<PAGE> 1
As filed with the Securities and Exchange Commission on June 2, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
INSITE VISION INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 94-3015807
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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965 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
(Address of principal executive offices) (Zip Code)
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INSITE VISION INCORPORATED
1994 STOCK OPTION PLAN
(Full title of the Plan)
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Copies to:
S. KUMAR CHANDRASEKARAN, PH.D.
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
INSITE VISION INCORPORATED
965 ATLANTIC AVENUE, ALAMEDA, CA 94501
(Name and address of agent for service)
(510) 865-8800
(Telephone number, including area code, of agent for service)
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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TITLE OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED (1) PRICE PER SHARE (2) OFFERING PRICE (2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 336,979 shares $1.25 $421,223.75 $117.10
==============================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the 1994 Stock Option
Plan by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the Registrant's receipt of
consideration which results in an increase in the number of the outstanding
shares of the Registrant's Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the high
and low selling prices per share of the Registrant's Common Stock on May 28,
1999 as reported on the American Stock Exchange.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
InSite Vision Incorporated (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 filed with the Commission on March 31,
1999, pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the "1934 Act");
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999 filed with the Commission on May 14,
1999; and
(c) The Registrant's Current Report on Form 8-K filed with the
Commission on March 3, 1999; and
(d) The Registrant's Registration Statements on Form 8-A and Form
8-A12B filed with the Commission on August 27, 1993 and June 8,
1998, respectively, which describe the terms, rights and
provisions applicable to the Registrant's outstanding Common
Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which is also deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
The Registrant's Restated Certificate of Incorporation provides that,
pursuant to Delaware law, the directors shall not be liable for monetary damages
for breach of their fiduciary duties as directors to the Registrant and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the fiduciary duties of the directors, and in appropriate
circumstances equitable remedies such as injunctive or other forms of
non-monetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of such director's
duty of loyalty to the Registrant, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for actions
leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.
<PAGE> 3
The Registrant has entered into separate indemnification agreements with
its directors and officers. These agreements require the Registrant, among other
things, to indemnify them against certain liabilities that may arise by reason
of their status or service as directors or officers (other than liabilities
arising from actions not taken in good faith or in a manner the director or
officer believed to be opposed to the best interests of the Registrant), to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified and to obtain liability insurance for the
director and officers if available on reasonable terms. Insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "1933 Act") may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, the Registrant
has been informed that in the opinion of the Commission, such indemnification is
against public policy as expressed in the 1933 Act and is therefore
unenforceable.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
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<S> <C>
4 Instruments Defining Rights of Stockholders. Reference
is made to Registrant's Registration Statements on Form
8-A and Form 8-A12B, including the exhibits thereto,
incorporated herein by reference pursuant to Item 3(d)
of this Registration Statement.
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained
in Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4 of
this Registration Statement.
99.1 InSite Vision Incorporated 1994 Stock Option Plan (As
amended and restated as of January 4, 1999).
99.2* Form of Notice of Grant of Stock Option.
99.3*** Form of Stock Option Agreement.
99.4*** Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Corporate Transaction).
99.5* Form of Addendum to Stock Option Agreement (Special Tax
Elections).
99.6* Form of Addendum to Stock Option Agreement (Limited
Stock Appreciation Right).
99.7* Form of Addendum to Stock Option Agreement (Financial
Assistance).
99.8** Form of Notice of Automatic Option Grant.
99.9*** Form of Non-Employee Director Stock Option Agreement.
</TABLE>
* Exhibits 99.2, 99.5, 99.6 and 99.7 are incorporated herein by
reference to Exhibits 99.2, 99.3, 99.4 and 99.5, respectively, of Registrant's
Registration Statement No. 33-75268 on Form S-8, filed with the Commission on
February 14, 1994.
** Exhibit 99.8 is incorporated herein by reference to Exhibit 99.5 of
Registrant's Registration Statement No. 333-29801 on Form S-8, filed with the
Commission on June 23, 1997.
*** Exhibits 99.3, 99.4 and 99.9 are incorporated herein by reference to
Exhibits 99.3, 99.4 and 99.8, respectively, of Registrant's Registration
Statement No. 333-60057 on Form S-8, filed with the Commission on July 28, 1998.
<PAGE> 4
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 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; and (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 1994 Stock Option
Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers or controlling persons of the Registrant
pursuant to the indemnity provisions summarized in Item 6 or otherwise, the
Registrant has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Alameda, State of California, on this 28th day
of May, 1999.
