This document consists of 11
pages, of which this page
is number 1.
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- -------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-11250
DIONEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2647429
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1228 Titan Way, Sunnyvale, California 94086
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 737-0700
NONE
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO_____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of October 31, 1997:
CLASS NUMBER OF SHARES
Common Stock 11,593,861
<PAGE>
DIONEX CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1997 and June 30, 1997............ 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, 1997 and 1996.. 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended September 30, 1997 and 1996.. 5-6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS...................................... 7-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............... 9-10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................. 11
SIGNATURES................................................. 11
2
<PAGE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
- -------------
September 30, June 30,
ASSETS 1997 1997
(unaudited)
Current assets:
Cash and equivalents (including invested cash
of $12,670 at September 30, 1997 and $16,586
at June 30, 1997)............................ $ 18,745 $ 24,624
Temporary cash investments..................... 6,702 8,252
Accounts receivable (net of allowance for
doubtful accounts of $473 at September 30, 1997
and $533 at June 30, 1997)................... 28,540 29,226
Inventories.................................... 10,517 9,479
Deferred tax benefits.......................... 7,767 7,136
Prepaid expenses and other..................... 916 1,076
Total current assets.................... 73,187 79,793
Property, plant and equipment, net............... 29,854 30,225
Other assets .................................... 9,668 8,145
$112,709 $118,163
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks......................... $ 820 $ -
Accounts payable............................... 4,380 4,442
Accrued liabilities............................ 14,831 18,639
Income taxes payable........................... 7,368 4,905
Accrued product warranty....................... 3,511 3,592
Total current liabilities............... 30,910 31,578
Deferred taxes................................... 3,091 2,422
Stockholders' equity:
Preferred stock (par value $.001 per share;
1,000,000 shares authorized; none
outstanding)................................. - -
Common stock (par value $.001 per share;
40,000,000 shares authorized; outstanding:
11,607,386 shares at September 30, 1997 and
11,847,030 shares at June 30, 1997).......... 36,211 36,323
Retained earnings.............................. 40,683 46,622
Accumulated translation adjustments............ (1,403) (996)
Unrealized gain on securities.................. 3,217 2,214
Total stockholders' equity.............. 78,708 84,163
$112,709 $118,163
See notes to condensed consolidated financial statements.
3
<PAGE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(In thousands, except per share amounts)
- ------------------
1997 1996
(unaudited)
Net sales......................................$33,933 $31,508
Cost of sales.................................. 10,767 9,654
Gross profit................................... 23,166 21,854
Operating expenses:
Selling, general and administrative.......... 11,565 11,481
Research and product development............. 3,107 2,757
Total operating expenses.................. 14,672 14,238
Operating income............................... 8,494 7,616
Interest income................................ 348 345
Interest expense............................... (41) (21)
Income before taxes on income.................. 8,801 7,940
Taxes on income................................ 2,992 2,739
Net income.....................................$ 5,809 $ 5,201
Net income per common and equivalent
share..........................................$ .47 $ .40
Common and equivalent shares used in
computing per share amounts.................. 12,370 12,920
See notes to condensed consolidated financial statements.
4
<PAGE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(In thousands)
- ------------------
1997 1996
(unaudited)
Cash and equivalents provided by (used for):
Cash flows from operating activities:
Net income............................................$ 5,809 $ 5,201
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................... 624 617
Deferred taxes...................................... (631) (208)
Changes in assets and liabilities:
Accounts receivable............................... (49) 1,028
Inventories....................................... (1,212) (710)
Prepaid expenses and other assets................ 133 286
Accounts payable.................................. (29) (223)
Accrued liabilities............................... (3,746) (3,552)
Income taxes payable.............................. 2,526 1,883
Accrued product warranty.......................... (61) 19
Net cash provided by operating activities............. 3,364 4,341
Cash flows from investing activities:
Purchase of temporary cash investments.............. (4,450) (7,600)
Proceeds from maturities of temporary
cash investments..................................... 6,000 11,300
Purchase of property, plant and equipment........... (302) (468)
Other............................................... 99 81
Net cash provided by investing activities............. 1,347 3,313
Cash flows from financing activities:
Net change in notes payable to banks................ 843 1,564
Sale of common stock................................ 722 749
Repurchase of common stock..........................(12,582) (8,492)
Other............................................... 7 53
Net cash used for financing activities................(11,010) (6,126)
Effect of exchange rate changes on cash............... 420 42
Net increase(decrease)in cash and equivalents......... (5,879) 1,570
Cash and equivalents, beginning of period............. 24,624 16,986
Cash and equivalents, end of period...................$18,745 $18,556
(continued)
5
<PAGE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(In thousands)
- ------------------
1997 1996
(unaudited)
(continued)
Supplemental disclosures of cash flow information:
Income taxes paid................................. $1,160 $ 902
Interest paid..................................... $ 41 $ 20
See notes to condensed consolidated financial statements.
6
<PAGE>
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- ------------------
1. Basis of Presentation
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote
disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes the
disclosures which are made are adequate to make the
information presented not misleading. It is suggested that
these condensed consolidated financial statements be read
in conjunction with the consolidated financial statements
and the notes thereto included in the Company's Annual
Report to Stockholders for the fiscal year ended
June 30, 1997.
