-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QuCGzBj5vSqBceX4jAWuVgFJycaiRVrSmHpFf/u+g5qADCeLJuyvb9wDd3yIRwj8 1sz9rSWmLbxZtQQ0vdZ0gQ== 0000891618-96-002248.txt : 19961010 0000891618-96-002248.hdr.sgml : 19961010 ACCESSION NUMBER: 0000891618-96-002248 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19961009 EFFECTIVENESS DATE: 19961009 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRODERBUND SOFTWARE INC /DE/ CENTRAL INDEX KEY: 0000812490 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 942768218 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-13803 FILM NUMBER: 96641377 BUSINESS ADDRESS: STREET 1: 500 REDWOOD BLVD CITY: NOVATO STATE: CA ZIP: 94948-6121 BUSINESS PHONE: 4153824400 MAIL ADDRESS: STREET 1: 500 REDWOOD BLVD CITY: NOVATO STATE: CA ZIP: 94948-6121 S-8 1 FORM S-8 1 As filed with the Securities and Exchange Commission on October 9, 1996 Registration No. 333-__________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 BRODERBUND SOFTWARE, INC. (Exact name of registrant as specified in its charter) DELAWARE 94-2768218 (State of incorporation) (I.R.S. Employer Identification No.) 500 Redwood Boulevard Novato, California 94947 (Address, including zip code, of principal executive offices) 1996 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN 1996 EMPLOYEE STOCK PURCHASE PLAN (Full Titles of the Plans) Thomas L. Marcus, Esq. Vice President and General Counsel BRODERBUND SOFTWARE, INC. 500 Redwood Boulevard Novato, California 94947 (Name and address of agent for service) (408) 382-4400 (Telephone number, including area code, of agent for service) Copies to: TOR R. BRAHAM, ESQ. WILSON, SONSINI, GOODRICH & ROSATI Professional Corporation 650 Page Mill Road Palo Alto, California 94304 2 CALCULATION OF REGISTRATION FEE
Title of Amount Proposed Proposed Amount of Securities to to be Maximum Offering Maximum Aggregate Registration be Registered Registered(1) Price Per Share(2) Offering Price(2) Fee Common Stock, $0.01 par value 1,750,000 $28.42355 $49,741,218.75 $17,152.26
(1) Includes 1,500,000 shares to be registered under the 1996 Employee and Consultant Stock Option Plan (the "Option Plan") and 250,000 shares to be registered under the 1996 Employee Stock Purchase Plan (the "Purchase Plan"). (2) The Proposed Maximum Offering Price Per Share was estimated in part pursuant to Rule 457(h) under the Securities Act of 1933, as amended (the "Securities Act"), and, in part, pursuant to Rule 457(c) under the Securities Act. With respect to 418,750 shares which are subject to outstanding options to purchase Common Stock under the Option Plan, the Proposed Maximum Offering Price Per Share was estimated pursuant to Rule 457(h) under which Rule the per share price of options to purchase stock under an employee stock option plan may be estimated by reference to the exercise price of such options. The weighted average exercise price of the 418,750 shares subject to outstanding options under the Option Plan is $38.91. With respect to (i) 1,081,250 shares of Common Stock available for future grant under the Option Plan and (ii) 250,000 shares of Common Stock available for purchase under the Purchase Plan, the estimated Proposed Maximum Offering Price Per Share was estimated pursuant to Rule 457(c) whereby the per share price was determined by reference to the average between the high and low price of the Registrant's stock as reported in the Nasdaq National Market on October 8, 1996, which average was $25.125. The number referenced above in the table entitled "Proposed Maximum Offering Price per Share" represents a weighted average of the foregoing estimates calculated in accordance with Rules 457(h) and 457(c). 3 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. There are hereby incorporated by reference in this Registration Statement the following documents and information heretofore filed with the Securities and Exchange Commission: (a) The Registrant's Annual Report on Form 10-K for the fiscal year ended August 31, 1995, filed pursuant to Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act"). (b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal quarters ended November 30, 1995, February 29, 1996 and May 31, 1996 filed pursuant to Section 13 of the Exchange Act. (c) The Registrant's Current Reports on Form 8-K dated October 5, 1995, November 7, 1995 and August 6, 1996. (d) The description of the Registrant's Common Stock to be offered hereby is contained in the Registrant's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on October 15, 1991 pursuant to Section 12(g) of the Exchange Act, including any amendment or report filed for the purpose of updating such description. All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be part hereof from the date of filing such documents. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Registrant's Certificate of Incorporation limits, to the maximum extent permitted by Delaware law, the personal liability of directors for monetary damages for breach of their fiduciary duties as a director. The Registrant's Bylaws provide that the Registrant shall indemnify its officers and directors II-1 4 and may indemnify its employees and other agents to the fullest extent permitted by Delaware law. The Registrant has entered into indemnification agreements with its officers and directors containing provisions which are in some respects broader than the specific indemnification provisions contained in the Delaware General Corporation Law. The indemnification agreements require the Registrant, among other things, to indemnify such officers and directors against certain liabilities that may arise by reason of their status or service as directors or officers (other than liabilities arising from willful misconduct of a culpable nature), to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified, and to obtain directors' and officers' insurance, if available on reasonable terms. The Registrant believes that these agreements are necessary to attract and retain qualified persons as directors and officers. Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify a director, officer, employee or agent made a party to an action by reason of that fact that he or she was a director, officer, employee or agent of the corporation or was serving at the request of the corporation, against expenses actually and reasonable incurred by him or her in connection with such action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and with respect to any criminal action, had no reasonable cause to believe his or her conduct was unlawful. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. Exhibit Number 4.1 1996 Employee and Consultant Stock Option Plan 4.2 Form of Incentive Stock Option Agreement 4.3 Form of Nonqualified Stock Option Agreement 4.4 1996 Employee Stock Purchase Plan 5.1 Opinion of Wilson, Sonsini, Goodrich & Rosati, P.C., as to legality of securities being registered 23.1 Consent of Ernst & Young LLP, Independent Auditors. 23.2 Consent of Counsel (contained in Exhibit 5.1) 24.1 Power of Attorney (see Page II-4) ITEM 9. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include any material information with respect to the plan of II-2 5 distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the pay ment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Novato, State of California, on October 9, 1996. BRODERBUND SOFTWARE, INC. By: /s/ Douglas G. Carlston ------------------------------------ Douglas G. Carlston, Chief Executive Officer and Chairman of the Board POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas L. Marcus and William M. McDonagh, and each of them, their true and lawful attorneys and agents, with full power of substitution, each with power to act alone, to sign and execute on behalf of the undersigned any amendment or amendments to this Registration Statement on Form S-8 and to perform any acts necessary in order to file such amendments, and each of the undersigned does hereby ratify and confirm all that said attorneys and agents, or their or his or her substitutes, shall do or cause to be done by virtue hereof. II-4 7 Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Douglas G. Carlston Chief Executive Officer and October 9, 1996 - ----------------------------------- (Douglas G. Carlston) and Chairman of the Board of Directors (principal executive officer) /s/ William M. McDonagh President, Chief Operating Officer October 9, 1996 - ----------------------------------- (William M. McDonagh) and Director /s/ Michael J. Shannahan Vice President and Chief Financial October 9, 1996 - ----------------------------------- (Michael J. Shannahan) Officer (Principal Financial and Accounting Officer) /s/ Edmund R. Auer Director October 9, 1996 - ----------------------------------- (Edmund R. Auer) /s/ Gary L. Buckmiller Director October 9, 1996 - ----------------------------------- (Gary L. Buckmiller) /s/ Scott D. Cook Director October 9, 1996 - ----------------------------------- (Scott D. Cook) /s/ William P. Egan Director October 9, 1996 - ----------------------------------- (William P. Egan) /s/ David E. Liddle Director October 9, 1996 - ----------------------------------- (David E. Liddle) /s/ Lawrence Wilkinson Director October 9, 1996 - ----------------------------------- (Lawrence Wilkinson)
