<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 12, 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)
DELAWARE 91-1646860
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 - 12TH AVENUE SOUTH, SUITE 1200
SEATTLE, WASHINGTON 98144
(Address of principal executive offices, including zip code)
CONVERGENCE CORPORATION STOCK OPTION PLAN
(Full title of the plan)
L. MICHELLE WILSON
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
AMAZON.COM, INC.
1200 - 12TH AVENUE SOUTH, SUITE 1200
SEATTLE, WASHINGTON 98144
(206) 266-1000
(Name, address and telephone number, including area code, of agent for service)
----------------------
COPY TO:
SCOTT L. GELBAND
PERKINS COIE LLP
1201 THIRD AVENUE, SUITE 4800
SEATTLE, WASHINGTON 98101-3099
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------- ----------------- ---------------- --------------- ------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1)(2) PER SHARE(3) OFFERING PRICE FEE
- ------------------------------------------- ----------------- ---------------- --------------- ------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value per share 82,414 $3.108 $256,162.058 $71.22
- ------------------------------------------- ----------------- ---------------- --------------- ------------
</TABLE>
(1) Pursuant to an Agreement and Plan of Merger dated as of August 23, 1999 (the
"Merger Agreement"), by and among the Registrant, Caspian Acquisition, Inc.,
Convergence Corporation ("Convergence") and certain shareholders of
Convergence, the Registrant assumed outstanding options to purchase capital
stock of Convergence granted under the Convergence Corporation Stock Option
Plan (the "Convergence Assumed Options"). Appropriate adjustments have been
made to the number of shares and the per share exercise price of each
Convergence Assumed Option to reflect the ratio at which Convergence capital
stock was converted into Common Stock of the Registrant under the Merger
Agreement.
(2) Together with an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant to
the Convergence Corporation Stock Option Plan as the result of any future
stock split, stock dividend or similar adjustment to the Registrant's
outstanding Common Stock.
(3) Shares are issuable upon exercise of outstanding options with fixed exercise
prices. Pursuant to Rule 457(h) under the Securities Act of 1933, as
amended, the proposed maximum aggregate offering price and the registration
fee have been computed based on the weighted average exercise price for
shares subject to the Convergence Assumed Options.
<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 Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999 and June 30, 1999;
(c) The Registrant's Current Reports on Form 8-K filed on August
27, 1998, October 26, 1998, January 5, 1999, January 27, 1999, January 28, 1999,
January 29, 1999, February 4, 1999, March 29, 1999, March 30, 1999, April 27,
1999, April 29, 1999, May 12, 1999, May 19, 1999, June 10, 1999, June 11, 1999
and July 22, 1999;
(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
II-1
<PAGE> 3
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 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 (i) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) payments of unlawful dividends or unlawful
stock repurchases or redemptions, or (iv) 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 Perkins Coie LLP (included in opinion filed as
Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Ernst & Young LLP, Independent Auditors
23.4 Consent of Deloitte & Touche LLP, Independent Auditors
23.5 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.6 Consent of PricewaterhouseCoopers LLP, Independent Accountants
24.1 Power of Attorney (see signature page)
99.1 Convergence Corporation 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:
II-2
<PAGE> 4
(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
(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 benefit 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 8th day of
October, 1999.
AMAZON.COM, INC.
By: /s/ JEFFREY P. BEZOS
---------------------------------
Jeffrey P. Bezos
Chief Executive Officer and
Chairman of the Board
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Jeffrey P. Bezos, Joy D. Covey, Joseph Galli, Jr., Kelyn J. Brannon and L.
Michelle Wilson, or any one 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 8th day of October, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ JEFFREY P. BEZOS Chief Executive Officer and Chairman of the Board
- -------------------------------- (Principal Executive Officer)
Jeffrey P. Bezos
/s/ WARREN C. JENSON Senior Vice President and Chief Financial Officer
- -------------------------------- (Principal Financial Officer)
Warren C. Jenson
/s/ KELYN J. BRANNON Vice President, Finance and Chief Accounting
- -------------------------------- Officer (Principal Accounting Officer)
Kelyn J. Brannon
/s/ TOM A. ALBERG Director
- --------------------------------
Tom A. Alberg
/s/ SCOTT D. COOK Director
- --------------------------------
Scott D. Cook
/s/ L. JOHN DOERR Director
- --------------------------------
L. John Doerr
/s/ JOSEPH GALLI, JR. Director, President and Chief Operating Officer
- --------------------------------
Joseph Galli, Jr.
