<PAGE>
As filed with the Securities and Exchange Commission on December 20, 1996
Registration No. 333-________________
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CYGNUS, INC.
(Exact name of issuer as specified in its charter)
DELAWARE 94-2978092
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
400 PENOBSCOT DRIVE, REDWOOD CITY, CALIFORNIA 94063
(Address of principal executive offices) (Zip Code)
---------------
CYGNUS, INC.
1994 STOCK OPTION/STOCK AWARD PLAN
1991 EMPLOYEE STOCK PURCHASE PLAN
(FULL TITLE OF THE PLANS)
GREGORY B. LAWLESS
CHIEF EXECUTIVE OFFICER AND PRESIDENT
CYGNUS, INC.
400 PENOBSCOT DRIVE, REDWOOD CITY, CALIFORNIA 94063
(Name and address of agent for service)
(415) 369-4300
(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>
1994 STOCK OPTION/AWARD PLAN
Options to Purchase Common Stock 1,500,000 N/A N/A N/A
Common Stock 1,500,000 $14.25 $21,375,000 $6,477.27
AMENDED 1991 EMPLOYEE STOCK PURCHASE PLAN
Common Stock 200,000 $14.25 $2,850,000 $863.64
Aggregate Filing Fee: $7,341.00
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement shall also cover any additional shares
of Common Stock which become issuable under the 1994 Stock Option/Award
Plan and the Amended 1991 Employee Stock Purchase Plan by reason of any
stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which results
in an increase in the number of the Registrant's outstanding shares of
Common Stock.
<PAGE>
(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 the Common Stock Of
Cygnus, Inc. on December 18, 1996, as reported by the Nasdaq National
Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Cygnus, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents
previously filed with the Securities and Exchange Commission (the
"Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 filed with the Commission
pursuant to Section 13 of the Securities Exchange Act of
1934 (the "1934 Act").
(b) The Registrant's Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1996, June 30, 1996, and
September 30, 1996, filed with the Commission on May 14,
1996, August 14, 1996 and November 13, 1996, respectively.
(c) The Registrant's Registration Statement No. 0-18962 on
Form 8-A filed with the Commission on October 29, 1993, 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 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.
II-1.
<PAGE>
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the
"Delaware Law") and Article VI of the Registrant's Bylaws (the
"Bylaws"), provide for the indemnification of directors, officers,
employees and other agents under certain circumstances. The Bylaws
require the Company to indemnify each of its officers and directors to
the maximum extent permitted by the Delaware Law against certain
expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason
of the fact that such person is or was an agent of the Registrant. In
addition, the Bylaws grant the Registrant the power to indemnify its
employees and agents under certain circumstances to the fullest extent
permitted by Delaware Law against certain expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in
connection with any proceeding arising by reason of the fact that such
person is or was an agent of the Registrant.
Section 145 of the Delaware Law and Article Four of the
Registrant's Certificate of Incorporation (the "Certificate") provide
for the indemnification, subject to certain limitations, of directors
and officers for breach of their duty to the Registrant and its
stockholders. The Certificate provides for indemnification to the
fullest extent permitted by Delaware Law.
The Registrant maintains directors' and officers' liability
insurance policies insuring the Registrant's directors and officers
against certain liabilities and expenses incurred by them in their
capacities as such, and insuring the Registrant under certain
circumstances, in the event that indemnification payments are made by
the Registrant to such directors and officers.
The Registrant has entered into indemnification agreements with
its officers and directors, pursuant to which the Registrant is
obligated to indemnify each officer and director against certain claims
and expenses for which the officer or director might be held liable.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
Item 8. EXHIBITS
Exhibit
Number Exhibit
- -------- -------
4.0 Instruments Defining Rights of Shareholders. Reference is made
to Registrant's Registration Statement No. 0-18225 on Form 8-A
which is incorporated herein by reference pursuant to Item 3(c).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1994 Stock Option/Award Plan.
99.2 Amended 1991 Employee Stock Purchase Plan.
II-2.
<PAGE>
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 1933 Act, (ii) to
reflect in the prospectus any facts or events arising after the
effective date of the 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 the Registration Statement, and (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the 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 the 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 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 at
the termination of the Cygnus, Inc. 1994 Stock Option/Award Plan and/or
Amended 1991 Employee Stock Purchase 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 the
Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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 summarized in
Item 6 or otherwise, the Registrant has been informed that, in the
opinion of the Commission, 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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Redwood City, State of California, on this 12th day of
December, 1996.
CYGNUS, INC.
By /s/ Gregory B. Lawless
-------------------------------------
Gregory B. Lawless
Chief Executive Officer and President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gregory B. Lawless and John C. Hodgman
and each of them acting individually, as such person's true and lawful
attorneys-in-fact and agents, each with full power of substitution, for
such person, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement,
and to file same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as such person might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his or her substitutes, may do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons on behalf of the Registrant and in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- -----
<C> <C> <C>
/s/ Gregory B. Lawless Chief Executive Officer, December 12, 1996
- -------------------------- President and Director (Principal
Gregory B. Lawless Executive Officer)
/s/ John C. Hodgman Vice President, Finance and December 12, 1996
- -------------------------- and Chief Financial Officer
John C. Hodgman (Principal Financial and Accounting
Officer)
/s/ Gary W. Cleary Chairman of the Board December 12, 1996
- -------------------------- and Director
Gary W. Cleary
</TABLE>
II-2.
<PAGE>
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- -----
<S> <C> <C>
/s/ Frank T. Cary
- -------------------------- Director December 12 , 1996
Frank T. Cary
/s/ Andre F. Marion
- -------------------------- Director December 12, 1996
Andre F. Marion
/s/ Richard G. Rogers
- -------------------------- Director December 12, 1996
Richard G. Rogers
/s/ Walter B. Wriston
- -------------------------- Director December 12, 1996
Walter B. Wriston
</TABLE>
II-3.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
CYGNUS, INC.
II-4.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
------ -------
4.0 Instruments Defining Rights of Shareholders. Reference is made to
Registrant's Registration Statement No. 0-18225 on Form 8-A which
is incorporated herein by reference pursuant to Item 3(c).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1994 Stock Option/Award Plan.
