<PAGE>
As filed with the Securities and Exchange Commission on May 12, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
ICOS CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 91-1463450
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
22021--20th Avenue S.E.
Bothell, Washington 98021
(Address of principal executive offices, including zip code)
ICOS CORPORATION 1999 STOCK OPTION PLAN
(Full title of the plan)
GARY L. WILCOX
Executive Vice President, Operations
ICOS Corporation
22021 20th Avenue S.E.
Bothell, Washington 98021
(425) 485-1900
(Name, address and telephone number, including area code, of agent for service)
______________________
Copy to:
JAMES R. LISBAKKEN
Perkins Coie LLP
1201 Third Avenue, 40th Floor
Seattle, Washington 98101-3099
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Securities Amount to Be Offering Price Per Aggregate Offering Amount of
to Be Registered Registered(1) (2) Share(3) Price Registration Fee
------------------- ----------------- ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value per share, under
the ICOS Corporation 1999 Stock Option Plan 5,000,000 $39.094 $195,470,000.00 $54,341.00
</TABLE>
(1) Together with an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant to
the ICOS Corporation 1999 Stock Option Plan as the result of any future
stock split, stock dividend or similar adjustment of the Registrant's
outstanding Common Stock.
(2) Form S-8 Registration Statements filed with the Securities and Exchange
Commission on July 19, 1996 (File No. 333-08485), June 24, 1994 (File No.
33-80680), June 21, 1993 (File No. 33-64762) and June 8, 1992 (File No. 33-
48401) have been post-effectively amended to provide that (a) up to 232,476
shares authorized but not issued or subject to outstanding options under
the Registrant's 1989 Stock Option Plan and (b) up to 7,044,621 shares
subject to outstanding options under the Registrant's 1989 Stock Option
Plan and its 1991 Stock Option Plan for Nonemployee Directors that cease to
be subject to such options (other than by reason of exercise of the options
to the extent they are exercised for shares) will no longer be available
for issuance under those plans but will be available for issuance under the
Registrant's 1999 Stock Option Plan.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended. The
price per share is estimated to be $39.094 based on the average of the high
($40.188) and low ($38.00) sales prices for the Common Stock on May 5, 1999
as reported on the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
(the "Commission") are hereby incorporated by reference in this Registration
Statement:
(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998, filed on March 31, 1999, which contains audited consolidated
financial statements for the most recent fiscal year for which such statements
have been filed;
(b) All other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by
the Annual Report on Form 10-K referred to in (a) above; and
(c) The description of the Common Stock in the Registrant's
Registration Statement on Form 8-A filed on April 18, 1991, under Section 12(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including any amendments or reports for the purpose of updating such
description.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date hereof and prior to the filing of a
post-effective amendment which indicates that the securities offered hereby have
been sold or which deregisters the securities covered hereby then remaining
unsold shall also be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof commencing on the respective
dates on which such documents are filed.
Item 4. DESCRIPTION OF SECURITIES
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
None.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 10 of the Registrant's Restated Certificate of Incorporation
provides that directors of the Registrant shall not be liable to the Registrant
or its stockholders for monetary damages for their conduct as directors to the
full extent permitted by the Delaware General Corporation Law (the "DGCL") as it
existed at the time the Restated Certificate of Incorporation was adopted, and
as it may thereafter be amended. Any amendment to or repeal of Article 10 shall
apply only to acts or omissions of directors occurring after such amendment or
repeal.
Section 10 of the By-Laws of the Registrant requires indemnification to the
full extent permitted under Delaware law as from time to time in effect. Subject
to any restrictions imposed by Delaware law, the By-Laws provide an
unconditional right to indemnification for all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) actually and reasonably incurred or suffered by
any person in connection with any actual or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative (including,
to the extent permitted by law, any derivative action) by reason of the fact
that such person is or was serving as a director or officer of the Registrant or
that, being or having been a director or officer or an employee of the
Registrant, such person is or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including an employee benefit plan. The By-
Laws also provide that the Registrant may, by action of its Board of Directors,
provide indemnification to its employees and agents with the same scope and
effect as the foregoing indemnification of directors and officers. Section
102(b)(7) of the DGCL permits a corporation to provide in its certificate of
incorporation that a director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability for (a) any breach of the
director's duty of loyalty to the corporation or its stockholders, (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) payments of unlawful dividends or unlawful stock
repurchases or redemptions, or (d) any transaction from which the director
derived an improper personal benefit.
II-1
<PAGE>
Section 145 of the DGCL, as currently in effect, sets forth the
indemnification rights of directors and officers of Delaware corporations. Under
such provision, a director or officer of a corporation (a) shall be indemnified
by the corporation for all expenses of litigation or other legal proceedings
when he or she is successful on the merits or otherwise, (b) may be indemnified
by the corporation for the expenses, judgments, fines and amounts paid in
settlement of such litigation (other than a derivative suit), even if he or she
is not successful on the merits, if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation (and, in the case of a criminal proceeding, had no
reason to believe his or her conduct was unlawful), and (c) may be indemnified
by the corporation for the expenses of a derivative suit (a suit by a
stockholder alleging a breach by a director or an officer of a duty owed to the
corporation), even if he or she is not successful on the merits, if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the corporation, provided that no such
indemnification may be made in accordance with this clause (c) if the director
or officer is adjudged liable to the corporation, unless a court determines
that, despite such adjudication but in view of all the circumstances, he or she
is fairly and reasonably entitled to indemnification of such expenses. The
indemnification described in clauses (b) and (c) above shall be made only upon a
determination by (i) a majority of a quorum of disinterested directors, (ii)
independent legal counsel in a written opinion, or (iii) the stockholders, that
indemnification is proper because the applicable standard of conduct has been
met.
