<PAGE>
As filed with the Securities and Exchange Commission on July 18, 1996.
Registration No. 333-_______
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------------
INSURANCE AUTO AUCTIONS, INC.
(Exact name of issuer as specified in its charter)
CALIFORNIA 95-3790111
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1270 WEST NORTHWEST HIGHWAY
PALATINE, ILLINOIS 60067
(Address of principal executive offices)(Zip Code)
--------------------
INSURANCE AUTO AUCTIONS, INC.
1991 STOCK OPTION PLAN
(FULL TITLE OF THE PLAN)
JAMES P. ALAMPI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
INSURANCE AUTO AUCTIONS, INC.
1270 WEST NORTHWEST HIGHWAY
PALATINE, ILLINOIS 60067
(Name and address of agent for service)
(847) 705-9550
(Telephone number, including area code, of agent for service)
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED (1) PER SHARE (2) OFFERING PRICE (2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options to Purchase Common Stock 250,000 shares N/A N/A N/A
Common Stock 250,000 shares $9.56 $2,390,000 $825
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1991 Stock Option Plan by
reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which
results in an increase in the number of the outstanding shares of Common
Stock of Insurance Auto Auctions, Inc.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933 on the basis of the average of the high and low
prices per share of Common Stock of Insurance Auto Auctions, Inc., on July
12, 1996, as reported by the Nasdaq National Market.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Insurance Auto Auctions, Inc. (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange Commission (the
"Commission"):
a. The Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995;
b. The Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1996;
c. The Registrant's Registration Statement No. 0-19594 on
Form 8-A filed with the Commission on October 17, 1991, together
with Amendments No. 1, 2 and 3 on Form 8 filed with the
Commission on November 1, November 13, and November 15, 1991,
respectively, in which there is described the terms, rights and
provisions applicable to the Registrant's outstanding Common
Stock; and
d. Any similar report filed subsequently with the
Commission and distributed to the Registrant's shareholders.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act") after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The California General Corporation Law provides that directors
will not be liable to the Registrant for monetary damages arising from a breach
of their fiduciary duty as directors in certain circumstances, including such
conduct during a merger or tender offer. Such limitation does not affect
liability for any breach of a director's duty to the Registrant or its
shareholders (i) with respect to approval by the director of any transaction
from which he or she derives an improper personal benefit; (ii) with respect to
any acts or omissions involving an absence of good faith, which he or she
believes to be contrary to the best interests of the Company or its
shareholders, which involve intentional misconduct or a knowing and culpable
violation of law, which constitute an unexcused pattern of inattention that
amounts to an abdication of his or her duty to the Registrant or its
shareholders, or which show a reckless disregard for his or her duty to the
Registrant or its shareholders in circumstances in which he or she was, or
should have been, aware, in the ordinary course of performing his or her duties,
of a risk of serious injury to the Registrant or its shareholders; or
(iii) based on transactions between the Registrant and its directors or another
corporation with interrelated directors, or on improper distributions, loans or
guarantees under applicable sections of the California Corporations Code. In
addition, such limitation of liability does not affect the availability of
II-1
<PAGE>
equitable remedies such as injunctive relief or rescission, although in certain
circumstances equitable relief may not be available as a practical matter. Such
limitation may relieve the directors of monetary liability to the Registrant for
grossly negligent conduct, including conduct in situations involving attempted
takeovers of the Registrant. No claim or litigation is currently pending
against the Registrant's directors that would be affected by such limitation of
liability.
Articles IV and V of the Amended Articles of Incorporation of the
Registrant and Article VI of the Registrant's Amended and Restated Bylaws
provide for indemnification of its directors, officers and other agents to the
maximum extent permitted by the California Corporations Code. The underwriting
agreement entered into by the Registrant and the other parties names therein in
connection with the Registrant's initial public offering and secondary offerings
of its shares of Common Stock provides for the underwriters to indemnify the
Registrant, its directors and executive officers and other persons for certain
liabilities, including liabilities arising under the Securities Act of 1933, as
amended (the "1933 Act"). The amended and restated registration rights agreement
entered into by the Registrant and certain of its shareholders also provides for
indemnification by the Registrant in favor of such shareholders against certain
liabilities, including liabilities arising under the securities laws. The
Registrant also maintains insurance for the benefit of its current directors and
officers that insures such persons against certain liabilities, including
liabilities under the securities laws.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
Item 8. EXHIBITS
EXHIBIT NUMBER EXHIBIT
- -------------- -------
5 Opinion and Consent of Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP.
23.1 Consent of Independent Auditors - KPMG Peat Marwick
LLP.
23.2 Consent of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of
this Registration Statement.
99.1 Amended and Restated 1991 Stock Option Plan.
99.2 Form of Notice of Grant with Option Agreement -
Employee (incorporated by reference to Exhibit 28.2 of
Registration Statement No. 33-647444).
99.3 Form of Notice of Grant with Option Agreement -
Officer (incorporated by reference to Exhibit 28.3 of
Registration Statement No. 33-647444).
99.4 Form of Notice of Grant with Option Agreement - Non-
Employee Director (incorporated by reference to
Exhibit 28.4 of Registration Statement No. 33-647444).
ITEM 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement (i) to include any prospectus required
by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change in such information in this
Registration Statement; PROVIDED, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required by those clauses to be included in a post-
effective amendment is contained in the periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by
reference into this Registration Statement; (2) that, for the purpose of
determining any liability under the 1933 Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such
II-2
<PAGE>
securities at that time shall be deemed to be the initial bona fide offering
thereof; and (3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the Registrant's 1991 Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona tide offering thereof.
