<PAGE>
As filed with the Securities and Exchange Commission
on August 1, 1995
Registration No. _____________
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
PARAMETRIC TECHNOLOGY CORPORATION
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2866152
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
128 Technology Drive, Waltham, MA 02154
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
RASNA CORPORATION 1988 STOCK OPTION PLAN
--------------------------------------------------------------------------------
(Full title of Plan)
James F. Kelliher
Vice President of Finance
Parametric Technology Corporation
128 Technology Drive
Waltham, Massachusetts 02154
--------------------------------------------------------------------------------
(Name and address of agent for service)
(617) 398-5554
--------------------------------------------------------------------------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Proposed maximum
Title of securities Amount to be maximum offering aggregate offering Amount of
to be registered registered price per share price registration fee
<S> <C> <C> <C> <C>
Common Stock, 651,596 shares(1) $52.25(2) $34,045,891(2) $11,739.96
$.01 par value
--------------------------------------------------------------------------------------------------------
</TABLE>
(1) To be offered by the Registrant pursuant to the Plan described herein.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(h) under the Securities Act of 1933, and based on
the average of the high and low sale prices of the Common Stock as reported
by the NASDAQ National Market System on July 25, 1995.
Page 1 of 15 Pages
Exhibit Index on page 6
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
-------------------------------------------------
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated herein by reference:
(a) The Registrant's latest annual report on Form 10-K filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(b) All other reports of the Registrant filed pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the fiscal year covered by the annual
report referred to in (a) above.
(c) The description of the Registrant's Common Stock, par value $.01 per
share (the "Common Stock"), contained in the Registrant's registration statement
on Form 8-A, filed on October 26, 1989, filed under the Exchange Act, including
any amendment or report filed for the purpose of updating such description.
All documents filed after the date of this Registration Statement by the
Registrant pursuant to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act
and prior to the filing of a post-effective amendment that indicates that all
shares of Common Stock offered hereunder have been sold or which deregisters all
shares of Common Stock remaining unsold shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of the filing of such
reports and documents.
Item 4. Description of Securities.
-----------------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
------------------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers.
--------------------------------------------------
Section 67 of Chapter 156B of the Massachusetts General Laws ("Section 67")
provides that a corporation may indemnify its directors and officers to the
extent specified in or authorized by (i) the articles of organization, (ii) a
by-law adopted by the stockholders, or (iii) a vote adopted by the holders of a
majority of the shares of stock entitled to vote on the election of directors.
In all instances, the extent to which a corporation provides indemnification to
its directors and officers under Section 67 is optional. In its Restated
Articles of Organization the Registrant has elected to commit to provide
indemnification to its directors and officers in specified circumstances.
Generally, Article 6 of the Registrant's Restated Articles of Organization
provides that the Registrant shall indemnify directors and officers of the
Registrant against liabilities and expenses arising out of legal proceedings
brought against them by reason of their status or service as directors or
officers or by reason of their agreeing to serve, at the request of the
Registrant as a director or officers of, or in a similar capacity with, another
organization or in any capacity with respect to any employee benefit plan of the
Registrant. Under this provision, a director or officer of the Registrant shall
be indemnified by the Registrant for all expenses, judgments, fines and amounts
paid in settlement of such proceedings, even if he is not successful on the
merits, if he acted in good faith and in a manner he reasonably believed to be
in the best interests of the Registrant.
The Registrant's Restated Articles of Organization establish the
presumption that the director or officer has met the applicable standard of
conduct required for indemnification. The indemnification above shall be made
unless the Board of Directors or independent counsel determines that the
applicable standard of conduct has not been met. Such a determination may be
made by a majority of a quorum of the directors, independent legal counsel, the
stockholders, or a court of competent jurisdiction. The Board of Directors
shall authorize advancing litigation expenses to a director or officer at his
request upon receipt of an undertaking by such
-2-
<PAGE>
director or officer to repay such expenses if it is ultimately determined that
he is not entitled to indemnification for such expenses.
The Registrant's Restated Articles of Organization also provide that, in
the event of a determination by the Board of Directors or independent legal
counsel that a director or officer did not meet the standard of conduct required
for indemnification, or if the Registrant fails to make an indemnification
payment or an advance of expenses within 60 days after such payment is claimed
by a director or officer, such director or officer may petition a court to make
an independent determination of whether such director or officer is entitled to
indemnification. The Registrant's Restated Articles of Organization explicitly
provide for partial indemnification of costs and expenses in the event that a
director or officer is not entitled to full indemnification.
