<PAGE> 1
As filed with the Securities and Exchange Commission on February 16, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GARTNER GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 04-3099750
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
P.O. Box 10212
56 Top Gallant Road
Stamford, Connecticut 06904-2212
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Gartner Group, Inc. 1999 Stock Option Plan
(FULL TITLE OF THE PLAN)
Regina M. Paolillo
Executive Vice President-Finance
and Administration and Chief Financial Officer
Gartner Group, Inc.
56 Top Gallant Road
P.O. Box 10212
Stamford, Connecticut 06904-2212
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(203) 316-1111
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copy to:
Michael J. Palmieri, Esq.
Shipman & Goodwin LLP
One Landmark Square
Stamford, Connecticut 06901
(203) 324-8100
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE REGISTRATION FEE
------------------- ---------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Class A Common Stock, par
value $.0.0005............. 20,000,000 $14.16 $283,200,000 $74,765
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) under the Securities Act of 1933 based on the
average of the high and low prices reported on the New York Stock Exchange
on February 9, 2000.
<PAGE> 3
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The Section 10(a) prospectus being delivered by Gartner Group, Inc. (the
"Company") to participants in the Company's 1999 Stock Option Plan (the "Plan"),
as required by Rule 428 under the Securities Act of 1933, as amended (the
"Securities Act"), has been prepared in accordance with the requirements of Form
S-8 and relates to shares of Class A Common Stock, par value $0.0005 per share,
issued or reserved for issuance pursuant to awards granted under the Plan. The
information with respect to awards granted under the Plan required in the
Section 10(a) prospectus is included in documents being maintained and delivered
by the Company as required by Rule 428 under the Securities Act. The Company
shall provide to participants a written statement advising them of the
availability without charge, upon written or oral request, of documents
incorporated by reference herein, as is required by Item 2 of Part I of Form
S-8.
<PAGE> 4
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are hereby incorporated by reference in this
registration statement:
(a) The Company's Annual Report on Form 10-K for the year ended
September 30, 1999;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1999;
(c) The Company's Current Report on Form 8-K dated January 3, 2000;
and
(d The description of the Company's Class A and Class B Common Stock,
contained in its registration statement on Form 8-A filed on July 7, 1999 and in
its Form 8-K dated January 3, 2000, and any amendment or report filed for the
purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or after the date of this registration statement and prior
to the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all such securities then
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be part thereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference in this registration statement shall be deemed to be
modified or superseded for purposes of this registration statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
registration statement.
ITEM 4. DESCRIPTION OF SECURITIES.
This Item is not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
This Item is not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("Delaware Law")
provides that a corporation may indemnify a director, officer, employee or agent
made a party to an action by reason of the fact that he was a director, officer,
employee or agent of the corporation, or was
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serving at the request of the corporation, against expenses actually and
reasonably incurred, including attorneys' fees, in connection with such action,
if he acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to any
criminal action, had no reasonable cause to believe his conduct was unlawful.
The Company's Certificate of Incorporation limits, to the maximum extent
permitted by Delaware Law, the personal liability of a director to the Company
or its stockholders for monetary damages for breach of fiduciary duty as a
director. The Company's Bylaws provide that the Company shall indemnify its
officers and directors to the fullest extent permitted by Delaware Law against
all expense, liability and loss, including attorneys' fees, actually and
reasonably incurred and may purchase and maintain insurance against any
liability asserted and incurred by reason of serving as such, whether or not the
Company has the power to indemnify against such liability. The Company has
entered into indemnification agreements with its officers and directors
containing provisions which are in some respects broader than the specific
indemnification provisions contained in Delaware Law and which require that, to
the extent the Company maintains liability insurance applicable to officers or
directors, each officer and director shall be covered by such policies to the
same extent as are accorded the most favorably insured of the Company's officers
or directors, as the case may be.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, or persons controlling the Company
pursuant to the foregoing provisions and agreements, the Company has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
This Item is not applicable.
ITEM 8. EXHIBITS.
Exhibit No. Description
- ----------- -----------
4.1 Amended and Restated Certificate of Incorporation of the
Company (filed as Exhibit A to the Company's Registration
Statement on Form 8-A (File No. 1-14443) as filed on July 7,
1999 and incorporated herein by reference).
4.2(a) Bylaws of the Company (filed as Exhibit B(1) to the Company's
Registration Statement on Form 8-A (File No. 1-14443) as filed
on July 7, 1999 and incorporated herein by reference).
4.2(b) Amendment to Bylaws of the Company (filed as Exhibit B(2) to
the Company's Registration Statement on Form 8-A (File No.
1-14443) as filed on July 7, 1999 and incorporated herein by
reference).
4.3 Form of Certificate for Common Stock, Class A (filed as
Exhibit 4.2 to the
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<PAGE> 6
Company's Registration Statement on Form S-1 (File No.
