<PAGE> 1
As filed with the Securities and Exchange Commission on December 22, 1994
Registration No. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
OCTEL COMMUNICATIONS CORPORATION
(Exact name of issuer as specified in its charter)
DELAWARE 77-0029449
(State of Incorporation) (I.R.S. Employer Identification Number)
1001 MURPHY RANCH ROAD
MILPITAS, CALIFORNIA 95035-7912
(Address of principal executive offices)
1987 EMPLOYEE STOCK PURCHASE PLAN
1988 DIRECTORS' STOCK OPTION PLAN
(Full title of the plan)
DEREK S. DALEY, ESQ.
Vice President, Secretary
and General Counsel
OCTEL COMMUNICATIONS CORPORATION
1001 Murphy Ranch Road
Milpitas, California 95035-7912
(408) 321-2000
(Name, address, including zip code and telephone number, including area code,
of agent for service)
Copy to:
Mark E. Bonham, Esq.
WILSON, SONSINI, GOODRICH & ROSATI, P.C.
650 Page Mill Road
Palo Alto, California 94306
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Share Offering Price Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value
- 1987 Employee Stock Purchase Plan 400,000 shares $16.3625(1) $6,545,000(1) $2,257
- 1988 Directors' Stock Option Plan 150,000 shares $19.25(2) $2,887,500(2) $996
TOTAL 550,000 shares $9,432,500 $3,253
=========================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457 solely for purposes of calculating the
registration fee on the basis of 85% of the closing price of $19.25
per share reported in the Nasdaq National Market on December 20,
1994.
(2) Estimated pursuant to Rule 457 solely for the purpose of calculating
the registration fee on the basis of the closing price of $19.25
per share reported in the Nasdaq National Market on December 20,
1994.
<PAGE> 2
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents and information previously filed with the
Securities and Exchange Commission by Octel Communications Corporation (the
"Company") are hereby incorporated by reference in this Registration Statement:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1994, filed pursuant to Section 13 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(2) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1994, filed pursuant to Section 13 of the Exchange
Act.
(3) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-B filed February 12, 1990 pursuant
to Section 12(g) of the Exchange Act.
(4) The description of the Company's Common Share Purchase Rights
contained in the Company's Registration Statement on Form 8-A filed August 1,
1990 pursuant to Section 12(g) of the Exchange Act.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities registered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Counsel for the Company, Wilson, Sonsini, Goodrich & Rosati,
Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304, has
rendered an opinion to the effect that the Common Stock offered hereby, when
offered and sold in accordance with the related plans and agreements, will be
duly and validly issued, fully paid and nonassessable. Certain members of
Wilson, Sonsini, Goodrich & Rosati, P.C., or investment partnerships of which
such persons are partners, beneficially own approximately 4,040 shares of the
Company's Common Stock.
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<PAGE> 3
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court
to award, or a corporation's Board of Directors to grant, indemnity to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). Further, in accordance with the Delaware
General Corporation Law, the Company's Certificate of Incorporation eliminates
the liability of a director of the Company to the Company and its stockholders
for monetary damages for breaches of such director's fiduciary duty of care in
certain instances. Article VI of the Bylaws of the Company provides for
indemnification of certain agents to the maximum extent permitted by the
Delaware General Corporation Law. Persons covered by this indemnification
include any current or former directors, officers, employees and other agents
of the Company, as well as persons who serve at the request of the Company as
directors, officers, employees or agents of another enterprise.
In addition, the Company has entered into contractual agreements with
each director and certain officers of the Company designated by the Board to
indemnify such individuals to the full extent permitted by law. These
Agreements also resolve certain procedural and substantive matters that are not
covered, or are covered in less detail, in the Bylaws or by the Delaware
General Corporation Law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
5.1 Opinion of counsel as to legality of securities being registered.
10.1 1987 Employee Stock Purchase Plan.
10.2 1988 Directors' Stock Option Plan.
23.1 Consent of counsel (contained in Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP (see page II-6).
24.1 Power of Attorney (see page II-4).
</TABLE>
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<PAGE> 4
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit 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 Act and
will be governed by the final adjudication of such issue.
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<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Milpitas, State of California, on this 21st day of
December, 1994.
OCTEL COMMUNICATIONS CORPORATION
/s/ DEREK S. DALEY, ESQ.
------------------------
Derek S. Daley, Esq.
Vice President, Secretary and
General Counsel
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Robert Cohn and Derek S. Daley,
and each of them acting individually, as his attorney-in-fact, each with full
power of substitution, for him in any and all capacities, to sign any and all
amendments to this Registration Statement on Form S-8, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitutes, may do or cause to be done by virtue
hereof.
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<PAGE> 6
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------------------------- ------------------------------- -----------------
<S> <C> <C>
/s/ ROBERT COHN Chairman of the Board, December 21, 1994
---------------------------
(Robert Cohn) President, Chief Executive
Officer and Director (Principal
Executive Officer)
/s/ DON CAMPODONICO Vice President (Principal December 21, 1994
---------------------------
(Don Campodonico) Financial Officer)
/s/ HERZEL ASHKENAZI Controller December 21, 1994
---------------------------
(Herzel Ashkenazi)
/s/ ANSON M. BEARD, JR. Director December 21, 1994
---------------------------
(Anson M. Beard, Jr.)
