SYMMETRICOM, INC.
85 West Tasman Drive
San Jose, California 95134-1703
Notice of Annual Meeting of Shareholders
to be Held October 25, 1995
The Annual Meeting of Shareholders of SymmetriCom, Inc., a
California corporation (the "Company"), will be held on Wednesday,
October 25, 1995 at 10:00 a.m. at the offices of the Company, at 85
West Tasman Drive, San Jose, California 95134-1703.
At the meeting, shareholders will consider and vote upon the
following proposals:
1. To elect a Board of Directors of the Company;
2. To approve the amendments to the Company's 1990 Employee
Stock Plan (the "1990 Plan") to (i) increase the number of shares
reserved for issuance thereunder from 1,700,000 to 2,200,000, (ii)
provide that on the first day of each fiscal year of the
corporation, beginning with the fiscal year commencing July 1, 1996,
the number of shares reserved for issuance under the 1990 Plan shall
be increased by an amount equal to 3.0% of the outstanding shares of
the Company's Common Stock as of the last trading day of the
Company's immediately preceding fiscal year, and (iii) provide that
the number of shares that may be granted to any employee of the
Company in any fiscal year is limited to 250,000 shares to comply
with the requirements applicable to "performance-based compensation"
under Section 162(m) of the Internal Revenue Code of 1986, as
amended; provided that at the time of initial hire, an employee of
the Company may be granted an option to purchase an additional
250,000 shares which shall not count against the 250,000 share limit
set forth above;
3. To approve the amendments to the Company's 1990 Director
Option Plan to (i) increase the number of shares reserved for
issuance thereunder from 150,000 to 300,000, (ii) provide for the
automatic grant to each outside director of (a) a 10,000 share
option on the date on which such person first becomes an outside
director and (b) a 10,000 share option on January 1 of each year, if
on such date, such person shall have served on the Board for at
least six months, and (iii) modify the section pertaining to
merger and sale of assets to (a) provide for full acceleration of
vesting in a merger or sale transaction in the event that
outstanding options are not assumed or substituted, (b) amend the
definition of "Change in Control" to delete reference to
transactions requiring shareholder approval, and (c) provide for
full acceleration of vesting in the event of the acquisition by a
person of 50% or more of the combined voting power of the Company's
then outstanding securities;
4. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the current fiscal year; and
5. To transact such other business as may properly come
before the meeting or any and all postponements or adjournments
thereof.
The Board of Directors has fixed the close of business on
September 1, 1995 as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting.
Accordingly, only shareholders of record at the close of business on
that day will be entitled to vote at the meeting, notwithstanding
any transfer of shares on the books of the Company after that date.
A Proxy Statement which contains information with respect to
the matters to be voted upon at the meeting and a Proxy card and
return envelope are furnished herewith. Management urges each
shareholder to carefully read the Proxy Statement. If you cannot be
present personally at the meeting, you are requested to fill in and
sign the Proxy card and return it promptly to the Company in the
envelope enclosed for that purpose.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Scott Kamsler
_______________
J. SCOTT KAMSLER
Secretary
San Jose, California
Dated: September 22, 1995
IT IS DESIRABLE THAT AS MANY OF THE SHAREHOLDERS AS
POSSIBLE BE REPRESENTED AT THE MEETING IN PERSON OR BY PROXY.
YOU ARE CORDIALLY INVITED TO ATTEND IN PERSON. IF YOU ARE
UNABLE TO BE PRESENT AT THE MEETING, OR ARE NOT SURE WHETHER
YOU WILL BE, YOU ARE REQUESTED TO SIGN AND RETURN THE
ENCLOSED PROXY PROMPTLY SO THAT YOUR SHARES WILL BE
REPRESENTED. SIGNING A PROXY AT THIS TIME WILL NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO
ATTEND THE MEETING.
SYMMETRICOM, INC.
85 West Tasman Drive
San Jose, California 95134-1703
PROXY STATEMENT
GENERAL
Date, Time and Place
This Proxy Statement is furnished to the shareholders of
SymmetriCom, Inc., a California corporation (the "Company"), in
connection with the solicitation of Proxies by the Board of Direc-
tors of the Company for use at the Annual Meeting of Shareholders to
be held at 10:00 a.m. on Wednesday, October 25, 1995, and any and
all postponements or adjournments thereof. It is anticipated that
this Proxy Statement and the enclosed Proxy card will be sent to
such shareholders on or about September 22, 1995.
Purposes of the Annual Meeting
The purposes of the Annual Meeting are to (1) elect a Board of
Directors of the Company, (2) approve amendments to the 1990
Employee Stock Plan, (3) approve amendments to the 1990 Director
Option Plan, (4) ratify the appointment of Deloitte & Touche LLP as
the Company's independent auditors for the current fiscal year and
(5) transact such other business as may properly come before the
meeting or any and all postponements or adjournments thereof.
Proxy/Voting Instruction Cards and Revocability of Proxies
When the Proxy in the enclosed form is returned, properly
executed, the shares represented thereby will be voted at the
meeting in accordance with the instructions given by the share-
holder. If no instructions are given, the returned Proxy will be
voted in favor of the election of the nominees named herein as
directors and in favor of each of the other proposals. Any
shareholder, including a shareholder personally attending the
meeting, may revoke his or her Proxy at any time prior to its use by
filing with the Secretary of the Company, at the corporate offices
at 85 West Tasman Drive, San Jose, California 95134-1703, a written
notice of revocation or a duly executed Proxy bearing a later date
or by voting in person at the Annual Meeting.
Record Date and Share Ownership
Shareholders of record at the close of business on September 1,
1995 (the "Record Date") are entitled to notice of and to vote at
the meeting. At the Record Date, 15,403,269 shares of the Company's
Common Stock were issued and outstanding. For information regarding
security ownership by management and by 5% shareholders, see "Other
Information--Share Ownership by Principal Shareholders and
Management."
Voting and Solicitation; Quorum
Every shareholder voting for the election of directors may
cumulate such shareholder's votes and give one candidate a number of
votes equal to the number of directors to be elected multiplied by
the number of votes to which the shareholder's shares are entitled,
or distribute the shareholder's votes on the same principle among as
many candidates as the shareholder thinks fit, provided that votes
cannot be cast for more than the number of candidates to be elected.
However, no shareholder shall be entitled to cumulate votes unless
the candidate's name has been placed in nomination prior to the
voting and the shareholder, or any other shareholder, has given
notice at the meeting prior to the voting of the intention to
cumulate the shareholder's votes. The Company will cumulate votes
in the event that additional persons are nominated at the Annual
Meeting for election as directors.
On matters other than the election of directors, each share has
one vote. Votes against any such proposal will be counted for
determining the presence or absence of a quorum and will also be
counted as having been voted with respect to the proposal for
purposes of determining whether the requisite majority of voting
shares has been obtained, but will be treated as votes against the
proposal.
An automated system administered by the Company's transfer
agent tabulates the proxies received prior to the date of the Annual
Meeting. While there is no definitive statutory or case law
authority in California as to the proper treatment of abstentions in
the counting of votes with respect to a proposal, the Company
believes that abstentions should be counted for purposes of
determining both (i) the presence or absence of a quorum for the
transaction of business and (ii) the total number of votes cast with
respect to a proposal. In the absence of controlling precedent to
the contrary, the Company intends to treat abstentions in this
manner. Accordingly, abstentions will have the same effect as a
vote against the proposal. Broker non-votes will be counted for
purposes of determining the presence or absence of a quorum for the
transaction of business, but will not be counted for purposes of
determining the number of votes cast with respect to a proposal.
A majority of the outstanding shares constitutes the quorum
required to transact business at the Annual Meeting.
The cost of this solicitation will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other
persons representing beneficial owners of shares for their expenses
in forwarding solicitation material to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors,
officers and regular employees, without additional compensation,
personally or by telephone, telegram or facsimile.
Shareholder Proposals for the Next Annual Meeting
Any proposal to be presented at the Company's next Annual
Meeting of Shareholders must be received at the Company's principal
office no later than May 25, 1996 in order to be considered for
inclusion in the Company proxy materials for such meeting. Any such
proposals must be submitted in writing and addressed to the
attention of the Company's Corporate Secretary at 85 West Tasman
Drive, San Jose, California 95134-1703.
PROPOSAL NO. ONE
ELECTION OF DIRECTORS
Nominees
The Bylaws of the Company provide for a Board of five
directors. Unless otherwise instructed, the proxy holders will vote
the proxies received by them for management's five nominees named
below, all of whom are presently directors of the Company. In the
event that any nominee of the Company is unable or declines to serve
as a director at the time of the Annual Meeting, the proxies will be
voted for any nominee who shall be designated by the present Board
of Directors to fill the vacancy. It is not expected that any
nominee will be unable or will decline to serve as a director. The
term of office of each person elected as a director will continue
until the next Annual Meeting of Shareholders or until his successor
has been elected and qualified.
The names of the nominees, and certain information about them,
are set forth below.
Name Age Director Principal Occupation or
Since Employment
_______________________________________________________________________
William D. Rasdal(1) 62 1985 Chairman of the Board
and Chief Executive
Officer of the Company
Paul N. Risinger 62 1989 Vice Chairman and
Assistant Secretary
of the Company
Howard Anderson(2)(3) 51 1994 Managing Director of
The Yankee Group
Roger A. Strauch(2)(3) 39 1995 President, Chief
Executive Officer and
Director of TCSI
Corporation
Robert M. Wolfe(1)(2)(3) 68 1990 Telecommunications
Network Consultant
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Stock Option and Compensation Committee
Mr. Rasdal has served as Chairman of the Board of the Company
since July 1989 and as Chief Executive Officer since joining the
Company in November 1985. From November 1985 until July 1989, Mr.
Rasdal was President of the Company. From March 1980 until March
1985, Mr. Rasdal was associated with Granger Associates, a
manufacturer of telecommunications products. His last position
with Granger Associates was President and Chief Operating Officer.
From November 1972 to January 1980, Mr. Rasdal was employed by
Avantek as Vice President and Division Manager for Avantek's
microwave integrated circuit and semiconductor operations. For the
thirteen years prior to joining Avantek, he was associated with TRW
in various management positions.
Mr. Risinger has served as Vice Chairman of the Company since
August 1990 and as a Director of the Company since March 1989.
From November 1985, when Mr. Risinger joined the Company, until
August 1990, he served as Executive Vice President, Advanced
Marketing and Technology (AMAT). From April 1981 to May 1985,
Mr. Risinger served as Executive Vice President, AMAT, for Granger
Associates and was responsible for the development of new
businesses for the Digital Signal Processing Division. For four
years prior thereto, he served as Executive Vice President and
Chief Operating Officer of the Safariland Companies, a manufacturer
of equipment and accessories in the public safety field. Prior to
joining Safariland, Mr. Risinger was associated with TRW in various
management roles in marketing, research and development, and
general management for seventeen years.
Mr. Anderson has been Managing Director of The Yankee Group, a
high technology market research and consulting firm, since 1970.
Mr. Anderson is also the founder of Battery Ventures, a Boston
based high technology venture capital company.
Mr. Strauch has been Chief Executive Officer and Director of
TCSI Corporation ("TCSI"), a software products and service
provider, since January 1989, and has been President of TCSI since
September 1987. From January 1986 until September 1987, he served
as Vice President of Teknekron Corporation and the Division Manager
of Teknekron Communications Systems. From August 1983, when Mr.
Strauch joined Teknekron Corporation, until January 1986, he served
as Division Manager of the Communications Systems Division. For
five years prior thereto, Mr. Strauch served as a senior staff
engineer and project manager for Hughes Aircraft Company's Space
and Communications Group.
Mr. Wolfe has been an independent telecommunications network
consultant since October 1989. From April 1985 until October 1989,
Mr. Wolfe served as Vice President of BellSouth Services, a
subsidiary of BellSouth Corporation, where he was responsible for
telecommunications network planning. For three years prior
thereto, he served as Assistant Vice President of BellSouth
Corporation involved in strategic planning for BellSouth after the
Bell System breakup. Prior to 1982, Mr. Wolfe held various
positions in the Bell System, including two years at AT&T in New
York.
Vote Required; Recommendation of Board of Directors
With respect to the election of directors, shareholders have
cumulative voting rights, which means that each shareholder has the
number of votes equal to the number of shares held multiplied by
the number of directors to be elected. Each shareholder may give
all such votes to one candidate or distribute such shareholder's
votes among the candidates as the shareholder chooses. However,
the right to cumulate votes may not be exercised until the
candidate or candidates have been nominated and a shareholder has
given notice at the Annual Meeting of the shareholder's intention
to vote cumulatively. If any shareholder present at the Annual
Meeting gives such notice, all shareholders may cumulate their
votes. The candidates receiving the highest number of votes of
shares entitled to vote for them, up to the number of directors to
be elected, shall be elected. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE NOMINEES SET FORTH HEREIN.
The Board of Directors and its Committees
The Board of Directors has an Executive Committee, an Audit
Committee and a Stock Option and Compensation Committee. There is
no Nominating Committee or a committee performing the functions of
a nominating committee. The Executive Committee may, to the extent
permitted by law, exercise all of the powers of the Board of
Directors with respect to the management of the Company. The Audit
Committee monitors the performance of the independent auditors,
recommends their engagement or dismissal to the Board of Directors
and monitors the Company's internal financial and accounting
organization and financial reporting. The Stock Option and
Compensation Committee recommends executive compensation arrange-
ments for action by the Board as a whole, and administers the
Company's stock option plans. During the 1995 fiscal year, the
Audit Committee held two meetings and the Stock Option and
Compensation Committee held four meetings. The Executive Committee
held no meetings separate from the Board of Directors as a whole
during the 1995 fiscal year.