C. Insofar as indemnification for liabilities arising under the
1933 Act maybe permitted to directors officers or controlling persons of the
Registrant pursuant to the provisions and agreements summarized in Item 6 above
or otherwise, the Registrant has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the 1933 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 Palatine, State of Illinois, on this 18th day of July, 1996.
INSURANCE AUTO AUCTIONS, INC.
By: /S/ James P. Alampi
--------------------------------------
James P. Alampi
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS
That the undersigned officers and directors of INSURANCE AUTO
AUCTIONS, INC., a California Corporation, do hereby constitute and appoint James
P. Alampi and Linda Larrabee, and each one of them, the lawful attorneys and
agents, with full power and authority to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, and any one of
them, determine may be necessary or advisable or required to enable said
corporation to comply with the 1933 Act, and any rules or regulations or
requirements of the Commission in connection with this Registration Statement.
Without limiting the generality of the foregoing power and authority, the powers
granted include the power and authority to sign the names of the undersigned
officers and directors in the capacities indicated below to this Registration
Statement, to any and all amendments, both pre-effective and post-effective, and
supplements to this Registration Statement, and to any and all instruments or
documents filed as part of or in conjunction with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby ratifies
and confirms all that said attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the 1933 Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURES TITLE DATE
- ---------- ----- ----
/S/ James P. Alampi
- ------------------------------ July 18, 1996
James P. Alampi President, Chief Executive
Officer and Director
(Principal Executive Officer)
/S/ Linda Larrabee July 18, 1996
- ------------------------------
Linda Larrabee Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
II-4
<PAGE>
SIGNATURES TITLE Date
- ---------- ----- ----
/S/ Bradley S. Scott
- ------------------------------
Bradley S. Scott Chairman of the Board July 18, 1996
/S/ Susan B. Gould
- ------------------------------
Susan B. Gould Director July 18, 1996
/S/ Melvin R. Martin
- ------------------------------
Melvin R. Martin Director July 18, 1996
/S/ Thomas J. O'Malia
- ------------------------------
Thomas J. O'Malia Director July 18, 1996
/S/ Christopher G. Knowles
- ------------------------------
Christopher G. Knowles Director July 18, 1996
/S/ Glen E. Tullman
- ------------------------------
Glen E. Tullman Director June 24, 1996
/S/ Richard A. Rosenthal
- ------------------------------
Richard A. Rosenthal Director July 18, 1996
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
INSURANCE AUTO AUCTIONS, INC.
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT SEQUENTIALLY
- -------------- ------- NUMBERED PAGE
-------------
5 Opinion and Consent of Gunderson
Dettmer Stough Villeneuve Franklin
& Hachigian, LLP.
23.1 Consent of Independent Auditors -
KPMG Peat Marwick LLP.
23.2 Consent of Gunderson Dettmer
Stough Villeneuve Franklin &
Hachigian, LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is
made to page II-4 of this
Registration Statement.
99.1 Amended and Restated 1991 Stock
Option Plan.
99.2 Form of Notice of Grant with
Option Agreement - Employee
(incorporated by reference to
Exhibit 28.2 of Registration
Statement No. 33-647444).
99.3 Form of Notice of Grant with
Option Agreement - Officer
(incorporated by reference to
Exhibit 28.3 of Registration
Statement No. 33-647444).
99.4 Form of Notice of Grant with
Option Agreement - Non-Employee
Director (incorporated by
reference to Exhibit 28.4 of
Registration Statement
No. 33-647444).
<PAGE>
EXHIBIT 5
OPINION AND CONSENT OF
GUNDERSON DETTMER STOUGH VILLENEUVE FRANKLIN & HACHIGIAN, LLP
<PAGE>
July 16, 1996
Insurance Auto Auctions, Inc.
1270 West Northwest Highway
Palatine, Illinois 60067
Re: Insurance Auto Auctions, Inc. Registration Statement for
Offering of Shares of Common Stock
----------------------------------
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 250,000 shares of
Common Stock under the Company's 1991 Stock Option Plan. We advise you that, in
our opinion, when such shares have been issued and sold pursuant to the
applicable provisions of the Company's 1991 Stock Option Plan and in accordance
with the Registration Statement, such shares will be validly issued, fully paid
and nonassessable shares of the Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
/S/ GUNDERSON DETTMER STOUGH VILLENEUVE
FRANKLIN & HACHIGIAN, LLP
GUNDERSON DETTMER STOUGH VILLENEUVE
FRANKLIN & HACHIGIAN, LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS - KPMG PEAT MARWICK LLP
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Insurance Auto Auctions, Inc.:
We consent to incorporation by reference in the registration statement on
Form S-8 of Insurance Auto Auctions, Inc. of our report dated February 9, 1996
relating to the consolidated balance sheets of Insurance Auto Auctions, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1995, and the related
schedule, which report appears in the December 31, 1995 annual report on Form
10-K of Insurance Auto Auctions, Inc.
/S/ KPMG Peat Marwick LLP
Los Angeles, California
July 16, 1996
<PAGE>
EXHIBIT 99.1
AMENDED AND RESTATED 1991 STOCK OPTION PLAN
<PAGE>
INSURANCE AUTO AUCTIONS, INC.
1991 STOCK OPTION PLAN
AS RESTATED AND AMENDED
THROUGH JUNE 19, 1996
I. PURPOSE.
This Insurance Auto Auctions, Inc. 1991 Stock Option Plan ("PLAN") is
intended to enable Insurance Auto Auctions, Inc. ("CORPORATION") to attract and
retain the following individuals and to encourage such individuals to acquire a
proprietary interest in the Corporation: (a) employees (including officers and
directors) of the Corporation and its subsidiaries primarily responsible for the
management, growth and financial success of the Corporation and its
subsidiaries, (b) non-employee members of the Corporation's Board of Directors
and (c) consultants and independent contractors who perform valuable services
for the Corporation or its subsidiaries.