Officers and directors of the Registrant are covered by insurance (with
certain exceptions and limitations) that indemnifies them against losses and
liabilities arising from certain alleged "wrongful acts," including alleged
errors or misstatements, or certain other alleged wrongful acts or omissions
constituting neglect or breach of duty.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
Item 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
5.1 Opinion of Perkins Coie LLP
23.1 Consent of Independent Certified Public Accountants
23.2 Consent of Perkins Coie LLP (included in opinion filed as Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 ICOS Corporation 1999 Stock Option Plan
</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:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(b) 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
(c) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(a) and (1)(b) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefits plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in 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 Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Bothell, State of Washington, on the 10th day of May,
1999.
ICOS CORPORATION
By: /s/ GEORGE B. RATHMANN
----------------------
George B. Rathmann
Chairman, Chief Executive Officer and President
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
George B. Rathmann and Gary L. Wilcox, or either of them, as attorneys-in-fact
with full power of substitution, to execute in the name and on the behalf of
each person, individually and in each capacity stated below, and to file, any
and all amendments to this Registration Statement, including any and all post-
effective amendments.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
below on the 10th day of May, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ GEORGE B. RATHMANN Chairman, Chief Executive Officer and President
- ---------------------------------- (Principal Executive Officer)
George B. Rathmann
/s/ GARY L. WILCOX Director and Executive Vice President, Operations
- ----------------------------------
Gary L. Wilcox
/s/ HOWARD S. MENDELSOHN Chief Accounting Officer (Principal Financial and
- ---------------------------------- Accounting Officer)
Howard S. Mendelsohn
/s/ FRANK T. CARY Director
- ----------------------------------
Frank T. Cary
Director
- ----------------------------------
James L. Ferguson
/s/ WILLIAM H. GATES, III Director
- ----------------------------------
William H. Gates, III
/s/ JANICE M. LECOCQ Director
- ----------------------------------
Janice M. LeCocq
/s/ DAVID V. MILLIGAN Director
- ----------------------------------
David V. Milligan
/s/ ROBERT W. PANGIA Director
- ----------------------------------
Robert W. Pangia
/s/ ALEXANDER B. TROWBRIDGE Director
- ----------------------------------
Alexander B. Trowbridge
/s/ WALTER B. WRISTON Director
- ----------------------------------
Walter B. Wriston
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
5.1 Opinion of Perkins Coie LLP
23.1 Consent of Independent Certified Public Accountants
23.2 Consent of Perkins Coie LLP (included in opinion filed as Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 ICOS Corporation 1999 Stock Option Plan
</TABLE>
<PAGE>
EXHIBIT 5.1
PERKINS COIE LLP
A LAW PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1201 THIRD AVENUE, 40TH FLOOR, SEATTLE, WASHINGTON 98101-3099
TELEPHONE: 206 583-8888 FACSIMILE: 206 583-8500
May 10, 1999
ICOS Corporation
22021 - 20th Avenue S.E.
Bothell, Washington 98021
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to you in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), which you are filing with the
Securities and Exchange Commission (the "Commission") with respect to up to
5,000,000 shares of Common Stock, par value $0.01 per share, pursuant to the
Act. The shares may be issued under the ICOS Corporation 1999 Stock Option Plan
(the "Plan").
In addition, we have acted as counsel to you in connection with the
preparation of a Post-Effective Amendment No. 1 (the "Post-Effective Amendment")
to Form S-8 Registration Statements originally filed with the Commission on July
19, 1996 (File No. 333-08485), June 24, 1994 (File No. 33-80680), June 21, 1993
(File No. 33-64762) and June 8, 1992 (File No. 33-48401). Pursuant to this
Amendment No. 1, (a) up to 232,476 shares available for issuance but not issued
or subject to outstanding options under the Company's 1989 Stock Option Plan
will not be issued under that plan but may be issued under the Plan and (b) up
to 7,044,621 shares subject to outstanding options under the Company's 1989
Stock Option Plan and the Company's 1991 Stock Option Plan for Nonemployee
Directors that cease to be subject to such options (other than by reason of
exercise of the options to the extent they are exercised for shares) will no
longer be available for issuance under those plans but will be available for
issuance under the Plan.
We have examined the Registration Statement, the Post-Effective Amendment
and such documents and records of the Company as we have deemed relevant and
necessary for the purpose of this opinion. In giving this opinion, we are
assuming the authenticity of all instruments presented to us as originals, the
conformity with originals of all instruments presented to us as copies and the
genuineness of all signatures.