During the 1995 fiscal year, there were four meetings of the
Board of Directors. Each of the Company's present directors
attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors (held during the period for
which such director has been a director) and (ii) the total number
of meetings of committees of the Board of Directors on which such
person served (during the period that such director served) during
the 1995 fiscal year.
Director Compensation
Under the terms of the 1990 Director Option Plan, on each
January 1, each non-employee director automatically receives a
nonstatutory option to purchase 10,000 shares of the Company's
Common Stock. As set forth in Proposal No. 3, "Approval of
Amendments to 1990 Director Option Plan," if approved by the
shareholders at the Annual Meeting, the 1990 Director Option Plan
shall be amended to provide that each non-employee director shall
automatically receive a nonstatutory stock option to purchase
10,000 shares of the Company's Common Stock (i) on the date on
which such person first becomes an outside director and
(ii) on January 1 of each year, if on such date,
such person shall have served on the Board of Directors
for at least six months. Non-employee directors
of the Company are paid $2,500 for each Board meeting attended. No
additional compensation is paid for committee meetings attended.
The Company also reimburses its directors for certain expenses
incurred by them in their capacity as directors or in connection
with attendance at Board meetings.
PROPOSAL NO. TWO
APPROVAL OF AMENDMENTS TO 1990 EMPLOYEE STOCK PLAN
General
In December 1990, the Company's shareholders adopted and
approved the 1990 Employee Stock Plan (the "1990 Plan"). The 1990
Plan originally provided for the issuance of 700,000 shares of
Common Stock of the Company. Through 1994, the shareholders have
approved amendments to the 1990 Plan increasing the number of
shares subject thereto to the current reserve of 1,700,000. For a
detailed description of the 1990 Plan, see "Summary of the 1990
Plan."
Proposal
In July 1995, the Board of Directors approved three amendments
to the 1990 Plan. At the Annual Meeting, the shareholders are
being requested to approve these amendments, which are discussed in
detail below.
(i) Increase in Shares Reserved Under the 1990 Plan.
The proposed amendment increases the number of shares reserved for
issuance under the 1990 Plan by 500,000 shares (the "1990 Plan
Increase"), for a total number of shares authorized for issuance
under the 1990 Plan of 2,200,000 shares. The 1990 Plan Increase is
necessary in order to provide an effective method of recognizing
employee contributions to the success of the Company. The Company
also believes that its ability to grant stock options is critical
to its success in attracting and retaining experienced and
qualified employees.
(ii) Automatic Annual Increase in Shares Reserved Under
the 1990 Plan. The Company proposes that on the first day of each
fiscal year of the Company, beginning with the fiscal year
commencing July 1, 1996, the number of shares reserved for issuance
under the 1990 Plan shall be increased by an amount equal to 3.0%
of the outstanding shares of the Company's Common Stock as of the
last trading day of the Company's immediately preceding fiscal
year.
(iii) Limit to Options Granted Under the 1990 Plan. The
proposed amendment would limit the number of shares subject to
options, stock appreciation rights ("SARs") and stock purchase
rights granted to any employee in any fiscal year of the Company to
250,000 in the aggregate; provided that the Company would be able
to make an additional one-time grant to newly hired employees of up
to 250,000 shares. The above limitations would adjust
proportionately in connection with any change in the Company's
capitalization. The Omnibus Budget Reconciliation Act of 1993
("OBRA") added Section 162(m) to the Internal Revenue Code of 1986,
as amended (the "Code"). Under Section 162(m), the allowable
deduction for compensation paid or accrued with respect to the
chief executive officer and each of the four most highly
compensated employees of a publicly-held corporation is limited to
no more than $1,000,000 per year for fiscal years beginning on or
after October 1, 1993. However, this limitation does not apply to
compensation attributable to stock options, SARs or stock purchase
rights if, among other things, the option plan includes limits on
option, SAR and stock purchase right grants to employees such as
the limitations described above.
Vote Required; Recommendation of Board of Directors
The affirmative vote of the holders of a majority of the
shares represented in person or by proxy and voting at the Annual
Meeting will be required to approve the amendments to the 1990
Plan. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "FOR" THIS PROPOSAL.
Summary of the 1990 Plan
The essential features of the 1990 Plan, taking into account
the proposed amendments, are outlined below.
Purpose. The purposes of the 1990 Plan are to attract and
retain qualified personnel for positions of substantial
responsibility, to provide additional incentive to employees and
consultants of the Company and its subsidiaries and to promote the
success of the Company's business.
Administration. With respect to grants of options or stock
rights to employees who are also officers or directors of the
Company, the 1990 Plan shall be administered by (i) the Board of
Directors of the Company if the Board of Directors may administer
the 1990 Plan in a manner complying with the rules under Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or any successor rule thereto ("Rule 16b-3")
relating to the disinterested administration of employee benefit
plans under which Section 16(b) exempt discretionary grants and
awards of equity securities are to be made, or (ii) a committee
designated by the Board of Directors, which committee shall be
constituted to comply with the rules under Rule 16b-3 relating to
the disinterested administration of employee benefit plans under
which Section 16(b) exempt discretionary grants and awards of
equity securities are to be made. With respect to grants of
options or stock rights to employees or consultants who are neither
officers nor directors of the Company, the 1990 Plan shall be
administered by (i) the Board of Directors or (ii) a committee
designated by the Board of Directors, which committee shall be
constituted in such a manner as to satisfy the legal requirements,
if any, relating to the administration of stock option plans under
California corporate law and the Code. If permitted by Rule 16b-3,
the 1990 Plan may be administered by different bodies with respect
to directors, non-director officers, and employees and consultants
who are neither officers nor directors.
The administrators of the 1990 Plan have full power to select,
from among the directors, officers, employees and consultants of
the Company eligible for awards, the individuals to whom awards
will be granted, to make any combination of awards to any
participant and to determine the specific terms of each grant,
subject to the provisions of the 1990 Plan.
Eligibility. The 1990 Plan provides that nonstatutory stock
options, SARs and stock purchase rights may be granted to
employees, including officers and consultants of the Company or any
subsidiary of the Company. Incentive stock options may be granted
only to employees, including officers, of the Company or any
subsidiary of the Company. No employee shall be granted, in any
fiscal year of the Company, options, SARs and stock purchase rights
to acquire in the aggregate more than 250,000 shares of Common
Stock. The Company may, however, make an additional one-time grant
to newly hired employees of up to 250,000 shares.
Stock Options. The 1990 Plan permits the granting of stock
options that either qualify as incentive stock options under
Section 422(b) of the Code ("Incentive Stock Options" or "ISOs") or
do not so qualify ("Nonstatutory Stock Options" or "NSOs").
The term of each option is fixed by the administrators but may
not exceed ten years from the date of grant in the case of ISOs or
five years from the date of grant in the case of ISOs granted to
the owner of Common Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
subsidiary. When the fair market value of shares subject to ISOs
first exercisable in one calendar year is greater than $100,000,
the excess options shall be treated as NSOs. For these purposes,
fair market value is determined on the date of grant, and all ISOs
granted by the Company or its subsidiaries to an individual are
aggregated. The administrators determine the time or times each
option may be exercised. Options may be made exercisable in
installments, and the exercisability of options may be accelerated
by the administrators.
Option Price. The option exercise price for each share
covered by an NSO or an ISO may not be less than 85% or 100%,
respectively, of the fair market value of a share of Common Stock
on the date of grant of such option. In the case of ISOs granted
to the owner of Common Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
subsidiary, the option exercise price for each share covered by
such option may not be less than 110% of the fair market value of a
share of Common Stock on the date of grant of such option. For so
long as the Company's Common Stock is traded on the Nasdaq National
Market, the fair market value of a share of Common Stock shall be
the closing sales price for such stock (or the closing bid if no
sales were reported) as quoted on such system on the date of grant.
Consideration. The consideration to be paid for shares issued
upon exercise of options granted under the 1990 Plan, including the
method of payment, is determined by the administrators (and, in the
case of ISOs, determined at the time of grant) and may consist
entirely of (1) cash, (2) check, (3) promissory note, (4) shares of
Common Stock which, in the case of shares acquired upon exercise of
an option, have been beneficially owned for at least six months or
which were not acquired directly or indirectly from the Company,
with a fair market value on the exercise date equal to the
aggregate exercise price of the shares being purchased, (5) the
delivery of a properly executed notice providing for cashless
exercise together with such other documentation as the
administrator and a broker, if applicable, shall require to effect
an exercise of the option and delivery to the Company of the sale
or loan proceeds required to pay the exercise price, (6) the
delivery of an irrevocable subscription agreement for the shares
which irrevocably obligates the optionee to take and pay for the
shares not more than 12 months after delivery of the subscription
agreement, (7) any combination of the foregoing methods, or (8)
such other consideration and method permitted by applicable laws.
Miscellaneous Provisions. Under the 1990 Plan, in the event
of an optionee's termination of employment or consulting
relationship for any reason other than death or total and permanent
disability, an option may thereafter be exercised, to the extent it
was exercisable at the date of such termination, for such period of
time as the administrator shall determine at the time of grant (not
to exceed six months, or three months in the case of Incentive
Stock Options). If an optionee's employment or consulting
relationship is terminated as a result of the optionee's permanent
and total disability, the option will be exercisable for six months
following such termination, but only to the extent it was
exercisable at the date of termination and to the extent that the
term of the option has not expired. If an optionee's employment or
consulting relationship is terminated by reason of the optionee's
death, the option will be exercisable by the optionee's estate or
successor for six months following death, but only to the extent it
was exercisable at the date of death and to the extent that the
term of the option has not expired.
The administrators of the 1990 Plan may at any time offer to
buy out for a payment in cash or shares of Common Stock of the
Company an option previously granted, based on such terms and
conditions as the administrators shall establish and communicate to
the optionee at the time that such offer is made.
All options granted under the 1990 Plan are evidenced by a
stock option agreement between the Company and the optionee to whom
such option is granted. Options granted to persons who are subject
to Section 16 of the Exchange Act are subject to any additional
restrictions applicable to options granted to such persons in
compliance with Rule 16b-3.
Stock Appreciation Rights. The 1990 Plan also permits the
granting of SARs. SARs may be granted in connection with all or
any part of an option, either concurrently with the grant of the
option or at any time thereafter during the term of the option. A
SAR granted in connection with an option entitles the optionee to
exercise the SAR by surrendering to the Company unexercised a
portion of the related option. The optionee receives in exchange
from the Company an amount equal to the excess of the fair market
value on the date of exercise of the SAR of the Common Stock
covered by the surrendered portion of the related option over the
exercise price of the Common Stock covered by the surrendered
portion of the related option. Notwithstanding the foregoing, the
administrators of the 1990 Plan may place limits on the aggregate
amount that may be paid upon exercise of a SAR; provided, however,
that such limits may not restrict the exercisability of the related
option. When a SAR granted in connection with an option is
exercised, the related option, to the extent surrendered, ceases to
be exercisable. A SAR granted in connection with an option is
exercisable and expires no later than the date on which the related
option expires. A SAR granted in connection with an option may
only be exercised at a time when the fair market value of the
Common Stock covered by the related option exceeds the exercise
price of the Common Stock covered by the related option.
SARs may also be granted without related options. In such an
event, the SAR entitles the optionee, by exercising the SAR, to
receive from the Company an amount equal to the excess of the fair
market value of the Common Stock covered by the exercised portion
of the SAR as of the date of such exercise, over the fair market
value of the Common Stock covered by the exercised portion of the
SAR, as of the last market trading date prior to the date on which
the SAR was granted. Notwithstanding the foregoing, the
administrators of the 1990 Plan may place limits on the aggregate
amount that may be paid upon exercise of a SAR. A SAR granted
without a related option is exercisable, in whole or in part, at
such time as the administrators specify in the optionee's SAR
agreement.
The Company's obligation arising upon the exercise of a SAR
may be paid in Common Stock or in cash, or any combination thereof,
as the administrators may determine. Shares issued upon the
exercise of a SAR are valued at their fair market value as of the
date of exercise.
SARs granted to persons who are subject to Section 16 of the
Exchange Act are subject to any additional restrictions applicable
to SARs granted to such persons in compliance with Rule 16b-3.
Stock Purchase Rights. The 1990 Plan permits the Company to
grant stock purchase rights to purchase Common Stock of the Company
("Stock Purchase Rights") either alone, in addition to, or in
tandem with other awards under the 1990 Plan and/or cash awards
made outside the 1990 Plan. Upon the granting of a Stock Purchase
Right under the 1990 Plan, the offeree is advised in writing of the
terms, conditions and restrictions related to the offer, including
the number of shares of Common Stock that the offeree is entitled
to purchase, the price to be paid (which price may not be less than
50% of the fair market value of the shares as of the date of the
offer) and the time within which the offeree must accept such offer
(which may in no event exceed 30 days from the date upon which the
administrators made the determination to grant the Stock Purchase
Right). The offer is accepted by execution of a restricted stock
purchase agreement between the Company and the offeree.
Unless the administrators of the 1990 Stock Plan determine
otherwise, the restricted stock purchase agreement grants the
Company a repurchase option exercisable upon the voluntary or
involuntary termination of the purchaser's employment or consulting
relationship with the Company for any reason (including death or
permanent and total disability). The purchase price for shares
repurchased pursuant to the restricted stock purchase agreement is
the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company.
The repurchase option lapses at such rate as the administrators may
determine.
Upon exercise of a Stock Purchase Right, the purchaser has all
rights of a shareholder of the Company.
Nontransferability of Options, Stock Appreciation Rights and
Stock Purchase Rights. Options, SARs and Stock Purchase Rights
granted pursuant to the 1990 Plan are nontransferable by the
participant, other than by will or by the laws of descent and
distribution and may be exercised, during the lifetime of the
participant, only by the participant.
