<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 21, 1998
REGISTRATION NO. 333-53775
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1.
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INTERPORE INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-3043318
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
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181 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618-2402
(Address of Principal Executive Offices including Zip Code)
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CROSS MEDICAL PRODUCTS, INC. AMENDED AND RESTATED
1994 STOCK OPTION PLAN;
THE DANNINGER MEDICAL TECHNOLOGY, INC.
AMENDED AND RESTATED 1984 INCENTIVE
STOCK OPTION PLAN; AND
THE DANNINGER MEDICAL TECHNOLOGY, INC. 1984
AMENDED AND RESTATED NON-STATUTORY
STOCK OPTION PLAN
(FULL TITLE OF THE PLANS)
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RICHARD L. HARRISON COPY TO:
SENIOR VICE PRESIDENT REGINA M. SCHLATTER, ESQ.
INTERPORE INTERNATIONAL, INC. LATHAM & WATKINS
181 TECHNOLOGY DRIVE 650 TOWN CENTER DRIVE, TWENTIETH FLOOR
IRVINE, CALIFORNIA 92618-2402 COSTA MESA, CALIFORNIA 92626
(949) 453-3200 (714) 540-1235
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(Name and Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
This Post-Effective Amendment No. 1 to the Registration Statement on
Form S-8 (No. 333-53775) is filed to reflect the name of the most recent version
of two of the plans subject to this Registration Statement, as follows: (i) "The
Danninger Medical Technology, Inc. Amended and Restated 1984 Incentive Stock
Option Plan" (not "The Danninger Medical Technology, Inc. 1984 Incentive Stock
Option Plan") and (ii) "The Danninger Medical Technology, Inc. Amended and
Restated 1984 Non-Statutory Stock Option Plan" (not "The Danninger Medical
Technology, Inc. 1984 Non-Statutory Stock Option Plan"). The most recent version
of each these two plans are filed as exhibits to this Post-Effective Amendment
No. 1 to the Registration Statement on Form S-8 (No. 333-53775).
ITEM 8. EXHIBITS
See Index to Exhibits on page 4.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Post-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Irvine, State of
California, on August 20, 1998.
INTERPORE INTERNATIONAL, INC.
By: /s/ David C. Mercer
--------------------------------------
David C. Mercer, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Post-Effective
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ David C. Mercer Chairman of the Board and Chief August 20, 1998
- ------------------------------ Executive Officer (Principal
David C. Mercer Executive Officer)
* Director, President and Chief August 20, 1998
- ------------------------------ Operating Officer
Joseph A. Mussey
/s/ Richard L. Harrison Senior Vice President and Chief August 20, 1998
- ------------------------------ Financial Officer (Principal
Richard L. Harrison Financial Officer)
* Director August 20, 1998
- ------------------------------
William A. Eisenecher
* Director August 20, 1998
- ------------------------------
Daniel A. Funk
* Director August 20, 1998
- ------------------------------
G. Bradford Jones
* Director August 20, 1998
- ------------------------------
Robert J. Williams
By: /s/ Richard L. Harrison
--------------------------
Richard L. Harrison
as Attorney-in-Fact
</TABLE>
3
<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------- ----
<C> <S> <C>
4.1 Certificate of Incorporation. Note (i)
5.1 Opinion of Latham & Watkins. Note (ii)
10.1 Danninger Medical Technology, Inc. Amended and Restated 5
1984 Non-Statutory Stock Option Plan
10.2 Danninger Medical Technology, Inc. Amended and Restated 10
1984 Incentive Stock Option Plan
10.3 Cross Medical Products Inc. Amended and Restated 1994 Note (ii)
Stock Option Plan.
23.1 Consent of Latham & Watkins (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP. Note (ii)
23.3 Consent of Coopers & Lybrand L.L.P. Note (ii)
24 Power of Attorney Note (ii)
</TABLE>
- ----------
(i) Incorporated by reference to Annex VII of the Company's Registration
Statement on Form S-4 (No. 333-49487).