Based on and subject to the foregoing, we are of the opinion that any
shares that may be issued pursuant to the Plan have been duly authorized and
that, upon the due execution by the Company and the registration by its
registrar of such shares and the sale thereof by the Company in accordance with
the terms of the Plan, and the receipt of consideration therefor in accordance
with the terms of the Plan, such shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ PERKINS COIE LLP
<PAGE>
EXHIBIT 23.1
Consent of Independent Certified Public Accountants
The Board of Directors
ICOS Corporation:
We consent to the use of our report incorporated herein by reference.
KPMG LLP
Seattle, Washington
May 10, 1999
<PAGE>
EXHIBIT 99.1
ICOS CORPORATION
1999 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the ICOS Corporation 1999 Stock Option Plan (the "Plan") is
to enhance the long-term stockholder value of ICOS Corporation, a Delaware
corporation (the "Company"), by offering opportunities to selected persons to
participate in the Company's growth and success, and to encourage them to remain
in the service of the Company and its Related Corporations (as defined in
Section 2) and to acquire and maintain stock ownership in the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth
below:
"Board" means the Board of Directors of the Company.
"Cause" means dishonesty, fraud, misconduct, unauthorized use or disclosure
of confidential information or trade secrets, or conviction or confession of a
crime punishable by law (except minor violations), in each case as determined by
the Plan Administrator, and its determination shall be conclusive and binding.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
"Corporate Transaction" has the meaning set forth in Section 11.2
"Disability," unless otherwise defined by the Plan Administrator, means a
mental or physical impairment of the Participant that is expected to result in
death or that has lasted or is expected to last for a continuous period of 12
months or more and that causes the Participant to be unable, in the opinion of
the Company, to perform his or her duties for the Company or a Related
Corporation and to be engaged in any substantial gainful activity.
"Effective Date" means the date on which the Plan is adopted by the Board,
so long as it is approved by the Company's stockholders at any time within 12
months of such adoption.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall be as established in good faith by the Plan
Administrator or (a) if the Common Stock is listed on the Nasdaq National
Market, the closing selling price for the Common Stock as reported by the Nasdaq
National Market for a single trading day or (b) if the Common Stock is listed on
the New York Stock Exchange or the American Stock Exchange, the closing selling
price for the Common Stock as such price is officially quoted in the composite
tape of transactions on such exchange for a single trading day; provided,
however, that if there is no such reported price for the Common Stock for the
date in question, then such price on the last preceding date for which such
price exists shall be determinative of Fair Market Value.
"Good Reason" means the occurrence of any of the following events or
conditions:
(a) the assignment to the Participant of any duties materially inconsistent
with the Participant's position, authority, duties or responsibilities as in
effect immediately prior to a Corporate Transaction or any other action by the
successor corporation which results in a material diminution in such position,
authority, duties or
<PAGE>
responsibilities, excluding for this purpose an isolated and inadvertent action
not taken in bad faith and which is remedied by the successor corporation
promptly after receipt of notice thereof given by the Participant;
(b) a reduction in the Participant's annual base salary;
(c) the successor corporation's requiring the Participant (without the
Participant's consent) to be based at any place outside a 35-mile radius of his
or her place of employment prior to a Corporate Transaction, except for
reasonably required travel on the successor corporation's business that is not
materially greater than such travel requirements prior to the Corporate
Transaction;
(d) the successor corporation's failure to provide the Participant with
compensation and benefits at least equal in the aggregate (in terms of benefit
levels and/or reward opportunities) to those provided for under any employee
benefit plan, program or practice as in effect immediately prior to the
Corporate Transaction, except for changes in general welfare and benefit plans
in a manner consistent with similar plans applicable to the employees of the
successor corporation and its affiliates in general, which changes on the whole
(after consideration of any additional benefits provided after the consummation
of the Corporate Transaction) are not material decreases; or
(e) any material breach by the successor corporation of its obligation to
Participant under the Plan.
"Grant Date" means the date on which the Plan Administrator completes the
corporate action relating to the grant of an Option and all conditions precedent
to the grant have been satisfied, provided that conditions to the exercisability
or vesting of Options shall not defer the Grant Date.
"Incentive Stock Option" means an Option to purchase Common Stock granted
under Section 7 with the intention that it qualify as an "incentive stock
option" as that term is defined in Section 422 of the Code.
"Nonqualified Stock Option" means an Option to purchase Common Stock
granted under Section 7 other than an Incentive Stock Option.
"Option" means the right to purchase Common Stock granted under Section 7.
"Option Term" has the meaning set forth in Section 7.3.
"Parent," except as otherwise provided in Section 8.4 in connection with
Incentive Stock Options, means any entity, whether now or hereafter existing,
that directly or indirectly controls the Company.
"Participant" means (a) the person to whom an Option is granted; (b) for a
Participant who has died, the personal representative of the Participant's
estate, the person(s) to whom the Participant's rights under the Option have
passed by will or by the applicable laws of descent and distribution, or the
beneficiary designated in accordance with Section 10; or (c) the person(s) to
whom an Option has been transferred in accordance with Section 10.
"Plan Administrator" means the Board or any committee or committees
designated by the Board to administer the Plan under Section 3.1.
"Related Corporation" means any Parent or Subsidiary of the Company.
"Retirement" means retirement as of the individual's normal retirement date
under the Company's 401(k) Plan or other similar successor plan applicable to
salaried employees, unless otherwise defined by the Plan Administrator from time
to time for purposes of the Plan.