99.2 Amended 1991 Employee Stock Purchase Plan.
<PAGE>
EXHIBIT 5.0
Opinion of Brobeck, Phleger & Harrison LLP
December 16, 1996
Cygnus, Inc.
400 Penobscot Drive
Redwood City, California 94063
Re: Cygnus, Inc. Registration Statement for
Offering of 1,700,000 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 (i) 1,500,000 shares of the
common stock ("Common Stock") of Cygnus, Inc. (the "Company") issuable under
the Company's 1994 Stock Option/Award Plan and (ii) 200,000 shares of the
Common Stock of the Company issuable under the Company's Amended 1991
Employee Stock Purchase Plan, (collectively, the "Plans"). We advise you
that, in our opinion, when such shares have been issued and sold pursuant to
the applicable provisions of the Plans and in accordance with the
Registration Statement, such shares will be validly issued, fully paid and
nonassessable shares of 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>
EXHIBIT 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Cygnus, Inc. 1994 Stock Option/Stock Award Plan and
the Cygnus, Inc. 1991 Employee Stock Purchase Plan of our reports dated January
19, 1996,with respect to the consolidated financial statements of Cygnus, Inc.
incorporated by reference in its Annual Report (Form 10-K) for the year ended
December 31, 1995 and the related financial statement schedule included therein,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Palo Alto, California
December 16, 1996
<PAGE>
EXHIBIT 99.1
CYGNUS, INC.
1994 STOCK OPTION\AWARD PLAN
I. PURPOSE
This Cygnus, Inc. 1994 Stock Option/Award Plan ("Plan") is intended to
enable Cygnus, Inc. (the "Company") to attract and retain the following
individuals by offering them incentives and rewards, in the form of options,
restricted shares, share rights, and share units ("awards") which will
encourage them to acquire a proprietary interest in the Company and to
continue in the service of the Company or its subsidiaries: (a) employees
(including officers and directors) of the Company and its subsidiaries, (b)
non-employee members of the Board of Directors of the Company ("Board"), and
(c) consultants and independent contractors who perform valuable services for
the Company and its subsidiaries.
This Plan supersedes the Company's Amended 1986 Stock Option Plan (the
"Prior Plan"), effective January 1, 1994.
II. ADMINISTRATION
The Plan will be administered by a committee or committees appointed by
the Board and consisting of one or more members of the Board. The Board may
delegate the responsibility for administration of the Plan with respect to
designated classes of award holders to different committees, subject to such
limitations as the Board deems appropriate. With respect to any matter, the
term "Committee," when used in this Plan, will refer to the committee that
has been delegated authority with respect to such matter. Members of a
committee will serve for such term as the Board may determine, and will be
subject to removal by the Board at any time.
A. 16(b). The composition of any committee responsible for
administration of the Plan with respect to award holders who are subject to
the trading restrictions of Section 16(b) of the Securities Exchange Act of
1934 ("1934 Act") with respect to securities of the Company will comply with
the applicable requirements of Rule 16b-3 of the Securities and Exchange
Commission.
B. AUTHORITY. Any committee appointed by the Board will have full
authority to administer the Plan within the scope of its delegated
responsibilities, including authority to interpret and construe any relevant
provision of the Plan, to adopt such rules and regulations as it may deem
necessary, and to determine the terms and conditions of awards made under the
Plan (which need not be identical). Decisions of a committee made within the
discretion delegated to it by the Board will be final and binding on all
persons who have an interest in the Plan.
III. ELIGIBILITY FOR AWARDS
A. DISCRETIONARY AWARDS. From time to time the Committee may, in its
discretion, select individuals from among the following categories to receive
awards under the Plan:
1. EMPLOYEES. The Committee may select employees of the Company or
its subsidiaries (including officers, whether or not they are also members
of the Board).
<PAGE>
2. CONSULTANTS AND INDEPENDENT CONTRACTORS. The Committee may
select consultants and independent contractors whose services tend to
contribute materially to the success of the Company or its subsidiaries or
whose services may reasonably be anticipated to so contribute.
B. AUTOMATIC GRANTS. Members of the Board who are not employees of the
Company or its subsidiaries will receive options in accordance with, and only
in accordance with, the Plan's automatic grant provisions.
IV. STOCK SUBJECT TO THE PLAN
A. CLASS. The stock subject to awards under the Plan is the Company's
authorized but unissued or reacquired Common Stock ("Common Stock"). In
connection with the grant of awards under the Plan, the Company may
repurchase shares in the open market or otherwise.
B. AGGREGATE AMOUNT
1. SHARES. Subject to adjustment under Sections IV(d) and IV(b)(2),
the aggregate maximum number of shares of Common Stock that may be subject
to awards under the Plan as amended is 1,763,242.
2. LIMITATION ON NUMBER OF SHARES AVAILABLE FOR GRANT. The maximum
number of shares that may be granted in fiscal year 1996 is 500,000.
3. REUSE OF SHARES. If any outstanding option under the Plan or the
Prior Plan expires or is terminated or cancelled for any reason before
being exercised for the full number of shares to which it applies, then the
shares allocable to the unexercised portion of such option will not be
charged against the limitations of Section IV(b)(1) and will become
available for subsequent grants under the Plan. To the extent that a share
right or share unit expires or is terminated, or is cancelled or forfeited
for any reason without being paid in cash or shares of Common Stock, any
remaining shares allocable to the unpaid portion of such share right or
share unit shall not be charged against the limitations of Section IV(b)(1)
and will become available again for subsequent grants under the Plan.
Shares for which a cash payment is made in lieu thereof under a restricted
share or share right and shares forfeited to or repurchased by the Company
pursuant to its forfeiture and repurchase rights under this Plan will NOT
be available for subsequent option grants under the Plan.
(c) INDIVIDUAL LIMIT. In no event shall any individual be granted
awards under the Plan covering or based on more than twenty-five percent
(25%) of the number of shares of Common Stock initially authorized for
issuance under the Plan pursuant to the first sentence of Section IV(a), plus
25% of any additional shares subsequently authorized for issuance by the
Corporation's shareholders (subject, in each case, to adjustment under
Section IV(d)).
