<PAGE>
As filed with the Securities and Exchange Commission on September 4, 1998
Registration No. 333-_________
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
ATG INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2657762
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
47375 FREMONT BOULEVARD
FREMONT, CALIFORNIA 94538
(510) 490-3008
(Address and telephone number of principal executive offices)
--------------------
ATG INC. EMPLOYEE STOCK PURCHASE PLAN
ATG INC. 1994 STOCK OPTION PLAN
ATG INC. 1998 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
ATG INC. 1998 STOCK OWNERSHIP INCENTIVE PLAN
(Full title of the plans)
DOREEN M. CHIU
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATG INC.
47375 FREMONT BOULEVARD
FREMONT, CALIFORNIA 94538
(510) 490-3008
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
Copies of communications to:
BRIAN A. SULLIVAN, ESQ.
MILLER & HOLGUIN
1801 CENTURY PARK EAST
SEVENTH FLOOR
LOS ANGELES, CALIFORNIA 90067
(310) 556-1990
CALCULATION OF REGISTRATION FEE
-------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,854,000 shares $4.20 $7,786,800 $2,360
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) and (h) promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). The price per
share and aggregate offering price are based upon (a) the weighted average
exercise price for shares subject to options previously granted under,
respectively, the Registrant's 1994 Stock Option Plan, the Registrant's
1998 Non-Employee Directors Stock Option Plan and the Registrant's 1998
Stock Ownership Incentive Plan, and (b) for shares subject to options
granted after the date hereof under such plans or issuable under the
Registrant's Employee Stock Purchase Plan, the average of the high and low
price of the Company's Common Stock on August 31, 1998, as reported on the
National Association of Securities Dealers Automated Quotation System.
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF OFFERING PRICE
TYPE OF SHARES SHARES PER SHARE
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares issuable pursuant to options outstanding under the
ATG Inc. 1994 Stock Option Plan 954,000 $2.17 (a)
- -------------------------------------------------------------------------------------------------
Shares issuable pursuant to options outstanding and upon
exercise of options available for grant under the ATG Inc.
1998 Stock Ownership Incentive Plan 500,000 $6.42 (b)
- -------------------------------------------------------------------------------------------------
Shares issuable pursuant to options outstanding and upon
exercise of options available for grant under the ATG Inc.
1998 Non-Employee Directors Stock Option Plan 200,000 $7.06 (b)
- -------------------------------------------------------------------------------------------------
Shares issuable pursuant to options outstanding and upon
exercise of options available for grant under the ATG Inc.
Employee Stock Purchase Plan 200,000 $5.47 (b)
- -------------------------------------------------------------------------------------------------
</TABLE>
(a) Based on the weighted average exercise price of options outstanding.
(b) Based on the weighted average exercise price of options outstanding (to the
extent determinable as of the date of filing of this Registration
Statement), and on the offering price of the Company's Common Stock as
computed in accordance with Rule 457(c) and (h) promulgated under the
Securities Act.
INCORPORATION OF DOCUMENTS BY REFERENCE
---------------------------------------
The following documents filed by ATG Inc. (the "Company") with the
Securities and Exchange Commission are incorporated by reference into this
Registration Statement:
1. The Company's prospectus filed pursuant to Rule 424(b) under the
Securities Act that contains audited financial statements for the Company's
latest fiscal year for which such statements have been filed.
2. The description of the Company's Common Stock which is contained in a
registration statement filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including any amendment or report filed for the
purpose of updating such description.
3. All reports filed by the Company pursuant to Section 13(a) or 15(d) of
the Exchange Act since December 31, 1997.
4. All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be a part of this
Registration Statement from the date of the filing of such reports and
documents.
-2-
<PAGE>
DESCRIPTION OF SECURITIES
-------------------------
Not applicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
--------------------------------------
Not applicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
The Company's Amended and Restated Articles of Incorporation, as amended
("Articles"), provide that, pursuant to the California Corporations Code, the
liability of the directors of the Company for monetary damages shall be
eliminated to the fullest extent permissible under California law. This is
intended to eliminate the personal liability of a director for monetary damages
in an action brought by, or in the right of, the Company for breach of a
director's duties to the Company or its shareholders. This provision in the
Articles does not eliminate the directors' fiduciary duty and does not apply for
certain liabilities: (i) for acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law; (ii) for acts or
omissions that a director believes to be contrary to the best interests of the
Company or its shareholders or that involve the absence of good faith on the
part of the director; (iii) for any transaction from which a director derived an
improper personal benefit; (iv) for acts or omissions that show a reckless
disregard for the director's duty to the Company or its shareholders in
circumstances in which the director was aware, or should have been aware, in the
ordinary course of performing a director's duties, of a risk of serious injury
to the Company or its shareholders; (v) for acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of the director's
duty to the Company or its shareholders; (vi) with respect to certain
transactions or the approval of transactions in which a director has a material
financial interest; and (vii) expressly imposed by statute for approval of
certain improper distributions to shareholders or certain loans or guarantees.
