<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1996
REGISTRATION NO. 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
______________________
ADVANCED LOGIC RESEARCH, INC.
(Exact name of Registrant as specified in its charter)
______________________
DELAWARE 33-0084573
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
9401 JERONIMO ROAD
IRVINE, CALIFORNIA 92718-1908
(Address of principal executive offices) (Zip code)
______________________
DIRECTORS' NON-QUALIFIED STOCK OPTION PLAN
(Full title of the Plan)
______________________
GENE LU
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ADVANCED LOGIC RESEARCH, INC.
9401 JERONIMO ROAD, IRVINE, CALIFORNIA 92718-1908
(Address, including zip code, of agent for service)
(714) 581-6770
(Telephone number, including area code, of agent for service)
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
<S> <C> <C> <C> <C>
Options to purchase 120,000 N/A N/A N/A
Common Stock
Common Stock, 120,000 shares $7.375 $885,000 $305.17
$0.01 par value
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Directors' Non-Qualified
Stock Option Plan by reason of any stock dividend, stock split,
recapitalization or any other similar transaction without receipt of
consideration which results in an increase in the number of outstanding
shares of Common Stock of Advanced Logic Research, Inc.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the average of
the high and low selling prices per share of Common Stock of Advanced
Logic Research, Inc. on August 22, 1996, as reported by the Nasdaq
National Market.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Advanced Logic Research, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995, filed with the SEC on December 27, 1995;
(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended December 31, 1995, March 31, 1996, and June 30,
1996, filed with the SEC on February 14, 1996, May 15, 1996, and
August 14, 1996, respectively;
(c) The Registrant's Registration Statement No. 00-018753 on Form 8-A,
filed with the SEC on August 8, 1990, in which there is described
the terms, rights and provisions applicable to the Registrant's
outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As authorized by the Delaware General Corporation Law, as amended (the
"Delaware Law"), the Registrant's charter documents provide that no director of
the Registrant will be personally liable to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director except for
liability (i) for any breach of the director's duty of loyalty to the Registrant
or its stockholders, (ii) for acts or omissions
<PAGE> 3
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) in respect of certain unlawful dividend payments or stock
redemptions or repurchases and (iv) for any transaction from which the director
derives an improper personal benefit. The effect of this provision is to
eliminate the rights of the Registrant and its stockholders (through
stockholders' derivative suits on behalf of the Registrant) to recover monetary
damages against a director for breach of the fiduciary duty of care as a
director (including breaches resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (i) through (iv) above.
This provision does not limit or eliminate the rights of the Registrant or any
stockholder to seek nonmonetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care. In addition, the
Registrant's charter documents provide for indemnification of the directors and
officers of the Registrant to the fullest extent authorized under Delaware Law,
and that if the Delaware Law is amended to authorize broader indemnification of
officers and directors or the further elimination or limitation of the liability
of a director, then such indemnification shall be increased and such liability
shall be eliminated or limited to the fullest extent permitted by the Delaware
Law, as so amended.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 00-018753 on
Form 8-A which is incorporated herein by reference pursuant to
Item 3(c).
5 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants -- KPMG Peat Marwick LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Directors' Non-Qualified Stock Option Plan.
99.2 Form of Directors' Non-Qualified Stock Option Agreement.
</TABLE>
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, as amended (the "1933 Act"), (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, represent a fundamental change
in the information set forth in this Registration Statement and (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 clauses
(1)(i) and (1)(ii) shall 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 1934 Act
that are incorporated by reference into this Registration Statement; (2) that
for the purpose of determining any liability under the 1933 Act, each such
post-effective amendment shall be deemed to be a new registration statement
<PAGE> 4
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; and
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold upon the termination of the
Registrant's Directors' Non-Qualified Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this 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.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnity provisions incorporated by reference in
Item 6, or otherwise, the Registrant has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the 1933
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 1933 Act and
will be governed by the final adjudication of such issue.
