<PAGE>
As filed with the Securities and Exchange Commission on_________________, 1995.
Registration No.______________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------------
SILICON GRAPHICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2789662
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2011 North Shoreline Boulevard, Mountain View, California 94043-1389
(Address of principal executive offices and zip code)
---------------------
Wavefront Technologies, Inc.
1990 Stock Option Plan
(Full title of the plan)
---------------------
WILLIAM M. KELLY
Vice President, General Counsel and Secretary
SILICON GRAPHICS, INC.
2011 North Shoreline Boulevard
Mountain View, California 94043-1389
(415) 960-1980
(Name, address and telephone number of agent for service)
---------------------
<TABLE>
<CAPTION>
Calculation of Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Title of Securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered (1) offering price per unit (2) aggregate offering price registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 419,375 shares $21.187 $8,885,362.70 $3,063.92
$0.001 par value
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Calculated in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee based upon the actual prices at which the
options granted pursuant to the plan may be exercised, which prices range from
$2.86 to $36.22.
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents and information heretofore filed by Silicon
Graphics, Inc. (the "Company") with the Securities and Exchange Commission are
hereby incorporated by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1994, filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) The Company's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1994, December 31, 1994, and March 31, 1995,
filed pursuant to Section 13 of the Exchange Act.
(c) The Company's Current Report on Form 8-K filed on February 13,
1995, filed pursuant to Section 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(d) The description of the Company's Common Stock to be offered
hereby which is contained in its Registration Statement on Form
8-B filed March 16, 1990 pursuant to Section 12 of the Exchange
Act.
(e) The description of the Company's Preferred Shares Purchase Rights
contained in the Company's Amendment on Form 8 to Registration
Statement on Form 8-A, filed November 12, 1992 pursuant to
Section 12(b) 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 offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be part hereof
from the date of filing such documents.
Item 4. DESCRIPTION OF SECURITIES.
Not Applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
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 1993, 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 provision include current and 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 designated by the Board to indemnify such
individuals to the full extent permitted by law. These agreements also
II-2
<PAGE>
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.
The following Exhibits are filed as part of, or incorporated by
reference into, this Registration Statement:
4.1 Wavefront Technologies, Inc. 1990 Stock Option Plan with
standard form of option agreement.
5.1 Opinion of counsel as to legality of securities being
registered.
23.1 Consent of Independent Auditors (see page II-7).
23.2 Consent of Counsel (contained in Exhibit 5.1).
24.1 Power of Attorney (see page II-5).
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 Company pursuant to the Delaware General Corporation Law, the Company's
Certificate of Incorporation, the foregoing Bylaw provisions or the Company's
indemnification agreements, the Company has been informed 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 Company of expenses incurred or paid by a director, officer
or controlling person of the Company in a successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Company will,
unless in the opinion of its counsel the question has already been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant, Silicon Graphics, Inc., a corporation organized and
existing under the laws of the State of Delaware, 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 Mountain
View, State of California, on June 13, 1995.
SILICON GRAPHICS, INC.
By: Edward R. McCracken
-------------------
Edward R. McCracken
Chairman and Chief
Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Edward R. McCracken, Stanley J. Meresman
and William M. Kelly jointly and severally, his or her attorneys-in-fact, each
with the power of substitution, for him or her in any and all capacities, to
sign any amendments to this Registration Statement, 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
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
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.
Signature Title Date
- ----------------------------- ------------------------------- ---------------
/s/ Edward R. McCracken Chairman of the Board and Chief June 13, 1995
- ----------------------------- Executive Officer --------------
Edward R. McCracken (Principal Executive Officer)
/s/ Thomas A. Jermoluk President, Chief Operating June 13, 1995
- ----------------------------- Officer and Director --------------
Thomas A. Jermoluk
/s/ Robert R. Bishop President, Silicon Graphics World June 13, 1995
- ----------------------------- Trade Corporation and Director --------------
Robert R. Bishop
/s/ Stanley J. Meresman Senior Vice President, Finance June 13, 1995
- ----------------------------- and Chief Financial Officer --------------
Stanley J. Meresman (Principal Financial Officer)
/s/ Thomas J. Oswold Vice President, Finance and June 13, 1995
- ----------------------------- Treasurer --------------
Thomas J. Oswold
/s/ Dennis P. McBride Vice President, Controller June 13, 1995
- ----------------------------- (Principal Accounting Officer) --------------
Dennis P. McBride
/s/ Allen F. Jacobson Director June 13, 1995
- ----------------------------- --------------
Allen F. Jacobson
II-5
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ C. Richard Kramlich Director June 13, 1995
- ----------------------------- --------------
C. Richard Kramlich
/s/ James A. McDivitt Director June 13, 1995
- ----------------------------- --------------
James A. McDivitt
/s/ Mark W. Perry Director June 13, 1995
- ----------------------------- --------------
Mark W. Perry
/s/ Lucille Shapiro Director June 13, 1995
- ----------------------------- --------------
Lucille Shapiro
/s/ James G. Treybig Director June 13, 1995
- ----------------------------- --------------
James G. Treybig
II-6
<PAGE>
Consent of Ernst & Young, LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement
pertaining to the Wavefront Technologies, Inc. 1990 Stock Option Plan of
Silicon Graphics, Inc. of our report dated July 18, 1994 with respect to the
consolidated financial statements of Silicon Graphics, Inc. incorporated by
reference in its Annual Report (Form 10-K) for the year ended June 30, 1994,
and the related financial statement schedules included therein, filed with
the Securities and Exchange Commission.
ERNST & YOUNG, LLP
Palo Alto, California
June 13, 1995
II-7
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.1 Wavefront Technologies, Inc. 1990 Stock Option Plan with standard form
of option agreement
5.1 Opinion of counsel as to legality of securities being registered.
23.1 Consent of Independent Auditors (see page II-7)
23.2 Consent of Counsel (contained in Exhibit 5.1)
24.1 Power of Attorney (see page (II-5)
- -------------
II-8
<PAGE>
WAVEFRONT TECHNOLOGIES, INC.
1990 STOCK OPTION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF THE DATE OF THE
EFFECTIVENESS OF THE COMPANY'S REGISTRATION STATEMENT ON FORM S-1
I. PURPOSES OF THE PLAN
This Stock Option Plan (the "Plan") is intended to promote the interests of
Wavefront Technologies, Inc., a California corporation (the "Company") by
providing a method whereby (i) key employees (including officers and directors)
of the company (or its parent or subsidiary corporations) responsible for the
management, growth and financial success of the Company (or its parent or
subsidiary corporations), (ii) the non-employee members of the Company's Board
of Directors (or the board of directors of any parent or subsidiary
corporations) and (iii) consultants and independent contractors who provide
valuable services to the Company (or its parent or subsidiary corporations) may
be offered incentives and rewards which will encourage them to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Company and continue to render services to the Company (or its parent or
subsidiary corporations).
For purposes of the Plan, the following provisions shall be applicable in
determining the parent and subsidiary corporations of the Company:
(i) Any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company shall be considered to be a parent
corporation of the Company, provided each such corporation in the unbroken
chain (other than the Company) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
(ii) Each corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company shall be considered to be a
subsidiary of the Company, provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
II. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors (the "Board") of
the Company. The Board, however, may at any time appoint one or more committees
("Committee") of two (2) or more members of the Board and delegate to such
Committee one or more of the administrative powers allocated to the Board
pursuant to the provisions of the Plan. Such Committee may also establish sub-
committees for such purposes, for instance, as complying with the "outside
director" stock option administration requirements of Internal Revenue Code
Section
<PAGE>
162(m). Members of the Committee shall serve for such period of time as the
Board may determine and shall be subject to removal by the Board at any time.
The Board may also at any time terminate the functions of the Committee and
reassume all powers and authority previously delegated to the Committee.
The Plan Administrator (either the Board or the Committee, to the extent
the Committee is at the time responsible for the administration of the Plan)
shall have full power and authority (subject to the provisions of the Plan) to
establish such rules and regulations as it may deem appropriate for the proper
administration of the Plan and to make such determinations under, and issue such
interpretations of, the Plan and any outstanding option as it may deem necessary
or advisable Decisions of the Plan Administrator shall be final and binding on
all parties who have an interest in the Plan or any outstanding option.
III. ELIGIBILITY FOR OPTION GRANTS
The persons eligible to receive option grants under the Plan are as
follows:
(i) key employees (including officers and directors) of the Company
(or its parent or subsidiary corporations) who render services which
contribute to the success and growth of the Company (or its parent or
subsidiary corporations) or which may reasonably be anticipated to
contribute to the future success and growth of the Company (or its parent
or subsidiary corporations);
(ii) the non-employee members of the Board or the non-employee members
of the board of directors of any parent or subsidiary corporations; and
(iii) those consultants or independent contractors who provide
valuable services to the Company (or its parent or subsidiary
corporations).
