SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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USA BIOMASS CORPORATION
-------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
33-0329559
(I.R.S. Employer Identification No.)
7314 Scout Avenue, Bell Gardens, California 90201
(Address of Principal Executive Offices) (Zip Code)
AMCOR Capital Corporation 1997 Stock Option Plan
(Full Title of the Plan)
Fred H. Behrens, 7314 Scout Avenue, Bell Gardens, California 90201
(Name and Address of Agent for Service)
(562) 928-9900
(Telephone Number, Including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
Amount Proposed maximum Proposed maximum
Title of securities to be offering price aggregate Amount of
to be registered registered(1) per share(2) offering price registration fee
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.002 par value 320,000 $4.0625 $1,300,000 $343.20
================================================================================================================
</TABLE>
(1) Consists of 320,000 shares under the 1997 Stock Option Plan.
(2) Calculated in accordance with Rule 457(h)(1) on the basis of the average of
the high and low sales price reported for such securities by The Nasdaq SmallCap
Market on December 17, 1999.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
(a) General Plan Information. The title of the plan is AMCOR Capital
Corporation 1997 Stock Option Plan ("Plan"). The purpose of the Plan
is to provide the Company with a means of attracting and retaining the
services of highly motivated directors and key personnel. The Plan
became effective November 14, 1997 and, except as to options granted
and outstanding under the Plan prior to such time, the Plan will
terminate at midnight on November 14, 2007. The Plan is administered
by a committee of the Board of Directors ("Committee") consisting of
not less than two (2) and no more than five (5) directors of USA
Biomass Corporation, a Delaware corporation formerly named AMCOR
Capital Corporation ("Company"). The Plan may be modified by the
Committee, and adjustments to existing options made, in the event of a
recapitalization, reclassification, reorganization, merger,
consolidation, share exchange, or other business combination, and may
be terminated in the event of the Company's liquidation or
dissolution. The Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974.
(b) Securities to be Offered. The Committee is authorized to grant options
for up to 500,000 shares of the Company's $.002 par value common
stock. The price per share to be paid by the respective optionees
shall not be less than one hundred percent (100%) of the fair market
value, as that term is defined in the Plan, of one share of the
optioned common stock on the date on which the option is granted.
Item 2. Registrant Information and Employee Plan Annual Information
Participants in the Plan will be provided copies of the documents incorporated
by reference in Item 3 of Part II of this Registration Statement without charge
upon written or oral request. These documents are incorporated by reference in
the Section 10(a) prospectus. Other documents required to be delivered to
employees in accordance with the provisions of Rule 428(b) promulgated pursuant
to the Securities Act of 1933 ("Securities Act") will be provided without charge
upon written or oral request. Participants should contact Eugene Tidgewell,
Chief Financial Officer, 7314 Scout Avenue, Bell Gardens, California 90201,
telephone 562.928.9900 to request such documents.
The information required by Part I to be specified in the Section 10(a)
prospectus not specified in this Part I is omitted from this Registration
Statement in accordance with the provisions of Rule 428 promulgated pursuant to
the Securities Act and the Note to Part I of Form S-8.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Company incorporates the following documents by reference in this
Registration Statement:
(a) The Company's latest Annual Report on Form 10-KSB for the year ended
December 31, 1998, filed with the Commission on March 8, 1999;
(b) All reports of the Company filed pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") since the
fiscal year ended December 31, 1998; and
(c) The description of the Company's common stock specified in the
Company's Registration Statement on Form S-1 which was declared effective by the
Commission on May 2, 1988, pursuant to the provisions of the Securities Act, in
which there is described the terms, rights and provisions applicable to the
Company's outstanding common stock;
All other documents filed by the Company after the date of this Registration
Statement pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment to this Registration Statement
which de-registers all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel. No "expert", as that term is
defined pursuant to Regulation Section 228.509(a) of Regulation S-B, or the
Company's "counsel", as that term is defined pursuant to Regulation Section
228.509(b) of Regulation S-B, was hired on a contingent basis, or will receive a
direct or indirect interest in the Company, or was a promoter, underwriter,
voting trustee, director, officer, or employee of the Company, at any time prior
to the filing of this Registration Statement.
