As filed with the Securities and Exchange Commission on December 14, 1998
Registration No.
___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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OPTICAL COATING LABORATORY, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 68-0164244
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(State or other jurisdiction (I.R.S.
Employer
of incorporation or organization) Identification
No.)
2789 NORTHPOINT PARKWAY
SANTA ROSA, CALIFORNIA 95407-7397
----------------------------------
(Address of Principal Executive Offices)
OPTICAL COATING LABORATORY, INC.
1998 INCENTIVE COMPENSATION PLAN
--------------------------------
(Full title of the plan)
CHARLES J. ABBE
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
----------------------------------
(Name and address of agent for service)
Copies to:
JOHN V. ERICKSON
Collette & Erickson
555 California Street
San Francisco, California 94104
(415) 788-4646
--------------------------------------------------
CALCULATION OF REGISTRATION FEE
=========================================================================
Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of Securities to be price offering registration
to be registered registered per unit (a) price (a) fee
- ------------------------------------------------------------------------
Common Stock,
$.01 par value 1,000,000 shares $19.875 $19,875,000 $6,022.73
========================================================================
(a) Estimated solely for the purpose of determining the registration fee.
Pursuant to Section 6(b) of the Securities Act of 1933 and Rule 457(c) of
<PAGE>
the Securities Act Rules, the computation of fees is based upon the average
of the high and low prices on December 11, 1998, of the Common Stock as
reported in The Wall Street Journal on December 14, 1998.
The approximate date of commencement of the proposed sale of the securities
to the public is as soon as practicable following the effective date of
this Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Company hereby incorporates by reference into this Registration
Statement the following documents filed with the Commission:
1. The Company's annual report on Form 10-K for the fiscal year ended
October 31, 1997 filed pursuant to Section 13(a) of the Exchange Act;
2. The Company's quarterly reports on Form 10-Q for the fiscal quarters
ended January 31, 1998, April 30, 1998 and July 31, 1998, filed
pursuant to Section 13(a) of the Exchange Act;
3. The Company's proxy statement dated March 3, 1998, filed pursuant to
Section 14 of the Exchange Act;
4. The Company's Form 8-K dated November 18, 1998 filed pursuant to Item
5, Other Events, to report the sale of the assets of the MMG Division
of OCLI Optical Coating Laboratory GmbH, the Company's 100% owned
subsidiary in Germany.
5. The description of the Company's Common Stock, registered under
Section 12 of the Exchange Act, which is contained in the Registration
Statement filed under such Act, including any amendment or report
filed for the purpose of updating such description.
All reports and definitive proxy or information statements
subsequently filed pursuant to Section 13(a), 13(c), 14 or 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 into this Registration Statement and to be a part hereof from the
date of filing of such documents. See "Available Information." Any
statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for
purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently-filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes
such statement.
The Company will provide without charge to each person to whom a
prospectus is delivered, upon request of such person, a copy of any or all
of the foregoing documents incorporated herein by reference (other than
exhibits to such documents not specifically incorporated by reference).
Written or telephone requests should be directed to Optical Coating
Laboratory, Inc., 2789 Northpoint Parkway, Santa Rosa, California 95407-7397
Telephone (707) 545-6440, Attention: Agie Navarro, Assistant Secretary.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In June 1986, Delaware enacted legislation which authorizes
corporations to eliminate the personal liability of directors to
corporations and their stockholders for monetary damages for breach or
alleged breach of directors' fiduciary "duty of care." Under prior
Delaware law, directors were accountable to corporations and their
stockholders for monetary damages for conduct constituting gross negligence
in the exercise of their duty of care. Although the new statute does not
change directors' duty of care, it enables corporations to limit available
relief to equitable remedies such as injunction or rescission. Numerous
lawsuits alleging breach of directors' duty of care have been filed in
connection with corporate mergers and acquisitions. The new statute
permits corporations to limit available remedies of stockholders in
connection with these transactions, as well as in other circumstances. The
legislation has no effect on director's liability for (1) breach of the
director's duty of loyalty, (2) acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law, (3) a
corporation's illegal payment of dividends, and (4) approval of any
transaction from which the director derives an improper personal benefit.
