<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 2000
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
ADVANCED DIGITAL INFORMATION CORPORATION
(Exact name of Registrant as specified in its charter)
WASHINGTON 91-1618616
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11431 WILLOWS ROAD
P.O. BOX 97507
REDMOND, WASHINGTON 98073-9757
(Address of principal executive offices, including zip code)
ADVANCED DIGITAL INFORMATION CORPORATION
1999 INCENTIVE COMPENSATION PLAN
(Full title of the plan)
PETER H. VAN OPPEN
CHIEF EXECUTIVE OFFICER
ADVANCED DIGITAL INFORMATION CORPORATION
11431 WILLOWS ROAD
P.O. BOX 97507
REDMOND, WASHINGTON 98073-9757
(425) 881-8004
(Name, address and telephone number, including area code, of agent for service)
----------------------
COPY TO:
LINDA A. SCHOEMAKER
PERKINS COIE LLP
1201 THIRD AVENUE, 48TH FLOOR
SEATTLE, WASHINGTON 98101-3099
(206) 583-8888
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------ ---------------- -------------------- -------------------- --------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE REGISTRATION FEE
- ------------------------------------------ ---------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
COMMON STOCK, NO PAR VALUE SUBJECT TO 48,000 $33.625(2) $1,614,000.00(2) $426.10
OUTSTANDING OPTIONS
- ------------------------------------------ ---------------- -------------------- -------------------- --------------------
COMMON STOCK, NO PAR VALUE, NOT SUBJECT 1,952,000 $14.375(3) $28,060,000.00(3) $7,407.84
TO OUTSTANDING OPTIONS
- ------------------------------------------ ---------------- -------------------- -------------------- --------------------
TOTAL 2,000,000 $29,674,000.00 $7,833.94
- ------------------------------------------ ---------------- -------------------- -------------------- --------------------
</TABLE>
(1) Together with an indeterminate number of additional shares which may
be necessary to adjust the number of shares reserved for issuance
pursuant to the plan as the result of any future stock split, stock
dividend or similar adjustment of the Registrant's outstanding Common
Stock.
(2) Computed pursuant to Rule 457(h) of the Securities Act of 1933, as
amended. The proposed maximum offering price per share of $33.625
represents the exercise price of currently outstanding options.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended. The
calculation of the registration fee is based on a share price of
$14.375, which was the average of the high and low sales prices for
the common stock of the registrant on May 18, 2000.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") are hereby incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1999, filed on January 18, 2000, which contains
audited financial statements for the most recent fiscal year for which such
statements have been filed;
(b) The description of the Registrant's Common Stock
contained in the Registrant's Registration Statement on Form 10 filed on July
30, 1996 under Section 12(g) of the Exchange Act, including any amendments or
reports filed for the purpose of updating such description; and
(c) All other reports filed by the Registrant pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since the end of the fiscal year covered by the Annual Report
on Form 10-K referred to in (a) above.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof and prior to the
filing of a post-effective amendment which indicates that the securities
offered hereby have been sold or which deregisters the securities covered
hereby then remaining unsold, shall also be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof commencing
on the respective dates on which such documents are filed.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act authorize a court to award, or a corporation's board of
directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Section 10 of the Registrant's Restated Bylaws provides for
indemnification of the Registrant's directors, officers, employees and agents
to the maximum extent permitted by Washington law.
Section 23B.08.320 of the Washington Business Corporation Act
authorizes a corporation to limit a director's liability to the corporation or
its shareholders for monetary damages for acts or omissions as a director,
except in certain circumstances involving intentional misconduct, self-dealing
or illegal corporate loans or distributions, or any transactions from which
the director personally receives a benefit in money, property or services to
which the director is not entitled. Article 11 of the Registrant's Restated
Articles of Incorporation contains provisions implementing, to the fullest
extent permitted by Washington law, such limitations on a director's liability
to the Registrant and its shareholders.
The Registrant also maintains an insurance policy insuring its
directors and officers against liability for certain acts or omissions while
acting in their official capacities.
II-1
<PAGE>
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ----------------- -----------------------------------------------------------
<S> <C>
5.1 Opinion of Perkins Coie LLP regarding legality of the
Common Stock being registered
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Perkins Coie LLP (included in opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 Advanced Digital Information Corporation 1999 Incentive
Compensation Plan
</TABLE>
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this
Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above 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 Registrant pursuant
to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefits plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
<PAGE>
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Redmond, State of Washington, on the
22nd day of May, 2000.
ADVANCED DIGITAL INFORMATION CORPORATION
/s/ Peter H. van Oppen
--------------------------------------------
By: Peter H. van Oppen
Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby
authorizes Peter H. van Oppen and Charles H. Stonecipher, or either of them,
as attorneys-in-fact with full power of substitution, to execute in the name
and on the behalf of each person, individually and in each capacity stated
below, and to file, any and all post-effective amendments to this Registration
Statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below on the 22nd day of May, 2000.
SIGNATURE TITLE
/s/ Peter H. van Oppen Chief Executive Officer and Chairman of
- ------------------------------------ the Board (Principal Executive Officer)
Peter H. van Oppen
/s/ Jon Gacek Senior Vice President and Chief Financial
- ------------------------------------ Officer (Principal Financial and
Jon Gacek Accounting Officer)
/s/ Tom A. Alberg Director
- ------------------------------------
Tom A. Alberg
/s/ Christopher T. Bayley Director
- ------------------------------------
Christopher T. Bayley
/s/ Richard L. McCormick Director
- ------------------------------------
Richard L. McCormick
/s/ John W. Stanton Director
- ------------------------------------
John W. Stanton
/s/ Walter F. Walker Director
- ------------------------------------
Walter F. Walker
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------------------ -----------------------------------------------------------
<S> <C>
5.1 Opinion of Perkins Coie LLP regarding legality of the
Common Stock being registered
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Perkins Coie LLP (included in opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 Advanced Digital Information Corporation 1999 Incentive
Compensation Plan
</TABLE>
<PAGE>
EXHIBIT 5.1
PERKINS COIE LLP
1201 THIRD AVENUE, 48TH FLOOR, SEATTLE, WASHINGTON 98101-3099
TELEPHONE: 206 583-8888 FACSIMILE: 206 583-8500
May 22, 2000
Advanced Digital Information Corporation
11431 Willows Road
Redmond, WA 98073-9757
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to you in connection with the preparation of
a Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended ("the Act"), which you are filing with the
Securities and Exchange Commission with respect to 2,000,000 shares of Common
Stock, no par value (the "Shares"), pursuant to the Advanced Digital
Information Corporation 1999 Incentive Compensation Plan (the "Plan"). We have
examined the Registration Statement and such documents and records of the
Company and other documents as we have deemed necessary for the purpose of
this opinion.