/s/ PATRICIA Q. STONESIFER Director
- --------------------------------
Patricia Q. Stonesifer
</TABLE>
II-4
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
5.1 Opinion of Perkins Coie LLP
23.1 Consent of Perkins Coie LLP (included in opinion filed as
Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Ernst & Young LLP, Independent Auditors
23.4 Consent of Deloitte & Touche LLP, Independent Auditors
23.5 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.6 Consent of PricewaterhouseCoopers LLP, Independent Accountants
24.1 Power of Attorney (see signature page)
99.1 Convergence Corporation Stock Option Plan
</TABLE>
<PAGE> 1
EXHIBIT 5.1
PERKINS COIE LLP
A LAW PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1201 THIRD AVENUE, SUITE 4800, SEATTLE, WASHINGTON 98101-3099
TELEPHONE: 206 583-8888 FACSIMILE: 206 583-8500
October 10, 1999
Amazon.com, Inc.
1200 - 12th Avenue S., Suite 1200
Seattle, Washington 98144
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 up to 82,414 shares of Common
Stock, par value $0.01 per share, which may be issued under the Convergence
Corporation Stock Option Plan (the "Plan").
We have examined the Registration Statement and such documents and
records of the Company and other documents as we have deemed relevant and
necessary for the purpose of this opinion. In giving this opinion, we are
assuming the authenticity of all instruments presented to us as originals, the
conformity with originals of all instruments presented to us as copies and the
genuineness of all signatures.
Based on and subject to the foregoing, we are of the opinion that any
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, 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 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Convergence Corporation Stock Option Plan 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.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Seattle, Washington
October 8, 1999
<PAGE> 1
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Convergence Corporation Stock Option Plan of our report
dated May 12, 1999, with respect to the consolidated financial statements of
Accept.com for the year ended December 31, 1998, included in the Current Report
(Form 8-K) of Amazon.com, Inc. filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
San Jose, California
October 8, 1999
<PAGE> 1
EXHIBIT 23.4
CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS
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.
/s/ Deloitte & Touche LLP
San Jose, California
October 8, 1999
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Amazon.com, Inc. of our report dated May 3, 1999,
relating to the financial statements of e-Niche Incorporated, which appears in
the Current Report on Form 8-K of Amazon.com, Inc. filed May 12, 1999.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 8, 1999
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 (No. 333-_____) of our report dated April 23, 1999,
relating to the financial statements of Alexa Internet, appearing in the Current
Report on Form 8-K of Amazon.com, Inc. filed May 12, 1999.
/s/ PricewaterhouseCoopers LLP
San Francisco, California
October 8, 1999
<PAGE> 1
EXHIBIT 99.1
CONVERGENCE CORPORATION
STOCK OPTION PLAN
ARTICLE 1 - PURPOSE
This Stock Option Plan (the "Plan") is intended to provide incentives to
employees of Convergence Corporation (the "Company") and its present and future
subsidiaries (as defined in Section 424(f) of the Internal Revenue Code of 1986,
as amended (the "Code")) by providing them with opportunities to purchase stock
in the Company pursuant to the exercise of options. Options granted under the
Plan may be either "incentive stock options" complying with, and subject to, the
terms and conditions of Section 422 of the Code, or may be non-statutory stock
options, as may be designated at the time of grant.
ARTICLE 2 - ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors (the "Board")
of the Company or by the Stock Option Committee (the "Committee") of the Board
of Directors of the Company. The word "Board" wherever used herein shall be
deemed to mean "Board or Committee," unless otherwise expressly provided. Acts
by a majority of the Board at a meeting, or acts approved in writing by all the
members of the Board, shall be the valid acts of the Board. Subject to the terms
of the Plan, and subject to such overall policies with respect thereto
established from time to time by the Board, the Board shall have authority to
determine the time or times at which options shall be granted, the persons to
whom options shall be granted, the number of shares covered by each option, the
price per share specified in each option, the time or times when each option
shall become exercisable and the duration of the exercise period or periods, and
all other terms and provisions of each option and each instrument by which each
option shall be evidenced.
All determinations and interpretations made by the Board with respect to
the Plan and each option granted thereunder shall be binding and conclusive on
all interested parties unless otherwise determined by the Board. The Board may
from time to time adopt such rules and regulations for carrying out the Plan as
it may determine in its sole discretion. No member of the Board shall be liable
with respect to any action or determination made in good faith regarding the
Plan or any option granted under it.
