As filed with the Securities and Exchange Page 1 of 26 pages
Commission on July 9, 1998 Reg. No. 333- _______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------
Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
EVANS & SUTHERLAND COMPUTER CORPORATION
(Exact name of registration as specified in charter)
Utah 87-0278175
(State of incorporation) (I.R.S. Employer Identification Number)
600 Komas Drive
Salt Lake City, Utah 84108
(801)588-1000
(Address of principal Executive Offices)
AccelGraphics, Inc. 1995 Stock Plan
(Full title of the Plan)
James R. Oyler Copy to:
Evans & Sutherland Computer Corporation, Inc. William C. Gibbs, Esq.
600 Komas Drive David K. Armstrong, Esq.
Salt Lake City, Utah 84100 Snell & Wilmer L.L.P.
(801)588-1000 111 East Broadway, Suite 900
Salt Lake City, Utah 84111
(Name, address and telephone number, (801) 237-1900
including area code,
of agent for service)
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, CHECK THE FOLLOWING BOX: [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title Of Proposed Proposed
Securities Amount Maximum Maximum Amount Of
To Be To Be Offering Price Aggregate Registration
Registered Registered (1) Per Share Offering Price(2) Fee(3)
- ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Common Stock
$.20 par value
Outstanding 353,089 $0.48 - $24.19 $5,476,410.39 1,615.54
under
AccelGraphics
1995 Stock
Option Plan
</TABLE>
1
<PAGE>
(1) Pursuant to the Agreement and Plan of Merger entered into as of April
22, 1998, by and among the Registrant, E&S Merger Corp. (a wholly owned
subsidiary of Registrant) and AccelGraphics, Inc., the Registrant
assumed all of the outstanding options to purchase Common Stock of
AccelGraphics, Inc. under the AccelGraphics 1995 Stock Plan and such
options became exercisable or will become exercisable to purchase
shares of Registrant's Common Stock, subject to appropriate adjustments
to the number of shares and the exercise price of each such assumed
option. This Registration Statement shall cover any additional shares
of Common Stock which become issuable under the plan set forth herein
by reason of any stock dividend, stock split, recapitalization or any
other similar transaction without receipt of consideration which
results in an increase in the number of shares of the Registrant's
outstanding Common Stock.
(2) Calculated solely for the purposes of this offering under Rule 457(h)
promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), on the basis of the weighted average price ($15.51
per share) at which the assumed options may be exercised.
(3) Estimated pursuant to Rule 457 solely for the purposes of calculating
the registration fee.
2
<PAGE>
Evans & Sutherland Computer Corporation
Form S-8 Registration Statement
For AccelGraphics 1995 Stock Plan
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Evans & Sutherland Computer Corporation (the "Company" or the
"Registrant") hereby incorporates by reference in this Registration Statement
the following documents:
(a) The Company's annual report on Form 10-K, for the fiscal
year ended December 31, 1997, filed with the Securities and Exchange
Commission ("SEC") on March 31, 1998, as amended by Form 10K/A filed
with the SEC on May 13, 1998.
(b) The Company's quarterly report on Form 10-Q for the fiscal
quarter ended March 28, 1998, filed with the SEC on May 11, 1998.
(c) The description of the Company's Common Stock included in
the Company's Registration Statement on Form 8-A, filed with the SEC on
September 27, 1978.
(d) All documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, ("the Exchange Act"), prior to the filing of a post-effective
amendment to this Registration Statements which indicates that all of
the securities offered have been sold or which in this Registration
Statement deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities
The class of securities to be offered is registered under Section 12 of
the Exchange Act.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Officers and Directors
3
<PAGE>
Section 16-10a-901, et.seq., of the Utah Revised Business Corporation
Act authorizes a court to award, or a corporation's board of directors to grant,
indemnity to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933.
