As filed with the Securities and Exchange Commission on June 25, 1998
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HIGHLAND BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4654552
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
601 South Glenoaks Boulevard91502
Burbank, California(Zip code)
(Address of principal executive offices)
HIGHLAND FEDERAL BANK
1994 STOCK OPTION AND PERFORMANCE
SHARE AWARD PLAN
(Full title of the plan)
STEPHEN N. RIPPE
President and Chief Executive Officer
Highland Bancorp, Inc.
601 South Glenoaks Boulevard
Burbank, California
(Name and address of agent for service)
(818) 848-4265
(Telephone number, including area code, of agent for service)
Copy to:
WILLIAM T. QUICKSILVER, ESQ.
Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, California 90064
(310) 312-4000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Securities to be Offering Price Aggregate Registration
to be Registered Registered (1) Per Share Offering Price Fee
------------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 100,000 shares $ 42.75 (2) $ 4,275,000 $ 1,261.13
</TABLE>
- --------------
(1) This Registration Statement covers, in addition to the number of
shares of Common Stock stated above, such indeterminate number of
shares of Common Stock as may be issued upon exercise of options and
pursuant to the grant of certain other awards under the Highland
Federal Bank 1994 Stock Option and Performance Share Award Plan (the
"Stock Option Plan") as a result of the adjustment provisions thereof.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457 based upon the closing sales
price of the Common Stock on June 22, 1998.
================================================================================
<PAGE>
EXPLANATORY NOTE AND INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
Highland Bancorp, Inc. (the "Registrant") hereby files this
Registration Statement on Form S-8 with the Securities and Exchange
Commission (the "Commission") to register 100,000 additional shares of the
Registrant's Common Stock, $0.01 par value per share, for issuance pursuant
to the Registrant's 1994 Stock Option and Performance Share Award Plan, as
amended and restated (the "Stock Option Plan" or the "Plan"), and such
indeterminate number of shares as may become available under the Plan as a
result of the adjustment provisions thereof. The Stock Option Plan was
formerly of Highland Federal Bank, a federally chartered savings bank (the
"Bank"), which was assumed by and became the Stock Option Plan of the
Registrant in connection with the reorganization of the Bank into a holding
company form of organization on December 15, 1997. The contents of the
Registration Statement on Form S-8 (File No. 333-45515), filed by the
Registrant with the Commission on February 3, 1998, including exhibits
thereto, are incorporated herein by reference. On April 22, 1998,
stockholders of the Registrant approved an amendment to the Plan to increase
the number of shares available for issuance pursuant to the Plan from 300,000
to 400,000.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 8. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
4.1 Registrant's Amended and Restated Certificate of
Incorporation, dated September 18, 1997, incorporated by
reference from Exhibit No. 3.1 on Form 10-K for the
Registrant's fiscal year ended December 31, 1997.
4.2 Registrant's Amended and Restated By-laws, dated November
18, 1997, incorporated by reference from Exhibit 3.2 on Form
10-k for the Registrant's fiscal year ended December 31,
1997.
5.1 Opinion of Manatt, Phelps & Phillips, LLP
23.1 Consent of Manatt, Phelps & Phillips, LLP (see Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick, LLP
23.3 Consent of Grant Thornton, LLP
99.1 1994 Stock Option and Performance Share Award Plan, as
Amended and Restated
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, 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 Burbank, State of
California, on this 23nd day of June, 1998.
HIGHLAND BANCORP, INC.
By /s/ Stephen N. Rippe
------------------------
Stephen N. Rippe
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen N. Rippe and Anthony
L. Frey his true and lawful attorney-in-fact and agent, each with full power
of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and
to file the same with all exhibits thereto, and all other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent with full power and authority to do
and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that each said
attorney-in-fact and agent, or his substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Stephen N. Rippe President, Chief Executive June 22, 1998
- --------------------- Officer and Director
Stephen N. Rippe (Principal Executive
Officer)
/s/ Anthony L. Frey Executive Vice President, June 22, 1998
- --------------------- Chief Financial Officer
Anthony L. Frey and Secretary (Principal
Financial and Accounting
Officer)
- --------------------- Director June __, 1998
Woodrow W. DeWitt
/s/ Richard O. Oxford Director June 22, 1998
- ---------------------
Richard O. Oxford
II-3
<PAGE>
/s/ Shirley E. Simmons Director June 23, 1998
- ----------------------
Shirley E. Simmons
/s/ George Piercy Director June 23, 1998
- ----------------------
George Piercy
/s/ Richard J. Cross Director June 23, 1998
- ----------------------
Richard J. Cross
/s/ William G. Dyess Director June 23, 1998
- ----------------------
William G. Dyess
II-4
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
4.1 Registrant's Amended and Restated Certificate of
Incorporation, dated September 18, 1997, incorporated by
reference from Exhibit No. 3.1 on Form 10-K for the
Registrant's fiscal year ended December 31, 1997.