The unaudited condensed consolidated financial statements
included herein reflect all adjustments (which include only
normal, recurring adjustments) which are, in the opinion of
management, necessary to state fairly the results for the
periods presented. The results for such periods are not
necessarily indicative of the results to be expected for
the entire fiscal year ending June 30, 1998.
2. Inventories
Inventories consist of (in thousands):
September 30, June 30,
1997 1997
Finished goods $ 4,257 $3,720
Work in process 3,102 2,584
Raw materials and subassemblies 3,158 3,175
$10,517 $9,479
3. Income Taxes
The effective income tax rate for the first three months of
fiscal 1998 was 34.0%, down slightly from the 34.5% reported
in the same period of fiscal 1997.
7
<PAGE>
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- ------------------
4. Net Income Per Share
Net income per common and equivalent share is computed by
dividing net income by the weighted average number of common
shares and dilutive common share equivalents outstanding
during each period. The difference between primary and
fully diluted net income per share is not significant in any
period.
In February 1997, the Financial Accounting Standards Board
issued SFAS No. 128, "Earnings Per Share." The Company is
required to adopt SFAS No. 128 in the second quarter of
fiscal 1998 and will restate at that time earnings per share
(EPS) data for prior periods to conform with SFAS No. 128.
Earlier application is not permitted.
SFAS No. 128 replaces current EPS reporting requirements and
requires a dual presentation of basic and diluted EPS. Basic
EPS excludes dilution and is computed by dividing net income
by the weighted average of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common
stock were exercised or converted into common stock.
If SFAS No. 128 had been in effect during the current and
prior year periods, basic EPS would have been $.50 and $.42
for the quarters ended September 30, 1997 and 1996,
respectively. Diluted EPS under SFAS No. 128 would have not
been significantly different than EPS currently reported for
the periods.
5. Common Stock Repurchases
During the first three months of fiscal 1998, the Company
repurchased 270,550 shares of its common stock on the open
market compared with 239,500 shares repurchased in the
first three months of the previous fiscal year. During all
of fiscal 1997, the Company repurchased 791,739 shares.
8
<PAGE>
DIONEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended September 30, 1997
and 1996
Net sales for the first quarter of fiscal 1998 were $33.9
million, an increase of 8% from the $31.5 million reported for
the same period last year. The increase in sales reflects solid
growth in Japan and North America. Business conditions in Europe
showed some improvement during the quarter after several quarters
of sluggish performance. Had currency rates been the same as in
last year's first quarter, sales growth would have been 14%.
Gross margin for the first quarter of fiscal 1998 was 68.3%, down
1.1% from the 69.4% reported for the same period last year. The
reduction in gross margin was due primarily to an unfavorable
effect of currency fluctuations. There were no significant
selling price changes between these periods.
Operating expenses of $14.7 million for the first quarter of
fiscal 1998 were up $434,000, or 3%, from the $14.2 million
reported in the same quarter last year. As a percentage of
sales, operating expenses were 43% compared with 45% for the
first quarter last year. Selling, general and administrative
(SG&A) expenses increased $84,000, or 1%, to $11.6 million in the
first quarter of fiscal 1998. The increase was due to higher
personnel and related costs, higher selling costs and a new
subsidiary in Austria, which was established effective January 1,
1997, partially offset by the favorable effect of currency
fluctuations on international selling expenses.
Research and development (R&D) costs of $3.1 million were up 13%
from the $2.8 million reported in the same period last year. The
increase in costs was due to higher personnel and related costs
and higher project material costs. The level of R&D spending
varies depending on both the breadth of the Company's R&D efforts
and the stage of specific product development.
Interest income of $348,000 for the first quarter of fiscal 1998
was essentially unchanged from the $345,000 reported in the first
quarter last year.
9
<PAGE>
The effective tax rate for the first quarter of fiscal 1998 was
34.0%, compared with 34.5% in the first quarter a year ago.
Variations in the tax rate reflect changes in the mix of taxable
income among the various tax jurisdictions in which the Company
does business. The effective tax rate for fiscal 1998 is
expected to be consistent with the first three months of fiscal
1998.
Net income in the first quarter of fiscal 1998 was $5.8 million,
an increase of 12% from the $5.2 million reported for the same
period last year. Net income per share rose $.07, or 18%, to
$.47 compared with $.40 for the same period last year. Net
income per share was favorably impacted by the Company's stock
repurchase programs.
Liquidity and Capital Resources
The Company's liquidity and capital resources remained strong
during the first three months of fiscal 1998. At September 30,
1998, the Company had cash and cash investments of $25.4 million.
During the first quarter of fiscal 1998, the Company repurchased
270,550 shares of its common stock compared with 239,500 shares
repurchased in the first three months of last year. During all
of fiscal 1997, the Company repurchased 791,739 shares.