INSITE VISION INCORPORATED
By: /s/ S. Kumar Chandrasekaran
----------------------------------
S. Kumar Chandrasekaran, Ph.D.
Chairman of the Board, President,
Chief Executive Officer and Chief
Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Insite Vision
Incorporated, a Delaware corporation, do hereby constitute and appoint S. Kumar
Chandrasekaran, Ph.D. the lawful attorney-in-fact and agent, with full power and
authority to do any and all acts and things and to execute any and all
instruments which said attorney and agent determines may be necessary or
advisable or required to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules or regulations or requirements of the
Securities and Exchange Commission in connection with this Registration
Statement. Without limiting the generality of the foregoing power and authority,
the powers granted include the power and authority to sign the names of the
undersigned officers and directors in the capacities indicated below to this
Registration Statement, to any and all amendments, both pre-effective and
post-effective, and supplements to this Registration Statement, and to any and
all instruments or documents filed as part of or in conjunction with this
Registration Statement or amendments or supplements thereof, and each of the
undersigned hereby ratifies and confirms all that said attorney and agent shall
do or cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
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<S> <C> <C>
/s/ S. Kumar Chandrasekaran Chairman of the Board President, Chief May 28, 1999
- ------------------------------ Executive Officer and Chief Financial
S. Kumar Chandrasekaran, Ph.D. Officer (Principal Executive Officer,
Principal Financial Officer and Accounting
Officer)
/s/ Mitchell H. Friedlaender Director May 28, 1999
- ------------------------------
Mitchell H. Friedlaender, M.D.
/s/ John E. Lucas Director May 28, 1999
- ------------------------------
John E. Lucas
/s/ John L. Mattana Director May 28, 1999
- ------------------------------
John L. Mattana
/s/ Anders P. Wiklund Director May 28, 1999
- ------------------------------
Anders P. Wiklund
</TABLE>
<PAGE> 6
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
INSITE VISION INCORPORATED
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
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<S> <C>
4 Instruments Defining Rights of Stockholders. Reference
is made to Registrant's Registration Statements on Form
8-A and Form 8-A12B, including the exhibits thereto,
incorporated herein by reference pursuant to Item 3(d)
of this Registration Statement.
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained
in Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4 of
this Registration Statement.
99.1 InSite Vision Incorporated 1994 Stock Option Plan (As
amended and restated as of January 4, 1999).
99.2* Form of Notice of Grant of Stock Option.
99.3*** Form of Stock Option Agreement.
99.4*** Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Corporate Transaction).
99.5* Form of Addendum to Stock Option Agreement (Special Tax
Elections).
99.6* Form of Addendum to Stock Option Agreement (Limited
Stock Appreciation Right).
99.7* Form of Addendum to Stock Option Agreement (Financial
Assistance).
99.8** Form of Notice of Automatic Option Grant.
99.9*** Form of Non-Employee Director Stock Option Agreement.
</TABLE>
* Exhibits 99.2, 99.5, 99.6 and 99.7 are incorporated herein by
reference to Exhibits 99.2, 99.3, 99.4 and 99.5, respectively, of Registrant's
Registration Statement No. 33-75268 on Form S-8, filed with the Commission on
February 14, 1994.
** Exhibit 99.8 is incorporated herein by reference to Exhibit 99.5 of
Registrant's Registration Statement No. 333-29801 on Form S-8, filed with the
Commission on June 23, 1997.
*** Exhibits 99.3, 99.4 and 99.9 are incorporated herein by reference to
Exhibits 99.3, 99.4 and 99.8, respectively, of Registrant's Registration
Statement No. 333-60057 on Form S-8, filed with the Commission on July 28, 1998.
<PAGE> 1
EXHIBIT 5.1
OPINION OF BROBECK, PHLEGER & HARRISON LLP
May 28, 1999
InSite Vision Incorporated
965 Atlantic Avenue
Alameda, CA 94501
Re: InSite Vision Incorporated (the "Company")
Registration Statement for Offering of 336,979 Shares of Common
Stock
Ladies and Gentlemen:
We have acted as counsel to InSite Vision Incorporated, a Delaware
corporation (the "Company") in connection with the registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of an
additional 336,979 shares of common stock (the "Shares") and related stock
options for issuance under the Company's 1994 Stock Option Plan (the "Plan").
This opinion is being furnished in accordance with the requirements of
Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the establishment and
amendment of the Plan. Based on such review, we are of the opinion that, if, as
an when the Shares are issued and sold (and the consideration therefor received)
pursuant to the provisions of option agreements duly authorized under the Plan
and in accordance with the Registration Statement, such Shares will be duly
authorized, legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Plan or the Shares.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-8 pertaining to the 1994 Stock Option Plan of InSite Vision
Incorporated, of our report dated January 29, 1999, with respect to the
consolidated financial statements of InSite Vision Incorporated, included in its
Annual Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Walnut Creek, California
May 28, 1999
<PAGE> 1
EXHIBIT 99.1
INSITE VISION INCORPORATED
1994 STOCK OPTION PLAN (AS AMENDED AND RESTATED JANUARY 4, 1999)
<PAGE> 2
INSITE VISION INCORPORATED
1994 STOCK OPTION PLAN
(Amended and Restated as of January 4, 1999)
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSES OF THE PLAN
A. The 1994 Stock Option Plan (the "Plan") was adopted as the 1993 Stock
Plan as of July 28, 1993 to be effective October 25, 1993 (the "Effective Date")
to promote the interests of InSite Vision Incorporated, a Delaware corporation
(the "Corporation"), by providing eligible individuals with the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the service
of the Corporation (or its parent or subsidiary corporations). This amendment
and restatement of the Plan is effective as of January 4, 1999.