/s/ LEO J. CHAMBERLAIN Director December 21, 1994
---------------------------
(Leo J. Chamberlain)
/s/ DEBORAH A. COLEMAN Director December 21, 1994
---------------------------
(Deborah A. Coleman)
/s/ JOHN FREIDENRICH Director December 21, 1994
---------------------------
(John Freidenrich)
/s/ ROBERT C. HAWK Director December 21, 1994
---------------------------
(Robert C. Hawk)
/s/ NATHANIEL DE ROTHSCHILD Director December 21, 1994
---------------------------
(Nathaniel de Rothschild)
/s/ DAG TELLEFSEN Director December 21, 1994
---------------------------
(Dag Tellefsen)
</TABLE>
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Octel Communications Corporation:
We consent to incorporation by reference in the registration statement
on Form S-8 of Octel Communications Corporation and subsidiaries of our report
dated July 27, 1994, relating to the consolidated balance sheets of Octel
Communications Corporation and subsidiaries as of June 30, 1994 and 1993, and
the related consolidated statements of income, stockholders' equity, and cash
flows and related schedules for the years then ended, which report appears in
the June 30, 1994, annual report on Form 10-K of Octel Communications
Corporation and subsidiaries.
KPMG PEAT MARWICK LLP
/s/ KPMG PEAT MARWICK LLP
Palo Alto, California
December 21, 1994
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<PAGE> 8
OCTEL COMMUNICATIONS CORPORATION
REGISTRATION STATEMENT ON FORM S-8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description Numbered
------- ----------- Page
------------
<S> <C>
5.1 Opinion of counsel as to legality of securities
being registered . . . . . . . . . . . . . . . . . . . . . . . .
10.1 1987 Employee Stock Purchase Plan . . . . . . . . . . . . . . .
10.2 1988 Directors' Stock Option Plan . . . . . . . . . . . . . . .
23.1 Consent of Counsel (contained in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP (see page II-6)
24.1 Power of Attorney (see page II-4)
</TABLE>
<PAGE> 1
EXHIBIT 5.1
December 21, 1994
Octel Communications Corporation
1001 Murphy Ranch Road
Milpitas, CA 95035-7912
RE: REGISTRATION STATEMENT ON FORM S-8
Ladies & Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about December 22, 1994
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of 550,000 shares of your Common Stock (the
"Shares"), 150,000 of which are to be issued pursuant to the 1988 Directors'
Stock Plan and 400,000 of which are to be issued pursuant to the 1987 Employee
Stock Purchase Plan (together, the "Plans"). As your legal counsel, we have
examined the proceedings proposed to be taken in connection with the issuance
and sale of the Shares to be issued under the Plans.
It is our opinion that the Shares, when issued and sold in the manner
referred to in the Plans and pursuant to the agreements which accompany the
Plans, will be legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name wherever
appearing in the Registration Statement, including any Prospectus constituting
a part thereof, and any amendments thereto.
Very truly yours,
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
/s/ WILSON, SONSINI, GOODRICH & ROSATI, P.C.
HKP
<PAGE> 1
EXHIBIT 10.1
OCTEL COMMUNICATIONS CORPORATION
1987 EMPLOYEE STOCK PURCHASE PLAN
As amended November 1994
The following constitute the provisions of the Employee Stock Purchase
Plan of Octel Communications Corporation.
1. Purpose. The purpose of the Plan is to provide employees of
the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as
amended. The provisions of the Plan shall, accordingly, be construed so as to
extend and limit participation in a manner consistent with the requirements of
that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(c) "Common Stock" shall mean the Common Stock, no par
value, of the Company.
(d) "Company" shall mean Octel Communications
Corporation, a Delaware corporation.
(e) "Compensation" shall mean all regular gross earnings,
including payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses, commissions or other compensation.
(f) "Continuous Status as an Employee" shall mean the
absence of any interruption or termination of service as an Employee.
Continuous Status as an Employee shall not be considered interrupted in the
case of a leave of absence agreed to in writing by the Company, provided that
such leave is for a period of not more than 90 days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.
(g) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole
discretion as eligible to participate in the Plan.
(h) "Employee" shall mean any person, including an
officer, who is customarily employed for at least twenty (20) hours
<PAGE> 2
per week and more than five (5) months in a calendar year by the
Company or one of its Designated Subsidiaries.
(i) "Exercise Date" shall mean the last day of each
offering period of the Plan.
(j) "Offering Date" shall mean the first business day of
each offering period of the Plan, except that in the case of an individual who
becomes an eligible Employee after the first business day of an offering period
but prior to the first business day of the last calendar month of such offering
period, the term "Offering Date" shall mean the first business day of the
calendar month following the month in which that individual becomes an eligible
Employee.
Options granted after the first business day of an
offering period will be subject to the same terms as the options granted on the
first business day of such offering period except that they will have a
different grant date (thus, potentially, a different exercise price) and,
because they expire at the same time as the options granted on the first
business day of such offering period, a shorter term.
(k) "Plan" shall mean this Employee Stock Purchase Plan.
(l) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.
