As filed with the Securities and Exchange Commission on July 12, 1996
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CELLULAR TECHNICAL SERVICES COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 11-2962080
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2401 Fourth Avenue, Seattle, Washington 98121
--------------------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
1996 Stock Option Plan
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(Full title of the plan)
Kyle R. Sugamele, Esq.
Vice President, General Counsel
Cellular Technical Services Company, Inc.
2401 Fourth Avenue
Seattle, Washington 98121
(206) 443-6400
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(Name, address and telephone number, including area code, of agent for service)
With a copy to:
Edward R. Mandell, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Approximate date of proposed sale to the public: As soon as practicable and
from time to time after the effective date of this Registration Statement.
<TABLE>
<CAPTION>
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Calculation of Registration Fee
Title of Amount Proposed maximum Proposed maximum
securities to be to be offering price aggregate Amount of
registered registered per share offering price registration fee
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<C> <C> <C> <C> <C>
Common stock,
$.001 par value 940,000 $16.125(1) $15,157,500 $5,226.72
160,000 17.875(2) 2,860,000 986.20
--------- ------- ----------- ---------
1,100,000(3) $18,017,500 $6,212.92
</TABLE>
(1) Calculated pursuant to Rule 457(h) and (c) solely for the purpose of
calculating the registration fee on the basis of the average of the
high and low prices ($17 and $15 1/4) of a share on July 10, 1996 as
quoted on the Nasdaq National Market System.
(2) Based, pursuant to Rule 457(h), on the exercise price of the related
option.
(3) Pursuant to Rule 416(b), there shall also be deemed covered hereby
such additional securities as may result from anti-dilution
adjustments under the 1996 Stock Option Plan.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
----------------------------------------
The Registrant hereby incorporates by reference the following
documents into this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
(b) The Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1996.
(c) The description of the Registrant's Common Stock contained
in its Registration Statement on Form 8-A filed on July
30, 1991 under the Securities Exchange Act of 1934 (the
"Exchange Act"), including any amendment or report filed
for the purpose of updating such description, and all
other reports heretofore filed by the Registrant with the
Securities and Exchange Commission (the "SEC") pursuant to
Sections 13(a) or 15(d) of the Exchange Act since December
31, 1995.
In addition, all documents filed by the Registrant with the SEC
subsequent to the filing date of this Registration Statement pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all the securities offered by this
Registration Statement have been sold or which de-registers all such securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of the filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated herein by reference, except for portions of such documents which
shall not be deemed incorporated by reference as indicated by statute, rule or
regulation or by such document itself, 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,
or is deemed to be, incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement, except as indicated herein.
ITEM 4. DESCRIPTION OF SECURITIES.
--------------------------
Not required, inasmuch as the Registrant's Common Stock is registered
under Section 12 of the Exchange Act.
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<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
---------------------------------------
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
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The description of the indemnification and insurance provided to the
officers and directors of the Registrant contained in Item 14 of the
Registrant's Registration Statement on Form S-1 (Registration No. 33-44176) is
hereby incorporated by reference.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
------------------------------------
Not applicable.
ITEM 8. EXHIBITS.
---------
See Exhibit Index on page 6 of this Registration Statement.
ITEM 9. UNDERTAKINGS.
- ------- -------------
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(1) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Act");
(2) 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 hereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement; and
(3) 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;
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<PAGE>
PROVIDED, HOWEVER, that paragraphs (a)(1) and (a)(2) will 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.
(b) That, for the purpose of determining any liability under the 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.
(c) 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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 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.
Insofar as indemnification for liabilities arising under the 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 SEC such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Valley Stream, New York, on this day of 11th July, 1996.
CELLULAR TECHNICAL SERVICES COMPANY, INC.
By: /s/ Stephen Katz
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Stephen Katz
Chairman of the Board of Directors and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint Stephen Katz and Michael E.