<PAGE> 5
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 Irvine, State of California on this 22nd day of
August, 1996.
ADVANCED LOGIC RESEARCH, INC.
By: /s/ Gene Lu
-------------------------------------
Gene Lu
Chairman of the Board, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of Advanced Logic
Research, Inc., a Delaware corporation, do hereby constitute and appoint Gene Lu
and Ronald J. Sipkovich, and each of them, the lawful attorneys-in-fact and
agents, with full power and authority to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, or either one
of them, determine may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and any rules
or regulation or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement and to any and all instruments or documents filed as part
of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or either one of them, shall do or cause to
be done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power
of Attorney as of the date indicated.
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>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Gene Lu Chairman of the Board, President August 22, 1996
- ---------------------------- and Chief Executive Officer
Gene Lu (Principal Executive Officer)
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Ronald J. Sipkovich Vice President, Finance and August 22, 1996
- --------------------------- Administration, Chief Financial
Ronald J. Sipkovich Officer and Secretary (Principal
Financial and Accounting Officer)
/s/ Chun Win Wong Director August 22, 1996
- ---------------------------
Chun Win Wong
/s/ Philip A. Harding Director August 22, 1996
- ---------------------------
Philip A. Harding
/s/ Therese E. Myers Director August 22, 1996
- ---------------------------
Therese E. Myers
Director , 1996
- --------------------------- ---------
Kenneth W. Simonds
</TABLE>
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made
to Registrant's Registration Statement No. 00-018753 on Form
8-A, which is incorporated herein by reference pursuant to
Item 3(c).
5 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - KPMG Peat Marwick LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Directors' Non-Qualified Stock Option Plan.
99.2 Form of Directors' Non-Qualified Stock Option Agreement.
</TABLE>
<PAGE> 1
EXHIBIT 5
Opinion of Brobeck, Phleger & Harrison LLP
August 26, 1996
ADVANCED LOGIC RESEARCH, INC.
9401 Jeronimo Road
Irvine, California 92718-1908
RE: ADVANCED LOGIC RESEARCH, INC. (THE "CORPORATION") --
REGISTRATION STATEMENT FOR OFFERING OF 120,000 SHARES OF COMMON
STOCK
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 120,000 shares of
the Corporation's Common Stock authorized for issuance under the Directors'
Non-Qualified Stock Option Plan (the "Plan"). We advise you that, in our
opinion, when such shares have been issued and sold pursuant to the provisions
of the Plan, and in accordance with the Registration Statement, such shares will
be validly issued, fully paid and non-assessable shares of the Corporation's
Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Advanced Logic Research, Inc.:
We consent to incorporation by reference in the registration statement on Form
S-8 of Advanced Logic Research, Inc. of our report dated November 2, 1995,
relating to the consolidated balance sheets of Advanced Logic Research, Inc. and
subsidiaries as of September 30, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended September 30, 1995, and related schedule,
which report appears in the September 30, 1995 annual report on Form 10-K of
Advanced Logic Research, Inc.
/s/ KPMG PEAT MARWICK LLP
-------------------------
Orange County, California
August 22, 1996
<PAGE> 1
Exhibit 99.1
ADVANCED LOGIC RESEARCH, INC.
DIRECTORS' NON-QUALIFIED STOCK OPTION PLAN
(As amended through November 8, 1995)
1. Establishment, Purpose, and Definitions.
(a) There is hereby adopted the Directors' Non-Qualified Stock
Option Plan (the "Plan") of Advanced Logic Research, Inc. (the "Company"). The
Plan is intended to provide a means whereby eligible directors of the Company,
as described in subparagraph 3(b) ("Participants"), may be given an opportunity
to purchase shares of Stock (as defined in Paragraph 3 of the Plan) of the
Company (the "Stock") pursuant to options which are not intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code as
amended from time to time.
(b) The purpose of this Plan is to provide incentives to
Participants for increased efforts and successful achievements on behalf of or
in the interests of the Company while serving on the Company's Board of
Directors (the "Board") and to maximize the rewards due them for such increased
efforts and successful achievements.