4.2 Registrant's Amended and Restated By-laws, dated November
18, 1997, incorporated by reference from Exhibit 3.2 on Form
10-k for the Registrant's fiscal year ended December 31,
1997.
5.1 Opinion of Manatt, Phelps & Phillips, LLP
23.1 Consent of Manatt, Phelps & Phillips, LLP (see Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick, LLP
23.3 Consent of Grant Thornton, LLP
99.1 1994 Stock Option and Performance Share Award Plan, as
Amended and Restated
II-5
<PAGE>
EXHIBIT 5.1
June 23, 1998
The Board of Directors
Highland Bancorp, Inc.
601 South Glenoaks Boulevard
Burbank, California 91502
Re: REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on
Form S-8 (the "Registration Statement") to be filed by Highland Bancorp,
Inc., a Delaware corporation (the "Company"), with the Securities and
Exchange Commission (the "Commission") in connection with the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of
100,000 shares of the Company's common stock, $0.01 par value per share (the
"Company Common Stock"), that may be issued in the aggregate upon the
exercise of options or the grant of certain other awards under the 1994 Stock
Option and Performance Share Award Plan, as amended and restated (the "Stock
Option Plan") formerly of Highland Federal Bank, a federally chartered
savings bank (the "Bank"), which was assumed by and became the Stock Option
Plan of the Company in connection with the reorganization of the Bank into a
holding company form of organization on December 16, 1997.
In rendering this opinion, we have examined only the following
documents, together with the applicable certificates of officers and
governmental authorities referenced in this letter:
1. Certificate of Incorporation of the Company, as certified by
the Delaware Secretary of State as of October 9, 1997;
2. Bylaws of the Company, as certified by the Delaware Secretary
of State as of October 9, 1997;
3. The Stock Option Plan, together with the forms of incentive
stock option agreement, nonqualified stock option agreement and restricted
stock purchase agreement for use in connection therewith (the "Agreements");
4. Certificate of Officers of the Company;
5. The resolutions adopted at a meeting of the Board of Directors
of the Company approving the Stock Option Plan and the Registration Statement
on March 16, 1998 and June 15, 1998; and
6. The Registration Statement.
With respect to the foregoing documents, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals and the conformity to originals of all documents submitted to
us as certified or reproduced copies. We have obtained from the officers of
the Company a certificate as to certain factual matters and insofar as this
opinion is based on such matters of fact, we have relied on such certificate
without independent investigation.
<PAGE>
Based upon the foregoing and assuming, without further inquiry,
that (i) all options granted under the Stock Option Plan to date have been,
and all options and other awards to be granted under the Stock Option Plan
will be, duly and validly granted in accordance with the terms of the Stock
Option Plan, (ii) the consideration for the shares of Company Common Stock to
be issued pursuant to the exercise of options or other awards granted under
the Stock Option Plan will be received prior to the issuance thereof, (iii)
the shares of Company Common Stock to be issued pursuant to the exercise of
options and the grant of other awards will be issued in accordance with the
terms of the Stock Option Plan and the applicable Agreements, (iv) the
Registration Statement will become effective under the Securities Act prior
to the issuance of any shares of Company Common Stock under the Stock Option
Plan and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or be pending before the Commission, (v) prospectuses
will be updated and delivered to participants in the Stock Option Plan, as
required by the Securities Act and the rules and regulations promulgated by
the Commission thereunder, and (vi) the grant of options and other awards
under the Stock Option Plan and the issuance of shares of Company Common
Stock upon the exercise of such options and the grant of such awards will
comply with the securities laws of each state or jurisdiction applicable
thereto (other than the Securities Act), upon which assumptions the following
opinion is expressly conditioned, it is the opinion of the undersigned that
the 100,000 shares of Company Common Stock issuable by the Company upon the
exercise of options and the grant of other awards pursuant to the Stock
Option Plan will be, when issued and delivered against payment therefor in
accordance with the Stock Option Plan, the applicable Agreements and the
Registration Statement, duly authorized, validly issued, fully paid and non-
assessable.
