<PAGE> 1
As filed with the Securities and Exchange Commission on September 12, 1996
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
THORATEC LABORATORIES CORPORATION
(Exact Name of Registrant as Specified in its Charter)
California 94-2340464
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2023 Eighth Street, Berkeley, California 94710
(Address of Principal Executive Offices)
1996 Stock Option Plan and
1996 Nonemployee Directors Stock Option Plan
(Full Title of the Plan)
D. Keith Grossman, Chief Executive Officer and President
2023 Eighth Street
Berkeley, California 94710
(Name and Address of Agent For Service)
(510) 841-1213
(Telephone number, including area code, of agent for service)
Copy to: August J. Moretti, Esq.
Heller Ehrman White & McAuliffe
525 University Avenue
Palo Alto, California 94301-1908
(415) 324-7000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
registered registered share (1) price fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 983,333 $9 $8,849,997 $3,052
no par value
========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of
registration fee pursuant to Rule 457(c) under the Securities Act, as
amended, based on the last sale reported of the Registrant's Common
Stock on the Nasdaq National Market on September 9, 1996.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed or to be filed with the Securities and
Exchange Commission (the "Commission") by the registrant are incorporated by
reference in this registration statement:
(a) The registrant's latest annual report (Form 10-K) filed
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the latest prospectus filed pursuant to Rule
424(b) under the Securities Act of 1933, as amended (the "Securities Act"), that
contains audited financial statements for the registrant's latest fiscal year
for which such statements have been filed;
(b) All other fiscal reports filed by the registrant pursuant to
Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year
covered by the annual report or prospectus referred to (a) above; and
(c) The description of the Common Stock of the registrant
contained in the registration statement filed under the Exchange Act registering
such Common Stock under Section 12 of the Exchange Act.
All documents subsequently filed by the registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold should be
deemed to be incorporated by reference in this registration statement and to be
part thereof from the date of filing of such documents.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to Sections 204(a) and 317 of the California Corporations
Code, as amended, the registrant has included in its articles of incorporation
and by-laws provisions regarding the indemnification of officers and directors
of the registrant. Article Fourth of registrant's Restated Articles of
Incorporation, as amended, provides as follows:
"Fourth: The liability of the directors of this corporation for
monetary damages shall be eliminated to the fullest extent permissible under
California law. This corporation is also authorized, to the fullest extent
permissible under California law, to indemnify its agents (as defined in Section
317 of the California Corporations Code), whether by law, agreement or
otherwise, in excess of the indemnification expressly permitted by Section 317
and to advance defense expenses to its agents in connection with such matters as
they are incurred. If, after the effective date of this Article, California law
is amended in a manner which permits a corporation to limit the monetary or
other liability of its directors or to authorize indemnification of, or
advancement of such defense expense to, its directors or other persons, in any
such case to a greater extent than is permitted on such effective date,
-2-
<PAGE> 3
the references in this Article to 'California law' shall to that extent be
deemed to refer to California law as so amended."
Section 29 of the registrant's by-laws, as amended, provides as
follows:
"29. Indemnification of Directors and Officers.
(a) Indemnification. To the fullest extent permissible under
California law, the corporation shall indemnify its directors and officers
against all expenses, judgment, fines settlement and other amounts actually and
reasonably incurred by them in connection with any proceeding, including an
action by or in the right of the corporation, by reason of the fact that such
person is or was a director or officer of the corporation, or is or was serving
at the request of the corporation as a director, officer, trustee, employee or
agent of another corporation, or of a partnership, joint venture, trust or other
enterprise (including service with respect to employee benefit plans). To the
fullest extent permissible under California law, expenses incurred by a director
or officer seeking indemnification under this By-law in defending any proceeding
shall be advanced by the corporation as they are incurred upon receipt by the
corporation of an undertaking by or on behalf of the director or officer to
repay such amount if it shall ultimately be determined that the director or
officer is not entitled to be indemnified by the corporation for those expenses.
If, after the effective date of this By-law, California law is amended in a
manner which permits the corporation to authorize indemnification of or
advancement of expense to its directors or officers, in any such case to a
greater extent than is permitted on such effective date, the references in this
By-law to "California law" shall to that extent be deemed to refer to California
law as so amended. The rights granted by this By-law are contractual in nature
and, as such, may not be altered with respect to any present or former director
or officer without the written consent of that person.
(b) Procedure. Upon written request to the Board of Directors by a
person seeking indemnification under this By-law, the Board shall promptly
determine in accordance with Section 317(e) of the California Corporations Code
whether the applicable standard of conduct has been met and, if so, the Board
shall authorize indemnification. If the Board cannot authorize indemnification
because the number of directors who are parties to the proceeding with respect
to which indemnification is sought prevents the formation of a quorum of
directors who are not parties to the proceeding, then, upon written request by
the person seeking indemnification, independent legal counsel (by means of a
written opinion obtained at the corporation's expense) or the corporation's
shareholders shall determine whether the applicable standard of conduct has been
met and, if so, shall authorize indemnification.
(c) Definitions. The term "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative. The term "expenses" includes, without
limitation, attorney's fees and any expenses of establishing a right to
indemnification."
-3-
<PAGE> 4
ITEM 8. EXHIBITS
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe (filed as part of
Exhibit 5)
23.2 Consent of Deloitte & Touche, LLP, Independent Auditors
24 Power of Attorney (see pages 6 and 7)
99.1 1996 Stock Option Plan
99.2 1996 Nonemployee Directors Stock Option Plan
ITEM 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement;
(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 A(1)(i) and A(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registrations 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.
-4-
<PAGE> 5
B. The undersigned registrant hereby undertakes that, for
purposes of determining liability under the Securities Act, each filing of the
registrants annual report pursuant to Section 13(a) or 15(d) of the Exchange Act
that is incorporated by reference in the registration statement shall be deemed
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 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> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Berkeley, State of California, on September 9, 1996.
THORATEC LABORATORIES CORPORATION
By: /s/ D. Keith Grossman
---------------------------------
D. Keith Grossman
Chief Executive Officer and President
POWER OF ATTORNEY TO SIGN AMENDMENTS
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint D. Keith Grossman and Cheryl D.