(c) The term "affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Section 424(e) and (f) of the Internal
Revenue Code (but substituting "the Company" for "employer corporation"),
including parents or subsidiaries which become such after adoption of the Plan.
2. Administration of the Plan. Administration of the Plan shall be
self-executing in accordance with the express terms of the Plan and neither the
Board nor any committee of the Board shall exercise any discretionary function
with respect to option grants made thereunder.
3. Stock Subject to the Plan.
(a) Stock shall mean Common Stock, $0.01 par value, of the
Company or such stock as the Common Stock may be changed into as contemplated by
subparagraph 3(c) below. The maximum number of shares of Stock which may be
issued over the term of the Plan shall not exceed 120,000(1) shares.
(b) An option to purchase 5,000 shares of Stock shall be granted
("Initial Grant") to each director who is not an officer of the Company
("Non-Employee Director"), such Initial Grant to be made on the later of (i) the
date of adoption by the
- --------
(1)Includes the 60,000-share increase approved by the Board on November 8, 1995,
and approved by the Company's stockholders at the 1996 Annual Meeting.
<PAGE> 2
Board of the Plan or (ii) the date the Non-Employee Director is initially
elected to serve on the Board. Thereafter, immediately following each annual
meeting of the Company's stockholders, each Non-Employee Director who continues
as a Non-Employee Director following such annual meeting shall be granted an
option to purchase 2,500 shares of Stock ("Subsequent Grant"), provided that no
Subsequent Grant shall be made to any such Non- Employee Director who has not
served as a director of the Company for at least one (1) year from the date of
his or her Initial Grant. Each such Subsequent Grant shall be made on the date
of the annual stockholders' meeting in question. If any option ceases to be
exercisable in whole or in part, the shares which were subject to such option
but as to which the option had not been exercised shall continue to be available
under the Plan.
(c) If there shall be any change in the Stock subject to the
Plan, including Stock subject to any option granted hereunder, through merger,
consolidation, reorganization, reincorporation, or other similar change in the
corporate structure of the Company, appropriate adjustments may be made by the
Board in order to preserve but not to increase the benefits to Participants,
including adjustments in the number of shares and the price per share subject to
outstanding options granted hereunder. Consistent with the foregoing, in the
event that the outstanding Common Stock of the Company is changed into another
class or series of capital stock of the Company, outstanding options granted
under the Plan shall become options to purchase such other class or series and
the provisions of this subparagraph 3(c) shall apply to such new class or
series.
4. Eligibility. All Non-Employee Directors shall be eligible to
receive grants of Stock options as provided in subparagraph 3(b) hereof.
5. Exercise Price for Options Granted Under the Plan. The exercise
price of the Stock covered by each option shall be the per-share fair market
value of such Stock on the date the option is granted. The price of an option
granted under the Plan shall be subject to adjustment to the extent provided in
subparagraph 3(c), above.
6. Terms and Conditions of Options.
(a) Each option granted pursuant to the Plan shall be evidenced
by a written stock option agreement executed by the Company and the person to
whom such option is granted.
(b) Each option granted pursuant to the Plan shall have a term of
ten (10) years and one (1) month measured from the option grant date.
(c) No option granted under the Plan may be exercised prior to
six (6) months following the date of grant. After such six (6)-month period, the
option may be exercised for any or all of the shares of Stock subject to such
option as fully vested shares of Stock.
2.
<PAGE> 3
(d) Should a Participant cease to serve as a Non-Employee
Director for any reason during the six (6)-month period following the date of
grant of an option, then such option shall, immediately upon such cessation of
Board service, terminate and cease to be outstanding.
