As filed with the Securities and Exchange Commission on February 9, 1996
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------------
DIGITAL MICROWAVE CORPORATION
(Exact name of issuer as specified in its charter)
DELAWARE 77-0016028
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
170 ROSE ORCHARD WAY, SAN JOSE, CALIFORNIA 95134
(Address of principal executive offices) (Zip Code)
--------------------------
DIGITAL MICROWAVE CORPORATION
1994 STOCK INCENTIVE PLAN
(Full title of the plan)
--------------------------
CHARLES KISSNER
President and Chief Executive Officer
DIGITAL MICROWAVE CORPORATION 170 Rose Orchard
Way, San Jose, CA 95134 (Name and address of agent
for service)
(408) 943-0777
--------
(Telephone number, including area code, of agent for service)
--------------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
---------- ------------- ------------ -------- ------------
<S> <C>
Options to purchase 150,000 N/A N/A N/A
Common Stock
Common Stock, 150,000 shares $10.81 $1,621,500 $559.14
$0.01 par value
================================================================================================
<FN>
(1) This Registration Statement shall also cover any
additional shares of Common Stock which become issuable
under the Digital Microwave Corporation 1994 Stock
Incentive Plan by reason of any stock dividend, stock
split, recapitalization or other similar transaction
effected without the receipt of consideration which
results in an increase in the number of the outstanding
shares of Common Stock of Digital Microwave
Corporation.
(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 Common Stock of Digital Microwave
Corporation on February 9, 1996, as reported by the
Nasdaq National Market.
</FN>
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
Digital Microwave Corporation (the
"Registrant") hereby incorporates by reference into this
Registration Statement the following documents previously filed
with the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Annual Report on Form
10-K for the fiscal year ended
March 31, 1995 filed with the SEC on
June 29, 1995.
(b) (1) The Registrant's Quarterly
Report on Form 10-Q for the
fiscal quarter ended June 30,
1995;
(2) The Registrant's Quarterly
Report on Form 10-Q for the
fiscal quarter ended
September 30, 1995;
(3) The Registrant's report on
Form 8-K filed with the SEC on
July 12, 1995; and
(4) The Registrant's report on
Form 10-C filed with the SEC
on August 28, 1995.
(c) The Registrant's Registration
Statement No. 0-15895 on Form 8-A
filed with the SEC on May22, 1987, in
which there is described 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 Securities Exchange Act of 1934 (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 also is 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 no director of the Registrant will be
personally liable to the Registrant or any of its stockholders
for monetary damages arising from the
<PAGE>
director's breach of his fiduciary duties. However, such
exemption from liability does not apply with respect to any
action in which the director would be liable under Section 174 of
Title 8 of the Delaware General Corporation Law ("Delaware Law"),
nor does it apply with respect to any liability in which the
director (i) breached his duty of loyalty to the Registrant;
(ii)did not act in good faith or, in failing to act, did not act
in good faith; (iii) acted in a manner involving intentional
misconduct or knowing violation of law or, in failing to act,
acted in a manner involving intentional misconduct or knowing
violation of law; or (iv) derived an improper personal benefit.
Pursuant to the provisions of Section 145 of
Delaware Law, the Registrant as a Delaware corporation has the
power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than an action by or
in the right of the Registrant) by reason of the fact that he is
or was a director, officer, employee or agent of the Registrant
or of any corporation, partnership, joint venture, trust or other
enterprise for which he is or was serving in such capacity at the
request of the Registrant, against any and all expenses,
judgments, fines and amounts paid in settlement which were
reasonably incurred by him in connection with such action, suit
or proceeding. The power to indemnify applies only if such person
acted in good faith and in a manner he reasonably believed to be
in the best interests, or not opposed to the best interests, of
the Registrant and, with respect to any criminal action or
proceeding, if he had no reasonable cause to believe his conduct
was unlawful.
The power to indemnify also applies to actions
brought by or in the right of the Registrant, but only to the
extent of defense and settlement expenses and not to the
satisfaction of a judgment or settlement of the claim itself. In
such actions, however, no indemnification will be made if there
is any adjudication of negligence or misconduct, unless the
court, in its discretion, feels that in the light of all the
circumstances indemnification should apply.
To the extent any such person is successful in
the defense of the actions referred to above, such person is
entitled pursuant to Section 145 of Delaware Law to
indemnification as described above. Section 145 also grants the
power to advance litigation expenses upon receipt of an
undertaking to repay such advances in the event no right to
indemnification is subsequently shown. A corporation may also
obtain insurance at its expense to protect anyone who might be
indemnified, or has a right to insist on indemnification, under
the statute.
The Registrant has entered into indemnification
agreements with its directors and certain officers which provide
for indemnification to the fullest extent permitted by Delaware
Law, including Section 145 thereof. The Registrant may also enter
into similar agreements from time to time with future directors
and/or present or future officers of the Registrant.
Item 7. Exemption from Registration Claimed
Not Applicable.
II-2
<PAGE>
Item 8. Exhibits
Exhibit No. Exhibit
- ----------- -------
4 Instruments Defining Rights of Stockholders.
Reference is made to Registrant's Registration
Statement No. 0-15895 on Form 8-A, which is
incorporated herein by reference pursuant to Item
3(c) of this Registration Statement.
5 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Arthur Andersen LLP, Independent
Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is
contained in Exhibit 5.
24. Power of Attorney. Reference is made to page II-5
of this Registration Statement.
99.1 Digital Microwave Corporation 1994 Stock Incentive
Plan.
99.2* Form of Notice of Grant of Stock Option to be
generally used in connection with the
Discretionary Option Grant Program of the 1994
Stock Incentive Plan.
99.3* Form of Stock Option Agreement to be generally
used in connection with the Discretionary Option
Grant Program of the 1994 Stock Incentive Plan.
99.4* Addendum to Stock Option Agreement (Involuntary
Termination).
99.5* Addendum to Stock Option Agreement (Special Tax
Election).
99.6* Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.7* Addendum to Stock Option Agreement (Financial
Assistance).
99.8* Form of Notice of Grant of Automatic Stock Option
to be generally used in connection with the
Automatic Option Grant Program of the 1994 Stock
Incentive Plan (Initial Grant).
99.9* Form of Notice of Grant of Automatic Stock Option
to be generally used in connection with the
Automatic Option Grant Program of the 1994 Stock
Incentive Plan (Annual Grant).
99.10* Form of Automatic Stock Option Agreement to be
generally used in connection with the Automatic
Option Grant Program of the 1994 Stock Incentive
Plan.
99.11* Form of Stock Issuance Agreement to be generally
used in connection with the Stock Fee Program of
the 1994 Stock Incentive Plan.
99.12* Form of Stock Issuance Agreement to be generally
used in connection with the Stock Issuance Program
of the 1994 Stock Incentive Plan.
99.13* Form of Addendum to Stock Issuance Agreement
(Special Tax Election).
99.14* Form of Addendum to Stock Issuance Agreement
(Involuntary Termination).
- --------
* Exhibits 99.2 through 99.14 are incorporated herein by
reference to Exhibits 99.2 through 99.14, respectively, on
Registrant's Registration Statement No. 33-85270 on Form S-8
which was filed with the SEC on October 17, 1994.
Item 9. Undertakings
A. The undersigned Registrant hereby
undertakes: (1) to file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement (i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, as amended (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
II-3
<PAGE>
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 upon the termination of the Registrant's 1994 Stock
Incentive 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 into 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 above or otherwise, the
Registrant has been informed that in the opinion of the SEC 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.
II-4
<PAGE>
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 San Jose,
State of California, on this 9th day of February, 1996.
DIGITAL MICROWAVE CORPORATION
By: CHARLES KISSNER
---------------------
Charles Kissner
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of
DIGITAL MICROWAVE CORPORATION, a Delaware corporation, do hereby
constitute and appoint Charles Kissner and Carl A. Thomsen and
each of them, the lawful attorneys and agents, with full power
and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, and any
one of them, determine 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 attorneys and agents, or any of them, 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.
Signatures Title Date
- ---------- ----- ----
CHARLES KISSNER President, Chief February 9, 1996
- --------------- Executive Officer
Charles Kissner and Director (Principal
Executive Officer)
II-5
<PAGE>
Signatures Title Date
- ---------- ----- ----
CARL A. THOMSEN Vice President and February 9, 1996
- --------------- Chief Financial
Carl A. Thomsen Officer (Principal Financial
and Accounting Officer)
CLIFFORD H. HIGGERSON Chairman of the February 9, 1996
- --------------------- Board of Directors
Clifford H. Higgerson
RICHARD C. ALBERDING Director February 9, 1996
- --------------------
Richard C. Alberding
WILLIAM E. GIBSON Director February 9, 1996
- --------------------
William E. Gibson
BILLY B. OLIVER Director February 9, 1996
- --------------------
Billy B. Oliver
JAMES MEINDL Director February 9, 1996
- --------------------
Dr. James Meindl
II-6
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
DIGITAL MICROWAVE CORPORATION
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Exhibit
- ----------- -------
4 Instruments Defining Rights of Stockholders.
Reference is made to Registrant's Registration
Statement No. 0-15895 on Form 8-A, which is
incorporated herein by reference pursuant to Item
3(c) of this Registration Statement.
