 12 months
following such termination. However, if your employment is terminated for
misconduct, the option will not be exercisable after the termination date.
The termination of your New Option under the circumstances specified in
this section will result in the termination of your interests in our 1995 Plan,
our 2000 Plan and the DMI Plan. In addition, your New Option may terminate,
together with our stock option plans and all other outstanding options issued to
other employees, following the occurrence of certain corporate events, as
described below.
Exercise Price.
The Administrator determines the exercise price at the time the option is
granted. The exercise price per share for the New Options will be 100% of the
fair market value of a share on the date of grant, which shall be equal to the
last reported sale price during regular trading hours of our common stock on the
Nasdaq National Market on the date of grant.
Vesting and Exercise.
Each stock option agreement specifies the term of the option and the date
or dates when the option becomes exercisable. The terms of vesting are
determined by the Administrator. Options granted by us to newly hired employees
generally vest over a five year period. Subject to continued employment with
Agile, 20% of the shares subject to the option vest 12 months following the date
of grant and then 1/60th of the shares subject to the option vest each month
thereafter. Retention and promotion grants may have other vesting terms, and
often vest over a shorter period of time.
26
The New Options granted through the offer will vest upon the same
schedule as the applicable corresponding Eligible Option or Required Option that
was returned for exchange (except that the number of shares vesting each month
will be adjusted for the fact that the New Options will be exercisable for 75%
of the shares for which the corresponding returned option was exercisable), as
follows:
. any tendered option that was fully vested on the date that the
offer expires will be fully vested;
. any portion of an option unvested on the date the offer expires
that would have been fully vested on the date the New Option is
granted (at least six months and one day from the date this offer
expires) will be fully vested on the date that the New Option is
granted (but for 75% of the shares for which the returned option
would have been vested); and
. any remaining unvested portion of an option will continue to vest
during the period of cancellation and shall have a vesting
schedule that is equivalent to what would have been in place had
the cancelled option remained in effect (except that the number
of shares vesting each month will be adjusted for the fact that
the New Options will be exercisable for 75% of the corresponding
returned option).
For example:
. An employee tenders for cancellation of an option that is 20/60th
vested at the time of cancellation.
. The New Option is granted six months and one day after
cancellation of the old option.
. The New Option will be 26/60th (plus one day) vested at the time
of grant, but will only be exercisable for 75% of the shares
subject to the tendered option.
Payment of Exercise Price.
You may exercise your New Options, in whole or in part, by delivery of
a written notice to us together with a share subscription or purchase form which
is accompanied by payment in full of the eligible exercise price. The
permissible methods of payment of the option exercise price are determined by
the Administrator and generally include the following:
27
. cash,
. certified check,
. tender to us of shares of our common stock, which if acquired
from us, have been owned by the option holder for no less than
six months, having a fair market value on the date of exercise
equal to the aggregate exercise price,
. promissory note, or
. a combination of the foregoing methods.
In addition, if your option agreement so provides, you may make payment
of the exercise price by having the certificates for the shares for which your
option is being exercised delivered to a licensed broker acceptable to the
Administrator. The notice should provide that, once the stock certificates are
delivered to the licensed broker, the broker will deliver to us cash or a check
payable and acceptable to us equal to the sum of the exercise price of the
shares purchased pursuant to the exercise of your options and any federal and
other taxes which in our judgment we may be required to withhold with respect to
the exercise of your option.
Adjustments Upon Certain Events.
If there is a change in our capitalization, such as a stock split,
reverse stock split, stock dividend or other similar event, and the change
results in an increase or decrease in the number of issued shares without
receipt of consideration by us, an appropriate adjustment will be made to the
price of each option and the number of shares subject to each option.
In the event there is a sale of all or substantially all of our assets
or stock, or we merge with another corporation, your New Options will be assumed
or replaced with new options of the successor corporation. If the successor
corporation does not assume or substitute your New Options, they will
automatically become fully vested and exercisable immediately prior to the
effective date of such transaction. Agile will use its best efforts to provide
at least 20 days prior written notice of the occurrence of any such transaction
in which the successor corporation intends not to assume or substitute your New
Options. In addition, if the successor corporation assumes or substitutes
outstanding New Options, the New Option will become exercisable and will be
credited with an additional 18 months of vesting if your service is terminated
by the successor corporation (other than for cause) or you resign for good
reason within 18 months following such a transaction.
Additionally, the Administrator has the discretion to provide for the
automatic acceleration (in whole or in part) of one or more outstanding options
at any time.
Transferability of Options.
Options may not be transferred, other than by will or the laws of
descent and distribution. In the event of your death, your New Options may be
exercised by a person who acquires the right to exercise the option by bequest
or inheritance.
Registration of Option Shares.
All shares of common stock issuable upon exercise of New Options under
our 2000 Plan have been registered under the Securities Act of 1933, as amended,
on registration statements on Form S-8 filed with the Securities and Exchange
Commission (the "SEC").
1995 Stock Option Plan.
The maximum number of shares available for issuance through the
exercise of options granted under our 1995 Plan is 12,750,000. Our 1995 Plan
permits us to grant only employees incentive stock options within the
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meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and to
grant nonstatutory stock options and direct stock issuances to employees,
non-employees directors and consultants.
Administration.
The 1995 Plan is administered by the Board of Directors or a duly
appointed committee appointed by the Board of Directors (the "Administrator").
Subject to the other provisions of the 1995 Plan, the Administrator has the
power to determine the terms and conditions of the options granted, including
whether an option is to be an incentive stock option or a nonstatutory stock
option, the exercise price, type of consideration to be paid upon exercise of
the option, the number of shares subject to the option and the exercisability
and vesting of the options.
Term.
Options generally have a term of ten years and it is expected that all
New Options will have a new term of ten years measured from the grant date.
Termination.
Except as your option agreement otherwise provides, your New Options
will terminate following the termination of your employment, unless the options
are exercised, to the extent that they were exercisable immediately before such
termination, within the time frame permitted by your stock option agreement or,
if no time period is specified in your option agreement, within three months
following your termination. In the event that the termination of your employment
is by reason of permanent or total disability or death, you, or your executors,
administrators, legatees or distributees of your estate, may exercise any option
held by you on the date of your employment termination, to the extent that it
was exercisable immediately before such termination, within the time frame
specified in your option agreement or, if no time is specified, for 12 months
following such termination. However, if your employment is terminated for
misconduct, the option will not be exercisable after the termination date.
The termination of your New Option under the circumstances specified in
this section will result in the termination of your interests in our 1995 Plan,
our 2000 Plan and the DMI Plan. In addition, your New Option may terminate,
together with our stock option plans and all other outstanding options issued to
other employees, following the occurrence of certain corporate events, as
described below.
Exercise Price.
The Administrator determines the exercise price at the time the option
is granted, however, the exercise price of each incentive stock option may not
be less than the fair market value of a share on the date of grant. The exercise
price per share for the New Options will be 100% of the fair market value of a
share on the date of grant, which shall be equal to the last reported sale price
during regular trading hours of our common stock on the Nasdaq National Market
on the date of grant.
Vesting and Exercise.
Each stock option agreement specifies the term of the option and the
date or dates when the option becomes exercisable. The terms of vesting are
determined by the Administrator. Options granted by us to newly hired employees
generally vest over a five year period. Subject to continued employment with
Agile, 20% of the shares subject to the option vest 12 months following the date
of grant and then 1/60th of the shares subject to the option vest each month
thereafter. Retention and promotion grants may have other vesting terms, and
often vest over a shorter period of time.
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The New Options granted through the offer will vest upon the same
schedule as the applicable corresponding Eligible Option or Returned Option that
was returned for exchange (except that the number of shares vesting each month
will be adjusted for the fact that the New Options will be exercisable for 75%
of the shares for which the corresponding returned option was exercisable), as
follows:
. any tendered option that was fully vested on the date that the
offer expires will be fully vested,
. any portion of an option unvested on the date the offer expires
that would have been fully vested on the date the New Option is
granted (at least six months and one day from the date this offer
expires) will be fully vested on the date that the New Option is
granted (but for 75% of the shares for which the returned option
would have been vested), and
. any remaining unvested portion of an option will continue to vest
during the period of cancellation and shall have a vesting
schedule that is equivalent to what would have been in place had
the cancelled option remained in effect (except that the number
of shares vesting each month will be adjusted for the fact that
the New Options will be exercisable for 75% of the corresponding
returned option).
For example:
. An employee tenders for cancellation of an option that is 20/60th
vested at the time of cancellation.
. The New Option is granted 6 months and one day after cancellation
of the old option.
. The New Option will be 26/60th (plus one day) vested at the time
of grant, but will only be exercisable for 75% of the shares
subject to the tendered option.
Payment of Exercise Price.
You may exercise your New Options, in whole or in part, by delivery of
a written notice to us together with a share subscription or purchase form which
is accompanied by payment in full of the eligible exercise price. The
permissible methods of payment of the option exercise price are determined by
the Administrator and generally include the following:
. cash,
. certified check,
. tender to us of shares of our common stock, which if acquired
from us, have been owned by the option holder for no less than
six months, having a fair market value on the date of exercise
equal to the aggregate exercise price,
. promissory note, or
. a combination of the foregoing methods.
In addition, if your option agreement so provides, you may make payment
of the exercise price by having the certificates for the shares for which your
option is being exercised delivered to a licensed broker acceptable to the
Administrator. The notice should provide that, once the stock certificates are
delivered to the licensed broker, the broker will deliver to us cash or a check
payable and acceptable to us equal to the sum of the exercise price of the
shares purchased pursuant to the exercise of your options and any federal and
other taxes which in our judgment we may be required to withhold with respect to
the exercise of your option.
30
Adjustments Upon Certain Events.
If there is a change in our capitalization, such as a stock split,
reverse stock split, stock dividend or other similar event, and the change
results in an increase or decrease in the number of issued shares without
receipt of consideration by us, an appropriate adjustment will be made to the
price of each option and the number of shares subject to each option.
In the event there is a sale of all or substantially all of our assets
or stock, or we merge with another corporation, your New Options will be assumed
or replaced with new options of the successor corporation. If the successor
corporation does not assume or substitute your New Options, they will
automatically become fully vested and exercisable immediately prior to the
effective date of such transaction. Agile will use its best efforts to provide
at least 20 days prior written notice of the occurrence of any such transaction
in which the successor corporation intends not to assume or substitute your New
Options. In addition, if the successor corporation assumes or substitutes
outstanding New Options, the New Option will become exercisable and will be
credited with an additional 18 months of vesting if your service is terminated
by the successor corporation (other than for cause) or you resign for good
reason within 18 months following such a transaction.
Additionally, the Administrator has the discretion to provide for the
automatic acceleration (in whole or in part) of one or more outstanding options
at any time.
Transferability of Options.
Options may not be transferred, other than by will or the laws of
descent and distribution. In the event of your death, your New Option may be
exercised by a person who acquires the right to exercise the option by bequest
or inheritance.
Registration of Option Shares.
All shares of common stock issuable upon exercise of New Options under
our 1995 Plan have been registered under the Securities Act of 1933, as amended,
on registration statements on Form S-8 filed with the SEC.
U.S. Federal Income Tax Consequences.
You should refer to Section 14 of this Offer to Exchange for a
discussion of the U.S. federal income tax consequences of the New Options and
the options tendered for exchange, as well as the consequences of accepting or
rejecting the New Options under this Offer to Exchange. If you are an employee
based outside of the United States, you should refer to Sections 15 through 20
of this Offer to Exchange for a discussion of income tax consequences for
employees in certain non-U.S. countries of the New Options and the options
tendered for exchange. We recommend that you consult with your own tax advisor
to determine the tax and social insurance consequences of this transaction under
the laws of the country in which you live and work.
10. Information Concerning Agile Software Corporation.
We are incorporated in Delaware. Our principal executive offices are
located at One Almaden Boulevard, San Jose, CA 95113, and our telephone number
at that address is (408) 975-3900.
Agile is a leading supplier of business-to-business software solutions
that are designed to enable supply chain partners to communicate and collaborate
over the Internet about new or changing product content, and then source and
procure the required components. These products are used by supply chain
participants such as original equipment manufacturers, electronic manufacturing
services providers and customers and suppliers who are connected in outsourced
supply chains or who manage multi-site engineering, manufacturing, sales and
distributions via the Internet.
The financial information included in our annual report on Form 10-K
for the fiscal year ended April 30, 2001, together with our quarterly reports on
Form 10-Q for the three months ended July 31, 2001, are incorporated
31
herein by reference. See "Additional Information" in Section 23 for instructions
on how you can obtain copies of our SEC filings, including filings that contain
our financial statements.
11. Interests of Directors and Officers; Transactions and Arrangements
Concerning the Options.
A list of our directors and executive officers is attached to this Offer to
Exchange as Schedule A. Please see our definitive proxy statement for our 2001
annual meeting of stockholders, filed with the SEC on August 20, 2001, for
information concerning the amount of our securities beneficially owned by our
executive officers and directors as of July 31, 2001. As of October 17, 2001,
our executive officers and directors (nine (9) persons) as a group beneficially
own options outstanding under our 1995 Plan to purchase a total of 1,978,600 of
our shares of common stock, which represent approximately 42% of the shares
subject to all options outstanding under the 1995 Plan as of that date.
Directors and executive officers, as a group, beneficially own options
outstanding under our 2000 Plan to purchase 499,273 shares of our common stock,
which represents approximately 4.4% of the shares subject to all options
outstanding under the 2000 Plan as of that date. Directors and executive
officers, as a group, beneficially owned options outstanding under all of our
stock plans to purchase a total of 2,478,323 of our shares, which represented
approximately 16% of the shares subject to all options outstanding under the
Option Plans as of that date. These options to purchase our shares owned by
officers are eligible to be tendered in the offer, although options owned by
directors are not eligible to be tendered in this offer.
The following table sets forth information, as of October 17, 2001, with
respect to the ownership of options to purchase our common stock by each
director, each of our executive officers and all of the directors and executive
officers as a group. The percentages in the table below are based on a total
16,007,534 outstanding stock options as of October 8, 2001.
Percentage of Total
Name Options Owned Options Outstanding
Bryan D. Stolle ......................... 7.2% 1,148,100
D. Kenneth Coulter ...................... 2.9% 470,000
Gregory G. Schott ....................... 1.5% 235,500
Richard J. Browne ....................... * 69,723
Joseph Hage ............................. 1.2% 185,000
William Jamaca .......................... 1.8% 295,000
Klaus-Dieter Laidig ..................... * 25,000
James L. Patterson....................... * 50,000
Nancy J. Schoendorf ..................... * 0
All 9 directors and executive directors
as a group .............................. 15.5% 2,478,232
* Represents ownership of less than 1% of options outstanding.
Our executive officers are eligible to participate in this offer. Our
directors are not eligible to participate in this offer.
The following is a transactions list of the stock and stock option
involving our executive officers and directors during the 60 days prior to and
including October 18, 2001:
. On August 31, 2001, Mr. D. Kenneth Coulter purchased 2,000 shares of
our common stock through our Employee Stock Purchase Plan at a price
of $8.50 per share. On September 28, 2001, Mr. Coulter exercised
options to purchase 30,000 shares of our common stock and sold such
shares to the public at a price of $8.9517 per share and sold 2,380
shares of common stock at a price of $9.04 per share.
. On August 31, 2001, Mr. Joseph Hage purchased 970 shares of our common
stock through our Employee Stock Purchase Plan at a price of $8.50 per
share.
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. On August 31, 2001, Mr. William R. Jamaca purchased 309 shares of our
common stock through our Employee Stock Purchase Plan at a price of
$8.50 per share.
. On August 31, 2001, Mr. Gregory G. Schott purchased 1,267 shares of
our common stock through our Employee Stock Purchase Plan at a price
of $8.50 per share.
Except as otherwise described above, there have been no transactions in
options to purchase our shares or in our shares which were effected during the
60 days prior to October 18, 2001 by Agile or, to our knowledge, by any
executive officer, director or affiliate of Agile.
12. Status of Options Acquired By Us in the Offer; Accounting Consequences of
the Offer.
Options we acquire through the offer will be cancelled and the shares
subject to those options will be returned to the pool of shares available for
grants of New Options under the respective option plan pursuant to which they
were originally granted, except for shares originally granted under the DMI
Plan, which will simply be cancelled and will not return to the pool. To the
extent these shares are not fully reserved for issuance upon exercise of the New
Options to be granted in connection with the offer, the shares will be available
for future awards to employees and other eligible plan participants without
further stockholder action, except as required by applicable law or the rules of
the Nasdaq National Market or any other securities quotation system or any stock
exchange on which our shares are then quoted or listed.
We believe that we will not incur any compensation expense for financial
reporting purposes, as determined under generally accepted accounting
principles, solely as a result of the transactions contemplated by the offer
because:
. an eligible employee who tenders any option for exchange must tender
all options granted to that employee during the six month period prior
to the option cancellation date;
. we will not grant any New Options until a business day that is at
least six months and one day after the date that we accept and cancel
options tendered for exchange; and
. the exercise price of all New Options will at least equal the market
value of the shares of common stock on the date we grant the New
Options.
We may incur compensation expense, however, if we grant any options to any
tendering option holder before the first business day that is at least six
months and one day after the date we cancel the Eligible Options accepted for
exchange. Our grant of those options to the tendering option holder would be
treated for financial reporting purposes as a variable award to the extent that
the number of shares subject to the newly granted options is equal to or less
than the number of the options holder's tendered option shares. In this event,
we would be required to record as compensation expense the amount by which the
market value of the shares subject to the newly granted options exceeds the
exercise price of those shares. This compensation expense would accrue as a
charge to our earnings over the vesting period of the newly granted options. We
would adjust this compensation expense periodically during the vesting period
based on increases or decreases in the market value of the shares subject to the
newly granted options.
13. Legal Matters; Regulatory Approvals.
We are not aware of any license or regulatory permit that appears to be
material to our business that might be adversely affected by our exchange of
options and issuance of New Options as contemplated by the offer, or of any
approval or other action by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, that would be required for
the acquisition or ownership of our options as contemplated herein. Should any
such approval or other action be required, we presently contemplate that we will
seek such approval or take such other action. We cannot assure you that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that the failure to obtain any such approval
or other action
33
might not result in adverse consequences to our business. Our obligation under
the offer to accept tendered options for exchange and to issue New Options for
tendered options is subject to the conditions described in Section 7.
If we are prohibited by applicable laws or regulations from granting New
Options during the period beginning immediately after the day that is six months
and one day from the date that we cancel the options accepted for exchange, when
we currently expect to grant the New Options, and continuing thereafter, we will
not grant any New Options. We are unaware of any such prohibition at this time,
and we will use reasonable efforts to effect the grant, but if the grant is
prohibited throughout the period we will not grant any New Options and you will
not receive any other consideration for the options you tendered.
14. Material U.S. Federal Income Tax Consequences.
The following is a general summary of the material U.S. federal income tax
consequences of the exchange of options pursuant to the offer. This discussion
is based on the Internal Revenue Code, its legislative history, Treasury
Regulations thereunder and administrative and judicial interpretations thereof
as of the date of the offer, all of which are subject to change, possibly on a
retroactive basis. This summary does not discuss all of the tax consequences
that may be relevant to you in light of your particular circumstances, nor is it
intended to be applicable in all respects to all categories of option holders.
Option holders who exchange outstanding options for New Options should not
be required to recognize income for federal income tax purposes at the time of
the exchange. We believe that the exchange will be treated as a non-taxable
event. WE ADVISE ALL OPTION HOLDERS CONSIDERING EXCHANGING THEIR OPTIONS TO MEET
WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER.
If you exchange incentive stock options and those options are accepted by
us, the New Options will not be incentive stock options and will not be eligible
for the favorable tax treatment applicable to incentive stock options. Following
is a comparison of the U.S. federal income tax treatment of incentive stock
options and nonstatutory stock options (also referred to as nonqualified stock
options).
Federal Income Tax Treatment of Incentive Stock Options.
Under current law, an option holder will not realize taxable income upon
the grant of an incentive stock option. In addition, an option holder generally
will not realize taxable income for regular tax purposes upon the exercise of an
incentive stock option. However, an option holder's alternative minimum taxable
income will be increased by the amount that the aggregate fair market value of
the shares purchased, which is generally determined as of the date of exercise,
exceeds the aggregate exercise price of the shares. Except in the case of an
option holder's death or disability, if an option is exercised more than three
months after the option holder's termination of employment, the option ceases to
be treated as an incentive stock option and is subject to taxation under the
rules that apply to nonstatutory stock options.
If an option holder sells the option shares acquired upon exercise of an
incentive stock option, the tax consequences of the disposition depend upon
whether the disposition is qualifying or disqualifying. The disposition of the
option shares is qualifying if it is made:
. more than two years after the date the incentive stock option was
granted, and
. more than one year after the date the incentive stock option was
exercised.
If the disposition of the option shares is qualifying, any excess of the
sale price of the option shares, over the exercise price of those shares will be
treated as long-term capital gain taxable to the option holder at the time of
the sale. Any such capital gain will be taxed at the long-term capital gain rate
in effect at the time of sale. If the disposition is not qualifying, which we
refer to as a "disqualifying disposition," the excess of the fair market value
of the option shares on the date the option was exercised over the exercise
price (not to exceed the gain realized on the sale if the disposition is a
transaction with respect to which a loss, if sustained, would be recognized)
will be
34
taxed as ordinary income to the option holder at the time of the disposition.
Any gain in excess of that amount will be long-term or short-term capital gain,
depending upon whether or not the shares were sold more than one year after the
option was exercised. If a loss is recognized, the option holder will have no
ordinary income as a result of the disqualifying disposition, and the loss will
be a capital loss.
Unless an option holder engages in a disqualifying disposition, we will not
be entitled to a deduction with respect to an incentive stock option. If an
option holder engages in a disqualifying disposition, we will be entitled to a
deduction equal to the amount of compensation income taxable to the option
holder.
We do not believe that our offer to you will change any of the terms of
your eligible incentive stock options if you do not accept the offer. However,
if you choose not to accept this offer, it is possible that the IRS would decide
that your right to exchange your incentive stock options under this offer is a
"modification" of your incentive stock options, even if you do not exchange the
options. A successful assertion by the IRS that the options are modified could
extend the options' holding period to qualify for favorable tax treatment and
cause a portion of your incentive stock options to be treated as nonstatutory
stock options.
If you tender incentive stock options and those options are accepted for
exchange, the New Options that you are granted will not qualify as incentive
stock options. While the exchange and cancellation of your incentive stock
options will not give rise to any tax consequences, you should refer to the tax
discussion below regarding "Federal Income Tax Treatment of Nonstatutory Stock
Options," because your New Options will not be incentive stock options and may
be subject to different tax treatment than your Eligible Options.
Federal Income Tax Treatment of Nonstatutory Stock Options.
Under current law, an option holder will not realize taxable income upon
the grant of an option which is not qualified as an incentive stock option, also
referred to as a nonstatutory stock option. However, when an option holder
exercises a nonstatutory stock option, the difference between the exercise price
of the shares purchased and their fair market value on the date of exercise will
be treated as compensation taxable as ordinary income to the option holder.
We will be entitled to a deduction equal to the amount of ordinary income
taxable to the option holder if we comply with eligible reporting requirements.
The subsequent sale of the shares acquired pursuant to the exercise of a
nonstatutory stock option generally will give rise to capital gain or loss equal
to the difference between the sale price and the sum of the exercise price paid
for the shares plus the ordinary income recognized with respect to the shares,
and these capital gains or losses will be treated as long-term if you held the
shares for more than one year following exercise of the option.
WE RECOMMEND THAT YOU CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PARTICIPATING IN THE
OFFER.
15. Material Tax Consequences for Employees Who are Tax Residents in Canada.
The following is a general summary of the material Canadian federal income
tax consequences of the exchange of options under the offer for Canadian tax
residents. This discussion is based on the Canadian tax laws as of the date of
the offer, which is subject to change, possibly on a retroactive basis. This
summary does not discuss all of the tax consequences that may be relevant to you
in light of your particular circumstances, nor is it intended to be applicable
in all respects to all categories of option holders.
If you are a resident of another country, the information contained in this
summary may not be applicable to you. You are advised to seek appropriate
professional advice as to how the tax or other laws in your country apply to
your specific situation.
35
Exchange of Options and Grant of New Options.
We believe that Canadian residents who participate in the exchange of
options will not be subject to Canadian federal income tax on the exchange of
the options, and we do not believe that there will be a tax liability solely as
the result of your tender of Eligible Options or Required Options for
replacement with New Options. We do not believe that you will be subject to tax
upon grant of the New Options.
Exercise of New Options.
Subject to the deferral provisions discussed below, you will recognize
taxable income upon exercise of the New Option based on the difference between
the fair market value of the shares on the date of exercise and the exercise
price. Canadian resident option holders may defer Canadian taxation on the
income from the new option until the earlier of the time that the option holder
sells the shares purchased on exercise, dies or becomes a non-resident of
Canada. To be eligible for the deferral, the option holder must file an
election. The deferral applies to the first C$100,000 worth of options that are
granted to the employee and that vest in the employee, in any one year. For the
purpose of calculating this limit, the value of an option equals the fair market
value of the underlying shares subject to the option at the time the option was
granted. This deferral applies to options exercised after February 27, 2000.
Sale of Shares.
When the option holder sells the shares, assuming the option holder has
elected to defer up to C$100,000 as described above, the option holder will be
taxed at their marginal rate on one-half of the income from the exercise of the
new option. The option holder also will be subject to Canadian capital gains tax
in an amount equal to one-half of the difference between the sale price and the
fair market value on the date of exercise (less any brokerage fees).
Dividends.
If you acquire shares upon exercise, you may be entitled to receive
dividends. You will be subject to income tax rate on any dividends paid on the
shares of Agile. You may be entitled to a foreign tax credit equal to the amount
of the dividend for United States federal tax withheld at source.
Withholding and Reporting.
You must report the taxable employee benefits where applicable, capital
gains, and dividend receipts, if applicable, in your annual income tax return.
For every year that you have a balance of deferred stock option benefits
outstanding, you must file the required forms with the Canada Customs and
Revenue Agency together with your annual tax return.
We recommend that all Canadian resident option holders consult their own
tax advisors with respect to the Canadian Federal and Provincial tax
consequences of participating in the offer.
16. Material Tax Consequences for Employees Who are Tax Residents in France.
The following is a general summary of the income and social insurance tax
consequences of the exchange of options under the offer for French tax
residents. This discussion is based on French tax law as of the date of the
offer. This summary does not discuss all of the tax consequences that may be
relevant to you in light of your particular circumstances, nor is it intended to
be applicable in all respects to all categories of option holders.
If you are a citizen or resident of another country, the information
contained in this summary may not be applicable to you. You are advised to seek
appropriate professional advice as to how the tax or other laws in your country
apply to your specific situation.
36
Exchange of Options and Grant of New Options.
We do not believe that there will be a tax liability solely as the result
of your tender of Eligible Options or Required Options for replacement with New
Options. We do not believe that you will be subject to tax when the New Options
are granted to you under the 2000 Plan.
Exercise of New Options.
When you exercise your New Options, you will not be subject to French
income tax or and social taxes.
Sale of Shares.
The income and social tax consequences of the sale of the shares will be
determined based on the date of the sale calculated from the date of the grant
of the New Option and the amount of gain realized between the option exercise
price and the sale price of the shares.
If the shares are sold within four years from the date of grant of the New
Option, the amount of the gain (i.e., the difference between the option price
and the sale price) will be subject to the following tax consequences:
. the gain is subject to income tax at your marginal rate for the year
in which the sale occurs;
. the gain is subject to employee social security charges which will be
withheld by the Company;
. the gain is subject to CSG and CRDS taxes which will be withheld by
the Company;
. the gain is not subject to the 2% social tax.
If the shares are sold during the fifth or sixth year from the date of the
grant of the option, the amount of the gain (i.e., the difference between the
option price and the sale price) will be subject to the following tax
consequences:
. the gain up to FF 1,000,000 is subject to income tax at a rate of 30%,
and the excess amount over FF 1,000,000 is subject to income tax at a
rate of 40%, for the year in which the sale occurs;
. the gain is not subject to employee social security charges;
. the gain is subject to CSG and CRDS taxes;
. the gain is subject to the 2% social tax;
. the total tax burden is 40% and 50% corresponding to the amount of
gain.