II-5 8 BRODERBUND SOFTWARE, INC. REGISTRATION STATEMENT ON FORM S-8 INDEX TO EXHIBITS Exhibit Number Description - ------- ----------- 4.1 1996 Employee and Consultant Stock Option Plan 4.2 Form of Incentive Stock Option Agreement 4.3 Form of Nonqualified Stock Option Agreement 4.4 1996 Employee Stock Purchase Plan 5.1 Opinion of Wilson, Sonsini, Goodrich & Rosati, P.C., as to legality of securities being registered 23.1 Consent Ernst & Young LLP, Independent Auditors 23.2 Consent of Counsel (contained in Exhibit 5.1) 24.1 Power of Attorney (see Page II-4) II-6 EX-4.1 2 1996 EMPLOYEE & CONSULTANT STOCK OPTION PLAN 1 EXHIBIT 4.1 1996 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN OF BRODERBUND SOFTWARE, INC. 1. PURPOSES OF THE PLAN The purposes of the 1996 Employee and Consultant Stock Option Plan (the "Plan") of Broderbund Software, Inc., a Delaware corporation (the "Company") are to: (a) Furnish incentive to individuals chosen to receive options because they are considered capable of responding by improving operations and increasing profits; (b) Encourage selected employees and consultants to accept or continue employment with, or consulting to, the Company or any parent or subsidiary corporation (as currently defined in Section 424 of the Internal Revenue Code of 1986, as it may be amended from time to time (the "Code")) of the Company (such parent and subsidiary corporations being hereafter collectively referred to as "Affiliates"); and (c) Increase the interest of selected employees and consultants in the Company's welfare through their participation in the growth in value of the common stock of the Company (the "Common Stock"). To accomplish the foregoing objectives, this Plan provides a means whereby employees and consultants may receive options to purchase Common Stock. Options granted under this Plan will be either nonqualified options ("NQOs") or incentive stock options ("ISOs"). 2. ELIGIBLE PERSONS Every person who at the date of grant is an employee of the Company or of any Affiliate of the Company is eligible to receive NQOs or ISOs under this Plan. The term "employee" includes an officer or director who is an employee, as well as a non-officer, non-director regular employee of the Company. Every person who at the date of grant is a consultant to, or a non-employee director of, the Company or any Affiliate of the Company is eligible to receive NQOs but shall not be eligible to receive ISOs. The term "consultant" includes persons employed by, or otherwise affiliated with, a consultant. 3. STOCK SUBJECT TO THIS PLAN The total number of shares of stock for which options may be granted pursuant to this Plan is 1,500,000 shares of Common Stock. If an option should expire or become unexercisable for any reason without having been exercised in full, then the unpurchased shares which were subject -1- 2 thereto shall, unless this Plan shall have been terminated, become available for future grant under this Plan. Notwithstanding any other provision of this Plan, vested shares issued under this Plan and later repurchased by the Company shall not become available for future grant or sale under this Plan. The number of shares reserved for purchase under this Plan is subject to adjustment in accordance with Sections 6.1.1 and 6.1.9, below. 4. ADMINISTRATION 4.1 PROCEDURE. This Plan shall be administered by the Board of Directors of the Company (the "Board") or by the President or the Chief Executive Officer of the Company (in any case, the "Administrator"); provided, however, that either the President or Chief Executive Officer may grant options to any number of eligible employees and consultants with regard to an aggregate of no more than 40,000 shares, or such further amounts as the Board may authorize by resolution duly adopted. Notwithstanding the above, if the Company is a Public Company (as defined below) and it is permitted by Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") ("Rule 16b-3"), then, with respect to option grants made to employees who are also officers or directors subject to Section 16(b) of the Exchange Act, the Plan shall be administered by (A) the Board of Directors of the Company (the "Board"), if the Board may administer the Plan in compliance with the rules governing a plan intended to qualify as a discretionary plan under Rule 16b-3, or (B) a committee designated by the Board to administer the Plan, which committee shall be constituted to comply with the rules governing a plan intended to qualify as a discretionary plan under Rule 16b-3 (and the Board or such committee shall also be referred to as the "Administrator"). Once appointed, such committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of the committee and appoint additional members, remove members (with or without cause) and substitute new members, fill vacancies (however caused), and remove all members of the committee and thereafter directly administer the Plan, all to the extent permitted by the rules governing a plan intended to qualify as a discretionary plan under Rule 16b-3. The Plan may be administered by different bodies with respect to directors, officers who are not directors, and employees who are neither directors nor officers. The term "Public Company" as used in this Plan means a company which has a class of equity securities registered under Section 12 of the Exchange Act. 4.2 POWERS OF THE ADMINISTRATOR. The term "Administrator" as used in this Plan refers to that person, the Board or any of its committees administering the Plan. The Administrator may delegate nondiscretionary administrative duties to such employees of the Company as it deems proper. Subject to the provisions of this Plan, the Administrator shall have the authority to select the persons to receive options under this Plan, to fix the number of shares that each optionee may purchase, to set the terms and conditions of each option (including whether each option should be an NQO or an ISO), and to determine all other matters relating to this Plan. Neither the Administrator nor any of its members shall be liable for any act or omission on its or its member's own part, -2- 3 including but not limited to the exercise of any power or discretion given to the Administrator or its members under this Plan, except for those acts or omissions resulting from the Administrator's or such member's own gross negligence or willful misconduct. All questions of interpretation, implementation and application of this Plan shall be determined by the Administrator. Such determinations shall be final and binding on all persons. 5. GRANTING OF OPTIONS No options shall be granted under this Plan after ten years from the date of adoption of this Plan by the Board of Directors. Each option shall be evidenced by a written stock option agreement, in form satisfactory to the Company, executed by the Company and the person to whom such option is granted. The agreement shall specify whether each option it evidences is an NQO or an ISO. The Administrator may approve the grant of options under this Plan to persons who are expected to become employees of, or consultants to, the Company, but are not employees or consultants at the date of approval. In such cases, the option shall be deemed granted, without further approval, on the date the grantee becomes an employee or consultant and must satisfy all requirements of this Plan for options granted on that date. 6. TERMS AND CONDITIONS OF OPTIONS Each option granted under this Plan shall be designated as an ISO or an NQO. Each option shall be subject to the terms and conditions set forth in Section 6.1. NQOs shall also be subject to the terms and conditions set forth in Section 6.2, but not those set forth in Section 6.3. ISOs shall also be subject to the terms and conditions set forth in Section 6.3, but not those set forth in Section 6.2. 6.1 TERMS AND CONDITIONS TO WHICH ALL OPTIONS ARE SUBJECT. All options granted under this Plan shall be subject to the following terms and conditions: 6.1.1 CHANGES IN CAPITAL STRUCTURE. Subject to Section 6.1.2, if the stock of the Company is changed by reason of a stock split, reverse stock split, stock dividend, or recapitalization, or converted into or exchanged for other securities as a result of a merger, consolidation or reorganization, appropriate adjustments shall be made in (A) the number and class of shares of stock subject to this Plan and each option outstanding under this Plan, and (B) the exercise price of each outstanding option; provided, however, that the Company shall not be required to issue fractional shares as a result of any such adjustments. Each such adjustment shall be subject to approval by the Board of Directors in its sole discretion, which determination shall be final and binding on all persons. -3- 4 6.1.2 CORPORATE TRANSACTIONS. New option rights may be substituted for the option rights granted under this Plan, or the Company's obligations as to options outstanding under this Plan may be assumed, by an employer corporation other than the Company, or by a parent or subsidiary of such employer corporation, in connection with any merger, consolidation, acquisition, separation, reorganization, liquidation or like occurrence in which the Company is involved, in such manner that the then outstanding options which are ISOs will continue to be incentive stock options within the meaning of Section 422 of the Code to the full extent permitted thereby. Notwithstanding the foregoing or the provisions of Section 6.1.1, if such employer corporation, or parent or subsidiary of such employer corporation, does not substitute new and substantially equivalent option rights for the option rights granted hereunder, or assume the option rights granted hereunder, or if the Company's Board of Directors determines, in its sole discretion, that option rights outstanding under this Plan should not then continue to be outstanding, the option rights granted hereunder shall terminate (A) upon dissolution or liquidation of the Company, or similar occurrence, or (B) upon any merger, consolidation, acquisition, separation, or similar occurrence where the Company will not be a surviving corporation; provided, however, that each optionee shall be mailed notice at least six days prior to such dissolution, liquidation, merger, consolidation, acquisition, separation, or similar occurrence, and shall have at least four days after the mailing of such notice to exercise any option rights granted hereunder, whether or not such option rights would otherwise be vested under the terms of any such option rights. 6.1.3 TIME OF OPTION EXERCISE. Except as otherwise explicitly provided in the stock option agreement entered with respect to an option, options granted under this Plan may be immediately exercisable, in whole or in part, as of the effective date of the stock option agreement granting the option, or may be subject to vesting in such amounts and over such periods of time as the Administrator may determine at the time such options are granted. 6.1.4 OPTION GRANT DATE. Except in the case of advance approvals described in Section 5, the date of grant of an option under this Plan shall be the date as of which the Administrator approves the grant. No option shall be exercisable, however, until a written stock option agreement in form satisfactory to the Company is executed by the Company and the optionee. 6.1.5 NONASSIGNABILITY OF OPTION RIGHTS. No option granted under this Plan shall be assignable or otherwise transferable by the optionee except by will or by the laws of descent and distribution. During the life of the optionee, an option shall be exercisable only by the optionee. 