Acceleration of Options, Stock Appreciation Rights and Stock
Purchase Rights. Subject to the change in control provisions
described below, in the event of a proposed sale of all or
substantially all of the assets of the Company or the merger of the
Company with or into another corporation, each outstanding option,
SAR and Stock Purchase Right shall be assumed or substituted by
such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise
of its sole discretion and in lieu of such assumption or
substitution, that the participant shall have the right to exercise
the option, SAR or Stock Purchase Right as to all shares subject to
such option, SAR or Stock Purchase Right, including shares as to
which the option, SAR or Stock Purchase Right would not otherwise
be exercisable. If the Board determines that options, SARs or
Stock Purchase Rights shall be fully exercisable in lieu of
assumption or substitution, the Company shall notify the
participant that the option, SAR or Stock Purchase Right shall be
fully exercisable for a period of 15 days from the date of such
notice and the option, SAR or Stock Purchase Right will terminate
upon the expiration of such period.
Change in Control Provisions. The 1990 Plan provides that in
the event of a "Change in Control" of the Company (as defined
below) any or all or none of the following acceleration and
valuation provisions shall apply, as determined by the Board in its
discretion prior to the Change in Control: (i) all stock options,
SARs and Stock Purchase Rights granted under the 1990 Plan
outstanding as of the date such Change in Control is determined to
have occurred that are not yet exercisable and vested on such date
will become immediately vested and fully exercisable and (ii) to
the extent exercisable and vested, the value of all outstanding
options, SARs and Stock Purchase Rights shall, unless otherwise
determined by the Board prior to any Change in Control but at or
after the time of grant, will be cashed out at the "Change in
Control Price" (as defined below) reduced by the exercise price
applicable to such options, SARs or Stock Purchase Rights. A
"Change in Control" means the occurrence of (i) the acquisition by
a person or entity (other than the Company, one of its subsidiaries
or a Company employee benefit plan or trustee thereof) of
securities representing 50% or more of the combined voting power of
the Company's then outstanding securities, or (ii) a transaction
requiring shareholder approval and involving the sale of all or
substantially all of the assets of the Company or a merger of the
Company with or into another corporation. The "Change in Control
Price" shall be, as determined by the Board, (i) the highest
closing sale price of a share of Common Stock as reported by the
National Association of Securities Dealers, Inc. Automated
Quotation System and as appearing in the Wall Street Journal at any
time within the 60 day period immediately preceding the date of
determination of the Change in Control Price by the Board, (ii) the
highest price paid or offered, as determined by the Board, in any
bona fide transaction or bona fide offer related to the Change in
Control of the Company at any time within such 60 day period, or
(iii) some lower price, as the Board, in its discretion, determines
to be a reasonable estimate of the fair market value of a share of
Common Stock.
Adjustment Upon Changes in Capitalization. In the event any
change, such as a stock split or dividend, is made in the Company's
capitalization which results in an increase or decrease in the
number of outstanding shares of Common Stock without receipt of
consideration by the Company, an appropriate adjustment shall be
made in the number of shares which have been reserved for issuance
under the 1990 Plan and the price per share covered by each out-
standing option, SAR or Stock Purchase Right. In the event of the
proposed dissolution or liquidation of the Company, all outstanding
options, SARs and Stock Purchase Rights will terminate immediately
prior to the consummation of such proposed action, unless otherwise
provided by the Board. The Board may, in its discretion, make
provision for accelerating the exercisability of shares subject to
options, SARs or Stock Purchase Rights under the 1990 Plan in such
event.
Amendment and Termination. The Board may amend, alter,
suspend or discontinue the 1990 Plan at any time, but such
amendment, alteration, suspension or discontinuation shall not
adversely affect any stock option, SAR or Stock Purchase Right then
outstanding under the 1990 Plan, without the consent of the
participant. To the extent necessary and desirable to comply with
Rule 16b-3 or Section 422 of the Code (or any other applicable law
or regulation), the Company shall obtain shareholder approval of
any amendment to the 1990 Plan in such a manner and to such a
degree as required.
Outstanding Options; Outstanding Options Contingent Upon
Shareholder Approval
As of the Record Date, outstanding options under the 1990 Plan
were exercisable for a total of 431,925 shares of Common Stock,
415,575 shares of Common Stock had been issued upon exercise of
stock options, and 297,125 shares remained available for grant
(giving effect to the increase in shares being presented to the
shareholders pursuant to this Proposal No. Two for approval at the
Annual Meeting).
Since the 1990 Plan was amended by the Board of Directors in
July 1995 to provide for an increase in the number of shares
reserved for issuance thereunder from 1,700,000 shares to 2,200,000
shares, options to purchase an aggregate of 441,000 have been
granted under the 1990 Plan. All of such option shares were issued
at an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant, and at a vesting rate
of not less than 25% of the option shares on each of the first and
second anniversaries of the date of grant, and 50% of the option
shares on the third anniversary of the date of grant.
Outstanding options granted, subject to shareholder approval,
to (i) the Company's Chief Executive Officer, (ii) the Company's
other executive officers, and (iii) all employees, other than
executive officers, as a group, since the 1990 Plan was amended by
the Board in July 1995, are summarized as follows:
Exercise
Options Price
Name Granted(#) Per Share($)
-------------------------------------------------------------------
William D. Rasdal 40,000 22.75
Paul N. Risinger 30,000 22.75
D. Ronald Duren 40,000 22.75
J. Scott Kamsler 20,000 22.75
Dale Pelletier 5,000 22.75
All employees (other than
executive officers) 306,000 22.75
_______
Total 441,000
=======
If shareholder approval of the 1990 Plan Increase requested
pursuant to this Proposal No. Two is not received at the Annual
Meeting, all of the stock options described in the above table
shall be cancelled in accordance with the terms of the 1990 Plan.
Tax Information
Options granted under the 1990 Plan may be either "incentive
stock options," as defined in Section 422 of the Code, or nonstatu-
tory options.
Incentive Stock Options. An optionee who is granted an
incentive stock option will not recognize taxable income either at
the time the option is granted or upon its exercise, although the
exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after
grant of the option and one year after exercising the option, any
gain or loss will be treated as long-term capital gain or loss. If
these holding periods are not satisfied, the optionee will
recognize ordinary income at the time of sale or exchange equal to
the difference between the exercise price and the lower of (i) the
fair market value of the shares at the date of the option exercise
or (ii) the sale price of the shares. A different rule for
measuring ordinary income upon such a premature disposition may
apply if the optionee is also an officer, director, or 10% share-
holder of the Company ("Corporate Insiders"). Generally, the
Company will be entitled to a deduction in the same amount as the
ordinary income recognized by the optionee. Any gain or loss
recognized on such a premature disposition of the shares in excess
of the amount treated as ordinary income will be characterized as
long-term or short-term capital gain or loss, depending on the
holding period.
Nonstatutory Stock Options. All other options which do not
qualify as incentive stock options are referred to as nonstatutory
options. An optionee will not recognize any taxable income at the
time of grant of the nonstatutory option. However, upon its
exercise, the optionee will recognize taxable income generally
measured as the excess of the then fair market value of the shares
purchased over the purchase price. Different rules may apply in
the case of Corporate Insiders. Any taxable income recognized in
connection with an option exercise by an optionee who is also an
employee of the Company will be subject to tax withholding by the
Company. Upon resale of such shares by the optionee, any dif-
ference between the sales price and the optionee's purchase price,
to the extent not recognized as taxable income as described above,
will be treated as long-term or short-term capital gain or loss,
depending on the holding period.
Generally, the Company will be entitled to a tax deduction in
the same amount as the ordinary income recognized by the optionee
with respect to shares acquired upon exercise of a nonstatutory
option.
Stock Appreciation Rights. No income will be realized by an
optionee in connection with the grant of a SAR. When the SAR is
exercised, the optionee will generally be required to include as
taxable ordinary income in the year of exercise an amount equal to
the amount of cash received and the fair market value of any Common
Stock received on the exercise. In the case of an optionee who is
also an employee, any income realized upon exercise of a SAR will
constitute wages for which withholding will be required. The
Company will be entitled to a tax deduction in the same amount. If
the optionee receives Common Stock upon the exercise of a SAR, any
gain or loss on the sale of such stock will be treated in the same
manner as discussed above under "Nonstatutory Stock Options."
Different rules may apply in the case of Corporate Insiders.
Stock Purchase Rights. Stock Purchase Rights will generally
be taxed in the same manner as nonstatutory options. However,
restricted stock is usually purchased upon exercise of a Stock
Purchase Right. At the time of purchase, restricted stock is
subject to a "substantial risk of forfeiture" within the meaning of
Section 83 of the Code. As a result, the purchaser will not
recognize ordinary income at the time of purchase. Instead, the
purchaser will recognize ordinary income on the dates when the
stock ceases to be subject to substantial risk of forfeiture. The
stock will generally cease to be subject to a substantial risk of
forfeiture when it is no longer subject to the Company's right to
repurchase the stock upon the purchaser's termination of employment
with the Company (i.e., as it "vests"). At such time, the
purchaser will recognize ordinary income measured as the difference
between the purchase price and the fair market value of the stock
on the date the stock is no longer subject to a substantial risk of
forfeiture. However, a purchaser may accelerate to the date of
purchase his or her recognition of ordinary income, if any, and the
beginning of any capital gain holding period by timely filing an
election pursuant to Section 83(b) of the Code. In such event, the
ordinary income recognized, if any, would be equal to the
difference between the purchase price and the fair market value of
the stock on the date of purchase, and the capital gain holding
period would commence on the purchase date. The ordinary income
recognized by a purchaser who is an employee will be treated as
wages and will be subject to tax withholding by the Company.
Generally, the Company will be entitled to a tax deduction in the
amount and at the time the purchaser recognizes ordinary income.
Different rules may apply in the case of Corporate Insiders.
The foregoing is only a summary of the effect of federal
income taxation upon the optionee and the Company with respect to
the grant and exercise of options, SARs and Stock Purchase Rights
under the 1990 Plan, does not purport to be complete, and does not
discuss the tax consequences of the optionee's death or the income
tax laws of any municipality, state or foreign country in which an
optionee may reside.
PROPOSAL NO. THREE
APPROVAL OF AMENDMENTS TO THE 1990 DIRECTOR OPTION
PLAN
General
In December 1990, the Company's shareholders adopted and
approved the 1990 Director Option Plan (the "Director Plan"). The
Director Plan currently provides for the issuance of 150,000 shares
of Common Stock of the Company. The Director Plan provides for the
automatic grant of nonstatutory options to non-employee directors
of the Company (each an "Outside Director"). For a detailed
description of the Director Plan, see "Summary of the Director
Plan."
Proposal
In January 1995 and July 1995, the Board of Directors approved
a total of three amendments to the Director Plan. At the Annual
Meeting, the shareholders are being requested to approve these
amendments, which are discussed in detail below.
(i) Increase in Shares Reserved Under the Director Plan.
The proposed amendment increases the number of shares reserved for
issuance under the Director Plan by 150,000 shares (the "Director
Plan Increase"), for a total number of shares authorized for
issuance under the Director Plan of 300,000 shares. The Director
Plan Increase is necessary in order for the Company to continue to
attract and retain the best personnel for service as Outside
Directors, provide additional incentive to current Outside
Directors to serve as directors and to encourage their continued
service on the Board.
(ii) Automatic Grant of 10,000 Share Option Upon Joining
the Board. The Director Plan currently provides that each Outside
Director shall be automatically granted an option to purchase
10,000 shares on January 1 of each year that such Outside Director
serves on the Board. The Company proposes to amend the Director
Plan to provide for the automatic grant to each Outside Director of
(a) a 10,000 share option on the date on which such person first
becomes an Outside Director and (b) a 10,000 share option on
January 1 of each year, if on such date, such person shall have
served on the Board for at least six months.
(iii) Automatic Acceleration of Vesting in Merger, Sale
and Change in Control Transactions. The Director Plan currently
provides that in the event of a merger of the Company with or into
another corporation or the sale of all or substantially all of the
assets of the Company (a "Merger or Sale Transaction"), all options
shall be assumed or equivalent options shall be substituted by the
successor corporation, unless the Board determines, in its sole
discretion and in lieu of such assumption or substitution, that the
vesting of all options shall accelerate in full. The Director Plan
also provides that in the event of (i) the acquisition by a person
of 50% or more of the combined voting power of the Company's then
outstanding securities or (ii) the occurrence of a transaction
requiring shareholder approval and involving the sale of all or
substantially all of the assets of the Company or the merger of the
Company with or into another corporation (a "Shareholder Approval
Transaction") ((i) and (ii) above are collectively referred to as a
"Change in Control"), the Board may provide that the vesting of all
options shall accelerate in full and\or that the value of vested
options shall be cashed out at a Change in Control Price (as
defined below) reduced by the exercise price of the options.
Change in Control Price is determined by the Board and means (a)
the highest closing sale price of the Company's Common Stock within
the 60 day period immediately preceding the date of determination
of the Change in Control Price (the "60 Day Period"), (b) the
highest price paid or offered in any transaction or offer related
to the Change in Control within the 60 Day Period, or (c) such
lower price as the Board determines to be a reasonable estimate of
the fair market value of a share of the Company's Common Stock.
The Company proposes to amend the Director Plan to
(i) provide for full acceleration of vesting in a Merger or Sale
Transaction in the event that outstanding options are not assumed
or substituted, (ii) amend the definition of Change in Control to
delete reference to a Shareholder Approval Transaction, and (iii)
provide for full acceleration of vesting in the event of a Change
in Control.
Vote Required; Recommendation of Board of Directors
The affirmative vote of the holders of a majority of the
shares represented in person or by proxy and voting at the Annual
Meeting will be required to approve the amendments to the Director
Plan. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
Summary of the Director Plan
The essential features of the Director Plan, taking into
account the proposed amendments, are outlined below.
Purpose. The purposes of the Director Plan are to attract and
retain the best available personnel for service as directors of the
Company, to provide additional incentive to the Outside Directors
and to encourage their continued service on the Board.