Item 6. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation limits, to the maximum extent
permitted by Delaware law, the personal liability of directors for monetary
damages for breach of their fiduciary duties as a director. The Company's Bylaws
provide that the Company shall indemnify its officers and directors and may
indemnify its employees and other agents to the fullest extent permitted by
Delaware law.
<PAGE>
Section 145 of the Delaware General Corporation Law provides that a corporation
may indemnify a director, officer, employee or agent made a party to an action
by reason of the fact that he or she was a director, officer, employee or agent
of the corporation, or was serving at the request of the corporation, against
expenses actually and reasonably incurred by him or her in connection with such
action if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal action, had no reasonable cause to believe his or
her conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES OCCURRING PURSUANT TO THE PROVISIONS
OF THE SECURITIES ACT MAY BE PERMITTED AS TO DIRECTORS, OFFICERS, OR PERSONS
CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS
BEEN INFORMED THAT IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION,
SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THAT ACT AND,
THEREFORE, IS UNENFORCEABLE.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
5 Opinion of Stepp & Beauchamp LLP
15 Previously filed on November 15, 1999 with the Commission as an exhibit to
Quarterly Report on Form 10-QSB
23.1 Consent of Stepp & Beauchamp LLP (contained in its opinion filed as Exhibit
5 to this Registration Statement)
23.2 Consent of Kelly and Company
99 AMCOR Capital Corporation 1997 Stock Option Plan
Item 9. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-
effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
<PAGE>
(ii) to specify in the prospectus any facts or events occurring after the
effective date of this Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information specified in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of the securities offered would not exceed
that which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; provided, however, that
paragraphs (1)(i) and (1)(ii) shall not apply if the information required to be
included in a post-effective amendment by those clauses is specified in periodic
reports filed by the Company pursuant to the provisions of Section 13 or Section
15(d) of the Securities Act that are incorporated by reference in this
Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities offered at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel that matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies it
has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-8 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Newport Beach, State of California, on this 20th day of December, 1999.
USA BIOMASS CORPORATION, a Delaware corporation
/s/ Fred H. Behrens
- --------------------------------------
Fred H. Behrens, Chairman of the Board
and Chief Executive Officer
/s/ Eugene W. Tidgewell
- --------------------------------------
Eugene W. Tidgewell,
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on December 17, 1999.
Signature Title
- --------- -----
/s/ Fred H. Behrens
- ---------------------
Fred H. Behrens Chairman of the Board, Chief Executive Officer
/s/ Marlene A. Tapie
- ---------------------
Marlene A. Tapie Director
/s/ H. Glen Leason
- ---------------------
H. Glen Leason Director
Pursuant to the requirements of the Securities Act of 1933, the members of the
Committee have duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Bell
Gardens, State of California, on December 20, 1999.
AMCOR Capital Corporation 1997 Stock Option Plan
By: /s/
------------------------
By: /s/
------------------------
EXHIBIT 5
STEPP & BEAUCHAMP LLP
December 17, 1999
USA Biomass Corporation
7314 Scout Avenue
Bell Gardens, CA 90201
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to USA Biomass Corporation, a Delaware corporation (the
"Company"), and in such capacity have examined the form of Registration
Statement on Form S-8 ("Registration Statement") to be filed with the Securities
and Exchange Commission ("Commission") by the Company in connection with the
registration under the Securities Act of 1933, as amended ("Act"), of up to
320,000 shares of common stock, $.002 par value per share, of the Company (the
"Shares"). The Shares are to be sold by the Company upon the exercise of stock
options granted by the Company under its 1997 Stock Option Plan. The Shares will
be offered and sold pursuant to the Company's Registration Statement to be filed
with the Commission.
As counsel for the Company and for purposes of this opinion, we have made those
examinations and investigations of legal and factual matters we deemed advisable
and have examined the originals, or copies certified to our satisfaction as
being true copies, of those corporate records, certificates, documents and other
instruments which, in our judgment, we considered necessary or appropriate to
enable us to render the opinion expressed below. For these purposes, we have
relied upon certificates provided by public officials and by officers of the
Company as to certain factual matters. We have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to the original documents of documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of the latter
documents.