33-67576) and incorporated herein by reference).
5.1* Opinion of Shipman & Goodwin LLP as to the legality of the
securities being registered.
23.1* Consent of Shipman & Goodwin LLP (included in Exhibit 5.1).
23.2* Consent of KPMG LLP.
24.1* Power of Attorney (included in the signature page of this
registration statement).
99.1* Gartner Group, Inc. 1999 Stock Option Plan.
*Filed herewith.
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 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.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13 or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act 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
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit
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<PAGE> 7
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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<PAGE> 8
SIGNATURES
Pursuant to 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 Stamford, State of Connecticut on February 15, 2000.
GARTNER GROUP, INC.
By: /s/ MICHAEL D. FLEISHER
-------------------------------------
Michael D. Fleisher
President and Chief Executive Officer
POWER OF ATTORNEY
Know All Persons by These Presents, that each person whose signature
appears below constitutes and appoints Michael D. Fleisher and Regina M.
Paolillo and each of them acting individually, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for him or her and in his or her name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file same, with all exhibits thereto, and
other documents in connection therewith with the Securities and Exchange
Commission, with full power and authority to do and perform each and every act
and thing requisite or necessary to be done in and about the premises, as fully
to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, of their 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MANUEL A . FERNANDEZ Director, Chairman of the Board February 15, 2000
- --------------------------------
Manuel A. Fernandez
/s/MICHAEL D. FLEISHER Director, President and Chief February 15, 2000
- -------------------------------- Executive Officer (Principal
Michael D. Fleisher Executive Officer)
/s/ REGINA M. PAOLILLO Executive Vice President Finance and February 15, 2000
- -------------------------------- Administration and Chief Financial
Regina M. Paolillo Officer
(Principal Financial and Accounting
Officer)
/s/ANNE SUTHERLAND FUCHS Director February 15, 2000
- --------------------------------
Anne Sutherland Fuchs
/s/ WILLIAM O. GRABE Director February 15, 2000
- --------------------------------
William O. Grabe
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ MAX D. HOPPER Director February 15, 2000
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Max D. Hopper
/s/ JOHN P. IMLAY, JR. Director February 15, 2000
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John P. Imlay, Jr.
/s/ CHARLES B. MCQUADE Director February 15, 2000
- --------------------------------
Charles B. McQuade
/s/ STEPHEN G. PAGLIUCA Director February 15, 2000
- --------------------------------
Stephen G. Pagliuca
/s/ KENNETH ROMAN Director February 15, 2000
- --------------------------------
Kenneth Roman
/s/ DENNIS G. SISCO Director February 15, 2000
- --------------------------------
Dennis G. Sisco
</TABLE>
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<PAGE> 10
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.1 Amended and Restated Certificate of Incorporation of the
Company (filed as Exhibit A to the Company's Registration
Statement on Form 8-A (File No. 1-14443) as filed on July 7,
1999 and incorporated herein by reference).
4.2(a) Bylaws of the Company (filed as Exhibit B(1) to the
Company's Registration Statement on Form 8-A (File No.
1-14443) as filed on July 7, 1999 and incorporated herein by
reference).
4.2(b) Amendment to Bylaws of the Company (filed as Exhibit B(2) to
the Company's Registration Statement on Form 8-A (File No.
1-14443) as filed on July 7, 1999 and incorporated herein by
reference).
4.3 Form of Certificate for Common Stock, Class A (filed as Exhibit
4.2 to the Company's Registration Statement on Form S-1 (File
No. 33-67576) and incorporated herein by reference).
5.1* Opinion of Shipman & Goodwin LLP as to the legality of the
securities being registered.
23.1* Consent of Shipman & Goodwin LLP (included in Exhibit 5.1).
23.2* Consent of KPMG LLP.
24.1* Power of Attorney (included in the signature page of this
registration statement).
99.1* Gartner Group, Inc. 1999 Stock Option Plan.
*Filed herewith.
<PAGE> 1
EXHIBIT 5.1
[SHIPMAN & GOODWIN LLP LETTERHEAD]
February 15, 2000
Gartner Group, Inc.
56 Top Gallant Road
Stamford, CT 06904
Re: Registration Statement on Form S-8
Relating to Shares of Common Stock of
Gartner Group, Inc. Issuable under its 1999 Stock Option Plan
Ladies and Gentlemen:
As counsel for Gartner Group, Inc., a Delaware corporation (the "Company"),
we are furnishing you with this opinion in connection with the issuance of a
maximum of 20,000,000 shares of Common Stock of the Company (the "Shares")
pursuant to the above-referenced Plan (the "Plan"), to which the
above-referenced Registration Statement relates.