(ii) Previously filed.
4
<PAGE> 1
EXHIBIT 10.1
Adopted: 4/26/84
Amended: 12/14/88
Amended: 11/09/89
Amended: 04/02/92
Amended: 05/06/93
DANNINGER MEDICAL TECHNOLOGY, INC.
AMENDED AND RESTATED
1984 NON-STATUTORY STOCK OPTION PLAN
1. PURPOSE. The purpose of this Amended and Restated 1984 Non-Statutory
Stock Option Plan (the "Plan") is to advance the interests of Danninger Medical
Technology, Inc. (the "Company") by providing an opportunity to selected key
employees and directors of the Company and its subsidiaries and to consultants,
technical advisory committee members, and others who may associate with the
Company or its subsidiaries to purchase stock of the Company through the
exercise of options granted under the Plan. By encouraging such stock ownership,
the Company seeks to attract, retain, and motivate employees, directors,
consultants, and other employees of training, experience, and ability.
2. EFFECTIVE DATE. The Plan shall become effective on April 26, 1984.
3. STOCK SUBJECT TO THE PLAN. The shares that may be granted under the
Plan shall not exceed in the aggregate 300,000 shares of $.01 par value Common
Stock of the Company. Any shares subject to an option which for any reason
expires or is terminated unexercised as to such shares may again be the subject
of an option under the Plan. The shares delivered upon exercise of options under
the Plan, in whole or in part, may be either authorized but unissued shares or
issued shares reacquired by the Company. Options granted hereunder shall not be
treated as incentive stock options.
4. ADMINISTRATION.
(a) The Plan shall be administered by a committee appointed by the Board
of Directors of the Company (the "Stock Option Committee") which consists of not
less than three directors. Subject to the provisions of the Plan, the Stock
Option Committee shall have full power to construe and interpret the Plan and to
establish, amend, and rescind rules and regulations for its administration.
(b) If any class of equity securities of the Company is registered under
Section 12 of the Securities Exchange Act of 1934 (the "1934 Act"), all members
of the Stock Option Committee (i) shall be directors who are not employees of
the Company, (ii) shall be "disinterested persons" as defined in Rule
16b-3(c)(2)(i) under the 1934 Act and (iii) shall not be eligible to receive any
options under this Plan, except as described in paragraph 4(c) below.
<PAGE> 2
(c) At the May meeting of the Board of Directors each year, all members
of the Board of Directors who are not employees of the Company, including
members of the Stock Option Committee, shall each be granted under this Plan an
option to purchase up to 5,000 shares of the Company's $.01 par value Common
Stock at an exercise price equal to 100% of the fair market value of the shares
on the date of grant. Such option shall not be exercisable until a period of one
year from the date of grant, except in the event of the optionee's termination
of employment as a result of disability or death as specified in paragraph 7(f),
in which event the option shall be immediately exercisable for the corresponding
period specified in paragraph 7(f). Such option shall terminate on the sixth
anniversary of the date of grant.
(d) Paragraph 4(c) of this Plan may not be amended more than once every
six months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder.
5. ELIGIBLE EMPLOYEES AND DIRECTORS.
(a) Persons shall be selected by the Stock Option Committee from among
the key employees and directors of the Company, or any of its subsidiaries, to
receive options under the Plan. If any class of equity securities of the Company
is registered under Section 12 of the 1934 Act, members of the Board of
Directors who are not employees of the Company shall not be granted options by
the Stock Option Committee under this Plan, but may receive options only
pursuant to paragraph 4(c) of this Plan.
(b) No optionee may receive options under the Plan in any one fiscal
year of the Company exceeding that number of shares representing 15% of the
total number of shares which options may be granted under the Plan and no
optionee shall be entitled to receive options under the Plan exceeding in the
aggregate that number of shares representing 33-1/3% of the total number of
shares for which options may be granted under the Plan, in each case as such
total number of shares may be increased from time to time with shareholder
approval.