At September 30, 1997, the Company's Japanese subsidiary had
utilized approximately $820,000 of the Company's $14.5 million in
committed bank lines of credit. The Company believes that its
cash flow from operations, current cash and cash investments and
the remainder of its $14.5 million bank lines of credit will be
adequate to meet its cash requirements for fiscal 1998 and the
foreseeable future.
The impact of inflation on Dionex Corporation's financial
position and results of operations was not significant during the
three months ended September 30, 1997.
Except for historical information contained herein, the above
discussion contains forward-looking statements that involve risks
and uncertainties that could cause actual results to differ
materially from those discussed here. Such risks and
uncertainties include: competition from other products, foreign
currency fluctuations, general economic conditions, new product
development, including market receptiveness, existing product
obsolescence, fluctuation in worldwide demand for analytical
instrumentation, the ability to manufacture products on an
efficient and timely basis and at a reasonable cost and in
sufficient volume, the ability to attract and retain talented
employees and other risks as described in more detail in the
Company's Form 10-K.
10
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Dionex Corporation Stock Option Plan, as amended and restated.
10.2 1988 Directors' Stock Option Plan, as amended and restated.
27 Financial Data Schedule for the period ended September 30, 1997.
(b) The Company did not file any reports on Form 8-K during
the quarter ended September 30, 1997.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
DIONEX CORPORATION
(Registrant)
Date: October 31, 1997 By: /s/ A. Blaine Bowman
A. Blaine Bowman
President, Chief Executive
Officer
By: /s/ Michael W. Pope
Michael W. Pope
Vice President, Finance and
and Administration
(Principal Financial and
Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE
FORM 10-Q OF DIONEX CORPORATION FOR THE QUARTER ENDED SEPTEMBER 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 18745
<SECURITIES> 6702
<RECEIVABLES> 29013
<ALLOWANCES> 473
<INVENTORY> 10517
<CURRENT-ASSETS> 73187
<PP&E> 45684
<DEPRECIATION> 15830
<TOTAL-ASSETS> 112709
<CURRENT-LIABILITIES> 30910
<BONDS> 0
0
0
<COMMON> 36211
<OTHER-SE> 42497
<TOTAL-LIABILITY-AND-EQUITY> 112709
<SALES> 33933
<TOTAL-REVENUES> 33933
<CGS> 10767
<TOTAL-COSTS> 10767
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41
<INCOME-PRETAX> 8801
<INCOME-TAX> 2992
<INCOME-CONTINUING> 5809
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5809
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
DIONEX CORPORATION
STOCK OPTION PLAN
(As Amended and Restated July 28, 1997)
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by
which selected Employees of and Consultants to the Company,
and its Affiliates, may be given an opportunity to purchase
stock of the Company.
(b) The Company, by means of the Plan, seeks to retain
the services of persons who are now Employees of or
Consultants to the Company or its Affiliates, to secure and
retain the services of new Employees and Consultants, and to
provide incentives for such persons to exert maximum efforts
for the success of the Company and its Affiliates.
(c) The Company intends that the Options issued under
the Plan shall, in the discretion of the Board or any
Committee to which responsibility for administration of the
Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock
Options. All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the
time of grant, and in such form as issued pursuant to
Section 6, and a separate certificate or certificates will
be issued for shares purchased on exercise of each type of
Option.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or
subsidiary corporation, whether now or hereafter existing,
as those terms are defined in Sections 424(e) and (f)
respectively, of the Code.
(b) "Board" means the Board of Directors of the
Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means a Committee appointed by the
Board in accordance with subsection 3(c) of the Plan.
(e) "Company" means Dionex Corporation, a Delaware
corporation.
(f) "Consultant" means any person, including an
advisor, engaged by the Company or an Affiliate to render
consulting services and who is compensated for such
services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the
Company or who are not compensated by the Company for their
services as Directors.
(g) "Continuous Status as an Employee or Consultant"
means the employment or relationship as a Consultant is not
interrupted or terminated. The Board, in its sole
discretion, may determine whether Continuous Status as an
Employee or Consultant shall be considered interrupted in
the case of: (i) any leave of absence approved by the
Board, including sick leave, military leave, or any other
personal leave; or (ii) transfers between locations of the
Company or between the Company, Affiliates or their
successors.
(h) "Covered Employee" means the chief executive
officer and the four (4) other highest compensated officers
of the Company for whom total compensation is required to be
reported to shareholders under the Exchange Act, as
determined for purposes of Section 162(m) of the Code.
(i) "Director" means a member of the Board.
(j) "Employee" means any person, including Officers
and Directors, employed by the Company or any Affiliate of
the Company. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(l) "Fair Market Value" means, as of any date, the
value of the common stock of the Company determined as
follows:
(1) If the common stock is listed on any
established stock exchange or a national market system,
including without limitation the Nasdaq National Market, the
Fair Market Value of a share of common stock shall be the
closing sales price for such stock (or the closing bid, if
no sales were reported) as quoted on such system or exchange
(or the exchange with the greatest volume of trading in
common stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal
or such other source as the Board deems reliable;
(2) If the common stock is not quoted on the
Nasdaq National Market, or if the common stock is regularly
quoted by a recognized securities dealer but selling prices
are not reported, the Fair Market Value of a share of common
stock shall be the mean between the bid and asked prices for
the common stock on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal
or such other source as the Board deems reliable;
(3) In the absence of an established market for
the common stock, the Fair Market Value shall be determined
in good faith by the Board.