The statute will have no effect on claims arising under the federal
securities laws.
In connection with the Company's reincorporation in Delaware in
November 1987, the Company included in its Certificate of Incorporation a
provision limiting directors' liability to the greatest extent permitted by
Delaware corporate law. In addition, the Certificate of Incorporation and
the Company's Bylaws provide that the Company will indemnify its directors
and officers to the fullest extent permitted under Delaware law, including
circumstances in which indemnification is otherwise discretionary. The
Company submitted these charter and Bylaw provisions to its stockholders,
who approved them in March 1987. In addition, the Company has entered into
separate Indemnification Agreements with its directors and officers to the
full extent permitted by applicable law and the Company's Certificate of
Incorporation. The general effect of the indemnification provisions of the
Bylaws and the Indemnification Agreements is to require the Company, among
other things, to indemnify its directors and officers against certain
liabilities that may arise by reason of their status or service as
directors or officers (provided the officer or director acted in good faith
and in a manner he or she believed to be in or not opposed to the best
interests of the Company and, with respect to a criminal proceeding,
provided he or she had no reasonable cause to believe that the conduct was
unlawful), and to advance their expenses (including attorneys' fees)
incurred as a result of any proceeding against them as to which they could
be indemnified. The Company believes that its charter and Bylaw provisions
and the separate Indemnification Agreements are necessary to attract and
retain qualified persons as directors and officers.
At present, the Company is not aware of any threatened litigation or
proceeding which could result in a claim for indemnification by any
director or officer.
Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors and other corporate agents in terms
sufficiently broad to indemnify such persons, under certain circumstances,
for liabilities (including reimbursement of expenses incurred) arising
under the Securities Act of 1933. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4(a) Restated Certificate of Incorporation dated June 10, 1988.
Incorporated by reference to Exhibit 4(a) of Registrant's Form 10-Q
for the quarter ended July 31, 1988.
4(b) Bylaws. Incorporated by reference to Exhibit (3)(b) of the
Registrant's Form 8-K under Item 5 dated November 2, 1987.
4(c) Rights Agreement between Registrant and ChaseMellon Shareholder
Services L.L.C. dated December 16, 1997. Incorporated by reference to
Exhibit 4.1 of Registrant's Form 10-K for the fiscal year ended
October 31, 1997.
5* Opinion and consent of Collette & Erickson.
15(a)* Letter of Deloitte & Touche LLP regarding unaudited interim
financial information.
15(b)* Letter of KPMG Peat Marwick LLP regarding unaudited interim
financial information of Flex Products, Inc.
23(a)* Consent of Deloitte & Touche LLP.
23(b)* Consent of KPMG Peat Marwick LLP.
23(c)* Consent of Counsel (See Exhibit 5, above).
24 Power of Attorney (See page II-7).
28 Not Applicable
99* 1998 Incentive Compensation Plan.
*Items not previously filed are designated by an asterisk.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(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 of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against 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 Act and will be governed by the final
adjudication of such issue.
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 Santa Rosa and State of
California, on the 14th day of December 1998.
OPTICAL COATING LABORATORY, INC.
By /s/CRAIG B. COLLINS
------------------------------------
Craig B. Collins
Vice President, Finance
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears above or below hereby appoints John V. Erickson, Joseph C. Zils or
Craig B. Collins, or any of them, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him in his
name, place and stead, in any and all capacities, to sign and file any and
all amendments to this registration statement under the Securities Act of
1933, and all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto each said attorney-
in-fact and agent full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the premises,
as full to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that each said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
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.
SIGNATURE TITLE DATE
/s/HERBERT M. DWIGHT, JR. Chairman of the Board December 14, 1998
- -------------------------
Herbert M. Dwight, Jr.
