<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 29, 1999
REGISTRATION NO. 333-___
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
GATEFIELD CORPORATION
(Exact name of registrant as specified in its charter)
----------------------
DELAWARE 41-1404495
(State of Incorporation) (I.R.S. Employer Identification No.)
----------------------
47100 BAYSIDE PARKWAY
FREMONT, CA 94538
(510) 249-5757
(Address and telephone number of principal executive offices)
1999 STOCK OPTION PLAN
1999 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plans)
----------------------
TIMOTHY SAXE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
47100 BAYSIDE PARKWAY
FREMONT, CA 94538
(510) 249-5757
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
----------------------
Copies to:
ERIC C. JENSEN
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CA 94306
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================= ===================== ============================ =========================== =================
TITLE OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AMOUNT OF
REGISTERED REGISTERED PRICE PER SHARE (1) AGGREGATE OFFERING PRICE REGISTRATION FEE
- --------------------------------- --------------------- ---------------------------- --------------------------- -----------------
<S> <C> <C> <C> <C>
Common Stock ($0.10 par value) 400,000 $4.82 $1,928,000 $536.00
- --------------------------------- --------------------- ---------------------------- --------------------------- -----------------
================================= ===================== ============================ =========================== =================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). The
offering price per share and aggregate offering price are based upon
the average of the bid and asked prices of the Common Stock of
Gatefield Corporation (the "Registrant") as reported on the Nasdaq
Unaffiliated Over the Counter Bulletin Board on July 23, 1999.
<PAGE>
NOTES TO CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
The chart below details the calculations of the registration fee:
<TABLE>
<CAPTION>
OFFERING PRICE PER
TYPE OF SHARES NUMBER OF SHARES SHARE AGGREGATE OFFERING PRICE
- --------------------------------------- -------------------- -------------------- ---------------------------
<S> <C> <C> <C>
Shares reserved for future issuance
pursuant to 1999 Stock Option Plan 300,000 $ 4.82 $1,446,000
Shares reserved for future issuance
pursuant to 1999 Employee Stock
Purchase Plan 100,000 $ 4.82 $ 482,000
Proposed Maximum Aggregate
Offering Price $1,928,000
Registration Fee $536.00
</TABLE>
Approximate date of commencement of proposed sale to the public: as soon as
practicable after this Registration Statement becomes effective.
<PAGE>
PART II
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "Commission") are incorporated by reference into
this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, (File No. 000-13244) filed pursuant to Sections
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including all materials incorporated by reference therein;
(b) (1) The Registrant's Quarterly Report on Form 10-Q for the three
months ended March 31, 1999 (File No. 000-13244), including all materials
incorporated by reference therein;
(2) The Registrant's Quarterly Report on Form 10-Q for the three
months ended June 30, 1999 (File No. 000-13244), including all materials
incorporated by reference therein;
(3) The Registrant's Current Report on Form 8-K dated May
28, 1999 (File No. 000-13244), including all materials incorporated by
reference therein;
(c) The description of the Registrant's Common Stock which is
contained in the Registration Statement on Form 8-A, filed April 23, 1984,
under the Exchange Act, including any amendment or report filed for the
purpose of updating such description;
All reports and other documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a
part of this Registration Statement from the date of the filing of such
reports and 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.
As permitted by Section 145 of the Delaware General Corporation Law,
the Registrant's Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach or alleged breach of their fiduciary duty. In addition, as permitted
by Section 145 of the Delaware General Corporation Law, the Bylaws of the
Registrant provide that the Registrant shall indemnify its officers and
directors, employees and agents to the extent permitted by the Delaware
General Corporation Law.
The Registrant has entered into indemnity agreements with each of
its executive officers and directors that provide the maximum indemnity
allowed to officers and directors by Section
1.
<PAGE>
145 of the Delaware General Corporation Law, as well as certain additional
procedural protections. The indemnity agreements provide that officers and
directors will be indemnified to the fullest possible extent not prohibited
by law against all expenses (including attorney's fees) and settlement
amounts paid or incurred by them in connection with any threatened, pending
or completed action or proceeding, including any derivative action by or in
the right of the Registrant, on account of their services as directors or
officers of the Registrant or as directors or officers of any other company
or enterprise when they are serving in such capacities at the request of the
Registrant. No indemnity will be provided, however, to any director or
officer on account of conduct that is adjudicated to be knowingly fraudulent,
deliberately dishonest or willful misconduct. The indemnity agreements also
provide that no indemnification will be available if a final court
adjudication determines that such indemnification is not lawful, or in
respect of any accounting of profits made from the purchase or sale of
securities of the Registrant in violation of Section 16(b) of the Exchange
Act.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIM.
Not Applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
4.1 Restated Certificate of Incorporation (incorporated by
reference from Exhibit 4.3, of the Registrant's current report
on Form 8-K dated August 31, 1998).
4.2 Certificate of Designations of Preferred Stock of Gatefield
Corporation to be designated Series C-1 Preferred Stock
(incorporated by reference to Exhibit 4.2 of the Registrant's
current report on Form 8-K dated May 28, 1999).
4.3 Certificate of Amendment of Restated Certificate of
Incorporation of Gatefield Corporation (incorporated by
reference to Exhibit 4.1 of the Company's quarterly report on
Form 10-Q dated July 29, 1999).
4.4 Bylaws of Registrant, as amended (incorporated by reference to
Exhibit 3.4, of the Company's quarterly report on Form 10-Q
dated August 14, 1998).
4.5 Specimen Stock Certificate.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Deloitte & Touche, Independent Auditors.
23.2 Consent of Cooley Godward LLP contained in Exhibit 5.1 to this
Registration Statement.
24.1 Power of Attorney is contained on the signature pages.
</TABLE>
2.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
99.1 1999 Stock Option Plan.
99.2 Form of Stock Option Agreement.
99.3 1999 Employee Stock Purchase Plan.
99.4 Form of Employee Stock Purchase Plan Offering.
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8, or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
3.
<PAGE>
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be
a new Registration Statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
4.
<PAGE>
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
July 29, 1999.
GATEFIELD CORPORATION
By: /s/ Timothy Saxe
-------------------------------
Timothy Saxe
President, Chief Executive Officer, and
Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Timothy Saxe and Lynne Bennett and
each or any one of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
5.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Timothy Saxe President, Chief Executive Officer July 29, 1999
- --------------------------------------- and Director
Timothy Saxe (Principal Executive Officer)
/s/ James B. Boyd Controller July 29, 1999
- --------------------------------------- (Principal Financial Officer and
James B. Boyd Principal Accounting Officer)
/s/ Horst G. Sandfort July 29, 1999
- --------------------------------------- Director
Horst G. Sandfort
/s/ Michael J. Kucha July 29, 1999
- --------------------------------------- Chairman of the Board and Secretary
Michael J. Kucha
</TABLE>
6.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
4.1 Restated Certificate of Incorporation (incorporated by
reference from Exhibit 4.3, of the Registrants current report
on Form 8-K dated August 31, 1998).
4.2 Certificate of Designations of Preferred Stock of Gatefield
Corporation to be designated Series C-1 Preferred Stock
(incorporated by reference to Exhibit 4.2 of the Registrant's
current report on Form 8-K dated May 28, 1999).
4.3 Certificate of Amendment of Restated Certificate of
Incorporation of Gatefield Corporation (incorporated by
reference to Exhibit 4.1 of the Company's quarterly report on
Form 10-Q dated July 29, 1999).
4.4 Bylaws of Registrant, as amended (incorporated by
reference to Exhibit 3.4, of the Company's
quarterly report on Form 10-Q dated August 14, 1998).
4.5 Specimen Stock Certificate.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Deloitte & Touche, Independent Auditors.
23.2 Consent of Cooley Godward LLP contained in Exhibit 5.1 to
this Registration Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 1999 Stock Option Plan.
99.2 Form of Stock Option Agreement.
99.3 1999 Employee Stock Purchase Plan.
99.4 Form of Employee Stock Purchase Plan Offering.
</TABLE>
<PAGE>
EXHIBIT 4.5
SPECIMEN STOCK CERTIFICATE
062201
NUMBER SHARES
SP
GATEFIELD CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFICATE IS TRANSFERABLE IN THE CITIES OF NEW YORK, NY OR BOSTON, MA
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 367339 20 7
THIS CERTIFIES that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK
OF THE PAR VALUE OF $.10 EACH OF
GATEFIELD CORPORATION, transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate is not valid unless
countersigned by the Transfer Agent and Registrar.
