<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
ITRON, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 91-1011792
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
2818 N. SULLIVAN ROAD
SPOKANE, WASHINGTON 99216-1897
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
ITRON, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
(FULL TITLE OF THE PLAN)
--------------------------
DAVID G. REMINGTON
CHIEF FINANCIAL OFFICER
ITRON, INC.
2818 N. SULLIVAN ROAD
SPOKANE, WASHINGTON 99216-1897
(509) 924-9900
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------------
COPY TO:
CHARLES J. KATZ, JR.
PERKINS COIE
1201 THIRD AVENUE, 40TH FLOOR
SEATTLE, WASHINGTON 98101-3099
(206) 583-8888
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
SHARE(1) PRICE(1)
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<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share(2) 80,000 shares(3) $54.50 $4,360,000 $1,504
==================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating
the amount of the registration fee. The price per share is estimated to
be $54.50 based on the average of the high ($55.00) and low ($54.00)
sales prices for the Common Stock in the over-the-counter market on May
22, 1996, as reported by the Nasdaq National Market.
(2) Including associated Common Stock Purchase Rights.
(3) Together with an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant
to the 1996 Employee Stock Purchase Plan as the result of any future
stock split, stock dividend or similar adjustment of the outstanding
Common Stock of the Company.
<PAGE> 2
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995 filed with the Securities and Exchange Commission (the
"Commission"), which contains audited financial statements for the most recent
year for which such statements have been filed;
(b) 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
referred to in (a) above; and
(c) The description of the Registrant's Common Stock contained
in the Registrant's Registration Statement on Form 8-A filed with the Commission
on September 16, 1993, under Section 12(g) of the Exchange Act, including any
amendments or reports filed for the purpose of updating such description.
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 all 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. Certain of the directors of the
Registrant, who are affiliated with principal shareholders of the Registrant,
also may be indemnified by such shareholders against liability they may incur
in their capacity as a director of the Registrant, including pursuant to a
liability insurance policy for such purpose.
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 transaction from which the
director personally receives a benefit in money, property or services to which
the director is not legally entitled. Article 9 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 has entered into an Indemnification Agreement with each
of its executive officers and directors in which the Registrant agrees to hold
harmless and indemnify the officer or director to the full extent permitted by
Washington law. In addition, the Registrant agrees to indemnify the officer or
director against any and all losses, claims, damages, liabilities or expenses
incurred in connection with any actual, pending or threatened action, suit,
claim or proceeding, whether civil, criminal, administrative or investigative
and whether formal or informal, in which the officer or director is, was or
becomes involved by reason of the fact that the officer or director is or was a
director, officer, employee or agent of the Registrant, or that being or having
been such a director, officer, employee or agent, such director is or was
serving at the request of the Registrant as a director, officer, employee,
trustee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee
benefit plan, whether the basis of such proceeding is alleged action (or
inaction) by the officer or director in an official capacity as a director,
officer, employee, trustee or agent or in any other capacity while serving as a
director, officer, employee, trustee or agent. The officer or director is not
indemnified for any action, suit, claim or proceeding instituted by or at the
direction of the
II-1
<PAGE> 3
officer or director unless such action, suit, claim or proceeding is or was
authorized by the Registrant's Board of Directors or unless the action is to
enforce the provisions of the Indemnification Agreement.
No indemnity pursuant to the Indemnification Agreements shall be
provided by the Registrant on account of any suit in which a final, unappealable
judgment is rendered against an officer or director for an accounting of profits
made from the purchase or sale by the officer or director of securities of the
Registrant in violation of the provisions of Section 16(b) of the Exchange Act,
or for damages that have been paid directly to the officer or director by an
insurance carrier under a policy of directors' and officers' liability
insurance maintained by the Registrant.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
5.1 Opinion of Perkins Coie regarding legality of the Common Stock being registered
23.1 Consent of Deloitte & Touche LLP (see page II-6)
23.2 Consent of Perkins Coie (included in opinion filed as Exhibit 5.1)
24.1 Power of Attorney (see Signature Page)
99.1 1996 Employee Stock Purchase 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 with or furnished to the
Commission 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 benefit 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> 4
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 of controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer of 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> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Spokane, State of Washington, on the 28th day of
May, 1996.
ITRON, INC.
