<PAGE> 1
As filed with the Securities and Exchange Commission on September 30, 1997
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
IMP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2722142
(State of incorporation) (I.R.S. Employer Identification No.)
2830 N. FIRST STREET
SAN JOSE, CA 95134
(Address of principal executive offices)
-----------------------
STOCK OPTION PLAN
(Full title of the Plan)
-----------------------
JAMES PHILLIP FERGUSON
IMP, INC.
2830 N. FIRST STREET
SAN JOSE, CA 95134
(408) 432-9100
(Name, address and telephone number, including area code, of agent for service)
-----------------------
Copy to:
Jeffrey Y. Suto
Venture Law Group
A Professional Corporation
2800 Sand Hill Road
Menlo Park, California 94025
(650) 854-4488
Page 1 of 30 Pages
Exhibit Index on Page 7
(Calculation of Registration Fee on following page)
<PAGE> 2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum
Maximum Offering Aggregate Amount of
Amount to be Price Per Offering Registration
Title of Securities to be Registered Registered(1) Share Price Fee
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock issuable upon
exercise of options granted 750,000 Shares $1.24(2)(3) $930,000 $281.82
pursuant to the Stock Option Plan
0.01 par value....................
Options to purchase Common Stock
(under the Stock Option Plan) 750,000 Shares $ n/a $ n/a $ n/a
0.01 par value....................
TOTAL 750,000 Shares $1.24 $930,000 $281.82
-----
</TABLE>
- ----------
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under any of the Plans being
registered pursuant to this Registration Statement by reason of any
stock dividend, stock split, recapitalization or any other similar
transaction effected without the receipt of consideration which results
in an increase in the number of the Registrant's outstanding shares of
Common Stock.
(2) Computed in accordance with Rule 457(h) under the Securities Act of 1933
(the "Securities Act") solely for the purpose of calculating the
registration fee. Computation based on the weighted average per share
exercise price (rounded to nearest cent) of outstanding options under
the referenced plan, the shares issuable under which are registered
hereby.
(3) Estimated in accordance with Rule 457(h) under the Securities Act solely
for the purpose of calculating the registration fee. The computation
with respect to unissued options is based upon the average high and low
sale prices of the Common Stock as reported on the Nasdaq National
Market on September 29, 1997.
-2-
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") are hereby incorporated by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended March 30, 1997 filed pursuant to Section 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), which contains audited financial
statements for the Registrant's latest fiscal year for which such statements
have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the Annual Report
referred to in (a) above.
(c) The description of the Registrant's Common Stock contained in
the Registrant's Registration Statement on Form S-1 filed with the Commission
under Section 12 of the Exchange Act on May 13, 1987, as amended by Amendment
No. 1 filed June 30, 1987 and including any additional amendment or report filed
for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing such documents.
Item 4. DESCRIPTION OF SECURITIES. Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Certificate of Incorporation reduces the liability of a
director to the corporation or its shareholders for monetary damages for
breaches of his or her fiduciary duty of care to the fullest extent permissible
under Delaware law. The Bylaws of the Registrant further provide for
indemnification of corporate agents to the maximum extent permitted by the
Delaware General Corporation Law. In addition, the Registrant has entered into
Indemnification Agreements with its officers and directors.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable.
Item 8. EXHIBITS.
Exhibit
Number
5.1 Opinion of Venture Law Group, a Professional
Corporation.
23.1 Consent of Venture Law Group, a Professional Corporation
(included in Exhibit 5.1).
23.2 Consent of Independent Auditors.
24.1 Powers of Attorney.
99.1 Restated 1997 Stock Option Plan
- ----------
-3-
<PAGE> 4
Item 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) that, for purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as the indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in a successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the question has already been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
[Signature Pages Follow]
-4-
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, IMP, Inc. a corporation organized and existing under the laws of the
State of Delaware, certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Jose, State of California, on this 30th day
of September, 1997.
IMP, INC.
By: /s/ James Phillip Ferguson
------------------------------------
James Phillip Ferguson
President, Chief Executive Officer,
and Director.
-5-
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James Phillips Ferguson and George Rassam
jointly and severally, his or her attorneys-in-fact and agents, each with the
power of substitution and resubstitution, for him or her and in his or her name,
place or stead, in any and all capacities, to sign any amendments to this
Registration Statement on Form S-8, and to file such amendments, together with
exhibits and other documents in connection therewith, with the Securities and
Exchange Commission, granting to each attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully as he or she might or could do in
person, and ratifying and confirming all that the attorney-in-facts and agents,
or his or her substitute or substitutes, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James Phillip Ferguson President, Chief Executive and Director September 30, 1997
- ----------------------------- (Principal Executive Officer)
James Phillip Ferguson
/s/ George Rassam Chief Financial Officer (Principal September 30, 1997
- ----------------------------- Accounting Officer)
George Rassam
/s/ David A. Laws Chairman of the Board of Directors September 30, 1997
- -----------------------------
David A. Laws
/s/ Zri Grinfas Director September 30, 1997
- -----------------------------
Zri Grinfas
/s/ Peter D. Olson Director September 30, 1997
- -----------------------------
Peter D. Olson
/s/ Bernard V. Vonderschmitt Director September 30, 1997
- -----------------------------
Bernard V. Vonderschmitt
</TABLE>
-6-
<PAGE> 7
INDEX TO EXHIBITS
Exhibit
No.
- -------
5.1 Opinion of Venture Law Group, a Professional Corporation
23.1 Consent of Venture Law Group, a Professional Corporation
(included in Exhibit 5.1)
23.2 Consent of Independent Auditors
24.1 Powers of Attorney (See page number)
99.1 Stock Option Plan
<PAGE> 1
EXHIBIT 5.1
September 30, 1997
IMP, Inc.