Based upon and subject to the foregoing, we are of the opinion that
any original issuance Shares that may be issued pursuant to the Plan have been
duly authorized and that, upon the due execution by the Company and the
registration by its registrar of such Shares and the sale thereof by the
Company in accordance with the terms of the Plan, and the receipt of
consideration therefor in accordance with the terms of the Plan, such Shares
will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ PERKINS COIE LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated December 7, 1999
related to the financial statements and financial statement schedules, which
appears in Advanced Digital Information Corporation's Annual Report on Form
10-K for the year ended October 31, 1999.
/s/ PricewaterhouseCoopers LLP
Seattle, Washington
May 22, 2000
<PAGE>
EXHIBIT 99.1
ADVANCED DIGITAL INFORMATION CORPORATION
1999 STOCK INCENTIVE COMPENSATION PLAN
SECTION 1. PURPOSE
The purpose of the Advanced Digital Information Corporation 1999
Stock Incentive Compensation Plan (the "Plan") is to enhance the long-term
shareholder value of Advanced Digital Information Corporation, a Washington
corporation (the "Company"), by offering opportunities to selected persons to
participate in the Company's growth and success, and to encourage them to
remain in the service of the Company and its Related Corporations (as defined
in Section 2) and to acquire and maintain stock ownership in the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
"AWARD" means an award or grant made pursuant to the Plan, including,
without limitation, awards or grants of Stock Options or Stock Awards, or any
combination of the foregoing.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each
case as determined by the Plan Administrator, and its determination shall be
conclusive and binding.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMON STOCK" means the common stock, no par value, of the Company.
"CORPORATE TRANSACTION" means any of the following events:
(a) Consummation of any merger or consolidation of the Company
in which the Company is not the continuing or surviving corporation, or
pursuant to which shares of the Common Stock are converted into cash,
securities or other property, if following such merger or consolidation the
holders of the Company's outstanding voting securities immediately prior to
such merger or consolidation own less than 2/3 of the outstanding voting
securities of the surviving corporation;
(b) Consummation of any sale, lease, exchange or other transfer
in one transaction or a series of related transactions of all or substantially
all of the Company's assets other than a transfer of the Company's assets to a
majority-owned subsidiary corporation (as the term "subsidiary corporation" is
defined in Section 8.3) of the Company;
<PAGE>
(c) Approval by the holders of the Common Stock of any plan or
proposal for the liquidation or dissolution of the Company; or
(d) Acquisition by a person, within the meaning of Section
3(a)(9) or of Section 13(d)(3) (as in effect on the date of adoption of the
Plan) of the Exchange Act of a majority or more of the Company's outstanding
voting securities (whether directly or indirectly, beneficially or of record).
Ownership of voting securities shall take into account and shall include
ownership as determined by applying Rule 13d-3(d)(1)(i) (as in effect on the
date of adoption of the Plan) pursuant to the Exchange Act.
"DISABILITY," unless otherwise defined by the Plan Administrator,
means a mental or physical impairment of the Participant that is expected to
result in death or that has lasted or is expected to last for a continuous
period of 12 months or more and that causes the Participant to be unable, in
the opinion of the Company, to perform his or her duties for the Company or a
Related Corporation and to be engaged in any substantial gainful activity.
"EFFECTIVE DATE" has the meaning set forth in Section 17.
"ELIGIBLE DIRECTOR" means a member of the Board who is not also an
employee of the Company or any "parent corporation" or "subsidiary
corporation" (as those terms are defined in Section 8.3) of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" shall be as established in good faith by the Plan
Administrator or (a) if the Common Stock is listed on the Nasdaq National
Market, the average of the high and low per share sales prices for the Common
Stock as reported by the Nasdaq National Market for a single trading day or
(b) if the Common Stock is listed on the New York Stock Exchange or the
American Stock Exchange, the average of the high and low per share sales
prices for the Common Stock as such price is officially quoted in the
composite tape of transactions on such exchange for a single trading day. If
there is no such reported price for the Common Stock for the date in question,
then such price on the last preceding date for which such price exists shall
be determinative of Fair Market Value.
"GOOD REASON" means the occurrence of any of the following events or
conditions and the failure of the Successor Corporation to cure such event or
condition within 30 days after receipt of written notice from the Participant:
(a) a change in the Participant's status, title, position or
responsibilities (including reporting responsibilities) that, in the
Participant's reasonable judgment, represents a substantial reduction in the
status, title, position or responsibilities as in effect immediately prior
thereto; the assignment to the Participant of any duties or responsibilities
that, in the Participant's reasonable judgment, are materially inconsistent
with such status, title, position or responsibilities; or any removal of the
Participant from or failure to reappoint or reelect the Participant to any of
such positions, except in connection with the termination of the Participant's
employment for Cause, for Disability or as a result of his or her death, or by
the Participant other than for Good Reason;
(b) a reduction in the Participant's annual base salary;
<PAGE>
(c) the Successor Corporation's requiring the Participant
(without the Participant's consent) to be based at any place outside a 35-mile
radius of his or her place of employment prior to a Corporate Transaction,
except for reasonably required travel on the Successor Corporation's business
that is not materially greater than such travel requirements prior to the
Corporate Transaction;
(d) the Successor Corporation's failure to (i) continue in
effect any material compensation or benefit plan (or the substantial
equivalent thereof) in which the Participant was participating at the time of
a Corporate Transaction, including, but not limited to, the Plan, or (ii)
provide the Participant with compensation and benefits substantially
equivalent (in terms of benefit levels and/or reward opportunities) to those
provided for under each material employee benefit plan, program and practice
as in effect immediately prior to the Corporate Transaction;
(e) any material breach by the Successor Corporation of its
obligations to the Participant under the Plan or any substantially equivalent
plan of the Successor Corporation; or
(f) any purported termination of the Participant's employment or
service relationship for Cause by the Successor Corporation that is not in
accordance with the definition of Cause under the Plan.