On the basis of the foregoing, and solely relying thereon, we are of the opinion
that the Shares are duly authorized and provided the Shares are issued,
delivered and paid for in the manner and upon the terms contemplated by the
Registration Statement, the Shares will be validly issued, fully paid and
nonassessable.
<PAGE>
We consent to the use of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission thereunder.
Sincerely,
/s/ STEPP & BEAUCHAMP LLP
STEPP & BEAUCHAMP LLP
By: Thomas E. Stepp, Jr.
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
USA Biomass Corporation
We consent to the incorporation by reference in this registration statement on
Form S-8 of our report on our audits of the financial statements of USA Biomass
Corporation, formerly named AMCOR Capital Corporation ("Company") contained in
the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1998 filed with the Commission on March 8, 1999.
/s/ Kelly & Company
- --------------------------
Kelly & Company
Newport Beach, California
December 20, 1999
Exhibit 99
AMCOR CAPITAL CORPORATION
1997 STOCK OPTION PLAN
<PAGE>
Exhibit A
AMCOR CAPITAL CORPORATION
1997 STOCK OPTION PLAN
1. Purpose of the Plan. The purpose of this 1997 Stock Option Plan ("Plan")
of AMCOR CAPITAL CORPORATION, a Delaware corporation ("Company"), is to provide
the Company with a means of attracting and retaining the services of highly
motivated and qualified directors and key personnel. The Plan is intended to
advance the interests of the Company by affording to directors and key
employees, upon whose skill, judgment, initiative and efforts the Company is
largely dependent for the successful conduct of its business, an opportunity for
investment in the Company and the incentives inherent in stock ownership in the
Company. In addition, the Plan contemplates the opportunity for investment in
the Company by employees of companies that do business with the Company. For
purposes of this Plan, the term Company shall include subsidiaries, if any, of
the Company.
2. Legal Compliance. It is the intent of the Plan that all options granted
under it ("Options") shall be either "Incentive Stock Options" ("ISOs"), as such
term is defined in Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), or non-qualified stock options ("NQOs"); provided, however, ISOs shall
be granted only to employees of the Company. An Option shall be identified as an
ISO or an NQO in writing in the document or documents evidencing the grant of
the Option. All Options that are not so identified as ISOs are intended to be
NQOs. In addition, the Plan provides for the grant of NQOs to employees of
companies that do business with the Company. It is the further intent of the
Plan that it conform in all respects with the requirements of Rule 16b-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended ("Rule 16b-3"). To the extent that any aspect of the Plan or its
administration shall at any time be viewed as inconsistent with the requirements
of Rule 16b-3 or, in connection with ISOs, the Code, such aspect shall be deemed
to be modified, deleted or otherwise changed as necessary to ensure continued
compliance with such provisions.
3. Administration of the Plan.
3.1 Plan Committee. The Plan shall be administered by a committee
("Committee"). The members of the Committee shall be appointed from time to
time by the Board of Directors of the Company ("Board") and shall consist
of not less than two (2) nor more than five (5) persons. Such persons shall
be directors of the Company.
3.2 Grants of Options by the Committee. In accordance with the
provisions of the Plan, the Committee, by resolution, shall select those
eligible persons to whom Options shall be granted ("Optionees"); shall
determine the time or times at which each Option shall be granted, whether
an Option is an ISO or an NQO and the number of shares to be subject to
each Option; and shall fix the time and manner in which the Option may be
exercised, the Option exercise price, and the Option period. The Committee
shall determine the form of option agreement to evidence the foregoing
terms and conditions of each Option, which need not be identical, in the
form provided
<PAGE>
for in Section 7. Such option agreement may include such other provisions
as the Committee may deem necessary or desirable consistent with the Plan,
the Code and Rule 16b-3.
3.3 Committee Procedures. The Committee from time to time may adopt
such rules and regulations for carrying out the purposes of the Plan as it
may deem proper and in the best interests of the Company. The Committee
shall keep minutes of its meetings and records of its actions. A majority
of the members of the Committee shall constitute a quorum for the
transaction of any business by the Committee. The Committee may act at any
time by an affirmative vote of a majority of those members voting. Such
vote may be taken at a meeting (which may be conducted in person or by any
telecommunica tion medium) or by written consent of Committee members
without a meeting.