McConnell and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and re-substitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including,
without limitation, post-effective amendments) to this registration statement,
and to file the 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 and about the premises, as fully to all intents and purposes as he 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 substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
/s/ Stephen Katz Chairman of the Board of July 11, 1996
- ------------------------- Directors and Chief Executive
Stephen Katz Officer (Principal Executive Officer)
/s/ Robert P. Dahut President, Chief Operating July 11, 1996
- ------------------------- Officer and Director
Robert P. Dahut
/s/ Michael E. McConnell Vice President and Chief July 11, 1996
- ------------------------- Financial Officer (Principal
Michael E. McConnell Financial and Accounting Officer)
Director July 11, 1996
- -------------------------
Jay Goldberg
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<PAGE>
Exhibit Index
Exhibit
Number Description
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4.1(i)* Restated Certificate of Incorporation of the Registrant.
4.1(ii)** Certificate of Amendment of Restated Certificate of
Incorporation.
4.2(i)* By-Laws of the Registrant.
4.2(ii)*** Amendment I dated October 31, 1993 to By-Laws of the Registrant.
5 Opinion of Parker Chapin Flattau & Klimpl, LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Parker Chapin Flattau & Klimpl (included in their
opinion filed as Exhibit 5).
24 Power of Attorney (included on the signature page of this
Registration Statement).
99 1996 Stock Option Plan.
* Incorporated by reference to Registration Statement on Form S-1, File
No. 33-41176.
** Incorporated by reference to Registration Statement on Form S-8, File
No. 33-82016.
*** Incorporated by reference to the Annual Report on Form 10-K for the year
ended December 31, 1993, File No. 0-19437.
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(PARKER CHAPIN FLATTAU & KLIMPL, LLP Letterhead)
July 11, 1996
Cellular Technical Services Company, Inc.
2401 Fourth Avenue
Seattle, Washington 98121
Gentlemen:
We have acted as counsel to Cellular Technical Services Company, Inc.
(the "Company") in connection with a Registration Statement on Form S-8 (the
"Registration Statement") being filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the
offering of 1,100,000 shares of common stock, $.001 par value per share (the
"Shares"), pursuant to options granted or which may be granted by the Company
under its 1996 Stock Option Plan (the "Plan").
In connection with the foregoing, we have examined originals or
copies, satisfactory to us, of all such corporate records and of all such
agreements, certificates and other documents as we have deemed relevant and
necessary as a basis for the opinion hereinafter expressed. In such examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity with the original
documents of all documents submitted to us as copies. As to any facts material
to such opinion, we have, to the extent that relevant facts were not
independently established by us, relied on certificates of officers or other
representatives of the Company.
Based upon and subject to the foregoing, we are of the opinion that,
when issued and paid for in accordance with the Plan and the stock option
contracts evidencing options granted thereunder, the Shares will be validly
issued, fully paid and non-assessable.
We hereby consent to filing of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
/s/ PARKER CHAPIN FLATTAU & KLIMPL, LLP
PARKER CHAPIN FLATTAU & KLIMPL, LLP
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 registration of 1,100,000 shares of common stock under
the 1996 Stock Option Plan of Cellular Technical Services Company, Inc. of our
report dated March 1, 1996, except Note J, as to which the date is March 18,
1996, with respect to the financial statements and schedules of Cellular
Technical Services Company, Inc. included in its Annual Report (Form 10-K) for
the year ended December 31, 1995 filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Seattle, Washington
July 5, 1996
EXHIBIT A
1996 STOCK OPTION PLAN
of
CELLULAR TECHNICAL SERVICES COMPANY, INC.