5 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Arthur Andersen LLP, Independent
Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is
contained in Exhibit 5.
24. Power of Attorney. Reference is made to page II-5
of this Registration Statement.
99.1 Digital Microwave Corporation 1994 Stock Incentive
Plan.
99.2* Form of Notice of Grant of Stock Option to be
generally used in connection with the
Discretionary Option Grant Program of the 1994
Stock Incentive Plan.
99.3* Form of Stock Option Agreement to be generally
used in connection with the Discretionary Option
Grant Program of the 1994 Stock Incentive Plan.
99.4* Addendum to Stock Option Agreement (Involuntary
Termination).
99.5* Addendum to Stock Option Agreement (Special Tax
Election).
99.6* Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.7* Addendum to Stock Option Agreement (Financial
Assistance).
99.8* Form of Notice of Grant of Automatic Stock Option
to be generally used in connection with the
Automatic Option Grant Program of the 1994 Stock
Incentive Plan (Initial Grant).
99.9* Form of Notice of Grant of Automatic Stock Option
to be generally used in connection with the
Automatic Option Grant Program of the 1994 Stock
Incentive Plan (Annual Grant).
99.10* Form of Automatic Stock Option Agreement to be
generally used in connection with the Automatic
Option Grant Program of the 1994 Stock Incentive
Plan.
99.11* Form of Stock Issuance Agreement to be generally
used in connection with the Stock Fee Program of
the 1994 Stock Incentive Plan.
99.12* Form of Stock Issuance Agreement to be generally
used in connection with the Stock Issuance Program
of the 1994 Stock Incentive Plan.
99.13* Form of Addendum to Stock Issuance Agreement
(Special Tax Election).
99.14* Form of Addendum to Stock Issuance Agreement
(Involuntary Termination).
- --------
* Exhibits 99.2 through 99.14 are incorporated herein by
reference to Exhibits 99.1 through 99.14, respectively, on
Registrant's Registration Statement No. 33-85270 on Form S-8
which was filed with the SEC on October 17, 1994.
<PAGE>
EXHIBIT 4
Instruments Defining Rights of Stockholders.
Reference is made to Registrant's Registration
Statement No. 0-15895 on Form 8-A, which is
incorporated herein by reference pursuant to Item
3(c) of this Registration Statement.
EXHIBIT 5
Opinion of Brobeck, Phleger & Harrison LLP
February 9, 1996
DIGITAL MICROWAVE CORPORATION
170 Rose Orchard Way
San Jose, CA 95134
RE: DIGITAL MICROWAVE CORPORATION -- REGISTRATION STATEMENT
OFFERING OF 150,000 SHARES OF COMMON STOCK
-------------------------------------------------------
Ladies and Gentlemen:
We refer to your registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933,
as amended, of 150,000 shares of Common Stock of Digital
Microwave Corporation (the "Company") authorized for issuance
under the Company's 1994 Stock Incentive Plan (the "Plan"). We
advise you that, in our opinion, when such shares have been
issued and sold pursuant to the applicable provisions of the Plan
and in accordance with the Registration Statement, such shares
will be validly issued, fully paid and nonassessable shares of
the Company's Common Stock.
We hereby consent to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated May 8, 1995 included in or incorporated by reference
in Digital Microwave Corporation's Form 10-K for the year ended
March 31, 1995.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
San Jose, California
February 12, 1996
<PAGE>
EXHIBIT 23.2
Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5
<PAGE>
EXHIBIT 24
Power of Attorney. Reference is made to page II-5
of this Registration Statement
EXHIBIT 99.1
Digital Microwave Corporation 1994 Stock Incentive Plan
DIGITAL MICROWAVE CORPORATION
1994 STOCK INCENTIVE PLAN
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1994 Stock Incentive Plan (the
"Plan") is intended to promote the interests of Digital Microwave
Corporation, a Delaware corporation (the "Corporation"), by
providing (i) key employees (including officers) of the
Corporation (or its Parent or Subsidiary corporations) who are
responsible for the management, growth and financial success of
the Corporation, (ii) the non-employee members of the
Corporation's Board of Directors (the "Board") or the board of
directors of any Parent or Subsidiary corporation and (iii) those
consultants and other independent contractors who provide
valuable services to the Corporation (or its Parent or Subsidiary
corporations) 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 subsidiary corporations).
B. The Plan shall become effective upon
approval by the Corporation's stockholders at the 1994 Annual
Meeting to be held on July 27, 1994. Such date is hereby
designated as the Effective Date of the Plan.
II. STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be
divided into five separate components:
- The Discretionary Option Grant Program under
which eligible individuals may, at the discretion of the
Plan Administrator, be granted options to purchase
shares of Common Stock in accordance with the provisions
of Article Two.
- The Automatic Option Grant Program under
which non-employee Board members shall automatically
receive special option grants at periodic intervals to
purchase shares of Common Stock in accordance with the
provisions of Article Three.
- The Stock Fee Program under which the
non-employee Board members may elect to apply all or a
portion of their annual cash retainer fee to the
acquisition of shares of Common Stock in accordance with
the provisions of Article Four.
- The Salary Reduction Grant Program under
which eligible individuals may, pursuant to the
provisions of Article Five, elect to have a portion of
their base salary reduced each year in return for
options to purchase shares of Common Stock at an
aggregate discount from the Fair Market Value of the
option shares on the grant date equal to the salary
reduction amount.
- The Stock Issuance Program under which
eligible individuals may, pursuant to the provisions of
Article Six, be issued shares of Common Stock directly,
through the immediate purchase of such shares at a price
not less than eighty-five percent (85%) of their Fair
Market Value at the time of issuance, as a bonus tied to
the performance of services or the Corporation's
attainment of financial objectives, or pursuant to the
individual's election to receive such shares in lieu of
base salary.
<PAGE>
B. General Provisions. Unless the context
clearly indicates otherwise, the provisions of Articles One and
Seven shall apply to the Discretionary Option Grant, Automatic
Option Grant, Salary Reduction Grant, Stock Issuance and Stock
Fee Programs and shall accordingly govern the interests of all
individuals under the Plan.
C. Glossary. Capitalized terms shall,
except as otherwise specifically defined within the provisions of
the Plan, have the meanings assigned to such terms in the
Glossary.
III. ADMINISTRATION OF THE PLAN
A. The Committee shall have sole and
exclusive authority to administer the Discretionary Option Grant,
Salary Reduction Grant and Stock Issuance Programs. No Board
member shall be eligible to serve on the Committee if such
individual has, within the twelve (12)-month period immediately
preceding the date such individual is to be appointed to the
Committee, received an option grant or stock issuance under this
Plan or any other stock option, stock appreciation, stock bonus
or other stock plan of the Corporation (or any Subsidiary), other
than pursuant to the Automatic Option Grant Program specified in
Article Three or the Stock Fee Program specified in Article Four
or the predecessor automatic option grant program in effect under
the Corporation's 1984 Stock Option Plan. Members of the
Committee shall serve for such period as the Board may determine
and shall be subject to removal by the Board at any time.
B. The Committee as Plan Administrator
shall have full power and discretion (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, Salary Reduction Grant and Stock
Issuance Programs and to make such determinations under, and
issue such interpretations of, the provisions of each such
program and any outstanding option grants or stock issuances
thereunder 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 those programs or any outstanding option
or stock issuance thereunder.
C. Service on the Committee shall
constitute service as a Board member, and members of the
Committee shall accordingly be entitled to full indemnification
and reimbursement as Board members for their service on the
Committee. No member of the Committee shall be liable for any act
or omission made in good faith with respect to the Plan or any
option grants or share issuances under the Plan.
D. Administration of the Automatic Option
Grant and Stock Fee Programs shall be self-executing in
accordance with the express terms and conditions of those
programs, and the Plan Administrator shall not exercise any
discretionary functions with respect to the option grants or
stock issuances made pursuant to such programs.
IV. ELIGIBILITY
A. The persons eligible to participate in
the Discretionary Option Grant, Salary Reduction Grant and Stock
Issuance Programs are as follows:
- officers and other key
employees of the Corporation (or any Parent or Subsidiary) who
render services which contribute to the management, growth and
financial success of the Corporation; and
- those consultants or other
independent contractors who provide valuable services to the
Corporation (or any Parent or Subsidiary).