Hess, or either of them, with full power of substitution, such person's true and
lawful attorneys-in-fact and agents for such person in such person's name, place
and stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this Registration Statement on Form S-8 and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully, to all intents and purposes, as he or
such person might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-8 has been signed by the following persons in the capacities
and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ D. Keith Grossman Director, President September 9, 1996
- ----------------------------------- and Chief Executive
D. Keith Grossman Officer (Principal
Executive Officer)
/s/ Cheryl D. Hess Vice President- September 9, 1996
- ------------------------------------ Finance, Chief
Cheryl D. Hess Financial Officer and
Secretary
</TABLE>
-6-
<PAGE> 7
<TABLE>
<S> <C> <C>
/s/ Christy W. Bell Director September 9, 1996
- ----------------------------------
Christy W. Bell
/s/ Howard E. Chase Director September 9, 1996
- ----------------------------------
Howard E. Chase
/s/ Wendell J. Gardner Director September 9, 1996
- ----------------------------------
Wendell J. Gardner
/s/ Robert J. Harvey, Ph.D. Director September 9, 1996
- ----------------------------------
Robert J. Harvey, Ph.D.
/s/ J. Donald Hill, M.D. Director September 9, 1996
- ----------------------------------
J. Donald Hill, M.D.
/s/ George W. Holbrook, Jr. Director September 9, 1996
- ----------------------------------
George W. Holbrook, Jr.
</TABLE>
-7-
<PAGE> 8
Index to Exhibits
<TABLE>
<CAPTION>
Sequentially
Item Numbered
No. Description of Item Page
- ---- ------------------- ------------
<S> <C> <C>
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe (filed as part of
Exhibit 5)
23.2 Consent of Deloitte & Touche, LLP, Independent Auditors
24 Power of Attorney (see pages 6 and 7)
99.1 1996 Stock Option Plan
99.2 1996 Nonemployee Directors Stock Option Plan
</TABLE>
-8-
<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF HELLER EHRMAN WHITE & MCAULIFFE]
September 11, 1996
18103\0001
Thoratec Laboratories Corporation
2023 Eighth Street
Berkeley, California 94710
Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Thoratec Laboratories Corporation, a
California corporation (the "Company"), in connection with the Registration
Statement on Form S-8 (the "Registration Statement") which the Company proposes
to file with the Securities Exchange Commission on September 12, 1996 for the
purposes of registering under the Securities Exchange Act of 1933, as amended,
983,333 shares of its Common Stock, no par value (the "Shares"). The Shares are
issuable under the Company's 1996 Employee Stock Option Plan and the Company's
1996 Nonemployee Director Stock Option Plan (collectively the "Plans").
We have assumed the authenticity of all records, documents and
instruments submitted to us as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
records, documents and instruments submitted to us as copies.
In rendering our opinion, we have examined the following records,
documents and instruments:
(a) The Amended and Restated Articles of Incorporation of the
Company, certified by the California Secretary of State as of
September 11, 1996, and certified to us by an officer of the
Company as being complete and in full force as of the date of
this opinion;
(b) The Bylaws of the Company certified to us by an officer of the
Company as being complete and in full force and effect as of
the date of this opinion;
(c) A Certificate of an officer of the Company (i) attaching
records certified to us as constituting all records of
proceedings and actions of the Board of Directors, including
any committee thereof, and
<PAGE> 2
Thoratec Laboratories Corporation
September 11, 1996 Page 2
shareholders of the Company relating to the Shares, and the
Registration Statement, and (ii) certifying as to certain
factual matters;
(d) The Registration Statement;
(e) The Plans; and
(f) A letter from American Securities Transfer & Trust, Inc.,
the Company's transfer agent, dated September 10, 1996, as to
the number of shares of the Company's common stock that were
outstanding on September 9, 1996.
This opinion is limited to the federal law of the United States of
America and the law of the State of California, and we disclaim any opinion as
to the laws of any other jurisdiction. We further disclaim any opinion as to any
other statute, rule, regulation, ordinance, order or other promulgation of any
other jurisdiction or any regional or local governmental body or as to any
related judicial or administrative opinion.
Based on the foregoing and our examination of such questions of law as
we have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered and issued, (ii) the full
consideration stated in the Plans is paid for each Share and that such
consideration in respect of each Share includes payment of cash or other lawful
consideration, (iii) appropriate certificates evidencing the Shares are executed
and delivered by the Company, and (iv) all applicable securities laws are
complied with, it is our opinion that when issued and sold by the Company, after
payment therefore in the manner provided in the Plans and Registration
Statement, the Shares will be legally issued, fully paid and nonassessable.
This opinion is rendered to you in connection with the Registration
Statement and is solely for your benefit. This opinion may not be relied upon by
you for any other purpose, or relied upon by any other person, firm, corporation
or other entity for any purpose, without our prior written consent. We disclaim
any obligation to advise you of any change of law that occurs, or any facts of
which we may become aware, after the date of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Heller Ehrman White & McAuliffe
<PAGE> 1
EXHIBIT 23.2
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Thoratec Laboratories Corporation on Form S-8 of our report dated March 1, 1996
(which report expresses an unqualified opinion and includes an explanatory
paragraph referring to the substantial doubt about the Company's ability to
continue as a going concern), appearing in the Annual Report on Form 10-K of
Thoratec Laboratories Corporation for the year ended December 30, 1995.