(m) "Incentive Stock Option" means an Option intended
to qualify as an incentive stock option within the meaning
of Section 422 of the Code and the regulations promulgated
thereunder.
(n) "Non-Employee Director" means a Director who
either (i) is not a current Employee or Officer of the
Company or its parent or subsidiary, does not receive
compensation (directly or indirectly) from the Company or
its parent or subsidiary for services rendered as a
Consultant or in any capacity other than as a Director
(except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act of 1933 ("Regulation S-K"),
does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business
relationship as to which disclosure would be required under
Item 404(b) of Regulation S-K; or (ii) is otherwise
considered a "non-employee director" for purposes of Rule
16b-3.
(o) "Nonstatutory Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.
(p) "Officer" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act
and the rules and regulations promulgated thereunder.
(q) "Option" means a stock option granted pursuant to
the Plan.
(r) "Option Agreement" means a written agreement
between the Company and an Optionee evidencing the terms and
conditions of an individual Option grant. Each Option
Agreement shall be subject to the terms and conditions of
the Plan.
(s) "Optionee" means an Employee or Consultant who
holds an outstanding Option.
(t) "Outside Director" means a Director who either
(i) is not a current employee of the Company or an
"affiliated corporation" (within the meaning of the Treasury
regulations promulgated under Section 162(m) of the Code),
is not a former employee of the Company or an "affiliated
corporation" receiving compensation for prior services
(other than benefits under a tax qualified pension plan),
was not an officer of the Company or an "affiliated
corporation" at any time, and is not currently receiving
direct or indirect remuneration from the Company or an
"affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the
Code.
(u) "Plan" means this Dionex Corporation Stock Option
Plan.
(v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act
or any successor to Rule 16b-3, as in effect when discretion
is being exercised with respect to the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless
and until the Board delegates administration to a Committee,
as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and
within the limitations of, the express provisions of the
Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted Options;
when and how each Option shall be granted; whether an Option
will be an Incentive Stock Option or a Nonstatutory Stock
Option; the provisions of each Option granted (which need
not be identical), including the time or times such Option
may be exercised in whole or in part; and the number of
shares for which an Option shall be granted to each such
person.
(2) To construe and interpret the Plan and
Options granted under it, and to establish, amend and revoke
rules and regulations for its administration. The Board, in
the exercise of this power, may correct any defect, omission
or inconsistency in the Plan or in any Option Agreement, in
a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(3) To amend the Plan or an Option as provided in
Section 11.
(4) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient
to promote the best interests of the Company.
(c) The Board may delegate administration of the Plan
to a committee composed of not fewer than two (2) members
(the "Committee"), all of the members of which Committee may
be Non-Employee Directors and may also be, in the discretion
of the Board, Outside Directors. If administration is
delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers
theretofore possessed by the Board (and references in this
Plan to the Board shall thereafter be to the Committee),
subject, however, to such resolutions, not inconsistent with
the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the
Plan. Notwithstanding anything in this Section 3 to the
contrary, the Board or the Committee may delegate to a
committee of one or more members of the Board the authority
to grant Options to eligible persons who (1) are not then
subject to Section 16 of the Exchange Act and/or (2) are
either (i) not then Covered Employees and are not expected
to be Covered Employees at the time of recognition of income
resulting from such Option, or (ii) not persons with respect
to whom the Company wishes to comply with Section 162(m) of
the Code.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating
to adjustments upon changes in stock, the stock that may be
sold pursuant to Options shall not exceed in the aggregate
Three Million (3,000,000) shares of the Company's common
stock. If any Option shall for any reason expire or
otherwise terminate, in whole or in part, without having
been exercised in full, the stock not purchased under such
Option shall revert to and again become available for
issuance under the Plan.
(b) The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or
otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
Employees. Nonstatutory Stock Options may be granted only
to Employees or Consultants.
(b) No person shall be eligible for the grant of an
Incentive Stock Option if, at the time of grant, such person
owns (or is deemed to own pursuant to Section 424(d) of the
Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the
Company or of any of its Affiliates unless the exercise
price of such Option is at least one hundred ten percent
(110%) of the Fair Market Value of such stock at the date of
grant and the Incentive Stock Option is not exercisable
after the expiration of five (5) years from the date of
grant.
(c) Subject to the provisions of Section 10 relating
to adjustments upon changes in stock, no person shall be
eligible to be granted Options covering more than two
hundred thousand (200,000) shares of the Company's common
stock in any twelve (12)-month period.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain
such terms and conditions as the Board shall deem
appropriate. The provisions of separate Options need not be
identical, but each Option shall include (through
incorporation of provisions hereof by reference in the
Option or otherwise) the substance of each of the following
provisions:
(a) Term. No Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) Price. The exercise price of each Incentive Stock
Option shall be not less than one hundred percent (100%) of
the Fair Market Value of the stock subject to the Option on
the date the Option is granted. The exercise price of each
Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the stock subject
to the Option on the date the Option is granted.