B. Non-employee Board members shall not be
eligible to participate in the Discretionary Option Grant, Salary
Reduction Grant or Stock Issuance Program or in any other stock
option, stock purchase,
2
<PAGE>
stock bonus or other stock plan of the Corporation (or its
Subsidiaries). Such non-employee Board members shall, however, be
eligible to participate in the Automatic Option Grant and Stock
Fee Programs.
C. The Plan Administrator shall have
full authority to determine, (i) with respect to grants made
under the Discretionary Option Grant and Salary Reduction Grant
Programs, which eligible individuals are to receive such grants,
the number of shares to be covered by each such grant, the status
of any granted option as either an Incentive Option or a
Non-Statutory Option, the time or times at which each granted
option is to become exercisable and the maximum term for which
the option may remain outstanding and (ii) with respect to stock
issuances under the Stock Issuance Program, which eligible
individuals are to be selected for participation, the number of
shares to be issued to each selected individual, the vesting
schedule (if any) to be applicable to the issued shares and the
consideration to be paid for such shares.
V. STOCK SUBJECT TO THE PLAN
A. Shares of 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 number of
shares of Common Stock reserved for issuance over the term of the
Plan shall initially be fixed at 900,000 1/ shares.
B. The number of shares of Common Stock
available for issuance under the Plan shall automatically
increase on the first trading day of each calendar year during
each of the first five years of the term of the Plan, beginning
with the 1995 calendar year, by an amount equal to one percent
(1%) of the shares of Common Stock outstanding on December 31 of
the immediately preceding calendar year; but in no event shall
such any annual increase exceed 150,000 shares. None of the
additional shares resulting from such annual increases may be
made the subject of Incentive Options granted under the Plan.
C. No one individual participating in the Plan
may be granted stock options, separately exercisable stock
appreciation rights and receive direct stock issuances for more
than 500,000 shares in the aggregate over the term of the Plan.
D. Should one or more outstanding options under
this Plan expire or terminate for any reason prior to exercise in
full, then the shares subject to the portion of each option not
so exercised shall be available for subsequent issuance under the
Plan. Shares subject to any stock appreciation rights exercised
under the Plan and all share issuances under the Plan (other than
issuances in payment of exercised stock appreciation rights),
whether or not the issued shares are subsequently repurchased by
the Corporation pursuant to its repurchase rights under the Plan,
shall reduce on a share-for-share basis the number of shares of
Common Stock available for subsequent issuance under the Plan. In
addition, should the exercise price of an outstanding option
under the 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 or the vesting of a share issuance under
the Plan, then the number of shares of Common Stock available for
issuance under the Plan shall be reduced by the gross number of
shares for which the option is exercised or which vest under the
share issuance, and not by the net number of shares of Common
Stock actually issued to the holder of such option or share
issuance.
E. Should any change be 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 the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number
and/or class of securities issuable under the
- --------
1/ Does NOT include the increases of 133,330 and 150,000 shares
effected automatically on January 3, 1995 and January 2, 1996,
respectively (each such increase representing 1% of the total
number of shares of Common Stock outstanding on such date).
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Plan, (ii) the maximum number and/or class of securities for
which the share reserve is to increase automatically each year
over the first five years of the term of the Plan, (iii) the
maximum number and/or class of securities for which any one
individual participating in the Plan may be granted stock
options, separately exercisable stock appreciation rights and
direct stock issuances in the aggregate over the term of the
Plan, (iv) the number and/or class of securities for which
automatic option grants are to be subsequently made to each newly
elected or continuing non-employee Board member under the
Automatic Option Grant Program and (v) the number and/or class of
securities and price per share in effect under each option
outstanding under the Plan. Such adjustments to the outstanding
options are to be effected in a manner which shall 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.
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary
Grant Program 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 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 the terms
and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the provisions
of the Plan applicable to such grants.
A. Exercise Price.
1. The exercise price per share shall be
fixed by the Plan Administrator in accordance with the following
provisions:
The exercise price per share of Common
Stock subject to an Incentive Option shall in no event
be less than one hundred percent (100%) of the Fair
Market Value of such Common Stock on the grant date.
The exercise price per share of Common
Stock subject to a Non-Statutory Option shall in no
event be less than eighty-five percent (85%) of the Fair
Market Value of such Common Stock on the grant date.
2. The exercise price shall become
immediately due upon exercise of the option and shall be payable
in one of the alternative forms specified below:
(i) full payment in cash or check
made payable to the Corporation's order,
(ii) full payment in shares of
Common Stock held 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 date the option
is exercised,
(iii) full payment in a combination
of shares of Common Stock held 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 date
the option is exercised and cash or check made payable to the
Corporation's order, or
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(iv) to the extent the option is
exercised for vested shares, full payment through a broker-dealer
sale and remittance procedure pursuant to which the Optionee
shall provide concurrent irrevocable written instructions (I) to
a Corporation-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 exercise price payable for the
purchased shares plus all applicable Federal, state and local
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.
B. Term and Exercise of Options. Each
option 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. No option shall, however, have a maximum term in
excess of ten (10) years. During the lifetime of the Optionee,
the option, together with any stock appreciation rights
pertaining to such option, shall be exercisable only by the
Optionee and shall not be assignable or transferable except for a
transfer of the option effected by will or by the laws of descent
and distribution following the Optionee's death.
C. Termination of Service.
1. Except to the extent otherwise
expressly authorized by the Plan Administrator, no Optionee shall
have more than a thirty-six (36)-month period measured from the
date of such individual's cessation of Service in which to
exercise his or her outstanding options under the Plan.
2. Any option exercisable in whole or in
part by the Optionee at the time of death may be subsequently
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. However, no such option shall remain
exercisable for more than thirty-six (36) months after the date
of the Optionee's death.
3. Under no circumstances shall any such
option be exercisable after the specified expiration date of the
option term.
4. During the applicable post-Service
exercise period, the option may not be exercised in the aggregate
for more than the number of shares (if any) in which the Optionee
is vested at the time of his or her cessation of Service. Upon
the expiration of the limited post-Service exercise period or (if
earlier) upon the specified expiration date of the option term,
each such option shall terminate and cease to remain outstanding
with respect to any vested shares for which the option has not
otherwise been exercised. However, each outstanding option shall
immediately terminate and cease to remain outstanding, at the
time of the Optionee's cessation of Service, with respect to any
shares for which the option is not otherwise at that time
exercisable or in which the Optionee is not otherwise vested.
5. Should the Optionee's Service be
terminated for Misconduct, all outstanding options held by that
individual shall terminate immediately and cease to remain
outstanding.
6. 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
to be exercised not only with respect to the number of
vested shares of Common Stock 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 vested shares for which the
option would otherwise have become exercisable had such
cessation of Service not occurred;
- to extend the period of time
for which the option is to remain exercisable following
the Optionee's cessation of Service or death from the
limited period
5
<PAGE>
otherwise in effect for that option to such greater
period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the specified
expiration date of the option term.
D. Stockholder Rights. An Optionee shall
have none of the rights of a stockholder with respect to
any option shares until such individual shall have
exercised the option and paid the exercise price for the
purchased shares.
E. Repurchase Rights. The shares of
Common Stock acquired under this Discretionary Grant
Program may be subject to repurchase by the Corporation
in accordance with the following provisions:
1. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested
shares of Common Stock. Should the Optionee cease Service while
holding any unvested shares purchased under such options, then
the Corporation shall have the right to repurchase any or all of
those unvested shares at the exercise price paid per share. The
terms and conditions upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall
be established by the Plan Administrator and set forth in the
instrument evidencing such repurchase right.
2. All of the Corporation's outstanding
repurchase rights shall automatically terminate, and all shares
subject to such terminated rights shall immediately vest in full,
upon the occurrence of a Corporate Transaction, except to the
extent: (i) any such repurchase right is expressly assigned to
the successor corporation (or parent thereof) in connection with
the Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed by the Plan Administrator
at the time the repurchase right is issued.
3. The Plan Administrator shall have the
discretionary authority, exercisable either before or after the
Optionee's cessation of Service, to cancel the Corporation's
outstanding repurchase rights with respect to one or more shares
purchased or purchasable by the Optionee under the Plan and
thereby accelerate the vesting of such shares in whole or in part
at any time.
II. 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. 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 Subsidiaries) 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
Hundred Thousand Dollars ($100,000). To the extent the Employee
holds two (2) 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. Should the
number of shares of Common Stock for which any Incentive Option
first becomes exercisable in any calendar year exceed the
applicable One Hundred Thousand Dollar ($100,000) limitation,
then the option may nevertheless be exercised in that calendar
year for the excess number of shares as a Non-Statutory Option
under the Federal tax laws.
