<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 15, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMAZON.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 91-1646860
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
1516 SECOND AVENUE, 4TH FLOOR
SEATTLE, WASHINGTON 98101
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
AMAZON.COM, INC. 1999 NONOFFICER EMPLOYEE STOCK OPTION PLAN
(FULL TITLE OF THE PLAN)
JEFFREY P. BEZOS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMAZON.COM, INC.
1516 SECOND AVENUE, 4TH FLOOR
SEATTLE, WASHINGTON 98101
(206) 622-2335
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPY TO:
L. MICHELLE WILSON
PERKINS COIE LLP
1201 THIRD AVENUE, 40TH FLOOR
SEATTLE, WASHINGTON 98101-3099
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE FEE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value per
share, under the 1999 Nonofficer
Employee Stock Option Plan...... 20,000,000 $122.8440 $2,456,880,000.00 $683,012.64
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Together with an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant to
the plan as the result of any future stock split, stock dividend or similar
adjustment of the Registrant's outstanding Common Stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based
on the average of the high and low sales prices for the Common Stock on
March 8, 1999 as reported on the Nasdaq National Market.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
(the "Commission") are hereby incorporated by reference in this Registration
Statement:
(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998;
(b) The Registrant's Current Reports on Form 8-K filed on January 5,
1999, January 27, 1999, January 28, 1999, January 29, 1999 and February 4,
1999;
(c) The Registrant's Current Report on Form 8-K filed on August 27,
1998;
(d) The description of the Common Stock in the Registrant's
Registration Statement on Form 8-A filed on May 2, 1997, under Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), including any amendments or reports for the purpose of updating such
description; and
(e) All other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered
by the Annual Report on Form 10-K referred to in (a) above.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date hereof and prior to the filing of a
post-effective amendment which indicates that the securities offered hereby have
been sold or which deregisters the securities covered hereby then remaining
unsold shall also be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof commencing on the respective
dates on which such documents are filed.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify its directors and officers, as well as other
employees and individuals, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation -- a
"derivative action"), if they acted in good faith and in a manner they
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 their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions, and the statute requires court approval
before there can be any indemnification in which the person seeking
indemnification has been found liable to the corporation. The statute provides
that it is not exclusive of other indemnification that may be granted by a
corporation's charter, bylaws, disinterested director vote, stockholder vote,
agreement or otherwise.
Section 10 of the Registrant's Bylaws requires indemnification to the full
extent permitted under Delaware law as it now exists or may hereafter be
amended. Subject to any restrictions imposed by Delaware law, the Bylaws provide
an unconditional right to indemnification for all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) actually and reasonably incurred or suffered by
any person in connection with any actual or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative (including,
to the extent permitted by law, any derivative action) by reason of the fact
that such person is or was serving as a director or officer of the
II-1
<PAGE> 3
Registrant or that, being or having been a director or officer of the
Registrant, such person is or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan. The Bylaws also provide that the Registrant may, by
action of its Board of Directors, provide indemnification to its employees and
agents with the same scope and effect as the foregoing indemnification of
directors and officers.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (1) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(2) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (3) payments of unlawful dividends or unlawful
stock repurchases or redemptions, or (4) any transaction from which the director
derived an improper personal benefit.
Article 10 of the Registrant's Restated Certificate of Incorporation
provides that to the full extent that the DGCL, as it now exists or may
hereafter be amended, permits the limitation or elimination of the liability of
directors, a director of the Registrant shall not be liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director. Any amendment to or repeal of such Article 10 shall not adversely
affect any right or protection of a director of the Registrant for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
The Registrant has entered into certain indemnification agreements with its
officers and directors. The indemnification agreements provide the Registrant's
officers and directors with further indemnification, to the maximum extent
permitted by the DGCL.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
5.1 Opinion of Perkins Coie LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Perkins Coie LLP (included in opinion filed as
Exhibit 5.1)
23.3 Consent of Deloitte & Touche LLP
24.1 Power of Attorney (see signature page)
99.1 Amazon.com, Inc. 1999 Nonofficer Employee Stock Option Plan
</TABLE>
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:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(b) 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; and
II-2
<PAGE> 4
(c) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(a) and (1)(b) above 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 Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefits plan's annual
report pursuant to Section 15(d) of the Exchange Act) 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 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 Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the 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 and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Seattle, State of Washington, on the 12th day of
March, 1999.
