As filed with the Securities and Exchange Commission on September 3, 1999
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
-------- ----------
(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)
1999 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------
1999 INCENTIVE COMPENSATION PLAN
--------------------------------
1999 DIRECTOR STOCK PLAN
------------------------
(Full title of the plan(s))
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 1,024,000 shares $74.50 $76,288,000 $23,118.00
========================================================================
(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 the Securities Act Rules, the computation of fees is based
upon the average of the high and low prices on September 2, 1999, of
the Common Stock as reported in The Wall Street Journal on September
3, 1999.
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 following documents, which we have filed with the Securities
& Exchange Commission (the "SEC"), are incorporated by reference into
this Registration Statement:
1. Our annual report on Form 10-K for the fiscal year ended
October 31, 1998, filed pursuant to Section 13(a) of the Exchange
Act;
2. Our quarterly reports on Form 10-Q for the fiscal quarters ended
January 31, 1999 and April 30, 1999, filed pursuant to Section
13(a) of the Exchange Act;
3. Our current reports on Form 8-K dated November 18, 1998,
December 22, 1998 and May 19, 1999, filed pursuant to Section
13(a) of the Exchange Act;
4. Our proxy statement dated March 4, 1999, filed pursuant to
Section 14 of the Exchange Act;
5. The description of our capital stock contained in our
registration statement on Form 8-A, as amended by our amendment
to the registration statement on Form 8-A/A filed on May 5, 1999;
and
6. Our registration statement (Reg. No. 333-76853) filed on Form S-3
on April 22, 1999, as amended by our amendments to the
registration statement on Form S-3 filed on May 7, 1999 and May
18, 1999 and the final prospectus filed pursuant to Rule
424(b)(4) dated May 20, 1999.
All documents that we file with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
<PAGE>
of this Registration Statement and before the termination of the
offering of the common stock offered pursuant to this Registration
Statement shall be deemed incorporated by reference into this
Registration Statement and to be a part of this Registration Statement
from the respective dates of filing such documents.
We will provide without charge to each person to whom a copy of a
prospectus is delivered, upon such person's written or oral request, a
copy of any or all of the information incorporated by reference in
this Registation Statement (other than exhibits to such documents,
unless such exhibits are specifically incorporated by reference into
the information that this Registration Statement incorporates).
Requests should be directed to Optical Coating Laboratory, Inc., 2789
Northpoint Parkway, Santa Rosa, California 95407-7397, Attention: Agie
Navarro, telephone number (707) 525-7072.
Any statement contained in a document incorporated or deemed to
be incorporated by reference in this Registration Statement shall be
deemed modified, superseded or replaced for purposes of this
Registration Statement to the extent that a statement contained in
this Registration Statement or in any subsequently filed document that
also is or is deemed to be incorporated by reference in this
Registration Statement modifies, supersedes or replaces such
statement. Any statement so modified, superseded or replaced shall not
be deemed, except as so modified, superseded or replaced, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The indemnification and liability of our directors and officers
are governed by Delaware law.
Under Section 145 of the General Corporation Law of the State of
Delaware, corporations have broad powers to indemnify their directors
and officers against liabilities that may incur in such capacities,
including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Delaware law also permits 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." While Delaware law does not
eliminate the directors' duty of care, it enables corporations to
limit available relief to equitable remedies such as injunction or
rescission. These provisions have 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, (4) approval of any transaction from which the director
derives an improper personal benefit, or (5) on claims arising under
other laws, such as the federal securities laws.
<PAGE>
In connection with the our reincorporation in Delaware in
November 1987, we included in our Certificate of Incorporation a
provision limiting directors' liability to the greatest extent
permitted by Delaware corporate law. In addition, our Certificate of
Incorporation and our Bylaws provide that we will indemnify our
directors and officers to the fullest extent permitted under Delaware
law, including circumstances in which indemnification is otherwise
discretionary. We submitted these charter and Bylaw provisions to our
stockholders, who approved them in March 1987.
In addition, we have entered into separate Indemnification
Agreements with our directors and officers to the full extent
permitted by applicable law and our Certificate of Incorporation. The
general effect of the indemnification provisions of the Bylaws and the
Indemnification Agreements is to require us, among other things, to
indemnify our 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 our best
interests 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. We believe that our charter and Bylaw provisions and the
separate indemnification Agreements are necessary to attract and
retain qualified persons as directors and officers.
At present, we are not aware of any threatened litigation or
proceeding which could result in a claim for indemnification by any
director or officer.
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.
4(d) First Amendment to Rights Agreement between Registrant and
ChaseMellon Shareholder Services, L.L.C., dated December 15,
1998. Incorporated by reference to Exhibit 4.2 of Registrant's
Registration Statement on Form S-3 (Reg. No. 333-76853).
5* Opinion and consent of Collette & Erickson LLP.
<PAGE>
15* Letter of Deloitte & Touche LLP regarding unaudited interim
financial information.