Subject to the limitations contained in the following paragraph, the Plan
Administrator shall have full authority to determine which eligible individuals
are to receive option grants under the Plan, the number of shares to be covered
by each such grant, whether the granted option is to be an incentive stock
option ("Incentive Option") which satisfies the requirements of Section 422 of
the Internal Revenue Code or a non-statutory option not intended to meet such
requirements, the time or times at which each such option is to become
exercisable, and the maximum term for which the option is to be outstanding.
The following limitations shall apply to grants of options to employees:
(i) No employee shall be granted, in any fiscal year of the
Company, options to purchase more than five hundred thousand (500,000) shares.
-2-
<PAGE>
(ii) The foregoing limitation shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section IV.
(iii) If an option is cancelled, the cancelled option will be
counted against the limit set forth in this Section. For this purpose, if the
exercise price of an option is reduced, the transaction will be treated as a
cancellation of the option and the grant of a new option.
IV. STOCK SUBJECT TO THE PLAN
The stock issuable under the Plan shall be shares of the Company's
authorized but unissued or reacquired Common Stock. The aggregate number of
shares which may be issued over the terms of the Plan shall not exceed one
million three hundred thousand (1,300,000) shares. The total number off shares
issuable under the a shall be subject to adjustment from time to time in
accordance with the provisions of this Section IV.
Should an option expire or terminate for any reason prior to exercise or
surrender in full (including options cancelled in accordance with the
cancellation-regrant provisions of Section VIII of the Plan), the shares subject
to the portion of the option not so exercised or surrendered shall be available
for subsequent option grants under the Plan. Shares subject to any option or
portion thereof surrendered in accordance with Section IX of the Plan and shares
repurchased by the Company pursuant to its repurchase rights under the Plan
shall NOT be available for subsequent option grants under the Plan.
In the event any change is made to the Common Stock issuable under the Plan
by reason of (i) any Corporate Transaction (as defined in Section VII) or
(ii) any stock split, stock dividend, combination of shares, exchange of shares
or other change affecting the outstanding Common Stock as a class without
receipt of consideration, then unless such change results in the termination of
all outstanding options under the Plan as a result of the corporate Transaction,
appropriate adjustments shall be made to (I) the aggregate class and/or number
of shares issuable under the Plan and (II) the class and/or number of shares and
price per share of the Common Stock subject to each outstanding option in order
to prevent the dilution or enlargement of benefits thereunder.
V. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action of the
Plan Administrator and may, at the Plan Administrator's discretion, be either
Incentive Options or nonstatutory options. Individuals who are not employees of
the Company or its parent or subsidiary corporations may only be granted non-
statutory options. Each granted option shall be evidenced by one or more
instruments in the form approved by the Plan Administrator; PROVIDED, however,
that each such instrument shall comply with and incorporate the terms and
conditions specified below. Each instrument evidencing an Incentive Option
shall, in addition, be subject to the applicable provisions of Section VI.
-3-
<PAGE>
1. OPTION PRICE.
A. The option price per share shall be fixed by the Plan
Administrator; PROVIDED, however, that in no event shall the option price per
share be less than eighty-five percent (85%) of the fair market value of a share
of Common Stock on the date of the option grant.
B. If any individual to whom an option is to be granted pursuant to
the provisions of the Plan is on the date of grant the owner of stock (as
determined under Section 424(d) of the Internal Revenue Code) possessing 10% or
more of the total combined voting power of all classes of stock of the Company
or any one of its parent or subsidiary corporations (such person to be here in
referred to as a 10% Shareholder), then the option price per share shall not be
less than one hundred and ten percent (110%) of the fair market value of one
share of Common Stock on the date of grant.
C. The option price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section X and the instrument
evidencing the grant, be payable in one of the alternative forms specified
below:
(i) full payment in cash or check; or
(ii) full payment in shares of Common Stock held by the optionee
for the requisite period necessary to avoid a charge to the Company's
earnings for financial reporting purposes and valued at fair market value
on the Exercise Date (as such term is defined below); or
(iii) payment through a combination of shares of Common Stock
held by the optionee for the requisite period necessary to avoid a charge
to the Company's earnings for financial reporting purposes and valued at
fair market value on the Exercise Date and cash or check, equal in the
aggregate to the option price; or
(iv) delivery of a properly executed exercise notice together
with such other documentation as the Plan Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery
to the Company of the sale or loan proceeds required to pay the exercise
price.
For purposes of this subparagraph C, the Exercise Date shall be the first
date on which the Company shall have received both written notice of the
exercise of the option and payment of the option price for the purchased shares.
D. The fair market value of a share of Common Stock on any relevant
date under subparagraph A, B or C above (and for all other valuation purposes
under the Plan) shall be determined in accordance with the following provisions:
-4-
<PAGE>
(i) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded in the over-the-counter market,
the fair market value shall be the mean between the highest bid and lowest
asked prices (or, if such information is available, the closing selling
price) per share of Common Stock on the date in question in the over-the-
counter market, as such prices are reported by the National Association of
Securities Dealers through its NASDAQ system or any successor system. If
there are no reported bid and asked prices (or closing selling price) for
the Common Stock on the date in question, then the mean between the highest
bid price and lowest asked price (or the closing selling price) on the last
preceding date for which such quotations exist shall be determinative of
fair market value.
(ii) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, then the fair market value shall be the
closing selling price per share of Common Stock on the date in question on
the stock exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on such exchange on the date in question, then the
fair market value shall be the closing selling price on the exchange on the
last preceding date for which such quotation exists.
(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the over-the-
counter market, or, if the Plan Administrator determines that the value as
determined pursuant to subparagraphs (i) and (ii) above does not reflect
fair market value, then the fair market value shall be determined by the
Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate, including one or more independent
professional appraisals.
2. TERM AND EXERCISE OF OPTIONS.
Each option granted under the Plan shall be exercisable at such time or
times, during such period, and for such number of shares as shall be determined
by the Plan Administrator and set forth in the instrument evidencing such
option; PROVIDED, however, that no such option shall have a maximum term in
excess of ten (10) years from the grant date and PROVIDED, further, that no such
option granted to a 10% Shareholder shall have a maximum term in excess of five
(5) years from the grant date. During the lifetime of the optionee, the option
shall be exercisable only by the optionee and shall not be assignable or
transferable by the optionee otherwise than by will or by the laws of descent
and distribution.
3. EFFECT OF TERMINATION OF EMPLOYMENT.
A. Should an optionee cease to be a Service Provider to the Company
for any reason (including death or permanent disability as defined in
Section 22(e)(3) of the Internal
-5-
<PAGE>
Revenue Code) while the holder of one or more outstanding options under the
Plan, then such option or options shall not (except to the extent otherwise
provided pursuant to Section XI below) remain exercisable for more than a
thirty-six (36) month period (or such shorter period determined by the Plan
Administrator and specified in the instrument evidencing the grant) following
the date of such cessation of Service Provider status; PROVIDED, however, that
under no circumstances shall such options be exercisable after the specified
expiration date of the option term. Each such option shall, during such thirty-
six (36) month or shorter period, be exercisable only to the extent of the
number of shares (if any) for which the option is exercisable on the date of
such cessation of Service Provider status. Upon the expiration of such thirty-
six (36) month or shorter period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be exercisable.
B. Any option granted to an optionee under the Plan and exercisable
in whole or in part on the date of the optionee's death may be subsequently
exercised, but only to the extent of the number of shares (if any) for which the
option is exercisable on the date of the optionee's death, by the personal
representative of the optionee's estate or by the person or persons to whom the
option is transferred pursuant to the optionee's will or in accordance with the
laws of descent and distribution, PROVIDED AND ONLY if such exercise occurs
prior to the EARLIER of (i) the third anniversary of the date of the optionee's
cessation of Service Provider status or (ii) the specified expiration date of
the option term. Upon the occurrence of the earlier event, the option shall
terminate and cease to be exercisable.
C. If (i) the optionee's status as Service Provider is terminated
for misconduct (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement) or (ii) the optionee makes or attempts to
make any unauthorized use or disclosure of confidential information or trade
secrets of the Company or its parent or subsidiary corporations, then in any
such event all outstanding options granted the optionee under the Plan shall
terminate and cease to be exercisable immediately upon such termination of
Service Provider status or such unauthorized use or disclosure of confidential
or secret information or attempt thereat.
D. Notwithstanding subparagraphs A and B above, the Plan
Administrator shall have complete discretion, exercisable either at the time the
option is granted or at the time the optionee ceases Service Provider status, to
establish as a provision applicable to the exercise of one or more options
granted under the Plan that during the limited period of exercisability
following the cessation of Service Provider status as provided in Section V.3.A
above, the option may be exercised not only with respect to the number of shares
for which it is exercisable at the time of the optionee's cessation of Service
Provider status but also with respect to one or more subsequent installments of
purchasable shares for which the option would otherwise have become exercisable
had such cessation of Service Provider status not occurred.
E. For purposes of the foregoing provisions of this Section V.3 (and
all other provisions of the Plan), unless it is evidenced otherwise in the
specific option agreement evidencing the option grant and/or the purchase
agreement evidencing the purchased optioned
-6-
<PAGE>
shares, the optionee shall be deemed to be a Service Provider to the Company for
so long as such individual renders services on periodic basis to the Company or
any parent or subsidiary corporation in the capacity of an Employee, a non
employee member of the board of directors or an independent consultant or
advisor. The optionee shall be considered to be an Employee for so long as such
individual remains in the employ of the Company or one or more of its parent or
subsidiary corporations.
