SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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14a-6(e)(2))
[ ] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to [section mark] 240.14a-12
VERTICA SOFTWARE, INC.
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(Name of Registrant as Specified In Its Charter)
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<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
VERTICA SOFTWARE, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 15, 2000
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To the Stockholders of
VERTICA SOFTWARE, INC.:
The annual meeting of stockholders of Vertica Software, Inc. will be
held at 10:00 a.m., local time, on December 15, 2000, at the Company's
offices, Vertica Software, Inc., 5801 Christie Avenue, Suite 390,
Emeryville, California 94608.
At the annual meeting, the stockholders will act on the following
matters:
1. The election of three directors, to serve until the 2001 annual
meeting and until their successors are elected;
2. The election of Randolph Scott & Company as independent public
accountants for the Company for 2000;
3. The approval and adoption of the Vertica Software, Inc. 2000 Equity
Incentive Plan;
4. The approval of the amendment to the Company's Articles of
Incorporation, pursuant to which the Company's name will be changed
from "Vertica Software, Inc." to "Hazweb, Inc."
5. The transaction of any other business that is properly raised at the
meeting.
All stockholders of record as of the close of business on November 16,
2000 are entitled to vote at the annual meeting.
The Company's Registration Statement on Form 10-SB, as amended and filed
with the Securities and Exchange Commission on March 20, 2000, which is not
part of the proxy soliciting material, is enclosed.
It is important that your shares be represented and voted at the annual
meeting. Please complete, sign and return the enclosed proxy card in the
envelope provided whether or not you expect to attend the annual meeting in
person.
By Order of the Board of Directors,
Hans Nehme,
President and Chief Executive Officer
November 23, 2000
Marietta, Pennsylvania
<PAGE>
TABLE OF CONTENTS
Page
ABOUT THE ANNUAL MEETING ............................................. 1
What is the purpose of the annual meeting? ....................... 1
Who is entitled to vote at the meeting? .......................... 1
What constitutes a quorum? ....................................... 1
What are the voting rights of the stockholders? .................. 1
Who can attend the meeting? ...................................... 2
How do I vote? ................................................... 2
Can I change my vote after I return my proxy card? ............... 2
What are the Board's recommendations? ............................ 2
What vote is required to approve each item? ...................... 2
Who will pay the costs of soliciting proxies
on behalf of the Board of Directors? .......................... 3
STOCK OWNERSHIP ...................................................... 3
Who are the largest owners of the Company's stock? ............... 3
How much stock do the Company's directors and
executive officers own? ....................................... 4
Section 16(a) Beneficial Ownership Reporting Compliance .......... 5
ITEM 1 - ELECTION OF DIRECTORS ....................................... 5
Director Nominees Standing for Election .......................... 5
The Board of Directors ........................................... 6
Compensation of Directors ........................................ 6
Executive Compensation ........................................... 6
Summary Compensation Table ....................................... 6
ITEM 2 - ELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS .................. 7
ITEM 3 - APPROVAL OF THE 2000 EQUITY INCENTIVE PLAN .................. 7
ITEM 4 - APPROVAL OF THE AMENDMENT TO THE ARTICLES OF INCOPORATION
TO CHANGE THE COMPANY'S NAME FROM "VERTICA SOFTWARE, INC." TO
"HAZWEB, INC." .............................................. 14
STOCKHOLDER PROPOSALS ................................................ 15
OTHER MATTERS ........................................................ 15
i
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VERTICA SOFTWARE, INC.
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PROXY STATEMENT
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This proxy statement contains information relating to the annual
meeting of stockholders of Vertica Software, Inc. to be held on Friday,
December 15, 2000, beginning at 10:00 a.m., at the offices of the Company,
5801 Christie Avenue, Suite 390, Emeryville, California 94608, and at any
postponement, adjournment or continuation of the meeting. This proxy
statement and accompanying proxy are first being mailed to stockholders on
November 23, 2000.
ABOUT THE ANNUAL MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Company's annual meeting, stockholders will act upon the matters
outlined in the notice of meeting on the cover page of this proxy
statement, including the election of directors, the election of the
Company's independent public accountants, the approval of the 2000 Equity
Incentive Plan and the approval of an amendment to the Company's Articles
of Incorporation to change the Company's name from "Vertica Software, Inc."
to "Hazweb, Inc."
WHO IS ENTITLED TO VOTE AT THE MEETING?
Only stockholders of record at the close of business on the record
date, November 16, 2000, are entitled to receive notice of the annual
meeting and to vote the shares of common stock that they held on that date
at the meeting, or any postponement, adjournment or continuation of the
meeting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. As of
the record date, 13,119,941 shares of common stock of the Company were
outstanding. Proxies received but marked as abstentions and broker
non-votes will be included in the calculation of the number of shares
considered to be present at the meeting.
WHAT ARE THE VOTING RIGHTS OF THE STOCKHOLDERS?
Each outstanding share of common stock will be entitled to one vote on
each matter to be voted upon at the meeting.
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WHO CAN ATTEND THE MEETING?
All stockholders as of the record date, or their duly appointed
proxies, may attend the meeting.
Please note that if you hold your shares in "street name" (that is,
through a broker or other nominee), you will need to bring a copy of a
brokerage statement reflecting your stock ownership as of the record date
and check in at the registration desk at the meeting.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and
return it to the Company, it will be voted as you direct. If you are a
registered stockholder and attend the meeting, you may deliver your
completed proxy card in person. "Street name" stockholders who wish to
vote at the meeting will need to obtain a proxy form from the institution
that holds their shares.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your
vote at any time before the proxy is exercised by filing with the Secretary
of the Company either a notice of revocation or a duly executed proxy
bearing a later date. The powers of the proxy holders will be revoked if
you attend the meeting in person and request that your proxy be revoked,
although attendance at the meeting will not by itself revoke a previously
granted proxy.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons
named as proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors. The Board recommends a vote:
o for election of the nominated Hans Nehme, Nalini Rajender Frush and
William F. Mason as directors (see page 5);
o for election of Randolph Scott & Company as the Company's independent
public accountants for 2000 (see page 7);
o for approval and adoption of the 2000 Equity Incentive plan (see
page 14); and
o for approval of an amendment to the Company's Articles of
Incorporation changing the Company's name from "Vertica Software, Inc."
to "Hazweb, Inc." (see page 15).
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the
votes cast at the meeting is required for the election of the directors. A
properly executed proxy marked "WITHHOLD
2
AUTHORITY" with respect to the election of the directors will not be
voted with respect to the directors indicated, although it will be counted
for purposes of determining whether there is a quorum.
ITEMS 2 AND 3. The affirmative vote of the holders of a majority of the
shares represented in person or by proxy and entitled to vote will be
required for approval of the election of independent public accountants and
the 2000 Equity Incentive Plan. A properly executed proxy marked "ABSTAIN"
with respect to any such matter will not be voted, although it will be
counted for purposes of determining whether there is a quorum. Therefore,
an abstention will have the effect of a negative vote.
If you hold your shares in "street name" through a broker or other
nominee, your broker or nominee may not be permitted to exercise voting
discretion with respect to some of the matters to be acted upon. Thus, if
you do not give your broker or nominee specific instructions, your shares
may not be voted on those matters and will not be counted in determining
the number of shares necessary for approval. Shares represented by such
"broker non-votes" will, however, be counted in determining whether there
is a quorum.
ITEM 4. The affirmative vote of the holders of a majority of the shares
issued and outstanding will be required for approval of the amendment to
the Company's Articles of Incorporation to change the Company's name from
"Vertica Software, Inc." to "Hazweb, Inc." An abstention and a "broker
non-vote" will have the effect of a negative vote.
WHO WILL PAY THE COSTS OF SOLICITING PROXIES ON BEHALF
OF THE BOARD OF DIRECTORS?
The cost of soliciting proxies on behalf of the Board of Directors will
be paid by the Company, including expenses of preparing and mailing this
proxy statement. This solicitation will be made by mail and may also be
made in person or by telephone or telegram by the Company's regular
officers and employees, none of whom will receive special compensation for
such services. The Company, upon request, will also reimburse brokers,
nominees, fiduciaries and custodians and persons holding shares in their
names or in the names of nominees for their reasonable expenses in sending
proxies and proxy material to beneficial owners.
STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF THE COMPANY'S STOCK?
The following table sets forth the amount and percentage of the
Company's outstanding common stock beneficially owned by each person who is
known by the Company to beneficially own more than 5% of its outstanding
common stock. All information is as of November 16, 2000 unless otherwise
noted.