(e) Should a Participant cease to serve as a Non-Employee
Director for any reason after the six (6)-month period following the date of
grant of an option, then such Participant shall have a one (1)-year period
following the date of such cessation of Board service in which to exercise such
option for any or all of the shares of Stock subject to such option as fully
vested shares of Common Stock. In no event, however, shall an option remain
exercisable after the expiration of the option term. Upon expiration of the one
(1)-year post-service exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding with respect
to any shares of Stock for which the option has not been exercised.
7. Use of Proceeds. Cash proceeds realized from the sale of Stock
pursuant to Stock issued under the Plan shall constitute general funds of the
Company.
8. Amendment of the Plan. The Board shall have complete and exclusive
power and authority to amend or modify the Plan in any or all respects. However,
(i) the Plan, together with the option grants outstanding hereunder, may not be
amended at intervals more frequently than once every six (6) months, other than
to the extent necessary to comply with applicable Federal income tax laws and
regulations and (ii) no such amendment or modification shall adversely affect
the rights and obligations with respect to options at the time outstanding under
the Plan unless the Participant consents to such amendment or modification. In
addition, the Board shall not, without the approval of the Company's
stockholders, (i) materially increase the maximum number of shares issuable
under the Plan or the number of shares for which options may be granted to each
Participant, except for permissible adjustments in the event of certain changes
in the Company's capitalization, (ii) materially modify the eligibility
requirements for Plan participation or (iii) materially increase the benefits
accruing to Participants.
9. Assignability of Options. Each option to purchase Stock granted
pursuant to this Plan shall, during the Participant's lifetime, be exercisable
only by the Participant, and the option shall not be transferable by the
Participant by operation of law or otherwise other than by will, the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code, or Title I of ERISA, or the rules
thereunder, or otherwise as permitted by Rule 16b-3 of the Securities and
Exchange Commission.
10. Payment Upon Exercise. Payment of the exercise price upon exercise
of any option to purchase Stock granted under this Plan shall be made in whole
or in part with (i) cash, (ii) shares of Stock held by the Participant for the
requisite period necessary to avoid a charge to the Company's earnings for
financial reporting purposes and valued at
3.
<PAGE> 4
fair market value on the date of the exercise of the option, or (iii) through a
special sale and remittance procedure pursuant to which the Participant shall
concurrently provide irrevocable written instructions to (A) a
Company-designated brokerage firm to effect the immediate sale of the purchased
shares and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate option exercise price
payable for the purchased shares plus all applicable Federal and State income
and employment taxes required to be withheld by the Company in connection with
such exercise and (B) the Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale
transaction.
11. Withholding Taxes.
(a) Shares of Stock issued hereunder shall be delivered to a
Participant only upon payment by such person to the Company of the amount of any
withholding tax which may be imposed thereon under the provisions of the
Internal Revenue Code as then in effect or any law or any other taxing
jurisdiction requiring such withholding tax.
(b) The Board may, under such terms and conditions as it deems
appropriate, authorize a Participant to satisfy withholding tax obligations
under this paragraph 11 by delivering shares of Stock or by electing to have the
Company withhold from the Stock to be issued to the Participant shares of Stock
having a fair market value equal to the amount of the withholding tax required
to be withheld.
12. Effective Date of Plan. The Plan became effective when adopted by
the Board in August 1990 and was approved by the Company's stockholders in
February 1991. On May 12, 1992, the Board amended the Plan to bring it into
compliance with the requirements of Rule 16b-3 of the Securities and Exchange
Commission. On November 8, 1995, the Board further amended the Plan to increase
the maximum number of shares of Stock reserved for issuance over the term
thereof from 60,000 to 120,000 shares. Such 60,000-share increase was approved
by the Company's stockholders at the 1996 Annual Meeting.
4.
<PAGE> 1
Exhibit 99.2
ADVANCED LOGIC RESEARCH, INC.
DIRECTORS' NON-QUALIFIED STOCK OPTION AGREEMENT
This agreement is made as of _______________, 199__ (the "Grant Date"),
between ADVANCED LOGIC RESEARCH, INC., a Delaware corporation (the "Company"),
and _________________ ("Optionee") (the "Agreement").