(c) Options may be granted to members of the Company's Board of
Directors who are also employees of the Company by the Stock Option Committee
only in the months of February, May, August, and November of each year.
(d) Options granted under the Plan to key employees and directors of the
Company shall not be exercisable until a period of one year from the date of
grant, except in the event of the optionee's termination of employment as a
result of disability or death as specified in paragraph 7(f), in which event the
option shall be immediately exercisable for the corresponding period specified
in paragraph 7(f).
(e) Notwithstanding any other provision of the Plan, no option granted
after December 14, 1988, shall be exercisable unless the sale of the underlying
shares is registered or qualified under applicable federal and state securities
laws or, in the opinion of counsel for the Company, there is an available
exemption for the underlying shares from such registration or qualification.
2
<PAGE> 3
6. DURATION OF THE PLAN. The Plan shall terminate ten (10) years from
the effective date of April 26, 1984, unless terminated earlier pursuant to
paragraph 10, and no options may be granted thereafter.
7. TERMS AND CONDITIONS OF OPTIONS. Options granted under the Plan shall
be evidenced by stock option agreements in such form and not inconsistent with
the Plan as the Stock Option Committee shall approve from time to time, which
agreements shall include, but are not limited to, the following terms and
conditions:
(a) PRICE. Each option agreement shall specify the purchase price
per share of stock payable upon the exercise of each option granted
hereunder, as determined by the Stock Option Committee.
(b) NUMBER OF SHARES. Each option agreement shall specify the number
of shares to which it pertains.
(c) EXERCISE OF OPTIONS. Each option shall be exercisable for the
full amount or for any part thereof and at such intervals or in such
installments as the Stock Option Committee may determine at the time it
grants such option; provided, however, that no option shall be
exercisable with respect to any shares later than ten (10) years after
the date of the grant of such option.
(d) NOTICE OF EXERCISE AND PAYMENT. An option shall be exercisable
only by delivery of a written notice to the Stock Option Committee, any
member of the Stock Option Committee, the Company's Treasurer, or any
other officer of the Company designated by the Stock Option Committee to
accept such notices on its behalf, specifying the number of shares for
which it is exercised. If said shares are not at the time effectively
registered under the Securities Act of 1933, as amended, the optionee
shall include with such notice a letter containing representations and
warranties, in form and substance satisfactory to the Company, that the
shares are being purchased for the optionee's own account for investment
and not with a view to distribution. Payment shall be made in full at
the time of delivery to the optionee of a certificate or certificates
covering the number of shares for which the option was exercised.
Payment shall be made either by (i) cashier's or certified check, (ii)
if permitted by a vote of the Stock Option Committee, by delivery and
assignment to the Company of shares of Company stock, or (iii) by a
combination of (i) and (ii). The value of the Company's common stock for
such purpose shall be its fair market value as of the date the option is
exercised, as determined in accordance with the procedures to be
established by the Stock Option Committee.
(e) NON-TRANSFERABILITY. No option shall be transferable by the
optionee otherwise than by will or the laws of descent or distribution,
and each option shall be exercisable during the optionee's lifetime only
by the optionee.
3
<PAGE> 4
(f) TERMINATION OF OPTIONS. Unless otherwise provided for in the
stock option agreements or by the Stock Option Committee, each option
shall terminate and may no longer be exercised if the optionee ceases
for any reason to be an employee or director of the Company or a
subsidiary, except that:
(i) if the optionee's employment or directorship shall have
terminated for any reason other than cause, disability (as defined
below), or death, the optionee at any time within a period of thirty
(30) days after such termination of employment or directorship, but
not later than the expiration date of the option, may exercise the
option to the extent that the option was exercisable by the optionee
on the date of such termination;
(ii) if the optionee's employment or directorship shall have
been terminated because of disability within the meaning of Section
105(d)(4) of the Internal Revenue Code of 1986 (the "Code"), the
optionee at any time within a period of one (1) year after such
termination of employment or directorship, but not later than the
expiration date of the option, may exercise the option to the extent
that the option was exercisable by the optionee on the date of such
termination; and
(iii) if the optionee dies at a time when the option was
exercisable by the optionee, then the optionee's estate, personal
representative, or beneficiary to whom it has been transferred
pursuant to paragraph 7(f), at any time within a period of six (6)
months following the death, but not later than the expiration date
of the option, may exercise the option to the extent the option
might have been exercised at the time of the optionee's death.
