As filed with the Securities and Exchange Commission on December 31, 1996.
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE FOREFRONT GROUP, INC.
(Exact name of registrant as specified in its charter)
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Delaware 76-0365256
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1330 Post Oak Boulevard, Suite 1300 Houston, Texas 77056
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(Address of Principal Executive Offices) (Zip Code)
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1996 NON-QUALIFIED STOCK OPTION PLAN
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Jeffrey R. Harder
Vice President, Corporate Development
& General Counsel
The ForeFront Group, Inc.
1330 Post Oak Boulevard, Suite 1300
Houston, Texas 77056
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(Name and address of agent for service)
(713) 961-1101
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(Telephone number, including area code,
of agent for service)
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CALCULATION OF REGISTRATION FEE
Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of Securities Amount to be Offering Price Offering Registration
to be Registered Registered Per Share(1) Price(1) Fee
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Common Stock,
par value
$.01 per share 1,250,000 Shares $5.6875 $7,109,375.00 $2,155.00
(1) Estimated solely for the purpose of calculating the amount of the
registration fee. The offering price per share and aggregate offering
price are based upon the average of the high and low prices reported on The
Nasdaq National Market, pursuant to Rule 457(c) of the Act, of the
Registrant's Common Stock on December 30, 1996, for shares subject to
options or rights available for grant under the 1996 Non-Qualified Stock
Option Plan.
(2) Average of the high and low prices reported on the Nasdaq National Market
for the Registrant's Common Stock on December 30, 1996.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The ForeFront Group, Inc. (the "Company") incorporates herein by reference the
following documents as of their respective dates as filed with the Securities
and Exchange Commission (the "Commission"):
(a) The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995;
(b) The Company's Current Report on Form 8-K filed with the Commission on
March 18, 1996;
(c) The Company's Quarterly Report on Form 10-QSB for the period ended
March 31, 1996;
(d) The Company's Current Report on Form 8-K filed with the Commission on
June 27, 1996, as amended by Form 8-K/A filed with the Commission on
August 23, 1996;
(e) The Company's Quarterly Report on Form 10-QSB for the period ended
June 30, 1996;
(f) The Company's Current Report on Form 8-K filed with the Commission on
August 6, 1996, as amended by Form 8-K/A filed with the Commission on
October 4, 1996;
(g) The Company's Quarterly Report on Form 10-QSB for the period ended
September 30, 1996;
(h) The Company's Registration Statement on Form S-3 filed with
the Commission on December 20, 1996; and
(i) The description of the Company's common stock, par value $0.01 per
share (the "Common Stock"), contained in the Company's Registration
Statement on Form 8-A filed with the Commission on December 15, 1995
pursuant to Section 12 of the Securities Exchange Act of 1934 (the
"Exchange Act"), as amended.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act after the date of this Registration Statement and
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all such
securities then remaining unsold shall be deemed to be incorporated by reference
in this Registration Statement and to be a part hereof from the date of filing
such documents.
Item 4. Description of Securities.
The information required by Item 4 is not applicable to this Registration
Statement because the class of securities to be offered is registered under
Section 12 of the Exchange Act.
Item 5. Interests of Named Experts and Counsel.
The information required by Item 5 is not applicable to this Registration
Statement.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law, inter alia, empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he
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reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. Similar indemnity
is authorized for such persons against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement
of any such threatened, pending or completed action or suit if such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and provided
further that (unless a court of competent jurisdiction otherwise provides) such
person shall not have been adjudged liable to the corporation. Any such
indemnification may be made only as authorized in each specific case upon a
determination by the stockholders or disinterested directors or by independent
legal counsel in a written opinion that indemnification is proper because the
indemnitee has met the applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145. The Company
maintains policies insuring its officers and directors against certain
liabilities for actions taken in such capacities, including liabilities under
the Securities Act of 1933.
Article Sixth of the Company's Certificate of Incorporation provides
directors' of the Company shall not be liable personally to the Company or its
stockholders for monetary damages for a breach of their fiduciary duty as
directors,except for liability (i) for a breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law (relating
to the declaration of dividends and purchase or redemption of shares in
violation of the Delaware General Corporation Law) or (iv) for any transaction
from which the director derived an improper personal benefit. Further, should
the General Corporation Law of the State of Delaware be amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then in such instance Article Sixth provides that the liability of
a director shall be eliminated or limited to the fullest extent permitted by
law.