"Securities Act" means the Securities Act of 1933, as amended.
<PAGE>
"Subsidiary," except as provided in Section 8.4 in connection with
Incentive Stock Options, means any entity that is directly or indirectly
controlled by the Company.
"Termination Date" has the meaning set forth in Section 7.6.
SECTION 3. ADMINISTRATION
3.1 Plan Administrator
The Plan shall be administered by the Board and/or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board (a "Plan Administrator"). If and so long as
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
the Board shall consider in selecting the members of any committee acting as
Plan Administrator, with respect to any persons subject or likely to become
subject to Section 16 of the Exchange Act, the provisions regarding (a) "outside
directors" as contemplated by Section 162(m) of the Code and (b) "nonemployee
directors" as contemplated by Rule 16b-3 under the Exchange Act.
Notwithstanding the foregoing, the Board may delegate the responsibility for
administering the Plan with respect to designated classes of eligible persons to
different committees consisting of one or more members of the Board, subject to
such limitations as the Board deems appropriate. Committee members shall serve
for such term as the Board may determine, subject to removal by the Board at any
time.
3.2 Administration and Interpretation by Plan Administrator
Except for the terms and conditions explicitly set forth in the Plan, the
Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Options under the Plan, including the
selection of individuals to be granted Options, the type of Options, the number
of shares of Common Stock subject to an Option, all terms, conditions,
restrictions and limitations, if any, of an Option and the terms of any
instrument that evidences the Option. The Plan Administrator shall also have
exclusive authority to interpret the Plan and the terms of any instrument
evidencing the Option and may from time to time adopt, and change, rules and
regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 Authorized Number of Shares
Subject to adjustment from time to time as provided in Section 11.1, the
number of shares of Common Stock that shall be available for issuance under the
Plan shall be 5,000,000 shares.
In addition, (a) any authorized shares not issued or subject to outstanding
options under the Company's 1989 Stock Option Plan or its 1991 Stock Option Plan
for Nonemployee Directors (the "Prior Plans") on the Effective Date and (b) any
shares subject to outstanding options under the Prior Plans on the Effective
Date that cease to be subject to such options (other than by reason of exercise
of the options to the extent they are exercised for shares), up to an aggregate
maximum of 7,412,048 shares, shall, as of the date of stockholder approval of
the Plan, cease to be available for grant and issuance under the Prior Plans,
but shall be available for issuance under the Plan.
Shares issued under the Plan shall be drawn from authorized and unissued
shares or shares now held or subsequently acquired by the Company as treasury
shares.
<PAGE>
4.2 Limitations
Subject to adjustment from time to time as provided in Section 11.1, not
more than 2,500,000 shares of Common Stock may be made subject to Options under
the Plan to any individual in the aggregate in any consecutive three year
period, such limitation to be applied in a manner consistent with the
requirements of, and only to the extent required for compliance with, the
exclusion from the limitation on deductibility of compensation under Section
162(m) of the Code.
4.3 Reuse of Shares
Any shares of Common Stock that have been made subject to an Option that
cease to be subject to the Option (other than by reason of exercise of the
Option to the extent it is exercised for shares) shall again be available for
issuance in connection with future grants of Options under the Plan; provided,
however, that for purposes of Section 4.2, any such shares shall be counted in
accordance with the requirements of Section 162(m) of the Code.
SECTION 5. ELIGIBILITY
Options may be granted under the Plan to those officers, directors and
employees of the Company and its Related Corporations as the Plan Administrator
from time to time selects. Options may also be made to consultants, agents,
advisors and independent contractors who provide services to the Company and its
Related Corporations; provided, however, that such Participants render bona fide
services not in connection with the offer and sale of the Company's securities
in a capital-raising transaction.
SECTION 6. SETTLEMENT OF OPTIONS AND ACQUIRED COMPANY OPTIONS
6.1 Settlement of Options
The Company may settle Options through the delivery of shares of Common
Stock, cash payments, the granting of replacement Options or any combination
thereof as the Plan Administrator shall determine. Any Option settlement,
including payment deferrals, may be subject to such conditions, restrictions and
contingencies as the Plan Administrator shall determine. The Plan Administrator
may permit or require the deferral of any Option payment, subject to such rules
and procedures as it may establish, which may include provisions for the payment
or crediting of interest, or dividend equivalents, including converting such
credits into deferred stock equivalents. The Plan Administrator may at any time
offer to buy out, for a payment in cash or Common Stock, an Option previously
granted based on such terms and conditions as the Plan Administrator shall
establish and communicate to the Participant at the time such offer is made.
6.2 Acquired Company Options
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Options under the Plan in substitution for options
issued under other plans, or assume under the Plan options issued under other
plans, if the other plans are or were plans of other acquired entities
("Acquired Entities") (or the parent of the Acquired Entity) and the new Option
is substituted, or the old option is assumed, by reason of a merger,
consolidation, acquisition of property or of stock, reorganization or
liquidation (the "Acquisition Transaction"). In the event that a written
agreement pursuant to which the Acquisition Transaction is completed is approved
by the Board and said agreement sets forth the terms and conditions of the
substitution for or assumption of outstanding options of the Acquired Entity,
said terms and conditions shall be deemed to be the action of the Plan
Administrator without any further action by the Plan Administrator, except as
may be required for compliance with Rule 16b-3 under the Exchange Act, and the
persons holding such options shall be deemed to be Participants.