2830 North First Street
San Jose, CA 95134
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 (the
"Registration Statement") filed by you with the Securities and Exchange
Commission (the "Commission") on September 30, 1997 in connection with the
registration under the Securities Act of 1933, as amended, of a total of 750,000
shares of your Common Stock (the "Shares") reserved for issuance under the Stock
Option Plan. As your counsel in connection with this transaction, we have
examined the proceedings taken and are familiar with the proceedings proposed to
be taken by you in connection with the sale and issuance of the Shares.
It is our opinion that upon conclusion of the proceedings being taken or
contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, and upon completion of the proceedings being taken in order to permit
such transactions to be carried out in accordance with the securities laws of
the various states where required, the Shares when issued and sold in the manner
described in the Registration Statement will be legally and validly issued,
fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and in any amendment thereto.
Very truly yours,
VENTURE LAW GROUP
A Professional Corporation
/s/ Venture Law Group
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated May 9, 1997 appearing on page 14 of
IMP Inc.'s Annual Report on Form 10-K for the year ended March 31, 1997. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears on page 31 of such Annual Report on Form 10-K.
/s/ PRICE WATERHOUSE LLP
Price Waterhouse LLP
San Jose, California
September 30, 1997
<PAGE> 1
EXHIBIT 99.1
IMP, INC.
STOCK OPTION PLAN
(AS AMENDED AND RESTATED THROUGH MAY 14, 1997)
ARTICLE ONE
GENERAL
I. PURPOSES OF THE RESTATED PLAN
This IMP, Inc. Stock Option Plan (the "Plan"), is intended to promote
the interests of IMP, Inc., a Delaware corporation (the "Company"), by providing
a method whereby key employees and key consultants of the Company or its parent
or subsidiary corporations who perform valuable services for the Company and its
parent and subsidiary corporations and the non-employee members of the Company's
Board of Directors may be offered incentives or rewards which will encourage
them to acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Company and continue to render services to the Company or its
parent and subsidiary corporations.
For purposes of the Plan, each corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company shall be considered
to be a SUBSIDIARY of the Company, provided each such corporation (other than
the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain. Each corporation (other than the Company) in an unbroken chain of
corporations ending with the Company shall be considered to be a PARENT of the
Company, provided each such corporation (other than the Company) in the unbroken
chain owns, at the time of determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
II. ADMINISTRATION OF THE PLAN
A. A Committee of two (2) or more non-employee Board
members appointed by the Board (the "Primary Committee") shall have sole and
exclusive authority to administer the Discretionary Option Grant Program of
Article Two with respect to Section 16 Insiders. No non-employee Board member
shall be eligible to serve on the Primary Committee if such individual has,
during the twelve (12) month period immediately preceding the date of his or her
appointment to the Committee received an option grant or stock award under the
Plan or any other stock option, stock appreciation, stock bonus or other stock
plan of the Company (or any parent or subsidiary), other than pursuant to the
automatic option grant provisions of Article Three. For purposes of the Plan,
SECTION 16 INSIDER shall mean an officer or director of the Company subject to
the short-swing profit liabilities of Section 16 of the Securities Exchange Act
of 1934, as amended (the "1934 Act").
<PAGE> 2
B. Administration of the Discretionary Option Grant Program
of Article Two with respect to all other persons eligible to participate in that
program may, at the Board's discretion, be vested in the Primary Committee or in
a Secondary Committee of one (1) or more Board members appointed by the Board
(the "Secondary Committee"), or the Board may retain the power to administer
that program with respect to all such persons. The Board may provide the
Secondary Committee with exclusive authority to administer the Discretionary
Option Grant Program with respect to non-Section 16 Insiders or may provide the
Secondary Committee with such authority on a separate but concurrent basis with
the Primary Committee so that both such committees may make grants under the
Discretionary Option Grant Program to non-Section 16 Insiders. The members of
the Secondary Committee may be Board members who are Employees eligible to
receive discretionary option grants under the Plan or any other stock option,
stock appreciation, stock bonus or other stock plan of the Company (or any
parent or subsidiary).
C. Members of the Primary Committee or any Secondary
Committee shall serve for such period of time as the Board may determine and may
be removed by the Board at any time.
D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Discretionary Option Grant Program of Article Two and to
make such determinations under, and issue such interpretations of, the
provisions of such programs and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the
Discretionary Option Grant Program under its jurisdiction or any stock option
thereunder.
E. Service on the Primary Committee or the Secondary
Committee shall constitute service as a Board member, and members of each such
committee shall accordingly be entitled to full indemnification and
reimbursement as Board members for their service on such committee. No member of
the Primary Committee or the Secondary Committee shall be liable for any act or
omission made in good faith with respect to the Plan or any option grants under
the Plan.
F. Administration of the Automatic Option Grant Program of
Article Three shall be self-executing in accordance with the terms of that
program, and no Plan Administrator shall exercise any discretionary functions
with respect to option grants made thereunder.
III. ELIGIBILITY FOR OPTION GRANTS
A. The persons eligible to receive options pursuant to the
Discretionary Option Grant Program shall be limited to the following
individuals: (i) key Employees (including officers and directors) and key
consultants of the Company or its parent or subsidiary corporations as the Plan
Administrator shall select from time to time and (ii) the non-employee Board
members (other than those at the time serving as members of the Primary
Committee).
-2-
<PAGE> 3
Non-employee Board members (including those at the time serving as members of
the Primary Committee) shall also be eligible to receive one or more option
grants pursuant to the provisions of the Automatic Option Grant Program.