Administration. The Director Plan is designed to work
automatically and not to require administration. However, to the
extent administration is necessary, it will be provided by the
Board of Directors of the Company. The interpretation and
construction of any provision of the Director Plan by the Board
shall be final. Members of the Board receive no additional
compensation for their services in connection with the
administration of the Director Plan.
Eligibility. The Director Plan provides for the grant of
nonstatutory stock options to Outside Directors. Each Outside
Director shall automatically receive an option to purchase 10,000
shares of Common Stock on the date on which such person first
becomes a director. In addition, on January 1 of each year, each
Outside Director shall automatically receive an option to purchase
10,000 shares of Common Stock, if on such date such person shall
have served on the Board for at least six months. The Director
Plan provides for neither a maximum nor a minimum number of option
shares that may be granted to any one Outside Director but does
provide for the method of making a grant.
Terms of Options. Options granted under the Director Plan
have a term of ten years. Each option is evidenced by a director
option agreement between the Company and the director to whom such
option is granted.
Rule 16b-3. Options granted to Outside Directors must comply
with the applicable provisions of Rule 16b-3 or any successor
rule thereto and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect
to the Director Plan transactions.
Exercise of the Options. The options become exercisable
cumulatively to the extent of 25% on the first anniversary
of the date of grant, 25% on the second anniversary of the date
of grant, and 50% on the third anniversary of the date of
grant, so long as the optionee remains a director.
Consideration. The provisions relating to consideration for
the exercise of stock options in the 1990 Plan description apply
equally to options granted under the Director Plan. See Proposal
No. Two: "Consideration."
Option Price. The option price under the Director Plan is
100% of the fair market value of the Company's Common Stock on the
date of grant. For so long as the Company's Common Stock is traded
on the Nasdaq National Market, the fair market value of a share of
Common Stock shall be the closing sales price for such stock (or
the closing bid if no sales were reported) as quoted on such system
on the last trading day prior to the date of grant.
Termination of Status as a Director Through Death, Disability
or Otherwise. Under the Director Plan, in the event an optionee
ceases to serve as a director of the Company for any reason other
than death or total and permanent disability, an option may
thereafter be exercised, to the extent it was exercisable at the
date of such termination, for three months. If an optionee's
service as a director of the Company is terminated as a result of
the optionee's permanent and total disability, the option will be
exercisable for six months following such termination, but only to
the extent it was exercisable at the date of termination. If an
optionee's service as a director of the Company is terminated by
reason of the optionee's death, the option will be exercisable by
the optionee's estate or successor for six months following death,
but only to the extent it was exercisable at the date of death.
However, in no event may an option be exercised once its term has
expired.
Nontransferability of Options. Options granted pursuant to
the Director Plan are nontransferable by the optionee, other than
by will or by the laws of descent and distribution and may be
exercised, during the lifetime of the optionee, only by the
optionee.
Acceleration of Options. Subject to the change in control
provisions described below, in the event of a proposed sale of all
or substantially all of the assets of the Company, or the merger of
the Company with or into another corporation, each outstanding
option shall be assumed or substituted by such successor
corporation or a parent or subsidiary of such successor
corporation; provided, however, that if such successor corporation
(or its parent or subsidiary) does not agree to assume or
substitute the options, each outstanding option shall become fully
vested and exercisable, including as to shares as to which it would
not otherwise be exercisable. In such event, the Company shall
notify the optionee that the option shall be fully exercisable for
a period of 15 days from the date of such notice and the option
will terminate upon the expiration of such period.
Change in Control Provision. In the event of a "Change in
Control" of the Company, as defined below, all stock options
outstanding as of the date such Change in Control is determined to
have occurred that are not yet exercisable and vested on such date
will become immediately vested and fully exercisable. A "Change in
Control" means the acquisition by any person (other then the
Company, one of its subsidiaries or a Company employee benefit plan
or trustee thereof) of securities representing 50% or more of the
combined voting power of the Company's then outstanding securities.
Adjustment Upon Changes in Capitalization. The Director Plan
is subject to adjustment upon changes in capitalization provisions
like those in the 1990 Plan. See Proposal No. Two: "Adjustment
Upon Changes in Capitalization."
Amendment and Termination. The Board may amend, alter,
suspend or discontinue the Director Plan at any time, but such
amendment, alteration, suspension or discontinuation shall not
adversely affect any stock option then outstanding under the
Director Plan, without the consent of the holder of such option.
To the extent necessary and desirable to comply with Rule 16b-3 (or
any other applicable law or regulation), the Company shall obtain
shareholder approval of any amendment to the Director Plan in such
a manner and to such a degree as required.
Outstanding Options; Outstanding Options Contingent Upon Shareholder
Approval
As of the Record Date, no outstanding options granted under the
Director Plan were exercisable, 55,000 shares of Common Stock had
been issued upon exercise of stock options, and 45,000 shares
remained available for grant (without giving effect to the increase
in shares being presented to the shareholders pursuant to this
Proposal No. Three for approval at the Annual Meeting).
The Board of Directors amended the Director Plan in January
1995 to provide for the automatic grant to each Outside Director
of a 10,000 share option on the date on which such person first
becomes an Outside Director. Such amendment was made in order to
provide that Roger A. Strauch, who joined the Board of Directors
in late January 1995, would not be required to wait until January
1, 1996 to be granted an option to purchase 10,000 shares. Mr.
Strauch was granted a 10,000 share option on January 25, 1995 at
an exercise price of $14.625 per share, which is equal to the
fair market value of the Company's Common Stock on the
date of grant. Mr. Strauch's option vests at a rate of 25% of
the option shares on each of the first and second anniversaries
of the date of grant, and 50% of the option shares on the third
anniversary of the date of grant.
If shareholder approval of the amendments to the Director
Plan requested pursuant to this Proposal No. Three is not
received at the Annual Meeting, Mr. Strauch's stock option shall
be cancelled and he shall not be eligible to receive an automatic
10,000 share option grant until January 1, 1996.
Tax Information
Options granted under the Director Plan may only be
nonstatutory options. See the discussion of nonstatutory options
under Proposal No. Two: "Tax Information."
PROPOSAL NO. FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
OF THE COMPANY
Deloitte & Touche LLP, Certified Public Accountants, have been
the independent auditors for the Company since 1976 and, upon
recommendation of the Audit Committee, their reappointment as
independent auditors for the 1996 fiscal year has been approved by
the Board of Directors, subject to ratification by the
shareholders.
The Company has been advised by Deloitte & Touche LLP that
neither it nor any of its members has had any relationship with the
Company or any of its affiliates during the past three years other
than as independent auditors. The Company has been advised that a
representative of Deloitte & Touche LLP will be present at the
Annual Meeting, will be available to respond to appropriate
questions, and will be given an opportunity to make a statement if
he or she so desires.
Vote Required; Recommendation of the Board of Directors
Although not required to be submitted for shareholder
approval, the Board of Directors has conditioned its appointment of
its independent auditors upon receiving the affirmative vote of a
majority of the shares represented, in person or by proxy, and
voting at the Annual Meeting. In the event the shareholders do not
approve the selection of Deloitte & Touche LLP, the appointment of
independent auditors will be reconsidered by the Board of
Directors. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
OTHER INFORMATION
Compliance with Section 16 of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires the Company's
officers and directors and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities, to
file certain reports regarding ownership of, and transactions in,
the Company's securities with the Securities and Exchange
Commission (the "SEC"). Such officers, directors and ten percent
(10%) shareholders are also required by SEC rules to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on its review of such forms furnished to the
Company and written representations from certain reporting persons,
the Company believes that all filing requirements applicable to the
Company's executive officers, directors and more than ten percent
(10%) shareholders were complied with, except that a statement of
changes in beneficial ownership of securities for the month of
April 1995 for D. Ronald Duren, an executive officer of the
Company, was filed late.
Share Ownership by Principal Shareholders and Management
The following table sets forth the beneficial ownership of
Common Stock of the Company as of July 31, 1995, by (i) all persons
known to the Company to be the beneficial owners of more than 5% of
the Company's Common Stock, (ii) the Company's Chief Executive
Officer, (iii) the four most highly compensated executive officers
other than the Chief Executive Officer, (iv) each director and (v)
all directors and executive officers as a group.
Shares Approximate
Beneficially Percent
Name and Address Owned Owned
________________________________________________________
William D. Rasdal(1)(2) 515,994 3.4%
Paul N. Risinger(1)(3) 222,136 1.5%
D. Ronald Duren(1)(4) 192,837 1.3%
J. Scott Kamsler(1) 115,988 *
Robert M. Wolfe(1) 37,500 *
Howard Anderson(5) 2,000 *
Roger A. Strauch __ __
Brad P. Whitney(6) __ __
All directors and executive
officers as a group
(9 persons)(1) 1,114,817 7.1%
_______________________
* Less than one percent (1%).
(1) Includes 177,500, 79,915, 118,000, 66,012, 37,500 and 501,427
shares which Messrs. Rasdal, Risinger, Duren, Kamsler,
Wolfe and all present directors and executive officers as
a group, respectively, have the right to acquire within 60
days of July 31, 1995 upon the exercise of stock options.
(2) Includes 338,494 shares held by the Rasdal Family Trust,
dated July 16, 1983, as amended, of which William D. Rasdal
and Marilyn Kay Rasdal are Co-Trustees.
(3) Includes 120,360 shares held by The Risinger Third Family
Limited Partnership, a California Limited Partnership.
(4) Includes an aggregate of 800 shares held by Sean P.
McHenry and Ashley C. Duren, children of Mr. Duren, as
to which Mr. Duren disclaims beneficial ownership.
(5) Includes 2,000 shares registered in the name of
Yankee Group Research, Inc. of which Mr. Anderson is the
sole shareholder.
(6) Excludes 250,000 shares which Mr. Whitney has the right to
acquire within 60 days of July 31, 1995 upon the exercise
of stock options to purchase shares of Common Stock of
Linfinity Microelectronics Inc. ("Linfinity"), a subsidiary
of the Company.
EXECUTIVE OFFICER COMPENSATION
Summary Compensation Table
The following table sets forth compensation received in the
last three fiscal years by (i) the Company's Chief Executive
Officer and (ii) the four most highly compensated executive
officers other than the Chief Executive Officer who were serving as
executive officers at the end of the fiscal year ended June 30,
1995 (together, the "Named Officers").
Long Term
Compensa-
tion
Annual Compensation Awards
______________________ ________
Secur-
Other ities All
Name Annual Under- Other
and Compen- lying Compen-
Principal Salary Bonus sation Options sation
Position Year ($) ($) ($)(1) (#) ($)(2)
---------------------------------------------------------------------------
William D. Rasdal 1995 246,645 246,645 0 30,000 300
Chairman of the 1994 225,903 0 0 80,000 300
Board and 1993 214,135 214,135 0 0 200
Chief Executive
Officer
------------------ ---------------------------------------------------------
Paul N. Risinger 1995 190,131 190,131 0 30,000 300
Vice Chairman and 1994 173,927 0 0 50,000 300
Assistant Secretary 1993 164,135 164,135 0 0 200
----------------------------------------------------------------------------
D. Ronald Duren 1995 201,062 170,904 0 40,000 300
President and 1994 184,119 0 0 20,000 300
Chief Operating
Officer, Telecom 1993 173,558 173,558 0 20,000 200
Solutions
--------- -----------------------------------------------------------------
J. Scott Kamsler 1995 167,338 167,338 0 20,000 300
Vice President, 1994 152,865 0 0 40,000 300
Finance,
Chief Financial 1993 144,135 144,135 0 0 200
Officer
and Secretary
----------------------------------------------------------------------------
Brad P. Whitney 1995 170,000 68,000 0 0 300
President and 1994 172,692 172,692 34,384(3) 0 0
Chief Operating
Officer, Linfinity 1993 92,297 46,667 57,377(3) 0(4) 0
Microelectronics
Inc.
----------------------- ----------------------------------------------------
___________
(1) Excludes certain perquisites and other amounts which, for any
executive officer, in the aggregate did not exceed the lesser of
$50,000 or 10% of the total annual salary and bonus for such
executive officer.
(2) Represents Company matching 401(k) Plan contributions.
(3) Represents reimbursed relocation expenses. Mr. Whitney
commenced employment with the Company in November 1992.
(4) On June 28, 1993, Mr. Whitney was granted an option to purchase
500,000 shares of Common Stock of Linfinity, a subsidiary of the
Company. As of June 30, 1995, 250,000 of such option shares were
vested and exercisable.
Option Grants in Last Fiscal Year
The following table sets forth, as to the Named Officers,
certain information relating to stock options granted during fiscal
1995.
Potential Realizable
Value at
Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants for Option Term(3)
------------------------------------ -----------------------
% of
Total
Options
Number of Granted Exercise
Securities to Em- or
Underlying ployees Base
Options in Price Expir
Granted Fiscal ($/Sh) ation 5% 10%
Name (#) Year(1) (2) Date ($) ($)
----------------------------------------------------------------------------
William D. 30,000 5.1% 8.9375 07/28/04 168,622 427,322
Rasdal
Paul N. 30,000 5.1% 8.9375 07/28/04 168,622 427,322
Risinger
D. Ronald 40,000 6.8% 8.9375 07/28/04 224,830 569,763
Duren
J. Scott 20,000 3.4% 8.9375 07/28/04 112,415 284,881
Kamsler
Brad P. 0
Whitney
-----------------------------------------------------------------------------
___________
(1) The total number of shares subject to options granted to
employees in fiscal 1995 was 590,500.
(2) The exercise price per share is equal to the closing price of the
Company's Common Stock on the date of grant.