As counsel to the Company, we have examined the Registration Statement and
such other documents as we have deemed necessary or appropriate in order to
express the opinion set forth below. In connection with our opinion hereinafter
given, we have examined and relied upon originals, or copies, certified or
otherwise, identified to our satisfaction, of such agreements, documents,
certificates and other statements of government officials, corporate officers
and representatives, and such other documents as we have deemed relevant and
necessary as a basis for such opinion. In such examination, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals and the conformity with the original documents of documents
submitted to us as copies.
Based upon the foregoing, we are of the opinion that the Shares, when issued
as contemplated by the Plan and the Registration Statement, will be duly
authorized and legally issued, fully paid and non-assessable.
<PAGE> 2
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not hereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act or the rules and regulations of the Securities and Exchange
Commission.
Very truly yours,
/s/ Shipman & Goodwin LLP
<PAGE> 1
Exhibit 23.2
Independent Auditors' Consent
We consent to the incorporation by reference herein of our report relating to
the consolidated balance sheets of Gartner Group, Inc. and subsidiaries as of
September 30, 1999 and 1998, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for each of the years
in the three-year period ended September 30, 1999, which report appears in the
September 30, 1999 annual report on Form 10-K of Gartner Group, Inc.
St. Petersburg, Florida
February 15, 2000 /s/ KPMG LLP
<PAGE> 1
Exhibit 99.1
GARTNER GROUP, INC.
1999 STOCK OPTION PLAN
1. Purpose of the Plan. The purpose of this Stock Option Plan is to
enable the Company to provide incentive to eligible employees, consultants and
officers whose present and potential contributions are important to the
continued success of the Company, to afford these individuals the opportunity to
acquire a proprietary interest in the Company, and to enable the Company to
enlist and retain in its employment qualified personnel for the successful
conduct of its business. It is intended that this purpose will be effected
through the granting of (a) stock options, (b) stock purchase rights, (c) stock
appreciation rights, and (d) long-term performance awards.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or such of its Committees as
shall be administering the Plan, in accordance with Section 8 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under applicable securities laws, Delaware
corporate law and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 8 of the Plan.
(f) "Common Stock" means the Class A Common Stock, $.0005 par value,
of the Company.
(g) "Company" means Gartner Group, Inc., a Delaware corporation.
(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
(i) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship is not interrupted or terminated by the
Company, or any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Administrator, including sick
<PAGE> 2
leave, military leave, or any other personal leave; provided, however, that for
purposes of Continuous Status as an Employee or Consultant, no such leave may
exceed ninety (90) days, unless reemployment upon the expiration of such leave
is guaranteed by contract (including written Company policies) or statute or
unless the Administrator has expressly designated a longer leave period during
which Continuous Status as an Employee or Consultant shall continue; or (ii)
transfers between locations of the Company or between the Company, its Parent,
its Subsidiaries or its successor; and provided further that any vesting or
lapsing of the Company's right to repurchase Shares at their original purchase
price shall cease on the ninety-first (91st) consecutive day of any leave of
absence approved by the Administrator and shall not recommence until such date,
if any, upon which the Employee or Consultant resumes his or her service with
the Company. Continuous employment shall be interrupted and terminated for an
Employee if the Employee's weekly work hours change from full time to part time.
Part-time status for the purpose of vesting continuation or eligibility to
receive Options or Rights shall be determined in accordance with policies
adopted by the Company from time to time, which policies, if any, shall
supercede the determination of part-time status set forth in the Company's
posted "employee status definitions".
(j) "Covered Employee" means those Employees of the Company
described in Section 162(a)(3) of the Code.
(k) "Director" means a member of the Board.
(l) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(m) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(o) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation
the Nasdaq National Market of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market
Value of a share of Common Stock shall be the closing sales price
for such stock (or the closing bid price, if no sales were reported)
as quoted on such exchange or system (or the exchange with the
greatest volume of trading in Common Stock) on the date of
determination, as reported in The Wall Street Journal or such other
source as the Administrator of the Plan deems reliable.
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<PAGE> 3
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the Nasdaq National Market thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported,
the Fair Market Value of a Share of Common Stock shall be the mean
between the high bid and low asked prices for the Common Stock on
the date of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable.
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by
the Administrator.
(p) "Long-Term Performance Award" means an award under Section 7
below. A Long-Term Performance Award shall permit the recipient to receive a
cash or stock bonus (as determined by the Administrator) upon satisfaction of
such performance factors as are set out in the recipient's individual grant.
Long-term Performance Awards will be based upon the achievement of Company,
Subsidiary and/or individual performance factors or upon such other criteria as
the Administrator may deem appropriate.
(q) "Long-Term Performance Award Agreement" means a written
agreement between the Company and an Optionee evidencing the terms and
conditions of an individual Long-Term Performance Award grant. The Long-Term
Performance Award Agreement is subject to the terms and conditions of the Plan.
(r) "Nonstatutory Stock Option" means an Option that is not intended
to qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(s) "Notice of Grant" means a written notice evidencing certain
terms and conditions of an individual Option, Stock Purchase Right, SAR or
Long-Term Performance Award grant. The Notice of Grant is part of the Option
Agreement, the SAR Agreement and the Long-Term Performance Award Agreement.
