<PAGE>
As filed with the Securities and Exchange Commission on August 6, 1999
Registration No. 333-
---------------------
---------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
Gilead Sciences, Inc.
--------------------------------------
(Exact name of registrant as specified in its charter)
----------------------
DELAWARE 94-3047598
------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
----------------------
333 Lakeside Drive
Foster City, CA 94404
----------------------------------------
(Address of principal executive offices)
NeXstar Pharmaceuticals, Inc. 1993 Incentive Stock Plan
NeXstar Pharmaceuticals, Inc. 1995 Director Option Plan
Vestar, Inc. 1988 Stock Option Plan
-------------------------------------------------------
(Full title of the plans)
Mark L. Perry, Esq.
Senior Vice President, Chief Financial Officer and General Counsel
Gilead Sciences, Inc.
333 Lakeside Drive
Foster City, CA 94404
(650) 574-3000
-------------------------------------------------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------
Copies to:
Julia L. Davidson, Esq.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
(650) 843-5000
----------------------
Page 1 of _______
Exhibit Index at Page _____
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------- ---------------------- ------------------------- -------------------------- -------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO OFFERING PRICE PER AGGREGATE OFFERING PRICE
BE REGISTERED AMOUNT TO BE SHARE (1) (1) AMOUNT OF REGISTRATION
REGISTERED FEE
- -------------------------- ---------------------- ------------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
Stock Options and Common
Stock (par value $.001) 757,070 $72.00 $54,509,040.00 $15,153.51
- -------------------------- ---------------------- ------------------------- -------------------------- -------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c). The price per share and
aggregate offering price are based upon the closing sales price of
Registrant's Common Stock on August 5, 1999 as reported on the Nasdaq
National Market.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Gilead Sciences, Inc. ("Gilead") with
the Securities and Exchange Commission (the "Commission") are incorporated by
reference into this Registration Statement:
(a) Gilead's latest annual report on Form 10-K/A for the
fiscal year ended December 31, 1998.
(b) All other reports filed pursuant to Sections 13(a) or 15(d) of
the Exchange Act of 1934, as amended (the "Exchange Act") since the end of
the fiscal year covered by the annual reports, the prospectus or the
registration statement referred to in (a) above.
(c) Current Report on Form 8-K filed with the SEC on November 21,
1994.
(d) The description of the Company's Common Stock which is contained
in a registration statement on Form 8-A filed under the Exchange Act,
including any amendment or report filed for the purpose of updating such
description.
(e) Current Report on Form 8-K filed with the SEC on March 9, 1999.
(f) Current Report on Form 8-K filed with the SEC on August 6, 1999.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a
part of this registration statement from the date of the filing of such
reports and documents.
DESCRIPTION OF SECURITIES
Not Applicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law Gilead has
broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act
of 1933, as amended. Gilead's Bylaws require Gilead to indemnify its
directors and executive officers, and permit Gilead to indemnify its other
officers, employees and other agents, to the extent permitted by Delaware
law. The Bylaws also require Gilead to advance litigation expenses in the
case of stockholder derivative actions or other actions, against an
undertaking by the indemnified party to repay such advances if it is
ultimately determined that the indemnified party is not entitled to
indemnification.
The Company has entered into indemnity agreements with each of its
directors and executive officers. Such indemnity agreements contain provisions
which are in some respects broader than the specific indemnification provisions
contained in Delaware law.
EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
<S> <C>
3.1 (1) Certificate of Amendment to Restated Certificate of Incorporation
of the Registrant
3.2 (2) Amended and Restated Certificate of Incorporation of the
Registrant
3.3 (3) Bylaws of the Registrant, as amended and restated March 30, 1999
4.1 Reference is made to Exhibits 3.1, 3.2, and 3.3
4.2 (4) Rights Agreement dated as of November 21, 1994, between
Registrant and First Interstate Bank, with exhibits
4.3 (4) Form of letter sent to Gilead Sciences, Inc. stockholders, dated
December 14, 1994
4.4 (1) First Supplemental Indenture dated July 29, 1999 among IBJ
Whitehall Bank & Trust Company, NeXstar Pharmaceuticals, Inc. and
the Registrant to the Indenture dated July 31, 1997 between IBJ
Whitehall Bank & Trust Company and NeXstar Pharmaceuticals, Inc.
4.5 (5) Indenture dated July 31, 1997 between IBJ Whitehall Bank & Trust
Company and NeXstar Pharmaceuticals, Inc. for NeXstar's 6 1/4%
Convertible Subordinated Debentures
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this
Registration Statement
24.1 Power of Attorney is contained on the signature pages
99.1 (5) NeXstar Pharmaceuticals, Inc. 1993 Incentive Stock Plan
99.2 NeXstar Pharmaceuticals, Inc. 1995 Director Option Plan
99.3 Vestar 1998 Stock Option Plan
</TABLE>
(1) Filed as an exhibit to Registrant's Current Report on Form 8-K filed on
August 6, 1999 and incorporated herein by reference.