This provision also does not limit or eliminate the rights of the Company or any
shareholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care.
The Articles also authorize the Company to indemnify the directors and
officers of the Company to the fullest extent permissible under California law.
Section 317 of the California Corporations Code ("Section 317") provides that a
California corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative (other than
action by or in the right of the corporation), by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise, against expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Section 317 also provides that a California corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
-3-
<PAGE>
indemnification may be made in respect to any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 317 provides further that to the extent a director or officer of a
California corporation has been successful in the defense of any action, suit or
proceeding referred to in the previous paragraphs or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith; that
indemnification authorized by Section 317 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him or
incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 317.
EXEMPTION FROM REGISTRATION CLAIMED
-----------------------------------
Not applicable.
EXHIBITS
--------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
5.1 Opinion of Miller & Holguin.
23.1 Consent of PricewaterhouseCoopers L.L.P.
23.2 Consent of Miller & Holguin. Reference is made to
Exhibit 5.1.
24.1 Power of Attorney. Reference is made to the signature
page.
99.1* Employee Stock Purchase Plan
99.2* 1998 Stock Ownership Incentive Plan
99.3* 1998 Non-Employee Directors Stock Option Plan
99.4 ATG Inc. 1994 Stock Option Plan
</TABLE>
________________________
* Filed as an exhibit to the Company's Registration Statement on Form S-1 (No.
333-46107), as amended through the date hereof, which exhibit is incorporated
herein by reference.
-4-
<PAGE>
UNDERTAKINGS
------------
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of such 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 such registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) (Section 230.424(b) of
this chapter) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in such effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in such
registration statement or any material change to such
information in such registration statement;
Provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) shall
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
such registration statement.
(b) 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 herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) 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.
2. 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 Section 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
-5-
<PAGE>
registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. 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
Securities and Exchange 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.
-6-
<PAGE>
SIGNATURES
----------
THE REGISTRANT. 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 cause this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fremont, State of
California, on the 2nd day of September, 1998.
ATG INC.
By: /s/ Doreen M. Chiu
------------------
Doreen M. Chiu
President and Chief Executive Officer
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Doreen M. Chiu and Steven J. Guerrettaz,
and each or any one of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their substitutes, 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Doreen M. Chiu Chairman, Chief Executive September 2, 1998
- -------------------------------- Officer and President
Doreen M. Chiu (Principal Executive Officer)
/s/ Steven J. Guerrettaz Chief Financial Officer September 2, 1998
- -------------------------------- and Director (Principal
Steven J. Guerrettaz Financial and Accounting Officer)
/s/ Frank Y. Chiu Director September 2, 1998
- --------------------------------
Frank Y. Chiu
/s/ William M. Hewitt Director September 2, 1998
- --------------------------------
William M. Hewitt
</TABLE>
-7-
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT
-------
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
5.1 Opinion of Miller & Holguin.
23.1 Consent of PricewaterhouseCoopers L.L.P.
23.2 Consent of Miller & Holguin. Reference
is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to
the signature page.
99.1* Employee Stock Purchase Plan
99.2* 1998 Stock Ownership Incentive Plan
99.3* 1998 Non-Employee Directors Stock Option
Plan
99.4 ATG Inc. 1994 Stock Option Plan
________________________
*Filed as an exhibit to the Company's Registration Statement on Form
S-1 (No. 333-46107), as amended through the date hereof, which exhibit
is incorporated herein by reference.
<PAGE>
EXHIBIT 5.1
[MILLER & HOLGUIN LETTERHEAD]
September 2, 1998
ATG Inc.