By: /s/ David G. Remington
--------------------------------------
David G. Remington
Chief Financial Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
and appoints Johnny M. Humphreys and David G. Remington, and each of them, with
full power of substitution and full power to act without the other, as his or
her true and lawful attorney-in-fact and agent to act in his or her name, place
and stead and to execute in the name and on behalf of each person, individually
and in each capacity stated below, and to file, any and all amendments to this
Registration Statement, including any and all post-effective amendments with the
Securities and Exchange Commission or any regulatory authority.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated below on the 28th day of May, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Paul A. Redmond Chairman of the Board of Directors
--------------------------------------
Paul A. Redmond
/s/ Johnny M. Humphreys President, Chief Executive Officer and Director
-------------------------------------- (Principal Executive Officer)
Johnny M. Humphreys
/s/ David G. Remington Chief Financial Officer
-------------------------------------- (Principal Financial and Accounting Officer)
David G. Remington
/s/ Michael B. Bracy Director
--------------------------------------
Michael B. Bracy
/s/ Ted C. DeMerritt Director
--------------------------------------
Ted C. DeMerritt
/s/ Jon E. Eliassen Director
--------------------------------------
Jon E. Eliassen
/s/ Mary Ann Peters Director
--------------------------------------
Mary Ann Peters
/s/ Stuart E. White Director
--------------------------------------
Stuart E. White
/s/ Graham M. Wilson Director
--------------------------------------
Graham M. Wilson
</TABLE>
II-4
<PAGE> 6
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Itron, Inc. on Form S-8 of our reports dated February 2, 1996, appearing in and
incorporated by reference in the Annual Report on Form 10-K of Itron, Inc. for
the year ended December 31, 1995.
DELOITTE & TOUCHE LLP
Seattle, Washington
May 24, 1996
II-5
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
5.1 Opinion of Perkins Coie regarding legality of the Common Stock being registered
23.1 Consent of Deloitte & Touche LLP (see page II-5)
23.2 Consent of Perkins Coie (included in Exhibit 5.1)
24.1 Power of Attorney (see Signature Page)
99.1 1996 Employee Stock Purchase Plan
</TABLE>
II-6
<PAGE> 1
EXHIBIT 5.1
[Perkins Coie Letterhead]
May 28, 1996
Itron, Inc.
2818 N. Sullivan Rd.
Spokane, WA 99216-1897
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen and Ladies:
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 80,000 shares of Common
Stock, $.01 par value per share (the "Shares"), which may be issued under the
Itron, Inc. 1996 Employee Stock Purchase 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 the
Shares that may be issued upon the exercise of stock options granted or to be
granted pursuant to the Plan have been duly authorized and that, upon the due
execution by the Company and the registration by its registrars of the Shares
and the sale thereof by the Company in accordance with the terms of the Plan,
and the receipt of the consideration therefor in accordance with the terms of
the Plan, the 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
LAS:lcp
<PAGE> 1
EXHIBIT 99.1
ITRON, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE
The purposes of the Itron, Inc. 1996 Employee Stock Purchase Plan (the
"Plan") are to (a) assist employees of Itron, Inc., a Washington corporation
(the "Company"), and its parent and subsidiary corporations in acquiring a stock
ownership interest in the Company pursuant to a plan that is intended to qualify
as an "employee stock purchase plan" under Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"), and (b) help employees provide for their
future security and to encourage them to remain in the employment of the Company
and its subsidiary corporations.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below.
"BOARD" means the Board of Directors of the Company.
"CHANGE NOTICE DATE" has the meaning set forth in Section 9.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" means Itron, Inc., a Washington corporation.
"DESIGNATED CORPORATION" has the meaning set forth under the definition
of "Eligible Employee" in this Section 2.
"ELIGIBLE COMPENSATION" means all regular cash compensation, including
overtime, cash bonuses and commissions. Regular cash compensation does not
include severance pay, hiring and relocation bonuses, pay in lieu of vacations,
sick leave or any other special payments.
"ELIGIBLE EMPLOYEE" means any employee of the Company (or any Parent
Corporation or Subsidiary Corporation designated by the Plan Administrator (a
<PAGE> 2
"Designated Corporation")) who is in the employ of the Company (or any such
Designated Corporation) on one or more Offering Dates and who meets the
following criteria:
(a) the employee does not, immediately after the Option is
granted, own stock (as defined by Code Sections 423(b)(3) and 424(d)) possessing
5% or more of the total combined voting power or value of all classes of stock
of the Company or of a Parent Corporation or Subsidiary Corporation of the
Company;
(b) the employee's customary employment is not 20 hours or
fewer per week;
(c) the employee's customary employment is for more than five
months in any calendar year; and
(d) the employee has been employed for at least three months.