B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine the
number of shares to be covered by each grant made under the Discretionary Option
Grant Program of Article Two, whether the granted option is to be an incentive
stock option ("Incentive Option") which satisfies the requirements of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), or a
non-statutory option not intended to meet such requirements, the time or times
at which each such option is to be granted and is to become exercisable, and the
maximum term for which the option is to be outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of the
Company's authorized but unissued or reacquired Common Stock, $.001 par value
per share ("Common Stock"). The maximum number of shares which may be issued
over the term of the Plan shall not exceed 6,177,000(1) shares. The total number
of shares issuable under the Plan shall be subject to adjustment from time to
time in accordance with Section IV.D below.
B. In no event may which any one individual participating
in the Plan be granted stock options or separately exercisable stock
appreciation rights for more than 1,000,000 shares of Common Stock in the
aggregate over the term of the Plan, subject to periodic adjustment in
accordance with the provisions of Section IV.D of this Article One. However, for
purposes of such limitation, any stock options or stock appreciation rights
granted prior to July 31, 1994 shall not be taken into account.
C. Should an option expire or terminate for any reason
prior to exercise or surrender in full (including options cancelled in
accordance with the cancellation-regrant provisions of Section IV of Article Two
of the Plan), the shares subject to the portion of the option not so exercised
or surrendered shall be available for subsequent option grants under the Plan.
Shares subject to any option or portion thereof surrendered or cancelled in
accordance with Section V of Article Two of the Plan or Section III of Article
Three of the Plan and all share issuances under the Plan, whether or not
subsequently repurchased by the Company 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 option grants under this Plan. In addition,
should the exercise price of an outstanding option under the Plan be paid with
shares of Common Stock, then the number of shares available for issuance under
the Plan shall be reduced by the gross number of shares for which the option is
exercised, and not by the net number of shares of Common Stock issued to the
option holder.
(1) The share reserve includes the 750,000 share increase authorized by the
Board on May 14, 1997, subject to stockholder approval at the 1997 Annual
Meeting. From and after June 30, 1997, the maximum number of shares which may be
issued under the Plan shall not exceed 2,655,970 shares, subject to adjustment
under Section IV.D
-3-
<PAGE> 4
D. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
combination of shares, recapitalization or other change affecting the
outstanding Common Stock as a class without the Company's receipt of
consideration, then, appropriate adjustments shall be made to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities for which any one individual may be granted
stock options and separately exercisable stock appreciation rights over the
remaining term of the Plan, (iii) the number and/or class of securities for
which options are to be granted to newly-elected or continuing non-employee
Board members pursuant to the automatic grant provisions of Article Three and
(iv) the number and/or class of securities and the option price per share in
effect under each outstanding option (including automatic grants made under
Article Three) in order to prevent the dilution or enlargement of benefits
thereunder.
-4-
<PAGE> 5
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Discretionary option grants under the Plan 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 of the Company or its parent or subsidiary corporations may only
receive non-statutory options under the Plan. Each such discretionary grant
shall be evidenced by an instrument in the form approved by the Plan
Administrator; provided, however, that each such instrument shall comply with
and incorporate the terms and conditions specified below. Each instrument
evidencing an Incentive Option shall, in addition, comply with the applicable
provisions of Section II.
A. Option Price.
1. The option price per share shall be fixed by the
Plan Administrator but shall in no event be less than eighty-five percent (85%)
of the fair market value per share of Common Stock on the date of grant (the
"Grant Date"). For such purpose, the Grant Date shall be the date on which the
Plan Administrator approves the option or, if later, the date the optionee
commences Service (as defined below in Section I.C.6 of this Article Two).
2. If any individual to whom an Incentive Option or
a non-statutory option is to be granted pursuant to the provisions of the Plan
is on the Grant Date the owner of stock (as determined under Section 424(d) of
the Internal Revenue Code) possessing 10% or more of the total combined voting
power of all classes of stock of the Company or any one of its parent or
subsidiary corporations (such person to be herein referred to as a 10%
Stockholder), then the option 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.
3. The option price shall become immediately due
upon exercise of the option and shall, subject to the provisions of Section VI
of this Article Two, be payable in one of the alternative forms specified below:
(i) payment in cash or check payable to the
Company's order; or
(ii) payment in shares of Common Stock held
for the requisite period necessary to avoid a charge to the Company's reported
earnings and valued at fair market value on the Exercise Date (as such term is
defined below); or
(iii) to the extent the option is exercised
for vested shares, payment through a broker-dealer sale and remittance procedure
pursuant to which the optionee shall provide irrevocable written instructions
(I) to a Company-designated broker-dealer to effect the immediate sale of the
purchased shares and remit to the
-5-
<PAGE> 6
Company, out of the sale proceeds available on the settlement date, an amount
equal to the aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be withheld
by the Company by reason of such purchase and (II) to the Company to deliver the
certificates for the purchased shares directly to such broker-dealer.
For purposes of this subparagraph 3, the Exercise Date shall be the date
on which written notice of the option exercise is delivered to the Company.
Except to the extent the sale and remittance procedure specified above is
utilized for the exercise of the option, payment of the option price for the
purchased shares must accompany such notice.
4. The fair market value per share of Common Stock
on any relevant date under subparagraph 1, 2 or 3 above (and for all other
valuation purposes under the Plan) shall be determined in accordance with the
following provisions:
(i) If the Common Stock is not at the time
listed or admitted to trading on any stock exchange but is traded on the Nasdaq
National Market, the fair market value shall be the closing selling price per
share of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no closing selling price for the Common Stock on
the date in question, then the closing selling price on the last preceding date
for which such quotation exists shall be determinative of fair market value.
(ii) If the Common Stock is at the time
listed or admitted to trading on any stock exchange, then the fair market value
shall be the closing selling price per share of Common Stock on the date in
question on the stock exchange determined by the Plan Administrator to be the
primary market for the Common Stock, as such prices are officially quoted in the
composite tape of transactions on such exchange. If there is no reported sale of
Common Stock on such exchange on the date in question, then the fair market
value shall be the closing selling price on the exchange on the last preceding
date for which such quotation exists.