Article VI of the Company's Bylaws provides that the Company shall, to the
maximum extent permitted under Delaware law, indemnify and shall advance
expenses to any person who is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit, proceeding or claim,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or officer of the Company or while a director or
officer is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against reasonable expenses (including attorney's fees),
judgments, fines, penalties, amounts paid in settlement and other liabilities
actually and reasonably incurred in connection with such action, suit or
proceeding upon such determination having been made as to such person's good
faith and conduct.
Item 7. Exemption from Registration Claimed.
The information required by Item 7 is not applicable to this Registration
Statement.
Item 8. Exhibits.
Exhibit
Number Description
5.1 Opinion of the Company's Counsel as to the legality of the securities
being registered
23.1 Consent of Company's Counsel (included in the opinion filed as
Exhibit 5.1 to this Registration Statement)
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (set forth on the signature page contained in
Part II of this Registration Statement)
99.1 1996 Non-Qualified Stock Option Plan
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Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in this Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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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 Houston, Texas, on the 31st day of December, 1996.
THE FOREFRONT GROUP, INC.
By: /s/ David Sikora
David Sikora
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of The ForeFront Group, Inc. (the "Company") hereby constitutes and
appoints David Sikora and Ernest D. Rapp, and each of them (with full power to
each of them to act alone), his true and lawful attorney-in-fact and agent, with
full power of substitution, for him and on his behalf and in his name, place and
stead, in any and all capacities, to sign, execute and file this Registration
Statement under the Securities Act of 1933, as amended, and any or all
amendments (including, without limitation, post-effective amendments), with all
exhibits and any and all documents required to be filed with respect thereto,
with the Securities and Exchange Commission or any regulatory authority,
granting unto such attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in order to effectuate the same, as fully to all intents
and purposes as he himself might or could do if personally present, hereby
ratifying and confirming all that such attorneys-in-fact and agents, or any of
them, or their substitute or substitutes, may lawfully do or cause to be done.
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/ David Sikora President, Chief Executive December 31, 1996
- -------------------- Officer and Director (Principal
David Sikora Executive Officer)
/s/ Ernest D. Rapp Chief Financial Officer December 31, 1996
- -------------------- (Principal Financial and
Ernest D. Rapp Accounting Officer)
/s/ G. Anthony Gorry Chairman of the Board of December 31, 1996
- -------------------- Directors
G. Anthony Gorry
/s/ Stephen J. Banks Director December 31, 1996
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Stephen J. Banks
/s/ Terry Ward Director December 31, 1996
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Terry Ward
/s/ Grant Dove Director December 31, 1996
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Grant Dove
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Index to Exhibits
Exhibit
Number Description
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5.1 Opinion of Company's Counsel as to the legality of the securities
being registered
23.1 Consent of Company's Counsel (included in the opinion filed as
Exhibit 5.1 to this Registration Statement)
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (set forth on the signature page contained in
Part II of this Registration Statement)
99.1 1996 Non-Qualified Stock Option Plan
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December 31, 1996
The ForeFront Group, Inc.
1330 Post Oak Boulevard, Suite 1300
Houston, Texas 77056
Gentlemen:
I have acted as counsel to The ForeFront Group, Inc., a Delaware
corporation (the "Company") in connection with the Company's Registration
Statement on Form S-8 (the "Registration Statement"), relating to the
registration under the Securities Act of 1933, as amended, of the issuance of
1,250,000 shares of Common Stock, par value $0.01 per share (the "Common
Stock"), of the Company (the "Shares") pursuant to the Company's 1996
Non-Qualified Stock Option Plan (the "1996 Plan").
As the basis for the opinions hereinafter expressed, I have examined
such corporate records and documents, certificates of corporate and public
officials and such other instruments as I have deemed necessary for the
purposes of the opinions contained herein. As to all matters of fact material
to such opinions, I have relied upon the representations of officers of the
Company. I have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, and the conformity with the
original documents of all documents submitted to me as copies.
Based upon the foregoing and having due regard for such legal
considerations as I deem relevant, I am of the opinion that the Shares have
been duly authorized, and that the Shares when sold and issued in accordance
with the 1996 Plan or the outstanding option grants and the Registration
Statement, will be validly issued, fully paid and nonassessable.
I hereby consent to the inclusion of this opinion as an exhibit to
the Registration Statement.
Very truly yours,
/s/ Jeffrey R. Harder
Jeffrey R. Harder
General Counsel
EXHIBIT 23.2
CONSENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-8 of our report dated July
22, 1996 included in The ForeFront Group, Inc.'s Form S-3 Registration Statement
dated December 20, 1996, and to all references to our firm included in this
Registration Statement.