AMAZON.COM, INC.
By: /s/ JEFFREY P. BEZOS
------------------------------------
Jeffrey P. Bezos
President, Chief Executive Officer
and Chairman of the Board
Each person whose individual signature appears below hereby authorizes
Jeffrey P. Bezos and Joy D. Covey, or either of them, as attorneys-in-fact with
full power of substitution, to execute in the name and on the behalf of each
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
below on the 12th day of March, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ JEFFREY P. BEZOS President, Chairman of the Board and Chief
- -------------------------------------------- Executive Officer (Principal Executive
Jeffrey P. Bezos Officer)
/s/ JOY D. COVEY Chief Financial Officer and Vice President
- -------------------------------------------- of Finance and Administration (Principal
Joy D. Covey Financial and Accounting Officer)
/s/ TOM A. ALBERG Director
- --------------------------------------------
Tom A. Alberg
/s/ SCOTT D. COOK Director
- --------------------------------------------
Scott D. Cook
/s/ JOHN DOERR Director
- --------------------------------------------
L. John Doerr
/s/ PATRICIA Q. STONESIFER Director
- --------------------------------------------
Patricia Q. Stonesifer
</TABLE>
II-4
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
5.1 Opinion of Perkins Coie LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Perkins Coie LLP (included in opinion filed as
Exhibit 5.1)
23.3 Consent of Deloitte & Touche LLP
24.1 Power of Attorney (see signature page)
99.1 Amazon.com, Inc. 1999 Nonofficer Employee Stock Option Plan
</TABLE>
<PAGE> 1
EXHIBIT 5.1
PERKINS COIE LLP
A Law Partnership Including Professional Corporations
1201 Third Avenue, 40th Floor, Seattle, Washington 98101-3099
Telephone: 206 583-8888 Facsimile: 206 583-8500
March 12, 1999
Amazon.com, Inc.
1516 Second Avenue, 4th Floor
Seattle, Washington 98101
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to you in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), which you are filing with the
Securities and Exchange Commission with respect to 20,000,000 shares of Common
Stock, par value $0.01 per share (the "Shares"), which may be issued under the
Amazon.com, Inc. 1999 Nonofficer Employee Stock Option Plan (the "Plan").
Based upon and subject to the foregoing, we are of the opinion that any
original issuance Shares that may be issued pursuant to the Plan have been duly
authorized and that, upon the due execution by the Company and the registration
by its registrar of such Shares and the sale thereof by the Company in
accordance with the terms of the Plan, and the receipt of consideration therefor
in accordance with the terms of the Plan, such Shares will be validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ PERKINS COIE LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference in the Registration Statement (Form S-8) pertaining
to the 1999 Nonofficer Employee Stock Option Plan of Amazon.com, Inc. and to the
incorporation by reference therein of our report dated January 22, 1999, except
for Note 11 as to which the date is February 10, 1999, with respect to the
consolidated financial statements and schedule of Amazon.com, Inc. included in
its Annual Report (Form 10-K) for the year ended December 31, 1998, filed with
the Securities and Exchange Commission.
ERNST & YOUNG LLP
Seattle, Washington
March 12, 1999
<PAGE> 1
EXHIBIT 23.3
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in this Registration Statement of
Amazon.com, Inc. on Form S-8 of our report dated February 6, 1998, on the
financial statements of Junglee Corp. as of December 31, 1997 and 1996 and for
the year ended December 31, 1997 and for the period from June 3, 1996
(inception) to December 31, 1996, appearing in the Current Report on Form 8-K of
Amazon.com, Inc. filed August 27, 1998.
Deloitte & Touche LLP
San Jose, California
March 12, 1999
<PAGE> 1
EXHIBIT 99.1
AMAZON.COM, INC.