(c) Consideration. The purchase price of stock
acquired pursuant to an Option shall be paid, to the extent
permitted by applicable statutes and regulations, either
(i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of
the grant of the Option, (A) by delivery to the Company of
other common stock of the Company, (B) according to a
deferred payment or other arrangement (which may include,
without limiting the generality of the foregoing, the use of
other common stock of the Company) with the person to whom
the Option is granted or to whom the Option is transferred
pursuant to subsection 6(d), or (C) in any other form of
legal consideration that may be acceptable to the Board. In
the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at the
minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of
any amounts other than amounts stated to be interest under
the deferred payment arrangement. Notwithstanding anything
to the foregoing, the "par value" of the common stock may
not be paid by deferred payment.
(d) Transferability. An Incentive Stock Option shall
not be transferable except by will or by the laws of descent
and distribution, and shall be exercisable during the
lifetime of the person to whom the Incentive Stock Option is
granted only by such person. A Nonstatutory Stock Option
may be transferred to the extent provided in the Option
Agreement; provided that if the Option Agreement does not
expressly permit the transfer of a Nonstatutory Stock
Option, the Nonstatutory Stock Option shall not be
transferable except by will, by the laws of descent and
distribution or pursuant to a domestic relations order
satisfying the requirements of Rule 16b-3, and shall be
exercisable during the lifetime of the person to whom the
Option is granted only by such person or any transferee
pursuant to a domestic relations order. Notwithstanding the
foregoing, the person to whom the Option is granted may, by
delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in
the event of the death of the Optionee, shall thereafter be
entitled to exercise the Option.
(e) Vesting. The total number of shares of stock
subject to an Option may, but need not, be allotted in
periodic installments (which may, but need not, be equal).
The Option Agreement may provide that from time to time
during each of such installment periods, the Option may
become exercisable ("vest") with respect to some or all of
the shares allotted to that period, and may be exercised
with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became
vested but was not fully exercised. The Option may be
subject to such other terms and conditions on the time or
times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem
appropriate. The provisions of this subsection 6(e) are
subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
(f) Securities Law Compliance. The Company may
require any Optionee, or any person to whom an Option is
transferred under subsection 6(d), as a condition of
exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge
and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is
capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the
Option; and (2) to give written assurances satisfactory to
the Company stating that such person is acquiring the stock
subject to the Option for such person's own account and not
with any present intention of selling or otherwise
distributing the stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares upon the
exercise of the Option has been registered under a then
currently effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"),
or (ii) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need
not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities
laws, including, but not limited to, legends restricting the
transfer of the stock.
(g) Termination of Employment or Relationship as a
Consultant. In the event an Optionee's Continuous Status as
an Employee or Consultant terminates (other than upon the
Optionee's death or disability), the Optionee may exercise
his or her Option (to the extent that the Optionee was
entitled to exercise it at the date of termination) but only
within such period of time ending on the earlier of (i) the
date thirty (30) days after the termination of the
Optionee's Continuous Status as an Employee or Consultant
(or such longer or shorter period specified in the Option
Agreement) or (ii) the expiration of the term of the Option
as set forth in the Option Agreement. If, after
termination, the Optionee does not exercise his or her
Option within the time specified in the Option Agreement,
the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for
issuance under the Plan.
(h) Disability of Optionee. In the event an
Optionee's Continuous Status as an Employee or Consultant
terminates as a result of the Optionee's disability, the
Optionee may exercise his or her Option (to the extent that
the Optionee was entitled to exercise it at the date of
termination), but only within such period of time ending on
the earlier of (i) the date one (1) year following such
termination (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, at the
date of termination, the Optionee is not entitled to
exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan. If,
after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall
revert to and again become available for issuance under the
Plan.
(i) Death of Optionee. In the event of the death of
an Optionee during, or within a period specified in the
Option Agreement after the termination of, the Optionee's
Continuous Status as an Employee or Consultant, the Option
may be exercised (to the extent the Optionee was entitled to
exercise the Option at the date of death) by the Optionee's
estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated
to exercise the option upon the Optionee's death pursuant to
subsection 6(d), but only within the period ending on the
earlier of (i) the date eighteen (18) months following the
date of death (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of
such Option as set forth in the Option Agreement. If, at
the time of death, the Optionee was not entitled to exercise
his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan. If,
after death, the Option is not exercised within the time
specified herein, the Option shall terminate, and the shares
covered by such Option shall revert to and again become
available for issuance under the Plan.
(j) Early Exercise. The Option may, but need not,
include a provision whereby the Optionee may elect at any
time while an Employee or Consultant to exercise the Option
as to any part or all of the shares subject to the Option
prior to the full vesting of the Option. Any unvested
shares so purchased may be subject to a repurchase right in
favor of the Company or to any other restriction the Board
determines to be appropriate.