4. SHAREHOLDER RIGHTS.
An optionee shall have none of the rights of a shareholder with respect to
any shares covered by the option until such individual shall have exercised the
option and paid the option price.
5. REPURCHASE RIGHTS.
The shares of Common Stock acquired upon the exercise of options granted
under the Plan may be subject to one or more repurchase rights of the Company in
accordance with the following provisions:
A. The Plan Administrator may in its discretion determine that it
shall be a term and condition of one or more options exercised under the Plan
that the Company (or its assignees) shall have the right, exercisable upon the
optionee cessation of Service Provider status, to repurchase at the option price
all or (at the discretion of the Company and with the consent of the optionee)
any portion of the shares of Common Stock previously acquired by the optionee
upon the exercise of such option. Any such repurchase right shall be
exercisable by the Company (or its assignees) upon such terms and conditions
(including the establishment of the appropriate vesting schedule and other
provision for the expiration of such right in one or more installments over the
optionee's period of Service Provider status) as the Plan Administrator may
specify in the instrument evidencing such right.
B. The Plan Administrator may assign the Company's repurchase rights
under subparagraph A. above to any person or entity selected by the Plan
Administrator, including one or more shareholders of the Company. If the
selected assignee is other than a parent or subsidiary corporation of the
Company, then the assignee must make a cash payment to the Company, upon the
assignment of the repurchase rights, in an amount equal to the excess (if any)
of the fair market value of the unvested shares at the time subject to the
repurchase rights and the aggregate repurchase price payable for such unvested
shares thereunder.
C. All of the Company's outstanding repurchase rights shall
automatically terminate, and all purchased shares under the Plan shall
immediately vest in full, upon the occurrence of any Corporate Transaction under
Section VII; PROVIDED, however, that no such termination of the repurchase
rights for immediate vesting of the purchased shares shall occur if (and to the
extent) (i) the Company's outstanding repurchase rights are to be assigned to
the
-7-
<PAGE>
successor corporation (or parent thereof) in connection with the Corporate
Transaction or (ii) such termination of repurchase rights and acceleration of
vesting are precluded by other limitations imposed by the Plan Administrator at
the time of the option grant.
D. The Plan Administrator may also in its discretion establish as a
term and condition of one or more options granted under the Plan that the
Company shall have a right of first refusal with respect to any proposed sale or
other disposition by the optionee (or any successor in interest by reason of
purchase, gift or other mode of transfer) of any shares of Common Stock issued
upon the exercise of such options. Any such right of first refusal shall be
exercisable by the Company (or its assignees) in accordance with the terms and
conditions set forth in the instrument evidencing such right.
VI. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees of the Company. Options which are specifically
designated as "non-statutory" options when issued under the Plan shall NOT be
subject to such terms and conditions.
A. OPTION PRICE. The option price per share of the Common Stock subject
to an Incentive Option shall in no event be less than one hundred percent (100%)
of the fair market value of a share of Common Stock on the date of grant.
B. DOLLAR LIMITATION. To the extent that the aggregate fair market
value:
(i) of shares subject to an optionee's Incentive Options granted
by the Company, any parent or subsidiary, which
(ii) become exercisable for the first time during any calendar
year (under all plans of the Company or any parent or subsidiary)
exceeds $100,000, such excess options shall be treated as non-statutory options.
For purposes of this Section VI.B., Incentive Options shall be taken into
account in the order in which they were granted, and the fair market value of
the shares shall be determined as of the time the option with respect to such
shares is granted.
Except as modified by the preceding provisions of this Section VI, all the
provisions of the Plan shall be applicable to the Incentive Options granted
hereunder.
VII. CORPORATE TRANSACTIONS
A. In the event of any of the following transactions (a "Corporate
Transaction"):
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(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State of the Company's incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company, or
(iii) any reverse merger in which the Company is the surviving
entity but in which fifty percent (50%) or more of the Company's
outstanding voting stock is transferred to holders different from those who
held the stock immediately prior to such merger,
then the exercisability of each option outstanding under the Plan shall be
automatically accelerated so that each such option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock
purchasable under such option and may be exercised for all or any portion of
such shares. However, an outstanding option under the Plan shall not be so
accelerated if and to the extent (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof, or (ii) such
option is to be replaced by a comparable cash incentive program of the successor
corporation based on the value of the option at the time of the Corporate
Transaction, or (iii) the acceleration of such option is subject to other
applicable limitations imposed by the Plan Administrator at the time of grant.
The determination of comparability under clause (i) or (ii) above shall be made
by the Plan Administrator and its determination shall be final, binding and
conclusive.
B. Upon the consummation of the Corporate Transaction, all outstanding
options under the Plan shall, to the extent not previously exercised or assumed
by the successor corporation or its parent company, terminate and cease to be
outstanding.
C. The grant of options under this Plan shall in no way affect the right
of the Company 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.
VIII. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different:
numbers of shares of Common Stock but having an option price per share not less
than eighty-five percent (85%) of fair market value (one hundred percent (100%)
of fair
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market value in the case of an Incentive Option or, in the case of a 10%
Shareholder, not less than one hundred and ten percent (110%) of fair market
value) on the new grant date.
IX. SURRENDER OF OPTIONS FOR CASH OR STOCK
A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this
Section IX, one or more optionees may be granted the right, exercisable upon
such terms and conditions as the Plan Administrator may establish, to surrender
all or part of an unexercised option under the Plan in exchange for a
distribution from the Company equal in amount to the excess of (i) the fair
market value (at date of surrender) of the number of shares in which the
optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate option price payable for such vested
shares.
B. No surrender of an option shall be effective hereunder unless it is
approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the optionee shall accordingly become entitled under this
Section IX may be made in shares of Common Stock valued at fair market value at
date of surrender, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the optionee shall retain whatever rights the optionee had
under the surrendered option (or surrendered portion thereof) on the date of
surrender and may exercise such rights at any time prior to the LATER of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised at any time after ten (10) years (or five (5) years in the case of
a 10% Shareholder) after the date of the option grant.
D. Notwithstanding the foregoing provisions of this Section IX, should
twenty-five percent (25%) or more of the Company's outstanding voting stock be
acquired, at a time when one or more classes of the Company's equity securities
are registered under Section 12(g) of the Securities Exchange Act of 1934 (as
amended), pursuant to a tender or exchange offer (I) which is made by a person
or group of related persons other than the Company or a person that directly or
indirectly controls, is controlled by or is under common control with the
Company and (II) which the Board does not recommend the company's shareholders
to accept, then each officer or director who is at the time subject to the
short-swing profit restrictions of the Federal securities laws shall have the
right (exercisable for a period not to exceed thirty (30) days) to surrender any
or all options held by such individual under this Plan, to the extent such
options are at the time exercisable for vested shares, and receive in exchange
therefor an appreciation distribution from the Company equal in amount to the
excess of (i) the fair market value (on the date of surrender) of the number of
shares in which the optionee is at the time vested under the surrendered option
or portion thereof over (ii) the aggregate option price
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payable for such vested shares. The approval of the Plan Administrator shall
not be required for such surrender, and the distribution to which such
individual shall become entitled upon such surrender shall be made entirely in
cash.
E. For purposes of subparagraph D. above, the fair market value per
share of the vested Common Stock subject to the surrendered option shall be
deemed to be equal to the GREATER of (a) the value per share on the date of
surrender, as determined in accordance with the valuation provisions of
Section V.l.D. or (b) the highest reported price per share paid in effecting the
tender or exchange offer. However, if the surrendered option is an Incentive
Option, then the fair market value of the vested shares subject to the
surrendered option shall not exceed the value per share determined under
clause (a) above.
X. LOANS OR GUARANTEE OF LOANS
The Plan Administrator may assist any optionee including any officer or
director) in the exercise of one or more options under the Plan by (a)
authorizing the extension of a loan to such optionee from the Company,
(b) permitting the optionee to pay the option price for the purchased Common
Stock in installments over a period of years or (c) authorizing a guarantee by
the Company of a third-party loan to the optionee. The terms of any loan,
installment method of payment or guarantee (including the interest rate and
terms of repayment) shall be established by the Plan Administrator in its sole
discretion. Loans, installment payments and guarantees may be granted without
security or collateral (other than to optionees who are consultants or
independent contractors, in which event the loan must be adequately secured by
collateral other than the purchased shares), but the maximum credit available to
the optionee shall not exceed the SUM of (i) the aggregate option price payable
for the purchased shares plus (ii) any Federal and State income and employment
tax liability incurred by the optionee in connection with the exercise of the
option.
XI. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority to extend the
period of time for which the option is to remain exercisable following the
optionee's termination of Service Provider status from the thirty-six (36) month
or shorter period set forth in the option agreement to such greater period of
time as the Plan Administrator shall deem appropriate; PROVIDED, however, that
in no event shall such option be exercisable after the specified expiration date
of the option term.
