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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MEASUREX CORPORATION
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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MEASUREX CORPORATION
1993 STOCK OPTION PLAN
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AS AMENDED THROUGH FEBRUARY 16, 1996
ARTICLE ONE
GENERAL
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I. PURPOSE OF THE PLAN
A. This 1993 Stock Option Plan ("Plan") is intended to promote the
interests of Measurex Corporation, a Delaware corporation (the "Corporation"),
by providing (i) key employees (including officers) of the Corporation (or its
parent or subsidiary corporations) who are responsible for the management,
growth and financial success of the Corporation (or its parent or subsidiary
corporations), (ii) the non-employee members of the Corporation's Board of
Directors and (iii) consultants and other independent contractors who provide
valuable services to the Corporation (or its parent or subsidiary corporations)
with the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to
remain in the service of the Corporation (or its parent or subsidiary
corporations).
B. The Plan became effective immediately upon approval by the
Corporation's stockholders at the 1993 Annual Stockholders Meeting held on April
20, 1993. Such date accordingly serves as the Effective Date of the Plan.
C. This Plan shall serve as the successor to the Corporation's 1981 Stock
Option Plan (the "1981 Plan"), and no further option grants or stock issuances
shall be made under the 1981 Plan from and after the Effective Date of this
Plan. All options outstanding under the 1981 Plan on such Effective Date are
hereby incorporated into this Plan and shall accordingly be treated as
outstanding options under this Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the express terms and
conditions of the instrument evidencing such grant, and no provision of this
Plan shall be deemed to affect or otherwise modify the rights or obligations of
the holders of such incorporated options with respect to their acquisition of
shares of the Corporation's common stock thereunder.
D. For purposes of the various equity incentive programs in effect under
the Plan, the following definitional provisions shall be in effect:
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BOARD: the Corporation's Board of Directors.
COMMON STOCK: shares of the Corporation's common stock, par value $0.01
per share.
CHANGE IN CONTROL: a change in ownership or control of the Corporation
effected through either of the following transactions:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation) directly or
indirectly acquires beneficial ownership (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended) of securities
possessing more than fifty percent (50%) of the total combined voting power
of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the
Board does not recommend such stockholders to accept; or
(ii) there is a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority
of the Board members (rounded up to the next whole number) ceases, by
reason of one or more proxy contests for the election of Board members, to
be comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board.
CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:
(i) a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State in which the Corporation is incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation
or dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty percent
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(50%) of the total combined voting power of the Corporation's outstanding
securities are transferred to person or persons different from those who
held such securities immediately prior to such merger.
EMPLOYEE: an individual who performs services while in the employ of
the Corporation or one or more parent or subsidiary corporations, subject to the
control and direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.
FAIR MARKET VALUE: the closing selling price per share of Common
Stock on the date in question on the New York Stock Exchange, as such price is
officially quoted in the composite tape of transactions on such exchange. If
there is no such reported price on the date in question, then the fair market
value shall be the closing selling price on such exchange on the last preceding
date for which such quotation exists.
HOSTILE TAKE-OVER: a change in ownership of the Corporation effected
through the following transaction:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation) directly or
indirectly acquires beneficial ownership (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended) of securities
possessing more than fifty percent (50%) of the total combined voting power
of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the
Board does not recommend such stockholders to accept, and
---
(ii) more than fifty percent (50%) of the securities so acquired
in such tender or exchange offer are accepted from holders other than the
officers and directors of the Corporation subject to the short-swing profit
restrictions of Section 16 of the 1934 Act.
SERVICE: the performance of services on a periodic basis to the
Corporation (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the board of directors or an independent
consultant or advisor, except to the extent otherwise specifically provided in
the applicable stock option agreement.
TAKE-OVER PRICE: the greater of (a) the Fair Market Value per share of
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Common Stock on the date the option is surrendered to the Corporation in
connection with a Hostile Take-Over or (b) the highest reported price per share
of Common Stock paid by the tender offeror in effecting such Hostile Take-Over.
However, if the surrendered
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option is an Incentive Option, the Take-Over Price shall not exceed the clause
(a) price per share.
E. The following provisions shall be applicable in determining the
parent and subsidiary corporations of the Corporation:
Any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation shall be considered to be a
PARENT of the Corporation, provided each such corporation in the unbroken
chain (other than the Corporation) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in any other corporation in such chain.
Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be considered to
be a SUBSIDIARY of the Corporation, provided each such corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in any other corporation in
such chain.
II. STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be divided into three separate
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equity incentive programs: the Discretionary Option Grant Program specified in
Article Two, the Automatic Option Grant Program specified in Article Three, and
the Salary Investment Option Grant Program specified in Article Four. Under the
Discretionary Option Grant Program, eligible individuals may, at the discretion
of the Plan Administrator, be granted options to purchase shares of Common Stock
in accordance with the provisions of Article Two. Under the Automatic Option
Grant Program, non-employee Board members will automatically receive special
option grants at periodic intervals to purchase shares of Common Stock in
accordance with the provisions of Article Three. Under the Salary Investment
Option Grant Program, eligible individuals may elect, in accordance with the
provisions of Article Four, to have a portion of their base salary reduced each
year in return for options to purchase shares of Common Stock at an aggregate
discount from the Fair Market Value of the option shares on the grant date equal
to the salary reduction amount.
B. General Provisions. Unless the context clearly indicates
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otherwise, the provisions of Articles One and Five shall apply to the
Discretionary Option Grant Program, the Automatic Option Grant Program and the
Salary Investment Option Grant Program and shall accordingly govern the
interests of all individuals under the Plan.
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III. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Board until such time as the
Board determines it appropriate to implement the following administrative
structure pursuant to the applicable disinterested administration requirements
of SEC Rule 16b-3:
(i) A committee (the "Primary Committee") of two (2) or more non-
employee Board members shall be appointed by the Board to have sole and
exclusive authority to administer the Discretionary Option Grant and Salary
Investment Option Grant Programs with respect to Board members eligible to
participate in those programs. No Board member shall be eligible to serve
on the Primary Committee if such individual has, within the twelve (12)-
month period immediately preceding the date he is to be appointed to the
Primary Committee, received an option grant or stock issuance under this
Plan or any other stock option, stock appreciation, stock bonus or other
stock plan of the Corporation (or any parent or subsidiary corporation),
other than pursuant to the Automatic Option Grant Program specified in
Article Three of this Plan or the predecessor automatic grant program in
effect under the 1981 Plan.
(ii) Administration of the Discretionary Option Grant and Salary
Investment Option Grant Programs with respect to the officers of the
Corporation who are not Board members and all other key employees eligible
to participate in those programs may, at the Board's discretion, be vested
in the Primary Committee or a secondary committee of two or more Board
members appointed by the Board, or the Board may retain the power to
administer those programs with respect to all individuals who are not Board
members. Should a secondary committee be appointed, the membership may
include Board members who are Employees of the Corporation eligible to
receive discretionary option grants or stock issuances under this Plan or
any other stock option, stock appreciation, stock bonus or other stock plan
of the Corporation (or any parent or subsidiary corporation).
