<PAGE> 1
As filed with the Securities and Exchange Commission on January 8, 1999.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ARROW ELECTRONICS, INC.
(Exact name of issuer as specified in its charter)
New York 11-1806155
(State of Incorporation) (I.R.S. Employer
Identification No.)
25 Hub Drive
Melville, New York 11747
(516) 391-1300
(Address and telephone number of principal executive offices)
RICHEY ELECTRONICS, INC.
AMENDED AND RESTATED 1992 STOCK OPTION PLAN
(Full Title of the Plan)
Robert E. Klatell, Esq.
Executive Vice President
Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747
(516) 391-1300
(Name, address and telephone number of agent for service)
Copies to:
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
(212) 530-5000
Attention: Howard S. Kelberg, Esq.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Title of Securities Amount to be Registered Proposed Maximum Proposed Maximum Amount of
to be Registered Offering Price Per Share Aggregate Offering Registration Fee
Price
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (par 233,376 shares $21.17 $4,939,873.05* $1373.28
value $1.00 per
share)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* The proposed maximum aggregate offering price listed above has been determined
pursuant to Rule 457(h) under the Securities Act of 1933, as amended, and
represents the sum of the aggregate exercise price of all options granted to
date under the Plan.
<PAGE> 2
PART I
ITEM 1. PLAN INFORMATION
This Registration Statement relates to the registration of
233,376 shares of Common Stock, $1.00 par value per share, of ARROW ELECTRONICS,
INC. (the "Registrant") awarded under the Richey Electronics, Inc. Amended and
Restated 1992 Stock Option Plan (the "Plan"). Documents containing the
information required by Part I of the Registration Statement will be sent or
given to participants in the Plan as specified by Rule 428(b). Such documents
are not filed with the Securities and Exchange Commission (the "Commission" or
the "SEC") either as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424 in reliance on Rule 428.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
The Registrant will, upon written or oral request, provide
without charge to any person to whom the Prospectus relating to this
Registration Statement is delivered, a copy of any and all of the information
which has been incorporated by reference in such Prospectus and this
Registration Statement (pursuant to Item 3 of Part II below). Such requests
should be directed to the Secretary, Arrow Electronics, Inc., 25 Hub Drive,
Melville, New York 11747 (telephone: 516-391-1300).
PART II
INFORMATION REQUIRED IN THE REGISTRATION
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have been filed by Arrow
Electronics, Inc. (the "Company") with the Securities and Exchange Commission
(the "Commission") pursuant to the Securities Act of 1933, as amended (the
"Securities Act") and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as applicable, are incorporated by reference herein and shall
be deemed to be a part hereof:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.
2. The Company's Quarterly Report on Form 10-Q for the fiscal
quarters ended March 31, 1998, June 30, 1998 and September 30,
1998.
3. The description of the Company's Capital Stock contained in
the registration statement filed with the Commission under the
1934 Act, including any amendment or report filed for the
purpose of updating such description.
4. The description of the Company's Rights contained in the
Company's registration statement filed under the 1934 Act,
including any amendment or report filed for the purpose of
updating such description.
All documents, filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment to this registration statement which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold shall be deemed to be incorporated by reference in this
registration statement and made a part hereof from their respective dates of
filing (such documents, and the documents enumerated above, being hereinafter
referred to as "Incorporated Documents"); provided, however, that the documents
enumerated above or
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<PAGE> 3
subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act in each year during which the offering made by this
registration statement is in effect prior to the filing with the Commission of
the Company's Annual Report on Form 10-K covering such year shall not be
Incorporated Documents or be incorporated by reference in this registration
statement or be a part hereof from and after the filing of such Annual Report on
Form 10-K.
Any statement contained in an Incorporated Document shall be
deemed to be modified or superseded for purposes of this registration statement
to the extent that a statement contained herein or in any other subsequently
filed Incorporated Document modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this registration statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Common Stock being registered hereunder has been
registered pursuant to Section 12 of the Exchange Act and a description of the
Common Stock is contained in the Exchange Act registration statement which has
been filed with the Commission.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 9 of this Company's Certificate of Incorporation
permits the indemnification of officers and directors under certain
circumstances to the full extent that such indemnification may be permitted by
law.