1. PURPOSES OF THE PLAN. This stock option plan (the "Plan") is
designed to provide an incentive to employees (including directors and officers
who are employees) of and consultants to Cellular Technical Services Company,
Inc., a Delaware corporation (the "Company") or any of its Subsidiaries (as
defined in Paragraph 19), and to offer an additional inducement in obtaining the
services of such persons. The Plan provides for the grant of "incentive stock
options" ("ISOs") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), and nonqualified stock options which do not
qualify as ISOs ("NQSOs"), but the Company makes no representation or warranty,
express or implied, as to the qualification of any option as an "incentive stock
option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph
12, the aggregate number of shares of common stock, $.001 par value per share,
of the Company ("Common Stock") for which options may be granted under the Plan
shall not exceed 1,100,000. Such shares of Common Stock may, in the discretion
of the Board of Directors of the Company (the "Board of Directors"), consist
either in whole or in part of authorized but unissued shares of Common Stock or
shares of Common Stock held in the treasury of the Company. Subject to the
provisions of Paragraph 13, any shares of Common Stock subject to an option
which for any reason expires, is canceled or is terminated unexercised or which
ceases for any reason to be exercisable shall again become available for the
granting of options under the Plan. The Company shall at all times during the
term of the Plan reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
committee of the Board of Directors (the "Committee") consisting of not less
than two directors. During such time as the Company has a class of equity
securities registered under Section 12 of the Securities Exchange Act of 1934,
as amended, each member of the Committee shall be (a) a "disinterested person"
within the meaning of Rule 16b-3 promulgated under such act until such time as
the amendments to Rule 16b-3 adopted by the Securities and Exchange Commission
on May 30, 1996 in Release No. 34-37260 become effective with respect to the
Plan (the "New Rule Date") and (b) from and after the New Rule Date, a
"Non-Employee Director" within the meaning of Rule 16b-3 (as the same may be in
effect and interpreted from time to time, "Rule 16b-3"). A majority of the
members of the Committee shall constitute a quorum, and the acts of a majority
of the members present at any meeting at which a quorum is present, and any acts
approved in writing by all members without a meeting, shall be the acts of the
Committee.
<PAGE>
Subject to the express provisions of the Plan, the Committee shall
have the authority, in its sole discretion, to determine: the employees and
consultants who shall be granted options; the times when options shall be
granted; whether an option granted to an employee shall be an ISO or a NQSO; the
number of shares of Common Stock to be subject to each option; the term of each
option; the date each option shall become exercisable; whether an option shall
be exercisable in whole, in part or in installments and, if in installments, the
number of shares of Common Stock to be subject to each install ment, whether the
installments shall be cumulative, the date each installment shall become
exercisable and the term of each installment; whether and under what conditions
to accelerate the date of exercise of any option or installment; whether shares
of Common Stock may be issued upon the exercise of an option as partly paid and,
if so, the dates when future installments of the exercise price shall become due
and the amounts of such installments; the exercise price of each option; the
form of payment of the exercise price; whether to restrict the sale or other
disposition of the shares of Common Stock acquired upon the exercise of an
option and, if so, whether to waive any such restriction; whether to subject the
exercise of all or any portion of an option to the fulfillment of contingencies
as specified in the contract referred to in Paragraph 11 hereof (the
"Contract"), including without limitation, contingencies relating to entering
into a covenant not to compete with the Company, any of its Subsidiaries or a
Parent (as defined in Paragraph 19), to financial objectives for the Company,
any of its Subsidiaries or a Parent, a division of any of the foregoing, a
product line or other category, and/or the period of continued employment of the
optionee with the Company, any of its Subsidiaries or a Parent, and to determine
whether such contingencies have been met; whether an optionee is Disabled (as
defined in Paragraph 19); the amount, if any, necessary to satisfy the Company's
obligation to withhold taxes or other amounts; and the fair market value of a
share of Common Stock; to construe the Plan; with the consent of the optionee,
to cancel or modify an option, provided, that the modified provision is
permitted to be included in an option granted under the Plan on the date of the
modification, and further, provided, that in the case of a modification (within
the meaning of Section 424(h) of the Code) of an ISO, such option as modified
would be permitted to be granted on the date of such modification under the
terms of the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; from and after the New Rule Date, to approve any provision
which under Rule 16b-3 requires approval by the Board of Directors, a committee
of Non-Employee Directors or the stockholders to be exempt (unless otherwise
specifically provided herein); and to make all other determinations necessary or
advisable for administering the Plan. Any controversy or claim arising out of or
relating to the Plan shall be determined unilaterally by the Committee in good
faith in its sole discretion. The determinations of the Committee on the matters
referred to in this Paragraph 3 shall be conclusive and binding on the parties.