WITNESS the seal of the Corporation and the signatures of its duly authorized
officers,
Dated:
GATEFIELD CORPORATION /s/ MICHAEL J. KUCHA /s/ TIMOTHY SAXE
CORPORATE SEAL
DELAWARE CHAIRMAN AND SECRETARY PRESIDENT AND
CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
BANKBOSTON, N.A.
TRANSFER AGENT AND REGISTRAR
BY /s/ MARY PENEZIC
AUTHORIZED SIGNATURE
<PAGE>
GATEFIELD CORPORATION
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF OF THE CORPORATION AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE MADE TO
THE OFFICE OF THE SECRETARY OF THE CORPORATION OR TO THE TRANSFER AGENT.
The following abbreviations, when used in the inscription of the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIF MIN ACT -- ................ Custodian ................
(Cust) (Minor)
under Uniform Gifts to Minors
Act .......................................
(State)
Additional abbreviations may also be used though not in the above list.
For value received, _____________________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
| |
- --------------------------------------
_____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
____________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated _________________________
X ______________________________________________
X ______________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
Signature(s) Guaranteed
By _________________________________________________
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCK-BROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
EXHIBIT 5.1
July 29, 1999
GATEFIELD CORPORATION
47100 Bayside Parkway
Fremont, CA 94538
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by GATEFIELD CORPORATION (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 400,000 shares of the
Company's Common Stock, $0.10 par value, (the "Shares") pursuant to its 1999
Stock Option Plan and 1999 Employee Stock Purchase Plan (collectively, the
"Plans").
In connection with this opinion, we have examined the Registration Statement
and related Prospectus, your Certificate of Incorporation and Bylaws, as
amended, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a basis for this opinion. We have assumed
the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares when sold and issued in accordance with the Plan(s), the
Registration Statement and the related Prospectus, will be validly issued,
fully paid, and nonassessable (except as to shares issued pursuant to certain
deferred payment arrangements, which will be fully paid and nonassessable
when such deferred payments are made in full.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Eric C. Jensen
----------------------------
Eric C. Jensen
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
of GateField Corporation on Form S-8 of our reports dated February 19, 1999
(which reports on the consolidated financial statements of GateField
Corporation, expresses an unqualified opinion and includes an explanatory
paragraph concerning certain factors which raise substantial doubt about the
Company's ability to continue as a going concern), appearing in the Annual
Report on Form 10-K of GateField Corporation for the year ended December 31,
1998.
/s/ Deloitte & Touche LLP
San Jose, California
July 27, 1999
<PAGE>
EXHIBIT 99.1
GATEFIELD CORPORATION
1999 STOCK OPTION PLAN
ADOPTED JANUARY 26, 1999
APPROVED BY STOCKHOLDERS JUNE 7, 1999
ADJUSTED FOR REVERSE SPLIT JUNE 30, 1999
TERMINATION DATE: JANUARY 25, 2009
1. PURPOSES.
(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to
receive Stock Awards are the Employees, Directors and Consultants of the
Company and its Affiliates.
(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide
a means by which eligible recipients of Stock Awards may be given an
opportunity to benefit from increases in value of the Common Stock through
the granting of the following Stock Awards: (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, and (iii) stock appreciation rights.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to
retain the services of the group of persons eligible to receive Stock Awards,
to secure and retain the services of new members of this group and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation of the Company, 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).
(e) "COMMON STOCK" means the common stock of the Company.
(f) "COMPANY" means Gatefield Corporation, a Delaware corporation.
(g) "CONSULTANT" means any person, including an advisor, (1)
engaged by the Company or an Affiliate to render consulting or advisory
services and who is compensated for such services or (2) who is a member of
the Board of Directors of an Affiliate. However, the term "Consultant" shall
not include either Directors of the Company who are not compensated
<PAGE>
by the Company for their services as Directors or Directors of the Company
who are merely paid a director's fee by the Company for their services as
Directors.
(h) "CONTINUOUS SERVICE" means that the Participant's service with
the Company or an Affiliate, whether as an Employee, Director or Consultant,
is not interrupted or terminated. The Participant's Continuous Service shall
not be deemed to have terminated merely because of a change in the capacity
in which the Participant renders service to the Company or an Affiliate as an
Employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant's Continuous Service. For example, a change
in status from an Employee of the Company to a Consultant of an Affiliate or
a Director of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.
(i) "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 stockholders under the Exchange
Act, as determined for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board of Directors of the
Company.
(k) "DISABILITY" means the permanent and total disability of a
person within the meaning of Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market or on an established over the counter 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 exchange or
market (or the exchange or market with the greatest volume of trading in 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.
(ii) In the absence of such markets for the Common
Stock, the Fair Market Value shall be determined in good faith by the Board.
<PAGE>
(o) "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.
(p) "NON-EMPLOYEE DIRECTOR" means a Director of the Company who
either (i) is not a current Employee or Officer of the Company or its parent
or a subsidiary, does not receive compensation (directly or indirectly) from
the Company or its parent or a 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 ("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.
(q) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(r) "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.
(s) "OPTION" means an Incentive Stock Option or a Nonstatutory
Stock Option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of an
individual Option grant. Each Option Agreement shall be subject to the terms
and conditions of the Plan.
(u) "OPTIONHOLDER" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.
(v) "OUTSIDE DIRECTOR" means a Director of the Company who either
(i) is not a current employee of the Company or an "affiliated corporation"
(within the meaning of 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.
(w) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(x) "PLAN" means this Gatefield Corporation 1999 Stock Option Plan.
(y) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor to Rule 16b-3, as in effect from time to time.
<PAGE>
(z) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(aa) "STOCK AWARD" means any right granted under the Plan, including
an Option or a stock appreciation right.
(bb) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of
an individual Stock Award grant. Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.
(cc) "TEN PERCENT STOCKHOLDER" means a person who 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.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board will administer the Plan
unless and until the Board delegates administration to a Committee, as
provided in subsection 3(c).
(b) POWERS OF BOARD. The Board shall have the power, subject to,
and within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when and how
each Stock Award shall be granted; what type or combination of types of Stock
Award shall be granted; the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be
permitted to receive stock pursuant to a Stock Award; and the number of
shares with respect to which a Stock Award shall be granted to each such
person.
(ii) To construe and interpret the Plan and Stock
Awards 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 Stock Award Agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in
Section 12.
(iv) 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 which are not in conflict with the provisions of the
Plan.
(c) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate administration
of the Plan to a Committee or Committees of one or more members of the Board,
and the term "Committee" shall apply to any person or persons to whom such
authority has been delegated. 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, including the power to
<PAGE>
delegate to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or subcommittee), 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.
(ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS
PUBLICLY TRADED. At such time as the Common Stock is publicly traded, in the
discretion of the Board, a Committee may consist solely of two or more
Outside Directors, in accordance with Section 162(m) of the Code, and/or
solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.
Within the scope of such authority, the Board or the Committee may (i)
delegate to a committee of one or more members of the Board who are not
Outside Directors, the authority to grant Stock Awards to eligible persons
who are either (a) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting from such
Stock Award or (b) not persons with respect to whom the Company wishes to
comply with Section 162(m) of the Code and/or (ii) delegate to a committee of
one or more members of the Board who are not Non-Employee Directors the
authority to grant Stock Awards to eligible persons who are not then subject
to Section 16 of the Exchange Act.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 11
relating to adjustments upon changes in stock, the stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate three hundred
thousand (300,000) shares of Common Stock.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, the stock not acquired under such
Stock Award shall revert to and again become available for issuance under the
Plan. Shares subject to stock appreciation rights exercised in accordance
with the Plan shall not be available for subsequent issuance under the Plan.
If any Common Stock acquired pursuant to the exercise of an Option shall for
any reason be repurchased by the Company under an unvested share repurchase
option provided under the Plan, the stock repurchased by the Company under
such repurchase option shall not revert to and again become available for
issuance under the Plan.
(c) SOURCE OF SHARES. The stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options
may be granted only to Employees. Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants.
(b) TEN PERCENT STOCKHOLDERS. No Ten Percent Stockholder shall be
eligible for the grant of an Incentive Stock Option unless the exercise price
of such Option is at least one
<PAGE>
hundred ten percent (110%) of the Fair Market Value of the Common Stock at
the date of grant and the Option is not exercisable after the expiration of
five (5) years from the date of grant.