The E&S Bylaws require E&S to indemnify its directors and officers, including
circumstances in which indemnification is otherwise discretionary under Utah
law. E&S has entered into indemnification agreements with its directors
containing provisions which are in some respects broader than the specific
indemnification provisions contained in Utah law. The indemnification agreements
may require E&S, among other things, to indemnify its directors and officers
against certain liabilities that may arise by reason of their status or service
as directors or officers (other than liabilities arising from willful misconduct
of a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
director and officer insurance, if available on reasonable terms. E&S's Articles
of Incorporation provide for indemnification of its directors and officers to
the maximum extent permitted by Utah law, and E&S's Bylaws provide for
indemnification of its directors, officers, employees and other agents as
permitted by Utah law.
Item 7. Exemption from Registration
Not Applicable.
Item 8. Exhibits
Exhibit Index located at Page 8.
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective amendment to the Registration
Statement:
(i) To include any prospectus required
by section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the
registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth
in the registration statement;
(iii) to include any material information
with respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to section 13 or section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
4
<PAGE>
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Salt Lake, State of Utah, on July 8, 1998.
Evans & Sutherland Computer Corporation
By /S/ Mark C. McBride
Mark C. McBride
Vice President, Corporate Controller and
Corporate Secretary
KNOW BY ALL MEN THESE PRESENTS, that the persons whose
signatures appear below constitute and appoint John T. Lemley and Mark C.
McBride, and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities to sign the Form S-8
Registration Statement pertaining to AccelGraphics 1995 Stock Plan and any or
all amendments (including post-effective amendments) to said Form S-8
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the SEC, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement and any amendments to Registration Statement have been
signed below by the following persons in the capacities and on the dates
indicated. Moreover, the undersigned hereby also certify that to the best of
their knowledge and belief the Registrant meets all of the requirements for
filing on Form S-8.
Signature Title Date
Stewart Carrell Chairman of the Board of Directors July 8, 1998
/S/ James R. Oyler
James R. Oyler Director and President July 8, 1998
(Chief Executive Officer)
6
<PAGE>
/S/ John T. Lemley
John T. Lemley Vice President and Chief
Financial Officer July 8, 1998
(Principal Financial Officer)
/S/ Mark C. McBride
Mark C. McBride Vice President, Corporate Controller and July 8, 1998
Corporate Secretary
(Principal Accounting Officer)
/S/ Gerald S. Casilli
Gerald S. Casilli Director July 8, 1998
/S/ Peter O. Crisp
Peter O. Crisp Director July 8, 1998
/S/ Ivan E. Sutherland
Ivan E. Sutherland Director July 8, 1998
John E. Warnock Director July 8, 1998
7
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
5.1 Opinion of Snell & Wilmer
L.L.P.
23.1 Consent of Snell & Wilmer
L.L.P. (included in the opinion
filed as Exhibit 5.1)
23.2 Consent of KPMG Peat
Marwick L.L.P. Certified
Public Accountants
24.1 Power of Attorney (included
on signature page)
99.1 AccelGraphics, Inc. 1995
Stock Plan
8
EXHIBIT 5.1
Opinion dated July 8, 1998, of
Snell & Wilmer L.L.P.
July 8, 1998
Evans & Sutherland Computer Corporation
600 Komas Drive
Salt Lake City, Utah 84108
Ladies and Gentlemen:
We have acted as counsel to Evans & Sutherland Computer
Corporation, a Utah corporation (the "Company"), in connection with its
Registration Statement on Form S-8 (the "Registration Statement") filed under
the Securities Act of 1933 relating to the sale and issuance from time to time
of not in excess of 353,089 shares of common stock, $.20 par value, of the
Company (the "Stock"). The Stock is issuable pursuant to the terms of the
AccelGraphics 1995 Stock Plan (the "Plan") which was assumed by the Company in
connection with its acquisition of AccelGraphics, Inc.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records, agreements, and other
instruments, certificates, orders, opinions, correspondence with public
officials, certificates provided by the Company and representatives, and other
documents, as we have deemed necessary or advisable for the purposes of
rendering the opinions set forth herein.