If the shares are sold after the sixth year from the date of grant of the
option, the amount of gain (i.e., the difference between the option price and
the sale price) will be subject to the following tax consequences:
. the gain up to FF 1,000,000 is subject to income tax at a rate of 16%
and the excess amount over FF 1,000,000 is subject to income tax at a
rate of 30% for the year in which the sale occurs;
. the gain is not subject to employee social security charges;
. the gain is subject to CSG and CRDS taxes;
. the gain is subject to the 2% social tax;
. the total tax burden is 26% and 40% corresponding to the amount of
gain.
37
Dividends.
If you exercise your New Options to purchase shares, you may be
entitled to receive dividends. Any dividends paid on Agile shares will be
subject to tax in France and withholding in the United States. You may be
entitled to receive a tax credit against the French tax payable equal to the
United States federal tax withheld at source.
Withholding and Reporting.
Your employer is not required to withhold income taxes but is required
to withhold and remit social taxes if you sell the shares purchased under your
New Options within four years from the date of the grant of the New Options.
You may hold shares purchased under the 2000 Plan outside of France
provided that you declare all foreign accounts (both those currently open and
those closed during the tax year) on a specific form in your income tax return.
You must also declare to the customs and excise authorities any cash or
securities you import or export without the use of a financial institution when
the value of cash or securities is equal to or exceeds FF 50,000.
Please consult a tax advisor to determine the tax considerations and
tax consequences relevant to your participation in the offer.
17. Material Tax Consequences for Employees Who are Tax Residents in
Germany.
The following is a general summary of the tax consequences of the
exchange of options under the offer for German tax residents. This discussion is
based on German tax law as of the date of the offer, which is subject to change,
possibly on a retroactive basis. This summary does not discuss all of the tax
consequences that may be relevant to you in light of your particular
circumstances, nor is it intended to be applicable in all respects to all
categories of option holders. Therefore, this summary does not replace the
advice only your personal tax advisor may give you.
If you are a citizen or resident of another country, the information
contained in this summary may not be applicable to you. You are advised to seek
appropriate professional advice as to how the tax or other laws in your country
apply to your specific situation.
Exchange of Options and Grant of New Options.
We do not believe that there will be a tax liability solely as the
result of your tender of Eligible Options or Required Options for replacement
with New Options. We do not believe that you will be subject to tax when the New
Options are granted to you under the 2000 Plan.
Exercise of New Options.
When you exercise your New Options, you will be subject to ordinary
income tax on the difference between the fair market value of the shares on the
date of exercise and the exercise price. The income recognized would be taxable
compensation to you. The difference may also be subject to social insurance
contributions if and to the extent to which your income in the month during
which you exercise your New Options is below the relevant social security
contribution limits.
Sale of Shares.
When you sell the shares, you will not be subject to tax on any
additional gain provided that: (i) you have held the stock for more than 12
months; (ii) you have not, during the last five years, held 1% or more of the
stated capital of Agile; and (iii) the stock is not held as a business asset.
Consequently, you normally will not be subject to tax at the time of sale on the
additional gains if you hold the shares for more than 12 months. If tax is due,
it is payable on the difference between what you receive from the sale and your
adjusted base cost. (Effective 1 January 2002, only 50% of such gain will be
subject to tax.) Your adjusted base cost is based on the exercise price, plus
any
38
taxable benefit you were deemed to have earned because of the exercise and
on which you already paid tax at exercise.
Dividends.
If you exercise your New Options and purchase shares, you may be
entitled to receive dividends. Any dividends paid on Agile shares will be
subject to income tax in Germany and withholding tax in the United States.
However, only 50% of the value of the dividend distributed is subject to tax in
Germany. You must report such dividends on your annual tax return. The U.S.
Federal withholding tax will be credited against your German tax due on the
dividends, to the extent that you are not entitled to a (partial) refund of U.S.
Federal withholding tax under the U.S.-German Tax Treaty.
Withholding and Reporting.
Under current laws, withholding and reporting for income tax and social
insurance are required when you exercise your options. You have the duty to
supply all information to your employer needed to determine the amount of wages
tax to be withheld by the employer, such as the number of options exercised,
date of exercise, the exercise price and the fair market value of the stock at
exercise date. Your employer will withhold income tax and social insurance
contributions from your wages at the time you exercise your option to the extent
your wages are below the social security contribution limits. You will be
responsible for paying any difference between the actual tax liability and the
amount withheld.
You must report cross-border payments in excess of EURO12,500 monthly.
This reporting is normally accomplished through the German bank involved in the
transaction, but you are responsible for making sure the report is filed. In
addition, you must report any receivables or payables or debts in foreign
currency exceeding an amount of DM3,000,000 on a monthly basis. Finally, you
must report on an annual basis your participation in Agile in the event that it
exceeds 10% of the total of the voting capital.
Please consult a tax advisor to determine the tax considerations and
tax consequences relevant to your participation in the offer.
18. Material Tax Consequences for Employees Who are Tax Residents in Japan.
The following is a general summary of the tax consequences of the
exchange of options under the offer for Japanese tax residents. This discussion
is based on Japanese tax law as of the date of the offer, which is subject to
change, possibly on a retroactive basis. This summary does not discuss all of
the tax consequences that may be relevant to you in light of your particular
circumstances, nor is it intended to be applicable in all respects to all
categories of options holders. Accordingly, we recommend that you consult your
own tax advisor with respect to the Japanese and foreign tax consequences of
participating in the offer.
If you are a citizen or resident of another country, the information
contained in this summary may not be applicable to you. You are advised to seek
appropriate professional advice as to how the tax or other laws in your country
apply to your specific situation.
Exchange of Options and Grant of New Options.
We do not believe that there will be a tax liability solely as a result
of your tender of Eligible Options or Required Options for replacement with New
Options; however, the tax laws in this area are not certain and so we cannot
predict the tax consequences with certainty. We do not believe that you will be
subject to tax when the New Options are granted to you.
Exercise of New Options.
When you exercise your New Options, you will be subject to income tax
on the difference between the fair market value of the shares on the date of
exercise and the exercise price. Your income will likely be treated as
"remuneration income" and will be taxed at your marginal tax rate.
39
Sale of Shares.
When you sell the shares you purchased under the 2000 Plan, you will be
subject to tax on any gain on the subsequent sale of the shares at a flat rate
of 26% (i.e., 20% national income tax and a 6% local inhabitants tax). If you
sell your shares through an authorized stockbroker or bank in Japan and submit
an election return form, you may elect to have the broker withhold 1.05% of the
total amount received (regardless of the gain) from selling your shares. If you
make this election, the deemed gain will be 5.25% of the proceeds from the sale
of the shares. The deemed gain will only be subject to the 20% national income
tax; the 6% local inhabitants tax would not apply. Please note that, although
this 1.05% taxation method was schedule to be abolished as of 1 April 2001 under
the 2000 tax legislation, the abolishment has been postponed to 31 March 2003.
Dividends.
If you exercise your New Options to purchase shares, you may be
entitled to receive dividends. If the dividend payments are made through a
Japanese paying agent, Japanese withholding tax will be imposed on the dividend
amount net of the foreign withholding tax which will be payable in the United
States.
Withholding and Reporting.
A foreign tax credit and domestic withholding tax credit will be
allowed if you are a Japanese resident taxpayer and if you choose the aggregate
taxation method (Sogo Kazei) on such dividend income. If you choose the separate
taxation method (Bunri Kazei), no tax credits will be allowed.
Although income from the exercise of stock options is classified as
remuneration income for individual income tax purposes, your employer is not, as
a rule, required to withhold income tax or social security contributions when
you exercise your options, as long as the employer is not directly involved in
the operation (i.e., payment of income) or costs of the 2000 Plan. It is your
responsibility to report and pay any taxes resulting from your participation in
the 2000 Plan.
If you intend to acquire shares whose value exceeds Y100,000 in a
single transaction, you must file a report with the Ministry of Finance through
the Bank of Japan within 20 days from the purchase of the shares (provided,
however, if you acquire such shares through a security company in Japan, such
requirement will not be imposed). Please not that the reporting requirements
vary depending on whether or not the relevant payment is made through a bank in
Japan.
Please consult a tax advisor to determine the tax considerations and
tax consequences relevant to your participation in the offer.
19. Material Tax Consequences for Employees who are Tax Residents in
Taiwan.
The following is a general summary of the tax consequences of the
exchange of options under the offer for tax residents of Taiwan. This discussion
is based on Taiwanese tax law as of the date of the offer, which is subject to
change, possibly on a retroactive basis. This summary does not discuss all of
the tax consequences that may be relevant to you in light of your particular
circumstances, nor is it intended to be applicable in all respects to all
categories of options holders. Accordingly, we recommend that you consult your
own tax advisor with respect to the Taiwanese and foreign tax consequences of
participating in the offer.
If you are a citizen or resident of another country, the information
contained in this summary may not be applicable to you. You are advised to seek
appropriate professional advice as to how the tax or other laws in your country
apply to your specific situation.
Exchange of Options and Grant of New Options.
We do not believe that there will be a tax liability solely as the
result of your tender of Eligible Options or Required Options for replacement
with New Options. We do not believe that you will be subject to tax when the New
Options are granted to you under the 2000 Plan.
40
Exercise of New Options.
You will not be subject to tax when you exercise your New Option unless
your employer (a subsidiary of Agile) reimburses Agile for the spread on the
exercise of the New Options under the 2000 Plan. In this case, you will be taxed
at your marginal income tax rate on the difference between the fair market value
of the underlying shares at exercise and the exercise price (i.e., the price you
pay in order to exercise the option).
Sale of Shares.
We do not believe that you will be subject to tax when you sell the
shares that you acquire under the 2000 Plan.
Dividends.
If you exercise your options to purchase shares, you may be entitled to
receive dividends. Any dividends paid on Agile shares will not be subject to tax
in Taiwan, but will be subject to withholding tax in the United States.
Withholding and Reporting.
Your employer will be required to withhold all income taxes if your
employer reimburses Agile for the spread on the exercise of the New Options
under the 2000 Plan. However, you will be responsible for paying any difference
between the actual tax liability and the amount withheld.
Generally, no exchange control restrictions will apply in respect of
your participation in the 2000 Plan unless the aggregate value of all of your
foreign currency transactions exceed US$5 million per year.
Please consult a tax advisor to determine the tax considerations and
tax consequences relevant to your participation in the offer.
20. Material Tax Consequences for Employees who are Tax Residents in the
United Kingdom.
The following is a general summary of the income tax and National
Insurance Contributions ("NICs") consequences of the exchange of options
pursuant to the offer for U.K. tax residents. This discussion is based on the
U.K. tax law as of the date of the offer, which is subject to change, possibly
on a retroactive basis. This summary does not discuss all of the tax
consequences that may be relevant to you in light of your particular
circumstances, nor is it intended to be applicable in all respects to all
categories of option holders. We advise all option holders considering replacing
their options to meet with their own tax advisors.
If you are a citizen or resident of another country, the information
contained in this summary may not be applicable to you. You are advised to seek
appropriate professional advice as to how the tax or other laws in your country
apply to your specific situation.
Exchange of Options.
We do not believe that there will be a tax liability solely as a result
of your tender of Eligible Options or Required Options for replacement with New
Options. We do not believe that you will be subject to tax when the New Options
are granted to you under the 2000 Plan.
Grant of New Options and Exercise of Options.
The original options granted to you by Agile were granted under a stock
option plan that has not been approved by Inland Revenue and any New Options
granted to you will be granted under a non-approved stock option scheme.
Consequently, you will be subject to income tax when you exercise your New
Options on the difference between the fair market value of the underlying shares
on the date of exercise and the exercise price (i.e., the "spread"). You will
also be liable to pay employees' NICs on the spread at exercise if your earnings
do not
41
already exceed the maximum limit for NIC purposes. The maximum limit is
pounds sterling 29,900 per year for the U.K. tax year 6 April 2001 to 5 April
2002.
To the extent that your Eligible Options were granted before 6 April
1999 and therefore not subject to NICs, you should be aware that any New Options
that may be granted to you will be subject to NICs. In addition, new legislation
has been enacted which allows an employer to transfer the employer's NIC
liability to employees in connection with the exercise, assignment, release or
cancellation of options by entering into a joint election with each employee
providing that the employee will meet the employer's NIC liability in such
circumstances. The employer's NIC liability is currently equal to 11.9% of the
spread upon the exercise of any New Options. If you choose to exchange your
Eligible Options for New Options, you may be required to agree to absorb your
employer's NIC liability on the exercise of the New Options and to enter into a
joint election which will provide that you will pay any NIC liability arising on
the exercise of the New Options that may be granted to you. It is our
understanding that you will be entitled to deduct the employer's portion of the
NIC payments you make for the purposes of calculating the amount of the gain
subject to income tax on the exercise of the New Options. If you do not enter
into a joint election once the form of election is approved by the Inland
Revenue, your New Option shall become null and void without any liability to
Agile and/or any of our subsidiaries and may not be exercised. You should take
these factors into consideration when deciding whether to tender your Eligible
Options for exchange.
Sale of Shares.
When you sell your shares, you may (subject to your personal
circumstances) be subject to capital gains tax. The tax is due on the amount (if
any) by which the sales proceeds exceed the fair market value of the shares on
the date on which you exercise your New Options. Any capital gains tax you may
owe is subject to an annual personal exemption (currently pounds sterling 7,5000
for the U.K. tax year 6 April 2001 to 5 April 2002) and to taper relief which is
calculated with reference to the period of time during which you held the shares
of Agile following exercise of your options.
Dividends.
If you acquire shares upon exercise, you may be entitled to receive
dividends. Any dividends paid on Agile shares will be subject to income tax in
the U.K. and withholding tax in the U.S. You may be entitled to a foreign tax
credit for United States federal tax withheld at source. You must report any
dividends you receive on your annual U.K. tax return.
Withholding and Reporting.
Your employer is required to arrange for the payment of income tax and
NICs on the spread at exercise or to withhold funds on account of income tax and
NICs on the spread at exercise from the payroll, the proceeds of exercise and
sale, or otherwise, and to remit such amounts to the U.K. Inland Revenue on your
behalf. Your employer will also report the details of any option grant and
exercise on its annual U.K. Inland Revenue tax return.
In addition to your employer's reporting obligations, you must report
details of any liabilities arising from the exercise of your New Options and
from the sale or disposal of shares, together with details of dividend income,
to the Inland Revenue on your personal U.K. Inland Revenue tax return.
You will be responsible for paying any taxes owed as a result of the
sale of the shares or the receipt of any dividends.
Please consult a tax advisor to determine the tax considerations and
tax consequences relevant to your participation in the offer.
21. Extension of Offer; Termination; Amendment.
We expressly reserve the right, in our discretion, at any time and from
time to time, and regardless of whether or not any event listed in Section 7 has
occurred or is deemed by us to have occurred, to extend the period
42
of time during which the offer is open and thereby delay the acceptance for
exchange of any options by giving oral, written or electronic notice of such
extension to the option holders or making a public announcement thereof.
We also expressly reserve the right, in our reasonable judgment, prior
to the expiration date to terminate or amend the offer and to postpone our
acceptance and cancellation of any options tendered for exchange upon the
occurrence of any of the events listed in Section 7, by giving oral, written or
electronic notice of such termination or postponement to you or by making a
public announcement thereof. Our reservation of the right to delay our
acceptance and cancellation of options tendered for exchange is limited by Rule
13e-4(f)(5) promulgated under the Securities Exchange Act, which requires that
we must pay the consideration offered or return the options tendered promptly
after termination or withdrawal of a tender offer.
Subject to compliance with applicable law, we further reserve the
right, in our discretion, and regardless of whether any event listed in Section
7 has occurred or is deemed by us to have occurred, to amend the offer in any
respect, including, without limitation, by decreasing or increasing the
consideration offered in the offer to option holders or by decreasing or
increasing the number of options being sought in the offer.
Amendments to the offer may be made at any time and from time to time
by public announcement of the amendment. In the case of an extension, the
amendment must be issued no later than November 19, 2001, 9:00 a.m. Pacific
Time, on the next business day after the last previously scheduled or announced
expiration date. Any public announcement made through the offer will be
disseminated promptly to option holders in a manner reasonably designated to
inform option holders of the change. Without limiting the manner in which we may
choose to make a public announcement, except as required by applicable law, we
have no obligation to publish, advertise or otherwise communicate any such
public announcement.
If we materially change the terms of the offer or the information
concerning the offer, or if we waive a material condition of the offer, we will
extend the offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3)
under the Securities Exchange Act. These rules require that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer, other than a change in price
or a change in percentage of securities sought, will depend on the facts and
circumstances, including the relative materiality of such terms or information.
If we decide to take any of the following actions, we will publish
notice or otherwise inform you in writing of these actions:
. we increase or decrease the amount of consideration offered for
the options;
. we decrease the number of options eligible to be tendered in the
offer; or
. we increase the number of options eligible to be tendered in the
offer by an amount that exceeds 2% of the shares issuable upon
exercise of the options that are subject to the offer immediately
prior to the increase.
If the offer is scheduled to expire at any time earlier than the tenth
(10th) business day from, and including, the date that notice of such increase
or decrease is first published, sent or given in the manner specified in this
Section 20, we will extend the offer so that the offer is open at least ten
business days following the publication, sending or giving of notice.
For purposes of the offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, Eastern Time.
22. Fees and Expenses.
We will not pay any fees or commissions to any broker, dealer or other
person for soliciting tenders of options pursuant to this Offer to Exchange.
43
23. Additional Information.
This Offer to Exchange is part of a Tender Offer Statement on Schedule
TO that we have filed with the SEC. This Offer to Exchange does not contain all
of the information contained in the Schedule TO and the exhibits to the Schedule
TO. We recommend that you review the Schedule TO, including its exhibits, and
the following materials which we have filed with the SEC before making a
decision on whether to tender your options:
1. our annual report on Form 10-K for our fiscal year ended April
30, 2001, filed with the SEC on July 25, 2001;
2. our quarterly report on Form 10-Q for the fiscal quarter ended
July 31, 2001, filed with the SEC on September 14, 2001;
3. our definitive proxy statement for our 2001 annual meeting of
stockholders, filed with the SEC on August 20, 2001;
4. our Form S-8 registration statements (registering shares to be
issued under the 2000 Nonstatutory Stock Option Plan, the 1995
Stock Option Plan and the Digital Market, Inc. 1995 Stock Plan)
filed with the Securities and Exchange Commission on December 17,
1999, April 21, 2000, November 22, 2000, and June 14, 2001 (file
numbers 333-93037, 333-35416, 333-50528, and 333-63010,
respectively); and
5. the description of our common stock contained in our Registration
Statement on Form 8-A, filed with the SEC on August 17, 1999
(file number 000-27071).
The SEC File Number for these filings is 000-27071 other than the
registration statements on Form S-8. These filings, our other annual, quarterly
and current reports, our proxy statements and our other SEC filings may be
examined, and copies may be obtained, at the following SEC public reference
rooms:
450 Fifth Street, N.W. 500 West Madison Street
Room 1024 Suite 1400
Washington, D.C. 20549 Chicago, Illinois 60661
You may obtain information on the operation of the public reference
rooms by calling the SEC at 1-800-SEC-0330.
Our SEC filings are also available to the public on the SEC's Internet
site at http://www.sec.gov.
Our common stock is quoted on the Nasdaq National Market under the
symbol "AGIL" and our SEC filings can be read at the following Nasdaq address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
Each person to whom a copy of this Offer to Exchange is delivered may
obtain a copy of any or all of the documents to which we have referred you,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents) at no cost, by writing to us at
Agile Software Corporation, One Almaden Boulevard, 12/th/ Floor, San Jose, CA
95113, or telephoning us at (408) 975-3900 between the hours of 9:00 a.m. and
5:00 p.m. Pacific Time.
As you read the foregoing documents, you may find some inconsistencies
in information from one document to another. If you find inconsistencies between
the documents, or between a document and this Offer to Exchange, you should rely
on the statements made in the most recent document.
44
The information contained in this Offer to Exchange about Agile should be
read together with the information contained in the documents to which we have
referred you.
24. Miscellaneous.
This Offer to Exchange and our SEC reports referred to above include
"forward-looking statements." When used in this Offer to Exchange, the words
"anticipate," "believe," "estimate," "expect," "intend" and "plan" as they
relate to Agile or our management are intended to identify these forward-looking
statements. All statements by us regarding our expected future financial
position and operating results, our business strategy, our financing plans and
expected capital requirements, forecasted trends relating to our services or the
markets in which we operate and similar matters are forward-looking statements.
The documents we filed with the SEC, including our annual report on Form 10-K
filed on July 25, 2001 and our quarterly report on Form 10-Q filed on September
14, 2001, discuss some of the risks that could cause our actual results to
differ from those contained or implied in the forward-looking statements. These
risks include, but are not limited to:
. our limited operating history and the limited operating history of the
companies we have acquired make it difficult to evaluate our business
and prospects;
. our quarterly operating results are subject to fluctuations and
difficult to predict, which may affect the price of our common stock;
. the success of our business depends on our key personnel, whose
knowledge and technical expertise would be difficult to replace;
. the competition for qualified personnel could affect our ability to
recruit or retain necessary personnel to develop or sell our products;
. our anticipated revenues might be harmed if the introduction and
customer acceptance of Agile Anywhere, Agile Buyer or any upgrades or
enhancements is unsuccessful;
. the market for our products is newly emerging and customers may not
accept our products;
. our revenues may be harmed if general economic conditions continue to
worsen;
. we may experience difficulties in introducing new products and
upgrades, which could result in loss of sales, delays in market
acceptance of our products or customer dissatisfaction;
. our products may not be compatible with all platforms that are
currently popular, which could inhibit sales;
. our variable sales cycle makes it difficult to predict when or if
sales will be made;
. the acquisition of Digital Market, and any future acquisitions, may be
difficult to integrate and may disrupt our business, dilute
stockholder value or divert management attention;
. defects in our software products could diminish demand for our
products;
. if we becomes subject to products liability litigation, it could be
time consuming and costly to defend;
. we depend on licensed technology and the loss or inability to maintain
these technology licenses could result in increased cost or delays in
sales of our products;
. if we are unable to protect our intellectual property we may lose a
valuable asset, experience reduced market share or incur costly
litigation to protect our rights;
45
. in order to manage our growth and expansion, we will need to improve
and implement new systems, procedures and controls; and
. competition among providers of products similar to ours may increase,
which could cause us to reduce prices, harm our ability to sell
products and reduce our market share.
For a complete description of these risks, please see the SEC filings
referred to in Section 23 of this Offer to Exchange, entitled "Additional
Information," above.
We are not aware of any jurisdiction where the making of the offer is not
in compliance with applicable law. If we become aware of any jurisdiction where
the making of the offer is not in compliance with any valid applicable law, we
will make a good faith effort to comply with such law. If, after such good faith
effort, we cannot comply with such law, the offer will not be made to, nor will
tenders be accepted from or on behalf of, the option holders residing in such
jurisdiction.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF
AS TO WHETHER YOU SHOULD TENDER OR NOT TENDER YOUR OPTIONS THROUGH THE OFFER.
YOU SHOULD RELY ONLY ON THE INFORMATION IN THIS DOCUMENT OR DOCUMENTS TO WHICH
WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THE
INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT, THE MEMORANDUM FROM
BRYAN D. STOLLE DATED OCTOBER 18, 2001, THE ELECTION FORM AND THE CHANGE OF
ELECTION FORM. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR
GIVES YOU ANY INFORMATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION,
REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US.
Agile Software Corporation October 18, 2001
46
SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF AGILE SOFTWARE CORPORATION
The directors and executive officers of Agile Software Corporation and
their positions and offices as of October 17, 2001, are set forth in the
following table:
Name Position
---- --------
Bryan D. Stolle ................ Chairman of the Board, Chief Executive Officer, President and Director
D. Kenneth Coulter ............. Senior Vice President, Worldwide Field Operations
Gregory G. Schott .............. Senior Vice President, Marketing and Corporate Development
Richard J. Browne .............. Interim Chief Financial Officer and Secretary
Joe Hage ....................... Vice President, Product Development
William R. Jamaca .............. Vice President, Support and Hosting
Klaus-Dieter Laidig ............ Director
James L. Patterson ............. Director
Nancy J. Schoendorf ............ Director
The address of each director and executive officer is: c/o Agile Software
Corporation, One Almaden Boulevard, 12th Floor, San Jose, CA 95113.
Executive officers are those persons defined as "officers" for purposes of
Section 16(b) of the Securities Exchange Act of 1934, as amended.
EX-99.(A)(2)
4
dex99a2.txt
PRESS RELEASE DATED OCTOBER 18, 2001
EXHIBIT (a)(2)
Agile Software Corporation Announces
Voluntary Stock Option Exchange
SAN JOSE, CA, October 18, 2001- Agile Software Corporation (NASDAQ: AGIL) today
announced that its Board of Directors has approved a voluntary stock option
exchange program for eligible option holders.
Under the program, Agile option holders will have the opportunity to cancel
outstanding options with an exercise price of $15.00 or more per share in
exchange for new options to be granted at a future date that is at least six
months and one day after the date of cancellation. The number of shares of
common stock subject to the new options will be equal to 75% of the number
subject to the exchanged options. The new options will have an exercise price
equal to the fair market value of Agile's common stock at the new grant date and
will vest at the same rate as the exchanged options. Agile expects that there
will be no accounting charges as a result of this stock option exchange program.
About Agile
Agile Software Corporation (NASDAQ: AGIL) provides product collaboration,
sourcing, and management and service solutions that enable manufacturers and
their partners to build better, more profitable products faster. Agile has more
than 700 customers, including Armstrong Airconditioning, B/E Aerospace, Bosch,
Compaq, Dell Computer, Flextronics International, Fuji Film, GE Medical,
InFocus, International Paper, Juniper Networks, Lucent, Nvidia, Philips, Precor
Sycamore Networks, Texas Instruments, and Zhone Technologies. Call (408)
975-3900, or visit Agile at http://www.agilesoft.com.
Notice Regarding Forward-Looking Statements
This media release contains forward-looking statements that involve risks and
uncertainties. Agile's actual results may differ materially from those
anticipated in these forward-looking statements, including those relating to the
Company's expected accounting treatment for the stock option exchange program.
Information about potential risk factors, which could affect the Company's
business and financial results, is contained in the Company's Annual Report on
Form 10-K filed July 25, 2001 with the Securities and Exchange Commission.
Forward-looking statements are based on information available to the Company on
the date hereof. Agile assumes no obligation to publicize the results of any
potential revision of its forward-looking statements.
Agile Software, the Agile Software logo, Agile Anywhere, Agile eHub, and
MyAgile.com are trademarks of Agile Software Corporation in the U.S. and/or
other countries. All other brand or product names are trademarks and registered
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EX-99.(A)(3)
5
dex99a3.txt
E-MAIL SENT TO EMPLOYEES OF THE COMPANY
EXHIBIT (a)(3)
To all Agile employees:
Today, I am happy to announce an exciting and important opportunity for
employees to participate in the Agile Stock Option Exchange Program.
In response to volatility of the stock markets over the past year, which have
left many of your options at exercise prices that are much higher than the
current market price of our common stock, we have decided to offer you a
voluntary program which allows all employees with options priced at $15.00 or
more per share an opportunity to keep their stock options at their current
exercise price, or to cancel those options in exchange for new options to
purchase 75% of the number of shares covered by the cancelled options. The new
options will be granted at least six months and one day from the cancellation
date, which is anticipated to be after May 20, 2002. The exercise price of the
new option will equal the fair market value of Agile common stock on the grant
date of the new options. The vesting schedule for the New Options will be
measured from the original vesting commencement date and will be based upon the
same vesting schedule as the original Eligible Options returned for exchange.
You will receive continued credit for vesting during the six month period
between the cancellation of the Eligible Options and grant of the New Options.
We hope that this offer to exchange outstanding options for new options will
give the benefit of holding options that over time may have a greater potential
to increase in value and to create better performance incentive for employees.
This is not a re-pricing of your stock options. A re-pricing would force the
Company to take a significant charge to earnings and would hinder the Company's
earnings growth. We expect there will be no accounting charge to our earnings as
a result of this stock option exchange program.