(c) SECTION 162(m) LIMITATION. Subject to the provisions of
Section 11 relating to adjustments upon changes in stock, no employee shall
be eligible to be granted Options and/or stock appreciation rights covering
more than one hundred thousand (100,000) shares of the Common Stock during
any calendar year.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and a separate certificate or certificates will be
issued for shares purchased on exercise of each type of Option. 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. Subject to the provisions of subsection 5(b) regarding
Ten Percent Stockholders, no Incentive Stock Option shall be exercisable
after the expiration of ten (10) years from the date it was granted.
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, 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. Notwithstanding the foregoing, an
Incentive Stock Option may be granted with an exercise price lower than that
set forth in the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. 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. Notwithstanding the foregoing, a
Nonstatutory Stock Option may be granted with an exercise price lower than
that set forth in the preceding sentence if such Option is granted pursuant
to an assumption or substitution for another option in a manner satisfying
the provisions of Section 424(a) of the Code.
(d) 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) as determined at the discretion of the Board at the time of the grant of
the Option (or subsequently in the case of a Nonstatutory Stock Option) by
delivery to the Company of other Common Stock, according to a deferred
payment or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other Common Stock) with the
Participant or in any other form of legal consideration that may be
acceptable to the Board; provided, however, that at any time that the Company
is incorporated in Delaware,
<PAGE>
payment of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded 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.
(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. 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
Optionholder only by the Optionholder. Notwithstanding the foregoing
provisions of this subsection 6(e), the Optionholder 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 Optionholder,
shall thereafter be entitled to exercise the Option.
(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory 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 Optionholder only by the Optionholder.
Notwithstanding the foregoing provisions of this subsection 6(f), the
Optionholder 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 Optionholder, shall thereafter be entitled to exercise the
Option.
(g) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable
in periodic installments which may, but need not, be equal. 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 vesting provisions of individual Options may
vary. The provisions of this subsection 6(g) are subject to any Option
provisions governing the minimum number of shares as to which an Option may
be exercised.
(h) TERMINATION OF CONTINUOUS SERVICE. In the event an
Optionholder's Continuous Service terminates (other than upon the
Optionholder's death or Disability), the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise it as of
the date of termination) but only within such period of time ending on the
earlier of (i) the date three (3) months following the termination of the
Optionholder's Continuous Service (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 Optionholder
does not exercise his or her Option within the time specified in the Option
Agreement, the Option shall terminate.
(i) EXTENSION OF TERMINATION DATE. An Optionholder's Option
Agreement may also provide that if the exercise of the Option following the
termination of the Optionholder's Continuous Service (other than upon the
Optionholder's death or Disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements
under the Securities Act, then the Option shall terminate on the earlier of
(i) the expiration of the
<PAGE>
term of the Option set forth in subsection 6(a) or (ii) the expiration of a
period of three (3) months after the termination of the Optionholder's
Continuous Service during which the exercise of the Option would not be in
violation of such registration requirements.
(j) DISABILITY OF OPTIONHOLDER. In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability,
the Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise it as of the date of termination), but
only within such period of time ending on the earlier of (i) the date twelve
(12) months 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, after termination, the
Optionholder does not exercise his or her Option within the time specified
herein, the Option shall terminate.
(k) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for
a reason other than death, then the Option may be exercised (to the extent
the Optionholder was entitled to exercise the Option as of the date of death)
by the Optionholder'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 Optionholder's death pursuant to subsection 6(e) or 6(f),
but only within the period ending on the earlier of (1) the date eighteen
(18) months following the date of death (or such longer or shorter period
specified in the Option Agreement) or (2) the expiration of the term of such
Option as set forth in the Option Agreement. If, after death, the Option is
not exercised within the time specified herein, the Option shall terminate.
(l) EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionholder may elect at any time before the
Optionholder's Continuous Service terminates to exercise the Option as to any
part or all of the shares subject to the Option prior to the vesting of such
shares under the Option. Any unvested shares so purchased may be subject to
an unvested share repurchase option in favor of the Company or to any other
restriction the Board determines to be appropriate.
(m) RE-LOAD OPTIONS. Without in any way limiting the authority of
the Board to make or not to make grants of Options hereunder, the Board shall
have the authority (but not an obligation) to include as part of any Option
Agreement a provision entitling the Optionholder to a further Option (a
"Re-Load Option") in the event the Optionholder exercises the Option
evidenced by the Option Agreement, in whole or in part, by surrendering other
shares of Common Stock in accordance with this Plan and the terms and
conditions of the Option Agreement. Any such Re-Load Option shall (i) provide
for a number of shares equal to the number of shares surrendered as part or
all of the exercise price of such Option; (ii) have an expiration date which
is the same as the expiration date of the Option the exercise of which gave
rise to such Re-Load Option; and (iii) have an exercise price which is equal
to one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option
<PAGE>
shall be subject to the same exercise price and term provisions heretofore
described for Options under the Plan.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board may designate at the time of the
grant of the original Option; provided, however, that the designation of any
Re-Load Option as an Incentive Stock Option shall be subject to the one
hundred thousand dollars ($100,000) annual limitation on exercisability of
Incentive Stock Options described in subsection 10(d) and in Section 422(d)
of the Code. There shall be no Re-Load Options on a Re-Load Option. Any
such Re-Load Option shall be subject to the availability of sufficient shares
under subsection 4(a) and the "Section 162(m) Limitation" on the grants of
Options under subsection 5(c) and shall be subject to such other terms and
conditions as the Board may determine which are not inconsistent with the
express provisions of the Plan regarding the terms of Options.
7. STOCK APPRECIATION RIGHT PROVISIONS.
(a) AUTHORIZED RIGHTS. The following three types of stock
appreciation rights shall be authorized for issuance under the Plan:
(1) TANDEM RIGHTS. A "Tandem Right" means a stock
appreciation right granted appurtenant to an Option which is subject to the
same terms and conditions applicable to the particular Option grant to which
it pertains with the following exceptions: The Tandem Right shall require
the holder to elect between the exercise of the underlying Option for shares
of Common Stock and the surrender, in whole or in part, of such Option for an
appreciation distribution. The appreciation distribution payable on the
exercise of the Tandem Right shall be in cash (or, if so provided, in an
equivalent number of shares of Common Stock based on Fair Market Value on the
date of the Option surrender) in an amount up to the excess of (A) the Fair
Market Value (on the date of the Option surrender) of the number of shares of
Common Stock covered by that portion of the surrendered Option in which the
Optionholder is vested over (B) the aggregate exercise price payable for such
vested shares.
(2) CONCURRENT RIGHTS. A "Concurrent Right" means a
stock appreciation right granted appurtenant to an Option which applies to
all or a portion of the shares of Common Stock subject to the underlying
Option and which is subject to the same terms and conditions applicable to
the particular Option grant to which it pertains with the following
exceptions: A Concurrent Right shall be exercised automatically at the same
time the underlying Option is exercised with respect to the particular shares
of Common Stock to which the Concurrent Right pertains. The appreciation
distribution payable on an exercised Concurrent Right shall be in cash (or,
if so provided, in an equivalent number of shares of Common Stock based on
Fair Market Value on the date of the exercise of the Concurrent Right) in an
amount equal to such portion as determined by the Board at the time of the
grant of the excess of (A) the aggregate Fair Market Value (on the date of
the exercise of the Concurrent Right) of the vested shares of Common Stock
purchased pursuant to the underlying Option which have Concurrent Rights
appurtenant to them over (B) the aggregate exercise price paid for such
shares.
(3) INDEPENDENT RIGHTS. An "Independent Right" means
a stock appreciation right granted independently of any Option but which is
subject to the same terms
<PAGE>
and conditions applicable to a Nonstatutory Stock Option with the following
exceptions: An Independent Right shall be denominated in share equivalents.
The appreciation distribution payable on the exercised Independent Right
shall be not greater than an amount equal to the excess of (a) the aggregate
Fair Market Value (on the date of the exercise of the Independent Right) of a
number of shares of Company stock equal to the number of share equivalents in
which the holder is vested under such Independent Right, and with respect to
which the holder is exercising the Independent Right on such date, over (b)
the aggregate Fair Market Value (on the date of the grant of the Independent
Right) of such number of shares of Company stock. The appreciation
distribution payable on the exercised Independent Right shall be in cash or,
if so provided, in an equivalent number of shares of Common Stock based on
Fair Market Value on the date of the exercise of the Independent Right.