3.4 Finality of Committee Action. The Committee shall resolve all
questions arising under the Plan and option agreements entered into
pursuant to the Plan. Each determination, interpretation, or other action
made or taken by the Committee shall be final and conclusive and binding on
all persons, including, without limitation, the Company, its shareholders,
the Committee and each of the members of the Committee, and the directors,
officers and employees of the Company, including Optionees and their
respective successors in interest.
3.5 Non-Liability of Committee Members. No Committee member shall be
liable for any action or determination made by him or her in good faith
with respect to the Plan or any Option granted under it.
4. Board Power to Amend, Suspend, or Terminate the Plan. The Board may,
from time to time, make such changes in or additions to the Plan as it may deem
proper and in the best interests of the Company and its shareholders. The Board
may also suspend or terminate the Plan at any time, without notice, and in its
sole discretion. Notwithstanding the foregoing, no such change, addition,
suspension, or termination by the Board shall (i) materially impair any option
previously granted under the Plan without the express written consent of the
optionee; or (ii) materially increase the number of shares subject to the Plan,
materially increase the benefits accruing to optionees under the Plan,
materially modify the requirements as to eligibility to participate in the Plan
or alter the method of determining the option exercise price described in
Section 8, without shareholder approval.
5. Shares Subject to the Plan. For purposes of the Plan, the Committee is
authorized to grant Options for up to 500,000 shares of the Company's common
stock ("Common Stock"), or the number and kind of shares of stock or other
securities which, in accordance with Section 13, shall be substituted for such
shares of Common Stock or to which such shares shall be adjusted. The Committee
is authorized to grant Options under the Plan with respect to such shares. Any
or all unsold shares subject to an Option which for any reason expires or
otherwise terminates (excluding shares returned to the Company in payment of the
exercise price for additional shares) may again be made subject to grant under
the Plan.
6. Optionees. Options shall be granted only to officers, directors or key
employees of the Company or employees of companies that do business with the
Company designated by the
2
<PAGE>
Committee from time to time as Optionees. Any Optionee may hold more than one
option to purchase Common Stock, whether such option is an Option held pursuant
to the Plan or otherwise. An Optionee who is an employee of the Company
("Employee Optionee") and who holds an Option must remain a continuous full or
part-time employee of the Company from the time of grant of the Option to him
until the time of its exercise, except as provided in Section 10.3.
7. Grants of Options. The Committee shall have the sole discretion to grant
Options under the Plan and to determine whether any Option shall be an ISO or an
NQO. The terms and conditions of Options granted under the Plan may differ from
one another as the Committee, in its absolute discretion, shall determine as
long as all Options granted under the Plan satisfy the requirements of the Plan.
Upon determination by the Committee that an Option is to be granted to an
Optionee, a written option agreement evidencing such Option shall be given to
the Optionee, specifying the number of shares subject to the Option, the Option
exercise price, whether the Option is an ISO or an NQO, and the other individual
terms and conditions of such Option. Such option agreement may incorporate
generally applicable provisions from the Plan, a copy of which shall be provided
to all Optionees at the time of their initial grants under the Plan. The Option
shall be deemed granted as of the date specified in the grant resolution of the
Committee, and the option agreement shall be dated as of the date of such
resolution. Notwithstanding the foregoing, unless the Committee consists solely
of non-employee directors, any Option granted to an executive officer, director
or 10% beneficial owner for purposes of Section 16 of the Securities Exchange
Act of 1934, as amended ("Section 16 of the 1934 Act"), shall either be (a)
conditioned upon the Optionee's agreement not to sell the shares of Common Stock
underlying the Option for at least six (6) months after the date of grant or (b)
approved by the entire Board or by the shareholders of the Company.
8. Option Exercise Price. The price per share to be paid by the Optionee at
the time an ISO is exercised shall not be less than one hundred percent (100%)
of the Fair Market Value (as hereinafter defined) of one share of the optioned
Common Stock on the date on which the Option is granted. No ISO may be granted
under the Plan to any person who, at the time of such grant, owns (within the
meaning of Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any parent thereof, unless the exercise price of such ISO is at least
equal to one hundred and ten percent (110%) of Fair Market Value on the date of
grant. The price per share to be paid by the Optionee at the time an NQO is
exercised shall not be less than eighty-five percent (85%) of the Fair Market
Value on the date on which the NQO is granted, as determined by the Committee.