3. Eligibility.
(a) Any person who is an Employee as of an Offering Date
of a given offering period shall be eligible to participate in such offering
period under the Plan, provided that such person was not eligible to
participate in such offering period as of any prior Offering Date, and further
subject to the requirements of paragraph 5(a) and the limitations imposed by
Section 423(b) of the Code. Notwithstanding the foregoing sentence, any
Employee who becomes an eligible Employee in the months of July or August, 1988
may begin participation in the Plan on September 1, 1988.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 425(d) of the Code)
would own stock and/or hold outstanding options to purchase stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes
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<PAGE> 3
of stock of the Company or of any Subsidiary of the Company, or (ii)
which permits his rights to purchase stock under all employee stock purchase
plans (described in Section 423 of the Code) of the Company and its
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) of fair market value of such stock (determined at the time such
option is granted) for each calendar year in which such option is outstanding
at any time.
4. Offering Periods.
The Plan shall be implemented by one offering during each
six-month period of the Plan, commencing on or about the first day following
the end of the prior offering period, and continuing thereafter until
terminated in accordance with paragraph 19 or 23 hereof. The Board of
Directors of the Company shall have the power to change the duration of
offering periods with respect to future offerings without stockholder approval
if such change is announced at least fifteen (15) days prior to the scheduled
beginning of the first offering period to be affected.
5. Participation.
(a) An eligible Employee may become a participant in the
Plan by completing a subscription agreement authorizing payroll deduction on
the form provided by the Company and filing it with the Company's payroll
office at such time as is specified by the Company and is prior to the
applicable Offering Date (unless a later time for filing the subscription
agreement is set by the Board for all eligible Employees with respect to a
given offering period). Once properly made, an eligible Employee's election to
participate shall be automatically renewed for each subsequent offering period,
subject to any termination or withdrawal as provided in paragraph 10.
(b) Payroll deductions for a participant shall commence
on the first payroll following the Offering Date and shall end on the Exercise
Date of the offering period to which such authorization is applicable, unless
sooner terminated by the participant as provided in paragraph 10.
6. Payroll Deductions.
(a) At the time a participant files his subscription
agreement, he shall elect to have payroll deductions made on each payday during
the offering period in an amount not exceeding ten percent (10%) of the
Compensation which he receives on each payday
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<PAGE> 4
during the offering period, and the aggregate of such payroll deductions during
the offering period shall not exceed ten percent (10%) of his aggregate
Compensation during said offering period.
(b) All payroll deductions made by a participant shall be
credited to his account under the Plan. A participant may not make any
additional payments into such account.
(c) A participant may discontinue his participation in
the Plan as provided in paragraph 10, or may decrease (but not increase) the
rate of his payroll deductions during the offering period by completing or
filing with the Company a new authorization for payroll deduction. The change
in rate shall be effective fifteen (15) days following the Company's receipt of
the new authorization.
(d) Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the Code and paragraph 3(b)
herein, a participant's payroll deductions may be decreased to 0% at such time
during any Offering Period that the aggregate of all payroll deductions
accumulated with respect to such Offering Period and any other Offering Period
ending within the same calendar year equal $21,250. Payroll deductions shall
recommence at the rate provided in such participant's subscription agreement at
the beginning of the first Offering Period which is scheduled to end in the
following calendar year, unless terminated by the participant as provided in
paragraph 11.
7. Grant of Option.
(a) On each Offering Date of each offering period, each
eligible Employee beginning participation in such offering period on such
Offering Date shall be granted an option to purchase (at the per share option
price) up to a number of shares of the Company's Common Stock determined by
dividing such Employee's payroll deductions to be accumulated during such
offering period by the lower of (i) eighty-five percent (85%) of the fair
market value of a share of the Company's Common Stock on the Offering Date, or
(ii) eighty-five percent (85%) of the fair market value of a share of the
Company's Common Stock on the Exercise Date; provided that in no event shall an
Employee be permitted to purchase during any offering period more than a number
of shares determined by dividing $25,000 by the fair market value of a share of
the Company's Common Stock on the first day of such offering period, and
provided further that such purchase shall be subject to the limitations set
forth in Section 3(b) and 12 hereof. Fair market value of a share of the
Company's Common Stock shall be determined as provided in Section 7(b) herein.
(b) The option price per share of the shares offered in a
given offering period shall be the lower of: (i) 85% of the fair
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<PAGE> 5
market value of a share of the Common Stock of the Company on the Offering
Date; or (ii) 85% of the fair market value of a share of the Common Stock of
the Company on the Exercise Date. The fair market value of the Company's
Common Stock on a given date shall be determined by the Board in its
discretion; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the closing sale price
or, if not so reported, the mean of the bid and asked prices of the Common
Stock for such date, as reported in either case in The Wall Street Journal (or,
if not so reported, as otherwise reported by the National Association of
Securities Dealers Automated Quotation (NASDAQ) System) or, in the event the
Common Stock is listed on a stock exchange, the fair market value per Share
shall be the closing price on such exchange on such date, as reported in The
Wall Street Journal.
8. Exercise of Option. Unless a participant withdraws from the
Plan as provided in paragraph 10, his option for the purchase of shares will be
exercised automatically on the Exercise Date of the offering period, and the
maximum number of full shares subject to option will be purchased for him at
the applicable option price with the accumulated payroll deductions in his
account. The shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the participant on the Exercise Date. During his
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him.