1999 NONOFFICER EMPLOYEE
STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Amazon.com, Inc. 1999 Nonofficer Employee Stock
Option Plan (the "Plan") is to enhance the long-term stockholder value of
Amazon.com, Inc., a Delaware corporation (the "Company"), by offering
opportunities to employees, consultants, agents, advisors and independent
contractors of the Company and its Subsidiaries (as defined in Section 2) who
are not officers of the Company or members of the Board to participate in the
Company's growth and success, and to encourage them to remain in the service of
the Company and its Subsidiaries and to acquire and maintain stock ownership in
the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
2.1 BOARD
"Board" means the Board of Directors of the Company.
2.2 CAUSE
"Cause" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Plan Administrator, and its determination shall be
conclusive and binding.
2.3 CODE
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.4 COMMON STOCK
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
2.5 CORPORATE TRANSACTION
"Corporate Transaction" means any of the following events:
(a) Consummation of any merger or consolidation of the Company in
which the Company is not the continuing or surviving corporation, or
pursuant to which shares of the Common Stock are converted into cash,
securities or other property (other than a merger of the Company in
which the holders of Common Stock immediately prior to the merger have
the same proportionate ownership of capital stock of the surviving
corporation immediately after the merger);
(b) Consummation of any sale, lease, exchange or other transfer
in one transaction or a series of related transactions of all or
substantially all of the Company's assets other than a transfer of the
Company's assets to a majority-owned subsidiary corporation (as the term
"subsidiary corporation" is
9
<PAGE> 2
defined in for purposes of Section 422 of the Code) of the Company; or
(c) Approval by the holders of the Common Stock of any plan or
proposal for the liquidation or dissolution of the Company.
2.6 DISABILITY
"Disability" means "disability" as that term is defined for purposes of
Section 22(e)(3) of the Code.
2.7 EARLY RETIREMENT
"Early Retirement" means early retirement as that term is defined by the
Plan Administrator from time to time for purposes of the Plan.
2.8 EXCHANGE ACT
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.9 FAIR MARKET VALUE
The "Fair Market Value" shall be as established in good faith by the
Plan Administrator or (a) if the Common Stock is listed on the Nasdaq National
Market, the average of the high and low per share sales prices for the Common
Stock as reported by the Nasdaq National Market for a single trading day or (b)
if the Common Stock is listed on the New York Stock Exchange or the American
Stock Exchange, the average of the high and low per share sales prices for the
Common Stock as such price is officially quoted in the composite tape of
transactions on such exchange for a single trading day. If there is no such
reported price for the Common Stock for the date in question, then such price on
the last preceding date for which such price exists shall be determinative of
the Fair Market Value.
2.10 GRANT DATE
"Grant Date" means the date the Plan Administrator adopted the granting
resolution. If, however, the Plan Administrator designates in a resolution a
later date as the date an Option is to be granted, then such later date shall be
the "Grant Date."
2.11 NONQUALIFIED STOCK OPTION
"Nonqualified Stock Option" means an Option that is not intended to
qualify as an incentive stock option under Section 422 of the Code.
2.12 OPTION
"Option" means a Nonqualified Stock Option to purchase Common Stock.
2.13 OPTIONEE
"Optionee" means (a) the person to whom an Option is granted; (b) for an
Optionee who has died, the personal representative of the Optionee's estate, the
person(s) to whom the Optionee's rights under the Option have passed by will or
by the applicable laws of descent and distribution, or the beneficiary
designated in accordance with Section 8; or (c) person(s) to whom an Option has
been transferred in accordance with Section 8.
2.14 PLAN ADMINISTRATOR
10
<PAGE> 3
"Plan Administrator" means the Board or any committee of the Board
designated to administer the Plan under Section 3.1.
2.15 RETIREMENT
"Retirement" means retirement as of the individual's normal retirement
date as that term is defined by the Plan Administrator from time to time for
purposes of the Plan.
2.16 SECURITIES ACT
"Securities Act" means the Securities Act of 1933, as amended.