B. This Plan serves as the successor to the Corporation's 1989 Stock
Plan (the 1989 Plan"), and no further option grants shall be made under the 1989
Plan from and after the Effective Date. All options outstanding under the 1989
Plan on such Effective Date have been incorporated into this Plan and are
treated as outstanding options under this Plan. However, each outstanding option
so incorporated continues to be governed solely by the express terms and
conditions of the instrument evidencing such grant, and no provision of this
Plan shall be deemed to affect or otherwise modify the rights or obligations of
the holders of such incorporated options with respect to their acquisition of
shares of the Corporation's common stock thereunder or their exercise of any
outstanding stock appreciation rights thereunder.
C. For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:
Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall
be considered to be a PARENT corporation of the Corporation,
provided each such corporation in the unbroken chain (other than
the Corporation) 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.
<PAGE> 3
Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation
shall be considered to be a SUBSIDIARY of the Corporation,
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. STRUCTURE OF THE PLAN
A. The Plan shall be divided into two separate components: the
Discretionary Option Grant Program specified in Article Two and the Automatic
Option Grant Program specified in Article Three. Under the Discretionary Option
Grant Program, eligible individuals may be granted options to purchase shares of
the Corporation's common stock. Under the Automatic Option Grant Program, each
eligible member of the Corporation's Board of Directors (the "Board") will
automatically receive an option grant to purchase shares of the Corporation's
common stock.
B. The provisions of Articles One and Four of the Plan shall apply to
the Discretionary Option Grant Program and the Automatic Option Grant Program
and shall accordingly govern the interests of all individuals in the Plan.
III. ADMINISTRATION OF THE PLAN
A. Article Two of the Plan shall be administered by a committee
("Committee") of two (2) or more non-employee Board members appointed by the
Board. 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.
B. The Committee which shall act as Plan Administrator (the "Plan
Administrator") shall have full power and authority (subject to the express
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for the proper administration of the Discretionary Option Grant
Program and to make such determinations and interpretations concerning such
program and any outstanding option under Article Two as it may deem necessary or
advisable. Decisions of the Plan Administrator shall be final and binding on all
parties with an interest in any outstanding option under the Plan.
C. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the express terms and conditions of Article
Three.
IV. ELIGIBILITY FOR OPTION GRANTS
A. The persons eligible to participate under Article Two of the Plan
shall be limited to the following:
2
<PAGE> 4
(i) officers and other employees of the Corporation (or its
parent or subsidiary corporations) who render services which contribute
to the management, growth and financial success of the Corporation (or
any parent or subsidiary corporation);
(ii) non-employee members of the Board or the non-employee
members of the board of directors of any parent or subsidiary
corporation;
(iii) those consultants or independent contractors who provide
valuable services to the Corporation (or any parent or subsidiary
corporation).
B. Non-employee members of the Board shall also be eligible to receive
automatic option grants pursuant to the provisions of Article Three, and such
individuals shall, for purposes of Articles Three and Four, be referred to as
"Eligible Directors".
C. The Plan Administrator shall have full authority to determine which
eligible individuals are to receive discretionary option grants under Article
Two, 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 remain outstanding.
V. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's common stock, par value $0.01 per share
("Common Stock") shall be available for issuance under the Plan and shall be
drawn from either the Corporation's authorized but unissued shares of Common
Stock or from reacquired shares of Common Stock, including shares repurchased by
the Corporation on the open market. The aggregate number of shares available for
issuance under the Plan from and after the Effective Date shall not exceed
3,091,353 shares of Common Stock, subject to adjustment from time to time in
accordance with the provisions of this Section V. Such share reserve includes
(i) the initial number of shares reserved for issuance under the Plan on the
Effective Date, including the shares reserved for issuance under outstanding
options granted under the 1989 Plan and incorporated into this Plan, (ii) the
500,000-share increase authorized by the Board on March 29, 1994 and approved by
the stockholders on May 31, 1994, (iii) an additional 500,000-share increase
authorized by the Board on March 17, 1997 and approved by the stockholders on
June 2, 1997 and (iv) the 265,521 share increase effected on January 2, 1998
pursuant to the automatic annual share increase provisions of the Plan and (v)
336,979 share increase effected on January 2, 1999 pursuant to the automatic
annual share increase provisions of the Plan. To the extent one or more
outstanding options under the 1989 Plan which have been incorporated into this
Plan are subsequently exercised, the number of shares issued with respect to
each such option shall reduce, on a share-for-share basis, the number of shares
available for issuance under this Plan.
3
<PAGE> 5
B. The number of shares of Common Stock available for issuance under the
Plan shall automatically increase on the first day of January each calendar
year, beginning with the 1998 calendar year, by an amount equal to two percent
(2%) of the total number of shares of the Corporation's Common Stock outstanding
on December 31st of the immediately preceding calendar year. All options granted
on the basis of each such annual share increase shall be non-statutory options
under the federal tax laws.
C. The maximum number of shares of Common Stock for which any one
participant in the Plan may be granted stock options and separately exercisable
stock appreciation rights over the term of the Plan shall be limited to 850,000
shares, subject to adjustment from time to time in accordance with the
provisions of this Section V. For purposes of the foregoing limitation, stock
options and stock appreciation rights granted prior to January 1, 1994 shall not
be taken into account.