9. Delivery. As promptly as practicable after the Exercise Date
of each offering period, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his option. Any cash remaining to the credit of a
participant's account under the Plan after a purchase by him of shares at the
termination of each offering period, or which is insufficient to purchase a
full share of Common Stock of the Company, shall be retained in the
participant's account for the subsequent offering period, subject to earlier
withdrawal by the participant as provided in paragraph 10.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all
the payroll deductions credited to his account under the Plan at any time prior
to the Exercise Date of the offering period by giving written notice to the
Company. All of the participant's payroll deductions credited to his account
will be paid to him promptly after receipt of his notice of withdrawal and his
option for the current period will be automatically terminated, and no further
payroll deductions for the purchase of shares will be made during the offering
period.
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<PAGE> 6
(b) Upon termination of the participant's Continuous
Status as an Employee prior to the Exercise Date of the offering period for any
reason, including retirement or death, the payroll deductions credited to his
account will be returned to him or, in the case of his death, to the person or
persons entitled thereto under paragraph 14, and his option will be
automatically terminated.
(c) In the event an Employee fails to remain in
Continuous Status as an Employee of the Company for at least twenty (20) hours
per week during the offering period in which the employee is a participant, he
will be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to his account will be returned to him and his option
terminated.
(d) A participant's withdrawal from an offering period
will not have any effect upon his eligibility to participate in a succeeding
offering period or in any similar plan which may hereafter be adopted by the
Company.
11. Interest. No interest shall accrue on the payroll deductions
of a participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be 1,650,000
shares, subject to adjustment upon changes in capitalization of the Company as
provided in paragraph 18. If the total number of shares which would otherwise
be subject to options granted pursuant to Section 7(a) hereof during an
offering period exceeds the number of shares then available under the Plan
(after deduction of all shares for which options have been exercised or are
then outstanding), the Company shall make a pro rata allocation of the shares
remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of shares
subject to the option to each Employee affected thereby and shall similarly
reduce the rate of payroll deductions, if necessary.
(b) The participant will have no interest or voting right
in shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the
Plan will be registered in the name of the participant or jointly (with right
of survivorship) in the name of the participant and another person, such as his
spouse, whom the participant designates.
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<PAGE> 7
13. Administration. The Plan shall be administered by the Board
of the Company or a committee of members of the Board appointed by the Board.
The administration, interpretation or application of the Plan by the Board or
its committee shall be final, conclusive and binding upon all participants.
Members of the Board who are eligible Employees are permitted to participate in
the Plan, provided that:
(a) Members of the Board who are eligible to participate
in the Plan may not vote on any matter affecting the administration of the Plan
or the grant of any option pursuant to the Plan.
(b) If a Committee is established to administer the Plan,
no member of the Board who is eligible to participate in the Plan may be a
member of the Committee.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to the end of the offering period but prior to delivery to him of
such shares and cash. In addition, a participant may file a written
designation of a beneficiary who is to receive any cash from the participant's
account under the Plan in the event of such participant's death prior to the
Exercise Date of the offering period.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in paragraph 14 hereof) by the participant. Any
such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with paragraph 10.
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<PAGE> 8
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees promptly following the Exercise Date, which statements will set forth
the amounts of payroll deductions, the per share purchase price, the number of
shares purchased and the remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each option under the Plan which has not yet been
exercised and the number of shares of Common Stock which have been authorized
for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the price per share of Common Stock
covered by each option under the Plan which has not yet been exercised, shall
be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.
In the event of the proposed dissolution or liquidation of the
Company, the offering period will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
The Board may, in the exercise of its sole discretion in such instances,
declare that any offering period shall terminate as of a date fixed by the
Board and give each Plan participant the right to exercise his option as to all
or any part of the shares subject to option thereunder, including shares as to
which the option would not otherwise be exercisable. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each option under the
Plan shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation.
In the event that such successor corporation refuses to assume the option or to
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<PAGE> 9
substitute an equivalent option, the Board shall, in lieu of such assumption or
substitution, provide for the Plan participant to have the right to exercise
the option as to all of the shares subject to option thereunder, including
shares as to which the option would not otherwise be exercisable. If the Board
makes an option fully exercisable in lieu of assumption or substitution in the
event of a merger or sale of assets, the Board shall notify the Plan
participant that the option shall be fully exercisable for a period of thirty
(30) days from the date of such notice, and the option will terminate upon the
expiration of such period.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding option, in the
event that the Company effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of shares of its outstanding
Common Stock, and in the event of the Company being consolidated with or merged
into any other corporation.
19. Amendment and Termination. The Board may at any time amend,
alter, suspend or discontinue the Plan, but, except as provided in paragraph
18, no amendment, alteration, suspension or discontinuation shall be made which
would impair the rights of any participant arising out of any offering period
which has already commenced without his or her written consent. In addition,
to the extent necessary and desirable to comply with Rule 16b-3 under the
Exchange Act or with Section 423 of the Code (or any other applicable law or
regulation, including the requirements of the NASD or an established stock
exchange), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.