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SHARES PERCENT OF
NAME OF INDIVIDUAL BENEFICIALLY OUTSTANDING
OR IDENTITY OF GROUP OWNED COMMON STOCK
-------------------- ------------ ------------
5% HOLDERS:
HANS NEHME 10,271,000(1) 85.1%
SUSAN N. HASTINGS 10,271,000(1) 85.1%
(1) Includes 9,680,000 shares owned of record by Mr. Nehme and 591,000
shares owned of record by Ms. Hastings. Mr. Nehme and Ms. Hastings are
husband and wife.
HOW MUCH STOCK DO THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table sets forth as of November 16, 2000 the amount and
percentage of the Company's outstanding common stock beneficially owned by
each director and nominee for director, each executive officer named in the
Summary Compensation Table and all executive officers and directors of the
Company as a group.
SHARES PERCENT OF
NAME OF INDIVIDUAL BENEFICIALLY OUTSTANDING
OR IDENTITY OF GROUP OWNED(1) COMMON STOCK(2)
-------------------- ------------ ---------------
DIRECTORS:
Hans Nehme .............. 10,271,000 85.1%
Susan N. Hastings ....... 10,271,000 85.1%
Jack C. Leutwyler ....... -0- -0-
EXECUTIVE OFFICERS (3):
Hans Nehme .............. 10,271,000 85.1%
Erick K. F. Ahrens ...... 1,990
Nalini Rajender Frush ... -0- -0-
---------------------
All directors and
executive officers
as a group (5 persons). 10,272,990 85.1%
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(1) Information furnished by each individual named. This table
includes shares that are owned jointly, in whole or in part, with the
person's spouse, or individually by his or her spouse.
(2) Less than 1% unless otherwise indicated.
(3) Excludes Executive Officers listed under "Directors."
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act")
requires that the officers and directors of the Company, as well as persons
who own more than 10% of a class of equity securities of the Company, file
reports of their ownership of the Company's securities, as well as monthly
statements of changes in such ownership, with the Company, the Securities
and Exchange Commission and the Nasdaq Stock Market. Based upon written
representations received by the Company from its officers, directors and
more than 10% stockholders, and the Company's review of the monthly
statements of ownership changes filed with the Company by its officers,
directors and more than 10% stockholders during 1999, the Company believes
that all such filings required during 1999 were made on a timely basis.
ITEM 1 - ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of three members.
The directors are elected for a one-year term and until his or her
successor has been duly elected.
Three directors, Hans Nehme, Nalini Rajender Frush and William F.
Mason, are to be elected at the annual meeting. Unless otherwise
instructed, the proxies solicited by the Board of Directors will be voted
for the election of the nominees named below. Mr. Nehme is currently a
director of the Company. Two current directors of the Company, Jack C.
Leutwyler and Susan N. Hastings, are not standing for re-election and their
terms will end when the new directors are elected. If the nominees become
unavailable for any reason, it is intended that the proxies will be voted
for substitute nominees designated by the Board of Directors. The Board of
Directors has no reason to believe the nominees named will be unable to
serve if elected. Any vacancy occurring on the Board of Directors for any
reason may be filled by a majority of the directors then in office until
the expiration of the term of the class of directors in which the vacancy
exists.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES NAMED BELOW.
DIRECTOR NOMINEES STANDING FOR ELECTION
DIRECTOR YEAR TERM
NAME AGE SINCE WILL EXPIRE*
---- --- -------- ------------
Hans Nehme ................. 37 1997 2001
Nalini Rajender Frush ...... 49 N/A 2001
William F. Mason ........... 53 N/A 2001
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*If elected at the annual meeting
Mr. Nehme has served as the Company's President and Chief Executive
Officer and a director since December 1998. Mr. Nehme served in similar
capacities with Vertica California from December 1995 to December 1998.
From December 1994 to December 1995, Mr. Nehme served as the President of
InterLink Trade Management, a consulting and export firm specializing in
5
<PAGE>
computer hardware and peripherals, and from July 1995 to December 1995
he was Chairman of Knowledge Direct, Inc., a company that produced training
software products.
Ms. Frush served, from 1992 to 2000, as President of Compliance &
Closure, Inc., a company that provides environmental consulting services to
the public and private sectors including, regulatory compliance assistance
as well as soil and groundwater investigation services. Prior thereto, she
was employed by Environmental Counsel where she provided private industry
clients with interpretation and implementation of regulatory requirements,
developed and drafted environmental impact reports and statements and
negotiated with regulatory agencies.
Mr. Mason has been President of WF Mason & Associates since 1988, a
consulting firm specializing in industrial and agricultural chemical
industries. Prior thereto, he was President and Chief Executive Officer of
Boliden Intertrade, Inc.
THE BOARD OF DIRECTORS
The Board of Directors met one time in 1999.
COMPENSATION OF DIRECTORS
Hans Nehme receives compensation as an executive officer of the
Company, as described below, and does not receive any additional
compensation for service as a director. No other current directors of the
Company receive compensation for his or her service as a director.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company
during the year ended December 31, 1999 for services rendered in all
capacities to the chief executive officer of the Company. No other
executive officer received compensation in excess of $100,000 in 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)
-----------------------------------------------
OTHER
NAME AND ANNUAL
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)
------------------ ---- --------- -------- ---------------
<S> <C> <C> <C> <C>
Hans Nehme,
President and Chief 1999 $112,800 -0- -0-
Executive Officer
</TABLE>
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ITEM 2 - ELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Unless instructed to the contrary, it is intended that votes will be
cast pursuant to the proxies for the election of Randolph Scott & Company
as the Company's independent public accountants for 2000. The Company has
been advised by Randolph Scott & Company that none of its members has any
financial interest in the Company. Election of Randolph Scott & Company
will require the affirmative vote of the holders of a majority of the
shares of the Company's common stock present in person or represented by
proxy at the annual meeting.
A representative of Randolph Scott & Company will attend the annual
meeting, will have the opportunity to make a statement, if he desires to do
so, and will be available to respond to any appropriate questions presented
by stockholders at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF RANDOLPH
SCOTT & COMPANY AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR 2000.
ITEM 3 - APPROVAL OF THE 2000 EQUITY INCENTIVE PLAN
At the Annual Meeting, the stockholders will be asked to consider and
vote upon the
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2000 Equity Incentive Plan (the "Plan"). The Board of Directors adopted the
Plan on October 2, 2000, subject to stockholder approval at the Annual
Meeting, to provide for grants of stock options, restricted stock awards and
stock bonus awards. The total number of shares for which grants may be made
is 3,000,000 shares.
The purpose of the Plan is to provide incentives to attract, retain and
motivate eligible persons whose present or potential contributions are
important to the success of the Company.
The Plan permits the granting of options, including options intended to
qualify as incentive stock options under the Code ("Incentive Stock
Options") and options not intended to so qualify ("Non-Qualified Options"),
Restricted Stock Awards and Stock Bonus Awards (collectively, "Awards") to
those directors, officers, employees, advisors and consultants of the
Company in accordance with the Plan's purposes. Nothing contained in the
Plan affects the right of the Company to terminate the employment of any
employee or the services of any director, consultant or advisor.
The number of persons who are eligible to participate in the Plan is
approximately 16.
The following table sets forth the proposed grants of stock options to
be approved by the Board of Directors of the Company. The exercise price
of all such options will be the fair market value on the date of grant.
VERTICA SOFTWARE, INC. 2000 EQUITY INCENTIVE PLAN
NAME AND POSITION NUMBER OF SHARES
----------------- ----------------
Executive Group 160,000
On November 16, 2000, the closing price of the Company's Common Stock
as reported on the OTC Bulletin Board was $_______ per share.
No Awards may be granted under the Plan after October 2,
2010. If an option expires or is terminated for any reason without having
been fully exercised, the number of shares subject to such option which
have not been purchased may again be made subject to an option under the
Plan. Appropriate adjustments to outstanding options and Restricted Stock
Awards and to the number or kind of shares subject to the Plan are
provided for in the event of a stock split, reverse stock split, stock
dividend, share combination or reclassification and certain other types of
corporate transactions involving the Company, including a merger or a sale
of substantially all of the assets of the Company. The maximum number of
shares of Common Stock for which options may be granted under the Plan to
any officer or employee in any calendar year is 3,000,000 shares.