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 Code) possessing ten
percent (10%) or more of the total combined voting power of all
classes of stock of the Corporation or any one of its
Subsidiaries, then the exercise price per share shall not be less
than one hundred 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.
6
<PAGE>
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL/HOSTILE
TAKE-OVER
A. In the event of any Corporate Transaction,
each outstanding option shall automatically accelerate so that
each such option shall, immediately prior to the specified
effective date for such Corporate Transaction, 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
shall NOT so accelerate 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 to be
replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof,
(ii) such option is to be replaced with a cash incentive program
of the successor corporation which preserves the option spread
existing at the time of the Corporate Transaction and provides
for subsequent payout in accordance with the same vesting
schedule applicable to such option or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant. The determination
of option comparability under clause (i) above shall be made by
the Plan Administrator, and its determination shall be final,
binding and conclusive.
B. The Plan Administrator shall have the
discretionary authority, exercisable either at the time the
option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration of one or
more outstanding options upon the occurrence of a Corporate
Transaction, whether or not those options are to be assumed or
replaced in the Corporate Transaction. Alternatively, the Plan
Administrator shall have the authority to provide for the
subsequent acceleration of any outstanding options which do not
otherwise accelerate at the time of the Corporate Transaction, or
the subsequent termination of any of the Corporation's
outstanding repurchase rights which do not otherwise terminate at
the time of the Corporate Transaction, should the Optionee's
Service terminate through an Involuntary Termination effected
within a designated period following the effective date of such
Corporate Transaction.
C. Immediately following the consummation
of the Corporate Transaction, all outstanding options shall
terminate, except to the extent assumed by the successor
corporation or its parent company.
D. Each outstanding option under this
Discretionary Grant Program that 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
exercise price payable per share, provided the aggregate exercise
price payable for such securities shall remain the same. In
addition, the class and number of securities available for
issuance under the Plan on both an aggregate and per individual
basis following the consummation of the Corporate Transaction
shall be appropriately adjusted.
E. The Plan Administrator shall have the
discretionary authority, exercisable either at the time the
option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration of one or
more outstanding options (and the termination of one or more of
the Corporation's outstanding repurchase rights) upon the
occurrence of a Change in Control. The Plan Administrator shall
also have full power and authority to condition any such option
acceleration (and the termination of any outstanding repurchase
rights) upon the subsequent termination of the Optionee's Service
through an Involuntary Termination effected within a specified
period following the Change in Control.
F. Any options accelerated in connection
with the Change in Control shall remain fully exercisable until
the expiration or sooner termination of the option term.
G. The grant of options 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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<PAGE>
H. The portion of any Incentive Option
accelerated in connection with a Corporate Transaction or Change
in Control shall remain exercisable as an incentive stock option
under the Federal tax laws only to the extent the applicable One
Hundred Thousand Dollar limitation is not exceeded. To the extent
such dollar limitation is exceeded, the accelerated portion of
such option shall be exercisable as a Non-Statutory Option under
the Federal tax laws.
IV. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full
power and authority, exercisable in its sole discretion, to grant
to selected Optionees: (i) Tandem Stock Appreciation Rights
("Tandem Rights") and/or Limited Stock Appreciation Rights
("Limited Rights").
B. The following terms and conditions
shall govern the grant and exercise of Tandem Rights:
1. One or more Optionees may be
granted the Tandem Right, exercisable upon such terms
and conditions as the Plan Administrator may establish,
to elect between the exercise of the underlying stock
option for shares of Common Stock and the surrender of
that option in exchange for a distribution from the
Corporation in an amount equal to the excess of (i) the
Fair Market Value (on the option surrender date) 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 exercise price
payable for such vested shares.
2. No such option surrender shall be
effective 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 may be made in shares of Common Stock
valued at Fair Market Value on the option surrender
date, in cash, or partly in shares and partly in cash,
as the Plan Administrator shall in its sole discretion
deem appropriate.
3. 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 option surrender date 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 more than ten (10) years after
the date of the option grant.
C. The following terms and conditions
shall govern the grant and exercise of Limited Rights:
1. One or more officers of the Corporation
subject to the short-swing profit restrictions of the
federal securities laws may, in the Plan Administrator's
sole discretion, be granted Limited Rights with respect
to their outstanding options.
2. Upon the occurrence of a Hostile Take-Over,
each such officer holding one or more options with such
a Limited Right in effect for at least six (6) months
shall have the unconditional right (exercisable for a
thirty (30)-day period following such Hostile Take-Over)
to surrender each such option to the Corporation, to the
extent the option is at the time exercisable for fully
vested shares of Common Stock. The officer 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 vested shares of Common Stock at
the time subject to each surrendered option (or
surrendered portion of such option) over (ii) the
aggregate exercise price payable for such vested shares.
Such cash distribution shall be made within five (5)
days following the option surrender date.
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<PAGE>
3. Neither the approval of the Plan
Administrator nor the consent of the Board shall be
required in connection with such option surrender and
cash distribution. Any unsurrendered portion of the
option shall continue to remain outstanding and become
exercisable in accordance with the terms of the
instrument evidencing such grant.
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
A. Eligible Optionees. The individuals
eligible to receive automatic option grants pursuant to the
provisions of this Automatic Grant Program shall be limited to
(i) those individuals who are first elected as non-employee Board
members at the 1994 Annual Meeting of Stockholders, (ii) those
individuals who are first elected or appointed as non-employee
Board members after the date of such Annual Meeting, whether
through appointment by the Board or election by the Corporation's
stockholders, and (iii) those individuals who are re-elected to
serve as non-employee Board members at one or more Annual
Stockholder Meetings beginning with the 1995 Annual Meeting. Only
individuals who have not been in the prior Service of the
Corporation (or any Parent or Subsidiary) may receive an
automatic option grant under clause (i) or (ii) above. Any
non-employee Board member eligible to participate in the
Automatic Grant Program pursuant to the foregoing criteria is
hereby designated an Eligible Director for purposes of such
program.
B. Limitation. Except for the option
grants to be made pursuant to the provisions of this Automatic
Option Grant Program and any share issuance to be made pursuant
to the provisions of the Stock Fee Program, non-employee Board
members shall not be eligible to receive any option grants or
stock issuances under this Plan or any other stock plan of the
Corporation (or any Parent or Subsidiary).
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants shall be
made on the dates specified below:
1. Each individual first elected as an Eligible
Director at the 1994 Annual Stockholders Meeting shall
automatically be granted on the date of such Meeting a
Non-Statutory Option to purchase 15,000 shares of Common Stock.
2. Each individual who first becomes an
Eligible Director after the date of the 1994 Annual Stockholders
Meeting, whether through election by the Corporation's
stockholders or appointment by the Board, shall automatically be
granted, at the time of such initial election or appointment, a
Non-Statutory Option to purchase 15,000 shares of Common Stock.
3. On the date of each Annual Stockholders
Meeting, beginning with the 1995 Annual Meeting, each individual
who is at that time re-elected as a non-employee Board member and
who has not otherwise received any prior automatic option grants
during the two immediately preceding calendar years shall
automatically be granted a Non-Statutory Option to purchase an
additional 5,000 shares of Common Stock, provided such individual
has served as a Board member for at least twelve (12) months.
B. No Limitation. There shall be no limit
on the number of such 5,000-share annual option grants any one
Eligible Director may receive at successive three-year intervals
over his or her period of Board service.
C. Exercise Price. The exercise price
per share of Common Stock of each automatic option grant shall be
equal to one hundred percent (100%) of the Fair Market Value per
share of Common Stock on the automatic grant date.
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<PAGE>
D. Payment. The exercise price shall be
payable in any of the alternative forms authorized under the
Discretionary Option Grant Program. To the extent the option is
exercised for any unvested shares, the Optionee must execute and
deliver to the Corporation a stock purchase agreement for those
unvested shares which provides the Corporation with the right to
repurchase, at the exercise price paid per share, any unvested
shares held by the Optionee at the time of cessation of Board
service and which precludes the sale, transfer or other
disposition of the purchased shares at any time while those
shares remain subject to such repurchase right.
E. Option Term. Each automatic grant shall
have a maximum term of ten (10) years measured from the grant
date.
F. Exercisability/Vesting. Each automatic
grant shall be immediately exercisable for any or all of the
option shares. However, any shares purchased under the option
shall be subject to repurchase by the Corporation, at the
exercise price paid per share, upon the Optionee's cessation of
Board service prior to vesting in those shares. Each automatic
grant shall vest, and the Corporation's repurchase right shall
lapse, in a series of three (3) equal and successive annual
installments over the Optionee's period of continued service as a
Board member, with the first such installment to vest upon
Optionee's completion of one (1) year of Board service measured
from the automatic grant date.