(3) The Potential Realizable Value is calculated based on the fair
market value on the date of grant, which is equal to the exercise
price of options granted in fiscal 1995, assuming that the stock
appreciates in value from the date of grant until the end of the
option term at the annual rate specified (5% and 10%). Potential
Realizable Value is net of the option exercise price. The assumed
rates of appreciation are specified in rules of the SEC, and do not
represent the Company's estimate or projection of future stock
price. Actual gains, if any, resulting from stock option exercises
and Common Stock holdings are dependent on the future performance of
the Common Stock, overall stock market conditions, as well as the
option holders' continued employment through the exercise/vesting
period. There can be no assurance that the amounts reflected in
this table will be achieved.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End
Option Values
The following table provides information with respect to
option exercises in fiscal 1995 by the Named Officers and the value
of such officers' unexercised options at the close of business on
June 30, 1995 (the last trading day prior to the end of the
Company's 1995 fiscal year).
- - -----------------------------------------------------------------------------
Number of Value of
Securities Unexercised
Underlying In-the- Money
Unexercised Options at
Options at Fiscal Fiscal Year End
Shares Year End(#) ($)(2)
Acquired on Value _________________ ___________________
Exercise Realized Exer- Unexer- Exer- Unexer-
Name (#) ($)(1) cisable cisable cisable cisable
- - ----------------------------------------------------------------------------
William D. 220,000 2,713,375 190,000 90,000 3,483,750 714,375
Rasdal
Paul N. 200,000 2,619,834 72,415 67,500 1,252,050 590,625
Risinger
D. Ronald 42,000 505,000 98,000 65,000 1,661,250 763,750
Duren
J. Scott 6,883 110,988 61,012 50,000 1,043,358 421,250
Kamsler
Brad P. 0 0 0 0 0 0
Whitney(3)
_______________
(1) Market value of underlying securities based on the closing price of
the Company's Common Stock on the date of exercise, minus the
exercise price.
(2) Market value of underlying securities based on the closing price of
$21.75 of the Company's Common Stock on June 30, 1995 (the last
trading day prior to the end of the Company's 1995 fiscal year),
minus the exercise price.
(3) Mr. Whitney has an option to purchase 500,000 shares of Common
Stock of Linfinity, a subsidiary of the Company, at an exercise
price of $0.50 per share, under Linfinity's employee stock option
plan, of which 250,000 shares are exercisable as of June 30, 1995.
The fair market value of Linfinity's Common Stock was most recently
determined, by Linfinity's Board of Directors in January 1995,
to be $2.65 per share, based upon independent appraisal.
Compensation Committee Interlocks and Insider Participation
The Stock Option and Compensation Committee of the Company's
Board of Directors (the "Compensation Committee") is composed of
three non-employee directors, Howard Anderson, Roger A. Strauch
and Robert M. Wolfe. Mr. Strauch has served on the Compensation
Committee since April 1995. No interlocking relationship exists
between the Company's Board of Directors or the compensation
committee of any other company, nor has any such interlocking
relationship existed in the past.
CERTAIN TRANSACTIONS
In November 1992, Brad P. Whitney joined the Company as
President and Chief Operating Officer of Linfinity. In accordance
with Mr. Whitney's employment agreement, in the event of his
termination of employment by the Company, Mr. Whitney shall
continue to receive his annual base salary, currently $187,000,
as well as medical benefits and car allowance, until the earlier of
(i) twelve months following such termination or (ii)
acceptance by Mr. Whitney of other employment.
In order to induce Mr. Whitney to accept the position of
President and Chief Operating Officer of Linfinity, the Company
offered to assist him in his relocation from Texas to California by
agreeing to lend him 20% of the purchase price of a home in
California, up to a maximum of $125,000.
Subsequent to Mr. Whitney's relocation, the Company loaned him
$95,000 pursuant to a promissory note dated April 19, 1993
(the "Loan"). Interest accrues on the Loan at the rate of 5.34% per
annum, with all accrued interest on the outstanding principal due
and payable on July 1, October 1, January 1 and April 1 of each
year. Any payments made by the Company to Mr. Whitney under the
management incentive plan applicable to him (after applicable taxes
and other withholdings) are to be applied to the principal amount
of the Loan, with all remaining principal and interest
on the Loan due and payable on April 19, 1998. As of the Record
Date, the Loan has been paid in full. In addition, the Company
made a short term advance of $10,000 to Mr. Whitney in January 1993
in connection with the down payment on a residence Mr. Whitney
subsequently did not purchase and has loaned him an additional
$4,205 to cover various legal fees in connection therewith
(collectively the "Advance"). As of the Record Date, the Advance
has been paid in full.
Notwithstanding anything to the contrary set forth in any of
the Company's previous filings under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that
might incorporate future filings, including this Proxy Statement,
in whole or in part, the following report and the Performance Graph
on page 22 shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission, nor shall such
information be incorporated by reference into any further filing
under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incor-
porates it by reference into any such filing.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is comprised of three independent,
non-employee directors who have no interlocking relationships, as
defined by the Securities and Exchange Commission. As part of its
duties, the Compensation Committee reviews compensation levels of
the executive officers and evaluates their performance. The
Compensation Committee also administers the Company's stock option
plans. In connection with such duties, the Compensation Committee
determines base salary levels and short-term incentive bonus
programs for the Company's executive officers at or about the start
of the fiscal year, and determines actual bonuses after the end of
such fiscal year based upon the achievement of Company or
subsidiary profit levels. The Compensation Committee also
determines stock option awards to executives throughout the year.
The Compensation Committee's review of the Company's executive
pay program included a comprehensive report from an independent
compensation consultant which analyzed the elements of the
Company's executive compensation program in comparison with
executive compensation programs maintained by other
high technology companies.
The Company's executive pay programs are designed to attract
and retain executives who will contribute to the Company's long-
term success, to reward executives for achieving both short- and
long-term strategic Company goals, to link executive and
shareholder interest through equity-based plans, and to provide a
compensation package that recognizes individual contributions and
Company performance. A substantial portion of each executive's
total compensation is intended to be variable and to relate to and
be contingent upon the achievement of Company or subsidiary profit
levels.
The three key components of the Company's executive
compensation program in fiscal 1995 were base salary, short-term
incentives, represented by the Company's annual bonus program, and
long-term incentives, represented by the Company's stock programs.
The Company also provides benefits to its executives to provide for
health, welfare and security needs, as well as for executive
efficiency. The Company's policies with respect to the three
principal elements of its executive compensation program, as well
as the basis for the compensation awarded to Mr. Rasdal, Chairman
of the Board and Chief Executive Officer of the Company, are
discussed below.
Base Salary
Base salaries of executive officers are initially determined
by evaluating the responsibilities of the position held and the
experience and performance of the individual, with reference to the
competitive marketplace for executive talent, including a com-
parison to base salaries for comparable positions for high
technology companies. The Compensation Committee considers not
only the achievement of corporate and business unit financial and
strategic goals but also individual performance, including
managerial effectiveness, teamwork and customer satisfaction. Base
salaries of executive officers in fiscal 1995 were set below the
average for comparable positions at high technology companies in
order to place a greater emphasis on incentive components of the
compensation package.
Annual Bonus Program
At the beginning of the 1995 fiscal year, the Compensation
Committee determined maximum annual incentive bonus payments
based on aggressive profit targets compared to fiscal 1994.
Following the end of the 1995 fiscal year, the Compensation
Committee determined the amount of the annual incentive payments
for each executive officer based on its evaluation of the
achievement of the
profit target set for each of (a) Linfinity, the Company's
semiconductor subsidiary, with respect to Linfinity officers, (b)
Telecom Solutions, the Company's telecommunications operation, with
respect to Telecom Solutions officers, and (c) the Company as a
whole, with respect to the Company's Chief Executive Officer, Vice
Chairman of the Board and Chief Financial Officer. The
Compensation Committee's philosophy is to set high profit targets,
and to make each executive officer's maximum incentive bonus payout
target high in relation to such executive officer's salary in
comparison with other high technology companies, in order to obtain
significant linkage between overall executive compensation and the
achievement of the applicable profit target. For fiscal 1995, the
Compensation Committee set the maximum annual executive
compensation payout target for the Named Officers at 100% of base
salary for achievement of targeted profit goals.
The Company's fiscal 1995 net sales increased by 5% over
fiscal 1994, operating income increased by 30% in fiscal 1995
compared to fiscal 1994; net earnings increased by approximately
58% in fiscal 1995 compared to fiscal 1994, while net earnings,
as a percentage of net sales, increased to 10.0% from 6.7% during
fiscal 1995 over fiscal 1994, and net earnings per common and
common equivalent share increased by 53% in fiscal 1995 compared
to fiscal 1994.
Based upon the achievement of targeted performance goals, the
fiscal 1995 annual incentive bonus payouts were paid to the Named
Officers at the following rates: to Linfinity Named Officers at
40% of annual salary, to Telecom Solutions Named Officers at 85% of
annual salary, and corporate Named Officers at 100% of annual
salary.
Equity-Based Compensation
Under the Company's 1990 Employee Stock Plan, stock options
may be granted to executive officers and other key employees of the
Company. The size of stock option awards is based primarily on an
individual's performance and the individual's responsibilities and
position with the Company, as well as on the individual's present
outstanding vested and unvested options. Options are designed to
align the interests of executive officers with those of share-
holders. Stock options are granted with an exercise price equal to
the fair market value of the Company's Common Stock on the date of
grant, and current grants generally vest over three years. This
approach is designed to encourage the creation of shareholder value
over the long term since no benefit is realized from the stock
option grant unless the price of the Common Stock rises over a
number of years. With respect to Linfinity officers, such officers
have received stock option grants directly from Linfinity, and do
not receive stock option grants with respect to the Company's
stock.
In addition to the 1990 Employee Stock Plan, all eligible
employees of the Company, including executive officers, may
participate in a payroll deduction Employee Stock Purchase Plan
pursuant to which Common Stock of the Company may be purchased at
85% of its fair market value at the beginning or end or each six-
month offering period, whichever is less.
Compensation of the Chief Executive Officer
The Compensation Committee meets without the Chief Executive
Officer present to evaluate his performance. The Chief Executive
Officer's base salary and annual incentive bonus was determined
based on a number of factors, including comparative salaries of
chief executive officers of similar performance high technology
companies, and the Company's performance in fiscal 1994 as well as
targets for 1995. Mr. Rasdal's base salary for fiscal 1995 was set
at levels below the average of chief executive officers of high
technology companies because of the Compensation Committee's
philosophy set forth above in "Compensation Committee Report--Base
Salary." Mr. Rasdal's maximum 1995 annual incentive bonus target
was based on the Company's achievement of targeted levels of
profits after tax. Mr. Rasdal was paid an incentive bonus equal to
his maximum targeted amount, due to the Company's fiscal 1995
performance, as summarized above in "Compensation Committee Report-
-Annual Bonus Program." Mr. Rasdal was awarded an option to
purchase 30,000 shares of the Company's Common Stock in fiscal
1995.
Stock Option and Compensation Committee
Robert M. Wolfe
Howard Anderson
Roger A. Strauch
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholders'
return on the Company's Common Stock for the last five fiscal years
with the total return on the S & P 500 Index and the S & P High
Technology - Composite Index over the same period (assuming the
investment of $100 in the Company's Common Stock, the S & P 500
Index and the S & P High Technology - Composite Index, and
reinvestment of all dividends).
PERFORMANCE GRAPH
SymmetriCom, Inc.
Comparison of Five-Year Cumulative Total Return
SymmetriCom, Inc., S & P 500 Index and
S & P High Technology - Composite Index
----------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
---------------------------------------------------------------------------
SymmetriCom, Inc. $100 $117 $167 $596 $267 $725
S&P 500 Index $100 $107 $122 $138 $140 $177
S&P High Technology-
Composite Index $100 $94 $100 $117 $126 $206
- - -----------------------------------------------------------------------------
OTHER MATTERS
The Company knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting, it
is the intention of the persons named in the enclosed form of Proxy
to vote the shares they represent as the Board of Directors may
recommend.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Scott Kamsler
_______________
J. Scott Kamsler,
Secretary
Dated: September 22, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
SYMMETRICOM, INC.
1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of SymmetriCom, Inc., a California
corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated
September 22, 1995, and hereby appoints William D. Rasdal and J.
Scott Kamsler, and each of them, proxies and attorneys-in-fact,
with full power to each of substitution, on behalf and in the name
of the undersigned, to represent the undersigned at the 1995 Annual
Meeting of Shareholders of SymmetriCom, Inc. to be held on
October 25, 1995, at 10:00 a.m., at the offices of the Company, at
85 West Tasman Drive, San Jose, California 95134-1703 and at any
adjournments thereof, and to vote all shares of Common Stock which
the undersigned would be entitled to vote if then and there
personally present, on the matters set forth below:
1. ELECTION OF DIRECTORS:
___ FOR all nominees listed below (except as indicated)
___ WITHHOLD authority to vote for all nominees listed
below.
If you wish to withhold authority to vote for any
individual nominee, strike a line through that nominee's name in
the list below:
William D. Rasdal, Paul N. Risinger, Howard Anderson,
Roger A. Strauch, Robert M. Wolfe
2. Proposal to amend the Company's 1990 Employee Stock Plan.
_____ FOR _____AGAINST _____ABSTAIN
3. Proposal to amend the Company's 1990 Director Option
Plan.
_____ FOR _____AGAINST _____ABSTAIN
4. Proposal to ratify the appointment of Deloitte & Touche
LLP as the independent auditors of the Company for the
1996 fiscal year.
_____ FOR _____AGAINST _____
and upon such other matter or matters which may properly come before the
meeting and any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS INDICATED, WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS
NAMED HEREIN, "FOR" EACH PROPOSAL LISTED, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING. EITHER OF SUCH ATTORNEYS OR SUBSTITUTES
SHALL HAVE AND MAY EXERCISE ALL OF THE POWERS OF SAID
ATTORNEYS-IN-FACT HEREUNDER.