(d) ADJUSTMENTS. In the event any change is made to the Common Stock
subject to the Plan (whether by reason of merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, combination of
shares, exchange of shares, or other change in corporate or capital structure
of the Company) then, unless such change results in the termination of all
awards, the Committee will make appropriate adjustments to the kind and
maximum number of shares subject to the Plan, the maximum number of shares
for which awards may be made to any individual, the kind and maximum number
of shares for which options are to be granted to non-employee directors, and
the kind and number of shares and, where applicable, price per share of stock
subject to outstanding awards.
2
<PAGE>
(e) GENERAL LIMITATION. Non-performance based restricted stock and stock
awards will have a minimum twenty-four (24) month restriction period before
they are eligible to be resold.
V. TERMS AND CONDITIONS OF OPTIONS
Stock options granted under the Plan may, in the Committee's discretion, be
either incentive stock options ("Incentive Options") qualifying under Section
422 of the Internal Revenue Code of 1986, as amended ("Internal Revenue Code"),
or nonstatutory options. Individuals who are not employees of the Company or
its subsidiaries may only be granted nonstatutory options. Options will be
evidenced by instruments in such form as the Committee may from time to time
approve. These instruments will conform to the following terms and conditions
and, in the discretion of the Committee, may contain such other terms,
conditions and restrictions as are not inconsistent with the following:
A. OPTION PRICE. The option price per share will be fixed by the
Committee, but in no event will the option price per share be less than one
hundred percent (100%) of the Fair Market Value of the option shares on the date
of the option grant.
B. NUMBER OF SHARES, TERM AND EXERCISE
1. TERM AND NUMBER. Each option granted under the Plan will be
exercisable on such date or dates, during such period, and for such number
of shares of Common Stock as the Committee determines and sets forth in the
instrument evidencing the option. Except as provided in Article X, no
option shall vest at a rate greater than 25% per year beginning one (1)
year after the date of grant of the option. No option granted under the
Plan will have an expiration date that is more than ten (10) years after
the date of the option grant.
2. EXERCISE. After any option granted under the Plan becomes
exercisable, it may be exercised by notice to the Company at any time prior
to the termination of such option. Except as authorized by the Committee
in accordance with Section VIII, the option price for the number of shares
for which the option is exercised will become due and payable upon
exercise.
3. PAYMENT. The option price will be payable in full in cash
(including cash equivalents); provided, however, that the Committee may,
either at the time the option is granted or at the time it is exercised and
subject to such limitations as it may determine, authorize payment of all
or a portion of the option price in one or a combination of the following
alternative forms:
a. a promissory note authorized pursuant to Section VIII;
b. full payment in shares of Common Stock valued as of the
exercise date and held for the requisite period to avoid a charge to
the Company's earnings; or
c. by delivery of a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan Proceeds to pay the option price.
C. TERMINATION OF SERVICES. The Committee will determine and set forth
in each option whether the option will continue to be exercisable, and the
terms and conditions of such exercise, on and after the date that an optionee
ceases to be employed by, or to provide services to, the Company or its
subsidiaries. The date of termination of an optionee's employment or services
will be determined by the Committee, which determination will be final.
D. INCENTIVE OPTIONS. Options granted under the Plan that are intended
to be Incentive Options will be subject to the following additional terms and
conditions:
3
<PAGE>
1. DOLLAR LIMITATION. To the extent that the aggregate Fair Market
Value (determined as of the respective date or dates of grant) of shares
with respect to which options that are granted after 1986 and that would
otherwise be Incentive Options are exercisable for the first time by any
individual during any calendar year under the Plan (or any other plan of
the Company, a parent or subsidiary corporation or predecessor thereof)
exceeds the sum of $100,000 (or such greater amount as may be permitted
under the Internal Revenue Code), whether by reason of acceleration or
otherwise, such options will not be treated as Incentive Options. In
making such a determination, options will be taken into account in the
order in which they were granted.
2. 10% SHAREHOLDER. If any employee to whom an Incentive Option is
to be granted pursuant to the provisions of the Plan is, on the date of
grant, the owner of stock (determined with application of the ownership
attribution rules of Section 424(d) of the Internal Revenue Code)
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of his or her employer corporation or of its parent
or subsidiary corporation ("10% Shareholder"), then the following special
provisions will apply to the option granted to such individual:
a. The option price per share of the stock subject to such
Incentive Option will not be less than one hundred ten percent (110%)
of the Fair Market Value of the option shares on the date of grant;
and
b. The option will not have a term in excess of five (5) years
from the date of grant.
3. PARENT AND SUBSIDIARY. For purposes of this Section V(d) "parent
corporation" and "subsidiary corporation" will have the meaning attributed
to those terms, as they are used in Section 422(b) of the Internal Revenue
Code.
E. WITHHOLDING
1. OBLIGATION. The Company's obligation to deliver stock
certificates upon the exercise of an option will be subject to the
optionee's satisfaction of all applicable federal, state and local income
and employment tax withholding requirements.
2. PAYMENT. In the event that an optionee is required to pay to the
Company an amount with respect to income and employment tax withholding
obligations in connection with exercise of an option, the Committee may, in
its discretion and subject to such limitations and rules as it may adopt,
permit the optionee to satisfy the obligation, in whole or in part, by
delivering shares of Common Stock already held by the optionee or by making
an irrevocable election that a portion of the total value of the shares
subject to the option be paid in the form of cash in lieu of the issuance
of Common Stock, and that such cash payment be applied to the satisfaction
of the withholding obligations.
F. REPURCHASE RIGHTS. The Committee may in its discretion establish as
a term of one or more options exercised under the Plan that the Company (or
its assigns) will have the right, exercisable upon the optionee's termination
of employment with, or cessation of services for, the Company and its
subsidiaries, to repurchase at the original option price any or all of the
shares of Common Stock acquired by the optionee upon the exercise of the
granted option. Any such repurchase right will be exercisable by the Company
(or its assigns) upon such terms and conditions (including provisions for the
expiration of such right in one or more installments) as the Committee may
specify in the instrument evidencing such right. The Committee
4
<PAGE>
will also have full power and authority to provide for the automatic
termination of the Company's repurchase rights, in whole or in part, thereby
accelerating the vesting of any or all of the purchased shares (other than
purchased shares obtained pursuant to the Automatic Option Grant provisions
of this Plan) upon the occurrence of a specified corporate event or other
event.