47375 Fremont Boulevard
Fremont, California 94538
Ladies and Gentlemen:
We are providing this opinion with respect to certain matters in connection
with the filing by ATG Inc. (the "Company") of a Registration Statement on Form
S-8 (the "Registration Statement") with the Securities and Exchange Commission
covering the offering of up to (i) 954,000 shares of the Company's Common Stock,
no par value per share (the "Common Stock"), pursuant to the ATG Inc. 1994 Stock
Option Plan (the "Non-Statutory Plan"), (ii) 500,000 shares of Common Stock
pursuant to the ATG Inc. 1998 Stock Ownership Incentive Plan (the "Incentive
Plan"), (iii) 200,000 shares of Common Stock pursuant to the ATG Inc. 1998 Non-
Employee Directors Stock Option Plan (the "Directors' Plan"), and (iv) 200,000
shares of Common Stock pursuant to the ATG Inc. Employee Stock Purchase Plan
(the "Purchase Plan") (collectively, the "Shares").
In connection with this opinion, we have examined and relied upon the
Registration Statement and related Prospectus, the Company's Amended and
Restated Articles of Incorporation and its Bylaws, as amended, the Non-Statutory
Plan, the Incentive Plan, the Directors' Plan, the Purchase Plan, resolutions of
the Company's Board of Directors dated February 5, 1998 and August 27, 1998, and
such other documents, records, certificates, memoranda and other instruments as
we deem necessary or appropriate to enable us to render this opinion. In
rendering this opinion, we have assumed the genuineness and authenticity of all
signatures on original documents, the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof, and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the
opinion that the Shares newly issued by the Company, when issued and sold in
accordance with the terms of (A) the Non-Statutory Plan, the Incentive Plan, the
Directors' Plan or the Purchase Plan and (B) the Registration Statement and
related Prospectus, will be validly issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
MILLER & HOLGUIN
By: /s/ Brian A. Sullivan
---------------------
Brian A. Sullivan
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
ATG Inc. on Form S-8, of our report dated January 31, 1998 except for Note 16
as to which the date is April 14, 1998, on our audits of the consolidated
financial statements and financial statement schedule of ATG Inc. as of
December 31, 1997 and 1996 and for the years ended December 13, 1997, 1996,
and 1995, which report is included in Form S-1 as filed with the Securities
and Exchange commission on May 4, 1998.
/s/ PricewaterhouseCoopers LLP
San Jose, California
September 2, 1998
<PAGE>
EXHIBIT 99.4
THE ATG INC. 1994 STOCK OPTION PLAN
PURPOSE. The purpose of the ATG Inc. 1994 Stock Option Plan (the "Plan")
-------
is to reward employees of and consultants to ATG Inc. (the "Company") and its
subsidiaries judged to have contributed to the long-term success of the Company,
and to attract qualified employees to the Company and its subsidiaries.
ADMINISTRATION. The Plan is administered, at the Company's expense, by the
--------------
Company's Board of Directors (the "Board"). The Board's interpretation or
determination of any matter or issue arising under the Plan, to the extent not
inconsistent with the terms of any rights expressly granted to participants
under the Plan in writing, shall be final, binding and conclusive for all
purposes. The Board shall have the power at any time to amend or modify the
Plan in a manner which does not adversely affect outstanding rights of any
person thereunder (absent the consent of such person).
ELIGIBILITY. All full-time and part-time employees of, and all consultants
-----------
to, the Company and its subsidiaries are eligible for awards under the Plan.
NATURE OF AWARDS. Awards under the Plan shall consist of options (the
----------------
"Options") to acquire shares of the Company's Common Stock, no par value per
share (the "Common Stock"), at a specified exercise price per share, covering a
specified number of such shares, and exercisable over such vesting period and
subject to such other terms and conditions, as are set forth in (i) a grant
letter (each, a "Grant Letter") from the Company to the grantee ("Optionee"),
(ii) any written instrument clarifying or further specifying the terms and
conditions applicable to the Option executed by both the Company and the
Optionee (each, a "Written Amendment"), and (iii) to the extent not inconsistent
with any express provision of a Grant Letter or a Written Amendment, the
document entitled "How to Exercise Your Rights Under ATG Inc. Stock Options
issued prior to January 1, 1998", a copy of which is attached hereto as Exhibit
"A". All grants of such stock options by the Company to employees of or
consultants to the Company or any subsidiary prior to January 1, 1998 shall be
deemed to be awards under the Plan.