XII. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to amend
or modify the Plan in any or all respects whatsoever; PROVIDED, however, that no
such amendment or modification shall, without the consent of the holders,
adversely affect the rights and obligations with respect to options at the time
outstanding under the Plan; and PROVIDED, further that the
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Board shall not, without the approval of the Company's shareholders,
(i) increase the maximum number of shares issuable under the Plan, except for
permissible adjustments under Section IV, or (ii) materially modify the
eligibility requirements for the grant of options under the Plan.
XIII. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective when adopted by the Board, but no
option granted under the Plan shall become exercisable unless and until the Plan
shall have been approved by the Company's shareholders. If such shareholder
approval is not obtained within twelve (12) months after the date of the Board's
adoption of the Plan, then all options previously granted under the Plan shall
terminate and no further options shall be granted. Subject to such limitation,
the Plan Administrator may grant options under the Plan at any time after the
effective date and before the date fixed herein for termination of the Plan.
B. Unless sooner terminated in accordance with Section VII, the Plan
shall terminate upon the EARLIER of (i) the expiration of the ten (10) year
period measured from the date of the Board's adoption of the Plan or (ii) the
date on which all shares available for issuance under the Plan shall have been
issued pursuant to the exercise or surrender of options granted hereunder. If
the date of termination is determined under clause (i) above, then options
outstanding on such date shall thereafter continue to have force and effect in
accordance with the provisions of the instruments evidencing such options.
C. Options may be granted under this Plan to purchase shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, PROVIDED, (i) an amendment to increase the maximum number of shares
issuable under the Plan is adopted by the Board prior to the initial grant of
any such option and within one year thereafter such amendment is approved by the
Company's shareholders and (ii) each option granted is not to become
exercisable; in whole or in part, at any time prior to the obtaining of such
shareholder approval.
XIV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.
XV. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option hereunder, and
the issuance of stock upon the exercise or surrender of any such option shall be
subject to the procurement by the Company of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the options granted
under it and the stock issued pursuant to it.
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EXHIBIT A
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
A. The Board of Directors of the Company has adopted the Company's 1990
Stock Option Plan (the "Plan") for the purpose of attracting and retaining the
services of selected key employees (including officers and directors), non-
employee members of the Board of Directors and consultants and other independent
contractors who contribute to the financial success of the Company or its parent
or subsidiary corporations.
B. Optionee is an individual who is to render valuable services to the
Company or its parent or subsidiary corporations, and this Agreement is executed
pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Company's grant of a stock option to Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and conditions set
forth in this Agreement, the Company hereby grants to Optionee, as of the grant
date (the "Grant Date") specified in the accompanying Notice of Grant of Stock
Option (the "Grant Notice"), a stock option to purchase up to that number of
shares of the Company's Common Stock (the "Optioned Shares") as is specified in
the Grant Notice. The Optioned Shares shall be purchasable from time to time
during the option term at the option price per share (the "Option Price")
specified in the Grant Notice.
2. OPTION TERM. This option shall have a maximum term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the expiration date (the "Expiration Date") specified in the Grant
Notice, unless sooner terminated in accordance with Paragraph 5, 6 or 19.
3. OPTION NONTRANSFERABLE; EXCEPTION. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution and may be exercised, during Optionee's lifetime, only
by Optionee.
4. DATES OF EXERCISE. This option may not be exercised in whole or in
part at any time prior to the time the Plan is approved by the Company's
shareholders in accordance with Paragraph 19. Provided such shareholder
approval is obtained, this option shall thereupon become exercisable for the
Optioned Shares in one or more installments as is specified in the Grant Notice.
As the option becomes exercisable in one or more installments, the installments
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shall accumulate and the option shall remain exercisable for such installments
until the Expiration Date or sooner termination of the option term under
Paragraph 5 or Paragraph 6 of this Agreement.
5. ACCELERATED TERMINATION OF OPTION TERM. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
(i) Except as otherwise provided in subparagraph (ii), (iii) or
(iv) below, should Optionee cease to be a Service Provider to the Company, then
the period for exercising this option shall be reduced to a three (3)-month
period commencing with the date of such cessation of Service Provider status,
but in no event shall this option be exercisable at any time after the
Expiration Date. Upon the expiration of such three (3)-month period or (if
earlier) upon the Expiration Date, this option shall terminate and cease to be
outstanding.
(ii) Should Optionee die while this option is outstanding, then the
personal representative of the Optionee's estate or the person or persons
to whom the option is transferred pursuant to the Optionee's will or in
accordance with the law of descent and distribution shall have the right to
exercise this option. Such right shall lapse and this option shall cease
to be exercisable upon the EARLIER of (A) the expiration of the thirty-six
(36) month period measured from the date of Optionee's cessation of Service
Provider status or (B) the Expiration Date. Upon the expiration of such
thirty-six (36) month period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding.
(iii) Should Optionee become permanently disabled and cease by reason
thereof to be a Service Provider, then the Optionee shall have a period of
thirty-six (36) months (commencing with the date of such cessation of Service
Provider status) during which to exercise this option; PROVIDED, however, that
in no event shall this option be exercisable at any time after the Expiration
Date. * Optionee shall be deemed to be permanently disabled if Optionee is, by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of not less than twelve (12)
consecutive months or more, unable to perform his/her usual duties for the
Company or parent or subsidiary corporation retaining his/her services. Upon
the expiration of such limited period of exercisability or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding.
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* In the event this option is an incentive stock option as specified in the
Grant Notice, the exercise of this option after a twelve month period
(commencing with the date of such cessation of Service Provider status due
to permanent disability) will disqualify this option for favorable tax
treatment as further specified in Paragraph 20.A.
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<PAGE>
(iv) Should the Optionee's status as a Service Provider be
terminated for misconduct (including, but not limited to, any act of
dishonesty, willful misconduct, fraud or embezzlement) or should the
Optionee make or attempt to make any unauthorized use or disclosure of the
confidential information or trade secrets of the Company or any parent or
subsidiary corporations, then in any such event this option shall terminate
and cease to be exercisable immediately upon such termination of Service
Provider status or such unauthorized disclosure or use of confidential or
secret information or attempt thereat.
(v) During such limited period of exercisability provided in
subparagraphs (i), (ii) and (iii) above, this option may be exercised for
any or all of the Optioned Shares for which this option is at the time of
the Optionee's cessation of Service Provider status, exercisable in
accordance with the exercise schedule specified in the Grant Notice.
(vi) For purposes of this Paragraph 5 and for all other purposes
under this Agreement, the Optionee shall be deemed to be a Service Provider
so long as the Optionee continues to render periodic services to the
Company or any parent or subsidiary corporation, whether as an Employee, a
non-employee member of the board of directors, or an independent contractor
or consultant. In applying the Provisions of this Agreement, the Optionee
shall be deemed to be an Employee of the Company and to continue in the
Company's employ for so long as the Optionee remains in the employ of the
Company or one or more of its parent or subsidiary corporations.
(vii) In applying the provisions of this Agreement, a corporation
shall be considered to be a subsidiary corporation of the Company if it is
a member of an unbroken chain of corporations beginning with the Company,
provided each such corporation in the chain (other than the last
corporation) owns, at the time of determination, 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. A corporation shall be considered to
be a parent corporation of the Company if it is a member of an unbroken
chain ending with the Company, provided each such corporation in the chain
(other than the Company) owns, at the time of determination, 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.
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6. SPECIAL TERMINATION OF OPTION.
A. In the event of one or more of the following transactions (a
"Corporate Transaction':):
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State of the Company's incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company, or
(iii) any reverse merger in which fifty percent (50%) or more of
the Company's outstanding voting stock is transferred to holders different
from those who held the stock immediately prior to such merger,
then the exercisability of this option shall, to the extent it is not otherwise
at the time fully exercisable, be automatically accelerated so that such option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable with respect to the Optioned Shares and
may be exercised for all or any portion of such shares. No such acceleration of
this option, however, shall occur if and to the extent: (i) the option is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof or (ii) the option is to be replaced by a comparable cash incentive
program of the successor corporation based on the value of the option at the
time of the Corporate Transaction. The determination of comparability under
clause (i) or (ii) shall be made by the Plan Administrator, and its
determination shall be final, binding and conclusive.
B. The exercisability of this option as an incentive stock option
under the Federal tax laws (if designated as such in the Grant Notice) shall, in
connection with any such Corporate Transaction, be subject to the applicable
dollar limitation of Paragraph 20.
C. This option, to the extent not previously exercised, shall
terminate upon the consummation of the Corporate Transaction and cease to be
exercisable, unless it is expressly assumed by the successor corporation or
parent thereof.
D. This Agreement shall not in any way affect the right of the
Company to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTIONED SHARES. In the event any change is made to the
Common Stock issuable under the Plan by reason of any (i) Corporate Transaction
or (ii) stock split, stock dividend, combination of shares, exchange of shares,
or other change affecting the outstanding
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Common Stock as a class without receipt of consideration, then unless such
change results in the termination of the option as a result of a Corporate
Transaction, appropriate adjustments shall be made to (I) the class and/or
number of Optioned Shares subject to this option and (II) the Option Price
payable per share in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder.