G. RIGHT OF FIRST REFUSAL. The Committee may, in its discretion,
establish as a term of one or more options granted under the Plan that the
Company has a right of first refusal with respect to the proposed disposition
by the optionee (or any successor in interest by reason of purchase, gift or
other mode of transfer) of any shares of Common Stock acquired by the
optionee upon the exercise of the granted option. Any such right of first
refusal will be exercisable by the Company or its assigns in accordance with
the terms and conditions specified in the instrument evidencing such right.
VI. RESTRICTED SHARES, SHARE RIGHTS AND SHARE UNITS
(a) NATURE OF AWARDS. The terms, conditions and restrictions to
which restricted shares, share rights, and share units are subject shall be
determined in the sole discretion of the Committee, shall be evidenced by
instruments in such form as the Committee may from time to time approve, and
may vary from grant to grant. However, except as provided in Article X, no
award shall vest at a rate greater than 33 1/3% per year beginning one year
after the date of grant of the award. In addition, the total number of
shares underlying grants of restricted shares, share rights and share units
shall not exceed 1,200,000 shares.
(1) RESTRICTED SHARES. A restricted share granted under the Plan
shall consist of shares of Common Stock, the retention and transfer of
which is subject to such terms, conditions and restrictions (whether based
on performance standards or periods of service or otherwise and including
repurchase and/or forfeiture rights in favor of the Company) as the
Committee shall determine. The Committee shall have the absolute
discretion to determine whether any consideration (other than the services
of the potential award holder) is to be received by the Company or its
subsidiaries as a condition precedent to the issuance of restricted shares.
(2) SHARE RIGHTS. A share right granted under the Plan shall consist
of the right, subject to such terms, conditions and restrictions (whether
based on performance standards or periods of service or otherwise), to
receive a share of Common Stock (together with cash dividend equivalents if
so determined by the Committee) as the Committee shall determine. The
Committee shall have the absolute discretion to determine whether any
consideration (other than the services of the potential award holder) is to
be received by the Company or its subsidiaries as a condition precedent to
the issuance of shares pursuant to share rights.
(3) SHARE UNITS. A share unit granted under the Plan shall consist
of the right to receive an amount in cash equal to the fair market value of
one share of Common Stock on the date of valuation of the unit (together
with cash dividend equivalents if so determined by the Committee) less such
amount, if any, as the Committee shall specify. The date of valuation and
payment of cash under a share unit and the conditions, if any, to which
such payment will be subject (whether based on performance standards or
periods of service or otherwise) shall be determined by the Committee.
(b) WITHHOLDING. The Committee may require, or permit an award holder
to elect, that a portion of the total value of the shares of Common Stock
subject to restricted shares or share rights held by one or more award
holders be paid in the form of cash in lieu of the issuance of Common Stock
and that such cash payment be applied to the satisfaction of the federal,
state and local income and employment tax withholding obligations that arise
at the time the restricted shares and share rights become free of all
restrictions under the Plan.
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(c) CASH PAYMENTS. The Committee may provide award holders with an
election to receive a percentage of the total value of the Common Stock subject
to restricted shares or share rights in the form of a cash payment, subject to
such terms conditions and restrictions as the Committee shall specify.
(d) ELECTIVE AND TANDEM AWARDS. The Committee may award restricted
shares, share rights and share units independently of other compensation or
in lieu of compensation that would otherwise be paid in cash or stock
options, whether at the election of the potential award holder or otherwise.
The number of restricted shares, share rights or share units to be awarded in
lieu of any cash compensation amount or number of stock options shall be
determined by the Committee in its sole discretion and need not be equal to
such foregone compensation in fair market value. In addition, restricted
shares, share rights and share units may be awarded in tandem with stock
options, so that a portion of such award becomes payable or becomes free of
restrictions only if and to the extent that the tandem options are not
exercised or are forfeited, subject to such terms and conditions as the
Committee may specify.
(e) MODIFICATION OF AWARDS. The Committee may, in its sole discretion,
modify or waive any or all of the terms, conditions or restrictions
applicable to any outstanding restricted share, share right or share unit;
provided, however, that no such modification or waiver shall, without the
consent of the holder of an outstanding award, adversely affect the holder's
rights thereunder.
VII. AUTOMATIC OPTION GRANTS TO DIRECTORS.
A. GRANTS. Non-employee members of the Board will automatically be
granted nonstatutory options ("Automatic Option Grants") to purchase the number
of shares of Common Stock set forth below (subject to adjustment under Section
IV(d) hereof) on the dates and terms set forth below:
1. No person shall have any discretion to select which Outside
Directors shall be granted options or to determine the number of shares to
be covered by options granted to Outside Directors; provided, however, that
nothing in this Plan shall be construed to prevent an Outside Director from
declining to receive an option under this Plan.
2. On June 1, 1994 and on each June 1 thereafter (or, if later, the
next trading day) during the term of this Plan, each Outside Director shall
automatically receive an option to purchase a number of shares equal to
6,000 (7,260 if he or she became an Outside Director before January 1, 1993
and 6,600 if he or she became an Outside Director on or after January 1,
1993 and before January 1, 1994) for 1994 and, for grants after 1994, 110%
of the number of shares of the previous year's grant. A person who becomes
an Outside Director between June 1 and December 31 of any year (and who is
not already a member of the Board of Directors of the Company) shall, on
the date such person becomes an Outside Director (or, if later, the next
trading day), automatically receive an option to purchase the number of
shares for which such person would have received an option on June 1 of
that year under the Plan had such person been an Outside Director on that
date.