6.1.6 PAYMENT. The Administrator shall determine the acceptable form of consideration for exercising an option, including the method of payment. In the case of an ISO, the Administrator shall determine the acceptable form of consideration at the time of grant. In the case of NQOs and ISOs, such consideration may consist entirely of: -4- 5 (i) cash, (ii) check, (iii) promissory note, (iv) other shares of Company stock which (A) in the case of shares acquired upon exercise of an option, have been owned by the optionee for more than six months on the date of surrender, and (B) have a fair market value on the date of surrender equal to the aggregate exercise price of the shares as to which said option shall be exercised, (v) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the option and delivery to the Company of the sale or loan proceeds required to pay the exercise price, (vi) any combination of the foregoing methods of payment, or (vii) such other consideration and method of payment for the issuance of shares to the extent permitted by state corporate and securities laws and the Code. 6.1.7 TERMINATION OF EMPLOYMENT. Option rights granted to an employee, consultant or Outside Director (as defined in Section 6.1.9 of the Plan) under this Plan, to the extent such rights have not then expired or been exercised, shall terminate three months after an optionee ceases, for any reason, to be an employee, consultant or Outside Director of the Company or any Affiliate of the Company, and shall not be exercisable on or after said date, except that if termination of employment, consultancy or service as an Outside Director is due to the disability or death of the optionee, the optionee, or the optionee's personal representative or any other person who acquires the option rights from the optionee by will or the applicable laws of descent and distribution, may within twelve months after the termination of employment, consultancy or service as an Outside Director exercise such option rights to the extent they were exercisable on the date of the termination. Continuous employment, consultancy or service as an Outside Director shall not be deemed interrupted or terminated in the case of: (i) any leave of absence approved by the Board, including sick leave, military leave, or any other personal leave; provided, however, that for purposes of Incentive Stock Options, any such leave may not exceed ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract (including certain Company policies) or statute; or (ii) transfers between locations of the Company or between the Company, its Parent (as that term is defined in the Code), its Subsidiaries (as that term is defined in the Code) or its successor. 6.1.8 OTHER PROVISIONS. Each option granted under this Plan may contain such other terms, provisions, and conditions not inconsistent with this Plan as may be determined by the Administrator, and each ISO granted under this Plan shall include such provisions -5- 6 and conditions as are necessary to qualify the option as an incentive stock option within the meaning of Section 422 of the Code. If options provide for a right of first refusal in favor of the Company with respect to stock acquired by employees, such options shall further provide that the right of first refusal shall terminate when the stock of the Company is first quoted on the National Association of Securities Dealers Automated Quotation System or listed on an established stock exchange. 6.1.9 AUTOMATIC GRANTS TO NEW OUTSIDE DIRECTORS. The provisions set forth in this Section 6.1.9 shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder. Notwithstanding any other provisions of this Plan, all grants of Options to members of the Board of Directors who are neither employees of nor consultants to the Company ("Outside Directors") under this Plan shall be automatic and non-discretionary and shall be made strictly in accordance with the following provisions: (i) No person shall have any discretion to select which Outside Directors shall be granted Options or to determine the number of shares to be covered by Options granted to Outside Directors; provided, however, that nothing in this Plan shall be construed to prevent an Outside Director from declining to receive an Option under this Plan. (ii) Each Outside Director shall automatically receive an NQO to purchase 40,000 shares of Common Stock on the date first appointed to the Board of Directors, provided that such appointment occurs after October 9, 1991. In addition, with respect to each Outside Director who was originally appointed to the Board prior to October 9, 1991 as a representative of a stockholder of the Company with a contractual right to elect a member to the Board (an "Electing Stockholder"), such Outside Director shall automatically receive an NQO to purchase 40,000 shares of Common Stock at such time as (a) the Electing Stockholder disposes of substantially all of its shares of the Company's capital stock and (b) the Board and such Outside Director determine that the Outside Director shall continue to serve on the Board. (iii) The terms of an NQO granted pursuant to this Section 6.1.9 shall be as follows: (A) the term of the NQO shall be ten (10) years; (B) except as provided in Section 6.1.7 of this Plan, the NQO shall be exercisable only while the Outside Director remains a director; (C) the exercise price per share of Common Stock shall be 100% of the fair market value (as determined pursuant to Section 6.3.1 of the Plan) on the date of grant of the Option; -6- 7 (D) the NQO shall become exercisable in installments cumulatively with respect to 20% of the shares subject to the NQO on each one year anniversary following the Date of Grant until all of such shares are exercisable, provided, however, that in no event shall any NQO be exercisable prior to obtaining requisite stockholder approval. This option may not be exercised for a fraction of a share. 6.2 TERMS AND CONDITIONS TO WHICH ONLY NQOS ARE SUBJECT. Options granted under this Plan which are designated as NQOs shall be subject to the following terms and conditions: 6.2.1 EXERCISE PRICE. The exercise price of an NQO shall be not less than the fair market value (determined in accordance with Section 6.3.1) of the stock subject to the option on the date of grant, except that the exercise price of an NQO granted to any person who owns, directly or indirectly (or is treated as owning by reason of attribution rules, currently set forth in Section 424 of the Code) stock of the Company constituting more than ten percent (10%) of the total combined voting power of all classes of the outstanding stock of the Company or of any Affiliate of the Company shall in no event be less than one hundred ten percent (110%) of such fair market value. 6.2.2 OPTION TERM. Each NQO granted under this Plan shall expire ten years from the date of its grant or on such earlier date as may be set by the Administrator on the date of its grant, except that an NQO granted to any ten percent stockholder shall expire five years from the date of its grant. 6.3 TERMS AND CONDITIONS TO WHICH ONLY ISOS ARE SUBJECT. Options granted under this Plan which are designated as ISOs shall be subject to the following terms and conditions: 6.3.1 EXERCISE PRICE. The exercise price of an ISO, which shall be approved by the Administrator, shall be determined in accordance with the applicable provisions of the Code and shall in no event be less than the fair market value (determined as described in this para graph) of the stock covered by the option at the time the option is granted, except that the exercise price of an ISO granted to any person who owns, directly or indirectly, (or is treated as owning by reason of attribution rules, currently set forth in Section 424 of the Code) stock of the Company constituting more than ten percent of the total combined voting power of all classes of the out standing stock of the Company or of any Affiliate of the Company, shall in no event be less than 110 percent of such fair market value. In the absence of an established market for the stock, the fair market value thereof shall be determined in good faith by the Administrator, with reference to the Company's net worth, prospective earning power, dividend-paying capacity, and other relevant factors, including the goodwill of the Company, the economic outlook in the Company's industry, the Company's position in its industry, quality of the Company's management, and the values of stock of other corporations in the same or a similar line of business. If the stock of the Company is regularly quoted by a recognized securities dealer, its fair market value shall be (a) the mean between the closing high bid and low asked quotations for the stock on the date the ISO is granted (or if there are -7- 8 no quoted prices for the date of grant, then for the last preceding business day on which there were quoted prices) as quoted on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), or any similar system of automated dissemination of quotations of securities prices then in common use, as reported in the Wall Street Journal or similar publication, or (b) if not quoted as described in clause (a), the mean between the high bid and low asked quotations for the stock as reported by the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for the security on at least five trading days of the 20 trading days preceding the date of grant; provided, however, that if the stock is quoted on a national securities or central market system, in lieu of a market or quotation system described above, the fair market value shall be determined in the manner set forth in clause (a) if bid and asked quotations are reported but actual transactions are not, and in the manner set forth in the next sentence if actual transactions are reported. If the stock of the Company is listed on any stock exchange, its fair market value shall be the mean between the highest and lowest selling prices for such stock as quoted on such exchange (or the largest such exchange) for the date the option is granted (or if there are no sales for such date of grant, then for the last preceding business day on which there were such sales), as reported in the Wall Street Journal or similar publication. 6.3.2 EXPIRATION. Unless an earlier expiration date is specified by the Administrator at the time of grant, each ISO granted under this Plan shall expire ten years from the date of its grant, except that an ISO granted to any person who owns, directly or indirectly (or is treated as owning by reason of applicable attribution rules, currently set forth in Section 424 of the Code), stock of the Company constituting more than ten percent of the total combined voting power of all classes of the outstanding stock of the Company or of any Affiliate of the Company, shall expire five years from the date of its grant (a "Ten Percent Holder"). 6.3.3 DISQUALIFYING DISPOSITIONS. If stock acquired by exercise of an ISO granted pursuant to this Plan is disposed of within two years from the date of grant of the option or within one year after the transfer of the stock to the optionee, the holder of the stock immediately prior to the disposition shall promptly notify the Company in writing of the date and terms of the disposition and shall provide such other information regarding the disposition as the Company may reasonably require. Such holder shall pay to Company any withholding and employment taxes which the Company in its sole discretion deems applicable to such disposition. The Company may instruct its stock transfer agent by appropriate means, including placement of legends on stock certificates, not to transfer stock acquired by exercise of an ISO unless it has been advised by the Company that the requirements of this Section 6.3.3 have been satisfied. 