Based on the foregoing, it is our opinion that the Stock, when
issued and sold in accordance with the terms of the Plan, will be validly
issued, fully paid and non-assessable.
Consent is hereby given to the use of this opinion as an exhibit to
the Registration Statement.
Sincerely yours,
/S/ Snell & Wilmer L.L.P.
SNELL & WILMER L.L.P.
EXHIBIT 23.2
Consent of KPMG Peat Marwick L.L.P.
Independent Certified Public Accountants
Accountants' Consent
The Board of Directors and Stockholders
Evans & Sutherland Computer Corporation:
We consent to incorporation by reference in the Registration Statements on Form
S-8 of Evans & Sutherland Computer Corporation of our report dated February 11,
1998, relating to the consolidated balance sheets of Evans & Sutherland Computer
Corporation and subsidiaries as of December 31, 1997 and December 27, 1996, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1997, and related schedule, which report appears in the December 31, 1997 Annual
Report on Form 10-K of Evans & Sutherland Computer Corporation.
/S/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Salt Lake City, Utah
July 8, 1998
EXHIBIT 99.1
AccelGraphics, Inc. 1995 Stock Plan
ACCELGRAPHICS, INC.
1995 STOCK PLAN
(Amended and Restated January 31, 1997)
1. Purposes of the Plan. The purposes of this Stock Plan are to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to Employees and Consultants of the Company and
its Subsidiaries and to promote the success of the Company's business. Options
granted under the Plan may be incentive stock options (as defined under Section
422 of the Code) or non-statutory stock options, as determined by the
Administrator at the time of grant of an option and subject to the applicable
provisions of Section 422 of the Code, as amended, and the regulations
promulgated thereunder. Stock purchase rights may also be granted under the
Plan.
2. Definitions. As used herein, the following definitions shall apply:
a. "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
b. "Board" means the Board of Directors of the Company.
c. "Code" means the Internal Revenue Code of 1986, as
amended.
d. "Committee" means the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4
of the Plan.
e. "Common Stock" means the Common Stock of the Company.
f. "Company" means AccelGraphics, Inc., a California
corporation.
g. "Consultant" means any person, including an advisor, who
is engaged by the Company or any Parent or Subsidiary to
render services and is compensated for such services, and
any Director of the Company whether compensated for such
services or not.
h. "Continuous Status as an Employee or Consultant" means
the absence of any interruption or termination of
service as an Employee or Consultant. Continuous Status
as an Employee or Consultant shall not be considered
interrupted in the case of: (i) sick leave; (ii)
military leave; (iii) any other leave of absence
approved by the Administrator, provided that such leave
is for a period of not more than ninety (90) days,
unless reemployment upon the expiration of such leave
is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted
from time to time; or (iv) in the case of transfers
between locations of the Company or between the
Company, its Subsidiaries or their respective
successors.
<PAGE>
For purposes of this Plan, a change in status from an
Employee to a consultant or from a consultant to an
Employee will not constitute a termination of employment.
i. "Director" means a member of the Board.
j. "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or
Subsidiary of the Company. The payment of a director's
fee to a Director by the Company shall not be sufficient
to constitute "employment" of such Director by the
Company.
k. "Exchange Act" means the Securities Exchange Act of
1934, as amended.
l. "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
i. If the Common Stock is listed on any established stock
exchange or a national market system including without
limitation the National Market System of the National
Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value
shall be the closing sales price for such stock (or the
closing bid, if no sales were reported, as quoted on
such exchange or system for the last market trading day
prior to the time of determination) as reported in The
Wall Street Journal or such other source as the
Administrator deems reliable;
ii. If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or regularly
quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be
the mean between the high bid and low asked prices for
the Common Stock or;
iii. In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be
determined in good faith by the Administrator.
m. "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning
of Section 422 of the Code.
n. "Named Executive" shall mean any individual who, on the
last day of the Company's fiscal year, is the chief
executive officer of the Company (or is acting in such
capacity) or among the four highest compensated officers
of the Company (other than the chief executive officer).
