<PAGE> 1
As filed with the Securities and Exchange Commission on August 16, 1996
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
SEEQ TECHNOLOGY INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 94-2711298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
47200 BAYSIDE PARKWAY, FREMONT, CA 94538
(Address of principal executive offices) (Zip Code)
---------------
SEEQ TECHNOLOGY INCORPORATED
RESTATED 1982 STOCK OPTION PLAN
----------------
(Full title of the Plan)
----------------
PHILLIP J. SALSBURY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SEEQ TECHNOLOGY INCORPORATED
47200 BAYSIDE PARKWAY, FREMONT, CA 94538
(Name and address of agent for service)
(510) 226-7400
(Telephone number, including area code, of agent for service)
----------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options to Purchase Common Stock
($0.01 par value) 2,400,000 N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock,
($0.01 par value) 2,400,000(1) $3.09 (2) $7,416,000 (2) $2,558.00
=================================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Restated 1982 Stock
Option Plan by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the
receipt of consideration which results in an increase in the number of
outstanding shares of Common Stock of Seeq Technology Incorporated.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933 on the basis of the average of the high and
low prices per share of Common Stock of SEEQ Technology Incorporated
on August 13, 1996 as reported by the Nasdaq National Market.
===============================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
SEEQ Technology Incorporated (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange Commission (the
"Commission"):
(a) The Registrant's Annual Report on Form 10-K, together with
amendments thereto, for the fiscal year ended September 30, 1995, filed pursuant
to Section 13(a) of the Securities Exchange Act of 1934 (the "1934 Act");
(b) The Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 31, 1995, filed with the Commission;
(c) The Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1996, filed with the Commission;
(d) The Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1996, filed with the Commission; and
(e) The Registrant's Registration Statement No. 0-11778 on
Form 8-A filed with the Commission on March 30, 1984 in which there is described
the terms, rights and provisions applicable to the Registrant's outstanding
Common Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the
date of this Registration Statement and 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 into this Registration Statement and to be a part
hereof 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
The Registrant's Restated Certificate of Incorporation
provides that no director of the Registrant will be personally liable to the
Registrant or any of its stockholders for monetary damages arising from the
director's breach of fiduciary duty. However, this does not apply with respect
to any action in which the director would be liable under Section 174 of Title 8
of the General Corporation Law of Delaware nor does it apply with respect to any
liability in which the director (i) breached his duty of loyalty to the
Registrant; (ii) did not act in good faith or, in failing to act, did not act in
good faith; (iii) acted in a manner involving intentional misconduct or a
knowing violation of law or, in failing to act, shall have acted in a manner
involving intentional misconduct or a knowing violation of law; or (iv) derived
an improper personal benefit.
<PAGE> 3
Pursuant to the provisions of Section 145 of the General
Corporation Law of Delaware, every Delaware corporation has power to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that he is
or was a director, officer, employee or agent of the Registrant or of any
corporation, partnership, joint venture, trust or other enterprise for which he
is or was serving in such capacity at the request of the Registrant, against any
and all expenses, judgments, fines and amounts paid in settlement and reasonably
incurred by him in connection with such action, suit or proceeding. The power to
indemnify applies only if such person acted in good faith and in a manner he
reasonably believed to be in the best interests, or not opposed to the best
interests, of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The power to indemnify applies to actions brought by or in the
right of the corporation as well, but only to the extent of defense and
settlement expenses and not to any satisfaction of a judgment or settlement of
the claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication of negligence or
misconduct unless the court, in its discretion, feels that in the light of all
the circumstances indemnification should apply.
To the extent any of the persons referred to in the two
immediately preceding paragraphs is successful in the defense of the actions
referred to therein, such person is entitled pursuant to Section 145 to
indemnification as described above. Section 145 also grants power to advance
litigation expenses upon receipt of any undertaking to repay such advances in
the event no right to indemnification is subsequently shown. A corporation may
also obtain insurance at its expense to protect anyone who might be indemnified,
or has a right to insist on indemnification, under the statute.
The Registrant has entered into indemnification agreements
with certain of its current officers and all of its current directors which
provide for indemnification to the fullest extent permitted by Delaware General
Corporation Law, including Section 145 thereof. Such agreements have been
approved by the Registrant's stockholders. The Registrant's stockholders also
approved the use of similar agreements which may be entered into from time to
time with future directors and/or future officers of the Registrant.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
5 Opinion and Consent of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian LLP.
23.1 Consent of Independent Accountants - Price Waterhouse LLP.
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Restated 1982 Stock Option Plan.
99.2 Form of Notice of Grant of Stock Option and Stock Option
Agreement (Non-Officer Employee) (incorporated by reference to
Registration Statement No. 33-65544 on Form S-8 filed with the
SEC on July 2, 1993).
99.3 Form of Notice of Grant of Stock Option and Stock Option
Agreement (Director/Officer) (incorporated by reference to
Registration Statement No. 33-65544 on Form S-8 filed with the
SEC on July 2, 1993).
</TABLE>
II-2
<PAGE> 4
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, (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, and (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 clauses
(1)(i) and (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
Securities Exchange Act of 1934 that are incorporated by reference into the
Registration Statement; (2) that for the purpose of determining any liability
under the Securities Act of 1933 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; and (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 Registrant's Restated 1982 Stock Option
Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, as
amended, each filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference into 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 of 1933 may be permitted to directors, officers or
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been informed that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, 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 of 1933 and will be governed by the
final adjudication of such issue.
II-3
<PAGE> 5
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 Fremont, State of California, on this 14th day
of August, 1996.
