1999 EXECUTIVE STOCK OPTION PLAN

Exhibit 10.22



PREVIEW SYSTEMS, INC.



1999 EXECUTIVE STOCK OPTION PLAN



1. Purposes of the Plan. The purposes of this 1999 Executive Stock

-------------------- Option Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Officers of the Company and its Subsidiaries and to promote the success of the Company's business. Options granted under the Plan may be incentive stock options (as defined under Section 422 of the Code) or nonstatutory stock options, as determined by the Administrator at the time of grant of an option and subject to the applicable provisions of Section 422 of the Code, as amended, and the regulations promulgated thereunder.



2. Definitions. As used herein, the following definitions shall apply:

-----------



(a) "Administrator" means the Board or any of its Committees appointed

------------- pursuant to Section 4 of the Plan.



(b) "Affiliate" means an entity other than a Subsidiary in which the

--------- Company owns an equity interest or which, together with the Company, is under common control of a third person or entity.



(c) "Applicable Laws" means the legal requirements relating to the

--------------- administration of stock option and restricted stock purchase plans under applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, the Code, any stock exchange rules or regulations and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan, as such laws, rules, regulations and requirements shall be in place from time to time.



(d) "Board" means the Board of Directors of the Company.

-----



(e) "Code" means the Internal Revenue Code of 1986, as amended.

----



(f) "Committee" means the Committee appointed by the Board of

--------- Directors in accordance with Section 4(a) of the Plan.



(g) "Common Stock" means the Common Stock of the Company.

------------



(h) "Company" means Preview Systems, Inc., a Delaware corporation.

-------



(i) "Continuous Status as an Officer" means the absence of any

------------------------------- interruption or termination of service as an Officer. Continuous Status as an Officer shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Administrator, provided that such leave is for a period of not more than ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time

to time; or (iv) in the case of transfers between locations of the Company or between the Company, its Subsidiaries or their respective successors.



(j) "Director" means a member of the Board of Directors of the

-------- Company.



(k) "Exchange Act" means the Securities Exchange Act of 1934, as

------------ amended.



(l) "Fair Market Value" means, as of any date, the fair market value

----------------- of Common Stock determined as follows:



(i) If the Common Stock is listed on any established stock exchange or a national market system including without limitation the National Market of the National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported), as quoted on such system or exchange, or the exchange with the greatest volume of trading in Common Stock for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;



(ii) If the Common Stock is quoted on the NASDAQ System (but not on the National Market thereof) or regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or



(iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.



(m) "Incentive Stock Option" means an Option intended to qualify as an

---------------------- incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable written option agreement.



(n) "Listed Security" means any security of the Company that is listed

--------------- or approved for listing on a national securities exchange or designated or approved for designation as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc.



(o) "Named Executive" means any individual who, on the last day of the

--------------- Company's fiscal year, is the chief executive officer of the Company (or is acting in such capacity) or among the four most highly compensated officers of the Company (other than the chief executive officer). Such officer status shall be determined pursuant to the executive compensation disclosure rules under the Exchange Act.



(p) "Nonstatutory Stock Option" means an Option not intended to

------------------------- qualify as an Incentive Stock Option, as designated in the applicable written option agreement.





(q) "Officer" means a person who is an officer of the Company within

------- the meaning of Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder, or such other officer of the Company so designated by the Board of Directors.



(r) "Option" means a stock option granted pursuant to the Plan.

------



(s) "Optioned Stock" means the Common Stock subject to an Option.

--------------



(t) "Optionee" means an Officer who receives an Option.

--------



(u) "Parent" means a "parent corporation," whether now or hereafter

------ ------------------ existing, as defined in Section 424(e) of the Code, or any successor provision.



(v) "Plan" means this 1999 Equity Incentive Stock Option Plan.

----



(w) "Reporting Person" means an officer, director, or greater than ten

---------------- percent shareholder of the Company within the meaning of Rule 16a-2 under the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange Act.



(x) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,

---------- as the same may be amended from time to time, or any successor provision.



(y) "Share" means a share of the Common Stock, as adjusted in

----- accordance with Section 12 of the Plan.



(z) "Stock Exchange" means any stock exchange or consolidated stock

-------------- price reporting system on which prices for the Common Stock are quoted at any given time.



(aa) "Subsidiary" means a "subsidiary corporation," whether now or

---------- ---------------------- hereafter existing, as defined in Section 424(f) of the Code, or any successor provision.



(bb) "Ten Percent Holder" means a person who owns stock representing

------------------ more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary.