If the Company permits any employee of a Designated Corporation to
participate in the Plan, then all employees of that Designated Corporation who
meet the requirements of this paragraph shall also be considered Eligible
Employees.
"ESPP BROKER" has the meaning set forth in Section 10.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"OFFERING" has the meaning set forth in Section 5.1.
"OFFERING DATE" means the first day of an Offering.
"OFFERING PERIOD" has the meaning set forth in Section 5.1.
"OPTION" means an option granted under the Plan to an Eligible Employee
to purchase shares of Stock.
"PARENT CORPORATION" means any corporation, other than the Company, in
an unbroken chain of corporations ending with the Company if, at the time of the
granting of the Option, each of the corporations, other than the Company, owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
"PARTICIPANT" means any Eligible Employee who has elected to
participate in an Offering in accordance with the procedures set forth in
Section 6.1 and who has
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<PAGE> 3
not withdrawn from the Offering or whose participation in the Offering is not
terminated.
"PLAN" means the Itron, Inc. 1996 Employee Stock Purchase Plan.
"PLAN ADMINISTRATOR" means any committee of the Board designated to
administer the Plan under Section 3.1.
"PURCHASE DATE" means the last day of each Purchase Period.
"PURCHASE PERIOD" has the meaning set forth in Section 5.2.
"PURCHASE PRICE" has the meaning set forth in Section 8.
"STOCK" means the Common Stock, no par value, of the Company.
"SUBSCRIPTION DATE" means the last regular business day prior to an
Offering Date.
"SUBSIDIARY CORPORATION" means any corporation, other than the Company,
in an unbroken chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations, other than the last
corporation in the unbroken chain, owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Compensation Committee of the
Board, except to the extent that the Board appoints another committee or
committees (which term includes subcommittees) consisting of one or more members
of the Board to administer the Plan. Committee members shall serve for such
terms as the Board may determine, subject to removal by the Board at any time.
The administration of the Plan with respect to officers and directors of the
Company who are subject to Section l6 of the Exchange Act with respect to
securities of the Company shall comply with the requirements of Rule 16b-3 under
Section 16(b) of the Exchange Act as then in effect.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Subject to the provisions of the Plan, the Plan Administrator shall
have exclusive authority, in its discretion, to determine all matters relating
to Options granted under the Plan, including all terms, conditions, restrictions
and limitations of
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<PAGE> 4
Options; provided, however, that all Participants granted Options pursuant to
the Plan shall have the same rights and privileges within the meaning of Code
Section 423(b)(5). The Plan Administrator shall also have exclusive authority to
interpret the Plan 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 or employees as it so determines.
SECTION 4. STOCK SUBJECT TO PLAN
Subject to adjustment from time to time as provided in Section 21, a
maximum of 300,000 shares of Stock shall be available for issuance under the
Plan. Shares issued under the Plan shall be drawn from authorized and unissued
shares or shares now held or subsequently acquired by the Company. Any shares of
Stock that have been made subject to an Option that cease to be subject to the
Option (other than by reason of exercise of the Option), including, without
limitation, in connection with the cancellation or termination of the Option,
shall again be available for issuance in connection with future grants of
Options under the Plan.
SECTION 5. OFFERING DATES
5.1 OFFERING PERIODS
Except as otherwise set forth below, the Plan shall be implemented by a
series of Offerings (each, an "Offering"). Offerings shall commence on January 1
and July 1 of each year and end on the next June 30 and December 31,
respectively, occurring thereafter. Notwithstanding the foregoing, the Plan
Administrator may establish (a) a different term for one or more Offerings and
(b) different commencing and ending dates for such Offerings; provided, however,
that an Offering Period (the "Offering Period") may not exceed five years; and
provided further that if the Purchase Price may be less than 85% of the fair
market value of the Stock on the Purchase Date, the Offering Period may not
exceed 27 months. An employee who becomes eligible to participate in the Plan
after an Offering Period has commenced shall not be eligible to participate in
such Offering but may participate in any subsequent Offering, provided that such
employee is still an Eligible Employee as of the commencement of any such
subsequent Offering. Eligible Employees may not participate in more than one
Offering at a time. In the event the first or the last day of an Offering Period
is not a regular business day, then the first day of the Offering Period shall
be deemed to be
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<PAGE> 5
the next regular business day and the last day of the Offering Period shall be
deemed to be the last preceding regular business day.