8
The Plan may be administered by the Board of Directors of the Company or
a committee of two or more members, each of whom must be a "non-employee
director" within the meaning of Rule 16b-3 under the Exchange Act or by the
entire Board of Directors (such committee or the Board being referred to
hereafter in this section of the proxy statement as the "Committee"). The
Committee is authorized to (i) construe and interpret the Plan and any
agreement or document executed pursuant to the Plan; (ii) prescribe, amend
and rescind rules and regulations relating to the Plan; (iii) select persons
to receive Awards; (iv) determine the form and terms of Awards; (v)
determine the number of shares or other consideration subject to Awards;
(vi) determine whether Awards will be granted singly, in combination, in
tandem with, in replacement of, or as alternatives to, other Awards under
the Plan or any other incentive or compensation plan of the Company; (vii)
grant waivers of Plan or Award conditions; (viii) determine the vesting,
exercisability and payment of Awards; (ix) correct any defect, supply any
omission, or reconcile any inconsistency in the Plan, any Award or any
agreement or document executed pursuant to the Plan; (x) determine whether
an Award has been earned; (xi) accelerate the exercisability of any Award;
and (xii) make all other determinations necessary or advisable for the
administration of the Plan.
INCENTIVE AND NON-QUALIFIED OPTIONS
The exercise price of shares subject to options granted under the Plan
will be set by the Committee but may not be less than 100%, in the case of
Incentive Stock Options, or 85%, in the case of Non-Qualified Options, of
the fair market value per share of Common Stock on the date the option is
granted as determined by the Committee.
Options will be evidenced by written agreements in such form not
inconsistent with the Plan as the Committee shall approve from time to time.
Each agreement will state the period or periods of time within which the
option may be exercised. No option that is unexercisable at the time of the
optionee's termination of employment may thereafter become exercisable. No
option may be exercised after ten years from the date of grant.
An outstanding Non-Qualified Option that has become exercisable
generally terminates one year after the termination of employment due to
death or disability and six months after employment termination for any
reason other than death or disability. Incentive Stock Options that have
become exercisable generally will terminate one year after termination of
employment due to disability or death and three months after an employment
termination for any other reason; provided, however, that in the event of
termination due to disability, other than as defined in Section 22 (e)(3) of
the Code, any Incentive Stock Option that remains exercisable after 90 days
after the date of termination shall be deemed a Non-Qualified Option. No
option may be assigned or transferred, except by will or by the applicable
laws of descent and distribution. During the lifetime of the optionee, an
option may be exercised only by the optionee.
The Committee will determine whether options granted are to be
Incentive Stock Options meeting the requirements of Section 422 of the
Code. Incentive Stock Options may be granted only to eligible employees.
Any such optionee must own less than 10% of the total combined voting
power of the Company or of any of its subsidiaries unless, at the time such
Incentive Stock Option is granted, the option price is at least 110% of
the fair market value of the Common Stock subject to the Option and, by its
terms, the Incentive Stock Option is not exercisable after the expiration
of five years from the date of grant. An optionee may not receive
Incentive Stock Options for shares that first become exercisable in any
calendar year with an aggregate fair market value determined at the date of
grant in excess of $100,000.
The option price must be paid in full at the time of exercise unless
otherwise determined by the Committee. Payment must be made in cash, unless
an alternative form of payment as provided for in the Plan is expressly
approved by the Committee and permitted by law.
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It is the policy of the Committee that any taxes required to be withheld must
also be paid at the time of exercise. The Committee may also consent to the
use of shares of common stock owned by the optionee or deliverable upon
exercise to satisfy the minimum withholding tax obligations of the optionee in
connection with an exercise.
RESTRICTED STOCK AWARDS
A Restricted Stock Award is an offer by the Company to sell to an
eligible person shares of common stock that are subject to restrictions.
The shares must be purchased by the grantee who receives the award within 30
days after receipt of a Restricted Stock Purchase Agreement. The purchase
price shall be at least 85% of the fair market value of such shares. The
awards are subject to such restrictions as the Committee may impose,
including stock price, market share, sales increases, earnings per share,
return on equity, cost reductions or any similar performance measure
established by the Committee in writing.
STOCK BONUS AWARDS
A Stock Bonus Award is an award of shares of common stock for services
rendered to the Company, which shall be subject to such terms and conditions
as the Committee shall approve. The Committee shall determine the nature,
length and starting dates of any period during which performance is to be
measured, the performance goals and criteria to be used to measure
performance, the number of shares that may be awarded and the extent to
which awards have been earned. The earned portion of a Stock Bonus Award
may be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in
the form of cash, whole shares of common stock, or a combination thereof.
If a participant is terminated during a performance period, the participant
shall be entitled to payment only to the extent earned on the date of
termination in accordance with the Stock Bonus Award agreement.
AMENDMENT AND TERMINATION
The Committee may terminate or amend the Plan at any time in any
respect, subject to any required stockholder approval or any stockholder
approval that the Board may deem to be advisable for any reason such as for
the purpose of obtaining or retaining any statutory or regulatory benefits
under tax, securities or other laws or satisfying any applicable stock
exchange listing requirement.
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FEDERAL INCOME TAX CONSEQUENCES
Based on the advice of counsel, the Company believes that the normal
operation of the Plan should generally have, under the Code and the
regulations thereunder, all as in effect on the date of this Proxy
Statement, the principal federal income tax consequences described below.
The tax treatment described below does not take into account any changes in
the Code or the regulations thereunder that may occur after the date of
this Proxy Statement. The following discussion is only a summary; it is
not intended to be all-inclusive or to constitute tax advice, and, among
other things, does not cover possible state or local tax consequences.
This description may differ from the actual tax consequences of
participation in the Plan.
An employee receiving an option will not recognize taxable income upon
the grant of the option, nor will the Company be entitled to any deduction
on account of such grant.
In the case of Non-Qualified Options, the optionee will recognize
ordinary income upon the exercise of the Non-Qualified Option in an amount
equal to the difference between the option price and the fair market value
of the shares on the date of exercise. An optionee exercising a
Non-Qualified Option is subject to federal income tax withholding on the
income recognized as a result of the exercise of the Non-Qualified Option.
Such income will include any income attributable to any shares issuable
upon exercise that are surrendered, if permitted under the applicable stock
option agreement, in order to satisfy the federal income tax withholding
requirements.
Except as provided below, the basis of the shares received by the
optionee upon the exercise of a Non-Qualified Option will be the fair
market value of the shares on the date of exercise. The optionee's holding
period will begin on the day after the date on which the optionee
recognizes income with respect to the transfer of such shares, i.e.,
generally the day after the exercise date. When the optionee disposes of
the shares acquired upon exercise of a Non-Qualified Option, the optionee
will generally recognize capital gain or loss under the Code rules that
govern stock dispositions, assuming the shares are held as capital assets,
equal to the difference between (i) the selling price of the shares and
(ii) the sum of the option price and the amount included in his or her
income when the Non-Qualified Option was exercised. Any net capital gain
(i.e., the excess of the net long-term capital gains for the taxable year
over net short-term capital losses for such taxable year) will be taxed at
a capital gains rate that depends on how long the shares were held and the
optionee's tax bracket. Any net capital loss may be used only to offset up
to $3,000 per year of ordinary income (reduced to $1,500 in the case of a
married individual filing separately) or carried forward to a subsequent
year. The use of shares to pay the exercise price of a Non-Qualified
Option, if permitted under the applicable stock option agreement, will be
treated as a like-kind exchange under Section 1036 of the Code to the
extent that the number of shares received on the exercise does not exceed
the number of shares surrendered. The optionee will therefore recognize no
gain or loss with respect to the surrendered shares and will have the same
basis and holding period with respect to the newly acquired shares (up to
the number of shares surrendered) as with respect to the surrendered
shares. To the extent the number of shares received exceeds the number
surrendered, the fair
11
<PAGE>
market value of such excess shares on the date of exercise, reduced by
any cash paid by the optionee upon such exercise, will be includible in the
gross income of the optionee. The optionee's basis in such excess shares
will equal the fair market value of such shares on the date of exercise,
and the optionee's holding period with respect to such excess shares will
begin on the day following the date of exercise.