/s/ Arthur Andersen LLP
Houston, Texas
December 30, 1996
THE FOREFRONT GROUP, INC.
1996 NON-QUALIFIED
STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this 1996 Non-
Qualified Stock Option Plan are to attract and retain the best available
personnel in The ForeFront Group, Inc. (the "Company"), and any
Subsidiary, to provide additional incentive to Employees and Consultants
of the Company and any Subsidiary and to promote the success of the
Company's and any Subsidiary's business. Options granted under this
Plan will be non-qualified stock options, and not 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,
as applicable, that is administering the Plan pursuant to Section
4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the
Plan.
(e) "Company" means The ForeFront Group, Inc., a Delaware
corporation.
(f) "Consultant" means any consultant or advisor to the
Company or any Subsidiary.
(g) "Continuous Status as an Employee" means the absence of
any interruption or termination of the employment relationship by
the Company or any Subsidiary. Continuous Status as an Employee
shall not be considered interrupted in the case of: (i) any leave
of absence approved by the Board, including sick leave, military
leave, or any other personal leave; or (ii) in the case of
transfers between locations of the Company or between the Company,
its Subsidiaries or its successor.
(h) "Employee" means any person employed by the Company or any
Subsidiary of the Company.
(i) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
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(j) "Fair Market Value" means, as of any date, the value of
Stock determined as follows:
(i) If the Stock is listed on any established stock
exchange or a national market system including without
limitation the National Market System 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 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 Stock is quoted on the NASDAQ System (but not
on the National Market System 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 and low asked prices for the Stock; or
(iii) In the absence of an established market for the
Stock, the Fair Market Value thereof shall be determined in
good faith by the Administrator.
(k) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section
422 of the Code.
(l) "Nonqualified Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(m) "Option" means a stock option granted pursuant to the
Plan.
(n) "Optioned Stock" means the Stock subject to an Option.
(o) "Optionee" means an Employee or Consultant who receives
an Option.
(p) "Plan" means this 1996 Non-Qualified Stock Option Plan.
(q) "Share" means a share of the Stock, as adjusted in
accordance with Section 12 of the Plan.
(r) "Stock" means the Common Stock, par value $.01 per share,
of the Company;
(s) "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
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3. Stock Subject to the Plan. Subject to the provisions of
Section 12 of the Plan, the maximum number of shares of Stock which may
be optioned and sold under the Plan is 1,250,000 shares. The shares may
be authorized, but unissued, or reacquired Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares
which were subject thereto shall, unless the Plan shall have been
terminated, become available for future grant under the Plan.
4. Administration of the Plan.
(a) The Plan shall be administered by (A) the Board or (B) a
Committee designated by the Board, which Committee shall be constituted
in such a manner as to satisfy the legal requirements relating to the
administration of stock option plans, if any, of corporate and
securities laws applicable to the Company and of the Code (the
"Applicable Laws"). 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 thereof, remove members (with or without
cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the
Applicable Laws.
(b) 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, the Administrator shall have
the authority, in its discretion:
(i) to determine the Fair Market Value of the Stock, in
accordance with Section 2(j) of the Plan;
(ii) to select Consultants and Employees to whom Options may
from time to time be granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Stock to be covered
by each such award 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 award granted hereunder
(including, but not limited to, the per share exercise price for
the Shares to be issued pursuant to the exercise of an Option and
any restriction or limitation, or any vesting acceleration or
waiver of forfeiture restrictions regarding any Option or other
award and/or the shares of Stock relating thereto, based in each
case on such factors as the Administrator shall determine, in its
sole discretion);
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(vii) to determine whether and under what circumstances an
Option may be bought-out for cash under subsection 9(f);
(viii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an
award under this Plan shall be deferred either automatically or at
the election of the participant (including providing for and
determining the amount, if any, of any deemed earnings on any
deferred amount during any deferral period); and
(ix) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Stock
covered by such Option shall have declined since the date the
Option was granted.
(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Administrator shall be final
and binding on all Optionees and any other holders of any Options.
Neither the Board, the Committee nor any member thereof shall be liable
for any act, omission, interpretation, construction or determination
made in connection with the Plan in good faith, and the members of the
Board and of the Committee shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or
expense (including counsel fees) arising therefrom to the full extent
permitted by law.
5. Eligibility.
(a) Nonqualified Stock Options may be granted to Employees
and Consultants. An Employee or Consultant who has been granted an
Option may, if he is otherwise eligible, be granted an additional Option
or Options.