SEEQ TECHNOLOGY INCORPORATED
By /s/ Phillip J. Salsbury
-------------------------------------
Phillip J. Salsbury
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of SEEQ Technology
Incorporated, a Delaware corporation, do hereby constitute and appoint Phillip
J. Salsbury and Robert O. Hersh and each of them, the lawful attorneys and
agents, with full power and authority to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, and any one of
them, determine may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and any rules
or regulations or requirements of the Commission in connection with this
Registration Statement. Without limiting the generality of the foregoing power
and authority, the powers granted include the power and authority to sign the
names of the undersigned officers and directors in the capacities indicated
below to this Registration Statement, to any and all amendments, both
pre-effective and post-effective, and supplements to this Registration
Statement, and to any and all instruments or documents filed as part of or in
conjunction with this Registration Statement or amendments or supplements
thereof, and each of the undersigned hereby ratifies and confirms all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Phillip J. Salsbury President, Chief Executive August 14, 1996
- ------------------------ Officer and Director (Principal
Phillip J. Salsbury Executive Officer)
/s/ Robert O. Hersh Vice President, Finance, August 14, 1996
- -------------------- Chief Financial Officer and Secretary
Robert O. Hersh (Principal Financial and
Accounting Officer)
</TABLE>
II-4
<PAGE> 6
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Alan V. Gregory Director August 14, 1996
- --------------------
Alan V. Gregory
/s/ Charles C. Harwood Director August 14, 1996
- -----------------------
Charles C. Harwood
- -----------------------
Peter C. Chen Director ______ __, 1996
</TABLE>
II-5
<PAGE> 7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
SEEQ TECHNOLOGY INCORPORATED
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Number Exhibit Numbered Page
- -------------- ------- -------------
<S> <C> <C>
5 Opinion and Consent of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian LLP.
23.1 Consent of Independent Accountants - Price Waterhouse LLP.
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Restated 1982 Stock Option Plan.
99.2 Form of Notice of Grant of Stock Option and Stock Option
Agreement (Non-Officer Employee) (incorporated by reference to
Registration Statement No. 33-65544 on Form S-8 filed with the
SEC on July 2, 1993).
99.3 Form of Notice of Grant of Stock Option and Stock Option
Agreement (Director/Officer) (incorporated by reference to
Registration Statement No. 33-65544 on Form S-8 filed with the
SEC on July 2, 1993).
</TABLE>
<PAGE> 1
Exhibit 5
August 14, 1996
Seeq Technology Incorporated
47200 Bayside Parkway
Fremont, California 94538
Re: Seeq Technology Incorporated Registration Statement
for Offering of 2,400,000 Shares of Common Stock
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 2,400,000 shares of
Common Stock under the Company's Restated 1982 Stock Option Plan. We advise you
that, in our opinion, when such shares have been issued and sold pursuant to the
applicable provisions of the Restated 1982 Stock Option Plan and in accordance
with the Registration Statement, such shares will be validly issued, fully paid
and nonassessable shares of the Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
<PAGE> 1
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 October 20, 1995, except for Note 12,
which is as of December 14, 1995, which appears on page 21 of SEEQ Technology
Incorporated's 1995 Annual Report on Form 10-K/A for the year ended September
30, 1995.
/S/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
San Jose, California
August 16, 1996
<PAGE> 1
SEEQ TECHNOLOGY INCORPORATED
RESTATED 1982 STOCK OPTION PLAN
Amended and Restated through April 1, 1996
I. PURPOSE OF THE PLAN
This Restated l982 Stock Option Plan (the "Plan") is a
consolidation of two pre-existing stock option plans maintained by SEEQ
Technology Incorporated, a Delaware corporation ("Company"): (i) the 1982
Incentive Stock Option Plan and (ii) the 1982 Supplemental Stock Option Plan,
and this restated Plan shall accordingly supersede those two plans and serve as
their successor. The Plan is intended to promote the interests of the Company,
by providing a method whereby (i) employees (including officers) of the Company
and its parent or subsidiary corporations who are primarily responsible for the
management, growth and financial success of the Company and its parent or
subsidiary corporations and (ii) consultants or other independent contractors
(other than non-employee members of the Board) who perform valuable services for
the Company and its parent or subsidiary corporations may be offered incentives
and rewards which will encourage them to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Company and continue to
render services to the Company or its parent or subsidiary corporations.
II. ADMINISTRATION OF THE PLAN
The Plan shall be administered in accordance with the
following standards:
(a) The Company's Board of Directors (the "Board") shall
appoint a committee ("Committee") consisting of not less than two (2) Board
members to administer the Plan, including (without limitation) the power to
grant options under the Plan, the power to accelerate the exercisability of
granted options and the power to administer the option surrender provisions of
the Plan. This committee shall function as the "Primary Committee" under the
Plan and shall have sole and exclusive authority to grant stock options to
officers of the Company who are Board members. No Board member shall be eligible
to serve on the Primary Committee if such individual has, within the twelve
(12)-month period immediately preceding the date he is to be appointed to the
Primary Committee, received an option grant under this Plan or an option grant
or stock issuance under any other stock option, stock appreciation, stock bonus
or other stock plan of the Company (or any parent or subsidiary corporation),
other than the SEEQ Technology Incorporated 1989 Non-Employee Director Stock
Option Plan.
(b) Administration of the Plan with respect to the officers of
the Company who are not Board members and all other key employees eligible to
participate in the Plan may, at the Board's discretion, be vested in the Primary
Committee or in a secondary committee of two or more Board members appointed by
the Board, or the Board may retain the power to administer the Plan with respect
to all individuals who are not Board members. Should a secondary committee be
appointed, the membership may include Board members who are
<PAGE> 2
employees of the Company eligible to receive option grants under this Plan or
option grants or stock issuances under any other stock option, stock
appreciation, stock bonus or other stock plan of the Company (or any parent or
subsidiary corporation).
(c) Members of the Primary Committee or any secondary
committee shall serve for such term as the Board may determine and shall be
subject to removal by the Board at any time.