WITNESSETH:
WHEREAS, the Company has adopted the Advanced Logic Research, Inc.
Directors' Non-Qualified Stock Option Plan (the "Plan"), which Plan is
incorporated in this Agreement by reference and made a part of it;
WHEREAS, the Company desires to provide additional incentives and
rewards for Optionee's work as a director of the Company; and
WHEREAS, the Company has determined that it would be to the advantage
and in the interest of the Company and its stockholders to grant the options
provided for in the Agreement to Optionee for that purpose.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Agreement hereby agree as follows:
1. Option Grant. Subject to obtaining approval of the Plan by the
Company's stockholders, the Company hereby grants to Optionee the right and
option to purchase from the Company on the terms and conditions hereinafter set
forth, all or any part of an aggregate of ( ) shares of the Common
Stock of the Company (the "Stock"). The exercise price of the stock subject to
this option shall be $ per share.
2. Option Period. This option shall be exercisable only during the
Option Period, and during such Option Period, the exercisability of the option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and, except as
provided in paragraph 3, shall end on the Terminal Date which shall be ten years
and one month from the Grant Date.
3. Limits on Option Period. The Option Period may end before the
Terminal Date, as follows:
a. If Optionee ceases to be a director on the Company's Board of
<PAGE> 2
Directors (the "Board") for any reason other than cause, disability (within the
meaning of subparagraph (c)) or death during the Option Period, the Option
Period shall terminate one year after the date Optionee ceases to be a director
or on the Terminal Date, whichever shall first occur, and the option shall be
exercisable only to the extent exercisable under paragraph 4 on the date
Optionee ceases to be a director.
b. If Optionee should die while serving on the Company's Board,
the Option Period shall end one year after the date of death or on the Terminal
Date, whichever shall first occur, and Optionee's executor or administrator or
the person or persons to whom Optionee's rights under this option shall pass by
will or by the applicable laws of descent and distribution may exercise the
entire unexercised portion of this option (or any lesser amount).
c. If Optionee ceases to be a director by reason of disability,
as defined below, the Option Period shall end one year after the date Optionee
ceases to be a director or on the Terminal Date, whichever shall first occur,
and the option shall be exercisable only to the extent exercisable under
paragraph 4 on the date Optionee ceases to be a director. For purposes of this
subparagraph (c), an individual is permanently and totally disabled if he is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which as lasted or can be expected to last for a continuous period of
not less than 12 months. An individual shall not be considered to be permanently
and totally disabled unless he furnishes proof of the existence thereof in such
form and manner, and at such times, as the Board may require.
d. If Optionee is removed from the Board for cause during the
Option Period, the Option Period shall terminate on the date of such Optionee's
removal as a director and shall not thereafter be exercisable to any extent.
4. Vesting of Right to Exercise Options. The shares covered by this
option shall vest as to one hundred percent (100%) of the number of shares
covered by the option, at any time after six months from the Grant Date. No
partial exercise of this option may be for less than five percent (5%) of the
total number of shares then available under this option to purchase shares of
Stock. In no event shall the Company be required to issue fractional shares.
5. Method of Exercise. Optionee may exercise the option with respect
to all of any part of the shares of Stock then subject to such exercise as
follows:
a. By giving the Company written notice of such exercise,
specifying the number of such shares as to which this option is exercised. Such
notice shall be accompanied by an amount equal to the exercise price of such
shares, in the form of any one or combination of the following: cash; a
certified check, bank draft, postal or express money order payable to the order
of the Company in lawful money of
2.
<PAGE> 3
the United States; or, if permitted by the Board, shares of Stock valued at fair
market value in accordance with procedures established by the Board, or a
full-recourse, interest-bearing note including such terms as the Board
determines appropriate.
b. If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or Optionee's legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which has heretofore been (or may hereafter be) filed and become
effective under the Securities Act of 1933, as amended, and with respect to
which no stop order suspending the effectiveness thereof has been issued, and
(2) any other sale of such shares with respect to which in the opinion of
counsel for the Company, such assurance is not required to be given in order to
comply with the provisions of the Securities Act of 1993, as amended.