Such officer status shall be determined pursuant to the
executive compensation disclosure rules under the
Exchange Act.
o. "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
<PAGE>
p. "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act.
q. "Option" means a stock option granted pursuant to the
Plan.
r. "Optioned Stock" means the Common Stock subject to an
Option or a Stock Purchase Right.
s. "Optionee" means an Employee or Consultant who receives
an Option or Stock Purchase Right.
t. "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the
Code.
u. "Plan" means this 1995 Stock Plan.
v. "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under
Section 12 below.
w. "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act as the same may be amended from time to
time, or any successor provision.
x. "Share" means a share of the Common Stock, as adjusted in
accordance with Section 14 below.
y. "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 12 below.
z. "Subsidiary" means a "subsidiary corporation", whether
now or hereafter existing, as defined in Section 424(f)
of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 14 of the
Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 3,300,000 shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which
were subject thereto shall, unless the Plan shall have been
terminated, become available for future grant under the Plan.
4. Administration of the Plan.
a. Composition of Administrator.
<PAGE>
i. Multiple Administrative Bodies. If permitted by Rule
16b-3, and by the legal requirements relating to the
administration of incentive stock option plans, if any,
of applicable securities laws and the Code
(collectively, the "Applicable Laws"), grants under the
Plan may (but need not) be made by different
administrative bodies with respect to Directors,
Officers who are not directors and Employees who are
neither Directors nor Officers.
ii. Administration with respect to Directors and Officers.
With respect to grants of Options to Employees or
Consultants who are also Officers or Directors of the
Company, grants under the Plan shall be made by (A) the
Board, if the Board may make grants under the Plan in
compliance with Rule 16b-3 and Section 162(m) of the
Code as it applies so as to qualify grants of Options
to Named Executives as performance-based compensation,
or (B) a Committee designated by the Board to make
grants under the Plan, which Committee shall be
constituted in such a manner as to permit grants under
the Plan to comply with Rule 16b-3, to qualify grants
of Options to Named Executives as performance-based
compensation under Section 162(m) of the Code and
otherwise so as to satisfy the Applicable Laws.
iii. Administration with respect to Other Persons. With
respect to grants of Options to Employees or
Consultants who are neither Directors nor Officers of
the Company, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to
satisfy the Applicable Laws.
iv. General. If a Committee has been appointed pursuant to
subsection (ii) or (iii) of this Section 4(a), such
Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any
Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies
(however caused) and remove all members of a Committee
and thereafter directly administer the Plan, all to the
extent permitted by the Applicable Laws and, in the
case of a committee appointed under subsection (ii), to
the extent permitted by Rule 16b-3 and to the extent
required under Section 162(m) of the Code to qualify
grants of Options to Named Executives as
performance-based compensation.
b. Powers of the Administrator. Subject to the provisions of
the Plan and in the case of a Committee, the specific
duties delegated by the Board to such Committee, the
Administrator shall have the authority, in its
discretion:
i. to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(m) of the Plan;
<PAGE>
ii. to select the Employees and Consultants to whom Options
may from time to time be granted hereunder;
iii. to determine whether and to what extent Options are
granted hereunder;
iv. to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;
v. to approve forms of agreement for use under the Plan;
vi. to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted
hereunder (including, but not limited to, the share
price and any restriction or limitation, or any vesting
acceleration or waiver of forfeiture restrictions
regarding any Option and/or the shares of Common Stock
relating thereto, based in each case on such factors as
the Administrator shall determine, in its sole
discretion);
vii. to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option shall have
declined since the date the Option was granted.
c. Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator
shall be final and binding on all Optionees and any other
holders of any Options.
5. Eligibility.
a. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Employees and Consultants. Incentive Stock
Options may be granted only to Employees. An Employee or
Consultant who has been granted an Option or Stock
Purchase Right may, if he is otherwise eligible, be
granted additional Options or Stock Purchase Rights.
b. Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such
designations, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for
the first time by any Optionee during any calendar year
(under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall
be treated as Nonstatutory Stock Options.
c. For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they
were granted, and the Fair Market Value of the Shares
shall be determined as of the time the Option with
respect to such Shares is granted.