For purposes of the Plan, the "Fair Market Value" of a share of the Company's
Common Stock as of a given date shall be: (i) the closing price of a share of
the Company's Common Stock on the principal exchange on which shares of the
Company's Common Stock are then trading, if any, on the day immediately
preceding such date, or, if shares were not traded on such date, then on the
next preceding trading day during which a sale occurred; or (ii) if the
Company's Common Stock is not traded on an exchange but is quoted on Nasdaq or a
successor quotation system, (1) the last sales price (if the Common Stock is
then listed as a National Market Issue under the Nasdaq National Market System)
or (2) the closing representative bid price (in all other cases) for the Common
Stock on the day immediately preceding such date as reported by Nasdaq or such
successor quotation system; or (iii) if the Company's Common Stock is not
publicly traded on an exchange and not quoted on Nasdaq or a successor quotation
system, the closing bid price for the Common Stock on such date as determined in
good
3
<PAGE>
faith by the Committee; or (iv) if the Company's Common Stock is not publicly
traded, the fair market value established by the Committee acting in good faith.
In addition, with respect to any ISO, the Fair Market Value on any given date
shall be determined in a manner consistent with any regulations issued by the
Secretary of the Treasury for the purpose of determining fair market value of
securities subject to an ISO plan under the Code.
9. Ceiling of ISO Grants. The aggregate Fair Market Value (determined at
the time any ISO is granted) of the Common Stock with respect to which an
Optionee's ISOs, together with incentive stock options granted under any other
plan of the Company and any parent, are exercisable for the first time by such
Optionee during any calendar year shall not exceed $100,000. If an Optionee
holds such incentive stock options that become first exercisable (including as a
result of acceleration of exercisability under the Plan) in any one year for
shares having a Fair Market Value at the date of grant in excess of $100,000,
then the most recently granted of such ISOs, to the extent that they are
exercisable for shares having an aggregate Fair Market Value in excess of such
limit, shall be deemed to be NQOs.
10. Duration, Exercisability, and Termination of Options.
10.1 Option Period. The option period shall be determined by the
Committee with respect to each Option granted. In no event, however, may
the option period exceed ten (10) years from the date on which the Option
is granted, or five (5) years in the case of a grant of an ISO to an
Optionee who is a ten percent (10%) shareholder at the date on which the
Option is granted as described in Section 8.
10.2 Exercisability of Options. Each Option shall be exercisable in
whole or in consecutive installments, cumulative or otherwise, during its
term as determined in the discretion of the Committee.
10.3 Termination of Options due to Termination of Employment,
Disability, or Death of Optionee; Termination for "Cause", or Resignation
in Violation of an Employment Agreement. All Options granted under the Plan
to any Employee Optionee shall terminate and may no longer be exercised if
the Employee Optionee ceases, at any time during the period between the
grant of the Option and its exercise, to be an employee of the Company;
provided, however, that the Committee may alter the termination date of the
Option if the Optionee transfers to an affiliate of the Company.