"GRANT DATE" means the date on which the Plan Administrator completes
the corporate action relating to the grant of an Award and all conditions
precedent to the grant have been satisfied, provided that conditions to the
exercisability or vesting of Awards shall not defer the Grant Date.
"INCENTIVE STOCK OPTION" means an Option to purchase Common Stock
granted under Section 7 with the intention that it qualify as an "incentive
stock option" as that term is defined in Section 422 of the Code.
"NONQUALIFIED STOCK OPTION" means an Option to purchase Common Stock
granted under Section 7 other than an Incentive Stock Option.
"OPTION" means the right to purchase Common Stock granted under
Section 7.
"OPTION TERM" has the meaning set forth in Section 7.3.
"PARENT," except as otherwise provided in Section 8.3 in connection
with Incentive Stock Options, means any entity, whether now or hereafter
existing, that directly or indirectly controls the Company.
"PARTICIPANT" means (a) the person to whom an Award is granted; (b)
for a Participant who has died, the personal representative of the
Participant's estate, the person(s) to whom the Participant's rights under the
Award have passed by will or by the applicable laws of descent and
distribution, or the beneficiary designated in accordance with Section 11; or
(c) the person(s) to whom an Award has been transferred in accordance with
Section 11.
<PAGE>
"PLAN ADMINISTRATOR" means the Board or any committee or committees
designated by the Board or any person to whom the Board has delegated
authority to administer the Plan under Section 3.1.
"RETIREMENT" means retirement as of the individual's normal
retirement date under the Company's 401(k) Plan or other similar successor
plan applicable to salaried employees, unless otherwise defined by the Plan
Administrator from time to time for purposes of the Plan.
"RELATED CORPORATION" means any Parent or Subsidiary of the Company.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STOCK AWARD" means shares of Common Stock or units denominated in
Common Stock granted under Section 9, the rights of ownership of which may be
subject to restrictions prescribed by the Plan Administrator.
"SUBSIDIARY," except as otherwise provided in Section 8.3 in
connection with Incentive Stock Options, means any entity that is directly or
indirectly controlled by the Company.
"SUCCESSOR CORPORATION" has the meaning set forth in Section 13.3.
"TERMINATION DATE" has the meaning set forth in Section 7.6.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board and/or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board (a "Plan Administrator"). If and so long as
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange
Act, the Board shall consider in selecting the members of any committee acting
as Plan Administrator, with respect to any persons subject or likely to become
subject to Section 16 of the Exchange Act, the provisions regarding (a)
"outside directors" as contemplated by Section 162(m) of the Code and (b)
"nonemployee directors" as contemplated by Rule 16b-3 under the Exchange Act.
Notwithstanding the foregoing, the Board may delegate the responsibility for
administering the Plan with respect to designated classes of eligible persons
to different committees consisting of two or more members of the Board,
subject to such limitations as the Board deems appropriate. Committee members
shall serve for such term as the Board may determine, subject to removal by
the Board at any time. To the extent consistent with applicable law, the Board
may authorize one or more senior executive officer of the Company to grant
Awards to designated classes of eligible persons, within the limits
specifically prescribed by the Board.
3.2 ADMINISTRATION AND INTERPRETATION BY PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the
selection of individuals to be granted Awards, the type of Awards, the number
of shares of Common Stock subject to an Award, all terms, conditions,
restrictions and
<PAGE>
limitations, if any, of an Award and the terms of any instrument that
evidences the Award. The Plan Administrator shall also have exclusive
authority to interpret the Plan and the terms of any instrument evidencing the
Award and may from time to time adopt and change rules and regulations of
general application for the Plan's administration. The Plan Administrator's
interpretation of the Plan and its rules and regulations, and all actions
taken and determinations made by the Plan Administrator pursuant to the Plan,
shall be conclusive and binding on all parties involved or affected. The Plan
Administrator may delegate administrative duties to such of the Company's
officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 13.1,
the number of shares of Common Stock that shall be available for issuance
under the Plan shall be 2,000,000(1) shares.
Shares issued under the Plan shall be drawn from authorized and
unissued shares or shares now held or subsequently acquired by the Company.
4.2 LIMITATIONS
(a) Subject to adjustment from time to time as provided in
Section 13.1, not more than an aggregate of 200,000(2) shares shall be
available for issuance pursuant to grants of Stock Awards under the Plan.
(b) Subject to adjustment from time to time as provided in
Section 13.1, not more than 400,000(3) shares of Common Stock may be made
subject to Awards under the Plan to any individual in the aggregate in any one
fiscal year of the Company, except that the Company may make additional
one-time grants of up to 800,000(4) shares to newly hired individuals, such
limitation to be applied in a manner consistent with the requirements of, and
only to the extent required for compliance with, the exclusion from the
limitation on deductibility of compensation under Section 162(m) of the Code.
- -----------
(1) This number reflects the two-for-one split of the Company's Common
Stock approved on February 16, 2000, payable on March 13, 2000 to shareholders
of record as of March 1, 2000.
(2) This number reflects the two-for-one split of the Company's Common
Stock approved on February 16, 2000, payable on March 13, 2000 to shareholders
of record as of March 1, 2000.
(3) This number reflects the two-for-one split of the Company's Common
Stock approved on February 16, 2000, payable on March 13, 2000 to shareholders
of record as of March 1, 2000.
(4) This number reflects the two-for-one split of the Company's Common
Stock approved on February 16, 2000, payable on March 13, 2000 to shareholders
of record as of March 1, 2000.
<PAGE>
4.3 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Award
that cease to be subject to the Award (other than by reason of exercise or
payment of the Award to the extent it is exercised for or settled in vested
and nonforfeitable shares) shall again be available for issuance in connection
with future grants of Awards under the Plan; provided, however, that for
purposes of Section 4.2, any such shares shall be counted in accordance with
the requirements of Section 162(m) of the Code.