5.2 PURCHASE PERIODS
Each Offering Period shall consist of two consecutive Purchase Periods
(each, a "Purchase Period"). The last day of each Purchase Period shall be the
Purchase Date for such Purchase Period. Purchase Periods commencing on January
1, April 1, July 1 and October 1 shall end on the next March 31, June 30,
September 30 and December 31, respectively. Notwithstanding the foregoing, the
Plan Administrator may establish (a) a different term for one or more Purchase
Periods and (b) different commencing dates and Purchase Dates for any such
Purchase Period. In the event the first or last day of a Purchase Period is not
a regular business day, then the first day of the Purchase Period shall be
deemed to be the next regular business day and the last day of the Purchase
Period shall be deemed to be the last preceding regular business day.
SECTION 6. PARTICIPATION IN THE PLAN
6.1 INITIAL PARTICIPATION
An Eligible Employee shall become a Participant on the first Offering
Date after satisfying the eligibility requirements and delivering to the
Company's payroll office not later than the last business day before such
Offering Date (the "Subscription Date") a subscription agreement indicating the
Eligible Employee's election to participate in the Plan and authorizing payroll
deductions. An Eligible Employee who does not deliver a subscription agreement
to the Company's payroll office on or before the Subscription Date shall not
participate in the Plan for that Offering Period or for any subsequent Offering
Period, unless such Eligible Employee subsequently enrolls in the Plan by filing
a subscription agreement with the Company by the Subscription Date for such
subsequent Offering Period. The Plan Administrator may, from time to time,
change the Subscription Date as deemed advisable by the Plan Administrator in
its sole discretion for the proper administration of the Plan.
6.2 CONTINUED PARTICIPATION
A Participant shall automatically participate in the next Offering
Period until such time as such Participant withdraws from the Plan pursuant to
Section 11.2 or terminates employment as provided in Section 13. If a
Participant withdraws from an Offering pursuant to Section 11.1, the Participant
is not required to file any additional subscription agreements for the next
subsequent Offering in order to continue participation in the Plan. If a
Participant is automatically withdrawn from an Offering
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<PAGE> 6
at the end of a Purchase Period pursuant to Section 12, then the Participant
shall automatically participate in the Offering Period commencing on the next
regular business day.
SECTION 7. LIMITATIONS ON RIGHT TO PURCHASE SHARES
7.1 $25,000 LIMITATION
No Participant shall be entitled to purchase Stock under the Plan (or
any other employee stock purchase plan that is intended to meet the requirements
of Code Section 423 sponsored by the Company, a Parent Corporation or a
Subsidiary Corporation) at a rate that exceeds $25,000 in fair market value,
determined as of the Offering Date for each Offering Period (or such other limit
as may be imposed by the Code), for each calendar year in which a Participant
participates in the Plan (or any other employee stock purchase plan described in
this Section 7.1).
7.2 PRO RATA ALLOCATION
In the event the number of shares of Stock that might be purchased by
all Participants in the Plan exceeds the number of shares of Stock available in
the Plan, the Plan Administrator shall make a pro rata allocation of the
remaining whole shares of Stock in as uniform a manner as shall be practicable
and as the Plan Administrator shall determine to be equitable. In no event shall
fractional shares be issued.
SECTION 8. PURCHASE PRICE
The purchase price (the "Purchase Price") at which Stock may be
acquired in an Offering pursuant to the exercise of all or any portion of an
Option granted under the Plan shall be 85% of the lesser of (a) the fair market
value of the Stock on the Offering Date of such Offering and (b) the fair market
value of the Stock on the Purchase Date. Notwithstanding the foregoing, the Plan
Administrator may establish a different Purchase Price for any Offering, which
shall not be less than the Purchase Price set forth in the preceding sentence.
The fair market value of the Stock on the Offering Date or on the Purchase Date
shall be the closing price of the Stock as reported by the Nasdaq National
Market (or any national stock exchange (an "exchange") on which the Stock is at
the time listed or admitted to trading) for a single trading day. If no sales of
the Stock were made on the Nasdaq National Market (or an exchange) on the
transaction date, fair market value shall mean the closing price of a share of
the Stock as reported for the next preceding day on which sales of the Stock
were made on the Nasdaq National Market (or an exchange).
