As filed with the Securities and Exchange Commission on September 9, 1999
Registration No. _______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
____________________
HUMANA INC.
(Exact name of registrant as specified in its charter)
Delaware 61-0647538
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 West Main Street
Louisville, Kentucky 40202
(Address of principal executive offices)
_____________________
HUMANA INC. NON-QUALIFIED STOCK OPTION PLAN FOR EMPLOYEES
(Full title of the plan)
_____________________
Arthur P. Hipwell
Senior Vice President and General Counsel
Humana Inc.
500 West Main Street
Louisville, Kentucky 40202
(502) 580-1000
(Name, address and telephone number,
including area code, of agent for service)
_______________________
CALCULATION OF REGISTRATION FEE
Proposed Proposed Amount
Title of Amount to maximum maximum of
securities be offering aggregate registration
to be Registered price offering fee
registered (1) per share (2) price (2)
Common Stock, 1,400,000 $9.4688 $13,256,320 $3,686
par value
$0.16-2/3 per
share
(1) Plus an indeterminable number of additional shares as may
become issuable as a result of any antidilution provisions of the
Plan. The shares represent the number of shares of the
Registrant's Common Stock, including associated Preferred Stock
Purchase Rights, which may be issued upon the exercise of
options.
(2) Estimated solely for the purpose of determining the
registration fee. Calculated in accordance with Rule 457(h)
under the Securities Act of 1933 and based on the average of
the high and low prices of the Common Stock as reported in
the New York Stock Exchange Composite Tape on September 2,
1999.
Exhibit Index on page II-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following documents filed by Humana Inc. (the
"Company" or the "Registrant") with the Commission (File No. 1-
5975) are incorporated herein by reference and made a part
hereof:
(a) The Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998;
(b) The Registrant's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999 and June 30, 1999; and
(c) The Registrant's Current Reports of Form 8-K dated April 8,
1999 and August 3, 1999.
(d) The description of the Registrant's Common Stock,
par value $0.16-2/3 per share (the "Common
Stock"), contained in the Registrant's
Registration Statement on Form 8-A, as such
description may be amended or updated.
All documents filed by the Company pursuant to Sections
13, 14 and 15(d) of the Securities Exchange Act of 1934
("Exchange Act"), subsequent to the date of this Registration
Statement and prior to the filing of a post-effective amendment
to this Registration Statement which indicates that all of the
securities offered have been sold or which deregisters all of
such shares then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute
a part of this Registration Statement.
Item 4. Description of Securities.
The Company's authorized capital stock consists of (i)
300,000,000 shares of Common Stock, of which 167,530,960 shares
were issued and outstanding as of September 1, 1999; (ii)
10,000,000 shares of Preferred Stock, par value $1.00 per share,
of which none were issued or outstanding as of September 1, 1999.
Item 5. Interest of Named Experts and Counsel.
The validity of the issuance of the shares of Common
Stock being offered by the Registration Statement will be passed
upon for the Registrant by Kathleen Pellegrino, Vice President
and Associate General Counsel of the Registrant. As of September
1, 1999, Ms. Pellegrino owned 8,450 shares of Common Stock,
has 2,940 shares of Common Stock in the Humana Retirement and
Savings Plan, and also has stock options to purchase 92,971
shares of Common Stock of the Registrant.
II-1
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law
(the "DGCL") permits a Delaware corporation to indemnify any
person who was or is, or is threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation) by reason
of the fact that such person is or was a director, officer,
employee or agent of such corporation, or is or was serving at
the request of such corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise. The indemnity may include expenses
(including attorneys' fees) actually and reasonably incurred by
such person in connection with such action, suit or proceeding,
provided that such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the
best interests of the corporation, and with respect to any
criminal action or proceeding, such person had no reasonable
cause to believe the conduct was unlawful. A Delaware
corporation may indemnify such persons in actions brought by or
in the right of the corporation to procure a judgment in its
favor under the same conditions, except that no indemnification
is permitted in respect of any claim, issue or matter as to which
such person has been adjudged to be liable to the corporation
unless and to the extent the Court of Chancery of the State of
Delaware, or the court in which such action or suit is brought,
determines upon application that, in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the Court of Chancery
or other such court deems proper. To the extent such person has
been successful on the merits or otherwise in defense of any
action referred to above, or in defense of any claim, issue or
matter therein, the corporation must indemnify such person
against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
Corporations, under certain circumstances, may pay expenses
incurred by an officer or director in advance of the final
disposition of an action for which indemnification may be
permitted or required. The indemnification and advancement of
expenses provided for or granted pursuant to Section 145 of the
DGCL are not exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under
any by-law, agreement, vote of stockholders or disinterested
directors or otherwise. Section 145 further provides that a
corporation may maintain insurance against liabilities for which
indemnification is not expressly provided by statute.