2.17 SUBSIDIARY
"Subsidiary" means any entity that is directly or indirectly controlled
by the Company or in which the Company has a significant ownership interest, as
determined by the Plan Administrator, and any entity that may become a direct or
indirect parent of the Company.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board or a committee or committees
(which term includes subcommittees) appointed by, and consisting of two or more
members of, the Board (the "Plan Administrator"). The Board may delegate the
responsibility for administering the Plan with respect to designated classes of
eligible persons to different committees consisting of one or more members of
the Board, subject to such limitations as the Board deems appropriate. Committee
members shall serve for such term as the Board may determine, subject to removal
by the Board at any time.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Options under the Plan, including the
selection of individuals to be granted Options, the type of Options, the number
of shares of Common Stock subject to an Option, all terms, conditions,
restrictions and limitations, if any, of an Option and the terms of any
instrument that evidences the Option. The Plan Administrator shall also have
exclusive authority to interpret the Plan and may from time to time adopt, and
change, rules and regulations of general application for the Plan's
administration. The Plan Administrator's interpretation of the Plan and its
rules and regulations, and all actions taken and determinations made by the Plan
Administrator pursuant to the Plan, shall be conclusive and binding on all
parties involved or affected. The Plan Administrator may delegate administrative
duties to such of the Company's officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 9.1, a
maximum of 20,000,000 shares of Common Stock shall be available for issuance
under the Plan. Shares issued under the Plan shall be drawn from authorized and
unissued shares or shares now held or subsequently acquired by the Company as
treasury shares.
4.2 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Option that
cease to be subject to the
11
<PAGE> 4
Option (other than by reason of exercise of the Option to the extent it is
exercised for shares) shall again be available for issuance in connection with
future grants of Options under the Plan.
SECTION 5. ELIGIBILITY
An Option may be granted only to an individual who, at the time the
Option is granted, is an employee, agent, consultant, advisor or independent
contractor of the Company or any Subsidiary who at the time the Option is
granted is not an officer of the Company or a member of the Board.
SECTION 6. ACQUIRED COMPANY OPTIONS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Options under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other acquired entities ("Acquired
Entities") (or the parent of an Acquired Entity) and the new Option is
substituted, or the old award is assumed, by reason of a merger, consolidation,
acquisition of property or of stock, reorganization or liquidation (the
"Acquisition Transaction"). In the event that a written agreement pursuant to
which the Acquisition Transaction is completed is approved by the Board and said
agreement sets forth the terms and conditions of the substitution for or
assumption of outstanding awards of the Acquired Entity, said terms and
conditions shall be deemed to be the action of the Plan Administrator without
any further action by the Plan Administrator, and the persons holding such
awards shall be deemed to be Optionees.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS
7.1 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator.
7.2 TERM OF OPTIONS
The term of each Option shall be as established by the Plan
Administrator or, if not so established, shall be 10 years from the Grant Date.
7.3 EXERCISE AND VESTING OF OPTIONS
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which or the installments in which the
Option shall vest and become exercisable, which provisions may be waived or
modified by the Plan Administrator at any time. If not so established in the
instrument evidencing the Option, the Option shall vest and become exercisable
according to the following schedule, which may be waived or modified by the Plan
Administrator at any time:
<TABLE>
<CAPTION>
Period of Optionee's Continuous Employment or Service
With the Company or Its Subsidiaries Percent of Total Option
From the Grant Date That Is Vested and Exercisable
<S> <C>
After 1 year 20%
After 2 years 40%
Each three-month period completed thereafter An additional 5%
After 5 years 100%
</TABLE>
To the extent that the right to purchase shares has accrued thereunder,
an Option may be exercised from time to time by written notice to the Company,
in accordance with procedures established by the Plan Administrator, setting
forth the number of shares with respect to which the Option is being exercised
and
12
<PAGE> 5
accompanied by payment in full as described in Section 7.4. An Option may not be
exercised as to less than a reasonable number of shares at any one time, as
determined by the Plan Administrator.