(d) The term "Plan Administrator" as used from time to time in
this plan document shall mean the particular entity, whether the Primary
Committee or any secondary committee, which is authorized to administer the
option grant and option surrender provisions of the Plan with respect to one or
more classes of eligible individuals, to the extent such entity is carrying out
its administrative functions under the Plan with respect to those individuals.
(e) The Plan Administrator shall have full power and authority
(subject to the express provisions of the Plan) to establish such rules and
regulations as it may deem appropriate for the proper administration of the plan
functions within the scope of its administrative authority and to make any and
all determinations with respect to those functions which it may deem necessary
or advisable. All decisions of the Plan Administrator within the scope of its
administrative authority under the Plan shall be final and binding on all
parties who have an interest in any outstanding option granted pursuant to such
authority.
III. ELIGIBILITY FOR OPTION GRANTS
(a) The persons who shall be eligible to receive options
pursuant to the Plan are those employees (including officers) and consultants or
other independent contractors (other than non-employee members of the Board) of
the Company or its parent or subsidiary corporations who render services which
tend to contribute materially to the success of the Company or its parent or
subsidiary corporations or which may reasonably be anticipated to contribute
materially to the future success of the Company or its parent or subsidiary
corporations.
(b) Non-employee members of the Board shall not be eligible to
participate in the Plan or in any other stock bonus, stock purchase, stock
option or other stock plan of the Company or its parent or subsidiary
corporations other than the SEEQ Technology Incorporated 1989 Non-Employee
Director Stock Option Plan.
(c) The Plan Administrator shall have the sole and exclusive
authority, within the scope of its administrative functions under the Plan, to
select the eligible individuals who are to receive option grants under the Plan
and to determine the number of shares to be covered by each such option grant,
the status of the granted option as either an incentive stock option ("Incentive
Option") which satisfies the requirements of Section 422 of the Internal Revenue
Code or a non-qualified option not intended to meet such requirements, the time
or times at which such option is to become exercisable and the maximum term for
which the option is to remain outstanding.
2
<PAGE> 3
(d) For purposes of this Plan, the following provisions shall
be applicable in determining the parent and subsidiary corporations of the
Company:
(i) Any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company shall be considered to be
a parent corporation of the Company, provided each such corporation in the
unbroken chain (other than the Company) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
(ii) Each corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company shall be considered to
be a subsidiary of the Company, provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
IV. STOCK SUBJECT TO THE PLAN
(a) The stock issuable under the Plan shall be shares of the
Company's authorized but unissued or reacquired common stock ("Common Stock").
The aggregate number of shares of Common Stock issuable over the term of the
Plan shall not exceed 7,760,000 shares, subject to adjustment from time to time
in accordance with paragraph IV(b) of the Plan(1). Should an option terminate
for any reason prior to exercise or surrender in full (including options
cancelled in accordance with the cancellation-regrant provisions of Article VIII
of the Plan), the shares subject to the portion of the option not so exercised
or surrendered shall be available for subsequent option grants under this Plan.
Shares subject to any option or portion thereof surrendered or cancelled in
accordance with Article IX of the Plan and all share issuances under the Plan,
whether or not the shares are subsequently repurchased by the Company pursuant
to its repurchase rights under the Plan, shall reduce on a share-for-share basis
the number of shares of Common Stock available for subsequent option grants
under the Plan. In addition, should the exercise price of an outstanding option
under the Plan be paid with shares of Common Stock or should shares of Common
Stock otherwise issuable under the Plan be withheld by the Company in
satisfaction of the withholding taxes incurred in connection with the exercise
of an outstanding option under the Plan, then the number of shares of Common
Stock available for issuance under the Plan shall be reduced by the gross number
of shares for which the option is exercised, and not by the net number of shares
of Common Stock actually issued to the option holder.
(b) In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding shares of the Common Stock as a class without the
Company's receipt of consideration, appropriate adjustments shall be made to (i)
the aggregate number and/or class of securities issuable under the Plan, and
(ii) the number
- --------
(1) Reflects the additional 1,000,000 share increase authorized by the
Board and approved by the Company's stockholders in 1995 and the 1,400,000 share
increase authorized by the Board and approved by the Company's stockholders in
1996.
3
<PAGE> 4
and/or class of shares and the price per share of the securities subject to each
outstanding option in order to prevent the dilution or enlargement of benefits
thereunder. The adjustments determined by the Primary Committee shall be final,
binding and conclusive.
(c) No one person participating in the Plan may receive
options and separately exercisable stock appreciation rights for more than
2,500,000 shares of the Common Stock over the term of the Plan, exclusive of
options granted prior to January 1, 1994.
V. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by
action of the Plan Administrator and may, at the discretion of the Plan
Administrator, be either Incentive Options or non-statutory options. Individuals
who are not employees of the Company or its parent or subsidiary corporations
may only be granted non-statutory options. Each granted option shall be
evidenced by one or more instruments in such form as the Plan Administrator
shall from time to time approve; provided, however, that each such instrument
shall comply with the terms and conditions specified below. Each instrument
evidencing an Incentive Option shall, in addition, be subject to the applicable
provisions of Article VI.