B. Term and Exercise of Options. Each option granted under
the Plan shall become exercisable at such time or times, during such period, and
for such number of shares as shall be determined by the Plan Administrator and
set forth in the instrument evidencing such option; provided, however, that no
such option shall have a term in excess of ten (10) years from the Grant Date.
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 by the optionee except for
any transfer of the option effected by will or by the laws of descent and
distribution following the optionee's death.
C. Effect of Termination of Service.
1. Should an optionee cease to remain in Service
for any reason (including death or permanent disability as defined in Section
22(e)(3) of the Internal Revenue
-6-
<PAGE> 7
Code) while the holder of one or more outstanding options under the Plan, then
each such option shall in no event remain exercisable for more than a twelve
(12) month period (or such shorter period determined by the Plan Administrator
and specified in the instrument evidencing the option) following the date of
such cessation of Service. Under no circumstances shall any such option be
exercisable after the specified expiration date of the option term. Each such
option shall, during the applicable twelve (12) month or shorter period, be
exercisable only to the extent of the number of vested shares (if any) for which
the option is exercisable on the date of the optionee's cessation of Service.
Upon the expiration of such twelve (12) month or shorter period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be exercisable. However, the option shall immediately, upon the optionee's
cessation of Service, terminate and cease to be outstanding to the extent it is
not otherwise at that time exercisable for vested shares.
2. Should the optionee cease Service and thereafter
die while holding one or more outstanding options under the Plan, then each such
option may be exercised, but only to the extent of the number of vested shares
(if any) for which the option is exercisable on the date of the optionee's
cessation of Service (less any shares for which the option is subsequently
exercised by optionee prior to his or her death), by the personal representative
of the optionee's estate or by the person or persons to whom the option is
transferred pursuant to the optionee's will or in accordance with the laws of
descent and distribution, provided and only if such exercise occurs prior to the
earlier of (i) the first anniversary of the date of the optionee's death or (ii)
the specified expiration date of the option term. Upon the occurrence of the
earlier event, the option shall terminate and cease to be exercisable.
3. Should the optionee die prior to cessation of
Service, then each option under the Plan held by such optionee at the time of
death may be subsequently exercised, for all or any part of the vested shares of
Common Stock at the time subject to such option, by the personal representative
of the optionee's estate or by the person or persons to whom the option is
transferred pursuant to the optionee's will or in accordance with the laws of
descent and distribution, provided and only if such exercise occurs prior to the
earlier of (i) the first anniversary of the date of the optionee's death or (ii)
the specified expiration date of the option term. Upon the occurrence of the
earlier event, the option shall terminate and cease to be exercisable.
4. If (i) the optionee's Service is terminated for
misconduct (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement or any unauthorized disclosure or use of
confidential information or trade secrets) or (ii) the optionee makes or
attempts to make any unauthorized use or disclosure of confidential information
or trade secrets of the Company or its parent or subsidiary corporations, then
in any such event each outstanding option held by the optionee under the Plan
shall immediately terminate and cease to be exercisable.
5. Notwithstanding subparagraphs 1 and 2 above, the
Plan Administrator shall have complete discretion, exercisable either at the
time the option is granted or at any while the option remains outstanding, to
establish as a provision applicable to the
-7-
<PAGE> 8
exercise of one or more options granted under the Plan that during the limited
period of exercisability following cessation of Service as provided in Section
I.C.1 above or following the Employee's death as provided in Section I.C.2 or
Section I.C.3 above, the option may be exercised not only with respect to the
number of vested shares for which it is exercisable at the time of the
optionee's cessation of Service or death but also with respect to one or more
subsequent installments of purchasable shares in which the optionee would
otherwise have vested had such cessation of Service not occurred.
6. For purposes of the foregoing provisions of this
Section I of Article Two (and all other provisions of the Plan), unless it is
specifically provided otherwise in the option agreement evidencing the option
grant and/or the purchase agreement evidencing the shares purchased under such
option, the optionee shall be deemed to remain in Service for so long as such
individual renders services on a periodic basis to the Company or any parent or
subsidiary corporation in the capacity of an Employee, a non-employee member of
the board of directors or an independent consultant or advisor. The optionee
shall be considered to be an Employee for so long as such individual remains in
the employ of the Company or one or more of its parent or subsidiary
corporations 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.
D. Stockholder Rights. An option holder shall have none of
the rights of a stockholder with respect to any shares covered by the option
until such individual shall have exercised the option, paid the option price for
the purchased shares and been issued a stock certificate for those shares. No
adjustment shall be made for dividends or distributions (whether paid in cash,
securities or other property) for which the record date is prior to the date
such stock certificate is issued.
E. Repurchase Rights. The shares of Common Stock acquired
upon the exercise of options granted under the Plan may be subject to repurchase
by the Company 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 such unvested shares, then the
Company shall have the right to repurchase, at the option exercise price paid
per share, any or all of those unvested shares. Any such repurchase right shall
be exercisable by the Company (or its assignees) upon such terms and conditions
(including the establishment of the appropriate vesting schedule and other
provisions for the expiration of such right in one or more installments over the
optionee's period of Service) as the Plan Administrator may specify in the
instrument evidencing such right.
2. The Plan Administrator may assign the Company's
repurchase rights under subparagraph 1 above to any person or entity selected by
the Plan Administrator, including one or more stockholders of the Company.
3. All of the Company's outstanding repurchase
rights shall automatically terminate, and all shares subject to such terminated
rights shall immediately vest in full, upon the occurrence of any Corporate
Transaction under Section III of Article Two, except
-8-
<PAGE> 9
to the extent that: (i) any such repurchase right is, in connection with the
Corporate Transaction, to be assigned to the successor corporation (or parent
thereof) or (ii) such termination is precluded by other limitations imposed by
the Plan Administrator at the time the repurchase right is granted.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Only Employees may be granted
Incentive Options. Options which are specifically designated as "non-statutory"
options when issued under the Plan shall not be subject to such terms and
conditions.