7.4 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or by check or, unless the Plan Administrator in its sole
discretion determines otherwise, either at the time the Option is granted or at
any time before it is exercised, a combination of cash and/or check (if any) and
one or both of the following alternative forms: (a) tendering (either actually
or, if and so long as the Common Stock is registered under Section 12(b) or
12(g) of the Exchange Act, by attestation) Common Stock already owned by the
Optionee for at least six months (or any shorter period necessary to avoid a
charge to the Company's earnings for financial reporting purposes) having a Fair
Market Value on the day prior to the exercise date equal to the aggregate Option
exercise price or (b) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (i) a brokerage firm
designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise and
(ii) the Company to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, to the extent permitted by the Plan Administrator in
its sole discretion, the exercise price for shares purchased under an Option may
be paid, either singly or in combination with one or more of the alternative
forms of payment authorized by this Section 7.4, by (y) a full-recourse
promissory note delivered pursuant to Section 11 or (z) such other consideration
as the Plan Administrator may permit.
7.5 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option will continue to be exercisable, and
the terms and conditions of such exercise, if an Optionee ceases to be employed
by, or to provide services to, the Company or its Subsidiaries, which provisions
may be waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option shall be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time.
In the case of termination of the Optionee's employment or services
other than by reason of death or Cause, the Option shall be exercisable, to the
extent of the number of shares vested at the date of such termination, only (a)
within one year if the termination of the Optionee's employment or services is
coincident with Retirement, Early Retirement at the Company's request or
Disability or (b) within three months after the date the Optionee ceases to be
an employee, director, officer, consultant, agent, advisor or independent
contractor of the Company or a Subsidiary if termination of the Optionee's
employment or services is for any reason other than Retirement, Early Retirement
at the Company's request or Disability, but in no event later than the remaining
term of the Option. Any Option exercisable at the time of the Optionee's death
may be exercised, to the extent of the number of shares vested at the date of
the Optionee's death, by the personal representative of the Optionee's estate,
the person(s) to whom the Optionee's rights under the Option have passed by will
or the applicable laws of descent and distribution or the beneficiary designated
pursuant to Section 8 at any time or from time to time within one year after the
date of death, but in no event later than the remaining term of the Option. Any
portion of an Option that is not vested on the date of termination of the
Optionee's employment or services shall terminate on such date, unless the Plan
Administrator determines otherwise. In the case of termination of the Optionee's
employment or services for Cause, the Option shall automatically terminate upon
first notification to the Optionee of such termination, unless the Plan
Administrator determines otherwise. If an Optionee's employment or services with
the Company are suspended pending an investigation of whether the Optionee shall
be terminated for Cause, all the Optionee's rights under any Option likewise
shall be suspended during the period of investigation.
The Plan Administrator shall determine, in its sole discretion, whether
a reduction in an Optionee's regular
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hours of employment shall constitute a "termination of the Optionee's employment
or services" for purposes of the Plan. A transfer of employment or services
between or among the Company and its Subsidiaries shall not be considered a
termination of employment or services. The effect of a Company-approved leave of
absence on the terms and conditions of an Option shall be determined by the Plan
Administrator, in its sole discretion.
SECTION 8. ASSIGNABILITY
No Option granted under the Plan may be assigned, pledged or transferred
by the Optionee other than by will or by the applicable laws of descent and
distribution, and, during the Optionee's lifetime, such Option may be exercised
only by the Optionee or a permitted assignee or transferee of the Optionee (as
provided below). Notwithstanding the foregoing, the Plan Administrator, in its
sole discretion, may permit such assignment, transfer and exercisability and may
permit an Optionee to designate a beneficiary who may exercise the Option after
the Optionee's death; provided, however, that any Option so assigned or
transferred shall be subject to all the same terms and conditions contained in
the instrument evidencing the Option.
SECTION 9. ADJUSTMENTS
9.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to stockholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (a) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Common Stock of the Company, then the Plan
Administrator shall make proportional adjustments in (i) the maximum number and
kind of securities subject to the Plan as set forth in Section 4.1 and (ii) the
number and kind of securities that are subject to any outstanding Option and the
per share price of such securities, without any change in the aggregate price to
be paid therefor. The determination by the Plan Administrator as to the terms of
any of the foregoing adjustments shall be conclusive and binding.