ARTICLE 3 - ELIGIBLE PERSONS
Options may be granted to such officers and other employees of the
Company or its subsidiaries (as defined in Section 424(f) of the Code) as may
from time to time be determined by the Board. The granting of any option to a
person shall neither entitle such person to, nor disqualify him from,
participation in any other grant of options pursuant to this Plan or any other
plan. Directors of the Company or its subsidiaries, whether or not they are
officers or employees of the Company, shall also be eligible to receive options
under the Plan. In addition, options may be granted to consultants to the
Company.
ARTICLE 4 - STOCK
The stock subject to the options granted hereunder shall be shares of
the Company's authorized but unissued shares of common stock or shares of common
stock reacquired by the Company, including shares purchased in the open market
("Common Stock"). The maximum number of shares which are hereby reserved for
issuance and may be issued pursuant to this Plan is two hundred thousand
(200,000), subject to adjustment as provided in Article 13. In the event any
option granted under the Plan shall expire, terminate or be cancelled for any
reason without having been exercised in full, or shall cease for any reason to
be exercisable in whole or in
<PAGE> 2
part, the unpurchased shares subject thereto, to the extent the option ceases to
be exercisable, shall again be available under the Plan.
If at the time of exercise of an option granted hereunder, substantially
all of the Company's issued and outstanding shares of common stock are subject
to stock restriction or shareholder agreements requiring that shares of common
stock first be offered to the Company or first be offered to other shareholders
of common stock prior to sale, then the issuance of stock upon exercise of an
option granted shall be conditioned on the execution of a stock restriction or
shareholder agreement, in the then current form, by the holder of the option.
ARTICLE 5 - GRANT OF OPTIONS
Options may be granted to eligible persons in such number and at such
times during the term of the Plan as the Board shall determine; provided,
however, that the aggregate fair market value (determined as of the time the
option is granted) of the shares with respect to which incentive stock options
are exercisable for the first time by the recipient during any calendar year
shall not exceed $100,000.
ARTICLE 6 - MINIMUM PRICE OF OPTIONS
In the case of an incentive stock option, the price per share shall not
be less than 100% (110% in the case of a 10% shareholder as defined in Sections
422(b)(6), 424(d) and related sections of the Code) of the fair market value per
share of Common Stock on the date the option is granted. Fair market value shall
be determined by the Board in accordance with applicable income tax regulations.
In the case of a non-tax qualified stock option, the price per share shall be as
determined by the Board and may be less than, equal to, or greater than the fair
market value per share of Common Stock on the date the option is granted.
ARTICLE 7 - DURATION OF OPTIONS
Subject to earlier termination as provided in Articles 9 and 10, each
option shall expire on the date specified by the Board, but not more than ten
years from its date of grant. The Board may extend the term of any previously
granted option provided that such option, as extended, expires not more than ten
years from its original date of grant as provided above. However, in the case of
an incentive stock option granted to a 10% stockholder as defined in Sections
422(b)(6), 424(d) and related sections of the Code, the term of the option shall
be no more than five (5) years from the date of grant.
ARTICLE 8 - RESTRICTIONS ON EXERCISE OF OPTIONS
Subject to the provisions of Articles 5 and 9 through 12, each option
granted under the Plan shall be exercisable as follows:
A. The option shall either be fully exercisable at the time of grant or
shall become exercisable in such installments as the Board may
determine, which installments may be cumulative or noncumulative as
the Board may determine.
B. Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the option, unless otherwise
specified by the Board.
C. Each option may be exercised from time to time, in whole or in part,
up to the total number of shares with respect to which it is then
exercisable.
D. The Board shall have the right to accelerate the date of exercise of
any installment for any reason.
<PAGE> 3
ARTICLE 9 - TERMINATION OF RELATIONSHIP WITH COMPANY
If an optionee ceases to be an employee, director or consultant of the
Company or any subsidiary, for any reason other than death, disability (within
the meaning of Section 22(e)(3) of the Code), or termination for cause, the
options held by the optionee may be exercised to the extent they were
exercisable on the date the optionee ceased to be an employee, director or
consultant of the Company or any subsidiary; but no further installments of such
options will become exercisable, and each such option shall terminate on the
date one month following the date the optionee ceased to be an employee,
director or consultant of the Company (but not later than the expiration date
specified in the option). The foregoing one-month period following the date the
optionee ceases to be an employee, director or consultant of the Company may be
extended by an additional period of no longer than two months by the Board in
its sole discretion.