8. PRIVILEGE OF STOCK OWNERSHIP. The holder of this option shall not
have any of the rights of a shareholder with respect to the Optioned Shares
until such individual shall have exercised the option and paid the Option Price.
9. MANNER OF EXERCISING OPTION.
A. In order to exercise this option with respect to all or any part
of the Optioned Shares for which this option is at the time exercisable,
Optionee (or in the case of exercise after Optionee's death, the Optionee's
executor, administrator, heir or legatee, as the case may be) must take the
following actions:
(i) Execute and deliver to the Secretary of Company a stock
purchase agreement (the "Purchase Agreement") in substantially the form of
Exhibit B to the Grant Notice.
(ii) Pay the aggregate Option Price for the purchased shares
in one or more of the following alternative forms:
1. full payment in cash or check; or
2. full payment in shares of Common Stock of the Company
held by the Optionee for the requisite period necessary to avoid a
charge to the Company's earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date (as such terms are
defined below); or
3. full payment in a combination of shares of Common Stock
of the Company held by the Optionee for the requisite period necessary
to avoid a charge to the Company's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise Date and
cash or check; or
4. delivery of a properly executed exercise notice
together with such other documentation as the Plan Administrator and
the broker, if applicable, shall require to effect an exercise of the
Option and delivery to the Company of the sale or loan proceeds
required to pay the exercise price.
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5. any other form which the Plan Administrator may, in its
discretion, approve at the time of exercise in accordance with the
provisions of paragraph 16 of this Agreement.**
(iii) Furnish to the Company appropriate documentation that the
person or persons exercising the option, if other than Optionee, have the
right to exercise this option.
B. For purposes of this Agreement, the Fair Market Value of a share
of Common Stock on any relevant date shall be determined in accordance with
subparagraphs (i) through (iii) below, and the Exercise Date shall be the first
date on which there shall have been delivered to the Company both (I) the
executed Purchase Agreement and (II) the payment of the Option Price for the
purchased shares.
(i) If the Common Stock is not on the date in question listed or
admitted to trading on any stock exchange, but is traded in the over-
the-counter market, the Fair Market Value shall be the mean between
the highest bid and lowest asked prices (or if such information is
available, the closing selling price) per share of Common Stock on
such date in the over-the-counter market, as such prices are reported
by the National Association of Securities Dealers through its NASDAQ
system or any successor system. If there are no reported bid and
asked prices (or closing selling price) for the Common Stock on the
date in question, then the mean between the highest bid and lowest
asked prices (or closing selling price) on the last preceding date for
which such quotations exist shall be determinative of Fair Market
Value.
(ii) If the Common Stock is on the date in-question listed or
admitted to trading on any stock exchange, then the Fair Market Value
shall be the closing selling price per share of Common Stock on such
date on the stock exchange determined by the Plan Administrator to be
the primary market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such exchange. If
there is no reported sale of Common Stock on such exchange on the date
in question, then the Fair Market Value shall be the closing selling
price on the exchange on the last preceding date for which such
quotation exists.
(iii) If the Common Stock is on the date in question neither
listed nor admitted to trading on any stock exchange nor traded in the
over-the-counter market, then the Fair Market Value shall be
determined by the Plan Administrator
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** Authorization of a loan under such provisions may, under currently proposed
Treasury Regulations, result in the loss of incentive stock option
treatment under the Federal tax laws.
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<PAGE>
after taking into account such factors as the Plan Administrator shall deem
appropriate, including one or more independent professional appraisals.
C. As soon after the Exercise Date as practical, the Company shall
mail or deliver to Optionee or to the other person or persons exercising this
option a certificate or certificates representing the shares so purchased and
paid for, with the appropriate legends affixed thereto.
D. In no event may this option be exercised for any fractional
shares.
10. REPURCHASE RIGHTS. THE OPTIONEE HEREBY AGREES THAT ALL OPTIONED
SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN
RIGHTS OF THE COMPANY AND ITS ASSIGNS TO REPURCHASE STOCK SHARES IN ACCORDANCE
WITH THE TERMS AND CONDITIONS SPECIFIED IN THE PURCHASE AGREEMENT.
11. COMPLIANCE WITH LAWS AND REGULATIONS.
A. The exercise of this option and the issuance of Optioned Shares
upon such exercise shall be subject to compliance by the Company and the
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange on which shares of the Company's
Common Stock may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option, Optionee shall
execute and deliver to the Company such representations in writing as may be
requested by the Company in order for it to comply with the applicable
requirements of Federal and State securities laws.
12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in
Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Company.
13. LIABILITY OF COMPANY.
A. If the Optioned Shares covered by this Agreement exceed, as of
the Grant Date, the number of shares of Common Stock which may without
shareholder approval be issued under the Plan, then this option shall be void
with respect to such excess shares, unless shareholder approval of an amendment
sufficiently increasing the number of shares of Common Stock issuable under the
Plan is obtained in accordance with the provisions of Section XII of the Plan.
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B. The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Company of any liability with respect to the non-issuance or sale of
the Common Stock as to which such approval shall not have been obtained. The
Company, however, shall use its best efforts to obtain all such approvals.
14. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or in
the Plan shall confer upon the Optionee any right to continue in the service of
the Company (or any parent or subsidiary corporation of the Company employing or
retaining Optionee) for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company (or any parent or
subsidiary corporation of the Company employing or retaining Optionee) or the
Optionee, which rights are hereby expressly reserved by each, to terminate the
Service Provider status of Optionee at any time for any reason whatsoever, with
or without cause.
15. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of the Corporate Secretary at its principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated below Optionee's signature line
on the Grant Notice. All notices shall be deemed to have been given or
delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
16. LOANS OR GUARANTEES. The Plan Administrator may, in its absolute
discretion and without any obligation to do so assist the Optionee in the
exercise of this option by (i) authorizing the extension of a loan to the
Optionee from the Company, (ii) permitting the Optionee to pay the option price
for the purchased Common Stock in installments over a period of years, or
(iii) authorizing a guarantee by the Company of a third-party loan to the
Optionee. The terms of any loan installment method of payment or guarantee
(including the interest rate, the collateral requirements and terms of
repayment) shall be established by the Plan Administrator in its sole
discretion.
17. CONSTRUCTION. This Agreement and the option evidenced hereby are made
and granted pursuant to the Plan and are in all respects limited by and subject
to the express terms and provisions of the Plan. All decisions of the Plan
Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an interest
in this option.
18. GOVERNING LAW. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict of laws rules.
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19. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE STOCK OPTION. In the event
this option is an incentive stock option as specified in the Grant Notice, the
following terms and conditions shall also apply to the grant:
A. This option shall cease to qualify for favorable tax treatment as
an incentive stock option under the Federal tax laws if (and to the extent) this
option is exercised for one or more Optioned Shares: (i) more than three
(3) months after the date the Optionee ceases to be an Employee for any reason
other than death or permanent disability (as defined in Paragraph 5) or
(ii) more than one (1) year after the date the Optionee ceases to be an Employee
by reason of permanent disability.
B. In the event this option is immediately exercisable as specified
in the Grant Notice, then except in the event of a Corporate Transaction under
Paragraph 6, this option shall not become exercisable in any calendar year to
the extent that the aggregate fair market value (determined at the Grant Date)
of the Company's Common Stock for which this option would otherwise first become
exercisable in such calendar year would, when added to the aggregate fair market
value (determined as of the respective date or dates of grant) of the Company's
Common Stock for which one or more other post-1986 incentive stock options
granted to the Optionee prior to the Grant Date (whether under the Plan or any
other option plan of the Company or its parent or subsidiary corporations) first
become exercisable during the same calendar year, exceeds One Hundred Thousand
Dollars ($100,000) in the aggregate. To the extent the exercisability of this
option is deferred by reason of the foregoing limitation, the deferred portion
will first become exercisable in the first calendar year or years thereafter in
which the One Hundred Thousand Dollar ($100,000) limitation of this Paragraph
2O.B would not be contravened.
C. In the event this option is exercisable in installments as
specified in the Grant Notice, no installment under this option (whether annual
or monthly) shall qualify for favorable tax treatment as an incentive stock
option under the Federal tax laws if (and to the extent) the aggregate fair
market value (determined at the Grant Date) of the Company's Common Stock for
which such installment first becomes exercisable hereunder will, when added to
the aggregate fair market value (determined as of the respective date or dates
of grant) of the Company's Common Stock for which one or more other post-1986
incentive stock options granted to the Optionee prior to the Grant Date (whether
under the Plan or any other option plan of the Company or any parent or
subsidiary corporation) first become exercisable during the same calendar year,
exceed One Hundred Thousand Dollars ($100,000) in the aggregate.