20. Notices. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.
21. Stockholder Approval.
(a) Continuance of the Plan shall be subject to approval
by the stockholders of the Company within twelve (12) months before or after
the date the Plan is adopted. If such stockholder approval is obtained at a
duly held stockholders' meeting, it must be obtained by the affirmative vote of
the holders of a majority of the outstanding shares of the Company, or if such
stockholder approval is obtained by written consent, it must be obtained by the
unanimous written consent of all stockholders of the Company; provided,
however, that approval at a meeting or by written consent may be obtained by a
lesser degree of stockholder approval if the
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<PAGE> 10
Board determines, in its discretion after consultation with the Company's legal
counsel, that such a lesser degree of stockholder approval will comply with all
applicable laws and will not adversely affect the qualification of the Plan
under Section 423 of the Code.*
(b) If and in the event that the Company registers any
class of equity securities pursuant to Section 12 of the Exchange Act, any
required approval of the stockholders of the Company obtained after such
registration shall be solicited substantially in accordance with Section 14(a)
of the Exchange Act and the rules and regulations promulgated thereunder.
(c) If any required approval by the stockholders of the
Plan itself or of any amendment thereto is solicited at any time otherwise than
in the manner described in paragraph 21(b) hereof, then the Company shall, at
or prior to the first annual meeting of stockholders held subsequent to the
later of (1) the first registration of any class of equity securities of the
Company under Section 12 of the Exchange Act or (2) the granting of an option
hereunder to an officer or director after such registration, do the following:
(i) furnish in writing to the holders entitled to
vote for the Plan substantially the same information which would be required
(if proxies to be voted with respect to approval or disapproval of the Plan or
amendment were then being solicited) by the rules and regulations in effect
under Section 14(a) of the Exchange Act at the time such information is
furnished; and
(ii) file with, or mail for filing to, the
Securities and Exchange Commission four copies of the written information
referred to in subsection (i) hereof not later than the date on which such
information is first sent or given to stockholders.
22. Conditions Upon Issuance of Shares. Shares shall not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
__________________________________
* The Plan was approved at a duly held Shareholder's meeting in November
of 1987.
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<PAGE> 11
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
the stockholders of the Company as described in paragraph 21. It shall
continue in effect for a term of twenty (20) years unless sooner terminated
under paragraph 19.
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<PAGE> 12
OCTEL COMMUNICATIONS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
ENROLLMENT FORM
Date of enrollment: _________________
1. I, ________________________, hereby elect to participate in the Octel
Communications Corporation 1987 Employee Stock Purchase Plan (the
"Stock Purchase Plan") and subscribe to purchase shares of the
Company's Common Stock, without par value, in accordance with this
enrollment form and the Stock Purchase Plan.
2. I hereby authorize the Company to deduct from each paycheck ____% of
my GROSS PAY for each payday during this Offering Period, and each
subsequent offering period during which I am eligible to participate,
in accordance with the provisions of the Stock Purchase Plan. I also
understand that this calculated amount will be deducted from my NET
PAY, or after all payroll taxes.
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock, without par value, at the
applicable purchase price determined in accordance with the Stock
Purchase Plan. I further understand that, except as otherwise set
forth in the Stock Purchase Plan, unless I withdraw from the Stock
Purchase Plan by giving written notice to the Company, shares will be
purchased for me automatically on the Exercise Date of each offering
period subsequent to my filing of this enrollment form.
4. I understand that, before the Exercise Date for this Offering Period,
the Company will provide me with a copy of the Company's most recent
prospectus describing the 1987 Employee Stock Purchase Plan, and
thereafter will provide me with annual updates and copies of any
revised versions of the prospectus. Therefore, before my options
received under the Plan are exercised to purchase Shares, I will have
the opportunity (after receiving the prospectus and before the
Exercise Date) to withdraw from the Plan and have returned to me all
the money that was deducted from my pay for the purpose of purchasing
shares. I acknowledge that I have received a copy of the complete
"Octel Communications Corporation 1987 Employee Stock Purchase Plan."
I understand that my participation in the Stock Purchase Plan is in
all respects subject to the terms of the Plan.
<PAGE> 13
5. Shares purchased for me under the Stock Purchase Plan should be issued
in the name(s) of:
Your name _________________________________________________
As you wish it to appear on the stock certificate
and
Other* _________________________________________________
As you wish it to appear on the stock certificate
* Please Note: If you wish for another person's name to appear on the stock
certificate in addition to you own, you must check off one of the selections
below to specify the type of ownership. This selection will be indicated on
your stock certificate.
_____ TENANTS IN COMMON - Abbreviated as "TEN COM," may be specified to
identify two or more owners.
_____ JOINT TENANCY WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON
- Abbreviated as "JT TEN," may be specified to identify two or more
joint owners.
_____ TENANTS BY THE ENTIRETIES - Abbreviated as "TEN ENT," (not appropriate
for California residents) may be specified for ownership by husband
and wife.
_____ COMMUNITY PROPERTY - If specified, will not be abbreviated.
6. I understand that if I dispose of any shares received by me pursuant
to the Plan, either (1) within 2 years after the Offering Date (the
first day of the offering period during which I purchased such shares)
or (2) within 1 year after the date on which such shares were
transferred to me, I will be treated for federal income tax purposes
as having received ordinary income at the time of such disposition in
an amount equal to the excess of the fair market value of the shares
at the time such shares were transferred to me over the price which I
paid for the shares.
