<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 25, 2000
REGISTRATION NO. __________
================================================================================
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)
___________________
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 3674 94-2722142
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
2830 NORTH FIRST STREET
SAN JOSE, CALIFORNIA 95143-2071
(408) 432-9100
(Address, Including Zip Code, and Telephone Number, Including Area
Code, of Registrant's Principal Executive Offices)
___________________
IMP, INC. 1999
STOCK OPTION PLAN
___________________
IMP, INC.
STOCK OPTION PLAN
___________________
BRAD WHITNEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
2830 NORTH FIRST STREET
SAN JOSE, CALIFORNIA 95143-2071
(408) 432-9100
(Name, Address Including Zip Code, and Telephone Number Including Area Code,
of Agent for Service)
___________________
COPIES TO:
RICHARD S. GREY
ORRICK, HERRINGTON & SUTCLIFFE LLP
OLD FEDERAL RESERVE BANK BUILDING
400 SANSOME STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 392-1122
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AT SUCH TIME OR TIMES AFTER THE EFFECTIVE DATE OF THIS
REGISTRATION STATEMENT AS THE SELLING STOCKHOLDERS SHALL DETERMINE.
___________________
Exhibit Index on Page 6
(Calculation of Registration Fee on following page)
================================================================================
<PAGE> 2
- --------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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 pursuant to the
IMP, Inc. 1999 Stock Option Plan
0.01 par value 250,000 Shares $4.25(2)(3) $1,062,500 $280.50
Options to purchase Common Stock
(under the IMP, Inc. 1999 Stock
Option Plan)
0.01 par value 250,000 Shares $ n/a $ n/a $ n/a
Common Stock issuable upon exercise
of options granted pursuant to the
IMP, Inc. Stock Option Plan
0.01 par value 50,000 Shares $4.25(2)(3) $ 212,500 $ 56.10
Options to purchase Common Stock
(under the IMP, Inc. Stock Option
Plan)
0.01 par value 50,000 Shares $ n/a $ n/a $ n/a
TOTAL 300,000 Shares $4.25 $1,275,000 $336.60
-----
</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 SmallCap Market on
January 20, 2000.
-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 28, 1999 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.
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C>
5.1(a) Opinion of Orrick, Herrington & Sutcliffe LLP
</TABLE>
-3-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
5.1(b) Opinion of Venture Law Group
23.1(a) Consent of Orrick, Herrington & Sutcliffe LLP
(included in Exhibit 5.1(a)).
23.1(b) Consent of Venture Law Group (included in Exhibit 5.1(b)).
23.2 Consent of Independent Accountants.
24.1 Powers of Attorney.
99.1 IMP, Inc. Stock Option Plan
99.2 IMP, Inc. 1999 Stock Option Plan
</TABLE>
- ---------------
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 21st day
of January, 2000.
IMP, INC.
By: /s/ Brad Whitney
------------------------------------
Brad Whitney
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Zvi Grinfas and Brad Whitney, his
or her attorney-in-fact and agent, 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 such 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-fact and agent, or his
substitute, 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/ Brad Whitney President, Chief Executive January 21, 2000
- ----------------------------- (Principal Executive Officer)
Brad Whitney
/s/ Zvi Grinfas Chief Financial Officer (Principal January 21, 2000
- ----------------------------- Accounting Officer) and Director
Zvi Grinfas
/s/ Subbarao Pinamaneni Director January 21, 2000
- -----------------------------
Subbarao Pinamaneni
/s/ Bernard V. Vonderschmitt Director January 21, 2000
- -----------------------------
Bernard V. Vonderschmitt
</TABLE>
-5-
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
5.1(a) Opinion of Orrick, Herrington & Sutcliffe LLP
5.1(b) Opinion of Venture Law Group
23.1(a) Consent of Orrick, Herrington & Sutcliffe LLP
(included in Exhibit 5.1(a))
23.1(b) Consent of Venture Law Group (included in 5.1(b))
23.2 Consent of Independent Accountants
24.1 Powers of Attorney
99.1 IMP, Inc. Stock Option Plan
99.2 IMP, Inc. 1999 Stock Option Plan
</TABLE>
-6-
<PAGE> 1
EXHIBIT 5.1(a)
[Orrick, Herrington & Sutcliffe Letterhead]
January 25, 2000
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 January 25, 2000 in connection with the registration under the
Securities Act of 1933, as amended, of a total of 250,000 shares of your Common
Stock (the "Shares") reserved for issuance under the IMP, Inc. 1999 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,
/s/ Orrick Herrington & Sutcliffe LLP
-------------------------------------
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE> 1
EXHIBIT 5.1(b)
January 25, 2000
[Venture Law Group Letterhead]
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 January 25, 2000 in connection with the registration under the
Securities Act of 1933, as amended, of a total of 50,000 shares of your Common
Stock (the "Shares") reserved for issuance under the IMP, Inc. 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,
/s/ Venture Law Group
--------------------------
Venture Law Group
A Professional Corporation
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
[PricewaterhouseCoopers LLP Letterhead]
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated June 12, 1999, except for Note 10
which is as of December 31, 1999, relating to the financial statements, which
appears in IMP, Inc.'s Annual Report on Form 10-K/A for the year ended March 28,
1999.