II. ADMINISTRATION.
The Plan will be administered by a committee or committees appointed
by the Corporation's Board of Directors ("BOARD"), and each such committee shall
consist of one or more members of the Board. The Board may delegate the
responsibility for administration of the Plan with respect to designated classes
of optionees to different committees, subject to such limitations as the Board
deems appropriate. With respect to any matter, the term "COMMITTEE," when used
in this Plan, will refer to the committee that has been delegated authority with
respect to such matter. Members of a committee will serve for such term as the
Board may determine and will be subject to removal by the Board at any time.
(a) 16(b). The composition of any committee responsible for
administration of the Plan with respect to optionees who are subject to the
short-swing profit restrictions of Section 16(b) of the Securities Exchange Act
of 1934, as amended ("1934 ACT") with respect to their trading in securities of
the Corporation will be comprised of two or more non-employee Board members who
have not received, at any time during the one-year period preceding the date of
their appointment to such committee or (if shorter) during the period between
the initial registration of the Corporation's equity securities under Section 12
of the 1934 Act and such appointment, any stock options, stock appreciation
rights or stock issuances under this Plan or under any other stock option, stock
appreciation, stock bonus, stock purchase or other stock plan of the Corporation
or its subsidiaries, except for automatic option grants made pursuant to
Section VI of this Plan.
(a) AUTHORITY. Any committee appointed by the Board will have full
authority to administer the Plan within the scope of its delegated
responsibilities, including authority to interpret and construe any relevant
provision of the Plan, to adopt such rules and regulations as it may deem
necessary, and to determine the terms of the grants made from time to time under
the Plan (which need not be identical). Decisions of a committee made within the
discretion
<PAGE>
delegated to it by the Board will be final and binding on all persons who have
an interest in the Plan.
III. ELIGIBILITY FOR AWARDS.
(a) DISCRETIONARY AWARDS. The Committee may, in its discretion,
select individuals from among the following categories to receive options under
the Plan:
(1) KEY EMPLOYEES. The Committee may select key employees of
the Corporation or its subsidiaries (including officers, whether or not they are
also members of the Board).
(2) CONSULTANTS AND INDEPENDENT CONTRACTORS. The Committee may
select consultants and independent contractors whose services tend to contribute
materially to the success of the Corporation or its subsidiaries or whose
services may reasonably be anticipated to so contribute.
Prior to November 20, 1991 ("IPO DATE"), discretionary grants
could be made to members of the Board who were not employees of the Corporation
or its subsidiaries.
(b) AUTOMATIC GRANTS. On and after the IPO Date, members of the
Board who are not employees of the Corporation or its subsidiaries will receive
options in accordance with, and only in accordance with, the Automatic Option
Grant provisions of Section VI.
IV. STOCK SUBJECT TO THE PLAN.
(a) CLASS. The stock subject to options granted under the Plan is
the Corporation's authorized but unissued or reacquired shares of Common Stock
("COMMON STOCK"). In connection with the issuance of shares under the Plan, the
Corporation may repurchase shares in the open market or otherwise.
(b) AGGREGATE AMOUNT.
(1) SHARES. Subject to adjustment under Section IV(c),
the maximum number of shares of Common Stock issuable under the Plan is
1,350,000 shares(1). However, not more than 1,266,319 shares may be issued
from and after March 31, 1996, subject to periodic adjustment under
Section IV(c).
(2) PARTICIPANT LIMITATION. No individual participating in the
Plan may be granted stock options and separately exercisable stock appreciation
rights for more than 500,000 shares of Common Stock over the remaining term of
the Plan, subject to periodic adjustment under Section IV(c). For purposes of
such limitation, no stock options or stock appreciation rights granted prior to
January 1, 1994 shall be taken into account.
- -------------------------
(1) Includes the 250,000-share increases authorized by the Board on March 11,
1996, and approved by the Corporation's shareholders at the 1996
Annual Meeting.
2
<PAGE>
(3) REUSE OF SHARES. If any outstanding option under this Plan
expires or terminates for any reason (including cancellation pursuant to
Section IX of the Plan) before being exercised for the full number of shares to
which it applies, the shares allocable to the unexercised portion of such option
will not be charged against the limitation of Section IV(b)(1) and will become
available for subsequent grants under the Plan. Shares subject to any option (or
portion thereof) surrendered or canceled in accordance with the "Surrender or
Cancellation of Options for Cash or Stock" provisions of this Plan and all stock
issuances under the Plan, whether or not the shares are subsequently repurchased
by the Corporation pursuant to its repurchase rights under the Plan, shall
reduce on a share-for-share basis the number of shares of Common Stock available
for subsequent issuance under this Plan. Should the exercise price of an
outstanding option under the Plan be paid with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection with
the exercise of an outstanding option under the Plan, the number of shares of
Common Stock issuable under the Plan shall be reduced by the gross number of
shares for which the option is exercised, and not by the net number of shares of
Common Stock actually issued to the option holder.