G. Non-Transferability. During the
lifetime of the Optionee, the automatic option grant, together
with the limited stock appreciation right pertaining to such
option, shall be exercisable only by the Optionee and shall not
be assignable or transferable except for a transfer of the option
effected by will or by the laws of descent and distribution
following the Optionee's death.
H. Termination of Board Service.
1. Should the Optionee cease to serve as a
Board member for any reason (other than death or Permanent
Disability) while holding one or more automatic option grants,
then such individual shall have a six (6)-month period following
the date of such cessation of Board service in which to exercise
each such option for any or all of the option shares in which the
Optionee is vested at the time of such cessation of Board
service. However, each such option shall immediately terminate
and cease to remain outstanding, at the time of such cessation of
Board service, with respect to any option shares in which the
Optionee is not otherwise at that time vested under such option.
2. Should the Optionee die within six (6)
months after cessation of Board service, then any automatic
option grant held by the Optionee at the time of death may
subsequently be exercised, for any or all of the option shares in
which the Optionee is vested at the time of his or her cessation
of Board service (less any option shares subsequently purchased
by the Optionee prior to 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. The right
to exercise each such option shall lapse upon the expiration of
the twelve (12)-month period measured from the date of the
Optionee's death.
3. Upon the Optionee's death or Permanent
Disability while serving as a Board member, the shares of Common
Stock at the time subject to each automatic option grant held by
the Optionee shall immediately vest in full (and the
Corporation's repurchase right with respect to such shares shall
terminate), and the Optionee (or the representative of the
Optionee's estate or the person or persons to whom the option is
transferred upon the Optionee's death) shall have a twelve
(12)-month period following the date of such cessation of Board
service in which to exercise such option for any or all of those
vested shares of Common Stock.
4. In no event shall any automatic grant remain
exercisable after the expiration date of the ten (10)-year option
term. Upon the expiration of the applicable post-service exercise
period provided above or (if earlier) upon the expiration of the
ten (10)-year option term, the automatic grant shall terminate
and cease to be outstanding for any option shares in which the
Optionee was vested at the time of his or her cessation of Board
service but for which such option was not otherwise exercised.
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<PAGE>
I. Stockholder Rights. The holder of an
automatic option grant under this Automatic Grant Program shall
have none of the rights of a stockholder with respect to any
shares subject to that option until such individual shall have
exercised the option and paid the exercise price for the
purchased shares.
J. Remaining Terms. The remaining terms
and conditions of each automatic option grant shall be as set
forth in the form Automatic Stock Option Agreement attached as
Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE
TAKE-OVER
A. The shares of Common Stock subject to
each automatic option grant outstanding at the time of any
Corporate Transaction but not otherwise vested shall
automatically vest in full and the Corporation's repurchase right
with respect to those shares shall terminate, so that each such
option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable for all
of the shares of Common Stock at the time subject to that option
and may be exercised for all or any portion of such shares as
fully vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, all automatic option
grants shall terminate and cease to remain outstanding, except to
the extent assumed by the successor entity or its parent
corporation.
B. The shares of Common Stock subject to
each automatic option grant outstanding at the time of any Change
in Control but not otherwise vested shall automatically vest in
full and the Corporation's repurchase right with respect to those
shares shall terminate, so that each such option shall,
immediately prior to the specified effective date for the Change
in Control, become fully exercisable for all of the shares of
Common Stock at the time subject to that option and may be
exercised for all or any portion of such shares as fully vested
shares of Common Stock. Each option shall remain so exercisable
for all the option shares following the Change in Control until
the expiration or sooner termination of the option term.
C. Upon the occurrence of a Hostile
Take-Over, the Optionee shall also have a thirty (30)-day period
in which to surrender to the Corporation each automatic option
grant held by him or her for a period of at least six (6) months.
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 surrendered option over (ii) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid
within five (5) days following the surrender of the option to the
Corporation. Neither the approval of the Plan Administrator nor
the consent of the Board shall be required in connection with
such option surrender and cash distribution. The shares of Common
Stock subject to each option surrendered in connection with the
Hostile Take-Over shall NOT be available for subsequent issuance
under the Plan.
D. The automatic option grants
outstanding under the Plan 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.
IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS
The provisions of this Automatic Option Grant
Program, together with the outstanding automatic option grants,
may not be amended at intervals more frequently than once every
six (6) months, other than to the extent necessary to comply with
applicable Federal income tax laws and regulations.
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<PAGE>
ARTICLE FOUR
STOCK FEE PROGRAM
I. ELIGIBILITY
Each individual serving as a non-employee Board
member shall be eligible to elect to apply all or any portion of
the annual retainer fee otherwise payable to such individual in
cash to the acquisition of unvested shares of Common Stock upon
the terms and conditions of this Stock Fee Program.
II. ELECTION PROCEDURE
A. Filing. The non-employee Board member
must make the stock-in-lieu-of-fee election prior to the start of
the calendar year for which the election is to be effective. The
first calendar year for which any such election may be filed
shall be the 1995 calendar year. The election, once filed, shall
be irrevocable. The election for any upcoming calendar year may
be filed at any time prior to the start of that year, but in no
event later than December 31 of the immediately preceding
calendar year. The non-employee Board member may file a standing
election to be in effect for two (2) or more consecutive calendar
years or to remain in effect indefinitely until revoked by
written instrument filed with the Plan Administrator at least six
(6) months prior to the start of the first calendar year for
which such standing election is no longer to remain in effect.
B. Election Form. The election must be
filed with the Plan Administrator on the appropriate form
provided for this purpose. On the election form, the non-employee
Board member must indicate the percentage or dollar amount of his
or her annual retainer fee to be applied to the acquisition of
unvested shares.
III. SHARE ISSUANCE
A. Issue Date. On the first trading day
in January of the calendar year for which the election is
effective, the portion of the retainer fee subject to such
election shall automatically be applied to the acquisition of
shares of Common Stock by dividing the elected dollar amount by
the Fair Market Value per share of Common Stock on that trading
day. The number of issuable shares shall be rounded down to the
next whole share, and the issued shares shall be held in escrow
by the Secretary of the Corporation as partly paid shares until
the non-employee Board member vests in those shares. The
non-employee Board member shall have full shareholder rights,
including voting, dividend and liquidation rights, with respect
to all issued shares held in escrow on his or her behalf, but
such shares shall not be assignable or transferable while they
remain unvested.
B. Vesting. Upon completion of each
calendar month of Board service during the year for which the
election is in effect, the non-employee Board member shall vest
in one-twelfth (1/12) of the issued shares, and the stock
certificate for those shares shall be released from escrow.
Immediate vesting in all the issued shares shall occur in the
event (i) the non-employee Board member should die or become
Permanently Disabled during his or her period of Board service or
(ii) there should occur a Corporate Transaction or Change in
Control while such individual remains in Board service. Should
such individual cease Board service prior to vesting in one or
more monthly installments of the issued shares, then those
unvested shares shall be cancelled by the Corporation, and the
non-employee Board member shall not be entitled to any cash
payment or other consideration from the Corporation with respect
to the cancelled shares and shall have no further shareholder
rights with respect to such shares.
IV. AMENDMENT OF THE STOCK FEE PROGRAM PROVISIONS
A. Limited Amendments. The provisions
of this Stock Fee Program, together with any outstanding unvested
share issuances, may not be amended at intervals more frequently
than once every six (6) months, other than to the extent
necessary to comply with applicable Federal income tax laws and
regulations.
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ARTICLE FIVE
SALARY REDUCTION GRANT PROGRAM
I. ELIGIBILITY
The Plan Administrator shall have plenary
authority to select, prior to the start of each calendar year,
the particular key employees who shall be eligible for
participation in the Salary Reduction Grant Program for that
calendar year. In order to participate for a particular calendar
year, each selected individual must, prior to the start of that
calendar year, file with the Plan Administrator (or its
designate) an irrevocable authorization directing the Corporation
to reduce his or her base salary for that calendar year by a
designated multiple of one percent (1%), but in no event less
than five percent (5%).
The Plan Administrator shall review the filed
authorizations and determine whether to approve, in whole or in
part, one or more of those authorizations. To the extent the Plan
Administrator approves one or more authorizations, the
individuals who filed those authorizations shall be granted
options under this Salary Reduction Grant Program.
Options granted under the Salary Reduction
Grant Program, such options shall be Non-Statutory Options
evidenced by instruments in such form as the Plan Administrator
shall from time to time approve; provided, however, that each
such instrument shall comply with and incorporate the terms and
conditions specified below.
II. TERMS AND CONDITIONS OF OPTION
A. Exercise Price.
1. The exercise price per share shall be
thirty-three and one-third percent (33-1/3%) of the Fair Market
Value per share of Common Stock on the grant date.