D. Should one or more outstanding options under this Plan (including any
outstanding options under the 1989 Plan incorporated into this Plan) expire or
terminate for any reason prior to exercise in full (including any option
cancelled in accordance with the cancellation-regrant provisions of Section IV
of Article Two of the Plan), the shares subject to the portion of the option not
so exercised shall be available for subsequent option grant under the Plan.
Shares subject to any option or portion thereof surrendered or cancelled in
accordance with Section V of Article Two and Section III of Article Three of the
Plan shall not be available for subsequent option grant under the Plan. Should
the exercise price of an outstanding option under the Plan (including any option
incorporated from the 1989 Plan) be paid with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection with
the exercise of an outstanding option under the Plan, then the number of shares
available for issuance under the Plan shall be reduced by the gross number of
shares for which the option is exercised, and not by the net number of shares of
Common Stock issued to the option holder.
E. In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities issuable for which any one individual may be granted stock options
and separately exercisable stock appreciation rights under the Plan after
December 31, 1993, (iii) the number and/or class of securities for which stock
options are to be granted to newly-elected or continuing non-employee Board
members under the Automatic Option Grant Program and (iv) the number and/or
class of securities and price per share in effect under each outstanding option
under the Plan (including each outstanding option incorporated into this Plan
from the 1989 Plan). The purpose of such adjustments to the outstanding options
shall be to preclude the enlargement or dilution of rights and benefits under
those options. The adjustments determined by the Plan Administrator shall be
final, binding and conclusive.
4
<PAGE> 6
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to this Article Two shall be authorized
by action of the Plan Administrator and may, at the Plan Administrator's
discretion, be either Incentive Options or non-statutory options. Individuals
who are not Employees may only be granted non-statutory options. Each option
granted shall be evidenced by one or more instruments in the form approved by
the Plan Administrator. Each such instrument shall, however, comply with the
terms and conditions specified below, and each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section II of this Article Two.
A. Option Price.
1. The option price per share shall be fixed by the Plan
Administrator, but in no event shall the option price per share be less than the
fair market value per share of Common Stock on the date of the option grant.
2. The option price shall become immediately due upon exercise of
the option and, subject to the provisions of Section VI of this Article Two and
the instrument evidencing the grant, shall be payable in one of the following
alternative forms:
- cash or check made payable to the Corporation's order;
- shares of Common Stock held by the optionee for the
requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and
valued at fair market value on the Exercise Date (as such term
is defined below); or
- through a broker-dealer sale and remittance procedure
pursuant to which the optionee shall provide irrevocable
instructions (I) to a designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate option
price payable for the purchased shares plus all applicable
federal and state income and employment taxes required to be
withheld by the Corporation in connection with such purchase and
(II) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to
complete the sale transaction.
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For purposes of this Section I.A.2, the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is used in
connection with the exercise of the option, payment of the option price for the
purchased shares must accompany such notice.
3. The fair market value per share of Common Stock on any
relevant date under the Plan shall be determined in accordance with the
following provisions:
- If the Common Stock is at the time listed or admitted to
trading on any national 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.
- If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded
on the Nasdaq National Market, the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question, as such price is reported by the National Association
of Securities Dealers on the Nasdaq National Market. If there is
no closing selling price for the Common Stock on the date in
question, then the closing selling price on the last preceding
date for which such quotation exists on the Nasdaq National
Market shall be determinative of Fair Market Value.
B. Term and Exercise of Options. Each option granted under this Article
Two 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 the option grant. No such option, however, shall
have a maximum term in excess of ten (10) years from the grant date.
C. Limited Transferability of Options. During the lifetime of the
optionee, Incentive Options shall be exercisable only by the optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the optionee's death. However, non-statutory options
may, in connection with the optionee's estate plan, be assigned in whole or in
part during the optionee's lifetime to one or more members of the optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion
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shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
D. Termination of Service.
1. Except to the extent otherwise provided pursuant to Section
VII of this Article Two, the following provisions shall govern the exercise
period applicable to any options held by the optionee at the time of cessation
of Service or death.
- Should the optionee cease to remain in Service for any
reason other than death or permanent disability, then the period
for which each outstanding option held by such optionee is to
remain exercisable shall be limited to the three (3)-month period
following the date of such cessation of Service.
- In the event such Service terminates by reason of
permanent disability (as defined in Section 22(e)(3) of the
Internal Revenue Code), then the period for which each
outstanding option held by the optionee is to remain exercisable
shall be limited to the twelve (12)-month period following the
date of such cessation of Service.
- Should the optionee die while in Service or during the
three (3)-month period following his or her cessation of Service,
then the period for which each of his or her outstanding options
is to remain exercisable shall be limited to the twelve
(12)-month period following the date of the optionee's cessation
of Service. During such limited period, the option may be
exercised 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.
- Under no circumstances, however, shall any option
be exercisable after the specified expiration date of the
option term.
- Each such option shall, during such limited exercise
period, be exercisable for any or all of the shares for which the
option is exercisable on the date of the optionee's cessation of
Service. Upon the expiration of such limited exercise period or
(if earlier) upon the expiration of the option term, the option
shall terminate and cease to be exercisable.