You will soon receive an e-mail from Stock Administration which details the
Agile Stock Option Exchange Program, the possible benefits and risks, and what
you need to do if you choose to participate in the program. In addition, you
will receive your individual stock option schedule which details your stock
option grants to date and the status of each.
I believe in the continued success of Agile and want to provide the best ways to
reward employees for that success. I believe that this program is an important
indication of our appreciation for the entire Agile team.
Agile Software Corporation
/s/ Bryan D. Stolle
-------------------------------------
Bryan D. Stolle
President and Chief Executive Officer
EX-99.(A)(4)
6
dex99a4.txt
FORM OF ELECTION FORM
EXHIBIT (a)(4)
AGILE SOFTWARE CORPORATION
OFFER TO EXCHANGE OPTIONS
ELECTION FORM
I have received, have read and understand the Offer to Exchange dated
October 18, 2001, the Election Form and Change of Election Form (together, as
they may be amended from time to time, constituting the "Offer"), offering to
eligible employees the opportunity to exchange outstanding, unexercised, stock
options ("Old Options") for new stock options ("New Options") to be granted on
and having an exercise price determined by the fair market value of a share of
Agile Software Corporation ("Agile") stock on May 20, 2002. The New Options will
be granted under Agile's 2000 Nonstatutory Stock Option Plan if I am not an
executive officer of Agile, and under the 1995 Stock Option Plan if I am an
executive officer of Agile. This offer expires at 5:00 p.m. Pacific Time on
November 19, 2001.
I understand that if I elect to tender my unexercised Old Option for
cancellation in exchange for Agile's promise to grant to me a New Option, the
number of shares subject to option will be 75% of the number of shares subject
to the corresponding options elected to be exchanged (rounded down to the
nearest whole share), subject to adjustments for stock splits, stock dividends
and other similar events. I understand that the original vesting schedule for
the Old Options will be applied to the New Options. I understand that for each
Old Option I tender, I will lose my right to all unexercised shares under that
option. I have read the offer and understand the possible loss of my cancelled
stock options if my employment terminates for any reason whatsoever before May
20, 2002. I UNDERSTAND THAT THERE IS A POSSIBILITY THAT THE EXERCISE PRICE OF
THE NEW OPTIONS COULD BE HIGHER THAN THE EXERCISE PRICE OF THE OLD OPTIONS,
RESULTING IN A LOSS OF A POTENTIALLY SIGNIFICANT STOCK OPTION BENEFIT. I ALSO
UNDERSTAND THAT IF I ELECT TO TENDER ANY OPTIONS, ALL OPTIONS GRANTED TO ME IN
THE SIX MONTHS PRIOR TO CANCELLATION, i.e., SINCE MAY 19, 2001, WILL ALSO BE
CANCELLED AND REPLACED WITH NEW OPTIONS. I AGREE TO ALL TERMS OF THE OFFER. I
FURTHER UNDERSTAND THAT MY NEW OPTION WILL BE A NONSTATUTORY STOCK OPTION EVEN
IF MY OLD OPTION WAS AN INCENTIVE STOCK OPTION.
Subject to the above understandings, I would like to participate in the
offer as indicated below. I HAVE READ AND FOLLOWED THE INSTRUCTIONS ATTACHED TO
THIS FORM.
Please check the box and note the grant date and grant number of each Old
Option you elect to tender for cancellation and replacement with a New Option
pursuant to the Offer. If you elect to tender any Old Option, your election must
include all stock options granted to you since May 19, 2001.
You may change the terms of your election to tender options for exchange by
submitting a new Election Form or a Change of Election Form prior to 5:00 p.m.,
Pacific Time, on November 19, 2001.
[_] Yes, I wish to tender for exchange each of the options specified below
(and on any additional sheets which I have attached to this form), along
with all options granted to me since May 19, 2001 even if I have not
listed them here:
-----------------------------------------------------------------------------------------------------------------------
Total Number of Unexercised Shares Subject to
Grant Number Grant Date Exercise Price the Option (Option Shares to be Cancelled)
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
[_] I have attached an additional sheet listing my name and any additional
options I wish to tender for exchange.
I understand that all of these Old Options will be irrevocably cancelled on
November 19, 2001.
____________________________ ______________________________________________________________
Employee Signature National Insurance/Social Security/National ID/Tax File Number
____________________________ _____________________________ _____________________________
Employee Name (Please Print) E-mail Address Date and Time
RETURN TO STOCK ADMINISTRATION NO LATER THAN 5:00 P.M. PACIFIC TIME
ON NOVEMBER 19, 2001 VIA FACSIMILE AT (408) 975-7836 OR HAND DELIVERY
TO STOCK ADMINISTRATION AT ONE ALMADEN BOULEVARD, 12th FLOOR,
SAN JOSE, CA 95113.
AGILE SOFTWARE CORPORATION WILL SEND AN E-MAIL
CONFIRMATION FOLLOWING RECEIPT
EX-99.(A)(5)
7
dex99a5.txt
FORM OF CHANGE OF ELECTION FORM
EXHIBIT (a)(5)
AGILE SOFTWARE CORPORATION
OFFER TO EXCHANGE OPTIONS
CHANGE OF ELECTION NOTICE
I previously received a copy of the Offer to Exchange and an Election Form.
I signed and returned the Election Form, in which I elected to accept Agile
Software Corporation's ("Agile's") offer to exchange (the "Offer") some of or
all of my options. I now wish to change that election and reject the Offer. I
understand that by signing this Notice and delivering it to Stock Administration
by 5:00 p.m. Pacific Time on November 19, 2001, I will have withdrawn my
acceptance of the Offer and will have rejected the Offer instead. I have read
and understand all the terms and conditions of the Offer. I have read and
understand the instructions attached to this Notice.
I understand that in order to reject the Offer, I must sign, date and
deliver this Notice via facsimile (fax # 408-975-7836) or hand delivery to Stock
Administration by 5:00 p.m. Pacific Time on November 19, 2001.
I understand that by rejecting the Offer, I will not receive any New
Options pursuant to the Offer and I will keep the Old Options that I have. These
options will continue to be governed by the stock option plan under which they
were granted and by the existing option agreements between Agile and me.
I understand that I may change this rejection of the Offer, and once again
accept the Offer, by submitting a new Election Form to Stock Administration via
facsimile (fax # 408-975-7836) prior to 5:00 p.m. Pacific Time on November 19,
2001. I have signed this Notice and printed my name exactly as it appears on the
Election Form.
I do not accept the Offer to exchange any options.
______________________ ______________________________________________________________
EMPLOYEE SIGNATURE NATIONAL INSURANCE/SOCIAL SECURITY/NATIONAL ID/TAX FILE NUMBER
____________________________ ______________________________ _____________________________
EMPLOYEE NAME (PLEASE PRINT) E-MAIL ADDRESS DATE AND TIME
RETURN TO STOCK ADMINISTRATION NO LATER THAN
5:00 P.M. PACIFIC TIME ON NOVEMBER 19, 2001 VIA FACSIMILE AT (408) 975-7836
AGILE SOFTWARE CORPORATION WILL SEND AN E-MAIL
CONFIRMATION AFTER RECEIPT
EX-99.(D)(1)
8
dex99d1.txt
AGILE SOFTWARE 1995 STOCK OPTION PLAN
Exhibit (d)(1)
AGILE SOFTWARE CORPORATION
1995 STOCK OPTION PLAN
(As Amended through April 2, 2001)
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1995 Stock Option Plan is intended to promote the interests of
Agile Software Corporation, a Delaware corporation, by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to remain in the service of the Corporation.
Unless otherwise defined herein, capitalized terms shall have the
meanings assigned to such terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
a Committee. Members of the Committee shall serve for such period of time as the
Board may determine and shall be subject to removal by the Board at any time.
The Board may also at any time terminate the functions of the Committee and
reassume all powers and authority previously delegated to the Committee.
B. Any officer of the Corporation shall have the authority to act on
behalf of the Corporation with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Corporation herein, provided the officer has apparent authority with
respect to such matter, right, obligation, determination or election.
C. In addition to any other powers set forth in the Plan and subject
to the provisions of the Plan, the Plan Administrator shall have the full and
final power and authority, in its discretion to:
1. establish such rules and regulations as it may deem
appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the Plan and any
outstanding option or stock issuance as it may deem necessary or advisable;
2. determine which eligible persons are to receive option
grants and stock issuances under the Plan, the time or times when such option
grants or stock issuances are to be made, the number of shares to be covered by
each such grant, the status of the granted option as either an Incentive Option
or a Non-Statutory Option, the time or times at which each option is to become
exercisable, the vesting schedule (if any) applicable to each option or stock
issuance, the maximum term for which the option is to remain outstanding;
3. amend, modify, extend, cancel, or renew, any option or stock
issuance or to waive any restrictions or conditions applicable to any option or
shares acquired pursuant to a stock issuance or upon the exercise of an option;
4. amend the exercisability of any option or the vesting of any
shares acquired upon the exercise of any option or pursuant to any stock
issuance, including with respect to the period following an Optionee's
termination of Service with the Corporation;
5. delegate to any proper officer of the Corporation the
authority to (a) grant one or more options or stock issuances, without further
approval of the Board, to any person eligible pursuant to Section II below,
other than a person who, at the time of such grant, is an Insider; provided,
however, that (i) such options and stock issuances shall not be granted to any
one person within any fiscal year of the Corporation in excess of such limits as
may be specified by the Plan Administrator, (ii) the exercise price per share of
each option shall be equal to the Fair Market Value per share of the Common
Stock on the effective date of grant (or, if the Common Stock has not traded on
such date, on the last day preceding the effective date of grant on which the
Common Stock was traded), and (iii) each option or stock issuance shall be
subject to the terms and conditions of the appropriate standard form of option
agreement or Issuance Agreement approved by the Board and shall conform to the
provisions of the Plan and such other guidelines as shall be established from
time to time by the Board and (b) extend the post-termination exercise period of
an option other than an option held by a person who is an Insider at the time of
such amendment; and
6. correct any defect, supply any omission or reconcile any
inconsistency in the Plan, any option agreement, or any stock issuance agreement
and to make all other determinations and take such other actions with respect to
the Plan or any option or stock issuance as the Board may deem advisable to the
extent not inconsistent with the provisions of the Plan or applicable law.
Decisions of the Plan Administrator shall be final and binding on all
parties who have an interest in the Plan or any option, stock issuance, or
shares issued thereunder.
D. With respect to participation by Insiders in the Plan, at any time
that any class of equity security of the Corporation is registered pursuant to
Section 12 of the 1934 Act, the Plan shall be administered in compliance with
the requirements, if any, of Rule 16b-3 of the 1934 Act.
E. If the Corporation (or Parent or Subsidiary corporation) is a
"publicly held corporation" within the meaning of Section 162(m) of the Code,
the Board may establish a Committee of "outside directors" within the meaning of
Section 162(m) of the Code to approve the grant of any option or stock issuance
which might reasonably be anticipated to result in the payment of employee
remuneration that would otherwise exceed the limit on employee remuneration
deductible for income tax purposes pursuant to Section 162(m).
F. In addition to such other rights of indemnification as they may have
as members of the Board or officers or employees of the Corporation (or Parent
or Subsidiary corporation), members of the Board and any officers or employees
of the Corporation (or Parent or Subsidiary corporation) to whom authority to
act for the Board or the Corporation is delegated shall be
2
indemnified by the Corporation against all reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Corporation) or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, except in relation to matters as to which it shall
be adjudged in such action, suit or proceeding that such person is liable for
gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Corporation, in writing, the
opportunity at its own expense to handle and defend the same.
III. ELIGIBILITY
A. Employees, Consultants and non-employee Directors are eligible to
receive option grants pursuant to the option Grant Program and/or stock
issuances under the Stock Issuance Program.
B. For purposes of the foregoing sentence, Employees, Consultants, and
non-employee Directors shall include prospective Employees, prospective
Consultants and prospective non-employee Directors to whom options and/or stock
issuances are granted in connection with written offers of employment or other
service relationship with the Corporation or any Parent or Subsidiary
corporation. Eligible persons may be granted more than one (1) option and/or
stock issuance.
IV. STOCK SUBJECT TO THE PLAN
A. The maximum number of shares of Common Stock which may be issued
over the term of the Plan shall not exceed 9,750,000 shares, cumulatively
increased on the first day of each fiscal year of the Corporation which begins
on or after May 1, 2000 by an amount equal to the lesser of (a) one million
(1,000,000) shares, (b) five percent (5%) of the number of shares of Common
Stock issued and outstanding on the last day of the immediately preceding fiscal
year, or (c) a lesser amount of shares determined by the Board, and shall
consist of authorized but unissued or reacquired shares of Common Stock, or any
combination thereof. Based on the foregoing, the Plan has a cumulative reserve
of 11,750,000 shares, which is equal to the sum of the fixed reserve of
9,750,000 shares, plus the annual increase of 1,000,000 shares on each of May 1,
2000 and May 1, 2001. If an outstanding option for any reason expires or is
terminated or canceled or if shares of stock are acquired upon the exercise of
an option or pursuant to a stock issuance are subject to repurchase by the
Corporation and are repurchased by the Corporation, the shares of stock
allocable to the unexercised portion of such option or such repurchased shares
of stock shall again be available for issuance under the Plan.
B. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of
3
securities issuable under the Plan, (ii) the number and/or class of securities
and the exercise price per share in effect under each outstanding option, and
(iii) the number and/or class of securities acquired pursuant to each stock
issuance that are subject to vesting and/or a repurchase right of the
Corporation, in order to prevent the dilution or enlargement of benefits
thereunder. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive. In no event shall any such adjustments be made in
connection with the conversion of one or more outstanding shares of the
Corporation's preferred stock into shares of Common Stock.
ARTICLE TWO
OPTION GRANT PROGRAM
--------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
--------
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, comply with the terms of the Plan
applicable to Incentive Options.
A. Exercise Price.
--------------
1. The exercise price per share shall be determined by the Plan
Administrator.
2. The exercise price shall become immediately due upon exercise of the
option and shall, subject to the documents evidencing the option, be made:
a. in cash, cash equivalent, or check made payable to the
Corporation;
b. in shares of Common Stock held for the requisite period necessary
to avoid a charge to the Corporation's earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date;
c. to the extent the option is exercised for vested shares, through a
special sale and remittance procedure pursuant to which the Optionee shall
concurrently provide irrevocable instructions (a) to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
shares plus all applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise and (b) to
the Corporation to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale;
d. provided that the person to whom the Option is granted is an
Employee and in the Corporation's sole discretion at the time the Option is
exercised, by delivery of a promissory note in a form approved by the
Corporation for the aggregate exercise price, provided that, (1) any promissory
note used to pay the exercise price shall be subject to the
4
provisions of paragraph A.3 below, and (2) if the Corporation is incorporated in
the State of Delaware, the portion of the aggregate exercise price not less than
the par value of the shares being acquired shall be paid in cash;
e. by such other consideration as may be approved by the Board from
time to time to the extent permitted by applicable law; or
f. by any combination thereof.
The Board may at any time or from time to time, grant options which do not
permit all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.
3. No promissory note shall be permitted if the exercise of an
option using a promissory note would be a violation of any law. Any permitted
promissory note shall be on such terms as the Board shall determine at the time
the option is granted. The Board shall have the authority to permit or require
the Optionee to secure any promissory note used to exercise an option with the
shares of stock acquired upon the exercise of the option or with other
collateral acceptable to the Corporation. Unless otherwise provided by the
Board, if the Corporation at any time is subject to the regulations promulgated
by the Board of Governors of the Federal Reserve System or any other
governmental entity affecting the extension of credit in connection with the
Corporation's securities, any promissory note shall comply with such applicable
regulations, and the Optionee shall pay the unpaid principal and accrued
interest, if any, to the extent necessary to comply with such applicable
regulations.
B. Exercise and Term of Options. Each option shall be exercisable at such
----------------------------
time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant; provided, however, that no option granted to a prospective
Employee, prospective Consultant, prospective non-employee Director may become
exercisable prior to the date on which such person commences services with the
Corporation (or any Parent or Subsidiary corporation).
C. Effect of Termination of Service. The following provisions shall govern
--------------------------------
the exercise of any options held by the Optionee at the time of cessation of
Service or death except as otherwise set forth in the Stock Option Agreement:
1. Should the Optionee cease to remain in Service for any reason
other than Disability, death or Misconduct, then the Optionee shall have a
period of three (3) months following the date of such cessation of Service
during which to exercise each outstanding option held by such Optionee.
2. Should such Service terminate by reason of Disability, then the
Optionee shall have a period of twelve (12) months following the date of such
cessation of Service during which to exercise each outstanding option held by
such Optionee.
3. Should the Optionee die while holding one or more outstanding
options, then the personal representative of the Optionee's estate or the person
or persons to whom the option is transferred pursuant to the Optionee's will or
in accordance with the laws of descent
5
and distribution shall have a period of twelve (12) months following the date of
the Optionee's death during which to exercise each such option.
4. Notwithstanding the foregoing, if the exercise of an Option within
the applicable time periods set forth above is prevented by the provisions of
Section V of Article Four below, the option shall remain exercisable until three
(3) months after the date the Optionee is notified by the Corporation that the
option is exercisable, but in any event no later than the specified expiration
of the option term.
5. Notwithstanding the foregoing, if a sale within the applicable time
periods set forth above of shares acquired upon the exercise of the option would
subject the Optionee to suit under Section 16(b) of the 1934 Act, the option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of Service, or (iii) the specified expiration
of the option term.
6. Under no circumstances, however, shall any option be exercisable
after the specified expiration of the option term.
7. During the applicable post-Service exercise period, the option may
not be exercised in the aggregate for more than the number of vested shares for
which the option is exercisable on the date of the Optionee's cessation of
Service. Upon the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's cessation
of Service, terminate and cease to be outstanding to the extent it is not
exercisable for vested shares on the date of such cessation of Service.
8. Should Optionee's Service be terminated for Misconduct, then all
outstanding options held by the Optionee shall terminate immediately and cease
to remain outstanding.
D. Stockholder Rights. The holder of an option shall have no stockholder
------------------
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.
E. Transferability of Options. During the lifetime of the Optionee, an
--------------------------
option shall be exercisable only by the Optionee or the Optionee's guardian or
legal representative. No option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Board, in its
discretion, and set forth in the option agreement evidencing such option, a
Non-Statutory Option shall be assignable or transferable subject to the
applicable limitations, if any, described in the General Instructions to Form
S-8 Registration Statement under the Securities Act.
F. Withholding. The Corporation's obligation to deliver shares of Common
-----------
Stock upon the exercise of any options granted under the Plan shall be subject
to the satisfaction of all applicable federal, state, local, and foreign income
and employment tax withholding requirements.
6
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
the Plan shall be applicable to Incentive Options. Options which are
specifically designated as Non-Statutory Options shall not be subject to the
terms specified in this Section II.
A. Eligibility. Incentive Options may only be granted to Employees. Any
-----------
person who is not an Employee on the effective date of the grant of an option to
such person may be granted only a Non-Statutory Option. An Incentive Option
granted to a prospective Employee upon the condition that such person become an
Employee shall be deemed granted effective on the date such person commences
service as an Employee with the Corporation or Parent or Subsidiary corporation,
with an exercise price determined as of such date.
B. Exercise Price. The exercise price per share shall be fixed by the Plan
--------------
Administrator in accordance with the following provisions:
1. The exercise price per share shall not be less than one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. If the person to whom the option is granted is a Ten Percent
Stockholder, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock on
the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the shares of
-----------------
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary corporation) may for the
first time become exercisable as Incentive Options during any one (1) calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. Term of Incentive Options. No Incentive Option shall be exercisable
-------------------------
after the expiration of ten (10) years after the effective date of grant of such
Incentive Option and no Incentive Option granted to a Ten Percent Stockholder
shall be exercisable after the expiration of five (5) years after the effective
date of grant of such option.
ARTICLE THREE
STOCK ISSUANCE PROGRAM
----------------------
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock shall be issued under the Stock Issuance Program
through direct and immediate purchases without any intervening stock options
grants. The issued shares
7
shall be evidenced by a Stock Issuance Agreement ("Issuance Agreement") that
complies with the terms and conditions of this Article Three.
A. Consideration.
-------------
Shares of Common Stock shall be issued under the Plan for one or more of
the following items of consideration, which the Plan Administrator may deem
appropriate in each individual instance:
1. cash or cash equivalents (such as a personal check or bank draft)
paid to the Corporation;
2. Common Stock of the Corporation valued at Fair Market Value on the
date of issuance;
3. a promissory note payable to the Corporation's order in one or more
installments, which may be subject to cancellation in whole or in part upon
terms and conditions established by the Plan Administrator;
4. past services rendered to the Corporation or any parent or subsidiary
corporation; or
5. any combination of the above approved by the Plan Administrator.
Shares may, in the absolute discretion of the Plan Administrator, be
issued for consideration with a value less than one-hundred percent (100%) of
the Fair Market Value of such shares, but in no event less than eighty-five
percent (85%) of such Fair Market Value.
B. Vesting Provisions.
------------------
1. Shares of Common Stock issued under this Article Three may, in the
absolute discretion of the Plan Administrator, be fully and immediately vested
upon issuance or may vest in one or more installments over the Participant's
period of Service. The effect which death, disability or other event designated
by the Plan Administrator is to have upon the vesting schedule shall be
determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.
2. The Participant shall have full stockholder rights with respect to
any shares of Common Stock issued to him or her under this Article Three,
whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares by reason of any stock dividend, stock split,
reclassification of Common Stock or other similar change in the Corporation's
capital structure or by reason of any Corporate Transaction shall be issued,
subject to (i) the same vesting requirements applicable to his or her unvested
shares and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.
8
3. Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock under this Article Three, then those
shares shall be immediately surrendered to the Corporation for cancellation, and
the Participant shall have no further stockholder rights with respect to those
shares. The Corporation shall repay to the Participant the cash consideration
paid for the surrendered shares and shall cancel the principal balance of any
outstanding purchase-money note of the Participant to the extent attributable to
such surrendered shares. The surrendered shares may, at the Plan Administrator's
discretion, be retained by the Corporation as treasury shares or may be retired
to authorized but unissued share status.
4. The Plan Administrator may in its discretion elect to waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which should otherwise occur upon the
non-completion of the vesting schedule applicable to such shares. Such waiver
shall result in the immediate vesting of the Participant's interest in the
shares of Common Stock as to which the waiver applies. Such wavier may be
effected at any time, whether before or after the Participant's cessation of
Service.
II. TRANSFER RESTRICTIONS/SHARE ESCROW
A. Certificates evidencing unvested shares issued pursuant to this
Article Three may, in the Plan Administrator's discretion, be held in escrow by
the Corporation until the Participant's interest in such shares vests or may be
held directly to the Participant with restrictive legends indicating that the
shares are unvested. To the extent an escrow arrangement is utilized, the
unvested shares and any securities or other assets issued with respect to such
shares (other than regular cash dividends) shall be delivered in escrow to the
Corporation to be held until the Participant's interest in such shares (or other
securities or assets) vests. Alternatively, if the unvested shares are issued
directly to the Participant, the restrictive legend on the certificates for such
shares shall read substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE
ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS AND TO (II)
CANCELLATION OR OTHER REPURCHASE IN THE EVENT THE REGISTERED HOLDER
(OR HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE
CORPORATION'S SERVICE. SUCH TRANSFER RESTRICTIONS AND THE TERMS AND
CONDITIONS OF SUCH CANCELLATION OR REPURCHASE ARE SET FORTH IN A
STOCK ISSUANCE AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED
HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) DATED _______________,
19__, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION."
B. The Participant shall have no right to transfer any unvested shares
of Common Stock issued to him or her under this Article Three. For purposes of
this restriction, the term ("transfer") shall include (without limitation) any
sale, pledge, assignment, encumbrance, gift, or other disposition of such
shares, whether voluntary or involuntary, other than an Ownership Change Event.
Upon any such attempted transfer, the unvested shares shall immediately be
9
cancelled, and neither the Participant nor the proposed transferee shall have
any rights with respect to those shares. However, the Participant shall have the
right to make a gift of unvested shares acquired under the Plan to his or her
spouse or issue, including adopted children, or to a trust established for such
spouse or issue, provided the donee of such shares delivers to the Corporation a
written agreement to be bound by all the provisions of the Plan and the Issuance
Agreement applicable to the gifted shares.
ARTICLE FOUR
MISCELLANEOUS
-------------
I. CORPORATE TRANSACTIONS
A. The shares subject to each option outstanding under the Plan at the time
of a Corporate Transaction shall automatically vest in full so that each such
option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, the shares subject to an
outstanding option shall not vest on such an accelerated basis if and to the
extent: (i) such option is assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and the Corporation's repurchase rights
with respect to the unvested option shares are concurrently assigned to such
successor corporation (or parent thereof) or (ii) such option is to be replaced
with a cash incentive program of the successor corporation which preserves the
spread existing on the unvested option shares at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to those unvested option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant.
B. All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. The Corporation shall use its best efforts to provide at least twenty
(20) days prior written notice of the occurrence of any Corporate Transaction in
which the options or repurchase rights under the Plan are not to be assumed by
or assigned to the successor corporation and such options or repurchase rights
vest or terminate on an accelerated basis.
D. Immediately following the consummation of the Corporate Transaction, all
outstanding options shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation (or parent thereof).
E. Each option which is assumed in connection with a Corporate Transaction
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply to the number and class of securities which would have been issuable to
the Optionee in consummation of such Corporate Transaction, had the option been
exercised immediately prior to such Corporate
10
Transaction. Appropriate adjustments shall also be made to (i) the number and
class of securities available for issuance under the Plan following the
consummation of such Corporate Transaction and (ii) the exercise price payable
per share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same.
F. The Plan Administrator shall have the discretion, exercisable either at
the time the option or stock issuance is granted or at any time while the option
remains outstanding or shares acquired pursuant to a stock issuance are
unvested, to provide for the automatic acceleration (in whole or in part) of one
or more outstanding options and the immediate termination of the Corporation's
repurchase rights with respect to the shares subject to those options or any
stock issuance upon the occurrence of a Corporate Transaction, whether or not
those options or repurchase rights are to be assumed or assigned in the
Corporate Transaction.
G. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option or stock issuance is granted or at any
time while the option remains outstanding or shares acquired pursuant to a stock
issuance are unvested, to structure such option or stock issuance so that the
shares subject to that option or stock issuance will automatically vest on an
accelerated basis should the Optionee's or Participant's Service terminate by
reason of an Involuntary Termination, as defined in the agreement evidencing the
option or stock issuance, within a designated period (not to exceed eighteen
(18) months) following the effective date of any Corporate Transaction in which
the option or stock issuance are assumed and the repurchase rights applicable to
the unvested option shares or stock issuance shares do not otherwise terminate.
Any option so accelerated shall remain exercisable for the fully-vested option
shares until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination. In addition, the Plan Administrator may provide that
one or more of the Corporation's outstanding repurchase rights with respect to
shares held by the Optionee or Participant at the time of such Involuntary
Termination shall immediately terminate on an accelerated basis, and the shares
subject to those terminated rights shall accordingly vest at that time.
H. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under
federal tax laws.
I. The grant of options or stock issuances under the Plan shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
II. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan became effective when adopted by the Board on May 8, 1995.
B. The Plan shall terminate upon the earliest of: (i) the date on which all
shares available for issuance under the Plan have been issued and all
restrictions on such shares under
11
the terms of the Plan and the agreements evidencing options or stock issuances
granted under the Plan have lapsed, or (ii) its termination by the Board;
provided, however, that, all Incentive Options shall be granted, if at all, on
or before May 7, 2005.
III. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to amend
or modify the Plan in any or all respects. However, subject to changes in
applicable law, regulations or rules that would permit otherwise, without the
approval of the Corporation's stockholders, there shall be (i) no increase in
the maximum aggregate number of shares of Common Stock that may be issued under
the Plan (except by operation of the provisions of Section IV(C) of Article
One), (ii) no change in the class of persons eligible to receive Incentive
Options, and (iii) no other amendment of the Plan that would require approval of
the Corporation's stockholders under any applicable law, regulation or rule. No
amendment or modification of the Plan shall affect any then outstanding option
or unvested shares acquired pursuant to a stock issuance unless expressly
provided by the Board. In any event, no amendment or modification of the Plan
may adversely affect any then outstanding option or unvested shares acquired
pursuant to a stock issuance without the consent of the Optionee or Participant,
unless such amendment or modification is required to enable an option designated
as an Incentive Option to qualify as an Incentive Option or is necessary to
comply with any applicable law, regulation or rule.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.
V. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option hereunder and
the issuance of any shares of Common Stock upon the exercise of any option shall
be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it and the shares of Common Stock issued pursuant to it.
VI. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or Participant any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary corporation employing or retaining the Optionee or Participant) or of
the Optionee or Participant, which rights are hereby expressly reserved by each,
to terminate the Optionee's or Participant's Service at any time for any reason,
with or without cause.
12
VII. FINANCIAL REPORTS
Each Optionee shall be given access to information concerning the
Corporation equivalent to that information generally made available to the
Corporation's common stockholders.
13
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
-----
B. Code shall mean the Internal Revenue Code of 1986, as amended.
----
C. Committee shall mean a committee of the Board duly appointed to
---------
administer the Plan and having such powers as shall be specified by the Board.
Unless the powers of the Committee have been specifically limited, the Committee
shall have all of the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law.
D. Common Stock shall mean the Corporation's common stock.
------------
E. Consultant shall mean a person engaged to provide consulting or advisory
----------
services (other than as an Employee or a Director) to the Corporation or any
Parent or Subsidiary corporation, provided that the identity of such person, the
nature of such services or the entity to which such services are provided would
not preclude the Corporation from offering or selling securities to such person
pursuant to the Plan in reliance on either the exemption from registration
provided by Rule 701 under the Securities Act or, if the Corporation is required
to file reports pursuant to Section 13 or 15(d) of the Exchange Act,
registration on a Form S-8 Registration Statement under the Securities Act.
F. Corporate Transaction shall mean an Ownership Change Event or a series
---------------------
of related Ownership Change Events (collectively, a "Transaction") wherein the
stockholders of the Corporation immediately before the Transaction do not retain
immediately after the Transaction, in substantially the same proportions as
their ownership of shares of the Corporation's voting stock immediately before
the Transaction, direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding voting stock
of the Corporation or the corporation or corporations to which the assets of the
Corporation were transferred (the "Transferee Corporation(s)"), as the case may
be. For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
stock of one or more corporations which, as a result of the Transaction, own the
Corporation or the Transferee Corporation(s), as the case may be, either
directly or through one or more subsidiary corporations. The Board shall have
the right to determine whether multiple sales or exchanges of the voting stock
of the Corporation or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.
G. Corporation shall mean Agile Software Corporation, a Delaware
-----------
corporation, and any successor corporation thereto.
H. Director shall means a member of the Board or of the board of directors
--------
of any other Parent or Subsidiary corporation.
A-1
I. Disability shall mean the permanent and total disability on the Optionee
----------
or Participant within the meaning of Section 22(e)(3) of the Code.
J. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary corporation), subject to the control
and direction of the employer entity as to both the work to be performed and the
manner and method of performance.
K. Exercise Date shall mean the date on which the Corporation shall have
-------------
received written notice of the ption exercise.
L. Fair Market Value per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by the
Plan Administrator to be the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any Stock
Exchange nor traded on the Nasdaq National Market, then the Fair Market Value
shall be determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate.
M. Incentive Option shall mean an option which satisfies the requirements
----------------
of Code Section 422.
N. Insider shall mean an officer or Director of the Corporation or any
-------
other person whose transactions in Common Stock are subject to Section 16 of the
1934 Act.
O. Involuntary Termination shall mean the termination of the Service of any
-----------------------
individual as defined in the greement evidencing the option or stock issuance.
P. Misconduct shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by the Optionee or Participant, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary corporation), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary corporation) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the
A-2
Corporation (or any Parent or Subsidiary corporation) may consider as grounds
for the dismissal or discharge of any Optionee, Participant or other person in
the Service of the Corporation (or any Parent or Subsidiary corporation).
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
--------
R. Non-Statutory Option shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
S. Ownership Change Event shall be deemed to have occurred if any of the
----------------------
following occurs with respect to the Corporation: (i) the direct or indirect
sale or exchange in a single or series of related transactions by the
stockholders of the Corporation of more than fifty percent (50%) of the voting
stock of the Corporation; (ii) a merger or consolidation in which the
Corporation is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Corporation; or (iv) a liquidation or
dissolution of the Corporation.
T. Optionee shall mean any person to whom an option is granted pursuant to
--------
the Option Grant Program under the Plan.
U. Parent shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Participant shall mean any person to whom a stock issuance or stock
-----------
bonus is granted pursuant to the Stock Issuance Program under the Plan.
W. Plan shall mean the Corporation's 1995 Stock Option Plan, as set forth
----
in this document.
X. Plan Administrator shall mean either the Board or the Committee, to the
------------------
extent the Committee is at the time responsible for the administration of the
Plan.
Y. Securities Act shall mean the Securities Act of 1933, as amended.
--------------
Z. Service shall mean an Optionee's or Participant's employment or service
-------
with the Corporation or Parent or Subsidiary corporation, whether in the
capacity of an Employee, a Director or a Consultant. Unless otherwise determined
by the Board, an Optionee's or Participant's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee or
Participant renders Service to the Corporation or Parent or Subsidiary
corporation or a change in the Corporation or Parent or Subsidiary corporation
for which the Optionee or Participant renders such Service, provided that there
is no interruption or termination of the Optionee's or Participant's Service.
Furthermore, an Optionee's or Participant's Service with the Corporation or
Parent or Subsidiary corporation shall not be deemed to have terminated if the
Optionee or Participant takes any military leave, sick leave, or other bona fide
leave of absence approved by the Corporation; provided, however, that if any
such leave exceeds ninety (90) days, on the one hundred eighty-first (181st) day
following the
A-3
commencement of such leave any Incentive Option held by the Optionee shall cease
to be treated as an Incentive Option and instead shall be treated thereafter as
a Non-Statutory Option unless the Optionee's right to return to Service with the
Corporation or Parent or Subsidiary corporation is guaranteed by statute or
contract. Notwithstanding the foregoing, unless otherwise designated by the
Corporation or required by law, a leave of absence shall not be treated as
Service for purposes of determining vesting under the Optionee's option
agreement or Participant's stock issuance agreement. An Optionee's or
Participant's Service shall be deemed to have terminated either upon an actual
termination of Service or upon the corporation for which the Optionee or
Participant performs Service ceasing to be a Parent or Subsidiary. Subject to
the foregoing, the Corporation, in its discretion, shall determine whether an
Optionee's or Participant's Service has terminated and the effective date of
such termination.
AA. Stock Exchange shall mean either the American Stock Exchange or the New
--------------
York Stock Exchange.
BB. Subsidiary shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
CC. Ten Percent Stockholder shall mean the owner of stock (as determined
-----------------------
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary corporation).
A-4
EX-99.(D)(2)
9
dex99d2.txt
AGILE SOFTWARE 1995 STOCK OPTION PLAN PROSPECTUS
Exhibit (d)(2)
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.*
Agile Software Corporation
1995 Stock Option Plan
This memorandum contains information regarding the Agile Software
Corporation 1995 Stock Option Plan (the "Plan"), pursuant to which shares of
Common Stock of Agile Software Corporation (the "Shares"), in any combination of
authorized but unissued Shares or reacquired Shares, may be offered to eligible
persons providing services for Agile Software Corporation (the "Company") or any
parent or subsidiary corporation of the Company.
Upon written or oral request, the Company will provide without charge,
to each person to whom a copy of this memorandum is delivered, a copy of the
Company's Registration Statement by which the securities described in this
memorandum are registered and copies of the documents that have been
incorporated by reference in the Company's Registration Statement (not including
exhibits to the documents that are incorporated by reference unless such
exhibits are specifically incorporated by reference into the documents that the
Registration Statement incorporates). Upon written or oral request, the Company
will also provide without charge, to each person to whom a copy of this
memorandum is delivered, an additional copy of this memorandum, a copy of the
Company's annual report to stockholders for its latest fiscal year, and a copy
of all reports, proxy statements and other communications distributed to its
stockholders for its latest fiscal year and a copy of all reports, proxy
statements and other communications distributed to its stockholders generally.
Such requests should be directed to Chief Financial Officer, Agile Software
Corporation, One Almaden Boulevard, San Jose, CA 95113, (408) 975-3900.
Alternatively, on the Securities and Exchange Commission's web site at
http:\\www.sec.gov you will find the Registration Statement, reports, proxy
statements and other information regarding the Company that was filed
electronically.
Except for the person set forth in the foregoing paragraph, no person
has been authorized to give any information or make any representations, other
than those contained in this prospectus, in connection with the Plan, and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company. This prospectus does not constitute an
offering in any state in which such offering may not lawfully be made.
-------------------------------------------------------------------------------
* Q&As 46 and 51 OF THIS DOCUMENT DO NOT CONSTITUTE A PART OF A
------
PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
-------------------------------------------------------------------------------
The date of this prospectus is April 2, 2001.
---------------------------------------------
TABLE OF CONTENTS
Page
----
INTRODUCTION ............................................................ 1
ELIGIBILITY & PARTICIPATION ............................................. 2
OPTION GRANTS ........................................................... 3
OPTION VESTING .......................................................... 4
OPTION EXERCISE ......................................................... 5
TERMINATING SERVICE WITH THE COMPANY .................................... 7
TRANSFERABILITY OF OPTIONS .............................................. 9
CORPORATE TRANSACTION OF THE COMPANY .................................... 9
RESTRICTED SHARES ....................................................... 10
VESTING OF RESTRICTED SHARES ............................................ 11
TRANSFERABILITY OF RESTRICTED SHARES .................................... 12
STOCK SALES ............................................................. 13
STOCKHOLDER RIGHTS ...................................................... 13
EMPLOYMENT STATUS ....................................................... 14
TAX IMPLICATIONS OF NON-STATUTORY OPTIONS ............................... 14
TAX IMPLICATIONS OF INCENTIVE OPTIONS ................................... 16
TAX IMPLICATIONS OF RESTRICTED SHARES ................................... 19
FEDERAL SECURITIES LAWS AFFECTING PARTICIPANTS .......................... 20
PLAN ADMINISTRATION ..................................................... 21
AMENDMENT OR TERMINATION OF THE PLAN .................................... 22
OTHER INFORMATION ....................................................... 23
Questions & Answers About
The Agile Software Corporation 1995 Stock Option Plan
================================================================================
The purpose of this prospectus is to provide you with a summary of the
terms of the Agile Software Corporation 1995 Stock Option Plan (the "Plan").
Should any inconsistency exist between the following description and the actual
terms of the Plan, your Stock Option Agreement or your Stock Issuance Agreement,
the terms of the Plan, your Stock Option Agreement and your Stock Issuance
Agreement control.
================================================================================
INTRODUCTION
================================================================================
1. What is the purpose of the Plan?
The Company adopted the Plan to promote the interests of the Company by
providing eligible persons with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest in the Company,
as an incentive for them to remain in service with the Company. Under the
Plan, the Company may award option grants or issue Shares ("Restricted
Shares") at a specified price ("Award") to any such employees, consultants,
and non-employee directors selected by the Company's Board of Directors
(the "Board") or a committee duly appointed by the Board to administer the
Plan (collectively, the "Plan Administrator").
The 1995 Stock Option Plan became effective when adopted by the Board on
May 8, 1995.
2. What is the total number of Shares that may be issued under the Plan?
Currently, a total of 11,750,000 Shares are reserved for issuance under the
Plan. This amount will be increased on May 1 of each year by the lessor of
1,000,000 shares, 5% of the number of shares issued and outstanding on
April 30th of each year, or a lesser amount determined by the Board. The
Shares may be authorized but unissued Shares, or reacquired Shares,
including Shares purchased on the open market.
3. What happens if there is a change in the Company's capital structure?
If there is a change in the Company's capital structure, the Company will
make appropriate adjustments to (i) the number and class of Shares subject
to the Plan, (ii) your outstanding options, and to the purchase price under
your outstanding options, and (iii) the number and class of Shares acquired
pursuant to a stock issuance that is subject
1
to vesting or a repurchase right of the Company. These adjustments will
prevent any dilution or enlargement of your rights and benefits under the
Plan that would otherwise occur as a result of a change in the Company's
capital structure. In no event will any adjustments be made in connection
with the conversion of outstanding shares of the Company's preferred stock
into shares of common stock.
A "change in the Company's capital structure" includes: a stock dividend,
stock split, recapitalization, combination, exchange of Shares, or similar
change affecting the Company's stock.
4. Is the Plan subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA")?
No. The Plan is not subject to ERISA.
================================================================================
ELIGIBILITY & PARTICIPATION
================================================================================
5. Am I eligible to receive Awards under the Plan?
You are eligible to receive a nonstatutory stock option ("Non-Statutory
Option") or an issuance of Restricted Shares under the Plan if you are a
current or prospective (pursuant to a written offer of employment)
employee, consultant or non-employee director of the Company or any parent
or subsidiary corporation of the Company.
If you are an employee or prospective employee of the Company or any parent
or subsidiary corporation of the Company, you are also eligible to receive
an incentive stock option ("Incentive Option"). Incentive Options granted
to a prospective employee are deemed granted on the date services with the
Company or parent or subsidiary corporation commence.
6. Do I need to enroll in the Plan?
No. You do not need to enroll in the Plan in order to receive an Award
under the Plan. The decision to grant or not to grant Awards to any
otherwise eligible person is solely within the discretion of the Plan
Administrator.
2
================================================================================
OPTION GRANTS
================================================================================
7. What is a stock option?
A stock option gives the option holder the right to purchase a specified
number of Shares within a specified time period at a price determined at
the time the option is granted. The exact number and the price of Shares
you are entitled to purchase under the option granted to you is set forth
in your Grant Notice and Stock Option Agreement (together, your "Stock
Option Agreement").
8. Are there different kinds of stock options?
Yes. The Plan authorizes both Incentive Options, which must meet certain
requirements under Section 422 of the Internal Revenue Code of 1986, as
amended, and Non-Statutory Options, which do not have to meet those
requirements. Your Stock Option Agreement will indicate whether your option
is intended to be an Incentive Option or a Non-Statutory Option. Please be
aware, however, that due to Internal Revenue Code limitations imposed on
Incentive Options, an option initially intended to be an Incentive Option
may not in fact qualify, and may instead be a Non-Statutory Option in full
or in part. In particular, if the aggregate exercise price of all your
Incentive Options exceeds $100,000, you should verify with the Company
whether or not all of your Incentive Options actually qualify as Incentive
Options. A Non-Statutory Option is a type of option that does not provide
the special tax treatment accorded to Incentive Options. See Q&A 53 through
68 regarding the major federal income tax consequences of Incentive Options
and Non-Statutory Options.
9. What are the benefits of receiving a stock option?
If the value of the Company increases, then the value of the Company's
stock and the value of your option will increase proportionately. Since
your option gives you the right to purchase Shares at a fixed price during
the period specified in your Stock Option Agreement, you may ultimately
profit from any increase in the value of the Shares. If you choose to
exercise your option, then, as a stockholder, you will become a part owner
of the Company and will have the right to receive any dividends paid on
your Shares and all communications sent to the Company's common
stockholders, attend all stockholder meetings and vote upon all matters
presented to the stockholders at such meetings. However, once you purchase
Shares, you also bear the risk of price declines.
3
10. What is the Grant Date?
The Grant Date is the day that the Company grants you an option to purchase
Shares unless the Board specifies a later effective date. Your Grant Date
is stated in your Grant Notice.
11. How many Shares does my option cover?
The number of Shares covered by each option is determined by the Plan
Administrator at its discretion. If you are granted an option, the number
of Shares subject to your option is stated in your Grant Notice.
12. What is the Option Expiration Date?
The option Expiration Date is the last day on which you may exercise your
option, unless your option has terminated on an earlier date due to your
termination of service or other events described in your Stock Option
Agreement.
13. Must I sign a Stock Option Agreement?
Yes. No option is valid or a binding obligation of the Company unless
evidenced by a fully executed Stock Option Agreement.
================================================================================
OPTION VESTING
================================================================================
14. What are the vesting provisions of my option?
Your Grant Notice states the rate at which your option vests and becomes
exercisable. [Most options granted under the Plan provide for vesting over
a period of five years. For example, if you received an initial option
grant as a new employee, your Stock Option Agreement may provide that 20%
of the Shares subject to the option become vested on an "initial vesting
date," provided that your service has not terminated prior to that date.
For each of the next 48 full months of your continuous service from the
"initial vesting date," your option would vest at a rate of 0.02% per month
until the vested percentage equals 100%.]
15. Does my termination from service affect the vesting of my option?
Yes. Upon your termination of service, your vesting will stop and the
vested percentage of your option will depend on your length of service at
the date of your termination.
4
16. What happens if I take a leave of absence?
Generally, if you take any military leave, sick leave, or other bona fide
leave approved by the Company of 90 days or less, your service for Plan
purposes will continue but will not be treated as service for purposes of
vesting. If your leave of absence exceeds 90 days, your service will be
deemed terminated on the 91st day of such leave unless your right to
reemployment remains guaranteed by statute or contract. See Q&A 52, below.
================================================================================
OPTION EXERCISE
================================================================================
17. What is my option exercise date?
The exercise date is the day that you exercise your option to purchase the
Company common stock.
18. When may I exercise my option?
You may exercise your option on or after your initial vest date, as stated
in your Stock Option Agreement, and prior to the option Expiration Date. If
you were granted an option as a prospective employee, prospective
consultant or prospective non-employee director, you may not in any event
exercise your option prior to the date on which your service commences. You
must exercise an Incentive Option within ten (10) years of the Grant Date
of such option. In addition, if you own more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation of the Company, you must exercise your
Incentive Option within five (5) years from the Grant Date of such option.
19. Are there any limitation to my option grant?
Yes. The aggregate fair market value of Shares granted to you as an
Incentive Option and become exercisable in any one calendar year may not
exceed $100,000. To the extent you hold two or more Incentive Options that
become exercisable in the same calendar year, the limitation will be
applied on the basis of the order in which the Incentive Options were
granted.
20. How many Shares may I purchase?
When you exercise your option, you may purchase up to a number of Shares
equal to the number of Shares subject to your option multiplied by your
vested percentage, less the number of Shares you previously acquired by
exercising your option. See Q&A 12 & 14 for a discussion of the Expiration
Date and vesting.
5
21. How do I exercise my option?
To exercise your option you must give written notice to the Company and pay
the exercise price for the Shares you are purchasing. The notice must state
your election to exercise the option, the number of Shares you are
purchasing and any other information required by your Stock Option
Agreement. You must sign the written notice and deliver it in person, by
certified or registered mail, return receipt requested, by confirmed
facsimile transmission, or by such other means as the Company may permit,
to an authorized representative of the Company. You must deliver the
written notice and your exercise price payment prior to the termination of
the option. You must also make appropriate arrangements with the Company
for the satisfaction of all federal, state, local and foreign income and
employment tax withholding requirements applicable to the option exercise.
See Q&A 23, below for authorized forms of payment.
22. What is the exercise price of my option?
The exercise price shall be determined by the Plan Administrator. The
exercise price of your option is stated in your Grant Notice. This price
was established when your option was granted. Under the terms of the Plan,
if your option is an Incentive Option, the price has to be set at no less
than the "fair market value" of a Share on the Grant Date.
If you own more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any parent or subsidiary
corporation of the Company, the price of an Incentive Option has to be set
at one hundred ten percent (110%) of the fair market value of a Share on
the Grant Date.
The "fair market value" for this purpose is generally the closing sale
price of a share on the applicable date as quoted on the Nasdaq National
Market.
23. How do I pay for the stock when I exercise my option?
Generally, you may pay the exercise price using any combination of the
following methods:
1. Cash, cash equivalent or check made payable to the Company.
2. If you are an employee, and in the Company's sole discretion at
the time of exercise, by promissory note in a form approved by
the Company; provided that, you must pay the portion of the
aggregate exercise price that is equal to the par value of the
Shares being purchased in cash.
3. In shares of common stock held for the requisite period necessary
to avoid a charge to the Company's earnings for financial
reporting purposes and valued at Fair Market Value on the
Exercise Date.
6
4. A "cashless exercise." A "cashless exercise" means the assignment
to the Company of the proceeds of a sale or loan with respect to
some or all of the Shares being acquired upon the exercise of the
option. A form of cashless exercise is often referred to as
"same-day sale."
5. Any other consideration approved by the Board and permitted by
law.
6. By any combination of the above.
The Board may at any time or from time to time grant options which do not
permit all of the foregoing forms of consideration to be used in payment of
the exercise price or which otherwise restrict one or more forms of
consideration.
24. Will I receive stock certificates for the Shares that I purchase?
Except in the case where you pay the exercise price by means of a cashless
exercise, you will receive a certificate for the Shares you have purchased
that will be registered in your name, or, if applicable, in the names of
your heirs.
================================================================================
TERMINATING SERVICE WITH THE COMPANY
================================================================================
25. What service counts for purposes of the Plan?
"Service" for Plan purposes means your employment as an employee or service
as an employee, consultant or director of the Company or any parent or
subsidiary corporation of the Company. Unless otherwise determined by the
Company, your service shall not be deemed to terminate merely because you
change the capacity in which you provide services to the Company or any
parent or subsidiary corporation of the Company or a change in the parent
or subsidiary corporation of the Company for which you render such service,
provided that there is no interruption or termination of your service.
If the Participating Company employing you or engaging you as an employee,
consultant or director ceases to be among the parent or subsidiary
corporation of the Company (e.g., the subsidiary employing you is sold to
an unrelated third party), then your service will be deemed terminated.
Subject to the terms of the Plan, the Company will have the discretion to
determine if and when your service has terminated for purposes of the Plan.
See Q&A 16, above.
26. What happens to my option if my service terminates?
The effect of your termination of service is specified in your Stock Option
Agreement. With certain exceptions described below, if your service
terminates, you will generally
7
have 3 months from the date of your termination of service (but in no event
later than the Expiration Date) in which to exercise the vested portion of
your option.
If your service terminates due to your disability or death, you (or your
estate) will generally have 12 months following termination to exercise the
vested portion of your option.
If your service terminates due to your "misconduct," then your option will
terminate and cease to be exercisable immediately on the effective date of
such termination. "Misconduct" means the commission of any act of fraud,
embezzlement or dishonesty and any unauthorized use or disclosure of
confidential information or trade secrets of the Company or any parent or
subsidiary corporation of the Company, or any other intentional misconduct
adversely affecting the business or affairs of the Company or any parent or
subsidiary corporation of the Company, in a material manner.
If the exercise of your option within the applicable time periods set forth
above is prevented by securities law, your option will remain exercisable
until 3 months after the date you are notified by the Company that the
Option is exercisable (but in no event later than the option Expiration
Date).
If a sale within the applicable time periods set forth above of shares
acquired by the exercise of your option will subject you to a suit under
Section 16(b) of the Exchange Act, your exercise period may be extended
until the earliest of (i) the 10th day following the date on which a sale
of such shares would no longer be subject to suit, (ii) the 190th day after
your termination of service, or (iii) the option Expiration Date.
In certain instances, as described in your Stock Option Agreement, the
exercise period following your termination of service may be extended. On
the other hand, in certain instances it may be reduced. For example, your
option may terminate sooner than described above if it is not assumed by an
acquiring corporation in connection with a corporate transaction.
See Q&A 12 for the meaning of option Expiration Date, Q&A 14 for a
discussion of vesting, and Q&A 29 through 31 for a discussion of the
effects of a corporate transaction.
27. What happens to my option Shares if my service with the Company terminates?
You are entitled to retain ownership of any Shares you have purchased until
such time as you decide to sell them. Generally, your option will terminate
and you will forfeit any Shares not vested as of the date of your
termination of service.
8
================================================================================
TRANSFERABILITY OF OPTIONS
================================================================================
28. Can I assign or transfer my options?
No. During your lifetime, your options can only be exercised by you, your
guardian or legal representative. You cannot transfer or assign any option,
except by will or by the laws of descent and distribution.
================================================================================
CORPORATE TRANSACTION OF THE COMPANY
================================================================================
29. What is a "corporate transaction"?
A "corporate transaction" of the Company includes any of the following
events in which the stockholders of the Company immediately before such
event do not retain immediately after such event, in substantially the same
proportions, direct or indirect beneficial ownership of at least a majority
of the beneficial interest in the voting stock of the Company or its
successor:
(1) a direct or indirect sale or exchange by the stockholders of the
Company of more than fifty percent (50%) of the voting stock of
the Company;
(2) a merger or consolidation in which the Company is a party;
(3) the sale, exchange or transfer of all or substantially all of the
assets of the Company; or
(4) liquidation or dissolution of the Company.
30. What happens to my option if there is a corporate transaction?
If a corporate transaction occurs, the surviving, continuing, successor, or
purchasing corporation or parent corporation of any of these may assume the
Company's rights and obligations under outstanding options, substitute for
outstanding options substantially equivalent options for the acquiring
corporation's stock, or replace the outstanding options with a cash
incentive program which preserves the spread existing on the unvested
option Shares at the time of the corporate transaction and provides for a
payout in accordance with the vesting schedules applicable to the
outstanding options.
9
However, if the acquiring corporation does not assume or substitute the
outstanding Company options, or replace the outstanding Company options
with a cash or incentive program, any unexercised and/or unvested portions
of the outstanding options will, immediately prior to the corporate
transaction, become exercisable and vested in full. Any option or portion
thereof which is neither assumed, substituted for, or replaced by the
acquiring corporation nor exercised as of the date of the corporate
transaction will terminate and cease to be outstanding effective as of the
date of the corporate transaction.
31. What happens to my Restricted Shares if there is a corporate transaction?
The Company's repurchase rights may be assigned to the acquiring
corporation. In the event the repurchase rights are not assigned to the
acquiring corporation, all outstanding repurchase rights will terminate
automatically and your Restricted Shares subject to a repurchase right will
immediately become vested in full, except to the extent such accelerated
vesting is precluded by other limitations imposed by the Plan Administrator
at the time the repurchase right is issued.
================================================================================
RESTRICTED SHARES
================================================================================
32. What is a Restricted Share?
The Board at its discretion may issue Restricted Shares through direct and
immediate purchases without any intervening stock option grants. The exact
number and the price of the Restricted Shares you are issued and entitled
to purchase is set forth in your Stock Issuance Agreement (the "Issuance
Agreement").
33. How many Restricted Shares does my stock issuance cover?
The number of Restricted Shares issued to you, if any, is determined by the
Plan Administrator at its discretion. The number of Restricted Shares
issued to you is stated in your Issuance Agreement.
34. Do I have to pay for the Restricted Shares?
Restricted Shares may be issued under the Plan without requiring monetary
payment from you. However, the Plan Administrator may require payment upon
issuance of such shares. See Q&A 36, below for forms of payment.
35. What is the exercise price for the Restricted Shares?
The exercise price of your Restricted Shares is stated in your Issuance
Agreement. Under the terms of the Plan, the price has to be set at no less
than 85% of the fair market value of a Share on the Grant Date.
10
36. How do I pay for the Restricted Shares?
Generally, you may pay the price using any combination of the following
methods:
1. cash or cash equivalents (such as a personal check or bank draft)
paid to the Company;
2. common stock of the Company valued at fair market value on the
date of issuance;
3. a promissory note payable to the Company's order in one or more
installments, which may be subject to cancellation in whole or in
part upon terms and conditions established by the Plan
Administrator;
4. past services rendered to the Company or any parent or subsidiary
corporation of the Company; or
5. any combination of the above approved by the Plan Administrator.
The Plan Administrator may at any time or from time to time issue
Restricted Shares which do not permit all of the foregoing forms of
consideration to be used in payment or which otherwise restrict one or more
forms of consideration.
37. Must I sign the Issuance Agreement?
Yes. No stock issuance is valid or a binding obligation of the Company
unless evidenced by a fully executed Issuance Agreement.
================================================================================
VESTING OF RESTRICTED SHARES
================================================================================
38. What are the vesting provisions of my Restricted Shares?
Your Issuance Agreement states the rate at which your Restricted Shares
vest.