President,
Chief Executive Officer
/s/CHARLES J. ABBE and Director December 14, 1998
- -------------------------
Charles J. Abbe
Vice President,Finance and
/s/CRAIG B. COLLINS Chief Financial Officer December 14, 1998
- -------------------------
Craig B. Collins
Corporate Controller and
/s/HOLLY D. NEAL Chief Accounting Officer December 14, 1998
- ----------------------------
Holly D. Neal
/s/DOUGLAS C. CHANCE Director December 14, 1998
- ----------------------------
Douglas C. Chance
/s/SHOEI KATAOKA Director December 14, 1998
- ----------------------------
Shoei Kataoka
/s/JOHN MCCULLOUGH Director December 14, 1998
- ----------------------------
John McCullough
/s/JULIAN SCHROEDER Director December 14, 1998
- ----------------------------
Julian Schroeder
/s/RENN ZAPHIROPOULOS Director December 14, 1998
- ----------------------------
Renn Zaphiropoulos
INDEX TO EXHIBITS
EXHIBIT
NUMBER
---------------------EXHIBIT-------------------
4(a) Restated Certificate of Incorporation dated June 10, 1988.
Incorporated by reference to Exhibit 4(a) of Registrant's Form 10-Q
for the quarter ended July 31, 1988.
4(b) Bylaws. Incorporated by reference to Registrant's Form 8-K dated
November 2, 1987.
4(c) Rights Agreement between Registrant and ChaseMellon Shareholder
Services L.L.C. dated December 16, 1997. Incorporated by reference
to Exhibit 4.1 of Registrant's Form 10-K for the fiscal year ended
October 31, 1997.
5* Opinion and consent of Collette & Erickson.
15(a)* Letter of Deloitte & Touche LLP regarding unaudited interim
financial information.
15(b)* Letter of KPMG Peat Marwick LLP regarding unaudited interim
financial information of Flex Products, Inc.
23(a)* Consent of Deloitte & Touche LLP.
23(b)* Consent of KPMG Peat Marwick LLP.
23(c)* Consent of Counsel (See Exhibit 5, above).
24 Power of Attorney (See page II-7).
28 Not Applicable
99* 1998 Incentive Compensation Plan.
*Items not previously filed are designated by an asterisk.
Exhibit 23 (c)
December 11, 1998
Craig B. Collins, Vice
President, Finance and
Chief Financial Officer
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
RE: ISSUANCE OF SECURITIES ON FORM S-8
REGISTRATION STATEMENT
----------------------
Dear Mr. Collins:
This letter is written to you in connection with the filing on or
about December 11, 1998, of the Registration Statement on Form S-8 with the
Securities and Exchange Commission for the purpose of registering Common
Stock, $.01 par value, offered by Optical Coating Laboratory, Inc. (the
"Company"), where shares were or are to be offered pursuant to the
Company's 1998 Incentive Compensation Plan (the "Plan").
As counsel for the Company, we have examined, among other things,
originals or copies identified to our satisfaction as being true copies of
the above-referenced Registration Statement, Certificate of Incorporation
and By-Laws of the Company, the corporate resolutions adopting the Plan
authorizing the issuance of options, unrestricted stock bonuses, restricted
stock bonuses, stock paid for with a recourse and non-recourse promissory
note, and stock withholding to satisfy tax liabilities under the Plan, and
other pertinent documents and instruments of the Company. In addition to
such examination, we have obtained from Directors and Officers of the
Company such other information and advice as we have deemed necessary for
the purposes of this opinion.
On the basis of the foregoing, and our examination and consideration
of such other factual and legal matters as we have deemed appropriate in
the premises, we are of the opinion that the shares to be registered will,
when sold in accordance with the terms of the Plan, be legally issued,
fully paid and non-assessable.