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and
employees of the Company and its Related Corporations as the Plan
Administrator from time to time selects. Awards may also be made to
consultants, agents, advisors and independent contractors who provide services
to the Company and its Related Corporations; provided, however, that such
Participants render bona fide services that are not in connection with the
offer and sale of the Company's securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the
Company's securities.
SECTION 6. AWARDS
6.1 FORM AND GRANT OF AWARDS
The Plan Administrator shall have the authority, in its sole
discretion, to determine the type or types of Awards to be made under the
Plan. Such Awards may include, but are not limited to, Incentive Stock
Options, Nonqualified Stock Options and Stock Awards. Awards may be granted
singly or in combination.
6.2 SETTLEMENT OF AWARDS
The Company may settle Awards through the delivery of shares of
Common Stock, cash payments, the granting of replacement Awards or any
combination thereof as the Plan Administrator shall determine. Any Award
settlement, including payment deferrals, may be subject to such conditions,
restrictions and contingencies as the Plan Administrator shall determine. The
Plan Administrator may permit or require the deferral of any Award payment,
subject to such rules and procedures as it may establish, which may include
provisions for the payment or crediting of interest, or dividend equivalents,
including converting such credits into deferred stock equivalents. The Plan
Administrator may at any time offer to buy out, for a payment in cash or
Common Stock, an Award previously granted based on such terms and conditions
as the Plan Administrator shall establish and communicate to the Participant
at the time such offer is made.
6.3 ACQUIRED COMPANY AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards
issued under other plans, or assume under the Plan awards issued under other
plans, if the other plans are or were plans of other acquired entities
("Acquired Entities") (or the parent of the Acquired Entity) and the new Award
is substituted, or the old award is assumed, by reason of a merger,
consolidation, acquisition of property or stock,
<PAGE>
reorganization or liquidation (the "Acquisition Transaction"). In the event
that a written agreement pursuant to which the Acquisition Transaction is
completed is approved by the Board and said agreement sets forth the terms and
conditions of the substitution for or assumption of outstanding awards of the
Acquired Entity, said terms and conditions shall be deemed to be the action of
the Plan Administrator without any further action by the Plan Administrator,
except as may be required for compliance with Rule 16b-3 under the Exchange
Act, and the persons holding such awards shall be deemed to be Participants.
SECTION 7. AWARDS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified
Stock Options, which shall be appropriately designated.
7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant Date. For Incentive Stock
Options granted to a more than 10% shareholder, the Option exercise price
shall be as specified in Section 8.2.
7.3 TERM OF OPTIONS
The term of each Option (the "Option Term") shall be as established
by the Plan Administrator or, if not so established, shall be ten years from
the Grant Date. For Incentive Stock Options, the maximum Option Term shall be
as specified in Sections 8.2 and 8.4.
7.4 EXERCISE OF OPTIONS
The Plan Administrator shall establish and set forth in each
instrument that evidences an Option the time at which, or the installments in
which, the Option shall vest and become exercisable, which provisions may be
waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option shall vest and
become exercisable according to the following schedule, which may be waived or
modified by the Plan Administrator at any time:
<TABLE>
<CAPTION>
PERIOD OF PARTICIPANT'S CONTINUOUS
EMPLOYMENT OR SERVICE WITH THE COMPANY OR
ITS RELATED CORPORATIONS FROM THE OPTION PERCENT OF TOTAL OPTION
GRANT DATE THAT IS VESTED AND EXERCISABLE
<S> <C>
After 1 year 25%
After 2 years 50%
After 3 years 75%
After 4 years 100%
</TABLE>
<PAGE>
The Plan Administrator may adjust the vesting schedule of an Option
held by a Participant who works less than "full-time" as that term is defined
by the Plan Administrator.
To the extent that an Option has vested and become exercisable, the
Option may be exercised from time to time by delivery to the Company of a
written stock option exercise agreement or notice, in a form and in accordance
with procedures established by the Plan Administrator, setting forth the
number of shares with respect to which the Option is being exercised, the
restrictions imposed on the shares purchased under such exercise agreement, if
any, and such representations and agreements as may be required by the Plan
Administrator, accompanied by payment in full as described in Section 7.5. An
Option may not be exercised for less than 100 shares at any one time (or the
lesser number of remaining shares covered by the Option).
7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid
in full to the Company by delivery of consideration equal to the product of
the Option exercise price and the number of shares purchased. Such
consideration must be paid in cash or by check or, unless the Plan
Administrator in its sole discretion determines otherwise, either at the time
the Option is granted or at any time before it is exercised, in any
combination of
(a) cash or check;
(b) tendering (either actually or, if and so long as the Common
Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by
attestation) shares of Common Stock already owned by the Participant for at
least six months (or any shorter period necessary to avoid a charge to the
Company's earnings for financial reporting purposes) having a Fair Market
Value on the day prior to the exercise date equal to the aggregate Option
exercise price;
(c) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (i) a brokerage
firm designated by the Company to deliver promptly to the Company the
aggregate amount of sale or loan proceeds to pay the Option exercise price and
any withholding tax obligations that may arise in connection with the exercise
and (ii) the Company to deliver the certificates for such purchased shares
directly to such brokerage firm, all in accordance with the regulations of the
Federal Reserve Board; or
(d) such other consideration as the Plan Administrator may
permit.
In addition, to assist a Participant (including a Participant who is
an officer or a director of the Company) in acquiring shares of Common Stock
pursuant to an Award granted under the Plan, the Plan Administrator, in its
sole discretion, may authorize, either at the Grant Date or at any time before
the acquisition of Common Stock pursuant to the Award, (i) the payment by a
Participant of a full-recourse promissory note, (ii) the payment by the
Participant of the purchase price, if any, of the Common Stock in
installments, or (iii) the guarantee by the Company of a full-recourse loan
obtained by the Participant from a third party. Subject to the foregoing, the
Plan Administrator shall in its sole discretion specify the terms of any
loans, installment payments or loan guarantees, including the interest rate
and terms of and security for repayment.