(c) ADJUSTMENTS. In the event any change is made to the Common Stock
subject to the Plan or subject to any outstanding option granted under the Plan
(whether by reason of merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, combination of shares, exchange of shares, or other
change in corporate or capital structure of the Corporation effected without the
Corporation's receipt of consideration) then, unless such change results in the
termination of all outstanding options, the Committee shall make appropriate
adjustments to (i) the maximum number and/or class of securities available for
issuance under the Plan, (ii) the maximum number and/or class of securities for
which any one individual may be granted stock options and separately-exercisable
stock appreciation rights under the Plan after December 31, 1993, (iii) the
number and/or class of securities and the price per share in effect under each
outstanding option under the Plan (including the automatic option grants) and
(iv) the number and/or class of securities per non-employee Board member for
which automatic option grants are subsequently to be made under the Automatic
Option Grant provisions of the Plan. The adjustments made by the Committee will
be final, binding and conclusive and will be designed to prevent the dilution or
enlargement of rights and benefits under the Plan.
V. TERMS OF OPTIONS.
Stock options granted under the Plan may, in the Committee's
discretion, be either incentive stock options ("INCENTIVE OPTIONS") qualifying
under Section 422 of the Internal Revenue Code of 1986, as amended ("INTERNAL
REVENUE CODE"), or nonstatutory options. Individuals who are not employees of
the Corporation or its subsidiaries may only be granted nonstatutory options.
Options will be evidenced by instruments in such form as the Committee may from
time to time approve. These instruments will conform to the following terms and,
in the discretion of the Committee, may contain such other terms and
restrictions as are not inconsistent with the following:
3
<PAGE>
(a) OPTION PRICE. The option price per share will be fixed by the
Committee; provided, however, that in no event will the option price per share
of an Incentive Option be less than one hundred percent (100%), or with respect
to nonstatutory options, eighty-five percent (85%), of the Fair Market Value of
a share of Common Stock on the date of the option grant.
(b) NUMBER OF SHARES, TERM AND EXERCISE.
(1) TERM AND NUMBER. Each option granted under the Plan will be
exercisable on such date or dates, during such period, and for such number of
shares of Common Stock as the Committee determines and sets forth in the
instrument evidencing the option. No option granted under the Plan will be
exercisable after the expiration of ten (10) years from the date the option was
granted.
(2) EXERCISE. After any option granted under the Plan becomes
exercisable, it may be exercised by notice to the Corporation at any time prior
to the termination of such option. Except as authorized by the Committee in
accordance with Section VII, the option price for the number of shares for which
the option is exercised will become immediately due and payable upon exercise.
(3) PAYMENT. The option price will be payable in full in cash
(including cash equivalents); provided, however, that the Committee may, either
at the time the option is granted or at the time the option is exercised and
subject to such limitations as the Committee may determine, authorize payment of
all or a portion of the option price in one or a combination of the following
alternative forms:
(i) a promissory note authorized pursuant to Section VII; or
(ii) delivery of a properly-executed exercise notice,
together with irrevocable instructions to a Corporation-designated
broker to promptly deliver to the Corporation the amount of sale
or loan proceeds to pay the option price for the purchased
shares; or
(iii) full payment in shares of Common Stock valued at
Fair Market Value on the exercise date and held for the requisite
period to avoid a charge to the Corporation's earnings.
(c) TERMINATION OF EMPLOYMENT. The Committee will have complete
discretion to determine and set forth in each option agreement whether the
option will continue to be exercisable, and the terms of such exercise, on and
after the date that an optionee ceases to be employed by, or to provide services
to, the Corporation or its subsidiaries. Included within such discretion shall
be the authority of the Committee, exercisable either at the time the option is
granted or at any time while the option remains outstanding, to permit one or
more options held by the optionee to be exercised, during the limited period of
exercisability following the optionee's cessation of employment or service, not
only with respect to the number of shares in which the optionee is at that time
vested but also with respect to one or more subsequent installments of
purchasable shares in which the optionee would otherwise have vested had the
4
<PAGE>
optionee continued in employment or service. The Committee will also have
complete discretion, exercisable at any time while the option remains
outstanding, to extend the period for which that option is to remain exercisable
following the optionee's cessation of employment or service, but in no event may
such period be extended beyond the specified expiration date of the option term.
(d) INCENTIVE OPTIONS. Options granted under the Plan that are
intended to be Incentive Options will be subject to the following additional
terms:
(1) DOLLAR LIMITATION. To the extent that the aggregate Fair
Market Value (determined as of the respective date or dates of grant) of shares
with respect to which options that would otherwise be Incentive Options become
exercisable for the first time by any individual during any calendar year under
the Plan (or any other plan of the Corporation, a parent or subsidiary
corporation or predecessor thereof) exceeds the sum of $100,000 (or such greater
amount as may be permitted under the Internal Revenue Code), whether by reason
of acceleration or otherwise, such options will not be treated as Incentive
Options. In making such determination, options will be taken into account in the
order in which they were granted. To the extent the $100,000 limitation on the
initial exercisability of Incentive Options would otherwise be exceeded in any
calendar year, the option or options shall nevertheless become exercisable in
that calendar year for the excess number of shares as nonstatutory options.
(2) 10% SHAREHOLDER. If any employee to whom an Incentive Option
is to be granted pursuant to the provisions of the Plan is, on the date of
grant, the owner of stock (determined with application of the ownership
attribution rules of Section 424(d) of the Internal Revenue Code) possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of his or her employer corporation or of its parent or subsidiary
corporation ("10% SHAREHOLDER"), then the following special provisions will
apply to the option granted to such individual:
(i) The option price per share of the stock subject to such
Incentive Option will not be less than one hundred ten percent
(110%) of the Fair Market Value of the option shares on the date
of grant; and
(ii) The option will not have a term in excess of
five (5) years from the date of grant.
(3) PARENT AND SUBSIDIARY. For purposes of this Section V(d)
"PARENT CORPORATION" and "SUBSIDIARY CORPORATION" will have the meaning
attributed to those terms as they are used in Section 424 of the Internal
Revenue Code.
(e) WITHHOLDING.