PricewaterhouseCoopers LLP
San Jose, California
January 21, 2000
<PAGE> 1
IMP, INC.
STOCK OPTION PLAN
(AS AMENDED AND RESTATED THROUGH OCTOBER 29, 1999)
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: (1) 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 (2) 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, $0.01 par value
per share ("Common Stock"). The maximum number of shares that may be issued over
the term of the Plan shall not exceed 667,700 shares.(1) 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 100,000 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.
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
- --------------
(1) The share numbers in this Article One have been revised to reflect 10:1
reverse stock split on January 13, 1999.
-3-
<PAGE> 4
change affecting the outstanding Common Stock as a class without the Company's
receipt of consideration, then, appropriate adjustments shall be made to (1) the
maximum number and/or class of securities issuable under the Plan, (2) 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, (3) 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
(4) 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
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<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
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<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 that 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
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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"):
(1) 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;
(2) the sale, transfer or other disposition of all
or substantially all of the assets of the Company; or
(3) any reverse merger in which the Company is the
surviving entity, but in which fifty percent (50%) or more of the Company's
outstanding voting stock is
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<PAGE> 10
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 (85%) of the fair market value per share of Common Stock on
the new Grant Date (or one
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<PAGE> 11
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 (1) 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 (2) 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
(1) the expiration of the five (5) business day period following receipt of the
rejection notice or (2) 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.
E. For purposes of Section V.D, the following definitions shall
be in effect: (1) A "Hostile Take-Over" shall be deemed to occur in the event
(i) any person or related group
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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 (2) 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; and (2) The Take-Over
Price per share shall be deemed to be equal to the greater of (i) 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
(ii) 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 (i) 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 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.
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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:
(1) 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 2,000 shares of Common Stock.(2)
(2) 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 2,000 shares of Common Stock.
(3) Each individual who continues to serve as a
non-employee Board member shall receive additional automatic option grants, each
for 2,000 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 (i) the date of the 1994 Annual Stockholders Meeting or
(ii) 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 2,000 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.
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(2) The share numbers in this Article Three have been revised to reflect the
10:1 reverse stock split effective on January 13, 1999.
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<PAGE> 14
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:
(1) payment in cash or check payable to the
Company's order; or
(2) 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
(3) 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:
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<PAGE> 15
(1) 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.
(2) 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.
(3) 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: (i) the death or permanent disability of the
optionee, (ii) a Change in Control under Section III of this Article Three or
(iii) 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.
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<PAGE> 16
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:
(1) 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
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<PAGE> 17
(2) 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 (i)
have been Board members continuously since the beginning of such period or (ii)
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 (i) 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 (1) 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 (2) 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 (1) 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 (2) 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.
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ARTICLE FOUR
MISCELLANEOUS
I. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to amend
or modify the Plan in any or all respects whatsoever. However, (A) 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 (B) 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, 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, materially modify the eligibility requirements for the
grant of options under the Plan or 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.(3) 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 include such procedure as a method
of exercise and for all options granted after May 13, 1992.
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<PAGE> 19
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. Prior to August 16, 1995, there were 4,177,000 shares of
Common Stock authorized for issuance under the Plan. As of August 16, 1995, the
stockholders of the Company approved 500,000 additional shares for issuance
under the Plan. Thereafter, on August 21, 1996, the stockholders of the Company
approved an additional 750,000 shares of Common Stock for issuance under the
Plan. The Plan was amended on May 14, 1997 to (1) 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 (2) allow the non-employee Board members (other
than those at the time serving as members of the Primary Committee). This
amendment was approved by the stockholders of the Company on August 20, 1997.
The Plan was amended again on May 13, 1998 to increase the maximum number of
shares of Common Stock authorized for issuance over the term of the Plan by an
additional 500,000 shares. This amendment was approved by the stockholders of
the Company on August 19, 1998.(3)
E. The Plan was amended and restated effective October 29, 1999
to reflect the 10:1 reverse stock split that was effective as of January 13,
1999. In addition, nonsubstantive charges (generally intended to add uniformity
to the wording of the Plan's document) were made at that time.
F. Unless sooner terminated in accordance with Section III of
Articles Two and Three, the Plan shall terminate upon the earlier of (1) August
16, 2005 or (2) 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 (1) 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.
G. 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 (1) 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 (2) 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.
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(3) The share numbers in this Section II.D have not been modified to reflect the
10:1 reverse stock split that was effective on January 13, 1999.
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<PAGE> 20
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.
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.
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<PAGE> 1
Exhibit 99.2
IMP, INC. 1999
STOCK OPTION PLAN
ARTICLE ONE
GENERAL
I. PURPOSES OF THE PLAN
This IMP, Inc. 1999 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 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. At the Board of Director's (the "Board's") discretion,
administration of the Plan shall be vested in a Committee of one (1) or more
Board members appointed by the Board (the "Committee"), or the Board may retain
the power to administer the Plan with respect to the grant of options to
individuals described in Section III of this Article One. If the Board retains
this authority, the Board shall be the Committee for purposes of this Plan.