A. Option Price. The option price per share of the Common
Stock subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the fair market value per share of Common Stock on the Grant
Date.
B. Dollar Limitation. The aggregate fair market value
(determined as of the respective Grant Date or Dates) of the Common Stock for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Company or its parent or subsidiary corporations) may for the
first time become exercisable as Incentive Options during any one calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two or more such options which become exercisable for
the first time in the same calendar year, the foregoing limitation on the
exercisability thereof as Incentive Options shall be applied on the basis of the
order in which such options are granted.
C. 10% Stockholder. If any Employee to whom an Incentive
Option is to be granted pursuant to the provisions of the Plan is on the Grant
Date a 10% Stockholder, then the option shall not have a term in excess of five
(5) years from the Grant Date.
Except as modified by the preceding provisions of this Section II, all
the provisions of the Plan shall be applicable to the Incentive Options granted
hereunder.
III. CORPORATE TRANSACTION
A. In the event of one or more of the following
stockholder-approved transactions (a "Corporate Transaction"):
(i) a merger or acquisition in which the
Company is not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Company's incorporation;
(ii) the sale, transfer or other disposition
of all or substantially all of the assets of the Company; or
(iii) any reverse merger in which the Company
is the surviving entity, but in which fifty percent (50%) or more of the
Company's outstanding
-9-
<PAGE> 10
voting stock is transferred to holders different from those who held the stock
immediately prior to such merger,
each option outstanding under the Plan shall automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to that option and
may be exercised for all or any portion of such shares. However, no such
acceleration of the outstanding options under the Plan shall occur if and to the
extent (i) the outstanding options are, in connection with the Corporate
Transaction, either to be assumed by the successor corporation or parent thereof
or be replaced with a comparable option to purchase shares of the capital stock
of the successor corporation or parent thereof or (ii) the acceleration of the
options is subject to other applicable limitations imposed by the Plan
Administrator at the time of grant. Immediately following the consummation of
the Corporate Transaction, all outstanding options under the Plan shall, except
to the extent assumed by the successor corporation or its parent company,
terminate and cease to be outstanding.
B. If the Company is the surviving entity in any merger or
other business combination, then each option which remains outstanding under the
Plan immediately after such merger or other business combination shall be
appropriately adjusted to apply and pertain to the number and class of
securities which would be issuable, in consummation of such merger or business
combination, to an actual holder of the same number of shares of Common Stock as
are subject to such option immediately prior to such merger or business
combination, and appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for the option
shares shall remain the same. Appropriate adjustments shall also be made to the
class and number of securities available for issuance under the Plan on both an
aggregate and per participant basis following the consummation of such merger or
business combination.
C. The portion of any Incentive Option accelerated in
connection with a Corporate Transaction shall remain exercisable as an Incentive
Option only to the extent the applicable One Hundred Thousand Dollar ($100,000)
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.
D. The grant of options under this Plan shall in no way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
IV. CANCELLATION AND NEW GRANT OF OPTIONS
The Primary Committee shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan (other than the
automatic grants made pursuant to Article Three) and to grant in substitution
therefor new options under the Plan covering the same or different numbers of
shares of Common Stock but having an option price per share not less than
eighty-five percent
-10-
<PAGE> 11
(85%) of the fair market value per share of Common Stock on the new Grant Date
(or one hundred percent (100%) of such fair market value in the case of an
Incentive Option or, in the case of a 10% Stockholder, one hundred ten percent
(110%) of such fair market value).
V. SURRENDER OF OPTIONS FOR CASH OR STOCK
A. One or more option holders may be granted, upon such
terms and conditions as the Plan Administrator may establish at the time of the
option grant or at any time thereafter, the right to surrender all or part of an
unexercised option in exchange for a distribution equal in amount to the excess
of (i) the fair market value (on the surrender date) of the number of shares in
which the optionee is at the time vested under the surrendered option or portion
thereof over (ii) the aggregate option price payable for those vested shares.
B. No surrender of an option shall be effective hereunder
unless it is approved by the Plan Administrator. If the surrender is so
approved, then the distribution to which the option holder shall accordingly
become entitled under this Section V may be made in shares of Common Stock
valued at fair market value at date of surrender, in cash, or partly in shares
and partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the option holder shall retain whatever rights the option
holder had under the surrendered option (or surrendered portion thereof) on the
date of surrender and may exercise such rights at any time prior to the later of
(i) the expiration of the five (5) business day period following receipt of the
rejection notice or (ii) the last day on which the option is otherwise
exercisable in accordance with the terms of the instrument evidencing such
option, but in no event may such rights be exercised at any time after ten (10)
years (or five (5) years in the case of a 10% Stockholder) after the date of the
option grant.
D. Notwithstanding the foregoing provisions of this Section
V, one or more officers of the Company subject to the short-swing profit
restrictions of the Federal securities laws may, in the Plan Administrator's
sole discretion, be granted limited stock appreciation rights in tandem with
their outstanding options under this Article Two. Each outstanding option with
such a limited stock appreciation right in effect for at least six (6) months
shall automatically be cancelled, to the extent exercisable for vested shares of
Common Stock, upon the occurrence of a Hostile Take-Over (as defined below), and
the optionee shall in return be entitled to a cash distribution from the Company
in an amount equal to the excess of (i) the fair market value (on the
cancellation date) of the number of shares in which the optionee is at the time
vested under the cancelled option or cancelled portion over (ii) the Take-Over
Price (as defined below) payable for such vested shares. Such cash distribution
shall be made within five (5) days following the consummation of the Hostile
Take-Over. Neither the approval of the Plan Administrator nor the consent of the
Board shall be required in connection with such option cancellation and cash
distribution. The balance (if any) of each such option shall continue in full
force and effect in accordance with the terms and conditions of the instrument
evidencing such grant.