<PAGE>
SECTION 7. TERMS AND CONDITIONS OF OPTIONS
7.1 Grant of Options
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock
Options, which shall be appropriately designated. Options may be granted singly
or in combination.
7.2 Option Exercise Price
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant Date with respect to
Incentive Stock Options and not less than 85% of the Fair Market Value of the
Common Stock on the Grant Date with respect to Nonqualified Stock Options. For
Incentive Stock Options granted to a more than 10% stockholder, the Option
exercise price shall be as specified in Section 8.2.
7.3 Term of Options
The term of each Option (the "Option Term") shall be as established by the
Plan Administrator or, if not so established, shall be ten years from the Grant
Date. For Incentive Stock Options, the maximum Option Term shall be as
specified in Sections 8.2 and 8.5.
7.4 Exercise of Options
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which, or the installments in which, the
Option shall vest and become exercisable, which provisions may be waived or
modified by the Plan Administrator at any time. If not so established in the
instrument evidencing the Option, the Option shall vest and become exercisable
according to the following schedule, which may be waived or modified by the Plan
Administrator at any time:
<TABLE>
<CAPTION>
Period of Participant's Continuous Employment or
Service With the Company or Its Related Corporations Percent of Total Option
From the Option Grant Date That Is Vested and Exercisable
---------------------------------------------------- ------------------------------
<S> <C>
After 1 month 1/48th
Each additional one-month period of continuous service An additional 1/48th
completed thereafter
After 4 years 100%
</TABLE>
Unless the Plan Administrator (or the Company's Chief Executive Officer in
the case of Participants who are not subject to Section 16 of the Exchange Act)
determines otherwise, the vesting schedule of an Option shall be adjusted
proportionately to the extent a Participant's hours of employment or service are
reduced after the Grant Date.
To the extent that the Option has vested and become exercisable, an Option
may be exercised from time to time by delivery to the Company of a written stock
option exercise agreement or notice, in a form and in accordance with procedures
established by the Plan Administrator, setting forth the number of shares with
respect to which the Option is being exercised, the restrictions imposed on the
shares purchased under such exercise agreement, if any, and such representations
and agreements as may be required by the Plan Administrator, accompanied by
payment in full as described in Section 7.5. An Option may not be exercised as
to less than a reasonable number of shares at any one time, as determined by the
Plan Administrator.
<PAGE>
7.5 Payment of Exercise Price
The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or by check or, unless the Plan Administrator in its sole
discretion determines otherwise, either at the time the Option is granted or at
any time thereafter, in any combination of
(a) cash or check;
(b) tendering (either actually or, if and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, by attestation)
shares of Common Stock already owned by the Participant for at least six months
(or any shorter period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) having a Fair Market Value on the day prior to the
exercise date equal in amount to the aggregate Option exercise price;
(c) if and so long as the Common Stock is registered under Section 12(b) or
12(g) of the Exchange Act, delivery of a properly executed exercise notice,
together with irrevocable instructions, to (i) a brokerage firm designated by
the Company to deliver promptly to the Company the aggregate amount of sale or
loan proceeds to pay the Option exercise price and any withholding tax
obligations that may arise in connection with the exercise and (ii) the Company
to deliver the certificates for such purchased shares directly to such brokerage
firm, all in accordance with the regulations of the Federal Reserve Board; or
(d) such other consideration as the Plan Administrator may permit.
In addition, to assist a Participant (including a Participant who is an
officer or a director of the Company) in acquiring shares of Common Stock
pursuant to an Option granted under the Plan, the Plan Administrator, in its
sole discretion, may authorize, either at the Grant Date or at any time before
the acquisition of Common Stock pursuant to the Option, (i) the payment by a
Participant of a full-recourse promissory note, (ii) the payment by the
Participant 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 Participant from
a third party. Subject to the foregoing, the Plan Administrator shall in its
sole discretion specify the terms of any loans, installment payments or loan
guarantees, including the interest rate and terms of and security for repayment.
7.6 Post-Termination Exercises
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option shall continue to be exercisable,
and the terms and conditions of such exercise, if a Participant ceases to be
employed by, or to provide services to, the Company or its Related Corporations,
which provisions may be waived or modified by the Plan Administrator at any
time. If not so established in the instrument evidencing the Option, the Option
shall be exercisable according to the following terms and conditions, which may
be waived or modified by the Plan Administrator at any time:
(a) Any portion of an Option that is not vested and exercisable on the date
of termination of the Participant's employment or service relationship (the
"Termination Date") shall expire on such date.
(b) Any portion of an Option that is vested and exercisable on the
Termination Date shall expire upon the earliest to occur of
(i) the last day of the Option Term;
(ii) if the Participant's Termination Date occurs for reasons other than
Cause, death, Disability or Retirement, the three-month anniversary of such
Termination Date;
<PAGE>
(iii) if the Participant's Termination Date occurs by reason of death or
Disability, the one-year anniversary of such Termination Date; and
(iv) if the Participant's Termination Date occurs by reason of Retirement,
the three-year anniversary of such Termination Date.