This opinion is limited to the current laws of the State of
Delaware and the Securities Act and the rules and regulations promulgated by
the Commission thereunder, to present judicial interpretations thereof and to
facts as they presently exist. In rendering this opinion, we have no
obligation to revise or supplement it should the current laws of the State of
Delaware or the Securities Act or such rules and regulations be changed by
legislative action, judicial decision or otherwise.
This opinion is issued to you solely for use in connection with the
Registration Statement and is not to be quoted or otherwise referred to in
any financial statements of the Company or related document, nor is it to be
filed with or furnished to any government agency or other person, without the
prior written consent of the undersigned in each instance.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement.
Respectfully submitted,
/s/ Manatt, Phelps & Phillips LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Highland Bancorp, Inc.
We consent to the incorporation by reference in this registration statement
on Form S-8 of Highland Bancorp, Inc. of our report dated January 23, 1998
relating to the consolidated statement of financial condition of Highland
Bancorp, Inc. and subsidiaries as of December 31, 1997 and the related
consolidated statements of operations, shareholders' equity and cash flows
for the year ended December 31, 1997, which report appears in the December
31, 1997 Annual Report on Form 10-K of Highland Bancorp, Inc.
/s/ KPMG PEAT MARWICK LLP
Los Angeles, California
June 22, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Highland Bancorp, Inc.
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Highland Bancorp, Inc. pertaining to the 1994 Stock
Option and Performance Share Award Plan, as amended and restated, of our
report dated January 28, 1997, appearing in the Annual Report on Form 10-K of
Highland Bancorp, Inc. for the year ended December 31, 1997.
/s/ GRANT THORNTON LLP
Los Angeles, California
June 22, 1998
<PAGE>
EXHIBIT 99.1
HIGHLAND BANCORP, INC.
1994 STOCK OPTION AND PERFORMANCE SHARE AWARD PLAN
AS AMENDED AND RESTATED
1. Purpose.
The purposes of this 1994 Stock Option and Performance Share Award
Plan (this "Plan") are to provide long-term incentives and rewards to
directors, officers and employees of Highland Bancorp, Inc. (the "Company")
and its subsidiaries (the "Company Group") to assist the Company Group in
attracting and retaining directors, officers and employees on a basis
competitive with industry practices, to align the interests of directors,
officers and employees with those of the Company's stockholders, and to
provide additional compensation to directors, officers and employees.
2. Effective Date; Amendment.
This Plan was effective as of April 27, 1994, and was amended
effective as of April 22, 1998.
3. Administration of the Plan.
(a) This Plan shall be administered by the Board of Directors of the
Company (the "Board"), or a committee of the Board (the "Committee") whose
members shall serve at the pleasure of the Board. The administrator of the
Plan shall be referred to as the "Administrator." During such time that
administration is delegated to the Committee, the Committee shall have, in
connection with the Administration of the Plan, the powers theretofore
possessed by the Board subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time
to time by the Board.
(b) The Administrator shall have full power and authority in its
discretion, subject to and not inconsistent with the express provisions of
this Plan to take any and all actions required or permitted to be taken
under this Plan. Such full power and authority shall include, without
limitation, the selection of participants to whom Options or Awards may be
granted; the determination of the number of shares of Common Stock
purchasable upon the exercise of each Option granted to each participant
and the amount payable by the participant upon the exercise thereof (the
"Exercise Price"); the determination of the number of shares subject to
each Award; the terms and conditions of each grant of Options and Awards
including without limitation establishing the objectives and conditions, if
any, for the earning or vesting of Options and Awards; the right to
interpret and construe each provision of this Plan and of all agreements
and instruments reflecting the terms and conditions of all grants hereunder
(the "Agreements"); the making of all required or appropriate
determinations under this Plan and the Agreements; and the adoption,
amendment and recision of such rules and regulations relating to this Plan
as the Administrator shall determine in its discretion (the "Rules"); in
each case subject to the express provisions of this Plan.
(c) The interpretation or construction by the Administrator of this
Plan, any Agreement or any rule, and all determinations by the
Administrator, shall in each case be final, binding and conclusive with
<PAGE>
respect to all interested parties. No member of the Administrator shall be
personally liable for any action, failure to act, determination,
interpretation or construction made in good faith.
(d) The Administrator shall determine the "fair market value" of the
Common Stock from time to time in accordance with such procedures for the
determination thereof as the Administrator shall determine.