(2) Filed as an exhibit to Registrant's Registration Statement on Form S-8
(No. 33-46058) and incorporated herein by reference.
(3) Filed as an exhibit to Registrant's Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1998 and incorporated herein by reference.
(4) Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1994 and incorporated herein by reference.
(5) Filed as an exhibit to NeXstar Pharmaceutical, Inc.'s Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997 and incorporated herein
by reference.
UNDERTAKINGS
1. 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 to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
(b) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
<PAGE>
(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.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<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 the City of Foster City, State of
California, on August 6, 1999.
GILEAD SCIENCES, INC.
By: /s/ John C. Martin
---------------------
John C. Martin
President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John C. Martin and Mark L. Perry, and
each or any one of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
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
connection therewith, 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 or substitute, may
lawfully do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ John C. Martin President, Chief Executive Officer August 6, 1999
- -------------------------------------------- and Direct
John C. Martin
/s/ Mark L. Perry Senior Vice President, Chief Financial August 6, 1999
- -------------------------------------------- Officer and General Counsel
Mark L. Perry
/s/ Paul Berg Director August 6, 1999
- --------------------------------------------
Paul Berg
/s/ Etienne F. Davignon Director August 6, 1999
- --------------------------------------------
Etienne F. Davignon
/s/ James M. Denny, Sr. Director August 6, 1999
- --------------------------------------------
James M. Denny, Sr.
/s/ Gordon E. Moore Director August 6, 1999
- --------------------------------------------
Gordon E. Moore
/s/ Donald H. Rumsfeld Director August 6, 1999
- --------------------------------------------
Donald H. Rumsfeld
/s/ George P. Shultz Director August 6, 1999
- --------------------------------------------
George P. Shultz
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION SEQUENTIAL PAGE NUMBER
<S> <C> <C>
3.1 (1) Certificate of Amendment to Restated Certificate of Incorporation
of the Registrant
3.2 (2) Amended and Restated Certificate of Incorporation of the
Registrant
3.3 (3) Bylaws of the Registrant, as amended and restated March 30, 1999
4.1 Reference is made to Exhibits 3.1, 3.2, and 3.3
4.2 (4) Rights Agreement dated as of November 21, 1994, between
Registrant and First Interstate Bank, with exhibits
4.3 (4) Form of letter sent to Gilead Sciences, Inc. stockholders, dated
December 14, 1994
4.4 (1) First Supplemental Indenture dated July 29, 1999 among IBJ
Whitehall Bank & Trust Company, NeXstar Pharmaceuticals, Inc. and
the Registrant to the Indenture dated July 31, 1997 between IBJ
Whitehall Bank & Trust Company and NeXstar Pharmaceuticals, Inc.
4.5 (5) Indenture dated July 31, 1997 between IBJ Whitehall Bank & Trust
Company and NeXstar Pharmaceuticals, Inc. for NeXstar's 6 1/4%
Convertible Subordinated Debentures
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this
Registration Statement
24.1 Power of Attorney is contained on the signature pages
99.1 (5) NeXstar Pharmaceuticals, Inc. 1993 Incentive Stock Plan
99.2 NeXstar Pharmaceuticals, Inc. 1995 Director Option Plan
99.3 Vestar 1998 Stock Option Plan
</TABLE>
(1) Filed as an exhibit to Registrant's Current Report on Form 8-K filed on
August 6, 1999 and incorporated herein by reference.
(2) Filed as an exhibit to Registrant's Registration Statement on Form S-8
(No. 33-46058) and incorporated herein by reference.
(3) Filed as an exhibit to Registrant's Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1998 and incorporated herein by reference.
(4) Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1994 and incorporated herein by reference.
(5) Filed as an exhibit to NeXstar Pharmaceutical, Inc.'s Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997 and incorporated herein
by reference.
<PAGE>
August 6, 1999
GILEAD SCIENCES, INC.
333 LAKESIDE DRIVE
FOSTER CITY, CA 94404
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Gilead Sciences, Inc. (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to seven hundred fifty-seven
thousand seventy (757,070) shares of the Company's Common Stock, $.001 par
value, (the "Shares") pursuant to the NeXstar Pharmaceuticals, Inc. 1993
Incentive Stock Plan, NeXstar Pharmaceuticals, Inc. 1995 Director Option Plan
and Vestar, Inc. 1988 Stock Option Plan (the "Plans").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, your Certificate of Incorporation and Bylaws, as amended,
and such other documents, records, certificates, memoranda and other instruments
as we deem necessary as a basis for this opinion. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof, and
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plans, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain deferred
payment arrangements, which will be fully paid and nonassessable when such
deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward llp
By: /s/ Julia L. Davidson
---------------------
Julia L. Davidson
cc: Mark L. Perry
Senior Vice President, Chief Financial Officer and General Counsel
Gilead Sciences, Inc.