7. MANNER OF EXERCISE An optionee wishing to exercise an option shall give written notice to the Company at its principal executive office, to the attention of the President of the Company, accompanied by pay ment of the exercise price as provided in Section 6.1.7. The date the Company receives written -8- 9 notice of an exercise hereunder accompanied by payment of the exercise price will be considered as the date such option was exercised. Promptly after receipt of written notice of exercise of an option, the Company shall, without stock issue or transfer taxes to the optionee or other person entitled to exercise the option, deliver to the optionee or such other person a certificate or certificates for the requisite number of shares of stock. An optionee or transferee of an option shall not have any privileges as a stockholder with respect to any stock covered by the option until the date of issuance of a stock certificate. 8. EMPLOYMENT OR CONSULTING RELATIONSHIP Nothing in this Plan or any option granted hereunder shall interfere with or limit in any way the right of the Company or of any of its Affiliates to terminate any optionee's employment or consultancy at any time, nor confer upon any optionee any right to continue in the employ of, or consulting to, the Company or any of its Affiliates. 9. AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN The Board of Directors may at any time amend, alter, suspend or discontinue this Plan, except to the extent that stockholder approval is required by applicable law; provided, however, that no amendment, alteration, suspension or discontinuation shall be made that would impair the rights of any optionee under any option theretofore granted, without the optionee's consent, or that, without the approval of the stockholders, would: (a) Except as is provided in Section 6.1.1 of this Plan, increase the total number of shares of stock reserved for the purposes of this Plan; (b) Extend the duration of this Plan; or (c) Change the class of persons eligible to receive options granted hereunder. 10. EFFECTIVE DATE OF THIS PLAN This Plan shall become effective upon adoption by the Board of Directors, provided, however, that no option shall be exercisable unless and until unanimous written consent of the stockholders of the Company, or action by stockholders of the Company voting at a validly called stockholders meeting and holding a majority (or such greater number as may be required by contrac tual commitment of the Company, by law, or by applicable governmental regulations or orders) of the shares entitled to vote, is obtained approving this Plan within 12 months before or after adoption by the Board of Directors. Options may be granted and exercised under this Plan only after there has been compliance with all applicable federal and state securities laws. -9- 10 11. TERM OF PLAN The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or its approval by vote of the holders of a majority of the outstanding shares of the Company entitled to vote on the adoption of the Plan. It shall continue in effect for a term of ten years unless sooner terminated under Section 9 of the Plan. 12. FINANCIAL INFORMATION The Company shall provide during the period an option is outstanding to each holder of such option a copy of the financial statements of the Company as prepared by either the Company or independent certified public accountants of the Company. Such financial statement shall be delivered as soon as practicable following the end of the Company's fiscal year during the period options are outstanding. -10- EX-4.2 3 FORM OF INCENTIVE STOCK OPTION PLAN 1 EXHIBIT 4.2 BRODERBUND SOFTWARE, INC. INCENTIVE STOCK OPTION AGREEMENT THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made and entered into as of ___________ (the "Date of Grant") by and between Broderbund Software, Inc., a Delaware corporation (the "Company"), and ____________ ("Optionee"). NOW THEREFORE, subject to the terms and conditions of this Agreement, the parties agree as follows: 1. GRANT OF OPTION. The Company hereby grants to Optionee, an option (the "Option") to purchase a total of ____________ shares of Common Stock (the "Shares"), subject to the terms and conditions of this Agreement and the 1996 Employee and Consultant Stock Option Plan (the "Plan") adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings herein. 2. NATURE OF THE OPTION. This Option is intended to qualify as an Incentive Stock Option ("ISO") as defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a nonqualified option. 3. EXERCISE PRICE. The exercise price is _____________ for each share of Common Stock (the "Exercise Price"), which price is not less than the fair market value per share of Common Stock on the date of grant, as determined by the Administrator. 4. EXERCISE OF OPTION. This Option shall be exercisable during its term in accordance with the provisions of Section 6 of the Plan as follows: (a) RIGHT TO EXERCISE. (i) Subject to subsections 4(a)(ii), (iii) and (iv) below, one-fifth (1/5th) of the total number of shares subject to this Option shall become exercisable on each one year anniversary following the Date of Grant until all of such shares are exercisable. (ii) This Option may not be exercised for a fraction of a share. (iii) In the event of Optionee's death, disability or other termination of employment, the exercisability of the Option is governed by Section 7 below, subject to the limitation contained in subsection 4(a)(iv). 2 (iv) In no event may this Option be exercised after the date of expiration of the term of this Option as set forth in Section 8 below. (b) METHOD OF EXERCISE. Subject to the terms and conditions of this Agreement (including without limitation Section 6) and the Plan, Optionee may exercise this Option by delivery to the Secretary of the Company at the Company's principal executive offices written notice (in the form attached as Exhibit A) which shall state the election to exercise the Option and the number of Shares in respect of which the Option is being exercised. Such written notice shall be signed by the Optionee and shall be delivered in person or by certified mail. The written notice shall be accompanied by payment of the Exercise Price and such other representations and agreements of the holder as may be required by the Company pursuant to Section 6 of this Agreement. This Option shall be deemed to be exercised upon receipt by the Company of such written notice, such representations and agreements as are required by the Company and payment of the Exercise Price. No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. 5. METHOD OF PAYMENT. Payment of the Exercise Price shall be made by cash or check. 6. RESTRICTIONS ON EXERCISE; DAMAGES. This Option may not be exercised if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulation, in the opinion of the Company and the Company's counsel including any rule under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. Optionee shall be liable to the Company for all costs and damages, including incidental and consequential damages, resulting from a disposition of Shares that is not in conformity with the provisions of this Option. 7. TERMINATION OF EMPLOYMENT. In the event Optionee ceases to be an employee of the Company, Optionee may, but only within three months after the date of such termination (but in no event later than the date of expiration of the term of this Option as set forth in Section 8 below), exercise this Option to the extent that Optionee was entitled to exercise it at the date of such termination. Notwithstanding the foregoing, if termination of employment is due to the disability or death of Optionee, Optionee, or Optionee's personal representative or any other person who acquires the right to exercise this Option from Optionee by will or the applicable laws of descent and distribution, may within twelve months after the termination of employment exercise this Option to the extent Optionee was entitled to exercise it at the date of the termination. -2- 3 8. TERM OF OPTION. This Option shall terminate ten (10) years from the Date of Grant unless terminated sooner pursuant to the terms of this Agreement or the Plan, and may be exercised during such term only in accordance with the terms of this Agreement and the Plan. Notwithstanding the preceding sentence, in the event that Optionee is a Ten Percent Holder as defined in Section 6.3.2 of the Plan, this Option shall terminate five (5) years from the Date of Grant, unless terminated sooner pursuant to the terms of this Agreement or the Plan. 9. RIGHTS AS STOCKHOLDER. Subject to the terms and conditions of this Agreement, Optionee shall have all of the rights of a stockholder of the Company with respect to the Shares from and after the date that Optionee delivers full payment of the Exercise Price until such time as Optionee disposes of the Shares. The Company and its transfer agent, if any, shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Option or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer" instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. 10. TAX CONSEQUENCES. Set forth below is a brief summary as of the date of this Option of some of the federal and California tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. (a) EXERCISE OF ISO. There will be no regular federal income tax liability or California income tax liability upon the exercise of the Option, although the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax for federal tax purposes and may subject the Optionee to the alternative minimum tax in the year of exercise. (b) DISPOSITION OF SHARES. If Shares transferred pursuant to this Option are held for at least one year after exercise and are disposed of at least two years after the date of this Option, any gain realized on disposition of the Shares will also be treated as long-term capital gain for federal and California income tax purposes. If Shares purchased under an ISO are disposed of within such one-year period or within two years after the Date of Grant, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, equal to the lesser of (i) the fair market value of the Shares acquired on the date of exercise less the aggregate Exercise Price or (ii) the sale price of the Shares less the Exercise Price. (c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If any of the Shares acquired by exercise of this Option are disposed of within two years from the Date of Grant of this Option or within one year after the transfer of the stock to Optionee, the holder of the stock immediately prior to -3- 4 the disposition shall promptly notify the Company in writing of the date and terms of the disposition and shall provide such other information regarding the disposition as the Company may reasonably require. Such holder agrees to pay to the Company any withholding and employment taxes which the Company in its sole discretion deems applicable to such disposition. The Company may instruct its stock transfer agent by appropriate means, including placement of legends on stock certificates, not to transfer stock acquired by exercise of an ISO unless it has been advised by the Company that the requirements of this Section 12(c) have been satisfied. 