We consent to the filing of this letter with the Securities and
Exchange Commission as an exhibit to the aforementioned Registration
Statement.
Very truly yours,
Collette & Erickson LLP
JVE:rg
OCLI 1.881
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Optical Coating Laboratory, Inc. on From S-8 of our report dated
December 19, 1997, appearing in the Annual Report on Form 10-K of Optical
Coating Laboratory, Inc. for the year ended October 31, 1997.
Deloitte & Touche LLP
San Jose, California
December 11, 1998
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Optical Coating Laboratory, Inc. on From S-8 of our report dated
December 19, 1997, appearing in the Annual Report on Form 10-K of Optical
Coating Laboratory, Inc. for the year ended October 31, 1997.
Deloitte & Touche LLP
San Jose, California
December 11, 1998
EXHIBIT 23
To the Board of Directors and Stockholders
Optical Coating Laboratory, Inc.
We consent to the incorporation by reference in the registration statement,
dated December 14, 1998, on Form S-8 of Optical Coating Laboratory, Inc. of
our report dated November 26, 1997, relating to the balance sheets of Flex
Products, Inc. as of November 2, 1997, and November 3, 1996, and the
related statements of operations and cash flows for the years then ended,
which report appears in the October 31, 1997, annual report on Form 10-K of
Optical Coating Laboratory, Inc.
KPMG Peat Marwick LLP
San Francisco, California
December 4, 1998
EXHIBIT 15
To the Board of Directors and Stockholders
Optical Coating Laboratory, Inc.
With respect to the registration statement, dated December 14, 1998, on
Form S-8 of Optical Coating Laboratory, Inc., we acknowledge our awareness
of the use therein of our reports dated February 17, 1997, May 14, 1997,
and August 15, 1997, related to our reviews of the interim balance sheets
and related statements of operations and cash flows of Flex Products, Inc.
for the three month periods ended February 2, 1997, May 3, 1997 and August
2, 1997, respectively.
Pursuant to Rule 436(c) under the Securities Act of 1933, such reports are
not considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of sections 7 and 11 of the Act.
KPMG Peat Marwick LLP
San Francisco, California
December 4, 1998
EXHIBIT 99
----------
OPTICAL COATING LABORATORY, INC.
1998 INCENTIVE COMPENSATION PLAN
--------------------------------
PART 1. PLAN PURPOSE, ADMINISTRATION AND ELIGIBILITY
I. PURPOSE
The purpose of the 1998 Incentive Compensation Plan (the "Plan") of
Optical Coating Laboratory, Inc. (the "Company") is to encourage ownership
in the Company by key personnel whose long-term employment is considered
essential to the Company's continued progress and thus to provide them with
a further incentive to continue in the employ of the Company. In adopting
the Plan, the Board of Directors has determined that the additional
incentive provided by the Plan to those employees whose efforts have the
most effect on the Company's success will promote the welfare of the
Stockholders in general.
II. ADMINISTRATION
The members of the Compensation and Stock Option Committee, acting as
a separate committee (the "Committee"), consisting of three or more
directors of the Company who are not eligible to participate in the Plan,
shall supervise and administer the Plan. The Committee shall, from time to
time, give authority to the Chief Executive Officer or President of the
Company to grant stock options ("Stock Options") or stock awards ("Stock
Awards"), to designate the employees of the Company who shall be granted
Stock Options and Stock Awards under the Plan and to determine the amount
and nature of the award to be granted to each such employee. All questions
of interpretation of the Plan or of any Stock Options or Stock Awards
issued under it shall be determined by the Committee and such determination
shall be final and binding upon all persons having an interest in the Plan.
Any or all powers and discretion vested in the Committee under this Plan
may be exercised by any subcommittee so authorized by the Committee.
III. PARTICIPATION IN THE PLAN
Employees who are also officers of the Corporation shall not be
eligible as recipients of Stock Options or Stock Awards under the plan nor
shall any Director of the Corporation be eligible under the Plan.