(g) Rights as Shareholder. The optionee shall have no rights as a
shareholder with respect to any shares covered by an option until the
date of issuance of a stock certificate to the optionee for such shares.
8. STOCK DIVIDENDS; STOCK SPLITS; STOCK COMBINATIONS; RECAPITALIZATIONS.
Appropriate adjustment shall be made in the maximum number of shares of Common
Stock subject to the Plan and in the number, kind, and option price of shares
covered by outstanding options granted hereunder to give effect to any stock
dividends or other distribution, stock splits, stock combinations,
recapitalizations, and other similar changes in the capital structure of the
Company after the effective date of the Plan.
9. MERGER; SALE OF ASSETS; DISSOLUTION. In the event of a change of the
Common Stock resulting from a merger or similar reorganization as to which the
Company is the surviving corporation, the number and kind of shares which
thereafter may be optioned and sold under the Plan and the number and kind of
shares then subject to options granted hereunder and the price per share thereof
shall be appropriately adjusted in such a manner as the Stock Option Committee
may deem equitable to prevent substantial dilution or enlargement of the rights
available or granted hereunder. If the Company at any time should elect to
dissolve, sell all or substantially all of its assets, undergo a reorganization,
or merge or consolidate with any
4
<PAGE> 5
corporation and the Company is not the surviving corporation, then (unless in
the case of a reorganization, merger, or consolidation where the surviving
corporation assumes the optionees' rights under the Plan or issues substantially
equivalent substitute rights in place thereof) each optionee shall be notified
of his or her right to exercise all outstanding options prior to any such
dissolution, sale, reorganization, merger, or consolidation. The failure to
exercise such outstanding options within twenty (20) days of such notification
shall cause the options to be terminated.
10. TERMINATION OR AMENDMENT OF THE PLAN. The Board of Directors may at
any time terminate the Plan or make such changes in or additions to the Plan as
it deems advisable, provided that no such termination or amendment shall
adversely affect or impair any then outstanding option without the consent of
the optionee holding such option.
11. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP. The establishment of
the Plan shall in no way, now or hereafter, reduce, enlarge, or modify the
employment relationship between the Company and the optionee. Nothing contained
in the Plan shall be construed as conferring upon any optionee any right to
continue in the employ of the Company.
12. DEFINITIONS.
(a) The term "key employees" means those executive,
administrative, operational, or managerial employees who are determined
by the Stock Option Committee to be eligible for options under the Plan.
(b) The term "optionee" means a key associate or a director to
whom an option is granted under the Plan.
(c) The term "parent", for purposes of the Plan, shall have the
meaning ascribed to it under Section 425(e) of the Code.
(d) The term "subsidiary", for purposes of the Plan, shall have
the meaning ascribed to it under Section 425(f) of the Code.
5
<PAGE> 1
EXHIBIT 10.2
ADOPTED: 1/27/84
SHAREHOLDER
APPROVAL: 4/26/84
AMENDED: 12/14/88
AMENDED: 11/9/89
AMENDED: 4/2/92
DANNINGER MEDICAL TECHNOLOGY, INC.
AMENDED AND RESTATED
1984 INCENTIVE STOCK OPTION PLAN
--------------------------------
1. PURPOSE. The purpose of this Amended and Restated 1984 Incentive
Stock Option Plan (the "Plan") is to advance the interests of Danninger Medical
Technology, Inc. (the "Company") by providing an opportunity to selected key
employees of the Company to purchase stock of the Company through the exercise
of options granted under the Plan. By encouraging such stock ownership, the
Company seeks to attract, retain, and motivate key employees of training,
experience, and ability. It is intended that this purpose will be effected by
the granting of stock options under the Plan which will qualify as "incentive
stock options" under the provisions of Section 422A of the Internal Revenue Code
of 1986, as amended (the "Code"), and the terms of the Plan shall be interpreted
in accordance with this intention.