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(a)* 1999 Employee Stock Purchase Plan
99(b)* 1999 Incentive Compensation Plan
99(c)* 1999 Director Stock 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.
<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 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 3rd day of September 1999.
OPTICAL COATING LABORATORY, INC.
By /s/CRAIG B. COLLINS
------------------------------------
Craig B. Collins
Vice President, Finance
and Chief Financial Officer
POWER OF ATTORNEY
<PAGE>
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 September 3, 1999
- ----------------------------
Herbert M. Dwight, Jr.
President,
Chief Executive Officer
/s/CHARLES J. ABBE and Director September 3, 1999
- ----------------------------
Charles J. Abbe
Vice President, Finance
/s/CRAIG B. COLLINS and Chief Financial Officer September 3, 1999
- ----------------------------
Craig B. Collins
Corporate Controller
/s/HOLLY D. NEAL and Chief Accounting Officer September 3, 1999
- ----------------------------
Holly D. Neal
/s/DOUGLAS C. CHANCE Director September 3, 1999
- ----------------------------
Douglas C. Chance
/s/SHOEI KATAOKA Director September 3, 1999
- ----------------------------
Shoei Kataoka
/s/JOHN MCCULLOUGH Director September 3, 1999
- ----------------------------
John McCullough
/s/JULIAN SCHROEDER Director September 3, 1999
- ----------------------------
Julian Schroeder
/s/RENN ZAPHIROPOULOS Director September 3, 1999
- ----------------------------
Renn Zaphiropoulos
<PAGE>
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.
4(d) First Amendment to Rights Agreement between Registrant and
ChaseMellon Shareholder Services, L.L.C., dated December 15,
1998. Incorporated by reference to Exhibit 4.2 of Registrant's
Registration Statement on Form S-3 (Reg. No. 333-76853).
5* Opinion and consent of Collette & Erickson LLP.
15* Letter of Deloitte & Touche LLP regarding unaudited interim
financial information.
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(a)* 1999 Employee Stock Purchase Plan.
99(b)* 1999 Incentive Compensation Plan.
99(c)* 1999 Director Stock Plan
*Items not previously filed are designated by an asterisk.
<PAGE>
September 3, 1999
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 August 30, 1999, of the Registration Statement on Form S-8 with
the Securities and Exchange Commission for the purpose of registering
1,024,000 shares of Common Stock, $.01 par value, offered by Optical
Coating Laboratory, Inc. (the "Company"), where 400,000 shares were or
are to be offered pursuant to the Company's 1999 Employee Stock
Purchase Plan, 600,000 shares were or are to be offered pursuant to
the Company's 1999 Incentive Compensation Plan and 24,000 shares were
or are to be offered pursuant to the Company's 1999 Director Stock
Plan (the 1999 Employee Stock Purchase Plan, the 1999 Incentive
Compensation Plan and the 1999 Director Stock Plan collectively
referred to herein as the "Plans").
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 Plans and 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 Plans, 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 Plans, 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
<PAGE>
JVE:rg
OCLI 1.881
Optical Coating Laboratory, Inc.
Santa Rosa, California
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited
interim financial information of Optical Coating Laboratory, Inc. and
subsidiaries for the periods ended January 31, 1999, and April 30,
1999 as indicated in our reports dated February 18, 1999 and May 19,
1999, respectively; because we did not perform an audit, we expressed
no opinion on that information.
We are aware that our reports referred to above, which were included
in your Quarterly Reports on Form 10-Q for the quarters ended
January 31, 1999, and April 30, 1999 are being used in this
Registration Statement on Form S-8.
We also are aware that the aforementioned reports, pursuant to Rule
436(c) under the Securities Act of 1933, are not considered a part of
the 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 that Act.
Deloitte & Touche LLP
San Jose, California
September 3, 1999
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Optical Coating Laboratory, Inc. on Form S-8 of our
report dated December 22, 1998 (January 8, 1999 as to Note 5),
appearing in the Annual Report on Form 10-K of Optical Coating
Laboratory, Inc. for the year ended October 31, 1998, and to the use
of our report dated December 22, 1998 (January 8, 1999 as to
paragraph 8 of Note 6 and February 22, 1999 as to Note 15), appearing
in Registration Statement No. 333-76853 on Form S-3 and the related
prospectus dated May 20, 1999.
Deloitte & Touche LLP
San Jose, California
September 3, 1999
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Optical Coating Laboratory, Inc. on Form S-8 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, stockholders' equity and
cash flows for the years then ended, which report appears in the
October 31, 1998, annual report on Form 10-K of Optical Coating
Laboratory, Inc.
KPMG
San Francisco, California
September 3, 1999
OPTICAL COATING LABORATORY, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1999 Employee
Stock Purchase Plan of Optical Coating Laboratory, Inc. ("OCLI").