(iii) Members of the Primary Committee or any secondary
committee shall serve for such term as the Board may determine and shall be
subject to removal by the Board at any time. The Board may also at any
time terminate the functions of any secondary committee appointed to
administer the Discretionary Option Grant and Salary Investment Option
Grant Programs with respect to non-Board members and may reassume all
administrative powers and authority delegated to such committee.
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B. The term "Plan Administrator" as used from time to time in this
plan document shall mean the particular entity, whether the Primary Committee,
the Board or any secondary committee, which is authorized to administer the
Discretionary Option Grant and Salary Investment Option Grant Programs with
respect to one or more classes of eligible individuals, to the extent such
entity is carrying out its administrative functions under those programs with
respect to the individuals under its jurisdiction.
C. The Plan Administrator shall have full power and authority
(subject to the express provisions of the Plan) to establish such rules and
regulations as it may deem appropriate for the proper administration of the
Discretionary Option Grant and Salary Investment Option Grant Programs and to
make such determinations under, and issue such interpretations of, the
provisions of each such program and any outstanding option grants thereunder as
it may deem necessary or advisable. All decisions of the Plan Administrator
within the scope of its administrative functions under the Plan shall be final
and binding on all parties who have an interest in the Discretionary Option
Grant or Salary Investment Option Grant Program under its jurisdiction or any
outstanding option thereunder.
D. Service on the Primary Committee or the secondary committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on each such committee. No member of either committee
shall be liable for any act or omission made in good faith with respect to the
Plan or any option grant under the Plan.
E. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the express terms and conditions of Article
Three, and no Plan Administrator shall exercise any discretionary functions with
respect to the option grants made pursuant to that program.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option
Grant Program under Article Two and the Salary Investment Option Grant Program
under Article Four ("Optionees") are as follows:
(i) officers and other key employees of the Corporation (or its
parent or subsidiary corporations) who render services which contribute to
the management, growth and financial success of the Corporation (or its
parent or subsidiary corporations); and
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(ii) those consultants or other independent contractors who
provide valuable services to the Corporation (or its parent or subsidiary
corporations).
B. Non-employee Board members shall not be eligible to participate in
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the Discretionary Option Grant or Salary Investment Option Grant Program or in
any other stock option, stock purchase, stock bonus or other stock plan of the
Corporation (or its parent or subsidiary corporations). Such non-employee Board
members shall, however, be eligible to receive automatic option grants under
Article Three.
C. The Plan Administrator shall have full authority to determine
which eligible individuals are to receive option grants, the number of shares to
be covered by each such grant, the status of the granted option as either an
incentive stock option ("Incentive Option") which satisfies the requirements of
Section 422 of the Internal Revenue Code or a non-statutory option not intended
to meet such requirements, the time or times at which each granted option is to
become exercisable and the maximum term for which the option may remain
outstanding.
V. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation on the open
market. The maximum number of shares of Common Stock which may be issued over
the term of the Plan shall not exceed 7,110,240 shares, subject to adjustment
from time to time in accordance with the provisions of this Section V. Such
authorized share reserve is comprised of (i) the number of shares which remained
available for issuance under the 1981 Plan as of the Effective Date, including
the shares subject to the outstanding options incorporated into this Plan and
any other shares which would have been available for future option grant under
the 1981 Plan (estimated to be 3,110,240 shares in the aggregate), plus (ii) an
additional increase of 2,000,000 shares of Common Stock approved by the
stockholders at the 1993 Annual Meeting, plus (ii) a further increase of
2,000,000 shares subject to the approval of the Corporation's stockholders at
the 1996 Annual Meeting. If the latter 2,000,000-share increase is approved by
the stockholders at the 1996 Annual Meeting, then the maximum number of shares
for which options may be granted on the basis of that increase shall be limited
to 1,000,000 shares in the aggregate during the twelve (12)-month period
measured from the date of the 1996 Annual Meeting.
B. To the extent one or more outstanding options under the 1981 Plan
which have been incorporated into this Plan are subsequently exercised, the
number of
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shares issued with respect to each such option shall reduce, on a share-for-
share basis, the number of shares available for issuance under this Plan.
C. In no event any one individual participating in the Plan be
granted stock options and separately exercisable stock appreciation rights for
more than 400,000 shares of Common Stock per calendar year, beginning with the
1996 calendar year.
D. Should one or more outstanding options under this Plan (including
outstanding options under the 1981 Plan incorporated into this Plan) expire or
terminate for any reason prior to exercise in full), then the shares subject to
the portion of each option not so exercised shall be available for subsequent
option grant under the Plan. Shares subject to any option or portion thereof
surrendered in accordance with the stock appreciation right provisions of the
Plan and all share issuances under the Plan, whether or not the shares are
subsequently repurchased by the Corporation pursuant to its repurchase rights
under the Plan, shall reduce on a share-for-share basis the number of shares of
Common Stock available for subsequent option grants under the Plan. In
addition, should the exercise price of an outstanding option under the Plan
(including any option incorporated from the 1981 Plan) be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an outstanding option under the Plan, then
the number of shares of Common Stock available for issuance under the Plan shall
be reduced by the gross number of shares for which the option is exercised, and
not by the net number of shares of Common Stock actually issued to the option
holder.
E. Should any change be made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which stock options and separately exercisable stock appreciation
rights may be granted to any one participant under the Plan per calendar year,
(iii) the number and/or class of securities for which automatic option grants
are to be subsequently made per non-employee Board member under the Automatic
Option Grant Program, (iv) the number and/or class of securities and price per
share in effect under each option outstanding under the Discretionary Option
Grant, Salary Investment Option Grant or Automatic Option Grant Program and (v)
the number and/or class of securities and price per share in effect under each
outstanding option incorporated into this Plan from the 1981 Plan. Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
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I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Option Grant Program
shall be authorized by action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Options or non-statutory
options. Individuals who are not Employees of the Corporation may only be
granted non-statutory options. Each granted option shall be evidenced by one or
more instruments in the form approved by the Plan Administrator; provided,
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however, that each such instrument shall comply with the terms and conditions
specified below. Each instrument evidencing an Incentive Option shall, in
addition, be subject to the applicable provisions of Section II of this Article
Two.
A. Option Price.
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1. The option price per share under this Article Two shall be
fixed by the Plan Administrator, but in no event shall the option price per
share be less than one hundred percent (100%) of the Fair Market Value per share
of Common Stock on the grant date.
2. The option price shall become immediately due upon
exercise of the option and shall be payable in one of the alternative forms
specified below:
(i) payment in cash or check made payable to the Corporation's
order;
(ii) payment in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date (as such term is defined below);
(iii) payment in a combination of shares of Common Stock held
for the requisite period necessary to avoid a charge to the Corporation's
reported earnings and valued at Fair Market Value on the Exercise Date and
cash or check payable to the Corporation's order; or
(iv) payment through a broker-dealer sale and remittance
procedure pursuant to which the Optionee (I) shall provide irrevocable
written instructions to a Corporation-designated brokerage firm
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to effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate option price payable for the
purchased shares plus all applicable Federal and State income and
employment taxes required to be withheld by the Corporation in connection
with such purchase and (II) shall provide written directives to the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale transaction.