/s/ Deloitte & Touche LLP
September 12, 1996
<PAGE> 1
EXHIBIT 99.1
1996 STOCK OPTION PLAN
OF
THORATEC LABORATORIES CORPORATION
<PAGE> 2
TABLE OF CONTENTS
PAGE
1. PURPOSES OF THE PLAN ................................................ 1
2. ELIGIBLE PERSONS .................................................... 1
3. STOCK SUBJECT TO THIS PLAN .......................................... 1
4. ADMINISTRATION ...................................................... 2
5. GRANTING OF OPTIONS; OPTION AGREEMENT ............................... 3
6. TERMS AND CONDITIONS OF OPTIONS ..................................... 3
6.1 Terms and Conditions to Which All Options Are Subject ........... 3
6.1.1 Changes in Capital Structure .............................. 3
6.1.2 Corporate Transactions .................................... 3
6.1.3 Time of Option Exercise ................................... 4
6.1.4 Option Grant Date ......................................... 4
6.1.5 Nonassignability of Option Rights ......................... 4
6.1.6 Payment ................................................... 4
6.1.7 Termination of Employment ................................. 5
6.1.8 Repurchase of Stock ....................................... 5
6.1.9 Withholding and Employment Taxes .......................... 5
6.1.10 Other Provisions .......................................... 6
6.1.11 Determination of Value .................................... 6
6.1.12 Option Term ............................................... 7
6.1.13 Exercise Price ............................................ 7
6.2 Terms and Conditions to Which Only NQOs Are Subject ............. 7
6.2.1 Exercise Price ............................................ 7
6.3 Terms and Conditions to Which Only ISOs Are Subject ............. 7
6.3.1 Exercise Price ............................................ 7
6.3.2 Disqualifying Dispositions ................................ 7
6.3.3 Grant Date ................................................ 8
6.3.4 Term ...................................................... 8
7. MANNER OF EXERCISE .................................................. 8
8. EMPLOYMENT OR CONSULTING RELATIONSHIP ............................... 8
9. FINANCIAL INFORMATION ............................................... 8
10. CONDITIONS UPON ISSUANCE OF SHARES .................................. 8
-i-
<PAGE> 3
11. NONEXCLUSIVITY OF THE PLAN ........................................... 9
12. AMENDMENTS TO PLAN ................................................... 9
13. EFFECTIVE DATE OF PLAN ............................................... 9
-ii-
<PAGE> 4
1996 STOCK OPTION PLAN
OF
THORATEC LABORATORIES CORPORATION
1. PURPOSES OF THE PLAN
The purposes of the 1996 Stock Option Plan (the "Plan") of Thoratec
Laboratories Corporation, a California corporation (the "Company"), are to:
(a) Encourage selected employees and consultants to
improve operations and increase profits of the Company;
(b) Encourage selected employees and consultants to
accept or continue employment or association with the Company or its Affiliates;
and
(c) Increase the interest of selected employees and
consultants in the Company's welfare through participation in the growth in
value of the common stock of the Company (the "Common Stock").
Options granted under this Plan ("Options") may be "incentive stock
options" ("ISOs") intended to satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or "nonqualified
options" ("NQOs").
2. ELIGIBLE PERSONS
The Plan shall consist of two parts, "Part 1" and "Part 2" (unless
otherwise indicated, references herein to the "Plan" shall refer to Part 1 and
Part 2). Every person who at the date of grant of an Option is a full-time
employee of the Company or of any Affiliate (as defined below) of the Company is
eligible to receive NQOs or ISOs under Part 1 of this Plan. Every person who at
the date of grant is a consultant to the Company or any Affiliate (as defined
below) of the Company is eligible to receive NQOs under Part 1 of this Plan. The
Chief Executive Officer is eligible to receive Options under Part 2 of the Plan,
and all such Options granted under Part 2 of the Plan shall be NQOs. The term
"Affiliate" as used in the Plan means a parent or subsidiary corporation as
defined in the applicable provisions (currently Sections 424(e) and (f),
respectively) of the Code. The term "employee" includes an officer or director
who is an employee, of the Company. The term "consultant" includes persons
employed by, or otherwise affiliated with, a consultant.
3. STOCK SUBJECT TO THIS PLAN
Subject to the provisions of Section 6.1.1 of the Plan, the total
number of shares of stock which may be issued under options granted pursuant to
this Plan shall not exceed 833,333 shares of Common Stock, 500,000 of which
shall be available for grant under Part 1 of the Plan and 333,333 of which shall
be available for grant under Part 2 of
<PAGE> 5
the Plan. The shares covered by the portion of any grant under the Plan which
expires unexercised shall become available again for grants under the Plan.
4. ADMINISTRATION
(a) This Plan shall be administered by the Board of
Directors of the Company (the "Board") or, either in its entirety or only
insofar as required pursuant to Section 4(b) hereof, by a committee (the
"Committee") of at least two Board members to which administration of the Plan,
or of any portion of the Plan, is delegated (in either case, the
"Administrator").
(b) From and after such time as the Company registers a
class of equity securities under Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), it is intended that this Plan shall be
administered in accordance with the disinterested administration requirements of
Rule 16b-3 promulgated by the Securities and Exchange Commission ("Rule 16b-3"),
or any successor rule thereto.
(c) Subject to the other provisions of this Plan, the
Administrator shall have the authority, in its discretion: (i) to grant Options;
(ii) to determine the fair market value of the Common Stock subject to Options;
(iii) to determine the exercise price of Options granted; (iv) to determine the
persons to whom, and the time or times at which, Options shall be granted, and
the number of shares subject to each Option; (v) to interpret this Plan; (vi) to
prescribe, amend, and rescind rules and regulations relating to this Plan; (vii)
to determine the terms and provisions of each Option granted (which need not be
identical), including but not limited to, the time or times at which Options
shall be exercisable; (viii) with the consent of the optionee, to modify or
amend any Option; (ix) to defer (with the consent of the optionee) the exercise
date of any Option; (x) to authorize any person to execute on behalf of the
Company any instrument evidencing the grant of an Option; and (xi) to make all
other determinations deemed necessary or advisable for the administration of
this Plan. The Administrator may delegate nondiscretionary administrative duties
to such employees of the Company as it deems proper.
(d) All questions of interpretation, implementation, and
application of this Plan shall be determined by the Administrator. Such
determinations shall be final and binding on all persons.
(e) With respect to persons subject to Section 16 of the
Exchange Act, if any, transactions under this Plan are intended to comply with
the applicable conditions of Rule 16b-3, or any successor rule thereto. To the
extent any provision of this Plan or action by the Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Administrator. Notwithstanding the above, it shall be
the responsibility of such persons, not of the Company or the Administrator, to
comply with the requirements of Section 16 of the Exchange Act; and neither the
Company nor the Administrator shall be liable if this Plan or any transaction
under this Plan fails to comply with the applicable conditions of Rule 16b-3 or
any successor rule thereto, or if any such person incurs any liability under
Section 16 of the Exchange Act.
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<PAGE> 6
5. GRANTING OF OPTIONS; OPTION AGREEMENT
(a) No Options shall be granted under this Plan after ten
years from the date of adoption of this Plan by the Board.
(b) Each Option shall be evidenced by a written stock
option agreement, in form satisfactory to the Company, executed by the Company
and the person to whom such Option is granted; provided, however, that the
failure by the Company, the optionee, or both to execute such an agreement shall
not invalidate the granting of an Option, although the exercise of each option
shall be subject to Section 6.1.3.
(c) The stock option agreement shall specify whether each
Option it evidences is a NQO or an ISO.
(d) Subject to Section 6.3.3 with respect to ISOs, the
Administrator may approve the grant of Options under this Plan to persons who
are expected to become employees or consultants of the Company, but are not
employees or consultants at the date of approval.
6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under this Plan shall be subject to the terms and
conditions set forth in Section 6.1. NQOs shall be also subject to the terms and
conditions set forth in Section 6.2, but not those set forth in Section 6.3.