IV. STOCK SUBJECT TO THE PLAN
The maximum number of shares which may be optioned or awarded under
the Plan shall be One Million (1,000,000) shares of the Company's Common
Stock. The limitation on the number of shares which may be optioned or
awarded under the Plan shall be subject to adjustment as provided in
Section XVII of the Plan.
The grant of a Stock Award not pursuant to a Stock Option under the
Plan shall be subject to such restrictions as the Committee shall determine
to be appropriate, including, but not limited to, restrictions on resale,
repurchase provisions, special vesting requirements or forfeiture
provisions.
If any outstanding Stock Option under the Plan for any reason expires
or is terminated without having been exercised in full, or if any Stock
Awards are forfeited, the forfeited share or shares allocable to the
unexercised portion of such Stock Option shall again become available for
grant pursuant to the Plan.
Upon the grant of a Stock Award or the exercise of a Stock Option, the
Company may issue new shares or reissue shares previously repurchased by or
on behalf of the Company.
PART 2. STOCK OPTIONS
V. NON-QUALIFIED STOCK OPTIONS
Any Stock Option granted under the Plan shall be designated by the
Committee as a non-qualified stock option within the meaning of Section
422A of the Internal Revenue Code of 1986, as amended (the "Code").
VI. TERMS OF STOCK OPTIONS
Each Stock Option granted under the Plan shall be for a period
determined by the Committee, or its designee, not to exceed ten (10) years
from the date of grant, shall be evidenced by a stock option agreement
between the Company and the person to whom such Stock Option is granted and
shall be subject to the following additional terms and conditions:
A. CONTINUATION OF EMPLOYMENT. An employee to whom such Stock Option
is granted must agree in writing, as a condition to the granting of the
Stock Option, that he or she will remain in the employ of the Company
following the date of granting of the Stock Option for a period of twelve
(12) months before any portion of the Stock Option can be exercised.
B. EXERCISE OF THE STOCK OPTION. Prior to its termination, such Stock
Option may be exercised by the person then entitled to do so, at such time
or times and in such amounts as shall be specified in the stock option
agreement. A Stock Option is exercised (i) by giving written notice of
exercise to the Company, specifying the number of full shares of Common
Stock to be purchased and accompanied by full payment of the option price;
provided, however, that to the extent authorized by the Committee, an
optionee may make all or any portion of any payment due to the Company upon
exercise of a Stock Option by delivery of any property (including
securities of the Company or promissory notes) other than cash, so long as
such property constitutes valid consideration for the Common Stock under
applicable law; and (ii) by giving assurances satisfactory to the Company
that the shares of Common Stock to be purchased upon such exercise are
being purchased for investment and not with a view to resale in connection
with any distribution of such shares in violation of the Securities Act of
1933; provided, however, that in the event the Common Stock subject to the
Stock Option is registered under the Securities Act of 1993, as amended, or
in the event a resale of such Common Stock without such registration would
otherwise be permissible, this condition shall be inoperative if in the
opinion of counsel for the Company such condition is not required under the
Securities Act of 1933, or any other applicable law, regulation or rule of
any governmental agency.
C. OPTION PRICE. The Option Price of each Stock Option shall be
determined by the Committee but shall not be less than one hundred percent
(100%) of the fair market value of the Company's Common Stock at the time
of granting the Stock Option.