Incentive Stock Options granted under the Plan are intended to qualify
as incentive stock options under Section 422 of the Code. A purchase of
shares upon exercise of an Incentive Stock Option will not result in
recognition of income at that time, provided the Optionee was an employee
of the Company or certain related corporations described in Section
422(a)(2) of the Code during the entire period from the date of grant of
the Incentive Stock Option until three months before the date of exercise
(increased to 12 months if employment ceased due to total and permanent
disability). The employment requirement is waived in the event of the
optionee's death. (Of course, in all of these situations, the Incentive
Stock Option itself may provide a shorter exercise period after employment
ceases than the allowable period under the Code.) However, the excess of
the fair market value of the shares purchased over the exercise price will
constitute an item of tax preference. This tax preference will be included
in the optionee's computation of the optionee's alternative minimum tax.
The basis of the shares received by the optionee upon exercise of an
Incentive Stock Option is the exercise price. The optionee's holding
period for such shares begins on the date of exercise.
If the optionee does not dispose of the shares issued to the optionee
upon the exercise of an Incentive Stock Option within one year after such
issuance or within two years after the date of the grant of such Incentive
Stock Option, whichever is later, then any gain or loss realized by the
optionee on a later sale or exchange of such shares generally will be a
long-term capital gain or a long-term capital loss equal to the difference
between the amount realized upon the disposition and the exercise price, if
such shares are otherwise a capital asset in the hands of the optionee.
Any net capital gain (i.e., the excess of the net long-term capital gains
for the taxable year over net short-term capital losses for such taxable
year) will be taxed at a capital gains rate that depends on how long the
shares were held and the optionee's tax bracket. Any net capital loss may
be used only to offset up to $3,000 per year of ordinary income (reduced to
$1,500 in the case of a married individual filing separately) or carried
forward to a subsequent year. If the optionee sells the shares during such
period (i.e., within two years after the date of grant of the Incentive
Stock Option or within one year after the transfer of the shares to the
optionee), the sale will be deemed a "disqualifying disposition." In that
event, the optionee will recognize ordinary income for the year in which
the disqualifying disposition occurs equal to the amount, if any, by which
the lesser of the fair market value of such shares on the date of exercise
of such Incentive Stock Option or the amount realized from the sale
exceeded the amount the optionee paid for such shares. In the case of
disqualifying dispositions resulting from certain transactions, such as
gift or related party transactions, the optionee will realize ordinary
income equal to the fair market value of the shares on the date of exercise
minus the exercise price. The basis of the shares with respect to which a
disqualifying disposition occurs will be increased by the amount included
in the optionee's ordinary income. Disqualifying dispositions of shares
may also, depending upon the sales price, result in capital gain or loss
under the Code rules that govern other stock dispositions, assuming that
the shares are held as a capital asset. The tax treatment of
12
<PAGE>
such capital gain or loss is summarized above.
Except as provided below, the use of shares already owned by the
optionee to pay the purchase price of an Incentive Stock Option will be
treated as a like-kind exchange under Section 1036 of the Code to the
extent that the number of shares received on the exercise does not exceed
the number of shares surrendered. The optionee will therefore recognize no
gain or loss with respect to the surrendered shares and will have the same
basis and holding period with respect to the newly acquired shares (up to
the number of shares surrendered) as with respect to the surrendered
shares. To the extent that the number of shares received exceeds the
number surrendered, the optionee's basis in such excess shares will equal
the amount of cash paid by the optionee upon the exercise of the Incentive
Stock Option (if any), and the optionee's holding period with respect to
such excess shares will begin on the date such shares are transferred to
the optionee. However, if payment of the purchase price upon exercise of
an Incentive Stock Option is made with shares acquired upon exercise of an
Incentive Stock Option before the shares used for payment have been held
for the two-year or one-year period described herein, use of such shares as
payment will be deemed a "disqualifying disposition" of the shares used for
payment subject to the rules described herein.
Under current law, any gain realized by an optionee, other than
long-term capital gain, is taxable at a maximum federal income tax rate of
39.6%. Under current law, long-term capital gain is taxable at a maximum
federal income tax rate of 20%.
The Company will be entitled to a tax deduction in connection with an
option under the Plan in an amount equal to the ordinary income realized by
the optionee and at the time such Optionee recognizes such income
(including any ordinary income realized by the optionee upon a
"disqualifying disposition" of an Incentive Stock Option described above).
The grant of a Restricted Stock Award would not result in income for the
grantee or in a deduction for federal income tax purposes, assuming the
shares transferred are subject to a "substantial risk of forfeiture," as
intended by the Company. If there are no such restrictions the grantee
would recognize ordinary income in a manner the same as the exercise of a
Non-Qualified Option. Dividends paid to the grantee while the shares
remained subject to restriction would be treated as compensation for federal
income tax purposes. At the time restrictions lapse, the grantee would
receive ordinary income and the Company would be entitled to a deduction
measured in a manner the same as the exercise of a Non-Qualified Option, and
withholding would be required.
The grant of a Stock Bonus Award would not result in income
for the grantee or in a deduction for the Company. Upon receipt of shares
or cash by the grantee, the grantee would recognize ordinary income and the
Company would be entitled to a deduction measured by the fair market value
of the shares plus any cash received, and withholding would be required.
The foregoing discussion is only a summary of certain of the federal
income tax consequences relating to the Plan as in effect on the date of
this Proxy Statement. No consideration has been given to the effects of
state, local, and other laws (tax or other) upon the
13
<PAGE>
Plan or upon the optionee or Company, which laws will vary depending
upon the particular jurisdiction or jurisdictions involved.
VOTE REQUIRED
Approval of the Plan will require the affirmative vote of the holders of
a majority of the outstanding shares of the Company's Common Stock present
in person or represented by proxy at the Annual Meeting and entitled to
vote. Abstentions are considered shares of stock present in person or
represented by proxy at the meeting and entitled to vote and are counted in
determining the number of votes necessary for a majority. An abstention
therefore will have the practical effect of voting against adoption of the
Plan because it represents one fewer vote for the adoption. Broker
non-votes are not considered shares present in person or represented by
proxy and entitled to vote on the Plan and will have no effect on the vote.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL AND
ADOPTION OF THE PLAN.
ITEM 4 - APPROVAL OF THE AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO CHANGE ITS NAME
FROM "VERTICA SOFTWARE, INC." TO "HAZWEB, INC."
At the Annual Meeting, the stockholders will be asked to consider and
vote upon the amendment of Article 1 of the Company's Articles of
Incorporation to change the Company's name from "Vertica Software, Inc." to
"Hazweb, Inc."
If the Amendment is approved by the stockholders of the Company, the
Board of Directors intends to prepare and file Articles of Amendment to
the Articles of Incorporation of the Company in accordance with the
Amendment, which will become effective (the "Effective Date") immediately
upon acceptance of the filing by the Secretary of State of the State of
Colorado. Although the Board of Directors currently intends to file the
Articles of Amendment if the proposal is approved by the stockholders at
the Annual Meeting, the resolution of stockholders will reserve to the
Board of Directors the right to defer or abandon the proposal and not file
such Amendment even if the Amendment has been approved by the stockholders.
The Amendment has been approved by the Company's directors. The
Company's directors believe the Amendment provides a better identity
between the Company's name and its online environmental data gathering
system and software.
14
<PAGE>
VOTE REQUIRED
Approval and adoption of the Amendment will require the affirmative
vote of the holders of a majority of the shares of Common Stock of the
Company outstanding and entitled to vote. For purposes of this matter,
therefore, abstentions and broker non-votes will have the effect of
negative votes.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL AND
ADOPTION OF THE AMENDMENT.
STOCKHOLDER PROPOSALS
Any stockholder who, in accordance with and subject to the provisions
of Rule 14a-8 of the proxy rules of the SEC, wishes to submit a proposal
for inclusion in the Company's proxy statement for its 2001 Annual Meeting
of Stockholders must deliver such proposal in writing to the Company's
Secretary at the Company's principal executive offices at 5801 Christie
Avenue, Suite 390, Emeryville, California 94608, not later than July 26,
2001.
Pursuant to Rule 14a-4(c) of the Exchange Act, if a stockholder who
intends to present a proposal at the 2001 Annual Meeting of Stockholders
does not notify the Company of such proposal on or before October 9, 2001,
then management proxies will be allowed to use their discretionary voting
authority to vote on the proposal when the proposal is raised at the 2001
Annual Meeting, even though there is no discussion of the proposal in the
2001 proxy statement.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration at the annual meeting other than the matters described in the
notice of annual meeting, but if any matters are properly presented,
proxies in the enclosed form returned to the Company will be voted in
accordance with the recommendation of the Board of Directors or, in the
absence of such a recommendation, in accordance with the judgment of the
proxy holder.