Article X of the Company's By-Laws essentially provides
for indemnification of directors, officers, employees and agents
of the Company to the fullest extent authorized under the DGCL.
The Tenth Article of the Company's Restated Certificate
of Incorporation provides that a director of the Company shall
not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director
except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit.
The Company has in effect officers and directors
liability insurance policies with various insurance companies.
The policies provide indemnity to the directors and officers of
the Company for loss arising from claims concerning a covered
wrongful act where there is no corporate indemnification. The
insurance will also reimburse the Company for indemnification it
may be required by statute or the Company's By-laws to make to
any of its directors and officers in connection with a claim by
reason of a wrongful act. The policies cover negligent acts,
errors, omissions, or breach of duty by a director or officer.
The principal exclusions from coverage include the following:
(i) claims involving violations of Section 16(b) of the Exchange
Act; (ii) dishonest acts; and (iii) libel, slander or non-
monetary damages. The policies generally provide for a $500,000
deductible self-insurance retention by the Company. The limit of
liability under the policies is $70,000,000 in the aggregate for
coverage in excess of deductibles and participations.
II-2
The Company has entered into Indemnity Agreements (the
"Agreements") with its directors and officers ("Indemnitees"),
whereby the Company will indemnify such parties and advance
expenses to the fullest extent permitted by the DGCL.
An Indemnitee will not be entitled to indemnification
or advancement of expenses under the Agreements with respect to
any proceeding or claim brought or made by the Indemnitee against
the Company. If the Indemnitee is not entitled to
indemnification of all expenses, he or she may still be
indemnified for a portion of the expenses. The determination of
entitlement to indemnification under the Agreements will be made
by a majority of a quorum of disinterested directors, independent
counsel or by the stockholders of the Company. In the event of a
change in control of the Company (as defined in the Agreements),
the determination of entitlement will be made, if the Indemnitee
so elects, by an independent counsel selected by the Indemnitee,
and the Company will have the burden of proof to overcome a
presumption that the Indemnitee is entitled to indemnification.
The Agreements further provide that to the extent the
Company maintains a liability insurance policy for directors,
officers, employees, agents or fiduciaries, the Indemnitee will
be covered by such policy in accordance with its terms to the
maximum extent of the coverage available for any such officer,
director, employee, agent or fiduciary under the policy. The
Agreements will terminate upon the later of: (a) 10 years after
the date the Indemnitee ceases to serve; or (b) the final
termination of all pending proceedings covered thereunder.
Item 7. Exemption From Registration Claimed.
Not Applicable.
Item 8. Exhibits.
The Exhibit Index immediately preceding the exhibits is
incorporated herein by reference.
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 ("Securities Act");
(ii) To reflect in the prospectus any facts
or events arising after the effective
date of this Registration Statement (or
the most recent post-effective amendment
hereof) which, individually or in the
aggregate, represent a fundamental
change in the information set forth in
this Registration Statement;
(iii) To include any material information
with respect to the plan of distribution
not previously disclosed in this
Registration Statement or any material
change to such information in this
Registration Statement;
II-3
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) shall not apply if the information
required to be included in a post-effective
amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in this
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) That for purposes of determining any liability
under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange
Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) 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 DGCL,
the Amended and Restated Certificate of Incorporation, the By-
Laws of the Registrant and the Agreements or otherwise, the
Registrant has been advised that in the opinion of the 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 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.
II-4
SIGNATURES
The Registrant.
Pursuant to the requirements of the Securities Act of 1933
("Securities Act"), the Registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this
Registration Statement on Form S-8 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of
Louisville, Commonwealth of Kentucky, on the 9th day of
September, 1999.
HUMANA INC.
NON-QUALIFIED STOCK OPTION PLAN
FOR EMPLOYEES
By: /s/ Arthur P. Hipwell
Arthur P. Hipwell
Senior Vice President and
General Counsel
II-5
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act, this
Registration Statement and Power of Attorney have been signed
below by the following persons in the capacities and on the dates
indicated.