B. Members of the Committee shall serve for such period of time
as the Board may determine and may be removed by the Board at any time.
C. The Committee 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 Plan
and to make such determinations under, and issue such interpretations of, the
Plan and any outstanding options thereunder as it may deem necessary or
advisable. Decisions of the Committee within the scope of its administrative
functions under the Plan shall be final and binding on all parties who have an
interest under its jurisdiction or any stock option issued under this Plan.
<PAGE> 2
D. Service on the Committee shall constitute service as a Board
member, and members of such Committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such
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 under the Plan.
III. ELIGIBILITY FOR OPTION GRANTS
A. The persons eligible to receive options pursuant to the
Discretionary Option Grant Program shall be limited to key employees and key
consultants of the Company or its parent or subsidiary corporations who are at
the director level or below as the Committee shall select from time to time.
Under no circumstances shall any individual who is a "Section 16 Insider" be
eligible for a grant of an Option. For this purpose, a "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.
B. The Committee 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 Plan, 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, $0.01 par value
per share ("Common Stock"). The maximum number of shares that may be issued over
the term of the Plan shall not exceed 250,000 shares. The total number of shares
issuable under the Plan shall be subject to adjustment from time to time in
accordance with Section IV.C below.
B. 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 III 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 IV of Article Two 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.
C. 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
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<PAGE> 3
which any one individual may be granted stock options and separately exercisable
stock appreciation rights over the remaining term of the Plan, and (iii) the
number and/or class of securities and the option price per share in effect under
each outstanding option in order to prevent the dilution or enlargement of
benefits thereunder.
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 Committee and shall, be non-statutory options. Each such
discretionary grant shall be evidenced by an instrument in the form approved by
the Committee; provided, however, that each such instrument shall comply with
and incorporate the terms and conditions specified below.
A. Option Price.
1. The option price per share shall be fixed by the
Committee and, to the extent required under applicable law, 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 Committee 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. To the extent required by applicable law, if any
individual to whom an option is to be granted 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 V 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-
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<PAGE> 4
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 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
Committee 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; and
(iii) if neither (i), nor (ii) is applicable, then the
Committee shall determine the fair market value.
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 Committee 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.
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<PAGE> 5
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 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 Committee 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 options 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
Committee shall have complete discretion, exercisable either at the time the
option is granted or at any while the
5
<PAGE> 6
option remains outstanding, to establish as a provision applicable to the
exercise of one or more options granted under the Plan that during the limited
period of exercisability following 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 Committee shall have the discretion to grant options
that 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 Committee may specify in the instrument evidencing such
right.
2. The Committee may assign the Company's repurchase rights
under subparagraph 1 above to any person or entity selected by the Committee,
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
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<PAGE> 7
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 Committee at the time the repurchase right is granted.
II. CORPORATE TRANSACTION
A. In the event of one or more of the following
stockholder-approved transactions (a "Corporate Transaction"):
1. 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;
2. the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
3. any reverse merger in which the Company is the surviving
entity, but in which fifty percent (50%) or more of the Company's outstanding
voting stock is transferred to holders different from those who held the stock
immediately prior to such merger, 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 Committee 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 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
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<PAGE> 8
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
III. CANCELLATION AND NEW GRANT OF OPTIONS
The Board 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 (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).
IV. SURRENDER OF OPTIONS FOR CASH OR STOCK
A. One or more option holders may be granted, upon such terms and
conditions as the Committee 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 Committee. If the surrender is so approved, then the
distribution to which the option holder shall accordingly become entitled under
this Section IV 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 Committee shall in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Committee,
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 to the extent required by applicable law five (5) years in the case of
a 10% Stockholder) after the date of the option grant.
D. The shares of Common Stock subject to any option surrendered
or cancelled for an appreciation distribution pursuant to this Section IV shall
not be available for subsequent option grant under the Plan.
V. FINANCING
The Committee may assist any optionee 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
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<PAGE> 9
method of payment (including the interest rate and terms of repayment) will be
established by the Committee 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 Committee may, in its absolute discretion,
determine that one or more loans extended under this Section V shall be subject
to forgiveness by the Company in whole or in part upon such terms and conditions
as the Committee in its discretion deems appropriate.
VI. EXTENSION OF EXERCISE PERIODS
The Committee 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 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 Committee shall deem appropriate, but in no event beyond the
specified expiration date of the option term.
ARTICLE THREE
MISCELLANEOUS
I. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever. However, no such
amendment or modification shall, without the consent of the holders, adversely
affect rights and obligations with respect to options at the time outstanding
under the Plan.
II. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall be effective as of September 30, 1999. The Plan shall
terminate upon the earlier of (i) October 1, 2009 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.
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
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<PAGE> 10
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.
B. Neither the action of the Company in establishing or restating
the Plan, nor any action taken by the Committee 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.
10