By Order of the Board of Directors,
Hans Nehme,
President and Chief Executive Officer
November 23, 2000
15
<PAGE>
VERTICA SOFTWARE INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 15, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Hans Nehme, the proxy of the
undersigned, with full power of substitution, to vote all of the shares of
common stock of Vertica Software, Inc. (the "Company") that the
undersigned may be entitled to vote at the Annual Meeting of Stockholders
of the Company to be held at the Company's offices, 5801 Christie Avenue,
Suite 390, Emeryville, California 94608, at 10:00 a.m., and at any
adjournment, postponement or continuation thereof, as set forth on the
reverse side of this proxy card.
PROXY
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to
vote in accordance with the Board of Directors' recommendations.
<PAGE>
o Please mark your votes as in this example.
This proxy will be voted as specified. If a choice is not specified,
the proxy will be voted FOR the nominees for Director and FOR Proposals 2, 3
and 4.
The Board of Directors recommends a vote FOR the nominees for Director
and FOR Proposals 2, 3 and 4.
1. Election of Directors
___ ___
|___| FOR all the nominees listed |___| WITHOUT AUTHORITY to vote
below for the nominees listed below
Hans Nehme, Nalini Rajender Frush and William F. Mason
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
-------------------------------------------------------------------------
FOR AGAINST ABSTAIN
___ ___ ___
2. Proposal to elect Randolph Scott & Company as |___| |___| |___|
the independent public accountants for the
Company for 2000.
------------------------
___ ___ ___
3. Proposal to approve and adopt the Company's |___| |___| |___|
2000 Equity Incentive Plan.
------------------------
___ ___ ___
4. Proposal to approve the amendment to the |___| |___| |___|
Company's Articles of Incorporation changing
its name from "Vertica Software, Inc." to
"Hazweb, Inc."
------------------------
5. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting and any adjournment,
postponement or continuation thereof.
<PAGE>
This proxy should be dated, signed by the stockholder exactly as his or
her name appears below and returned promptly to Corporate Stock Transfer,
8200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209, in the
enclosed envelope. Persons signing in a fiduciary capacity should so
indicate.
-----------------------------------
-----------------------------------
Signature(s)
Date: _________________, 2000
<PAGE>
VERTICA SOFTWARE, INC.
2000 EQUITY INCENTIVE PLAN
As Adopted on ______________, 2000
1. PURPOSE. The purpose of the 2000 Equity Incentive Plan (the "Plan")
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of Vertica Software, Inc., a Colorado corporation (the "Company"), is to
provide incentives to attract, retain and motivate eligible persons whose
present and potential contributions are important to the success of the
Company (as defined below), by offering them an opportunity to participate
in the Company's future performance through awards of Options, Restricted
Stock and Stock Bonuses (as defined below).
2. DEFINITIONS. As used in the Plan, the following terms shall have
-----------
the following meanings:
"AFFILIATE" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, another corporation, where "control"
(including the terms "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to cause the direction of
the management and policies of the corporation, whether through the
ownership of voting securities, by contract or otherwise.
"AWARD" means any award under the Plan, including any Option,
Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to administer
the Plan, or if no committee is so appointed, the Board.
"COMPANY" means Vertica Software, Inc., a corporation organized
under the laws of the State of Colorado, or any successor corporation.
"DISABILITY" means a disability, as determined by the Committee,
which results in a Participant's termination of employment with the Company
and all Affiliates.
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<PAGE>
"EFFECTIVE DATE" means the date on which the Plan is adopted by the
Board of Directors.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share of
the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, its last reported sale price on the Nasdaq National
Market or, if no such reported sale takes place on such
date, the average of the closing bid and asked prices;
(b) if such Common Stock is publicly traded and is then listed
on a national securities exchange, the last reported sale
price or, if no such reported sale takes place on such date,
the average of the closing bid and asked prices on the
principal national securities exchange on which the Common
Stock is listed or admitted to trading;
(c) if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading
on a national securities exchange, the average of the
closing bid and asked prices on such date, as reported by
The Wall Street Journal, for the over-the-counter market; or
(d) if none of the foregoing is applicable, by the Board of
Directors of the Company in its sole discretion.
"ISO" means an Option that is an incentive stock option, as defined
in section 422 of the Code and as described in Section 6 and the Stock
Option Agreement.
"INSIDER" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"NQSO" means an Option that is not an ISO, as described in Section 6
and the Stock Option Agreement.
"OPTION" means an award of an option to purchase Shares pursuant to
Section 6.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if at the time of
the granting of an Award under the Plan, each of such corporations other
than the Company owns stock possessing fifty percent
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<PAGE>
(50%), or more, of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under the Plan.
"PLAN" means this Vertica Software, Inc. 2000 Equity Incentive Plan,
as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 7.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved for
issuance under the Plan, as adjusted pursuant to Sections 3 and 19, and any
successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 8.
"STOCK OPTION AGREEMENT" means the Award Agreement that describes
the Option.
"SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time
of granting of the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty percent
(50%), or more, of the total combined voting power of all classes of stock
in one of the other corporations in such claim.
"TERMINATION" or "TERMINATED" means, for purposes of the Plan with
respect to a Participant, that the Participant has ceased to provide
services as an employee, director, consultant or adviser, to the Company or
a Parent, Subsidiary or Affiliate of the Company, except in the case of
sick leave, military leave, or any other leave of absence approved by the
Committee; provided, however, that such leave is for a period of not more
than ninety (90) days, or reinstatement upon the expiration of such leave
is guaranteed by contract or statute. The Committee shall have sole
discretion to determine whether a Participant has ceased to provide
services and the effective date on which the Participant ceased to provide
services (the "Termination Date").
3. SHARES SUBJECT TO THE PLAN.
--------------------------
3.1. NUMBER OF SHARES AVAILABLE. Subject to Sections 3.2 and 19,
--------------------------
the total number of Shares reserved and available for grant and issuance
pursuant to the Plan shall be three million (3,000,000) Shares. Subject to
Sections 3.2 and 19, Shares shall again be available for grant and issuance
in connection with future Awards under the Plan that: (a) are subject to
issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option; (b) are subject to an
Award granted hereunder but are forfeited; or
A-3
<PAGE>
(c) are subject to an Award that otherwise terminates without Shares
being issued. In any given year, no Participant may receive awards
covering more than three million Shares. Such number of Shares shall be
adjusted in accordance with Sections 3.2 and 19.
3.2. ADJUSTMENT OF SHARES. In the event that the number of
--------------------
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without
consideration, then (a) the number of Shares reserved for issuance under
the Plan; (b) the Exercise Prices of and number of Shares subject to
outstanding Options; and (c) the number of Shares subject to other
outstanding Awards shall be proportionately adjusted, subject to any
required action by the Board or the shareholders of the Company and
compliance with applicable securities laws; provided, however, that
fractions of a Share shall not be issued but shall either be paid in cash
at Fair Market Value or shall be rounded up to the nearest Share, as
determined by the Committee; and provided further, that, except as provided
herein, no issuance by the Company of shares of stock of any class or
securities convertible into shares of stock of any class will affect, and
no adjustment by reason thereof will be made with respect to, the number or
price of Shares subject to an Award.
4. ELIGIBILITY. ISOs (as defined in Section 6 below) may be granted
-----------
only to employees (including officers and directors who are also employees)
of the Company, its Parent or Subsidiaries. All other Awards may be
granted to employees, officers, directors, consultants and advisors of the
Company or any Parent, Subsidiary or Affiliate of the Company; provided,
however, such consultants and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. A person may be granted more than one Award under the Plan.
5. ADMINISTRATION.
--------------
5.1. COMMITTEE AUTHORITY. The Plan shall be administered by the
-------------------
Committee or the Board acting as the Committee. Subject to the general
purposes, terms and conditions of the Plan, and to the direction of the
Board, the Committee shall have full power to implement and carry out the
Plan. The Committee shall have the authority to:
(a) construe and interpret the Plan, any Award Agreement and any
other agreement or document executed pursuant to the Plan;
(b) prescribe, amend and rescind rules and regulations relating
to the Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
A-4
<PAGE>
(f) determine whether Awards will be granted singly, in
combination, in tandem with, in replacement of, or as
alternatives to, other Awards under the Plan or any other
incentive or compensation plan of the Company or any Parent,
Subsidiary or Affiliate of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned;
(k) accelerate the exercisability of any Award; and
(l) make all other determinations necessary or advisable for the
administration of the Plan.