Dated:
_______________________
Signature:
_______________________
Signature:
_______________________
(This Proxy should be
dated, signed by the share-
holder(s) exactly as his or her
name appears hereon, and
returned promptly in the
enclosed envelope. Persons
signing in a fiduciary capacity
should so indicate. If shares
are held by joint tenants or as
community property, both should
sign.)
(Filed pursuant to Instruction 3 to Item 10 (b) (2) of Schedule
14A of the Securities Exchange Act of 1934).
SYMMETRICOM, INC.
1990 EMPLOYEE STOCK PLAN
(as amended through October 25, 1995)
1. Purposes of the Plan. The purposes of this Employee Stock
Plan are to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional
incentive to Employees and Consultants of the Company and its
Subsidiaries and to promote the success of the Company's business.
Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock
options, as determined by the Administrator at the time of grant of
an option and subject to the applicable provisions of Section 422
of the Code, as amended, and the regulations promulgated thereunder.
Stock appreciation rights ("SARs") and stock purchase rights may
also be granted under the Plan.
2. Definitions. As used herein, the following definitions
shall apply:
(a) "Administrator" means the Board or any of its
Committees as shall be administering the Plan, in accordance with
Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(d) "Common Stock" means the Common Stock of the Company.
(e) "Company" means Symmetricom, Inc., a California
corporation.
(f) "Committee" means a Committee, if any, appointed by
the Board in accordance with paragraph (a) of Section 4 of the Plan.
(g) "Consultant" means any person, including an advisor,
who is engaged by the Company or any Parent or Subsidiary to render
services and is compensated for such services, provided the term
Consultant shall not include directors who are not compensated for
their services or are paid only a director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant"
means the absence of any interruption or termination of the employ-
ment or consulting relationship by the Company or any Subsidiary.
Continuous Status as an Employee or Consultant shall not be consid-
ered interrupted in the case of: (i) sick leave; (ii) military
leave; (iii) any other leave of absence approved by the Board,
provided that such leave is for a period of not more than ninety
(90) days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) in the
case of transfers between locations of the Company or between the
Company, its Subsidiaries or its successor.
(i) "Disability" means total and permanent disability, as
defined in Section 22(e)(3) of the Code.
(j) "Employee" means any person, including officers and
directors, employed by the Company or any Subsidiary. The payment
of directors' fees by the Company shall not be sufficient to
constitute "employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(l) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any estab-
lished stock exchange or a national market system, including without
limitation the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the
Fair Market Value of a Share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with
the greatest volume of trading in Common Stock) on the day of
determination, as reported in the Wall Street Journal or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly
quoted by a recognized securities dealer but selling prices are not
reported, the Fair Market Value of a Share of Common Stock shall be
the mean between the high and low asked prices for the Common Stock
on the day of determination, as reported in the Wall Street Journal
or such other source as the Administrator deems reliable;
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Administrator.
(m) "Incentive Stock Option" means an Option that
satisfies the provisions of Section 422A of the Code.
(n) "Nonstatutory Stock Option" means an Option that is
not an Incentive Stock Option.
(o) "Option" means an Option granted pursuant to the
Plan.
(p) "Optioned Stock" means the Common Stock subject to an
Option or Right.
(q) "Optionee" means an Employee or Consultant who
receives an Option or Right.
(r) "Parent" corporation shall have the meaning defined
in Section 425(e) of the Code.
(s) "Plan" means this 1990 Employee Stock Plan.
(t) "Restricted Stock" means shares of Common Stock
acquired pursuant to a grant of Stock Purchase Rights under
Section 8 below.
(u) "Right" means and includes SARs and Stock Purchase
Rights granted pursuant to the Plan.
(v) "SAR" means a stock appreciation right granted
pursuant to Section 7 below.
(w) "Share" means the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(x) "Stock Purchase Right" means the right to purchase
Common Stock pursuant to Section 8.
(y) "Subsidiary" corporation shall have the meaning
defined in Section 425(f) of the Code.
In addition, the terms "Rule 16b-3" and "Applicable Laws," the
term "Insiders," the term "Tax Date," and the terms "Change of Con-
trol" and "Change of Control Price," shall have the meanings set
forth, respectively, in Sections 4, 7, 9 and 11 below.
3. Stock Subject to the Plan. Subject to the provisions of
Section 11 of the Plan, the total number of Shares reserved and
available for distribution pursuant to awards made under the Plan
shall be two million, two hundred thousand (2,200,000), increased on
the first day of each fiscal year of the Company, beginning with the
fiscal year commencing July 1, 1996, by a number equal to 3.0% of
the number of shares outstanding as of the last trading day of the
Company's immediately preceding fiscal year. The maximum number of
Shares reserved and available for issuance pursuant to Incentive
Stock Options is 2,200,000. The Shares may be authorized but
unissued, or reacquired stock.
If an Option or Right should expire or become unexer-
cisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan
shall have been terminated, become available for other Options or
Rights under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Administration With Respect to Directors and
Officers. With respect to grants of Options or Rights to Employees
who are also officers or directors of the Company, the Plan shall be
administered by (A) the Board if the Board may administer the Plan
in compliance with Rule 16b-3 promulgated under the Exchange Act or
any successor rule ("Rule 16b-3") with respect to a plan intended to
qualify thereunder as a discretionary plan, or (B) a Committee
designated by the Board to administer the Plan, which Committee
shall be constituted in such a manner as to permit the Plan to
comply with Rule 16b-3 with respect to a plan intended to qualify
thereunder as a discretionary plan. Once appointed, such Committee
shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove
members (with or without cause) and appoint new members in substitu-
tion therefor, fill vacancies, however caused, and remove all
members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by Rule 16b-3 with respect to a
plan intended to qualify thereunder as a discretionary plan.
(ii) Administration With Respect to Consultants and
Other Employees. With respect to grants of Options or Rights to
Employees or Consultants who are neither directors nor officers of
the Company, the Plan shall be administered by (A) the Board or
(B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the legal requirements,
if any, relating to the administration of incentive stock option
plans under California corporate and securities laws and under the
Code (the "Applicable Laws"). Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise direc-
ted by the Board. From time to time the Board may increase the size
of the Committee and appoint additional members thereof, remove
members (with or without cause) and appoint new members in
substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws.
(iii) Multiple Administrative Bodies. If permitted
by Rule 16b-3, the Plan may be administered by different bodies with
respect to directors, non-director officers and Employees who are
neither directors nor officers and Consultants who are not
directors.
(b) Powers of the Administrator. Subject to the provi-
sions of the Plan and in the case of a Committee, the specific
duties delegated by the Board to such Committee, the Administrator
shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(l) of the Plan;
(ii) to select the officers, Consultants and
Employees to whom Options and Rights may from time to time be
granted hereunder;
(iii) to determine whether and to what extent
Options and Rights or any combination thereof, are granted
hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under
the Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted
hereunder (including, but not limited to, the share price and
any restriction or limitation, or any vesting acceleration or
waiver of forfeiture restrictions regarding any Option or other
award and/or the shares of Common Stock relating thereto, based
in each case on such factors as the Administrator shall
determine, in its sole discretion);
(vii) to determine whether and under what circum-
stances an Option may be settled in cash under subsection
7(a)(vii) instead of Common Stock;
(viii) to determine whether, to what extent and under
what circumstances Common Stock and other amounts payable with
respect to an award under this Plan shall be deferred either
automatically or at the election of the participant (including
providing for and determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral period);
(ix) to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option shall have declined
since the date the Option was granted; and
(x) to determine the terms and restrictions appli-
cable to Options and Rights and any Restricted Stock acquired
pursuant to Rights.
(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Administrator shall be
final and binding.
5. Eligibility.
(a) Nonstatutory Stock Options and Rights may be granted
only to Employees and Consultants. Incentive Stock Options may be
granted only to Employees. An Employee who has been granted an
Option or Right may, if he or she is otherwise eligible, be granted
additional Options or Rights. Each Option shall be evidenced by a
written Option agreement, which shall expressly identify the Options
as Incentive Stock Options or as Nonstatutory Stock Options, and
which shall be in such form and contain such provisions as the
Administrator shall from time to time deem appropriate. Without
limiting the foregoing, the Administrator may, at any time, or from
time to time, authorize the Company, with the consent of the
respective recipients, to issue Options in exchange for the
surrender and cancellation of any or all outstanding Options, other
options, or Rights.
(b) Neither the Plan nor any Option or Right agreement
shall confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it interfere in
any way with the Optionee's right or the Company's right to
terminate the Optionee's employment at any time.
(c) The following limitations shall apply to grants of
Options and Rights to Employees:
(i) No Employee shall be granted, in any fiscal year
of the Company, Options and Rights to purchase more than an
aggregate of 250,000 Shares.
(ii) In connection with his or her initial
employment, an Employee may be granted Options and Rights to
purchase up to an additional 250,000 Shares in the aggregate which
shall not count against the limit set forth in subsection (i) above.
(iii)The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's
capitalization as described in Section 11.
(iv) If an Option or Right is cancelled in the same
fiscal year of the Company in which it was granted (other than in
connection with a transaction described in
Section 11), the cancelled Option or Right will be counted against
the limits set forth in subsections (i) and (ii) above. For this
purpose, if the exercise price of an Option or Right is reduced, the
transaction will be treated as a cancellation of the Option or Right
and the grant of a new Option or Right.
6. Term of Plan. Subject to Section 17 of the Plan, the Plan
shall become effective upon the earlier to occur of its adoption by
the Board or its approval by the shareholders of the Company as
described in Section 17. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 13 of the
Plan.
7. Options and SARs.
(a) Options. The Administrator, in its discretion, may
grant Options to eligible participants and shall determine whether
such Options shall be Incentive Stock Options or Nonstatutory Stock
Options. Each Option shall be evidenced by a written Option agree-
ment which shall expressly identify the Options as Incentive Stock
Options or as Nonstatutory Stock Options, and be in such form and
contain such provisions as the Administrator shall from time to time
deem appropriate. Without limiting the foregoing, the Administrator
may, at any time, or from time to time, authorize the Company, with
the consent of the respective recipients, to issue Options or Rights
in exchange for the surrender and cancellation of any or all
outstanding Options or Rights. Option agreements shall contain the
following terms and conditions:
(i) Option Price; Number of Shares. The per Share
exercise price for the Shares issuable pursuant to an Option shall
be such price as is determined by the Administrator, but shall in no
event be less than 85% of the Fair Market Value of Common Stock,
determined as of the date of grant of the Option. In the event that
the Administrator shall reduce the exercise price, the exercise
price shall be no less than 85% of the Fair Market Value as of the
date of that reduction.
The Option agreement shall specify the number of
Shares to which it pertains.
(ii) Waiting Period and Exercise Dates. At the
time an Option is granted, the Administrator will determine the
terms and conditions to be satisfied before Shares may be purchased,
including the dates on which Shares subject to the Option may first
be purchased. The Administrator may specify that an Option may not
be exercised until the completion of the service period specified at
the time of grant. (Any such period is referred to herein as the
"waiting period.") At the time an Option is granted, the Admin-
istrator shall fix the period within which the Option may be exer-
cised, which shall not be less than the waiting period, if any, nor,
in the case of an Incentive Stock Option, more than ten (10) years,
from the date of grant.
(iii) Form of Payment. The consideration to be paid
for the Shares to be issued upon exercise of an Option, including
the method of payment, shall be determined by the Administrator
(and, in the case of an Incentive Stock Option, shall be determined
at the time of grant) and may consist entirely of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the
case of Shares acquired upon exercise of an Option either have been
owned by the Optionee for more than six months on the date of sur-
render or were not acquired, directly or indirectly, from the
Company, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) delivery of a properly executed
exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company the amount of sale or loan pro-
ceeds required to pay the exercise price, (6) delivery of an irre-
vocable subscription agreement for the Shares which irrevocably
obligates the Optionee to take and pay for the Shares not more than
twelve months after the date of delivery of the subscription agree-
ment, (7) any combination of the foregoing methods of payment, or
(8) such other consideration and method of payment for the issuance
of Shares to the extent permitted under Applicable Laws.
(iv) Termination of Employment or Consulting
Relationship. In the event an Optionee's Continuous Status as an
Employee or Consultant terminates (other than upon the Optionee's
death or Disability), the Optionee may exercise his or her Option,
but only within such period of time as is determined by the Admin-
istrator at the time of grant, not to exceed six (6) months (three
(3) months in the case of an Incentive Stock Option) from the date
of such termination, and only to the extent that the Optionee was
entitled to exercise it at the date of such termination (but in no
event later than the expiration of the term of such Option as set
forth in the Option Agreement). To the extent that Optionee was not
entitled to exercise an Option at the date of such termination, and
to the extent that the Optionee does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein,
the Option shall terminate.
(v) Special Incentive Stock Option Provisions. In
addition to the foregoing, Options granted under the Plan which are
intended to be Incentive Stock Options under Section 422A of the
Code shall be subject to the following terms and conditions:
(A) Exercise Price. The per share exercise
price of an Incentive Stock Option shall be no less than 100% of the
Fair Market Value per Share on the date of grant.
(B) Dollar Limitation. To the extent that the
aggregate Fair Market Value of (i) the Shares with respect to which
Options designated as Incentive Stock Options plus (ii) the shares
of stock of the Company, Parent and any Subsidiary with respect to
which other incentive stock options are exercisable for the first
time by an Optionee during any calendar year under all plans of the
Company and any Parent and Subsidiary exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For
purposes of the preceding sentence, (i) Options shall be taken into
account in the order in which they were granted, and (ii) the Fair
Market Value of the Shares shall be determined as of the time the
Option or other incentive stock option is granted.