4. Participants.
Participants in the Plan shall be directors, officers and employees of
the Company and/or its subsidiaries selected by the Administrator. Nothing
set forth in this Plan or in any Agreement shall confer upon any employee
or officer any right to continue in the employ of the Company Group or as
an officer of any member of the Company Group, nor limit in any manner the
right of the Company or any subsidiary to terminate such employee or office
for any reason whatsoever, with or without good cause. No director,
officer, employee or other person shall have any right to be granted an
Option or an Award.
5. Shares of Stock Subject to this Plan.
(a) The shares available for issuance under this Plan pursuant to the
exercise of Options or pursuant to Awards shall consist of 400,000 shares
of the Common Stock of the Company (the "Common Stock"), subject to
adjustment as provided in Section 8.1. Such number of shares shall be set
aside out of the authorized but unissued shares of Common Stock not
reserved for any other purpose. Should an Option expire for any reason
without being exercise, or be canceled in whole or in part, or should an
outstanding Award for a participant be forfeited or terminated for any
reason, the shares of Common Stock subject to such Option or Award shall
again be available for issuance under this Plan.
(b) No person shall receive Options and/or Awards representing more
than 50% of the aggregate number of shares of Common Stock that may be
issued pursuant to all Options and Awards under the Plan as set forth in
Section 5 hereof.
6. Options.
(a) The Administrator may from time to time, in its sole discretion,
award to such eligible participants as it designates options to purchase
shares of the Common Stock ("Options"). In connection therewith, the
Administrator shall have full and final authority in its discretion (i) in
the case of each Option, to determine whether the Option shall be an
incentive stock option (an "ISO") pursuant to Section 422 of the Internal
Revenue Code of 1986 (the "IRC"), as such section may from time to time be
amended or supplemented, or an Option that does not qualify under such
Section 422 (an "NQSO"), (ii) to determine the time or times at which
Options will be awarded, (iii) to determine the number of shares that may
be purchased upon the exercise of each Option, (iv) to determine the
Exercise Price for each Option, which price shall not be less than 100% of
the fair market value of the Common Stock on the date on which the Option
is granted, (v) to determine the time or times when each Option shall
become exercisable and the duration of the exercise period, (vi) to permit
the optionee to pay the Exercise Price with Common Stock or other property
issuable pursuant to the Option, or to permit the participant to pay his or
her tax withholding obligation with respect to such issuance, in whole or
in part, by delivering previously owned shares of Common Stock (including
"pyramiding") or other property, or by reducing the number of shares of
<PAGE>
Common Stock or the amount of other property otherwise issuable pursuant to
the Option, (vii) to prescribe the form or forms of the Agreements
reflecting the terms and conditions of each Option.
(b) Each Option shall be exercisable on such date or dates and during
such period as shall be determined by the Administrator at the time of
grant, provided that (i) no ISO shall be exercisable after the expiration
of 10 years after the grant date, and (ii) with respect to each grant of
Options to a participant that is required to file reports pursuant to
Section 16(a) of the 1934 Act, no Option shall be exercisable prior to six
months after the date it is granted.
(c) Upon the termination of the employment of a participant with the
Company Group, unless specified otherwise in the Agreement evidencing such
Option, such participant's rights to exercise an Option then held shall be
as follows, subject to the authority of the Administrator to extend the
exercisability of an Option in its sole discretion (with the consent of the
participant or the participant's legal representative in the case of an
ISO):
(i) DEATH OR PERMANENT AND TOTAL DISABILITY. If the employment
is terminated by reason of the death or "permanent and total disability"
(as defined in Section 22(e)(3) of the IRC) of the participant, each Option
held by the participant on the date of termination shall expire on the
earlier of (i) the date that is 12 months after the date of termination of
employment, or (ii) the fixed expiration date of such Option.
(ii) OTHER DISABILITY. If the employment is terminated by reason
of the disability of the participant that is not permanent and total
disability (as defined in Section 22(e)(3) of the IRC), each Option held by
the participant on the date of termination shall expire the earlier of (i)
the date that is three months after the date of termination of employment
for each Option that is an ISO, or the date that is 12 months after the
date of termination of employment for each Option that is an NQSO, or (ii)
the fixed expiration date of such Option.
(iii) OTHER TERMINATION. If the employment is terminated by
any reason other than death or disability, each Option held by the
participant on the date of termination shall expire on the earlier of (i)
the date that is three months after the date of termination of employment,
or (ii) the fixed expiration date of such Option.