MAXIMUM NUMBER OF SHARES AVAILABLE UNDER PLAN. The maximum number of
---------------------------------------------
shares of Common Stock available for purchase under the Plan is 1 million,
subject to adjustment by the Board conformably with the principles described
below under "Adjustment to Options".
SELECTION OF GRANTEES AND DETERMINATION OF AWARDS. Only the Board, or one
-------------------------------------------------
or more members of the Company's management to whom such power is expressly
delegated by the Board, shall have the authority to select the persons to whom
Options are to be granted and, consistently with the terms of the Plan,
determine all specific terms and conditions applicable thereto.
<PAGE>
ACCELERATION OF VESTING OF OPTIONS. Upon a change in control of the
----------------------------------
Company, including a sale, merger or reorganization, all outstanding options
shall become fully vested and immediately exercisable. In addition, in the
event of the death or total disability of a participant while employed by the
Company or a subsidiary of the Company all of his or her outstanding options
shall become fully vested and immediately exercisable.
ADJUSTMENT TO OPTIONS. The number of shares covered by an Option will be
---------------------
increased or decreased proportionately, and the exercise price modified
inversely, in the event of a stock split, stock dividend or reverse stock split
with respect to the Common Stock. In the event of any other fundamental change
affecting the Common Stock, the Board will make the appropriate adjustments to
the Option so as to prevent any enlargement or dilution of the rights of
Optionees under the Plan as a result thereof.
NON-QUALIFIED STATUS OF OPTIONS UNDER INTERNAL REVENUE CODE. Options
-----------------------------------------------------------
issued under the Plan are not intended to be "incentive stock options" under the
Internal Revenue Code of 1986, as amended (the "Code").
NON-QUALIFIED NATURE OF PLAN. The Plan is not intended to be subject to
----------------------------
the provisions of the federal Employee Retirement Income Security Act of 1974,
as amended, or to be qualified under Section 401(a) of the Code.
TERMINATION OF PLAN. The Plan shall terminate on such date as is
-------------------
determined by the Board in its discretion.
NO GRANTING OF EMPLOYMENT RIGHTS. Neither the Plan, nor any action taken
--------------------------------
under the Plan, shall be construed as giving any eligible employee the right to
become a participant in the Plan, nor shall an Option awarded under the Plan be
construed as giving the Optionee any right with respect to continuance of
employment by the Company or any of its subsidiaries.
-2-
<PAGE>
THIS DOCUMENT CONSTITUTES PART OF
A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1993.
August 31, 1998
HOW TO EXERCISE YOUR RIGHTS UNDER
ATG INC. STOCK OPTIONS
ISSUED PRIOR TO JANUARY 1, 1998
Commencing in 1995 and extending through 1997, ATG Inc. (the
"Company") issued options (the "Options") to purchase up to a maximum
aggregate of 1,000,000 shares of the Company's Common Stock (the "Shares"), no
par value per share (the "Common Stock"), to a total of 41 employees and
consultants of the Company and its subsidiaries. As of the date hereof,
Options to purchase up to a maximum aggregate of 954,000 Shares are
outstanding. The Company's Board of Directors (the "Board") has recently
denominated, for convenience of reference, the arrangement under which the
Options were issued the "ATG Inc. 1994 Stock Option Plan" (the "Plan"). The
purpose of the Plan was to provide a mechanism pursuant to which the Company
could reward those employees and consultants judged to be significant
contributors to its success, and to attract qualified employees in the future.
The Board has recently taken action to formally terminate the ability of the
Company to issue any additional options under the Plan, on the basis that the
Company's 1998 Stock Ownership Incentive Plan adopted earlier this year
provides a more flexible mechanism for effectuating the purposes of the Plan.
Notwithstanding this termination, the rights of each holder of an outstanding
Option (each, an "Optionee") shall continue to exist unaffected in accordance
with the terms of (i) his or her initial option grant letter from the Company
(each, a "Grant Letter"), (ii) the memorandum of clarification relating
thereto from the Company dated May 15, 1998 agreed to by the Optionee in
writing (each, a "Memorandum of Clarification") and, to the extent not
inconsistent therewith, (iii) the provisions of the Plan as described herein.