No member or former member of the Committee shall be liable for any action,
failure to act or determination made in good faith with respect to the Plan or
any option hereunder.
4. ELIGIBILITY. The Committee may from time to time, in its sole
discretion, consistent with the purposes of the Plan, grant options to employees
(including officers and directors who are employees) of, and to consultants to,
the Company or any of its Subsidiaries. Such options granted shall cover such
number of shares of Common Stock as the Committee may determine in the
applicable Contract, in its sole discretion; provided, however, that the maximum
number of shares subject to options that may be granted to any employee during
any calendar year under the Plan (the
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<PAGE>
"162(m) Maximum") shall not exceed 400,000 shares; and further, provided, that
the aggregate market value (determined at the time the option is granted in
accordance with Paragraph 5) of the shares of Common Stock for which any
eligible employee may be granted ISOs under the Plan or any other plan of the
Company, or of a Parent or a Subsidiary of the Company, which are exercisable
for the first time by such optionee during any calendar year shall not exceed
$100,000. Such limitation shall be applied by taking ISOs into account in the
order in which they were granted. Any option granted in excess of such amount
shall be treated as a NQSO to the extent of such excess.
5. EXERCISE PRICE. The exercise price of the shares of Common Stock
under each option shall be determined by the Committee in the applicable
Contract, in its sole discretion; provided, however, that the exercise price of
an ISO shall not be less than the fair market value of the Common Stock subject
to such option on the date of grant; and further, provided, that if, at the time
an ISO is granted, the optionee owns (or is deemed to own under Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company, of any of its Subsidiaries or of a
Parent, the exercise price of such ISO shall not be less than 110% of the fair
market value of the Common Stock subject to such ISO on the date of grant.
The fair market value of a share of Common Stock on any day shall be
(a) if the principal market for the Common Stock is a national securities
exchange, the average of the highest and lowest sales prices per share of Common
Stock on such day as reported by such exchange or on a composite tape reflecting
transactions on such exchange, (b) if the principal market for the Common Stock
is not a national securities exchange and the Common Stock is quoted on The
Nasdaq Stock Market ("Nasdaq"), and (i) if actual sales price information is
available with respect to the Common Stock, the average of the highest and
lowest sales prices per share of Common Stock on such day on Nasdaq, or (ii) if
such information is not available, the average of the highest bid and lowest
asked prices per share of Common Stock on such day on Nasdaq, or (c) if the
principal market for the Common Stock is not a national securities exchange and
the Common Stock is not quoted on Nasdaq, the average of the highest bid and
lowest asked prices per share of Common Stock on such day as reported on the OTC
Bulletin Board Service or by National Quotation Bureau, Incorporated or a
comparable service; provided, however, that if clauses (a), (b) and (c) of this
Paragraph are all inapplicable, or if no trades have been made or no quotes are
available for such day, the fair market value of the Common Stock shall be
determined by the Board by any method consistent with applicable regulations
adopted by the Treasury Department relating to stock options.
6. TERM. The term of each option granted pursuant to the Plan shall
be such term as is established by the Committee in the applicable Contract, in
its sole discretion; provided, however, that the term of each ISO granted
pursuant to the Plan shall be for a period not exceeding 10 years from the date
of grant thereof; and further, provided, that if, at the time an ISO is granted,
the optionee owns (or is deemed to own under Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, of any of its Subsidiaries or of a Parent, the term of the
ISO shall be for a period not exceeding five years from the date of grant.
Options shall be subject to earlier termination as hereinafter provided.
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<PAGE>
7. EXERCISE. An option (or any part or installment thereof), to the
extent then exercisable, shall be exercised by giving written notice to the
Company at its principal office stating which option is being exercised,
specifying the number of shares of Common Stock as to which such option is being
exercised and accompanied by payment in full of the aggregate exercise price
therefor (or the amount due on exercise if the Contract permits installment
payments) (a) in cash or by certified check or (b) if the applicable Contract
permits, with previously acquired shares of Common Stock having an aggregate
fair market value on the date of exercise (determined in accordance with
Paragraph 5) equal to the aggregate exercise price of all options being
exercised, or with any combination of cash, certified check or shares of Common
Stock.