Notwithstanding the foregoing, (i) if the Employee Optionee's employment
with the Company shall have terminated for any reason (other than
involuntary dismissal for "cause" or voluntary resignation in violation of
any agreement to remain in the employ of the Company, including, without
limitation, any such agreement pursuant to Section 15), he may, at any time
before the expiration of three (3) months after such termination or before
expiration of the Option, whichever shall first occur, exercise the Option
(to the extent that the Option was exercisable by him on the date of the
termination of his employment); (ii) if the Employee Optionee's employment
shall have terminated due to disability (as defined in Section 22(e)(3) of
the Code and subject to such proof of disability as the Committee may
require), such Option may be exercised by the Employee Optionee (or by his
guardian(s), or conservator(s), or other legal representative(s)) before
the expiration of twelve (12) months after such termination or before
expiration of the Option,
4
<PAGE>
whichever shall first occur (to the extent that the Option was exercisable
by him on the date of the termination of his employment); (iii) in the
event of the death of the Employee Optionee, an Option exercisable by him
at the date of his death shall be exercisable by his legal
representative(s), legatee(s), or heir(s), or by his beneficiary or
beneficiaries so designated by him, as the case may be, within twelve (12)
months after his death or before the expiration of the Option, whichever
shall first occur (to the extent that the Option was exercisable by him on
the date of his death); and (iv) if the Employee Optionee's employment is
terminated for "cause" or in violation of any agreement to remain in the
employ of the Company, including, without limitation, any such agreement
pursuant to Section 14, his Option shall terminate immediately upon
termination of employment, and such Option shall be deemed to have been
forfeited by the Optionee. For purposes of the Plan, "cause" may include,
without limitation, any illegal or improper conduct (1) which injures or
impairs the reputation, goodwill, or business of the Company; (2) which
involves the misappropriation of funds of the Company, or the misuse of
data, information, or documents acquired in connection with employment by
the Company; or (3) which violates any other directive or policy
promulgated by the Company. A termination for "cause" may also include any
resignation in anticipation of discharge for "cause" or resignation
accepted by the Company in lieu of a formal discharge for "cause."
11. Manner of Option Exercise; Rights and Obligations of Optionees.
11.1 Written Notice of Exercise. An Optionee may elect to exercise an
Option in whole or in part, from time to time, subject to the terms and
conditions contained in the Plan and in the agreement evidencing such
Option, by giving written notice of exercise to the Company at its
principal executive office.
11.2 Cash Payment for Optioned Shares. If an Option is exercised for
cash, such notice shall be accompanied by a cashier's or personal check, or
money order, made payable to the Company for the full exercise price of the
shares purchased.
11.3 Stock Swap Feature. At the time of the Option exercise, and
subject to the discretion of the Committee to accept payment in cash only,
the Optionee may determine whether the total purchase price of the shares
to be purchased shall be paid solely in cash or by transfer from the
Optionee to the Company of previously acquired shares of Common Stock, or
by a combination thereof. If the Optionee elects to pay the total purchase
price in whole or in part with previously acquired shares of Common Stock,
the value of such shares shall be equal to their Fair Market Value on the
date of exercise, determined by the Committee in the same manner used for
determining Fair Market Value at the time of grant for purposes of Section
8.
11.4 Investment Representation for Non-Registered Shares and Legality
of Issuance. The receipt of shares of Common Stock upon the exercise of an
Option shall be conditioned upon the Optionee (or any other person who
exercises the Option on his or her behalf as permitted by Section 10.3)
providing to the Committee a written representation that, at the time of
such exercise, it is the intent of such person(s) to acquire the shares for
investment only and not with a view toward distribution. The certificate
for unregistered shares issued for investment shall be restricted by the
Company as to transfer unless the Company receives an opinion of counsel
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satisfactory to the Company to the effect that such restriction is not
necessary under then pertaining law. The providing of such representation
and such restrictions on transfer shall not, however, be required upon any
person's receipt of shares of Common Stock under the Plan in the event
that, at the time of grant of the Option relating to such receipt or upon
such receipt, whichever is the appropriate measure under applicable federal
or state securities laws, the shares subject to the Option shall be (i)
covered by an effective and current registration statement under the
Securities Act of 1933, as amended, and (ii) either qualified or exempt
from qualification under applicable state securities laws. The Company
shall, however, under no circumstances be required to sell or issue any
shares under the Plan if, in the opinion of the Committee, (i) the issuance
of such shares would constitute a violation by the Optionee or the Company
of any applicable law or regulation of any governmental authority, or (ii)
the consent or approval of any governmental body is necessary or desirable
as a condition of, or in connection with, the issuance of such shares.
11.5 Shareholder Rights of Optionee. Upon exercise, the Optionee (or
any other person who exercises the Option on his behalf as permitted by
Section 10.3) shall be recorded on the books of the Company as the owner of
the shares, and the Company shall deliver to such record owner one or more
duly issued stock certificates evidencing such ownership. No person shall
have any rights as a shareholder with respect to any shares of Common Stock
covered by an Option granted pursuant to the Plan until such person shall
have become the holder of record of such shares. Except as provided in
Section 13, no adjustments shall be made for cash dividends or other
distributions or other rights as to which there is a record date preceding
the date such person becomes the holder of record of such shares.