1. Purpose. The purpose of the Plan is to provide employees of
OCLI and its Designated Subsidiaries with an opportunity to purchase
Common Stock through accumulated payroll deductions. It is the
intention of OCLI to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Internal Revenue Code of 1986,
as amended. The provisions of the Plan, accordingly, shall be
construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of OCLI.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean a committee of members of the
Board appointed
by the Board.
(d) "Common Stock" shall mean OCLI Common Stock.
(e) "Company" shall mean OCLI, a Delaware corporation.
(f) "Compensation" shall mean all salary, wages (including
amounts elected to be deferred by the employee, that would otherwise
have been paid, under any cash or deferred arrangement established by
the Company), overtime pay, commissions, bonuses and any other
remuneration paid directly to the employee, but excluding 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 recognized in connection with stock
options, contributions made by the Company under any employee benefit
plan, and similar items of compensation.
(g) "Designated Subsidiary" shall mean any Subsidiary, which
has been designated by the Board or the Committee from time to time in
its sole discretion as eligible to participate in the Plan.
(h) "Employee" shall mean any individual who is an Employee
of the Company or a Designated Subsidiary for tax purposes whose
customary employment is at least twenty (20) hours per week. For
purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave
of absence approved by the Company.
(i) "Enrollment Date" shall mean the first day of each
Offering Period.
<PAGE>
(j) "Exercise Date" shall mean the last day of each Purchase
Period.
(k) "Fair Market Value" on a given date shall be determined
by the Committee or Board in its discretion based on the closing price
of the Common Stock for such date (or, in the event that the Common
Stock is not traded on such date, on the immediately preceding trading
date), as reported by the National Association of Securities Dealers
Automated Quotation (NASDAQ) National Market System or, if such price
is not reported, the mean of the bid and asked prices per share of the
Common Stock as reported by NASDAQ or, in the event the Common Stock
is listed on a stock exchange, the Fair Market Value per share shall
be the closing price on such exchange on such date (or, in the event
that the Common Stock is not traded on such date, on the immediately
preceding trading date), as reported in The Wall Street Journal.
(l) "Offering Periods" shall mean the periods of
approximately twelve (12) months during which an option granted
pursuant to the Plan may be exercised, commencing on the first Trading
Day on or after January 1 and July 1 of each year and terminating on
the last Trading Day in the periods ending twelve months later
(December 31 and June 30, respectively); provided, however, the first
Offering Period under the Plan shall commence on the first Trading Day
on or after August 1, 1999 and end on the last Trading Day on or
before June 30, 2000. The duration and timing of Offering Periods may
be changed pursuant to Section 4 of this Plan.
(m) "Plan" shall mean this Employee Stock Purchase Plan.
(n) "Purchase Price" shall mean an amount equal to 85% of
the Fair Market Value of a share of Common Stock on the Enrollment
Date or on the Exercise Date, whichever is lower.
(o) "Purchase Period" shall mean the approximately six month
period commencing after one Exercise Date and ending with the next
Exercise Date, where the first Purchase Period under the Plan shall
commence on the first Trading Day on or after August 1, 1999.
Purchase Periods under the Plan will end on the last Trading Day in
the period ending on or before June 30 and December 31 each year. The
first Purchase Period under the Plan shall end on the last Trading Day
in the period ending December 31, 1999.
(p) "Reserves" shall mean the number of shares of Common
Stock covered by each option under the Plan which have not yet been
exercised and the number of shares of Common Stock which have been
authorized for issuance under the Plan but not yet placed under
option.
(q) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by
the Company or a Subsidiary, whether or not such corporation now
exists or is hereafter organized or acquired by the Company or a
Subsidiary.
(r) "Trading Day" shall mean a day on which the NASDAQ is
open for trading.
3. Eligibility.
<PAGE>
(a) Any Employee who shall be employed by the Company or a
Designated Subsidiary on a given Enrollment Date shall be eligible to
participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan
(i) to the extent that, immediately after the grant, such Employee (or
any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own capital stock of the
Company and/or hold outstanding options to purchase such stock
possessing five percent (5%) or more of the total combined voting
power or value of all classes of the capital stock of the Company or
of any Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company
and its subsidiaries accrues at a rate which exceeds twenty-five
thousand dollars ($25,000) worth of stock (determined at the fair
market value of the shares at the time such option is granted) for
each calendar year in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by
consecutive, overlapping Offering Periods with a new Offering Period
commencing on the first Trading Day on or after January 1 and July 1
each year, or on such other date as the Board or the Committee shall
determine, and continuing thereafter until terminated in accordance
with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading day on or
after August 1, 1999 and end on the last Trading Day on or before June
30, 2000. The Board or the Committee shall have the power to change
the duration of Offering Periods (including the commencement dates
thereof) with respect to future offerings without stockholder approval
if such change is announced at least five (5) days prior to the
scheduled beginning of the first Offering Period to be affected
thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the
Plan by completing a subscription agreement authorizing payroll
deductions in the form provided by the Company and filing it with the
Company's Office of Human Resources prior to the applicable Enrollment
Date.