I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER
THE DATE OF ANY SUCH DISPOSITION.
However, if I dispose of such shares at any time after the expiration
of the 2-year and 1-year holding periods, I understand that I will be
treated for federal income tax purposes as having received income only
at the time of such disposition, and that such income will be treated
as ordinary income only to the extent of an amount equal to the lesser
of (1) the
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<PAGE> 14
excess of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares under
the option, or (2) the excess of the fair market value of the shares
over the option price, measured as if the option had been exercised on
the Offering Date. The remainder of the gain or loss, if any,
recognized on such disposition will be treated as capital gain or
loss. The federal income tax treatment of ordinary income and capital
gain and loss is described in the Company's prospectus relating to the
Stock Purchase Plan.
7. I hereby agree to be bound by the terms of the Stock Purchase Plan. I
understand that my enrollment is dependent upon my eligibility to
participate in the Stock Purchase Plan.
8. I FURTHER ACKNOWLEDGE AND UNDERSTAND THAT THE COMPANY'S OBLIGATION TO
SELL SHARES TO ME IS CONDITIONAL UPON COMPLIANCE WITH ALL APPLICABLE
FEDERAL AND STATE SECURITIES LAWS, AND SPECIFICALLY CONDITIONAL UPON
THE EXISTENCE OF AN EFFECTIVE REGISTRATION STATEMENT REGARDING THE
SHARES WHICH I WILL PURCHASE ON THE DATE OF THAT PURCHASE.
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<PAGE> 15
9. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Stock Purchase Plan:
NAME: (Please print)________________________________________________________
(First) (Middle) (Last)
__________________________ ___________________________________________
Relationship
___________________________________________
(Address)
NAME: (Please print)________________________________________________________
(First) (Middle) (Last)
__________________________ ___________________________________________
Relationship
___________________________________________
(Address)
NAME: (Please print)________________________________________________________
(First) (Middle) (Last)
__________________________ ___________________________________________
Relationship
___________________________________________
(Address)
NAME: (Please print)________________________________________________________
(First) (Middle) (Last)
__________________________ ___________________________________________
Relationship
___________________________________________
(Address)
Note: You may use the back side of this form to list any additional
beneficiary(ies) than those above or attach a list of your own.
* * * * * * * * * * * * * * * * * * *
Dated:____________________ ___________________________________________
Signature of Employee
Print Name: ______________________________
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<PAGE> 1
EXHIBIT 10.2
OCTEL COMMUNICATIONS CORPORATION
1988 DIRECTORS' STOCK OPTION PLAN
As Amended November 1994
1. Purposes of the Plan. The purposes of this Directors' Stock
Option Plan are to attract and retain the best available personnel for service
as Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their
continued service on the Board.
All options granted hereunder shall be "nonstatutory stock
options."
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(c) "Common Stock" shall mean the Common Stock of the
Company.
(d) "Company" shall mean Octel Communications
Corporation, a Delaware corporation.
(e) "Continuous Status as a Director" shall mean the
absence of any interruption or termination of service as a Director.
(f) "Director" shall mean a member of the Board.
(g) "Employee" shall mean any person, including officers
and Directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee by the Company shall not be
sufficient in and of itself to constitute "employment" by the Company.
(h) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(i) "Option" shall mean a stock option granted pursuant
to the Plan.
(j) "Optioned Stock" shall mean the Common Stock subject
to an Option.
<PAGE> 2
(k) "Optionee" shall mean an Outside Director who
receives an Option.
(l) "Outside Director" shall mean a Director who is not
an Employee.
(m) "Parent" shall mean a "parent corporation," whether
now or hereafter existing, as defined in Section 425(e) of the Code.
(n) "Plan" shall mean this 1988 Directors' Stock Option
Plan.
(o) "Share" shall mean a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.
(p) "Subsidiary" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 425(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is 350,000 Shares (the "Pool") of Common
Stock. The Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan. If Shares which were acquired upon
exercise of an Option are subsequently repurchased by the Company, such Shares
shall not in any event be returned to the Plan and shall not become available
for future grant under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administrator. Except as otherwise required herein,
the Plan shall be administered by the Board.
(b) Procedure for Grants. All grants of Options
hereunder shall be automatic and nondiscretionary and shall be made strictly in
accordance with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number of
Shares to be covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically
granted an Option to purchase 25,000 Shares upon the date (on or
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<PAGE> 3
after the effective date of this Plan) on which such person first
becomes a Director, whether through election by the stockholders of the Company
or appointment by the Board of Directors to fill a vacancy.
(iii) Each Outside Director shall automatically
receive, on the date of each Annual Meeting of Stockholders, an Option to
purchase 3,000 Shares of the Company's Common Stock, such Option to become
exercisable immediately unless a later date is specified in the written
agreement therefor in order to comply with Section 16 of the Exchange Act;
provided however, that such Option shall only be granted to Outside Directors
who have served since the date of the last Annual Meeting of Stockholders and
will continue to serve after the date of grant of such Option.