Such rights of indemnification are in addition to, and not in
limitation of, any rights to indemnification to which any officer or director of
the Company is entitled under the Business Corporation Law of the State of New
York which provides for indemnification by a corporation of its officers and
directors under certain circumstances as stated in the Business Corporation Law
and subject to specified limitations set forth in the Business Corporation Law.
The Company also maintains directors' and officers' liability
insurance coverage which insures directors and officers of the Company against
certain losses arising from claims made, and for which the Company has not
provided reimbursement, by reason of their being directors and officers of the
Company or its subsidiaries.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Exhibit Index on page 7.
ITEM 9. UNDERTAKINGS.
(1) The Company hereby undertakes:
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(a) to file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Company pursuant to Section 13(a) or Section 15(d) of the 1934 Act that are
incorporated by reference in the registration statement.
(b) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(2) The Company hereby undertakes that, for the purpose of determining any
liability under the Securities Act, each filing of the issuer's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act of (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial bona fide offering hereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the above-mentioned provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Melville and the State of New York, on January
8, 1999.
ARROW ELECTRONICS, INC.
By: /s/ Robert E. Klatell
------------------------
Robert E. Klatell
Executive Vice President
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POWER OF ATTORNEY
Each person whose signature appears below hereby severally
constitutes and appoints Stephen P. Kaufman, Robert E. Klatell, and John C.
Waddell and each of them acting singly, as his or her true and lawful
attorney-in-fact and agent, with full and several power of substitution and
resubstitution, to sign for him or her and in his or her name, place and stead
in any and all capacities indicated below, the registration statement on Form
S-8 filed herewith and any and all pre-effective and post-effective amendments
and supplements to the said registration statement, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary fully to all intents and purposes as he or she might or
could do in person hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement or amendment thereto has been signed below by the
following persons in the capacities and on the date indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Stephen P. Kaufman Chairman, Principal Executive January 8, 1999
- -------------------------- Officer, and Director
Stephen P. Kaufman
/s/ Robert E. Klatell Executive Vice President, January 8, 1999
- -------------------------- Secretary, and Director
Robert E. Klatell
/s/ Gerald Luterman Senior Vice President and January 8, 1999
- -------------------------- Principal Financial Officer
Gerald Luterman
/s/ Paul J. Reilly Vice President, Controller and January 8, 1999
- -------------------------- Principal Accounting Officer
Paul J. Reilly
/s/ Daniel W. Duval Director January 8, 1999
- --------------------------
Daniel W. Duval
/s/ Carlo Giersch Director January 8, 1999
- --------------------------
Carlo Giersch
/s/ John N. Hanson Director January 8, 1999
- --------------------------
John N. Hanson
/s/ Roger King Director January 8, 1999
- --------------------------
Roger King
/s/ Karen Gordon Mills Director January 8, 1999
- --------------------------
Karen Gordon Mills
/s/ Richard S. Rosenbloom Director January 8, 1999
- --------------------------
Richard S. Rosenbloom
/s/ Robert S. Throop Director January 8, 1999
- --------------------------
Robert S. Throop
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ John C. Waddell Director January 8, 1999
- --------------------------
John C. Waddell
</TABLE>
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
4(a) Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994,
Commission File No. 1-4482).
4(b) By-laws of the Company, as amended (incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1986, Commission File No. 1-4482).
5 Opinion of Milbank, Tweed, Hadley & McCloy as to the legality
of the Company's Common Stock.
23(a) Consent of Milbank, Tweed, Hadley & McCloy (included in the
Opinion filed as Exhibit 5 hereto).
23(b) Consent of Ernst & Young LLP, independent auditors.
24 Power of Attorney (set forth on the signature page hereof).
99(a) Richey Electronics, Inc. Amended and Restated 1992 Stock
Option Plan.