(b) Payroll deductions for a participant shall commence on
the first payroll following the Enrollment Date and shall end on the
last payroll in the Offering Period to which such authorization is
applicable, unless sooner terminated by the participant as provided in
Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on
each pay day during the Offering Period in an amount not exceeding ten
percent (10%) of the Compensation which he or she receives on each pay
day during the Offering Period; provided, however, that the aggregate
of such payroll deductions during the Offering Period shall not exceed
<PAGE>
ten percent (10%) of the participant's aggregate Compensation during
said Offering Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in
whole percentages only. A participant may not make any additional
payments into such account.
(c) A participant may discontinue his or her participation
in the Plan as provided in Section 10 hereof, or may increase or
decrease the rate of his or her payroll deductions during the Offering
Period by completing or filing with the Company a new subscription
agreement authorizing a change in payroll deduction rate. The Company
may, in its discretion, limit the number of participation rate changes
during any Purchase Period. The change in rate shall be effective with
the first full payroll period following five (5) business days after
the Company's receipt of the new subscription agreement unless the
Company elects to process a given change in participation more
quickly. A participant's subscription agreement shall remain in effect
for successive Purchase Periods unless terminated as provided in
Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary
to comply with Section 423(b)(3) and (8) of the Code and Section 3(b)
hereof, a participant's payroll deductions may be decreased to zero
percent (0%) at any time during a Purchase Period. Payroll deductions
shall recommence at the rate provided in such participant's
subscription agreement at the beginning of the first Purchase Period
which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in
part, or at the time some or all of the Company's Common Stock issued
under the Plan is disposed of, the participant must make adequate
provision for the Company's federal, state, or other tax withholding
obligations, if any, which arise upon the exercise of the option or
the disposition of the Common Stock. At any time, the Company may, but
shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable
withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable
to sale or early disposition of Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such Offering Period
shall be granted an option to purchase on each Exercise Date during
such Offering Period (at the applicable Purchase Price) up to a number
of shares of the Company's Common Stock determined by dividing such
Employee's payroll deductions accumulated prior to such Exercise Date
and retained in the participant's account as of the Exercise Date by
the applicable Purchase Price; provided that such purchase shall be
subject to the limitations set forth in Sections 3(b) and 12 hereof.
Exercise of the option shall occur as provided in Section 8 hereof,
unless the participant has withdrawn pursuant to Section 10 hereof.
8. Exercise of Option. Unless a participant withdraws from the
Plan as provided in Section 10 hereof, his or her option for the
<PAGE>
purchase of shares shall be exercised automatically on the Exercise
Date, and the maximum number of full shares subject to option shall be
purchased for such participant at the applicable Purchase Price with
the accumulated payroll deductions in his or her account. No
fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to
purchase a full share shall be retained in the participant's account
for the subsequent Purchase Period of Offering Period, subject to
earlier withdrawal by the participant as provided in Section 10
hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a
participant's lifetime, a participant's option to purchase shares
hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date
on which a purchase of shares occurs, the Company shall arrange the
delivery to each participant (or his or her brokerage account), of a
certificate representing the shares purchased upon exercise of his or
her option, or the Company shall establish some other means for such
participants to receive ownership of the shares.
10. Withdrawal.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to
exercise his or her option under the Plan at any time by giving
written notice to the Company in the form to be provided by the
Company. All of the participant's payroll deductions credited to his
or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the
Offering Period shall be automatically terminated, and no further
payroll deductions for the purchase of shares shall be made for such
Offering Period. If a participant withdraws from an Offering Period,
payroll deductions shall not resume at the beginning of the succeeding
Offering Period unless the participant delivers to the Company a new
subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any
similar plan which may hereafter be adopted by the Company or in
succeeding Offering Periods which commence after the termination of
the Offering Period from which the participant withdraws.
(c) To the extent permitted by any applicable laws, regulations
or stock exchange rules, if the Fair Market Value of the Common Stock
on any Exercise Date in an Offering Period is lower than the Fair
Market Value of the Common Stock on the Enrollment Date of such
Offering Period, than all participants in such Offering Period shall
be automatically withdrawn from such Offering Period immediately after
the exercise of their option on such Exercise Date and automatically
re-enrolled in the immediately following Offering Period as of the
first date thereof.
11. Termination of Employment.
Upon a participant's ceasing to be an Employee, for any reason,
he or she shall be deemed to have elected to withdraw from the Plan
and the payroll deductions credited to such participant's account
<PAGE>
during the Offering Period but not yet used to exercise the option
shall be returned to such participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 15
hereof, and such participant's option shall be automatically
terminated.
12. Interest. No interest shall accrue on the payroll deductions
of a participant in the Plan.
13. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be four
hundred thousand (400,000) shares, subject to adjustment upon changes
in capitalization of the Company as provided in Section 19 hereof. If,
on a given Exercise Date, the number of shares with respect to which
options are to be exercised exceeds the number of shares then
available under the Plan, the Company shall make a pro rata allocation
of the shares remaining available for purchase in as uniform a manner
as shall be practicable and as it shall determine to be equitable.