(t) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(u) "Option" means a stock option granted pursuant to the Plan.
(v) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(w) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(x) "Optioned Stock" means the Common Stock subject to an Option or
Right.
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<PAGE> 4
(y) "Optionee" means an Employee or Consultant who holds an
outstanding Option or Right.
(z) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(aa) "Plan" means this 1999 Stock Option Plan.
(bb) "Restricted Stock" means shares of Common Stock subject
to a Restricted Stock Purchase Agreement acquired pursuant to a grant of Stock
Purchase Rights under Section 6 below.
(cc) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.
(dd) "Right" means and includes SARs, Long-Term Performance
Awards and Stock Purchase Rights granted pursuant to the Plan.
(ee) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor rule thereto, as in effect when discretion is being exercised with
respect to the Plan.
(ff) "SAR" means a stock appreciation right granted pursuant
to Section 5 of the Plan.
(gg) "SAR Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual SAR
grant. The SAR Agreement is subject to the terms and conditions of the Plan.
(hh) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(ii) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 6 of the Plan, as evidenced by a Notice of Grant.
(jj) "Subsidiary" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. Shares Subject to the Plan. Subject to the provisions of
Section 10 of the Plan, the total number of Shares reserved and available for
distribution under the Plan is 20,000,000 Shares. Subject to Section 10 of the
Plan, if any Shares that have been optioned under an Option cease to be subject
to such Option (other than through exercise of the Option), or if any Option or
Right granted hereunder is forfeited or any such award otherwise terminates
prior to the issuance of Common Stock to the participant, the shares that were
subject to such Option or Right shall again be available for distribution in
connection with future Option or right grants under the
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<PAGE> 5
Plan; provided, however, that Shares that have actually been issued under the
Plan, whether upon exercise of an Option or Right, shall not in any event be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. Eligibility. Options and Rights may be granted to Employees
who are not Covered Employees and Consultants. If otherwise eligible, an
Employee or Consultant who has been granted an Option or Right may be granted
additional Options or Rights.
5. Options and SARs.
(a) Options. The Administrator, in its discretion, may grant
Options to eligible Employees and Consultants. All Options granted under the
Plan shall be Nonstatutory Stock Options. Each Option shall be evidenced by a
Notice of Grant which shall be in such form and contain such provisions as the
Administrator shall from time to time deem appropriate. Without limiting the
foregoing, the Administrator may at any time authorize the Company, with the
consent of the respective recipients, to issue new Options or Rights in exchange
for the surrender and cancellation of outstanding Options or Rights. Option
agreements shall contain the following terms and conditions:
(i) Exercise Price; Number of Shares. The per Share
exercise price for the Shares issuable pursuant to an
Option shall be such price as is determined by the
Administrator. The Notice of Grant shall specify the
number of Shares to which it pertains.
(ii) Waiting Period and Exercise Dates. At the time an
Option is granted, the Administrator will determine
the terms and conditions to be satisfied before
Shares may be purchased, including the dates on which
Shares subject to the Option may first be purchased.
The Administrator may specify that an Option may not
be exercised until the completion of the service
period specified at the time of grant. (Any such
period is referred to herein as the "waiting
period.") At the time an Option is granted, the
Administrator shall fix the period within which the
Option may be exercised, which shall not be earlier
than the end of the waiting period, if any.
(iii) Form of Payment. The consideration to be paid for the
Shares to be issued upon exercise of an Option,
including the method of payment, shall be determined
by the Administrator and may consist entirely of:
(1) cash;
(2) check;
(3) promissory note;
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<PAGE> 6
(4) other Shares which (1) in the case of Shares
acquired upon exercise of an option, have been owned
by the Optionee for more than six months on the date
of surrender, and (2) have a Fair Market Value on the
date of surrender not greater than the aggregate
exercise price of the Shares as to which said Option
shall be exercised;
(5) delivery of a properly executed exercise
notice together with such other documentation as the
Administrator and any broker approved by the Company,
if applicable, shall require to effect an exercise of
the Option and delivery to the Company of the sale or
loan proceeds required to pay the exercise price;
(6) any combination of the foregoing methods of
payment; or
(7) such other consideration and method of
payment for the issuance of Shares to the extent
permitted by Applicable Laws.
(iv) Other Provisions. Each Option granted under the Plan
may contain such other terms, provisions, and
conditions not inconsistent with the Plan as may be
determined by the Administrator.
(v) Buyout Provisions. The Administrator may at any time
offer to buy out for a payment in cash or Shares, an
Option previously granted, based on such terms and
conditions as the Administrator shall establish and
communicate to the Optionee at the time that such
offer is made.
(b) SARs.