Each person whose signature appears below constitutes and
appoints David A. Jones and Arthur P. Hipwell, and each of them,
his or her true and lawful attorneys-in-fact and agents, with
full power of substitution to execute in his or her name and on
his or her behalf, and to file any amendments (including, without
limitation, post-effective amendments) to this Registration
Statement necessary or advisable in the opinion of any of them to
enable the Company to comply with the Securities Act, and any
rules, regulations and requirements of the Commission thereunder,
in connection with the registration of the additional securities
which are under the subject of this Registration Statement.
BY: /s/ David A. Jones
David A. Jones
Chairman of the Board,
Interim Chief Executive Officer
(Principal Executive Officer) and
Director
DATE: September 9, 1999
BY: /s/ James E. Murray
James E. Murray
Sr. Vice President & Chief Financial
Officer
(Principal Financial & Accounting
Officer)
DATE: September 9, 1999
BY: /s/ K. Frank Austen, M.D.
K. Frank Austen, M.D.
Director
DATE: September 9, 1999
BY: /s/ Michael E. Gellert
Michael E. Gellert
Director
DATE: September 9, 1999
BY: /s/ John R. Hall
John R. Hall
Director
DATE: September 9, 1999
II-6
BY: /s/ David A. Jones, Jr.
David A. Jones, Jr.
Vice-Chairman
DATE: September 9, 1999
BY: /s/ Irwin Lerner
Irwin Lerner
Director
DATE: September 9, 1999
BY: /s/ W. Ann Reynolds, Ph.D.
W. Ann Reynolds, Ph.D.
Director
DATE: September 9, 1999
II-7
Exhibit Index.
4.1 Restated Certificate of Incorporation filed with the
Secretary of State of Delaware on November 9, 1989 as
restated to incorporate the amendment of January 9, 1992,
and the correction of March 23, 1992. Exhibit 4(i) to the
Company's Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form S-8 (Reg. No. 33-49305)
filed February 2, 1994 is incorporated by reference herein.
4.2 By-Laws as amended. Exhibit 3(b) to the Company's Annual
Report for the year ended December 31, 1997, is
incorporated by reference herein.
4.3 Form of Amended and Restated Rights Agreement, dated
February 14, 1996, between Humana Inc. and Mid-America Bank
of Louisville and Trust Company. Exhibit 1.3 to the
Registration Statement (File No. 1-5975) on Form 8-A/A
dated February 14, 1996 is incorporated by reference
herein.
4.4 Amendment No. 1 dated May 27, 1998, to Amended and
Restated Rights Agreement, dated February 14, 1996 between
Humana Inc. and Mid-America Bank of Louisville and Trust
Company ("Rights Agreement"). Exhibit 4.2 to the
Registration Statement (File No. 1-5975) on Form 8-A/A dated
June 15, 1998 is incorporated by reference herein.
4.5 Amendment No. 2 dated as of March 1, 1999 to the Rights
Agreement. Exhibit 4.3 to the Registration Statement (File
No. 1-5975) on Form 8-A12B/A dated February 26, 1999 is
incorporated by reference herein.
5 Opinion of counsel as to the validity of the
securities registered herein, filed herewith.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants for the Registrant, filed herewith.
23.2 Consent of counsel, included in 5 above.
24 Powers of Attorney (included on the signature page of
this Registration Statement).
99 Humana Inc. Non-Qualified Stock Option Plan for Employees,
filed herewith.
II-8
Exhibit 5
September 9, 1999
Humana Inc.
500 West Main Street
Louisville, KY 40202
RE: Form S-8 Registration Statement
Ladies and Gentlemen:
I am Vice President and Associate General Counsel for Humana
Inc., a Delaware Corporation (the "Company"), and have been
involved with the preparation of a Registration Statement on
Form S-8 (the "Registration Statement") under the Securities
Act of 1933, as amended, covering an aggregate of 1,400,000
shares of the common stock, par value $0.16-2/3 per share
(the "Shares") to be issued in connection with the Company's
Non-Qualified Stock Option Plan for Employees ( the "Plan").
I have examined and am familiar with the Restated
Certificate of Incorporation and Restated By-Laws of the
Company and the various corporate records and proceedings
related to the organization of the Company and the proposed
issuance of Shares. I have also examined such other
documents as I have considered necessary for the purpose of
this opinion.
Based on the foregoing, it is my opinion that the Shares
have been duly authorized and, when issued and paid for in
accordance with the terms of the Plan, will be validly
issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an Exhibit
to the Registration Statement.