(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall
be registered in the name of the participant or in the name of the
participant and his or her spouse.
14. Administration. The Board or the Committee shall administer
the Plan. The Board or the Committee shall have full and exclusive
discretionary authority to construe, interpret and apply the terms of
the Plan, to determine eligibility and to adjudicate all disputed
claims filed under the Plan. Every finding, decision and determination
made by the Board or the Committee shall, to the full extent permitted
by law, be final and binding upon all parties.
15. 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 an Exercise Date on which the option is exercised but
prior to delivery to such 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 prior to
exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. 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
<PAGE>
knowledge of the Company), the Company, in its 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.
16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an
option or to receive shares under the Plan may be assigned,
transferred, pledged or otherwise disposed of in any way (other than
by will, the laws of descent and distribution or as provided in
Section 15 hereof) by the participant. Any such attempt at assignment,
transfer, pledge or other disposition shall be without effect, except
that the Company may treat such act as an election to withdraw funds
from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such
payroll deductions.
18. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to
participating Employees at least annually, which statements shall set
forth the amounts of payroll deductions, the Purchase Price, the
number of shares purchased and the remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the Reserves, the maximum
number of shares each participant may purchase each Purchase Period
(pursuant to Section 7), as well as the price per share and the number
of shares of Common Stock covered by each option under the Plan which
has not yet been exercised shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other
increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration".
Such adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Common Stock
subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in
progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date"), and shall terminate immediately prior to the
consummation of such proposed dissolution or liquidation, unless
<PAGE>
provided otherwise by the Board. The New Exercise Date shall be before
the date of the Company's proposed dissolution or liquidation. The
Board shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date
for the participant's option has been changed to the New Exercise Date
and that the participant's option shall be exercised automatically on
the New Exercise Date, unless prior to such date the participant has
withdrawn from the Offering Period as provided in Section 10 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger
of the Company with or into another corporation, each outstanding
option shall be assumed or an equivalent option substituted by the
successor corporation or a parent or Subsidiary of the successor
corporation. In the event that the successor corporation refuses to
assume or substitute for the option, any Purchase Periods then in
progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on
the New Exercise Date. The New Exercise Date shall be before the date
of the Company's proposed sale or merger. The Board shall notify each
participant in writing, at least ten (10) business days prior to the
New Exercise Date, that the Exercise Date for the participant's option
has been changed to the New Exercise Date and that the participant's
option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
20. Amendment or Termination.
a) The Board may at any time and for any reason terminate or
amend the Plan. Except as provided in Section 19 hereof, no such
termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board on any Exercise Date if
the Board determines that the termination of the Plan is in the best
interests of the Company and its stockholders. Except as provided in
Section 19 hereof, no amendment may make any change in any option
theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Section 423 of the
Code (or any successor rule or provision or any other applicable law,
regulation or stock exchange rule), the Company shall obtain
stockholder approval in such a manner and to such a degree as
required.
(b) Without stockholder consent and without regard to
whether any participant rights may be considered to have been
"adversely affected," the Board (or the Committee) shall be entitled
to change the Offering Periods, limit the frequency and/or number of
changes in the amount withheld during an Offering Period, establish
the exchange ratio applicable to amounts withheld in a currency other
than U.S. dollars, permit payroll withholding in excess of the amount
designated by a participant in order to adjust for delays or mistakes
in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or
accounting and crediting procedures to ensure that amounts applied
toward the purchase of Common Stock for each participant properly
correspond with amounts withheld from the participant's Compensation,
and establish such other limitations or procedures as the Board (or
<PAGE>
the Committee) determines in its sole discretion advisable which are
consistent with the Plan.
21. Notices. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to
have been duly given when received in the form specified by the
Company at the location, or by the person, designated by the Company
for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be
issued with respect to an option unless the exercise of such option
and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at
the time of any such exercise that the shares are being purchased only
for investment and without any present intention to sell or distribute
such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned applicable
provisions of law.
23. Term of Plan. The Plan shall become effective upon its
approval by the stockholders of the Company. It shall continue in
effect for a term of ten (10) years unless sooner terminated under
Section 20 hereof.
OPTICAL COATING LABORATORY, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
____Original Application Enrollment Date:________
____Change in Payroll Deduction Rate
____Change of Beneficiary (ies)
1. _____________________ hereby elects to participate in the
Optical Coating Laboratory, Inc. 1999 Employee Stock Purchase Plan
(the "Employee Stock Purchase Plan") and subscribes to purchase shares
of the Company's Common Stock in accordance with this Subscription
Agreement and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in
the amount of ___% of my Compensation on each payday (from 1 to 10%)
during the Offering Period in accordance with the Employee Stock
Purchase Plan. (Please note that no fractional percentages are
permitted.)
<PAGE>
3. I understand that said payroll deductions shall be accumulated
for the purchase of shares of Common Stock at the applicable Purchase
Price determined in accordance with the Employee Stock Purchase Plan.
I understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete Employee Stock Purchase
Plan prospectus. I understand that my participation in the Employee
Stock Purchase Plan is in all respects subject to the terms of the
Plan. I understand that my ability to exercise the option under this
Subscription Agreement is subject to the Company's stockholder
approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan
should be issued in the name(s) of (Employee or Employee and Spouse
only):
------------------------------
------------------------------
6. I understand that if I dispose of any shares received by me
pursuant to the Plan within 2 years after the Enrollment Date (the
first day of the Offering Period during which I purchased such shares)
or one year after the Exercise Date, I will be treated for federal
income tax purposes as having received ordinary income at the time of
such disposition in an amount equal to the excess of the fair market
value of the shares at the time such shares were purchased by me over
the price which I paid for the shares. I HEREBY AGREE TO NOTIFY THE
COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY DISPOSITION OF
MY SHARES AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL, STATE OR
OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE
DISPOSITION OF THE COMMON STOCK. The Company may, but will not be
obligated to, withhold from my compensation the amount necessary to
meet any applicable withholding obligation including any withholding
necessary to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by
me. If I dispose of such shares at any time after the expiration of
the 2-year and 1-year holding periods, I understand that I will be
treated for federal income tax purposes as having received income only
at the time of such disposition, and that such income will be taxed as
ordinary income only to the extent of an amount equal to the lesser of
(1) the excess of the fair market value of the shares at the time of
such disposition over the purchase price which I paid for the shares,
or (2) 15% of the fair market value of the shares on the first day of
the Offering Period. The remainder of the gain, if any, recognized on
such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock
Purchase Plan. The effectiveness of this Subscription Agreement is
dependent upon my eligibility to participate in the Employee Stock
Purchase Plan.
8. In the event of my death, I hereby designate the following as
my beneficiary(ies) to receive all payments and shares due me under
the Employee Stock Purchase Plan:
<PAGE>
NAME: (Please print)
_________________________________________________________
(First) (Middle) (Last)
Relationship:
Address:
Employee's Social
Security Number:
Employee's Address:
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT
THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:
--------------------------
Signature of Employee
----------------------
Spouse's Signature
(If beneficiary otherthan spouse)
OPTICAL COATING LABORATORY, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Optical
Coating Laboratory, Inc. 1999 Employee Stock Purchase Plan which began
on __________________, 19__ (the "Enrollment Date") hereby notifies
the Company that he or she hereby withdraws from the Offering Period.
The undersigned hereby directs the Company to pay to the undersigned
as promptly as practicable all the payroll deductions credited to his
or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period
will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of
shares in the current Offering Period and the undersigned shall be
eligible to participate in succeeding Offering Periods only by
delivering to the Company a new Subscription Agreement.
Name and Address of Participant:
Signature:
_________________________________
Date:
_________________________________
O P T I C A L C O A T I N G L A B O R A T O R Y , I N C .
1 9 9 9 I N C E N T I V E C O M P E N S A T I O N P L A N
PART 1. PLAN PURPOSE, ADMINISTRATION AND ELIGIBILITY
I. PURPOSE
The purpose of this 1999 Incentive Compensation Plan (the "Plan")
of Optical Coating Laboratory, Inc. (the "Company") is to encourage
ownership in the Company by 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 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, designate the employees of the Company who
shall be granted stock options ("Stock Options") or stock awards
("Stock Awards") under the Plan and the amount and nature of the award
to be granted to each such employee; provided however, at least 50% of
all stock options and stock awards granted under the Plan shall be
made to employees of the Company who are not officers or directors of
the Company. 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
All employees of the Company, including officers and directors,
are eligible to participate in the Plan.
IV. STOCK SUBJECT TO THE PLAN
The maximum number of shares, which may be optioned or awarded
under the Plan, shall be 600,000 shares of OCLI Common Stock. The
limitation on the number of shares that may be optioned or awarded
under the Plan shall be subject to adjustment as provided in Section
XVII of the Plan.
At least 50% of all Stock Options and Stock Awards granted under
the Plan shall be made to employees of the Company who are not
officers or directors of the Company.
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.
<PAGE>
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 AND INCENTIVE STOCK OPTIONS
Any Stock Option granted under the Plan shall be designated by
the Committee as a non-qualified stock option or as an incentive stock
option ("ISO") within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code").
No ISO shall be granted hereunder unless the Stockholders of the
Company approve the Plan within twelve (12) months before or after the
date the Plan is adopted.