ISOs shall also be subject to the terms and conditions set forth in Section 6.3,
but not those set forth in Section 6.2.
6.1 Terms and Conditions to Which All Options Are
Subject. All Options granted under this Plan shall be subject to the following
terms and conditions:
6.1.1 Changes in Capital Structure. Subject to
Section 6.1.2, if the stock of the Company is changed by reason of a stock
split, reverse stock split, stock dividend, or recapitalization, combination or
reclassification, appropriate adjustments shall be made by the Board in (a) the
number and class of shares of stock subject to this Plan and each Option
outstanding under this Plan, and (b) the exercise price of each outstanding
Option; provided, however, that the Company shall not be required to issue
fractional shares as a result of any such adjustments. Each such adjustment
shall be subject to approval by the Board in its sole discretion.
6.1.2 Corporate Transactions. In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify each optionee at least 30 days prior to such proposed action. To the
extent not previously exercised, all Options will terminate immediately prior to
the consummation of such proposed action. In the event of a merger or
consolidation of the Company with or into another corporation or entity in which
the Company does not survive, or in the event of a sale of all or substantially
all of the assets of the Company in which the shareholders of the Company
receive securities of the acquiring entity or an affiliate thereof, all Options
shall be assumed or equivalent options shall be substituted by the successor
corporation (or other entity) or a parent or
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<PAGE> 7
subsidiary of such successor corporation (or other entity). In the event that
such successor does not agree to assume the Options or to substitute equivalent
options therefor, unless the Administrator shall determine otherwise, the
Options will expire upon such event.
6.1.3 Time of Option Exercise. Subject to Section
5, Options granted under this Plan shall be exercisable (a) immediately as of
the effective date of the stock option agreement granting the Option, or (b) in
accordance with a schedule related to the date of the grant of the Option, the
date of first employment, or such other date as may be set by the Administrator
(in any case, the "Vesting Base Date") and specified in the written stock option
agreement relating to such Option; provided, however, that the right to exercise
an Option must vest at the rate of at least 20% per year over five years from
the date the option was granted. In any case, no Option shall be exercisable
until a written stock option agreement in form satisfactory to the Company is
executed by the Company and the optionee.
6.1.4 Option Grant Date. Except in the case of
advance approvals described in Section 5(d), the date of grant of an Option
under this Plan shall be the date as of which the Administrator approves the
grant.
6.1.5 Nonassignability of Option Rights. No Option
granted under this Plan shall be assignable or otherwise transferable by the
optionee except by will or by the laws of descent and distribution. During the
life of the optionee, an Option shall be exercisable only by the optionee.
6.1.6 Payment. Except as provided below, payment
in full, in cash, shall be made for all stock purchased at the time written
notice of exercise of an Option is given to the Company, and proceeds of any
payment shall constitute general funds of the Company. At the time an Option is
granted or exercised, the Administrator, in the exercise of its absolute
discretion after considering any tax or accounting consequences, may authorize
any one or more of the following additional methods of payment:
(a) Acceptance of the optionee's full
recourse promissory note for all or part of the Option price, payable on such
terms and bearing such interest rate as determined by the Administrator (but in
no event less than the minimum interest rate specified under the Code at which
no additional interest would be imputed), which promissory note may be either
secured or unsecured in such manner as the Administrator shall approve
(including, without limitation, by a security interest in the shares of the
Company); and
(b) Delivery by the optionee of Common
Stock already owned by the optionee for all or part of the Option price,
provided the value (determined as set forth in Section 6.1.11) of such Common
Stock is equal on the date of exercise to the Option price, or such portion
thereof as the optionee is authorized to pay by delivery of such stock;
provided, however, that if an optionee has exercised any portion of any Option
granted by the Company by delivery of Common Stock, the optionee may not, within
six months following such exercise, exercise any Option granted under this Plan
by delivery of Common Stock without the consent of the Administrator.
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6.1.7 Termination of Employment. Except as
otherwise approved by the Administrator in its absolute discretion, if for any
reason other than death or permanent and total disability, an optionee ceases to
be employed by the Company or any of its Affiliates (such event being called a
"Termination"), Options held at the date of Termination (to the extent then
exercisable) may be exercised in whole or in part at any time within three
months of the date of such Termination, (but in no event after the Expiration
Date); provided, that if such exercise of the Option would result in liability
for the optionee under Section 16(b) of the Exchange Act, such Option shall
terminate at such later date as is fixed by the Administrator (but in no event
after the Expiration Date). If an optionee dies or becomes permanently and
totally disabled (within the meaning of Section 22(e)(3) of the Code) while
employed by the Company or an Affiliate or within the period that the Option
remains exercisable after Termination, Options then held (to the extent then
exercisable) may be exercised, in whole or in part, by the optionee, by the
optionee's personal representative or by the person to whom the Option is
transferred by devise or the laws of descent and distribution, at any time
within six months after the death or six months after the permanent and total
disability of the optionee (but in no event after the Expiration Date). For
purposes of this Section 6.1.7, "employment" includes service as a consultant.
For purposes of this Section 6.1.7, an optionee's employment shall not be deemed
to terminate by reason of sick leave, military leave or other leave of absence
approved by the Administrator, if the period of any such leave does not exceed
90 days or, if longer, if the optionee's right to reemployment by the Company or
any Affiliate is guaranteed either contractually or by statute.
6.1.8 Repurchase of Stock. At the option of the
Administrator, the stock to be delivered pursuant to the exercise of any Option
granted to an employee or consultant under this Plan may be subject to a right
of repurchase in favor of the Company with respect to any employee or consultant
whose employment, or consulting relationship with the Company is terminated.
Such right of repurchase shall be at the Option exercise price and (i) shall
lapse at the rate of at least 20% per year over five years from the date the
Option is granted (without regard to the date it becomes exercisable), and must
be exercised for cash or cancellation of purchase money indebtedness within 90
days of such termination and (ii) if the right is assignable by the Company, the
assignee must pay the Company upon assignment of the right (unless the assignee
is a 100% owned subsidiary of the Company or is an Affiliate) cash equal to the
difference between the Option exercise price and the value (determined as set
forth in Section 6.1.11) of the stock to be purchased if the Option exercise
price is less than such value.
Determination of the number of shares subject to any such right of
repurchase shall be made as of the date the employee's employment by, or
consultant's consulting relationship with, the Company terminates, not as of the
date that any Option granted to such employee or consultant is thereafter
exercised.