Notwithstanding the foregoing, if the Participant dies after the
Termination Date while the Option is otherwise exercisable, the portion of the
Option that is vested and exercisable on such Termination Date shall expire upon
the earlier to occur of (y) the last day of the Option Term and (z) the first
anniversary of the date of death, unless the Plan Administrator determines
otherwise.
Also notwithstanding the foregoing, in case of termination of the
Participant's employment or service relationship for Cause, the Option shall
automatically expire upon first notification to the Participant of such
termination, unless the Plan Administrator determines otherwise. If a
Participant's employment or service relationship with the Company is suspended
pending an investigation of whether the Participant shall be terminated for
Cause, all the Participant's rights under any Option likewise shall be suspended
during the period of investigation.
A Participant's transfer of employment or service relationship between or
among the Company and its Related Corporations, or a change in status from an
employee to a consultant that is evidenced by a written agreement between a
Participant and the Company or a Related Corporation, shall not be considered a
termination of employment or service relationship for purposes of this Section
7. Employment or service relationship shall be deemed to continue while the
Participant is on a bona fide leave of absence, if such leave was approved by
the Company or a Related Corporation in writing and if continued crediting of
service for purposes of this Section 7 is expressly required by the terms of
such leave or by applicable law (as determined by the Company). The effect of a
Company-approved leave of absence on the terms and conditions of an Option shall
be determined by the Plan Administrator, in its sole discretion.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock Options
shall be subject to the following additional terms and conditions:
8.1 Dollar Limitation
To the extent the aggregate Fair Market Value (determined as of the Grant
Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds $100,000, such portion in
excess of $100,000 shall be treated as a Nonqualified Stock Option. In the
event the Participant holds two or more such Options that become exercisable for
the first time in the same calendar year, such limitation shall be applied on
the basis of the order in which such Options are granted.
8.2 More Than 10% Stockholders
If an employee owns more than 10% of the total voting power of all classes
of the Company's stock, then the exercise price per share of an Incentive Stock
Option shall not be less than 110% of the Fair Market Value of the Common Stock
on the Grant Date and the Option Term shall not exceed five years. The
determination of more than 10% ownership shall be made in accordance with
Section 422 of the Code.
8.3 Attribution Rule
For purposes of Section 8.2, in determining stock ownership, an employee
shall be deemed to own the stock owned, directly or indirectly, by or for his or
her brothers, sisters, spouse, ancestors and lineal descendants.
<PAGE>
Stock owned, directly or indirectly, by or for a corporation, partnership,
estate or trust shall be deemed to be owned proportionately by or for its
stockholders, partners or beneficiaries. If an employee or a person related to
the employee owns an unexercised option or warrant to purchase stock of the
Company, the stock subject to that portion of the option or warrant which is
unexercised shall not be counted in determining stock ownership. For purposes of
this Section 8, stock owned by an employee shall include all stock actually
issued and outstanding immediately before the grant of the Incentive Stock
Option to the employee.
8.4 Eligible Employees
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.4, "parent corporation" and "subsidiary
corporation" shall have the meanings attributed to those terms for purposes of
Section 422 of the Code.
8.5 Term
Except as provided in Section 8.2, the Option Term shall not exceed 10
years.
8.6 Exercisability
An Option designated as an Incentive Stock Option shall cease to qualify
for favorable tax treatment as an Incentive Stock Option to the extent it is
exercised (if permitted by the terms of the Option) (a) more than three months
after the Termination Date for reasons other than death or Disability, (b) more
than one year after the Termination Date by reason of Disability, or (c) after
the Participant has been on leave of absence for more than 90 days, unless the
Participant's reemployment rights are guaranteed by statute or contract.
For purposes of this Section 8.6, Disability shall mean "disability" as
that term is defined for purposes of Section 422 of the Code.
8.7 Taxation of Incentive Stock Options
In order to obtain certain tax benefits afforded to Incentive Stock Options
under Section 422 of the Code, the Participant must hold the shares issued upon
the exercise of an Incentive Stock Option for two years after the Grant Date and
one year from the date of exercise. A Participant may be subject to the
alternative minimum tax at the time of exercise of an Incentive Stock Option.
The Participant shall give the Company prompt notice of any disposition of
shares acquired by the exercise of an Incentive Stock Option prior to the
expiration of such holding periods.
8.8 Promissory Notes
The amount of any promissory note delivered pursuant to Section 7.5 in
connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator, but in no case less than the rate required
to avoid imputation of interest (taking into account any exceptions to the
imputed interest rules) for federal income tax purposes.
SECTION 9. WITHHOLDING
The Company may require the Participant to pay to the Company the amount of
any withholding taxes that the Company is required to withhold with respect to
the grant, vesting or exercise of any Option. Subject to the Plan and
applicable law, the Plan Administrator may, in its sole discretion, permit the
Participant to satisfy withholding obligations, in whole or in part, (a) by
paying cash, (b) by electing to have the Company withhold shares of Common Stock
(up to the minimum required federal tax withholding rate) or (c) by transferring
to the Company shares of Common Stock (already owned by the Participant for such
period necessary to avoid a charge
<PAGE>
to the Company's earnings for financial reporting purposes), in such amounts as
are equivalent to the Fair Market Value of the withholding obligation. The
Company shall have the right to withhold from any Option or any shares of Common
Stock issuable pursuant to an Option (up to the minimum required federal tax
withholding rate) or from any cash amounts otherwise due or to become due from
the Company to the Participant an amount equal to such taxes. The Company may
also deduct from any Option any other amounts due from the Participant to the
Company or a Related Corporation.