B. TERMS AND CONDITIONS. The terms and conditions applicable to each
Automatic Option Grant will be as follows:
1. PRICE. The option price per share will be equal to one hundred
percent (100%) of the Fair Market Value of one share of Common Stock on the
date of grant;
2. TERM. The options will have terms of ten (10) years, measured
from the date of grant, and will be exercisable at any time beginning
twelve (12) months after the date of grant
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and during their term for all or any part of the covered shares; provided,
however, that no options may be exercised prior to approval of the Plan
by the Company's shareholders.
3. PAYMENT. Upon exercise of the option, the option price for the
purchased shares will become payable immediately in cash or in shares of
Common Stock that the optionee has held for at least six (6) months.
Payment may also be made by delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to
the Company the amount of sale or loan proceeds to pay the option price.
4. CESSATION. In the event the optionee ceases to provide services
to the Company or its subsidiaries as a director, the option may be
exercised, within the term of the option, for a period of three (3) months
after the date of such cessation (twelve (12) months in the case of
cessation by reason of disability or death). In the case of death, the
option may be exercised within such period by the estate or heirs of the
optionee.
VIII. LOANS AND INSTALLMENT PAYMENTS
In order to assist an award holder (including an employee who is an
officer or director of the Company) in the acquisition of shares of Common
Stock pursuant to an award granted under the Plan (other than pursuant to the
Automatic Option Grant provisions of this Plan), the Committee may authorize,
at either the time of the grant of an award or the time of the acquisition of
Common Stock pursuant to the award (i) the extension of a loan to the award
holder by the Company, (ii) the payment by the award holder of the purchase
price, if any, of the Common Stock in installments, or (iii) the guarantee by
the Company of a loan obtained by the award holder from a third party. The
terms of any loans, guarantees or installment payments, including the
interest rate and terms of repayment, will be subject to the discretion of
the Committee. Loans, installment payments and guarantees may be granted
without security, the maximum credit available being the purchase price, if
any, of the Common Stock acquired plus the maximum federal and state income
and employment tax liability that may be incurred in connection with the
acquisition.
IX. ASSIGNABILITY
No award granted under the Plan is assignable or transferable by the
award holder other than by will or by the laws of descent and distribution,
and during the lifetime of the award holder, only the award holder may
exercise options or exercise the rights provided under awards granted under
the Plan.
X. ACCELERATION AND TERMINATION OF OPTIONS
A. ACCELERATION. In the event of an agreement to dispose of all or
substantially all of the assets or outstanding capital stock of the Company
by means of a sale, merger, reorganization, or liquidation, each award will
be automatically accelerated so that (1) options become fully exercisable
with respect to the total number of shares purchasable under the options,
provided, however, that the exercise of accelerated Incentive Options granted
prior to 1987 will remain subject to any limitations imposed by the Internal
Revenue Code's sequential exercise rule, (2) restrictions on restricted
shares will be eliminated, and the shares will immediately vest, and (3)
share rights and share units will immediately vest and become payable. The
Committee may also provide for the automatic termination of repurchase rights
upon the occurrence of such an event.
B. NO ACCELERATION. No acceleration of awards will occur if the terms
of the agreement require as a prerequisite to the consummation of any such
sale, merger, reorganization or liquidation that each such award will be
either assumed by the successor corporation or parent thereof or be replaced
with a comparable award subject to shares of the successor corporation or
parent thereof. The determination of
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such comparability will be made by the Committee, and its determination will
be final, binding and conclusive. Upon consummation of the sale, merger,
reorganization or liquidation contemplated by the agreement, all awards,
whether or not accelerated, will terminate unless assumed pursuant to a
written agreement by the successor corporation or parent thereof.
C. CORPORATE STRUCTURE. The grant of awards under this Plan will in no
way affect the right of the Company to adjust, reclassify, reorganize, or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
XI. VALUATION
For purposes of this Plan, the Fair Market Value of a share of Common
Stock on any relevant date will be determined in accordance with the
following provisions:
A. If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported), as
quoted on such exchange (or the exchange with the greatest volume of trading
in Common Stock) or system on the day of such determination, as reported in
THE WALL STREET JOURNAL or such other source as the Committee deems reliable,
or;
B. If the Common Stock is quoted on the NASDAQ system (but not on the
National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high and low asked prices for the Common Stock
on the day of such determination, as reported in THE WALL STREET JOURNAL or
such other source as the Board deems reliable, or;
C. In the absence of an established market for the Common Stock, then
the Fair Market Value will be determined by the Committee after taking into
account such factors as the Committee deems appropriate, or in the case of
Automatic Option Grants, by an independent third party valuation.
XII. EFFECTIVE DATE AND TERM OF PLAN
A. EFFECTIVE DATE. The Plan is effective on the earlier of January 1,
1994 or the date that it is approved by the Company's shareholders; provided
that no option shall be exercisable and no shares shall be issued under the
Plan before it is approved by the Company's shareholders. If shareholder
approval is not obtained, all awards hereunder shall be cancelled and the
Prior Plan shall continue in accordance with its terms.
B. TERM. No further grants may be made under this Plan after the tenth
anniversary of the date of adoption of this Plan by the Board.
XIII. AMENDMENT OR DISCONTINUANCE
A. BOARD. The Board may amend, suspend or discontinue the Plan in
whole or in part at any time; provided, however, that (1) except to the
extent necessary to qualify as Incentive Options any or all options granted
under the Plan that are intended to so qualify, such action may not, without
the consent of the award holder, adversely affect rights and obligations with
respect to awards outstanding under the Plan; (2) to the extent necessary to
comply with Rule 16b-3, the provisions of the Plan concerning the eligibility
of non-employee members of the Board for awards and the amount, price and
timing of Automatic Option Grants under this Plan may not be amended more
than once every six months, other than to comport with
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changes in the Internal Revenue Code or rules thereunder; and (3) the Board
may not, without the approval of the Company's shareholders (i) materially
increase the number of shares of Common Stock subject to awards under the
Plan (unless necessary to effect the adjustments required under Section
IV(c)), (ii) materially modify the eligibility requirements for awards under
the Plan, or (iii) make any other change with respect to which the Board
determines that shareholder approval is required by applicable law or
regulatory standards.