(d) Unless the Agreement evidencing the Option provides otherwise, if
the employment of a participant is terminated for any reason other than by
voluntary termination by the participant or termination by the Company or
any subsidiary "for cause," all Options held by such participant shall
become immediately vested, notwithstanding any conditions to the vesting of
such Options set forth herein or in the Agreement reflecting such Options.
If for purposes of this Plan, termination "for cause" shall mean
termination because of the participant's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or
final cease and desist order.
(e) The Options of a participant who dies shall be exercisable by a
legatee or legatees of such Options under the participant's last will, or
by such participant's executor, personal representative or distributees.
However, in the event of a participant's death after the date of
termination of employment that occurs for another reason, such deceased's
<PAGE>
participant's Options shall expire in accordance with their terms as if
such participant were still living.
(f) The Administrator shall have the authority to determine the
reason for and date of termination of employment of each participant
(including but not limited to determining whether a termination is by
reason of disability or retirement), which determination shall be final,
binding and conclusive on all interested parties.
(g) In the event that the Company enters into any or more agreements
to dispose of all or substantially all of its assets or the Company's
stockholders dispose of or become obligated to dispose of 50% or more of
the outstanding shares of Common Stock, other than to the Company or a
subsidiary of the Company, in either case by means of a tender offer, sale,
merger, reorganization or liquidation, in one or a series of related
transactions (an "Acceleration Event"), then each outstanding Option shall
become exercisable during the 30 days immediately prior to the scheduled
consummation of the Acceleration Event with respect to the full number of
shares for which such option has been granted; PROVIDED, HOWEVER, that no
Acceleration Event shall be deemed to occur for purposes of this section in
the event that (i) the terms of the agreements pursuant to which such
transaction is occurring require as a condition to the consummation thereof
that each Option shall either be assumed by a successor corporation or
parent thereof or be replaced with a comparable option to purchase shares
of capital stock of a successor corporation or parent thereof, and (ii) the
transaction is approved by a majority of the directors who have been in
office for more than 12 months prior to the scheduled consummation of the
transaction. Any exercise of Options during such 30-day period shall be
condition upon the consummation of the Acceleration Event, and in the event
the Acceleration Event is not consummated all exercises of Options made
pursuant to this section shall be of no further force or effect; unless,
with respect to any such Option, such Option was otherwise exercisable in
accordance with its terms without regard to this section and the
participant is exercising such Option indicates in writing that such
exercise is not conditioned on the consummation of the Acceleration Event.
Upon consummation of the Acceleration Event, all outstanding Options,
whether or not accelerated pursuant to this section, shall expire and cease
to be exercisable, unless assumed by the successor corporation or a parent
thereof.
(h) The Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected participant, the
cancellation of any or all outstanding Options and the grant in
substitution thereof of new Options under this Plan (subject to the
limitations hereof) providing for the purchase of the same or a different
number of shares of Common Stock at an Exercise Price not less than 100% of
the fair market value of the Common Stock on the new grant date. The
Agreement reflecting the terms of the new Options may, in the discretion of
the Administration, include the same terms and conditions as the Agreement
reflecting the terms of the old Options including, without limitation, the
same vesting schedule.
The Administrator may, in its discretion, amend the terms of any
Agreement, with the consent of the affected participant, to provide that
the Exercise Price of the shares remaining subject to the original Option
shall be reestablished at a price not less than 100% of the fair market
value of the Common Stock on the effective date of such amendment.
<PAGE>
7. Awards.
(a) The Administrator may from time to time, in its sole discretion,
grant to such officers and employees of the Company Group as it designates,
awards ("Awards") consisting of shares of the Common Stock. Awards may be
granted as compensation for past services and may be granted without
condition or subject to forfeiture if vesting or other criteria established
by the Administrator are not satisfied. In addition, Awards may consist of
the right to receive shares of Common Stock in the future if certain
performance or other criteria established by the Administrator in
connection with the Award are met. For purposes of this Plan, an Award
shall be deemed outstanding at any date if the receipt of shares of Common
Stock pursuant to the Award is subject to one or more conditions to be
fulfilled subsequent to that date or, if the shares shall have been issued
prior to that date, the shares shall be subject to forfeiture if one or
more conditions are not fulfilled subsequent to that date.
