ex4-10_102011.htm


 


Exhibit 4.10


 


 


VERITY, INC.



 


1996 NONSTATUTORY STOCK OPTION PLAN


 


(As Amended Through November 15, 2002)


 


1.           Establishment, Purpose and Term of Plan.


 


1.1           Establishment.  The Verity, Inc. 1996 Nonstatutory Stock Option Plan (the “Plan”) is hereby established effective as of February 6, 1996 (the “Effective Date”).


 


1.2           Purpose.  The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group.


 


1.3           Term of Plan.  The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed.


 


2.           Definitions and Construction.


 


2.1           Definitions.  Whenever used herein, the following terms shall have their respective meanings set forth below:


 


(a)           “Board” means the Board of Directors of the Company.  If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means such Committee(s).


 


(b)           “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.


 


(c)           “Committee” means the Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board.  Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law.


 


(d)           “Company” means Verity, Inc., a Delaware corporation, or any successor corporation thereto.


 


(e)           “Consultant” means any person, including an advisor, engaged by a Participating Company to render services other than as an Employee or a Director.


 


(f)           “Director” means a member of the Board or of the board of directors of any other Participating Company.


 


 




  





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(g)           “Employee” means any person treated as an employee (including an officer or a Director who is also treated as an employee) in the records of a Participating Company; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.


 


(h)           “Exchange Act” means the Securities Exchange Act of 1934, as amended.


 


(i)           “Fair Market Value” means, as of any date, the value of a share of stock or other property as determined by the Board, in its sole discretion, or by the Company, in its sole discretion, if such determination is expressly allocated to the Company herein.


 


(j)           “Insider” means an officer or a Director of the Company or any other person whose transactions in Stock are subject to Section 16 of the Exchange Act.


 


(k)           “Option” means a right to purchase Stock (subject to adjustment as provided in Section 4.2) pursuant to the terms and conditions of the Plan.  Options are intended to be nonstatutory stock options and shall not be treated as incentive stock options within the meaning of Section 422(b) of the Code.


 


(l)           “Option Agreement” means a written agreement between the Company and an Optionee setting forth the terms, conditions and restrictions of the Option granted to the Optionee and any shares acquired upon the exercise thereof.


 


(m)           “Optionee” means a person who has been granted one or more Options.


 


(n)           “Parent Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code.


 


(o)           “Participating Company” means the Company or any Parent Corporation or Subsidiary Corporation.


 


(p)           “Participating Company Group” means, at any point in time, all corporations collectively which are then Participating Companies.


 


(q)           “Stock” means the common stock, $0.001 par value, of the Company, as adjusted from time to time in accordance with Section 4.2.


 


(r)           “Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.


 


2.2           Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan.  Except when otherwise indicated by the context, the singular shall include the plural, the plural shall include the singular, and the term “or” shall include the conjunctive as well as the disjunctive.


 




  





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3.           Administration.


 


3.1           Administration by the Board.  The Plan shall be administered by the Board, including any duly appointed Committee of the Board.  All questions of interpretation of the Plan or of any Option shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Option.  Any officer of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, determination or election.


 


3.2           Powers of the Board.  In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority, in its sole discretion:


 


(a)           to determine the persons to whom, and the time or times at which, Options shall be granted and the number of shares of Stock to be subject to each Option;


 


(b)           to determine the Fair Market Value of shares of Stock or other property;


 


(c)           to determine the terms, conditions and restrictions applicable to each Option (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the Option, (ii) the method of payment for shares purchased upon the exercise of the Option, (iii) the method for satisfaction of any tax withholding obligation arising in connection with the Option or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms and conditions of the exercisability of the Option or the vesting of any shares acquired upon the exercise thereof, (v) the time of the expiration of the Option, (vi) the effect of the Optionee’s termination of employment or service with the Participating Company Group on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to the Option or such shares not inconsistent with the terms of the Plan;


 


(d)           to approve one or more forms of Option Agreement;


 


(e)           to amend, modify, extend, or renew, or grant a new Option in substitution for, any Option or to waive any restrictions or conditions applicable to any Option or any shares acquired upon the exercise thereof, including without limitation (1) the reduction of the exercise price of any outstanding Option under the Plan to the then Fair Market Value and/or (2) the cancellation of any outstanding Option under the Plan and the grant in substitution  therefor of (A) a new Option under the Plan covering the same or a different number of shares of Common Stock, (B) a stock bonus, (C) the right to acquire restricted stock, (D) cash and/or (E) other valuable consideration (as determined by the Board, in its sole discretion);


 


(f)           to accelerate, continue, extend or defer the exercisability of any Option or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following an Optionee’s termination of employment or service with the Participating Company Group;


 


 




  





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(g)           to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Options; and


 


(h)           to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Option Agreement and to make all other determinations and take such other actions with respect to the Plan or any Option as the Board may deem advisable to the extent consistent with the Plan and applicable law.