2. The exercise price shall become immediately
due upon exercise of the option and shall be payable in any of
the alternative forms authorized under the Discretionary Grant
Program.
B. Number of Option Shares. The number
of shares of Common Stock for which each grant is to be made to a
selected Optionee shall be determined pursuant to the following
formula (rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the
approved reduction in the Optionee's base
salary for the calendar year, and
B is the Fair Market Value per share
of Common Stock on the date of the
grant.
C. Term and Exercise of Options.
1. Each option shall have a maximum term of ten
(10) years measured from the grant date. Provided the Optionee
continues in Service, the option shall become exercisable for (i)
fifty percent (50%) of the option shares on the last day of June
in the calendar year for which the option is granted and for (ii)
the
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balance of the option shares in a series of six (6) successive
equal monthly installments on the last day of each of the next
six (6) calendar months.
2. During the Optionee's lifetime, the option
shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by transfer of the option
effected by will or by the laws of descent and distribution
following the Optionee's death.
D. Effect of Termination of Service.
1. Should an Optionee cease Service for any
reason AFTER his or her outstanding option has become exercisable
in whole or in part, then that option shall remain exercisable,
for any or all of the shares for which the option is exercisable
on the date of such cessation of Service, until the expiration of
the ten (10)-year option term or any sooner termination in
connection with a Corporate Transaction. Following the Optionee's
death, such option may be exercised, for any or all of the shares
for which the option is exercisable at the time 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. Such right of exercise shall lapse, and
the option shall terminate, upon the expiration of the ten
(10)-year option term or any sooner termination in connection
with a Corporate Transaction.
2. Should the Optionee die BEFORE his or her
outstanding option becomes exercisable for any of the option
shares, 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 laws of
descent and distribution shall nevertheless have the right to
exercise such option for up to that number of option shares equal
to (i) one-twelfth (1/12) of the total number of option shares
multiplied by (ii) the number of full calendar months which have
elapse between the first day of the calendar year for which the
option is granted and the last day of the calendar month during
which the Optionee ceases Service. Such right of exercise shall
lapse, and the option shall terminate, upon the earliest to occur
of (i) the specified expiration date of the option term, (ii) the
termination of the option in connection with a Corporate
Transaction or (iii) the third anniversary of the date of the
Optionee's death. However, the option shall, with respect to any
and all option shares for which it is not exercisable at the time
of the Optionee's cessation of Service, terminate immediately
upon such cessation of Service and shall cease to remain
outstanding with respect to those option shares.
3. Should the Optionee become Permanently
Disabled and cease by reason thereof to remain in Service BEFORE
his or her outstanding option becomes exercisable for any of the
option shares, then the Optionee shall nevertheless have the
right to exercise such option for up to that number of option
shares equal to (i) one-twelfth (1/12) of the total number of
option shares multiplied by (ii) the number of full calendar
months which elapse between the first day of the calendar year
for which the option is granted and the last day of the calendar
month during which the Optionee ceases Service. Such right of
exercise shall lapse, and the option shall terminate, upon the
expiration of the ten (10)-year option term or any sooner
termination in connection with a Corporate Transaction. However,
the option shall, with respect to any and all option shares for
which it is not exercisable at the time of the Optionee's
cessation of Service, terminate immediately upon such cessation
of Service and shall cease to remain outstanding with respect to
those option shares.
4. Except to the limited extent specifically
provided above, should the Optionee cease for any reason to
remain in Service before his or her outstanding option first
become exercisable for one or more option shares, then that
option shall immediately terminate upon such cessation of Service
and shall cease to remain outstanding.
E. Stockholder Rights. The Optionee
shall have none of the rights of a stockholder with respect to
any option shares until such individual shall have exercised the
option and paid the exercise price for those shares.
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III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. Should any Corporate Transaction occur while
the Optionee remains in Service, then each outstanding option
held by such Optionee under this Salary Reduction Program shall
become exercisable, immediately prior to the specified effective
date of such Corporate Transaction, for all of the shares at the
time subject to such option and may be exercised for any or all
of such shares as fully vested shares of Common Stock.
Immediately following the consummation of the Corporate
Transaction, each such option shall terminate unless assumed by
the successor entity or its parent corporation.
B. Upon the Involuntary Termination of the
Optionee's Service following a Change in Control, each
outstanding option held by such Optionee under this Salary
Reduction Program shall immediately become exercisable for all of
the shares at the time subject to such option and may be
exercised for any or all of such shares as fully vested shares of
Common Stock. The option shall remain so exercisable until the
expiration of the ten (10)-year option term.
C. Option grants under this Salary Reduction
Program shall not affect the Corporation's right to adjust,
reclassify, reorganize or change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell
or transfer any or all of its assets.
ARTICLE SIX
STOCK ISSUANCE PROGRAM
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock may be issued under the
Stock Issuance Program through direct and immediate purchases
without any intervening stock option grants. The issued shares
shall be evidenced by a Stock Issuance Agreement ("Issuance
Agreement") that complies with the terms and conditions below.
A. Consideration
1. Newly Issued Shares shall be issued under
the Stock Issuance Program for one or more of the following items
of consideration that the Plan Administrator may deem appropriate
in each individual instance:
(i) full payment in cash
or check made payable to the Corporation's order,
(ii) a promissory note
payable to the Corporation's order in one or more
installments, which may be subject to cancellation in
whole or in part upon terms and conditions established
by the Plan Administrator, or
(iii) past services rendered
to the Corporation or any Parent or Subsidiary.
2. Newly Issued Shares must be issued for
consideration with a value not less than eighty-five percent
(85%) of the Fair Market Value of such shares at the time of
issuance.
3. Treasury Shares may be issued under the
Stock Issuance Program for such consideration (including one or
more of the items of consideration specified above) as the Plan
Administrator may deem appropriate, whether such consideration is
in an amount less than, equal to or greater than the Fair Market
Value of the Treasury Shares at the time of issuance. Treasury
Shares may, in lieu of any cash
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consideration, be issued subject to such vesting requirements
tied to the Participant's period of future Service or the
Corporation's attainment of specified performance objectives as
the Plan Administrator may establish at the time of issuance.
4. Shares of Common Stock may also, in the Plan
Administrator's absolute discretion, be issued pursuant to an
irrevocable election by the Participant to receive a portion of
his or her base salary in shares of Common Stock in lieu of such
base salary. Any such issuance shall be effected in accordance
with the following guidelines:
- On the first trading day in January of the
calendar year for which the election is effective, the
portion of base salary subject to such election shall
automatically be applied to the acquisition of Common
Stock by dividing the elected dollar amount by the Fair
Market Value per share of the Common Stock on that
trading day. The number of issuable shares shall be
rounded down to the next whole share, and the issued
shares shall be held in escrow by the Secretary of the
Corporation as partly paid shares until the Participant
vests in those shares. The Participant shall have full
stockholder rights, including voting, dividend and
liquidation rights, with respect to all issued shares
held in escrow on his or her behalf, but such shares
shall not be assignable or transferable while they
remain unvested.
- Upon completion of each calendar month of
Service during the year for which the election is in
effect, the Participant shall vest in one-twelfth (1/12)
of the issued shares, and the stock certificate for
those shares shall be released from escrow. All the
issued shares shall immediately vest upon (i) the
consummation of a Corporate Transaction or (ii) the
Involuntary Termination of the Participant's Service
following a Change in Control. Should the Participant
otherwise cease Service prior to vesting in one or more
monthly installments of the issued shares, then those
unvested shares shall immediately be surrendered to the
Corporation for cancellation, and the Participant shall
not be entitled to any cash payment or other
consideration from the Corporation with respect to the
cancelled shares and shall have no further stockholder
rights with respect to such shares.
B. Vesting Provisions
1. The shares of Common Stock issued under the
Stock Issuance Program (other than shares issued in lieu of
salary) may, in the absolute discretion of the Plan
Administrator, be fully and immediately vested upon issuance or
may vest in installments over the Participant's period of
Service. The elements of the vesting schedule applicable to any
unvested shares of Common Stock issued under the Stock Issuance
Program, namely:
(i) the Service period to be
completed by the Participant or the performance
objectives to be achieved by the Corporation,
(ii) the number of installments in
which the shares are to vest,
(iii) the interval or intervals (if
any) which are to lapse between installments, and
(iv) the effect which death,
Permanent Disability or other event designated by the
Plan Administrator is to have upon the vesting schedule,
shall be determined by the Plan Administrator and incorporated
into the Issuance Agreement executed by the Corporation and the
Participant at the time such unvested shares are issued.
