<PAGE> 1
As filed with the Securities and Exchange Commission on July 28, 1997
Registration No. ________
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 94710-2090
(Address of principal executive offices)
1997 STOCK OPTION PLAN
----------------------
(Full title of the plan)
D. Keith Grossman
Thoratec Laboratories Corporation
2023 Eighth Street
Berkeley, California 94710-2090
-------------------------------
(Name and address of agent for service)
(510) 841-1213
--------------
(Telephone number, including area code, of agent for service)
Copy to: August J. Moretti
Heller, Ehrman, White & McAuliffe
525 University Avenue
Palo Alto, California 94301-1900
(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,
no par value 1,000,000 $7.00 $7,000,000 $2,121.21
================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933,
as amended, and based on the average of the high and low prices reported
on the NASDAQ Stock Market on July 24, 1997.
<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 Commission
by the registrant are incorporated by reference in this registration statement:
(a) The registrant's latest annual report (Form 10-K or Form
10-KSB) 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 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 in (a) above;
(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, shall
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 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to Section 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
-2-
<PAGE> 3
(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, 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.
-3-
<PAGE> 4
(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."
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Independent Auditors' Consent
23.2 Consent of Heller, Ehrman, White & McAuliffe (filed as
part of Exhibit 5)
24 Power of Attorney (see pages 6 and 7)
99.1 1997 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 of 1933, as amended (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
-4-
<PAGE> 5
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 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 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 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 provisions described in Item 6, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
-5-
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Berkeley, State of California, on this 25th day of
July, 1997.
THORATEC LABORATORIES CORPORATION
By: /s/ D. Keith Grossman
--------------------------------
D. Keith Grossman, 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, and each of them, with full power of substitution and full power
to act without the other, as such person's true and lawful attorney-in-fact and
agent 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, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully, to all intents and purposes, as they
or such person might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or cause
to be done by virtue hereof.
-6-
<PAGE> 7
Pursuant to the requirements of the Securities Act of 1933,
this registration statement on Form S-8 has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ D. Keith Grossman Chief Executive Officer, July 25, 1997
- ------------------------------- President and Director
D. Keith Grossman (Principal Executive
Officer)
/s/ Cheryl D. Hess Chief Financial Officer and July 25, 1997
- ------------------------------- Vice President - Finance
Cheryl D. Hess (Principal Financial and
Accounting Officer)
/s/ Christy W. Bell Director June 20, 1997
- -------------------------------
Christy W. Bell
/s/ William W. Hitchcock Director July 25, 1997
- -------------------------------
William W. Hitchcock
/s/ Howard E. Chase Director June 23, 1997
- -------------------------------
Howard E. Chase
/s/ George W. Holdbrook, Jr. Director July 25, 1997
- -------------------------------
George W. Holdbrook, Jr.
/s/ J. Donald Hill Director June 23, 1997
- -------------------------------
J. Donald Hill
/s/ Daniel M. Mulven Director June 27, 1997
- -------------------------------
Daniel M. Mulvena
</TABLE>
-7-
<PAGE> 8
Index to Exhibits
<TABLE>
<CAPTION>
Sequentially
Item No. Description of Item Numbered Page
- -------- ------------------- -------------
<S> <C> <C>
5 Opinion of Heller, Ehrman, White & McAuliffe
23.1 Independent Auditors' Consent
23.2 Consent of Heller, Ehrman, White & McAuliffe
(See Exhibit 5)
24 Power of Attorney (See pages 6 and 7)
99.1 1997 Stock Option Plan
</TABLE>
-8-
<PAGE> 1
EXHIBIT 5
July 25, 1997
18103-1000
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 July 28, 1997 for the
purposes of registering under the Securities Exchange Act of 1933, as amended,
1,000,000 shares of its Common Stock, no par value (the "Shares"). The Shares
are issuable under the Company's 1997 Stock Option Plan (the "Plan").
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 July 25, 1997, 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
shareholders of the Company relating to the Shares,
<PAGE> 2
Thoratec Laboratories Corporation
July 25, 1997 Page 2
and the Registration Statement, and (ii) certifying
as to certain factual matters;
(d) The Registration Statement;
(e) The Plan; and
(f) A letter from American Securities Transfer & Trust,
Inc., the Company's transfer agent, dated July 24,
1997, as to the number of shares of the Company's
common stock that were outstanding on July 23, 1997.
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 Plan 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 Plan 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 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registrtion Statement of
Thoratec Laboratories Corporation on Form S-8 of our report dated February 14,
1997, appearing in the Annual Report on Form 10-K of Thoratec Laboratories
Corporation for the year ended December 28, 1996.
/S/DELOITTE & TOUCHE LLP
San Jose, California
July 23, 1997
<PAGE> 1
1997 STOCK OPTION PLAN
OF
THORATEC LABORATORIES CORPORATION
1. PURPOSES OF THE PLAN
The purposes of the 1997 Stock Option Plan (the "Plan") of
Thoratec Laboratories Corporation, a California corporation (the "Company"), are
to:
(a) Encourage selected directors, employees and consultants to
improve operations and increase profits of the Company;
(b) Encourage selected directors, employees and consultants to
accept or continue employment or association with the Company or its Affiliates;
and
(c) Increase the interest of selected directors, 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
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 this Plan. Every person who at
the date of grant is a consultant or non-employee director to the Company or any
Affiliate (as defined below) of the Company is eligible to receive NQOs under
this Plan. 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 1,000,000 shares of Common Stock. The
shares covered by the portion of any grant under the Plan which expires
unexercised shall become available again for grants under the Plan.
<PAGE> 2
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 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.
-2-
<PAGE> 3
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 directors, employees or consultants of the Company, but
are not directors, 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
-3-
<PAGE> 4
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.
-4-
<PAGE> 5
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 director or
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 a director, employee or consultant under this Plan may be subject to
a right of repurchase in favor of the Company with respect to any director,
employee or consultant whose director, 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. Shares
repurchased by the Company pursuant to the Company's right of repurchase are not
again available for grant under the Plan.
Determination of the number of shares subject to any such
right of repurchase shall be made as of the date the director's director
relationship with, employee's employment by, or consultant's consulting
relationship with, the Company terminates, not as of the date that any Option
granted to such director, 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
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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 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.
Any limitations may be waived (or additional limitations may
be imposed) by the Administrator, in its sole discretion, if the Administrator
determines that 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 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 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
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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 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 director,
employment or consultancy relationship forming the basis for such grant, and, in
addition, satisfies all requirements of this Plan for Options granted on that
date.
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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. RELATIONSHIP OF PARTICIPANT
Neither the adoption of this Plan nor the grant of any Option
hereunder shall (i) confer upon any employee any right to continued employment
nor shall it interfere in any way with the right of the Company or an Affiliate
to terminate the employment of any employee at any time; or (ii) confer upon any
consultant any right to a continued consultancy relationship nor shall it
interfere in any way with the right of the Company or an Affiliate to terminate
the consultancy relationship of any consultant at any time; or (ii) confer upon
any participant any right with respect to continuation of the participant's
membership on the Board or shall interfere in any way with provisions in the
Company's Articles of Incorporation and Bylaws relating to the election,
appointment, terms of office, and removal of members of the Board.
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.
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
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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 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 may be
granted and exercised under this Plan only after there has been compliance with
all applicable federal and state securities laws.
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