-11-
<PAGE> 12
E. For purposes of Section V.D, the following definitions
shall be in effect:
A Hostile Take-Over shall be deemed to occur in the event (i)
any person or related group of persons (other than the Company
or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Company) directly or
indirectly acquires 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
Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's stockholders which
the Board does not recommend such stockholders to accept and
(ii) more than fifty percent (50%) of the securities so acquired
in such tender or exchange offer are accepted from holders other
than Section 16 Insiders.
The Take-Over Price per share shall be deemed to be equal to the
greater of (a) the fair market value per share on the date of
option cancellation, as determined pursuant to the valuation
provisions of Section I.A.4 of this Article Two, or (b) the
highest reported price per share of Common Stock paid in
effecting such Hostile Take-Over. However, if the cancelled
option is an Incentive Option, the Take-Over Price shall not
exceed the clause (a) price per share.
F. The shares of Common Stock subject to any option
surrendered or cancelled for an appreciation distribution pursuant to this
Section V shall NOT be available for subsequent option grant under the Plan.
VI. FINANCING
The Plan Administrator may assist any optionee (including any officer or
director) in the exercise of one or more options under this Article Two of the
Plan by (a) authorizing the extension of a loan to such optionee from the
Company or (b) permitting the optionee to pay the option price for the purchased
Common Stock in installments over a period of years. The terms of any loan or
installment method of payment (including the interest rate and terms of
repayment) will be established by the Plan Administrator in its sole discretion;
provided, however, that loans and installment payments may be granted without
security or collateral, but the maximum credit available to the optionee shall
not exceed the sum of the aggregate option price of the purchased shares (less
their par value), plus any Federal and State income and employment tax liability
incurred by the optionee in connection with such exercise. The Plan
Administrator may, in its absolute discretion, determine that one or more loans
extended under this Section VI shall be subject to forgiveness by the Company in
whole or in part upon such terms and conditions as the Plan Administrator in its
discretion deems appropriate.
VII. EXTENSION OF EXERCISE PERIODS
The Plan Administrator shall have full power and authority exercisable
in its sole discretion to extend, at the time the option is granted or at any
time the option remains
-12-
<PAGE> 13
outstanding, the period of time for which the option is to remain exercisable
following the optionee's cessation of Service from the twelve (12) month or
shorter period set forth in the option agreement 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.
-13-
<PAGE> 14
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. AUTOMATIC GRANTS
A. Grant Dates. Option grants shall be made pursuant to the
provisions of this Article Three as follows:
(i) Each individual who is serving as a
Board member on the date of the 1989 Annual Stockholders Meeting and is neither
an employee of the Company nor any of its parent or subsidiary corporations
shall automatically be granted on such date a non-statutory option under the
Plan to purchase 20,000 shares of Common Stock.
(ii) Each individual who first becomes a
non-employee Board member after the date of the 1989 Annual Stockholders
Meeting, whether through appointment by the Board or election by the Company's
stockholders, shall, on the date of such election or appointment, receive an
automatic option grant to purchase 20,000 shares of Common Stock.
(iii) Each individual who continues to serve
as a non-employee Board member shall receive additional automatic option grants,
each for 20,000 shares of Common Stock, at successive four (4) year intervals
over his or her period of continued Board service. The first such additional
grant shall be made on the later of (A) the date of the 1994 Annual Stockholders
Meeting or (B) the date of the Annual Stockholders Meeting held in the calendar
year in which occurs the fourth anniversary of the grant date of the initial
automatic option grant made to such individual under this Article Three,
provided he or she is re-elected to the Board at that Annual Meeting. Additional
automatic grants for 20,000 shares each shall be made to such individual at
every fourth Annual Stockholders Meeting thereafter over such individual's
period of continued service as a non-employee Board member.
B. Limitation. Except for the automatic grants to be made
pursuant to the provisions of this Article Three, non-employee Board members
shall not be eligible to receive any additional option grants under this Plan or
any other stock plan of the Company (or its parent or subsidiary corporations).
C. Adjustment. The number and/or class of securities
subject to each automatic option grant to be made to the non-employee Board
members under this Article Three shall be subject to periodic adjustment
pursuant to the applicable provisions of Section IV.D of Article One.
-14-
<PAGE> 15
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Option Price. The option price per share shall be equal
to one hundred percent (100%) of the fair market value per share of Common Stock
on the automatic grant date.
B. Payment. The option price shall be payable in one of the
alternative forms specified below:
(i) payment in cash or check payable to the
Company's order; or
(ii) payment in shares of Common Stock held
for the requisite period necessary to avoid a charge to the Company's reported
earnings and valued at fair market value on the Exercise Date (as such term is
defined below); or
(iii) to the extent the option is exercised
for vested shares, payment through a broker-dealer sale and remittance procedure
pursuant to which the optionee shall provide irrevocable written instructions
(I) to a Company-designated broker-dealer to effect the immediate sale of the
purchased shares and remit to the Company, out of the sale proceeds available on
the settlement date, an amount equal to the aggregate option price payable for
the purchased shares plus all applicable Federal and State income and employment
taxes required to be withheld by the Company by reason of such purchase and (II)
to the Company to deliver the certificates for the purchased shares directly to
such broker-dealer.
For purposes of this Section II.B, the Exercise Date shall be the date
on which written notice of the option exercise is delivered to the Company, and
the fair market value per share of Common Stock on any relevant date shall be
determined in accordance with the provisions of Section I.A.4 of Article Two.