(b) Each Option shall be designated in a written option
agreement.
(c) 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 his right or
the Company's right to terminate his employment or consulting
relationship at any time, with or without cause, unless otherwise agreed
in writing by the Company and such Optionee.
6. Term of Plan. The Plan shall become effective upon its
adoption by the Board of Directors. It shall continue in effect until
June 30, 2006 unless extended by the Board or sooner terminated under
Section 14 of the Plan. No grants of Options will be made pursuant to
the Plan after June 30, 2006.
7. Term of Option. Unless stated otherwise in an Option
Agreement, the term of each Option shall be 10 years from the date of
grant.
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8. 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 Administrator, but shall be subject to the following:
(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 may consist entirely of (1) cash,
(2) check, (3) promissory note, (4) other shares of the Company's
capital stock which (x) in the case of shares of the Company's capital
stock acquired upon exercise of an Option either have been owned by the
Optionee for more than six months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (y) 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, (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 irrevocable
instructions to a broker to promptly deliver to the Company the amount
of sale or loan proceeds required to pay the exercise price, (7) any
combination of the foregoing methods of payment, or (8) such other
consideration and method of payment for the issuance of Shares to the
extent permitted under applicable laws.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. 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. An Option may
not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised, and the Optionee
deemed to be a stockholder of the Shares being purchased upon exercise,
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 full payment for the Shares with respect to
which the Option is exercised has been received by the Company. Full
payment may, as authorized by the Board, consist of any consideration
and method of payment allowable under Section 8(b) of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which 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. In the event of termination
of an Optionee's relationship as a Consultant (unless such termination
is for purposes of becoming an Employee of the Company) or Continuous
Status as an Employee, such Optionee may, but only within ninety (90)
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days (or such other period of time as is determined by the Board), 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 Option to the extent that 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. Notwithstanding the provisions
of Section 9(b) above, in the event of termination of an Optionee's
relationship as a Consultant or Continuous Status as an Employee as a
result of his total and permanent disability (as defined in 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.
(d) Death of Optionee. In the event of the death of an
Optionee, the Option may be exercised, at any time within twelve (12)
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 the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the
extent the Optionee was entitled to exercise the Option at the date of
death. To the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if the Optionee's estate (or such
other person who acquired the right to exercise the Option) does not
exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
(e) Buyout Provisions. The Administrator may at any time
offer to buy out for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall
establish and communicate to the Optionee at the time that such offer is
made.
10. Non-Transferability of Options. The Option may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in
any manner other than by will or by the laws of descent or distribution
and may be exercised, during the lifetime of the Optionee, only by the
Optionee.
11. Stock Withholding to Satisfy Withholding Tax Obligations.
At the discretion of the Administrator, Optionees may satisfy
withholding obligations as provided in this paragraph. When an Optionee
incurs tax liability in connection with an Option, which tax liability
is subject to tax withholding under applicable tax laws, and the
Optionee is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the Optionee may satisfy the
withholding tax obligation by electing to have the Company withhold from
the Shares to be issued upon exercise
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of the Option, that number of Shares having a Fair Market Value equal to the
amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined (the "Tax Date").
All elections by an Optionee to have Shares withheld for this
purpose shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable
Tax Date;
(b) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;
and
(c) all elections shall be subject to the consent or
disapproval of the Administrator.
In the event the election to have Shares withheld is made by
an Optionee and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the
Optionee shall receive the full number of Shares with respect to which
the Option is exercised but such Optionee shall be unconditionally
obligated to tender back to the Company the proper number of Shares on
the Tax Date.
12. Changes in the Company's Capital Structure. The existence
of outstanding Options shall not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Stock or
the rights thereof, or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of its assets or business, or
any other corporate act or proceeding, whether of a similar character or
otherwise.
If the Company shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock dividend,
or other increase or reduction of the number of shares of the Stock
outstanding, without receiving compensation therefor in money, services
or property, then (a) the number, class, and per share price of shares
of Stock subject to outstanding Options hereunder shall be appropriately
adjusted in such a manner as to entitle an Optionee to receive upon
exercise of an Option, for the same aggregate cash consideration, the
same total number and class of shares as he would have received had he
exercised his Option in full immediately prior to the event requiring
the adjustment; and (b) the number and class of shares of Stock then
reserved for issuance under the Plan shall be adjusted by substituting
for the total number and class of shares of Stock then reserved that
number and class of shares of stock that would have been received by the
owner of an equal number of outstanding shares of each class of Stock as
the result of the event requiring the adjustment.