(ii) RELATIONSHIP TO OPTIONS. Stock appreciation rights
appurtenant to Incentive Stock Options may be granted only to Employees. The
"Section 162(m) Limitation" provided in subsection 5(c) and any authority to
reprice Options shall apply as well to the grant of stock appreciation rights.
(iii) EXERCISE. To exercise any outstanding stock
appreciation right, the holder shall provide written notice of exercise to
the Company in compliance with the provisions of the Stock Award Agreement
evidencing such right. Except as provided in subsection 5(c) regarding the
"Section 162(m) Limitation," no limitation shall exist on the aggregate
amount of cash payments that the Company may make under the Plan in
connection with the exercise of a stock appreciation right.
8. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards,
the Company shall keep available at all times the number of shares of Common
Stock required to satisfy such Stock Awards.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain
from each regulatory commission or agency having jurisdiction over the Plan
such authority as may be required to grant Stock Awards and to issue and sell
shares of Common Stock upon exercise of the Stock Awards; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act the Plan, any Stock Award or any stock issued or issuable
pursuant to any such Stock Award. 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 Stock
Awards unless and until such authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. MISCELLANEOUS.
<PAGE>
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall
have the power to accelerate the time at which a Stock Award may first be
exercised or the time during which a Stock Award or any part thereof will
vest in accordance with the Plan, notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during
which it will vest.
(b) STOCKHOLDER RIGHTS. No Participant 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 Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or
any instrument executed or Stock Award granted pursuant thereto shall confer
upon any Participant or other holder of Stock Awards any right to continue to
serve the Company or an Affiliate in the capacity in effect at the time the
Stock Award was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without
notice and with or without cause, (ii) the service of a Consultant pursuant
to the terms of such Consultant's agreement with the Company or an Affiliate
or (iii) the service of a Director pursuant to the Bylaws of the Company or
an Affiliate, and any applicable provisions of the corporate law of the state
in which the Company or the Affiliate is incorporated, as the case may be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. 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 Optionholder during any calendar year (under all 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.
(e) INVESTMENT ASSURANCES. The Company may require a Participant,
as a condition of exercising or acquiring stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant'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 Stock Award; and (ii)
to give written assurances satisfactory to the Company stating that the
Participant is acquiring the stock subject to the Stock Award for the
Participant'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 (iii)
the issuance of the shares upon the exercise or acquisition of stock under
the Stock Award has been registered under a then currently effective
registration statement under the Securities Act or (iv) 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
<PAGE>
appropriate in order to comply with applicable securities laws, including,
but not limited to, legends restricting the transfer of the stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms
of a Stock Award Agreement, the Participant may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by
the Company) or by a combination of such means: (i) tendering a cash
payment; (ii) authorizing the Company to withhold shares from the shares of
the Common Stock otherwise issuable to the participant as a result of the
exercise or acquisition of stock under the Stock Award; or (iii) delivering
to the Company owned and unencumbered shares of the Common Stock.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the stock
subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving
the receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the
Plan pursuant to subsection 4(a) and the maximum number of securities subject
to award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of
securities and price per share of stock subject to such outstanding Stock
Awards. Such adjustments shall be made by the Board, the determination of
which shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a transaction
"without receipt of consideration" by the Company.)
(b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then such Stock Awards shall be terminated if not
exercised (if applicable) prior to such event.
(c) CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (1) a 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 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 any
surviving corporation or acquiring corporation may assume any Stock Awards
outstanding under the Plan or may substitute similar stock awards (including
an award to acquire the same consideration paid to the stockholders in the
transaction described in this subsection 11(c)) for those outstanding under
the Plan. In the event any surviving corporation or acquiring corporation
does not assume such Stock Awards or does not substitute similar stock awards
for those outstanding under the Plan, then with respect to Stock Awards held
by Participants whose Continuous Service has not terminated, the vesting of
such Stock Awards (and, if applicable, the time during which such Stock
Awards may be exercised) shall be accelerated in full, and the Stock Awards
shall terminate if not exercised (if
<PAGE>
applicable) at or prior to such event. With respect to any other Stock
Awards outstanding under the Plan, such Stock Awards shall terminate if not
exercised (if applicable) prior to such event.
(d) CHANGE IN CONTROL--SECURITIES ACQUISITION. In the event of an
acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Exchange Act, or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or an Affiliate) of the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors, then any such acquiring person, entity or group may
assume any Stock Awards outstanding under the Plan or may substitute similar
stock awards (including an award to acquire the same consideration paid to
the stockholders in the transaction described in this subsection 11(d)) for
those outstanding under the Plan. In the event any such acquiring person,
entity or group does not assume such Stock Awards or does not substitute
similar stock awards for those outstanding under the Plan, then such Stock
Awards shall continue in full force and effect.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to
time, may amend the Plan. However, except as provided in Section 11 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 to satisfy the requirements of Section 422 of the Code,
Rule 16b-3 or any Nasdaq or securities exchange listing requirements.
(b) STOCKHOLDER APPROVAL. 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 thereunder
regarding the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to certain executive officers.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or
advisable to provide eligible Employees 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) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award 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 Participant and (ii)
the Participant consents in writing.
(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from
time to time, may amend the terms of any one or more Stock Awards; provided,
however, that the rights under any Stock Award shall not be impaired by any
such amendment unless (i) the Company requests the consent of the Participant
and (ii) the Participant consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
<PAGE>
(a) PLAN TERM. The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on the day before
the tenth (10th) anniversary of the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is earlier. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Rights and obligations under any
Stock Award granted while the Plan is in effect shall not be impaired by
suspension or termination of the Plan, except with the written consent of the
Participant.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Stock Award 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.
<PAGE>
EXHIBIT 99.2
GATEFIELD CORPORATION
1999 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
(INCENTIVE AND NONSTATUTORY STOCK OPTIONS)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, Gatefield Corporation (the "Company") has granted you
an option under its 1999 Stock Option Plan (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice
at the exercise price indicated in your Grant Notice. Defined terms not
explicitly defined in this Stock Option Agreement but defined in the Plan
shall have the same definitions as in the Plan.
The details of your option are as follows:
1. VESTING.
(a) Subject to the limitations contained herein, the shares
covered by your option will vest (and become exercisable) as provided in your
Grant Notice, provided that vesting will cease upon the termination of your
Continuous Service.
(b) Notwithstanding any other provision of this Stock Option
Agreement or of the Plan to the contrary, in the event of the occurrence of a
transaction described in subsections 11(c) or 11(d) of the Plan (hereafter, a
"Change in Control") and if this option remains in effect following such
Change in Control or if this option is assumed or a similar option
substituted for this option in connection with a Change in Control, then the
vesting and exercisability of the shares covered by this option (or by any
substituted option) shall accelerate so that fifty percent (50%) of any
unvested shares covered by this option shall immediately vest and become
exercisable upon the effective date of the Change in Control. The remaining
fifty percent (50%) of the unvested shares covered by this option (or by any
substituted option) shall vest and become exercisable in accordance with the
original schedule for vesting and exercisability (as provided in the Grant
Notice), but in no event shall such remaining period of vesting be longer
than two (2) years from the effective date of the Change in Control.
Moreover, if your Continuous Service is terminated without Cause (as defined
below) or you voluntarily terminate your Continuous Service due to a
Constructive Termination (as defined below) within one (1) month prior to the
effective date of the Change in Control or within six (6) months following
the effective date of the Change in Control, then all remaining unvested
shares covered by this option (or by any substituted option) shall vest and
become exercisable as of the date of such termination.
For purposes of this subparagraph 1(b) only, Cause means (i)
conviction of, a guilty plea with respect to, or a plea of NOLO CONTENDERE to
a charge that you have committed a felony under the laws of the United States
or of any state or a crime involving moral turpitude, including, but not
limited to, fraud, theft, embezzlement or any crime that results in or is
intended to result in
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personal enrichment at the expense of the Company or an Affiliate; (ii)
material breach of any agreement entered into between you and the Company or
an Affiliate that impairs the Company's or the Affiliate's interest therein;
(iii) willful misconduct, significant failure by you to perform your duties,
or gross neglect by you of your duties; or (iv) engagement in any activity
that constitutes a material conflict of interest with the Company or any
Affiliate.