(i) In Connection with Options. At the sole discretion of
the Administrator, SARs may be granted in connection
with all or any part of an Option, either
concurrently with the grant of the Option or at any
time thereafter during the term of the Option. The
following provisions apply to SARs that are granted
in connection with Options:
(1) The SAR shall entitle the Optionee to exercise
the SAR by surrendering to the Company unexercised a
portion of the related Option. The Optionee shall
receive in exchange from the Company an amount equal
to the excess of (1) the Fair Market Value on the
date of exercise of the SAR of the Common Stock
covered by the surrendered portion of the related
Option over (2) the exercise price of the Common
Stock covered by the surrendered portion of the
related Option. Notwithstanding the foregoing, the
Administrator may place limits on the amount that
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<PAGE> 7
may be paid upon exercise of an SAR; provided,
however, that such limit shall not restrict the
exercisability of the related Option.
(2) When an SAR is exercised, the related Option, to
the extent surrendered, shall cease to be
exercisable.
(3) An SAR shall be exercisable only when and to the
extent that the related Option is exercisable and
shall expire no later than the date on which the
related Option expires.
(4) An SAR may only be exercised at a time when the
Fair Market Value of the Common Stock covered by the
related Option exceeds the exercise price of the
Common Stock covered by the related Option.
(ii) Independent of Options. At the sole discretion of the
Administrator, SARs may be granted without related
Options. The following provisions apply to SARs that
are not granted in connection with Options:
(1) The SAR shall entitle the Optionee, by exercising
the SAR, to receive from the Company an amount equal
to the excess of (1) the Fair Market Value of the
Common Stock covered by the exercised portion of the
SAR, as of the date of such exercise, over (2) the
Fair Market Value of the Common Stock covered by the
exercised portion of the SAR, as of the last market
trading date prior to the date on which the SAR was
granted; provided, however, that the Administrator
may place limits on the aggregate amount that may be
paid upon exercise of an SAR.
(2) SARs shall be exercisable, in whole or in part,
at such times as the Administrator shall specify in
the Optionee's SAR agreement.
(iii) Form of Payment. The Company's obligation arising
upon the exercise of an SAR may be paid in Common
Stock or in cash, or in any combination of Common
Stock and cash, as the Administrator, in its sole
discretion, may determine. Shares issued upon the
exercise of an SAR shall be valued at their Fair
Market Value as of the date of exercise.
(c) Method of Exercise.
(i) Procedure for Exercise; Rights as a Stockholder. Any
Option or SAR granted hereunder shall be exercisable
at such times and under such conditions as determined
by the Administrator and as shall be permissible
under the terms of the Plan.
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<PAGE> 8
An Option may not be exercised for a fraction of a
Share.
An Option or SAR shall be deemed to be exercised when
written notice of such exercise has been given to the
Company in accordance with the terms of the Option or
SAR by the person entitled to exercise the Option or
SAR and full payment for the Shares with respect to
which the Option is exercised has been received by
the Company. Full payment may, as authorized by the
Administrator and permitted by the Option Agreement
consist of any consideration and method of payment
allowable under subsection 5(a)(iii) of the Plan.
Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to
vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other right
for which the record date is prior to the date the
stock certificate is issued, except as provided in
Section 10 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter
shall be available, both for purposes of the Plan and
for sale under the Option, by the number of Shares as
to which the Option is exercised. Exercise of an SAR
in any manner shall, to the extent the SAR is
exercised, result in a decrease in the number of
Shares which thereafter shall be available for
purposes of the Plan, and the SAR shall cease to be
exercisable to the extent it has been exercised.
(ii) Rule 16b-3. Options and SARs granted to individuals
subject to Section 16 of the Exchange Act
("Insiders") must comply with the applicable
provisions of Rule 16b-3 and shall contain such
additional conditions or restrictions as may be
required thereunder to qualify for the maximum
exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
(iii) Termination of Employment or Consulting Relationship.
In the event an Optionee's Continuous Status as an
Employee or Consultant terminates (other than upon
the Optionee's death or Disability), the Optionee may
exercise his or her Option or SAR, but only within
such period of time as is determined by the
Administrator at the time of grant, not to exceed six
(6) months from the date of such termination, and
only to the extent that the Optionee was entitled to
exercise it at the date of such termination (but in
no event later than the expiration of the term of
such Option
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<PAGE> 9
or SAR as set forth in the Option or SAR Agreement).
To the extent that the Optionee was not entitled to
exercise an Option or SAR at the date of such
termination, and to the extent that the Optionee does
not exercise such Option or SAR (to the extent
otherwise so entitled) within the time specified
herein, the Option or SAR shall terminate.