If an optionee is terminated as an employee, director or consultant of
the Company for cause, all his options shall terminate immediately and be of no
further force or effect. Whether authorized leaves of absence or absence on
military or governmental service constitute termination for the purposes of the
Plan shall be conclusively determined by the Board.
Nothing in the Plan or in any option granted hereunder shall be deemed
to give any optionee the right to continue in the employ of the Company or any
of its subsidiaries or shall be deemed to interfere in any way with the right of
the Company to terminate any optionee's employment at any time for any reason.
Options granted under the Plan shall not be affected by any change of employment
among the Company and its subsidiaries so long as the optionee continues to be
an employee of the Company or one of its subsidiaries (as defined in Section
424(f) of the Code).
ARTICLE 10 - DISABILITY; DEATH
If an optionee becomes disabled (within the meaning of Section 22(e)(3)
of the Code), his options may be exercised to the extent they were exercisable
on the date he ceased to an employee, director or consultant of the Company or
any subsidiary; but no further installments of such options will become
exercisable, and each such option shall terminate on the date one year following
the date the optionee ceased to be an employee, director or consultant of the
Company (but not later than its specified expiration date).
If an optionee dies while an employee, director or consultant of the
Company or during the one month (or extended) period referred to in Article 9 or
the one year period referred to above in this Article 10, his options may be
exercised to the extent they were exercisable on the date of his death (or the
date the optionee ceased to be an employee, director or consultant, whichever
first occurred), by his estate, or duly appointed representative, or beneficiary
who acquires the options by will or by the laws of descent and distribution, but
no further installments of such options will become exercisable; and each such
option shall terminate on the date one year following the date of the optionee's
death (but not later than its specified expiration date).
ARTICLE 11 - ASSIGNABILITY
No option shall be assignable or transferable by the optionee except by
will or by the laws of descent and distribution, and during the lifetime of the
optionee each option shall be exercisable only by him.
ARTICLE 12 - TERMS AND CONDITIONS OF OPTIONS
Options shall be evidenced by instruments (which need not be identical)
in such forms as the Board may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in Articles 6 through 11 and may
contain such other provisions not inconsistent with the Plan, including
restrictions applicable to shares of Common Stock issuable upon exercise of
options granted under the Plan, as the Board deems advisable. The Company shall
not be obligated to deliver any shares unless and until, in the opinion of the
<PAGE> 4
Company's counsel, all applicable federal and state laws and regulations have
been complied with, nor, in the event the outstanding common stock is at the
time listed upon any stock exchange, unless and until the shares to be delivered
have been listed, or authorized to be added to the list upon official notice of
issuance, upon such exchange, nor unless and until all other legal matters in
connection with the issuance and delivery of shares have been approved by the
Company's counsel. Without limiting the generality of the foregoing, the Company
may require from the optionee such investment representation or such agreement,
if any, as counsel for the Company may consider necessary in order to comply
with applicable securities laws, including the Securities Acts of 1933 and 1934.
The Company shall use its best efforts to effect any such compliance and
listing, and the optionee shall take any action reasonably requested by the
Company in such regard.
ARTICLE 13 - ADJUSTMENTS
Upon the happening of any of the following described events, an
optionee's rights under options granted hereunder shall be adjusted as
hereinafter provided:
A. in the event shares of Common Stock of the Company shall be
subdivided or combined into a greater or smaller number of shares or
if, upon a merger, consolidation, reorganization, split-up,
liquidation, combination, recapitalization or the like of the
Company, the shares of the Company's Common Stock shall be exchanged
for other securities of the Company or of another corporation, each
optionee shall be entitled to purchase, subject to the terms and
conditions herein stated and to the terms and conditions of each
individual option, such number of shares of Common Stock or amount of
other securities of the Company or such other corporation as were
exchangeable for the number of shares of Common Stock of the Company
which such optionee would have been entitled to purchase except for
such action, and appropriate adjustments shall be made in the
purchase price per share to reflect such subdivision, combination, or
exchange;
B. notwithstanding any other provision of the Plan, in the event of a
merger or consolidation in which the Company is not the surviving
corporation or which results in the acquisition of substantially all
of the Company's outstanding shares by a single person or entity or
by a group of persons and/or entities acting in concert, or in the
event of the sale or transfer of substantially all the Company's
assets, then if the Board so determines, all outstanding options
shall terminate, provided that at least twenty (20) days prior to the
effective date of any such merger, consolidation or sale of assets,
the Board shall either (1) make all outstanding options exercisable
immediately prior to consummation of such merger, consolidation or
sale of assets or (2) if there is a surviving or acquiring
corporation, arrange, subject to consummation of the merger,
consolidation or sale of assets, to have that corporation or
affiliate of that corporation grant to optionees replacement awards,
which awards in the case of incentive stock options shall satisfy, in
the discretion of the Board, the requirements of Section 424(a) of
the Code; and
C. in the event the Company shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class
which shall at the time be subject to option hereunder, each optionee
upon exercising such an option shall be entitled to receive (for the
purchase price paid upon such exercise) the shares as to which he is
exercising his option and, in addition thereto (at no additional
cost), such number of shares of the class or classes in which such
stock dividend or dividends were declared or paid, and such amount of
cash in lieu of fractional shares, as he would have received if he
had been the holder of the shares as to which he is exercising his
option at all times between the date of the granting of such option
and the date of its exercise.