5.2. COMMITTEE DISCRETION. Any determination made by the Committee
--------------------
with respect to any Award shall be made in its sole discretion at the time
of grant of the Award or, unless in contravention of any express term of
the Plan or Award, at any later time, and such determination shall be final
and binding on the Company and all persons having an interest in any Award
under the Plan. The Committee may delegate to one or more officers of the
Company some or all of its power and authority hereunder; provided,
however, that the Committee may not delegate its authority with regard to
any matter or action affecting an officer who is subject to Section 16 of
the Exchange Act.
5.3. EXCHANGE ACT REQUIREMENTS. If the Company is subject to the
-------------------------
Exchange Act, the Company will take appropriate steps to comply with the
non-employee director requirements of Section 16(b) of the Exchange Act,
and Rule 16b-3 thereunder, including but not limited to, the appointment by
the Board of a Committee consisting of not less than two (2) persons (who
are members of the Board), each of whom is a non-employee director.
6. OPTIONS. The Committee may grant Options to eligible persons and
-------
shall determine whether such Options shall be ISOs or NQSOs, the number of
Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:
6.1. FORM OF OPTION GRANT. Each Option granted under the Plan
--------------------
shall be evidenced by an Award Agreement which shall expressly identify the
Option as an ISO or NQSO ("Stock Option Agreement"), and be in such form
and contain such provisions (which need not be the same for each
Participant) as the Committee shall from time to time approve, and which
shall comply with and be subject to the terms and conditions of the Plan.
A-5
<PAGE>
6.2. DATE OF GRANT. The date of grant of an Option shall be the
-------------
date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock Option Agreement
and a copy of the Plan will be delivered to the Participant within a
reasonable time after the granting of the Option.
6.3. EXERCISE PERIOD. Options shall be exercisable within the
---------------
times or upon the events determined by the Committee as set forth in the
Stock Option Agreement; provided, however, that no Option shall be
exercisable after the expiration of ten (10) years from the date the Option
is granted, and provided further that no ISO granted to a person who
directly or by attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent
or Subsidiary of the Company ("Ten Percent Shareholder") shall be
exercisable after the expiration of five (5) years from the date the ISO is
granted. The Committee also may provide for the exercise of Options to
become exercisable at one time or from time to time, periodically or
otherwise, in such number or percentage as the Committee determines.
6.4. EXERCISE PRICE. The Exercise Price shall be determined by the
--------------
Committee when the Option is granted and may not be less than eighty-five
percent (85%) of the Fair Market Value of the Shares on the date of grant;
provided that (i) the Exercise Price of an ISO shall be not less than one
hundred percent (100%) of the Fair Market Value of the Shares on the date
of grant; and (ii) the Exercise Price of any ISO and granted to a Ten
Percent Shareholder shall not be less than one hundred ten percent (110%)
of the Fair Market Value of the Shares on the date of grant. Payment for
the Shares purchased may be made in accordance with Section 9 of the Plan.
6.5. METHOD OF EXERCISE. Options may be exercised only by delivery
------------------
to the principal office of the Company of a written stock option exercise
agreement (the "Exercise Agreement"), together with payment in full of the
Exercise Price for the number of Shares being purchased. The Exercise
Agreement must be in a form approved by the Committee (which need not be
the same for each Participant) and must state (a) the number of Shares
being purchased, (b) the restrictions imposed on the Shares, if any, and
(c) such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be
required or desirable by the Company to comply with applicable securities
laws.
6.6. TERMINATION. Notwithstanding the exercise periods set forth
-----------
in the Stock Option Agreement, exercise of an Option shall always be
subject to the following:
(a) If the Participant is Terminated for any reason except death
or Disability, then the Participant may exercise such
Participant's Options, only to the extent that such Options
would have been exercisable on the Termination Date,
(i) with respect to an ISO, no later than three (3) months
after the Termination Date (or such shorter time period
as may
A-6
<PAGE>
be specified in the Stock Option Agreement), but
in any event, no later than the expiration date of the
Options; and
(ii) with respect to a NQSO, no later than six (6) months
after the Termination Date (or such shorter time period
as may be specified in the Stock Option Agreement), but
in any event, no later than the expiration date of the
Options.
(b) If the Participant is terminated because of death or
Disability (or the Participant dies within three (3) months
of such termination), then the Participant's Options may be
exercised only to the extent that such Options would have
been exercisable by the Participant on the Termination Date
and must be exercised by the Participant (or the
Participant's legal representative or authorized assignee)
no later than twelve (12) months after the Termination Date
(or such shorter time period as may be specified in the
Stock Option Agreement), but in any event no later than the
expiration date of the Options; provided, however, that in
the event of termination due to Disability other than as
defined in Section 22(e)(3) of the Code, any ISO that
remains exercisable after ninety (90) days after the date of
termination shall be deemed a NQSO.
6.7. LIMITATIONS ON EXERCISE. The Committee may specify a
-----------------------
reasonable minimum number of Shares that may be purchased on any exercise
of an Option; provided, however, that such minimum number will not prevent
Participant from exercising the Option for the full number of Shares for
which it is then exercisable.
6.8. LIMITATIONS ON ISOs. The aggregate Fair Market Value
-------------------
(determined as of the date of grant) of Shares with respect to which ISOs
are exercisable for the first time by a Participant during any calendar
year (under the Plan or under any other incentive stock option plan of the
Company or any Affiliate, Parent or Subsidiary of the Company) shall not
exceed One Hundred Thousand Dollars ($100,000). If the Fair Market Value
of Shares on the date of grant with respect to which ISOs are exercisable
for the first time by a Participant during any calendar year exceeds One
Hundred Thousand Dollars ($100,000), the Options for the first One Hundred
Thousand Dollars ($100,000) worth of Shares to become exercisable in such
calendar year shall be ISOs and the Options for the amount in excess of One
Hundred Thousand Dollars ($100,000) that become exercisable in that
calendar year shall be NQSOs. In the event that the Code or the
regulations promulgated thereunder are amended after the Effective Date of
the Plan to provide for a different limit on the Fair Market Value of
Shares permitted to be subject to ISOs, such different limit shall be
automatically incorporated herein and shall apply to any Options granted
after the effective date of such amendment.
6.9. MODIFICATION, EXTENSION OR RENEWAL. Subject to any required
----------------------------------
action by stockholders of the Company, the Committee may modify, extend or
renew outstanding Options and authorize the grant of new Options in
substitution therefor; provided, however, that any such
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action may not, without the written consent of Participant, impair
any of Participant's rights under any Option previously granted. Any
outstanding ISO that is modified, extended, renewed or otherwise altered
shall be treated in accordance with Section 424(h) of the Code. The
Committee may reduce the Exercise Price of outstanding Options, without the
consent of affected Participants, by forwarding a written notice to them;
provided, however, that the Exercise Price may not be reduced below the
minimum Exercise price that would be permitted under Section 6.4 of the
Plan for Options granted on the date the action is taken to reduce the
Exercise Price.
6.10. NO DISQUALIFICATION. Notwithstanding any other provision in
-------------------
the Plan, no term of the Plan relating to ISOs shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the
Plan be exercised, so as to disqualify the Plan under Section 422 of the
Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.
7. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
----------------
Company to sell to an eligible person Shares that are subject to
restrictions. The Committee shall determine to whom an offer will be made,
the number of Shares the person may purchase, the price to be paid (the
"Purchase Price"), the restrictions to which the Shares shall be subject,
and all other terms and conditions of the Restricted Stock Award, subject
to the following:
7.1. FORM OF RESTRICTED STOCK AWARD. All purchases under a
------------------------------
Restricted Stock Award made pursuant to the Plan shall be evidenced by an
Award Agreement ("Restricted Stock Purchase Agreement") that shall be in
such form (which need not be the same for each Participant) as the
Committee shall from time to time approve, and shall comply with and be
subject to the terms and conditions of the Plan. The offer of Restricted
Stock shall be accepted by the Participant's execution and delivery of the
Restricted Stock Purchase Agreement and full payment for the shares to the
Company within thirty (30) days from the date the Restricted Stock Purchase
Agreement is delivered to the person. If such person does not execute and
deliver the Restricted Stock Purchase Agreement along with full payment for
the Shares to the Company within thirty (30) days, then the offer shall
terminate, unless otherwise determined by the Committee.