Except to the extent the sale and remittance procedure specified above is
utilized for the exercise of the option, payment of the option price for the
purchased shares must accompany such notice.
C. Option Term. Each automatic grant under this Article
Three shall have a maximum term of ten (10) years measured from the automatic
grant date.
D. Exercisability. Each automatic grant shall become
exercisable for all the option shares upon the optionee's completion of six (6)
months of Board service measured from the automatic grant date, but any shares
purchased under the option shall be subject to the repurchase rights of the
Company under Section II.E of this Article Three.
E. Repurchase Right. The shares purchased under each
automatic option grant shall be subject to repurchase by the Company, at the
option price paid per share, in the event the optionee ceases to serve as a
Board member. However, the Company's repurchase right shall lapse in accordance
with the following schedule:
-15-
<PAGE> 16
(i) The repurchase right will lapse with
respect to 25% of the option shares upon the optionee's completion of one year
of Board service measured from the automatic grant date.
(ii) The repurchase right will lapse with
respect to the remaining option shares in a series of thirty-six (36) successive
equal monthly installments over the optionee's period of continued Board
service, with the first such installment to lapse on the 13th calendar month
after the automatic grant date.
(iii) The repurchase right shall also
terminate in its entirety should any of the following events occur prior to the
optionee's cessation of Board service: (A) the death or permanent disability of
the optionee, (B) a Change in Control under Section III of this Article Three or
(C) a Corporate Transaction under Section III of this Article Three.
F. Non-Transferability. During the lifetime of the
optionee, the option, together with the special stock appreciation right
pertaining to such option under Section III.C of this Article Three, shall be
exercisable only by the optionee and shall not be assignable or transferable by
the optionee except for any transfer of the option effected by will or by the
laws of descent and distribution following the optionee's death.
G. Effect of Termination of Board Membership.
1. Should the optionee cease to serve as a Board
member for any reason (other than death) while holding an automatic option grant
under this Article Three, then the optionee shall have a six (6) month period
following the date of such cessation of Board service in which to exercise that
option for any or all of the shares of Common Stock in which the optionee is
vested at the time of such cessation of Board service. The option shall
immediately, upon the optionee's cessation of Board service for any reason,
terminate and cease to be outstanding with respect to any option shares in which
the optionee is not otherwise at that time vested.
2. Should the optionee die while a Board member or
during the six (6) -month period following his or her cessation of Board
service, then the option may subsequently be exercised, for any or all of the
shares of Common Stock 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 such option shall terminate upon the earlier of (i) the
first anniversary of the optionee's death or (ii) the expiration date of the
option term.
3. For purposes of this Article Three, an optionee
will be deemed to remain in Board service for so long as such optionee remains a
member of the Board or of the board of directors of any parent or subsidiary
corporation of the Company.
-16-
<PAGE> 17
4. In no event shall any automatic grant under this
Article Three remain exercisable after the specified expiration date of the ten
(10) year option term. Upon the expiration of the applicable exercise period in
accordance with subparagraphs 1 and 2 above or (if earlier) upon the expiration
of the ten (10) year option term, the automatic grant shall terminate and cease
to be exercisable with respect to any vested option shares for which the option
has not otherwise been exercised.
H. Stockholder Rights. The holder of an automatic option
grant under this Article Three shall have no stockholder rights with respect to
any shares covered by that option until such individual shall have exercised the
option, paid the exercise price for the purchased shares and been issued a stock
certificate for such shares. No adjustment shall be made for dividends or
distributions (whether paid in cash, securities or other property) for which the
record date is prior to the date such stock certificate is issued.
I. Remaining Terms. The remaining terms and conditions of
each automatic option grant shall be as set forth in the prototype Non-Employee
Director Automatic Grant Agreement attached as Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/
HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction (as such term
is defined in Section III of Article Two above), the option shares at the time
subject to each automatic option grant outstanding under this Article Three
shall immediately vest in full so that each such option shall, immediately prior
to the specified effective date for the Corporate Transaction, become fully
exercisable for all of those shares as fully-vested shares of Common Stock and
may be exercised for all or any portion of those vested shares. Immediately
following the consummation of the Corporate Transaction, all automatic option
grants under this Article Three shall terminate and cease to be outstanding,
unless assumed by the successor corporation or parent thereof.
B. In the event of any Change in Control of the Company,
the option shares at the time subject to each automatic option grant outstanding
under this Article Three shall immediately vest in full so that each such option
shall, immediately prior to the effective date of such Change in Control, become
fully exercisable for all of those shares as fully-vested shares of Common Stock
and may be exercised for all or any portion of those vested shares. For purposes
of this Article Three, a Change in Control shall be deemed to occur in the
event:
(i) any person or related group of persons
(other than the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) directly or
indirectly acquires 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 Company's outstanding securities pursuant to
a tender or exchange offer which the Board does not recommend the Company's
stockholders to accept; or
-17-
<PAGE> 18
(ii) there is a change in the composition of
the Board over a period of twenty-four (24) consecutive months or less such that
a majority of the Board members ceases, by reason of one or more proxy contests
for the election of Board members, 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 two-thirds 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.
C. Upon the occurrence of a Hostile Take-Over, each
automatic option grant at the time outstanding under this Article Three shall
automatically be cancelled, provided that option has been so outstanding for a
period of at least six (6) months. The optionee shall in return receive a cash
distribution from the Company in an amount equal to the excess of (i) the
Take-Over Price of the shares of Common Stock at the time subject to the
cancelled option (whether or not those shares are vested) over (ii) the
aggregate option price payable for such shares. The cash distribution payable
upon such cancellation shall be made within five (5) days following the
consummation of the Hostile Take-Over. Neither the approval of the Plan
Administrator nor the consent of the Board shall be required in connection with
such option cancellation and cash distribution.