39. Does my termination from service affect the vesting of my Restricted
Shares?
Yes, if you terminate service with the Company or any parent or subsidiary
corporation of the Company, you must surrender to the Company any unvested
Restricted Shares for cancellation, and you will have no further
stockholder rights with respect to those shares.
11
40. Will I be repaid for the unvested Restricted Shares that I return to the
Company as a result of my termination from service?
Yes, the Company will refund you the cash amount you paid for the unvested
Restricted Shares, and will cancel any outstanding promissory note you owe
to the Company to the extent attributable to the such shares.
41. What affect will death or disability have on the vesting of my Restricted
Shares?
Your Issuance Agreement states the effect of death or disability on the
vesting of your Restricted Shares.
================================================================================
TRANSFERABILITY OF RESTRICTED SHARES
================================================================================
42. Can I assign or transfer my Restricted Shares?
You may assign and transfer any Restricted Share issued to you that is one
hundred percent (100%) vested. You may not transfer any unvested Restricted
-------
Share issued to you. Any attempt to transfer unvested Restricted Shares
will result in the immediate cancellation of such shares and neither you
nor the proposed transferee will have any rights with respect to such
shares.
43. What constitutes a transfer of Restricted Shares?
A "Transfer" of a Restricted Share includes any voluntary or involuntary
sale, pledge, assignment, encumbrance, gift, or other disposition of such
share. However, a transfer shall not include any transfer made in
connection with a corporate transaction. See Q&A 30.
44. Are there any exceptions to the limitation on the transfer of Restricted
Shares?
Yes. You have the right to make a gift of unvested Restricted Shares to
your spouse, children (including adopted children) and to any trust
established for your spouse or children; provided, your spouse, children or
the trust deliver to the Company a written agreement to be bound to all the
provisions of the Plan and the Issuance Agreement applicable to the gifted
Restricted Shares.
12
================================================================================
STOCK SALES
================================================================================
45. When may I sell the Shares that I receive by exercising my option or the
Restricted Shares which I have been issued?
Generally, you may sell the Shares that you receive pursuant to the
exercise of your option at any time after the Shares have been issued in
your name. Also, generally, you may also sell any fully vested Restricted
Shares. Before you sell any of your Shares, you should discuss the tax
implications of the sale with a tax advisor. See Q&A 53, below, Tax
Implications of Nonstatutory Stock Options. See also, Q&A 61, below, Tax
Implications of Incentive Options. See also, Q&A 69, below, Tax
Implications of Restricted Shares.
Furthermore, all employees and consultants are subject to U.S. federal
securities laws which impose severe civil and criminal penalties on persons
who trade while in possession of "inside information." See Q&A 77-79,
below, Federal Securities Laws Affecting Participants.
46. Do I pay brokerage commissions on the purchase of Shares under the Plan or
when I subsequently sell such Shares?
You will not pay any brokerage commissions when you exercise your option or
when you purchase Restricted Shares. However, you will be responsible for
paying any brokerage commissions you incur on your subsequent sale of such
Shares.
================================================================================
STOCKHOLDER RIGHTS
================================================================================
47. Do I become a stockholder when I receive an option?
No. You have no rights as a Company stockholder merely by virtue of being
an option holder.
48. When do I have rights as a stockholder as an option holder?
You have rights as a Company stockholder on the date you are issued a
certificate for the Shares for which your option has been exercised, as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company.
13
49. When do I have rights as a stockholder if I am issued a Restricted Share?
You will have full stockholder rights with respect to any Restricted Shares
issued to you, whether or not your interest in such shares is vested. You
will have the right to vote such shares and receive any regular cash
dividend paid on those shares. See Q&A 35 for a discussion on the effect of
termination from service on vesting.
50. What information do I receive as an option holder?
You will be given access to information concerning the Company equivalent
to the information generally made available to the Company's common
stockholders.
================================================================================
EMPLOYMENT STATUS
================================================================================
51. If I receive an Award under the Plan will it affect the terms of my
employment?
No. Unless you have a written employment contract with the Company
providing otherwise, your employment is "at-will." This means that either
you or your employer has the right to end your employment relationship at
any time, for any reason, with or without cause. If you receive an Award
under the Plan, it will not affect your "at-will" relationship with the
Company.
52. What happens to my option if I take a leave of absence?
If you are granted an Incentive Option and your leave of absence exceeds 90
days, unless your right to return to service with the Company is guaranteed
by law or by contract, your Incentive Option will cease to be treated as an
Incentive Option and will automatically become a Non-Statutory Option on
the 181st day of your leave. See Q&A 16, above, for a discussion of
vesting.
================================================================================
TAX IMPLICATIONS OF NON-STATUTORY OPTIONS
================================================================================
The tax consequences arising in connection with options are complex and
subject to change. The following summary is only a general guide to the current
U.S. federal income tax consequences of Non-Statutory Options granted under the
Plan. In addition, your particular situation may be such that some variation of
the general rules is applicable. For example, the following summary does not
describe the tax consequences of certain transactions, such as if shares are
used to exercise an option, if shares acquired by exercise of an option are sold
to certain related parties, or if you acquire substantially identical shares
within the 30-day period
14
before or after your sale of shares acquired upon exercise of an option. YOU
SHOULD CONSULT YOUR OWN TAX ADVISORS PRIOR TO THE EXERCISE OF ANY OPTION AND
PRIOR TO THE DISPOSITION OF ANY SHARES ACQUIRED UNDER THE PLAN.
53. Is the grant to me of a Non-Statutory Option a taxable event?
No. You do not receive taxable income merely because you are granted a
Non-Statutory Option under the Plan.
54. Is my exercise of a Non-Statutory Option a taxable event?
Yes. You will receive taxable income as a result of your exercise of a
Non-Statutory Option. Generally, the amount of that income is determined on
the date you exercise your option. At that time, you will recognize
ordinary income equal to the excess of the fair market value of the Shares
on the exercise date over the purchase price you pay for the Shares. If you
are an employee or former employee, that ordinary income is treated as
wages subject to income and employment tax withholding.
55. Is my subsequent sale of Shares acquired pursuant to a Non-Statutory Option
under the Plan a taxable event?
Yes. Your sale of any shares that you acquire pursuant to a Non-Statutory
Option under the Plan is a taxable event. At that time, you will recognize
capital gain or loss equal to any additional gain or loss recognized in the
disposition. That gain or loss is determined by the difference between the
amount you realize on the sale of the shares and the fair market value of
those shares on the option exercise date. The tax consequences of disposing
of the Shares will vary depending on how long you have held the Shares.
56. What are long-term and short-term capital gains?
A capital gain or loss will be long-term if you hold the Shares for more
than 1 year after your purchase date and short-term if you hold the Shares
for 1 year or less after your purchase date. Currently, long-term capital
gains are subject to a maximum federal income tax rate of 20%.
57. Will any amounts be withheld from my paycheck to cover my tax liability?
If you are an employee or former employee, when you purchase Shares by
exercising your Non-Statutory Option, you must make adequate provision for
any federal, state, local or foreign tax withholding obligations.
Generally, you will be required to pay directly to the Company or your
employer the full amount of your tax withholding obligation at the time you
exercise your Non-Statutory Option. If you exercise your Non-Statutory
Option in a cashless exercise (same-day sale), you will be required to
assign to the Company a portion of your Share sale proceeds sufficient to
pay your withholding tax. The Company may, but is not required to, withhold
from your compensation the amount necessary to meet its tax withholding
obligations. If you
15
request, the Company may, but is not obligated to, withhold from the Shares
otherwise issuable to you on exercise of your option a number of whole
Shares having a fair market value on the exercise date not in excess of the
minimum amount of tax required to be withheld by law. The Company will not
be liable to you for any adverse tax consequences you suffer in connection
with this share withholding procedure. The Company has no obligation to
deliver shares of stock until you have satisfied the withholding
obligation.
58. Will I owe any other taxes?
The above discussion is only a summary of certain aspects of the highly
complex U.S. federal income tax rules applicable to Non-Statutory Options
and does not deal with other taxes which may affect you, such as state and
local income taxes, federal and state estate, gift and inheritance taxes
and taxes of countries other than the United States of America. You should
obtain and rely on the advice of your own tax advisor with respect to such
matters.
59. Who can I talk to about my specific tax situation?
Since the tax implications of stock options can be complex and can vary by
individual, we suggest that you contact your tax advisor with questions
specific to your situation.
60. Does the Company receive a tax deduction?
The Company is generally entitled to a tax deduction equal to the ordinary
income that you recognize under the rules discussed above, except to the
extent such deduction is limited by applicable provisions of the Internal
Revenue Code or the regulations thereunder.
================================================================================
TAX IMPLICATIONS OF INCENTIVE OPTIONS
================================================================================
The tax consequences arising in connection with options are complex and
subject to change. The following summary is only a general guide to the current
U.S. federal income tax consequences of Incentive Options granted under the Plan
and does not describe all such possible tax consequences or consequences
associated with Non-Statutory Options. In addition, your particular situation
may be such that some variation of the general rules is applicable. For example,
the following summary does not describe the tax consequences of certain
transactions, such as if Shares are used to exercise an option, if Shares
acquired by exercise of an option are sold to certain related parties, or if you
acquire substantially identical Shares within the 30-day period before or after
your sale of Shares acquired upon exercise of an option. YOU SHOULD CONSULT YOUR
OWN TAX ADVISORS PRIOR TO THE
16
EXERCISE OF ANY OPTION AND PRIOR TO THE DISPOSITION OF ANY SHARES ACQUIRED UNDER
THE PLAN.
61. Is the grant to me of an Incentive Option a taxable event?
No. You do not recognize taxable income merely because you are granted an
Incentive Option under the Plan.
62. Is my exercise of an Incentive Option a taxable event?
No. You do not recognize taxable income for regular tax purposes as a
-------
result of your exercise of an Incentive Option. However, when you exercise
an Incentive Option, the excess of the fair market value of the Shares on
the date of the exercise over the exercise price of the Incentive Option,
often referred to as the "spread," is treated as income for purposes of
computing your alternative minimum tax unless you dispose of the Shares in
-----------------------
the same calendar year as your exercise.
EXAMPLE: Adams has an Incentive Option for 1,000 Shares of stock with
an exercise price of $7 per share. If Adams exercises the option for
all 1,000 Shares on a day when they are fully vested and the fair
market value of the stock is $10 per share, then the spread of $3 per
share ($10 - $7), or $3,000, is an item of alternative minimum taxable
income.
The Internal Revenue Code requires taxpayers to compute the tax due under
the alternative minimum tax and to pay that amount with their Form 1040
return if it is greater than the amount due under the regular method of
determining income taxes. (If you are required to pay such additional
taxes, you may be entitled to claim certain tax credits against your
regular tax obligations in years following the year of exercise.) You may
need to pay quarterly estimated tax or increase your income tax withholding
from wages to avoid penalties for underpayment of estimated tax. If you are
considering exercising Incentive Options, you should consult your personal
tax advisor before exercising your options to determine the alternative
-----------------------
minimum tax consequences based on your particular situation.
63. Is my subsequent sale of Shares acquired pursuant to an Incentive Option
under the Plan a taxable event?
Yes. When you sell or otherwise dispose of your Shares, your federal income
tax consequences will depend on how long you have held the stock. If you do
not dispose of the stock prior to the later of two years after the Grant
Date and one year after the date on which you exercised the option (the
"Incentive Option Holding Period"), you will recognize a capital gain (or
loss) equal to the amount by which the sale proceeds exceed (or are less
than) your adjusted basis in the Shares. For regular tax purposes the
adjusted basis is generally the exercise price. For alternative minimum tax
purposes the adjusted
17
basis is generally the exercise price plus any spread treated as an item of
income for alternative minimum tax purposes. The capital gain will be long
term capital gain.
However, if you sell or otherwise dispose of your Shares prior to the end
of the Incentive Option Holding Period, then you will generally recognize
ordinary income in the year of disposition equal to the lesser of: (1) the
difference between the fair market value of the Shares on the date of
option exercise and the exercise price you paid, or (2) the actual gain you
realized on the disposition (sale proceeds minus the exercise price you
paid) and any additional gain or loss will be long-term or short-term
capital gain or loss depending upon the length of time you have held the
Shares.
64. What are long-term and short-term capital gains?
A capital gain or loss will be long-term if you hold the Shares for more
than 1 year after your purchase date and short-term if you hold the Shares
for 1 year or less after your purchase date. Currently, long-term capital
gains are subject to a maximum federal income tax rate of 20%.
65. Will any amounts be withheld from my paycheck to cover my tax liability?
No.
66. Will I owe any other taxes?
The above discussion is only a summary of certain aspects of the highly
complex U.S. federal income tax rules applicable to Incentive Options and
does not deal with other taxes which may affect you, such as state and
local income taxes, federal and state estate, gift and inheritance taxes
and taxes of countries other than the United States of America. You should
obtain and rely on the advice of your own tax advisor with respect to such
matters.
67. Who can I talk to about my specific tax situation?
Since the tax implications of stock options can be complex and can vary by
individual, we suggest that you contact your tax advisor with questions
specific to your situation.
68. Does the Company receive a tax deduction?
The Company is generally entitled to a tax deduction equal to the ordinary
income that you recognize under the rules discussed above, except to the
extent such deduction is limited by applicable provisions of the Internal
Revenue Code or the regulations thereunder.
18
================================================================================
TAX IMPLICATIONS OF RESTRICTED SHARES
================================================================================
The tax consequences arising in connection with Restricted Shares are
complex and subject to change. The following summary is only a general guide to
the current U.S. federal income tax consequences of Restricted Shares issued
under the Plan and does not describe all such possible tax consequences or
consequences associated with Restricted Shares. In addition, your particular
situation may be such that some variation of the general rules is applicable.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO
YOU OF ANY RESTRICTED SHARES AWARDED TO YOU UNDER THE PLAN.
69. Is the grant to me of unvested Restricted Shares a taxable event?
No. Generally you do not recognize taxable income merely because you are
issued unvested Restricted Shares under the Plan. But see Q&A 70, below.
70. Is my vesting in my Restricted Shares a taxable event?
Yes, unless you have filed an 83(b) election as described in Q&A 71, below.
You will recognize taxable income as a result of the vesting of your
Restricted Shares. The amount of that income is determined on your vesting
date. The excess, if any, of the fair market value of the stock on the date
or dates the Restricted Shares vest over the amount paid for such
Restricted Shares is includable in your gross income in the year such
Restricted Shares vest. If you are an employee or former employee, that
ordinary income is treated as wages subject to income and employment tax
withholding.
71. What is the effect of a Section 83(b) election?
You may avoid potential characterization of post-issuance appreciation of
your Restricted Shares as ordinary income and defer the payment of tax on
such appreciation until the Restricted Shares are sold, if you file an
election (a "Section 83(b) election") with the IRS no later than 30 days
after the date the Restricted Shares are issued.
72. Is my subsequent sale of Restricted Shares issued under the Plan a taxable
event?
Yes. Your sale of any of the Restricted Shares that are issued to you under
the Plan is a taxable event. At that time, you will recognize capital gain
or loss equal to any additional gain or loss recognized in the disposition.
That gain or loss is determined by the difference between the amount you
realize on the sale of the Restricted Shares and their adjusted basis. Your
adjusted basis is generally the price, if any, paid for the Restricted
Shares plus the amount of ordinary income recognized on the vesting or the
filing of a
19
Section 83(b) election with respect to such shares. The tax consequences of
disposing of the Shares will vary depending on how long you have held the
shares.
73. What are long-term and short-term capital gains?
A capital gain or loss will be long-term if you hold the shares for more
than 1 year after your Restricted Shares were issued to you and short-term
if you hold the shares for 1 year or less after your Restricted Shares were
issued to you. Currently, long-term capital gains are subject to a maximum
federal income tax rate of 20%.
74. Will I owe any other taxes?
The above discussion is only a summary of certain aspects of the highly
complex U.S. federal income tax rules applicable to Restricted Shares and
does not deal with other taxes which may affect you, such as state and
local income taxes, federal and state estate, gift and inheritance taxes
and taxes of countries other than the United States of America. You should
obtain and rely on the advice of your own tax advisor with respect to such
matters.
75. Who can I talk to about my specific tax situation?
Since the tax implications of stock options can be complex and can vary by
individual, we suggest that you contact your tax advisor with questions
specific to your situation.
76. Does the Company receive a tax deduction?
The Company is generally entitled to a tax deduction equal to the ordinary
income that you recognize under the rules discussed above, except to the
extent such deduction is limited by applicable provisions of the Internal
Revenue Code or the regulations thereunder.
================================================================================
FEDERAL SECURITIES LAWS AFFECTING PARTICIPANTS
================================================================================
77. What is Section 16(b)?
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), permits the recovery by the Company of any profit realized
by an "Insider" from each purchase and subsequent sale, or sale and
subsequent purchase, of shares within any period of less than six months.
An "Insider" for this purpose is any officer or director of the Company or
person who is directly or indirectly the beneficial owner of more than 10%
of any class of equity security of the Company that is registered under
Section 12 of the Exchange Act. If you are an Insider, you should consult
with the Company's general
20
counsel or your own legal advisor prior to the disposition of any shares in
order to ascertain the precise application to your particular situation of
your reporting obligations and liability under Section 16(b).
78. What is Rule 10b-5?
Rule 10b-5 under the Exchange Act prohibits you from engaging in fraudulent
practices in connection with the purchase or sale of securities. This rule
generally prohibits you from buying or selling the Company's securities
using material information about the Company which has not yet been
released to the public. Before buying or selling any shares and, in
particular, before selling shares acquired under the Plan, you should
consult with the Company's general counsel regarding the applicability of
any the Company "trading window" policies prohibiting trading in the
Company's stock during specified periods of the year when material inside
information is likely to be held prior to its release to the public.
79. What is Rule 144?
"Affiliates" of the Company are generally obligated to resell shares in
compliance with Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities
Act"). Participants in the Plan with the power to manage and direct the
policies of the Company, relatives of such participants, and trusts,
estates, corporations, or other organizations controlled by such
participants may be deemed to be "Affiliates" of the Company.
Rule 144 requires that sales by Affiliates be effected in "broker
transactions" (as defined in Rule 144), and limits the number of shares
that may be sold in any 3-month period to no more than the greater of 1% of
the outstanding shares or the average weekly reported volume of trading in
shares during the 4 calendar weeks preceding the filing of the required
notice of the proposed sale. Since the shares have been registered under
the Securities Act, Affiliates selling shares in compliance with Rule 144
are not subject to the holding period requirements of Rule 144.
================================================================================
PLAN ADMINISTRATION
================================================================================
80. Who administers the Plan?
The Plan is administered by the Board and/or by a duly appointed committee
having such powers as specified by the Board. All questions of
interpretation of the Plan or of any Award are determined by the Board,
whose decisions are final and binding upon all persons having an interest
in the Plan.
21
81. Who is on the Board of Directors?
The Board is divided into three classes of directors, with each class
serving a staggered two-year term ending at the second succeeding annual
meeting of the stockholders following election. Directors hold office until
the expiration of the term for which elected and until their successors are
elected and qualified or until their earlier death, resignation or removal
from office. Members of the Board receive no additional compensation for
administering the Plan.
82. Does the Company have any role in administering the Plan?
Yes. While the Board has overall authority for administering the Plan, the
Company, acting through its officers, may from time to time establish,
change or terminate rules, guidelines, policies, procedures, limitations or
adjustments as deemed advisable by the Company, in its sole discretion, in
the administration of the Plan.
================================================================================
AMENDMENT OR TERMINATION OF THE PLAN
================================================================================
83. Can the Plan be amended or terminated?
Yes. The Board may terminate or amend the Plan at any time. However, no
termination or amendment may affect any outstanding option or unvested
Restricted Shares unless expressly provided by the Board. In any event, no
termination or amendment of the Plan may adversely affect an option or
unvested Restricted Shares previously granted to you without your consent,
unless such termination or amendment is necessary to comply with any
applicable law, regulation or rule.
84. How long can the Plan remain in effect?
The Plan will remain in effect until the date all Shares available for
issuance under the Plan have been issued and all restrictions on such
Shares have lapsed or the Board terminates the Plan, whichever is earlier.
However, all Incentive Options will be granted, if at all, on or before May
7, 2005.
22
================================================================================
OTHER INFORMATION
================================================================================
85. Where can I get additional information?
You can get additional information about the Plan from the Company at:
Agile Software Corporation
One Almaden Boulevard
San Jose, CA 95113
Attention: Chief Financial Officer
(408) 975-3900
86. Can anyone at the Company provide me with tax advice?
No. Since the tax implications of your stock options can be complex and can
vary by individual, you should contact your individual tax advisor with
questions specific to your situation.
87. What documents are incorporated by reference in this prospectus?
The following documents and information previously filed by the Company
with the Securities and Exchange Commission are incorporated by reference
in this prospectus:
. The Company's latest annual report on Form 10-K filed pursuant to
Sections 13(a) or 15(d) of the Exchange Act, containing audited
financial statements for the Company's latest fiscal year;
. All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the
registrant document referred to above;
. The description of the Company's common stock contained in its
Registration Statement on Form 8-A filed under the Exchange Act,
including any amendment or report filed for the purpose of updating
such description; and
. All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act after the date of this prospectus and
prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated
by reference in this prospectus and to be part hereof from the date of
filing such documents.
23
EX-99.(D)(3)
10
dex99d3.txt
FORM OF OPTION AGREEMENT - 1995 STOCK OPTION PLAN
Exhibit (d)(3)
AGILE SOFTWARE CORPORATION
STOCK OPTION AGREEMENT
----------------------
RECITALS
--------
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee Directors and Consultants who
provide services to the Corporation (or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of the
---------------
Grant Date, an option to purchase up to the number of Option Shares specified in
the Grant Notice. The Option Shares shall be purchasable from time to time
during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a term of ten (10) years measured
-----------
from the Grant Date and shall accordingly expire at the close of business on the
Expiration Date, unless sooner terminated in accordance with Paragraph 5, 6, 16
or 17.
3. Limited Transferability. This option shall be neither transferable
-----------------------
nor assignable by Optionee other than by will or by the laws of descent and
distribution and may be exercised, during Optionee's lifetime, only by Optionee
or the Optionee's guardian or legal representative.
4. Dates of Exercise. Except as otherwise provided herein, this option
-----------------
shall become exercisable for the Option Shares in one or more installments on
and after the Initial Vest Date in an amount not to exceed the number of vested
Option Shares (as determined pursuant to the Vesting Schedule) less the number
of Option Shares previously acquired upon exercise of this option. As the option
becomes exercisable for such installments, those installments shall accumulate
and the option shall remain exercisable for the accumulated installments until
the Expiration Date or sooner termination of the option term under Paragraph 5,
6, 16 or 17.
5. Cessation of Service. The option term specified in Paragraph 2 shall
--------------------
terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service for any reason (other
than death, Disability or Misconduct) while this option is outstanding, then
Optionee shall have a period of three (3) months (commencing with the date of
such cessation of Service) during which
to exercise this option, but in no event shall this option be exercisable at any
time after the Expiration Date.
(b) Should Optionee die while this option is outstanding, then the
personal representative of Optionee's estate or the person or persons to whom
the option is transferred pursuant to Optionee's will or in accordance with the
laws of descent and distribution shall have the right to exercise this option.
Such right shall lapse and this option shall cease to be outstanding upon the
earlier of (i) the expiration of the twelve (12)- month period measured from the
-------
date of Optionee's death or (ii) the Expiration Date.
(c) Should Optionee cease to remain in Service by reason of
Disability while this option is outstanding, then Optionee shall have a period
of twelve (12) months (commencing with the date of such cessation of Service)
during which to exercise this option. In no event shall this option be
exercisable at any time after the Expiration Date.
(d) Notwithstanding the foregoing, if the exercise of this option
within the applicable time period set forth in Paragraph 5(a), (b), or (c) is
prevented by Paragraph 10, then this option shall remain exercisable until three
(3) months after the date Optionee is notified by the Corporation that this
option is exercisable. In no event shall this option be exercisable at any time
after the Expiration Date.
(e) Notwithstanding the foregoing, if a sale within the applicable
time periods set forth in Paragraph 5(a), (b), or (c) of shares acquired upon
the exercise of this option would subject the Optionee to suit under Section
16(b) of the 1934 Act, this option shall remain exercisable until the earliest
to occur of (i) the tenth (10th) day following the date on which a sale of such
shares by the Optionee would no longer be subject to such suit, (ii) the one
hundred and ninetieth (190th) day after the Optionee's cessation of Service, or
(iii) the Expiration Date.
(f) During the limited period of post-Service exercisability, this
option may not be exercised in the aggregate for more than the number of Option
Shares which were vested at the time of Optionee's cessation of Service. Upon
the expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding for any
vested Option Shares for which the option has not been exercised. To the extent
Optionee is not vested in the Option Shares at the time of Optionee's cessation
of Service, this option shall immediately terminate and cease to be outstanding
with respect to those shares.
(g) Should Optionee's Service be terminated for Misconduct, then this
option shall terminate immediately and cease to remain outstanding.
6. Accelerated Vesting.
-------------------
(a) In the event of any Corporate Transaction, the Option Shares at
the time subject to this option but not otherwise vested shall automatically
vest in full so that this option shall, immediately prior to the effective date
of the Corporate Transaction, become fully exercisable for all of those Option
Shares and may be exercised for any or all of those Option Shares as
fully-vested shares of Common Stock. However, the Option Shares shall not vest
on such an accelerated basis if and to the extent: (i) this option is assumed by
the successor corporation (or parent thereof) in the Corporate Transaction or
(ii) this option is to be replaced
2
with a cash incentive program of the successor corporation which preserves the
spread existing on the unvested Option Shares at the time of the Corporate
Transaction (the excess of the Fair Market Value of those Option Shares over the
Exercise Price payable for such shares) and provides for subsequent payout in
accordance with the same Vesting Schedule applicable to those unvested Option
Shares as set forth in the Grant Notice.
(b) The Corporation shall use its best efforts to provide at least
twenty (20) days prior written notice of the occurrence of any Corporate
Transaction in which options under the Plan are not to be assumed by the
successor corporation.
(c) Immediately following the Corporate Transaction, this option
shall terminate and cease to be outstanding, except to the extent assumed
by the successor corporation (or parent thereof) in connection with the
Corporate Transaction.
(d) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
--------
(e) If this option is assumed in connection with a Corporate
Transaction and Optionee's Service ceases as a result of an Involuntary
---
Termination within eighteen (18) months following such Corporate Transaction,
then the Optionee shall be credited with an additional eighteen (18) months of
Service (or such lesser number of months necessary to cause all of the Option
Shares to become vested) solely for purposes of calculating the number of vested
Option Shares. Further, notwithstanding anything stated in Paragraph 5 to the
contrary, this Option shall remain exercisable until the earlier of: (i) the
-------
Expiration Date, or (ii) the expiration of the one (1)-year period measured from
the date of the Involuntary Termination.
(f) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. Adjustment in Option Shares. Should any change be made to the Common
---------------------------
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. Rights as a Stockholder, Employee, or Consultant. The holder of this
------------------------------------------------
option shall not have any Stockholder rights with respect to the Option Shares
until such person shall have exercised the option, paid the Exercise Price and
become a holder of record of the purchased shares. Further, no adjustment shall
be made for dividends, distributions or other rights for which the record date
is prior to the date such certificate is issued, except as provided in Section
7. If the Optionee is an Employee, the Optionee understands and acknowledges
that,
3
except as otherwise provided in a separate, written employment agreement between
the Corporation (or Parent or Subsidiary) and the Optionee, the Optionee's
employment is "at will" and is for no specified term. Nothing in this Agreement
shall confer upon the Optionee any right to continue in the Service of the
Corporation (or Parent or Subsidiary) or interfere in any way with any right of
the Corporation (or Parent or Subsidiary) to terminate the Optionee's Service as
an Employee or Consultant, as the case may be, at any time.