11. SUCCESSORS AND ASSIGNS; NONTRANSFERABILITY OF OPTION. The Company may assign any of its rights under this Option to single or multiple assignees, and this Option shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Option shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns. This Option may not be transferred by Optionee in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 12. INTERPRETATION. Any dispute regarding the interpretation of this Option shall be submitted by Optionee or by the Company forthwith to the Administrator, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on the Company and on Optionee. 13. GOVERNING LAW; SEVERABILITY. This Option shall be governed by and construed in accordance with the laws of the State of California, excluding that body of law pertaining to conflicts of law. Should any provision of this Option be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable. 14. NOTICES. All notices and other communications under this Agreement shall be in writing. Unless and until Optionee is notified in writing to the contrary, all notices, communications and documents directed to the Company and related to the Agreement, if not delivered by hand, shall be mailed, addressed as follows: Broderbund Software, Inc. 500 Redwood Boulevard Novato, California 94947 Unless and until the Company is notified in writing to the contrary, all notices, communications and documents intended for Optionee and related to this Agreement, if not delivered by hand, shall be mailed to Optionee's last known address as shown on the Company's books. Notices and communications shall be mailed by first class mail, postage prepaid; documents shall be mailed by registered mail, return receipt requested, postage prepaid. All mailings and deliveries related to this Agreement shall be deemed received only when actually received. -4- 5 15. ENTIRE AGREEMENT. The Plan is incorporated herein by reference. This Agreement and the Plan constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof. BRODERBUND SOFTWARE, INC. A DELAWARE CORPORATION By:_____________________________ Title:__________________________ Address: 500 Redwood Boulevard Novato, California 94947 -5- 6 OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE. Optionee acknowledges receipt of a copy of the Plan and represents that Optionee is familiar with the terms and provisions of the Plan, and accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan. Optionee acknowledges that Optionee's spouse, if any, has signed the consent of spouse attached as Attachment 1. Optionee further agrees to notify the Company upon any change in the residence address indicated below. Dated: _______________ ______________________________ Optionee Address: _____________________ _____________________ _____________________ -6- 7 ATTACHMENT 1 CONSENT OF SPOUSE As the undersigned spouse of the Optionee, I hereby represent that I have read and approve the foregoing Agreement. I hereby agree to be irrevocably bound by the provisions of the Agreement insofar as I may have any rights under such Agreement or in any Shares issued pursuant thereto, and I further agree that any rights that I may have with respect to such Agreement and/or such Shares pursuant to the community property laws of the State of California or similar laws relating to marital property as of the date of the Agreement shall be similarly bound. I appoint my spouse as my attorney-in-fact with respect to any amendment or the exercise of any rights under the Agreement. Dated: __________________ _________________________________ Print name: _____________________ 8 EXHIBIT A EXERCISE NOTICE BRODERBUND SOFTWARE, INC. 500 Redwood Boulevard Novato, California 94947 Attention: President Effective as of today, ___________, 19__, the undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase _________ shares of the Common Stock (the "Shares") of BRODERBUND SOFTWARE, INC. (the "Company") at $_____ per share (total exercise price of $_______) under and pursuant to the Company's 1996 Employee and Consultant Stock Option Plan (the "Plan") and the Incentive Stock Option Agreement dated ___________, 19___ (the "Agreement"). Optionee acknowledges that Optionee has received, read and understood the Plan and the Agreement and agrees to abide by and be bound by their terms and conditions. Please prepare the stock certificate in the following name(s). ______________________ ______________________ Sincerely, ______________________________ (Signature) ______________________________ (Print or Type Name) Notice and consideration received by Broderbund Software, Inc. on ________________, 19__. By: _________________________ EX-4.3 4 FORM OF NONQUALIFIED STOCK OPTION AGREEMENT 1 EXHIBIT 4.3 BRODERBUND SOFTWARE, INC. NONQUALIFIED STOCK OPTION AGREEMENT THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and entered into as of _____________ (the "Date of Grant") by and between Broderbund Software, Inc., a Delaware corporation (the "Company"), and _____________ ("Optionee"). NOW THEREFORE, subject to the terms and conditions of this Agreement, the parties agree as follows: 1. GRANT OF OPTION. The Company hereby grants to Optionee, an option (the "Option") to purchase a total of _____________ shares of Common Stock (the "Shares"), subject to the terms and conditions of this Agreement and the 1996 Employee and Consultant Stock Option Plan (the "Plan") adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings herein. 2. NATURE OF THE OPTION. This Option is intended to be a Nonqualified Stock Option and does not qualify for any special tax benefits to the Optionee. 3. EXERCISE PRICE. The exercise price is _____________ for each share of Common Stock (the "Exercise Price"), which price is not less than the fair market value per share of Common Stock on the date of grant, as determined by the Administrator. 4. EXERCISE OF OPTION. This Option shall be exercisable during its term in accordance with the provisions of Section 6 of the Plan as follows: (a) RIGHT TO EXERCISE. (i) Subject to subsections 4(a)(ii), (iii) and (iv) below, one-fifth (1/5th) of the total number of shares subject to this Option shall become exercisable on each one year anniversary following the Date of Grant until all of such shares are exercisable. (ii) This Option may not be exercised for a fraction of a share. (iii) In the event of Optionee's death, disability or other termination of employment or consultancy, the exercisability of the Option is governed by Section 7 below, subject to the limitation contained in subsection 4(a)(iv). (iv) In no event may this Option be exercised after the date of expiration of the term of this Option as set forth in Section 8 below. 2 (b) METHOD OF EXERCISE. Subject to the terms and conditions of this Agreement (including without limitation Section 6) and the Plan, Optionee may exercise this Option by delivery to the Secretary of the Company at the Company's principal executive offices written notice (in the form attached as Exhibit A) which shall state the election to exercise the Option and the number of Shares in respect of which the Option is being exercised. Such written notice shall be signed by the Optionee and shall be delivered in person or by certified mail. The written notice shall be accompanied by payment of the Exercise Price and such other representations and agreements of the holder as may be required by the Company pursuant to Section 6 of this Agreement. This Option shall be deemed to be exercised upon receipt by the Company of such written notice, such representations and agreements as are required by the Company and payment of the Exercise Price. No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. 5. METHOD OF PAYMENT. Payment of the Exercise Price shall be made by cash or check. 6. RESTRICTIONS ON EXERCISE; DAMAGES. This Option may not be exercised if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulation, in the opinion of the Company and the Company's counsel including any rule under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. Optionee shall be liable to the Company for all costs and damages, including incidental and consequential damages, resulting from a disposition of Shares that is not in conformity with the provisions of this Option. 7. TERMINATION OF RELATIONSHIP. In the event Optionee ceases to serve as an employee or consultant of the Company, Optionee may, but only within three months after the date of such termination (but in no event later than the date of expiration of the term of this Option as set forth in Section 8 below), exercise this Option to the extent that Optionee was entitled to exercise it at the date of such termination. Notwithstanding the foregoing, if termination of employment or consultancy is due to the disability or death of Optionee, Optionee, or Optionee's personal representative or any other person who acquires the right to exercise this Option from Optionee by will or the applicable laws of descent and distribution, may within twelve months after the termination of employment or consultancy exercise this Option to the extent Optionee was entitled to exercise it at the date of the termination. 8. TERM OF OPTION. This Option shall terminate ten (10) years from the Date of Grant unless terminated sooner pursuant to the terms of this Agreement or the Plan, and may be exercised during such term only in accordance with the terms of this Agreement and the Plan. Notwithstanding the preceding sentence, in the event that Optionee owns directly or indirectly (or is treated as owning by reason of attribution rules, currently set forth in Section 424 of the Code), stock of the Company constituting more -2- 3 than ten percent (10%) of the total combined voting power of all classes of the outstanding stock of the Company or of any Affiliate of the Company, this Option shall terminate five (5) years from the Date of Grant, unless terminated sooner pursuant to the terms of this Agreement or the Plan. 9. RIGHTS AS STOCKHOLDER. Subject to the terms and conditions of this Agreement, Optionee shall have all of the rights of a stockholder of the Company with respect to the Shares from and after the date that Optionee delivers full payment of the Exercise Price until such time as Optionee disposes of the Shares. The Company and its transfer agent, if any, shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Option or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer" instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. 