For purposes of this subparagraph 1(b) only, Constructive Termination
means the occurrence of any of the following events or conditions: (i) (A) a
change in your status, title, position or responsibilities (including
reporting responsibilities) which represents an adverse change from your
status, title, position or responsibilities as in effect at any time within
ninety (90) days preceding the date of a Change in Control or at any time
thereafter; (B) the assignment to you of any duties or responsibilities which
are inconsistent with your status, title, position or responsibilities as in
effect at any time within ninety (90) days preceding the date of a Change in
Control or at any time thereafter; or (C) any removal of you from or failure
to reappoint or reelect you to any of such offices or positions, except in
connection with the termination of the your Continuous Service for Cause, as
a result of the your Disability or death or by you other than as a result of
Constructive Termination; (ii) a reduction in your annual base compensation
or any failure to pay you any compensation or benefits to which you are
entitled within five (5) days of the date due; (iii) the Company's requiring
you to relocate to any place outside a twenty (20) mile radius of your
current work site, except for reasonably required travel on the business of
the Company or its Affiliates which is not materially greater than such
travel requirements prior to the Change in Control; (iv) the failure by the
Company to (A) continue in effect (without reduction in benefit level and/or
reward opportunities) any material compensation or employee benefit plan in
which you were participating at any time within ninety (90) days preceding
the date of a Change in Control or at any time thereafter, unless such plan
is replaced with a plan that provides substantially equivalent compensation
or benefits to you, or (B) provide you with compensation and benefits, in the
aggregate, at least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each other employee benefit plan,
program and practice in which you were participating at any time within
ninety (90) days preceding the date of a Change in Control or at any time
thereafter; (v) any material breach by the Company of any provision of an
agreement between the Company and you, whether pursuant to this Plan or
otherwise, other than a breach which is cured by the Company within fifteen
(15) days following notice by you of such breach; or (vi) the failure of the
Company to obtain an agreement from any successors and assigns to assume and
agree to perform the obligations created under the Plan.
(c) Notwithstanding, subparagraph 1(b) above, in the event the
potential acceleration of vesting and exercisability of the shares covered by
this option would cause a contemplated Change in Control transaction that
would otherwise be accounted for as a "pooling-of-interests" transaction to
become ineligible for such accounting treatment under generally accepted
accounting principles as determined by the Company's independent public
accountants (the "Accountants") prior to the Change in Control, such
acceleration shall not occur.
(d) Notwithstanding any other provision of this paragraph (1) to
the contrary, in the event that the acceleration of the vesting and
exercisability of the shares covered by this option as provided for in this
Stock Option Agreement and benefits otherwise payable to you (i)
<PAGE>
constitute "parachute payments" within the meaning of Section 280G (as it may
be amended or replaced) of the Code and (ii) but for this subparagraph 1(d)
would be subject to the excise tax imposed by Section 4999 (as it may be
amended or replaced) of the Code (the "Excise Tax"), then your benefits
hereunder shall be delivered to such lesser extent which would result in no
portion of such benefits being subject to the Excise Tax; PROVIDED, HOWEVER,
that the benefits hereunder shall be reduced only to the extent necessary
only after all cash and all restricted stock otherwise payable to you and
which constitute "parachute payments" have been returned. Unless the Company
and you otherwise agree in writing, any determination required under this
subparagraph 1(d) shall be made in writing in good faith by the Accountants.
For purposes of making the calculations required by this subparagraph 1(d),
the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Code. The Company and you shall furnish to
the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this subparagraph
1(d). The Company shall bear all costs the Accountants may reasonably incur
in connection with any calculations contemplated by this subparagraph 1(d).
2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of
Common Stock subject to your option and your exercise price per share
referenced in your Grant Notice may be adjusted from time to time for
capitalization adjustments, as provided in the Plan.
3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in
your Grant Notice (i.e., the "Exercise Schedule" indicates that "Early
Exercise" of your option is permitted) and subject to the provisions of your
option, you may elect at any time that is both (i) during the period of your
Continuous Service and (ii) during the term of your option, to exercise all
or part of your option, including the nonvested portion of your option;
provided, however, that:
(a) a partial exercise of your option shall be deemed to cover
first vested shares of Common Stock and then the earliest vesting installment
of unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments that
have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement;
(c) you shall enter into the Company's form of Early Exercise Stock
Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred; and
(d) if your option is an incentive stock option, then, as provided
in the Plan, to the extent that the aggregate Fair Market Value (determined
at the time of grant) of the shares of Common Stock with respect to which
your option plus all other incentive stock options you hold are exercisable
for the first time by you during any calendar year (under all plans of the
Company and its Affiliates) exceeds one hundred thousand dollars ($100,000),
your option(s) or portions thereof that exceed such limit (according to the
order in which they were granted) shall be treated as nonstatutory stock
options.
<PAGE>
4. METHOD OF PAYMENT. Payment of the exercise price is due in
full upon exercise of all or any part of your option. You may elect to make
payment of the exercise price in cash or by check or in any other manner
PERMITTED BY YOUR GRANT NOTICE, which may include one or more of the
following:
(a) In the Company's sole discretion at the time your option
is exercised and provided that at the time of exercise the Common Stock is
publicly traded, pursuant to a program developed under the rules and
regulations promulgated by the Federal Reserve Board that, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock
is publicly traded, by delivery of already-owned shares of Common Stock
either that you have held for the period required to avoid a charge to the
Company's reported earnings (generally six months) and that you did not
acquire, directly or indirectly from the Company, that are owned free and
clear of any liens, claims, encumbrances or security interests, and that are
valued at Fair Market Value on the date of exercise. "Delivery" for these
purposes, in the sole discretion of the Company at the time you exercise your
option, shall include delivery to the Company of your attestation of
ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, you may not exercise your option by tender to
the Company of Common Stock to the extent such tender would violate the
provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.
(c) Pursuant to the following deferred payment alternative:
(i) Not less than one hundred percent (100%) of the
aggregate exercise price, plus accrued interest, shall be due four (4) years
from date of exercise or, at the Company's election, upon termination of your
Continuous Service.
(ii) Interest shall be compounded 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
portion of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(iii) At any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall be made in cash and not by deferred
payment.
(iv) In order to elect the deferred payment
alternative if allowed, you must, as a part of your written notice of
exercise, give notice of the election of this payment alternative and, in
order to secure the payment of the deferred exercise price to the Company
hereunder, if the Company so requests, you must tender to the Company a
promissory note and a security agreement covering the purchased shares of
Common Stock, both in form and substance satisfactory to the Company, or such
other or additional documentation as the Company may request.
<PAGE>
5. WHOLE SHARES. You may exercise your option only for whole
shares of Common Stock.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the shares
of Common Stock issuable upon such exercise are then registered under the
Securities Act or, if such shares of Common Stock are not then so registered,
the Company has determined that such exercise and issuance would be exempt
from the registration requirements of the Securities Act. The exercise of
your option must also comply with other applicable laws and regulations
governing your option, and you may not exercise your option if the Company
determines that such exercise would not be in material compliance with such
laws and regulations.
7. TERM. The term of your option commences on the Date of Grant
and expires upon the EARLIEST of the following:
(a) three (3) months after the termination of your
Continuous Service for any reason other than your Disability or death,
provided that if during any part of such three (3)-month period your option
is not exercisable solely because of the condition set forth in the preceding
paragraph relating to "Securities Law Compliance," your option shall not
expire until the earlier of the Expiration Date or until it shall have been
exercisable for an aggregate period of three (3) months after the termination
of your Continuous Service;
(b) twelve (12) months after the termination of your
Continuous Service due to your Disability;
(c) eighteen (18) months after your death if you die either
during your Continuous Service or within three (3) months after your
Continuous Service terminates;
(d) the Expiration Date indicated in your Grant Notice; or
(e) the tenth (10th) anniversary of the Date of Grant.
If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option,"
the Code requires that at all times beginning on the date of grant of your
option and ending on the day three (3) months before the date of your
option's exercise, you must be an employee of the Company or an Affiliate,
except in the event of your death or Disability. The Company has provided
for extended exercisability of your option under certain circumstances for
your benefit but cannot guarantee that your option will necessarily be
treated as an "incentive stock option" if you continue to provide services to
the Company or an Affiliate as a Consultant or Director after your employment
terminates or if you otherwise exercise your option more than three (3)
months after the date your employment terminates.
8. EXERCISE.
(a) You may exercise the vested portion of your option (and
the unvested portion of your option if your Grant Notice so permits) during
its term by delivering a Notice of
<PAGE>
Exercise (in a form designated by the Company) together with the exercise
price to the Secretary of the Company, or to such other person as the Company
may designate, during regular business hours, together with such additional
documents as the Company may then require.