<PAGE>
d. The Plan shall not confer upon any Optionee any right
with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in
any way with his or her right or the Company's right to
terminate his or her employment or consulting
relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to occur of
its adoption by the Board of Directors or its approval by the shareholders of
the Company as described in Section 20 of the Plan. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 15 of the
Plan.
7. Term of Option. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.
8. Limitation on Grants to Employees. Subject to adjustment as provided in this
Plan, the maximum number of Shares which may be subject to options granted to
any one Employee under this Plan for any fiscal year of the Company shall be
500,000.
9. Option Exercise Price and Consideration.
a. The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as
is determined by the Board, but shall be subject to the
following:
i. In the case of an Incentive Stock Option
(1) granted to an Employee who, at the time of
the grant of such Incentive Stock Option, owns
stock representing more than ten percent (10%)
of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the
date of grant.
(2) granted to any Employee, the per Share
exercise price shall be no less than 100% of
the Fair Market Value per Share on the date of
grant.
ii. In the case of a Nonstatutory Stock Option
(1) granted to a person who, at the time of
the grant of such Option, is a Named Executive
of the Company, the per Share exercise price
shall be no less than 100% of the Fair Market
Value per Share on the date of the grant.
<PAGE>
(2) granted to any person, the per Share
exercise price shall be no less than 85% of
the Fair Market Value per Share on the date of
grant.
b. The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive
Stock Option, shall be determined at the time of grant) and may
consist entirely of (1) cash, (2) check, (3) promissory note, (4)
other Shares which (x) in the case of Shares acquired upon
exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (y) have
a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option
shall be exercised, (5) authorization from the Company to retain
from the total number of Shares as to which the Option is
exercised that number of Shares having a Fair Market Value on the
date of exercise equal to the exercise price for the total number
of Shares as to which the Option is exercised, (6) delivery of a
properly executed exercise notice together with such other
documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the
exercise price, (7) by delivering an irrevocable subscription
agreement for the Shares which irrevocably obligates the option
holder to take and pay for the Shares not more than twelve months
after the date of delivery of the subscription agreement, (8) any
combination of the foregoing methods of payment, (9) or such
other consideration and method of payment for the issuance of
Shares to the extent permitted under Applicable Laws. In making
its determination as to the type of consideration to accept, the
Board shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
10. Exercise of Option.
a. Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such
times and under such conditions as determined by the
Board, including performance criteria with respect to the
Company and/or the Optionee.
An Optionee may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in
accordance with the terms of the Option by the person
entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has
been received by the Company. Full payment may, as
authorized by the Board, consist of any consideration and
method of payment allowable under Section 9(b) of the
Plan. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall
exist with
<PAGE>
respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is
prior to the date the stock certificate is issued, except
as provided in Section 14 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be
available, both for purposes of the Plan and for sale
under the Option, by the number of Shares as to which the
Option is exercised.
b. Termination of Status as an Employee or Consultant. In the
event of termination of an Optionee's Continuous Status as
an Employee or a Consultant with the Company, such Optionee
may, but only within sixty (60) days of such termination (or
such other period of time as is determined by the Board,
with such determination in the case of an Incentive Stock
Option being made at the time of grant of the Option and not
exceeding three (3) months after the date of such
termination but in no event later than the expiration date
of the term of such Option as set forth in the Option
Agreement), exercise his Option to the extent that Optionee
was entitled to exercise it at the date of such termination.