B. COMMITTEE. The Committee will have full power and authority to modify
or waive any or all of the terms, conditions or restrictions applicable to any
outstanding award, (other than Automatic Option Grants and repricing options) to
the extent not inconsistent with the Plan.
XIV. NO OBLIGATION
Nothing contained in the Plan (or the Prior Plan) shall confer upon any
employee, consultant, or independent contractor any right to continue in the
employ of, or to provide services to, the Company or any affiliate or constitute
a contract or agreement of employment or for the provision of services, or
interfere in any way with the right of the Company or an affiliate to reduce
such employee's, consultant's or independent contractor's compensation from the
rate in existence at the time of the granting of award or to terminate such
employee's, consultant's or independent contractor's employment or services at
any time, with or without cause; but nothing contained in the Plan or in any
award granted under this Plan shall affect any contractual rights of an employee
pursuant to a written employment agreement.
XV. USE OF PROCEEDS
The cash proceeds received by the Company pursuant to awards granted under
the Plan will be used for general corporate purposes.
XVI. COMPLIANCE
No option may be exercised, and the Company will not be obligated to issue
stock under any award unless, in the opinion of counsel for the Company, such
exercise and issuance is in compliance with all applicable federal and state
securities laws. As a condition to the grant of any award, or to the issuance
of stock under any award, the Committee may require that the award holder agree
to comply with such provisions of federal and state securities laws as may be
applicable to such grant, or to the sale of stock acquired pursuant to the Plan,
and that the award holder deliver to the Company a written agreement, in form
and substance satisfactory to the Company and its counsel, implementing such
agreement.
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EXHIBIT 99.2
CYGNUS, INC.
AMENDED 1991 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the Amended 1991 Employee
Stock Purchase Plan of Cygnus, Inc., as amended on June 6, 1996.
1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company through accumulated payroll deductions. It is
the intention of the Company to have the Plan quality as an "Employee Stock
Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as
amended. The provisions of the Plan, accordingly, shall be construed so as
to extend and limit participation in a manner consistent with the
requirements of that section of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company or a
Committee appointed by the Board pursuant to paragraph 13.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean Cygnus, Inc.
(e) "COMPENSATION" shall mean all base straight time gross earnings,
including bonuses, but excluding payments for overtime, shift premiums and
commissions, awards, and other compensation.
(f) "DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "EMPLOYEE" shall mean any individual who is a regular employee of
the Company for purposes of tax-withholding under the Code. For purposes of the
Plan, the employment relationship shall be treated as continuing intact while
the individual is on sick leave or other leave of absence approved by the
Company. Where the period of leave exceeds 90 days and the individual's right
to reemployment is not guaranteed either by statute or by contract, the
employment relationship will be deemed to have terminated on the 91st day of
such leave.
(h) "ENROLLMENT DATE" shall mean the first Trading Day of each
Offering Period.
(i) "EXERCISE DATE" shall mean the last Trading Day of each Purchase
Period.
(j) "FAIR MARKET VALUE" shall mean, as of any date, the value of
Common Stock determined as follows:
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the
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closing sales price for such stock (or the closing bid, if no sales were
reported), as quoted on such exchange (or the exchange with the greatest
volume of trading in Common Stock) or system on the day of such
determination, as reported in THE WALL STREET JOURNAL or such other source as
the Board deems reliable, or;
(2) If the Common Stock is quoted on the NASDAQ system (but
not on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high and low asked prices for the
Common Stock on the day of such determination, as reported in THE WALL STREET
JOURNAL or such other source as the Board deems reliable, or;
(3) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(k) "OFFERING PERIOD" shall mean, subject to the discretion of the
Board pursuant to paragraph 4, a period of approximately twenty-four (24)
months, commencing on the first Trading Day on or after October 1 and
terminating on the last Trading Day in the September twenty-four (24) months
later, or commencing on the first Trading Day on or after April 1 and
terminating on the last Trading Day in the March twenty-four (24) months
later.
(l) "PLAN" shall mean this Amended 1991 Employee Stock Purchase
Plan.
(m) "PURCHASE PRICE" shall mean an amount equal to a designated
percentage of the Fair Market Value of a share of Common Stock on the
Enrollment Date or a designated percentage of the Fair Market Value on the
Exercise Date, whichever is lower. Each designated percentage shall be 85%
unless determined otherwise by the Board with respect to any Offering Period,
but shall in no event be less than 85%.
(n) "PURCHASE PERIOD" shall mean the approximately six-month period
commencing after one Exercise Date and ending with the next following
Exercise Date, except that the first Purchase Period of any Offering Period
shall commence on the Enrollment Date and end with the next following
Exercise Date.
(o) "RESERVES" shall mean the number of shares of Common Stock
covered by each purchase right under the Plan which have not yet been
exercised and the number of shares of Common Stock which have been authorized
for issuance under the Plan but not yet placed under purchase right.
(p) "SUBSIDIARY" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(q) "TRADING DAY" shall mean a day on which national stock
exchanges and the National Association of Securities Dealers Automated
Quotation (NASDAQ) System are open for trading.
3. ELIGIBILITY.
(a) Any Employee, as defined in paragraph 2, who shall be employed
by the Company on a given Enrollment Date shall be eligible to participate in
the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted a purchase right under the Plan (i) if, immediately
after the grant, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of the Code) would own
stock and/or hold outstanding purchase rights to purchase stock possessing
five percent (5%) or more
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of the total combined voting power or value of all classes of stock of the
Company or of any subsidiary of the Company, or (ii) which permits his or her
rights to purchase stock under all employee stock purchase plans of the
Company and its subsidiaries to accrue at a rate which exceeds Twenty-Five
Thousand Dollars ($25,000) worth of stock (determined at the fair market
value of the shares at the time such purchase right is granted) for each
calendar year in which such purchase right is outstanding at any time.
4. OFFERING PERIODS. The Plan shall be implemented by consecutive and
overlapping Offering Periods, with the first Offering Period beginning
October 1, 1991 and continuing unless terminated in accordance with the Plan.