9.2 CORPORATE TRANSACTION
Except as otherwise provided in the instrument that evidences the
Option, in the event of a Corporate Transaction, the Plan Administrator shall
determine whether provision will be made in connection with the Corporate
Transaction for an appropriate assumption of the Options theretofore granted
under the Plan (which assumption may be effected by means of a payment to each
Optionee (by the Company or any other person or entity involved in the Corporate
Transaction), in exchange for the cancellation of the Options held by such
Optionee, of the difference between the then Fair Market Value of the aggregate
number of shares of Common Stock then subject to such Options and the aggregate
exercise price that would have to be paid to acquire such shares) or for
substitution of appropriate new options covering stock of a successor
corporation to the Company or stock of an affiliate of such successor
corporation. If the Plan Administrator determines that such an assumption or
substitution will be made, the Plan Administrator shall give notice of such
determination to the Optionees, and the provisions of such assumption or
substitution, and any adjustments made (a) to the number and kind of shares
subject to the outstanding Options (or to the options in substitution therefor),
(b) to the exercise prices, and/or (c) to the terms and conditions of the stock
options, shall be binding on the Optionees. Any such determination shall be made
in the sole discretion of the Plan Administrator and shall be final, conclusive
and binding on all Optionees. If the Plan Administrator, in its sole discretion,
determines that no such assumption or substitution will be made, the Plan
Administrator shall give notice of such determination to the Optionees, and each
Option that is at the time outstanding shall automatically accelerate so that
each such Option shall, immediately prior to the specified effective date for
the Corporate Transaction, become 100% vested and exercisable, except that such
acceleration will not occur if, in the opinion of the Company's outside
accountants, it would render unavailable "pooling of interest" accounting for a
Corporate Transaction that would otherwise qualify for such accounting
treatment. All
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such Options shall terminate and cease to remain outstanding immediately
following the consummation of the Corporate Transaction, except to the extent
assumed by the successor corporation or an affiliate thereof.
9.3 FURTHER ADJUSTMENT OF OPTIONS
Subject to Section 9.2, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to Optionees, with respect to
Options. Such authorized action may include (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or duration of, or
restrictions on, Options so as to provide for earlier, later, extended or
additional time for exercise and other modifications, and the Plan Administrator
may take such actions with respect to all Optionees, to certain categories of
Optionees or only to individual Optionees. The Plan Administrator may take such
action before or after granting Options to which the action relates and before
or after any public announcement with respect to such sale, merger,
consolidation, reorganization, liquidation or change in control that is the
reason for such action.
9.4 LIMITATIONS
The grant of Options shall in no way affect the Company's right to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
SECTION 10. WITHHOLDING
The Company may require the Optionee to pay to the Company the amount of
any withholding taxes that the Company is required to withhold with respect to
the grant or exercise of any Option. Subject to the Plan and applicable law, the
Plan Administrator may, in its sole discretion, permit the Optionee to satisfy
withholding obligations, in whole or in part, by paying cash, by electing to
have the Company withhold shares of Common Stock or by transferring shares of
Common Stock to the Company, in such amounts as are equivalent to the Fair
Market Value of the withholding obligation. The Company shall have the right to
withhold from any shares of Common Stock issuable pursuant to an Option or from
any cash amounts otherwise due or to become due from the Company to the Optionee
an amount equal to such taxes. The Company may also deduct from any Option any
other amounts due from the Optionee to the Company or a Subsidiary.
SECTION 11. LOANS, INSTALLMENT PAYMENTS AND LOAN GUARANTEES
To assist an Optionee in acquiring shares of Common Stock pursuant to an
Option granted under the Plan, the Plan Administrator, in its sole discretion,
may authorize, either at the Grant Date or at any time before the acquisition of
Common Stock pursuant to the Option, (a) the extension of a loan to the Optionee
by the Company, (b) the payment by the Optionee of the purchase price, if any,
of the Common Stock in installments, or (c) the guarantee by the Company of a
loan obtained by the Optionee from a third party. The terms of any loans,
installment payments or loan guarantees, including the interest rate and terms
of repayment, will be subject to the Plan Administrator's discretion; provided,
however, that repayment of any Company loan to the Optionee shall be secured by
delivery of a full-recourse promissory note for the loan amount executed by the
Optionee, together with any other form of security determined by the Plan
Administrator. The maximum credit available is the purchase price, if any, of
the Common Stock acquired, plus the maximum federal and state income and
employment tax liability that may be incurred in connection with the
acquisition.