SECTION 10. ASSIGNABILITY
Options granted under the Plan shall not be transferable, pledgable or
assignable other than (a) by will or the laws of descent and distribution or (b)
to the extent permitted by the Plan Administrator, in its sole discretion, and
by Section 422 of the Code with respect to Incentive Stock Options, by gift or
other transfer to either (i) any trust or partnership in which the original
option recipient or such person's spouse or other immediate family member has a
substantial beneficial interest or (ii) a spouse or other immediate family
member; provided, however, that any Option so assigned or transferred shall be
subject to all the same terms and conditions contained in the instrument
evidencing the Option. During a Participant's lifetime, any Options granted
under the Plan are personal to the Participant and are exercisable solely by the
Participant or a permitted assignee or transferee. Notwithstanding the
foregoing, to the extent permitted by Section 422 of the Code with respect to
Incentive Stock Options, the Plan Administrator may permit a Participant, during
the Participant's lifetime, to designate a person who may exercise an Option
after the Participant's death by giving written notice of such designation to
the Company (such designation may be changed from time to time by the
Participant by giving written notice to the Company revoking any earlier
designation and making a new designation). Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of any Option under the Plan or of any
right or privilege conferred thereby, contrary to the provisions of the Plan, or
the sale or levy or any attachment or similar process upon the rights and
privileges conferred hereby, shall be null and void.
SECTION 11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
11.1 Adjustment of Shares
The aggregate number and class of shares for which Options may be granted
under the Plan, the number and class of shares covered by each outstanding
Option and the exercise price per share thereof (but not the total price), and
the limitations set forth in Section 4.2, shall all be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock of
the Company resulting from a split-up or consolidation of shares or any like
capital adjustment, or the payment of any stock dividend.
11.2 Effect of Liquidation, Reorganization or Change in Control
(a) Except as provided in subsection 11.2(b), upon a merger (other than a
merger of the Company in which the holders of Common Stock immediately prior to
the merger have the same proportionate ownership of common stock in the
surviving corporation immediately after the merger), consolidation, acquisition
of property or stock, separation, reorganization (other than a mere
reincorporation or the creation of a holding company) or liquidation of the
Company, as a result of which the stockholders of the Company receive cash,
stock or other property in exchange for or in connection with their shares of
Common Stock, any Option granted hereunder shall terminate, but the Participant
shall have the right immediately prior to any such merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation to
exercise such Participant's Option in whole or in part whether or not the
vesting requirements set forth in the Option agreement have been satisfied.
(b) If the stockholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock in
any transaction involving a merger (other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation
or reorganization (other than a mere reincorporation or
<PAGE>
the creation of a holding company) (each a "Corporate Transaction"), all Options
granted hereunder shall be converted into options to purchase shares of Exchange
Stock unless the Company and the corporation issuing the Exchange Stock, in
their sole discretion determine that any or all such Options granted hereunder
shall not be converted into options to purchase shares of Exchange Stock but
instead shall terminate in accordance with the provisions of subsection 11.2(a).
The amount and price of converted options shall be determined by adjusting the
amount and price of the Options granted hereunder in the same proportion as used
for determining the number of shares of Exchange Stock the holders of the Common
Stock receive in such merger, consolidation, acquisition of property or stock,
separation or reorganization.
(c) Each converted option shall, immediately following the consummation of
the Corporate Transaction, become fully vested and exercisable in whole or in
part whether or not the vesting requirements set forth in the Option agreement
have been satisfied, except that such acceleration shall not occur if, in the
opinion of the Company's outside accountants, such acceleration would render
unavailable "pooling of interests" accounting treatment for any Corporate
Transaction for which pooling of interests accounting treatment is sought by the
Company. Such Options shall not so accelerate, however, if and to the extent
that: (i) such Option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation or parent thereof or to be replaced
with a comparable option for the purchase of shares of the capital stock of the
successor corporation or its parent corporation or (ii) such Option is to be
replaced with a cash incentive program of the successor corporation that
preserves the spread existing at the time of the Corporate Transaction and
provides for subsequent payout in accordance with the same vesting schedule
applicable to such Option. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be conclusive and binding. All such Options shall terminate and cease to
remain outstanding immediately following the consummation of the Corporate
Transaction, except to the extent assumed by the successor corporation or its
parent corporation. Any such Options that are assumed or replaced in the
Corporate Transaction and do not otherwise accelerate at that time shall be
accelerated in the event the Participant's employment or services should
subsequently terminate within two years following such Corporate Transaction,
unless such employment or services are terminated by the successor corporation
for Cause or by the Participant voluntarily without Good Reason.