D. TERMINATION OF THE STOCK OPTION. To the extent not previously
exercised, each Stock Option shall terminate on the date fixed therefor in
the stock option agreement; provided, however, that (i) in the event that
an employee who has been granted a Stock Option ceases to be employed by
the Company or a subsidiary for any reason other than death, the Stock
Option shall terminate to the extent the employee fails to exercise the
Stock Option within the time period fixed by the Committee at the time of
grant, but only to the extent his or her rights to exercise such Stock
Option have accrued pursuant to the terms hereof and have not previously
been exercised at the date of such termination; provided, however, that if
such employee shall have his or her employment terminated for cause, the
Stock Option shall terminate simultaneously with such employee's effective
date of termination, and any unexercised portion of the Stock Option shall
thereupon expire; and (ii) in the event the employee shall die while in the
employ of the Company or after the termination of his employment for any
reason other than for cause, and shall not have exercised the Stock Option,
it shall be exercisable at any time within the period fixed by the
Committee at the time of its grant, by the executors or administrators of
the employee by bequest or inheritance. Termination of employment "for
cause", as used herein, shall mean discharge by the Company or any of its
subsidiaries for (i) dishonesty, (ii) commission of a crime, or (iii)
divulging trade secrets to competitors or others not entitled to receive
them. The foregoing provisions shall apply with equal force and effect and
equivalent meaning, with such changes as may be necessary, to a director
who has been granted options hereunder.
E. STOCK OPTIONS NOT TRANSFERABLE. Any Stock Option shall be
nontransferable by the optionee otherwise than by will or the laws of
descent and distribution, and shall be exercisable during the optionee's
lifetime only by the optionee, or in the event of death, by the optionee's
representative or any person designated by the optionee in his stock option
agreement.
F. QUALIFICATION OF STOCK. The right to exercise the Stock Options
shall be further subject to the requirement that if at any time the Board
of Directors determines, in its discretion, that the listing, registration
or qualification of the shares covered by the Stock Option upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory authority, is necessary or
desirable as a condition of, or in connection with, the granting of such
Stock Option or the purchase of shares thereunder, the Stock Option may not
be exercised, in whole or in part, unless and until such listing,
registration, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Board of
Directors, in its sole discretion.
G. RESTRICTION ON INCENTIVE STOCK OPTIONS. No option designated as an
ISO entitled to special tax treatment under Code Section 422A may be
granted under the Plan.
H. PROCEEDS FROM SALE OF STOCK. The proceeds of sale of all shares of
Stock issued from time to time upon the exercise of options granted
pursuant to the Plan shall be added to the general funds of the Company and
as such shall be used from time to time for such corporate purposes as the
Board of Directors of the Company may determine.
I. OTHER PROVISIONS. The stock option agreement may contain such
other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Committee in its sole discretion.
VII. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend or renew outstanding Stock Options
granted under the Plan, or accept the surrender of outstanding Stock
Options (to the extent not theretofore exercised) and authorize the
granting of new Stock Options in substitution therefor (to the extent not
theretofore exercised). Notwithstanding the foregoing, however, no
modification of any Stock Option shall, without the consent of the
employee, alter or impair any rights or obligations under any Stock Option
theretofore granted under the Plan.
PART 3. STOCK AWARDS
VIII. STOCK AWARD DETERMINATION
The Committee, or its designee, may grant an eligible employee Stock
Awards at such times and in such amounts as the Committee, or its designee,
may designate which in its opinion fully reflect the performance level and
potential of such employee. Such awards shall be made in accordance with
such guidelines as the Committee may from time to time adopt. Stock Awards
shall be independent of any grant of any Stock Option under this Plan, and
shall be made subject to such restrictions as the Committee may determine
to be appropriate.
IX. PAYMENT OF STOCK AWARDS
A. No employee shall have the right to receive payment of any Stock
Award until notified of the amount of such award, in writing, by the
Committee or its authorized delegate.
B. An award of Common Stock may be subject to restrictions
("Restricted Stock") or acquired by the employee by delivery of a recourse
or non-recourse promissory note ("Loan Stock"), and certificates for such
shares will be deposited in escrow with the Company's Secretary. The
employee shall retain all rights in the Restricted Stock or Loan Stock
while it is held in escrow including, but not limited to, voting rights and
the right to receive dividends, except that the employee shall not have the
right to transfer or assign such shares until all restrictions pertaining
to such shares are terminated and all loans paid in full, at which time the
applicable stock certificates shall be released from escrow and delivered
to the employee by the Company's Secretary.