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2. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the optionee
under this Article Two to be exercised, during the limited period of
exercisability provided under Section I.D. 1 above, not only with respect to the
number of shares for which each such option is exercisable at the time of the
optionee's cessation of Service 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 not occurred. The Plan
Administrator shall also have full power and authority to extend the period of
time for which any option granted under this Article Two is to remain
exercisable following the optionee's cessation of Service or death from the
limited period in effect under Section I.D. 1 of this Article Two 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.
3. For purposes of the foregoing provisions of this Section I.D
(and for all other purposes under the Plan):
- The optionee shall be deemed to remain in the SERVICE of
the Corporation for so long as such individual renders services
on a periodic basis to the Corporation (or any parent or
subsidiary corporation) in the capacity of an Employee, a
non-employee member of the Board 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
Corporation or one or more of its parent or subsidiary
corporations, subject to the control and direction of the
employer entity as to the work to be performed and the manner and
method of performance.
E. Stockholder Rights. An optionee shall have no stockholder rights with
respect to any shares covered by the option until such individual shall have
exercised the option and paid the option price for the purchased shares.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees. Options which are specifically
designated as "non-statutory" options when issued under the Plan shall not be
subject to such terms and conditions.
A. Dollar Limitation. The aggregate fair market value (determined as of
the respective date or dates of grant) of the Common Stock for which one or more
options granted to any Employee under this Plan (or any other option plan of the
Corporation or its parent or subsidiary corporations) may for the first time
become exercisable as incentive stock options under the federal tax laws during
any one calendar year shall not exceed the sum of One
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Hundred Thousand Dollars ($100,000). To the extent the Employee holds two or
more such options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability of such options as
incentive stock options under the federal tax laws shall be applied on the basis
of the order in which such options are granted.
B. 10% Stockholder. If any individual to whom an Incentive Option is
granted is 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 Corporation or any one of its parent or
subsidiary corporations ("10% Stockholder"), then the option price per share
shall not be less than one hundred and ten percent (110%) of the fair market
value per share of Common Stock on the grant date, and the option term shall not
exceed five (5) years measured from the grant date.
Except as modified by the preceding provisions of this Section II, the
provisions of the Plan shall apply to all Incentive Options granted hereunder.
III. CORPORATE TRANSACTION/CHANGES IN CONTROL
A. In the event of any Corporate Transaction or Change in Control (as
defined below), each option which is at the time outstanding under this Article
Two shall automatically accelerate so that each such option shall, immediately
prior to the specified effective date for the Corporate Transaction or Change in
Control, respectively, become fully exercisable with respect to the total number
of shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares. However, an outstanding option
under this Article Two shall not so accelerate upon a Corporate Transaction if
and to the extent 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. The determination of comparability
shall be made by the Plan Administrator, and its determination shall be final
and binding.
B. A "Corporate Transaction" shall mean any of the following
stockholder-approved transactions:
(a) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons
holding those securities immediately prior to such transaction,
or
(b) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation.
C. For all purposes under the Plan, a "Change in Control" shall mean a
change in control of the Corporation of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of
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1934, as amended (the "Exchange Act"), whether or not the Corporation is then
subject to such reporting requirement, other than a Corporate Transaction;
provided that, without limitation, a Change in Control shall be deemed to have
occurred if:
(i) any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity,
or any syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), directly or indirectly, of
securities of the Corporation representing forty percent (40%) or
more of the combined voting power of the Corporation's then
outstanding securities entitled to vote in the election of
directors of the Corporation, pursuant to a tender or exchange
offer made directly to the Corporation's stockholders which the
Board does not recommend such stockholders to accept; or
(ii) a change in the composition of the Board occurs over
any period of two (2) consecutive years or less such that a
majority of the Board ceases for any reason to be comprised of
individuals who either (A) have been Board members continuously
since the beginning of that period or (B) have been elected or
nominated for election as Board members during such period by a
vote of at least three-fourths (3/4) of the Board members
described in clause (A) who were still in office at the time the
Board approved such election or nomination.
D. Upon the consummation of the Corporate Transaction, all outstanding
options under this Article Two shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its parent company.
Any options accelerated in connection with the Change in Control shall remain
fully exercisable until the expiration or sooner termination of the option term.
E. Each outstanding option under this Article Two which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for such
securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.
F. The grant of options under this Article Two shall in no way affect
the right of the Corporation 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.
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G. The exercisability as incentive stock options under the federal tax
laws of any options accelerated under this Section III in connection with a
Corporate Transaction or Change in Control shall remain subject to the dollar
limitation of Section II of this Article Two. To the extent such dollar
limitation is exceeded, the accelerated option shall be exercisable as a
non-statutory option under the federal tax laws.
IV. 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 this Article Two and to
grant in substitution 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 the fair market value of the Common Stock on the new grant date (or one
hundred ten percent (110%) of such fair market value in the case of an Incentive
Option granted to a 10% Stockholder).