(iv) Each Outside Director who has been serving
since the August 1989 amendments to the Plan and did not receive any option
grant prior to January 1, 1988, shall receive a one-time automatic grant of an
option to purchase 10,000 shares of the Company's Common Stock as of November
21, 1991. Such one-time automatic grant may be in addition to any similar
grant received pursuant to the Plan as amended in August 1989.
(v) Each Outside Director serving during fiscal
1992 who did not otherwise receive a grant under subparagraph (iv) shall
receive a one-time automatic grant of an option to purchase 10,000 shares of
the Company's Common Stock as of April 22, 1992. Such one-time automatic grant
may be in addition to any similar grant received pursuant to the Plan as
amended in August 1989.
(vi) The terms of an Option granted hereunder
shall be as follows:
(A) the term of the Option shall be five
(5) years and seven (7) months.
(B) the Option shall be exercisable only
while the Outside Director remains a Director of the
Company, except as set forth in Section 9 hereof.
(C) the exercise price per Share shall
be 100% of the fair market value per Share on the
date of grant of the Option.
(D) any Option granted pursuant to
subsections 4(b)(ii), (iv) or (v) above shall become
exercisable in installments cumulatively with respect
to 20% of the aggregate number of Shares subject to
the Option on each of the first five annual
anniversaries of the date of grant of such Option;
provided however, that if the Optionee is
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<PAGE> 4
unable to continue his service as a director of
the Company as a result of his death or total and
permanent disability (as defined in Section 22(e)(3)
of the Code), the Option shall become exercisable as
to 1/3 of the aggregate number of Shares subject to
the Option on each of the first three annual
anniversaries of the date of grant of the Option.
(E) To the extent necessary to comply
with the applicable provisions of Rule 16b-3
promulgated under the Exchange Act ("Rule 16b-3"), no
Option will be exercisable until a date more than six
months subsequent to the date of the grant of that
Option.
(c) Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its
discretion: (i) to determine, upon review of relevant information and in
accordance with Section 8(b) of the Plan, the fair market value of the Common
Stock; (ii) to determine the exercise price per share of Options to be granted,
which exercise price shall be determined in accordance with Section 8(a) of the
Plan; (iii) to interpret the Plan; (iv) to prescribe, amend and rescind rules
and regulations relating to the Plan; (v) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option previously granted hereunder; and (vi) to make all other determinations
deemed necessary or advisable for the administration of the Plan.
(d) Effect of Board's Decision. All decisions,
determinations and interpretations of the Board shall be final and binding on
all Optionees and any other holders of any Options granted under the Plan.
(e) Suspension or Termination of Option. If the
President of the Company or his designee reasonably believes that an Optionee
has committed an act of misconduct, the President may suspend the Optionee's
right to exercise any option pending a determination by the Board of Directors
(excluding the Outside Director accused of such misconduct). If the Board of
Directors (excluding the Outside Director accused of such misconduct)
determines an Optionee has committed an act of embezzlement, fraud, dishonesty,
nonpayment of an obligation owed to the Company, breach of fiduciary duty or
deliberate disregard of the Company rules resulting in loss, damage or injury
to the Company, or if an Optionee makes an unauthorized disclosure of any
Company trade secret or confidential information, engages in any conduct
constituting unfair competition, induces any Company customer to breach a
contract with the Company or induces any principal for whom the Company acts as
agent to terminate such agency relationship, neither the Optionee nor his
estate shall be entitled to exercise
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<PAGE> 5
any option whatsoever. In making such determination, the Board of Directors
(excluding the Outside Director accused of such misconduct) shall act fairly
and shall give the Optionee an opportunity to appear and present evidence on
Optionee's behalf at a hearing before a committee of the Board.
5. Eligibility. Options may be granted only to Outside
Directors. All Options shall be automatically granted in accordance with the
terms set forth in Section 4(b) hereof.
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate his directorship at any time.
6. Term of Plan. The Plan shall become effective upon the
earlier of (i) its adoption by the Board or (ii) its approval by the
stockholders of the Company as described in Section 17 of the Plan. It shall
continue in effect for a term of ten (10) years (until November 30, 1998)
unless sooner terminated under Section 13 of the Plan.
7. Term of Option. The term of each Option shall be five (5)
years and seven (7) months from the date of grant thereof.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be 100% of the fair
market value per Share on the date of grant of the Option.
(b) Fair Market Value. The fair market value shall be
determined by the Board in its discretion; provided, however, that where there
is a public market for the Common Stock, the fair market value per Share shall
be the closing bid price of the Common Stock in the over-the-counter market on
the date of grant, as reported in The Wall Street Journal (or, if not so
reported, as otherwise reported by the National Association of Securities
Dealers Automated Quotation ("NASDAQ") System) or, in the event the Common
Stock is traded on the NASDAQ National Market System or listed on a stock
exchange, the fair market value per Share shall be the closing price on such
system or exchange on the date of grant of the Option, as reported in The Wall
Street Journal.