</TABLE>
<PAGE> 1
Exhibits 5 and 23(a)
LETTERHEAD
January 8, 1999
Arrow Electronics, Inc.
25 Hub Drive
Melville, NY 11747
Re: Registration Statement on Form S-8 of Arrow Electronics, Inc.
Relating to the Issuance Shares of Common Stock Pursuant to
the Richey Electronics, Inc. Amended and Restated 1992 Stock
Option Plan.
Ladies and Gentlemen:
We have acted as counsel to Arrow Electronics, Inc., a New York
corporation (the "Company"), in connection with the preparation of a
registration statement on Form S-8 (the "Registration Statement") to be filed
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended, (the "Act") relating to the offering of up
to 233,376 shares of the Company's Common Stock, par value $1.00 per share (the
"Shares"), to be issued pursuant to the provisions of the Richey Electronics,
Inc. Amended and Restated 1992 Stock Option Plan (the "Plan"). We have examined
such records, documents, statutes and decisions as we have deemed relevant in
rendering this opinion.
We are of the opinion that when:
(a) the applicable provisions of the Act and of State securities
or blue sky laws shall have been complied with;
(b) the Company's Board of Directors shall have duly authorized
the issuance of the Shares; and
(c) the Shares shall have been duly issued and paid for in an
amount not less than par value of $1.00 per share, the Shares
will be legally issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement. In giving such opinion, we do not thereby admit that we
are acting within the category of persons whose consent is required under
Section 7 of the Act or the rules or regulations of the Commission thereunder.
Very truly yours,
/s/ Milbank, Tweed, Hadley & McCloy
HSK/RH
<PAGE> 1
Exhibit 23(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) related to the offering of 233,376 shares of stock of Arrow Electronics,
Inc., issuable pursuant to the Richey Electronics, Inc. Amended and Restated
1992 Stock Option Plan, of our report dated February 16, 1998 with respect to
the consolidated financial statements and schedule of Arrow Electronics, Inc.
included in the Annual Report (Form 10-K) for the year ended December 31, 1997,
as filed with the Securities and Exchange Commission.
/s/ Ernst & Young, LLP
New York, NY
January 8, 1999
<PAGE> 1
Exhibit 99(a)
RICHEY ELECTRONICS, INC.
AMENDED AND RESTATED 1992 STOCK OPTION PLAN
1. Purpose.
(a) The purpose of the Plan is to provide a means by which employees
and directors (if eligible under paragraph 4) of and consultants to Richey
Electronics, Inc., a Delaware corporation and successor to Brajdas Corporation
(the "Company"), and its Affiliates, as defined in subparagraph 1(b), may be
given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now employed by or serving as consultants or directors to the Company,
to secure and retain the services of persons capable of filing such positions,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.
(d) The Company intends that the options issued under the Plan shall,
in the discretion of the Board of Directors of the Company (the "Board") or any
committee to which responsibility for administration of the Plan has been
delegated pursuant to subparagraph 2(c), be either incentive stock options as
that term is used in Section 422 of the Code ("Incentive Stock Options"), or
options which do not qualify as incentive stock options ("Supplemental Stock
Options"). All options shall be separately designated Incentive Stock Options or
Supplemental Stock Options at the time of grant, and a separate certificate or
certificates will be issued for shares purchased on exercise of each type of
option. An option designated as a Supplemental Stock Option will not be treated
as an Incentive Stock Option.
2. Administration.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a committee, as provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted options; when and how the option shall
be granted; whether the option will be an Incentive Stock Option or a
Supplemental Stock Option; the provisions of each option granted (which need not
be identical), including the time or times during the term of each option within
which all or portions of such option may be exercised; and the number of shares
for which an option shall be granted to each such person.
<PAGE> 2
(2) To construe and interpret the Plan and options granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company.