(b) By exercising your option you agree that, as a condition
to any exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise
of your option, (2) the lapse of any substantial risk of forfeiture to which
the shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.
(c) If your option is an incentive stock option, by
exercising your option you agree that you will notify the Company in writing
within fifteen (15) days after the date of any disposition of any of the
shares of the Common Stock issued upon exercise of your option that occurs
within two (2) years after the date of your option grant or within one (1)
year after such shares of Common Stock are transferred upon exercise of your
option.
9. TRANSFERABILITY. Your option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during
your life only by you. Notwithstanding the foregoing, by delivering written
notice to the Company, in a form satisfactory to the Company, you may
designate a third party who, in the event of your death, shall thereafter be
entitled to exercise your option.
10. RIGHT OF REPURCHASE. To the extent provided in the Company's
bylaws as amended from time to time, the Company shall have the right to
repurchase all or any part of the shares of Common Stock you acquire pursuant
to the exercise of your option.
11. OPTION NOT A SERVICE CONTRACT. Your option is not an
employment or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue in the
employ of the Company or an Affiliate, or of the Company or an Affiliate to
continue your employment. In addition, nothing in your option shall obligate
the Company or an Affiliate, their respective shareholders, Boards of
Directors, Officers or Employees to continue any relationship that you might
have as a Director or Consultant for the Company or an Affiliate.
12. WITHHOLDING OBLIGATIONS.
(a) At the time you exercise your option, in whole or in
part, or at any time thereafter as requested by the Company, you hereby
authorize withholding from payroll and any other amounts payable to you, and
otherwise agree to make adequate provision for (including by means of a
"cashless exercise" pursuant to a program developed under the rules and
regulations promulgated by the Federal Reserve Board to the extent permitted
by the Company), any sums required to satisfy the federal, state, local and
foreign tax withholding obligations of the Company or an Affiliate, if any,
which arise in connection with your option.
(b) Upon your request and subject to approval by the
Company, in its sole discretion, and compliance with any applicable
conditions or restrictions of law, the Company
<PAGE>
may withhold from fully vested shares of Common Stock otherwise issuable to
you upon the exercise of your option a number of whole shares of Common Stock
having a Fair Market Value, determined by the Company as of the date of
exercise, not in excess of the minimum amount of tax required to be withheld
by law. If the date of determination of any tax withholding obligation is
deferred to a date later than the date of exercise of your option, share
withholding pursuant to the preceding sentence shall not be permitted unless
you make a proper and timely election under Section 83(b) of the Code,
covering the aggregate number of shares of Common Stock acquired upon such
exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date
of exercise of your option. Notwithstanding the filing of such election,
shares of Common Stock shall be withheld solely from fully vested shares of
Common Stock determined as of the date of exercise of your option that are
otherwise issuable to you upon such exercise. Any adverse consequences to
you arising in connection with such share withholding procedure shall be your
sole responsibility.
(c) You may not exercise your option unless the tax
withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your option when desired even
though your option is vested, and the Company shall have no obligation to
issue a certificate for such shares of Common Stock or release such shares of
Common Stock from any escrow provided for herein.
13. NOTICES. Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt
or, in the case of notices delivered by mail by the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to
you at the last address you provided to the Company.
14. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of
your option, and is further subject to all interpretations, amendments, rules
and regulations which may from time to time be promulgated and adopted
pursuant to the Plan. In the event of any conflict between the provisions of
your option and those of the Plan, the provisions of the Plan shall control.
<PAGE>
EXHIBIT 99.3
GATEFIELD CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
ADOPTED JANUARY 26, 1999
APPROVED BY THE STOCKHOLDERS ON JUNE 7, 1999
ADJUSTED FOR REVERSE STOCK SPLIT JUNE 30, 1999
EFFECTIVE DATE: AUGUST 1, 1999
1. PURPOSE.
(a) The purpose of this 1999 Employee Stock Purchase Plan (the
"Plan") is to provide a means by which employees of Gatefield Corporation, a
Delaware corporation (the "Company"), and its Affiliates, as defined in
subparagraph 1(b), which are designated as provided in subparagraph 2(b), 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 its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success
of the Company.
(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an
"employee stock purchase plan" as that term is defined in Section 423(b) 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:
(i) To determine when and how rights to purchase stock of
the Company shall be granted and the provisions of each offering of such
rights (which need not be identical).
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
<PAGE>
(iii) To construe and interpret the Plan and rights 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, in a manner and to the extent
it shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such
acts as the Board or the Committee deems necessary or expedient to promote
the best interests of the Company and its Affiliates and to carry out the
intent that the Plan be treated as an "employee stock purchase plan" within
the meaning of Section 423 of the Code.
(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 12 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
rights granted under the Plan shall not exceed in the aggregate one hundred
thousand (100,000) shares of the Company's common stock (the "Common Stock").
If any right granted under the Plan shall for any reason terminate without
having been exercised, the Common Stock not purchased under such right 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. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or
provide for the grant of rights to purchase Common Stock of the Company under
the Plan to eligible employees (an "Offering") on a date or dates (the
"Offering Date(s)") selected by the Board or the Committee. Each Offering
shall be in such form and shall contain such terms and conditions as the
Board or the Committee shall deem appropriate, which shall comply with the
requirements of Section 423(b)(5) of the Code that all employees granted
rights to purchase stock under the Plan shall have the same rights and
privileges. The terms and conditions of an Offering shall be incorporated by
reference into the Plan and treated as part of the Plan. The provisions of
separate Offerings need not be identical, but each Offering shall include
(through incorporation of the provisions of this Plan by reference in the
document comprising the Offering or otherwise) the period during which the
Offering shall be effective, which period shall not exceed twenty-seven (27)
months beginning with the Offering Date, and the substance of the provisions
contained in paragraphs 5 through 8, inclusive.
<PAGE>
(b) If an employee has more than one right outstanding under the
Plan, unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right
with a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as
the Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in
subparagraph 5(b), an employee of the Company or any Affiliate shall not be
eligible to be granted rights under the Plan unless, on the Offering Date,
such employee has been in the employ of the Company or any Affiliate for such
continuous period preceding such grant as the Board or the Committee may
require, but in no event shall the required period of continuous employment
be equal to or greater than two (2) years. In addition, unless otherwise
determined by the Board or the Committee and set forth in the terms of the
applicable Offering, no employee of the Company or any Affiliate shall be
eligible to be granted rights under the Plan unless, on the Offering Date,
such employee's customary employment with the Company or such Affiliate is
for at least twenty (20) hours per week and at least five (5) months per
calendar year.
(b) The Board or the Committee may provide that each person who,
during the course of an Offering, first becomes an eligible employee of the
Company or designated Affiliate will, on a date or dates specified in the
Offering which coincides with the day on which such person becomes an
eligible employee or occurs thereafter, receive a right under that Offering,
which right shall thereafter be deemed to be a part of that Offering. Such
right shall have the same characteristics as any rights originally granted
under that Offering, as described herein, except that:
(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of
the exercise price of such right;
(ii) the period of the Offering with respect to such right
shall begin on its Offering Date and end coincident with the end of such
Offering; and
(iii) the Board or the Committee may provide that if such
person first becomes an eligible employee within a specified period of time
before the end of the Offering, he or she will not receive any right under
that Offering.
(c) No employee shall be eligible for the grant of any rights under
the Plan if, immediately after any such rights are granted, such employee owns
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or of any Affiliate. For purposes
of this subparagraph 5(c), the rules of Section 424(d) of the Code shall apply
in determining the stock ownership of any employee, and stock which such
<PAGE>
employee may purchase under all outstanding rights and options shall be
treated as stock owned by such employee.
(d) An eligible employee may be granted rights under the Plan only
if such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock
of the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at
the time such rights are granted) for each calendar year in which such rights
are outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that
the Board or the Committee may provide in an Offering that certain employees
who are highly compensated employees within the meaning of Section
423(b)(4)(D) of the Code shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to
the number of shares of Common Stock of the Company purchasable with a
percentage designated by the Board or the Committee not exceeding fifteen
percent (15%) of such employee's Earnings (as defined by the Board for each
Offering) during the period which begins on the Offering Date (or such later
date as the Board or the Committee determines for a particular Offering) and
ends on the date stated in the Offering, which date shall be no later than
the end of the Offering. The Board or the Committee shall establish one or
more dates during an Offering (the "Purchase Date(s)") on which rights
granted under the Plan shall be exercised and purchases of Common Stock
carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board
or the Committee may specify a maximum number of shares that may be purchased
by any employee as well as a maximum aggregate number of shares that may be
purchased by all eligible employees pursuant to such Offering. In addition,
in connection with each Offering that contains more than one Purchase Date,
the Board or the Committee may specify a maximum aggregate number of shares
which may be purchased by all eligible employees on any given Purchase Date
under the Offering. If the aggregate purchase of shares upon exercise of
rights granted under the Offering would exceed any such maximum aggregate
number, the Board or the Committee shall make a pro rata allocation of the
shares available in as nearly a uniform manner as shall be practicable and as
it shall deem to be equitable.