1. Option Price.
a. The option price per share shall be fixed by the Plan
Administrator, but in no event shall the option price per share be less than
eighty-five percent (85%) of the fair market value per share of Common Stock on
the grant date.
b. If any individual to whom an option is to be granted
pursuant to the provisions of the Plan is on the date of grant the owner of
stock (as determined under Section 424(d) of the Internal Revenue Code)
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any one of its parent or subsidiary corporations (such
person to be herein referred to as a 10% Stockholder, then the option price per
share shall not be less than one hundred ten percent (110%) of the fair market
value per share of Common Stock on the grant date.
c. The option price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Article IX, be payable in
one of the alternative forms specified below:
(i) full payment in cash or check payable to the
Company's order; or
(ii) full payment in shares of Common Stock held for
the requisite period necessary to avoid a charge to the Company's earnings for
financial reporting purposes and valued at fair market value on the Exercise
Date (as such term is defined below) equal to the option price; or
4
<PAGE> 5
(iii) full payment through a combination of shares of
Common Stock held by the optionee for the requisite period necessary to avoid a
charge to the Company's reported earnings and valued at fair market value on the
Exercise Date and cash or check payable to the Company's order; or
(iv) full payment through a special sale and
remittance procedure pursuant to which the optionee is to provide irrevocable
written instructions (I) to a designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, an amount sufficient to cover the aggregate
option price payable for the purchased shares plus all applicable Federal and
State income and employment taxes required to be withheld by the Company by
reason of such purchase and (II) to the Company to deliver the certificates for
the purchased shares directly to such brokerage firm in order to complete the
sale transaction.
For purposes of this subparagraph C, the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Company. Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the option price for the
purchased shares must accompany such exercise notice.
d. The fair market value of a share of Common Stock on any
relevant date under subparagraph A, B or C above (and for all other valuation
purposes under the Plan) shall be determined in accordance with the following
provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded in the over-the-counter
market, the fair market value shall be the mean between the highest bid and
lowest asked prices (or, if such information is available, the closing selling
price) of the Common Stock on the date in question in the over-the-counter
market, as such prices are reported by the National Association of Securities
Dealers through its Nasdaq National Market System or any successor system. If
there are no reported bid and asked prices (or closing selling price) on the
date in question, then the mean between the highest bid price and lowest asked
price (or the closing selling price) on the last preceding date for which such
quotations exist shall be determinative of fair market value.
(ii) If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the fair market value shall be
the closing selling price per share of Common Stock on the date in question on
the stock exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted on such exchange. If
there is no reported sale of Common Stock on such exchange on the date in
question, then the fair market value shall be the closing selling price of the
Common Stock on the exchange on the last preceding date for which such quotation
exists.
2. Term and Exercise of Options. Each option granted under the
Plan shall be exercisable at such time or times, during such period, and for
such number of shares as shall be determined by the Plan Administrator and set
forth in the instrument evidencing such option. However, no option granted under
this Plan shall have a term in excess of ten (10) years from the
5
<PAGE> 6
grant date. No option or stock appreciation right outstanding under the Plan
shall be assignable or transferable by the optionee other than a transfer of the
option by will or by the laws of descent and distribution following the
optionee's death, and during the optionee's lifetime the option and all stock
appreciation rights pertaining to such option shall be exercisable only by the
optionee.
3. Effect of Termination of Employment.
a. Should an optionee cease to be an Employee of the Company
for any reason (including death or permanent disability as defined in Section
22(e)(3) of the Internal Revenue Code) while the holder of one or more
outstanding options granted to such optionee under the Plan, then such option or
options shall in no event remain exercisable for more than a twenty-four (24)
month period (or such shorter period as is determined by the Plan Administrator
and set forth in the option agreement) following the date of such cessation of
Employee status, but under no circumstances shall any such option be exercisable
after the specified expiration date of the option term. Each such option shall,
during such twenty-four (24) month or shorter period, be exercisable only to the
extent of the number of shares (if any) for which the option is exercisable on
the date of such cessation of Employee status. Upon the expiration of such
twenty-four (24) month or shorter period or (if earlier) upon the expiration of
the option term, the option shall terminate and cease to be exercisable.
b. Any option granted to an optionee under the Plan and
exercisable in whole or in part on the date of the optionee's death may be
subsequently exercised, but only to the extent of the number of shares (if any)
for which the option is exercisable on the date of the optionee's cessation of
Employee status (less any option shares which the Optionee may have purchased
prior to death), by the personal representative of the optionee's estate or by
the person or persons to whom the option is transferred pursuant to the
optionee's will or in accordance with the laws of descent and distribution,
provided and only if such exercise occurs prior to the earlier of (i) the
expiration of the eighteen-(18) month period following the death of the optionee
or (ii) the specified expiration date of the option term. Upon the occurrence of
the earlier event, the option shall terminate and cease to be exercisable.
c. If (i) the optionee's status as an Employee is terminated
for cause (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement or any unauthorized disclosure or use of
confidential information or trade secrets) or (ii) the optionee makes or
attempts to make any unauthorized use or disclosure of confidential information
or trade secrets of the Company or its parent or subsidiary corporations, then
in any such event all outstanding options granted the optionee under the Plan
shall immediately terminate and cease to be exercisable.
d. Notwithstanding subparagraphs A, B and C above, the Plan
Administrator shall have complete discretion, exercisable either at the time the
option is granted or at the time during which the option remains outstanding, to
extend the period of time for which the option is to remain exercisable
following the optionee's cessation of Employee status from the twenty-four (24)
month or shorter period previously established by the Plan Administrator and set
forth in the
6
<PAGE> 7
option agreement to such greater period of time as the Plan Administrator shall
deem appropriate; provided , however, that no option shall be exercisable after
the specified expiration date of the option term. The Plan Administrator shall
have similar discretion to establish as a provision applicable to the exercise
of one or more options granted under the Plan that during the period of
exercisability following cessation of Employee status (as provided in
subparagraph V.3.A. or V.3.B above), the option may be exercised not only with
respect to the number of shares for which it is exercisable at the time of the
optionee's cessation of Employee status but also with respect to one or more
installments of purchasable shares for which the option otherwise would have
become exercisable had such cessation of Employee status not occurred.
e. For purposes of the foregoing provisions of this Paragraph
V.3, the optionee shall be deemed to be an Employee of the Company for so long
as the optionee remains in the employ of the Company or one or more of parent or
subsidiary corporations.
f. If the option is granted to a consultant or other
independent contractor, then the instruments evidencing the granted option shall
include provisions comparable to subparagraphs V.3.A, V.3.B and V.3.C above, and
may include provisions comparable to subparagraph V.3.D above, with respect to
the optionee's termination of service with the Company or its parent or
subsidiary corporations.