The Committee may, in its sole discretion, permit payment of the
exercise price of an option by delivery by the optionee of a properly executed
notice, together with a copy of his irrevocable instructions to a broker
acceptable to the Committee to deliver promptly to the Company the amount of
sale or loan proceeds sufficient to pay such exercise price. In connection
therewith, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
A person entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a stockholder with respect to such shares of
Common Stock until the date of issuance of a stock certificate for such shares
or in the case of uncertificated shares, an entry is made on the books of the
Company's transfer agent representing such shares; provided, however, that until
such stock certificate is issued or book entry is made, any optionee using
previously acquired shares of Common Stock in payment of an option exercise
price shall continue to have the rights of a stockholder with respect to such
previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased or
issued under the Plan.
8. TERMINATION OF RELATIONSHIP. Except as may otherwise be expressly
provided in the applicable Contract, any optionee whose relationship with the
Company, its Parent and Subsidiaries as an employee or a consultant has
terminated for any reason (other than the death or Disability of the optionee)
may exercise such option, to the extent exercisable on the date of such
termination, at any time within three months after the date of termination, but
not thereafter and in no event after the date the option would otherwise have
expired; provided, however, that if such relationship is terminated either (a)
for Cause (as defined in Paragraph 19) , or (b) without the consent of the
Company, such option shall terminate immediately.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and the Company, any of its Subsidiaries
or a Parent if, at the time of the determination, the individual was an employee
of such corporation for purposes of Section 422(a) of the Code. As a result, an
individual on military, sick leave or other bona fide leave of absence shall
continue to be considered an employee for purposes of the Plan during such leave
if the period of the leave does not exceed 90 days, or, if longer, so long as
the individual's right to reemployment with the Company, any
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<PAGE>
of its Subsidiaries or a Parent is guaranteed either by statute or by contract.
If the period of leave exceeds 90 days and the individual's right to
reemployment is not guaranteed by statute or by contract, the employment
relationship shall be deemed to have terminated on the 91st day of such leave.
Except as may otherwise be expressly provided in the applicable
Contract, options granted under the Plan shall not be affected by any change in
the status of the optionee so long as the optionee continues to be an employee
of, or a consultant to, the Company, or any of the Subsidiaries or a Parent
(regardless of having changed from one to the other or having been transferred
from one corporation to another).
Nothing in the Plan or in any option granted under the Plan shall
confer on any optionee any right to continue in the employ of, or as a
consultant to, the Company, any of its Subsidiaries or a Parent, or interfere in
any way with any right of the Company, any of its Subsidiaries or a Parent to
terminate the optionee's relationship at any time for any reason whatsoever
without liability to the Company, any of its Subsidiaries or a Parent.
9. DEATH OR DISABILITY OF AN OPTIONEE. Except as may otherwise be
expressly provided in the applicable Contract, if an optionee dies (a) while he
is an employee of, or consultant to, the Company, any of its Subsidiaries or a
Parent, (b) within three months after the termination of such relationship
(unless such termination was for Cause or without the consent of the Company) or
(c) within one year following the termination of such relationship by reason of
his Disability, his option may be exercised, to the extent exercisable on the
date of his death, by his Legal Representative (as defined in Paragraph 19) at
any time within one year after death, but not thereafter and in no event after
the date the option would otherwise have expired.
Except as may otherwise be expressly provided in the applicable
Contract, any optionee whose relationship as an employee of, or consultant to,
the Company, its Parent and Subsidiaries has terminated by reason of such
optionee's Disability may exercise his option, to the extent exercisable upon
the effective date of such termination, at any time within one year after such
date, but not thereafter and in no event after the date the option would
otherwise have expired.
10. COMPLIANCE WITH SECURITIES LAWS. The Committee may require, in
its sole discretion, as a condition to the exercise of any option that either
(a) a Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock to be issued upon
such exercise shall be effective and current at the time of exercise, or (b)
there is an exemption from registration under the Securities Act for the
issuance of the shares of Common Stock upon such exercise. Nothing herein shall
be construed as requiring the Company to register shares subject to any option
under the Securities Act or to keep any Registration Statement effective or
current.