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<PAGE> 7
SECTION 9. PAYMENT OF PURCHASE PRICE
9.1 GENERAL RULES
Stock that is acquired pursuant to the exercise of all or any portion
of an Option may be paid for only by means of payroll deductions from the
Participant's Eligible Compensation. Except as set forth in this Section 9, the
amount of compensation to be withheld from a Participant's Eligible Compensation
during each pay period shall be determined by the Participant's subscription
agreement.
9.2 CHANGE NOTICES
During an Offering Period, a Participant may elect to decrease the
amount withheld from his or her compensation by filing an amended subscription
agreement with the Company's payroll office on or before the seventh day prior
to the end of the pay period for which such election is to be effective (the
"Change Notice Date"); provided, however, that the Plan Administrator may change
such Change Notice Date from time to time.
9.3 PERCENT WITHHELD
The amount of payroll withholding with respect to the Plan for any
Participant during any pay period shall be at least l% of the Participant's
Eligible Compensation for such pay period, but shall not exceed 10% of the
Participant's Eligible Compensation for such pay period. Amounts shall be
withheld in only whole percentages.
9.4 PAYROLL DEDUCTIONS
Payroll deductions shall commence on the first payday following the
Offering Date and shall continue to the end of the Offering Period unless sooner
altered or terminated as provided in the Plan.
9.5 MEMORANDUM ACCOUNTS
Individual accounts shall be maintained for each Participant for
memorandum purposes only. All payroll deductions from a Participant's
compensation shall be credited to such account, but shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.
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<PAGE> 8
9.6 NO INTEREST
Interest shall not be paid on sums withheld from a Participant's
compensation.
9.7 ACQUISITION OF STOCK
On each Purchase Date of an Offering Period, each Participant shall
automatically acquire, pursuant to the exercise of the Participant's Option, the
number of whole shares of Stock arrived at by dividing the total amount of the
Participant's accumulated payroll deductions for the Purchase Period by the
Purchase Price; provided, however, that in no event shall the number of shares
of Stock purchased by the Participant exceed the number of shares of Stock
subject to the Participant's Option. In no event shall fractional shares be
issued.
9.8 REFUND OF EXCESS AMOUNTS
Any cash balance remaining in the Participant's account shall be
refunded to the Participant as soon as practical after the Purchase Date. In the
event the cash to be returned to a Participant pursuant to the preceding
sentence is in an amount less than the amount necessary to purchase a whole
share of Stock, the Company may establish procedures whereby such cash is
maintained in the Participant's account and applied to the purchase of Stock in
the subsequent Purchase Period or Offering Period.
9.9 WITHHOLDING OBLIGATIONS
At the time the Option is exercised, in whole or in part, or at the
time some or all of the Stock is disposed of, the Participant shall make
adequate provision for federal and state withholding obligations of the Company,
if any, that arise upon exercise of the Option or upon disposition of the Stock.
The Company may, but shall not be obligated to, withhold from the Participant's
compensation the amount necessary to meet such withholding obligations.
9.10 TERMINATION OF PARTICIPATION
No Stock shall be purchased on behalf of a Participant on a Purchase
Date whose participation in the Offering or the Plan has terminated on or before
such Purchase Date.
9.11 PROCEDURAL MATTERS
The Plan Administrator may, from time to time, establish (a)
limitations on the frequency and/or number of changes in the amount withheld
during an Offering, (b) an exchange ratio applicable to amounts withheld in a
currency other than
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U.S. dollars, (c) payroll withholding in excess of the amount designated by a
Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, and (d) such other
limitations or procedures as deemed advisable by the Plan Administrator in the
Plan Administrator's sole discretion that are consistent with the Plan and in
accordance with the requirements of Code Section 423.
9.12 LEAVES OF ABSENCE
During leaves of absence approved by the Company and meeting the
requirements of Treasury Regulations Section 1.421-7(h)(2), a Participant may
continue participation in the Plan by delivering cash payments to the Company's
payroll office on the Participant's normal paydays equal to the amount of his or
her payroll deduction under the Plan had the Participant not taken a leave of
absence.