For purposes of this subparagraph 2, the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
B. Term and Exercise of Options.
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Each option granted under this Article Two shall be exercisable at
such time or times, during such period, and for such number of shares as shall
be determined by the Plan Administrator and set forth in the instrument
evidencing such option. No granted option shall, however, have a maximum term
in excess of ten (10) years. During the lifetime of the Optionee, the option,
together with any stock appreciation rights pertaining to such option, shall be
exercisable only by the Optionee and shall not be assignable or transferable
other than by transfer of the option effected by will or by the laws of descent
and distribution following the Optionee's death.
C. Termination of Service.
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1. In the event the Optionee should cease Service while holding one
or more options under this Article Two, then each such option shall not remain
exercisable beyond the limited post-Service exercise period specified by the
Plan Administrator in the instrument evidencing the grant, unless the Plan
Administrator otherwise extends such period in accordance with subparagraph C.5
below.
2. During the post-Service exercise period, the option may not be
exercised for more than the number of option shares (if any) in which the
Optionee is vested at the time of cessation of Service. Upon the expiration of
such post-Service exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding for any
vested shares for which the option has not been exercised. However, each option
shall immediately terminate and cease to be outstanding, at the time of the
Optionee's cessation of Service, with respect to any option shares for which
such option is not otherwise at that time exercisable or in which the Optionee
is not otherwise at that time vested.
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3. Should the Optionee die while holding one or more outstanding
options under this Article Two, then each such option may be exercised, subject
to the limitations of subparagraph 2 above, by the personal representative of
the Optionee's estate or by the person or persons to whom the option is
transferred pursuant to the Optionee's will or the laws of descent and
distribution.
4. Should (i) the Optionee's Service be terminated for misconduct
(including, but not limited to, any act of dishonesty, willful misconduct, fraud
or embezzlement) or (ii) the Optionee make any unauthorized use or disclosure of
confidential information or trade secrets of the Corporation or its parent or
subsidiaries, then in any such event all outstanding options held by the
Optionee under this Article Two shall terminate immediately and cease to be
outstanding.
5. The Plan Administrator shall have full power and authority to
extend the period of time for which the option is to remain exercisable
following the Optionee's cessation of Service or death from the limited period
specified in the instrument evidencing such grant to such greater period of time
as the Plan Administrator shall deem appropriate under the circumstances. In no
event, however, shall such option be exercisable after the specified expiration
date of the option term.
6. The Plan Administrator shall have complete discretion, exercisable
either at the time the option is granted or at any time the option remains
outstanding, to permit one or more options granted under this Article Two to be
exercised not only for the number of shares for which each such option is
exercisable at the time of the Optionee's cessation of Service but also for one
or more subsequent installments of purchasable shares for which the option would
otherwise have become exercisable had such cessation of Service not occurred.
D. Stockholder Rights.
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An Optionee shall have none of the rights of a stockholder with
respect to any option shares until such individual shall have exercised the
option and paid the option price for the purchased shares.
E. Repurchase Rights.
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The shares of Common Stock acquired under this Article Two may be
subject to repurchase by the Corporation in accordance with the following
provisions:
1. The Plan Administrator shall have the discretion to grant
options for unvested shares of Common Stock under this Article Two. Should the
Optionee cease
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Service while holding any unvested shares purchased under such options, then the
Corporation shall have the right to repurchase any or all of those unvested
shares at the option price paid per share. The terms and conditions upon which
such repurchase right shall be exercisable (including the period and procedure
for exercise and the appropriate vesting schedule for the purchased shares)
shall be established by the Plan Administrator and set forth in the instrument
evidencing such repurchase right.
2. All of the Corporation's outstanding repurchase rights under this
Article Two shall automatically terminate, and all shares subject to such
terminated rights shall immediately vest in full, upon the occurrence of any
Corporate Transaction, except to the extent: (i) any such repurchase right is
expressly assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
3. The Plan Administrator shall have the discretionary authority,
exercisable either before or after the Optionee's cessation of Service, to
cancel the Corporation's outstanding repurchase rights with respect to one or
more shares purchased or purchasable by the Optionee under this Article Two and
thereby accelerate the vesting of such shares in whole or in part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees of the Corporation. Options which are
specifically designated as "non-statutory" options when issued under the Plan
shall not be subject to such terms and conditions.
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A. Dollar Limitation. The aggregate fair market value (determined as
-----------------
of the respective date or dates of grant) of the Common Stock for which one or
more options granted to any Employee after December 31, 1986 under this Plan (or
any other option plan of the Corporation or its parent or subsidiary
corporations) may for the first time become exercisable as incentive stock
options under the Federal tax laws during any one calendar year shall not exceed
the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee
holds two (2) or more such options which become exercisable for the first time
in the same calendar year, the foregoing limitation on the exercisability of
such options as incentive stock options under the Federal tax laws shall be
applied on the basis of the order in which such options are granted. Should the
number of shares of Common Stock for which any Incentive Option first becomes
exercisable in any calendar year exceed the applicable One Hundred Thousand
Dollar ($100,000) limitation, then the option may
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nevertheless be exercised in that calendar year for the excess number of shares
as a non-statutory option under the Federal tax laws.
B. 10% Stockholder. If any individual to whom an Incentive Option is
---------------
granted is the owner of stock (as determined under Section 424(d) of the
Internal Revenue Code) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Corporation or any one of
its parent or subsidiary corporations, then the option price per share shall not
be less than one hundred and ten percent (110%) of the fair market value per
share of Common Stock on the grant date, and the option term shall not exceed
five (5) years, measured from the grant date.
Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Five of the Plan shall apply to all
Incentive Options granted hereunder.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. Each option which is outstanding under this Article Two at the
time of a Corporate Transaction shall automatically accelerate so that each such
option shall, immediately prior to the specified effective date for such
Corporate Transaction, become fully exercisable with respect to the total number
of shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares. However, an outstanding option
under this Article Two shall not so accelerate if and to the extent: (i) such
option is, in connection with the Corporate Transaction, either to be assumed by
the successor corporation or parent thereof or to be replaced with a comparable
option to purchase shares of the capital stock of the successor corporation or
parent thereof, (ii) such option is to be replaced with a cash incentive program
of the successor corporation which preserves the option spread existing at the
time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such option, or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant. The determination of option
comparability under clause (i) above shall be made by the Plan Administrator,
and its determination shall be final, binding and conclusive. The Plan
Administrator shall also have full power and authority to grant options under
the Plan which are to automatically accelerate in whole or in part immediately
prior to the Corporate Transaction or upon the subsequent termination of the
Optionee's Service, whether or not those options are otherwise to be assumed or
replaced in connection with the consummation of such Corporate Transaction.
B. Upon the consummation of the Corporate Transaction, all
outstanding options under this Article Two shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.
13
<PAGE>
C. Each outstanding option under this Article Two which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for such
--------
securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.
D. The grant of options under this Article Two shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
E. The Plan Administrator shall have the discretionary authority,
exercisable either in advance of any actually-anticipated Change in Control or
at the time of an actual Change in Control, to provide for the automatic
acceleration of one or more outstanding options under this Article Two (and the
termination of one or more of the Corporation's outstanding repurchase rights
under this Article Two) upon the occurrence of the Change in Control. The Plan
Administrator shall also have full power and authority to condition any such
option acceleration (and the termination of any outstanding repurchase rights)
upon the subsequent termination of the Optionee's Service within a specified
period following the Change in Control.
F. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term or the surrender of such option in accordance with Section V of this
Article Two.
G. The exercisability as incentive stock options under the Federal
tax laws of any options accelerated under this Section III in connection with a
Corporate Transaction or Change in Control shall remain subject to the dollar
limitation of Section II of this Article Two.
IV. STOCK APPRECIATION RIGHTS
A. One or more Optionees may be granted the right, exercisable upon
such terms and conditions as the Plan Administrator may establish, to surrender
all or part of an unexercised option under this Article Two in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the
Fair Market Value (on the option surrender date) of the number of shares in
which the Optionee is at the time vested under
14
<PAGE>
the surrendered option (or surrendered portion thereof) over (ii) the aggregate
option price payable for such vested shares.
B. No such option surrender shall be effective unless it is approved
by the Plan Administrator. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section V may be made in shares of Common Stock valued at Fair Market Value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
-----
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.
D. One or more officers of the Corporation subject to the short-swing
profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under this Discretionary Option Grant
Program. Upon the occurrence of a Hostile Take-Over, each such officer holding
one or more options with such a limited stock appreciation right in effect for
at least six (6) months shall have the unconditional right (exercisable for a
thirty (30)-day period following such Hostile Take-Over) to surrender each such
option to the Corporation, to the extent the option is at the time exercisable
for vested shares of Common Stock. In return for the surrendered option, the
officer shall be entitled to a cash distribution from the Corporation in an
amount equal to the excess of (i) the Take-Over Price of the shares of Common
Stock which are at the time vested under each surrendered option (or surrendered
portion) over (ii) the aggregate exercise price payable for such vested shares.
Such cash distribution shall be paid within five (5) days following the option
surrender date. Neither the approval of the Plan Administrator nor the consent
of the Board shall be required in connection with such option surrender and cash
distribution. The balance of the option (if any) shall continue in full force
and effect in accordance with the instrument evidencing such grant.
15
<PAGE>
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
------------------------------
I. ELIGIBILITY
A. Eligible Optionees. The individuals eligible to receive automatic
------------------
option grants pursuant to the provisions of this Article Three program shall be
limited to (i) those individuals who are first elected or appointed as non-
employee Board members on or after the Effective Date of this Plan, whether
through appointment by the Board or election by the Corporation's stockholders,
provided they have not otherwise been in the prior employ of the Corporation (or
any parent or subsidiary corporation), and (ii) those individuals who continue
to serve as non-employee Board members at one or more Annual Stockholder
Meetings held while this Automatic Grant Program remains in effect, including
the 1993 Annual Meeting coincident with the Effective Date.
B. Limitation. Except for the option grants to be made pursuant to
----------
the provisions of this Automatic Option Grant Program (and any automatic grants
made under the predecessor program in effect under the 1981 Plan), non-employee
Board members shall not be eligible to receive any additional option grants or
---
stock issuances under this Plan or any other stock plan of the Corporation (or
its parent or subsidiaries).
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants will be made under this Article Three
-----------
on the dates specified below:
(i) Each individual who first becomes a non-employee Board member
on or after the Effective Date of this Plan, whether through election by
the stockholders or appointment by the Board, shall automatically be
granted, at the time of such initial election or appointment, a non-
statutory stock option to purchase 16,000 shares of Common Stock upon the
terms and conditions of this Article Three.
(ii) Each individual who continues to serve as a non-employee
Board member at one or more Annual Stockholder Meetings held while this
Automatic Grant Program remains in effect, including the 1993 Annual
Meeting, shall automatically be granted at each such meeting, whether or
not he is standing for re-election at that meeting, a non-statutory stock
option to purchase an additional 4,000 shares of Common Stock upon the
terms and conditions of this Article Three, provided he has served as a
non-
16
<PAGE>
employee Board member for at least six (6) months prior to that time.
There shall be no limit on the number of 4,000-share option grants any one
non-employee Board member may receive over the period of Board service.
The 16,000-share and 4,000-share limitation on the automatic grants to
be made to each newly-elected or continuing non-employee Board member shall be
subject to periodic adjustment pursuant to the applicable provisions of Section
V.C of Article One.
B. Option Price. The option price per share of each automatic option
------------
grant made under this Article Three shall be equal to one hundred percent (100%)
of the Fair Market Value per share of Common Stock on the automatic grant date.
C. Payment. The option price shall become immediately due upon
-------
exercise of the option and shall be payable in one of the alternative forms
specified in Section I.A.2 of Article Two.
D. Option Term. Each automatic grant under this Article Three shall
-----------
have a maximum term of ten (10) years measured from the automatic grant date.
E. Exercisability. Each automatic grant shall become exercisable in
--------------
a series of four (4) equal and successive annual installments over the
Optionee's period of service on the Board, with the first such installment to
become exercisable one (1) year after the automatic grant date. The option
shall not become exercisable for any additional option shares following the
Optionee's cessation of Board service for any reason.
F. Non-Transferability. During the lifetime of the non-employee
-------------------
Board member, each automatic option grant, together with the limited stock
appreciation right pertaining to such option, shall be exercisable only by that
individual and shall not be assignable or transferable other than by transfer of
the option by will or by the laws of descent and distribution following the
Optionee's death.
G. Effect of Termination of Board Membership.
-----------------------------------------
1. Should the Optionee cease to serve as a Board member for
any reason (other than death) while holding one or more automatic option grants
under this Article Three, then such Optionee shall have a six (6)-month period
following the date of such cessation of Board service in which to exercise each
such option for any or all of the shares of Common Stock for which the option is
exercisable at the time of such cessation of Board service. However, each such
option shall immediately terminate and cease to be outstanding, at the time of
such cessation of Board service, with respect to any shares for which the option
is not otherwise at that time exercisable.
17
<PAGE>
2. Should the Optionee die while serving as a member of the Board or
within six (6) months after cessation of Board service, then each outstanding
automatic option grant held by the Optionee at the time of death may
subsequently be exercised, for any or all of the shares of Common Stock for
which the option is exercisable at the time of the Optionee's cessation of Board
service (less any option shares subsequently purchased by the Optionee prior to
death), by the personal representative of the Optionee's estate or by the person
or persons to whom the option is transferred pursuant to the Optionee's will or
in accordance with the laws of descent and distribution. Any such exercise must
occur within twelve (12) months after the date of the Optionee's death.
However, each such automatic option grant shall immediately terminate and cease
to be outstanding, at the time of the Optionee's cessation of Board service,
with respect to any option shares for which it is not otherwise at such time
exercisable.
3. In no event shall any automatic grant under this Article
Three remain exercisable after the specified expiration date of the ten (10)-
year option term. Upon the expiration of the applicable exercise period under
subparagraph 1 or 2 above or (if earlier) upon the expiration of the ten (10)-
year option term, the automatic grant shall terminate and cease to be
outstanding for all shares for which such option was exercisable at the time of
the Optionee's cessation of Board service but for which that option was not
subsequently exercised.