7.2. PURCHASE PRICE. The Purchase Price of Shares sold pursuant to
--------------
a Restricted Stock Award shall be determined by the Committee and shall be
at least eighty-five percent (85%) of the Fair Market Value of the Shares
on the date the Restricted Stock Award is granted, except in the case of a
sale to a Ten Percent Shareholder, in which case the Purchase Price shall
be one hundred percent (110%) of the Fair Market Value. Payment of the
Purchase Price may be made in accordance with Section 9 of the Plan.
7.3. RESTRICTIONS. Restricted Stock Awards shall be subject to
------------
such restrictions as the Committee may impose. The Committee may provide
for the lapse of such restrictions in installments and may accelerate or
waive such restrictions, in whole or in part, based on length of service,
performance or such other factors or criteria as the Committee may
determine. Restricted Stock Awards that the Committee intends to qualify
under Code section 162(m) shall
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be subject to a performance-based goal. Restrictions on such stock
shall lapse based on one or more of the following performance goals: stock
price, market share, sales increases, earnings per share, return on equity,
cost reductions, or any other similar performance measure established by
the Committee. Such performance measures shall be established by the
Committee, in writing, no later than the earlier of (a) ninety (90) days
after the commencement of the performance period with respect to which the
Restricted Stock award is made and (b) the date as of which twenty-five
percent (25%) of such performance period has elapsed.
8. STOCK BONUSES.
-------------
8.1. AWARDS OF STOCK BONUSES. A Stock Bonus is an award of Shares
-----------------------
(which may consist of Restricted Stock) for services rendered to the
Company or any Parent, Subsidiary or Affiliate of the Company. A Stock
Bonus may be awarded for past services already rendered to the Company, or
any Parent, Subsidiary or Affiliate of the Company pursuant to an Award
Agreement (the "Stock Bonus Agreement") that shall be in such form (which
need not be the same for each Participant) as the Committee shall from time
to time approve, and shall comply with and be subject to the terms and
conditions of the Plan subject to Section 8.2 herein, a Stock Bonus may be
awarded upon satisfaction of such performance goals as are set out in
advance in Participant's individual Award Agreement (the "Performance Stock
Bonus Agreement") that shall be in such form (which need not be the same
for each Participant) as the Committee shall from time to time approve, and
shall comply with and be subject to the terms and conditions of the Plan.
Stock Bonuses may vary from Participant to Participant and between groups
of Participants, and may be based upon such other criteria as the Committee
may determine.
8.2. CODE SECTION 162(M). A Stock Bonus that the Committee intends
-------------------
to qualify for the performance-based exception under Code section 162(m)
shall only be awarded based upon the attainment of one or more of the
following performance goals: stock price, market share, sales increases,
earning per share, return on equity, cost reductions, or any other similar
performance measure established by the Committee. Such performance
measures shall be established by the Committee, in writing, no later than
the earlier of: (a) ninety (90) days after the commencement of the
performance period with respect to which the Stock Bonus award is made; and
(b) the date as of which twenty-five percent (25%) of such performance
period has elapsed.
8.3. TERMS OF STOCK BONUSES. The Committee shall determine the
----------------------
number of Shares to be awarded to the Participant and whether such Shares
shall be Restricted Stock. If the Stock Bonus is being earned upon the
satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee shall determine: (a) the nature, length and
starting date of any period during which performance is to be measured (the
"Performance Period") for each Stock Bonus; (b) the performance goals and
criteria to be used to measure the performance, if any; (c) the number of
Shares that may be awarded to the Participant; and (d) the extent to which
such Stock Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses
that are subject to different Performance Periods and different performance
goals and other criteria. The number of Shares may be fixed or may vary in
accordance with such performance goals and criteria as may
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be determined by the Committee. The Committee may adjust the
performance goals applicable to the Stock Bonuses to take into account
changes in law and accounting or tax rules and to make such adjustments as
the Committee deems necessary or appropriate to reflect the impact of
extraordinary or unusual items, events or circumstances to avoid windfalls
or hardships.
8.4. FORM OF PAYMENT. The earned portion of a Stock Bonus may be
---------------
paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in
the form of cash, whole Shares, including Restricted Stock, or a
combination thereof, either in a lump sum payment or in installments, all
as the Committee shall determine.
8.5. TERMINATION DURING PERFORMANCE PERIOD. If a Participant is
-------------------------------------
Terminated during a Performance Period for any reason, then such
Participant shall be entitled to payment (whether in Shares, cash or
otherwise) with respect to the Stock Bonus only to the extent earned as of
the date of Termination in accordance with the Performance Stock Bonus
Agreement, unless the Committee shall determine otherwise.
9. PAYMENT FOR SHARE PURCHASES.
---------------------------
9.1. PAYMENT. Payment for Shares purchased pursuant to the Plan
-------
may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) unless the Committee determines that such method of payment
would result in liability to the Participant under Section
16 of the Exchange Act and subject to such other limitations
and prohibitions as the Committee shall deem appropriate, by
surrender of Shares previously owned by the Participant that
have no restriction on their transfer;
(c) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing
interest at a rate sufficient to avoid imputation of income
under Sections 483 and 1274 of the Code; provided, however,
that Participants who are not employees of the Company shall
not be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other
than the Shares.
(d) by waiver of compensation due or accrued to Participant for
services rendered;
(e) by tender of property;
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<PAGE>
(f) with respect only to purchases upon exercise of an Option,
and provided that a public market for the Company's stock
exists:
i) through a "same day sale" commitment from Participant and
a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer")
whereby the Participant irrevocably elects to exercise
the Option and to sell a portion of the Shares so
purchased to pay for the Exercise Price, and whereby the
NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company; or
ii) through a "margin" commitment from Participant and an
NASD Dealer whereby Participant irrevocably elects to
exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount
of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; or
(g) by any combination of the foregoing.
9.2. LOAN GUARANTIES. The Committee may help the Participant pay
---------------
for Shares purchased under the Plan by authorizing a guaranty by the
Company of a third-party loan to the Participant.
10. WITHHOLDING TAXES.
-----------------
10.1. WITHHOLDING GENERALLY. Whenever Shares are to be issued in
---------------------
satisfaction of Awards granted under the Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy
federal, FICA, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such Shares. Whenever,
under the Plan, payments in satisfaction of Awards are to be made in cash,
such payment shall be net of an amount sufficient to satisfy federal, FICA,
state, and local withholding tax requirements.
10.2. STOCK WITHHOLDING. When, under applicable tax laws, a
-----------------
Participant incurs tax liability in connection with the exercise or vesting
of any Award that is subject to tax withholding and the Participant is
obligated to pay the Company the amount required to be withheld, the
Committee may allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be
issued that number of Shares having a Fair Market Value equal to the
minimum amount required to be withheld, determined on the date that the
amount of tax to be withheld is to be determined (the "Tax Date"). All
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<PAGE>
elections by a Participant to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Committee and shall be
subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made, then except as provided below, the election shall
be irrevocable as to the particular Shares as to which the
election is made;
(c) unless the Stock Option Agreement or Award Agreement
specifically provides the Participant with the right to
surrender or deliver shares, all elections shall be subject
to the prior consent of the Committee;
(d) if the Participant is an Insider who is subject to Section
16(b) of the Exchange Act, then stock withholding may occur
in accordance with the provisions of SEC Rule 16b-3 under
the Exchange Act.
(e) in the event that the Tax Date is deferred until six (6)
months after the delivery of Shares under Section 83(b) of
the Code, the Participant shall receive the full number of
Shares with respect to which the exercise occurs, but such
Participant shall be unconditionally obligated to tender
back to the Company the proper number of Shares on the Tax
Date.
11. PRIVILEGES OF STOCK OWNERSHIP.
-----------------------------
11.1. VOTING AND DIVIDENDS. No Participant shall have any of the
--------------------
rights of a shareholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant shall be a shareholder and have all the rights of a shareholder
with respect to such Shares, including the right to vote and receive all
dividends or other distributions made or paid thereafter with respect to
such Shares; provided, however, that if such Shares are Restricted Stock,
then any new, additional or different securities the Participant may become
entitled to receive with respect to such Shares by virtue of a stock
dividend, stock split or any other change in the corporate or capital
structure of the Company shall be subject to the same restrictions as the
Restricted Stock.
11.2. FINANCIAL STATEMENTS. The Company shall provide financial
--------------------
statements to each Participant prior to such Participant's purchase of
Shares under the Plan, and to each Participant annually during the period
such Participant has Awards outstanding; provided, however, the Company
shall not be required to provide such financial statements to Participants
whose services in connection with the Company assure them access to
equivalent information.