(iv) Disability of Optionee. In the event an Optionee's
Continuous Status as an Employee or Consultant
terminates as a result of the Optionee's Disability,
the Optionee may exercise his or her Option or SAR,
but only within six (6) months from the date of such
termination, and only to the extent that the Optionee
was entitled to exercise it at the date of such
termination (but in no event later than the
expiration of the term of such Option or SAR as set
forth in the Option or SAR Agreement). To the extent
that Optionee was not entitled to exercise an Option
or SAR at the date of such termination, and to the
extent that the Optionee does not exercise such
Option or SAR (to the extent otherwise so entitled)
within the time specified herein, the Option or SAR
shall terminate.
(v) Death of Optionee. Notwithstanding Sections 5(c)(iii)
and 5(c)(iv) above, in the event of an Optionee's
death during the Optionee's Continuous Status as an
Employee or Consultant, the Optionee's estate or a
person who acquired the right to exercise the
deceased Optionee's Option or SAR by bequest or
inheritance may exercise the Option or SAR, but only
within six (6) months (or such lesser period as the
Option or SAR Agreement may provide, or such longer
period, not to exceed twelve (12) months, as the
Option or SAR Agreement may provide) following the
date of death, and only to the extent that the
Optionee was entitled to exercise it at the date of
death (but in no event later than the expiration of
the full term of such Option or SAR as set forth in
the Option or SAR Agreement). To the extent that
Optionee was not entitled to exercise an Option or
SAR at the date of death, and to the extent that the
Optionee's estate or a person who acquired the right
to exercise such Option does not exercise such Option
or SAR (to the extent otherwise so entitled) within
the time specified herein, the Option or SAR shall
terminate.
6. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that the offeree shall be entitled
to purchase, the price to be paid, and the time within which the offeree must
accept such offer, which shall in
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<PAGE> 10
no event exceed thirty (30) days from the date upon which the Administrator made
the determination to grant the Stock Purchase Right. The offer shall be accepted
by execution of a Restricted Stock Purchase Agreement in the form determined by
the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine.
(c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
(d) Rule 16b-3. Stock Purchase Rights granted to Insiders, and
Shares purchased by Insiders in connection with Stock Purchase Rights, shall be
subject to any restrictions applicable thereto in compliance with Rule 16b-3. An
Insider may only purchase Shares pursuant to the grant of a Stock Purchase
Right, and may only sell Shares purchased pursuant to the grant of a Stock
Purchase Right, during such time or times as are permitted by Rule 16b-3.
(e) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 10
of the Plan.
7. Long-Term Performance Awards.
(a) Administration. Long-Term Performance Awards are cash or
stock bonus awards that may be granted either alone or in addition to other
awards granted under the Plan. Such awards shall be granted for no cash
consideration. The Administrator shall determine the nature, length and starting
date of any performance period (the "Performance Period") for each Long-Term
Performance Award, and shall determine the performance or employment factors, if
any, to be used in the determination of Long-Term Performance Awards and the
extent to which such Long-Term Performance Awards are valued or have been
earned. Long-Term Performance Awards may vary from participant to participant
and between groups of participants and shall be based upon the achievement of
Company, Subsidiary, Parent and/or individual performance factors or upon such
other criteria as the Administrator may deem appropriate. Performance Periods
may overlap and participants may participate simultaneously with respect to
Long-Term Performance Awards that are subject to different Performance Periods
and different performance factors and criteria. Long-Term Performance Awards
shall be confirmed by, and be subject to
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<PAGE> 11
the terms of, a Long-Term Performance Award agreement. The terms of such awards
need not be the same with respect to each participant.
At the beginning of each Performance Period, the Administrator
may determine for each Long-Term Performance Award subject to such Performance
Period the range of dollar values or number of shares of Common Stock to be
awarded to the participant at the end of the Performance Period if and to the
extent that the relevant measures of performance for such Long-Term Performance
Award are met. Such dollar values or number of shares of Common Stock may be
fixed or may vary in accordance with such performance or other criteria as may
be determined by the Administrator.
(b) Adjustment of Awards. The Administrator may adjust
the performance factors applicable to the Long-Term Performance Awards to take
into account changes in legal, accounting and tax rules and to make such
adjustments as the Administrator deems necessary or appropriate to reflect the
inclusion or exclusion of the impact of extraordinary or unusual items, events
or circumstances in order to avoid windfalls or hardships.
8. Administration.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. If permitted
by Rule 16b-3 and Applicable Laws, the Plan
may (but need not) be administered by
different administrative bodies with respect
to (A) Directors who are employees, (B)
Officers who are not Directors and (C)
Employees who are neither Directors nor
Officers.
(ii) Administration with respect to Directors and
Officers. With respect to grants of Options
and Rights to eligible participants who are
Officers or Directors of the Company, the
Plan shall be administered by (A) the Board,
if the Board may administer the Plan in
compliance with Rule 16b-3 as it applies to
a plan intended to qualify thereunder as a
discretionary grant or award plan, or (B) a
Committee designated by the Board to
administer the Plan, which Committee shall
be constituted (1) in such a manner as to
permit the Plan to comply with Rule 16b-3 as
it applies to a plan intended to qualify
thereunder as a discretionary grant or award
plan and (2) in such a manner as to satisfy
the Applicable Laws.