(C) 10% Shareholder. If any Optionee to whom
an Incentive Stock Option is to be granted pursuant to the pro-
visions of the Plan is, on the date of grant, the owner of Common
Stock (as determined under Section 425(d) of the Code) possessing
more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary, then the following special
provisions shall be applicable to the Option granted to such
individual:
(1) The per Share Option price of Shares
subject to such Incentive Stock Option shall not be less than 110%
of the Fair Market Value of Common Stock on the date of grant; and
(2) The Option shall not have a term in excess of
five (5) years from the date of grant.
Except as modified by the preceding provisions of this subsec-
tion 7(a)(v) and except as otherwise limited by Section 422A of the
Code, all of the provisions of the Plan shall be applicable to the
Incentive Stock Options granted hereunder.
(vi) Other Provisions. Each Option granted under
the Plan may contain such other terms, provisions, and conditions
not inconsistent with the Plan as may be determined by the
Administrator.
(vii) Buyout Provisions. The Administrator may at
any time offer to buy out for a payment in cash or Shares, an Option
previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the
time that such offer is made.
(b) SARs.
(i) In Connection with Options. At the sole
discretion of the Administrator, SARs may be granted in connection
with all or any part of an Option, either concurrently with the
grant of the Option or at any time thereafter during the term of the
Option. The following provisions apply to SARs that are granted in
connection with Options:
(A) The SAR shall entitle the Optionee to exer-
cise the SAR by surrendering to the Company unexercised a portion of
the related Option. The Optionee shall receive in exchange from the
Company an amount equal to the excess of (x) the Fair Market Value
on the date of exercise of the SAR of the Common Stock covered by
the surrendered portion of the related Option over (y) the exercise
price of the Common Stock covered by the surrendered portion of the
related Option. Notwithstanding the foregoing, the Administrator
may place limits on the amount that may be paid upon exercise of an
SAR; provided, however, that such limit shall not restrict the
exercisability of the related Option.
(B) When an SAR is exercised, the related
Option, to the extent surrendered, shall cease to be exercisable.
(C) An SAR shall be exercisable only when and
to the extent that the related Option is exercisable and shall
expire no later than the date on which the related Option expires.
(D) An SAR may only be exercised at a time when
the Fair Market Value of the Common Stock covered by the related
Option exceeds the exercise price of the Common Stock covered by the
related Option.
(ii) Independent of Options. At the sole
discretion of the Administrator, SARs may be granted without related
Options. The following provisions apply to SARs that are not
granted in connection with Options:
(A) The SAR shall entitle the Optionee, by
exercising the SAR, to receive from the Company an amount equal to
the excess of (x) the Fair Market Value of the Common Stock covered
by the exercised portion of the SAR, as of the date of such exer-
cise, over (y) the Fair Market Value of the Common Stock covered by
the exercised portion of the SAR, as of the last market trading date
prior to the date on which the SAR was granted; provided, however,
that the Administrator may place limits on the aggregate amount that
may be paid upon exercise of an SAR.
(B) SARs shall be exercisable, in whole or in
part, at such times as the Administrator shall specify in the
Optionee's SAR agreement.
(iii) Form of Payment. The Company's obligation
arising upon the exercise of an SAR may be paid in Common Stock or
in cash, or in any combination of Common Stock and cash, as the
Administrator, in its sole discretion, may determine. Shares issued
upon the exercise of an SAR shall be valued at their Fair Market
Value as of the date of exercise.
(iv) Section 16 Restrictions. SARs granted to per-
sons who are subject to Section 16 of the Exchange Act ("Insiders")
shall be subject to any additional restrictions applicable to SARs
granted to such persons in compliance with Rule 16b-3. An Insider
may only exercise an SAR during such time or times as are permitted
by Rule 16b-3.
(c) Method of Exercise.
(i) Procedure for Exercise; Rights as a Share-
holder. Any Option or SAR granted hereunder shall be exercisable at
such times and under such conditions as determined by the
Administrator and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a
Share.
An Option or SAR shall be deemed to be exercised when
written notice of such exercise has been given to the Company in
accordance with the terms of the Option or SAR by the person
entitled to exercise the Option or SAR and full payment for the
Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the
Administrator (and, in the case of an Incentive Stock Option,
determined at the time of grant) and permitted by the Option Agree-
ment consist of any consideration and method of payment allowable
under subsection 7(a)(iii) of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the
Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter shall be avail-
able, both for purposes of the Plan and for sale under the Option,
by the number of Shares as to which the Option is exercised.
Exercise of an SAR in any manner shall, to the extent the SAR is
exercised, result in a decrease in the number of Shares which
thereafter shall be available for purposes of the Plan, and the SAR
shall cease to be exercisable to the extent it has been exercised.
(ii) Rule 16b-3. Options and SARs granted to
Insiders must comply with the applicable provisions of Rule 16b-3
and shall contain such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption from
Section 16 of the Exchange Act with respect to Plan transactions.
(iii) Termination of Employment or Consulting
Relationship. In the event an Optionee's Continuous Status as an
Employee or Consultant terminates (other than upon the Optionee's
death or Disability), the Optionee may exercise his or her Option or
SAR, but only within such period of time as is determined by the
Administrator at the time of grant, not to exceed six (6) months
(three (3) months in the case of an Incentive Stock Option) from the
date of such termination, and only to the extent that the Optionee
was entitled to exercise it at the date of such termination (but in
no event later than the expiration of the term of such Option or SAR
as set forth in the Option or SAR Agreement). To the extent that
Optionee was not entitled to exercise an Option or SAR at the date
of such termination, and to the extent that the Optionee does not
exercise such Option or SAR (to the extent otherwise so entitled)
within the time specified herein, the Option or SAR shall terminate.
(iv) Disability of Optionee. In the event an
Optionee's Continuous Status as an Employee or Consultant terminates
as a result of the Optionee's Disability, the Optionee may exercise
his or her Option or SAR, but only within six (6) months from the
date of such termination, and only to the extent that the Optionee
was entitled to exercise it at the date of such termination (but in
no event later than the expiration of the term of such Option or SAR
as set forth in the Option or SAR Agreement). To the extent that
Optionee was not entitled to exercise an Option or SAR at the date
of such termination, and to the extent that the Optionee does not
exercise such Option or SAR (to the extent otherwise so entitled)
within the time specified herein, the Option or SAR shall terminate.
(v) Death of Optionee. In the event of an
Optionee's death, the Optionee's estate or a person who acquired the
right to exercise the deceased Optionee's Option or SAR by bequest
or inheritance may exercise the Option or SAR, but only within six
(6) months following the date of death, and only to the extent that
the Optionee was entitled to exercise it at the date of death (but
in no event later than the expiration of the term of such Option or
SAR as set forth in the Option or SAR Agreement). To the extent
that Optionee was not entitled to exercise an Option or SAR at the
date of death, and to the extent that the Optionee's estate or a
person who acquired the right to exercise such Option does not
exercise such Option or SAR (to the extent otherwise so entitled)
within the time specified herein, the Option or SAR shall terminate.
8. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be
issued either alone, in addition to, or in tandem with other awards
granted under the Plan and/or cash awards made outside of the Plan.
After the Administrator determines that it will offer Stock Purchase
Rights under the Plan, it shall advise the offeree in writing of the
terms, conditions and restrictions related to the offer, including
the number of Shares that the offeree shall be entitled to purchase,
the price to be paid (which price shall not be less than 50% of the
Fair Market Value of the Shares as of the date of the offer), and
the time within which the offeree must accept such offer, which
shall in no event exceed thirty (30) days from the date upon which
the Administrator made the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a Restricted
Stock purchase agreement in the form determined by the
Administrator. Shares purchased pursuant to the grant of a Stock
Purchase Right shall be referred to herein as "Restricted Stock."
(b) Repurchase Option. Unless the Administrator deter-
mines otherwise, the Restricted Stock purchase agreement shall grant
the Company a repurchase option exercisable upon the voluntary or
involuntary termination of the purchaser's employment with the
Company for any reason (including death or Disability). The pur-
chase price for Shares repurchased pursuant to the Restricted Stock
purchase agreement shall be the original price paid by the purchaser
and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as
the Administrator may determine.
(c) Other Provisions. The Restricted Stock purchase
agreement shall contain such other terms, provisions and conditions
not inconsistent with the Plan as may be determined by the Admin-
istrator in its sole discretion. In addition, the provisions of
Restricted Stock purchase agreements need not be the same with
respect to each purchaser.
(d) Section 16 Restrictions. Stock Purchase Rights
granted to Insiders, and Shares purchased by Insiders in connection
with Stock Purchase Rights, shall be subject to any restrictions
applicable thereto in compliance with Rule 16b-3. An Insider may
only purchase Shares pursuant to the grant of a Stock Purchase
Right, and may only sell Shares purchased pursuant to the grant of a
Stock Purchase Right, during such time or times as are permitted by
Rule 16b-3.
(e) Rights as a Shareholder. Once the Stock Purchase
Right is exercised, the purchaser shall have the rights equivalent
to those of a shareholder, and shall be a shareholder when his or
her purchase is entered upon the records of the duly authorized
transfer agent of the Company. No adjustment will be made for a
dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in
Section 11 of the Plan.
9. Stock Withholding to Satisfy Withholding Tax Obligations.
At the discretion of the Administrator, Optionees may satisfy
withholding obligations as provided in this Section 9. When an
Optionee incurs tax liability in connection with the an Option or
Right, which tax liability is subject to tax withholding under
applicable tax laws, and the Optionee is obligated to pay the
Company an amount required to be withheld under applicable tax laws,
the Optionee may satisfy the withholding tax obligation by electing
to have the Company withhold from the Shares to be issued upon
exercise of the Option, or the Shares to be issued in connection
with the Right, if any, that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date
that the amount of tax to be withheld is to be determined (the "Tax
Date").
All elections by an Optionee to have Shares withheld for this
purpose shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the
applicable Tax Date;
(b) once made, the election shall be irrevocable as to
the particular Shares of the Option or Right as to which the
election is made;
(c) all elections shall be subject to the consent or
disapproval of the Administrator;
(d) if the Optionee is an Insider, the election must
comply with the applicable provisions of Rule 16b-3 and shall
be subject to such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan
transactions.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the
Optionee shall receive the full number of Shares with respect to
which the Option or Right is exercised but such Optionee shall be
unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.
10. Non-Transferability of Options. Options and Rights may
not be sold, pledged, assigned, hypothecated, transferred or dis-
posed of in any manner other than by will or by the laws of descent
or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization or Merger.
(a) Subject to any required action by the shareholders of
the Company, the number of Shares covered by each outstanding Option
and Right, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Options or Rights have
yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option or Right, as well as the
price per Share covered by each such outstanding Option or Right,
shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the aggregate
number of issued Shares effected without receipt of consideration by
the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no
issuance by the Company of Shares of stock of any class, or
securities convertible into Shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Option or
Right.
In the event of the proposed dissolution or liqui-
dation of the Company, all outstanding Options and Rights will
terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that
any Option or Right shall terminate as of a date fixed by the Board
and give each Optionee the right to exercise his Option or Right as
to all or any part of the Optioned Stock or Right, including Shares
as to which the Option or Right would not otherwise be exercisable.
Subject to the provisions of paragraph (b) hereof, in
the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into
another corporation, each outstanding Option and Right shall be
assumed or an equivalent option or Right shall be substituted by
such successor corporation or a parent or subsidiary of such suc-
cessor corporation, unless the Board determines, in the exercise of
its sole discretion and in lieu of such assumption or substitution,
that the Optionee shall have the right to exercise the Option or
Right as to all of the Optioned Stock, including Shares as to which
the Option or Right would not otherwise be exercisable. If the
Board makes an Option or Right fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of
assets, the Company shall notify the Optionee that the Option or
Right shall be fully exercisable for a period of fifteen (15) days
from the date of such notice, and the Option or Right will terminate
upon the expiration of such period. For purposes of this paragraph,
an Option granted under the Plan shall be deemed to be assumed if,
following the sale of assets or merger, the Option confers the right
to purchase, for each Share of Optioned Stock subject to the Option
immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in
the sale of assets or merger by holders of Common Stock for each
Share held on the effective date of the transaction (and if such
holders were offered a choice of consideration, the type of
consideration chosen by the holders if a majority of the outstanding
Shares); provided, however, that if such consideration received in
the sale of assets or merger was not solely Common Stock of the
successor corporation or its parent, the Board may, with the consent
of the successor corporation and the participant, provide for the
consideration to be received upon exercise of the Option or Right to
be solely Common Stock of the successor corporation or its parent
equal in Fair Market Value to the per share consideration received
by holders of Common Stock in the sale of assets or merger.
(b) In the event of a "Change in Control" of the Company,
as defined in paragraph (c) below, any or all or none of the
following acceleration and valuation provisions shall apply, as the
Board, in its discretion, shall determine prior to such Change of
Control:
(i) Any Options and Rights outstanding as of the
date such Change in Control is determined to have occurred that
are not yet exercisable and vested on such date shall become
fully exercisable and vested;
(ii) To the extent they are exercisable and vested,
the value of all outstanding Options and Rights shall, unless
otherwise determined by the Board at or after grant, shall be
cashed out at the Change in Control Price, reduced by the
exercise price applicable to such Options or Rights. The cash
out proceeds shall be paid to the Optionee or, in the event of
death of an Optionee prior to payment, to the estate of the
Optionee or to a person who acquired the right to exercise the
Option or Right by bequest or inheritance.
(c) Definition of "Change in Control". For purposes of
this Section 11, a "Change in Control" means the happening of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than the
Company, a Subsidiary or a Company employee benefit plan,
including any trustee of such plan acting as trustee) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities; or
(ii) The occurrence of a transaction requiring
shareholder approval, and involving the sale of all or
substantially all of the assets of the Company or the merger of
the Company with or into another corporation.