(c) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.
<PAGE>
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan
pursuant to an Offering by delivering a participation agreement to the
Company within the time specified in the Offering, in such form as the
Company provides. Each such agreement shall authorize payroll deductions of
up to the maximum percentage specified by the Board or the Committee of such
employee's Earnings (as defined by the Board for each Offering) during the
Offering. The payroll deductions made for each participant shall be credited
to an account for such participant under the Plan and shall be deposited with
the general funds of the Company. A participant may reduce (including to
zero) or increase such payroll deductions, and an eligible employee may begin
such payroll deductions, after the beginning of any Offering only as provided
for in the Offering. A participant may make additional payments into his or
her account only if specifically provided for in the Offering and only if the
participant has not had the maximum amount withheld during the Offering.
(b) At any time during an Offering, a participant may terminate his
or her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering.
Upon such withdrawal from the Offering by a participant, the Company shall
distribute to such participant all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the participant) under the Offering, without interest, and
such participant's right to acquire Common Stock under that Offering shall be
automatically terminated. A participant's withdrawal from an Offering will
have no effect upon such participant's eligibility to participate in any
other Offerings under the Plan but such participant will be required to
deliver a new participation agreement in order to participate in subsequent
Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of a participant's employment with the
Company and any designated Affiliate, for any reason, and the Company shall
distribute to such terminated employee all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the terminated employee), under the Offering, without
interest.
(d) Rights granted under the Plan shall not be transferable by a
participant other than by will or the laws of descent and distribution, or by
a beneficiary designation as provided in paragraph 14, and during a
participant's lifetime, shall be exercisable only by such participant.
8. EXERCISE.
(a) On each date specified therefor in the relevant Offering
("Purchase Date"), each participant's accumulated payroll deductions and
other additional payments specifically provided for in the Offering (without
any increase for interest) will be applied to the purchase of whole shares of
stock of the Company, up to the maximum number of shares permitted pursuant
to the terms of the Plan and the applicable Offering, at the purchase price
specified in the Offering. Unless otherwise provided for in the applicable
Offering, no fractional shares shall be issued upon the exercise of rights
granted under the Plan. The amount, if any, of accumulated payroll
<PAGE>
deductions remaining in each participant's account after the purchase of
shares which is less than the amount required to purchase one share of stock
on the final Purchase Date of an Offering shall be held in each such
participant's account for the purchase of shares under the next Offering
under the Plan, unless such participant withdraws from such next Offering, as
provided in subparagraph 7(b), or is no longer eligible to be granted rights
under the Plan, as provided in paragraph 5, in which case such amount shall
be distributed to the participant after such final Purchase Date, without
interest. The amount, if any, of accumulated payroll deductions remaining in
any participant's account after the purchase of shares which is equal to the
amount required to purchase whole shares of stock on the final Purchase Date
of an Offering shall be distributed in full to the participant after such
Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including
rights granted thereunder) are covered by an effective registration statement
pursuant to the Securities Act of 1933, as amended (the "Securities Act") and
the Plan is in material compliance with all applicable state, foreign and
other securities and other laws applicable to the Plan. If on a Purchase
Date in any Offering hereunder the Plan is not so registered or in such
compliance, no rights granted under the Plan or any Offering shall be
exercised on such Purchase Date, and the Purchase Date shall be delayed until
the Plan is subject to such an effective registration statement and such
compliance, except that the Purchase Date shall not be delayed more than
twelve (12) months and the Purchase Date shall in no event be more than
twenty-seven (27) months from the Offering Date. If on the Purchase Date of
any Offering hereunder, as delayed to the maximum extent permissible, the
Plan is not registered and in such compliance, no rights granted under the
Plan or any Offering shall be exercised then all payroll deductions
accumulated during the Offering (reduced to the extent, if any, such
deductions have been used to acquire stock) shall be distributed to the
participants, without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the
Company shall at all times keep available the number of shares of stock
required to satisfy such rights.
(b) The Company shall seek to obtain from each federal, state,
foreign or other 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 rights granted under the Plan. 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
rights unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock to participants pursuant to rights
granted under the Plan shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
<PAGE>
A participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to rights
granted under the Plan unless and until the participant's shares acquired
upon exercise of rights hereunder are recorded in the books of the Company
(or its transfer agent).
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any rights 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 other transaction not involving
the receipt of consideration by the Company), the Plan and outstanding rights
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 rights. Such adjustments shall be made
by the Board or the Committee, the determination of which shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")
(b) In the event of: (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of 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; or (4) the
acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any comparable successor provisions (excluding any
employee benefit plan, or related trust, sponsored or maintained by the
Company or any Affiliate of the Company) of the beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at least fifty
percent (50%) of the combined voting power entitled to vote in the election
of directors, then, as determined by the Board in its sole discretion (i) any
surviving or acquiring corporation may assume outstanding rights or
substitute similar rights for those under the Plan, (ii) such rights may
continue in full force and effect, or (iii) participants' accumulated payroll
deductions may be used to purchase Common Stock immediately prior to the
transaction described above and the participants' rights under the ongoing
Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board or the Committee at any time, and from time to time,
may amend the Plan. However, except as provided in paragraph 12 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company within twelve (12) months before
or after the adoption of the amendment if such amendment requires stockholder
approval in order for the Plan to obtain employee stock purchase plan
treatment under Section 423 of the Code or to comply with the requirements of
Rule 16b-3 promulgated under the Exchange Act.
(b) The Board or the Committee may amend the Plan in any respect
the Board or the Committee deems necessary or advisable to provide eligible
employees with the maximum
<PAGE>
benefits provided or to be provided under the provisions of the Code and the
regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(c) Rights and obligations under any rights 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 such rights were
granted, or except as necessary to comply with any laws or governmental
regulations, or except as necessary to ensure that the Plan and/or rights
granted under the Plan comply with the requirements of Section 423 of the
Code.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to the end
of an Offering but prior to delivery to the participant of such shares and
cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death during an Offering.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice in the form prescribed by the
Company. In the event of the death of a participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time of
such participant's death, the Company shall deliver such shares and/or cash
to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its sole discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board or the Committee in its discretion, may suspend or
terminate the Plan at any time. No rights may be granted under the Plan
while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan
is in effect shall not be altered or impaired by suspension or termination of
the Plan, except as expressly provided in the Plan or with the consent of the
person to whom such rights were granted, or except as necessary to comply
with any laws or governmental regulation, or except as necessary to ensure
that the Plan and/or rights granted under the Plan comply with the
requirements of Section 423 of the Code.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on August 1, 1999 (the "Effective
Date"), provided that the Plan has been approved by the stockholders of the
Company prior to the Effective Date.
<PAGE>
EXHIBIT 99.4
GATEFIELD CORPORATION
EMPLOYEE STOCK PURCHASE PLAN OFFERING
ADOPTED JANUARY 26, 1999
1. GRANT; OFFERING DATE.
(a) The Board of Directors of Gatefield Corporation (the
"Company"), pursuant to the Company's 1999 Employee Stock Purchase Plan (the
"Plan"), hereby authorizes the grant of rights to purchase shares of the
common stock of the Company ("Common Stock") to all Eligible Employees (an
"Offering"). Subject to subsection 1(b) below, the first Offering shall
begin on August 1, 1999 and shall end on January 31, 2001 (the "Initial
Offering"). Thereafter, subject to subsection 1(b) below, an Offering shall
begin on February 1 every year, beginning on February 1, 2001. An Offering
shall end on the day prior to the first day of the subsequent Offering. The
first day of an Offering is that Offering's "Offering Date." If an Offering
Date would fall on a day during which the Company's Common Stock is not
actively traded, then the Offering Date shall be the next subsequent day
during which the Company's Common Stock is actively traded.