12. TRANSFERABILITY. Awards granted under the Plan, and any
---------------
interest therein, shall not be transferable or assignable by Participant,
and may not be made subject to execution,
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<PAGE>
attachment or similar process, otherwise than by will or by the laws
of descent and distribution or as consistent with the specific Plan and
Award Agreement provisions relating thereto. During the lifetime of the
Participant an Award shall be exercisable only by the Participant, and any
elections with respect to an Award, may be made only by the Participant
(except in the event of the Participant's Disability, in which event the
exercise and elections may be made by his legal guardian or
representative).
13. RESTRICTIONS ON SHARES. At the discretion of the Committee,
----------------------
the Company may reserve to itself and/or its assignee(s) in the Award
Agreement a right of first refusal to purchase all Shares that a
Participant (or a subsequent transferee) may propose to transfer to a third
party.
14. CERTIFICATES. All certificates for Shares or other securities
------------
delivered under the Plan shall be subject to such stock transfer orders,
legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or
foreign securities law, or any rules, regulations and other requirements of
the SEC or any stock exchange or automated quotation system upon which the
Shares may be listed.
15. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
------------------------
Participant's Shares, the Committee may require the Participant to deposit
all certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee
may cause a legend or legends referencing such restrictions to be placed on
the certificates. Any Participant who is permitted to execute a promissory
note as partial or full consideration for the purchase of Shares under the
Plan shall be required to place and deposit with the Company all or part of
the Shares so purchased as collateral to secure the payment of
Participant's obligation to the Company under the promissory note;
provided, however, that the Committee may require or accept other or
additional forms of collateral to secure the payment of such obligation
and, in any event, the Company shall have full recourse against the
Participant under the promissory note notwithstanding any pledge of the
Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant shall be required to execute and deliver a written
pledge agreement in such form as the Committee shall from time to time
approve. The Shares purchased with the promissory note may be released
from the pledge on a pro rata basis as the promissory note is paid.
16. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time
-----------------------------
or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the surrender
and cancellation of any or all outstanding Awards. The Committee may at
any time buy from a Participant an Award previously granted with payment in
cash, Shares (including Restricted Stock) or other consideration, based on
such terms and conditions as the Committee and the Participant shall agree.
17. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award shall
----------------------------------------------
not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any
governmental body, and the requirements of any stock exchange or
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<PAGE>
automated quotation system upon which the Shares may then be listed,
as they are in effect on the date of grant of the Award and also on the
date of exercise or other issuance. Notwithstanding any other provision in
the Plan, the Company shall have no obligation to issue or deliver
certificates for Shares under the Plan prior to (a) obtaining any approvals
from governmental agencies that the Company determines are necessary or
advisable, and/or (b) completion of any registration or other qualification
of such shares under any state or federal law or ruling of any governmental
body that the Company determines to be necessary or advisable. The Company
shall be under no obligation to register the Shares with the SEC or to
effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated
quotation system, and the Company shall have no liability for any inability
or failure to do so.
18. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award
-----------------------
granted under the Plan shall confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any
other relationship with, the Company or any Parent, Subsidiary or Affiliate
of the Company or limit in any way the right of the Company or any Parent,
Subsidiary or Affiliate of the Company to terminate Participant's
employment or other relationship at any time, with or without cause.
19. CORPORATE TRANSACTIONS.
----------------------
19.1. ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In the
------------------------------------------------
event of (a) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change
in the shareholders of the company and the Awards granted under the Plan
are assumed or replaced by the successor corporation, which assumption
shall be binding on all Participants); (b) a dissolution or liquidation of
the Company; (c) the sale of substantially all of the assets of the
Company; or (d) any other transaction which qualifies as a "corporate
transaction" under Section 424(a) of the Code wherein the shareholders of
the Company give up all of their equity interest in the Company (except for
------
the acquisition, sale or transfer of all or substantially all of the
outstanding shares of the Company), any or all outstanding Awards may be
assumed or replaced by the successor corporation (if any), which assumption
or replacement shall be binding on all Participants. In the alternative,
the successor corporation may substitute equivalent Awards or provide
substantially similar consideration to Participants as was provided to
shareholders (after taking into account the existing provisions of the
Awards). The successor corporation may also issue, in place of outstanding
Shares of the Company held by the Participant, substantially similar shares
or other property subject to repurchase restrictions no less favorable to
the Participant.
In the event such successor corporation (if any) refuses to assume
or substitute Options, as provided above, pursuant to a transaction
described in this Subsection 19.1, such Options shall expire on such
transaction at such time and on such conditions as the Board shall
determine.
19.2. OTHER TREATMENT OF AWARDS. Subject to any greater rights
-------------------------
granted to Participants under the foregoing provisions of this Section 19,
in the event of the occurrence of
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<PAGE>
any transaction described in Section 19.1, any outstanding Awards shall be
treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation, sale of assets or other "corporate
transaction."
19.3. ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from time
-----------------------------------
to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other
company or otherwise, by either (a) granting an Award under the Plan in
substitution of such other company's award; or (b) assuming such award as
if it had been granted under the Plan if the terms of such assumed award
could be applied to an Award granted under the Plan. Such substitution or
assumption shall be permissible if the holder of the substituted or assumed
award would have been eligible to be granted an Award under the Plan if the
other company had applied the rules of the Plan to such grant. In the
event the Company assumes an award granted by another company, the terms
and conditions of such award shall remain unchanged (except that the
------
exercise price and the number and nature of Shares issuable upon exercise
of any such option will be adjusted approximately pursuant to Section
424(a) of the Code). In the event the Company elects to grant a new Option
rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
20. ADOPTION AND SHAREHOLDER APPROVAL. The Plan shall become
---------------------------------
effective on the Effective Date. The Plan shall be approved by the
shareholders of the Company (excluding Shares issued pursuant to this
Plan), consistent with applicable laws, within twelve months before or
after the Effective Date. On the Effective Date, the Board may grant
Awards pursuant to the Plan; provided, however, that: (a) no Option may be
exercised prior to initial shareholder approval of the Plan; (b) no Option
granted pursuant to an increase in the number of Shares approved by the
Board shall be exercised prior to the time such increase has been approved
by the shareholders of the Company; and (c) in the event that shareholder
approval is not obtained within the time period provided herein, all Awards
granted hereunder shall be canceled, any Shares issued pursuant to any
Award shall be canceled and any purchase of Shares hereunder shall be
rescinded.
21. TERM OF PLAN. The Plan will terminate ten (10) years from the
------------
Effective Date or, if earlier, the date of shareholder approval of the
Plan.
22. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
--------------------------------
terminate or amend the Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed
pursuant to the Plan; provided, however, that the Board shall not, without
the approval of the shareholders of the Company, amend the Plan in any
manner that requires such shareholder approval pursuant to the Code or the
regulations promulgated thereunder as such provisions apply to ISO plans or
pursuant to the Exchange Act or Rules of any national securities exchange
or automated quotation system applicable to the Company.
23. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan
--------------------------
by the Board, the submission of the Plan to the shareholders of the Company
for approval, nor any provision of the Plan shall be construed as creating
any limitations on the power of the Board to adopt such
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<PAGE>
additional compensation arrangements as it may deem desirable,
including, without limitation, the granting of stock options and bonuses
otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
24. APPLICATION OF FUNDS. The proceeds received from the Company
--------------------
for the sale of Shares pursuant to the exercise of Options and Restricted
Stock Awards shall be used for general corporate purposes.
25. RESERVATION OF SHARES. During the term of this Plan, the
---------------------
Company shall at all times reserve and keep available such number of Shares
as shall be sufficient to satisfy the requirements of the Plan. The
Company shall use its best efforts to obtain from appropriate regulatory
agencies authorization in order to issue and sell such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. The inability
of the Company to obtain such authorization(s) deemed by the Company's
counsel to be necessary for the lawful issuance and sale of any Shares
hereunder, or the inability of the Company to confirm to its satisfaction
that any issuance and sale of any Shares hereunder will meet applicable
legal requirements, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
26. OTHER AGREEMENTS. The Committee may, from time to time,
----------------
require such other agreements in connection with Awards as it, in its sole
discretion, deems advisable.
27. INVALID PROVISIONS. If any provision of this Plan is found to
------------------
be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any
other provisions herein as invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as
though the invalid or unenforceable provision was not contained herein.
28. APPLICABLE LAW. This Plan shall be governed by and construed
--------------
in accordance with the laws of the State of California.
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