 


3.3           Limitation on Option Grants.  The power of the Board to grant Options shall be limited as follows:  from the date of the amendment of the Plan to extend eligibility to Insiders, to each anniversary of such amendment (commencing with the period from the date of such amendment to the third anniversary of such amendment, then the period from the date of such amendment to the fourth anniversary of such amendment, etc.), less than fifty percent (50%) of the shares made subject to Options granted in such time period may be made subject to Options granted to Insiders; however, shares made subject to an Option granted to an Insider as an essential inducement for such person to become an Employee shall not be included in the numerator nor in the denominator of such calculation.


 


4.           Shares Subject to Plan.


 


4.1           Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be twenty-nine million seven hundred thousand (29,700,000) (after giving effect to the Company’s 2:1 stock split of December 3, 1999) and shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  If an outstanding Option for any reason expires or is terminated or canceled or shares of Stock acquired, subject to repurchase, upon the exercise of an Option are repurchased by the Company, the shares of Stock allocable to the unexercised portion of such Option, or such repurchased shares of Stock, shall again be available for issuance under the Plan.


 


4.2           Adjustments for Changes in Capital Structure.  In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the Company, appropriate adjustments shall be made in the number and class of shares subject to the Plan and to any outstanding Options, and in the exercise price per share of any outstanding Options.  If a majority of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event, as defined in Section 8.1) shares of another corporation (the “New Shares”), the Board may unilaterally amend the outstanding Options to provide that such Options are exercisable for New Shares.  In the event of any such amendment, the number of shares subject to, and the exercise price per share of, the outstanding Options shall be adjusted in a fair and equitable manner as determined by the Board, in its sole discretion.  Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded up or down to the nearest whole number, as determined by the Board, and in no event may the exercise price of any Option be 


 


 




  





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decreased to an amount less than the par value, if any, of the stock subject to the Option.  The adjustments determined by the Board pursuant to this Section 4.2 shall be final, binding and conclusive.




 


5.           Eligibility. Subject to Section 3.3, Options may be granted only to Employees, Directors and Consultants.  For purposes of the foregoing sentence:  (A) “Employees” shall include prospective Employees to whom Options are granted in connection with written offers of employment with the Participating Company Group; and (B) “Consultants” shall include prospective Consultants to whom Options are granted in connection with written offers of engagement with the Participating Company Group.  Eligible persons may be granted more than one (1) Option.


 


6.           Terms and Conditions of Options.  Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall from time to time establish.  Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:


 


6.1           Exercise Price.  The exercise price for each Option shall be established in the sole discretion of the Board; provided, however, that the exercise price per share for an Option shall be not less than eighty-five percent (85%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option.  Notwithstanding the foregoing, an Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code.


 


6.2           Exercise Period.  Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria, and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such Option; provided, however, that no Option granted to a prospective Employee or prospective Consultant may become exercisable prior to the date on which such person commences service with a Participating Company.


 


6.3           Payment of Exercise Price.


 


(a)           Forms of Consideration Authorized.  Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of shares of Stock owned by the Optionee having a Fair Market Value (as determined by the Company without regard to any restrictions on transferability applicable to such stock by reason of federal or state securities laws or agreements with an underwriter for the Company) not less than the exercise price, (iii) by the assignment of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by the Optionee’s promissory note in a form approved by the Company, (v) by such other consideration as may be approved by the Board from time to time to 


 


 




  





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the extent permitted by applicable law, or (vi) by any combination thereof.  The Board may at any time or from time to time, by adoption of or by amendment to the standard form of Option Agreement described in Section 7, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.