Article 6 of the Registrant's Restated Articles of Organization also
eliminates the personal liability of the Registrant's directors to the
Registrant or its stockholders for monetary damages for breach of a director's
fiduciary duty, except to the extent Chapter 156B of the Massachusetts General
laws prohibits the elimination or limitation of such liability.
Item 7. Exemption from Registration Claimed.
--------------------------------------------
Not Applicable.
Item 8. Exhibits.
------------------
See Exhibit Index immediately following signature pages.
Item 9. Undertakings.
----------------------
(a) 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 of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth 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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
-------- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration
-3-
<PAGE>
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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referred to in Item 6 hereof, 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 Registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant 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 the 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 Act and
will be governed by the final adjudication of such issue.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Waltham, Massachusetts, on the 31st day of July,
1995.
PARAMETRIC TECHNOLOGY CORPORATION
By /s/ C. Richard Harrison
-----------------------------------------
C. Richard Harrison
President and Chief Operating Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Parametric Technology
Corporation, hereby severally constitute and appoint Steven C. Walske, Steven N.
Farber and Martha L. Durcan and each of them singly, our true and lawful
attorneys with full power to sign for us and in our names in the capacities
indicated below, any and all amendments to this Registration Statement on Form
S-8 and any and all other documents in connection herewith, hereby ratifying and
confirming our signatures as they may be signed by any of said attorneys
pursuant hereto.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Steven C. Walske Director and July 31, 1995
------------------------- Principal
Steven C. Walske Executive Officer
/s/ Robert N. Goldman Director July 31, 1995
-------------------------
Robert N. Goldman
/s/ Donald K. Grierson Director July 31, 1995
-------------------------
Donald K. Grierson
/s/ C. Richard Harrison Director July 31, 1995
-------------------------
C. Richard Harrison
/s/ Michael E. Porter Director July 31, 1995
-------------------------
Michael E. Porter
/s/ Noel G. Posternak Director July 31, 1995
-------------------------
Noel G. Posternak
/s/ James F. Kelliher Principal Financial July 31, 1995
------------------------- and Accounting Officer
James F. Kelliher
</TABLE>
-5-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
------- ----------- ----
<S> <C> <C>
4.1 Restated Articles of Organization of *
the Registrant. Filed as Exhibit 3.4
to the Annual Report on Form 10-K for
the fiscal year ended September 30, 1993
and incorporated herein by reference.
4.2 By-Laws, as amended and restated, of the *
Registrant. Filed as Exhibit 3.2 to the
Annual Report on Form 10-K for the fiscal year
ended September 30, 1990 and incorporated herein
by reference.
5.1 Opinion of Palmer & Dodge.
24.1 Consent of Palmer & Dodge
(included in Exhibit 5.1).
24.2 Consent of Price Waterhouse LLP.
25.1 Power of Attorney (contained on signature page hereto).
99.1 Rasna Corporation 1988 Stock Option Plan
</TABLE>
___________
*Incorporated by reference
-6-
<PAGE>
Exhibit 5.1
Palmer & Dodge
One Beacon Street
Boston, Massachusetts 02108
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
Telex: 951104
July 31, 1995
Parametric Technology Corporation
128 Technology Drive
Waltham, MA 02154
Gentlemen:
We are rendering this opinion in connection with the Registration Statement
on Form S-8 (the "Registration Statement") to be filed by Parametric Technology
Corporation, a Massachusetts corporation (the "Company") with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), on or about the date hereof. The Registration Statement
relates to up to 651,596 shares of Common Stock, $.01 par value, of the Company
(the "Shares"), issuable upon exercise of options granted under the Rasna
Corporation 1988 Stock Option Plan (the "Plan") which were assumed by the
Company in connection with its acquisition of Rasna Corporation.
We have acted as your counsel in connection with the preparation of the
Registration Statement and are familiar with the proceedings taken by the
Company in connection with authorization, issuance and sale of the Shares. We
have examined all such documents as we consider necessary to enable us to render
this opinion.
Based upon the foregoing, we are of the opinion that when issued in
accordance with the terms of the Plan and the options, the Shares will be duly
authorized, validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as a part of the
Registration Statement.
Very truly yours,
/s/Palmer & Dodge
PALMER & DODGE
-7-
<PAGE>
Exhibit 24.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated October 19, 1994, which appears on
page 23 of the 1994 Annual Report to Stockholders of Parametric Technology
Corporation, which is incorporated by reference in Parametric Technology's
Annual Report on Form 10-K for the year ended September 30, 1994. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedules, which appears on page 11 of such Annual Report on Form 10-
K.