The Company intends to file with the Securities and Exchange Commission a
Registration Statement on Form S-8 covering all of the Shares subject to
outstanding Options (the "Registration Statement"), which will become
effective automatically upon such filing, and to keep the Registration
Statement effective until the earlier of (i) the date on which all such
Options have been exercised in full, or (ii) the date on which the last
outstanding Option expires unexercised in accordance with its terms. The
balance of this Memorandum will address those questions concerning the Plan
which the Company believes are material to an Optionee's decision to exercise
his or her rights thereunder.
<PAGE>
MECHANICS OF EXERCISE
---------------------
1. WHEN MAY I EXERCISE MY OPTION?
-----------------------------
Until such time as the Option has expired or terminated in accordance with
its terms, an Optionee may exercise from time to time the unexercised
portion of his or her Option with respect to all or a portion of the
Shares covered by such Option as to which he or she is then vested.
------------------------------------
2. WHEN DOES MY OPTION VEST?
------------------------
Unless the relevant Grant Letter specifically provides otherwise, each
Option vests incrementally over time, as follows: prior to the first
anniversary of the grant date (as set forth in the Stock Option Summary
(the "Summary") appended to the Memorandum of Clarification relating to
the Option), the Option is not vested as to any Shares; on such first
anniversary, the Option vests as to the total number of underlying Shares
divided by the total number of years in the vesting period applicable to
the Option (again, as set forth in the Summary); thereafter, the balance
of the Shares underlying the Option vests ratably over the remaining
months in the vesting period. In addition, the entire unvested portion of
an Option shall vest upon an Optionee's separation from employment with
the Company and its subsidiaries, if the length of the Optionee's past
services to the Company and its subsidiaries exceeds the length of his or
her entire original vesting schedule. For example, if an Optionee whose
Option has an original three year vesting period separates from the
Company after six years of employment, the unvested portion of the Option
will vest simultaneously with such separation.
3. WHEN DOES MY OPTION EXPIRE OR TERMINATE?
----------------------------------------
Each Option expires upon the earlier of (i) the tenth (10th) anniversary of
-------
the grant date, or (ii) sixty (60) days after the voluntary termination of
your employment with the Company or a subsidiary of the Company (a
"Subsidiary"). Each Option terminates immediately if the Optionee's
----------
employment by the Company or a Subsidiary is terminated for cause.
4. HOW DO I EXERCISE MY RIGHTS UNDER MY OPTION?
-------------------------------------------
At any time prior to its expiration or termination in accordance with its
terms, an Optionee may exercise his or her Option as to all or a portion
of the then vested Shares covered thereby by: (i) notifying the Chief
Financial Officer of the Company (the "CFO") of the Optionee's intention
to exercise the Option as to a specified whole number of such Shares, and
either (ii) paying to the Company, in a manner deemed acceptable by the
Company, an amount in cash equal to the exercise price of the Option per
Share (as set forth in the Summary) multiplied by such specified whole
number (the "Aggregate Exercise Price"), or (iii) following the procedures
--
approved by the CFO and one or more cooperating securities
- 2 -
<PAGE>
brokerage houses selected by the Optionee for the net "cashless exercise"
of Options, pursuant to which the exercising Optionee receives upon
exercise not such specified number of Shares but such lesser number as is
equal to (x) the current market value of one share of Common Stock, less
the exercise price per Share of the Option, (y) divided by said current
market value, (z) multiplied by such specified number of Shares.
5. HOW DO I RECEIVE MY SECURITIES?
------------------------------
All Shares acquirable pursuant to exercise of an Option will be newly
issued by the Company out of its authorized but unissued Common Stock. As
promptly as reasonably practicable after such exercise, the Company's
transfer agent will be directed to issue a stock certificate to the
Optionee representing the Shares issuable to him or her against such
exercise. In the case of exercise pursuant to a cashless exercise
procedure, that portion of the total number of Shares as to which the
Option is exercised resulting from dividing the Aggregate Exercise Price
by the current market value of one Share of the Common Stock, will not be
issued to the Optionee, but will be sold by the cooperating brokerage
house on behalf of the Company to a third party purchaser, with the
proceeds of such sale being remitted to the Company in satisfaction of the
Aggregate Exercise Price.
6. WILL I HAVE TO PAY ANY TRANSACTION COSTS UPON EXERCISE OTHER THAN THE
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EXERCISE PRICE?
--------------
No, except that those Optionees electing to exercise pursuant to the above
described cashless exercise procedure will be responsible for paying all
fees and commissions charged by the cooperating brokerage houses in
connection therewith. No portion of any such fees or commissions will be
remitted to or for the benefit of the Company.