(k) Withholding. To the extent provided by the terms
of an Option Agreement, the Optionee may satisfy any
federal, state or local tax withholding obligation relating
to the exercise of such Option by any of the following means
or by a combination of such means: (1) tendering a cash
payment; (2) authorizing the Company to withhold shares from
the shares of the common stock otherwise issuable to the
Optionee as a result of the exercise of the Option; or (3)
delivering to the Company owned and unencumbered shares of
the common stock of the Company.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall
keep available at all times the number of shares of stock
required to satisfy such Options.
(b) The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the
Plan such authority as may be required to issue and sell
shares of stock upon exercise of the Options; provided,
however, that this undertaking shall not require the Company
to register under the Securities Act either the Plan, any
Option or any stock issued or issuable pursuant to any such
Option. If, after reasonable efforts, the Company is unable
to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for
the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to
issue and sell stock upon exercise of such Options unless
and until such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options
shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the
time at which an Option may first be exercised or the time
during which an Option or any part thereof will vest
pursuant to subsection 6(e), notwithstanding the provisions
in the Option stating the time at which it may first be
exercised or the time during which it will vest.
(b) Neither an Optionee nor any person to whom an
Option is transferred under subsection 6(d) shall be deemed
to be the holder of, or to have any of the rights of a
holder with respect to, any shares subject to such Option
unless and until such person has satisfied all requirements
for exercise of the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or
Option granted pursuant thereto shall confer upon any
Employee or Consultant or Optionee any right to continue in
the employ of the Company or any Affiliate (or to continue
acting as a Consultant) or shall affect the right of the
Company or any Affiliate to terminate the employment or
relationship as a Consultant of any individual with or
without cause.
(d) To the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to
which Incentive Stock Options are exercisable for the first
time by any Optionee during any calendar year under the Plan
and all other stock plans of the Company and its Affiliates
exceeds one hundred thousand dollars ($100,000), the Options
or portions thereof which exceed such limit (according to
the order in which they were granted) shall be treated as
Nonstatutory Stock Options.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the
Plan, or subject to any Option (through merger,
consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the
Plan will be appropriately adjusted in the class(es) and
maximum number of shares subject to the Plan pursuant to
subsection 4(a) and the maximum number of shares subject to
award to any person during any twelve (12) month period
pursuant to subsection 5(c), and the outstanding Options
will be appropriately adjusted in the class(es) and number
of shares and price per share of stock subject to such
outstanding Options.
(b) In the event of: (1) a dissolution, liquidation
or sale of substantially all of the assets of the Company;
(2) a merger or consolidation in which the Company is not
the surviving corporation; or (3) a reverse merger in which
the Company is the surviving corporation but the shares of
the Company's common stock outstanding immediately preceding
the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or
otherwise, then to the extent permitted by applicable law:
(i) any surviving corporation shall assume any Options
outstanding under the Plan or shall substitute similar
Options for those outstanding under the Plan, or (ii) such
Options shall continue in full force and effect. In the
event any surviving corporation refuses to assume or
continue such Options, or to substitute similar options for
those outstanding under the Plan, then, with respect to
Options held by persons then performing services as
Employees or Consultants, the time during which such Options
may be exercised shall be accelerated and the Options
terminated if not exercised prior to such event.
11. AMENDMENT OF THE PLAN AND OPTIONS.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 10
relating to adjustments upon changes in stock, no amendment
shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary
for the Plan to satisfy the requirements of Section 422 of
the Code, Rule 16b-3 or any Nasdaq or securities exchange
listing requirements.
(b) The Board may in its sole discretion submit any
other amendment to the Plan for stockholder approval,
including, but not limited to, amendments to the Plan
intended to satisfy the requirements of Section 162(m) of
the Code and the regulations promulgated thereunder
regarding the exclusion of performance-based compensation
from the limit on corporate deductibility of compensation
paid to certain executive officers.
(c) It is expressly contemplated that the Board may
amend the Plan in any respect the Board deems necessary or
advisable to provide Optionees with the maximum benefits
provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to
Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance
therewith.
(d) Rights and obligations under any Option granted
before amendment of the Plan shall not be impaired by any
amendment of the Plan unless (i) the Company requests the
consent of the person to whom the Option was granted and
(ii) such person consents in writing.
(e) The Board at any time, and from time to time, may
amend the terms of any one or more Options; provided,
however, that the rights and obligations under any Option
shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the
Option was granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on
August 26, 2005, which shall be within ten (10) years from
the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No
Options may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) Rights and obligations under any Option granted
while the Plan is in effect shall not be impaired by
suspension or termination of the Plan, except with the
consent of the person to whom the Option was granted.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the
Board, but no Options granted under the Plan shall be
exercised unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is
adopted by the Board, and, if required, an appropriate
permit has been issued by the Commissioner of Corporations
of the State of California.