PRICE WATERHOUSE LLP
Boston, Massachusetts /s/Price Waterhouse LLP
July 31, 1995
-8-
<PAGE>
Exhibit 99.1
RASNA CORPORATION
1988 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Option Plan are
--------------------
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. Definitions. As used herein, the following definitions shall apply;
-----------
(a) "Board" shall mean the Committee, if one has been appointed, or
-----
the Board of Directors of the Company, if no Committe is appointed.
(b) "Code" shall mean the Internal Revenue Code
----
of 1986, as amended.
(c) "Committee" shall mean the Committee appointed by the Board of
---------
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one
is appointed.
(d) "Common Stock" shall mean the Common Stock of the Company.
------------
(e) "Company" shall mean Rasna Corporation, a California corporation.
-------
(f) "Consultant" shall mean any person who is engaged by the Company
----------
or any Parent or Subsidiary to render consulting services and is compensated for
such consulting services, and any director of the Company whether compensated
for such services or not; provided that if and in the event the Company
registers any class of any equity security pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the term
Consultant shall thereafter not include directors who are not compensated for
their services or are paid only a director's fee by the Company.
(g) "Continuous Status as an Employee or Consultant" shall mean the
----------------------------------------------
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Board; provided that such leave is for a period
of not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
(h) "Employee" shall mean 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 to
constitute "employment" by the Company.
(i) "Incentive Stock Option" shall mean an Option intended to qualify
----------------------
as an incentive stock option within the meaning of Section 422 of the Code.
(j) "Nonstatutory Stock Option" shall mean an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
(k) "Option" shall mean a stock option granted pursuant to the Plan.
------
(l) "Optioned Stock" shall mean the Common Stock subject to an Option.
--------------
(m) "Optionee" shall mean an Employee or Consultant who receives
--------
an Option.
-9-
<PAGE>
(n) "Parent" shall mean a "parent corporation" whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
(o) "Plan" shall mean this 1988 Stock Option Plan.
----
(p) "Share" shall mean a share of the Common Stock, as adjusted in
-----
accordance with Section 11 of the Plan.
(q) "Subsidiary" shall mean a "subsidiary corporation" whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section
-------------------------
11 of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 4,533,000 shares 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. Notwithstanding any other provision of the Plan,
shares issued under the Plan and later repurchased by the Company shall not
become available for future grant or sale under the Plan.
4. Administration of the Plan.
--------------------------
(a) Procedure. The Plan shall be administered by the Board of
---------
Directors of the Company.
(i) Subject to subparagraph (ii), the Board of Directors may
appoint a Committee consisting of not less than two members of the Board of
Directors to administer the Plan on behalf of the Board of Directors, subject
to such terms and conditions as the Board of Directors may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by
the Board of Directors. Members of the Board who are either eligible for
Options or have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of any Options pursuant to the Plan,
except that no such member shall act upon the granting of an Option to
himself, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board during which action is taken with respect
to the granting of the Options to him.
(ii) Notwithstanding the foregoing subparagraph (i), if and in any
event the Company registers any class of any equity security pursuant to Section
12 of the Exchange Act, from the effective date of such registration until six
months after the termination of such registration, any grants of Options to
officers or directors shall only be made by the Board of Directors; provided,
however, that if a majority of the Board of Directors is eligible to participate
in this plan or any other stock option or other stock plan of the Company or any
of its affiliates, or has been eligible at any time within the preceding year,
any grants of options to directors must be made by, or only in accordance with
the recommendation of, a Committee consisting of three or more persons, who may
but need not be directors or employees of the Company, appointed by the Board of
Directors and having full authority to act in the matter, none of whom is
eligible to participate in this Plan or any other stock option or other stock
plan of the Company or any of its affiliates, or has been eligible at any time
within the preceding year. Any Committee administering the Plan with respect to
grants to officers who are not also directors shall conform to the requirements
of the preceding sentence. Once appointed, the Committee shall continue to
serve until otherwise directed by the Board of Directors.
(iii) Subject to the foregoing subparagraphs (i) and (ii), from
time to time the Board of Directors 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, or
remove all members of the Committee and thereafter directly administer the Plan.