4. Stockholder Rights. An option holder shall have none of the
rights of a stockholder with respect to any shares covered by the option until
such individual shall have exercised the option, paid the option price and been
issued a stock certificate for the purchased shares.
5. Repurchase Price. The shares of Common Stock acquired upon
the exercise of options granted under the Plan may be subject to one or more
repurchase rights of the Company in accordance with the following provisions:
(a) The Plan Administrator effecting the option
grants may in its discretion determine that it shall be a term and condition of
one or more of the granted options that the Company (or its assigns) shall have
the right, exercisable upon the optionee's cessation of Employee status, to
repurchase at the original option price any or all of the unvested shares of
Common Stock previously acquired by the optionee upon the exercise of such
option(s). Any such repurchase right shall be exercisable by the Company (or its
assigns) upon such terms and conditions (including the establishment of the
appropriate vesting schedule and other provisions of the expiration of such
right in one or more installments) as the Plan Administrator may specify in the
instrument evidencing such right.
(b) The Plan Administrator effecting the option
grants shall also have full power and authority to provide for the automatic
termination of the Company's outstanding repurchase rights, in whole or in part,
and thereby vest the optionees in one or more of the shares purchased or
purchasable under the granted options, upon the occurrence of any Corporate
Transaction specified in Article VII or any Change in Control specified in
Article IX.
7
<PAGE> 8
VI. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable
to all Incentive Options granted under the Plan. Options which are specifically
designated as "non-statutory" or "non-qualified" options when issued under the
Plan shall not be subject to such terms and conditions:
(a) Option Price. The option price per share of the Common
Stock subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the fair market value per share of Common Stock on the grant
date.
(b) Sequentia1 Exercise Rule. Except to the extent now or
hereafter permitted by Section 422 of the Internal Revenue Code, no Incentive
Option granted prior to January 1, 1987 may be exercised while there remains
outstanding (within the meaning of subsection (c) (7) of such Section 422) any
other pre-1987 Incentive Option which was granted at an earlier date to the
optionee to purchase stock in the Company or in any other corporation which is
on the date of grant of the later option either a parent of subsidiary
corporation of the Company of a predecessor corporation of any of much
corporations.
(c) Dollar Limitation. The following dollar limitations shall
be in effect for Incentive Options granted under the Plan:
(i) Pre-1987 Grants. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common Stock
which may be made the subject of Incentive Options granted under the Plan (or
any other option plan of the Company or its parent or subsidiary corporations)
to any Employee in any one calendar year prior to the 1987 calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000) plus any unused
Carryover to such pre-1987 calendar year. For purposes of the preceding
limitation, the term "Carryover" means one-half (1/2) of the amount by which the
sum of One Hundred Thousand Dollars ($100,000) exceeds the aggregate fair market
value (determined as of the respective date or dates of grant) of the Common
Stock for which the Employee was previously granted Incentive Options under the
Plan (or any other option plan of the Company or its parent or subsidiary
corporations) in each calendar year after 1980 and prior to 1987. The unused
Carryover shall be available for each of the three (3) pre-1987 calendar years
immediately following the calendar year in which the Carryover arises and shall
increase the basic $100,000 limitation otherwise applicable to the Employee for
each such pre-1987 calendar year by an amount equal to the Carryover, less the
portion thereof used in prior calendar years. Incentive options granted the
Employee during any pre-l987 calendar year shall first be applied against the
basic $100,000 limitation in effect for such calendar year and then applied
against any of the Employee's unused Carryovers to such calendar year, in the
order in which such Carryovers arose in prior calendar years.
(ii) Post-1986 Grants. The aggregate fair market
value (determined as of the respective date or dates of grant) of the Common
Stock for which one or more options granted after December 31, 1986 to any
Employee under this Plan (or any other option plan of
8
<PAGE> 9
the Company or its parent or subsidiary corporations) may for the first time
become exercisable as an Incentive Option during any one post-1986 calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two or more such post-1986 options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability thereof as Incentive Options shall be applied
on the basis of the order in which such options are granted.
(d) Maximum Term. If the individual to whom the Incentive
Option is granted is a 10% Stockholder (as defined in subparagraph V.1.b. above)
on the date of the option grant, then the option shall not have a term in excess
of five years from the grant date.
Except as modified by the preceding provisions of this Article
VI, all the terms and conditions of the Plan shall be applicable to the
Incentive Options granted hereunder.
VII. CORPORATE TRANSACT1ON
(a) In the event of one or more of the following transactions
to which the Company in a party ("Corporate Transaction"):
(i) a merger or acquisition in which the Company is
not the surviving entity, except for a transaction the principal purpose of
which is to change the State of the Company's incorporation;
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Company; or
(iii) any reverse merger in which the Company is the
surviving entity,
then each option outstanding under the Plan shall
automatically become exercisable, during the five (5) business day period
immediately prior to the specified effective date for the Corporate Transaction,
with respect to the full number of shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares. However,
an outstanding option under the Plan shall not be so accelerated if and to the
extent: (i) such option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation or parent thereof or be replaced with
a comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof or (ii) the acceleration of such option would,
when added to the present value of certain other payments in the nature of
compensation which become due and payable to the option holder in connection
with the Corporate Transaction, result in the payment to such individual of an
excess parachute payment under Section 280G(b) of the Internal Revenue Code. The
existence of any such excess parachute payment shall be determined by the Plan
Administrator in the exercise of its reasonable business judgment and on the
basis of tax counsel provided the Company. Upon the consummation of the
Corporate Transaction, all outstanding options under the Plan shall, to the
extent not previously exercised or assumed by the successor corporation or its
parent corporation, terminate and cease to be exercisable.