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Unless otherwise expressly provided in an Option Agreement (as
defined in Section 17), upon a Corporate Change (as defined below),
notwithstanding any other term of this Plan, any and all outstanding
Options not fully vested and exercisable shall vest in full and be
immediately exercisable, and any other restrictions on such Options
including, without limitation, requirements concerning the achievement
of specific goals shall terminate.
As used in this Plan, a "Corporate Change" shall be deemed to
have occurred upon, and shall mean (A) the acquisition after August 14,
1995 by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person"), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 80% or more of either (i) the then outstanding shares
of Stock of the Company (the "Outstanding Company Common Stock") or (ii)
the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following transactions shall not constitute a Corporate Change: (u) any
acquisition by virtue of the conversion of preferred stock of the
Company outstanding on August 14, 1995, (v) customary transactions with
and between underwriters and selling group members with respect to a
bona fide public offering of securities, (w) any acquisition directly
from the Company (excluding an acquisition by virtue of the exercise of
a conversion privilege), (x) any acquisition by the Company, (y) any
acquisition by any employee benefit plan(s) (or related trust(s))
sponsored or maintained by the Company or any corporation controlled by
the Company or (z) any acquisition by any entity pursuant to a
reorganization, merger or consolidation, if, immediately following such
reorganization, merger or consolidation the conditions described in
clauses (i), (ii) and (iii) of clause B of this paragraph are satisfied;
or (B) the approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, unless
immediately following such reorganization, merger or consolidation (i)
more than 60% of, respectively, the then outstanding shares of common
stock (or other equivalent securities) of the entity resulting from such
reorganization, merger or consolidation and the combined voting power of
the then outstanding voting securities of such entity entitled to vote
generally in the election of directors (or other similar governing body)
is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may
be, (ii) no Person (excluding the Company, any employee benefit plan(s)
(or related trust(s)) of the Company and/or its subsidiaries or such
entity resulting from such reorganization, merger or consolidation and
any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 80% or
more of the Outstanding Company Common Stock or Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 80% or more of, respectively, the then outstanding shares of
common stock (or other equivalent securities) of the entity resulting
from such reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such entity entitled
to vote generally in the election of directors (or other similar
governing body)
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<PAGE>
and (iii) at least a majority of the members of the
board of directors (or other similar governing body) of the entity
resulting from such reorganization, merger or consolidation were members
of the Incumbent Board (as defined below) at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation. The "Incumbent Board" shall mean individuals who as of
July 19, 1996, constitute the Company's Board of Directors; provided,
however, that any individual becoming a director subsequent to such date
whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either (i) an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act), or an actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Company's Board of Directors or (ii) a plan or
agreement to replace a majority of the members of the Board of Directors
then comprising the Incumbent Board.
Except as hereinbefore expressly provided, the issue by the
Company of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or
services either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number, class, or price of shares of Stock
then subject to outstanding Options.
13. Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date on which the Administrator makes
the determination granting such Option, or such other date as is
determined by the Administrator. Notice of the determination shall be
given to each Employee or Consultant to whom an Option is so granted
within a reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment,
alteration, suspension or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made,
without his or her consent.
(b) Effect of Amendment or Termination. Any such amendment
or termination of the Plan shall not affect Options already granted and
such Options shall remain in full force and effect as if this Plan had
not been amended or terminated, unless mutually agreed otherwise between
the Optionee and the Board, which agreement must be in writing and
signed by the Optionee and the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be
issued pursuant to the exercise of an Option unless the exercise of such
Option and the issuance and delivery of such
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Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, 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 relevant
provisions of law.
16. Reservation of Shares. The Company, during the term of
this Plan, will at all times reserve and keep available such number of
Shares as shall be sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any
Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
17. Agreements. Options shall be evidenced by written
agreements ("Option Agreement") in such form as the applicable
Administrator shall approve from time to time.
18. Information to Optionees. The Company shall provide to
each Optionee, during the period for which such Optionee has one or more
Options outstanding, copies of all annual reports and other information
which are generally provided to all stockholders of the Company. The
Company shall not be required to provide such information to persons
whose duties in connection with the Company assure their access to
equivalent information.
19. Governing Law; Construction. All rights and obligations
under the Plan shall be governed by, and the Plan shall be construed in
accordance with, the laws of the State of Delaware without regard to the
principles of conflicts of laws. Titles and headings to Sections herein
are for purposes of reference only, and shall in no way limit, define or
otherwise affect the meaning or interpretation of any provisions of the
Plan.
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