2. EFFECTIVE DATE. The Plan shall become effective on January 27, 1984,
provided that the Plan is approved by the shareholders of the Company within one
(1) year from that date. Although options may be granted before such approval,
no option may be exercised until such approval is obtained and such options will
be null and void if such approval is not obtained.
3. STOCK SUBJECT TO THE PLAN. The shares that may be granted under the
Plan shall not exceed in the aggregate 750,000 shares of $.01 par value Common
Stock of the Company. Any shares subject to an option which for any reason
expires or is terminated unexercised as to such shares may again be the subject
of an option under the Plan. The shares delivered upon exercise of options under
the Plan, in whole or in part, may be either authorized but unissued shares or
issued shares reacquired by the Company.
4. ADMINISTRATION.
(a) The Plan shall be administered by a committee appointed by the Board
of Directors of the Company (the "Stock Option Committee") which consists of not
less than three directors. Subject to the provisions of the Plan, the Stock
Option Committee shall have full power to construe and interpret the Plan and to
establish, amend, and rescind rules and regulations for its administration.
(b) If any class of equity securities of the Company is registered
under Section 12 of the Securities Exchange Act of 1934 (the "1934 Act"), all
members of the Stock Option Committee (i) shall be directors who are not
employees of the Company, (ii) shall be "disinterested persons" as defined in
Rule 16b-3(c)(2)(i) under the 1934 Act and (iii) shall ont be eligible to
participate in this Plan.
5. ELIGIBLE EMPLOYEES AND DIRECTORS.
(a) Persons shall be selected to receive options under the Plan by the
Stock Option Committee from among the key employees of the Company, or any of
its subsidiaries, including directors who are also key employees.
<PAGE> 2
(b) No optionee may receive options under the Plan in any one fiscal
year of the Company exceeding that number of shares representing 15% of the
total number of shares for which options may be granted under the Plan and no
optionee shall be entitled to receive options under the Plan exceeding in the
aggregate that number of shares representing 33-1/3% of the total number of
shares for which options may be granted under the Plan, in each case as such
total number of shares may be increased from time to time with shareholder
approval.
(c) Options may be granted by the Board of Directors to its members who
are key employees by the Stock Option Committee only in the months of February,
May, August, and November of each year.
(d) Options granted under the Plan to employees and directors of the
Company shall not be exercisable until a period of one year from the date of
grant, except in the event of the optionee's termination of employment as a
result of disability or death as specified in paragraph 8(f), in which event the
option shall be immediately exercisable for the corresponding period specified
in paragraph 8(f).
(e) Notwithstanding any other provision of the Plan, no option granted
after December 14, 1988, shall be exercisable unless the sale of the underlying
shares is registered or qualified under applicable federal and state securities
laws or, in the opinion of counsel for the Company, there is an available
exemption for the underlying shares from such registration or qualification.
6. DURATION OF THE PLAN. The Plan shall terminate ten (10) years from
the effective date unless terminated earlier pursuant to paragraph 11, and no
options may be granted thereafter.
7. LIMITATIONS ON NUMBER OF SHARES. The aggregate fair market value,
determined as of the date the option is granted, of the shares for which options
are exercisable for the first time by an employee during any calendar year shall
not exceed One Hundred Thousand Dollars ($100,000). In the event that such
employee is eligible to participate in any other stock incentive plans of the
Company or a subsidiary which are also intended to comply with the provisions of
Section 422A of the Code, such annual limitation shall apply to the aggregate
number of shares for which options may be granted for such plans.