9
<PAGE> 10
(b) Each outstanding option which is assumed in connection
with the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been
issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the option price payable per share, provided the aggregate
option price payable for such securities shall remain the same. In addition, the
class and number of securities available for issuance under the Plan following
the consummation of the Corporate Transaction shall be appropriately adjusted.
(c) In connection with any Corporate Transaction, the exercise
of any accelerated pre-l987 Incentive Option shall remain subject to the
sequential exercise limitation of paragraph VI(b), and the exercisability as an
incentive stock option under the Federal tax laws of any accelerated post-1986
option shall be subject to the applicable dollar limitation of paragraph
VI(c)(i).
(d) The grant of options under this Plan shall in no way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merger, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
VIII. CANCELLATION AND NEW GRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected option holders,
the cancellation of any or all outstanding options under the Plan and to grant
in substitution therefor new options under the Plan covering the same or
different numbers of shares of Common Stock but having an option price per share
not less than (i) eighty-five percent (85%) of the fair market value per share
of Common Stock on the new grant date, or (ii) one hundred percent (100%) of
such fair market value if the new option is to be an Incentive Option or (iii)
one hundred ten percent (110%) of fair market value in the case of a 10%
Stockholder. If one or more of the cancelled options are pre-l987 Incentive
options, then such options shall (solely for purposes of the "sequential
exercise" rule of paragraph VI(b) as applied to other outstanding pre-1987
Incentive Options) be considered to be outstanding options until the expiration
date initially specified for the option term.
IX. SURRENDER OF OPTIONS FOR CASH OR STOCK
(a) One or more option holders may, upon such terms and
conditions as the Plan Administrator may establish at the time of the option
grant or at any time thereafter, be granted the right to surrender all or part
of an unexercised option in exchange for a distribution equal in amount to the
excess of (i) the fair market value (on the option surrender date) of the number
of shares in which the optionee is at the time vested under the surrendered
option (or surrendered portion) over (ii) the aggregate option price payable for
such shares. No surrender of
10
<PAGE> 11
an option, however, shall be effective unless it is approved by the Plan
Administrator granting such right. If the surrender is so approved, then the
distribution to which the option holder shall accordingly become entitled under
this Article IX may be made in shares of Common Stock valued at fair market
value at date of surrender, in cash, or partly in shares and partly in cash, as
the Plan Administrator granting such right shall in its sole discretion deem
appropriate.
(b) If the surrender of the option is not approved by the Plan
Administrator granting such right, then the option holder shall retain whatever
rights the option holder had under the surrendered option (or surrendered
portion thereof) on the date of surrender and may exercise such rights at any
time prior to the later of (i) the expiration of the 5 business-day period
following receipt of the rejection notice or (ii) the last day on which the
option is otherwise exercisable in accordance with the terms of the instrument
evidencing such option, but in no event may such rights be exercised at any time
after ten (10) years from the date of the option grant.
(c) Special limited stock appreciation rights may be granted
by the Plan Administrator in tandem with one or more option grants made under
the Plan. The grant and exercise of such rights shall be subject to the
following terms and conditions:
Pre-September 1. 1992 Grants. Limited rights may be
granted prior to September 1, 1992 to one or more officers or directors
of the Company subject to the short-swing profit restrictions of
Section 16 (b) of the Securities Exchange Act of 1934 ("Section 16
Insider"), Such limited rights shall be exercisable as follows:
a. Upon the occurrence of a Change in Control at a
time when one or more classes of the Company's equity securities are
registered under Section 12(g) of the Exchange Act, each Section 16
Insider who holds such a limited right in tandem with one or more of
his/her outstanding options under the Plan may surrender those options,
to the extent such options (I) have been outstanding with such limited
rights for at least six (6) months and (II) are at the time exercisable
for one or more shares. In exchange for each option so surrendered, the
Section 16 Insider shall receive an Appreciation Distribution from the
Company in an amount equal to the excess of (i) the Change in Control
Price of the number of shares for which the surrendered option (or
surrendered portion) is at the time exercisable over (ii) the aggregate
option price payable for such shares.
b. Neither the approval of the Plan Administrator
granting the limited right nor the consent of the Board shall be
required in connection with the exercise of such right, and the
Appreciation Distribution shall be made entirely in cash.
c. For purposes of such Appreciation Distribution,
the following definitions shall be in effect:
Change-in-Control: the occurrence of any of the
following transactions: (i) the acquisition by a person or related
group of persons, other than the Company or a
11
<PAGE> 12
person that directly or indirectly controls, is controlled by or is
under common control with the Company, of twenty-five percent (25%) or
more of the Company's outstanding Common Stock pursuant to a tender or
exchange offer which the Board does not recommend the stockholders to
accept, (ii) the acquisition by a person or related group of persons,
other than the Company or a person that directly or indirectly
controls, is controlled by or is under common control with the Company,
of fifty percent (50%) or more of the Company's outstanding Common
Stock in a single transaction or in a series of related transactions
(other than a Corporate Transaction), or (iii) a change in the
composition of the Board such that the individuals elected to the Board
at the last meeting of the stockholders at which there is not a
contested election subsequently cease to comprise a majority of the
Board by reason of a contested election for Board membership.
Chance in Control Price: the greater of (a) the fair
market value per share of Common Stock on the date of the option
surrender, as determined in accordance with the normal valuation
provisions of the Plan, or (b) the highest reported price per share
paid in acquiring ownership of the twenty-five percent (25%) or greater
interest in the Company's outstanding Common Stock in connection with
the Change in Control. However, if the surrendered option is an
Incentive Option, then the Change in Control Price per share of the
Common Stock subject to the surrendered option shall not exceed the
value per share determined under clause (a).