<PAGE>
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each
instrument that evidences an Option whether the Option shall continue to be
exercisable, and the terms and conditions of such exercise, if a Participant
ceases to be employed by, or to provide services to, the Company or its
Related Corporations, which provisions may be waived or modified by the Plan
Administrator at any time. If not so established in the instrument evidencing
the Option, the Option shall be exercisable according to the following terms
and conditions, which may be waived or modified by the Plan Administrator at
any time:
(a) Any portion of an Option that is not vested and exercisable
on the date of termination of the Participant's employment or service
relationship (the "Termination Date") shall expire on such date.
(b) Any portion of an Option that is vested and exercisable on
the Termination Date shall expire upon the earliest to occur of
(i) the last day of the Option Term;
(ii) if the Participant's Termination Date occurs for
reasons other than Disability, Retirement, Cause or death, the three-month
anniversary of such Termination Date;
(iii) if the Participant's Termination Date occurs by
reason of Disability, Retirement or death, the one-year anniversary of such
Termination Date.
Notwithstanding the foregoing, if the Participant dies after the
Termination Date while the Option is otherwise exercisable, the portion of the
Option that is vested and exercisable on such Termination Date shall expire
upon the earlier to occur of (y) the last day of the Option Term and (z) the
first anniversary of the date of death, unless the Plan Administrator
determines otherwise.
Also notwithstanding the foregoing, in case of termination of the
Participant's employment or service relationship for Cause, the Option shall
automatically expire upon first notification to the Participant of such
termination, unless the Plan Administrator determines otherwise. If a
Participant's employment or service relationship with the Company is suspended
pending an investigation of whether the Participant shall be terminated for
Cause, all the Participant's rights under any Option likewise shall be
suspended during the period of investigation.
A Participant's transfer of employment or service relationship
between or among the Company and its Related Corporations, or a change in
status from an employee to a consultant, agent, advisor or independent
contractor, shall not be considered a termination of employment or service
relationship for purposes of this Section 7. The effect of a Company-approved
leave of absence on the terms and conditions of an Option shall be determined
by the Plan Administrator, in its sole discretion.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock
Options shall be subject to the following additional terms and conditions:
<PAGE>
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and
all other stock option plans of the Company) exceeds $100,000, such portion in
excess of $100,000 shall be treated as a Nonqualified Stock Option. In the
event the Participant holds two or more such Options that become exercisable
for the first time in the same calendar year, such limitation shall be applied
on the basis of the order in which such Options are granted.
8.2 MORE THAN 10% SHAREHOLDERS
If an individual owns more than 10% of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the Grant Date and the Option Term shall not exceed five
years. The determination of more than 10% ownership shall be made in
accordance with Section 422 of the Code.
8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, "parent corporation" and
"subsidiary corporation" shall have the meanings attributed to those terms for
purposes of Section 422 of the Code.
8.4 TERM
Except as provided in Section 8.2, the Option Term shall not exceed
10 years.
8.5 EXERCISABILITY
An Option designated as an Incentive Stock Option shall cease to
qualify for favorable tax treatment as an Incentive Stock Option to the extent
it is exercised (if permitted by the terms of the Option) (a) more than three
months after the Termination Date for reasons other than death or Disability,
(b) more than one year after the Termination Date by reason of Disability, or
(c) after the Participant has been on leave of absence for more than 90 days,
unless the Participant's reemployment rights are guaranteed by statute or
contract.
For purposes of this Section 8.5, Disability shall mean "disability"
as that term is defined for purposes of Section 422 of the Code.
8.6 TAXATION OF INCENTIVE STOCK OPTIONS
In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Participant must hold the shares
issued upon the exercise of an Incentive Stock Option for two years after the
Grant Date and one year from the date of exercise. A Participant may be
subject to the alternative minimum tax at the time of exercise of an Incentive
Stock Option. The Participant shall give the Company prompt notice of any
disposition of shares
<PAGE>
acquired by the exercise of an Incentive Stock Option prior to the expiration
of such holding periods.
8.7 PROMISSORY NOTES
The amount of any promissory note delivered pursuant to Section 7.5
in connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator, but in no case less than the rate
required to avoid imputation of interest (taking into account any exceptions
to the imputed interest rules) for federal income tax purposes.
SECTION 9. STOCK AWARDS
9.1 GRANT OF STOCK AWARDS
The Plan Administrator is authorized to make Awards of Common Stock
or Awards denominated in units of Common Stock on such terms and conditions
and subject to such restrictions, if any (which may be based on continuous
service with the Company or the achievement of performance goals related to
profits, revenue or profit growth, profit-related return ratios, cash flow or
total shareholder return, where such goals may be stated in absolute terms or
relative to comparison companies), as the Plan Administrator shall determine,
in its sole discretion, which terms, conditions and restrictions shall be set
forth in the instrument evidencing the Award. The terms, conditions and
restrictions that the Plan Administrator shall have the power to determine
shall include, without limitation, the manner in which shares subject to Stock
Awards are held during the periods they are subject to restrictions and the
circumstances under which forfeiture of the Stock Award shall occur by reason
of termination of the Participant's employment or service relationship.
9.2 ISSUANCE OF SHARES
Upon the satisfaction of any terms, conditions and restrictions
prescribed in respect to a Stock Award, or upon the Participant's release from
any terms, conditions and restrictions of a Stock Award, as determined by the
Plan Administrator, the Company shall release, as soon as practicable, to the
Participant or, in the case of the Participant's death, to the personal
representative of the Participant's estate or as the appropriate court
directs, the appropriate number of shares of Common Stock.
9.3 WAIVER OF RESTRICTIONS
Notwithstanding any other provisions of the Plan, the Plan
Administrator may, in its sole discretion, waive the forfeiture period and any
other terms, conditions or restrictions on any Stock Award under such
circumstances and subject to such terms and conditions as the Plan
Administrator shall deem appropriate; provided, however, that the Plan
Administrator may not adjust performance goals for any Stock Award intended to
be exempt under Section 162(m) of the Code for the year in which the Stock
Award is settled in such a manner as would increase the amount of compensation
otherwise payable to a Participant.