D. Should the exercisability of this option be accelerated upon a
Corporate Transaction in accordance with Paragraph 6, then this option shall
qualify for favorable tax treatment as an incentive stock option under the
Federal tax laws only to the extent the aggregate fair market value (determined
at the Grant Date) of the Company's Common Stock for which this option first
becomes exercisable in the calendar year in which the Corporate Transaction
occurs does not, when added to the aggregate fair market value (determined as of
the respective
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date or dates of grant) of the Company's Common Stock for which this option or
one or more other post-1986 incentive stock options granted to the Optionee
prior to the Grant Date (whether under the Plan or any other option plan of the
Company or any parent or subsidiary corporations) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate.
E. To the extent this option should fail to qualify as an incentive
stock option under the Federal tax laws, the Optionee will recognize
compensation income in connection with the acquisition of one or more Optioned
Shares hereunder, and the Optionee must make appropriate arrangements for the
satisfaction of all Federal, State or local income or other tax withholding
requirements and Federal social security employee tax requirements applicable to
such compensation income.
20. ADDITIONAL TERMS APPLICABLE TO A NON-QUALIFIED STOCK OPTION. In the
event this option is a non-qualified stock option as specified in the Grant
Notice, or to the extent the $100,000 incentive stock option limitation of Code
Section 422(c) is exceeded, Optionee hereby agrees to make appropriate
arrangements with the Company or parent or subsidiary corporation employing
Optionee for the satisfaction of all Federal, State or local income or other tax
withholding requirements and Federal social security employee tax requirements
applicable to the exercise of this option.
21. LIMITED STOCK APPRECIATION RIGHT. Optionee is hereby granted a
limited stock appreciation right, exercisable upon the terms and conditions set
forth below:
A. The stock appreciation right shall under no circumstances become
exercisable until it has been outstanding for a period of at least six months
measured from the Grant Date of this option.
B. Provided (i) the Optionee is at the time an officer or director
of the Company subject to the short-swing profit restrictions of the Federal
securities laws and (ii) one or more classes of the Company's equity securities
are at such time registered under Section 12(g) of the Securities Exchange Act
of 1934 (as amended), should twenty-five percent (25%) or more of the Company's
outstanding voting stock be acquired pursuant to a tender or exchange offer (i)
which is made by a person or group of related persons other than the Company, or
a person that directly or indirectly controls, is controlled by or is under
common control with the Company and (ii) which the Board does not recommend the
Company's shareholders accept, then Optionee shall have the right (exercisable
for a period of thirty (30) days following such acquisition) to surrender this
option (or any portion thereof), to the extent such surrendered option (or
portion thereof) is at the time exercisable for vested shares, for a cash
distribution from the Company equal in amount to the excess of (i) the fair
market value (at date of surrender) of the number of shares in which Optionee is
at the time vested under the surrendered option or portion thereof over (ii) the
aggregate option price payable for such vested shares.
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C. For purposes of subparagraph B. above, the fair market value per
share of the vested Common Stock subject to the surrendered option shall be
deemed to be equal to the GREATER of (I) the value per share on the date of
surrender, as determined in accordance with the valuation provisions of
Paragraph 9.B. or (II) the highest reported price per share paid in effecting
the tender or exchange offer. However, if the surrendered option is an
incentive stock option as specified in the Grant Notice, then the fair market
value of the vested shares subject to the surrendered option shall not exceed
the value per share determined under clause (I) above.
D. The limited stock appreciation right may be exercised by the
Optionee upon written notice to the Company, accompanied by the return of this
Agreement and all other instruments evidencing the surrendered option (or
portion thereof), prior to the expiration of the applicable thirty (30) day
period.
E. In no event may this limited stock appreciation right be
exercised when there is not a positive spread between the fair market value of
the Optioned Shares and the aggregate option price payable for such shares.
This limited stock appreciation right shall in all events terminate upon the
expiration or sooner termination of the option term and may not be assigned or
transferred by the Optionee.
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EXHIBIT B
REPURCHASE RIGHT
RIGHT OF FIRST REFUSAL
STOCK PURCHASE AGREEMENT
This Agreement is made as of this ___ day of ________ 19__, by and among
Wave Front Technologies Inc., a California corporation ("Company"),
_____________________, the holder of a stock option ("Optionee") under the
Company's 1990 Stock Option Plan and _____________________, the Optionee's
spouse.
I. EXERCISE OF OPTION.
1.1 EXERCISE. Optionee hereby purchases ________ shares of the
Company's Common Stock ("Purchased Shares") pursuant to that certain option
("Option") granted Optionee on ___________, 19__ ("Grant Date"), to purchase up
to __________ shares of the Company's Common Stock ("Total Purchasable Shares")
under the Company's 1990 Stock Option Plan ("Plan") at an option price of
$________ per share ("Option Price").
1.2 PAYMENT. Concurrently with the delivery of this Agreement to the
Secretary of the Company, Optionee shall pay the Option Price for the Purchased
Shares in accordance with the provisions of the agreement between the Company
and Optionee evidencing the Option ("Option Agreement") and shall deliver
whatever additional documents may be required by the Option Agreement as a
condition for exercise, together with a duly executed blank Assignment Separate
from Certificate (in the form attached hereto as Exhibit I) with respect to the
Purchased Shares.
1.3 DELIVERY OF CERTIFICATES. The certificates representing the
Purchased Shares hereunder shall be held in escrow by the Secretary of the
Company as provided in Article V hereof.
1.4 SHAREHOLDER RIGHTS. Until such time as the Company actually
exercises its repurchase right, Optionee (or any successor in interest) shall
have all the rights of a shareholder (including voting and dividend rights) with
respect to the Purchased Shares, including the Purchased Shares held in escrow
under Article V, subject, however, to the transfer restrictions of Article III.
II. SPECIAL TAX ELECTION
2.1 SECTION 83(b) ELECTION APPLICABLE TO THE EXERCISE OF A NON-
QUALIFIED STOCK OPTION. If the Purchased Shares are acquired hereunder pursuant
to the exercise of a NON-QUALIFIED STOCK OPTION, as specified in the Grant
Notice, or to the extent the $100,000 incentive stock option limitation of Code
Section 422(c) is exceeded, then the Optionee understands that
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under Section 83 of the Internal Revenue Code of 1986, as amended (the "Code"),
the excess of the fair market value of the Purchased Shares on the date any
forfeiture restrictions applicable to such shares lapse over the Option Price
paid for such shares will be reportable as ordinary income at that time. For
this purpose, the term "forfeiture restrictions" includes the right of the
Company to repurchase the Purchased Shares pursuant to the Repurchase Right
provided under Article IV of this Agreement. Optionee understands that he/she
may elect to be taxed at the time the Purchased Shares are acquired hereunder,
rather than when and as such Purchased Shares cease to be subject to such
forfeiture restrictions, by filing an election under Section 83(b) of the Code
with the Internal Revenue Service within thirty (30) days after the date of this
Agreement. Even if the fair market value of the Purchased Shares at the date of
this Agreement equals the Option Price paid (and thus no tax is payable), the
election must be made to avoid adverse tax consequences in the future. The
form for making this election is attached as Exhibit II(a) hereto. Optionee
understands that failure to make this filing within the thirty (30) day period
will result in the recognition of ordinary income by the Optionee as the
forfeiture restrictions lapse.
2.2 CONDITIONAL SECTION 83(b) ELECTION APPLICABLE TO THE EXERCISE OF
AN INCENTIVE STOCK OPTION. If the Purchased Shares are acquired hereunder
pursuant to the exercise of an INCENTIVE STOCK OPTION under the Federal tax
laws, as specified in the Grant Notice, then the following tax principles shall
be applicable to the Purchased Shares:
A. For regular tax purposes, no taxable income will be recognized at
the time the Option is exercised.
B. The excess of (i) the fair market value of the Purchased Shares
on the date the Option is exercised or (if later) on the date any forfeiture
restrictions applicable to the Purchased Shares lapse over (ii) the Option Price
paid for the Purchased Shares will be includable in the Optionee's taxable
income for alternative minimum tax purposes.
C. If the Optionee makes a disqualifying disposition of the
Purchased Shares, then the Optionee will recognize ordinary income in the year
of such disposition equal in amount to the lesser of (i) the fair market value
of the Purchased Shares on the date the Option is exercised or (if later) on the
date any forfeiture restrictions applicable to the Purchased Shares lapse over,
or (ii) the sale price, minus the Option Price paid for the Purchased Shares.
Any additional gain recognized upon the disqualifying disposition will be either
short-term or long-term capital gain depending upon the period for which the
Purchased Shares are held prior to the disposition.
D. For purposes of the foregoing, the term "forfeiture restrictions"
will include the right of the Company to repurchase the Purchased Shares
pursuant to the Repurchase Right provided under Article IV of this Agreement.
The term "disqualifying disposition" means
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any sale or other disposition*** of the Purchased Shares within two (2) years
after the Grant Date or within one (1) year after the execution date of this
Agreement.