SECTION 12. MARKET STANDOFF
In connection with any underwritten public offering by the Company of
its equity securities pursuant to an effective registration statement filed
under the Securities Act, including the Company's initial public offering, a
person shall not sell, or make any short sale of, loan, hypothecate, pledge,
grant any option for the purchase of, or
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otherwise dispose or transfer for value or otherwise agree to engage in any of
the foregoing transactions with respect to, any shares issued pursuant to an
Option granted under the Plan without the prior written consent of the Company
or its underwriters. Such limitations shall be in effect only if and to the
extent and for such period of time as may be requested by the Company or such
underwriters and agreed to by the Company's officers and directors; provided,
however, that in no event shall the weighted average number of days in such
period exceed 180 days. The limitations of this paragraph shall in all events
terminate two years after the effective date of the Company's initial public
offering.
In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock effected as a class without the Company's
receipt of consideration, then any new, substituted or additional securities
distributed with respect to the purchased shares shall be immediately subject to
the provisions of this Section 12, to the same extent the purchased shares are
at such time covered by such provisions.
In order to enforce the limitations of this Section 12, the Company may
impose stop-transfer instructions with respect to the purchased shares and any
new, substituted or additional securities distributed with respect to the
purchased shares until the end of the applicable standoff period.
SECTION 13. AMENDMENT AND TERMINATION OF PLAN
13.1 AMENDMENT OF PLAN
The Plan may be amended only by the Board in such respects as it shall
deem advisable.
13.2 TERMINATION OF PLAN
The Board may suspend or terminate the Plan at any time. The Plan shall
have no fixed expiration date.
13.3 CONSENT OF OPTIONEE
The amendment or termination of the Plan shall not, without the consent
of the Optionee, impair or diminish any rights or obligations under any Option
theretofore granted under the Plan.
SECTION 14. GENERAL
14.1 OPTION AGREEMENTS
Options granted under the Plan shall be evidenced by a written agreement
that shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and that are not inconsistent with the
Plan.
14.2 CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN OPTIONS
None of the Plan, participation in the Plan or any action of the Plan
Administrator taken under the Plan shall be construed as giving any person any
right to be retained in the employ of the Company or limit the Company's right
to terminate the employment or services of any person.
14.3 REGISTRATION
The Company shall be under no obligation to any Optionee to register for
offering or resale or to qualify for exemption under the Securities Act, or to
register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if made.
The Company may issue certificates for shares with such legends and subject
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to such restrictions on transfer and stop-transfer instructions as counsel for
the Company deems necessary or desirable for compliance by the Company with
federal and state securities laws.
Inability of the Company to obtain, from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of an
exemption from registration for the issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the nonissuance or sale
of such shares as to which such requisite authority shall not have been
obtained.
14.4 NO RIGHTS AS A STOCKHOLDER
No Option shall entitle the Optionee to any dividend, voting or other
right of a stockholder unless and until the date of issuance under the Plan of
the shares that are the subject of such Option, free of all applicable
restrictions.
14.5 PARTICIPANTS IN FOREIGN COUNTRIES
The Plan Administrator shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Subsidiaries may operate to assure the viability of the benefits from
Options granted to Optionees employed in such countries and to meet the
objectives of the Plan.
14.6 NO TRUST
The Plan is intended to constitute an "unfunded" plan. Nothing contained
herein shall require the Company to segregate any monies or other property, or
shares of Common Stock, or to create any trusts, or to make any special deposits
for any immediate or deferred amounts payable to any Optionee, and no Optionee
shall have any rights that are greater than those of a general unsecured
creditor of the Company.
14.7 SEVERABILITY
If any provision of the Plan or any Option is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Option under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Option, such provision shall be stricken as to such jurisdiction,
person or Option, and the remainder of the Plan and any such Option shall remain
in full force and effect.
SECTION 15. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the
Board.
Adopted by the Board on February 10, 1999.
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