(b) Powers of the Board. Subject to the provisions of the Plan, the
-------------------
Board shall have the authority, in its discretion: (i) to grant Incentive Stock
Options or Nonstatutory Stock Options; (ii) to determine, upon review of
relevant information and in accordance with Section 8(b) of the Plan, the fair
market value of
-10-
<PAGE>
the Common Stock; (iii) to determine the exercise price per share of Options to
be granted, which exercise price shall be determined in accordance with Section
8(a) of the Plan; (iv) to determine the Employees or Consultants to whom, and
the time or times at which, Options shall be granted and the number of shares to
be represented by each Option; (v) to interpret the Plan; (vi) to prescribe,
amend and rescind rules and regulations relating to the Plan; (vii) to determine
the terms and provisions of each Option granted (which need not be identical)
and, with the consent of the holder thereof, modify or amend each Option; (viii)
to accelerate or defer (with the consent of the Optionee) the exercise date of
any option, consistent with the provisions of Section 5 of the Plan; (ix) to
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted by the Board; and (x) to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
(c) Effect of Board's Decision. All decisions, determinations and
--------------------------
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
5. Eligibility.
-----------
(a) Nonstatutory Stock Options may be granted only to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.
(b) No Incentive Stock Option may be granted to an Employee which,
when aggregated with all other incentive stock options granted to such Employee
by the Company or any Parent or Subsidiary, would result in Shares having an
aggregate fair market value (determined for each Share as of the date of grant
of the Option covering such Share) in excess of $100,000 becoming first
available for purchase upon exercise of one or more incentive stock options
during any calendar year.
(c) Section 5(b) of the Plan shall apply only to an Incentive Stock
Option evidenced by an "Incentive Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall qualify as an
incentive stock option. Section 5(b) of the Plan shall not apply to any Option
evidenced by a "Nonstatutory Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall be a
Nonstatutory Stock Option.
(d) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to
------------
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 17 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.
7. Term of Option. The term of each Incentive Stock Option shall be
--------------
ten (10) years from the date of grant thereof or such shorter term as may be
provided in the Incentive Stock Option Agreement. The term of each Nonstatutory
Stock Option shall be ten (10) years and one (1) day from the date of grant
thereof or such shorter term as may be provided in the Nonstatutory Stock Option
Agreement. However, in the case of an Option granted to an Optionee who, at the
time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, (a) if the Option is an Incentive Stock Option, the term of the
Option shall be five (5) years from the date of the grant thereof or such
shorter term as may be provided in the Incentive Stock Option Agreement, or (b)
if the Option is a Nonstatutory Stock Option, the term of the Option shall be
five (5) years and one (1) day from the date of grant thereof or such shorter
term as may be provided in the Nonstatutory Stock Option Agreement.
8. Exercise Price and Consideration.
--------------------------------
(a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option
-11-
<PAGE>
(A) granted to an Employee who, at the time of the grant
of such Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
fair market value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the fair market value per Share on the date of
grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant of such Option,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the fair market value per Share on
the date of the grant.
(B) granted to any person, the per Share exercise price shall be no
less than 85% of the fair market value per Share on the date of grant.
(iii) In the case of an Option granted on or after the
effective date of registration of any class of equity security of the Company
pursuant to Section 12 of the Exchange Act and prior to six months after the
termination of such registration, the per Share exercise price shall be no
less than 100% of the fair market value per Share on the date of grant.
(b) The fair market value shall be determined by the Board in its
discretion; provided, however, that where there is a public market for the
Common Stock, the fair market value per share shall be the mean of the bid and
asked prices (or the closing price per share if the Common Stock is listed on
the National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System) of the Common Stock for the date of grant, as reported
in the Wall Street Journal (or, if not so reported, as otherwise reported by the
NASDAQ System) or, in the event the Common Stock is listed on a stock exchange,
the fair market value per Share shall be the closing price on such exchange on
the date of grant of the Option, as reported in the Wall Street Journal.
(c) 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 cash, check, promissory note, other Shares
of Common Stock having 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, or any combination of such methods of payment, or such other
consideration and method of payment for the issuance of Shares to the extent
permitted under Sections 408 and 409 of the California General Corporation Law.
In making its determination as to the type of consideration to accept, the Board
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company (Section 315(b) of the California General Corporation Law).
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan; provided, however, that an Incentive Stock Option granted prior to January
1, 1987 (the "Sequential Option") shall not be exercisable while there is
outstanding any Incentive Stock Option which was granted, before the granting of
the Sequential Option, to the same Optionee to purchase stock of the Company,
any Parent or Subsidiary, or any predecessor corporation of such corporations.
For purposes of this provision, an Incentive Stock Option shall be treated as
outstanding until such option is exercised in full or expires by reason of lapse
of time.