2. The Participant shall have full stockholder
rights with respect to any shares of Common Stock issued to him
or her under the Stock Issuance Program, whether or not his or
her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to
receive any regular cash
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dividends paid on such shares. Any new, additional or different
shares of stock or other property (including money paid other
than as a regular cash dividend) which the Participant may have
the right to receive with respect to his or her unvested shares
by reason of any stock dividend, stock split, recapitalization,
combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued, subject
to (i) the same vesting requirements applicable to the
Participant's unvested shares and (ii) such escrow arrangements
as the Plan Administrator shall deem appropriate.
3. Should the Participant cease to remain in
Service while holding one or more unvested shares of Common Stock
under the Stock Issuance Program, then those shares shall be
immediately cancelled by the Corporation, and the Participant
shall have no further stockholder rights with respect to those
shares. To the extent the cancelled shares were previously issued
to the Participant for consideration paid in cash or cash
equivalent (including the Participant's purchase-money promissory
note), the Corporation shall repay to the Participant the cash
consideration paid for the surrendered shares and shall cancel
the unpaid principal balance of any outstanding purchase-money
note of the Participant attributable to such cancelled shares.
The cancelled shares may, at the Plan Administrator's discretion,
be retained by the Corporation as Treasury Shares or may be
retired to authorized but unissued share status.
4. The Plan Administrator may in its discretion
elect to waive the cancellation of one or more unvested shares of
Common Stock (or other assets attributable thereto) which would
otherwise occur upon the non-completion of the vesting schedule
applicable to such shares. Such waiver shall result in the
immediate vesting of the Participant's interest in the shares of
Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's
cessation of Service or the attainment or non-attainment of the
applicable performance objectives.
II. CORPORATE TRANSACTIONS/CHANGE IN CONTROL
A. Upon the occurrence of any Corporate
Transaction, all unvested shares of Common Stock at the time
outstanding under this Stock Issuance Program shall immediately
vest in full and the Corporation's repurchase rights shall
terminate, except to the extent: (i) any such repurchase right is
expressly assigned to the successor corporation (or parent
thereof) in connection with the Corporate Transaction or (ii)
such termination is precluded by other limitations imposed in the
Issuance Agreement.
B. The Plan Administrator shall have the
discretionary authority, exercisable at any time while unvested
shares remain outstanding under this Stock Issuance Program, to
provide for the immediate and automatic vesting of those shares
in whole or in part upon the occurrence of a Change in Control.
The Plan Administrator shall also have full power and authority
to condition any such accelerated vesting upon the subsequent
termination of the Participant's Service through an Involuntary
Termination effected within a specified period following the
Change in Control.
III. TRANSFER RESTRICTIONS/SHARE ESCROW
A. Unvested shares may, in the Plan
Administrator's discretion, be held in escrow by the Corporation
until the Participant's interest in such shares vests or may be
issued directly to the Participant with restrictive legends on
the certificates evidencing such unvested shares. To the extent
an escrow arrangement is utilized, the unvested shares and any
securities or other assets issued with respect to such shares
(other than regular cash dividends) shall be delivered in escrow
to the Corporation to be held until the Participant's interest in
such shares (or other securities or assets) vests. Alternatively,
if the unvested shares are issued directly to the Participant,
the restrictive legend on the certificates for such shares shall
read substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
UNVESTED AND ARE SUBJECT TO (I) CERTAIN TRANSFER
RESTRICTIONS AND (II) CANCELLATION OR REPURCHASE IN THE
EVENT THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN
INTEREST) CEASES TO REMAIN IN THE
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CORPORATION'S SERVICE. SUCH TRANSFER RESTRICTIONS AND
THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR
REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT
BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) DATED ________________,
A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THE CORPORATION."
B. The Participant shall have no right to
transfer any unvested shares of Common Stock issued to him or her
under the Stock Issuance Program. For purposes of this
restriction, the term "transfer" shall include (without
limitation) any sale, pledge, assignment, encumbrance, gift, or
other disposition of such shares, whether voluntary or
involuntary. Upon any such attempted transfer, the unvested
shares shall immediately be cancelled, and neither the
Participant nor the proposed transferee shall have any rights
with respect to such cancelled shares. However, the Participant
shall have the right to make a gift of unvested shares acquired
under the Stock Issuance Program to the Participant's spouse or
issue, including adopted children, or to a trust established for
such spouse or issue, provided the transferee of such shares
delivers to the Corporation a written agreement to be bound by
all the provisions of the Stock Issuance Program and the Issuance
Agreement applicable to the transferred shares.
ARTICLE SEVEN
MISCELLANEOUS
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its
discretion, assist any Optionee or Participant (including an
Optionee or Participant who is an officer of the Corporation), in
the exercise of one or more options granted to such Optionee
under the Discretionary Grant Program or the Salary Reduction
Grant Program or the purchase of one or more shares issued to
such Participant under the Stock Issuance Program, including the
satisfaction of any Federal, state and local income and
employment tax obligations arising therefrom, by (i) authorizing
the extension of a loan from the Corporation to such Optionee or
Participant or (ii) permitting the Optionee or Participant to pay
the exercise price or purchase price for the acquired shares 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) shall be upon such terms as the Plan
Administrator specifies in the applicable option or issuance
agreement or otherwise deems appropriate under the circumstances.
Loans or installment payments may be authorized with or without
security or collateral. However, the maximum credit available to
the Optionee or Participant may not exceed the exercise or
purchase price of the acquired shares (less the par value of such
shares) plus any Federal, state and local income and employment
tax liability incurred by the Optionee or Participant in
connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute
discretion, determine that one or more loans extended under this
financial assistance program shall be subject to forgiveness by
the Corporation in whole or in part upon such terms and
conditions as the Plan Administrator may deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power
and authority to amend or modify the Plan (or any component
thereof) in any or all respects whatsoever. However, no such
amendment or modification shall adversely affect rights and
obligations with respect to stock options, stock appreciation
rights or unvested stock issuances at the time outstanding under
the Plan, unless the Optionee or Participant consents to such
amendment. In addition, the Board may not, without the approval
of the Corporation's stockholders, amend the Plan to (i)
materially increase the maximum number of shares issuable under
the Plan, the number of shares for which options may be granted
to newly elected or continuing non-employee Board members under
the Automatic Grant Program or the maximum number of shares for
which any one individual participating in the Plan may be granted
stock options, separately exercisable stock appreciation rights
and direct stock issuances
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in the aggregate over the term of the Plan, except for
permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) materially modify the
eligibility requirements for Plan participation or (iii)
materially increase the benefits accruing to Optionees or
Participants.
B. Options to purchase shares of Common Stock
may be granted under the Discretionary Grant Program and the
Salary Reduction Grant Program and shares of Common Stock may be
issued under the Stock Issuance Program, which are in excess of
the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under those programs
are held in escrow until stockholder approval is obtained for a
sufficient increase in the number of shares available for
issuance under the Plan. If such stockholder approval is not
obtained within twelve (12) months after the date the first such
excess option grants or excess share issuances are made, then (i)
any unexercised excess options shall terminate and cease to be
exercisable and (ii) the Corporation shall promptly refund the
purchase price paid for any excess shares actually issued under
the Plan and held in escrow, together with interest (at the
applicable short term federal rate) for the period the shares
were held in escrow.
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver
shares of Common Stock upon the exercise of stock options or
stock appreciation rights or the direct issuance or vesting of
such shares under the Plan shall be subject to the satisfaction
of all applicable Federal, state and local income tax and
employment tax withholding requirements.
B. The Plan Administrator may, in its
discretion, provide any or all holders of Non-Statutory Options
(other than the automatic option grants made pursuant to the
Automatic Grant Program) or unvested shares under the Stock
Issuance Program with the right to use shares of Common Stock in
satisfaction of all or part of the Federal, state and local
income and employment tax liabilities (the "Taxes") incurred by
such holders in connection with the exercise of their options or
the vesting of their shares. Such right may be provided to any
such holder in either or both of the following formats:
- Stock Withholding: The holder of the
Non-Statutory Option or unvested shares may be provided with the
election to have the Corporation withhold, from the shares of
Common Stock otherwise issuable upon the exercise of such
Non-Statutory Option or the vesting of such shares, a portion of
those shares with an aggregate Fair Market Value equal to the
percentage of the Taxes (up to one hundred percent (100%))
specified by such holder.
- Stock Delivery: The holder of the
Non-Statutory Option or the unvested shares may be provided with
the election to deliver to the Corporation, at the time the
Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such individual
(other than in connection with the option exercise or share
vesting triggering the Taxes) with an aggregate Fair Market Value
equal to the percentage of the Taxes (up to one hundred percent
(100%)) specified by such holder.
IV. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan shall become effective
immediately upon approval by the Corporation's stockholders at
the 1994 Annual Meeting.