H. Stockholder Rights. The holder of an automatic option grant under
------------------
this Article Three shall have none of the rights of a stockholder with respect
to any shares subject to such option until such individual shall have exercised
the option and paid the exercise price for the purchased shares.
I. Remaining Terms. The remaining terms and conditions of each
---------------
automatic option grant shall be as set forth in the prototype Non-statutory
Stock Option Agreement attached as Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. Each automatic option grant outstanding at the time of a Corporate
Transaction shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for such Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for all
or any portion of such shares. Upon the consummation of the Corporate
Transaction, all automatic option grants under this Article Three shall
terminate and cease to be outstanding.
18
<PAGE>
B. Each automatic option grant outstanding at the time of a Change in
Control shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for such Change in Control,
become fully exercisable with respect to the total number of shares of Common
Stock at the time subject to such option and may be exercised for all or any
portion of such shares at any time prior to the expiration or sooner termination
of the option term.
C. Upon the occurrence of a Hostile Take-Over, each non-employee
Board member holding an automatic option grant which has been outstanding under
this Article Three for a period of at least six (6) months shall have the
unconditional right (exercisable for a thirty (30)-day period following such
Hostile Take-Over) to surrender such option in return for a cash distribution
from the Corporation in an amount equal to the excess of (i) the Take-Over Price
of the shares of Common Stock at the time subject to the surrendered option
(whether or not the option is otherwise at the time exercisable for such shares)
over (ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the option surrender
date. Neither the approval of the Plan Administrator nor the consent of the
Board shall be required in connection with such option surrender and cash
distribution.
D. The automatic option grants outstanding under this Article Three
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS
A. Limited Amendments. The provisions of this Automatic Option Grant
------------------
Program, together with the automatic option grants outstanding under this
Article Three, may not be amended at intervals more frequently than once every
six (6) months, other than to the extent necessary to comply with applicable
Federal income tax laws and regulations.
19
<PAGE>
ARTICLE FOUR
SALARY INVESTMENT OPTION GRANT PROGRAM
--------------------------------------
I. ELIGIBILITY
The Primary Committee shall have plenary authority to select, prior to
the start of each calendar year, the particular key employees who will be
eligible for participation in the Salary Investment Option Grant Program for
that calendar year. In order to become an actual participant for a particular
calendar year, each selected individual must, prior to the start of that
calendar year, file with the Primary Committee (or its designate) an irrevocable
authorization pursuant to which the Corporation is to reduce his base salary for
that calendar year by a designated multiple of five percent (5%).
The Primary Committee shall review the filed authorizations and
determine whether to approve, in whole or in part, one or more of those
authorizations. To the extent the Primary Committee approves one or more such
authorizations, the participants who filed those authorizations shall be granted
options under this Article Four option program. To the extent one or more
authorizations are not approved by the Primary Committee, those authorizations
shall have no force or effect and no discounted options shall be granted with
respect to the unapproved salary reductions.
To the extent options are granted under the Salary Investment Option
Grant Program, such options shall be non-statutory options evidenced by
instruments in such form as the Primary Committee shall from time to time
approve; provided, however, that each such instrument shall comply with and
--------
incorporate the terms and conditions specified below.
II. TERMS AND CONDITIONS OF OPTION
A. Option Price.
------------
1. The option price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the grant date.
2. The option price shall become immediately due upon
exercise of the option and shall be payable in one of the alternative forms
specified in Section I.A.2 of Article Two.
20
<PAGE>
B. Number of Option Shares.
-----------------------
1. The number of shares of Common Stock for which each grant
under this Article Four is to be made to a selected Optionee shall be determined
pursuant to the following formula:
X = A / (B x 66-2/3%)
where X is the number of option shares,
A is the dollar amount of the approved reduction in the
Optionee's base salary for the calendar year, and
B is the Fair Market Value per share of Common Stock on the date
of the grant.
C. Term and Exercise of Options.
----------------------------
1. Each option shall have a maximum term of ten (10) years
measured from the grant date. Provided the Optionee continues in Service, the
option shall become exercisable for (A) fifty percent (50%) of the option shares
on last day of June next following the grant date and (B) for the balance of the
option shares in a series of six (6) successive equal monthly installments on
the last day of each of the next six (6) calendar months.
2. During the Optionee's lifetime, the option, shall be
exercisable only by the Optionee and shall not be assignable or transferable
other than by transfer of the option by will or by the laws of descent and
distribution following the Optionee's death.
D. Effect of Termination of Service.
--------------------------------
1. Should an Optionee cease Service for any reason after one
or more of his outstanding options under this Article Four have become
exercisable in whole or in part, then each such option shall remain exercisable,
for any or all of the shares for which the option is exercisable on the date of
such cessation of Service, until the expiration of the ten (10)-year option term
or its sooner termination under Section F.1 of this Article Four. Following the
Optionee's death, each such option may be exercised, for any or all of the
shares for which the option is exercisable at the time of the Optionee's death,
by the personal representative of the Optionee's estate or by the person or
persons to whom the option is transferred pursuant to the Optionee's will or in
accordance with the laws of descent and distribution, but any such exercise must
be effected prior to the expiration or sooner termination of the option term.
21
<PAGE>
2. Should the Optionee die before one or more of his
outstanding options under this Article Four become exercisable for any of the
option shares, then the personal representative of the Optionee's estate or the
person or persons to whom such options are transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution shall
nevertheless have the right to exercise each such option for up to that number
of option shares equal to (A) one-twelfth (1/12) of the total number of option
shares multiplied by (B) the number of full calendar months which will have
elapsed between the first day of the calendar year for which the option is
granted and the last day of the calendar month during which the Optionee ceases
Service. Such exercise must occur prior to the specified expiration date of the
option term or (if earlier) the first anniversary of the date of the Optionee's
death. Upon the occurrence of the earlier event, the option shall terminate and
cease to be exercisable. Each such option shall, with respect to the balance of
the option shares for which it is not exercisable at the time of the Optionee's
cessation of Service, terminate immediately upon such cessation of Service and
shall cease to be outstanding with respect to those option shares.
3. Should the Optionee become permanently disabled (as
determined in accordance with Section 22(e) of the Internal Revenue Code) and
cease by reason thereof to remain in Service before one or more of his
outstanding options under this Article Four become exercisable for any of the
option shares, then the Optionee shall nevertheless have the right to exercise
each such option for up to that number of option shares equal to (A) one-twelfth
(1/12) of the total number of option shares multiplied by (B) the number of full
calendar months which will have elapsed between the first day of the calendar
year for which the option is granted and the last day of the calendar month
during which the Optionee ceases Service. Each such exercise must, however, be
effected prior to the expiration of the ten (10)-year option term or its sooner
termination under Section F.1 of this Article Four. The option shall, with
respect to the balance of the option shares for which it is not exercisable at
the time of the Optionee's cessation of Service, terminate immediately upon such
cessation of Service and shall cease to be outstanding with respect to those
option shares.
4. Except to the limited extent specifically provided in
subparagraphs 2 and 3 above, should the Optionee cease for any reason to remain
in Service before one or more of his outstanding options under this Article Four
become exercisable for any of the option shares, then each such non-exercisable
option shall immediately terminate upon such cessation of Service and cease to
be outstanding.