11.6 Holding Periods for Tax Purposes. The Plan does not provide that
an Optionee must hold shares of Common Stock acquired under the Plan for
any minimum period of time. Optionees are urged to consult with their own
tax advisors with respect to the tax consequences to them of their
individual participation in the Plan.
12. Successive Grants. Successive grants of Options may be made to any
Optionee under the Plan.
13. Adjustments.
(a) If the outstanding Common Stock shall be hereafter increased or
decreased, or changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation, by
reason of a recapitalization, reclassification, reorganization, merger,
consolidation, share exchange, or other business combination in which the
Company is the surviving parent corporation, stock split-up, combination of
shares, or dividend or other distribution payable in capital stock or
rights to acquire capital stock, appropriate adjustment shall be made by
the Committee in the number and kind of shares for which options may be
granted under the Plan. In addition, the Committee shall make appropriate
adjustment in the number and kind of shares as to which outstanding and
unexercised options shall be exercisable, to the end that the proportionate
interest of the holder of the option shall, to the extent practicable, be
maintained as before the occurrence of such event. Such adjustment in
outstanding options shall be made without change in
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the total price applicable to the unexercised portion of the option but
with a corresponding adjustment in the exercise price per share.
(b) In the event of the dissolution or liquidation of the Company, any
outstanding and unexercised options shall terminate as of a future date to
be fixed by the Committee.
(c) In the event of a Reorganization (as hereinafter defined), then,
(i) If there is no plan or agreement with respect to the
Reorganization ("Reorganiza tion Agreement"), or if the Reorganization
Agreement does not specifically provide for the adjustment, change,
conversion, or exchange of the outstanding and unexercised options for
cash or other property or securities of another corporation, then any
outstanding and unexercised options shall terminate as of a future
date to be fixed by the Committee; or
(ii) If there is a Reorganization Agreement, and the
Reorganization Agreement specifically provides for the adjustment,
change, conversion, or exchange of the outstanding and unexercised
options for cash or other property or securities of another
corporation, then the Committee shall adjust the shares under such
outstanding and unexercised options, and shall adjust the shares
remaining under the Plan which are then available for the issuance of
options under the Plan if the Reorganization Agreement makes specific
provisions therefor, in a manner not inconsistent with the provisions
of the Reorganization Agreement for the adjustment, change,
conversion, or exchange of such options and shares.
(d) The term "Reorganization" as used in this Section 13 shall mean
any reorganization, merger, consolidation, share exchange, or other
business combination pursuant to which the Company is not the surviving
parent corporation after the effective date of the Reorganization, or any
sale or lease of all or substantially all of the assets of the Company.
Nothing herein shall require the Company to adopt a Reorganization
Agreement, or to make provision for the adjustment, change, conversion, or
exchange of any options, or the shares subject thereto, in any
Reorganization Agreement which it does adopt.
(e) The Committee shall provide to each optionee then holding an
outstanding and unexercised option not less than thirty (30) calendar days'
advanced written notice of any date fixed by the Committee pursuant to this
Section 13 and of the terms of any Reorganization Agreement providing for
the adjustment, change, conversion, or exchange of outstanding and
unexercised options. Except as the Committee may otherwise provide, each
optionee shall have the right during such period to exercise his option
only to the extent that the option was exercisable on the date such notice
was provided to the optionee.
Any adjustment to any outstanding ISO pursuant to this Section 13, if
made by reason of a transaction described in Section 424(a) of the Code,
shall be made so as to conform to the requirements of that Section and the
regulations thereunder. If any other transaction described in Section
424(a) of the Code affects the Common Stock subject to any unexercised ISO
theretofore granted under the Plan (hereinafter for purposes of this
Section 13 referred to as the "old option"), the Board of Directors of the
Company or of any surviving or acquiring corporation may take such
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action as it deems appropriate, in conformity with the requirements of that
Code Section and the regulations thereunder, to substitute a new option for
the old option, in order to make the new option, as nearly as may be
practicable, equivalent to the old option, or to assume the old option.