Upon the happening of any of the foregoing events, the class and
aggregate number of shares set forth in Article 4 hereof which are reserved for
issuance pursuant to the Plan or are subject to options which have heretofore
been or may hereafter be granted under the Plan shall also be appropriately
adjusted to reflect the events specified in paragraph A and C above.
<PAGE> 5
The Board (but not the Committee) shall determine the adjustments to be
made under this Article 13, and its determination shall be conclusive and
binding on all interested parties.
Each person who receives an incentive stock option agrees to notify the
Board in writing immediately after he makes a disqualifying disposition of any
shares received pursuant to the exercise of the option. The phrase
"disqualifying disposition" means any disposition (including any sale) of shares
before the later of (a) two years after the optionee was granted the option
under which the optionee acquired such shares, or (b) one year after the
participant acquired the shares by exercising the option.
ARTICLE 14 - EXERCISE OF OPTIONS
An option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal office address,
identifying the option being exercised, specifying the number of shares as to
which such option is being exercised and accompanied by full payment of the
purchase price therefor in United States Dollars, in cash or by certified or
bank check. Unless the Board otherwise determines, no adjustment shall be made
for dividends or similar rights for which the record date occurs after the
exercise of the option but prior to the date such stock certified is issued. In
no case may a fraction of a share be purchased or issued under the Plan.
ARTICLE 15 - TERMINATION AND AMENDMENTS
The Plan shall expire on January 15, 2007 (except as to options
outstanding on that date). Options may be granted under the Plan prior to the
date of stockholder approval of the Plan but such options shall be granted
subject to, and may not be exercised until after, such approval. The Board (but
not the Committee) may terminate or amend the Plan in any respect at any time,
except that, without the approval of the stockholders (a) the total number of
shares that may be issued under the Plan may not be increased (except by
adjustment pursuant to Article 13); (b) the provisions of Article 3, regarding
eligibility, may not be modified; (c) the provisions of Article 6, regarding the
exercise price at which shares may be offered pursuant to options, may not be
modified (except by adjustment pursuant to Article 13); and (d) the expiration
date of the Plan may not be extended. No action of the Board or stockholders,
however, may, without the consent of an optionee, substantially impair his
rights under any option previously granted to him; and no amendment may cause
any incentive stock options previously granted or to be granted under the Plan
to cease to qualify as incentive stock options in accordance with the terms and
conditions of the Plan.
ARTICLE 16 - INCOME TAX WITHHOLDING
Federal, state or local law may require the withholding of taxes
applicable to compensation income resulting from the exercise of an option. The
Board may, in its discretion and subject to such rules as it may adopt, permit
an optionee to pay all or a portion of the federal, state or local withholding
taxes arising in connection with the exercise of an option by electing or (i)
have the Company withhold shares of Common Stock or (ii) deliver to the Company
other previously owned shares of Common Stock. The fair market value of the
shares of Common Stock retained by or delivered to the Company under any of the
foregoing elections shall be determined as of the date of exercise of the
option.
<PAGE> 6
ARTICLE 17 - GOVERNMENTAL REGULATION
The Plan and the grant and exercise of options thereunder, and the
Company's obligation to sell and deliver shares of the Company's Common Stock
under such options, shall be subject to all applicable laws (including tax
laws), rules and regulations. A true copy.
By:
John W. Avery
Secretary