(1) OBLIGATION. The Corporation's obligation to deliver stock
certificates upon the exercise of an option will be subject to the option
holder's satisfaction of all applicable federal, state and local income and
employment tax withholding requirements.
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(2) PAYMENT. The Committee may, in its discretion and upon such
terms and conditions as it may deem appropriate (including the applicable
safe-harbor provisions of SEC Rule 16b-3 or any successor rule or regulation)
provide any or all holders of outstanding option grants under the Plan with the
election to have the Corporation withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such options, a portion of such shares
with an aggregate Fair Market Value equal to the designated percentage (up to
100% as specified by the option holder) of the federal and state income and
employment taxes ("Taxes") incurred in connection with the acquisition of such
shares. In lieu of such direct withholding, one or more optionees may also be
granted the right to deliver previously-acquired shares of Common Stock to the
Corporation in satisfaction of such Taxes. The withheld or delivered shares
shall be valued at the Fair Market Value on the applicable determination date
for such Taxes or such other date required by the applicable safe-harbor
provisions of SEC Rule 16b-3.
(f) REPURCHASE RIGHTS. The Committee may, in its discretion,
establish as a term of one or more options that the Corporation (or its assigns)
will have the right, exercisable upon the optionee's termination of employment
with, or cessation of service to, the Corporation and its subsidiaries, to
repurchase at the original option price any or all of the shares of Common Stock
acquired by such optionee upon exercise of the option. Any such repurchase right
will be exercisable by the Corporation (or its assigns) upon such terms
(including provisions for the expiration of such right in one or more
installments) as the Committee may specify in the instrument evidencing such
right.
(g) SHAREHOLDER RIGHTS. An option holder shall have no shareholder
rights with respect to any shares covered by the option until such individual
shall have exercised the option, paid the option price and satisfied all other
conditions precedent to the issuance of the stock certificates for the purchased
shares.
VI. AUTOMATIC OPTION GRANTS TO DIRECTORS.
(a) GRANTS. Each non-employee member of the Board shall
automatically be granted nonstatutory options ("AUTOMATIC OPTION GRANTS") to
purchase the number of shares of Common Stock indicated below (subject to
adjustment under Section IV(c) of this Plan) on the dates and pursuant to the
terms and conditions set forth below. Such terms and conditions have been
revised effective February 22, 1994, but such revisions shall not affect any
outstanding options granted under this Section VI prior to such date. However,
all option grants made pursuant to the revised provisions of this Section VI as
effective February 22, 1994 shall not become exercisable in whole or in part
unless those revisions are approved by the Corporation's shareholders at the
1994 Annual Meeting. If such shareholder approval is not obtained, then the
provisions of this Section VI as last approved by the shareholders shall
automatically be reinstated and continue to govern all subsequent Automatic
Option Grants made under the Plan.
(1) INITIAL IPO GRANTS. Each individual who was a non-employee
Board member on the IPO Date received at that time an Automatic Option Grant to
purchase 5,000 shares of Common Stock.
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(2) OCTOBER 28, 1992 GRANTS. Each individual who was serving as
a non-employee Board member on October 28, 1992 was on that date granted an
Automatic Option Grant to purchase an additional 1,000 shares of Common Stock.
(3) NEW DIRECTORS PRIOR TO FEBRUARY 22, 1994. Each person who
was first elected or appointed as a non-employee member of the Board after
October 28, 1992 but prior to February 22, 1994 received, on the effective date
of such initial election or appointment, an Automatic Option Grant to purchase
5,000 shares of Common Stock.
(4) NEW DIRECTORS AFTER FEBRUARY 21, 1994. Each person who is
first elected or appointed as a non-employee member of the Board on or after
February 22, 1994 shall receive, on the effective date of such initial election
or appointment, an Automatic Option Grant to purchase 10,000 shares of Common
Stock.
(5) SPECIAL GRANT. Each individual who is re-elected as a
non-employee Board member at the 1994 Annual Shareholders Meeting shall receive
at that time an Automatic Option Grant to purchase an additional 5,000 shares of
Common Stock, provided the February 22, 1994 amendment to the Plan is approved
by the shareholders at the 1994 Annual Meeting.
(6) CONTINUING DIRECTORS. On the last business day of the
second quarter (the "AUTOMATIC GRANT DATE") of each fiscal year of the
Corporation beginning after October 28, 1992, each individual who is at that
time serving as a non-employee member of the Board will receive an
Automatic Option Grant to purchase an additional 2,000 shares(2) of Common
Stock. However, an individual who is first elected or appointed as a
non-employee Board member after October 28, 1992 shall not receive his or
her first Automatic Option Grant for 2,000 shares under this subparagraph
(6) until the last business day of the second quarter of the fiscal year
immediately following the fiscal year of his or her initial election or
appointment to the Board.
(b) TERMS. The terms applicable to each Automatic Option Grant shall
be as follows:
(1) PRICE. The option price per share will be equal to one
hundred percent (100%) of the Fair Market Value of one share of Common Stock on
the date of grant.
(2) TERM. Each Automatic Option Grant shall have a maximum
term of ten (10) years, measured from the date of grant.
(3) VESTING. Subject to paragraphs (4) and (5) below, each
Automatic Option Grant shall become exercisable as to twenty-five percent (25%)
of the option shares on the last business day of the fiscal quarter immediately
following the date of grant and as to an additional twenty-five percent (25%) of
the option shares on the last business day of each of the next three (3) fiscal
quarters thereafter, provided the optionee continues to serve as a Board member.
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(2) Prior to October 28, 1992 amendment to Section VI, each
periodic option grant was for 1,000 shares of Common Stock.