D. Hostile Take-Over shall have the meaning assigned to
such term in Section V.E of Article Two, and the Take-Over Price per share shall
be deemed to be equal to the greater of (a) the fair market value per share on
the option cancellation date, as determined pursuant to the valuation provisions
of Section I.A.4 of Article Two, or (b) the highest reported price per share of
Common Stock paid in effecting such Hostile Take-Over.
E. The shares of Common Stock subject to each option
cancelled in connection with the Hostile Take-Over shall NOT be available for
subsequent issuance under this Plan.
F. The automatic option grants outstanding under this
Article Three shall in no way affect the right of the Company to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS
The provisions of this Automatic Option Grant Program, and any automatic
option grants outstanding under this Article Three, 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.
-18-
<PAGE> 19
ARTICLE FOUR
MISCELLANEOUS
I. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to amend
or modify the Plan in any or all respects whatsoever. However, (i) no such
amendment or modification shall, without the consent of the holders, adversely
affect rights and obligations with respect to options at the time outstanding
under the Plan and (ii) any amendment made to the Automatic Option Grant Program
(or any options outstanding thereunder) shall be in compliance with Section IV
of Article Three. In addition, the Board shall not, without the approval of the
stockholders of the Company, (i) increase the maximum number of shares issuable
under the Plan or the number of shares for which any one individual
participating in the Plan may be granted stock options and separately
exercisable stock appreciation rights over the remaining term of the Plan,
except for permissible adjustments under Section IV.D of Article One or Section
III.B of Article Two, (ii) materially modify the eligibility requirements for
the grant of options under the Plan or (iii) otherwise materially increase the
benefits accruing to participants under the Plan.
II. EFFECTIVE DATE AND TERM OF PLAN
A. The Company's 1981 Stock Option Plan was initially
adopted by the Board in October 1981. The 1981 Stock Option Plan was restated in
its entirety by the Board on December 16, 1986, and such restatement was
approved by the stockholders on February 26, 1987. The Plan as so restated was
subsequently amended on several occasions, and those amendments were approved by
the Company's stockholders on August 3, 1988 and August 2, 1989. On May 13,
1992, the Plan was further restated by the Board, and the 1992 restatement was
subsequently approved by the Company's stockholders. On August 18, 1994, the
Plan was again restated to authorize the automatic option grants provided
pursuant to Section I.A.(iii) of Article Three. Such restatement was approved by
the Company's stockholders at the 1995 Annual Meeting. On November 8, 1995 the
Board further amended the Plan to authorize the appointment of a secondary
committee of Board Members to administer the Discretionary Option Grant Program
of Article Two of the Plan with respect to individuals other than Section 16
Insiders.
B. The provisions of the 1994 restatement shall apply only
to options granted under the Plan on or after August 18, 1994. All options
issued and outstanding under the Plan prior to such date shall continue to be
governed by the terms and conditions of the Plan (and the instrument evidencing
each such option) as in effect on the date each such option was previously
granted, and nothing in the 1994 restatement shall be deemed to affect or
otherwise modify the rights or obligations of the holders of those options.
C. The special sale and remittance procedure for the
exercise of outstanding options under the Plan shall be in effect for all
currently-outstanding options which already
-19-
<PAGE> 20
include such procedure as a method of exercise and for all options granted after
May 13, 1992. In addition, such procedure shall be available for all
non-statutory options currently held by officers and directors which do not
otherwise include such procedure and for any disqualifying dispositions of
Incentive Option shares effected after May 13, 1992.
D. The Plan was amended on May 14, 1997 to (i) increase the
maximum number of shares of Common Stock authorized for issuance over the term
of the Plan by an additional 750,000 shares and (ii) allow the non-employee
Board members (other than those at the time serving as members of the Primary
Committee). However, no shares granted on the basis of the 750,000-share
increase to the Plan shall become exercisable in whole or in part unless and
until such increase is approved by the Corporation's stockholders. Should such
stockholder approval not be obtained at the 1997 Annual Meeting, then any
options granted on the basis of the 750,000-share increase shall terminate
without ever becoming exercisable for any of the option shares, and no further
option grants shall be made on the basis of such share increase. In addition,
without such stockholder approval, the non-employee Board members (other than
those serving on the Primary Committee) shall not become eligible to receive
option grants under the Discretionary Option Grant Program, but will continue to
participate in the Automatic Option Grant Program.
E. Unless sooner terminated in accordance with Section III
of Articles Two and Three, the Plan shall terminate upon the earlier of (i)
August 16, 2005 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 granted hereunder. If the date of
termination is determined under clause (i) above, then any options outstanding
on such date shall thereafter continue to have force and effect in accordance
with the provisions of the instruments evidencing such options.
F. Options may be granted under this Plan to purchase
shares of Common Stock in excess of the number of shares then available for
issuance under the Plan, provided (i) an amendment to increase the maximum
number of shares issuable under the Plan is adopted by the Board prior to the
initial grant of any such option and within one year thereafter such amendment
is approved by the stockholders of the Company and (ii) each option so granted
is not to become exercisable, in whole or in part, at any time prior to the
obtaining of such stockholder approval.
III. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.
IV. MISCELLANEOUS PROVISIONS
A. The implementation of the Plan, the granting of any
option hereunder, and the issuance of stock upon the exercise or surrender of
any such option shall be subject to the procurement by the Company of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it and the stock issued pursuant to it.
-20-
<PAGE> 21
B. Neither the action of the Company in establishing or
restating the Plan, nor any action taken by the Plan Administrator hereunder,
nor any provision of the Plan shall be construed so as to grant any individual
the right to remain in the employ or service of the Company (or any parent or
subsidiary) for any period of specific duration, and the Company (or such parent
or subsidiary corporation) may terminate such individual's employment or service
at any time and for any reason, with or without cause.
-21-