As soon as practicable after receipt of the notice required in
paragraph 5(a) and satisfaction of the conditions set forth in paragraph 5(b),
the Company shall, without transfer or issue tax and without other incidental
expense to Optionee, deliver to Optionee at the office of the Company, at 9401
Jeronimo, Irvine, California 92718, attention of the Corporate Secretary, or
such other place as may be mutually acceptable to the Company and Optionee, a
certificate or certificates of such shares of Stock; provided, however, that the
time of such delivery may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply with applicable registration
requirements under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, any applicable listing requirements of any
national securities exchange, and requirements under any other law or regulation
applicable to the issuance or transfer of such shares. If Optionee fails to
accept delivery of and pay for all or any part of the number of shares specified
in such notice upon tender or delivery thereof, Optionee's right to purchase
such shares may be terminated by the Company at its election.
6. Corporate Transactions. If there should be any change in the Stock
subject to this option, through merger, consolidation, reorganization,
reincorporation, or other similar change in the corporate structure of the
Company, the Company may make appropriate adjustments in order to preserve, but
not to increase, the benefits to Optionee, including adjustments in the number
of shares subject to this option and in the exercise price per share. If there
shall be any change in the Stock subject to the option herein granted, through
recapitalization, stock split, stock dividend (in excess of two percent) or
other similar change in the corporate structure of the Company, adjustments
shall automatically occur to preserve but not increase the benefits to the
Optionee, including adjustments in the number of shares subject to this option
and in the exercise price per share. Any adjustment made pursuant to this
paragraph 6 as a consequence of a change in the corporate structure of the
Company shall not entitle Optionee to acquire
3.
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a number of shares of Stock of the Company or shares of stock of any successor
company greater than the number of shares Optionee would receive if, prior to
such change, Optionee had actually held a number of shares of Stock equal to the
number of shares then subject to this option.
7. Limitations on Transfer. This option shall, during Optionee's
lifetime, be exercisable only by Optionee, and neither this option nor any right
hereunder shall be transferable by Optionee by operation of law or otherwise
other than by will or the laws of descent and distribution. In the event of any
attempt by Optionee to alienate, assign, pledge, hypothecate, or otherwise
dispose of this option or of any right hereunder, except as provided for in this
Agreement, or in the event of the levy of any attachment, execution, or similar
process upon the rights or interest hereby conferred, the Company at its
election may terminate this option by notice to Optionee and this option shall
thereupon become null and void.
8. No Stockholder Rights. Neither Optionee nor any person entitled to
exercise Optionee's rights in the event of Optionee's death shall have any of
the rights of a stockholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.
9. Notice. Any notice required to be given under the terms of this
Agreement shall be addressed to the Company in care of its Corporate Secretary
at the office of the Company at 9401 Jeronimo, Irvine, California 92718, and any
notice to be given to Optionee shall be addressed to Optionee at the address
given by Optionee beneath Optionee's signature to this Agreement, or such other
address as either party to this Agreement may hereafter designate in writing to
the other. Any such notice shall be deemed to have been duly given when enclosed
in a properly sealed envelope addressed as aforesaid, registered or certified
and deposited (postage and registration or certification fee prepaid) in a post
office or branch post office regularly maintained by the United States.
10. Board Decisions Conclusive. All decisions of the Board upon any
question arising under the Plan or under this Agreement shall be conclusive.
11. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
12. Withholding. Optionee agrees to make appropriate arrangements with
the Company for satisfaction of any applicable federal, state or local income
tax withholding requirements or social security requirements.
4.
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13. Governing Law. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first written above.
ADVANCED LOGIC RESEARCH, INC.
By_______________________________
_________________________________
_______________________, Optionee
Address: _________________________________
_________________________________
5.