8. TERMS AND CONDITIONS OF OPTIONS. Options granted under the Plan shall
be evidenced by stock option agreements in such form and not inconsistent with
the Plan as the Stock Option Committee shall approve from time to time, which
agreements shall include, but not be limited to, the following terms and
conditions:
(a) PRICE. The purchase price per share of stock payable upon the
exercise of each option granted hereunder shall be not less than one hundred
percent (100%) of the fair market value of the stock on the day the option is
granted; provided, however, that if at the time of the grant the optionee owns
stock possessing more than ten percent (10%) of the combined voting power of all
2
<PAGE> 3
classes of stock of the Company or its parent or a subsidiary, such purchase
price per share shall be not less than one hundred and ten percent (110%) of the
fair market value of the stock on the day the option is granted. Such fair
market value shall be determined in accordance with procedures to be established
in good faith by the Stock Option Committee conforming to regulations issued by
the Internal Revenue Service with regard to incentive stock options.
(b) NUMBER OF SHARES. Each option agreement shall specify the number of
shares to which it pertains.
(c) EXERCISE OF OPTIONS. Each option shall be exercisable for the full
amount or for any part thereof and at such intervals or in such installments as
the Stock Option Committee may determine in its sole discretion at the time it
grants such option; provided, however, that no option shall be exercisable with
respect to any shares later than ten (10) years after the date of the grant of
such option; and provided, further, that if at the time of the grant of such
option, the optionee owns stock possessing more than ten percent (10%) of the
combined voting power of all classes of stock of the Company or a subsidiary,
such option shall be exercisable no later than five (5) years after the date of
its grant.
(d) NOTICE OF EXERCISE AND PAYMENT. An option shall be exercisable only
by delivery of a written notice to the Stock Option Committee, any member of the
Stock Option Committee, the Company's Treasurer, or any other officer of the
Company designated by the Stock Option Committee to accept such notices on its
behalf, specifying the number of shares for which it is exercised. If said
shares are not at the time effectively registered under the Securities Act of
1933, as amended, the optionee shall include with such notice a letter
containing representations and warranties, in form and substance satisfactory to
the Company, that the shares are being purchased for the optionee's own account
for investment and not with a view to distribution. Payment shall be made in
full at the time of delivery to the optionee of a certificate or certificates
covering the number of shares for which the option was exercised. Payment shall
be made either by (i) cashier's or certified check, (ii) if permitted by a vote
of the Stock Option Committee, by delivery and assignment to the Company of
shares of the Company's common stock, or (iii) by a combination of (i) and (ii).
The value of the Company's common stock for such purpose shall be its fair
market value as of the date the option is exercised, as determined in accordance
with the procedures to be established by the Stock Option Committee.
(e) NON-TRANSFERABILITY. No option shall be transferable by the optionee
otherwise than by will or the laws of descent or distribution, and each option
shall be exercisable during the optionee's lifetime and only by the optionee.
3
<PAGE> 4
(f) TERMINATION OF OPTIONS. Each option shall terminate and may no
longer be exercised if the optionee ceases for any reason to be an employee of
the Company, or its parent or a subsidiary, except that:
(i) if the optionee's employment shall have terminated for any
reason other than cause, disability (as defined below), or death, the optionee
at any time within a period of thirty (30) days after such termination of
employment, but not later than the expiration date of the option, may exercise
the option to the extent that the option was exercisable by the optionee on the
date of termination of his or her employment;
(ii) if the optionee's employment shall have been terminated because
of disability within the meaning of Section 105(d)(4) of the Code, the optionee
at any time within a period of one (1) year after such termination of
employment, but not later than the expiration date of the option, may exercise
the option to the extent that the option was exercisable by the optionee on the
date of termination of his or her employment; and
(iii) if the optionee dies at a time when the option was exercisable
by the optionee, then the optionee's estate, personal representative, or
beneficiary to whom it has been transferred pursuant to paragraph 8(e), within
six (6) months following the death, but not later than the expiration date of
the option, may exercise the option to the extent the option might have been
exercised at the time of the optionee's death.