E. Stockholder Rights. The Optionee shall have none of the rights of
------------------
a stockholder with respect to any option shares until such individual shall have
exercised the option and paid the option price for those shares.
22
<PAGE>
F. Corporate Transaction/Change in Control.
---------------------------------------
1. Should any Corporate Transaction occur while the Optionee
remains in Service, then each outstanding option held by such Optionee under
this Article Four shall become exercisable, immediately prior to the specified
effective date of such Corporate Transaction, for all of the shares at the time
subject to such option and may be exercised for any or all of such shares. Upon
the consummation of the Corporate Transaction, each such option shall terminate
unless assumed by the successor corporation or parent thereof.
2. Should a Change in Control occur while the Optionee is
still in Service, then each outstanding option held by such Optionee under this
Article Four shall, immediately prior to the effective date of such Change in
Control, become exercisable with respect to the total number of shares of Common
Stock at the time subject to such option and may be exercised for all or any
portion of such shares at any time prior to the expiration or sooner termination
of the option term.
3. The grant of options under this Article Four shall in no
way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
23
<PAGE>
ARTICLE FIVE
MISCELLANEOUS
-------------
I. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to amend
or modify the Plan (or any equity incentive program hereunder) in any or all
respects whatsoever. However, (i) no such amendment or modification shall
adversely affect rights and obligations with respect to options at the time
outstanding under the Plan, unless the Optionee consents to such amendment, and
(ii) any amendment made to the Automatic Option Grant Program (or any options
outstanding thereunder) shall be in compliance with the limitation of Section IV
of Article Three. In addition, the Board may not, without the approval of the
Corporation's stockholders, amend the Plan to (i) materially increase the
maximum number of shares issuable under the Plan, the maximum number of shares
for which any one individual participating in the Plan may be granted stock
options and separately exercisable stock appreciation rights in the aggregate
per calendar year, or the number of shares for which options may be granted to
newly-elected or continuing non-employee Board members under Article Three of
the Plan, except for permissible adjustments under Section V.C. of Article One,
(ii) materially modify the eligibility requirements for plan participation or
(iii) materially increase the benefits accruing to Optionees.
B. Options to purchase shares of Common Stock may be granted under
the Discretionary Option Grant and the Salary Investment Option Grant Programs
which are in excess of the number of shares then available for issuance under
the Plan, provided any excess shares actually issued under the Discretionary
Option Grant or the Salary Investment Option Grant Program are held in escrow
until stockholder approval is obtained for a sufficient increase in the number
of shares available for issuance under the Plan. If such stockholder approval
is not obtained within twelve (12) months after the date the first such excess
option grants or excess share issuances are made, then (I) any unexercised
excess options shall terminate and cease to be exercisable and (II) the
Corporation shall promptly refund the purchase price paid for any excess shares
actually issued under the Plan and held in escrow, together with interest (at
the applicable Short Term Federal Rate) for the period the shares were held in
escrow.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of stock options or the vesting of shares acquired upon
exercise of such options under the Plan shall be subject to the satisfaction of
all applicable Federal, State and local income tax and employment tax
withholding requirements.
24
<PAGE>
B. The Plan Administrator may, in its discretion and in accordance
with the provisions of this Section III and such supplemental rules as the Plan
Administrator may from time to time adopt (including the applicable safe-harbor
provisions of SEC Rule 16b-3), provide any or all holders of non-statutory
options (other than the automatic grants made pursuant to Article Three of the
Plan) or unvested shares under the Plan with the right to use shares of Common
Stock in satisfaction of all or part of the Federal, State and local income tax
and employment tax liabilities incurred by such holders in connection with the
exercise of their options or the vesting of their shares (the "Taxes"). Such
right may be provided to any such holder in either or both of the following
formats:
(i) Stock Withholding: The holder of the non-statutory option or
-----------------
unvested shares may be provided with the election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the
exercise of such non-statutory option or the vesting of such shares, a
portion of those shares with an aggregate Fair Market Value equal to the
percentage of the applicable Taxes (up to one hundred (100%)) specified by
such holder.
(ii) Stock Delivery: The Plan Administrator may, in its
--------------
discretion, provide the holder of the non-statutory option or the unvested
shares with the election to deliver to the Corporation, at the time the
non-statutory option is exercised or the shares vest, one or more shares of
Common Stock already held by such individual with an aggregate Fair Market
Value equal to the percentage (up to one hundred percent (100%) as
specified by such individual) of the Taxes incurred in connection with such
option exercise or share vesting.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan became effective immediately upon approval by the
Corporation's stockholders at the 1993 Annual Meeting and serves as the
successor to the 1981 Plan. No further option grants or stock issuances shall be
made under the 1981 Plan from and after the date of 1993 Annual Meeting.
B. Each option issued and outstanding under the 1981 Plan immediately
prior to the Effective Date of this Plan has been incorporated into this Plan
and is treated as an outstanding option under this Plan, but each such option
shall continue to be governed solely by the terms and conditions of the
instrument evidencing such grant, and nothing in this Plan shall be deemed to
affect or otherwise modify the rights or obligations of the holders of such
options with respect to their acquisition of shares of Common Stock thereunder.
25
<PAGE>
C. One or more provisions or features of this Plan may, in the Plan
Administrator's discretion, be extended to one or more stock options outstanding
under the 1981 Plan on the Effective Date and incorporated into this Plan.
D. The Plan shall terminate upon the earlier of (i) December 31, 2002
-------
or (ii) the date on which all shares available for issuance under the Plan shall
have been issued or cancelled pursuant to the exercise of options or stock
appreciation rights granted under the Plan. If the date of termination is
determined under clause (i) above, then all option grants and unvested stock
issuances outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the instruments evidencing such
grants or issuances.
E. In February 1996, the Board approved an amendment to the Plan to
(i) eliminate the discretion of the Plan Administrator to grant options under
the Discretionary Option Grant Program with an exercise price per share less
than 100% of the Fair Market Value per share of Common Stock on the grant date,
(ii) eliminate the loan provisions of the Plan pursuant to which one or more
Optionees would otherwise have the opportunity to finance the exercise of their
outstanding options through the delivery of full-recourse promissory notes and
(iii) increase the number of shares of Common Stock available for issuance under
the Plan by an additional 2,000,000 shares, with not more than 1,000,000 shares
of that increase to be made the subject of option grants under the Plan during
the twelve (12)-month period measured from the date of the 1996 Annual
Stockholders Meeting. The 2,000,000-share increase is subject to stockholder
approval at the 1996 Annual Stockholders Meeting, and no options granted on the
basis of that increase shall become exercisable in whole or in part, unless and
until such stockholder approval is obtained. If such stockholder approval is
not obtained at the 1996 Annual Meeting, then all options granted on the basis
of such increase shall terminate and cease to be outstanding, and no further
options shall be granted in reliance upon such increase.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants under the Plan shall be used for general corporate
purposes.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option under
the Plan, and the issuance of Common Stock upon the exercise or surrender of the
option grants made hereunder shall be subject to the Corporation's procurement
of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it, and the Common Stock
issued pursuant to it.