V. STOCK APPRECIATION RIGHTS
A. Each officer of the Corporation subject to the short-swing profit
restrictions of the federal securities laws shall be granted limited stock
appreciation rights in tandem with his or her outstanding options under this
Article Two. Upon the occurrence of a Hostile Take-Over, each outstanding option
with such a limited stock appreciation right shall automatically be cancelled,
and the optionee shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of the
shares of Common Stock at the time subject to the cancelled option (whether or
not the option is otherwise at the time exercisable for those shares) over (ii)
the aggregate exercise price payable for such shares. The cash distribution
payable upon such cancellation shall be made within five (5) days following the
consummation of the Hostile Take-Over. The Plan Administrator shall pre-approve,
at the time the limited stock appreciation right is granted, the subsequent
exercise of that right in accordance with the terms of the grant and the
provisions of this Section V.A. No additional approval of the Plan Administrator
or the Board shall be required at the time of the actual option cancellation and
cash distribution.
B. For purposes of Section V.A, the following definitions shall be in
effect:
A Hostile Take-Over shall be deemed to occur in the event any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange offer
which the Board does not recommend the Corporation's stockholders to accept.
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The Take-Over Price per share shall be deemed to be equal to the
greater of (a) the fair market value per share on the date of cancellation, as
determined pursuant to the valuation provisions of Section I.A.3 of this Article
Two, or (b) the highest reported price per share paid in effecting such Hostile
Take-Over. However, if the cancelled option is an Incentive Option, the
Take-Over Price shall not exceed the clause (a) price per share.
C. The shares of Common Stock subject to any option surrendered or
cancelled for an appreciation distribution pursuant to this Section V shall NOT
be available for subsequent option grants under the Plan.
VI. LOANS OR INSTALLMENT PAYMENTS
The Plan Administrator may assist any optionee (including any officer)
in the exercise of one or more outstanding options under this Article Two,
including the satisfaction of any federal and state income and employment tax
obligations arising therefrom, by (a) authorizing the extension of a loan to
such optionee from the Corporation or (b) permitting the optionee to pay the
option price for the purchased Common Stock in installments over a period of
years. The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) will be established by the Plan
Administrator in its sole discretion. Loans and installment payments may be
granted with or 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 (less par value) of 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.
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ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
The individuals eligible to receive automatic option grants pursuant to
the provisions of this Article Three shall be limited to (i) those individuals
who are first elected or appointed as non-employee Board members on or after the
Effective Date, whether through appointment by the Board or election by the
Corporation's stockholders, provided they have not otherwise been in the prior
employ of the Corporation (or any parent or subsidiary corporation) and (ii)
those individuals who continue to serve as non-employee Board members on one or
more automatic annual option grant dates below while this Automatic Grant
Program remains in effect.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants will be made under this Article Three on
the dates specified below. The revised automatic grant program was approved by
the stockholders at the 1998 Annual Meeting.
(i) Each individual who first becomes a non-employee Board
member at any time after October 25, 1993, whether through
election at an Annual Stockholders Meeting or through appointment
by the Board, and who has not previously been in the employ of
the Corporation (or any parent or subsidiary corporation) shall
automatically be granted upon the terms and conditions of this
Article Three, at the time of such initial election or
appointment, a non-statutory stock option to purchase 10,000
shares of Common Stock. A non-employee Board member who replaces
a Board member shall not receive an initial 10,000-share grant if
both the new and former Board member are affiliated with the same
investment fund or similar entity.
(ii) On December 15, 1997, each individual serving as a
non-employee Board member shall automatically be granted a
non-statutory stock option to purchase 10,000 shares of Common
Stock.
(iii) On the date of the first Board meeting in December
each year, beginning December 1998, each individual continuing
to serve as a non-employee Board member shall automatically be
granted a non-statutory stock option to purchase 10,000 shares
of Common Stock, provided such individual did not receive his or
her initial option grant under this Article III within the
preceding six (6) months. In the event there is no Board meeting
in December of
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any year, then the automatic option grant for that year shall be
made on December 15th: If December 15th in any year is not a day
on which the New York Stock Exchange is open for business (a
"Trading Day"), then the grant for that year shall be made on
the immediately succeeding Trading Day.
The 10,000-share limitation applicable to each initial automatic
option grant and each annual automatic option grant per eligible non-employee
Board member shall be subject to periodic adjustment pursuant to the applicable
provisions of paragraph V.E of Article One.
Stockholder approval of the December 15, 1997 restatement of the
Plan constitutes pre-approval of each option granted on or after that date
pursuant to the provisions of this Article Three and the subsequent exercise of
that option in accordance with the terms and conditions of this Article Three.
B. Exercise Price. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
automatic grant date.
C. Payment. The option price shall become immediately due upon exercise
of the option and shall be payable in one of the alternative forms specified in
Section I.A.2 of Article Two.
D. Option Term. Each automatic grant under this Article Three shall have
a maximum term of ten (10) years measured from the automatic grant date.
E. Exercisability. Each automatic option grant under this Article Three
shall become exercisable for the option shares one (1) year after the date of
grant, provided the optionee remains a member of the Board through such date.
Each such option shall remain exercisable until the expiration or sooner
termination of the option term.
F. Limited Transferability. Each automatic grant under this Article
Three may, in connection with the optionee's estate plan, be assigned in whole
or in part during the optionee's lifetime to one or more members of the
optionee's immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment.