(f) No modification, extension, renewal, or other change in any option
granted under the Plan may be made, after the grant of such option, without
the optionee's consent, unless the same is permitted by the provisions of
the Plan and the option agreement. In the case of an ISO, optionees are
hereby advised that certain changes may disqualify the ISO from being
considered as such under Section 422 of the Code, or constitute a
modification, extension, or renewal of the ISO under Section 424(h) of the
Code.
(g) All adjustments and determinations under this Section 13 shall be
made by the Committee in good faith in its sole discretion.
14. Continued Employment. As determined in the sole discretion of the
Committee at the time of grant and if so stated in a writing signed by the
Company, each Option may have as a condition the requirement of an Employee
Optionee to remain in the employ of the Company, or of its affiliates, and to
render to it his or her exclusive service, at such compensation as may be
determined from time to time by it, for a period not to exceed the term of the
Option, except for earlier termination of employment by or with the express
written consent of the Company or on account of disability or death. The failure
of any Employee Optionee to abide by such agreement as to any Option under the
Plan may result in the termination of all of his or her then outstanding Options
granted pursuant to the Plan. Neither the creation of the Plan nor the granting
of Option(s) under it shall be deemed to create a right in an Employee Optionee
to continued employment with the Company, and each such Employee Optionee shall
be and shall remain subject to discharge by the Company as though the Plan had
never come into existence. Except as specifically provided by the Committee in
any particular case, the loss of existing or potential profit in options granted
under this Plan shall not constitute an element of damages in the event of
termination of the employment of an employee even if the termination is in
violation of an obligation of the Company to the employee by contract or
otherwise.
15. Tax Withholding. The exercise of any Option granted under the Plan is
subject to the condition that if at any time the Company shall determine, in its
discretion, that the satisfaction of withholding tax or other withholding
liabilities under any federal, state or local law is necessary or desirable as a
condition of, or in connection with, such exercise or a later lapsing of time or
restrictions on or disposition of the shares of Common Stock received upon such
exercise, then in such event, the exercise of the Option shall not be effective
unless such withholding shall have been effected or obtained in a manner
acceptable to the Company. When an Optionee is required to pay to the Company an
amount required to be withheld under applicable income tax laws in connection
with the exercise of any Option, the Optionee may, subject to the approval of
the Committee, which approval shall not have been disapproved at any time after
the election is made, satisfy the obligation, in whole or in part, by electing
to have the Company withhold shares of Common Stock having a value equal to the
amount required to be withheld. The value of the Common Stock withheld pursuant
to the election shall be determined by the Committee, in accordance with the
criteria set forth in Section 8, with reference to the date the amount of tax to
be withheld is
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determined. The Optionee shall pay to the Company in cash any amount required to
be withheld that would otherwise result in the withholding of a fractional
share. The election by an Optionee who is an officer of the Company within the
meaning of Section 16 of the 1934 Act, to be effective, must meet all of the
requirements of Section 16 of the 1934 Act.
16. Term of Plan.
16.1 Effective Date. Subject to shareholder approval, the Plan shall
become effective as of November 14, 1997.
16.2 Termination Date. Except as to options granted and outstanding
under the Plan prior to such time, the Plan shall terminate at midnight on
November 14, 2007, and no Option shall be granted after that time. Options
then outstanding may continue to be exercised in accordance with their
terms. The Plan may be suspended or terminated at any earlier time by the
Board within the limitations set forth in Section 4.
17. Non-Exclusivity of the Plan. Nothing contained in the Plan is intended
to amend, modify, or rescind any previously approved compensation plans,
programs or options entered into by the Company. This Plan shall be construed to
be in addition to and independent of any and all such other arrangements.
Neither the adoption of the Plan by the Board nor the submission of the Plan to
the shareholders of the Company for approval shall be construed as creating any
limitations on the power or authority of the Board to adopt, with or without
shareholder approval, such additional or other compensation arrangements as the
Board may from time to time deem desirable.
18. Governing Law. The Plan and all rights and obligations under it shall
be construed and enforced in accordance with the laws of the State of
California.
19. Information to Optionees. Optionees under the Plan who do not otherwise
have access to financial statements of the Company will receive the Company's
financial statements at least annually.
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