(b) Prior to the commencement of any Offering, the Board of
Directors (or the Committee described in subparagraph 2(c) of the Plan, if
any) may change any or all terms of such Offering and any subsequent
Offerings. The granting of rights pursuant to each Offering hereunder shall
occur on each respective Offering Date unless, prior to such date (a) the
Board of Directors (or such Committee) determines that such Offering shall
not occur, or (b) no shares remain available for issuance under the Plan in
connection with the Offering.
2. ELIGIBLE EMPLOYEES.
(a) All employees of the Company and each of its Affiliates (as
defined in the Plan) incorporated in the United States, shall be granted
rights to purchase Common Stock under each Offering on the Offering Date of
such Offering, provided that each such employee otherwise meets the
employment requirements of subparagraph 5(a) of the Plan (an "Eligible
Employee"). Notwithstanding the foregoing, the following employees shall NOT
be Eligible Employees or be granted rights under an Offering: (i) part-time
or seasonal employees whose customary employment is less than 20 hours per
week or 5 months per calendar year or (ii) 5% stockholders (including
ownership through unexercised options) described in subparagraph 5(c) of the
Plan.
(b) Each person who first becomes an Eligible Employee during any
Offering will, on the first business day of the month of August or on the
first business day of the month of February during the Offering, which
coincides with the day on which such person becomes an Eligible Employee or
which occurs thereafter, receive a right under such Offering, which right
shall thereafter be deemed to be a part of the Offering. Such right shall
have the same characteristics as any rights originally granted under the
Offering except that:
<PAGE>
(1) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of
the exercise price of such right; and
(2) the Offering for such right shall begin on its Offering
Date and end coincident with the end of the ongoing Offering.
3. RIGHTS.
(a) Subject to the limitations contained herein and in the Plan, on
each Offering Date each Eligible Employee shall be granted the right to
purchase the number of shares of Common Stock purchasable with up to fifteen
percent (15%) of such Eligible Employee's Earnings paid during such Offering
after the Eligible Employee first commences participation; provided, however,
that no employee may purchase Common Stock on a particular Purchase Date that
would result in more than fifteen percent (15%) of such employee's Earnings
in the period from the Offering Date to such Purchase Date having been
applied to purchase shares under all ongoing Offerings under the Plan and all
other Company plans intended to qualify as "employee stock purchase plans"
under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). For this Offering, "Earnings" means the total compensation paid to
an employee, including all salary, wages (including amounts elected to be
deferred by the employee, that would otherwise have been paid, under any cash
or deferred arrangement or other deferred compensation program established by
the Company), overtime pay, commissions, bonuses, and other remuneration paid
directly to the employee, but excluding profit sharing, the cost of employee
benefits paid for by the Company, education or tuition reimbursements,
imputed income arising under any Company group insurance or benefit program,
traveling expenses, business and moving expense reimbursements, income
received in connection with stock options, contributions made by the Company
under any employee benefit plan, and similar items of compensation.
(b) Notwithstanding the foregoing, the maximum number of shares of
Common Stock an Eligible Employee may purchase on a Purchase Date in an
Offering is such number of shares as has a fair market value (determined as
of the Offering Date for such Offering) equal to (x) $25,000 multiplied by
the number of calendar years in which the right under such Offering has been
outstanding any time, minus (y) the fair market value of any other shares of
Common Stock (determined as of the relevant Offering Date with respect to
such shares) which, for purposes of the limitation of Section 423(b)(8) of
the Code, are attributed to any of such calendar years in which the right is
outstanding. The amount in clause (y) of the previous sentence shall be
determined in accordance with regulations under Section 423(b)(8) of the Code
based on (i) the number of shares previously purchased with respect to such
calendar years pursuant to such Offering or any other Offering under the
Plan, or pursuant to any other Company plans intended to qualify as "employee
stock purchase plans" under Section 423 of the Code, and (ii) the number of
shares subject to other rights outstanding on the Offering Date for such
Offering pursuant to the Plan or any other such Company plan.
(c) The maximum aggregate number of shares available to be
purchased by all Eligible Employees under an Offering shall be the number of
shares remaining available under the Plan on the Offering Date. The maximum
aggregate number of shares available to be purchased by all Eligible
Employees on a Purchase Date shall be twenty thousand (20,000)
<PAGE>
shares of Common Stock. If the aggregate purchase of shares of Common Stock
upon exercise of rights granted under the Offering would exceed the maximum
aggregate number of shares available under either of the limits set forth in
this subsection 3(c), the Board shall make a pro rata allocation of the
shares available in a uniform and equitable manner.
4. PURCHASE PRICE.
The purchase price of the Common Stock under the Offering shall be the
lesser of eighty-five percent (85%) of the fair market value of the Common
Stock on the Offering Date or eighty-five percent (85%) of the fair market
value of the Common Stock on the Purchase Date, in each case rounded up to
the nearest whole cent per share.
5. PARTICIPATION.
(a) Except as otherwise provided in this paragraph 5, an Eligible
Employee may elect to participate in an Offering only at the beginning of the
Offering; provided, however, that a person who first becomes an Eligible
Employee during an Offering may elect to participate at the Offering Date
applicable to such Eligible Employee in accordance with subparagraph 2(b). An
Eligible Employee shall become a participant in an Offering by delivering an
agreement authorizing payroll deductions. Such deductions may be in whole
percentages only, with a minimum percentage of one percent (1%) and maximum
percentage of fifteen percent (15%) of Earnings. A participant may not make
additional payments into his or her account. The agreement shall be made on
such enrollment form as the Company provides, and must be delivered to the
Company before the date of participation to be effective for such Offering,
as determined by the Company and communicated to Eligible Employees. As to
the Initial Offering, the time for filing an enrollment form and commencing
participation for individuals who are Eligible Employees on the Offering Date
for the Initial Offering shall be determined by the Company and communicated
to such Eligible Employees.
(b) Generally, a participant may increase or reduce (including to
zero) his or her participation level only as of each February 1 and August 1
during any Offering (except not during the ten (10) days immediately
preceding a Purchase Date). Any such change in participation shall be made
by delivering a notice to the Company or a designated Affiliate in such form
and at such time as the Company provides. Notwithstanding the foregoing, a
participant may reduce his or her participation level to zero once at any
time during the six (6) month period ending on a Purchase Date (except not
during the ten (10) days immediately preceding a Purchase Date).
Additionally, a participant may withdraw from an Offering and receive his or
her accumulated payroll deductions from the Offering (reduced to the extent,
if any, such deductions have been used to acquire Common Stock for the
participant on any prior Purchase Dates), without interest at any time prior
to the end of the Offering, excluding only each ten (10) day period
immediately preceding a Purchase Date (or such shorter period of time
determined by the Company and communicated to participants), by delivering a
withdrawal notice to the Company in such form as the Company provides. A
participant who has withdrawn from an Offering shall not be entitled to again
participate in such Offering, but may participate in other Offerings under
the Plan by submitting a new participation agreement in accordance with the
terms thereof.
<PAGE>
6. PURCHASES.
Subject to the limitations contained herein, on each Purchase Date,
each participant's accumulated payroll deductions (without any increase for
interest) shall be applied to the purchase of whole shares of Common Stock,
up to the maximum number of shares permitted under the Plan and the Offering.
"Purchase Date" shall be defined as the last day of each January and of each
July. If a Purchase Date would not fall on a day during which the Company's
Common Stock is actively traded, then the Purchase Date shall be the nearest
prior day during which the Company's Common Stock is actively traded.
7. NOTICES AND AGREEMENTS.
Any notices or agreements provided for in an Offering or the Plan
shall be given in writing, in a form provided by the Company, and unless
specifically provided for in the Plan or this Offering shall be deemed
effectively given upon receipt or, in the case of notices and agreements
delivered by the Company, five (5) days after deposit in the United States
mail, postage prepaid.
8. EXERCISE CONTINGENT ON STOCKHOLDER APPROVAL.
The rights granted under an Offering are subject to the approval of
the Plan by the shareholders as required for the Plan to obtain treatment as
a tax-qualified employee stock purchase plan under Section 423 of the Code.
9. OFFERING SUBJECT TO PLAN.
Each Offering is subject to all the provisions of the Plan, and its
provisions are hereby made a part of the Offering, and is further subject to
all interpretations, amendments, rules and regulations which may from time to
time be promulgated and adopted pursuant to the Plan. In the event of any
conflict between the provisions of an Offering and those of the Plan
(including interpretations, amendments, rules and regulations which may from
time to time be promulgated and adopted pursuant to the Plan), the provisions
of the Plan shall control.