(5) To grant options in exchange for cancellation of options
granted earlier at different exercise prices; provided, however, that nothing
contained herein shall empower the Board to grant an Incentive Stock Option
under conditions or pursuant to terms that are inconsistent with the
requirements of Section 4(b) below, or Section 422 of the Code.
(6) To take appropriate action to cause any option granted
hereunder to cease to be an Incentive Stock Option; provided, however, no such
action may be taken by the Board without the written consent of the affected
optionee.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two directors (the "Committee"). Solely to the extent
deemed necessary or advisable by the Board, each Committee member shall meet the
definition of (i) a "nonemployee director" for purposes of satisfying the
requirements of Rule 16b-3 of the Securities and Exchange Act of 1934 and/or
(ii) an "outside director" for purposes of satisfying the requirements of
Section 162(m) of the Code. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board.
3. Shares Subject to the Plan.
(a) Subject to the provisions of paragraph 9 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate 1,300,000 shares of the
Company's common stock. If any option granted under the Plan shall for any
reason expire or otherwise terminate without having been exercised in full, the
stock not purchased under such option shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. Eligibility.
(a) Incentive Stock Options may be granted only to employees (including
officers) of the Company or its Affiliates. A director of the Company shall not
be eligible to receive Incentive Stock Options unless such director is also an
employee (including an officer) of the Company or any Affiliate. Supplemental
Stock Options may be granted only to employees (including officers) of,
directors or consultants to the Company or its Affiliates.
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(b) No person shall be eligible for the grant of an Incentive Stock
Option under the Plan if, at the time of grant, such person owns (or is deemed
to own pursuant to Section 424(d) of the code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates unless the exercise price of such option is
at least one hundred ten percent (110%) of the fair market value of such stock
at the date of grant and the option is not exercisable after the expiration of
five (5) years from the date of grant.
5. Option Provisions.
Each option shall be in such form and shall contain such terms and
conditions as the Board or the Committee shall deem appropriate. The provisions
of separate options need not be identical, but each option shall include
(through incorporation of provisions hereby by reference in the option or
otherwise) the substance of each of the following provisions:
(a) No option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) The exercise price of each Incentive Stock Option shall be not less
than one hundred percent (100%) of the fair market value of the stock subject to
the option on the date the option is granted. The exercise price of each
Supplemental Stock Option shall not be less than eighty-five percent (85%) of
the fair market value of the stock subject to the option on the date the option
is granted, provided, however, that any option granted under the Plan that is
intended to satisfy the requirements of Section 162(m) of the code shall have an
exercise price of not less than one hundred percent (100%) of the fair market
value of the stock subject to the option on the date the option is granted.
(c) The purchase price of stock acquired pursuant to an option shall be
paid, to the extent permitted by applicable statutes and regulations, either (i)
in cash at the time the option is exercise, or (ii) at the discretion of the
Board or the Committee, either at the time of the grant or exercise of the
option, (A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other common stock of the
Company) with the person to whom the option is granted or to whom the option is
transferred pursuant to subparagraph 5(d), or (C) in any other form of legal
consideration that may be acceptable to the Board or the Committee.
In the case of any deferred payment arrangement, interest
shall be payable at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
The Company may make loans or guarantee loans made by an
appropriate financial institution to individual optionees, including officers,
on such terms as may be approved by the Board or the Committee for the purpose
of financing the exercise of options granted under the Plan and the payment of
any taxes that may be due by reason of such exercise.
(d) An Incentive Stock Option shall not be transferable except by will
or by the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the Incentive Stock Option is granted only by
such person. An option which is not an Incentive Stock
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<PAGE> 4
Option shall not be transferable except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder (a "QDRO"), and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person or any transferee
pursuant to a QDRO.