Sincerely,
/s/Kathleen Pellegrino
Kathleen Pellegrino
Vice President and Associate General Counsel
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation
by reference in this Registration
Statement on Form S-8 of our report
dated February 9, 1999 relating to the
financial statements, which appears in
the 1998 Annual Report to Shareholders
of Humana Inc., which is incorporated by
reference in Humana Inc.'s Annual Report
on Form 10-K for the year ended December
31, 1998. We also consent to the
incorporation by reference of our report
dated February 9, 1999 relating to the
financial statement schedule, which
appears in such Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
/s/
Louisville, Kentucky
September 9, 1999
EXHIBIT 99
NON-QUALIFIED STOCK OPTION PLAN FOR EMPLOYEES
1. PURPOSE. The purpose of the Non-Qualified Stock
Option Plan for Employees (the "Plan") is to enable Humana
Inc., a Delaware corporation, and its subsidiaries
(collectively the "Company") to attract and retain capable
employees and to provide a long-range inducement for
employees to remain in the management of the Company, to
perform at increasing levels of effectiveness, to acquire a
stake in the Company with the interest and outlook of an
owner and to realize an economic benefit from any future
appreciation in the price of the Company's common stock.
These objectives will be promoted through the granting to
employees of non-qualified options to acquire shares of
common stock of the Company pursuant to the terms of the
Plan.
2. DEFINITIONS AND INTERPRETATION.
2.1 Defined Terms. Except as otherwise stated
herein, defined terms whenever used in this Plan, shall have
the same meaning as defined in the Humana Inc. 1996 Stock
Incentive Plan for Employees or its successor.
2.2 Gender and Number. Except when otherwise
indicated by context, reference to the masculine gender
shall include the feminine gender and any term used in the
singular shall also include the plural.
3. ADMINISTRATION. The Board shall appoint the
committee to administer the Plan. The members of the
Committee shall not be eligible to receive Options. In
accordance with and subject to the provisions of the Plan,
the Committee shall (a) select the employees to whom Options
shall be granted; (b) determine the number of shares to be
included in each Option; (c) determine the time at which the
Option is to be granted; (d) define the Option period; (e)
determine the duration and purposes for leaves of absences,
which may be granted to an Employee on an individual basis
without constituting termination of employment for purposes
of the Plan; (f) determine when Options may be exercised;
and (g) establish such other provisions of the Agreement as
the Committee may deem necessary or desirable. The Committee
shall have full authority in its discretion to determine
when Options may be exercised, including the ability to
accelerate exercise dates of Options previously granted
under the Plan and to extend the exercise period. From time
to time the Committee may adopt such rules and regulations
for carrying out the Plan as it may deem proper and in the
best interest of the Company. However, in no event may
Options be repriced under the Plan without shareholder
approval. The interpretation of any provision of the Plan
by the Committee shall be final.
4. ELIGIBILITY. Executive Officers, as defined in the
Exchange Act, and Directors of the Company are not eligible
to participate in the Plan. Any other employee ("Employee")
of the Company whose judgment, initiative and efforts
contribute or may be expected to contribute materially to
the successful performance of the Company shall be eligible
to receive Options under the Plan.
5. SHARES AVAILABLE FOR OPTIONS. The Shares to be
subject to Options under the Plan may be either authorized
and unissued or held in the Treasury of the Company. The
total amount of Shares for which Options may be granted
under the Plan shall not exceed 1,400,000 Shares.
The maximum number of Shares which may be authorized by the
Board over the life of the Plan shall not exceed 2% of the
Shares outstanding. Such number of Shares is subject to
adjustment as provided herein. In the event that an Option
granted under the Plan to any Employee expires, is cancelled
or is otherwise terminated for any reason without having
been exercised or a payment having been made, any
unexercised shares covered thereby shall be available for
the granting of Options under the Plan.
6. OPTION CONDITIONS. The Committee shall set forth in
a related Agreement the terms, conditions and limitations
applicable to each grant, including but not limited to those
specified in the Plan.
7. OPTION PRICE. The Option exercise price per Share
purchasable under an Option shall be determined by the
Committee at the time of grant, but in no event shall the
exercise price of an Option be less than one hundred percent
(100%) of the Fair Market Value of the Stock on the date of
the grant of such Option.
8. OPTION TERM. The term of each Option shall be fixed
by the Committee.