The Committee may require, in its sole discretion, as a condition to
the exercise of any option that the optionee execute and deliver to the Company
his representations and warranties, in
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<PAGE>
form, substance and scope satisfactory to the Committee, which the Committee
determines are necessary or convenient to facilitate the perfection of an
exemption from the registration requirements of the Securities Act, applicable
state securities laws or other legal requirement, including without limitation
that (a) the shares of Common Stock to be issued upon the exercise of the option
are being acquired by the optionee for his own account, for investment only and
not with a view to the resale or distribution thereof, and (b) any subsequent
resale or distribution of shares of Common Stock by such optionee will be made
only pursuant to (i) a Registration Statement under the Securities Act which is
effective and current with respect to the shares of Common Stock being sold, or
(ii) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption, the optionee shall prior to any offer of
sale or sale of such shares of Common Stock provide the Company with a favorable
written opinion of counsel satisfactory to the Company, in form, substance and
scope satisfactory to the Company, as to the applicability of such exemption to
the proposed sale or distribution.
In addition, if at any time the Committee shall determine, in its
sole discretion, that the listing or qualification of the shares of Common Stock
subject to such option on any securities exchange, Nasdaq or under any
applicable law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition to, or in connection with, the granting
of an option or the issue of shares of Common Stock thereunder, such option may
not be exercised in whole or in part unless such listing, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
11. STOCK OPTION CONTRACTS. Each option shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
optionee, and shall contain such terms, provisions and conditions not
inconsistent herewith as may be determined by the Committee.
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any
other provision of the Plan, in the event of a stock dividend, split-up, spin
off, combination, reclassification, recapitalization, merger in which the
Company is the surviving corporation, or exchange of shares or the like which
results in a change in the number or kind of shares of Common Stock which are
outstanding immediately prior to such event, the aggregate number and kind of
shares subject to the Plan, the aggregate number and kind of shares subject to
each outstanding option and the exercise price thereof, and the 162(m) Maximum
shall be appropriately adjusted by the Board of Directors, whose determination
shall be conclusive and binding on all parties.
In the event of (a) the liquidation or dissolution of the Company, or
(b) a merger in which the Company is not the surviving corporation or a
consolidation, any outstanding options shall terminate upon the earliest of any
such event, unless other provision is made therefor in the transaction. The
Company shall give each optionee under the Plan at least 20 days prior notice of
any such transaction, advising the optionee of the impact of the transaction on
his options.
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13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by
the Board of Directors on April 24, 1996. No option may be granted under the
Plan after April 23, 2006. The Board of Directors, without further approval of
the Company's stockholders, may at any time suspend or terminate the Plan, in
whole or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, to comply
with the provisions of Rule 16b- 3, Section 162(m) of the Code, or any change in
applicable law, regulations, rulings or interpretations of administrative
agencies; provided, however, that no amendment shall be effective without the
requisite prior or subsequent stockholder approval which would (a) except as
contemplated in Paragraph 12, increase the maximum number of shares of Common
Stock for which options may be granted under the Plan or the 162(m) Maximum, (b)
prior to the New Rule Date, materially increase the benefits accruing to
participants under the Plan or (c) change the eligibility requirements to
receive options hereunder. No termination, suspension or amendment of the Plan
shall, without the consent of the holder of an existing and outstanding option
affected thereby, adversely affect his rights under such option. The power of
the Committee to administer any options granted under the Plan prior to the
termination or suspension of the Plan nevertheless shall continue after such
termination or during such suspension.
14. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan
shall be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the optionee,
only by the optionee or his Legal Representatives. Except to the extent provided
above, options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process, and any such attempted
assignment, transfer, pledge, hypothecation or disposition shall be null and
void ab initio and of no force or effect.