26
<PAGE>
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and State securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which the common stock is then listed.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor
any action taken by the Plan Administrator hereunder, nor any provision of the
Plan shall be construed so as to grant any individual the right to remain in the
employ or service of the Corporation (or any parent or subsidiary corporation)
for any period of specific duration, and the Corporation (or any parent or
subsidiary corporation retaining the services of such individual) may terminate
such individual's employment or service at any time and for any reason, with or
without cause.
VII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the Plan
may not be assigned, encumbered or otherwise transferred by any Optionee, except
as specifically provided in the Plan.
B. The provisions of the Plan relating to the exercise of options and
the vesting of shares shall be governed by the laws of the State of California,
as such laws are applied to contracts entered into and performed in such State.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.
27
<PAGE>
EXHIBIT A
---------
NON-STATUTORY STOCK OPTION AGREEMENT
AUTOMATIC OPTION GRANT PROGRAM
------------------------------
28
<PAGE>
MEASUREX CORPORATION
NON-EMPLOYEE DIRECTOR AUTOMATIC STOCK OPTION AGREEMENT
RECITALS
- --------
A. The Corporation has approved an automatic option grant program
under the 1993 Stock Option Plan (the "Plan") pursuant to which the non-employee
members of the Corporation's Board of Directors (the "Board") will automatically
receive periodic option grants designed to reward them for services they have
rendered to the Corporation and to encourage them to continue in the service of
the Corporation.
B. Optionee is a non-employee member of the Board and this Agreement
is executed pursuant to, and is intended to carry out the purposes of, the Plan
in connection with the automatic grant of a stock option to purchase shares of
the Corporation's common stock, $0.01 par value ("Common Stock"), under the
Plan.
C. The granted option is intended to be a non-statutory option which
does not meet the requirements of Section 422 of the Internal Revenue Code and
---
is designed to provide Optionee with a meaningful incentive to continue to serve
as a member of the Board.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and conditions set
---------------
forth in this Agreement, there is hereby granted to Optionee, as of the date of
grant (the "Grant Date") specified in the accompanying Notice of Grant of Non-
Employee Director Automatic Stock Option (the "Grant Notice"), a stock option to
purchase up to that number of shares of Common Stock (the "Option Shares") as is
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term at the price per share (the "Option Price")
specified in the Grant Notice.
2. OPTION TERM. This option shall have a maximum term of ten (10)
-----------
years measured from the Grant Date and shall expire at the close of business on
the Expiration Date specified in the Grant Notice, unless sooner terminated in
accordance with Paragraph 5, 7 or 8 of this Agreement.
3. LIMITED TRANSFERABILITY. This option, together with the special
-----------------------
stock appreciation right provided under Paragraph 8(b), shall be neither
transferable nor assignable by Optionee, other than a transfer of this option
effected by will or by the laws of descent and distribution following Optionee's
death, and may be exercised, during Optionee's lifetime, only by Optionee.
4. DATES OF EXERCISE. This option shall become exercisable in a
-----------------
series of successive annual installments as specified in the Grant Notice. As
the option becomes exercisable for one or more installments, those installments
shall accumulate, and the option shall remain exercisable for the accumulated
<PAGE>
installments until the expiration or sooner termination of the option term. In
no event shall this option become exercisable for any additional Option Shares
following Optionee's cessation of service as a Board member.
5. CESSATION OF BOARD SERVICE. Should Optionee's service as a Board
--------------------------
member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
(i) Should Optionee cease to serve as a Board member for any
reason (other than death) while holding this option, then the period for
exercising this option shall be reduced to a six (6)-month period
commencing with the date of such cessation of Board service, but in no
event shall this option be exercisable at any time after the Expiration
Date. During such limited period of exercisability, this option may not be
exercised for more than the number of Option Shares (if any) for which it
is exercisable on the date Optionee ceases service as a Board member. Upon
the expiration of such six (6)-month period, the option shall terminate and
cease to be exercisable.
(ii) Should Optionee die while serving as a Board member or
during the six (6)-month period following his or her cessation of Board
service, then the personal representative of Optionee's estate or the
person or persons to whom the option is transferred pursuant to Optionee's
will or in accordance with the laws of descent and distribution shall have
the right to exercise this option for any or all of the Option Shares for
which the option is exercisable at the time of Optionee's cessation of
Board service (less any Option Shares purchased by Optionee after his or
her cessation of Board service but prior to death). Such right of exercise
shall terminate, and this option shall accordingly cease to be outstanding,
upon the earlier of (A) the expiration of the twelve (12)-month period
-------
measured from the date of Optionee's death or (B) the specified Expiration
Date of the option term.
(iii) Upon Optionee's cessation of Board service for any reason,
this option shall immediately terminate and cease to be outstanding with
respect to any and all Option Shares for which such option is not otherwise
at that time exercisable in accordance with the normal exercise provisions
of Paragraph 4 or the special acceleration provisions of Paragraph 7 or 8.
6. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
---------------------------
Common Stock issuable under the Plan by reason of any stock split, stock
dividend, combination of shares, exchange of shares or other change affecting
such Common Stock as a class
<PAGE>
without the Corporation's receipt of consideration, then the number and class of
securities purchasable under this option and the Option Price payable per share
shall be appropriately adjusted to prevent the dilution or enlargement of
Optionee's rights hereunder; provided, however, the aggregate Option Price shall
remain the same.
7. CORPORATE TRANSACTION. In the event of any of the following
---------------------
stockholder-approved transactions to which the Corporation is a party (a
"Corporate Transaction"):
(i) a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State in which the Corporation is incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in liquidation or
dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's outstanding
securities is transferred to person or persons different from those who
held such securities immediately prior to such merger,
this option, to the extent outstanding at such time but not
otherwise fully exercisable, shall automatically accelerate so that such
option shall, immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable for all of the Option
Shares at the time subject to this option and may be exercised for all or
any portion of such shares as fully-vested shares of Common Stock. Upon
the consummation of the Corporate Transaction, this option shall terminate
and cease to be outstanding.
8. CHANGE IN CONTROL/HOSTILE TAKEOVER.
----------------------------------
(a) This option, to the extent outstanding at the time of a
Change in Control (as defined below), but not otherwise fully exercisable,
shall automatically accelerate so that this option shall, immediately prior
to the effective date of such Change in Control, become fully exercisable
for all of the Option Shares at the time subject to this option and may be
exercised for all or any portion of such shares as fully-vested shares of
Common Stock. This option as so accelerated shall remain fully exercisable
until the earliest to occur of (i) the specified Expiration Date of the
--------
option term, (ii) the sooner termination of this option in accordance with
Paragraph 5 or 7 or (iii) the surrender of this option under Paragraph
8(b).
<PAGE>
(b) Provided this option has been outstanding for at least six
(6) months prior to the occurrence of a Hostile Take-Over (as defined
below), Optionee shall have an unconditional right (exercisable during the
thirty (30)-day period immediately following the consummation of such
Hostile Take-Over) to surrender this option to the Corporation in exchange
for a cash distribution from the Corporation in an amount equal to the
excess of (I) the Take-Over Price of the Option Shares at the time subject
to the surrendered option (whether or not the option is otherwise at the
time exercisable for such shares) over (II) the aggregate Option Price
payable for such shares.