VI. TERMS OF STOCK OPTIONS
Each Stock Option granted under the Plan shall be for a period
determined by the Committee 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 therefor; 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 under 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 shall
cease to be employed by the Company or a subsidiary for any reason
<PAGE>
other than death, the Stock Option shall terminate to the extent such
employee shall fail to exercise such 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 shall determine, 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. LIMITATION ON INCENTIVE STOCK OPTIONS. No option designated
by the Committee as an ISO entitled to special tax treatment under
Code Section 422A may be granted under the Plan if such grant,
together with any applicable prior grants, would exceed any maximum
established under the Code for ISO's that may be granted to a single
employee. Should it be determined that any such ISO granted under the
Plan exceeds such maximum, the excess portion of such ISO shall be
reclassified as a non-qualified option not entitled to special tax
treatment under Section 422A of the Code.
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.
<PAGE>
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, and no
modification of or substitution for any Stock Option shall have the
effect of reducing the option exercise price for such Stock Option.
PART 3. STOCK AWARDS
VIII. STOCK AWARD DETERMINATION
The Committee may grant an eligible employee Stock Awards at such
times and in such amounts as the Committee 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.
<PAGE>
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 remains 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. The
Committee in exceptional circumstances may waive this provision.
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
<PAGE>
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 a
grantee 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
this Plan; provided, however, no ISO shall be granted under the Plan
unless the Plan is approved by the Stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted.
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
<PAGE>
for under this Plan and any salary, any payments under a Company
retirement plan or which may be otherwise payable or eligible to be
distributed 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 that 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.
<PAGE>
OPTICAL COATING LABORATORY, INC.
1999 DIRECTOR STOCK PLAN
PART 1. PLAN PURPOSE, ADMINISTRATION AND ELIGIBILITY
I. PURPOSE
The purpose of this 1999 Director Stock Plan (the "Plan") of
Optical Coating Laboratory, Inc. (the "Company") is to encourage
ownership in the Company by outside directors of the Company (each, a
"Non-Employee Director," or collectively, the "Non-Employee
Directors") whose continued services are considered essential to the
Company's continued progress and to provide them with a further
incentive to remain as directors of the Company.
II. ADMINISTRATION
The full Board of Directors (the "Board") of the Company shall
supervise and administer the Plan.
The Board shall, from time to time, designate the Non-Employee
Directors of the Company who shall be granted stock options ("Stock
Options") or stock awards ("Stock Awards") under the Plan and the
amount and nature of the award to be granted to each such director.
The Board may adopt such rules or guidelines as it deems appropriate
to implement the Plan. All questions of interpretation of the Plan or
of any Stock Options or Stock Awards issued under it shall be
determined by the Board and such determination shall be final and
binding upon all persons having an interest in the Plan.
III. PARTICIPATION IN THE PLAN
Each member of the Board who is not an employee of the Company
shall be eligible to participate in the Plan.
IV. STOCK SUBJECT TO THE PLAN
The maximum number of shares, which may be optioned or awarded
under the Plan, shall be TWENTY-FOUR THOUSAND (24,000) shares of the
Company's Common Stock. The limitation on the number of shares that
may be optioned or awarded under the Plan shall be subject to
adjustment as provided in Section XV 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 Board 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
<PAGE>
Any Stock Option granted under the Plan shall be 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 Board 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. 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 therefor; provided, however, that to the
extent authorized by the Board, 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 that have been held by the optionee for at least six months or
full recourse promissory notes bearing a market rate of interest)
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 1933, 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.
B. OPTION PRICE. The option price under each Stock Option shall
be determined by the Board 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.
C. 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 a Non-Employee Director who has been granted a Stock
Option shall cease to be a Non-Employee Director of the Company or a
subsidiary for any reason other than death, the Stock Option shall
terminate to the extent such Non-Employee Director shall fail to
exercise such Stock Option within the time period fixed by the Board,
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 Non-Employee Director shall have his or her directorship
terminated for cause the Stock Option shall terminate simultaneously
with such Non-Employee Director's effective date of removal or
resignation, and any unexercised portion of the Stock Option shall
thereupon expire; and (ii) in the event the Non-Employee Director
<PAGE>
shall die while acting as a Non-Employee Director of the Company or
after the termination of his or her directorship 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 Board
at the time of its grant, by the executors or administrators of the
Non-Employee Director by bequest or inheritance. Termination of a Non-
Employee Director "for cause", as used herein, shall mean removal from
office by the Company, any of its subsidiaries, or the Company's or
any of its shareholders for (i) dishonesty, (ii) commission of a
crime, or (iii) divulging trade secrets to competitors or others not
entitled to receive them.
D. 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.
E. QUALIFICATION OF STOCK. The right to exercise the Stock
Options shall be further subject to the requirement that if at any
time the Board shall determine, 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 in its sole discretion.
F. LIMITATION ON INCENTIVE STOCK OPTIONS. No option designated
by the Board as an ISO entitled to special tax treatment under Code
Section 422A may be granted under the Plan.
G. 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 the Company may determine.
H. 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 Board in its sole discretion.
VII. MODIFICATION OF OPTIONS
Subject to the terms and conditions and within the limitations of
the Plan, the Board may accelerate the vesting period of outstanding
Stock Options granted under the Plan but may make no other
modifications to Stock Options previously granted under the Plan.