9. Manner of Exercising Option.
---------------------------
(a) In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time exercisable, Optionee
(or any other person or persons exercising the option) must take the following
actions:
(i) Pay the aggregate Exercise Price for the purchased shares in
one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) provided the Optionee is an Employee and in the
Corporation's sole discretion at the time this option is exercised, by delivery
of a promissory note in a form approved by the Corporation for the aggregate
Exercise Price, provided that any promissory note used to pay the Exercise Price
shall be subject to the provision of Paragraph 9(d) and that if the Corporation
is incorporated in the State of Delaware, the Optionee shall pay in cash that
portion of the aggregate Exercise Price not less than the par value of the
Option Shares being acquired;
(C) in shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date; or
(D) through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons exercising the
option) shall concurrently provide irrevocable instructions (a) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all applicable federal,
state, local, and foreign income and employment taxes required to be withheld by
the Corporation by reason of such exercise and (b) to the Corporation to deliver
the certificates for the purchased shares directly to such brokerage firm in
order to complete the sale.
(ii) Furnish to the Corporation appropriate documentation that
the person or persons exercising the option (if other than Optionee) have the
right to exercise this option.
(iii) Execute and deliver to the Corporation a written notice to
the Corporation in a form acceptable to the Corporation, indicating the
Optionee's intent to exercise
4
the option and any such written representations as may be requested by the
Corporation in order for it to comply with the applicable requirements of
federal, state, and foreign securities laws.
(iv) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction of
all federal, state, local, and foreign income and employment tax withholding
requirements applicable to the option exercise.
(b) Unless the Exercise Price is paid pursuant to Paragraph
9(a)(i)(D), as soon as practical after the Exercise Date, the Corporation shall
issue to or on behalf of Optionee (or any other person or persons exercising
this option) a certificate for the purchased Option Shares, with the appropriate
legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
(d) No promissory note shall be permitted if an exercise of this
option using a promissory note would be a violation of any law. If at any time
the Corporation is subject to the regulations promulgated by the Board of
Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Corporation's
securities, any promissory note shall comply with such applicable regulations,
and the Optionee shall pay the unpaid principal and accrued interest, if any, to
the extent necessary to comply with such applicable regulations. The Corporation
in its sole discretion, may require the Optionee to pay the unpaid principal
balance of the promissory note and any accrued interest thereon upon termination
of the Optionee's Service for any reason, with or without cause.
10. Compliance with Laws and Regulations.
------------------------------------
(a) The exercise of this option and the issuance of the Option Shares
upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
11. Successors and Assigns. Except to the extent otherwise provided in
----------------------
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.
12. Notices. Any notice required to be given or delivered to the
-------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated on the Grant Notice. All notices shall be
5
deemed effective upon personal delivery or upon deposit in the U.S. mail,
postage prepaid and properly addressed to the party to be notified.
13. Construction. This Agreement and the option evidenced hereby are made
------------
and granted pursuant to the Plan and are in all respects limited by and subject
to the terms of the Plan. All decisions of the Plan Administrator with respect
to any question or issue arising under the Plan or this Agreement shall be
conclusive and binding on all persons having an interest in this option.
14. Integrated Agreement. The Grant Notice and this Agreement constitute
--------------------
the entire understanding and agreement between the Optionee and the Corporation
with respect to the subject matter contained herein or therein and supersedes
any prior agreements, understandings, restrictions, representations, or
warranties among the Optionee and the Corporation with respect to such subject
matter other than those as set forth or provided for herein or therein. To the
extent contemplated herein or therein, the provisions of the Grant Notice and
the Agreement shall survive any exercise of this option and shall remain in full
force and effect.
15. Governing Law. The interpretation, performance and enforcement of this
-------------
Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
16. Termination or Amendment. The Board may terminate or amend or this
------------------------
option at any time; provided, however, that except as provided in Paragraph 6 in
connection with a Corporate Transaction, no such termination or amendment may
adversely affect this option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation or is required to enable
this option, if designated an Incentive Option in the Grant Notice, to qualify
as an Incentive Option. No amendment or addition to this Agreement shall be
effective unless in writing.
17. Additional Terms Applicable to an Incentive Option. In the event this
--------------------------------------------------
option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
(a) This option shall cease to qualify for favorable tax treatment as
an Incentive Option if (and to the extent) this option is exercised for one or
more Option Shares: (i) more than three (3) months after the date Optionee
ceases to be an Employee for any reason other than death or Disability or (ii)
more than twelve (12) months after the date Optionee ceases to be an Employee by
reason of Disability.
(b) To the extent that the option (together with all Incentive
Options granted to the Optionee under all stock option plans of the Corporation
(or Parent or Subsidiary, including the Plan) becomes exercisable for the first
time during any calendar year for shares having a Fair Market Value greater than
One Hundred Thousand Dollars ($100,000), the portion of such options which
exceeds such amount will be treated as Non-Statutory Options. For purposes of
this Paragraph 17(b), options designated as Incentive Options are taken into
account
6
in the order in which they were granted, and the Fair Market Value of stock is
determined as of the time the option with respect to such stock is granted. If
the Code is amended to provide for a different limitation from that set forth in
this Paragraph 17(b), such different limitation shall be deemed incorporated
herein effective as of the date required or permitted by such amendment to the
Code. If the option is treated as an Incentive Option in part and as a
Non-Statutory Option in part by reason of the limitation set forth in this
Paragraph 17(b), the Optionee may designate which portion of such option the
Optionee is exercising. In the absence of such designation, the Optionee shall
be deemed to have exercised the Incentive Option portion of the option first.
Separate certificates representing each such portion shall be issued upon the
exercise of the option. (NOTE TO OPTIONEE: If the aggregate Exercise Price of
the option (that is, the Exercise Price multiplied by the total number Option
Shares subject to this option) plus the aggregate exercise price of any other
Incentive Options you hold (whether granted pursuant to the Plan or any other
stock option plan of the Corporation (or Parent or Subsidiary)) is greater than
$100,000, you should contact the Chief Financial Officer of the Corporation to
ascertain whether the entire option qualifies as an Incentive Option.)
(c) Notwithstanding Paragraph 2, if Optionee is a Ten Percent
Stockholder on the Grant Date, then this option shall have a term of five (5)
years measured from the Grant Date, unless sooner terminated in accordance with
Paragraph 5, 6, or 16.
7
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
---------
B. Board shall mean the Corporation's Board of Directors.
-----
C. Code shall mean the Internal Revenue Code of 1986, as amended.
----
D. Common Stock shall mean the Corporation's common stock.
------------
E. Consultant shall mean a person engaged to provide consulting or
----------
advisory services other than as an Employee or director) to the Corporation (or
any Parent or Subsidiary), provided that the identity of such person, the nature
of such services or the entity to which such services are provided would not
preclude the Corporation from offering or selling securities to such person
pursuant to the Plan in reliance on either the exemption from registration
provided by Rule 701 under the Securities Act or, if the Corporation is required
to file reports pursuant to Section 13 or 15(d) of the 1934 Act, registration on
a Form S-8 Registration Statement under the Securities Act.
F. Corporate Transaction shall mean an Ownership Change Event or a series
---------------------
of related Ownership Change Events (collectively, a "Transaction") wherein the
stockholders of the Corporation immediately before the Transaction do not retain
immediately after the Transaction, in substantially the same proportions as
their ownership of shares of the Corporation's voting stock immediately before
the Transaction, direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding voting stock
of the Corporation or the corporation or corporations to which the assets of the
Corporation were transferred (the "Transferee Corporation(s)"), as the case may
be. For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
stock of one or more corporations which, as a result of the Transaction, own the
Corporation or the Transferee Corporation(s), as the case may be, either
directly or through one or more subsidiary corporations. The Board shall have
the right to determine whether multiple sales or exchanges of the voting stock
of the Corporation or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.
G. Corporation shall mean Agile Software Corporation, a Delaware
-----------
corporation, and any successor corporation thereto.
H. Director shall mean a member of the Board or of the board of directors
--------
of any other Parent or Subsidiary corporation.
I. Disability shall mean the permanent and total disability of the
----------
Optionee within the meaning of Code Section 22(e)(3).
A-1
J. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
K. Exercise Date shall mean the date on which the option shall have been
-------------
exercised in accordance with Paragraph 9 of the Agreement.
L. Exercise Price shall mean the exercise price per share as specified in
--------------
the Grant Notice.
M. Expiration Date shall mean the date on which the option expires as
---------------
specified in the Grant Notice.
N. Fair Market Value per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as the price is reported by
the National Association of Securities Dealers on the Nasdaq National Market or
any successor system. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any Stock
Exchange nor traded on the Nasdaq National Market, then the Fair Market Value
shall be determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate.
O. Grant Date shall mean the date of grant of the option as specified in
----------
the Grant Notice.
P. Grant Notice shall mean the Notice of Grant of Stock Options
------------
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
Q. Incentive Option shall mean an option which satisfies the requirements
----------------
of Code Section 422.
R. Initial Vest Date shall mean the date the first installment of Option
-----------------
Shares will vest, as specified in the Grant Notice.
A-2
S. Involuntary Termination shall mean the termination of Optionee's
-----------------------
Service by reason of:
(i) Optionee's involuntary dismissal or discharge by the Corporation
(or a Parent or Subsidiary employing Optionee) for reasons other than
Misconduct; or
(ii) Optionee's voluntary resignation following (1) a reduction in
Optionee's level of base salary by more than fifteen percent, (15%) (2) a
reduction in the Optionee's level of participation in any corporate-performance
based bonus or incentive programs (not including sales compensation or sales
incentive programs) by more than fifteen percent (15%) or (3) a relocation of
Optionee's place of employment by more than fifty (50) miles, provided and only
if such reduction or relocation is effected by the Corporation without
Optionee's consent.
T. Misconduct shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).
U. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
--------
V. Non-Statutory Option shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
W. Option Shares shall mean the number of shares of Common Stock subject
-------------
to the option.
X. Optionee shall mean the person to whom this option is granted as
--------
specified in the Grant Notice.
Y. Ownership Change Event shall be deemed to have occurred if any of the
----------------------
following occurs with respect to the Corporation: (i) the direct or indirect
sale or exchange in a single or series of related transactions by the
stockholders of the Corporation of more than fifty percent (50%) of the voting
stock of the Corporation; (ii) a merger or consolidation in which the
Corporation is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Corporation; or (iv) a liquidation or
dissolution of the Corporation.
Z. Parent shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
AA. Plan shall mean the Corporation's 1995 Stock Option Plan.
----
A-3
BB. Plan Administrator shall mean either the Board or a committee of Board
------------------
members, to the extent the committee is at the time responsible for the
administration of the Plan.
CC. Securities Act shall mean the Securities Act of 1933, as amended.
--------------
DD. Service shall mean an Optionee's employment or service with the
-------
Corporation (or Parent or Subsidiary corporation), whether in the capacity of an
Employee, a Director or a Consultant. Unless otherwise determined by the Board,
an Optionee's Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Optionee renders Service to the Corporation
(or Parent or Subsidiary corporation) or a change in the Corporation (or Parent
or Subsidiary corporation) for which the Optionee renders such Service, provided
that there is no interruption or termination of the Optionee's Service.
Furthermore, an Optionee's Service with the Corporation (or Parent or Subsidiary
corporation) shall not be deemed to have terminated if the Optionee takes any
military leave, sick leave, or other bona fide leave of absence approved by the
Corporation; provided, however, that if any such leave exceeds ninety (90) days,
on the one hundred eighty-first (181st) day following the commencement of such
leave any Incentive Option held by the Optionee shall cease to be treated as an
Incentive Option and instead shall be treated thereafter as a Non-Statutory
Option unless the Optionee's right to return to Service with the Corporation (or
Parent or Subsidiary corporation) is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Corporation or
required by law, a leave of absence shall not be treated as Service for purposes
of determining vesting under the Optionee's option agreement. An Optionee's
Service shall be deemed to have terminated either upon an actual termination of
Service or upon the corporation for which the Optionee performs Service ceasing
to be a Parent or Subsidiary. Subject to the foregoing, the Corporation, in its
discretion, shall determine whether an Optionee's Service has terminated and the
effective date of such termination.
EE. Stock Exchange shall mean the American Stock Exchange or the New York
--------------
Stock Exchange.
FF. Subsidiary shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
GG. Ten Percent Stockholder shall mean the owner of stock (as determined
-----------------------
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary corporation).
HH. Vesting Schedule shall mean the vesting schedule specified in the
----------------
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.
A-4
EX-99.(D)(4)
11
dex99d4.txt
AGILE SOFTWARE 2000 NONSTATUTORY STOCK OPTION PLAN
EXhibit (d)(4)
AGILE SOFTWARE CORPORATION
2000 NONSTATUTORY STOCK OPTION PLAN
(As Amended through April 2, 2001)
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 2000 Nonstatutory Stock Option Plan is intended to promote the
interests of Agile Software Corporation, a Delaware corporation, by providing
eligible persons with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation.
Unless otherwise defined herein, capitalized terms shall have the meanings
assigned to such terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
a Committee. Members of the Committee shall serve for such period of time as the
Board may determine and shall be subject to removal by the Board at any time.
The Board may also at any time terminate the functions of the Committee and
reassume all powers and authority previously delegated to the Committee.
B. Any officer of the Corporation shall have the authority to act on
behalf of the Corporation with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Corporation herein, provided the officer has apparent authority with
respect to such matter, right, obligation, determination or election.
C. In addition to any other powers set forth in the Plan and subject to
the provisions of the Plan, the Plan Administrator shall have the full and final
power and authority, in its discretion to:
1. establish such rules and regulations as it may deem appropriate
for proper administration of the Plan and to make such determinations under, and
issue such interpretations of, the Plan and any outstanding option or stock
issuance as it may deem necessary or advisable;
2. determine which eligible persons are to receive option grants and
stock issuances under the Plan, the time or times when such option grants or
stock issuances are to be made, the number of shares to be covered by each such
grant, the time or times at which each option is to become exercisable, the
vesting schedule (if any) applicable to each option or stock issuance, the
maximum term for which the option is to remain outstanding;
3. amend, modify, extend, cancel, or renew, any option or stock
issuance or to waive any restrictions or conditions applicable to any option or
shares acquired pursuant to a stock issuance or upon the exercise of an option;
4. amend the exercisability of any option or the vesting of any
shares acquired upon the exercise of any option or pursuant to any stock
issuance, including with respect to the period following an Optionee's
termination of Service with the Corporation;
5. delegate to any proper officer of the Corporation the authority
to (a) grant one or more options or stock issuances, without further approval of
the Board, to any person eligible pursuant to Section III below, provided,
however, that (i) such options and stock issuances shall not be granted to any
one person within any fiscal year of the Corporation in excess of such limits as
may be specified by the Plan Administrator, (ii) the exercise price per share of
each option shall be equal to the Fair Market Value per share of the Common
Stock on the effective date of grant (or, if the Common Stock has not traded on
such date, on the last day preceding the effective date of grant on which the
Common Stock was traded), and (iii) each option or stock issuance shall be
subject to the terms and conditions of the appropriate standard form of option
agreement or Issuance Agreement approved by the Board and shall conform to the
provisions of the Plan and such other guidelines as shall be established from
time to time by the Board and (b) extend the post-termination exercise period
for an option other than an option held by a person who is an Insider at the
time of such amendment; and
6. correct any defect, supply any omission or reconcile any
inconsistency in the Plan, any option agreement, or any stock issuance agreement
and to make all other determinations and take such other actions with respect to
the Plan or any option or stock issuance as the Board may deem advisable to the
extent not inconsistent with the provisions of the Plan or applicable law.
Decisions of the Plan Administrator shall be final and binding on all
parties who have an interest in the Plan or any option, stock issuance, or
shares issued thereunder.
D. In addition to such other rights of indemnification as they may have
as members of the Board or officers or employees of the Corporation (or Parent
or Subsidiary corporation), members of the Board and any officers or employees
of the Corporation (or Parent or Subsidiary corporation) to whom authority to
act for the Board or the Corporation is delegated shall be indemnified by the
Corporation against all reasonable expenses, including attorneys' fees, actually
and necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Corporation) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Corporation, in writing, the opportunity at its own expense to
handle and defend the same.
2
III. ELIGIBILITY
A. Employees and Consultants are eligible to receive option grants
pursuant to the option Grant Program and/or stock issuances under the Stock
Issuance Program However, notwithstanding any other provision herein to the
contrary, no person shall be eligible to be granted an option or stock issuance
under the Plan whose eligibility would require approval of the Plan by the
stockholders of the Corporation under any law or regulation or the rules of any
stock exchange or market system upon which the Common Stock may then be listed.
B. For purposes of the foregoing sentence, Employees and Consultants
shall include prospective Employees and prospective Consultants to whom options
and/or stock issuances are granted in connection with written offers of
employment or other service relationship with the Corporation or any Parent or
Subsidiary corporation. Eligible persons may be granted more than one (1) option
and/or stock issuance under the Plan
C. Options granted under the Plan may only be Non-Statutory Options.
IV. STOCK SUBJECT TO THE PLAN
A. The maximum number of shares of Common Stock which may be issued over
the term of the Plan shall not exceed 14,500,000 shares. If an outstanding
option for any reason expires or is terminated or canceled or if shares of stock
are acquired upon the exercise of an option or pursuant to a stock issuance are
subject to repurchase by the Corporation and are repurchased by the Corporation,
the shares of stock allocable to the unexercised portion of such option or such
repurchased shares of stock shall again be available for issuance under the
Plan.
B. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities and the exercise price per
share in effect under each outstanding option, and (iii) the number and/or class
of securities acquired pursuant to each stock issuance that are subject to
vesting and/or a repurchase right of the Corporation, in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive. In no event shall
any such adjustments be made in connection with the conversion of one or more
outstanding shares of the Corporation's preferred stock into shares of Common
Stock.
ARTICLE TWO
OPTION GRANT PROGRAM
--------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
--------
shall comply with the terms specified below.
3
A. Exercise Price.
--------------
1. The exercise price per share of an option shall be determined by
the Plan Administrator.
2. The exercise price shall become immediately due upon exercise of
the option and shall, subject to the documents evidencing the option, be made:
a. in cash, cash equivalent, or check made payable to the
Corporation;
b. in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date;
c. to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the Optionee
shall concurrently provide irrevocable instructions (a) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale;
d. provided that the person to whom the Option is granted is an
Employee and in the Corporation's sole discretion at the time the Option is
exercised, by delivery of a promissory note in a form approved by the
Corporation for the aggregate exercise price, provided that, (1) any promissory
note used to pay the exercise price shall be subject to the provisions of
paragraph A.3 below, and (2) if the Corporation is incorporated in the State of
Delaware, the portion of the aggregate exercise price not less than the par
value of the shares being acquired shall be paid in cash;
e. by such other consideration as may be approved by the Board
from time to time to the extent permitted by applicable law; or
f. by any combination thereof.
The Board may at any time or from time to time, grant options which do not
permit all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.
3. No promissory note shall be permitted if the exercise of an
option using a promissory note would be a violation of any law. Any permitted
promissory note shall be on such terms as the Board shall determine at the time
the option is granted. The Board shall have the authority to permit or require
the Optionee to secure any promissory note used to exercise an option with the
shares of stock acquired upon the exercise of the option or with other
collateral acceptable to the Corporation. Unless otherwise provided by the
Board, if the Corporation at any
4
time is subject to the regulations promulgated by the Board of Governors of the
Federal Reserve System or any other governmental entity affecting the extension
of credit in connection with the Corporation's securities, any promissory note
shall comply with such applicable regulations, and the Optionee shall pay the
unpaid principal and accrued interest, if any, to the extent necessary to comply
with such applicable regulations.
B. Exercise and Term of Options. Each option shall be exercisable at such
----------------------------
time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant; provided, however, that no option granted to a prospective
Employee or prospective Consultant may become exercisable prior to the date on
which such person commences services with the Corporation (or any Parent or
Subsidiary corporation).
C. Effect of Termination of Service. The following provisions shall
--------------------------------
govern the exercise of any options held by the Optionee at the time of cessation
of Service or death except as otherwise set forth in the Nonstatutory Stock
Option Agreement:
1. Should the Optionee cease to remain in Service for any reason
other than Disability, death or Misconduct, then the Optionee shall have a
period of three (3) months following the date of such cessation of Service
during which to exercise each outstanding option held by such Optionee.
2. Should such Service terminate by reason of Disability, then the
Optionee shall have a period of twelve (12) months following the date of such
cessation of Service during which to exercise each outstanding option held by
such Optionee.
3. Should the Optionee die while holding one or more outstanding
options, then the personal representative of the Optionee's estate or the person
or persons to whom the option is transferred pursuant to the Optionee's will or
in accordance with the laws of descent and distribution shall have a period of
twelve (12) months following the date of the Optionee's death during which to
exercise each such option.
4. Notwithstanding the foregoing, if the exercise of an Option
within the applicable time periods set forth above is prevented by the
provisions of Section V of Article Four below, the option shall remain
exercisable until three (3) months after the date the Optionee is notified by
the Corporation that the option is exercisable, but in any event no later than
the specified expiration of the option term.
5. Under no circumstances, however, shall any option be exercisable
after the specified expiration of the option term.
6. During the applicable post-Service exercise period, the option
may not be exercised in the aggregate for more than the number of vested shares
for which the option is exercisable on the date of the Optionee's cessation of
Service. Upon the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's cessation
of Service,
5
terminate and cease to be outstanding to the extent it is not exercisable for
vested shares on the date of such cessation of Service.
7. Should Optionee's Service be terminated for Misconduct, then all
outstanding options held by the Optionee shall terminate immediately and cease
to remain outstanding.
D. Stockholder Rights. The holder of an option shall have no stockholder
------------------
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.
E. Transferability of Options. During the lifetime of the Optionee, an
--------------------------
option shall be exercisable only by the Optionee or the Optionee's guardian or
legal representative. No option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Board, in its
discretion, and set forth in the option agreement evidencing such option, an
Option shall be assignable or transferable subject to the applicable
limitations, if any, described in the General Instructions to Form S-8
Registration Statement under the Securities Act.
F. Withholding. The Corporation's obligation to deliver shares of Common
-----------
Stock upon the exercise of any options granted under the Plan shall be subject
to the satisfaction of all applicable federal, state, local, and foreign income
and employment tax withholding requirements.
ARTICLE THREE
STOCK ISSUANCE PROGRAM
----------------------
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock shall be issued under the Stock Issuance Program
through direct and immediate purchases without any intervening stock options
grants. The issued shares shall be evidenced by a Stock Issuance Agreement
("Issuance Agreement") that complies with the terms and conditions of this
------------------
Article Three.
A. Consideration.
-------------
Shares of Common Stock shall be issued under the Plan for one or more
of the following items of consideration, which the Plan Administrator may deem
appropriate in each individual instance:
1. cash or cash equivalents (such as a personal check or bank draft)
paid to the Corporation;
2. Common Stock of the Corporation valued at Fair Market Value on
the date of issuance;
6
3. a promissory note payable to the Corporation's order in one or
more installments, which may be subject to cancellation in whole or in part upon
terms and conditions established by the Plan Administrator;
4. past services rendered to the Corporation or any parent or
subsidiary corporation; or
5. any combination of the above approved by the Plan Administrator.
Shares may, in the absolute discretion of the Plan Administrator, be
issued for consideration with a value less than one-hundred percent (100%) of
the Fair Market Value of such shares, but in no event less than eighty-five
percent (85%) of such Fair Market Value.
B. Vesting Provisions.
------------------
1. Shares of Common Stock issued under this Article Three may, in
the absolute discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant's period of Service. The effect which death, disability or other
event designated by the Plan Administrator is to have upon the vesting schedule
shall be determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.
2. The Participant shall have full stockholder rights with respect
to any shares of Common Stock issued to him or her under this Article Three,
whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares by reason of any stock dividend, stock split,
reclassification of Common Stock or other similar change in the Corporation's
capital structure or by reason of any Corporate Transaction shall be issued,
subject to (i) the same vesting requirements applicable to his or her unvested
shares and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.
3. Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock under this Article Three, then those
shares shall be immediately surrendered to the Corporation for cancellation, and
the Participant shall have no further stockholder rights with respect to those
shares. The Corporation shall repay to the Participant the cash consideration
paid for the surrendered shares and shall cancel the principal balance of any
outstanding purchase-money note of the Participant to the extent attributable to
such surrendered shares. The surrendered shares may, at the Plan Administrator's
discretion, be retained by the Corporation as treasury shares or may be retired
to authorized but unissued share status.
4. The Plan Administrator may in its discretion elect to waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which should otherwise occur upon the
non-completion of the vesting schedule applicable to such shares. Such waiver
shall result in the immediate vesting of the Participant's
7
interest in the shares of Common Stock as to which the waiver applies. Such
wavier may be effected at any time, whether before or after the Participant's
cessation of Service.
II. TRANSFER RESTRICTIONS/SHARE ESCROW
A. Certificates evidencing unvested shares issued pursuant to this
Article Three may, in the Plan Administrator's discretion, be held in escrow by
the Corporation until the Participant's interest in such shares vests or may be
held directly to the Participant with restrictive legends indicating that the
shares are unvested. To the extent an escrow arrangement is utilized, the
unvested shares and any securities or other assets issued with respect to such
shares (other than regular cash dividends) shall be delivered in escrow to the
Corporation to be held until the Participant's interest in such shares (or other
securities or assets) vests. Alternatively, if the unvested shares are issued
directly to the Participant, the restrictive legend on the certificates for such
shares shall read substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND
ARE ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS
AND TO (II) CANCELLATION OR OTHER REPURCHASE IN THE EVENT THE
REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) CEASES
TO REMAIN IN THE CORPORATION'S SERVICE. SUCH TRANSFER
RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION
OR REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT
BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR HIS/HER
PREDECESSOR IN INTEREST) DATED _______________, 200_, A COPY
OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION."
B. The Participant shall have no right to transfer any unvested shares of
Common Stock issued to him or her under this Article Three. For purposes of this
restriction, the term ("transfer") shall include (without limitation) any sale,
--------
pledge, assignment, encumbrance, gift, or other disposition of such shares,
whether voluntary or involuntary, other than an Ownership Change Event. Upon any
such attempted transfer, the unvested shares shall immediately be cancelled, and
neither the Participant nor the proposed transferee shall have any rights with
respect to those shares. However, the Participant shall have the right to make a
gift of unvested shares acquired under the Plan to his or her spouse or issue,
including adopted children, or to a trust established for such spouse or issue,
provided the donee of such shares delivers to the Corporation a written
agreement to be bound by all the provisions of the Plan and the Issuance
Agreement applicable to the gifted shares.
ARTICLE FOUR
MISCELLANEOUS
-------------
I. CORPORATE TRANSACTIONS
A. The shares subject to each option outstanding under the Plan at the
time of a Corporate Transaction shall automatically vest in full so that each
such option shall, immediately
8
prior to the effective date of the Corporate Transaction, become fully
exercisable for all of the shares of Common Stock at the time subject to that
option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, the shares subject to an outstanding option
shall not vest on such an accelerated basis if and to the extent: (i) such
option is assumed by the successor corporation (or parent thereof) in the
Corporate Transaction and the Corporation's repurchase rights with respect to
the unvested option shares are concurrently assigned to such successor
corporation (or parent thereof) or (ii) such option is to be replaced with a
cash incentive program of the successor corporation which preserves the spread
existing on the unvested option shares at the time of the Corporate Transaction
and provides for subsequent payout in accordance with the same vesting schedule
applicable to those unvested option shares or (iii) the acceleration of such
option is subject to other limitations imposed by the Plan Administrator at the
time of the option grant.
B. All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. The Corporation shall use its best efforts to provide at least twenty
(20) days prior written notice of the occurrence of any Corporate Transaction in
which the options or repurchase rights under the Plan are not to be assumed by
or assigned to the successor corporation and such options or repurchase rights
vest or terminate on an accelerated basis.
D. Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).
E. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction, had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same.
F. The Plan Administrator shall have the discretion, exercisable either
at the time the option or stock issuance is granted or at any time while the
option remains outstanding or shares acquired pursuant to a stock issuance are
unvested, to provide for the automatic acceleration (in whole or in part) of one
or more outstanding options and the immediate termination of the Corporation's
repurchase rights with respect to the shares subject to those options or any
stock issuance upon the occurrence of a Corporate Transaction, whether or not
those options or repurchase rights are to be assumed or assigned in the
Corporate Transaction.