C. The Committee may permit, on such terms as it deems appropriate,
use of Restricted Stock or Loan Stock as partial or full payment upon
exercise of a stock option under any stock option of a Company plan or this
Plan. In the event shares of Restricted Stock or Loan Stock are so tendered
as consideration for the exercise of an option, a number of the shares
issued upon the exercise of said option, equal to the number of shares of
Restricted Stock or Loan Stock used as consideration therefor, shall be
subject to the same conditions as the Restricted Stock or Loan Stock so
submitted plus any additional conditions that may be imposed by the
Committee.
X. DURATION OF RESTRICTIONS AND TERMS OF PROMISSORY NOTES
The Committee will establish the period or periods after which the
conditions on Restricted Stock will lapse and the terms of any promissory
notes relating to Loan Stock.
XI. DEATH OR TOTAL AND PERMANENT DISABILITY OF A PARTICIPATING EMPLOYEE
HOLDING RESTRICTED STOCK
By written notice to the Company, an employee who has received a grant
of Restricted Stock may designate one or more persons (and from time to
time change such designation) who, by reason of his death, shall acquire
the right to receive any vested but unpaid Stock Awards held by the
employee at the time of his death. Such Stock Awards shall be paid to the
designated representative at such time and in such manner as if the
employee were living.
In the event of total and permanent disability of an employee who has
participated in the Plan, any unpaid but vested Stock Award shall be paid
to the employee if legally competent or to other legally designated
guardian or representative if the employee is legally incompetent.
After the death or total and permanent disability of an employee, the
Committee may in its sole discretion at any time terminate restrictions
upon stock awarded to the employee. A request to the Committee for the
termination of restrictions or the acceleration of payments not yet due may
be made by the employee's beneficiary or representative, or by a totally
and permanently disabled employee.
If at the time of the employee's death, there is no effective
beneficiary designation as to all or some portion of the awards hereunder,
such awards or such portion thereof shall be paid to or on the order of the
legal representative of the employee's estate. In the event of uncertainty
as to the interpretation or effect of any notice of designation, the
Committee's decision with respect thereto shall be conclusive.
XII. RESTRICTIONS AND FORFEITURE OF STOCK AWARDS
The Company's obligation to deliver stock certificates held in escrow
is subject to the condition that the employee remain an active employee of
the Company for the entire deferral and/or restriction period, including
mandatory and optional deferrals. If the employee fails to meet this
condition, the employee's right to any such unpaid amounts or undelivered
stock certificates shall be forfeited. This provision may be waived by the
Committee in exceptional circumstances.
PART 4. STOCK WITHHOLDING
XIII. USE OF SHARES TO SATISFY TAX LIABILITY
Agreements with employees implementing this Plan may permit an
employee who has been granted Restricted Stock, Stock Options or Loan Stock
to elect that the tax liability arising from the lapse of restrictions on
Restricted Stock, exercise of Stock Options, or payment of a non-recourse
note used to purchase Loan Stock be satisfied by the Company's withholding
from the shares to be delivered to the employee that number of shares the
fair market value of which is closest to, without exceeding, such tax
liability. For purposes of this paragraph, "tax liability" shall mean the
minimum federal and state income taxes required to be withheld from such
compensation income arising from the transaction, or, in the discretion of
the Company, such greater amount of taxes (including taxes other than
income taxes) that are required to be withheld from such compensation. An
employee's election under an Agreement with the Company permitting such
election shall be made in writing to the Company at least three (3) days
prior to the event giving rise to the employee's tax liability. An employee
who is subject to the requirements of Section 16(b) of the Securities
Exchange Act of 1934 ("Section 16(b)") desiring to elect the treatment
provided for herein shall give such written notice of the same to the
Company as legal counsel for the Company shall determine is required.