6.1.9 Withholding and Employment Taxes. At the
time of exercise of an Option or at such other time as the amount of such
obligations becomes determinable (the "Tax Date"), the optionee shall remit to
the Company in cash all applicable federal and state withholding and employment
taxes. If authorized by the Administrator in its sole discretion after
considering any tax or accounting consequences, an optionee may
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elect to (i) deliver a promissory note on such terms as the Administrator deems
appropriate, (ii) tender to the Company previously owned shares of Stock or
other securities of the Company, or (iii) have shares of Common Stock which are
acquired upon exercise of the Option withheld by the Company to pay some or all
of the amount of tax that is required by law to be withheld by the Company as a
result of the exercise of such Option, subject to the following limitations:
(a) Any election pursuant to clause
(iii) above by an optionee subject to Section 16 of the Exchange Act shall
either (x) be made at least six months before the Tax Date and shall be
irrevocable; or (y) shall be made in (or made earlier to take effect in) any
ten-day period beginning on the third business day following the date of release
for publication of the Company's quarterly or annual summary statements of
earnings and shall be subject to approval by the Administrator, which approval
may be given at any time after such election has been made. In addition, in the
case of (y), the Option shall be held at least six months prior to the Tax Date.
(b) Any election pursuant to clause
(ii) above, where the optionee is tendering Common Stock issued pursuant to the
exercise of an Option, shall require that such shares be held at least six
months prior to the Tax Date.
Any of the foregoing limitations may be waived (or additional
limitations may be imposed) by the Administrator, in its sole discretion, if the
Administrator determines that such foregoing limitations are not required (or
that such additional limitations are required) in order that the transaction
shall be exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3,
or any successor rule thereto. In addition, any of the foregoing limitations may
be waived by the Administrator, in its sole discretion, if the Administrator
determines that Rule 16b-3, or any successor rule thereto, is not applicable to
the exercise of the Option by the optionee or for any other reason.
Any securities tendered or withheld in accordance with this Section
6.1.9 shall be valued by the Company as of the Tax Date.
6.1.10 Other Provisions. Each Option granted under
this Plan may contain such other terms, provisions, and conditions not
inconsistent with this Plan as may be determined by the Administrator, and each
ISO granted under this Plan shall include such provisions and conditions as are
necessary to qualify the Option as an "incentive stock option" within the
meaning of Section 422 of the Code.
6.1.11 Determination of Value. For purposes of the
Plan, the value of Common Stock or other securities of the Company shall be
determined as follows:
(a) If the stock of the Company 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 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 system or exchange (or the largest such exchange)
for the date the value is to be determined (or if there are no sales for such
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date, then for the last preceding business day on which there were sales), as
reported in The Wall Street Journal or similar publication.
(b) If the stock of the Company is
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 stock on the date the value is to be determined (or if
there are no quoted prices for the date of grant, then for the last preceding
business day on which there were quoted prices).
(c) In the absence of an established
market for the stock, the fair market value thereof shall be determined in good
faith by the Administrator, with reference to the Company's net worth,
prospective earning power, dividend-paying capacity, and other relevant factors,
including the goodwill of the Company, the economic outlook in the Company's
industry, the Company's position in the industry and its management, and the
values of stock of other corporations in the same or a similar line of business.
6.1.12 Option Term. Subject to Section 6.3.4, no
Option shall be exercisable more than ten years after the date of grant, or such
lesser period of time as is set forth in the stock option agreement (the end of
the maximum exercise period stated in the stock option agreement is referred to
in this Plan as the "Expiration Date").
6.1.13 Exercise Price. The exercise price of any
Option granted to any person who owns, directly or by attribution under the Code
currently Section 424(d), stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or of any Affiliate
(a "Ten Percent Stockholder") shall in no event be less than 110% of the fair
market value (determined in accordance with Section 6.1.11) of the stock covered
by the Option at the time the Option is granted.
6.2 Terms and Conditions to Which Only NQOs Are Subject.
Options granted under this Plan which are designated as NQOs shall be subject to
the following terms and conditions:
6.2.1 Exercise Price. Except as set forth in
Section 6.1.13, the exercise price of a NQO shall be not less than 85% of the
fair market value (determined in accordance with Section 6.1.11) of the stock
subject to the Option on the date of grant.
6.3 Terms and Conditions to Which Only ISOs Are Subject.
Options granted under this Plan which are designated as ISOs shall be subject to
the following terms and conditions:
6.3.1 Exercise Price. Except as set forth in
Section 6.1.13, the exercise price of an ISO shall be determined in accordance
with the applicable provisions of the Code and shall in no event be less than
the fair market value (determined in accordance with Section 6.1.11) of the
stock covered by the Option at the time the Option is granted.
6.3.2 Disqualifying Dispositions. If stock
acquired by exercise of an ISO granted pursuant to this Plan is disposed of in a
"disqualifying
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disposition" within the meaning of Section 422 of the Code, the holder of the
stock immediately before the disposition shall promptly notify the Company in
writing of the date and terms of the disposition and shall provide such other
information regarding the Option as the Company may reasonably require.
6.3.3 Grant Date. If an ISO is granted in
anticipation of employment as provided in Section 5(d), the Option shall be
deemed granted, without further approval, on the date the grantee assumes the
employment relationship forming the basis for such grant, and, in addition,
satisfies all requirements of this Plan for Options granted on that date.
6.3.4 Term. Notwithstanding Section 6.1.12, no ISO
granted to any Ten Percent Stockholder shall be exercisable more than five years
after the date of grant.
7. MANNER OF EXERCISE
(a) An optionee wishing to exercise an Option shall give
written notice to the Company at its principal executive office, to the
attention of the officer of the Company designated by the Administrator,
accompanied by payment of the exercise price as provided in Section 6.1.6. The
date the Company receives written notice of an exercise hereunder accompanied by
payment of the exercise price will be considered as the date such Option was
exercised.
(b) Promptly after receipt of written notice of exercise
of an Option, the Company shall, without stock issue or transfer taxes to the
optionee or other person entitled to exercise the Option, deliver to the
optionee or such other person a certificate or certificates for the requisite
number of shares of stock. An optionee or permitted transferee of an optionee
shall not have any privileges as a shareholder with respect to any shares of
stock covered by the Option until the date of issuance (as evidenced by the
appropriate entry on the books of the Company or a duly authorized transfer
agent) of such shares.
8. EMPLOYMENT OR CONSULTING RELATIONSHIP
Nothing in this Plan or any Option granted thereunder shall interfere
with or limit in any way the right of the Company or of any of its Affiliates to
terminate any optionee's employment or consulting at any time, nor confer upon
any optionee any right to continue in the employ of, or consult with, the
Company or any of its Affiliates.