(iii) Administration with respect to Other
Persons. With respect to grants of Options
to eligible participants who are neither
Directors nor Officers of the Company, the
Plan shall be administered by (A) the Board
or (B) a Committee designated by the Board,
which Committee shall be constituted in such
a manner as to satisfy the Applicable Laws.
(iv) General. Once a Committee has been appointed
pursuant to
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<PAGE> 12
subsection (ii) or (iii) of this Section
8(a), such Committee shall continue to serve
in its designated capacity until otherwise
directed by the Board. From time to time the
Board may increase the size of any Committee
and appoint additional members thereof,
remove members (with or without cause) and
appoint new members in substitution
therefor, fill vacancies (however caused)
and remove all members of a Committee and
thereafter directly administer the Plan, all
to the extent permitted by the Applicable
Laws and, in the case of a Committee
appointed under subsection (ii), to the
extent permitted by Rule 16b-3 as it applies
to a plan intended to qualify thereunder as
a discretionary grant or award plan.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(o) of the Plan;
(ii) to select the Consultants and Employees to whom
Options and Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and
Rights or any combination thereof, are granted
hereunder;
(iv) to determine the number of shares of Common Stock to
be covered by each Option and Right granted
hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award
granted hereunder. Such terms and conditions include,
but are not limited to, the exercise price, the time
or times when Options or Rights may be exercised
(which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation
regarding any Option or Right or the shares of Common
Stock relating thereto, based in each case on such
factors as the Administrator, in its sole discretion,
shall determine;
(vii) to construe and interpret the terms of the Plan;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(ix) to determine whether and under what circumstances an
Option or
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<PAGE> 13
Right may be settled in cash instead of Common Stock
or Common Stock instead of cash;
(x) to reduce the exercise price of any Option or Right;
(xi) to modify or amend each Option or Right (subject to
Section 15 of the Plan);
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant
of an Option or Right previously granted by the
Administrator;
(xiii) to institute an Option Exchange Program;
(xiv) to determine the terms and restrictions applicable to
Options and Rights and any Restricted Stock; and
(xv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Rights.
9. Transferability of Options. Unless otherwise determined by the
Administrator to the contrary, Options and Rights may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. The Administrator may, in the
manner established by the Administrator, provide for the transfer of an Option
by the Optionee to any member of the Optionee's immediate family. In such case,
the Option shall be exercisable only by such transferee. Following transfer, any
such Options shall continue to be subject to the same terms and conditions as
were applicable immediately prior to the transfer. For purposes of this Section,
an Optionee's "immediate family" shall mean any of the following who have
acquired the Option from the Optionee through a gift or domestic relations
order: a child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, trusts for
the exclusive benefit of these persons and any other entity owned solely by
these persons, and such other persons and entities as shall be eligible to be
included as transferees in the Form S-8 Registration Statement under the
Securities Act of 1933, as amended, filed or to be filed by the Company to
register shares of Common Stock to be issued upon the exercise of Options
granted pursuant to the Plan.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the
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<PAGE> 14
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Right, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
Options or Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Right, as well as the price per
share of Common Stock covered by each such outstanding Option or Right, 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 issued 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 or Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or Right
has not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option or Right shall terminate
as of a date fixed by the Board and give each Optionee the right to exercise his
or her Option or Right as to all or any part of the Optioned Stock, including
Shares as to which the Option or Right would not otherwise be exercisable.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option and Right shall be assumed or
an equivalent Option or Right substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation does not agree to assume the Option or to substitute an
equivalent option, the Administrator shall, in lieu of such assumption or
substitution, provide for the Optionee to have the right to exercise the Option
or Right as to all or a portion of the Optioned Stock, including Shares as to
which it would not otherwise be exercisable. If the Administrator makes an
Option or Right exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Administrator shall notify the Optionee that
the Option or Right shall be exercisable for a period of not less than fifteen
(15) days from the date of such notice, and the Option or Right will terminate
upon the expiration of such period. For the purposes of this paragraph, the
Option or Right shall be considered assumed if, immediately following the merger
or sale of assets, the Option or Right confers the right to purchase, for each
Share of Optioned Stock subject to the Option or Right immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of
Common Stock for each Share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of assets was
not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor
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<PAGE> 15
corporation and the participant, provide for the consideration to be received
upon the exercise of the Option or Right, for each Share of Optioned Stock
subject to the Option or Right, to be solely common stock of the successor
corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
11. Date of Grant. The date of grant of an Option or
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Right, or such other later date as is
determined by the Administrator. Notice of the determination shall be provided
to each Optionee within a reasonable time after the date of such grant.
12. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option or Right unless the exercise of such Option or Right
and the issuance and delivery of such Shares shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
Applicable Laws, and the requirements of any stock exchange or quotation system
upon which the Shares may then be listed or quoted, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise
of an Option or Right, the Company may require the person exercising such Option
or Right 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.
13. Liability of Company. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company.
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<PAGE> 16
16. Taxation Upon Exercise of Option or Right. At the discretion
of the Administrator, Optionees may satisfy withholding obligations as provided
in this Section 16. When an Optionee incurs tax liability in connection with an
Option or Right, which tax liability is subject to withholding under applicable
tax laws, the Optionee may satisfy the tax withholding obligation by one or some
combination of the following methods: (a) by cash payment, or (b) out of
Optionee's current compensation, or (c) by surrendering to the Company Shares
which (i) in the case of Shares previously acquired from the Company, have been
owned by the Optionee for more than six months on the date of surrender, and
(ii) have a fair market value on the date of surrender equal to or less than
Optionee's marginal tax rate times the ordinary income recognized, or (d) by
electing to have the Company withhold from the Shares to be issued upon exercise
of the Option or Right that number of Shares having a fair market value equal to
the amount required to be withheld. For this purpose, the fair market value of
the Shares to be withheld shall be determined on the date that the amount of tax
to be withheld is to be determined (the "Tax Date").
If the Optionee is an Insider, any surrender of previously owned Shares
to satisfy tax withholding obligations arising upon exercise of this Option must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the
applicable Tax Date;
(b) once made, the election shall be irrevocable as to
the particular Shares of the Option or Right as to which the election is made;
(c) all elections shall be subject to the consent or
disapproval of the Administrator;
(d) if the Optionee is an Insider, the election must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.
17. Term of the Plan. The Plan shall expire, and no further
Options shall be granted pursuant to the Plan, on November 9, 2009.
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<PAGE> 17
18. Tax and Social Security Indemnity. An Optionee shall indemnify
the Company against any tax arising in respect of the grant or exercise of an
Option or Right which is a liability of the Optionee but for which the Company
is required to account under the laws of any relevant territory. The Company may
recover the tax from the Optionee in such manner as the Administrator deems
appropriate, including (but without prejudice to the generality of the
foregoing):
(a) withholding shares upon the exercise of the Option and
selling the same;
(b) deducting the necessary amount from the Optionee's
compensation; or
(c) requiring the Optionee to make cash payment to the Company
for such tax.
19. Options Granted to Employees of French Subsidiaries.
(a) Purpose. Options granted under the Plan to Employees of
French subsidiaries are intended to qualify under the French regulations as
provided in articles 208-1 to 208-8-2 of the French Company Act (Code des
Societes). The purpose of this Section is to specify the applicable rules to
Options for French Employees and shall not be applicable to any other Employee
of the Company.
(b) General. Options granted to French Employees under the
Plan are subject to the provisions of the Plan and any option agreement unless
otherwise provided in this Section 19.
(c) Eligible Participants. Options may be granted exclusively
to Employees of French subsidiaries as (defined in Section 2(m)) of the Plan.
Payment of Director fees by the Company shall not be sufficient to constitute
employment for any purposes of the Options granted to Employees of French
subsidiaries. Employees of French subsidiaries may not be granted Options if, at
the date of grant, they hold more than ten percent (10%) of the Common Stock of
the Company.
(d) Options. Eligible Employees may be granted options as
provided in Section 5(a) of the Plan. If rights or awards mentioned in Section
5(b) (Stock Appreciation Rights), Section 6 (Stock Purchase Rights) and Section
7 (Long-Term Performance Awards) of the Plan are granted to Employees of French
subsidiaries, the provisions of this Section shall not apply to the Stock
Appreciation Rights, Stock Purchase Rights and Long-Term Performance Awards
granted.
(e) Option Price. The exercise price of the Option shall be
determined as set forth in the Plan but it shall not be less than 80% of the
average Fair Market Value of the Common Stock during the twenty (20) market
trading days prior to the date of the grant. The
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<PAGE> 18
exercise price shall remain unchanged once the Option is granted. The authority
of Administrator to reduce the Option exercise price, as set forth in Section
8(b)(x) of the Plan, shall, with respect to Options granted to Employees of
French subsidiaries, be limited to the extend that such reduction may not be to
a price less than 80% of the average Fair Market Value of the Common Stock
during the twenty (20) market trading days prior to the date of such reduction.
(f) Exercise of the Option. Upon exercise of an Option,
Employees of French subsidiaries will receive Shares of Common Stock. Section
8(b)(ix) of the Plan, concerning the ability to settle the Option in cash
instead of Shares of Common Stock, is not applicable to Employees of French
subsidiaries.
(g) Qualification of Plan. In order to have the Plan qualify
in France, any other provision of the Plan that would not be consistent with
French company law or tax law requirements shall not apply to Employees of
French subsidiaries.
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