PART 5. GENERAL PROVISIONS
XIV. ASSIGNMENTS
The rights and benefits under this Plan may not be assigned except for
the designation of a beneficiary as provided in Sections VI and XI.
XV. TIME FOR GRANTING STOCK OPTIONS OR STOCK AWARDS
All Stock Options and Stock Awards subject to this Plan shall be
granted, if at all, not later than ten (10) years after the adoption of
this Plan by the Company's Board of Directors.
XVI. LIMITATION OF RIGHTS
A. NO RIGHT TO A STOCK OPTION OR STOCK AWARD . Nothing in the Plan
shall be construed to give any employee of the Company any right to be
granted a Stock Option or Stock Award.
B. NO EMPLOYMENT RIGHT. Neither the Plan, nor the granting of a
Stock Option or Stock Award nor any other action taken pursuant to the
Plan, shall constitute or be evidence of any agreement or understanding,
express or implied, that the Company will employ an optionee for any period
of time or in any position, or at any particular rate of compensation.
C. NO STOCKHOLDERS' RIGHTS FOR STOCK OPTIONS. An optionee shall have
no rights as a Stockholder with respect to the shares covered by his or her
Stock Options until the date of issuance of a stock certificate upon
exercise of the Stock Option.
XVII. CHANGES IN PRESENT STOCK
In the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, or other change in the
corporate structure or capitalization affecting the Company's present
Common Stock, appropriate adjustment shall be made by the Board of
Directors, in its sole discretion, in the number and kind of shares which
are or may become subject to Stock Options and Stock Awards granted or to
be granted hereunder, and in the option price of shares which are subject
to Stock Options granted hereunder.
XVIII. EFFECTIVE DATE OF THE PLAN
The Plan shall take effect on the date of adoption by the Board of
Directors of the Company. Stock Options and Stock Awards may be granted
under the Plan at any time after the adoption of the Plan by the Board of
Directors of the Company and prior to the termination of the Plan.
XIX. AMENDMENT OF THE PLAN
The Board of Directors of the Company may suspend or discontinue the
Plan or revise or amend it in any respect whatsoever, including, but not
limited to, changing the number of shares subject to the Plan, designating
the classification of employees eligible to receive Stock Options or Stock
Awards and materially increasing the benefits accruing to participants
under the Plan.
XX. NOTICE
Any written notice to the Company required by any of the provisions of
this Plan shall be addressed to the Secretary of the Company and shall
become effective when it is received.
XXI. COMPANY BENEFIT PLANS
Nothing contained in this Plan shall prevent the employee, prior to
death or the employee's dependents or beneficiaries after the employee's
death, from receiving, in addition to any awards provided for under this
Plan and any salary, any payments under a Company retirement plan or which
may be otherwise payable or distributable to such employee, or to the
employee's dependents or beneficiaries under any other plan or policy of
the Company or otherwise.
XXII. UNFUNDED PLAN
Insofar as it provides for Stock Awards, this Plan shall be unfunded.
Although bookkeeping accounts may be established with respect to employees
who are granted Stock Awards under this Plan, any such accounts will be
used merely as a bookkeeping convenience. Except for the holding of
Restricted Stock and Loan Stock in escrow pursuant to Section IX B, the
Company shall not be required to segregate any assets which may at any time
be represented by Stock Awards, nor shall this Plan be construed as
providing for such segregation, nor shall the Company nor the Board nor the
Committee be deemed to be a trustee of shares or cash to be awarded under
the Plan. Any liability of the Company to any employee with respect to a
Stock Award under this Plan shall be based solely upon any contractual
obligations which may be created by the Plan and any agreement consistent
with this Plan; no such obligation of the Company shall be deemed to be
secured by any pledge or other encumbrance on any property of the Company.
Neither the Company nor the Board nor the Committee shall be required to
give any security or bond for the performance of any obligation which may
be created by this Plan.
XXIII. GOVERNING LAW
This Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of California and
construed accordingly.