 


(b)           Tender of Stock.  Notwithstanding the foregoing, an Option may not be exercised by tender to the Company of shares of Stock to the extent such tender of Stock would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.  Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company of shares of Stock unless such shares either have been owned by the Optionee for more than six (6) months or were not acquired, directly or indirectly, from the Company.


 


(c)           Cashless Exercise.  The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise.


 


(d)           Payment by Promissory Note.  No promissory note shall be permitted if the exercise of an Option using a promissory note would be a violation of any law. Any permitted promissory note shall be on such terms as the Board shall determine at the time the Option is granted.  The Board shall have the authority to permit or require the Optionee to secure any promissory note used to exercise an Option with the shares of Stock acquired upon the exercise of the Option or with other collateral acceptable to the Company.  Unless otherwise provided by the Board, if the Company at any time is subject to the regulations promulgated by the Board of Governors of the Federal Reserve System or any other governmental entity affecting the extension of credit in connection with the Company’s securities, any promissory note shall comply with such applicable regulations, and the Optionee shall pay the unpaid principal and accrued interest, if any, to the extent necessary to comply with such applicable regulations.


 


6.4           Tax Withholding.  The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable upon the exercise of an Option, or to accept from the Optionee the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by the Participating Company Group with respect to such Option or the shares acquired upon the exercise thereof.  Alternatively or in addition, in its sole discretion, the Company shall have the right to require the Optionee, through payroll with-holding, cash payment or otherwise, including by means of a Cashless Exercise, to make adequate provision for any such tax withholding obligations of the Participating Company Group arising in connection with the Option or the shares acquired upon the exercise thereof. The Company shall have no obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to the Option Agreement until the Participating Company Group’s tax withholding obligations have been satisfied by the Optionee.


 


 




  





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6.5           Repurchase Rights.  Shares issued under the Plan may be subject to a right of first refusal, one or more repurchase options, or other conditions and restrictions as determined by the Board in its sole discretion at the time the Option is granted.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.  Upon request by the Company, each Optionee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.


 


7.           Standard Form of Option Agreement.


 


7.1           General.  Unless otherwise provided by the Board at the time the Option is granted, an Option shall comply with and be subject to the terms and conditions set forth in the form of Immediately Exercisable Nonstatutory Stock Option Agreement adopted by the Board concurrently with its adoption of the Plan and as amended from time to time.


 


7.2           Standard Term of Options.  Except as otherwise provided by the Board in the grant of an Option, any Option granted hereunder shall have a term of ten (10) years from the effective date of grant of the Option.


 


7.3           Authority to Vary Terms.  The Board shall have the authority from time to time to vary the terms of the standard form of Option Agreement described in this Section 7 either in connection with the grant or amendment of an individual Option or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Option Agreement shall be in accordance with the terms of the Plan.  Such authority shall include, but not by way of limitation, the authority to grant Options which are not immediately exercisable.


 


8.           Transfer of Control.


 


8.1           Definitions.


 


(a)           An “Ownership Change Event” shall be deemed to have occurred if any of the following occurs with respect to the Company:


 


(i)           the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company;


 


(ii)          a merger or consolidation in which the Company is a party;


 


(iii)          the sale, exchange, or transfer of all or substantially all of the assets of the Company; or


 


(iv)         a liquidation or dissolution of the Company.


 


 




  





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(b)           A “Transfer of Control” shall mean an Ownership Change Event or a series of related Ownership Change Events (collectively, the “Transaction”) wherein the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting stock of the Company or the corporation or corporations to which the assets of the Company were transferred (the “Transferee Corporation(s)”), as the case may be.  For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting stock of one or more corporations which, as a result of the Transaction, own the Company or the Transferee Corporation(s), as the case may be, either directly or through one or more subsidiary corporations.  The Board shall have the right to determine whether multiple sales or exchanges of the voting stock of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.