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(4) CESSATION. The option will terminate three (3) months
(twelve (12) months in the case of cessation by reason of disability or death)
after the optionee ceases to serve as a Board member unless the option would
terminate sooner under paragraph (2) above. In the case of death, the option may
be exercised within the applicable period by the estate or heirs of the
optionee.
(5) ACCELERATION. The options will be subject to the
acceleration provisions contained in Section X(a) of this Plan.
(6) PAYMENT. Upon exercise of the option, the option price for
the purchased shares will become payable immediately in cash, in shares of
Common Stock of the Corporation that the optionee has held for at least six (6)
months, or by delivery of a properly-executed exercise notice, together with
irrevocable instructions to a Corporation-designated broker to promptly deliver
to the Corporation the amount of sale or loan proceeds to pay the option price
for the purchased shares.
VII. LOANS AND INSTALLMENT PAYMENTS.
In order to assist an optionee (including an employee who is an
officer or member of the Board) in the acquisition of shares pursuant to an
option granted under the Plan (other than pursuant to the Automatic Option Grant
provisions of this Plan), the Committee may authorize, at either the time of the
grant of an option or the time of the acquisition of shares under the option,
(i) the extension of a loan to the optionee by the Corporation, (ii) the payment
by the optionee of the option price for the purchased option shares in
installments, or (iii) the guarantee by the Corporation of a loan obtained by
the optionee from a third party. The terms of any loans, guarantees or
installment payments, including the interest rate and terms of repayment, will
be subject to the discretion of the Committee. Loans, installment payments and
guarantees may be granted without security, but the maximum credit available to
the optionee shall be limited to the option price of the purchased option shares
(less the par value of such shares) plus the maximum federal and state income
and employment tax liability that may be incurred in connection with the
acquisition.
VIII. ASSIGNABILITY.
No option or stock appreciation right granted under the Plan is
assignable or transferable by the optionee other than by will or by the laws of
descent and distribution, and during the lifetime of the optionee the granted
option or stock appreciation right may be exercised only by the optionee.
IX. CANCELLATION AND NEW GRANT OF OPTIONS.
The Committee will have the authority to effect, at any time and from
time to time, with the consent of the affected option holders, the cancellation
of any or all outstanding options under the Plan (other than options granted
under the Automatic Option Grant provisions of this Plan) and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares, but with an option price per share not less than eighty-five
percent
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(85%) of the Fair Market Value of the option shares on the new grant date
or, in the case of an Incentive Option, one hundred percent (100%) of such
Fair Market Value on the new grant date (or, in the case of an Incentive
Option granted to a 10% Shareholder, one hundred ten percent (110%) of such
Fair Market Value).
X. ACCELERATION AND TERMINATION OF OPTIONS.
(a) ACCELERATION. In the event of one or more of the following
shareholder-approved transactions ("Corporate Transactions"):
(1) a merger or acquisition in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Corporation's incorporation,
(2) the sale, transfer or other disposition of all or
substantially all of the assets or outstanding capital stock of the Corporation,
or
(3) any reverse merger in which the Corporation is the surviving
entity but in which all of the Corporation's outstanding voting stock is
transferred to the acquiring entity or its wholly-owned subsidiary, each option
outstanding under the Plan will become exercisable, immediately prior to the
consummation of such Corporate Transaction, with respect to the full number of
shares of Common Stock at the time subject to that option and may be exercised
for any or all of those shares as fully-vested shares. Immediately following the
consummation of the Corporate Transaction, all outstanding options will
terminate and cease to be exercisable, except to the extent assumed by the
successor corporation or parent thereof.
(b) ADJUSTMENTS TO SHARES. Each outstanding option which is assumed
in connection with the Corporate Transaction or is otherwise to continue in
effect will be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issuable, in consummation of such Corporate Transaction, to an
actual holder of the same number of shares of Common Stock subject to such
option immediately prior to such Corporate Transaction. Appropriate adjustments
will also be made to the option price payable per share, PROVIDED the aggregate
option price payable for such securities will remain the same. In addition, the
class and number of securities available for issuance under the Plan on both an
aggregate and per participant basis following the consummation of the Corporate
Transaction will be appropriately adjusted.
(c) CORPORATE STRUCTURE. The grant of options under this Plan
will in no way affect the right of the Corporation to adjust, reclassify,
reorganize, or otherwise change its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.
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XI. FAIR MARKET VALUE.
For all valuation purposes under the Plan, the Fair Market Value of a
share of Common Stock (rounded upwards to the nearest whole cent) on any
relevant date will be determined in accordance with the following provisions:
(a) If the Common Stock is not at the time listed or admitted to
trading on any national securities exchange, but is traded on the Nasdaq
National Market, the Fair Market Value will be the closing selling price per
share of Common Stock on the trading day immediately preceding the date in
question, as such price is reported by the National Association of Securities
Dealers, Inc. through the Nasdaq National Market or any successor system.
(b) If the Common Stock is at the time listed or admitted to trading
on any national securities exchange, then the Fair Market Value will be the
closing selling price per share of Common Stock on the trading day immediately
preceding the date in question on the securities exchange that serves as the
primary market for the Common Stock, as such price is officially quoted on such
exchange.
(c) If the Common Stock is at the time neither listed nor admitted to
trading on any national securities exchange nor traded on the Nasdaq National
Market, then the Fair Market Value will be determined by the Committee after
taking into account such factors as the Committee deems appropriate.