(g) RIGHTS AS SHAREHOLDER. The optionee shall have no rights as a
shareholder with respect to any shares covered by the option until the date of
issuance of a stock certificate to the optionee for such shares.
(h) EFFECT OF OTHER OUTSTANDING OPTIONS. No option granted hereunder, on
or before December 31, 1986, shall be exercisable by an optionee while there is
"outstanding" within the meaning of Section 422A(c)(7) of the Internal Revenue
Code, before amendment by the Tax Reform Act of 1986, any incentive stock option
which was granted to the optionee before the granting of the option under the
Plan and which permits the optionee to purchase stock in (i) the Company, (ii) a
corporation which (at the time of the granting of the option under the Plan) is
a parent or subsidiary of the Company, or (iii) a predecessor corporation of any
such corporations. The foregoing "sequential exercise rule" shall not apply to
any option granted hereunder after December 31, 1986.
4
<PAGE> 5
9. STOCK DIVIDENDS; STOCK SPLITS; STOCK COMBINATIONS; RECAPITALIZATIONS.
Appropriate adjustment shall be made in the maximum number of shares of Common
Stock subject to the Plan and in the number, kind, and option price of shares
covered by outstanding options granted hereunder to give effect to any stock
dividends or other distribution, stock splits, stock combinations,
recapitalizations, and other similar changes in the capital structure of the
Company after the effective date of the Plan.
10. MERGER; SALE OF ASSETS; DISSOLUTION. In the event of a change of the
Common Stock resulting from a merger or similar reorganization as to which the
Company is the surviving corporation, the number and kind of shares which
thereafter may be optioned and sold under the Plan and the number and kind of
shares then subject to options granted hereunder and the price per share thereof
shall be appropriately adjusted in such a manner as the Stock Option Committee
may deem equitable to prevent substantial dilution or enlargement of the rights
available or granted hereunder. If the Company at any time should elect to
dissolve, sell all or substantially all of its assets, undergo a reorganization,
or merge or consolidate with any corporation and the Company is not the
surviving corporation, then (unless in the case of a reorganization, merger, or
consolidation where the surviving corporation assumes the optionees' rights
under the Plan or issues substantially equivalent substitute rights in place
thereof) each optionee shall be notified by the Company of his or her right to
exercise all outstanding options prior to any such dissolution, sale,
reorganization, merger, or consolidation. The failure to exercise such
outstanding options within thirty (30) days of such notification shall cause the
options to be terminated.
11. TERMINATION OR AMENDMENT OF THE PLAN. The Board of Directors may at
any time terminate the Plan or make such changes in or additions to the Plan as
it deems advisable without further action on the part of the shareholders of the
Company; provided:
(a) that no such termination or amendment shall adversely affect or
impair any then outstanding option without the consent of the optionee holding
such option;
(b) subject to paragraph 9, that any such amendment which increases
the number of shares subject to the Plan shall be subject to approval by
shareholders of the Company within one (1) year from the effective date of such
amendment and shall be null and void if such approval is not obtained; and
(c) that in no event shall any amendment be made to the Plan which
would cause the options granted hereunder to fail to qualify as incentive stock
options under the Code.
12. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP. The establishment of
the Plan shall in no way, now or hereafter, reduce, enlarge, or modify the
employment relationship between the Company and the optionee. Nothing contained
in the Plan shall be construed as conferring upon any optionee any right to
continue in the employ of the Company.
13. DEFINITIONS.
(a) The term "key employees" means those executive, administrative,
operational, or managerial employees of the Company who are determined by the
Stock Option Committee to be eligible for options under the Plan.
(b) The term "optionee" means a key associate to whom an option is
granted under the Plan.
(c) The term "parent", for purposes of the Plan, shall have the meaning
ascribed to it under Section 425(e) of the Code.
(d) The term "subsidiary", for purposes of the Plan, shall have the
meaning ascribed to it under Section 425(f) of the Code.
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