E. If the Purchased Shares are acquired hereunder pursuant to the
exercise of an incentive stock option, as specified in the Grant Notice, or to
the extent the $100,000 incentive stock option limitation of Code Section 422(c)
is exceeded, then the Optionee understands that the excess of the fair market
value of the Purchased Shares on the date any forfeiture restrictions applicable
to such shares lapse over the Option Price paid for such shares will be
reportable as income for alternative minimum tax purposes at that time. For
this purpose, the term "forfeiture restrictions" includes the right of the
Company to repurchase the Purchased Shares pursuant to the Repurchase Right
provided under Article IV of this Agreement. Optionee understands that he/she
may elect to be taxed for alternative minimum tax purposes at the time the
Purchased Shares are acquired hereunder, rather than when and as such Purchased
Shares cease to be subject to such forfeiture restrictions, by filing an
election under Section 83(b) of the Code with the Internal Revenue Service
within thirty (30) days after the date of this Agreement. Even if the fair
market value of the Purchased Shares at the date of this Agreement equals the
Option Price paid (and thus no tax is payable), the election must be made to
avoid adverse tax consequences in the future. The form for making this
election is attached as Exhibit III(b) hereto. Optionee understands that
failure to make this filing within the thirty (30) day period will result in the
recognition of income for alternative minimum tax purposes by the Optionee as
the forfeiture restrictions lapse.
2.3 OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY,
AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER Section 83(b), EVEN IF
OPTIONEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
HIS/HER BEHALF.
III. TRANSFER RESTRICTIONS
3.1 RESTRICTION ON TRANSFER. Optionee shall not transfer, assign,
encumber or otherwise dispose of any of the Purchased Shares which are subject
to the Company's Repurchase Right under Article IV. Such restriction on
transfer, however, shall NOT be applicable to (i) a gratuitous transfer of the
Purchased Shares made to the Optionee's spouse or issue, including adopted
children, or to a trust for the exclusive benefit of the Optionee or the
Optionee's spouse or issue, PROVIDED AND ONLY IF the Optionee obtains the
Company's prior written consent to such transfer, (ii) a transfer of title to
the Purchased Shares effected pursuant
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*** Generally, a disposition of shares purchased under an incentive stock
option includes any transfer of legal title, including a transfer by sale,
exchange or gift, but does not include a transfer to the Optionee's spouse,
a transfer into joint ownership with right of survivorship if Optionee
remains one of the joint owners, a pledge, a transfer by bequest or
inheritance or certain tax free exchanges permitted under the Code.
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to the Optionee's will or the laws of intestate succession or (iii) a transfer
to the Company in pledge as security for any purchase money indebtedness
incurred by the Optionee in connection with the acquisition of the Purchased
Shares.
3.2 TRANSFEREE OBLIGATIONS. Each person (other than the Company) to
whom the Purchased Shares are transferred by means of one of the permitted
transfers specified in paragraph 3.1 must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Company that such
person is bound by the provisions of this Agreement and that the transferred
shares are subject to the Company's Repurchase Right to the same extent such
shares would be so subject if retained by the Optionee.
3.3 DEFINITION OF OWNER. For purposes of Articles III, IV and V of
this Agreement, the term "Owner" shall include the Optionee and all subsequent
holders of the Purchased Shares who derive their chain of ownership through a
permitted transfer from the Optionee in accordance with paragraph 3.1.
IV. REPURCHASE RIGHT
4.1 GRANT. The Company is hereby granted the right (the "Repurchase
Right"), exercisable at any time during the sixty (60)-day period following the
date the Optionee ceases for any reason to be a Service Provider to the Company
or (if later) during the sixty (60)-day period following the execution date of
this Agreement, to repurchase at the Option Price all or (at the discretion of
the Company and with the consent of the Optionee) any portion of the Purchased
Shares in which the Optionee has not acquired a vested interest in accordance
with the vesting provisions of paragraph 4.3 (such shares to be hereinafter
called the "Unvested Shares"). For purposes of this Agreement, the Optionee
shall be deemed to be a Service Provider to the Company for so long as the
Optionee renders periodic services to the Company or one or more of its parent
or subsidiary corporations, whether as an employee, non-employee member of the
board of directors, or an independent consultant.
4.2 EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
exercisable by written notice delivered to the Owner of the Unvested Shares
prior to the expiration of the applicable sixty (60)-day period specified in
paragraph 4.1. The notice shall indicate the number of Unvested Shares to be
repurchased and the date on which the repurchase is to be effected, such date to
be not more than thirty (30) days after the date of notice. To the extent one
or more certificates representing Unvested Shares may have been previously
delivered out of escrow to the Owner, then Owner shall, prior to the close of
business on the date specified for the repurchase, deliver to the Secretary of
the Company the certificates representing the Unvested Shares to be repurchased,
each certificate to be properly endorsed for transfer. The Company shall,
concurrently with the receipt of such stock certificates (either from escrow in
accordance with paragraph 5.3 or from Owner as herein provided), pay to Owner in
cash or cash equivalents (including the cancellation of any purchase-money
indebtedness), an amount equal to the Option Price previously paid for the
Unvested Shares which repurchased:
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4.3 TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under paragraph 4.2. In addition, the Repurchase Right shall
terminate, and cease to be exercisable, with respect to any and all Purchased
Shares in which the Optionee vests in accordance with the schedule below.
Accordingly, provided the Optionee continues to be a Service Provider to the
Company, the Optionee shall acquire a vested interest in, and the Repurchase
Right shall lapse with respect to, the Purchased Shares in accordance with the
following provisions:
(i) The Optionee shall not acquire any vested interest in,
nor shall the Repurchase Right lapse with respect to, any Purchased Shares
during the initial twelve (12) month period measured from the Grant Date of the
Option.
(ii) Upon the expiration of the twelve (12) month waiting-
period specified in subparagraph (i) above, the Optionee shall acquire a vested
interest in, and the Repurchase Right shall lapse with respect to, that number
of Purchased Shares equal to twenty-five percent (25%) of the Total Purchasable
Shares under the Option (without adjustment for shares already purchased
pursuant to such Option).
(iii) From and after the initial vesting date under
subparagraph (ii) above, the Optionee shall acquire a vested interest in, and
the Repurchase Right shall lapse with respect to, that number of Purchased
Shares equal to the remaining seventy-five percent (75%) of the Total
Purchasable Shares under the Option (without adjustment for shares already
purchased pursuant to such Option) in a series of thirty-six (36) successive
equal monthly installments.
All Purchased Shares as to which the Repurchase Right lapses shall,
however, continue to be subject to the market stand-off provisions of paragraph
3.4.
4.4 AGGREGATE VESTING LIMITATION. If the Option is exercised in
more than one increment so that the Optionee is a party to one or more other
Stock Purchase Agreements ("Prior Purchase Agreements") which are executed prior
to the date of this Agreement, then the total number of Purchased Shares as to
which the Optionee shall as of any determination date be deemed to have a fully
vested interest under this Agreement and all Prior Purchase Agreements shall not
exceed in the aggregate the number of Purchased Shares in which the Optionee
would otherwise at the time be vested, in accordance with the installment
provisions of paragraph 4.3, had all the Purchased Shares been acquired
exclusively under this Agreement.
4.5 FRACTIONAL SHARES. No fractional shares shall be
repurchased by the Company. Accordingly, should the Repurchase Right extend to
a fractional share (in accordance with the vesting computation provisions of
paragraph 4.3) at the time the Optionee ceases to be a Service Provider, then
such fractional share shall be added to any fractional share in which the
Optionee is at such time vested in order to make one whole vested share no
longer subject to the Repurchase Right.
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4.6 ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of any
stock dividend, stock split, recapitalization or other change affecting the
Company's outstanding Common Stock as a class effected without receipt of
consideration, then any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which is
by reason of any such transaction distributed with respect to the Purchased
Shares shall be immediately subject to the Repurchase Right, but only to the
extent the Purchased Shares are at the time covered by such right. Appropriate
adjustments to reflect the distribution of such securities or property shall be
made to the number of Purchased Shares and Total Purchasable Shares hereunder
and to the price per share to be paid upon the exercise of the Repurchase Right
in order to reflect the effect of any such transaction upon the Company's
capital structure; PROVIDED, however, that the aggregate purchase price shall
remain the same.
4.7 CORPORATE TRANSACTION.
(a) In the event of any of the following transactions (a "Corporate
Transaction"):
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State in which the Company is incorporated,
(ii) the sale, transfer or other disposition of all
substantially all of the assets of the Company, or
(iii) any reverse merger in which the Company is the
surviving entity but in which fifty percent (50%) or more of the Company' s
outstanding voting stock is transferred to holders different from those who held
the stock immediately prior to such merger,
then the Repurchase Right shall automatically lapse in its entirety, and the
Optionee shall acquire a vested interest in all the Purchased Shares, upon the
consummation of such Corporate transaction. However, no such lapse of the
Repurchase Right shall occur if and to the extent the Repurchase Right is to be
assigned to the successor corporation (or its parent company) in connection with
such Corporate Transaction.
(b) To the extent the Repurchase Right remains in effect
following such Corporate Transaction in accordance with sub-paragraph (a) above,
it shall apply to the new capital stock or other property (including cash)
received in exchange for the Purchased Shares in consummation of the Corporate
Transaction, but only to the extent the Purchased Shares are at the time covered
by such right. Appropriate adjustments shall be made to the price per share
payable upon exercise of the Repurchase Right to reflect the effect of the
Corporate Transaction upon the Company's capital structure; PROVIDED, however,
that the aggregate purchase price shall remain the same.