XII. SURRENDER OR CANCELLATION OF OPTIONS FOR CASH OR STOCK.
(a) If and only if the Committee, in its discretion, elects to
implement an option surrender program under the Plan, one or more option holders
may, upon such terms as the Committee may establish at the time of the option
grant or at any time thereafter, be granted the right to surrender all or part
of an unexercised option in exchange for a distribution equal in amount to the
excess of (i) the Fair Market Value (on the option surrender date) of the shares
for which the surrendered option or portion thereof is at the time exercisable
over (ii) the aggregate option price payable for such shares. The distribution
to which an option holder becomes entitled under this Section XII may be made in
shares of Common Stock, valued at Fair Market Value on the option surrender
date, in cash, or partly in shares and partly in cash, as the Committee, in its
sole discretion, deems appropriate. The option surrender provisions of this
Section XII will not apply to options granted pursuant to the Automatic Option
Grant provisions of this Plan.
(b) One or more officers of the Corporation subject to the
short-swing profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under the Plan. Upon the occurrence of a
Hostile Take-Over effected at any time when the Corporation's outstanding Common
Stock is registered under Section 12(g) of the 1934 Act, each outstanding option
with such a limited stock appreciation right in effect for at least six (6)
months shall automatically be canceled, and the officer shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to the canceled option (whether or not the option is otherwise
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at the time exercisable for such shares) over (ii) the aggregate option price
payable for such shares. The cash distribution payable upon such
cancellation shall be made within five (5) days following the consummation
of the Hostile Take-Over. Neither the approval of the Committee nor the
consent of the Board shall be required in connection with such option
cancellation and cash distribution.
(c) For purposes of subparagraph (b) above, the following definitions
shall be in effect:
A Hostile Take-Over shall be deemed to occur in the event
(i) any person or related group of persons (other than the Corporation
or a person that directly or indirectly controls, is controlled by, or
is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's shareholders which the Board does not recommend such
shareholders to accept AND (ii) more than fifty percent (50%) of the
securities so acquired in such tender or exchange offer are accepted
from holders other than the Corporation's officers and directors
subject to Section 16(b) of the 1934 Act.
The Take-Over Price per share shall be deemed to be equal to
the GREATER of (a) the Fair Market Value per share of Common Stock on
the date of the option cancellation or (b) the highest reported price
per share of Common Stock paid in effecting such Hostile Take-Over.
However, if the canceled option is an Incentive Option, the Take-Over
Price shall not exceed the clause (a) price per share.
(d) The shares of Common Stock subject to any option surrendered or
canceled for an appreciation distribution pursuant to this Section XII shall not
be available for subsequent issuance under the Plan.
XIII. EFFECTIVE DATE AND TERM.
(a) EFFECTIVE DATE. The Plan was originally adopted by the
Board effective on September 27, 1991 and approved by the shareholders
on September 30, 1991. The Plan was restated on March 13, 1992 to increase
the number of shares issuable thereunder by 50,000 shares and to revise
the Corporate Transaction provisions, and such restated Plan was approved by
the Corporation's shareholders on May 27, 1992. The Board again amended the
Plan, effective October 27, 1992, to revise the Automatic Option Grant
program for non-employee Board members so as to increase the number of shares
subject to the periodic option grants made to continuing Board members and
to effect the changes indicated in subparagraph (b) below, and the Board
adopted a restatement of the Plan on March 9, 1993 to increase the number of
shares of Common Stock issuable thereunder by 350,000 shares. Both the
October 27, 1992 amendment and the March 9, 1993 restatement were approved by
the shareholders on June 8, 1993. The Board again amended the Plan on
September 14, 1993 to increase the number of shares issuable thereunder by
200,000 shares. On February 22, 1994, the Board restated the Plan to (i)
increase
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the number of shares of Common Stock issuable under the Plan by an additional
300,000 shares, (ii) impose a 500,000-share limit on the maximum number of
shares of Common Stock for which any one participant may be granted stock
options and separately exercisable stock appreciation rights under the Plan
after December 31, 1993 and (iii) revise the Automatic Option Grant
provisions of Section VI in the manner indicated therein. The September 14,
1993 amendment and the February 22, 1994 restatement were approved by the
shareholders at the 1994 Annual Meeting. On March 11, 1996, the Board
adopted another amendment of the Plan which increased the number of shares of
Common Stock issuable thereunder by an additional 250,000 shares. The 1996
amendment was approved by the shareholders at the 1996 Annual Meeting.
(b) RULE 16b-3 AMENDMENTS. On October 27, 1992, the Board amended the
March 13, 1992 restatement of the Plan in order to bring its provisions into
conformity with the revisions to Rule 16(b)-3 of the Securities and Exchange
Commission governing the treatment, for the purposes of the short-swing
liability provisions of the Federal securities laws, of certain transactions
effected under employee stock plans such as the Plan, and the Plan shall
accordingly become subject to such Rule 16b-3 revisions effective as of October
27, 1992.
(c) RESTATEMENTS. Each option issued and outstanding under the Plan
at the time of the adoption of the March 13, 1992 restatement was automatically
amended to incorporate the terms of the revised provisions of Section X of the
Plan applicable to Corporate Transactions. Except as so modified, nothing in the
March 13, 1992 restatement shall be deemed to affect or otherwise modify the
rights or obligations of the holders of such options with respect to their
acquisition of shares of Common Stock thereunder. The revisions to the Plan
effected by the October 27, 1992 restatement shall apply only to stock options
and stock appreciation rights granted under the Plan from and after the October
27, 1992 effective date. All stock options and stock appreciation rights which
were issued and outstanding under the Plan immediately prior to such effective
date shall continue to be governed by the terms and conditions of the Plan (and
the instrument evidencing each such option or stock appreciation right) as in
effect on the date each such option or stock appreciation right was previously
granted, and none of the October 27, 1992 revisions to the Plan shall affect or
otherwise modify the rights or obligations of the holders of such options or
stock appreciation rights with respect to the acquisition of shares of Common
Stock under those options or the exercise of their stock appreciation rights.