(d) Change in Control Price. For purposes of this
Section 11, "Change in Control Price" shall be, as determined by the
Board, (i) the highest closing sale price of a Share of Common Stock
as reported by the NASDAQ System and as appearing in the Wall Street
Journal (or, in the event the Common Stock is listed on a stock
exchange, the highest closing price on such exchange as reported on
the Composite Transaction Reporting System), at any time within the
60 day period immediately preceding the date of determination of the
Change in Control Price by the Board (the "60-Day Period"), or
(ii) the highest price paid or offered, as determined by the Board,
in any bona fide transaction or bona fide offer related to the
Change in Control of the Company, at any time within the 60-Day
Period, or (iii) some lower price as the Board, in its discretion,
determines to be a reasonable estimate of the fair market value of a
share of Common Stock.
12. Time of Granting Options and Rights. The date of grant of
an Option or Right shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option or Right.
Notice of the determination shall be given to each Employee or
Consultant to whom an Option or Right is so granted within a
reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend, or discontinue the Plan, but no amendment,
alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made,
without his or her consent. In addition, to the extent necessary
and desirable to comply with Rule 16b-3 under the Exchange Act or
under Section 422A of the Code (or any other applicable law or
regulation), the Company shall obtain shareholder approval of any
Plan amendment in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amend-
ment or termination of the Plan shall not affect Options or Rights
already granted and such Options and Rights shall remain in full
force and effect as if this Plan had not been amended or terminated.
14. Conditions Upon Issuance of Shares. Shares shall not be
issued with respect to an Option or Right unless the exercise of
such Option or Right and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option or the
issuance of Shares on exercise of an Option or Right, the Company
may require the person exercising such Option or Right to represent
and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
15. Reservation of Shares. The Company, during the term of
this Plan, will at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of the
Plan.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by
the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the non-issuance or sale of such Shares as
to which such requisite authority shall not have been obtained.
16. Agreements. Options and Rights shall be evidenced by
written agreements in such form as the Board shall approve from time
to time.
17. Shareholder Approval. Continuance of the Plan shall be
subject to approval by the shareholders of the Company within twelve
(12) months before or after the date the Plan is adopted as provided
in Section 6. Such shareholder approval shall be obtained in the
degree and manner required under applicable state and federal law.
(Filed pursuant to Instruction 3 to Item 10(b)(2) of Schedule
14A of the Securities Exchange Act of 1934)
SYMMETRICOM, INC.
1990 DIRECTOR OPTION PLAN
(as amended through October 25, 1995)
1. Purposes of the Plan. The purposes of this 1990 Director
Option Plan are to attract and retain the best available personnel
for service as Directors of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as
Directors, and to encourage their continued service on the Board.
All options granted hereunder shall be "non-statutory
stock options".
2. Definitions. As used herein, the following definitions
shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means Symmetricom, Inc., a California
corporation.
(e) "Continuous Status as a Director" means the absence
of any interruption or termination of service as a Director.
(f) "Director" means a member of the Board.
(g) "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of
the Company. The payment of a Director's fee by the Company shall
not be sufficient in and of itself to constitute "employment" by the
Company.
(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(i) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without
limitation the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the
Fair Market Value of a Share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with
the greatest volume of trading in Common Stock) on the last market
trading day prior to the day of determination, as reported in the
Wall Street Journal or such other source as the Board deems
reliable;
(ii)If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly
quoted by a recognized securities dealer but selling prices are not
reported, the Fair Market Value of a Share of Common Stock shall be
the mean between the high and low asked prices for the Common Stock
on the last market trading day prior to the day of determination, as
reported in the Wall Street Journal or such other source as the
Board deems reliable, or;
(iii)In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Board.
(j) "Option" means a stock option granted pursuant to the
Plan.
(k) "Optioned Stock" means the Common Stock subject to an
Option.
(l) "Optionee" means an Outside Director who receives an
Option.
(m) "Outside Director" means a Director who is not an
Employee.
(n) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 425(e) of the Internal
Revenue Code of 1986.
(o) "Plan" means this 1990 Director Option Plan.
(p) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 10 of the Plan.
(q) "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 425(f) of
the Internal Revenue Code of 1986.
3. Stock Subject to the Plan. Subject to the provisions of
Section 10 of the Plan, the maximum aggregate number of Shares which
may be optioned and sold under the Plan is three hundred thousand
(300,000) Shares (the "Pool") of Common Stock. The Shares may be
authorized but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares
which were subject thereto shall, unless the Plan shall have been
terminated, become available for future grant under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administrator. Except as otherwise required herein,
the Plan shall be administered by the Board. No discretion con-
cerning decisions regarding the Plan shall be afforded to any person
who is not a "disinterested person" (as defined in Rule 16b-3 under
the Exchange Act).
(b) Procedure for Grants. All grants of Options
hereunder shall be automatic and non-discretionary and shall be made
strictly in accordance with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the
number of Shares to be covered by Options granted to Outside
Directors.
(ii) Each Outside Director shall be automa-
tically granted an Option to purchase 10,000 Shares (the "First
Option") on the date on which such person first becomes an Outside
Director, whether through election by the shareholders of the
Company or appointment by the Board to fill a vacancy; provided,
however, that no First Option shall be granted to an Outside
Director who, immediately prior to becoming an Outside Director, was
a Director. After the First Option has been granted to an Outside
Director, such Outside Director shall thereafter be automatically
granted an Option to purchase 10,000 Shares on January 1 of each
year, if on such date, he or she shall have served on the Board for
at least six (6) months.
(iii)The terms of each Option granted hereunder
shall be as follows:
(A) the term of the Option shall be ten (10)
years.
(B) the Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as
set forth in Section 8 hereof.
(C) the exercise price per Share shall be 100%
of the Fair Market Value per Share on the date of grant of the
Option.
(D) the Option shall become exercisable in
installments cumulatively as to twenty-five percent (25%) of the
Optioned Stock one year after the date of grant and as to an addi-
tional twenty-five percent (25%) of the Optioned Stock two years
after the date of grant and as to an additional fifty percent (50%)
of the Optioned Stock three years after the date of grant, so that
100% of the Optioned Stock granted under an individual Option shall
be exercisable three years after the date of grant of the Option.
(iv)In the event that any Option granted under
the Plan would cause the number of Shares subject to outstanding
Options plus the number of Shares previously purchased upon exercise
of Options to exceed the Pool, then each such automatic grant shall
be for that number of Shares determined by dividing the total number
of Shares remaining available for grant by the number of Outside
Directors on the automatic grant date. No further grants shall be
made until such time, if any, as additional Shares become available
for grant under the Plan through action of the shareholders to
increase the number of Shares which may be issued under the Plan or
through cancellation or expiration of Options previously granted
hereunder.
(c) Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its
discretion: (i) to determine, upon review of relevant information
and in accordance with Section 2(i) of the Plan, the Fair Market
Value of the Common Stock; (ii) to interpret the Plan; (iii) to
prescribe, amend and rescind rules and regulations relating to the
Plan; (iv) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option
previously granted hereunder; and (v) to make all other
determinations deemed necessary or advisable for the administration
of the Plan.
(d) Effect of Board's Decision. All decisions, deter-
minations and interpretations of the Board shall be final.
5. Eligibility. Options may be granted only to Outside
Directors. All Options shall be automatically granted in accordance
with the terms set forth in Section 4(b) hereof. An Outside
Director who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options in accordance
with such provisions.
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to
serve as a Director, nor shall it interfere in any way with any
rights which the Director or the Company may have to terminate his
directorship at any time.
6. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board or its approval by the
shareholders of the Company as described in Section 16 of the Plan.
It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 11 of the Plan.
7. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for
Optioned Stock shall be 100% of the Fair Market Value per Share on
the date of grant of the Option.
(b) Form of Consideration. The consideration to be paid
for the Shares to be issued upon exercise of an Option, including
the method of payment, shall be determined by the Board and may
consist entirely of (i) cash, (ii) check, (iii) promissory note,
(iv) other shares which (x) in the case of Shares acquired upon
exercise of an Option either have been owned by the Optionee for
more than six (6) months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (y) have a
Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be
exercised, (v) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds required
to pay the exercise price, (vi) delivery of an irrevocable subscrip-
tion agreement for the Shares which irrevocably obligates the
Optionee to take and pay for the Shares not more than twelve (12)
months after the date of delivery of the subscription agreement,
(vii) any combination of the foregoing methods of payment, or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted under applicable law.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times as are
set forth in Section 4(b) hereof; provided, however, that no Options
shall be exercisable until shareholder approval of the Plan in
accordance with Section 16 hereof has been obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance
with the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full payment
may consist of any consideration and method of payment allowable
under Section 7(b) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to
the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued,
except as provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available,
both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.
(b) Rule 16b-3. Options granted to Outside Directors
must comply with the applicable provisions of Rule 16b-3 promulgated
under the Exchange Act or any successor thereto and shall contain
such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of
the Exchange Act with respect to Plan transactions.
(c) Termination of Continuous Status as a Director. In
the event an Optionee's Continuous Status as a Director terminates
(other than upon the Optionee's death or total and permanent dis-
ability (as defined in Section 22(e)(3) of the Code)), the Optionee
may exercise his or her Option, but only within three (3) months
from the date of such termination, and only to the extent that the
Optionee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise
an Option at the date of such termination, and to the extent that
the Optionee does not exercise such Option (to the extent otherwise
so entitled) within the time specified herein, the Option shall
terminate.
(d) Disability of Optionee. In the event Optionee's
Continuous Status as a Director terminates as a result of total and
permanent disability (as defined in Section 22(e)(3) of the Code),
the Optionee may exercise his or her Option, but only within six (6)
months from the date of such termination, and only to the extent
that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of its ten
(10) year term). To the extent that the Optionee was not entitled
to exercise an Option at the date of termination, or if he or she
does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.
(e) Death of Optionee. In the event of an Optionee's
death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance may exercise the
Option, but only within six (6) months following the date of death,
and only to the extent that the Optionee was entitled to exercise it
at the date of death (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option at the date of death, and to the
extent that the Optionee's estate or a person who acquired the right
to exercise such Option does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option
shall terminate.
9. Non-Transferability of Options. The Option may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or dis-
tribution and may be exercised, during the lifetime of the Optionee,
only by the Optionee.
10. Adjustments Upon Changes in Capitalization or Merger.
(a) Subject to any required action by the shareholders of
the Company, the number of Shares covered by each outstanding
Option, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per Share covered by
each such outstanding Option, shall be proportionately adjusted for
any increase or decrease in the number of issued Shares resulting
from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or
decrease in the aggregate number of issued Shares effected without
receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of Shares of
stock of any class, or securities convertible into Shares of stock
of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares subject
to an Option.
In the event of the proposed dissolution or liquidation of
the Company, all outstanding Options will terminate immediately
prior to the consummation of such proposed action, unless otherwise
provided by the Board. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall termi-
nate as of a date fixed by the Board and give each Optionee the
right to exercise his Option as to all or any part of the Optioned
Stock, including Shares as to which the Option would not otherwise
be exercisable.
Subject to the provisions of paragraph (b) hereof, in the
event of a proposed sale of all or substantially all of the assets
of the Company, or the merger of the Company with or into another
corporation, each outstanding Option shall be assumed or an equiv-
alent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation. In the event
that the successor corporation does not agree to assume the Option
or to substitute an equivalent option, each outstanding Option shall
become fully vested and exercisable, including as to Shares as to
which it would not otherwise be exercisable. If an Option becomes
fully vested and exercisable in the event of a merger or sale of
assets, the Company shall notify the Optionee that the Option shall
be fully exercisable for a period of fifteen (15) days from the date
of such notice, and the Option shall terminate upon the expiration
of such period. For purposes of this paragraph, an Option granted
under the Plan shall be deemed to be assumed if, following the sale
of assets or merger, the Option confers the right to purchase, for
each Share of Optioned Stock subject to the Option immediately prior
to the sale of assets or merger, the consideration (whether stock,
cash or other securities or property) received in the sale of assets
or merger by holders of Common Stock for each Share held on the
effective date of the transaction (and if such holders were offered
a choice of consideration, the type of consideration chosen by the
holders if a majority of the outstanding Shares).
(b) In the event of a "Change in Control" of the Company,
as defined in paragraph (c) below, any Options outstanding as of the
date such Change in Control is determined to have occurred that are
not yet exercisable and vested on such date shall become fully
exercisable and vested.
(c) Definition of "Change in Control". For purposes of
this Section 10, a "Change in Control" means when any "person," as
such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company, a Subsidiary or a Company employee benefit
plan, including any trustee of such plan acting as trustee) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend, or discontinue the Plan, but no amendment,
alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made,
without his or her consent. In addition, to the extent necessary
and desirable to comply with Rule 16b-3 under the Exchange Act (or
any other applicable law or regulation), the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to
such a degree as required.
(b) Effect of Amendment or Termination. Any such amend-
ment or termination of the Plan shall not affect Options already
granted and such Options shall remain in full force and effect as if
this Plan had not been amended or terminated.
12. Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date determined in accordance with
Section 4(b) hereof. Notice of the determination shall be given to
each Outside Director to whom an Option is so granted within a
reasonable time after the date of such grant.
13. Conditions Upon Issuance of Shares. Shares shall not be
issued pursuant to the exercise of an Option unless the exercise of
such Option and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder,
state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to
such compliance.
As a condition to the exercise of an Option, the Company
may require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to
sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the afore-
mentioned relevant provisions of law.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by
the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any lia-
bility in respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of
this Plan, will at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of the
Plan.
15. Option Agreement. Options shall be evidenced by written
option agreements in such form as the Board shall approve.
16. Shareholder Approval. Continuance of the Plan shall be
subject to approval by the shareholders of the Company at or prior
to the first annual meeting of shareholders held subsequent to the
granting of an Option hereunder. Such shareholder approval shall be
obtained in the degree and manner required under applicable state
and federal law.