<PAGE>
SECTION 10. AWARDS OF OPTIONS TO NONEMPLOYEE DIRECTORS
Notwithstanding any other provision of the Plan to the contrary,
grants to Eligible Directors shall be made only pursuant to the terms and
conditions set forth below.
10.1 ANNUAL GRANTS
Commencing with the Company's 2000 Annual Meeting of Shareholders,
each Eligible Director shall automatically receive a grant of an Option to
purchase 6000(5) shares of Common Stock immediately following each year's
Annual Meeting of Shareholders ("Annual Grants"). Annual Grants shall vest and
become exercisable upon the optionee's continued service as a director until
the next Annual Meeting of Shareholders after the Grant Date.
10.2 INITIAL GRANTS
Each Eligible Director shall automatically receive a grant of an
Option to purchase 24,000(6) shares of Common Stock immediately following his
or her initial election or appointment to the Board ("Initial Grants").
Initial Grants shall vest and become exercisable as follows: Options for
6,000(7) shares shall become exercisable on and after one year after the Grant
Date, and Options for an additional 6,000(8) shares shall become exercisable
on and after each of the three succeeding anniversaries of the Grant Date.
10.3 NONQUALIFIED STOCK OPTIONS; TERM OF OPTIONS
Options granted to an Eligible Director under the Plan shall
constitute Nonqualified Stock Options. The term of each Option granted under
this Section 10 shall be five years from the Grant Date.
10.4 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option granted under
this Section 10 shall be the Fair Market Value of the Common Stock on the
Grant Date.
- -----------
(5) This number reflects the two-for-one split of the Company's Common
Stock approved on February 16, 2000, payable on March 13, 2000 to shareholders
of record as of March 1, 2000.
(6) This number reflects the two-for-one split of the Company's Common
Stock approved on February 16, 2000, payable on March 13, 2000 to shareholders
of record as of March 1, 2000.
(7) This number reflects the two-for-one split of the Company's Common
Stock approved on February 16, 2000, payable on March 13, 2000 to shareholders
of record as of March 1, 2000.
(8) This number reflects the two-for-one split of the Company's Common
Stock approved on February 16, 2000, payable on March 13, 2000 to shareholders
of record as of March 1, 2000.
<PAGE>
10.5 POST-TERMINATION EXERCISES
In case of termination of the Participant's services other than by
reason of death or Cause, the Option shall be exercisable, to the extent of
the number of shares purchasable by the Participant at the date of such
termination, only within three months after the date the Participant ceases to
be a director of the Company if such termination is for reasons other than
Disability and only within one year if such termination is by reason of
Disability, but in no event later than the remaining term of the Option. Any
Option exercisable at the time of the Participant's death may be exercised, to
the extent of the number of shares purchasable by the Participant at the date
of the Participant's death, by the personal representative of the
Participant's estate entitled thereto at any time or from time to time within
one year after the date of death, but in no event later than the remaining
term of the Option. In case of termination of the Participant's services for
Cause, the Option shall automatically terminate upon first notification to the
Participant of such termination. If a Participant's services with the Company
are suspended pending an investigation of whether the Participant shall be
terminated for Cause, all the Participant's rights under any Option likewise
shall be suspended during the period of investigation.
10.6 CORPORATE TRANSACTION
In the event of a Corporate Transaction, each Option that is at the
time outstanding shall automatically accelerate so that each such Option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become 100% vested, except that such acceleration will not occur
if, in the opinion of the Company's accountants, it would render unavailable
"pooling of interests" accounting for a Corporate Transaction that would
otherwise qualify for such accounting treatment. All such Options not
exercised prior to that time shall terminate and cease to remain outstanding
immediately following the consummation of the Corporate Transaction.
10.7 AVAILABILITY OF SHARES
The Options provided for in this Section 10 are subject to the
availability of shares under the Plan. If at the date of any grant under this
Section 10 there are insufficient shares of Common Stock available to satisfy
the grants in whole, then the shares available shall be divided by the number
of Eligible Directors then entitled to a grant and each such Eligible Director
shall be granted an Option for that number of shares.
10.8 OTHER TERMS APPLICABLE
Except as otherwise provided in this Section 10, Options granted to
Eligible Directors shall be subject to the terms and conditions of the Plan
applicable to other Participants.
SECTION 11. WITHHOLDING
The Company may require the Participant to pay to the Company the
amount of any withholding taxes that the Company is required to withhold with
respect to the grant, vesting or exercise of any Award. Subject to the Plan
and applicable law, the Plan Administrator may, in its sole discretion, permit
the Participant to satisfy withholding obligations, in whole or in part, (a)
by paying cash, (b) by electing to have the Company withhold shares of Common
Stock (up to the minimum required federal tax withholding rate) or (c) by
transferring to the Company shares of
<PAGE>
Common Stock (already owned by the Participant for the period necessary to
avoid a charge to the Company's earnings for financial reporting purposes), in
such amounts as are equivalent to the Fair Market Value of the withholding
obligation. The Company shall have the right to withhold from any Award or any
shares of Common Stock issuable pursuant to an Award or from any cash amounts
otherwise due or to become due from the Company to the Participant an amount
equal to such taxes. The Company may also deduct from any Award any other
amounts due from the Participant to the Company or a Related Corporation.
SECTION 12. ASSIGNABILITY
Awards granted under the Plan and any interest therein may not be
assigned, pledged or transferred by the Participant and may not be made
subject to attachment or similar proceedings otherwise than by will or by the
applicable laws of descent and distribution, and, during the Participant's
lifetime, such Awards may be exercised only by the Participant.
Notwithstanding the foregoing, and to the extent permitted by Section 422 of
the Code, the Plan Administrator, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit a Participant to
designate a beneficiary who may exercise the Award or receive compensation
under the Award after the Participant's death; provided, however, that any
Award so assigned or transferred shall be subject to all the same terms and
conditions contained in the instrument evidencing the Award.