The revisions to the Plan effected by the February 22, 1994 amendment shall
apply only to stock options and stock appreciation rights granted under the Plan
from and after the February 22, 1994 effective date. All stock options and stock
appreciation rights which were issued and outstanding under the Plan immediately
prior to such effective date shall continue to be governed by the terms and
conditions of the Plan (and the instrument evidencing each such option or stock
appreciation right) as in effect on the date each such option or stock
appreciation right was previously granted, and none of the February 22, 1994
revisions to the Plan shall affect or otherwise modify the rights or obligations
of the holders of such options or stock appreciation rights with respect to the
acquisition of shares of Common Stock under those options or the exercise of
their stock appreciation rights. The revisions to the Plan effected by the March
11, 1996 amendment shall apply only to stock options and stock appreciation
rights granted under the Plan from and after the March 11, 1996 effective date.
All stock options and stock appreciation rights which were issued and
outstanding under the Plan immediately prior to such effective date shall
continue to
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be governed by the terms and conditions of the Plan (and the instrument
evidencing each such option or stock appreciation right) as in effect on the
date each such option or stock appreciation right was previously granted, and
none of the March 11, 1996 revisions to the Plan shall affect or otherwise
modify the rights or obligations of the holders of such options or stock
appreciation rights with respect to the acquisition of shares of Common Stock
under those options or the exercise of their stock appreciation rights.
(d) TERM. Unless sooner terminated in accordance with Section X(a) of
the Plan, the Plan will terminate upon the EARLIER of (i) September 26, 2001 or
(ii) the date on which all shares available for issuance under the Plan shall
have been issued or canceled pursuant to the exercise, surrender or cash-out of
options granted under the Plan. If the date of termination is determined under
clause (i) above, then options outstanding on such date will thereafter continue
to have force and effect in accordance with the provisions of the instruments
evidencing such options.
(e) EXCESS GRANTS. Options may be granted under this Plan to
purchase shares of Common Stock in excess of the number of shares then available
for issuance under the Plan, PROVIDED (i) an amendment to increase the maximum
number of shares issuable under the Plan is adopted by the Board prior to the
initial grant of any such option and within one year thereafter such amendment
is approved by the shareholders of the Corporation and (ii) each option so
granted is not to become exercisable, in whole or in part, at any time prior to
the obtaining of such shareholder approval.
XIV. AMENDMENT OR DISCONTINUANCE.
(a) BOARD. The Board may amend, suspend or discontinue the Plan in
whole or in part at any time; provided, however, that (a) except to the extent
necessary to qualify as Incentive Options any or all options granted under the
Plan that are intended to so qualify, such action may not adversely affect
rights and obligations with respect to options outstanding under the Plan; (b)
the provisions of the Plan concerning the eligibility of non-employee members of
the Board for awards and the amount, price and timing of Automatic Option Grants
under this Plan may not be amended more than once every six months, other than
to comport with changes in the Internal Revenue Code or the rules or regulations
thereunder; and (c) the Board may not, without the approval of the Corporation's
shareholders, (1) materially increase the number of shares of Common Stock
issuable under the Plan or increase the maximum number of shares for which any
one participant may be granted stock options and separately exercisable stock
appreciation rights after December 31, 1993 (unless necessary to effect the
adjustments required under Section IV(c)), (2) materially modify the eligibility
requirements for awards under the Plan, (3) materially increase the benefits
accruing to participants in the Plan or (4) make any other change with respect
to which the Board determines that shareholder approval is required by
applicable law or regulatory standards.
(b) COMMITTEE. The Committee will have full power and authority to
modify or waive any or all of the terms or restrictions applicable to any
outstanding option, to the extent not inconsistent with the Plan, including
(without limitation) the authority to accelerate the
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exercisability of one or more outstanding options under the Plan upon such
terms and conditions as the Committee deems appropriate.
XV. NO EMPLOYMENT OBLIGATION.
Nothing contained in the Plan (or in any option granted under this
Plan) shall confer upon any employee, director, consultant or
independent contractor any right to continue in the employ of, or to provide
services to, the Corporation or any affiliate or constitute a contract
or agreement of employment or for the provision of services, or interfere
in any way with the right of the Corporation or an affiliate to reduce such
employee's, consultant's or independent contractor's compensation from the
rate in existence at the time of the granting of an option or to terminate
such employee's, consultant's or independent contractor's employment or
services at any time, with or without cause; but nothing contained in
the Plan or in any option granted under this Plan shall affect any
contractual rights of an employee pursuant to a written employment
agreement.
XVI. USE OF PROCEEDS.
The cash proceeds received by the Corporation from the issuance of
shares pursuant to options under the Plan will be used for general
corporate purposes.
XVII. COMPLIANCE.
No option may be exercised, and the Corporation will not be obligated
to issue stock under any option unless, in the opinion of counsel for the
Corporation, such exercise and issuance is in compliance with all applicable
federal and state securities laws. As a condition to the grant of any option, or
to the issuance of stock under any option, the Committee may require that the
option holder agree to comply with such provisions of federal and state
securities laws as may be applicable to such grant, or to the sale of stock
acquired pursuant to the Plan, and that the option holder deliver to the
Corporation a written agreement, in form and substance satisfactory to the
Corporation and its counsel, implementing such agreement.
XVIII. GOVERNING LAW.
To the extent not otherwise governed by federal law, the Plan and its
implementation will be governed by and construed in accordance with the laws
of the State of California.
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