(d) Upon a merger of the Company in which the holders of Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock in the surviving corporation immediately after the merger, a mere
reincorporation or the creation of a holding company, each Option outstanding
under the Plan shall be assumed or an equivalent option shall be substituted by
the successor corporation or a parent or subsidiary of such corporation, and the
vesting schedule set forth in the instrument evidencing the Option shall
continue to apply to such assumed or equivalent option.
11.3 Fractional Shares
In the event of any adjustment in the number of shares covered by any
Option, any fractional shares resulting from such adjustment shall be
disregarded and each such Option shall cover only the number of full shares
resulting from such adjustment.
11.4 Determination of Board to Be Final
All Section 11 adjustments shall be made by the Board, and its
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
SECTION 12. AMENDMENT AND TERMINATION OF PLAN
12.1 Amendment of Plan
The Plan may be amended only by the Board in such respects as it shall deem
advisable; provided, however, that to the extent required for compliance with
Section 422 of the Code or any applicable law or
<PAGE>
regulation, stockholder approval shall be required for any amendment that would
(a) increase the total number of shares available for issuance under the Plan,
(b) modify the class of persons eligible to receive Options, or (c) otherwise
require stockholder approval under any applicable law or regulation. Any
amendment made to the Plan that would constitute a "modification" to Incentive
Stock Options outstanding on the date of such amendment shall not, without the
consent of the Participant, be applicable to such outstanding Incentive Stock
Options but shall have prospective effect only.
12.2 Termination of Plan
The Board may suspend or terminate the Plan at any time. The Plan shall
have no fixed expiration date; provided, however, that no Incentive Stock
Options may be granted more than ten years after the later of (a) the Plan's
adoption by the Board and (b) the adoption by the Board of any amendment to the
Plan that constitutes the adoption of a new plan for purposes of Section 422 of
the Code.
12.3 Consent of Participant
The amendment or termination of the Plan or the amendment of an outstanding
Option shall not, without the Participant's consent, impair or diminish any
rights or obligations under any Option theretofore granted to the Participant
under the Plan. Any change or adjustment to an outstanding Incentive Stock
Option shall not, without the consent of the Participant, be made in a manner so
as to constitute a "modification" that would cause such Incentive Stock Option
to fail to continue to qualify as an Incentive Stock Option. Notwithstanding
the foregoing, any adjustments made pursuant to Section 11 shall not be subject
to these restrictions.
SECTION 13. GENERAL
13.1 Evidence of Options
Options granted under the Plan shall be evidenced by a written instrument
that shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and that are not inconsistent with the
Plan.
13.2 No Individual Rights
Nothing in the Plan or any Option granted under the Plan shall be deemed to
constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Related Corporation or limit in any way
the right of the Company or any Related Corporation of the Company to terminate
a Participant's employment or other relationship at any time, with or without
Cause.
13.3 Registration
Notwithstanding any other provision of the Plan, the Company shall have no
obligation to issue or deliver any shares of Common Stock under the Plan or make
any other distribution of benefits under the Plan unless such issuance, delivery
or distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act), and the applicable
requirements of any securities exchange or similar entity.
The Company shall be under no obligation to any Participant to register for
offering or resale or to qualify for exemption under the Securities Act, or to
register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if made.
The Company may issue certificates for shares with such legends and subject to
such restrictions on transfer and stop-transfer instructions as counsel for the
Company deems necessary or desirable for compliance by the Company with federal
and state securities laws.
<PAGE>
To the extent that the Plan or any instrument evidencing an Option provides
for issuance of stock certificates to reflect the issuance of shares of Common
Stock, the issuance may be effected on a noncertificated basis, to the extent
not prohibited by applicable law or the applicable rules of any stock exchange.
13.4 No Rights as a Stockholder
No Option shall entitle the Participant to any cash dividend, voting or
other right of a stockholder unless and until the date of issuance under the
Plan of the shares that are the subject of such Option.
13.5 Compliance With Laws and Regulations
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator, in its sole discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to Participants who are
officers or directors subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other
Participants. Additionally, in interpreting and applying the provisions of the
Plan, any Option granted as an Incentive Stock Option pursuant to the Plan
shall, to the extent permitted by law, be construed as an "incentive stock
option" within the meaning of Section 422 of the Code.
13.6 Participants in Foreign Countries
The Plan Administrator shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Related Corporations may operate to assure the viability of the benefits
from Options granted to Participants employed in such countries and to meet the
objectives of the Plan.
13.7 No Trust or Fund
The Plan is intended to constitute an "unfunded" plan. Nothing contained
herein shall require the Company to segregate any monies or other property, or
shares of Common Stock, or to create any trusts, or to make any special deposits
for any immediate or deferred amounts payable to any Participant, and no
Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.
13.8 Severability
If any provision of the Plan or any Option is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Option under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Option, such provision shall be stricken as to such jurisdiction,
person or Option, and the remainder of the Plan and any such Option shall remain
in full force and effect.
13.9 Choice of Law
The Plan and all determinations made and actions taken pursuant hereto, to
the extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Washington without giving effect to
principles of conflicts of laws.
SECTION 14. EFFECTIVE DATE
The Effective Date is the date on which the Plan is adopted by the Board,
so long as it is approved by the Company's stockholders at any time within 12
months of such adoption.
Adopted by the Board on March 10, 1999 and approved by the Company's
stockholders on May 6, 1999.