B. The Plan shall terminate upon the earlier of
(i) April 28, 2004 or (ii) the date on which all shares available
for issuance under the Plan shall have been issued or cancelled
pursuant to the exercise of options or stock appreciation rights
or the issuance of shares (whether vested or unvested) under the
Plan. If the date of termination is determined under clause (i)
above, then all option grants and unvested stock issuances
outstanding on such date shall thereafter continue to have force
and effect in accordance with the provisions of the instruments
evidencing such grants or issuances.
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V. USE OF PROCEEDS
Any cash proceeds received by the Corporation
from the sale of shares pursuant to option grants or stock
issuances under the Plan shall be used for general corporate
purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting
of any option or stock appreciation right under the Plan, the
issuance of any shares under the Stock Issuance Program, and the
issuance of Common Stock upon the exercise of the stock options
and stock appreciation rights granted hereunder shall be subject
to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the
Plan, the stock options and stock appreciation rights granted
under it and the Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets
shall be issued or delivered under this 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 the 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 the Common Stock is then listed for trading.
VII. 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 Service of the Corporation (or Subsidiary) for any period of
specific duration, and the Corporation (or any Subsidiary
retaining the services of such individual) may terminate such
individual's Service at any time and for any reason, with or
without cause.
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GLOSSARY
The following definitions shall be in
effect under the Plan:
CHANGE IN CONTROL: a change in ownership or
control of the Corporation effected through any of the following
transactions:
- the direct or indirect acquisition by 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) of beneficial ownership (within
the meaning of Rule 13d-3 of the 1934 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 made
directly to the Corporation's stockholders which the
Board does not recommend such stockholders to accept, or
- a change in the composition of the Board over
a period of thirty-six (36) months or less such that a
majority of the Board members (rounded up to the next
whole number) ceases, by reason of one or more contested
elections for Board membership, to be comprised of
individuals who either (a) have been Board members
continuously since the beginning of such period or (b)
have been elected or nominated for election as Board
members during such period by at least a majority of the
Board members described in clause (a) who were still in
office at the time such election or nomination was
approved by the Board.
CODE: the Internal Revenue Code of 1986, as
amended.
COMMITTEE: a committee of two (2) or more
non-employee Board members appointed by the Board to administer
the Plan.
CORPORATE TRANSACTION: any of the following
stockholder-approved transactions to which the Corporation is a
party:
- a merger or consolidation in which the
Corporation is not the surviving entity, except for a
transaction the principal purpose of which is to change
the state in which the Corporation is incorporated,
- a sale, transfer or other disposition of
all or substantially all of the Corporation's assets in
complete liquidation or dissolution of the Corporation,
or
- any reverse merger in which the Corporation
is the surviving entity but 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 merger.
EMPLOYEE: an individual who performs services
while in the employ of the Corporation or one or more
Subsidiaries, subject to the control and direction of the
employer entity not only as to the work to be performed but also
as to the manner and method of performance.
FAIR MARKET VALUE: the closing selling price
per share on the date in question on the Nasdaq National Market.
If there is no reported closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which
such quotation exists.
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HOSTILE TAKE-OVER: a change in ownership of
the Corporation effected through the following transaction:
- the direct or indirect acquisition by any
person or related group of persons 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 made
directly to the Corporation's stockholders which the
Board does not recommend such stockholders to accept,
and
- more than fifty percent (50%) of the acquired
securities are accepted from holders other than the
officers and directors of the Corporation subject to the
short-swing profit restrictions of Section 16 of the
1934 Act.
INCENTIVE OPTION: a stock option which satisfies
the requirements of Code Section 422.
INVOLUNTARY TERMINATION: the termination of
the Service of any Optionee or Participant which occurs by reason
of:
- such individual's involuntary dismissal
or discharge by the Corporation for reasons other
than Misconduct, or
- such individual's voluntary resignation
following (A) a change in his or her position with the
Corporation which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and
any non-discretionary and objective-standard incentive
payment or bonus award) by more than five percent (5%)
or (C) a relocation of such individual's place of
employment by more than fifty (50) miles, provided and
only if such change, reduction or relocation is effected
by the Corporation without the individual's consent.
MISCONDUCT: the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any
unauthorized use or disclosure by such individual of confidential
information or trade secrets of the Corporation or any Parent or
Subsidiary, or any other intentional misconduct by such
individual adversely affecting the business or affairs of the
Corporation in a material manner. The foregoing definition shall
not be deemed to be inclusive of all the acts or omissions which
the Corporation or any Parent or Subsidiary may consider as
grounds for the dismissal or discharge of any Optionee,
Participant or other individual in the Service of the
Corporation.
NEWLY ISSUED SHARES: shares of Common Stock
drawn from the Corporation's authorized but unissued shares of
Common Stock.
1934 ACT: the Securities and Exchange Act of
1934, as amended.
NON-STATUTORY OPTION: a stock option not
intended to meet the requirements of Code Section 422.
OPTIONEE: any person to whom an option is
granted under the Discretionary Grant, Automatic Grant or Salary
Reduction Grant Program in effect under the Plan.
PARENT: each corporation (other than the
Corporation) in an unbroken chain of corporations ending with the
Corporation, provided each such corporation (other than the
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 any
other corporation in such chain.
22
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PARTICIPANT: any person who receives a
direct issuance of Common Stock under the Stock Issuance Program
in effect under the Plan.
PERMANENT DISABILITY OR PERMANENTLY DISABLED:
the inability of the Optionee or the Participant to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve (12) months or
more.
PLAN ADMINISTRATOR: the committee of
two (2) or more non-employee Board members appointed by the Board
to administer the Discretionary Option Grant, the Salary
Reduction and the Stock Issuance Programs.
SERVICE: the provision of services on a
periodic basis to the Corporation or any Parent or Subsidiary in
the capacity of an Employee, a non-employee member of the board
of directors or an independent consultant or advisor, except to
the extent otherwise specifically provided in the applicable
stock option or stock issuance agreement.
SUBSIDIARY: each corporation (other than the
Corporation) in an unbroken chain of corporations beginning with
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 any
other corporation in such chain.
TAKE-OVER PRICE: the greater of (i) the Fair
Market Value per share of Common Stock on the date the option is
surrendered to the Corporation in connection with a Hostile
Take-Over or (ii) the highest reported price per share of Common
Stock paid by the tender offeror in effecting such Hostile
Take-Over. However, if the surrendered option is an Incentive
Option, the Take-Over Price shall not exceed the clause (i) price
per share.
TREASURY SHARES: shares of Common Stock
reacquired by the Corporation and held as treasury shares.
23
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EXHIBIT 99.2*
Form of Notice of Grant of Stock Option to be
generally used in connection with the
Discretionary Option Grant Program of the 1994
Stock Incentive Plan.
<PAGE>
EXHIBIT 99.3*
Form of Stock Option Agreement to be generally used in
connection with the Discretionary Option Grant Program
of the 1994 Stock Incentive Plan.
<PAGE>
EXHIBIT 99.4*
Addendum to Stock Option Agreement (Involuntary
Termination).
<PAGE>
EXHIBIT 99.5*
Addendum to Stock Option Agreement (Special Tax
Election).
<PAGE>
EXHIBIT 99.6*
Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
<PAGE>
EXHIBIT 99.7*
Addendum to Stock Option Agreement (Financial
Assistance).
<PAGE>
EXHIBIT 99.8*
Form of Notice of Grant of Automatic Stock Option
to be generally used in connection with the
Automatic Option Grant Program of the 1994 Stock
Incentive Plan (Initial Grant).
<PAGE>
EXHIBIT 99.9*
Form of Notice of Grant of Automatic Stock Option
to be generally used in connection with the
Automatic Option Grant Program of the 1994 Stock
Incentive Plan (Annual Grant).
<PAGE>
EXHIBIT 99.10*
Form of Automatic Stock Option Agreement to be
generally used in connection with the Automatic Option
Grant Program of the 1994 Stock Incentive
Plan.
<PAGE>
EXHIBIT 99.11*
Form of Stock Issuance Agreement to be generally
used in connection with the Stock Fee Program of
the 1994 Stock Incentive Plan.
<PAGE>
EXHIBIT 99.12*
Form of Stock Issuance Agreement to be generally
used in connection with the Stock Issuance Program
of the 1994 Stock Incentive Plan.
<PAGE>
EXHIBIT 99.13*
Form of Addendum to Stock Issuance Agreement
(Special Tax Election).
<PAGE>
EXHIBIT 99.14*
Form of Addendum to Stock Issuance Agreement
(Involuntary Termination).
- --------
* Exhibits 99.2 through 99.14 are incorporated herein by
reference to Exhibits 99.2 through 99.14, respectively, on
Registrant's Registration Statement No. 33-85270 on Form S-8
which was filed with the SEC on October 17, 1994.