3. Stock Subject to the Plan. Subject to the provisions of Section 12 of

------------------------- the Plan, the maximum aggregate number of shares that may be optioned and sold under the Plan is 862,500 shares of Common Stock (on a post-split basis). The shares may be authorized, but unissued, or reacquired Common Stock. If an Option should expire or become unexercisable for any reason without having been exercised in full, the unpurchased Shares that were subject thereto shall, unless the Plan shall have been terminated, become available for future grant under the Plan. In addition, any shares of Common Stock which are retained by the Company upon exercise of an Option in order to satisfy the exercise or purchase price for such Option or any withholding taxes due with respect to such exercise shall be treated as not issued and shall continue to be available under the Plan. Shares repurchased by the Company pursuant to any repurchase right which the Company may have shall not be available for future grant under the Plan.





4. Administration of the Plan.

--------------------------



(a) General. The Plan shall be administered by the Board or a

------- Committee, or a combination thereof, as determined by the Board. The Plan may be administered by different administrative bodies with respect to different classes of Optionees and, if permitted by the Applicable Laws, the Board may authorize one or more officers (who may (but need not) be Officers) to grant Options to Officers.



(b) Administration With Respect to Reporting Persons. With respect to

------------------------------------------------ Options granted to Reporting Persons and Named Executives, the Plan may (but need not) be administered so as to permit such Options to qualify for the exemption set forth in Rule 16b-3 and to qualify as performance-based compensation under Section 162(m) of the Code.



(c) Committee Composition. If a Committee has been appointed pursuant

--------------------- to this Section 4, 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 any Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies (however caused) and remove all members of a Committee and thereafter directly administer the Plan, all to the extent permitted by the Applicable Laws and, in the case of a Committee administering the Plan pursuant to Section 4(b) above, to the extent permitted or required by Rule 16b-3 and Section 162(m) of the Code.



(d) Powers of the Administrator. Subject to the provisions of the

--------------------------- Plan and in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, including the approval, if required, of any Stock Exchange, the Administrator shall have the authority, in its discretion:



(i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(n) of the Plan;



(ii) to select the Officers to whom Options may from time to time be granted hereunder;



(iii) to determine whether and to what extent Options or any combination thereof are granted hereunder;



(iv) to determine the number of shares of Common Stock to be covered by each such option granted hereunder;



(v) to approve forms of agreement for use under the Plan;



(vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any option granted hereunder;



(vii) to determine whether and under what circumstances an Option may be settled in cash under Section 10(g) instead of Common Stock;





(viii) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option shall have declined since the date the Option was granted;



(ix) to construe and interpret the terms of the Plan and Options granted under the Plan; and



(x) in order to fulfill the purposes of the Plan and without amending the Plan, to modify grants of Options to participants who are foreign nationals or employed outside of the United States in order to recognize differences in local law, tax policies or customs.



(e) Effect of Administrator's Decision. All decisions,

---------------------------------- determinations and interpretations of the Administrator shall be final and binding on all holders of Options.



5. Eligibility.

-----------



(a) Recipients of Grants. Nonstatutory Stock Options and Incentive

-------------------- Stock Options may be granted to Officers, provided however that Officers of an Affiliate shall not be eligible to receive Incentive Stock Options. An Officer who has been granted an Option may, if he or she is otherwise eligible, be granted additional Options.



(b) Type of Option. Each Option shall be designated in the written

-------------- option agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of the Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares subject to an Incentive Stock Option shall be determined as of the date of the grant of such Option.



(c) Employment Relationship. The Plan shall not confer upon any

----------------------- Optionee any right with respect to continuation of employment or consulting relationship with the Company, nor shall it interfere in any way with such Optionee's right or the Company's right to terminate his or her employment or consulting relationship at any time, with or without cause.



6. 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 the shareholders of the Company as described in Section 19 of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 15 of the Plan.



7. Term of Option. The term of each Option shall be the term stated in

-------------- the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement. However, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is





granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement.



8. Limitation on Grants to Officers. Subject to adjustment as provided

-------------------------------- in Section 13 below, the maximum number of Shares which may be subject to Options granted to any one Officer under this Plan for any fiscal year of the Company shall be 250,000 Shares.



9. Option Exercise Price and Consideration.

---------------------------------------



(a) The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Board, but shall be subject to the following:



(i) In the case of an Incentive Stock Option that is:



(A) granted to an Officer who, at the time of the grant of such Incentive Stock Option, is a Ten Percent Holder, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.



(B) granted to any other Officer, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.



(ii) In the case of a Nonstatutory Stock Option that is:



(A) granted prior to the date, if any, on which the Common Stock becomes a Listed Security, to a person who, at the time of the grant of such Option, is a Ten Percent Holder, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of the grant.



(B) granted to a person who, at the time of the grant of such Option, is a Named Executive of the Company, the per share Exercise Price shall be no less than 100% of the Fair Market Value on the date of grant if such Option is intended to qualify as performance-based compensation under Section 162(m) of the Code; or



(C) granted prior to the date, if any, on which the Common Stock becomes a Listed Security to any person other than a Named Executive or a Ten Percent Holder, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant if required by the Applicable Laws and, if not so required, shall be such price as is determined by the Administrator.



(iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.





(b) The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant) and may consist entirely of (1) cash, (2) check, (3) promissory note, (4) other Shares that (x) 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 or such other period as may be required to avoid a charge to the Company's earnings, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) authorization for the Company to retain from the total number of Shares as to which the Option is exercised that number of Shares having a Fair Market Value on the date of exercise equal to the exercise price for the total number of Shares as to which the Option is exercised, (6) 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 and any applicable income or employment taxes, (7) delivery of an irrevocable subscription agreement for the Shares that irrevocably obligates the option holder to take and pay for the Shares not more than twelve months after the date of delivery of the subscription agreement, (8) any combination of the foregoing methods of payment, or (9) such other consideration and method of payment for the issuance of Shares to the extent permitted under Applicable Laws. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.



10. Exercise of Option.

------------------



(a) Procedure for Exercise; Rights as a Shareholder. Any Option

----------------------------------------------- granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, including performance criteria with respect to the Company and/or the Optionee, and as shall be permissible under the terms of the Plan; provided, however, that if required by the Applicable Laws, any Option granted prior to the date, if any, upon which the Common Stock becomes a Listed Security shall become exercisable at the rate of at least 20% per year over five years from the date the Option is granted. In the event that any of the Shares issued upon exercise of an Option (which exercise occurs prior to the date, if any, upon which the Common Stock becomes a Listed Security) should be subject to a right of repurchase in the Company's favor, such repurchase right shall, if required by the Applicable Laws, lapse at the rate of at least 20% per year over five years from the date the Option is granted. Notwithstanding the above, in the case of an Option granted to an officer (including but not limited to Officers), Director or Consultant of the Company or any Parent or Subsidiary of the Company, the Option may become fully exercisable, and a repurchase right, if any, in favor of the Company shall lapse, at any time or during any period established by the Administrator.



An Option may not be exercised for a fraction of a Share.



An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and the Company has received full payment for the Shares with respect to





which the Option is exercised. Full payment may, as authorized by the Board, consist of any consideration and method of payment allowable under Section 9(b) of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, not withstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 12 of the Plan.



Exercise of an Option in any manner shall result in a decrease in the number of Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.



(b) Termination of Employment or Consulting Relationship. In the

---------------------------------------------------- event of termination of an Optionee's Continuous Status as an Employee or Consultant with the Company, such Optionee may, but only within three (3) months (or such other period of time not less than thirty (30) days as is determined by the Administrator, with such determination in the case of an Incentive Stock Option being made at the time of grant of the Option and not exceeding three (3) months) after the date of such termination (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise his or her Option to the extent that the Optionee was entitled to exercise it at the date of such termination. To the extent that Optionee was not entitled to exercise the Option at the date of such termination, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate.



(c) Disability of Optionee.

----------------------



(i) Notwithstanding Section 10(b) above, in the event of termination of an Optionee's Continuous Status as an Officer as a result of his or her total and permanent disability (within the meaning of Section 22(e)(3) of the Code), Optionee may, but only within twelve (12) months from the date of such termination (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination. To the extent that Optionee was not entitled to exercise the Option at the date of termination, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate.



(ii) In the event of termination of an Optionee's Continuous Status as an Officer as a result of a disability which does not fall within the meaning of total and permanent disability (as set forth in Section 22(e)(3) of the Code), Optionee may, but only within six (6) months from the date of such termination (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination. However, to the extent that such Optionee fails to exercise an Option which is an Incentive Stock Option ("ISO") (within the

---





meaning of Section 422 of the Code) within three (3) months of the date of such termination, the Option will not qualify for ISO treatment under the Code. To the extent that Optionee was not entitled to exercise the Option at the date of termination, or if Optionee does not exercise such Option to the extent so entitled within six months (6) from the date of termination, the Option shall terminate.



(d) Death of Optionee. In the event of the death of an Optionee

----------------- during the period of Continuous Status as an Officer since the date of grant of the Option, or within thirty (30) days following termination of Optionee's Continuous Status as an Employee or Consultant, the Option may be exercised, at any time within six (6) months following the date of death (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), by Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the date of death or, if earlier, the date of termination of Optionee's Continuous Status as an Employee or Consultant. To the extent that Optionee was not entitled to exercise the Option at the date of death or termination, as the case may be, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate.



(e) Extension of Exercise Period. The Administrator shall have full

---------------------------- power and authority to extend the period of time for which an Option is to remain exercisable following termination of an Optionee's Continuous Status as an Officer from the periods set forth in Sections 10(b), 10(c) and 10(d) above or in the Option Agreement to such greater time as the Board shall deem appropriate, provided that in no event shall such Option be exercisable later than the date of expiration of the term of such Option as set forth in the Option Agreement.



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