The Board shall have the power to change the duration of Offering Periods
with respect to future offerings without shareholder approval if such change
is announced at least fifteen (15) days prior to the scheduled beginning of
the first Offering Period to be affected. Absent action by the Board, each
Offering Period shall be for a period of approximately twenty-four months
(24) and new Offering Periods shall commence on the first Trading Day of
April and October of each year. No Offering Period shall exceed twenty-four
(24) months in length.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the
form provided by the Company and filing it with the Company's payroll office
prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll period following the Enrollment Date and shall end on the last
payroll period in the Offering Period, unless sooner terminated by the
participant as provided in paragraph 10.
6. PAYROLL DEDUCTIONS.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay
day during the Offering Period in an amount not exceeding fifteen percent
(15%) of the Compensation which he or she receives on each pay day during the
Offering Period, and the aggregate of such payroll deductions during the
Offering Period shall not exceed fifteen percent (15%) of the participant's
Compensation during said Offering Period.
(b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into
such account.
(c) A participant may discontinue his or her participation in the
Plan as provided in paragraph 10, or may increase or decrease the rate of his
or her payroll deductions during the current Purchase Period by filing with
the Company a new subscription agreement authorizing such a change in the
payroll deduction rate. The change in rate shall be effective with the first
full payroll period following such advance notice period as the Company shall
specify. A participant's subscription agreement shall remain in effect for
successive Purchase Periods and Offering Periods unless terminated as
provided in paragraph 10. The Board shall be authorized to limit the number
of participation rate changes during any Offering Period. A participant may
at any tune elect to have his or her participation agreement become
irrevocable for such period of time as he or she may designate.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and paragraph 3(b) herein, a
participant's payroll deductions may be decreased to 0% at such time during
any Purchase Period which is scheduled to end during the current calendar
year (the "Current Purchase Period") that the aggregate of all payroll
deductions which were
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previously used to purchase stock under the Plan in a prior Purchase Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Purchase Period equal $21,250. The Company may
provide either (i) that payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Purchase Period which is scheduled to end in the following calendar
year, unless terminated by the participant as provided in paragraph 10, or
(ii) that participation shall recommence only upon filing a new enrollment
form following such waiting period as the Company shall specify, which, in
the case of a person subject to section 16(b), shall be no less than the time
period necessary to quality the plan for exemption under Rule 16b-3.
(e) At the time the purchase right is exercised, in whole or in
part, or at the time some or all of the Company's Common Stock issued under
the Plan is disposed of, the participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any, which
arise upon the exercise of the purchase right or the disposition of the
Common Stock. At any time, the Company may, but will not be obligated to,
withhold from the participant's compensation the amount necessary for the
Company to meet applicable withholding obligations, including any withholding
required to make available to the Company any tax deductions or benefit
attributable to sale or early disposition of Common Stock by the Employee.
7. GRANT OF PURCHASE RIGHT. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such Offering Period shall be
granted a purchase right to purchase on each Exercise Date during such
Offering Period (at the applicable Purchase Price) up to a number of shares
of the Company's Common Stock determined by dividing such Employee's payroll
deductions accumulated prior to such Exercise Date and retained in the
Participant's account as of the Exercise Date by the applicable Purchase
Price; provided that such purchase shall be subject to the limitations set
forth in Section 3(b) and 12 hereof. Exercise of the purchase right shall
occur as provided in Section 8, unless the participant has withdrawn pursuant
to Section 10, and the purchase right shall expire on the last day of the
Offering Period.
8. EXERCISE OF PURCHASE RIGHT. Unless a participant withdraws from the
Plan as provided in paragraph 10 below, his or her purchase right for the
purchase of shares will be exercised automatically on each Exercise Date, and
the maximum number of full shares subject to purchase right shall be
purchased for such participant at the applicable Purchase Price with the
accumulated payroll deductions in his or her account. No fractional shares
will be purchased; any payroll deductions accumulated in a participant's
account which are not sufficient to purchase a full share shall be retained
in the participant's account for the subsequent Purchase Period, subject to
earlier withdrawal by the participant as provided in paragraph 10. Any other
monies left over in a participant's account after the Exercise Date shall be
returned to the participant. During a participant's lifetime, a
participant's purchase right to purchase shares hereunder is exercisable only
by him or her.
9. DELIVERY. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her purchase right.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A participant may, subject to the terms of any irrevocable
participation agreement elected by the participant, withdraw all but not less
than all the payroll deductions credited to his or her account and not yet
used to exercise his or her purchase right under the Plan at any time by
giving written notice to the Company in the form provided by the Company.
All of the participant's payroll deductions credited to his or her account
will be paid to such participant promptly after receipt of notice of
withdrawal and such participant's purchase right for the Offering Period will
be automatically terminated, and no further payroll deductions for the
purchase of shares will be made during the Offering Period. If a participant
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withdraws from an Offering Period, payroll deductions will not resume at the
beginning of the succeeding Offering Period unless the participant delivers
to the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee for any reason or
upon termination of a participant's employment relationship (as described in
Section 2(g)), the payroll deductions credited to such participant's account
during the Offering Period but not yet used to exercise the purchase right will
be returned to such participant or, in the case of his or her death, to the
person or persons entitled thereto under paragraph 14, and such participant's
purchase right will be automatically terminated.
11. INTEREST. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. STOCK.
(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be 375,000 shares, subject
to adjustment upon changes in capitalization of the Company as provided in
paragraph 18. If on a given Exercise Date the number of shares with respect to
which purchase rights are to be exercised exceeds the number of shares then
available under the Plan, the Company shall make a pro rata allocation of the
shares remaining available for purchase in as uniform a manner as shall be
practicable and as it shall determine to be equitable.
(b) The participant will have no interest or voting right in shares
covered by his purchase right until such purchase right has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.
13. ADMINISTRATION.
(a) ADMINISTRATIVE BODY. The Plan shall be administered by the Board
of the Company or a committee of members of the Board appointed by the Board.
The Board or its committee shall have full and exclusive discretionary authority
to construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Board or its committee shall, to the full
extent permitted by law, be final and binding upon all parties. Members of the
Board who are eligible Employees are permitted to participate in the Plan,
provided that:
(1) Members of the Board who are eligible to participate in the
Plan may not vote on any matter affecting the administration of the Plan or the
grant of any purchase right pursuant to the Plan.