9
G. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option or stock issuance is granted or at any
time while the option remains outstanding or shares acquired pursuant to a stock
issuance are unvested, to structure such option or stock issuance so that the
shares subject to that option or stock issuance will automatically vest on an
accelerated basis should the Optionee's or Participant's Service terminate by
reason of an Involuntary Termination, as defined in the agreement evidencing the
option or stock issuance, within a designated period (not to exceed eighteen
(18) months) following the effective date of any Corporate Transaction in which
the option or stock issuance are assumed and the repurchase rights applicable to
the unvested option shares or stock issuance shares do not otherwise terminate.
Any option so accelerated shall remain exercisable for the fully-vested option
shares until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination. In addition, the Plan Administrator may provide that
one or more of the Corporation's outstanding repurchase rights with respect to
shares held by the Optionee or Participant at the time of such Involuntary
Termination shall immediately terminate on an accelerated basis, and the shares
subject to those terminated rights shall accordingly vest at that time.
H. The grant of options or stock issuances under the Plan shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
II. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan became effective when adopted by the Board on February 10,
2000.
B. The Plan shall terminate upon the earlier of: (i) the date on which
all shares available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing options or stock issuances granted under the Plan have lapsed, or
(ii) its termination by the Board.
III. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. No amendment or modification of
the Plan shall affect any then outstanding option or unvested shares acquired
pursuant to a stock issuance unless expressly provided by the Board. In any
event, no amendment or modification of the Plan may adversely affect any then
outstanding option or unvested shares acquired pursuant to a stock issuance
without the consent of the Optionee or Participant, unless such amendment or
modification is necessary to comply with any applicable law, regulation or rule.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.
10
V. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option hereunder and
the issuance of any shares of Common Stock upon the exercise of any option shall
be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it and the shares of Common Stock issued pursuant to it.
VI. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or Participant any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary corporation employing or retaining the Optionee or Participant) or of
the Optionee or Participant, which rights are hereby expressly reserved by each,
to terminate the Optionee's or Participant's Service at any time for any reason,
with or without cause.
VII. FINANCIAL REPORTS
Each Optionee shall be given access to information concerning the
Corporation equivalent to that information generally made available to the
Corporation's common stockholders.
11
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
-----
B. Code shall mean the Internal Revenue Code of 1986, as amended.
----
C. Committee shall mean a committee of the Board duly appointed to
---------
administer the Plan and having such powers as shall be specified by the Board.
Unless the powers of the Committee have been specifically limited, the Committee
shall have all of the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law.
D. Common Stock shall mean the Corporation's common stock.
------------
E. Consultant shall mean a person engaged to provide consulting or
----------
advisory services (other than as an Employee or a Director) to the Corporation
or any Parent or Subsidiary corporation, provided that the identity of such
person, the nature of such services or the entity to which such services are
provided would not preclude the Corporation from offering or selling securities
to such person pursuant to the Plan in reliance on a Form S-8 Registration
Statement under the Securities Act.
F. Corporate Transaction shall mean an Ownership Change Event or a series
---------------------
of related Ownership Change Events (collectively, a "Transaction") wherein the
-----------
stockholders of the Corporation immediately before the Transaction do not retain
immediately after the Transaction, in substantially the same proportions as
their ownership of shares of the Corporation's voting stock immediately before
the Transaction, direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding voting stock
of the Corporation or the corporation or corporations to which the assets of the
Corporation were transferred (the "Transferee Corporation(s)"), as the case may
-------------------------
be. For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
stock of one or more corporations which, as a result of the Transaction, own the
Corporation or the Transferee Corporation(s), as the case may be, either
directly or through one or more subsidiary corporations. The Board shall have
the right to determine whether multiple sales or exchanges of the voting stock
of the Corporation or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.
G. Corporation shall mean Agile Software Corporation, a Delaware
-----------
corporation, and any successor corporation thereto.
H. Director shall means a member of the Board or of the board of
--------
directors of any other Parent or Subsidiary corporation.
I. Disability shall mean the permanent and total disability on the
----------
Optionee or Participant within the meaning of Section 22(e)(3) of the Code.
1
J. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary corporation), subject to the control
and direction of the employer entity as to both the work to be performed and the
manner and method of performance.
K. Exercise Date shall mean the date on which the Corporation shall have
-------------
received written notice of the option exercise.
L. Fair Market Value per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by the
Plan Administrator to be the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any Stock
Exchange nor traded on the Nasdaq National Market, then the Fair Market Value
shall be determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate.
M. Involuntary Termination shall mean the termination of the Service of
-----------------------
any individual as defined in the agreement evidencing the option or stock
issuance.
N. Misconduct shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by the Optionee or Participant, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary corporation), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary corporation) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary corporation) may consider as
grounds for the dismissal or discharge of any Optionee, Participant or other
person in the Service of the Corporation (or any Parent or Subsidiary
corporation).
O. Non-Statutory Option shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
P. Ownership Change Event shall be deemed to have occurred if any of the
----------------------
following occurs with respect to the Corporation: (i) the direct or indirect
sale or exchange in a
2
single or series of related transactions by the stockholders of the Corporation
of more than fifty percent (50%) of the voting stock of the Corporation; (ii) a
merger or consolidation in which the Corporation is a party; (iii) the sale,
exchange, or transfer of all or substantially all of the assets of the
Corporation; or (iv) a liquidation or dissolution of the Corporation.
Q. Optionee shall mean any person to whom an option is granted pursuant
--------
to the Option Grant Program under the Plan.
R. Parent shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S. Participant shall mean any person to whom a stock issuance or stock
-----------
bonus is granted pursuant to the Stock Issuance Program under the Plan.
T. Plan shall mean the Corporation's 2000 Nonstatutory Stock Option Plan,
----
as set forth in this document.
U. Plan Administrator shall mean either the Board or the Committee, to
------------------
the extent the Committee is at the time responsible for the administration of
the Plan.
V. Securities Act shall mean the Securities Act of 1933, as amended.
--------------
W. Service shall mean an Optionee's or Participant's employment or
-------
service with the Corporation or Parent or Subsidiary corporation, whether in the
capacity of an Employee or a Consultant. Unless otherwise determined by the
Board, an Optionee's or Participant's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee or
Participant renders Service to the Corporation or Parent or Subsidiary
corporation or a change in the Corporation or Parent or Subsidiary corporation
for which the Optionee or Participant renders such Service, provided that there
is no interruption or termination of the Optionee's or Participant's Service.
Furthermore, an Optionee's or Participant's Service with the Corporation or
Parent or Subsidiary corporation shall not be deemed to have terminated if the
Optionee or Participant takes any military leave, sick leave, or other bona fide
leave of absence approved by the Corporation. Notwithstanding the foregoing,
unless otherwise designated by the Corporation or required by law, a leave of
absence shall not be treated as Service for purposes of determining vesting
under the Optionee's option agreement or Participant's stock issuance agreement.
An Optionee's or Participant's Service shall be deemed to have terminated either
upon an actual termination of Service or upon the corporation for which the
Optionee or Participant performs Service ceasing to be a Parent or Subsidiary.
Subject to the foregoing, the Corporation, in its discretion, shall determine
whether an Optionee's or Participant's Service has terminated and the effective
date of such termination.
X. Stock Exchange shall mean either the American Stock Exchange or the
--------------
New York Stock Exchange.
3
Y. Subsidiary shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
4
EX-99.(D)(5)
12
dex99d5.txt
AGILE SOFTWARE 2000 NONSTATUTORY STOCK PROSPECTUS
Exhibit(d)(5)
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.*
Agile Software Corporation
2000 Nonstatutory Stock Option Plan
This memorandum contains information regarding the Agile Software
Corporation 2000 Nonstatutory Stock Option Plan (the "Plan"), pursuant to which
shares of Common Stock of Agile Software Corporation (the "Shares"), in any
combination of authorized but unissued Shares or reacquired Shares, may be
offered to eligible persons providing services for Agile Software Corporation
(the "Company") or any parent or subsidiary corporation of the Company.
Upon written or oral request, the Company will provide without charge,
to each person to whom a copy of this memorandum is delivered, a copy of the
Company's Registration Statement by which the securities described in this
memorandum are registered and copies of the documents that have been
incorporated by reference in the Company's Registration Statement (not including
exhibits to the documents that are incorporated by reference unless such
exhibits are specifically incorporated by reference into the documents that the
Registration Statement incorporates). Upon written or oral request, the Company
will also provide without charge, to each person to whom a copy of this
memorandum is delivered, an additional copy of this memorandum, a copy of the
Company's annual report to stockholders for its latest fiscal year, and a copy
of all reports, proxy statements and other communications distributed to its
stockholders for its latest fiscal year and a copy of all reports, proxy
statements and other communications distributed to its stockholders generally.
Such requests should be directed to Chief Financial Officer, Agile Software
Corporation, One Almaden Boulevard, San Jose, CA 95113, (408) 975-3900.
Alternatively, on the Securities and Exchange Commission's web site at
http:\\www.sec.gov you will find the Registration Statement, reports, proxy
statements and other information regarding the Company that was filed
electronically.
Except for the person set forth in the foregoing paragraph, no person has
been authorized to give any information or make any representations, other than
those contained in this prospectus, in connection with the Plan, and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Company. This prospectus does not constitute an offering
in any state in which such offering may not lawfully be made.
--------------------------------------------------------------------------------
* Q&As 46 and 52 OF THIS DOCUMENT DO NOT CONSTITUTE A PART OF A
------
PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
--------------------------------------------------------------------------------
The date of this prospectus is April 2, 2001.
---------------------------------------------
TABLE OF CONTENTS
Page
----
INTRODUCTION ........................................................ 1
ELIGIBILITY & PARTICIPATION ......................................... 2
OPTION GRANTS ....................................................... 2
OPTION VESTING ...................................................... 3
OPTION EXERCISE ..................................................... 4
TERMINATING SERVICE WITH THE COMPANY ................................ 6
TRANSFERABILITY OF OPTIONS .......................................... 7
CORPORATE TRANSACTION OF THE COMPANY ................................ 7
RESTRICTED SHARES ................................................... 8
VESTING OF RESTRICTED SHARES ........................................ 10
TRANSFERABILITY OF RESTRICTED SHARES ................................ 10
STOCK SALES ......................................................... 11
STOCKHOLDER RIGHTS .................................................. 12
EMPLOYMENT STATUS ................................................... 12
TAX IMPLICATIONS OF NONSTATUTORY STOCK OPTIONS ...................... 13
TAX IMPLICATIONS OF RESTRICTED SHARES ............................... 15
FEDERAL SECURITIES LAWS AFFECTING PARTICIPANTS ...................... 16
PLAN ADMINISTRATION ................................................. 17
AMENDMENT OR TERMINATION OF THE PLAN ................................ 18
OTHER INFORMATION ................................................... 19
Questions & Answers About
The Agile Software Corporation 2000 Nonstatutory Stock Option Plan
================================================================================
The purpose of this prospectus is to provide you with a summary of the
terms of the Agile Software Corporation 2000 Nonstatutory Stock Option Plan (the
"Plan"). Should any inconsistency exist between the following description and
the actual terms of the Plan, your Stock Option Agreement or your Stock Issuance
Agreement, the terms of the Plan, your Stock Option Agreement and your Stock
Issuance Agreement control.
================================================================================
INTRODUCTION
================================================================================
1. What is the purpose of the Plan?
The Company adopted the Plan to promote the interests of the Company by
providing eligible persons with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest in the Company,
as an incentive for them to remain in service with the Company. Under the
Plan, the Company may award stock options or issue Shares ("Restricted
Shares") at a specified price ("Award") to any such employees and
consultants selected by the Company's Board of Directors (the "Board") or a
committee duly appointed by the Board to administer the Plan (collectively,
the "Plan Administrator").
The 2000 Nonstatutory Stock Option Plan became effective when adopted by
the Board on February 10, 2000.
2. What is the total number of Shares that may be issued under the Plan?
A total of 14,500,000 Shares of the Company are reserved for issuance under
the Plan. The Shares may be authorized but unissued Shares or reacquired
Shares.
3. What happens if there is a change in the Company's capital structure?
If there is a change in the Company's capital structure, the Company will
make appropriate adjustments to (i) the number and class of Shares subject
to the Plan, (ii) your outstanding options, and to the purchase price under
your outstanding options, and (iii) the number and class of Shares acquired
pursuant to a stock issuance that is subject to vesting or a repurchase
right of the Company. These adjustments will prevent any dilution or
enlargement of your rights and benefits under the Plan that would otherwise
occur as a result of a change in the Company's capital structure.
1
A "change in the Company's capital structure" includes: a stock dividend,
stock split, recapitalization, combination, exchange of Shares, or similar
change affecting the Company's stock.
4. Is the Plan subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA")?
No. The Plan is not subject to ERISA.
================================================================================
ELIGIBILITY & PARTICIPATION
================================================================================
5. Am I eligible to receive Awards under the Plan?
Generally, you are eligible to receive Awards under the Plan if you are a
current or prospective (pursuant to a written offer of employment) employee
or consultant of the Company or any parent or subsidiary corporation of the
Company. However, no person is eligible to be granted an Award whose
eligibility would require the approval of the Company's stockholders under
any applicable law, regulation or rule.
6. Do I need to enroll in the Plan?
No. You do not need to enroll in the Plan in order to receive an Award
under the Plan. The decision to grant or not to grant Awards to any
otherwise eligible person is solely within the discretion of the Plan
Administrator.
================================================================================
OPTION GRANTS
================================================================================
7. What is a stock option?
A stock option gives the option holder the right to purchase a specified
number of Shares within a specified time period at a price determined at
the time the option is granted. The exact number and the price of Shares
you are entitled to purchase under the option granted to you is set forth
in your Grant Notice and Nonstatutory Stock Option Agreement (together,
your "Stock Option Agreement").
8. What kind of stock option will I receive?
You will receive only nonstatutory stock options. See Q&A 53 through 60,
below, regarding the major federal income tax consequences of a NSO.
2
9. What are the benefits of receiving a stock option?
If the value of the Company increases, then the value of the Company's
stock and the value of your option will increase proportionately. Since
your option gives you the right to purchase Shares at a fixed price during
the period specified in your Stock Option Agreement, you may ultimately
profit from any increase in the value of the Shares. If you choose to
exercise your option, then, as a stockholder, you will become a part owner
of the Company and will have the right to receive any dividends paid on
your Shares and all communications sent to the Company's common
stockholders, attend all stockholder meetings and vote upon all matters
presented to the stockholders at such meetings. However, once you purchase
Shares, you also bear the risk of price declines.
10. What is the Grant Date?
The Grant Date is the day that the Company grants you an option to purchase
Shares unless the Board specifies a later effective date. Your Grant Date
is stated in your Grant Notice.
11. How many Shares does my option cover?
The number of Shares covered by each option is determined by the Plan
Administrator at its discretion. If you are granted an option, the number
of Shares subject to your option is stated in your Grant Notice.
12. What is the option Expiration Date?
The Expiration Date is the last day on which you may exercise your option,
unless your option has terminated on an earlier date due to your
termination of service or other events described in your Stock Option
Agreement.
13. Must I sign a Stock Option Agreement?
Yes. No option is valid or a binding obligation of the Company unless
evidenced by a fully executed Stock Option Agreement.
================================================================================
OPTION VESTING
================================================================================
14. What are the vesting provisions of my option?
Your Grant Notice states the rate at which your option vests and becomes
exercisable. [Most options granted under the Plan provide for vesting over
a period of five years. For example, if you received an initial option
grant as a new employee, your Stock Option Agreement may provide that 20%
of the Shares subject to the option become vested on
3
an "initial vesting date," provided that your service has not terminated
prior to that date. For each of the next 48 full months of your continuous
service from the "initial vesting date," your option would vest at a rate
of 0.02% per month until the vested percentage equals 100%.]
15. Does my termination from service affect the vesting of my option?
Yes. Upon your termination of service, your vesting will stop and the
vested percentage of your option will depend on your length of service at
the date of your termination.
================================================================================
OPTION EXERCISE
================================================================================
16. What is my option exercise date?
The exercise date is the day that you exercise your option to purchase the
Company common stock.
17. When may I exercise my option?
You may exercise your option on or after your initial vesting date, as
stated in your Stock Option Agreement, and prior to the option Expiration
Date. If you were granted an option as a prospective employee or
prospective consultant, you may not in any event exercise your option prior
to the date on which your service commences.
18. How many Shares may I purchase?
When you exercise your option, you may purchase up to a number of Shares
equal to the number of Shares subject to your option multiplied by your
vested percentage, less the number of Shares you previously acquired by
exercising your option. See Q&A 12 & 14 for a discussion of the Expiration
Date and vesting.
19. How do I exercise my option?
To exercise your option you must give written notice to the Company and pay
the exercise price for the Shares you are purchasing. The notice must state
your election to exercise the option, the number of whole shares of the
Company stock you are purchasing and any other information required by your
Stock Option Agreement. You must sign the written notice and deliver it in
person, by certified or registered mail, return receipt requested, by
confirmed facsimile transmission, or by such other means as the Company may
permit, to an authorized representative of the Company. You must deliver
the written notice and your exercise price payment prior to the termination
of the option. You must also make appropriate arrangements with the Company
for the satisfaction of
4
all federal, state, local and foreign income and employment tax withholding
requirements applicable to the option exercise. See Q&A 21, below for
authorized forms of payment.
20. What is the exercise price of my option?
The exercise price shall be determined by the Plan Administrator. The
exercise price of your option is stated in your Grant Notice. This price
was established when your option was granted.
21. How do I pay for the stock when I exercise my option?
Generally, you may pay the exercise price using any combination of the
following methods:
1. Cash, check or cash equivalent.
2. If you are an employee, and in the Company's sole discretion at
the time of exercise, by promissory note in a form approved by
the Company; provided that, you must pay the portion of the
aggregate exercise price that is equal to the par value of the
Shares being purchased in cash.
3. In shares of common stock held for the requisite period necessary
to avoid a charge to the Company's earnings for financial
reporting purposes and valued at Fair Market Value on the Date of
Exercise.
4. A " cashless exercise." A "cashless exercise" means the
assignment to the Company of the proceeds of a sale or loan with
respect to some or all of the Shares being acquired upon the
exercise of the option. A form of cashless exercise is often
referred to as "same-day sale."
5. Any other consideration approved by the Board and permitted by
law.
The Board may at any time or from time to time grant options which do not
permit all of the foregoing forms of consideration to be used in payment of
the exercise price or which otherwise restrict one or more forms of
consideration.
22. Will I receive stock certificates for the Shares that I purchase?
Except in the case where you pay the exercise price by means of a cashless
exercise, you will receive a certificate for the Shares you have purchased
that will be registered in your name, or, if applicable, in the names of
your heirs.
5
================================================================================
TERMINATING SERVICE WITH THE COMPANY
================================================================================
23. What service counts for purposes of the Plan?
"Service" for Plan purposes means your employment as an employee or service
as an employee or consultant of the Company or any parent or subsidiary
corporation of the Company. Unless otherwise determined by the Company,
your service shall not be deemed to terminate merely because you change the
capacity in which you provide services to the Company or any parent or
subsidiary corporation of the Company or a change in the parent or
subsidiary corporation of the Company for which you render such service,
provided that there is no interruption or termination of your service.
If the Participating Company employing you or engaging you as an employee
or consultant ceases to be among the parent or subsidiary corporation of
the Company (e.g., the subsidiary employing you is sold to an unrelated
third party), then your service will be deemed terminated. Subject to the
terms of the Plan and your Stock Option Agreement, the Company will have
the discretion to determine if and when your service has terminated for
purposes of the Plan.
24. What happens to my option if my service terminates?
The effect of your termination of service is specified in your Stock Option
Agreement. With certain exceptions described below, if your service
terminates, you will generally have 3 months from the date of your
termination of service (but in no event later than the Expiration Date) in
which to exercise the vested portion of your option.
If your service terminates due to your disability or death, you (or your
estate) will generally have 12 months following termination to exercise the
vested portion of your option.
If your service terminates due to your "misconduct," then your option will
terminate and cease to be exercisable immediately on the effective date of
such termination. "Misconduct" means the commission of any act of fraud,
embezzlement or dishonesty and any unauthorized use or disclosure of
confidential information or trade secrets of the Company or any parent or
subsidiary corporation of the Company, or any other intentional misconduct
adversely affecting the business or affairs of the Company or any parent or
subsidiary corporation of the Company, in a material manner.
In certain instances, as described in your Stock Option Agreement, the
exercise period following your termination of service may be extended. On
the other hand, in certain instances it may be reduced. For example, your
option may terminate sooner than
6
described above if it is not assumed by an acquiring corporation in
connection with a corporate transaction.
See Q&A 12 for the meaning of option Expiration Date, Q&A 14 for a
discussion of vesting, and Q&A 27 through 29 for a discussion of the
effects of a corporate transaction.
25. What happens to my option Shares if my service with the Company terminates?
You are entitled to retain ownership of any Shares you have purchased until
such time as you decide to sell them. Generally, your option will terminate
and you will forfeit any Shares not vested as of the date of your
termination of service.
================================================================================
TRANSFERABILITY OF OPTIONS
================================================================================
26. Can I assign or transfer my options?
No. During your lifetime, your options can only be exercised by you, your
guardian or legal representative. You cannot transfer or assign any option,
except by will or by the laws of descent and distribution.
================================================================================
CORPORATE TRANSACTION OF THE COMPANY
================================================================================
27. What is a "corporate transaction"?
A "corporate transaction" of the Company includes any of the following
events in which the stockholders of the Company immediately before such
event do not retain immediately after such event direct or indirect
beneficial ownership of at least a majority of the beneficial interest in
the voting stock of the Company or its successor:
(1) a direct or indirect sale or exchange by the stockholders of the
Company of more than fifty percent (50%) of the voting stock of
the Company;
(2) a merger or consolidation in which the Company is a party;
(3) the sale, exchange or transfer of all or substantially all of the
assets of the Company (other than a sale, exchange or transfer to
one or more subsidiaries of the Company); or
7
(4) liquidation or dissolution of the Company.
28. What happens to my option if there is a corporate transaction?
If a corporate transaction occurs, the surviving, continuing, successor, or
purchasing corporation or parent corporation of any of these may assume the
Company's rights and obligations under outstanding options, substitute for
outstanding options substantially equivalent options for the acquiring
corporation's stock, or replace the outstanding options with a cash
incentive program which preserves the spread existing on the unvested
option Shares at the time of the corporate transaction and provides for a
payout in accordance with the vesting schedules applicable to the
outstanding options.
However, if the acquiring corporation does not assume or substitute the
outstanding Company options, or replace the outstanding Company options
with a cash or incentive program, any unexercised and/or unvested portions
of the outstanding options will, immediately prior to the corporate
transaction, become exercisable and vested in full. Any option or portion
thereof which is neither assumed, substituted for, or replaced by the
acquiring corporation nor exercised as of the date of the corporate
transaction will terminate and cease to be outstanding effective as of the
date of the corporate transaction.
29. What happens to my Restricted Shares if there is a corporate transaction?
The Company's repurchase rights may be assigned to the acquiring
corporation. In the event the repurchase rights are not assigned to the
acquiring corporation, all outstanding repurchase rights will terminate
automatically and your Restricted Shares subject to a repurchase right will
immediately become vested in full, except to the extent such accelerated
vesting is precluded by other limitations imposed by the Plan Administrator
at the time the repurchase right is issued.
================================================================================
RESTRICTED SHARES
================================================================================
30. What is a Restricted Share?
The Board at its discretion may issue Restricted Shares through direct and
immediate purchases without any intervening stock option grants. The exact
number and the price of the Restricted Shares you are issued and entitled
to purchase is set forth in your Stock Issuance Agreement (the "Issuance
Agreement").
8
31. How many Restricted Shares does my stock issuance cover?
The number of Restricted Shares issued to you, if any, is determined by the
Board at its discretion. The number of Restricted Shares issued to you is
stated in your Issuance Agreement.
32. Do I have to pay for the Restricted Shares?
Restricted Shares may be issued under the Plan without requiring monetary
payment from you. However, the Board may require payment upon issuance of
such shares. See Q&A 41, below for forms of payment.
33. What is the exercise price for the Restricted Shares?
The exercise price for your Restricted Shares is stated in your Issuance
Agreement. Under the terms of the Plan, the price has to be set at no less
than 85% of the fair market value of a share on the Grant Date.
34. How do I pay for the Restricted Shares?
Generally, you may pay the price using any combination of the following
methods:
1. cash or cash equivalents (such as a personal check or bank draft)
paid to the Company;
2. common stock of the Company valued at fair market value on the
date of issuance;
3. a promissory note payable to the Company's order in one or more
installments, which may be subject to cancellation in whole or in
part upon terms and conditions established by the Board;
4. past services rendered to the Company or any parent or subsidiary
corporation of the Company; or
5. any combination of the above approved by the Board.
The Board may at any time or from time to time issue Restricted Shares
which do not permit all of the foregoing forms of consideration to be used
in payment or which otherwise restrict one or more forms of consideration.
35. Must I sign the Issuance Agreement?
Yes. No stock issuance is valid or a binding obligation of the Company
unless evidenced by a fully executed Issuance Agreement.
9
================================================================================
VESTING OF RESTRICTED SHARES
================================================================================
36. What are the vesting provisions of my Restricted Shares?
Your Issuance Agreement states the rate at which your Restricted Shares
vest.
37. Does my termination from service affect the vesting of my Restricted
Shares?
Yes, if you terminate service with the Company or any parent or subsidiary
corporation of the Company, you must surrender to the Company any unvested
Restricted Shares for cancellation, and you will have no further
stockholder rights with respect to those shares.
38. Will I be repaid for the unvested Restricted Shares that I return to the
Company as a result of my termination from service?
Yes, the Company will refund you the cash amount you paid for the unvested
Restricted Shares, and will cancel any outstanding promissory note you owe
to the Company to the extent attributable to the such shares.
39. What affect will death or disability have on the vesting of my Restricted
Shares?
Your Issuance Agreement states the effect of death or disability on the
vesting of your Restricted Shares.
================================================================================
TRANSFERABILITY OF RESTRICTED SHARES
================================================================================
40. Can I assign or transfer my Restricted Shares?
You may assign and transfer any Restricted Share issued to you that is one
hundred percent (100%) vested. You may not transfer any unvested Restricted
--- ---
Share issued to you. Any attempt to transfer unvested Restricted Shares
will result in the immediate cancellation of such shares and neither you
nor the proposed transferee will have any rights with respect to such
shares.
41. What constitutes a transfer of Restricted Shares?
A "Transfer" of a Restricted Share includes any voluntary or involuntary
sale, pledge, assignment, encumbrance, gift, or other disposition of such
share. However, a transfer
10
shall not include any transfer made in connection with a corporate
transaction. See Q&A 27.
42. Are there any exceptions to the limitation on the transfer of Restricted
Shares?
Yes. You have the right to make a gift of unvested Restricted Shares to
your spouse, children (including adopted children) and to any trust
established for your spouse or children; provided, your spouse, children or
the trust deliver to the Company a written agreement to be bound to all the
provisions of the Plan and the Issuance Agreement applicable to the gifted
Restricted Shares.
================================================================================
STOCK SALES
================================================================================
43. When may I sell the Shares that I receive by exercising my option or the
Restricted Shares which I have been issued?
Generally, you may sell the Shares that you receive pursuant to the
exercise of your option at any time after the Shares have been issued in
your name. Also, generally, you may also sell any fully vested Restricted
Shares. Before you sell any of your Shares, you should discuss the tax
implications of the sale with a tax advisor. See Q&A 53-60, below, Tax
Implications of Nonstatutory Stock Options. See also, Q&A 61-68, below, Tax
Implications of Restricted Shares.
Furthermore, all employees and consultants are subject to U.S. federal
securities laws which impose severe civil and criminal penalties on persons
who trade while in possession of "inside information." See Q&A 69-71,
below, Federal Securities Laws Affecting Participants.
44. Do I pay brokerage commissions on the purchase of Shares under the Plan or
when I subsequently sell such Shares?
You will not pay any brokerage commissions when you exercise your option or
when you purchase Restricted Shares. However, you will be responsible for
paying any brokerage commissions you incur on your subsequent sale of such
Shares.