To the extent that Optionee was not entitled to exercise the
Option at the date of such termination, or if Optionee does
not exercise such Option to the extent so entitled within
the time specified herein, the Option shall terminate.
c. Disability of Optionee.
i. Notwithstanding the provisions of Section 10(b) above,
in the event of termination of an Optionee's Continuous
Status as an Employee or a Consultant as a result of
his or her total and permanent disability (within the
meaning of Section 22(e)(3) of the Code), Optionee may,
but only within twelve (12) months from the date of
such termination (but in no event later than the
expiration date of the term of such Option as set forth
in the Option Agreement), exercise the Option to the
extent otherwise entitled to exercise it at the date of
such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such
Option to the extent so entitled within the time
specified herein, the Option shall terminate.
ii. In the event of termination of an Optionee's consulting
relationship or Continuous Status as an Employee as a
result of a disability which does not fall within the
meaning of total and permanent disability (as set forth
in Section 22(e)(3) of the Code), Optionee may, but
only within six (6) months from the date of such
termination (but in no event later than the expiration
date of the term of such Option as set forth in the
Option Agreement), exercise the Option to the extent
otherwise entitled to exercise it at the date of such
termination. However, to the extent that such
<PAGE>
Optionee fails to exercise an Option which is an Incentive
Stock Option ("ISO") (within the meaning of Section 422 of
the Code) within three (3) months of the date of
termination, the Option will not qualify for ISO treatment
under the Code. To the extent that Optionee was not entitled
to exercise the Option at the date of termination, or if
Optionee does not exercise such Option to the extent so
entitled within six months (6) from the date of termination,
the Option shall terminate.
d. Death of Optionee. In the event of the death of an Optionee,
the Option may be exercised, at any time within six (6)
months following the date of death (but in no event later
than the expiration date of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or
by a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent the Optionee
was entitled to exercise the Option at the date of death. To
the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if Optionee does not
exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate.
e. Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and
shall contain such additional conditions or restrictions
as may be required thereunder to qualify for the maximum
exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
f. Buyout Provisions. The Administrator may at any time
offer to buy out for a payment in cash or Shares, an
Option previously granted, based on such terms and
conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer
is made.
11. Non-Transferability of Options. An Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
12. Stock Purchase Rights.
a. Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards
granted under the Plan and/or cash awards made outside of
the Plan. After the Administrator determines that it will
offer Stock Purchase Rights under the Plan, it shall advise
the offeree in writing of the terms, conditions and
restrictions related to the offer, including the number of
Shares that such person shall be entitled to purchase, the
price to be paid, and the time within which such person must
accept such offer, which shall in no event exceed thirty
(30) days from the date upon which the Administrator made
the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a Restricted Stock
Purchase Agreement in the form determined by the
Administrator. Shares
<PAGE>
purchased pursuant to the grant of a Stock Purchase Right
shall be referred to herein as "Restricted Stock."
b. Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall
grant the Company a repurchase option exercisable upon the
voluntary or involuntary termination of the purchaser's
employment with the Company for any reason (including death
or Disability. The purchase price for Shares repurchased
pursuant to the Restricted Stock Purchase Agreement shall be
the higher of the original price paid by the purchaser or
the then current Fair Market Value of the Shares as
determined by the Board of Directors of the Company and may
be paid by cancellation of any indebtedness of the purchaser
to the Company.
c. Other Provisions. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions
not inconsistent with the Plan as may be determined by
the Administrator in its sole discretion. In addition,
the provisions of Restricted Stock purchase agreements
need not be the same with respect to each purchaser.
d. Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent
to those of a shareholder, and shall be a shareholder
when his or her purchase is entered upon the records of
the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for
which the record date is prior to the date the Stock
Purchase Right is exercised, except as provided in
Section 14 of the Plan.
13. Stock Withholding to Satisfy Withholding Tax Obligations. At the discretion
of the Administrator, Optionees may satisfy withholding obligations as provided
in this paragraph. When an Optionee incurs tax liability in connection with an
Option or Stock Purchase Right, which tax liability is subject to tax
withholding under applicable tax laws, and the Optionee is obligated to pay the
Company an amount required to be withheld under applicable tax laws, the
Optionee may satisfy the withholding tax obligation by electing to have the
Company withhold from the Shares to be issued upon exercise of the Option, or
the Shares to be issued in connection with the Stock Purchase Right, if any,
that number of Shares having a Fair Market Value equal to the amount required to
be withheld. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be determined
(the "Tax Date").