SECTION 10. EVIDENCE OF STOCK OWNERSHIP
Promptly following each Purchase Date, the number of shares of Stock
purchased by each Participant shall be deposited into an account established in
the Participant's name at a stock brokerage or other financial services firm
designated or approved by the Plan Administrator (the "ESPP Broker"). A
Participant shall be free to undertake a disposition of the shares of Stock in
his or her account at any time, but, in the absence of such a disposition, the
shares of Stock must remain in the Participant's account at the ESPP Broker
until the holding period set forth in Code Section 423(a) has been satisfied.
With respect to shares of Stock for which the Code Section 423(a) holding
periods have been satisfied, the Participant may move those shares of Stock to
another brokerage account of the Participant's choosing or request that a stock
certificate be issued and delivered to him or her. A Participant who is not
subject to payment of U.S. income taxes may move his or her shares of Stock to
another brokerage account of his or her choosing or request that a stock
certificate be delivered to him or her at any time, without regard to the Code
Section 423(a) holding period.
SECTION 11. VOLUNTARY WITHDRAWAL
11.1 WITHDRAWAL FROM AN OFFERING
A Participant may withdraw from an Offering by signing and delivering
to the Company's payroll office a written notice of withdrawal on a form
provided by the Plan Administrator for such purpose. Such withdrawal may be
elected at any time prior to the end of an Offering Period; provided, however,
that if a Participant withdraws after the Purchase Date for a Purchase Period of
an Offering, the
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withdrawal shall not affect Stock acquired by the Participant in the earlier
Purchase Periods. Unless otherwise indicated, withdrawal from an Offering shall
not result in a withdrawal from the Plan or any succeeding Offering therein. A
Participant is prohibited from again participating in the same Offering at any
time upon withdrawal from such Offering. The Company may, from time to time,
impose a requirement that the notice of withdrawal be on file with the Company's
payroll office for a reasonable period prior to the effectiveness of the
Participant's withdrawal.
11.2 WITHDRAWAL FROM THE PLAN
A Participant may withdraw from the Plan by signing a written notice of
withdrawal on a form provided by the Plan Administrator for such purpose and
delivering such notice to the Company's payroll office. In the event a
Participant voluntarily elects to withdraw from the Plan, the withdrawing
Participant may not resume participation in the Plan during the same Offering
Period, but may participate in any subsequent Offering under the Plan by again
satisfying the definition of Participant. The Company may, from time to time,
impose a requirement that the notice of withdrawal be on file with the Company's
payroll office for a reasonable period prior to the effectiveness of the
Participant's withdrawal.
11.3 RETURN OF PAYROLL DEDUCTIONS
Upon withdrawal from an Offering pursuant to Section 11.1 or from the
Plan pursuant to Section 11.2, the withdrawing Participant's accumulated payroll
deductions that have not been applied to the purchase of Stock shall be returned
as soon as practical after the withdrawal, without the payment of any interest,
to the Participant, and the Participant's interest in the Offering shall
terminate. Such accumulated payroll deductions may not be applied to any other
Offering under the Plan.
SECTION 12. AUTOMATIC WITHDRAWAL FROM AN OFFERING
If the fair market value of the Stock on a Purchase Date of an Offering
(other than the final Purchase Date of such Offering) is less than the fair
market value of the shares on the Offering Date for such Offering and the Plan
Administrator has established that the Purchase Price for the Offering may be
the lesser of the fair market value (or a percentage thereof) of the Stock on
the Offering Date and the fair market value of the Stock on the Purchase Date,
then every Participant shall automatically (a) be withdrawn from such Offering
at the close of such Purchase Date and (b) after the acquisition of Stock for
such Purchase Period, be enrolled in the Offering commencing on the first
business day subsequent to such Purchase Period.
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SECTION 13. TERMINATION OF EMPLOYMENT
Termination of a Participant's employment with the Company for any
reason, including retirement, death or the failure of a Participant to remain an
Eligible Employee, shall immediately terminate the Participant's participation
in the Plan. In such event, the payroll deductions credited to the Participant's
account since the last Purchase Date shall, as soon as practical, be returned to
the Participant or, in the case of a Participant's death, to the Participant's
legal representative, and all the Participant's rights under the Plan shall
terminate. Interest shall not be paid on sums returned to a Participant pursuant
to this Section 13.