9. EXERCISE OF OPTION. The exercise of an Option shall
be made only by a written notice delivered in person or by
mail to the Secretary of the Company at the Company's
principal executive office, specifying the number of Shares
to be exercised and accompanied by payment therefore and
otherwise in accordance with the Agreement pursuant to which
the Option was granted. The purchase price of the Shares as
to which an Option shall be exercised shall be paid in full
at the time of exercise at the election of the holder of an
Option (a) in cash or currency of the United States of
America, (b) if approved by the Committee, by tendering to
the Company Shares then owned having a Fair Market Value
equal to the cash exercise price of the Option being
exercised, or (c) a combination of (a) and (b). Such Fair
Market Value for the tendered Shares shall be determined as
of the close of the business day immediately preceding the
day on which the Option is exercised. The right to purchase
Shares shall be cumulative so that when the right to
purchase any Shares has accrued such Shares or any part
thereof may be purchased at any time thereunder until the
expiration or termination of the Option.
10. TAX WITHHOLDING. With respect to any Option the
Committee may, in its discretion and subject to such rules
as the Committee may adopt to comply with Exchange Act, Code
or other rules, permit an employee to satisfy, in whole or
in part, any withholding tax obligation which may arise in
connection with the exercise of such option by electing to
(a) have the Company collect or withhold cash; or (b)
deliver to the Company, on the date on which the amount of
tax to be withheld is determined (the "Tax Date"), Shares
owned prior to or acquired in such Option exercise having a
Fair Market Value equal to the amount of the withholding
tax; or (c) a combination of (a) and (b).
11. TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY. If the
employment of an Employee is terminated for Cause, all the
Option rights of such Employee, whether or not exercisable,
under any then outstanding Option shall terminate
immediately.
If the employment of the Employee is terminated for any
reason other than for Cause, Retirement, death or
Disability, an Option shall be exercisable by such Employee
or a personal representative at any time prior to the
expiration date of the Option or within ninety (90) days
after the date of such termination, whichever is the shorter
period, but only to the extent of the accrued right to
exercise at the date of such termination.
In the event of Retirement, an Option shall be
exercisable by such Employee at any time prior to the
expiration date of the Option or within two (2) years after
the date of such Retirement, whichever is the shorter
period, but only to the extent of the accrued right to
exercise at the date of Retirement.
In the event of death or Disability of an Employee
while in the employ of the Company, all Options of such
Employee then outstanding shall become immediately
exercisable. In the event of death of an Employee, all
Options of such Employee shall be exercisable by the person
or the persons to whom those rights pass by will or by the
laws of descent and distribution or, if appropriate, by the
legal representative of the estate of the deceased Employee
at any time within two (2) years after the date of such
death, regardless of the expiration date of the Option. In
the event of Disability of an Employee all Options of such
Employee shall be exercisable by the Employee or, if
incapacitated, by a legal representative at any time within
two (2) years of the date of determination of Disability
regardless of the expiration date of the Options.
12. RESTRICTIONS ON TRANSFER. No Option granted under the
Plan shall be transferable by an Employee other than by will
or, if the Employee dies intestate, by the laws of descent
and distribution of the state of such Employee's domicile at
the time of death. An Option shall be exercisable during
the lifetime of an Employee only by such Employee or, if
incapacitated because of Disability, by a legal
representative.
13. EFFECT OF CHANGE IN CONTROL. Except as may be set
forth in an Agreement, in the event of a Change in Control,
all Options outstanding on the date of such Change in
Control shall become immediately and fully exercisable. In
the event an Employee's employment with the Company is
terminated other than for Cause within two (2) years
following a Change in Control, each Option held by the
Employee that was exercisable as of the date of termination
of the Employee's employment or service shall remain
exercisable for a period ending the earlier of the second
anniversary of the termination of the Employee's employment
or service or the expiration of the stated term of the
Option.
14. CAPITAL ADJUSTMENTS AFFECTING SHARES. In the event of
a capital adjustment resulting from a stock dividend, stock
split, reverse stock split, reorganization, merger,
consolidation, combination or exchange of stock, spinoff or
other change in corporate structure or capitalization
affecting the stock, the number of Shares or other stock or
securities subject to the Plan and the number of Shares or
other stock or securities subject to Options shall be
adjusted in a manner consistent with such capital
adjustment. The purchase price of the Shares, stock or
other securities subject to Options shall be adjusted so
that there will be no material increase in the aggregate
purchase price payable upon exercise of any such Options or
other options or rights granted; provided, however, that
such adjustments shall be made in a manner which preserves,
without exceeding, the then existing value of the Option.