All elections by an Optionee to have Shares withheld for this
purpose shall be made in writing in a form acceptable to the
Administrator 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, the election shall be irrevocable as to the
particular Shares of the Option or Stock Purchase Right
as to which the election is made; and
<PAGE>
c. all elections shall be subject to the consent or
disapproval of the Administrator.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the
Optionee shall receive the full number of Shares with respect to
which the Option or Stock Purchase Right is exercised but such
Optionee shall be unconditionally obligated to tender back to the
Company the proper number of Shares on the Tax Date.
14. Adjustments Upon Changes in Capitalization; Corporate Transaction.
a. Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option or Stock
Purchase Right, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but
as to which no Options or Stock Purchase Rights have yet
been granted or which have been returned to the Plan upon
cancellation or expiration of an Option or Stock Purchase
Right, the maximum number of shares of Common Stock for
which options may be granted to any employee under Section 8
of the Plan, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase
Right, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that
conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt
of consideration." Such adjustment shall be made by the
Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of
Common Stock subject to an Option or Stock Purchase Right.
b. Corporate Transactions. In the event of the proposed
dissolution or liquidation of the Company, the Option will
terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the
Administrator. The Administrator may, in the exercise of its
sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Administrator and
give each Optionee the right to exercise his or her Option
as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be
exercisable. In the event of a sale of all or substantially
all of the assets of the Company, or the merger of the
Company with or into another corporation, each outstanding
Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or
subsidiary of such successor corporation. In the event that
the successor corporation refuses to assume or substitute
for the Option, the Optionee shall have the right to
exercise the Option as to all of the Optioned Stock,
<PAGE>
including Shares as to which the Option would not otherwise
be exercisable. If an Option becomes fully exercisable in
lieu of assumption or substitution in the event of a merger
or sale of assets, the Administrator shall notify the
Optionee that the Option shall be exercisable for a period
of fifteen (15) days from the date of such notice, and the
Option will terminate upon the expiration of such period.
15. Time of Granting Options and Stock Purchase Rights. The date of grant of an
Option or Stock Purchase Right shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option or Stock Purchase
Right, or such other date as is determined by the Board. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.
16. Amendment and Termination of the Plan.
a. Amendment and Termination. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment,
alteration, suspension or discontinuation shall be made
which would impair the rights of any Optionee under any
grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act or with Sections
162(m) and 422 of the Code (or any other applicable law or
regulation, including the requirements of the NASD or an
established stock exchange), the Company shall obtain
shareholder approval of any Plan amendment in such a manner
and to such a degree as required
b. Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already
granted and such Options shall remain in full force and
effect as if this Plan had not been amended or terminated,
unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by
the Optionee and the Company.
17. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance. As a condition to the exercise of an Option, the
Company may require the person exercising such Option to represent and warrant
at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required
by any of the aforementioned relevant provisions of law.
18. Reservation of Shares. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any
<PAGE>
Shares hereunder, 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.
19. Agreements. Options and Stock Purchase Rights shall be evidenced by written
agreements in such form as the Board shall approve from time to time.
20. Shareholder Approval. Continuance of the Plan shall be subject to approval
by the shareholders of the Company within twelve (12) months before or after the
date the Plan is adopted. Such shareholder approval shall be obtained in the
degree and manner required under applicable state and federal law and the rules
of any stock exchange upon which the Common Stock is listed.
21. Information to Optionees and Purchasers. The Company shall provide to each
Optionee and to each individual who acquired Shares pursuant to the Plan, during
the period such Optionee or purchaser has one or more Options or Stock Purchase
Rights outstanding, and, in the case of an individual who acquired Shares
pursuant to the Plan, during the period such individual owns such Shares,
financial statements at least annually. The Company shall not be required to
provide such information if the issuance of Options or Stock Purchase Rights
under the Plan is limited to key employees whose duties in connection with the
Company assure their access to equivalent information.