G. Effect of Termination of Board Membership.
1. Should the optionee cease to be a Board member for any reason
(other than death or Permanent Disability (as defined in Code Section 22(e)(3))
while holding an automatic option grant under this Article Three, then he or she
shall have a three (3)-month period following the date of such cessation of
Board membership in which to exercise such option for any or all of the shares
of Common Stock for which the option is exercisable at the time the optionee
ceases service as a Board member.
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2. Should the optionee cease to be a Board member by reason of
Permanent Disability while holding an automatic option grant under this Article
Three, then he or she shall have a six (6)-month period following the date of
such cessation of Board membership in which to exercise such option for any or
all of the shares of Common Stock for which the option is exercisable at the
time the optionee ceases service as a Board member.
3. Should the optionee die while serving as a Board member or
during the three (3)-month period following his or her cessation of Board
service, then the option may subsequently be exercised, for any or all of the
shares of Common Stock for which the option is exercisable at the time of the
optionee's cessation of Board membership, by the personal representative of his
or her 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. Any such exercise must, however, occur within six (6) months after
the date of the optionee's death.
4. In no event shall any automatic grant under this Article Three
remain exercisable after the specified expiration date of the ten (10)-year
option term. Upon the expiration of the applicable exercise period in accordance
with subparagraphs 1, 2 and 3 above or (if earlier) upon the expiration of the
ten (10)-year option term, the automatic grant shall terminate and cease to be
exercisable.
H. Stockholder Rights. The holder of an automatic option grant under
this Article Three shall have no stockholder rights with respect to any shares
covered by such option until such individual shall have exercised the option and
paid the exercise price for the purchased shares.
I. Remaining Terms. The remaining terms and conditions of each automatic
option grant shall be as set forth in the prototype Director Automatic Grant
Agreement attached as Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKEOVER
A. Each automatic option grant outstanding at the time of a Corporate
Transaction or a Change in Control shall automatically accelerate so that each
such option shall, immediately prior to the specified effective date for such
Corporate Transaction or Change in Control, become fully exercisable with
respect to the total number of shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares at any
time prior to the expiration or sooner termination of the option term. Upon the
consummation of the Corporate Transaction, all automatic option grants under
this Article Three shall terminate and cease to be outstanding.
B. Upon the occurrence of a Hostile Take-Over, each outstanding
automatic option grant made pursuant to the provisions of this Article Three
shall automatically be cancelled and the optionee shall in return be entitled to
a cash distribution from the Corporation calculated in accordance with Section
V.B of Article Two and payable at the time and in the manner set forth in
Section V.B of Article Two. Stockholder approval of the December 15, 1997
restatement of
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the Plan constitutes pre-approval of each option subsequently granted under this
Article Three with such a cancellation provision and the subsequent cancellation
of that option in accordance with the terms of this Section III.B. No additional
approval of the Board or any Plan Administrator shall be required at the time of
the actual option cancellation and cash distribution.
C. The automatic option grants outstanding under this Article Three
shall in no way affect the right of the Corporation 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.
D. The shares of Common Stock subject to each option cancelled in
connection with the Hostile Take-Over shall NOT be available for subsequent
issuance under this Plan.
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ARTICLE FOUR
MISCELLANEOUS
I. 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. However, no such
amendment or modification shall, without the consent of the holders, adversely
affect rights and obligations with respect to options at the time outstanding
under the Plan. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares or cash upon
the exercise of stock options or stock appreciation rights granted under the
Plan shall be subject to the satisfaction of all applicable federal, state and
local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion and upon such
terms and conditions as it may deem appropriate (including the applicable
safe-harbor provisions of Rule 16b-3 of the Exchange Act) provide any or all
holders of outstanding option grants under Article Two with the election to have
the Corporation withhold, from the shares of Common Stock otherwise issuable
upon the exercise of such options, one or more of such shares with an aggregate
fair market value equal to the designated percentage (any multiple of 5%
specified by the optionee) of the federal and state income and employment
withholding taxes ("Withholding Taxes") to which such holders may become subject
in connection with the acquisition of such shares. In lieu of such direct
withholding, one or more optionees may also be granted the right to deliver
shares of Common Stock to the Corporation in satisfaction of such Withholding
Taxes. The withheld or delivered shares shall be valued at the Fair Market Value
on the applicable determination date for such Withholding Taxes.
III. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan, as successor to the Corporation's 1989 Plan, became
effective as of the October 25, 1993 Effective Date. The Plan was subsequently
amended and restated by the Board on December 15, 1993 with the purpose of,
among other provisions, deleting direct stock issuances and renaming the Plan to
the 1994 Stock Option Plan. On March 29, 1994 the Board amended and restated the
Plan (the "1994 Restatement") to increase the number of shares of Common Stock
issuable thereunder by 500,000 shares and to impose a limitation on the maximum
number of shares of Common Stock for which any one participant in the Plan may
be granted stock options and separately exercisable stock appreciation rights
after December 31, 1993. The 1994 Restatement was approved by the Corporation's
stockholders in May 1994. On March 17, 1997, the Board adopted amendments to the
Plan (the "1997 Restatement") to effect the following changes: (i) increase the
maximum number of shares of Common Stock available
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for issuance over the term of the Plan by an additional 500,000 shares; (ii)
implement an automatic share increase feature pursuant to which the number of
shares of Common Stock available for issuance under the Plan will automatically
increase on the first day of January each year, beginning January 1, 1998, by
two percent (2%) of the total number of shares of Common Stock outstanding on
the last day of December in the immediately preceding year; (iii) increase the
maximum number of shares available for issuance under the Automatic Option Grant
Program in effect under the Plan by an additional 33,334 shares to 150,000
shares; (iv) impose a specific limitation of 850,000 shares on the maximum
number of shares for which any one participant may be granted stock options and
separately exercisable stock appreciation rights in the aggregate under the 1994
Plan; (v) render the non-employee Board members eligible to receive option
grants under the Discretionary Option Grant Program; (vi) remove certain
restrictions on the eligibility of non-employee Board members to serve as Plan
Administrator; and (vii) effect a series of additional changes to the provisions
of the Plan (including the stockholder approval requirements, the
transferability of non-statutory stock options and the elimination of the six
(6) month holding period requirement as a condition to the exercise of stock
appreciation rights) in order to take advantage of the recent amendments to Rule
16b-3 of the Securities and Exchange Commission which exempts certain officer
and director transactions under the 1993 Plan from the short-swing liability
provisions of the federal securities laws. The 1997 Restatement was approved by
the Corporation's stockholders on June 2, 1997.
B. On December 15, 1997, the Board adopted a series of amendments
(the "1997 Amendment") to the Plan which effect the following changes to the
Automatic Option Grant Program for non-employee Board members under Article
Three of the Plan: (i) increase the number of shares of Common Stock for which
options are to be granted annually (the "Annual Automatic Grant") to each
non-employee Board member from five thousand (5,000) shares to ten thousand
(10,000) shares; (ii) change the date on which such Annual Automatic Grants are
to be made to the non-employee Board members from the date of the Annual
Stockholders Meeting to the date of the first Board meeting in December each
year (commencing December 1997); provided, however, that if there is no Board
meeting in December of any year, the Annual Automatic Grants for that year shall
be made on December 15 or, if December 15th is not a Trading Day, the
immediately succeeding Trading Day; (iii) authorize and effect an Annual
Automatic Grant for each individual serving as a non-employee Board member on
December 15, 1997, whether or not that individual received his or her initial
automatic grant within the preceding six (6) months; (iv) provide that after
December 15, 1997, each non-employee Board member shall be eligible to receive
an Automatic Option Grant in December of any year only if that individual did
not receive his or her initial automatic grant within the preceding six (6)
months; and (v) eliminate the provisions of the Plan which impose a
150,000-share limitation on the maximum number of shares issuable under the
Automatic Option Grant Program. The 1997 Amendment was approved by the
stockholders at the 1998 Annual Meeting. All option grants made prior to the
1997 Amendment shall remain outstanding in accordance with the terms and
conditions of the respective instruments evidencing those options, and nothing
in the 1997 Amendment shall be deemed to modify or in any way affect those
outstanding options.
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C. Each option issued and outstanding under the 1989 Plan
immediately prior to the Effective Date shall be incorporated into this Plan and
treated as an outstanding option under this Plan, but each such option shall
continue to be governed solely by the terms and conditions of the instrument
evidencing such grant, and nothing in this Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such options with
respect to their acquisition of shares of Common Stock thereunder or their
exercise of outstanding stock appreciation rights thereunder.
D. The Plan shall terminate upon the earlier of (i) July 27, 2003
or (ii) the date on which all shares available for issuance under the Plan have
been issued pursuant to the exercise of options granted under Article Two. If
the date of termination is determined under clause (i) above, then no options
outstanding on such date shall be affected by the termination of the Plan, and
such securities shall thereafter continue to have force and effect in accordance
with the provisions of the instruments evidencing such options.
E. 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 each option granted is not to become exercisable, in whole or
in part, at any time prior to stockholder approval of an amendment authorizing a
sufficient increase in the number of shares issuable under the Plan.
IV. REGULATORY APPROVALS
A. 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 Corporation 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.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of federal and state securities laws, including the
filing and effectiveness of a Form S-8 registration statement for the shares of
Common Stock issuable under the Plan, and all applicable listing requirements of
any securities exchange on which stock of the same class is then listed.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to options granted under the Plan shall be used for general
corporate purposes.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan,
nor any action taken by the Plan Administrator hereunder, nor any provision of
the Plan shall be construed so as to grant any individual the right to remain in
the employ or Service of the Corporation (or any
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parent or subsidiary corporation) for any period of specific duration, and the
Corporation (or any parent or subsidiary corporation retaining the services of
such individual) may terminate such individual's employment or Service at any
time and for any reason, with or without cause.
VII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the
Plan may not be assigned, encumbered or otherwise transferred by any optionee.
B. The provisions of the Plan shall be governed by the laws of
the state of California, as such laws are applied to contracts entered into and
performed in such state.
C. The provisions of the Plan shall inure to the benefit of, and
be binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.
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