(b) The Administrator shall have full and final authority in its
discretion in the case of each Award to determine the time or times at
which Awards will be granted, the number of shares of Common Stock subject
to each Award, the vesting, performance or other criteria (if any) to be
established under which receipt of the shares will be conditioned, the
conditions (if any) upon which the shares will be subject to forfeiture,
the duration of the periods over which such performance criteria will be
measured and the other terms and conditions of each Award, and to prescribe
the form or forms of the Agreements reflecting the terms and conditions of
each Award. The terms and conditions of Awards need not be the same for
each participant.
(c) All shares of Common Stock subject to an outstanding Award shall
be issued by the Company to the participant at such time as any
Acceleration Event is consummated; provided, however, that no Acceleration
Event shall be deemed to occur for the purposes of this section in the
event that (i) the terms of the agreements pursuant to which such
transaction is occurring require as a condition to the consummation thereof
that each Award shall either be assumed by a successor corporation or
parent thereof or be replaced with a comparable award of shares of capital
stock of the successor corporation or parent thereof, and (ii) the
transaction is approved by a majority of the directors who have been in
office for more than 12 months prior to the scheduled consummation of the
transaction.
8. Adjustments and Changes in the Common Stock.
(a) In the event that the shares of Common Stock as presently
constituted shall be changed into or exchanged for a different number or
kind of shares or other securities of the Company, or if the number of such
shares of Common Stock shall be increased through the payment of a stock
dividend, then unless such change results in the termination of all
outstanding Options or Awards pursuant to the provisions of Sections 6.7 or
7.3, there shall be substituted for or added to each share of Common Stock
theretofore appropriated or thereafter subject or which may be come subject
to an Option or an Award, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be so
changed, or for which each share shall be exchanged, or to which each such
share shall be entitled, as the case may be. Each Agreement shall be
deemed amended appropriately as to price and other terms as may be
necessary in the determination of the Administrator to reflect the
foregoing events. In the event there shall be any other change in the
number or kind of outstanding Common Stock, or of any stock or securities
into which such shares have been changed, or for which it shall have been
exchanged, then if the Administrator shall, in its sole discretion,
<PAGE>
determine that such change requires an adjustment in the terms of any
Option or Award granted or that may be granted, such adjustment shall be
made in accordance with such determination and each Agreement reflecting
such terms shall be deemed amended. Fractional shares resulting from any
adjustment in Options or Awards pursuant to this section shall be rounded
down to the nearest whole number of shares.
(b) Notwithstanding the foregoing, any and all adjustments in the
terms of ISO's shall comply in all respects with applicable sections of the
IRC and the regulations thereunder.
(c) Notice of any adjustment in the terms of Options or Awards shall
be given by the Company to each holder of an Option or Award that has been
so adjusted. However, such adjustment shall be effective and binding for
all purposes whether or not such notice is given or received.
9. No Rights as Stockholder.
No participant shall have rights as a holder of Common Stock with
respect to Options or Awards unless and until certificates for shares of
such stock are issued to the participant or the participant's legal
representative.
10. Withholding Taxes.
The Company shall have the right to withhold from the participant, at
the time of the issuance by the Company of any shares, any federal, state
or other taxes required by law to be withheld with respect to such issuance
or to require (through withholding from the participant's salary or
otherwise) the payment by the participant of any such taxes.
11. Non-Transferability.
No Option or outstanding Award may be in any way transferred,
assigned, pledged or hypothecated by the participant to whom it was granted
or awarded, other than by will or the laws of descent and distribution, and
an Option may be exercised during the participant's lifetime only by the
participant or the participant's legal representative; PROVIDED, HOWEVER,
that the Administrator may upon request consent to transfers of NQSO's or
Awards as it may determine in its sole discretion, if such transfer is
pursuant to a "qualified domestic relations order" as defined by the IRC,
and subject to such conditions as the Administrator may require.
12. Amendments and Termination.
(a) In addition to such amendments as are provided for in Section 12,
with the consent of the affected participant the Administrator may amend
any outstanding Agreement in a manner not inconsistent with this Plan.
(b) The Board may at any time terminate or from time to time amend
this Plan in whole or in part, but no such action shall adversely affect
any rights or obligations with respect to any Options or Awards theretofore
granted under this Plan; PROVIDED, HOWEVER, without stockholder approval,
no amendment of this Plan shall be effective which would increase the
maximum number of shares of Common Stock referred to in Section 5.
13. Governing Law.
The validity and construction of this Plan and the Agreements shall be
governed by the laws of the State of California.
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