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
-12-
<PAGE>
Option 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 Board, consist of any consideration and method of payment allowable under
Section 8(c) 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. The company
shall issue (or cause to be issued) such stock certificate promptly upon
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 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) Termination of Status as an Employee or Consultant. In the event
--------------------------------------------------
of termination of an Optionee's Continuous Status as an Employee or Consultant
(as the case may be), such Optionee may, but only within thirty (30) days (or
such other prior of time, not exceeding three (3) months in the case of an
Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Board, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) after the
date of such termination (but in no event later than the date of expiration of
the term of such Option as set forth in the Option Agreement), exercise his
Option to the extent that he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of such termination, or if he does not exercise such Option (which he
was entitled to exercise) within the time specified herein, the Option shall
terminate.
(c) Disability of Optionee. Notwithstanding the provisions of Section
----------------------
9(b) above, in the event of termination of an Optionee's Continuous Status as an
Employee or Consultant as a result of his disability (as defined in Section
22(e)(3) of the Code), he may, but only within six (6) months (or such other
period of time not exceeding twelve (12) months as is determined by the Board,
with such determination in the case of an Incentive Stock Option being made at
the time of grant of the Option) from the date of such termination (but in no
event later than the date of expiration of the term of such Option as set forth
in the Option Agreement), exercise his Option to the extent he was entitled to
exercise it at the date of such termination. To the extent that he was not
entitled to exercise the Option at the date of termination, or if he does not
exercise such Option (which he was entitled to exercise) within the time
specified herein, the Option shall terminate.
(d) Death of Optionee. In the event of the
-----------------
death of an Optionee:
(i) during the term of the Option who is at the time of his death
an Employee or Consultant of the Company and who shall have been in Continuous
Status as an Employee or Consultant since the date of grant of the Option, the
Option may be exercised, at any time within three (3) months following the date
of death (but in no even later than the date of expiration of the term of such
Option as set forth in the Option Agreement), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that would have accrued had the
Optionee continued living and remained in Continuous Status as an Employee or
Consultant three (3) months after the date of death, subject to the limitation
set forth in section 5(b); or
(ii) within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within three (3) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.
10. 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 distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
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<PAGE>
11. Adjustments Upon Changes in Capitalization or Merger. Subject to
----------------------------------------------------
any required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock 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 of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock 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 number of issued shares of Common Stock 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 of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Option will terminate immediately prior to the consummation of such
proposed action. In the event of the merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent options shall be
substituted by such successor or corporation or a parent or subsidiary of such
successor corporation, unless such successor corporation does not agree to
assume the Option or to substitute an equivalent option, then the Option shall
terminate.
12. Time of Granting Options. The date of grant of an Option shall,
------------------------
for all purposes, be the date on which the Board makes the determination
granting such Option. Notice of the determination shall be given to each
Employee or Consultant to whom an Option 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 amend or terminate
-------------------------
the Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the shareholders of the Company in the manner described in Section 17 of the
Plan:
(i) any increase in the number of Shares subject to the
Plan, other than in connection with an adjustment under Section
11 of the Plan;
(ii) any change in the designation of the class of persons
eligible to be granted Options; or
(iii) if the Company has a class of equity securities
registered under Section 12 of the Exchange Act at the time of
such revision or amendment, any material increase in the
benefits accruing to participants under the Plan.
(b) Shareholder Approval. If any amendment requiring shareholder
--------------------
approval under Section 13(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 17 of the Plan.
(c) Effect of Amendment or Termination. Any such amendment 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, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
14. 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, and the requirements of any
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<PAGE>
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 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.
The 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 failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
16. Option Agreement. Options shall be evidenced by written option
----------------
agreements in such form as the Board shall approve.
17. Shareholder Approval.
--------------------
(a) 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. If such shareholder approval is obtained at a duly held
shareholders' meeting, it must be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company, or if such
shareholder approval is obtained by written consent, it must be obtained by the
unanimous written consent of all shareholders of the Company; provided, however,
that approval at a meeting or by written consent may be obtained by a lesser
degree of shareholder approval if the Board determines, in its discretion after
consultation with the Company's legal counsel, that such a lesser degree of
shareholder approval will comply with all applicable laws and will not adversely
affect the qualification of the Plan under Section 422 of the Code.
(b) If and in the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the shareholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
(c) If any required approval by the shareholders of the Plan itself or
of any amendment thereto is solicited at any time otherwise than in the manner
described in Section 17(b) hereof, then the Company shall, at or prior to the
first annual meeting of shareholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
officer or director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote for the
Plan substantially the same information which would be required (if proxies to
be voted with respect to approval or disapproval of the Plan or amendment were
then being solicited) by the rules and regulations in effect under Section
14(a) of the Exchange Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and Exchange
Commission four copies of the written information referred to in subsection (i)
hereof not later than the date on which such information is first sent or given
to shareholders.
18. Information to Optionees. The Company shall provide to each Optionee,
------------------------
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.
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