7. WILL THE SHARES ISSUED UPON EXERCISE BE RESTRICTED IN MY HANDS?
--------------------------------------------------------------
Inasmuch as the offer and sale by the Company of the Shares issuable upon
exercise will be covered by the Registration Statement, each Optionee who
is not an officer, director, 10% shareholder or otherwise a controlling
person of the Company (each, an "Affiliate") will receive upon such
exercise "freely tradable" Shares. An Affiliate, on the other hand,
attempting to resell his or her Shares in the public markets will
generally be subject to the volume limitations and certain other
requirements of Rule 144 promulgated under the Securities Act of 1933, but
such volume limitations will generally permit such Affiliate (including
for this purpose the persons whose sales of Common Stock must be
aggregated with his or her sales for purposes of the Rule) to sell up to
1% of the total issued and outstanding shares of the Common Stock in any
three month period. In addition, resale of such Shares by officers,
directors or 10% shareholders of the Company may be subject to the "short-
swing profit" provisions of Section 16(b) of the Securities Exchange Act
of 1934, and such persons should accordingly consult with legal counsel
prior to effecting any such resales.
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<PAGE>
PLAN ADMINISTRATION
-------------------
8. HOW IS THE PLAN ADMINISTERED?
----------------------------
The Plan is administered, at the Company's expenses, by the Board. The
Board currently consists of seven members, each of whom serves until the
next annual meeting of shareholders or until successors are elected and
qualified. The Board's interpretation or determination of any matter or
issue arising under the Plan, to the extent not inconsistent with the
express terms of any Grant Letter or Memorandum of Clarification, or this
Memorandum, shall be final, binding and conclusive for all purposes.
9. HOW DOES THE COMPANY APPLY THE FUNDS RECEIVED FROM EXERCISING
-------------------------------------------------------------
OPTIONEES?
---------
All funds received by the Company upon exercise of Options will be added
to the Company's general funds and may be used for any corporate purpose.
10. WHAT HAPPENS TO MY OPTION IF THERE IS A STOCK SPLIT, STOCK DIVIDEND,
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REVERSE STOCK SPLIT OR OTHER FUNDAMENTAL CHANGE AFFECTING THE COMMON
--------------------------------------------------------------------
STOCK?
-----
The number of shares covered by the Option will be increased or decreased
proportionately, and the exercise price modified inversely, in the event
of a stock split, stock dividend or reverse stock split. In the event of
any other such fundamental change, the Board will make the appropriate
adjustments to the Option so as to prevent any enlargement or dilution of
the Optionee's rights under the Plan as a result thereof.
11. CAN MY RIGHTS UNDER THE PLAN BE ASSIGNED OR HYPOTHECATED TO ANYONE
------------------------------------------------------------------
ELSE?
----
No, other than pursuant to transfers by bequest or the laws of descent and
distribution. Accordingly, each Option shall be exercisable during the
Optionee's lifetime only by the Optionee.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
---------------------------------------
The Options granted under the Plan are not intended to be "incentive stock
options" under the Internal Revenue Code of 1986, as amended. At the time of
grant of an Option, no income will be recognized by the Optionee, and the
Company will not be entitled to a deduction. Upon the exercise of an Option, the
Optionee will recognize taxable ordinary income and the Company will be entitled
(subject to the requirement of reasonableness and the satisfaction of a tax
reporting obligation) to a corresponding business deduction in an amount by
which the then fair market value of the Shares issued to such Optionee exceeds
the exercise price of the Option (provided certain tax withholding requirements
are met). Upon any subsequent disposition of such Shares, the Optionee will
recognize capital gain or loss in an amount equal to the difference between the
proceeds
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<PAGE>
received upon such disposition and the fair market value of such Shares at the
time of exercise. Such capital gain or loss will be long-term, or short-term
depending on how long the Optionee holds the Shares. Capital gains are generally
subject to lower tax rates than ordinary income.
GENERAL INFORMATION
-------------------
The Plan is not subject to the provisions of the federal Employee Retirement
Income Security Act of 1974 ("ERISA") and is not qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended.
In order to obtain additional information concerning the Plan and its
administrators, please contact Steven J. Guerrettaz, Chief Financial Officer,
ATG Inc., 47375 Fremont Boulevard, Fremont, California 94538, telephone:
(510) 490-3008, Extension 233.
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