SECTION 13. ADJUSTMENTS
13.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock
dividend, stock split, spin-off, combination or exchange of shares,
recapitalization, merger, consolidation, distribution to shareholders other
than a normal cash dividend, or other change in the Company's corporate or
capital structure results in (a) the outstanding shares, or any securities
exchanged therefor or received in their place, being exchanged for a different
number or class of securities of the Company or of any other corporation or
(b) new, different or additional securities of the Company or of any other
corporation being received by the holders of shares of Common Stock of the
Company, then the Plan Administrator shall make proportional adjustments in
(i) the maximum number and kind of securities subject to the Plan as set forth
in Section 4.1 and the maximum number and kind of securities that may be made
subject to Stock Awards and to Awards to any individual as set forth in
Sections 4.2, 10.1 and 10.2 and (ii) the number and kind of securities that
are subject to any outstanding Award and the per share price of such
securities, without any change in the aggregate price to be paid therefor. The
determination by the Plan Administrator as to the terms of any of the
foregoing adjustments shall be conclusive and binding. Notwithstanding the
foregoing, a dissolution or liquidation of the Company or a Corporate
Transaction shall not be governed by this Section 13.1 but shall be governed
by Sections 13.2 and 13.3, respectively.
13.2 DISSOLUTION OR LIQUIDATION
In the event of the proposed dissolution or liquidation of the
Company, the Plan Administrator shall notify each Participant as soon as
practicable prior to the effective date of such proposed transaction. The Plan
Administrator in its discretion may permit a Participant to exercise an Option
until ten days prior to such transaction with respect to all vested and
exercisable shares
<PAGE>
of Common Stock covered thereby and with respect to such number of unvested
shares as the Plan Administrator shall determine. In addition, the Plan
Administrator may provide that any forfeiture provision or Company repurchase
option applicable to any Award shall lapse as to such number of shares as the
Plan Administrator shall determine, contingent upon the occurrence of the
proposed dissolution or liquidation at the time and in the manner
contemplated. To the extent an Option has not been previously exercised, the
Option shall terminate automatically immediately prior to the consummation of
the proposed action. To the extent a forfeiture provision applicable to a
Stock Award has not been waived by the Plan Administrator, the Stock Award
shall be forfeited automatically immediately prior to the consummation of the
proposed action.
13.3 CORPORATE TRANSACTION
13.3.1 OPTIONS
In the event of a Corporate Transaction, except as otherwise provided
in the instrument evidencing the Award, and except for Options granted
pursuant to Section 10, each outstanding Option shall be assumed or continued
or an equivalent option or right substituted by the surviving corporation, the
successor corporation or its parent corporation, as applicable (the "Successor
Corporation"). In the event that the Successor Corporation refuses to assume,
continue or substitute for the Option, the Participant shall fully vest in and
have the right to exercise the Option as to all of the shares of Common Stock
subject thereto, including shares as to which the Option would not otherwise
be vested or exercisable. If an Option will become fully vested and
exercisable in lieu of assumption or substitution in the event of a Corporate
Transaction, the Plan Administrator shall notify the Participant in writing or
electronically that the Option shall be fully vested and exercisable for a
specified time period after the date of such notice, and the Option shall
terminate upon the expiration of such period, in each case conditioned on the
consummation of the Corporate Transaction. For the purposes of this Section
13.3, the Option shall be considered assumed if, following the Corporate
Transaction, the option or right confers the right to purchase or receive, for
each share of Common Stock subject to the Option, immediately prior to the
Corporate Transaction, the consideration (whether stock, cash, or other
securities or property) received in the Corporate Transaction by holders of
Common Stock for each share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares); provided,
however, that if such consideration received in the Corporate Transaction is
not solely common stock of the Successor Corporation, the Plan Administrator
may, with the consent of the Successor Corporation, provide for the
consideration to be received upon the exercise of the Option, for each share
of Common Stock subject thereto, to be solely common stock of the Successor
Corporation equal in fair market value to the per share consideration received
by holders of Common Stock in the Corporate Transaction. All Options shall
terminate and cease to remain outstanding immediately following the
consummation of the Corporate Transaction, except to the extent assumed by the
Successor Corporation. Any such Awards that are assumed or replaced in the
Corporate Transaction and do not otherwise accelerate at that time shall be
accelerated in the event the Participant's employment or services should
subsequently terminate within two years following such Corporate Transaction,
unless such employment or services are terminated by the Successor Corporation
for Cause or by the Participant voluntarily without Good Reason.
Notwithstanding the foregoing, no Incentive Stock Option shall become
exercisable pursuant to this Section 13.1 without the Participant's consent,
if the result would be to cause such Option not to be treated as an
<PAGE>
Incentive Stock Option (whether by reason of the annual dollar limitation
described in Section 8.1 or otherwise).
13.3.2 STOCK AWARDS
In the event of a Corporate Transaction, except as otherwise provided
in the instrument evidencing the Award, the vesting of shares subject to Stock
Awards shall accelerate, and the forfeiture provisions to which such shares
are subject shall lapse, if and to the same extent that the vesting of
outstanding Options accelerates in connection with the Corporate Transaction.
If unvested Options are to be assumed, continued or substituted by a Successor
Corporation without acceleration upon the occurrence of a Corporate
Transaction, the forfeiture provisions to which such Stock Awards are subject
shall continue with respect to shares of the Successor Corporation that may be
issued in exchange for such shares.
Any such Awards that are assumed or replaced in the Corporate
Transaction, other than a Related Party Transaction, and do not otherwise
accelerate at that time shall be accelerated in the event that the
Participant's employment or service relationship should subsequently terminate
within two years following such Corporate Transaction, unless such employment
or service relationship is terminated by the Successor Corporation for Cause
or by the Participant voluntarily without Good Reason; provided, that such
acceleration shall not occur if, in the opinion of the Company's outside
accountants, such acceleration would render unavailable "pooling of interests"
accounting treatment for any Corporate Transaction for which pooling of
interests accounting treatment is sought by the Company.
"Related Party Transaction" means (a) a merger of the Company in
which the holders of shares of Common Stock immediately prior to the merger
hold at least a majority of the shares of Common Stock in the surviving
corporation immediately after the merger, (b) a mere reincorporation of the
Company or (c) a transaction undertaken for the sole purpose of creating a
holding company.