15. CORPORATE MERGERS, ACQUISITIONS, ETC. The
Committee may grant Options or, with the consent of the
Option holder, modify Options under the Plan to include such
provisions as it deems necessary and in the best interest of
the Company and the Employee to preserve for the Employee
the benefits of any appreciation of the underlying stock
during the term of the Option, which benefits might
otherwise be lost as a result of a Change in Control of the
Company.
16. AMENDMENT TO THE PLAN. The Board shall have the
right to amend, including the addition of Shares to the
Plan, suspend or terminate the Plan at any time without the
approval of Stockholders of the Company, to the extent such
approval is not required pursuant to the Exchange Act,
except in no event may Options be repriced without
shareholders' approval.
17. EFFECTIVE DATE AND TERM OF THE PLAN. The effective
date of the Plan is September 9, 1999. No Options may be
granted under the Plan after September 9, 2004.
18. MAXIMUM OPTIONS TO AN INDIVIDUAL EMPLOYEE. No
individual Employee may be granted Options to purchase
Shares in excess of fifteen percent (15%) of the number of
Shares available under the Plan.
19. RIGHTS OF EMPLOYEES. No Employee shall be deemed
for any purpose to be the owner of any Shares subject to any
Option unless and until (a) the Option shall have been
exercised pursuant to the terms thereof, (b) the Company
shall have issued and delivered Shares to the Employee, and
(c) the Employee's name shall have been entered as a
stockholder of record on the books of the Company.
Thereupon, the Employee shall have full voting, dividend and
other ownership rights with respect to such Shares, subject
to such terms and conditions as may be set forth in the
applicable Agreement.
20. "POOLING TRANSACTION" Notwithstanding anything
contained in the Plan or any Agreement to the contrary, in
the event of a Change in Control, which has been approved by
the Board, which is also intended to constitute a Pooling
Transaction, the Committee shall take such actions, if any,
which are specifically recommended by an independent
accounting firm retained by the Company to the extent
reasonably necessary in order to assure that the Pooling
Transaction will qualify as such, including but not limited
to (i) deferring the vesting, exercise, payment, settlement,
or lapsing of restriction with respect to any Option, (ii)
providing that the payment or settlement in respect of any
Option be made in the form of cash, Shares or securities of
a successor or acquirer of the Company, or a combination of
the foregoing and (iii) providing for the extension of the
term of any Option to the extent necessary to accommodate
the foregoing, but not beyond the maximum term permitted for
any Option.
21. NON-EXCLUSIVITY OF THE PLAN. The adoption of the
Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it
may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or
only in specific cases.
22. LIMITATION OF LIABILITY. As illustrative of the
limitations of liability of the Company, but not intended
to be exhaustive thereof, nothing in the Plan shall be
construed to:
(a) give any person any right to be granted an Option
other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect
to Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any
time; or
(d) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any
person at any particular rate of compensation or for any
particular period of time.
23. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
23.1 Except as to matters of federal law, the Plan and
the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the
State of Delaware without giving effect to conflicts of laws
principles thereof.
23.2 The obligation of the Company to sell or deliver
Shares with respect to Options under the Plan shall be
subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws,
and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the
Committee.
23.3 The Board may make such changes as may be
necessary or appropriate to comply with the rules and
regulations of any government authority, or to obtain
for Employees the tax benefits under the applicable provisions
of the Code and regulations promulgated thereunder.
23.4 Each Option is subject to the requirement that, if
at any time the Committee determines, in its discretion,
that the listing, registration or qualification of Shares
issuable pursuant to the Plan is required by any securities
exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the
grant of an Option, no Options shall be granted or payment
made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been
effected or obtained free of any conditions as acceptable to
the Committee.
23.5 Notwithstanding anything contained in the Plan or
any Agreement to the contrary, in the event that the
disposition of Shares acquired pursuant to the Plan is not
covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Securities Act"),
and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent
required by the Securities Act and Rule 144 or other
regulations thereunder. The Committee may require any
individual receiving Shares pursuant to an Option granted
under the Plan, as a condition precedent to receipt of such
Shares, to represent and warrant to the Company in writing
that the Shares acquired by such individual are acquired
without a view to any distribution thereof and will not be
sold or transferred other than pursuant to an effective
registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act or the rules
and regulations promulgated thereunder. The certificates
evidencing any of such Shares shall be appropriately amended
or have an appropriate legend placed thereon to reflect
their status as restricted securities as aforesaid.