(c) Form of Consideration. Subject to compliance with
applicable provisions of Section 16b of the Exchange Act, (or other applicable
law), the consideration to be paid for the Shares to be issued upon exercise of
an Option, including the method of payment, shall be determined by the Board
and may consist entirely of
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<PAGE> 6
(i) cash, (ii) check, (iii) promissory note, (iv) other Shares which (X) in the
case of Shares acquired upon exercise of an Option either have been owned by
the Optionee for more than six months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (Y) have a Fair Market
Value on the date of exercise equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (v) authorization for the
Company to retain from the total number of Shares as to which the Option is
exercised that number of Shares having a Fair Market Value on the date of
exercise equal to the exercise price for the total number of Shares as to which
the Option is exercised, (vi) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds required to pay the exercise price,
(vii) by delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the option holder to take and pay for the Shares not more
than twelve months after the date of delivery of the subscription agreement,
(viii) any combination of the foregoing methods of payment, (ix) or such other
consideration and method of payment for the issuance of Shares to the extent
permitted under applicable laws. In making its determination as to the type of
consideration to accept, the Board shall consider whether acceptance of such
consideration may be reasonably expected to benefit the Company (Section 153 of
the Delaware General Corporation Law).
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4(b) hereof; provided, however, that no Options shall be exercisable
until stockholder approval of the Plan in accordance with Section 17 hereof has
been obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may consist of any consideration and method of
payment allowable under Section 8(c) of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. A share certificate for the number of Shares so
acquired shall be issued to the Optionee as soon as practicable after exercise
of the Option. No adjustment will be made for a dividend or other right
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<PAGE> 7
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as a Director. If an Outside
Director ceases to serve as a Director, he may, but only within seven (7)
months after the date he ceases to be a Director of the Company, exercise his
Option to the extent that he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise an Option at
the date of such termination, or if he does not exercise such Option (which he
was entitled to exercise) within the time specified herein, the Option shall
terminate.
(c) Disability of Optionee. Notwithstanding the
provisions of Section 9(b) above, in the event an Optionee is unable to
continue his service as a Director with the Company as a result of his total
and permanent disability (as defined in Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended), he may, but only within seven (7) months
from the date of termination, exercise his Option to the extent he was entitled
to exercise it at the date of such termination. To the extent that he was not
entitled to exercise the Option at the date of termination, or if he does not
exercise such Option (which he was entitled to exercise) within the time
specified herein, the Option shall terminate.
(d) Death of Optionee. Notwithstanding the provisions of
Section 9(b) above, in the event of the death of an Optionee:
(i) during the term of the Option who is at the
time of his death a Director of the Company and who shall have been in
Continuous Status as a Director since the date of grant of the Option, the
Option may be exercised, at any time within seven (7) months following the date
of death, by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the date of death; or
(ii) within thirty (30) days after the termination
of Continuous Status as a Director, the Option may be exercised, at any time
within seven (7) months following the date of death, by the Optionee's estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that had accrued
at the date of termination.
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<PAGE> 8
10. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization or Merger. Subject
to any required action by the stockholders of the Company, the number of shares
of Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Option will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. The Board may,
in the exercise of its sole discretion in such instances, declare that any
Option shall terminate as of a date fixed by the Board and give each Optionee
the right to exercise his Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable. In
the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, the
Option shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation.
In the event that such successor corporation refuses to assume the Option or to
substitute an equivalent Option, the Board shall, in lieu of such assumption or
substitution, provide that the Optionee shall have the right to exercise the
Option as to all of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable. If the Board makes an Option fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Board shall notify the
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Optionee that the Option shall be fully exercisable for a period of fifteen
(15) days from the date of such notice, and the Option will terminate upon the
expiration of such period. The Board may provide in individual Option
Agreements for the repurchase of Options in return for a cash payment by the
Company upon the occurrence of a merger, sale of all or substantially all
assets of the Company, tender offer or other transaction or series of related
transactions resulting in a change of ownership of more than 50% of the voting
securities of the Company.
12. Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date determined in accordance with Section 4(b)
hereof. Notice of the determination shall be given to each Outside Director to
whom an Option is so granted within a reasonable time after the date of such
grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act (or any other applicable law or regulation), the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such
a degree as required.
(b) Effect of Amendment or Termination. Any such
amendment or termination of the Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if this Plan had not
been amended or terminated, unless mutually agreed otherwise between the
Optionee and the Board, which agreement must be in writing and signed by the
Optionee and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be
issued pursuant to the exercise of an Option unless the exercise of such Option
and the issuance and delivery of such Shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, state securities laws, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment
and without any present intention to
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sell or distribute such Shares, if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not
have been obtained.
15. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
16. Option Agreement. Options shall be evidenced by written
option agreements in such form as the Board shall approve.
17. Stockholder Approval.
(a) Continuance of the Plan shall be subject to approval
by the stockholders of the Company at or prior to the first annual meeting of
stockholders held subsequent to the granting of an Option hereunder. If such
stockholder approval is obtained at a duly held stockholders' meeting, it may
be obtained by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present or represented and entitled to vote
thereon. If such stockholder approval is obtained by written consent, it may
be obtained by the written consent of the holders of a majority of the
outstanding shares of the Company.
(b) Any required approval of the stockholders of the
Company shall be solicited substantially in accordance with Section 14(a) of
the Exchange Act and the rules and regulations promulgated thereunder.
18. Information to Optionees. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports to stockholders, proxy statements and
other information provided to all stockholders of the Company.
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