DIONEX CORPORATION
1988 DIRECTORS' STOCK OPTION PLAN
(As Amended and Restated July 28, 1997)
1. PURPOSE
(a) The purpose of the 1988 Directors' Stock Option Plan
(the "Plan") is to provide a means by which each director of
DIONEX CORPORATION, a Delaware corporation (the "Company"), who
is not otherwise an employee of the Company or any Affiliate as
defined in subparagraph 1(b), and has not been an employee of the
Company or any Affiliate for all or part of the preceding fiscal
year (each such person being referred to as a "Non-Employee
Director") may be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company as
those terms are defined in Sections 424(e) and (f), respectively,
of the Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now serving as Non-Employee Directors of the
Company, to secure and retain the services of persons capable of
serving in such capacity, and to provide incentives for such
persons to exert maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the
Plan not be incentive stock options as that term is used in
Section 422 of the Code.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of
Directors (the "Board") of the Company unless and until the Board
delegates administration to a committee, as provided in
subparagraph 2(c). Whether or not the Board has delegated
administration, the Board shall have the final power to determine
all questions of policy and expediency that may arise in the
administration of the Plan.
(b) The Board shall have the power, subject to and within
the limitations of, the express provisions of the Plan:
(1) To construe and interpret the Plan and options
granted under it, and to establish, amend, and revoke rules and
regulations for its administration. The Board, in the exercise
of this power, may correct any defect, omission, or inconsistency
in the Plan or in any option agreement or option grant form under
the Plan, in a manner and to the extent it shall deem necessary
or expedient to make the Plan fully effective.
(2) To amend the Plan as provided in paragraph 11.
(3) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote
the best interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than two (2) members of the Board
(the "Committee"). If administration is delegated to a
Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by
the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration
of the Plan.
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 10 relating to
adjustments upon changes in stock, the stock that may be sold
pursuant to options granted under the Plan shall not exceed in
the aggregate one hundred fifty thousand (150,000) shares of the
Company's common stock. If any option granted under the Plan
shall for any reason expire or otherwise terminate without having
been exercised in full, the stock not purchased under such option
shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. ELIGIBILITY
Options shall be granted only to Non-Employee Directors of
the Company.
5. NON-DISCRETIONARY GRANTS
(a) Each Non-Employee Director who serves on the Company's
Board of Directors on the date of initial approval of the Plan by
the stockholders of the Company in 1988 (the "Adoption Date")
shall automatically be granted under the Plan, without further
action by the Company, the Board, or the Company's stockholders,
an option to purchase ten thousand (10,000) shares of common
stock of the Company (subject to adjustment as provided in
paragraph 10 hereof) on the terms and conditions set forth
herein.
(b) Each person who is elected for the first time to be a
Non-Employee Director after the Adoption Date shall, on the date
of his or her initial election as a Non-Employee Director by the
Board or stockholders of the Company, automatically be granted an
option to purchase ten thousand (10,000) shares of the Company's
common stock (subject to adjustment as provided in paragraph 10
hereof) upon the terms and conditions set forth herein.
(c) On October 21 of each year (or the next business day
should such date be a legal holiday), commencing October 21, 1989
and ending on October 21, 1996 (inclusive), and thereafter on the
date of each annual meeting of stockholders of the Company, an
option to purchase two thousand (2,000) shares of the Company's
common stock (subject to adjustment as provided in paragraph 10
hereof) shall automatically be granted to each person who (i) is
at that time a Non-Employee Director (and, in the case of options
granted after 1996, has been re-elected to the Board by the
stockholders on such date), (ii) has already received an option
to purchase 10,000 shares of common stock of the Company pursuant
to paragraphs 5(a) or 5(b) hereof, and (iii) has served
continuously as a Non-Employee Director for the entire preceding
fiscal year.
6. OPTION PROVISIONS
Each option granted under the Plan shall contain the
following terms and conditions (through incorporation of
provisions hereof by reference in the option or otherwise):
(a) The term of each option shall be five (5) years from
the date granted (the "Expiration Date"). Notwithstanding the
foregoing, if an optionee's service as a Non-Employee Director
or, subsequently, as an employee of the Company terminates for
any reason or for no reason, the option(s) held by such optionee
shall terminate on the earlier of the Expiration Date or thirty
(30) days following the date of termination of service; provided,
however, that (i) if such termination of service is due to the
optionee's death or permanent and total disability (within the
meaning of Section 422(c)(6) of the Code) ("disability"), the
option shall terminate on the earlier of the Expiration Date or
twelve (12) months following the date of the optionee's death or
disability, or (ii) if exercise of the option within thirty (30)
days after such termination of service would result in liability
under section 16(b) of the Securities Exchange Act of 1934, as
amended, the option shall terminate on the earlier of (A) the
Expiration Date of the option, (B) the tenth (10th) day after the
last date upon which exercise would result in such liability, or
(C) six (6) months and ten (10) days after the termination of
service with the Company.
(b) The exercise price of each option shall be one hundred
percent (100%) of the fair market value of the stock subject to
such option on the date such option is granted. (c) The
optionee may elect to make payment of the purchase price of
common stock acquired upon exercise of an option under one of the
following alternatives: (1) payment of the exercise price in
cash at the time the option is exercised; (2) provided that at
the time of exercise the Company's common stock is publicly
traded and quoted regularly in The Wall Street Journal, payment
by delivery of shares of common stock of the Company that have
been owned by the optionee for at least six (6) months and that
are owned free and clear of any liens, claims, encumbrances, or
security interests, which common stock shall be valued at fair
market value on the date of exercise; or (3) payment by a
combination of the methods of payment specified in subparagraphs
6(c)(1) and 6(c)(2) above.