Post-August 31. 1992 Grants. One or more Section 16
Insiders may, in the discretion of the Plan Administrator, be granted
limited stock appreciation rights on or after September 1, 1992 in
tandem with the option grants made to such individuals under the Plan.
Any limited right so granted shall become exercisable as follows:
a. Upon the occurrence of a Hostile Take-Over at a
time when one or more classes of the Company's equity securities are
registered under Section 12(g) of the Exchange Act, each outstanding
option held by the Section 16(b) Insider with such a limited right in
effect for at least six (6) months shall automatically be cancelled, to
the extent such option is at the time exercisable for fully-vested
shares of Common Stock. The Section 16(b) Insider shall in return be
entitled to a cash distribution from the Company in an amount equal to
the excess of (I) the Take-Over Price of the shares of Common Stock
which are at the time vested under the cancelled option (or cancelled
portion) over (II) the aggregate exercise price payable for such vested
shares. The balance of the option (if any) shall continue in full force
and effect in accordance with the instrument evidencing such grant.
b. The cash distribution payable upon such
cancellation shall be made within five (5) days following the
consummation of the Hostile Take-Over. Neither the approval of the Plan
Administrator nor the consent of the Board shall be required in
connection with such option cancellation and cash distribution.
12
<PAGE> 13
c. For purposes of such option cancellation and cash
distribution, the following definitions shall be in effect:
A Hostile Take-Over shall be deemed to occur in the
event (i) any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Company) directly or
indirectly acquires beneficial ownership (within the meaning of Rule
13d-3 of the Exchange Act) of twenty-five percent (25%) or more of
Company's outstanding Common Stock pursuant to a tender or exchange
offer made directly to the Company's stockholders which the Board does
not recommend such stockholders to accept and (ii) more than fifty
percent (50%) of the securities so acquired in such tender or exchange
offer are accepted from holders other than Company officers and
directors participating in this Plan or the 1989 Non-Employee Directors
Stock Option Plan.
The Take-Over Price per share shall be deemed to be
equal to the greater of (i) the fair market value per share on the
option cancellation date, as determined pursuant to the normal
valuation provisions of the Plan, or (ii) the highest reported price
per share paid in effecting such Hostile Take-Over. However, if the
cancelled option is an Incentive Option, then the Take-Over Price per
share of the Common Stock subject to the cancelled option shall not
exceed the value per share determined under clause (i).
X. LOANS OR GUARANTEES OF LOANS
The Plan Administrator may assist any optionee (including any
officer or director) in the exercise of one or more options granted by such Plan
Administrator to such optionee under the Plan by (a) authorizing the extension
of a loan to such optionee from the Company, (b) permitting the optionee to pay
the option price for the purchased Common Stock in installments over a period of
years or (c) authorizing a guarantee by the Company of a third-party loan to the
optionee. The terms of any loan, installment method of payment or guarantee
(including the interest rate and terms of repayment) will be established by the
Plan Administrator in its sole discretion. Loans, installment payments and
guarantees may be granted without security or collateral (other than to
optionees who are consultants or independent contractors, in which event the
loan must be adequately secured by collateral other than the purchased shares),
but the maximum credit available to the optionee shall not exceed the sum of (i)
the aggregate option price payable for the purchased shares (less the par value
of those shares), plus (ii) any federal and state income and employment tax
liability incurred by the optionee in connection with the exercise of the
option.
XI. SPECIAL TAX WITHHOLDING ELECTION
The Plan Administrator may, in its discretion and in
accordance with the provisions of this Article XI and such supplemental rules as
the Plan Administrator may from time to time adopt, provide any or all holders
of the non-qualified options granted by such Plan Administrator under the Plan
with the right to use shares of the Company's Common Stock in satisfaction of
the Federal and State income and employment tax withholding liability incurred
13
<PAGE> 14
by such holders in connection with the exercise of their options (the
"Withholding Taxes"). Such right may be provided to any such option holder in
either or both of the following formats:
1. Stock Withholding: The holder of the non-qualified option
may be provided with the election to have the Company withhold, from the shares
of Common Stock otherwise issuable upon the exercise of such non-qualified
option, a portion of such shares with an aggregate fair market value equal to
the designated percentage (up to 100% as specified by the option holder) of the
applicable Withholding Taxes.
Any such stock withholding election shall be subject to the
following terms and conditions:
(i) The election must be made on or before the date
the amount of the Federal and State income and employment tax liability
incurred by the option holder in connection with the exercise of the
option is determined (the "Tax Determination Date").
(ii) The election shall be irrevocable.
(iii) The election shall be subject to the approval
of the Plan Administrator, and none of the shares of Common Stock for
which the option is exercised shall be withheld in satisfaction of the
Withholding Taxes incurred in connection with such exercise except to
the extent the Plan Administrator approves the election.
(iv) The shares of Common Stock withheld pursuant to
the election shall be valued at fair market value on the Tax
Determination Date in accordance with the valuation procedures of the
Plan.
(v) In no event may the number of shares requested to
be withheld exceed in value the dollar amount of Withholding Taxes
incurred by the option holder in connection with the exercise of the
nonqualified option.
If the stock withholding election is to be made by a Section
16 Insider, then the following limitations, in addition to the
preceding provisions of this Article XI, shall also be applicable:
(i) The election shall not become effective at any
time prior to the expiration of the six (6)-month period measured from
the later of the grant date of the non-qualified option to which such
election pertains or the actual grant date of the stock withholding
election, and no shares shall accordingly be withheld in connection
with any Tax Determination Date which occurs before the expiration of
such six (6)-month period.