10. TAX CONSEQUENCES. Set forth below is a brief summary as of the date of this Option of some of the federal and California tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. (a) EXERCISE OF NONQUALIFIED STOCK OPTION. There may be a regular federal income tax liability and a California income tax liability upon the exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price. If Optionee is an employee, the Company will be required to withhold from Optionee's compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise. (b) DISPOSITION OF SHARES. If Shares are held for at least one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. 11. SUCCESSORS AND ASSIGNS; NONTRANSFERABILITY OF OPTION. The Company may assign any of its rights under this Option to single or multiple assignees, and this Option shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Option shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns. This Option may not be transferred by Optionee in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 12. INTERPRETATION. Any dispute regarding the interpretation of this Option shall be submitted by Optionee or by the Company forthwith to the Administrator, which shall review such dispute at its -3- 4 next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on the Company and on Optionee. 13. GOVERNING LAW; SEVERABILITY. This Option shall be governed by and construed in accordance with the laws of the State of California, excluding that body of law pertaining to conflicts of law. Should any provision of this Option be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable. 14. NOTICES. All notices and other communications under this Agreement shall be in writing. Unless and until Optionee is notified in writing to the contrary, all notices, communications and documents directed to the Company and related to the Agreement, if not delivered by hand, shall be mailed, addressed as follows: Broderbund Software, Inc. 500 Redwood Boulevard Novato, California 94947 Unless and until the Company is notified in writing to the contrary, all notices, communications and documents intended for Optionee and related to this Agreement, if not delivered by hand, shall be mailed to Optionee's last known address as shown on the Company's books. Notices and communications shall be mailed by first class mail, postage prepaid; documents shall be mailed by registered mail, return receipt requested, postage prepaid. All mailings and deliveries related to this Agreement shall be deemed received only when actually received. 15. ENTIRE AGREEMENT. The Plan is incorporated herein by reference. This Agreement and the Plan constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof. BRODERBUND SOFTWARE, INC. A DELAWARE CORPORATION By:_____________________________ Title:__________________________ Address: 500 Redwood Boulevard Novato, California 94947 -4- 5 OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT OR CONSULTANCY AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE. Optionee acknowledges receipt of a copy of the Plan and represents that Optionee is familiar with the terms and provisions of the Plan, and accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan. Optionee acknowledges that Optionee's spouse, if any, has signed the consent of spouse attached as Attachment 1. Optionee further agrees to notify the Company upon any change in the residence address indicated below. Dated: _______________ ______________________________ Optionee Address: _____________________ _____________________ _____________________ -5- 6 ATTACHMENT 1 CONSENT OF SPOUSE As the undersigned spouse of the Optionee, I hereby represent that I have read and approve the foregoing Agreement. I hereby agree to be irrevocably bound by the provisions of the Agreement insofar as I may have any rights under such Agreement or in any Shares issued pursuant thereto, and I further agree that any rights that I may have with respect to such Agreement and/or such Shares pursuant to the community property laws of the State of California or similar laws relating to marital property as of the date of the Agreement shall be similarly bound. I appoint my spouse as my attorney-in-fact with respect to any amendment or the exercise of any rights under the Agreement. Dated: __________________ _________________________________ Print name: _____________________ -6- 7 EXHIBIT A EXERCISE NOTICE BRODERBUND SOFTWARE, INC. 500 Redwood Boulevard Novato, California 94947 Attention: President Effective as of today, ___________, 19__, the undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase _________ shares of the Common Stock (the "Shares") of BRODERBUND SOFTWARE, INC. (the "Company") at $_____ per share (total exercise price of $_______) under and pursuant to the Company's 1996 Employee and Consultant Stock Option Plan (the "Plan") and the Nonqualified Stock Option Agreement dated ___________, 19___ (the "Agreement"). Optionee acknowledges that Optionee has received, read and understood the Plan and the Agreement and agrees to abide by and be bound by their terms and conditions. Please prepare the stock certificate in the following name(s). ______________________ ______________________ Sincerely, ______________________________ (Signature) ______________________________ (Print or Type Name) Notice and consideration received by Broderbund Software, Inc. on ________________, 19__. By: _________________________ -7- EX-4.4 5 1996 EMPLOYEE STOCK PURCHASE PLAN 1 EXHIBIT 4.4 BRODERBUND SOFTWARE, INC. 1996 EMPLOYEE STOCK PURCHASE PLAN 1. Purpose. The purpose of the Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the Code. The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. 2. Definitions. (a) "Board" shall mean the Board of Directors of the Company. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Common Stock" shall mean the Common Stock of the Company. (d) "Company" shall mean Broderbund Software, Inc. and any Designated Subsidiary. (e) "Compensation" shall mean all cash compensation, including, but not limited to, salaries, incentive bonuses and commissions. (f) "Designated Subsidiaries" shall mean the Subsidiaries which have been designated by the Board from time to time in its sole discretion as eligible to participate in the Plan. (g) "Employee" shall mean any individual who is an Employee of the Company for tax purposes whose customary employment with the Company is at least twenty (20) hours per week and more than five (5) months in any calendar year. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company. Where the period of leave exceeds ninety (90) days and the individual's right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the 91st day of such leave. (h) "Enrollment Date" shall mean the first day of each Offering Period. (i) "Exercise Date" shall mean the last day of each Offering Period. (j) "Fair Market Value" shall mean, as of any date, the value of Common Stock determined as follows: (1) If the Common Stock of the Company is regularly quoted by a recognized securities dealer, its fair market value shall be the mean between the closing high bid and low asked quotations for the Common Stock on the date of determination (or if there are no quoted 2 prices for the date of determination, then for the last preceding business day on which there were quoted prices) as quoted on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), or any similar system of automated dissemination of quotations of securities prices then in common use, as reported in the Wall Street Journal or similar publication, or; (2) If not quoted as described in Section 2(j)(1) above, the mean between the high bid and low asked quotations for the Common Stock as reported by the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for the security on at least five trading days of the 20 trading days preceding the date of determination; provided, however, that if the Common Stock is quoted on a national securities or central market system, in lieu of a market or quotation system described above, the fair market value shall be determined in the manner set forth in Section 2(j)(1) if bid and asked quotations are reported but actual transactions are not, and in the manner set forth in the next sentence if actual transactions are reported. If the Common Stock of the Company is listed on any stock exchange, its fair market value shall be the mean between the highest and lowest selling prices for such Common Stock as quoted on such exchange (or the largest such exchange) for the date the option is granted (or if there are no sales for such date of determination, then for the last preceding business day on which there were such sales), as reported in the Wall Street Journal or similar publication, or; (3) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board. (k) "Offering Period" shall mean a period of approximately six (6) months, commencing on the first Trading Day on or after April 15 and terminating on the last Trading Day in the period ending the following October 14, or commencing on the first Trading Day on or after October 15 and terminating on the last Trading Day in the period ending the following April 14, during which an option granted pursuant to the Plan may be exercised. The duration of Offering Periods may be changed pursuant to Section 4 of this Plan. (l) "Plan" shall mean this 1996 Employee Stock Purchase Plan. (m) "Purchase Price" shall mean an amount equal to eighty-five percent (85%) of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower. (n) "Reserves" shall mean the number of shares of Common Stock covered by each option under the Plan which have not yet been exercised and the number of shares of Common Stock which have been authorized for issuance under the Plan but not yet placed under option. (o) "Subsidiary" shall mean a corporation, domestic or foreign, of which not less than fifty percent (50%) of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary. -2- 3 (p) "Trading Day" shall mean a day on which national stock exchanges and the Nasdaq System are open for trading. 