13.4 FURTHER ADJUSTMENT OF AWARDS
Subject to Sections 13.2 and 13.3, the Plan Administrator shall have
the discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to the Participants, with
respect to Awards. Such authorized action may include (but shall not be
limited to) establishing, amending or waiving the type, terms, conditions or
duration of, or restrictions on, Awards so as to provide for earlier, later,
extended or additional time for exercise, lifting restrictions and other
modifications, and the Plan Administrator may take such actions with respect
to all Participants, to certain categories of Participants or only to
individual Participants. The Plan Administrator may take such action before or
after granting Awards to which the action relates and before or after any
public announcement with respect to such sale, merger, consolidation,
reorganization, liquidation or change in control that is the reason for such
action.
<PAGE>
13.5 LIMITATIONS
The grant of Awards shall in no way affect the Company's right 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.
13.6 FRACTIONAL SHARES
In the event of any adjustment in the number of shares covered by any
Award, each such Award shall cover only the number of full shares resulting
from such adjustment.
SECTION 14. AMENDMENT AND TERMINATION OF PLAN
14.1 AMENDMENT OF PLAN
The Plan may be amended only by the Board in such respects as it
shall deem advisable; provided, however, that to the extent required for
compliance with Section 422 of the Code or any applicable law or regulation,
shareholder approval shall be required for any amendment that would (a)
increase the total number of shares available for issuance under the Plan, (b)
modify the class of persons eligible to receive Options, or (c) otherwise
require shareholder approval under any applicable law or regulation. Any
amendment made to the Plan that would constitute a "modification" to Incentive
Stock Options outstanding on the date of such amendment shall not, without the
consent of the Participant, be applicable to such outstanding Incentive Stock
Options but shall have prospective effect only.
14.2 TERMINATION OF PLAN
The Board may suspend or terminate the Plan at any time. The Plan
shall have no fixed expiration date; provided, however, that no Incentive
Stock Options may be granted more than ten years after the later of (a) the
Plan's adoption by the Board and (b) the adoption by the Board of any
amendment to the Plan that constitutes the adoption of a new plan for purposes
of Section 422 of the Code.
14.3 CONSENT OF PARTICIPANT
The amendment or termination of the Plan or the amendment of an
outstanding Award shall not, without the Participant's consent, impair or
diminish any rights or obligations under any Award theretofore granted to the
Participant under the Plan. Any change or adjustment to an outstanding
Incentive Stock Option shall not, without the consent of the Participant, be
made in a manner so as to constitute a "modification" that would cause such
Incentive Stock Option to fail to continue to qualify as an Incentive Stock
Option. Notwithstanding the foregoing, any adjustments made pursuant to
Section 12 shall not be subject to these restrictions.
<PAGE>
SECTION 15. GENERAL
15.1 EVIDENCE OF AWARDS
Awards granted under the Plan shall be evidenced by a written
instrument that shall contain such terms, conditions, limitations and
restrictions as the Plan Administrator shall deem advisable and that are not
inconsistent with the Plan.
15.2 NO INDIVIDUAL RIGHTS
Nothing in the Plan or any Award granted under the Plan shall be
deemed to constitute an employment contract or confer or be deemed to confer
on any Participant any right to continue in the employ of, or to continue any
other relationship with, the Company or any Related Corporation or limit in
any way the right of the Company or any Related Corporation to terminate a
Participant's employment or other relationship at any time, with or without
Cause.
15.3 REGISTRATION
Notwithstanding any other provision of the Plan, the Company shall
have no obligation to issue or deliver any shares of Common Stock under the
Plan or make any other distribution of benefits under the Plan unless such
issuance, delivery or distribution would comply with all applicable laws
(including, without limitation, the requirements of the Securities Act), and
the applicable requirements of any securities exchange or similar entity.
The Company shall be under no obligation to any Participant to
register for offering or resale or to qualify for exemption under the
Securities Act, or to register or qualify under state securities laws, any
shares of Common Stock, security or interest in a security paid or issued
under, or created by, the Plan, or to continue in effect any such
registrations or qualifications if made.
To the extent that the Plan or any instrument evidencing an Award
provides for issuance of stock certificates to reflect the issuance of shares
of Common Stock, the issuance may be effected on a noncertificated basis, to
the extent not prohibited by applicable law or the applicable rules of any
stock exchange.
15.4 NO RIGHTS AS A SHAREHOLDER
No Option or Stock Award denominated in units shall entitle the
Participant to any cash dividend, voting or other right of a shareholder
unless and until the date of issuance under the Plan of the shares that are
the subject of such Award.
15.5 COMPLIANCE WITH LAWS AND REGULATIONS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator, in its sole discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to
Participants who are officers or directors subject to Section 16 of the
Exchange Act without so restricting, limiting or conditioning the Plan with
respect to other Participants. Additionally, in interpreting and applying the
provisions of the Plan, any Option granted as an Incentive Stock
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Option pursuant to the Plan shall, to the extent permitted by law, be
construed as an "incentive stock option" within the meaning of Section 422 of
the Code.
15.6 PARTICIPANTS IN FOREIGN COUNTRIES
The Plan Administrator shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company
or its Related Corporations may operate to assure the viability of the
benefits from Awards granted to Participants employed in such countries and to
meet the objectives of the Plan.
15.7 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing
contained herein shall require the Company to segregate any monies or other
property, or shares of Common Stock, or to create any trusts, or to make any
special deposits for any immediate or deferred amounts payable to any
Participant, and no Participant shall have any rights that are greater than
those of a general unsecured creditor of the Company.
15.8 SEVERABILITY
If any provision of the Plan or any Award is determined to be
invalid, illegal or unenforceable in any jurisdiction, or as to any person, or
would disqualify the Plan or any Award under any law deemed applicable by the
Plan Administrator, such provision shall be construed or deemed amended to
conform to applicable laws, or, if it cannot be so construed or deemed amended
without, in the Plan Administrator's determination, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, person or Award, and the remainder of the Plan and any such
Award shall remain in full force and effect.
15.9 CHOICE OF LAW
The Plan and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the laws of the United States,
shall be governed by the laws of the State of Washington without giving effect
to principles of conflicts of laws.
SECTION 17. EFFECTIVE DATE
The Effective Date is the date on which the Plan is adopted by the
Board, so long as it is approved by the Company's shareholders at any time
within 12 months of such adoption.
