As filed with the Securities and Exchange Commission on August 19, 1997.
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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AMENDED AND RESTATED 1996 STOCK OPTION PLAN
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Jeffrey R. Harder
Vice President, Corporate Development
& General Counsel
The ForeFront Group, Inc.
1360 Post Oak Boulevard, Suite 2050
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 750,000 Shares $2.4375 $1,828,125 $554.00
(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 August 14, 1997, for shares subject to options
or rights available for grant under the Amended and Restated 1996 Stock
Option Plan.
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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, 1996;
(b) The Company's Current Report on Form 8-K filed with the Commission on
March 18, 1996;
(c) 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;
(d) 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;
(e) The Company's Quarterly Report on Form 10-QSB for the period ended
March 31, 1997;
(f) The Company's Quarterly Report on Form 10-QSB for the period ended
June 30, 1997; and
(g) 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 Amended and Restated 1996 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 __st day of __________, 1997.
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 August 19, 1997
- -------------------- Officer and Director (Principal
David Sikora Executive Officer)
/s/ Ernest D. Rapp Chief Financial Officer August 19, 1997
- -------------------- (Principal Financial and
Ernest D. Rapp Accounting Officer)
/s/ G. Anthony Gorry Chairman of the Board of August 19, 1997
- -------------------- Directors
G. Anthony Gorry
/s/ Stephen J. Banks Director August 19, 1997
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Stephen J. Banks
/s/ Terry Ward Director August 19, 1997
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Terry Ward
/s/ Grant Dove Director August 19, 1997
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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 Amended and Restated 1996 Stock Option Plan
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August 19, 1997
The ForeFront Group, Inc.
1360 Post Oak Boulevard, Suite 2050
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
750,000 shares of Common Stock, par value $0.01 per share (the "Common Stock"),
of the Company (the "Shares") pursuant to the Company's Amended and Restated
1996 Stock Option Plan (the "Amended 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
Amended 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
February 18, 1997 included in the Annual Report on Form 10-KSB of The ForeFront
Group, Inc. for the year ended December 31, 1996 and to all references to our
firm included in this Registration Statement.
/s/ Arthur Andersen LLP
Houston, Texas
August 14, 1997
THE FOREFRONT GROUP, INC.
AMENDED AND RESTATED 1996
STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Amended and
Restated 1996 Stock Option Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to Employees and Consultants of the Company and its Subsidiaries and
to promote the success of the Company's business. Options granted under this
Plan may be incentive stock options (as defined under Section 422 of the Code,
and limited to 750,000 shares) or nonqualified 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. This Amended and Restated 1996 Stock Option
Plan amends and restates in its entirety the 1996 Nonqualified Stock Option
Plan.
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 Parent or Subsidiary and any director of the
Company whether compensated for such services or not, provided
that if and in the event the Company registers any class of any
equity security pursuant to the Exchange Act, the term Consultant
shall thereafter not include directors who are not compensated
for their services or are paid only a director's fee by the
Company.
(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; provided, however, that for
purposes of Incentive Stock Options, 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
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Company policy adopted from time to time; 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, including officers and
directors, employed by the Company or any Parent or Subsidiary of
the Company. The payment of a director's fee by the Company shall
not be sufficient to constitute "employment" by the Company.
(i) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(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) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
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(q) "Plan" means this Amended and Restated 1996 Stock Option
Plan.
(r) "Share" means a share of the Stock, as adjusted in
accordance with Section 12 of the Plan.
(s) "Stock" means the Common Stock, par value $.01 per
share, of the Company;
(t) "Subsidiary" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the
Code.
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 2,000,000 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) Procedure.
(i) Administration With Respect to Directors and
Officers. With respect to grants of Options to Employees who
are also officers or directors of the Company, the Plan
shall be administered by (A) the Board or (B) a Committee
designated by the Board to administer the Plan, which
Committee shall be constituted in such a manner as to permit
the Plan to comply with Rule 16b-3 promulgated under the
Exchange Act or any successor thereto ("Rule 16b-3") with
respect to a plan intended to qualify thereunder as a
discretionary plan. 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 Rule 16b-3 with respect to a plan
intended to qualify thereunder as a discretionary plan.
Notwithstanding the foregoing, the Plan shall not be
administered by the Board if (a) the Company and its
officers and directors are then subject to the requirements
of Section 16 of the Exchange Act and (b) the Board's
administration of the Plan would prevent the Plan from
complying with Rule 16b-3.
(ii) Multiple Administrative Bodies. If permitted by
Rule 16b-3, the Plan may be administered by different bodies
with respect to directors, non-director officers and
Employees who are neither directors nor officers.
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(iii) Administration With Respect to Consultants and
Other Employees. With respect to grants of Options to
Employees or Consultants who are neither directors nor
officers of the Company, 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 incentive 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 the officers, 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);
(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
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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. Incentive Stock Options may be granted only to
Employees, and may not be granted for more than 750,000 shares at
any time. 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 the written option
agreement as either an Incentive Stock Option or a Nonqualified
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 Nonqualified Stock Options.
(c) For purposes of 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 shall be
determined as of the time the Option with respect to such Shares
is granted.
(d) 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 subject only to approval by the holders of a
majority of the outstanding Shares within 12 months after such date. It shall
continue in effect until June 30, 2006 unless extended by the
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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. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that in the case of an
Incentive Stock Option, 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 Option granted to an Optionee who, at the
time the Option is granted, 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, 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. 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:
In the case of an Incentive Stock Option:
(i) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, 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, the per Share exercise price shall be no less
than 110% of the Fair Market Value per Share on the date of
grant.
(ii) granted to any Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value
per Share on the date of grant.
(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 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.
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<PAGE>
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 with the Company (as
the case may be), such Optionee may, but only within ninety (90)
days (or such other period of time as is determined by the Board,
with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option and not exceeding
ninety (90) days) 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.
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<PAGE>
(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) Rule 16b-3. Options granted to persons subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and
shall contain such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption from
Section 16 of the Exchange Act with respect to Plan transactions.
(f) 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 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;
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<PAGE>
(c) all elections shall be subject to the consent or
disapproval of the Administrator; and
(d) if the Optionee is subject to Rule 16b-3, the election
must comply with the applicable provisions of Rule 16b-3 and
shall be subject to such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan
transactions.
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.
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.
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<PAGE>
As used in this Plan, a "Corporate Change" shall be deemed
to have occurred upon, and shall mean (A) the acquisition after July 19, 1996 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 July 19, 1996, (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) 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
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<PAGE>
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.
The Company intends that this Paragraph 12 shall comply with
the requirements of Rule 16b-3 and any future rules promulgated in substitution
therefor under the Exchange Act during the term of the Plan. Should any
provision of this Paragraph 12 not be necessary to comply with the requirements
of Rule 16b-3 or should any additional provisions be necessary for this
Paragraph 12 to comply with the requirements of Rule 16b-3, the Board of
Directors may amend the Plan to add to or modify the provisions of the Plan
accordingly.
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. In addition, to the
extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422 of the Code (or any other
applicable law or regulation, including the applicable
requirements of the NASD or an established stock exchange), the
Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.
(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
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<PAGE>
the Optionee and the Board, which agreement must be in writing and signed by the
Optionee and the Company. Adoption of this Plan by the Board of Directors and
stockholders of the Company shall not affect any Options already granted, and
such Options shall remain in full force and effect as Nonqualified Stock Options
as if this Plan had not been adopted.
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 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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