9. FINANCIAL INFORMATION
The Company shall provide to each optionee during the period such
optionee holds an outstanding Option, and to each holder of Common Stock
acquired upon exercise of Options granted under the Plan for so long as such
person is a holder of such Common Stock, a balance sheet and income statement of
the Company at least annually as prepared either by the Company or independent
certified public accountants of the Company. Such financial statements shall be
delivered as soon as practicable following the end of the Company's fiscal year.
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10. CONDITIONS UPON ISSUANCE OF SHARES
Shares of Common Stock 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
"Securities Act").
11. NONEXCLUSIVITY OF THE PLAN
The adoption of the Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options other than under the Plan.
12. AMENDMENTS TO PLAN
The Board may at any time amend, alter, suspend or discontinue this
Plan or any Option. Without the consent of an optionee, no amendment,
alteration, suspension or discontinuance may adversely affect outstanding
Options except to conform this Plan and ISOs granted under this Plan to the
requirements of federal or other tax laws relating to incentive stock options.
No amendment, alteration, suspension or discontinuance shall require shareholder
approval unless (a) shareholder approval is required to preserve incentive stock
option treatment for federal income tax purposes, (b) for so long as the Company
has a class of equity securities registered under Section 12 of the Exchange
Act, shareholder approval is required to meet the exceptions provided by Rule
16b-3, or any successor rule thereto, or (c) the Board otherwise concludes that
shareholder approval is advisable.
13. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon adoption by the Board provided,
however, that no Option granted pursuant to Part 1 of the Plan shall be
exercisable unless and until written consent of the shareholders of the Company,
or approval of shareholders of the Company voting at a validly called
shareholders' meeting, is obtained within 12 months after adoption by the Board.
If such shareholder approval is not obtained within such time, Options granted
hereunder shall terminate and be of no force and effect from and after
expiration of such 12-month period. Options granted pursuant to Part 2 of the
Plan shall not be subject to Shareholder approval. Options may be granted and
exercised under this Plan only after there has been compliance with all
applicable federal and state securities laws.
Plan adopted by the Board of Directors on January 10, 1996.
Plan approved by Shareholders on June 3, 1996.
Total number of shares covered by the Plan: 833,333 (as adjusted to reflect the
1 for 3 reverse split of Common Stock effectuated on June 3, 1996).
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EXHIBIT 99.2
1996 NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
OF
THORATEC LABORATORIES CORPORATION
1. PURPOSES OF THE PLAN
The purposes of the 1996 Nonemployee Directors Stock Option Plan of
Thoratec Laboratories Corporation, a California corporation, are to:
(a) Encourage Nonemployee Directors to improve operations
and increase profits of the Company;
(b) Encourage Nonemployee Directors to accept or continue
their association with the Company; and
(c) Increase the interest of Nonemployee Directors in the
Company's welfare through participation in the growth in value of the Common
Stock of the Company.
Options granted hereunder shall be "Nonstatutory Options", and shall
not include "incentive stock options" intended to satisfy the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended.
2. DEFINITIONS
As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the entity, either the
Board or the Committee, responsible for administering this Plan, as provided in
Section 3.
(b) "Board" shall mean the Board of Directors of the
Company, as constituted from time to time.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(d) "Committee" shall mean the committee, if any,
appointed by the Board in accordance with Section 5(a) to administer this Plan.
(e) "Common Stock" shall mean the Common Stock of the
Company.
(f) "Company" shall mean Thoratec Laboratories
Corporation, a California corporation.
(g) "Director Fee" shall mean the cash amount, if any, a
Nonemployee Director shall be entitled to receive for serving as a director of
the Company in any fiscal year.
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(h) "Fair Market Value" shall mean, as of the date in
question, the last transaction price quoted by the NASDAQ National Market System
on the date of grant; provided, however, that if the Common Stock is not traded
on such market system or the foregoing shall otherwise be inappropriate, then
the Fair Market Value shall be determined by the Administrator in good faith at
its sole discretion and on such basis as it shall deem appropriate. Such
determination shall be conclusive and binding on all persons.
(i) "Nonemployee Director" shall mean any person who is a
member of the Board but is not an employee of the Company or any Parent or
Subsidiary of the Company and has not been an employee of the Company or any
Parent or Subsidiary of the Company at any time during the preceding twelve (12)
months. Service as a director does not in itself constitute employment for
purposes of this definition.
(j) "Option" shall mean a stock option granted pursuant
to this Plan. Each Option shall be a nonstatutory option not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(k) "Option Agreement" shall mean the written agreement
described in Section 6 evidencing the grant of an Option to a Nonemployee
Director and containing the terms, conditions and restrictions pertaining to
such Option.
(l) "Option Shares" shall mean the Shares subject to an
Option granted under this Plan.
(m) "Optionee" shall mean a Nonemployee Director who
holds an Option.
(n) "Plan" shall mean this Thoratec Laboratories
Corporation Nonemployee Directors Stock Option Plan, as it may be amended from
time to time.
(o) "Related Option" shall have the meaning set forth in
Section 8.7.
(p) "Rule 16b-3" shall have the meaning set forth in
Section 5(a).
(q) "Section" unless the context clearly indicates
otherwise, shall refer to a Section of this Plan.
(r) "Share" shall mean a share of Common Stock, as
adjusted in accordance with Section 8.1.
(s) "Subsidiary" shall mean a "subsidiary corporation" of
the Company, whether now or hereafter existing, within the meaning of Section
425(f) of the Code, but only for so long as it is a "subsidiary corporation".
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3. ELIGIBLE PERSONS
Every person who at the date of grant of an Option is a Nonemployee
Director is eligible to receive Options under this Plan.
4. STOCK SUBJECT TO THIS PLAN
Subject to Section 8.1 of this Plan, the maximum aggregate number of
Shares which may be issued on exercise of Options granted pursuant to this Plan
is 150,000 Shares. The Shares covered by the portion of any grant under the Plan
which expires unexercised shall become available again for grants under the
Plan.
5. ADMINISTRATION
(a) This Plan shall be administered by the Board, or by a
committee (the "Committee") of at least two (2) Board members to which
administration of the Plan is delegated (in either case, the "Administrator"),
in accordance with the "disinterested administration" requirements of Rule 16b-3
promulgated by the Securities and Exchange Commission ("Rule 16b-3"), or any
successor rule thereto.