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V. ESCROW
5.1 DEPOSIT. Upon issuance, the certificates for the Purchased
Shares shall be deposited in escrow with the Company to be held in accordance
with the provisions of this Article V. Each deposited certificate shall be
accompanied by a duly executed Assignment Separate from Certificate in the form
of Exhibit I. The deposited certificates, together with any other assets or
securities from time to time deposited with the Company pursuant to the
requirements of this Agreement, shall remain in escrow until such time or times
as the certificates (or other assets and securities) are to be released or
otherwise surrendered for cancellation in accordance with paragraph 5.3. Upon
delivery of the certificates (or other assets and securities) to the Company,
the Owner shall be issued an instrument of deposit acknowledging the number of
Purchased Shares (or other assets and securities) delivered in escrow to the
Company.
5.2 RECAPITALIZATION. All regular cash dividends on the Purchased Shares
(or other securities at the time held in escrow) shall be paid directly to the
Owner and shall not be held in escrow. However, in the event of any stock
dividend, stock split, recapitalization or other change affecting the Company's
outstanding Common Stock as a class effected without receipt of consideration or
in the event of a Corporate Transaction, any new, substituted or additional
securities or other property which is by reason of such transaction distributed
with respect to the Purchased Shares shall be immediately delivered to the
Company to be held in escrow under this Article V, but only to the extent the
Purchased Shares are at the time subject to the escrow requirements of paragraph
5.1.
5.3 RELEASE/SURRENDER. The Purchased Shares, together with any other
assets or securities held in escrow hereunder, shall be subject to the following
terms and conditions relating to their release from escrow or their surrender to
the Company for repurchase and cancellation:
(i) Should the Company (or its assignees) elect to exercise the
Repurchase Right under Article IV with respect to any Unvested Shares, then the
escrowed certificates for such Unvested Shares (together with any other assets
or securities issued with respect thereto) shall be delivered to the Company for
cancellation, concurrently with the payment to the Owner, in cash or cash
equivalent (including the cancellation of any purchase money indebtedness), of
an amount equal to the aggregate Option Price for such Unvested Shares, and the
Owner shall cease to have any further rights or claims with respect to such
Unvested Shares (or other assets or securities).
(ii) As the interest of the Optionee in the Purchased Shares (or
any other assets or securities issued with respect thereto) vests in accordance
with the provisions of Article IV, the certificates for such vested shares (as
well as all other vested assets and securities) shall be released from escrow
and delivered to the Owner in accordance with the following schedule:
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a. The initial release of vested shares (or other vested
assets and securities) from escrow shall be effected within thirty (30) days
following the expiration of the initial twelve (12) month period measured from
the Grant Date.
b. Subsequent releases of vested shares (or other vested
assets and securities from escrow shall be effected at semi-annual intervals
thereafter, with the first such semi-annual release to occur eighteen (18)
months after the Grant Date.
c. Upon the Optionee's cessation of Service Provider
status, any escrowed Purchased Shares (or other assets or securities) in which
the Optionee is at the time vested shall be promptly released from escrow.
d. Upon any earlier termination of the Company's
Repurchase Right in accordance with the applicable provisions of Article IV, the
Purchased Shares (or other assets or securities) at the time held in escrow
hereunder shall promptly be released to the Owner as fully-vested shares or
other property.
VI. GENERAL PROVISIONS
6.1 ASSIGNMENT. The Company may assign its Repurchase Right under
Article IV to any person or entity selected by the Company's Board of Directors,
including (without limitation) one or more shareholders of the Company.
If the assignee of the Repurchase Right is other than a parent or
subsidiary corporation of the Company, then such assignee must make a cash
payment to the Company, upon the assignment of the Repurchase Right, in an
amount equal to the excess (if any) of the fair market value of the Unvested
Shares at the time subject to the assigned Repurchase Right and the aggregate
repurchase price payable for the Unvested Shares thereunder.
6.2 DEFINITIONS. For purposes of this Agreement, the following provisions
shall be applicable in determining the parent and subsidiary corporations of the
Company:
(i) Any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company shall be considered to be a parent
corporation of the Company, provided each such corporation in the unbroken chain
(other than the Company) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
(ii) Each corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company shall be considered to be a
subsidiary of the Company, provided each such corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
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6.3 NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or in
the Plan shall confer upon the Optionee any right to continue in the service of
the Company (or any parent or subsidiary corporation of the Company employing or
retaining Optionee) for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company (or any parent or
subsidiary corporation of the Company employing or retaining Optionee) or the
Optionee, which rights are hereby expressly reserved by each, to terminate the
Service Provider status of Optionee at any time for any reason whatsoever, with
or without cause.
6.4 NOTICES. Any notice required in connection with (i) the Repurchase
Right (ii) the disposition of any Purchased Shares covered thereby shall be
given in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States mail, registered or certified, postage prepaid and
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this
paragraph 7.4 to all other parties to this Agreement.
9.6 CANCELLATION OF SHARES. If the Company (or its assignees) shall make
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement, and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Company (or its assignees) shall be deemed the owner and holder of such shares,
whether or not the certificates therefor have been delivered as required by this
Agreement.
VII. MISCELLANEOUS PROVISIONS
7.1 OPTIONEE UNDERTAKING. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Company may in
its judgment deem necessary or advisable in order to carry out or effect one or
more of the obligations or restrictions imposed on either the Optionee or the
Purchased Shares pursuant to the express provisions of this Agreement.
7.2 AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the Plan and shall in all
respects be construed in conformity with the express terms and provisions of the
Plan.
7.3 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, as such laws are applied
to contracts entered into and performed in such State without resort to that
State's conflict-of-laws rules.
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7.4 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
7.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Company and its successors and
assigns and the Optionee and the Optionee's legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join herein and be bound by the terms and conditions hereof.
7.6 POWER OF ATTORNEY. Optionee's spouse hereby appoints Optionee his or
her true and lawful attorney in fact, for him or her and in his or her name,
place and stead, and for his or her use and benefit, to agree to any amendment
or modification of this Agreement and to execute such further instruments and
take such further actions as may reasonably be necessary to carry out the intent
of this Agreement. Optionee's spouse further gives and grants unto Optionee as
his or her attorney in fact full power and authority to do and perform every act
necessary and proper to be done in the exercise of any of the foregoing powers
as fully as he or she might or could do if personally present, with full power
of substitution and revocation, hereby ratifying and confirming all that
Optionee shall lawfully do and cause to be done by virtue of this power of
attorney.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first indicated above.
WAVEFRONT TECHNOLOGIES, INC.
By: _____________________________
Title: __________________________
Address: ________________________
________________________
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_________________________________
Optionee****
Address:_______________________
_______________________
The undersigned spouse of Optionee has read and hereby approves the
foregoing Stock Purchase Agreement. In consideration of the Company's granting
the Optionee the right to acquire the Purchase Shares in accordance with the
terms of such Agreement, the undersigned hereby agrees to be irrevocably bound
by all the terms and provisions of such Agreement, including (specifically) the
right of the Company (or its assignees) to purchase any and all interest or
right the undersigned may otherwise have in such shares pursuant to community
property laws or other material property rights.
___________________________
Optionee's Spouse
Address: _______________________
_______________________
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**** I have received, completed, executed and retained I.R.C. Section 83(b)
election that was attached hereto as Exhibit III. As set forth in Article
III, I understand that I, and NOT the Corporation, will be responsible for
completing the form and filing the election with the appropriate office
of the federal and state tax authorities and that if such filing is not
completed within thirty (30) days after the date of this Agreement, I will
not be entitled to the tax benefits provided by Section 83(b). I
understand further that such filing should be made by registered or
certified mail, return receipt requested, and that I must retain two (2)
copies of the completed form for filing with my state and federal tax
returns for the current tax year and an additional copy for my records.
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EXHIBIT 5.1
June 13, 1995
Silicon Graphics, Inc.
2011 North Shoreline Boulevard
Mountain View, CA 94043-1389
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
I have examined the Registration Statement on Form S-8 to be filed by Silicon
Graphics, Inc. (the "Company") with the Securities and Exchange Commission on or
about June 13, 1994 (the "Registration Statement"), in connection with the
registration under the Securities Act of 1933, as amended, of 419,375 shares
of the Company's common stock, par value $0.001 per share, to be issued pursuant
to the Wavefront Technologies. Inc. 1990 Stock Option Plan (the "Plan Shares").
I have examined the proceedings taken and proposed to be taken in connection
with the issuance and sale of the Plan Shares to be issued under such Plan.
It is my opinion that, upon completion of the proceedings being taken or
contemplated to be taken prior to the issuance of the Plan Shares pursuant to
the Plans, and upon completion of the proceedings being taken in order to permit
such transactions to be carried out in accordance with the securities laws of
the various states where required, the Plan Shares will be legally and validly
issued, fully-paid and non-assessable.
I consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of my name wherever appearing in the
Registration Statement and any amendments thereto.
Sincerely,
/s/ Sandra M. Escher
Sandra M. Escher
Securities Counsel