SECTION 14. RESTRICTIONS UPON ASSIGNMENT
An Option granted under the Plan shall not be transferable otherwise
than by will or the laws of descent and distribution, and is exercisable during
the Participant's lifetime only by the Participant. The Plan Administrator will
not recognize, and shall be under no duty to recognize, any assignment or
purported assignment by a Participant, other than by will or the laws of descent
and distribution, of the Participant's interest in the Plan, of his or her
Option or of any rights under his or her Option.
SECTION 15. EXCHANGE ACT HOLDING PERIOD
Disposition of the shares of Stock obtained upon exercise of the Option
within six months of the Purchase Date by persons required to file Forms 3, 4
and 5 pursuant to Section 16 of the Exchange Act could result in short-swing
liability under Section 16(b) of the Exchange Act.
SECTION 16. NO RIGHTS OF SHAREHOLDER UNTIL
CERTIFICATE ISSUED
With respect to shares of Stock subject to an Option, a Participant
shall not be deemed to be a shareholder of the Company, and he or she shall not
have any of the rights or privileges of a shareholder. A Participant shall have
the rights and privileges of a shareholder of the Company when, but not until,
the shares have been issued following exercise of the Participant's Option.
SECTION 17. AMENDMENT OF THE PLAN
The Board may amend the Plan in such respects as it shall deem
advisable; provided, however, that to the extent required for compliance with
Rule 16b-3 under the Exchange Act, Code Section 423 or any applicable law or
regulation, shareholder
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approval will be required for any amendment that will (a) increase the total
number of shares as to which Options may be granted under the Plan, (b)
materially modify the class of persons eligible to receive Options, (c)
materially increase the benefits accruing to Participants under the Plan, (d)
decrease the Purchase Price below a price computed in the manner stated in
Section 8, or (e) otherwise require shareholder approval under any applicable
law or regulation.
SECTION 18. TERMINATION OF THE PLAN
The Company's shareholders or the Board may suspend or terminate the
Plan at any time. Unless the Plan shall theretofore have been terminated by the
Company's shareholders or the Board, the Plan shall terminate on, and no Options
shall be made after April 30, 2006, except that such termination shall have no
effect on Options made prior thereto. No Options shall be granted during any
period of suspension of the Plan.
SECTION 19. NO RIGHTS AS AN EMPLOYEE
Nothing in the Plan shall be construed to give any person (including
any Eligible Employee or Participant) the right to remain in the employ of the
Company or a Parent Corporation or Subsidiary Corporation or to affect the right
of the Company and the Parent Corporations and Subsidiary Corporations to
terminate the employment of any person (including any Eligible Employee or
Participant) at any time with or without cause.
SECTION 20. EFFECT UPON OTHER PLANS
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Parent Corporation or
Subsidiary Corporation. Nothing in the Plan shall be construed to limit the
right of the Company, any Parent Corporation or any Subsidiary Corporation to
(a) establish any other forms of incentives or compensation for employees of the
Company, any Parent Corporation or any Subsidiary Corporation or (b) grant or
assume options otherwise than under the Plan in connection with any proper
corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
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SECTION 21. ADJUSTMENTS
21.1 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 Stock, then the Plan Administrator, in its sole
discretion, shall make such equitable adjustments as it shall deem appropriate
in the circumstances in the maximum number of shares of Stock subject to the
Plan as set forth in Section 4. The determination by the Plan Administrator as
to the terms of any of the foregoing adjustments shall be conclusive and
binding.
21.2 LIMITATIONS
The grant of Options will 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.
SECTION 22. GENERAL
22.1 REGISTRATION; CERTIFICATES FOR SHARES
The Company shall be under no obligation to any Participant to register
for offering or resale under the Securities Act of 1933, as amended, or register
or qualify under state securities laws, any shares of Stock. The Company may
issue certificates for shares with such legends and subject to such restrictions
on transfer and stop-transfer instructions as counsel for the Company deems
necessary or desirable for compliance by the Company with federal and state
securities laws.
22.2 COMPLIANCE WITH RULE 16b-3
It is the Company's intention that, so long as any of the Company's
equity securities are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, the Plan shall comply in all respects with Rule 16b-3 under the
Exchange Act, and if any Plan provision is later found not to be in compliance
with such Rule, the provision
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shall be deemed null and void, and in all events the Plan shall be construed in
favor of its meeting the requirements of Rule 16b-3.
SECTION 23. EFFECTIVE DATE
The Plan's effective date is the date on which it is approved by the
Company's shareholders.
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