(b) Subject to the other provisions of this Plan, the
Administrator shall have the authority, in its sole discretion: (i) to determine
the Fair Market Value of the Shares subject to Option; (ii) to interpret this
Plan; (iii) to prescribe, amend and rescind rules and regulations relating to
this Plan; (iv) to defer (with the consent of the Optionee) or accelerate the
exercise date of any Option; (v) to authorize any person to execute on behalf of
the Company any instrument evidencing the grant of an Option; and (vi) to make
all other determinations deemed necessary or advisable for the administration of
this Plan. The Administrator may delegate nondiscretionary administrative duties
to such employees of the Company as it deems proper.
(c) All questions of interpretation, implementation and
application of this Plan shall be determined by the Administrator. Such
determination shall be final and binding on all persons.
6. GRANT OF OPTIONS
(a) Subject to the terms and conditions of this Plan, if
any person who is not an officer or employee of the Company is first elected or
appointed as a member of the Board on or after the Company's annual meeting of
shareholders held in 1996, then on the effective date of such appointment or
election of such person, the Company shall grant to such Nonemployee Director an
Option to purchase 3,333 Shares at an exercise price equal to the Fair Market
Value of such Shares on the date of such option grant.
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(b) Subject to the terms and conditions of this Plan, on
the date of the first meeting of the Board immediately following each annual
meeting of shareholders of the Company (even if held on the same day as the
meeting of shareholders) which is held after the date this Plan is approved by
the shareholders of the Company and thereafter, the Company shall grant to each
Nonemployee Director then in office an Option to purchase 1,667 Shares at an
exercise price equal to the Fair Market Value of such Shares on the date of such
option grant; provided that if the first such meeting of the Board occurs within
six months after the date a director is first elected or appointed as a member
of the Board, such director shall not receive an Option pursuant to this
subsection (b).
(c) No Options shall be granted under this Plan after ten
(10) years from the date of adoption of this Plan by the Board. Each Option
shall be evidenced by a written Option Agreement, in form satisfactory to the
Company, executed by the Company and the Nonemployee Director to whom such
Option is granted; provided, however, that the failure by the Company, the
Nonemployee Director or both to execute such an agreement shall not invalidate
the granting of an Option.
7. DIRECTOR FEE ELECTION
Upon election by the Board, all or any part of the Director Fees can be
waived in any given year, and the Director Fees waived may be applied by the
Board to reduce the exercise price of Options granted to the Nonemployee
Directors pursuant to Sections 6(a) and 6(b). The amount of Director Fees waived
may vary from year to year. By way of example, if the Board elects pursuant to
this Section to waive an aggregate of $6,000 of Director Fees which would
otherwise be payable to three Nonemployee Directors ($2,000 of fees for each),
an amount of $6,000 ($2,000 each) shall be applied by the Board to reduce the
exercise price of Options granted pursuant to Section 6(b), so that if each of
the three Nonemployee Directors in this example are granted Options for 1,000
shares exercisable at $5.00 each, the $2,000 could be applied to reduce the
exercise price of these options to $3.00 per share ($2,000 / 1,000 shares =
$2.00 per share reduction in exercise price).
8. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under this Plan shall be subject to the terms and
conditions set forth in this Section 8.
8.1 Changes in Capital Structure. Subject to Section 8.2,
if the Common Stock is changed by reason of a stock split, reverse stock split,
stock dividend or re-capitalization, or converted into or exchanged for other
securities as a result of a merger, consolidation or reorganization, appropriate
adjustments shall be made in: (a) the number and class of shares of Common Stock
subject to this Plan and each Option outstanding under this Plan; and (b) the
exercise price of each outstanding
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Option; provided, however, that the Company shall not be required to issue
fractional shares as a result of any such adjustments. Each such adjustment
shall be subject to approval by the Administrator in its sole discretion.
8.2 Time of Option Exercise. Subject to the other
provisions of this Plan, each Option granted pursuant to this Plan shall be for
a term of ten (10) years and two (2) days. Each Option granted under Section 6
of this Plan shall be exercisable in full six months after the date of grant.
The Company shall have a right of repurchase with respect to shares purchased
upon exercise of Options granted pursuant to Section 6 which shall expire with
respect to 12 1/2% of the number of Shares covered by such Option six months
after the date such Option is granted and shall expire with respect to 6 1/4% of
the number of shares covered by such Option at the end of each three-month
period thereafter.
8.3 Corporate Transactions. In connection with an
acquisition of the Company affected by a merger, consolidation, sale of all or
substantially all of the Company's assets, acquisition of shares, or any like
occurrence in which the Company is involved, the right of repurchase specified
in Section 8.2 shall lapse with respect to twice the number of shares then
subject to such right of repurchase. The Administrator shall have the authority,
in its sole discretion, to determine the time prior to consummation of such
transaction when such right of repurchase shall so lapse.
8.4 Limitation on Other Grants. The Administrator shall
have no discretion to grant Options under this Plan other than as set forth in
Sections 6(a) and 6(b).
8.5 Nonassignability of Option Rights. No Option granted
under this Plan shall be assignable or otherwise transferable by the Optionee,
except by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined by the Code. During the life of an
Optionee, an Option shall be exercisable only by the Optionee.
8.6 Payment. Except as provided below, payment in full,
in cash, shall be made for all Option Shares purchased at the time written
notice of exercise of an Option is given to the Company, and proceeds of any
payment shall constitute general funds of the Company. At the time an Option is
granted or exercised, the Administrator, in the exercise of its absolute
discretion, may authorize any one or more of the following additional methods of
payment: (a) acceptance of the Optionee's full recourse promissory note for all
or part of the Option price, less any par value per share, which must be paid in
cash, payable on such terms and bearing such interest rate as determined by the
Administrator (but in no event less than the minimum interest rate specified
under the Code at which no additional interest on debt instruments of such type
would be imputed), which promissory note may be either secured or
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<PAGE> 6
unsecured in such manner as the Administrator shall approve (including, without
limitation, by a security interest in the Shares); (b) delivery by the Optionee
of Common Stock already owned by the Optionee for all or part of the Option
price, provided the Fair Market Value of such Common Stock is equal on the date
of exercise to the Option price, or such portion thereof as the Optionee is
authorized to pay by delivery of such stock; provided, however, that if an
Optionee has exercised any portion of any option granted by the Company by
delivery of Common Stock, the Optionee may not, within six (6) months following
such exercise, exercise any Option granted under this Plan by delivery of Common
Stock; and (c) any other consideration and method of payment to the extent
permitted under the California Corporations Code.