(e) The total number of shares of stock subject to an option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). From time to time during each of such installment periods, the option
may become exercisable ("vest") with respect to some or all of the shares
allotted to that period, and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which the option
was not fully exercised. During the remainder of the term of the option (if its
term extends beyond the end of the installment periods), the option may be
exercised from time to time with respect to any shares then remaining subject to
the option. The provisions of this subparagraph 5(e) are subject to any option
provisions governing the minimum number of shares as to which an option may be
exercised.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 5(d), as a condition of exercising any
such option, (1) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters, and that he
or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the option; and (2) to give
written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the option for such person's own account and not
with any present intention of selling or otherwise distributing the stock. These
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares upon the exercise of the option
has been registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws.
(g) An option shall terminate three (3) months after termination of the
optionee's employment or relationship as a consultant or director with the
Company or an Affiliate, unless (i) such termination is due to such person's
permanent and total disability, within the meaning of Section 422(c)(6) of the
Code, in which case the option may, but need not, provide that it may be
exercised at any time within one (1) year following such termination of
employment or relationship as a consultant or director; or (ii) the optionee
dies while in the employ of or while serving as a consultant or director to the
Company or an Affiliate, or within not more than three (3) months after
termination of such relationship, in which case the option may, but need not,
provide that it may be exercised at any time within eighteen (18) months
following the death of the optionee by the person or persons to whom the
optionee's rights under such option pass by will or by the laws of descent and
distribution; or (iii) the option by its terms specifies either (A) that it
shall terminate sooner than three (3) months after termination of the optionee's
employment or relationship as a consultant or director, or (B) that it may be
exercised more than three (3) months after termination of such relationship with
the Company or an Affiliate; or (iv) if an optionee is determined by the Board
or the Committee to have committed an act of theft, embezzlement, fraud,
dishonesty, a breach of fiduciary duty to the Company or an Affiliate, or
deliberate disregard of the rules of the Company or
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<PAGE> 5
an Affiliate which resulted in loss, damage or injury to the Company or an
Affiliate, or if an optionee makes any unauthorized disclosure of any of the
trade secrets or confidential information of the Company or an Affiliate,
engages in any conduct which constitutes unfair competition with the Company or
an Affiliate, induces any customer of the Company or an Affiliate to break any
contract with the Company or an Affiliate or induces any principal for whom the
Company or an Affiliate acts as agent to terminate such agency relationship, in
which case neither the optionee nor the optionee's estate shall be entitled to
exercise any option with respect to any shares whatsoever after termination of
the optionee's employment or relationship as a consultant or director to the
Company, whether or not after such termination the optionee may receive payment
from the Company or an Affiliate for vacation pay, for services rendered prior
to termination, for services for the day on which termination occurs, for salary
in lieu of notice, or for any other benefits. In making such determination, the
Board or the Committee shall give the optionee an opportunity to present to the
Board or the Committee evidence on his or her own behalf. For the purpose of
this paragraph of this subsection 5(g)(iv), termination shall be deemed to occur
when the Company or an Affiliate dispatches notice or advice to the optionee of
such termination. This subparagraph 5(g) shall not be construed to extend the
term of any option or to permit anyone to exercise the option after expiration
of its term, nor shall it be construed to increase the number of shares as to
which any option is exercisable from the amount exercisable on the date of
termination of the optionee's employment or relationship as a consultant or
director.
(h) The option may, but need not, include a provision whereby the
optionee may elect at any time during the term of his or her employment or
relationship as a consultant or director with the Company or any Affiliate to
exercise the option as to any part or all of the shares subject to the option
prior to the stated vesting date of the option or of any installment or
installments specified in the option. Any shares so purchased from any unvested
installment or option may be subject to a repurchase right in favor of the
Company or to any other restriction the Board or the Committee determines to be
appropriate.
(i) To the extent provided by the terms of an option, the optionee may
satisfy any federal, state or local tax withholding obligation relating to the
exercise of such option by any of the following means or by a combination of
such means: (1) tendering a cash payment; (2) authorizing the Company to
withhold from the shares of the common stock otherwise issuable to the
participant as a result of the exercise of the stock option a number of shares
having a fair market value (in combination with any cash payment) equal to the
amount of the withholding tax obligation; or (3) delivering to the Company owned
and unencumbered shares of the common stock having a fair market value (in
combination with any cash payment) equal to the amount of the withholding tax
obligation.