PART 3. STOCK AWARDS
VIII. STOCK AWARD DETERMINATION
The Board may grant an eligible Non-Employee Director Stock
Awards at such times and in such amounts as the Board may designate
which, in its opinion, fully reflect the value of the corporate
<PAGE>
guidance given by such Non-Employee Director. Such awards shall be
made in accordance with such guidelines as the Board 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 Board may determine to be appropriate.
IX. PAYMENT OF STOCK AWARDS
A. No Non-Employee Director shall have the right to receive
payment of any Stock Award until notified of the amount of such award,
in writing, by the Board.
B. An award of Common Stock may be subject to restrictions
("Restricted Stock") and certificates for such shares will be
deposited in escrow with the Company's Secretary. The Non-Employee
Director shall retain all rights in the Restricted Stock while it is
held in escrow including, but not limited to, voting rights and the
right to receive dividends, except that the Non-Employee Director
shall not have the right to transfer or assign such shares until all
restrictions pertaining to such shares are terminated, at which time
the applicable stock certificates shall be released from escrow and
delivered to the Non-Employee Director by the Company's Secretary.
The Board will establish the period or periods after which the
conditions on Restricted Stock will lapse.
X. DEATH OR TOTAL AND PERMANENT DISABILITY OF A PARTICIPATING NON-
EMPLOYEE DIRECTOR HOLDING RESTRICTED STOCK
By written notice to the Company, a Non-Employee Director 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 Non-Employee Director 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 Non-Employee Director were
living.
In the event of total and permanent disability of a Non-Employee
Director who has participated in the Plan, any unpaid but vested Stock
Award shall be paid to the Non-Employee Director if legally competent
or to other legally designated guardian or representative if the Non-
Employee Director is legally incompetent.
After the death or total and permanent disability of a Non-
Employee Director, the Board may in its sole discretion at any time
terminate restrictions upon stock awarded to the Non-Employee
Director. A request to the Board for the termination of restrictions
or the acceleration of payments not yet due may be made by the Non-
Employee Director's beneficiary or representative, or by a totally and
permanently disabled Non-Employee Director.
If at the time of the Non-Employee Director'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 Non-Employee
Director's estate. In the event of uncertainty as to the
interpretation or effect of any notice of designation, the Board 's
decision with respect thereto shall be conclusive.
<PAGE>
XI. RESTRICTIONS AND FORFEITURE OF STOCK AWARDS
The Company's obligation to deliver stock certificates held in
escrow is subject to the condition that the Non-Employee Director
remains a director of the Company for the entire deferral and/or
restriction period, including mandatory and optional deferrals. If the
Non-Employee Director fails to meet this condition, the Non-Employee
Director's right to any such unpaid amounts or undelivered stock
certificates shall be forfeited. The Board, in exceptional
circumstances, may waive this provision.
PART 4. GENERAL PROVISIONS
XII. 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 X.
XIII. 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.
XIV. LIMITATION OF RIGHTS
A. NO RIGHT TO A STOCK OPTION OR STOCK AWARD. Nothing in the
Plan shall be construed to give any Non-Employee Director 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 retain a Non-
Employee Director for any period of time, 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.
XV. 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.
XVI. 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
this Plan.
XVII. 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,
<PAGE>
but not limited to, changing the number of shares subject to the Plan,
designating the classification of directors eligible to receive Stock
Options or Stock Awards and materially increasing the benefits
accruing to participants under the Plan; provided, however, the Board
shall not take any such action with respect to the Plan which would
have the effect of modifying any stock option previously granted under
the Plan other than to accelerate the vesting of such previously
granted stock options.
XVIII. 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.
XIX. COMPANY BENEFIT PLANS
Nothing contained in this Plan shall prevent the Non-Employee
Director prior to death, or the Non-Employee Director's dependents or
beneficiaries after the Non-Employee Director'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 eligible to be distributed to such Non-Employee Director,
or to the Non-Employee Director's dependents or beneficiaries under
any other plan or policy of the Company or otherwise.
XX. UNFUNDED PLAN
Insofar as it provides for Stock Awards, this Plan shall be
unfunded. Although bookkeeping accounts may be established with
respect to Non-Employee Directors 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 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 be deemed to be a
trustee of shares or cash to be awarded under the Plan. Any liability
of the Company to any Non-Employee Director 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 shall be
required to give any security or bond for the performance of any
obligation that may be created by this Plan.
XXI. COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
It is the Company's intent that the Plan comply in all respects
with Rule 16b-3. If any provision of this Plan is found not to be in
compliance with such rule and regulations, the provision shall be
deemed null and void, and the remaining provisions of the Plan shall
continue in full force and effect. All transactions under this Plan
shall be executed in accordance with the requirements of Section 16 of
the Exchange Act and regulations promulgated thereunder. The Board
may, in its sole discretion, modify the terms and conditions of this
Plan in response to and consistent with any changes in applicable law,
rule or regulation.
XXII. GOVERNING LAW
<PAGE>
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.