3. Eligibility. (a) Any Employee (as defined in Section 2(g)), who has been employed by the Company for at least six (6) months on a given Enrollment Date shall be eligible to participate in the Plan. (b) Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) to the extent that, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Subsidiary, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans of the Company and its subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the fair market value of the shares at the time such option is granted) for each calendar year in which such option is outstanding at any time. 4. Offering Periods. The Plan shall be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after April 15 and October 15 each year, or on such other date as the Board shall determine, and continuing thereafter until terminated in accordance with Section 19 hereof. The Board shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without stockholder approval if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected thereafter. 5. Participation. (a) An eligible Employee may become a participant in the Plan by completing a subscription agreement authorizing payroll deductions in the form of Exhibit A to this Plan and filing it with the Company prior to the applicable Enrollment Date. (b) Payroll deductions for a participant shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof. 6. Payroll Deductions. (a) At the time a participant files his or her subscription agreement, he or she shall elect to (i) have payroll deductions made in whole percentages on each pay day during the Offering Period or (ii) have payroll deductions made in ten (10) dollar increments on each pay day during the -3- 4 Offering Period. In no event may such payroll deductions exceed ten percent (10%) of the Compensation which a participant receives on each pay day during the Offering Period. If a participant is enrolled in multiple offering periods under this and/or any of the Company's employee stock purchase plans, his or her deductions under such offering periods shall be counted against the ten percent (10%) limit set forth in this Section 6(a) so that no more than ten percent (10%) of Compensation in the aggregate shall be deducted under all such offering periods. (b) All payroll deductions made for a participant shall be credited to his or her account under the Plan. A participant may not make any additional payments into such account. (c) A participant may discontinue his or her participation in the Plan as provided in Section 10 hereof, or may increase or decrease the rate of his or her payroll deductions during the Offering Period by completing or filing with the Company a new subscription agreement authorizing a change in payroll deduction rate. A participant shall be limited to one (1) payroll deduction rate change during any Offering Period; provided, however, that a decrease in the rate of payroll deductions to zero percent (0%) shall not be counted therein. The change in rate shall be effective with the first full payroll period following five (5) business days after the Company's receipt of the new subscription agreement unless the Company elects to process a given change in participation more quickly. A participant's subscription agreement shall remain in effect for successive Offering Periods unless terminated as provided in Section 10 hereof. A decrease in the rate of payroll deductions to zero percent (0%) shall not be treated as a termination pursuant to Section 10 hereof unless and until a Notice of Withdrawal, in substantially the form attached hereto as Exhibit B, has been provided to the Company. (d) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's payroll deductions may be decreased to zero percent (0%) at such time during any Offering Period which is scheduled to end during the current calendar year (the "Current Offering Period") that the aggregate of all payroll deductions which were previously used to purchase stock under the Plan (or another employee stock purchase plan of the Company) in a prior offering period which ended during that calendar year plus all payroll deductions accumulated with respect to the current offering period or periods equal $21,250. Payroll deductions shall recommence at the rate provided in such participant's subscription agreement at the beginning of the first Offering Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in Section 10 hereof. (e) At the time the option is exercised, in whole or in part, or at the time some or all of the Company's Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company's federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock. At any time, the Company may, but shall not be obligated to, withhold from the participant's compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Employee. -4- 5 7. Grant of Option. On the Enrollment Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on the Exercise Date of such Offering Period (at the applicable Purchase Price) up to a number of shares of the Company's Common Stock determined by dividing such Employee's payroll deductions accumulated prior to such Exercise Date and retained in the Participant's account as of the Exercise Date by the applicable Purchase Price; provided that in no event shall an Employee be permitted to purchase during each Offering Period more than a number of Shares determined by dividing $25,000 by the Fair Market Value of a share of the Company's Common Stock on the Enrollment Date, and provided further that such purchase shall be subject to the limitations set forth in Sections 3(b), 6(a) and 12 hereof. Exercise of the option shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof. The Option shall expire on the last day of the Offering Period. 8. Exercise of Option. Unless a participant withdraws from the Plan as provided in Section 10 hereof, his or her option for the purchase of shares shall be exercised automatically on the Exercise Date, and the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares shall be purchased; any payroll deductions accumulated in a participant's account which are not sufficient to purchase a full share shall be retained in the participant's account for the subsequent Offering Period, subject to earlier withdrawal by the participant as provided in Section 10 hereof. Any other monies left over in a participant's account after the Exercise Date shall be returned to the participant. 9. Brokerage Account; Delivery. The Company will coordinate the maintenance of an account in street name at an approved brokerage firm reflecting all purchases pursuant to the Plan. If requested by a participant, the Company shall arrange the delivery to such participant, as appropriate, of a certificate representing the shares purchased upon exercise of his or her option. The costs associated with such requested delivery shall be borne by the participant. 10. Withdrawal; Termination of Employment. (a) A participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by providing a Notice of Withdrawal to the Company in substantially the form attached hereto as Exhibit B. All of the participant's payroll deductions credited to his or her account shall be paid to such participant promptly after receipt of notice of withdrawal and such participant's option for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of shares shall be made for such Offering Period. If a participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the participant delivers to the Company a new subscription agreement. (b) Upon a participant's ceasing to be an Employee (as defined in Section 2(g) hereof) for any reason, he or she shall be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant's account during the Offering Period but not yet used -5- 6 to exercise the option shall be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 14 hereof, and such participant's option shall be automatically terminated. A participant who receives payment in lieu of notice of termination of employment shall not be treated as continuing to be an Employee during the period in which the participant is subject to such payment in lieu of notice. (c) A participant's withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the participant withdraws. 11. Interest. No interest shall accrue on the payroll deductions of a participant in the Plan. 12. Stock. (a) The maximum number of shares of the Company's Common Stock which shall be made available for sale under the Plan shall be Two Hundred Fifty Thousand (250,000) shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 18 hereof. If, on a given Exercise Date, the number of shares with respect to which options are to be exercised exceeds the number of shares then available under the Plan, the Company shall make a pro rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable. (b) The participant shall have no interest or voting right in shares covered by his option until such option has been exercised. (c) Shares that may be delivered to a participant under the Plan pursuant to Section 9 hereof shall be registered in the name of the participant or in the name of the participant and his or her spouse. All other Shares shall be maintained in street name in a brokerage account as described in Section 9 hereof. 13. Administration. (a) Administrative Body. The Plan shall be administered by the Board or a committee of members of the Board appointed by the Board. The Board or its committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding, decision and determination made by the Board or its committee shall, to the full extent permitted by law, be final and binding upon all parties. -6- 7 (b) Rule 16b-3 Limitations. Notwithstanding the provisions of Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any successor provision ("Rule 16b-3") provides specific requirements for the administrators of plans of this type, the Plan shall be administered only by such a body and in such a manner as shall comply with the applicable requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no discretion concerning decisions regarding the Plan shall be afforded to any committee or person that is not "disinterested" as that term is used in Rule 16b-3. 14. Designation of Beneficiary. (a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant's account under the Plan in the event of such participant's death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant's account under the Plan in the event of such participant's death prior to exercise of the option. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective. (b) Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant's death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 15. Transferability. Neither payroll deductions credited to a participant's account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 14 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof. 16. Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. 