(ii) The election must be effected in accordance with
either of the following guidelines:
- The election must be made six (6) months or more
prior to the Tax Determination Date, or
14
<PAGE> 15
- The exercise of such election and the exercise of
the non-qualified option to which it relates must occur concurrently
within a quarterly "window" period. Quarterly window periods shall
begin on the third (3rd) business day following the date of public
release of each quarterly or annual summary statement of the Company's
sales and earnings and end on the earlier of the twelfth (12th)
business day following such release date or the Tax Determination Date.
(iii) The six (6)-month period specified in clauses
(i) and (ii) shall not be applicable in the event of the option
holder's death or disability.
2. Stock Delivery: The Plan Administrator may, in its
discretion, provide the holder of the non-qualified option with the election to
deliver, at the time the non-qualified option is exercised, one or more shares
of Common Stock already held by such individual with an aggregate fair market
value equal to the designated percentage (up to 100% as specified by the option
holder) of the Withholding Taxes incurred by such individual in connection with
such option exercise.
Any such stock delivery election shall be subject to the
following terms and conditions:
(i) The election must be made on or before the date
the amount of the Federal and State income and employment tax liability
incurred by the option holder in connection with the exercise of the
option is determined (the "Tax Determination Date").
(ii) The election shall be irrevocable.
(iii) The election shall be subject to the approval
of the Plan Administrator, and none of the delivered shares of Common
Stock shall be accepted in satisfaction of the Withholding Taxes
incurred in connection with the option exercise except to the extent
the election is approved by the Plan Administrator.
(iv) The shares of Common Stock delivered in
satisfaction of such Withholding Taxes shall be valued at fair market
value on the Tax Determination Date in accordance with the valuation
procedures of the Plan.
(v) In no event may the number of delivered shares
exceed in value the dollar amount of Withholding Taxes incurred by the
option holder in connection with the exercise of the non-qualified
option.
Any stock delivery election made by an individual who is at
the time a Section 16 Insider shall not be subject to any of the special
limitations which would otherwise be applicable to such individual in connection
with the exercise of the stock withholding election specified above.
15
<PAGE> 16
XII. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects whatsoever;
provided, however, that no such amendment or modification shall, without the
consent of the holders, adversely affect rights and obligations with respect to
options at the time outstanding under the Plan. In addition, the Board shall
not, without the approval of the Company's stockholders, (i) increase the
maximum number of shares issuable under the Plan, except for permissible
adjustments under paragraph IV(b), (ii) materially modify the eligibility
requirements for the grant of options under the Plan or (iii) otherwise
materially increase the benefits accruing to participants under the Plan.
XIII. EFFECTIVE DATE AND TERM OF PLAN
(a) The restated Plan was adopted by the Board in August 1987,
and approved by the Company's stockholders in February 1988, as a consolidation
of the Company's 1982 Incentive Stock Option Plan and 1982 Supplemental Stock
Option Plan. The Plan was restated in October 1988, and amended in November
1990, November 1991, February 1995, and February 1996, to increase the number of
shares issuable under the Plan by 750,000, 1,000,000, 1,400,000 1,000,000 and
1,400,000 shares, respectively. The October 1988 restatement, November 1990,
November 1991, February 1995 and February 1996 amendments were approved by the
Company's stockholders in February 1989, February l991, February l992, February
1995 and March 1996, respectively.
(b) The Plan Administrator may, within the scope of its
administrative functions under the Plan, grant stock options and stock
appreciation rights under the Plan at any time after the date the Plan was
initially adopted and prior to the date the Plan is to terminate in accordance
with paragraph (e) below.
(c) The Plan was restated by the Board effective July 30, 1992
to bring the Plan in compliance with the applicable requirements of revised SEC
Rule 16b-3, as amended May 1, 1991, under the Securities Exchange Act of 1934.
Such restatement shall apply only to options granted under the Plan from and
after the July 30, 1992 effective date. Each option (together with any related
stock appreciation rights) issued and outstanding under the Plan immediately
prior to such effective date shall continue to be governed by the terms and
conditions of the Plan (and the instrument evidencing such option) as in effect
on the date such option was previously granted, and nothing in the July 30, 1992
restatement shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such options with respect to the acquisition of
shares thereunder or the exercise of their outstanding stock appreciation
rights.
(d) The sale and remittance procedure authorized for the
exercise of outstanding options shall be available for all options granted under
the Plan from and after July 30, 1992 and for all non-qualified options
exercised under the Plan on or after May 1, 1991. The Primary Committee may also
allow such procedure to be utilized in connection with one or more disqualifying
dispositions of incentive stock option shares effected on or after May 1, l991.
16
<PAGE> 17
(e) Unless sooner terminated in accordance with Article VII,
the Plan shall terminate upon the earlier of (i) November 30, 2000 or (ii) the
date on which all shares available for issuance under the restated Plan shall
have been issued or cancelled pursuant to the exercise, surrender or
cancellation of the options granted hereunder. If the date of termination is
determined under clause (i) above, then any options outstanding on such date
(together with any stock appreciation rights pertaining to such options) shall
not be affected by the termination of the Plan and shall continue to have force
and effect in accordance with the provisions of the instruments evidencing such
options (or related stock appreciation rights).
(f) Options may be granted under this Plan to purchase shares
of Common Stock in excess of the number of shares then available for issuance
under the Plan, provided (i) an amendment to increase the maximum number of
shares issuable under the Plan is adopted by the Board prior to the initial
grant of any such option and is thereafter submitted to the Company's
stockholders for approval and (ii) each option so granted is not to become
exercisable, in whole or in part, at any time prior to the obtaining of such
stockholder approval.
XIV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of
shares pursuant to options granted under the Plan shall be used for general
corporate purposes.
XV. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option
hereunder, and the issuance of Common Stock upon the exercise or surrender of
any such option shall be subject to the Company's procurement of all approvals
and permits required by regulatory authorities having jurisdiction over the
Plan, the options granted under it and the Common Stock issued pursuant to it.
17