11
================================================================================
STOCKHOLDER RIGHTS
================================================================================
45. Do I become a stockholder when I receive an option?
No. You have no rights as a Company stockholder merely by virtue of being
an option holder.
46. When do I have rights as a stockholder as an option holder?
You have rights as a Company stockholder on the date you are issued a
certificate for the Shares for which your option has been exercised, as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company.
47. When do I have rights as a stockholder if I am issued a Restricted Share?
You will have full stockholder rights with respect to any Restricted Shares
issued to you, whether or not your interest in such shares is vested. You
will have the right to vote such shares and receive any regular cash
dividend paid on those shares. See Q&A 36 for a discussion on the effect of
termination from service on vesting.
48. What information do I receive as an option holder?
You will be given access to information concerning the Company equivalent
to the information generally made available to the Company's common
stockholders.
================================================================================
EMPLOYMENT STATUS
================================================================================
49. If I receive an Award under the Plan will it affect the terms of my
employment?
No. Unless you have a written employment contract with the Company
providing otherwise, your employment is "at-will." This means that either
you or your employer has the right to end your employment relationship at
any time, for any reason, with or without cause. If you receive an Award
under the Plan, it will not affect your "at-will" relationship with the
Company.
12
================================================================================
TAX IMPLICATIONS OF NONSTATUTORY STOCK OPTIONS
================================================================================
The tax consequences arising in connection with options are complex and
subject to change. The following summary is only a general guide to the current
U.S. federal income tax consequences of Nonstatutory Stock Options granted under
the Plan. In addition, your particular situation may be such that some variation
of the general rules is applicable. For example, the following summary does not
describe the tax consequences of certain transactions, such as if shares are
used to exercise an option, if shares acquired by exercise of an option are sold
to certain related parties, or if you acquire substantially identical shares
within the 30-day period before or after your sale of shares acquired upon
exercise of an option. YOU SHOULD CONSULT YOUR OWN TAX ADVISORS PRIOR TO THE
EXERCISE OF ANY OPTION AND PRIOR TO THE DISPOSITION OF ANY SHARES ACQUIRED UNDER
THE PLAN.
50. Is the grant to me of a Nonstatutory Stock Option a taxable event?
No. You do not receive taxable income merely because you are granted a
Nonstatutory Stock Option under the Plan.
51. Is my exercise of a Nonstatutory Stock Option a taxable event?
Yes. You will receive taxable income as a result of your exercise of a
Nonstatutory Stock Option. Generally, the amount of that income is
determined on the date you exercise your option. At that time, you will
recognize ordinary income equal to the excess of the fair market value of
the Shares on the exercise date over the purchase price you pay for the
Shares. If you are an employee or former employee, that ordinary income is
treated as wages subject to income and employment tax withholding.
52. Is my subsequent sale of Shares acquired pursuant to a Nonstatutory Stock
Option under the Plan a taxable event?
Yes. Your sale of any shares that you acquire pursuant to a Nonstatutory
Stock Option under the Plan is a taxable event. At that time, you will
recognize capital gain or loss equal to any additional gain or loss
recognized in the disposition. That gain or loss is determined by the
difference between the amount you realize on the sale of the shares and the
fair market value of those shares on the option exercise date. The tax
consequences of disposing of the Shares will vary depending on how long you
have held the Shares.
13
53. What are long-term and short-term capital gains?
A capital gain or loss will be long-term if you hold the Shares for more
than 1 year after your purchase date and short-term if you hold the Shares
for 1 year or less after your purchase date. Currently, long-term capital
gains are subject to a maximum federal income tax rate of 20%.
54. Will any amounts be withheld from my paycheck to cover my tax liability?
If you are an employee or former employee, when you purchase Shares by
exercising your Nonstatutory Stock Option, you must make adequate provision
for any federal, state, local or foreign tax withholding obligations.
Generally, you will be required to pay directly to the Company or your
employer the full amount of your tax withholding obligation at the time you
exercise your Nonstatutory Stock Option. If you exercise your Nonstatutory
Stock Option in a cashless exercise (same-day sale), you will be required
to assign to the Company a portion of your Share sale proceeds sufficient
to pay your withholding tax. The Company may, but is not required to,
withhold from your compensation the amount necessary to meet its tax
withholding obligations. If you request, the Company may, but is not
obligated to, withhold from the Shares otherwise issuable to you on
exercise of your option a number of whole Shares having a fair market value
on the exercise date not in excess of the minimum amount of tax required to
be withheld by law. The Company will not be liable to you for any adverse
tax consequences you suffer in connection with this share withholding
procedure. The Company has no obligation to deliver shares of stock until
you have satisfied the withholding obligation.
55. Will I owe any other taxes?
The above discussion is only a summary of certain aspects of the highly
complex U.S. federal income tax rules applicable to Nonstatutory Stock
Options and does not deal with other taxes which may affect you, such as
state and local income taxes, federal and state estate, gift and
inheritance taxes and taxes of countries other than the United States of
America. You should obtain and rely on the advice of your own tax advisor
with respect to such matters.
56. Who can I talk to about my specific tax situation?
Since the tax implications of stock options can be complex and can vary by
individual, we suggest that you contact your tax advisor with questions
specific to your situation.
57. Does the Company receive a tax deduction?
The Company is generally entitled to a tax deduction equal to the ordinary
income that you recognize under the rules discussed above, except to the
extent such deduction is limited by applicable provisions of the Internal
Revenue Code or the regulations thereunder.
14
================================================================================
TAX IMPLICATIONS OF RESTRICTED SHARES
================================================================================
The tax consequences arising in connection with Restricted Shares are
complex and subject to change. The following summary is only a general guide to
the current U.S. federal income tax consequences of Restricted Shares issued
under the Plan and does not describe all such possible tax consequences or
consequences associated with Restricted Shares. In addition, your particular
situation may be such that some variation of the general rules is applicable.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO
YOU OF ANY RESTRICTED SHARES AWARDED TO YOU UNDER THE PLAN.
58. Is the grant to me of unvested Restricted Shares a taxable event?
No. Generally you do not recognize taxable income merely because you are
issued unvested Restricted Shares under the Plan. But see Q&A 62, below.
59. Is my vesting in my Restricted Shares a taxable event?
Yes, unless you have filed an 83(b) election as described in Q&A 63, below.
You will recognize taxable income as a result of the vesting of your
Restricted Shares. The amount of that income is determined on your vesting
date. The excess, if any, of the fair market value of the stock on the date
or dates the Restricted Shares vest over the amount paid for such
Restricted Shares is includable in your gross income in the year such
Restricted Shares vest. If you are an employee or former employee, that
ordinary income is treated as wages subject to income and employment tax
withholding.
60. What is the effect of a Section 83(b) election?
You may avoid potential characterization of post-issuance appreciation of
your Restricted Shares as ordinary income and defer the payment of tax on
such appreciation until the Restricted Shares are sold, if you file an
election (a "Section 83(b) election") with the IRS no later than 30 days
after the date the Restricted Shares are issued.
61. Is my subsequent sale of Restricted Shares issued under the Plan a taxable
event?
Yes. Your sale of any of the Restricted Shares that are issued to you under
the Plan is a taxable event. At that time, you will recognize capital gain
or loss equal to any additional gain or loss recognized in the disposition.
That gain or loss is determined by the difference between the amount you
realize on the sale of the Restricted Shares and their adjusted basis. Your
adjusted basis is generally the price, if any, paid for the Restricted
Shares plus the amount of ordinary income recognized on the vesting or the
filing of a
15
Section 83(b) election with respect to such shares. The tax consequences of
disposing of the Shares will vary depending on how long you have held the
shares.
62. What are long-term and short-term capital gains?
A capital gain or loss will be long-term if you hold the shares for more
than 1 year after your Restricted Shares were issued to you and short-term
if you hold the shares for 1 year or less after your Restricted Shares were
issued to you. Currently, long-term capital gains are subject to a maximum
federal income tax rate of 20%.
63. Will I owe any other taxes?
The above discussion is only a summary of certain aspects of the highly
complex U.S. federal income tax rules applicable to Restricted Shares and
does not deal with other taxes which may affect you, such as state and
local income taxes, federal and state estate, gift and inheritance taxes
and taxes of countries other than the United States of America. You should
obtain and rely on the advice of your own tax advisor with respect to such
matters.
64. Who can I talk to about my specific tax situation?
Since the tax implications of stock options can be complex and can vary by
individual, we suggest that you contact your tax advisor with questions
specific to your situation.
65. Does the Company receive a tax deduction?
The Company is generally entitled to a tax deduction equal to the ordinary
income that you recognize under the rules discussed above, except to the
extent such deduction is limited by applicable provisions of the Internal
Revenue Code or the regulations thereunder.
================================================================================
FEDERAL SECURITIES LAWS AFFECTING PARTICIPANTS
================================================================================
66. What is Section 16(b)?
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), permits the recovery by the Company of any profit realized
by an "Insider" from each purchase and subsequent sale, or sale and
subsequent purchase, of shares within any period of less than six months.
An "Insider" for this purpose is any officer or director of the Company or
person who is directly or indirectly the beneficial owner of more than 10%
of any class of equity security of the Company that is registered under
Section 12 of
16
the Exchange Act. If you are an Insider, you should consult with the
Company's general counsel or your own legal advisor prior to the
disposition of any shares in order to ascertain the precise application to
your particular situation of your reporting obligations and liability under
Section 16(b).
67. What is Rule 10b-5?
Rule 10b-5 under the Exchange Act prohibits you from engaging in fraudulent
practices in connection with the purchase or sale of securities. This rule
generally prohibits you from buying or selling the Company's securities
using material information about the Company which has not yet been
released to the public. Before buying or selling any shares and, in
particular, before selling shares acquired under the Plan, you should
consult with the Company's general counsel regarding the applicability of
any the Company "trading window" policies prohibiting trading in the
Company's stock during specified periods of the year when material inside
information is likely to be held prior to its release to the public.
68. What is Rule 144?
"Affiliates" of the Company are generally obligated to resell shares in
compliance with Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities
Act"). Participants in the Plan with the power to manage and direct the
policies of the Company, relatives of such participants, and trusts,
estates, corporations, or other organizations controlled by such
participants may be deemed to be "Affiliates" of the Company.
Rule 144 requires that sales by Affiliates be effected in "broker
transactions" (as defined in Rule 144), and limits the number of shares
that may be sold in any 3-month period to no more than the greater of 1% of
the outstanding shares or the average weekly reported volume of trading in
shares during the 4 calendar weeks preceding the filing of the required
notice of the proposed sale. Since the shares have been registered under
the Securities Act, Affiliates selling shares in compliance with Rule 144
are not subject to the holding period requirements of Rule 144.
================================================================================
PLAN ADMINISTRATION
================================================================================
69. Who administers the Plan?
The Plan is administered by the Board and/or by a duly appointed committee
having such powers as specified by the Board. All questions of
interpretation of the Plan or of any Award are determined by the Board,
whose decisions are final and binding upon all persons having an interest
in the Plan.
17
70. Who is on the Board of Directors?
The Board is divided into three classes of directors, with each class
serving a staggered two-year term ending at the second succeeding annual
meeting of the stockholders following election. Directors hold office until
the expiration of the term for which elected and until their successors are
elected and qualified or until their earlier death, resignation or removal
from office. Members of the Board receive no additional compensation for
administering the Plan.
71. Does the Company have any role in administering the Plan?
Yes. While the Board has overall authority for administering the Plan, the
Company, acting through its officers, may from time to time establish,
change or terminate rules, guidelines, policies, procedures, limitations or
adjustments as deemed advisable by the Company, in its sole discretion, in
the administration of the Plan.
================================================================================
AMENDMENT OR TERMINATION OF THE PLAN
================================================================================
72. Can the Plan be amended or terminated?
Yes. The Board may terminate or amend the Plan at any time. However, no
termination or amendment may affect any outstanding option or unvested
Restricted Shares unless expressly provided by the Board. In any event, no
termination or amendment of the Plan may adversely affect an option or
unvested Restricted Shares previously granted to you without your consent,
unless such termination or amendment is necessary to comply with any
applicable law, regulation or rule.
73. How long can the Plan remain in effect?
The Plan will remain in effect until either all Shares available for
issuance under the Plan have been issued or the Board terminates the Plan,
whichever is earlier.
18
================================================================================
OTHER INFORMATION
================================================================================
74. Where can I get additional information?
You can get additional information about the Plan from the Company at:
Agile Software Corporation
One Almaden Boulevard
San Jose, CA 95113
Attention: Chief Financial Officer
(408) 975-3900
75. Can anyone at the Company provide me with tax advice?
No. Since the tax implications of your stock options can be complex and can
vary by individual, you should contact your individual tax advisor with
questions specific to your situation.
76. What documents are incorporated by reference in this prospectus?
The following documents and information previously filed by the Company
with the Securities and Exchange Commission are incorporated by reference
in this prospectus:
. The Company's latest annual report on Form 10-K filed pursuant to
Sections 13(a) or 15(d) of the Exchange Act, containing audited
financial statements for the Company's latest fiscal year;
. All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the
registrant document referred to above;
. The description of the Company's common stock contained in its
Registration Statement on Form 8-A filed under the Exchange Act,
including any amendment or report filed for the purpose of updating
such description; and
. All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act after the date of this prospectus and
prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated
by reference in this prospectus and to be part hereof from the date of
filing such documents.
19
EX-99.(D)(6)
13
dex99d6.txt
FORM OF OPTION AGREEMENT - 2000 NONSTATUTORY PLAN
Exhibit (d)(6)
AGILE SOFTWARE CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT
-----------------------------------
(For Use With 2000 Nonstatutory Stock Option Plan)
RECITALS
--------
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees and Consultants who provide services to the
Corporation (or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of
---------------
the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a term of ten (10) years
-----------
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5, 6, or 16.
3. Limited Transferability. This option shall be neither transferable
-----------------------
nor assignable by Optionee other than by will or by the laws of descent and
distribution and may be exercised, during Optionee's lifetime, only by Optionee
or the Optionee's guardian or legal representative.
4. Dates of Exercise. Except as otherwise provided herein, this option
-----------------
shall become exercisable for the Option Shares in one or more installments in an
amount not to exceed the number of vested Option Shares (as determined pursuant
to the Vesting Schedule) less the number of Option Shares previously acquired
upon exercise of this option. As the option becomes exercisable for such
installments, those installments shall accumulate and the option shall remain
exercisable for the accumulated installments until the Expiration Date or sooner
termination of the option term under Paragraph 5, 6, or 16.
5. Cessation of Service. The option term specified in Paragraph 2 shall
--------------------
terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service for any reason (other
than death, Disability or Misconduct) while this option is outstanding,
then Optionee shall have a period of three (3) months (commencing with the date
of such cessation of Service) during which
to exercise this option, but in no event shall this option be exercisable at any
time after the Expiration Date.
(b) Should Optionee die while this option is outstanding, then the
personal representative of Optionee's estate or the person or persons to whom
the option is transferred pursuant to Optionee's will or in accordance with the
laws of descent and distribution shall have the right to exercise this option.
Such right shall lapse and this option shall cease to be outstanding upon the
earlier of (i) the expiration of the twelve (12) month period measured from the
-------
date of Optionee's death or (ii) the Expiration Date.
(c) Should Optionee cease to remain in Service by reason of Disability
while this option is outstanding, then Optionee shall have a period of twelve
(12) months (commencing with the date of such cessation of Service) during which
to exercise this option. In no event shall this option be exercisable at any
time after the Expiration Date.
(d) Notwithstanding the foregoing, if the exercise of this option
within the applicable time period set forth in Paragraph 5(a), (b), or (c) is
prevented by Paragraph 10, then this option shall remain exercisable until three
(3) months after the date Optionee is notified by the Corporation that this
option is exercisable. In no event shall this option be exercisable at any time
after the Expiration Date.
(e) During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the number of
Option Shares which were vested at the time of Optionee's cessation of Service.
Upon the expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding for any
vested Option Shares for which the option has not been exercised. To the extent
Optionee is not vested in the Option Shares at the time of Optionee's cessation
of Service, this option shall immediately terminate and cease to be outstanding
with respect to those shares.
(f) Should Optionee's Service be terminated for Misconduct, then this
option shall terminate immediately and cease to remain outstanding.
6. Accelerated Vesting.
-------------------
(a) In the event of any Corporate Transaction, the Option Shares at the
time subject to this option but not otherwise vested shall automatically vest in
full so that this option shall, immediately prior to the effective date of the
Corporate Transaction, become fully exercisable for all of those Option Shares
and may be exercised for any or all of those Option Shares as fully-vested
shares of Common Stock. However, the Option Shares shall not vest on such an
accelerated basis if and to the extent: (i) this option is assumed by the
successor corporation (or parent thereof) in the Corporate Transaction or (ii)
this option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing on the unvested Option Shares at
the time of the Corporate Transaction (the excess of the Fair Market Value of
those Option Shares over the Exercise Price payable for such shares) and
provides for subsequent payout in accordance with the same Vesting Schedule
applicable to those unvested Option Shares as set forth in the Grant Notice.
2
(b) The Corporation shall use its best efforts to provide at least
twenty (20) days prior written notice of the occurrence of any Corporate
Transaction in which options under the Plan are not to be assumed by the
successor corporation.
(c) Immediately following the Corporate Transaction, this
option shall terminate and cease to be outstanding, except to the extent assumed
by the successor corporation (or parent thereof) in connection with the
Corporate Transaction.
(d) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
--------
(e) If this option is assumed in connection with a Corporate
Transaction and Optionee's Service ceases as a result of an Involuntary
---
Termination within eighteen (18) months following such Corporate Transaction,
then the Optionee shall be credited with an additional eighteen (18) months of
Service (or such lesser number of months necessary to cause all of the Option
Shares to become vested) solely for purposes of calculating the number of vested
Option Shares. Further, notwithstanding anything stated in Paragraph 5 to the
contrary, this Option shall remain exercisable until the earlier of: (i) the
-------
Expiration Date, or (ii) the expiration of the one (1)-year period measured from
the date of the Involuntary Termination.
(f) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. Adjustment in Option Shares. Should any change be made to the Common
---------------------------
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. Rights as a Stockholder, Employee, or Consultant. The holder of this
------------------------------------------------
option shall not have any Stockholder rights with respect to the Option Shares
until such person shall have exercised the option, paid the Exercise Price and
become a holder of record of the purchased shares. Further, no adjustment shall
be made for dividends, distributions or other rights for which the record date
is prior to the date such certificate is issued, except as provided in Section
7. If the Optionee is an Employee, the Optionee understands and acknowledges
that, except as otherwise provided in a separate, written employment agreement
between the Corporation (or Parent or Subsidiary) and the Optionee, the
Optionee's employment is "at will" and is for no specified term. Nothing in this
Agreement shall confer upon the Optionee any right to continue in the Service of
the Corporation (or Parent or Subsidiary) or interfere in any way with any right
of the Corporation (or Parent or Subsidiary) to terminate the Optionee's Service
as an Employee or Consultant, as the case may be, at any time.
3
9. Manner of Exercising Option.
---------------------------
(a) In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time exercisable, Optionee
(or any other person or persons exercising the option) must take the following
actions:
(i) Pay the aggregate Exercise Price for the purchased shares
in one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) provided the Optionee is an Employee and in the
Corporation's sole discretion at the time this option is exercised, by delivery
of a promissory note in a form approved by the Corporation for the aggregate
Exercise Price, provided that any promissory note used to pay the Exercise Price
shall be subject to the provision of Paragraph 9(d) and that if the Corporation
is incorporated in the State of Delaware, the Optionee shall pay in cash that
portion of the aggregate Exercise Price not less than the par value of the
Option Shares being acquired;
(C) in shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date; or
(D) through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons exercising the
option) shall concurrently provide irrevocable instructions (a) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all applicable federal,
state, local, and foreign income and employment taxes required to be withheld by
the Corporation by reason of such exercise and (b) to the Corporation to deliver
the certificates for the purchased shares directly to such brokerage firm in
order to complete the sale.
(ii) Furnish to the Corporation appropriate documentation that
the person or persons exercising the option (if other than Optionee) have the
right to exercise this option.
(iii) Execute and deliver to the Corporation a written notice to
the Corporation in a form acceptable to the Corporation, indicating the
Optionee's intent to exercise the option and any such written representations as
may be requested by the Corporation in order for it to comply with the
applicable requirements of federal, state, and foreign securities laws.
(iv) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction of
all federal, state, local, and foreign income and employment tax withholding
requirements applicable to the option exercise.
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(b) Unless the Exercise Price is paid pursuant to Paragraph
9(a)(i)(D), as soon as practical after the Exercise Date, the Corporation shall
issue to or on behalf of Optionee (or any other person or persons exercising
this option) a certificate for the purchased Option Shares, with the appropriate
legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
(d) No promissory note shall be permitted if an exercise of this
option using a promissory note would be a violation of any law. If at any time
the Corporation is subject to the regulations promulgated by the Board of
Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Corporation's
securities, any promissory note shall comply with such applicable regulations,
and the Optionee shall pay the unpaid principal and accrued interest, if any, to
the extent necessary to comply with such applicable regulations. The Corporation
in its sole discretion, may require the Optionee to pay the unpaid principal
balance of the promissory note and any accrued interest thereon upon termination
of the Optionee's Service for any reason, with or without cause.
10. Compliance with Laws and Regulations.
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(a) The exercise of this option and the issuance of the Option Shares
upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
11. Successors and Assigns. Except to the extent otherwise provided in
----------------------
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.
12. Notices. Any notice required to be given or delivered to the
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Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated on the Grant Notice. All notices shall be deemed effective
upon personal delivery or upon deposit in the U.S. mail, postage prepaid and
properly addressed to the party to be notified.
13. Construction. This Agreement and the option evidenced hereby are made
------------
and granted pursuant to the Plan and are in all respects limited by and subject
to the terms of the Plan. All decisions of the Plan Administrator with respect
to any question or issue arising under
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the Plan or this Agreement shall be conclusive and binding on all persons having
an interest in this option.
14. Integrated Agreement. The Grant Notice and this Agreement constitute
--------------------
the entire understanding and agreement between the Optionee and the Corporation
with respect to the subject matter contained herein or therein and supersedes
any prior agreements, understandings, restrictions, representations, or
warranties among the Optionee and the Corporation with respect to such subject
matter other than those as set forth or provided for herein or therein. To the
extent contemplated herein or therein, the provisions of the Grant Notice and
the Agreement shall survive any exercise of this option and shall remain in full
force and effect.
15. Governing Law. The interpretation, performance and enforcement of this
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Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
16. Termination or Amendment. The Board may terminate or amend or this
------------------------
option at any time; provided, however, that except as provided in Paragraph 6 in
connection with a Corporate Transaction, no such termination or amendment may
adversely affect this option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation. No amendment or
addition to this Agreement shall be effective unless in writing.
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APPENDIX
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The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
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B. Board shall mean the Corporation's Board of Directors.
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C. Code shall mean the Internal Revenue Code of 1986, as amended.
----
D. Common Stock shall mean the Corporation's common stock.
------------
E. Consultant shall mean a person engaged to provide consulting
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or advisory services other than as an Employee or a member of the Board or of
the board of directors of any other Parent or Subsidiary corporation) to the
Corporation (or any Parent or Subsidiary), provided that the identity of such
person, the nature of such services or the entity to which such services are
provided would not preclude the Corporation from offering or selling securities
to such person pursuant to the Plan in reliance on a Form S-8 Registration
Statement under the Securities Act.
F. Corporate Transaction shall mean an Ownership Change Event or
---------------------
a series of related Ownership Change Events (collectively, a "Transaction")
wherein the stockholders of the Corporation immediately before the Transaction
do not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Corporation's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Corporation or the corporation or corporations
to which the assets of the Corporation were transferred (the "Transferee
Corporation(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Corporation or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Corporation or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
G. Corporation shall mean Agile Software Corporation, a Delaware
-----------
corporation, and any successor corporation thereto.
H. Disability shall mean the permanent and total disability of
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the Optionee within the meaning of Code Section 22(e)(3).
I. Employee shall mean an individual who is in the employ of the
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Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
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J. Exercise Date shall mean the date on which the option shall
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have been exercised in accordance with Paragraph 9 of the Agreement.
K. Exercise Price shall mean the exercise price per share as
--------------
specified in the Grant Notice.
L. Expiration Date shall mean the date on which the option
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expires as specified in the Grant Notice.
M. Fair Market Value per share of Common Stock on any relevant
-----------------
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as the price is reported by
the National Association of Securities Dealers on the Nasdaq National Market or
any successor system. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market
Value shall be determined by the Plan Administrator after taking into account
such factors as the Plan Administrator shall deem appropriate.
N. Grant Date shall mean the date of grant of the option as
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specified in the Grant Notice.
O. Grant Notice shall mean the Notice of Grant of Stock Options
------------
accompanying the Agreement, pursuant to which the Optionee has been informed of
the basic terms of the option evidenced hereby.
P. Involuntary Termination shall mean the termination of
-----------------------
Optionee's Service by reason of:
(i) Optionee's involuntary dismissal or discharge by the
Corporation (or a Parent or Subsidiary employing Optionee) for reasons other
than Misconduct; or
(ii) Optionee's voluntary resignation following (1) a
reduction in Optionee's level of base salary by more than fifteen percent, (15%)
(2) a reduction in the Optionee's level of participation in any
corporate-performance based bonus or incentive
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programs (not including sales compensation or sales incentive programs) by more
than fifteen percent (15%) or (3) a relocation of Optionee's place of employment
by more than fifty (50) miles, provided and only if such reduction or relocation
is effected by the Corporation without Optionee's consent.
Q. Misconduct shall mean the commission of any act of fraud,
----------
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
Optionee or any other individual in the Service of the Corporation (or any
Parent or Subsidiary).
R. Non-Statutory Option shall mean an option not intended to
--------------------
satisfy the requirements of Code Section 422.
S. Option Shares shall mean the number of shares of Common Stock
-------------
subject to the option.
T. Optionee shall mean the person to whom this option is granted
--------
as specified in the Grant Notice.
U. Ownership Change Event shall be deemed to have occurred if any
----------------------
of the following occurs with respect to the Corporation: (i) the direct or
indirect sale or exchange in a single or series of related transactions by the
stockholders of the Corporation of more than fifty percent (50%) of the voting
stock of the Corporation; (ii) a merger or consolidation in which the
Corporation is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Corporation; or (iv) a liquidation or
dissolution of the Corporation.
V. Parent shall mean any corporation (other than the Corporation)
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in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
W. Plan shall mean the Corporation's 2000 Nonstatutory Stock
----
Option Plan.
X. Plan Administrator shall mean either the Board or a committee
------------------
of Board members, to the extent the committee is at the time responsible for the
administration of the Plan.
Y. Securities Act shall mean the Securities Act of 1933, as
--------------
amended.
Z. Service shall mean an Optionee's employment or service with
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the Corporation (or Parent or Subsidiary corporation), whether in the capacity
of an Employee or a Consultant. Unless otherwise determined by the Board, an
Optionee's Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Optionee renders Service to the Corporation
(or Parent or Subsidiary corporation) or a change in the Corporation (or Parent
A-3
or Subsidiary corporation) for which the Optionee renders such Service, provided
that there is no interruption or termination of the Optionee's Service.
Furthermore, an Optionee's Service with the Corporation (or Parent or Subsidiary
corporation) shall not be deemed to have terminated if the Optionee takes any
military leave, sick leave, or other bona fide leave of absence approved by the
Corporation. Notwithstanding the foregoing, unless otherwise designated by the
Corporation or required by law, a leave of absence shall not be treated as
Service for purposes of determining vesting under the Optionee's option
agreement. An Optionee's Service shall be deemed to have terminated either upon
an actual termination of Service or upon the corporation for which the Optionee
performs Service ceasing to be a Parent or Subsidiary. Subject to the foregoing,
the Corporation, in its discretion, shall determine whether an Optionee's
Service has terminated and the effective date of such termination.
AA. Stock Exchange shall mean the American Stock Exchange or the
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New York Stock Exchange.
BB. Subsidiary shall mean any corporation (other than the
----------
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
CC. Vesting Schedule shall mean the vesting schedule specified in
----------------
the Grant Notice pursuant to which the Optionee is to vest in the Option Shares
in a series of installments over his or her period of Service.
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