To exercise this limited stock appreciation right, Optionee must,
during the applicable thirty (30)-day exercise period, provide the
Corporation with written notice of the option surrender in which there is
specified the number of Option Shares as to which the Option is being
surrendered. Such notice must be accompanied with the return of Optionee's
copy of this Agreement, together with any written amendments to such
Agreement. The cash distribution shall be paid to Optionee within five (5)
days following such delivery date, and neither the approval of the Plan
Administrator nor the consent of the Board shall be required in connection
with such option surrender and cash distribution. Upon receipt of such
cash distribution, this option shall be cancelled with respect to the
shares subject to the surrendered option (or the surrendered portion), and
Optionee shall cease to have any further right to acquire those Option
Shares under this Agreement. In the event this option is surrendered for
only a portion of the Option Shares at the time subject thereto, the
Corporation shall issue a new stock option agreement (substantially in the
form of this Agreement) for the balance of the Option Shares for which this
option is not surrendered.
This limited stock appreciation right shall in all events
terminate upon the expiration or sooner termination of the option term and
may not be assigned or transferred by Optionee.
(c) Definitions: For purposes of this Agreement, the following
-----------
definitional provisions shall be in effect:
A CHANGE IN CONTROL shall be deemed to occur in the event:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934 (the
"1934 Act")) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept; or
<PAGE>
(ii) there is a change in the composition of the Board over
a period of thirty-six (36) consecutive months or less such that a
majority of the Board members (rounded up to the next whole number)
ceases, by reason of one or more proxy contests for the election of
Board members, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or
nomination was approved by the Board.
A HOSTILE TAKE-OVER shall be deemed to occur in the event
(i) any person or related group of persons (other than the Corporation
or a person that directly or indirectly controls, is controlled by, or
is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer which the Board does
not recommend the Corporation's shareholders to accept and (ii) more
---
than fifty percent (50%) of the securities so acquired in such tender
or exchange offer are accepted from holders other than officers and
directors of the Corporation subject to the short-swing profit
restrictions of Section 16 of the 1934 Act.
The TAKE-OVER PRICE per share shall be deemed to be equal to
the greater of (a) the Fair Market Value per share of Common Stock on
-------
the option surrender date, as determined in accordance with the
valuation provisions of Paragraph 9(b), or (b) the highest reported
price per share of Common Stock paid by the tender offeror in
effecting the Hostile Take-Over.
9. MANNER OF EXERCISING OPTION.
---------------------------
(a) In order to exercise this option for all or any part of the
Option Shares for which the option is at the time exercisable, Optionee (or
in the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(i) Provide the Secretary of the Corporation with written
notice of the option exercise (the "Exercise Notice"), in
substantially the form of Exhibit I attached hereto, in which there
is specified the number of Option Shares which are to be purchased
under the exercised option.
<PAGE>
(ii) Pay the aggregate Option Price for the purchased
shares in one of the following alternative forms:
1. full payment in cash or check made payable to the
Corporation's order; or
2. full payment in shares of Common Stock held by Optionee
for the requisite period necessary to avoid a charge to the
Corporation's reported earnings and valued at Fair Market Value on
the Exercise Date; or
3. full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date and cash or check made payable
to the Corporation's order; or
4. full payment effected through a broker-dealer sale and
remittance procedure pursuant to which Optionee shall provide
irrevocable written instructions (A) to a designated brokerage firm
to effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Option Price payable
for the purchased shares and (B) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than
Optionee) have the right to exercise this option.
(b) For purposes of subparagraph 9(a) above and for all other
valuation purposes under this Agreement, the Fair Market Value per share of
Common Stock on any relevant date shall be the closing selling price per
share of Common Stock on the date in question on the New York Stock
Exchange, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no such reported price on the
date in question, then the Fair Market Value shall be the closing selling
price on such exchange on the last preceding date for which such quotation
exists.
(c) The Exercise Date shall be the date on which the Exercise
Notice is delivered to the Secretary of the Corporation. Except to the
extent the sale and remittance procedure specified above is utilized in
connection with the option exercise, payment of the Option Price for the
purchased shares must accompany such notice.
<PAGE>
(d) As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or other person or persons
exercising this option) a certificate or certificates representing the
purchased Option Shares.
(e) In no event may this option be exercised for any fractional
share.
10. STOCKHOLDER RIGHTS. The holder of this option shall not
------------------
have any of the rights of a stockholder with respect to the Option Shares
until such individual shall have exercised this option and paid the Option
Price for the purchased shares.
11. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any
-----------------------
way affect the right of the Corporation to adjust, reclassify, reorganize
or otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove Optionee from the Board at any
time in accordance with the provisions of applicable law.
12. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this
------------------------------------
option and the issuance of the Option Shares upon such exercise shall be
subject to compliance by the Corporation and Optionee with all applicable
requirements of law relating thereto and with all applicable regulations of
any stock exchange on which shares of the Common Stock may be listed at the
time of such exercise and issuance.
13. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
-----------------------
provided in Paragraph 3 or 7, the provisions of this Agreement shall inure
to the benefit of, and be binding upon, the successors, administrators,
heirs, legal representatives and assigns of Optionee and the successors and
assigns of the Corporation.
14. DISCHARGE OF LIABILITY. The inability of the Corporation
----------------------
to obtain approval from any regulatory body having authority deemed by the
Corporation to be necessary to the lawful issuance and sale of any Common
Stock pursuant to this option shall relieve the Corporation of any
liability with respect to the non-issuance or sale of the Common Stock as
to which such approval shall not have been obtained. However, the
Corporation shall use its best efforts to obtain all such applicable
approvals.
15. NOTICES. Any notice required to be given or delivered to
-------
the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation in care of the Corporate Secretary at the
Corporate Offices at One Results Way, Cupertino, CA 95014. Any notice
required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated below Optionee's signature
line on the Grant Notice. All notices shall be deemed to have been given
or
<PAGE>
delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
16. CONSTRUCTION/GOVERNING LAW. This Agreement and the option
--------------------------
evidenced hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to the express terms and provisions of the
Plan, including the automatic option grant provisions of Article Three of
the Plan. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
<PAGE>
EXHIBIT I
---------
NOTICE OF EXERCISE OF
---------------------
NONSTATUTORY STOCK OPTION
-------------------------
I hereby notify Measurex Corporation (the "Corporation") that I
elect to purchase _________ shares of Common Stock of the Corporation (the
"Purchased Shares") pursuant to that certain option (the "Option") granted
to me on ___________, 199_ to purchase up to __________ shares of the
Corporation's Common Stock at an option price of $______ per share (the
"Exercise Price").
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the
Exercise Price for the Purchased Shares in accordance with the provisions
of my agreement with the Corporation evidencing the Option and shall
deliver whatever additional documents may be required by such agreement as
a condition for exercise. Alternatively, I may utilize the special
broker/dealer sale and remittance procedure specified in my agreement to
effect payment of the Exercise Price for the Purchased Shares.
- --------------------------------- --------------------------------------------
Date Optionee
Address:
-----------------------------------
-----------------------------------
Print name in exact manner
it is to appear on the
stock certificate: __________________________________
Address to which certificate
is to be sent, if different
from address above: __________________________________
----------------------------------
Social Security Number: __________________________________