17. Reports. Individual accounts shall be maintained for each participant in the Plan. Statements of account shall be given to participating Employees at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any. -7- 8 18. Adjustments Upon Changes in Capitalization, Liquidation, Dissolution, Merger or Asset Sale. (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the Reserves as well as the price per share of Common Stock covered by each option under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period shall terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board. (c) Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the "New Exercise Date") immediately prior to the consummation of such transaction. If the Offering Period then in progress is shortened in the event of a merger or sale of assets, the Board shall notify each participant in writing, at least five (5) business days prior to the New Exercise Date, that the Exercise Date for his option has been changed to the New Exercise Date and that his option shall be exercised automatically on the New Exercise Date, unless prior to such date he has withdrawn from the Offering Period as provided in Section 10 hereof. 19. Amendment or Termination. (a) The Board of Directors of the Company may at any time and for any reason terminate or amend the Plan. Except as provided in Section 18 hereof, no such termination can affect options previously granted, provided that an Offering Period may be terminated by the Board of Directors on any Exercise Date if the Board determines that the termination of the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 18 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant. To the extent necessary to comply with Rule 16b-3 or under Section 423 of the Code (or any successor rule or provision or any other applicable law or regulation), the Company shall obtain stockholder approval in such a manner and to such a degree as required. -8- 9 (b) Without stockholder consent and without regard to whether any participant rights may be considered to have been "adversely affected," the Board (or its committee) shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company's processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant's Compensation, and establish such other limitations or procedures as the Board (or its committee) determines in its sole discretion advisable which are consistent with the Plan. 20. Notices. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. 21. Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law. 22. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption be the Board of Directors or its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 19 hereof. -9- 10 EXHIBIT A BRODERBUND SOFTWARE, INC. 1996 EMPLOYEE STOCK PURCHASE PLAN SUBSCRIPTION AGREEMENT _____ Original Application Enrollment Date: __________ _____ Change in Payroll Deduction Rate _____ Change of Beneficiary(ies) 1. _____________________________________ hereby elects to participate in the Broderbund Software, Inc. 1996 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and subscribes to purchase shares of the Company's Common Stock in accordance with this Subscription Agreement and the Employee Stock Purchase Plan. 2. I hereby authorize payroll deductions in: ___ The amount of ___% of my Compensation on each payday (no fractional percentages are permitted); or ___ The amount of $________ from each paycheck (which amount must be denominated in ten (10) dollar increments). In either case, I understand that such payroll deductions may not exceed ten percent (10%) of my Compensation, including amounts deferred under other employee stock purchase plans of the Company, if any, during the Offering Period in accordance with the Employee Stock Purchase Plan. 3. I understand that said payroll deductions shall be accumulated for the purchase of shares of Common Stock at the applicable Purchase Price determined in accordance with the Employee Stock Purchase Plan. I understand that if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise my option. 4. I understand that the Internal Revenue Code limits the amount that may be purchased under all employee stock purchase plans of the Company to a maximum of $25,000 worth of Company stock, based on the fair market value of the stock on the first day of the Offering Period, per calendar year. 5. I have received a copy of the complete "1996 Employee Stock Purchase Plan." I understand that my participation in the Employee Stock Purchase Plan is in all respects subject to the terms of the Plan. I understand that my ability to exercise the option under this Subscription Agreement is subject to stockholder approval of the Employee Stock Purchase Plan. 11 6. Shares purchased for me under the Employee Stock Purchase Plan should be issued in the name(s) of (Employee or Employee and Spouse only): . 7. I understand that if I dispose of any shares received by me pursuant to the Plan within 2 years after the Enrollment Date (the first day of the Offering Period during which I purchased such shares) or one year after the Exercise Date, I will be treated for federal income tax purposes as having received ordinary income at the time of such disposition in an amount equal to the excess of the fair market value of the shares at the time such shares were purchased by me over the price which I paid for the shares. I hereby agree to notify the Company in writing within 30 days after the date of any disposition of my shares and I will make adequate provision for Federal, state or other tax withholding obligations, if any, which arise upon the disposition of the Common Stock. The Company may, but will not be obligated to, withhold from my compensation the amount necessary to meet any applicable withholding obligation including any withholding necessary to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by me. If I dispose of such shares at any time after the expiration of the 2-year and 1-year holding periods, I understand that I will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal to the lesser of (1) the excess of the fair market value of the shares at the time of such disposition over the purchase price which I paid for the shares, or (2) fifteen percent (15%) of the fair market value of the shares on the first day of the Offering Period. The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain. 8. I hereby agree to be bound by the terms of the Employee Stock Purchase Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Employee Stock Purchase Plan. 9. In the event of my death, I hereby designate the following as my beneficiary(ies) to receive all payments and shares due me under the Employee Stock Purchase Plan: NAME: (Please print) ____________________________________________________ (First) (Middle) (Last) _________________________ _____________________________________________ Relationship _____________________________________________ (Address) Employee's Social Security Number: _____________________________________________ -2- 12 Employee's Address: _____________________________________________ _____________________________________________ I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME. Dated: ___________________ _____________________________________________ Signature of Employee _____________________________________________ Spouse's Signature (If beneficiary other than spouse) -3- 13 EXHIBIT B BRODERBUND SOFTWARE, INC. 1996 EMPLOYEE STOCK PURCHASE PLAN NOTICE OF WITHDRAWAL The undersigned participant in the Offering Period of the Broderbund Software, Inc. 1996 Employee Stock Purchase Plan which began on ___________ 19____ (the "Enrollment Date") hereby notifies the Company that he or she hereby withdraws from the Offering Period. He or she hereby directs the Company to pay to the undersigned as promptly as practicable all the payroll deductions credited to his or her account with respect to such Offering Period. The undersigned understands and agrees that his or her option for such Offering Period will be automatically terminated. The undersigned understands further that no further payroll deductions will be made for the purchase of shares in the current Offering Period and the undersigned shall be eligible to participate in succeeding Offering Periods only by delivering to the Company a new Subscription Agreement. Name and Address of Participant: _____________________________________________ _____________________________________________ _____________________________________________ Signature: _____________________________________________ Date:________________________________________ EX-5.1 6 OPINION OF WILSON,SONSINI,GOODRICH & ROSATI 1 EXHIBIT 5.1 October 9, 1996 Broderbund Software, Inc. 500 Redwood Boulevard Novato, California 94947 RE: REGISTRATION STATEMENT ON FORM S-8 Ladies and Gentlemen: We have examined the Registration Statement on Form S-8 to be filed by you with the Securities and Exchange Commission on or about October 9, 1996 (the "Registration Statement"), in connection with the registration under the Securities Act of 1933, as amended, of (i) 1,500,000 shares of your Common Stock reserved for issuance under the 1996 Employee and Consultant Stock Option Plan (the "Option Plan") and (ii) 250,000 shares of your Common Stock reserved for issuance under the 1996 Employee Stock Purchase Plan (the "Purchase Plan"). The 1,500,000 shares of Common Stock reserved under the Option Plan and the 250,000 shares of Common Stock reserved under the Purchase Plan are referred to collectively hereinafter as the "Shares," and the Option Plan and the Purchase Plan are referred to hereinafter collectively as the "Plans." As your legal counsel, we have examined the proceedings taken and proposed to be taken in connection with the issuance, sale and payment of consideration for the Shares to be issued under the Plans. It is our opinion that, when issued and sold in compliance with applicable prospectus delivery requirements and in the manner referred to in the Plans and pursuant to the agreements which accompany the Plans, the Shares will be legally and validly issued, fully paid and non-assessable. We consent to the use of this opinion as an exhibit to the Registration Statement and further consent to the use of our name wherever appearing in the Registration Statement and any amendments thereto. Sincerely, WILSON, SONSINI, GOODRICH & ROSATI Professional Corporation /s/ Wilson, Sonsini, Goodrich & Rosati EX-23.1 7 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the 1996 Employee and Consultant Stock Option Plan and the 1996 Employee Stock Purchase Plan of Broderbund Software, Inc. of our reports dated October 4, 1995, except for Note 2 as to which the date is November 7, 1995, and November 27, 1995, with respect to the consolidated financial statements of Broderbund Software, Inc. incorporated by reference in the Form 10-K for the year ended August 31, 1995 and the related financial statement schedule included therein, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP San Francisco, California October 4, 1996 -----END PRIVACY-ENHANCED MESSAGE-----