8.7 Termination as Director. Unless determined otherwise
by the Administrator in its absolute discretion, to the extent not already
expired or exercised, an Option shall terminate at the earlier of: (a) the
expiration of the term of the Option; or (b) three (3) months after the last day
served by the Optionee as a director of the Company; provided, that an Option
shall be exercisable after the date of termination of service as a director only
to the extent exercisable on the date of termination; and provided further, that
if termination of service as a director is due to the Optionee's death or
"disability" (as determined in accordance with Section 22(e)(3) of the Code),
the Optionee, or the Optionee's personal representative (or any other person who
acquires the Option from the Optionee by will or the applicable laws of descent
and distribution), may at any time within twelve (12) months after the
termination of service as a director (or such lesser period as is specified in
the Option Agreement but in no event after the expiration of the term of the
Option), exercise the rights to the extent they were exercisable on the date of
the termination.
8.8 Withholding and Employment Taxes. At the time of
exercise of an Option (or at such later time(s) as the Company may prescribe),
the Optionee shall remit to the Company in cash all applicable federal and state
withholding and employment taxes. If authorized by the Administrator in its sole
discretion, an Optionee shall be permitted to elect, by means of a form of
election to be prescribed by the Administrator, to have shares of Common Stock
which are acquired upon exercise of the Option withheld by the Company or to
tender to the Company other shares of Common Stock or other securities of the
Company owned by the Optionee on the date of determination of the amount of tax
to be withheld as a result of the exercise of such Option (the "Tax Date") to
pay the amount of tax that is required by law to be withheld by the Company as a
result of the exercise of such Option; provided, that such election satisfies
the following requirements: (a) such election shall be irrevocable; (b) such
election shall be subject to the disapproval of the Administrator at any time;
(c) such election may not be made within six (6) months of the grant date of the
Option the exercise of which resulted in the tax withholding obligation (the
"Related
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Option"), except that this limitation shall not apply in the event of death or
disability of the Optionee occurring prior to the expiration of the six (6)
month period; and (d) such election must be made either: (x) at least six (6)
months prior to the Tax Date; or (y) prior to or coincident with the date of
exercise of the Related Option and within any ten (10) business day period
beginning on the third business day following the date of release by the Company
for publication of quarterly or annual summary statements of sales or earnings
of the Company. Any securities so withheld or tendered shall be valued by the
Company as of the Tax Date.
8.9 Option Term. Each Option granted hereunder shall
expire ten (10) years and two (2) days after the date of grant.
9. MANNER OF EXERCISE
(a) An Optionee wishing to exercise an Option shall give
written notice to the Company at its principal executive office, to the
attention of the officer of the Company designated by the Administrator,
accompanied by payment of the exercise price as provided in Section 8.6 and, if
required, by payment of any federal or state withholding or employment taxes
required to be withheld by virtue of exercise of the Option. The date the
Company receives written notice of an exercise hereunder accompanied by payment
of the exercise price and any required federal or state withholding or
employment taxes will be considered as the date such Option was exercised.
Unless otherwise provided by the Administrator, options may be exercised only
twice in any calendar year.
(b) Promptly after the date an Option is exercised, the
Company shall, without stock issue or transfer taxes to the optionee or other
person entitled to exercise the Option, deliver to the Optionee or such other
person a certificate or certificates for the requisite number of shares of
Common Stock. An Optionee or transferee of an Optionee shall not have any
privileges as a stockholder with respect to any Common Stock covered by the
Option until the date of issuance of a stock certificate.
10. NO RIGHT TO DIRECTORSHIP
Neither this Plan nor any Option granted hereunder shall confer upon
any Optionee any right with respect to continuation of the Optionee's membership
on the Board or shall interfere in any way with provisions in the Company's
Articles of Incorporation and By-Laws relating to the election, appointment,
terms of office, and removal of members of the Board.
11. FINANCIAL INFORMATION
The Company shall provide to each Optionee during the period such
optionee holds an outstanding Option a copy of the financial statements of the
Company as prepared either by the
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Company or independent certified public accountants of the Company. Such
financial statements shall be delivered as soon as practicable following the end
of the Company's fiscal year during the period Options are outstanding.
12. LEGAL REQUIREMENTS
The Company shall not be obligated to offer or sell any Shares upon
exercise of any Option unless the Shares are at that time effectively registered
or exempt from registration under the federal securities laws and the offer and
sale of the Shares are otherwise in compliance with all applicable securities
laws and the regulations of any stock exchange on which the Company's securities
may then be listed. The Company shall have no obligation to register the Shares
covered by this Plan under the federal securities laws or take any other steps
as may be necessary to enable the Shares covered by this Plan to be offered and
sold under federal or other securities laws. Upon exercising all or any portion
of an Option, an Optionee may be required to furnish representations or
undertakings deemed appropriate by the Company to enable the offer and sale of
the Shares or subsequent transfers of any interest in the Shares to comply with
applicable securities laws. Certificates evidencing Shares acquired upon
exercise of Options shall bear any legend required by, or useful for purposes of
compliance with, applicable securities laws, this Plan or the Option Agreements.
13. AMENDMENTS TO PLAN
The Board may amend this Plan at any time. Without the consent of an
optionee, no amendment may adversely affect outstanding Options. No amendment
shall require shareholder approval unless:
(a) shareholder approval is required to meet the
exemptions provided by Rule 16b-3, or any successor rule thereto; or
(b) the Board otherwise concludes that shareholder
approval is advisable.
14. SHAREHOLDER APPROVAL; TERM
This Plan shall become effective upon adoption by the Board of
Directors; provided, however, that no Option shall be exercisable unless and
until written consent of holders of a majority of the outstanding shares of
capital stock of the Company, or approval by holders of a majority of shares of
capital stock of the Company present, or represented, and entitled to vote at a
validly called shareholders' meeting (or such greater number as may be required
by law or applicable governmental regulations or orders) is obtained within
twelve (12) months after adoption by the Board. This Plan shall terminate ten
(10) years after adoption by the Board unless terminated earlier by the Board.
The Board may terminate this
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Plan at any time without shareholder approval. No Options shall be granted after
termination of this Plan, but termination shall not affect rights and
obligations under then outstanding Options.
Adopted by the Board of Directors: February 21, 1996
Approved by the Shareholders: June 3, 1996
Total number of shares covered by the Plan: 150,000 (as adjusted to reflect the
1 for 3 reverse split of Common Stock effectuated on June 3, 1996).
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