 


8.2           Effect of Transfer of Control on Options.  In the event of a Transfer of Control, the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the “Acquiring Corporation”), may either assume the Company’s rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options for the Acquiring Corporation’s stock.  Any Options which are neither assumed or substituted for by the Acquiring Corporation in connection with the Transfer of Control nor exercised as of the date of the Transfer of Control shall terminate and cease to be outstanding effective as of the date of the Transfer of Control.  Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Transfer of Control and any consideration received pursuant to the Transfer of Control with respect to such shares shall continue to be subject to all applicable provisions of the Option Agreement evidencing such Option except as otherwise provided in such Option Agreement.  Furthermore, notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding Options immediately prior to an Ownership Change Event described in Section 8.1(a)(i) constituting a Transfer of Control is the surviving or continuing corporation and immediately after such Ownership Change Event less than fifty percent (50%) of the total combined voting power of its voting stock is held by another corporation or by other corporations that are members of an affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions of Section 1504(b) of the Code, the outstanding Options shall not terminate unless the Board otherwise provides in its sole discretion.


 


9.           Provision of Information.  Each Optionee shall be given access to information concerning the Company equivalent to that information generally made available to the Company’s common stockholders.


 


10.         Nontransferability of Options.  During the lifetime of the Optionee, an Option shall be exercisable only by the Optionee or the Optionee’s guardian or legal representative.  No Option shall be assignable or transferable by the Optionee, except by will or by the laws of descent and distribution.


 


 




  





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11.         Indemnification.  In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Participating Company Group,  members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.


 


12.         Termination or Amendment of Plan.  The Board may terminate or amend the Plan at any time.  However, no termination or amendment of the Plan may adversely affect any then outstanding Option or any unexercised portion thereof, without the consent of the Optionee, unless such termination or amendment is necessary to comply with any applicable law or government regulation.


 






  





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ADDENDUM


 


Verity, Inc.


 







 


1996 Nonstatutory Stock Option Plan (“the Plan”)


 


Additional Terms and Conditions for Employees resident of France


 


The additional terms and conditions detailed below are to be read in conjunction with the rules of the Plan. Defined terms are to have the same meaning as that stated in the rules of the Plan. These additional terms and conditions are specific to Employees who are resident in the Republic of France only and do not affect the rights afforded to other Employees who are granted Options under the Plan.


 



	
1.

	
Notwithstanding any other provision of the Plan, Options may only be granted to Employees having a work contract with a Participating Company.







 



	
2.

	
An Option granted to any participant who, at the time of grant, holds shares representing 10% or more of the share capital of any Participating Company will not be deemed to have been granted pursuant to this Addendum.







 



	
3.

	
Notwithstanding any other provision of the Plan, an Option will generally only be exercisable after the expiration of the holding period mentioned under article 163 bis C I of the tax code of the Republic of France, except as otherwise decided at the sole discretion of the Board or Committee.







 



	
4.

	
Notwithstanding any other provision of the Plan, the exercise price shall only be adjusted upon the occurrence of the events specified under July 24, 1966 corporate law (section 208-5) in accordance with the laws of the Republic of France.







 



	
5.

	
Notwithstanding any other provision of the Plan, in the event of the Optionee’s death, the period during which the legal heirs (pursuant to a transfer on death permitted under the laws of the Republic of France) are entitled to exercise that Optionee’s Option (or Options) is the lesser of: (i) six months following that Optionee’s death, and (ii) the expiration of the term of such Option as set forth in the Option Agreement.







 



	
6.

	
The total number of Options granted and remaining unexercised (outstanding options) will never cover a number of shares exceeding one-third of the share capital of Verity, Inc.







 



	
7.

	
The per share exercise price of an Option granted pursuant to this addendum shall be no less than the higher of: (i) ninety-five percent (95%) of the average closing sales price for a share of such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Company’s common stock) for the twenty (20)  market trading days immediately preceding the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; or (ii) one hundred percent (100%) of the Fair Market Value of the stock.







 


 




  





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8.

	
The terms herein shall be interpreted to qualify Options granted pursuant to this addendum for the favorable tax and social security treatment applicable to stock options granted under sections L 208-1 up to L 208-8-2 of the Law n° 66-537 of July 24, 1966, and in accordance with the relevant provisions set forth by the tax and social security laws, as well as the tax and social security regulations of the Republic of France.







 



	
9.

	
Except as required by the tax and social security laws and regulations of the Republic of France, the Plan (including this addendum and Options granted hereunder) shall be governed and construed in accordance with the laws of the State of California and the United States of America.







 


IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing Verity, Inc. 1996 Nonstatutory Stock Option Plan was duly adopted by the Board on February 6, 1996 and last amended by the Board on November 15, 2002.


 






  





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