15. WITHHOLDING TAXES. The Company may withhold (a) cash, (b) subject
to any limitations under Rule 16b-3, shares of Common Stock to be issued with
respect thereto having an aggregate fair market value on the exercise date
(determined in accordance with Paragraph 5), or (c) any combination thereof, in
an amount equal to the amount, if any, which the Committee determines is
necessary to satisfy the Company's obligation to withhold Federal, state and
local income taxes or other amounts incurred by reason of the grant or exercise
of an option, its disposition, or the disposition of the underlying shares of
Common Stock. Alternatively, the Company may require the optionee to pay to the
Company such amount, in cash, promptly upon demand. The Company shall not be
required to issue any shares of Common Stock pursuant to any such option until
all required payments have been made.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend
or legends upon the certificates for shares of Common Stock issued upon exercise
of an option under the Plan and may issue such "stop transfer" instructions to
its transfer agent in respect of such shares as it determines, in its
discretion, to be necessary or appropriate to (a) prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act
and any applicable state
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securities laws, (b) implement the provisions of the Plan or any agreement
between the Company and the optionee with respect to such shares of Common
Stock, or (c) permit the Company to determine the occurrence of a "disqualifying
disposition," as described in Section 421(b) of the Code, of the shares of
Common Stock issued or transferred upon the exercise of an ISO granted under the
Plan.
The Company shall pay all issuance taxes with respect to the issuance
of shares of Common Stock upon the exercise of an option granted under the Plan,
as well as all fees and expenses incurred by the Company in connection with such
issuance.
17. USE OF PROCEEDS. The cash proceeds from the sale of shares of
Common Stock pursuant to the exercise of options under the Plan shall be added
to the general funds of the Company and used for such corporate purposes as the
Board of Directors may determine.
18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
options for prior options of a Constituent Corporation (as defined in Paragraph
19) or assume the prior options of such Constituent Corporation.
19. DEFINITIONS. For purposes of the Plan, the following terms shall
be defined as set forth below:
(a) Cause. The term "Cause" shall mean (i) if there is a written
employment or consulting agreement between the optionee and the Company, any of
its Subsidiaries or a Parent which defines cause for termination of such
relationship, cause as defined in such agreement, or (ii) if there is no such
agreement, cause as defined by applicable state law.
(b) Constituent Corporation. The term "Constituent Corporation"
shall mean any corporation which engages with the Company, any of its
Subsidiaries or a Parent in a transaction to which Section 424(a) of the Code
applies (or would apply if the option assumed or substituted were an ISO), or
any Parent or any Subsidiary of such corporation.
(c) Disability. The term "Disability" shall mean a permanent and
total disability within the meaning of Section 22(e)(3) of the Code.
(d) Legal Representative. The term "Legal Representative" shall
mean the executor, administrator or other person who at the time is entitled by
law to exercise the rights of a deceased or incapacitated optionee with respect
to an option granted under the Plan.
(e) Parent. The term "Parent" shall have the same definition as
"parent corporation" in Section 424(e) of the Code.
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(f) Subsidiary. The term "Subsidiary" shall have the same
definition as "subsidiary corporation" in Section 424(f) of the Code.
20. GOVERNING LAW; CONSTRUCTION. The Plan, such options as may be
granted hereunder and all related matters shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to conflict
of law provisions.
Neither the Plan nor any Contract shall be construed or interpreted
with any presumption against the Company by reason of the Company causing the
Plan or Contract to be drafted. Whenever from the context it appears
appropriate, any term stated in either the singular or plural shall include the
singular and plural, and any term stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter.
21. PARTIAL INVALIDITY. The invalidity, illegality or
unenforceability of any provision in the Plan or any Contract shall not affect
the validity, legality or enforceability of any other provision, all of which
shall be valid, legal and enforceable to the fullest extent permitted by
applicable law.
22. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the votes present in person or by proxy at the next duly held
meeting of the Company's stockholders at which a quorum is present. No options
granted hereunder may be exercised prior to such approval; provided, however,
that the date of grant of any option shall be determined as if the Plan had not
been subject to such approval. Notwithstanding the foregoing, if the Plan is not
approved by a vote of the stockholders of the Company on or before April 23,
1997, the Plan and any options granted hereunder shall terminate.
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