(2) If a Committee is established to administer the Plan, no
member of the Board who is eligible to participate in the Plan may be a member
of the Committee.
(b) RULE 16b-3 LIMITATIONS. Notwithstanding the provisions of
Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under The Securities Exchange Act of 1934, as amended, or any successor
provision ("Rule 16b-3") provides specific requirements for the administrators
of plans of this type, the Plan shall be only administered by such a body and in
such a manner as shall comply with the applicable requirements of Rule 16b-3.
Unless permitted by Rule 16b-3, no discretion concerning decisions regarding the
Plan shall be afforded to any committee or person that is not "disinterested" as
that term is used in Rule 16b-3.
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14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the purchase right is exercised but prior to delivery
to such participant of such shares and cash. In addition, a participant may
file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the purchase right. ff a participant is married
and the designated beneficiary is not the spouse, spousal consent shall be
required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant (and his or her spouse, if any) at any time by written notice.
In the event of the death of a participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time of
such participant's death, the Company shall deliver such shares and/or cash
to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such shares and/or cash
to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of a
purchase right or to receive shares under the Plan may be assigned,
transferred, pledged or otherwise disposed of in any way (other than by will,
the laws of descent and distribution or as provided in paragraph 14 hereof)
by the participant. Any such attempt at assignment, transfer, pledge or
other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds from an Offering Period in
accordance with paragraph 10.
16. USE OF FUNDS. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll deductions.
17. REPORTS. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to
participating Employees at least annually, which statements will set forth
the amounts of payroll deductions, the Purchase Price, the number of shares
purchased and the remaining cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) CHANCES IN CAPITALIZATION. Subject to any required action by
the shareholders of the Company, the Reserves as well as the price per share
of Common Stock covered by each purchase right under the Plan which has not
yet been exercised, 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 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 issue 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 a
purchase right. The Board may, if it so determines in the exercise of its
sole discretion, make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding purchase right,
in the event the Company effects one or more
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reorganizations, recapitalizations, rights offerings or other increases or
reductions of shares of its outstanding Common Stock.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Offering Periods will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
(c) MERGER OR ASSET SALE. In the event of a proposed sale of all
or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each purchase right under the Plan
shall be assumed or an equivalent purchase right shall be substituted by such
successor corporation or a parent or subsidiary of such successor
corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the
Offering Periods then in progress by setting a new Exercise Date (the "New
Exercise Date"). If the Board shortens the Offering Periods then in progress
in lieu of assumption or substitution in the event of a merger or sale of
assets, the Board shall notify each participant in writing, at least ten (10)
days prior to the New Exercise Date, that the Exercise Date for his purchase
right has been changed to the New Exercise Date and that his purchase right
will be exercised automatically on the New Exercise Date, unless prior to
such date he has withdrawn from the Offering Period as provided in paragraph
10. For purposes of this paragraph, a purchase right granted under the Plan
shall be deemed to be assumed if, following the sale of assets or merger, the
purchase right confers the right to purchase, for each share of purchase
right stock subject to the purchase right immediately prior to the sale of
assets or merger, the consideration (whether stock, cash or other securities
or property) received in the sale of assets or merger by holders of Common
Stock for each share of Common Stock held on the effective date of the
transaction (and if such holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that if such consideration
received in the sale of assets or merger was not solely common stock of the
successor corporation or its parent (as defined in Section 424(e) of the
Code), the Board may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon exercise of
the purchase right to be solely common stock of the successor corporation or
its parent equal in fair market value to the per share consideration received
by holders of Common Stock in the sale of assets or merger.
19. AMENDMENT OR TERMINATION.
(a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in paragraph 18,
no such termination can affect purchase rights previously granted, provided
that an Offering Period may be terminated by the Board of Directors on any
Exercise Date if the Board determines that the termination of the Plan is in
the best interests of the Company and its shareholders. Except as provided
in paragraph 18, no amendment may make any change in any purchase right
theretofore granted which adversely affects the rights of any participant.
To the extent necessary to comply with Rule 16b-3 or under Section 423 of the
Code (or any successor rule or provision or any other applicable law or
regulation), the Company shall obtain shareholder approval in such a manner
and to such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Purchase Periods
and/or Offering Periods, limit the frequency and/or number of changes in the
amount withheld during Purchase Periods and/or Offering Periods, establish
the exchange ratio applicable to amounts withheld in a currency other than
U.S. dollars, permit payroll withholding in excess of the amount designated
by a participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
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participant properly correspond with amounts withheld from the participant's
Compensation, and establish such other limitations or procedures as the Board
(or its committee) determines in its sole discretion advisable which are
consistent with the Plan.
20. NOTICES. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to a purchase right unless the exercise of such purchase right and
the issuance and delivery of such shares pursuant thereto shall comply with
all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of a purchase right, the Company may
require the person exercising such purchase right to represent and warrant at
the time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation
is required by any of the aforementioned applicable provisions of law.
22. 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. It shall continue in effect for a term of
twenty (20) years unless sooner terminated under paragraph 19.
23. ADDITIONAL RESTRICTIONS OF RULE 16b-3. The terms and conditions of
purchase rights granted hereunder to, and the purchase of shares by, persons
subject to Section 16 of the Exchange Act shall comply with the applicable
provisions of Rule 16b-3. This Plan shall be deemed to contain, and such
purchase rights shall contain, and the shares issued upon exercise thereof
shall be subject to, such additional conditions and restrictions as may be
required by Rule 16b-3 to quality for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.
24. AUTOMATIC TRANSFER TO LOW PRICE OFFERING PERIOD. To the extent
permitted by Rule 16b-3 of the Exchange Act, if the Fair Market Value of the
Common Stock on any Exercise Date in an Offering Period is lower than the
Fair Market Value of the Common Stock on the Enrollment Date of such Offering
Period, then all participants in such Offering Period shall be automatically
withdrawn from such Offering Period immediately after the exercise of their
purchase rights on such Exercise Date and automatically reenrolled in the
immediately following Offering Period as of the first day thereof.
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