(d) An option shall not be transferable except by will or
by the laws of descent and distribution, and shall be exercisable
during the lifetime of the person to whom the option is granted
only by such person or by his or her guardian or legal
representative. The optionee may, by delivering written notice
to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the optionee,
shall thereafter be entitled to exercise the option.
(e) (1) An option shall vest with respect to each optionee
in four (4) equal annual installments commencing on the date one
year after the date of grant, provided that the optionee has,
during the entire year prior to such vesting date, continuously
served as a Non-Employee Director or as an employee of the
Company or any Affiliate of the Company, whereupon such option
shall become fully exercisable in accordance with its terms with
respect to that portion of the shares represented by that
installment.
(2) In the event of the termination of an optionee's
service as a Non-Employee Director or as an employee of the
Company or any Affiliate of the Company, options held by such
optionee may be exercised only as to that number of shares as to
which such options were exercisable on the date of termination of
such service under the provisions of Section 6(e)(1) above.
Notwithstanding the foregoing, however, in the event such service
terminates due to an optionee's death or disability, such options
shall become exercisable in full in accordance with their terms
and without regard to their original vesting schedule.
(f) The Company may require any optionee, or any person to
whom an option is transferred under subparagraph 6(d), as a
condition of exercising any such option: (1) to give written
assurances satisfactory to the Company as to the optionee's
knowledge and experience in financial and business matters; and
(2) to give written assurance satisfactory to the Company stating
that such person is acquiring the stock subject to the option for
such person's own account and not with any present intention of
selling or otherwise distributing the stock. These requirements,
and any assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares upon the exercise
of the option has been registered under a then currently
effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or (ii) as to any
particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.
7. COVENANTS OF THE COMPANY
(a) During the terms of the options granted under the Plan,
the Company shall keep available at all times the number of
shares of common stock required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of common
stock upon exercise of the options granted under the Plan;
provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any
option granted under the Plan, or any stock issued or issuable
pursuant to any such option. If the Company is unable to obtain
from any such regulatory commission or agency the authority for
which counsel for the Company deems necessary for the lawful
issuance and sale of common stock under the Plan, the Company
shall be relieved from any liability for failure to issue and
sell common stock upon exercise of such options unless and until
such authority is obtained.
8. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to options granted
under the Plan shall constitute general funds of the Company.
9. MISCELLANEOUS
(a) Neither an optionee nor any person to whom an option is
transferred under subparagraph 6(d) hereof shall be deemed to be
the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such option unless and until
such person has satisfied all requirements for exercise of the
option pursuant to its terms.
(b) Throughout the term of any option granted pursuant to
the Plan, the Company shall make available to the holder of such
option, not later than one hundred twenty (120) days after the
close of each of the Company's fiscal years during the option
term, upon written request, such financial and other information
regarding the Company as comprises the annual report to the
stockholders of the Company provided for in the Bylaws of the
Company and such other information regarding the Company as the
holders of such option may reasonably request.
10. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If any change is made in the common stock subject to
the Plan, or subject to any option granted under the Plan
(through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure, or otherwise), the Plan
and outstanding options will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan and
the class(es) and number of shares and price per share of stock
subject to outstanding options.
(b) In the event of (1) a dissolution, liquidation or sale
of substantially all of the assets of the Company; (2) a merger
or consolidation in which the Company is not the surviving
corporation; or (3) any other capital reorganization (including a
reverse merger in which the Company is the surviving corporation)
in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged for or converted into
other property, whether in the form of securities, cash or
otherwise, then to the extent permitted by applicable law:
(i) any surviving corporation shall assume any options
outstanding under the Plan or shall substitute similar options
for those outstanding under the Plan, or (ii) such options shall
continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such options, or to
substitute similar options for those outstanding under the Plan,
then, with respect to options held by persons then performing
services as a Non-Employee Director or as an employee of the
Company, the time during which such options may be exercised
shall be accelerated and the options terminated if not exercised
prior to such event. Notwithstanding the foregoing, no option
may be terminated pursuant to this provision unless and until ten
(10) days written notice of such termination has been given to
the holder of an option to be so terminated.
11. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend
the Plan.
(b) Rights and obligations under any option granted before
amendment of the Plan shall not be altered or impaired by any
amendment of the Plan, except with the consent of the person to
whom the option was granted.
12. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate at the
time that all shares reserved for issuance under the Plan have
been issued. No options may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while
the Plan is in effect shall not be altered or impaired by
suspension or termination of the Plan, except with the consent of
the person to whom the option was granted.
13. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon adoption by the Board
of Directors, subject to the condition that the Plan be approved
by the vote of the holders of a majority of the shares of the
Company represented and voting at the next special or annual
meeting of stockholders of the Company. No option granted under
the Plan shall be exercised or exercisable unless and until the
condition of this Paragraph 13 has been met.