(j) The number of shares of common stock underlying options that may be
granted under the Plan to any one person during any one calendar year shall not
exceed 97,500 shares and the total number of shares with respect to which
options may be granted to any one person during the term of the Plan shall not
exceed 97,500 shares, in each case, subject to adjustment in the same manner as
provided in Section 9 (relating to adjustments upon changes in capital structure
and other corporate transactions). To the extent required for exemption under
Section 162(m) of the Code, any options that are cancelled or repriced shall not
again be available for grant under this maximum share limit.
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6. Covenants of the Company.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options unless and until such authority is obtained.
7. Use of Proceeds From Stock.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
8. Miscellaneous.
(a) The Board or the Committee shall have the power to accelerate the
time at which an option may first be exercised or the time during which an
option or any part thereof will vest pursuant to subparagraph 5(e),
notwithstanding the provisions in the option stating the time at which it may
first be exercised or the time during which it will vest; provided, however,
that the Board or Committee shall not exercise this power as a means of
circumventing the provisions of paragraph 9(b) hereof.
(b) Neither an optionee nor any person to whom an option is transferred
under subparagraph 5(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(c) Throughout the term of any option granted pursuant to the Plan, the
Company shall make available to the holder of such option, not later than one
hundred twenty (120) days after the close of each of the Company's fiscal years
during the option term, upon request, such financial and other information
regarding the Company as comprises the annual report to the shareholders of the
Company provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or option granted
pursuant thereto shall confer upon any eligible employee, consultant or director
or optionee any right to continue in the employ of the Company or any Affiliate
or to continue acting as a consultant or director or shall affect the right of
the Company or any Affiliate to terminate the employment or consulting
relationship or directorship of any eligible employee, consultant or director or
optionee with or without cause. In the event that an optionee is permitted or
otherwise entitled to take a leave of absence, the Company shall have the
unilateral right to (i) determine whether such leave of absence will be treated
as a termination of employment or relationship as consultant or director for
purposes
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of paragraph 5(g) hereof and corresponding provisions of any outstanding
options, and (ii) suspend or otherwise delay the time or times at which the
shares subject to the option would otherwise vest.
(e) To the extent that the aggregate fair market value (determined at
the time of grant) of stock with respect to which incentive stock options (as
defined in the Code) granted after 1986 are exercisable for the first time by
any optionee during any calendar year under all plans of the Company and its
Affiliates exceeds one hundred thousand dollars ($100,000), the options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Supplemental Stock Options.
9. Adjustments Upon Changes In Stock.
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then at the sole discretion of the Board
and to the extent permitted by applicable law: (i) any surviving corporation
shall assume any options outstanding under the Plan or shall substitute similar
options for those outstanding under the Plan, or (ii) such options shall
continue in full force and effect. In the event any surviving corporation
refuses to assume or continue such options, or to substitute similar options for
those outstanding under the Plan, then, with respect to options held by persons
then performing services as employees, consultants or directors for the Company,
the time during which such options may be exercised shall be accelerated and the
options terminated if not exercised prior to such event.
10. Amendment of the Plan.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 9 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for options under
the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan to the extent such modification requires shareholder
approval in order for the Plan to satisfy the requirements of Section 422(b) of
the Code.
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(iii) Modify the Plan in any other way if such modification
requires shareholder approval in order for the Plan to satisfy the requirements
of Section 422(b) of the Code.
(b) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee incentive stock
options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.
(c) Rights and obligations under any option granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the option was
granted and (ii) such person consents in writing.
11. Termination or Suspension of the Plan.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on December 31, 2001. No options may
be granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
12. Effective Date of Plan.
The Plan shall become effective as determined by the Board, but no
options granted under the Plan shall be exercisable unless and until the Plan
has been approved by the shareholders of the Company, and, if required, an
appropriate permit has been issued by the Commissioner of Corporations of the
State of California.
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