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
(Form S-8) pertaining to the NeXstar Pharmaceuticals, Inc. 1993 Incentive
Stock Plan, NeXstar Pharmaceuticals, Inc. 1995 Director Option Plan and
Vestar, Inc. 1998 Stock Option Plan of our report dated January 21, 1999,
with respect to the consolidated financial statements of Gilead Sciences,
Inc. included in its Annual Report (Form 10-K/A) for the year ended December
31, 1998 filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
August 6, 1999
<PAGE>
NEXSTAR PHARMACEUTICALS, INC.
1995 DIRECTOR OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this 1995 Director Option
Plan are to attract and retain the best available personnel for service as
Outside Directors (as defined herein) of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and
to encourage their continued service on the Board.
All options granted hereunder shall be nonstatutory stock
options.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "BOARD" means the Board of Directors of the Company.
(b) "CODE" means the Internal Revenue Code of 1986, as
amended.
(c) "COMMON STOCK" means the Common Stock of the Company.
(d) "COMPANY" means NeXstar Pharmaceuticals, Inc., a
Delaware corporation.
(e) "CONTINUOUS STATUS AS A DIRECTOR" means the absence of
any interruption or termination of service as a Director.
(f) "DIRECTOR" means a member of the Board.
(g) "EMPLOYEE" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a Director's fee by the Company shall not be
sufficient in and of itself to constitute "employment" by the Company.
(h) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(i) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market of the National Association of Securities Dealers,
Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share
of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or exchange
(or the exchange with the greatest volume of trading in Common Stock) on the
date of determination, as reported in THE WALL STREET JOURNAL or such other
source as the Board deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market thereof) or regularly quoted by a
recognized securities dealer but selling
<PAGE>
prices are not reported, the Fair Market Value of a Share of Common Stock
shall be the mean between the high bid and low asked prices for the Common
Stock on the date of determination, as reported in THE WALL STREET JOURNAL or
such other source as the Board deems reliable, or;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith
by the Board.
(j) "OPTION" means a stock option granted pursuant to the
Plan.
(k) "OPTIONED STOCK" means the Common Stock subject to an
Option.
(l) "OPTIONEE" means an Outside Director who receives an
Option.
(m) "OUTSIDE DIRECTOR" means a Director who is not an
Employee, but shall not include any representatives of Warburg, Pincus & Co.
or any related or affiliated company.
(n) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(o) "PLAN" means this 1995 Director Option Plan.
(p) "SHARE" means a share of the Common Stock, as adjusted
in accordance with Section 10 of the Plan.
(q) "SUBSIDIARY" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Internal
Revenue Code of 1986.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
10 of the Plan, the maximum aggregate number of Shares which may be optioned
and sold under the Plan is 500,000 Shares of Common Stock (the "Pool"). The
Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having
been exercised in full, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the
Plan has terminated); PROVIDED, however, that Shares that have actually been
issued under the Plan shall not be returned to the Plan and shall not become
available for future distribution under Plan.
4. ADMINISTRATION AND GRANTS OF OPTIONS UNDER THE PLAN.
(a) PROCEDURE FOR GRANTS. The provisions set forth in this
Section 4(a) shall not be amended more than once every six months, other than
to comport with changes in the Code, the Employee Retirement Income Security
Act of 1974, as amended, or the rules thereunder. All grants of Options to
Outside Directors under this Plan shall be automatic and nondiscretionary and
shall be made strictly in accordance with the following provisions:
2.
<PAGE>
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number
of Shares to be covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically
granted an Option to purchase 10,000 Shares (the "First Option") on the date
on which the later of the following events occurs: (A) the effective date of
this Plan, as determined in accordance with Section 6 hereof, or (B) the date
on which such person first becomes an Outside Director, whether through
election by the shareholders of the Company or appointment by the Board to
fill a vacancy; provided, however, that no First Option shall be granted to
an Outside Director who, immediately prior to becoming an Outside Director,
was a Director.
(iii) After the First Option has been granted to an
Outside Director, such Outside Director shall thereafter be automatically
granted an Option to purchase 5,000 Shares (a "Subsequent Option") on the
last business day prior to each annual meeting of stockholders of the
Company, if on such date, he or she shall have served on the Board for at
least six (6) months.
(iv) Notwithstanding the provisions of subsections
(ii) and (iii) hereof, any exercise of an Option made before the Company has
obtained shareholder approval of the Plan in accordance with Section 16
hereof shall be conditioned upon obtaining such shareholder approval of the
Plan in accordance with Section 16 hereof.
(v) The terms of a First Option granted hereunder
shall be as follows:
(A) the term of the first Option shall be ten
(10) years.
(B) the First Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Section 8 hereof.
(C) the exercise price per Share shall be 100%
of the fair market value per Share on the date of grant of the First Option.
In the event that the date of grant of the First Option is not a trading day,
the exercise price per Share shall be the Fair Market Value on the next
trading day immediately following the date of grant of the First Option.
(D) the First Option shall become exercisable
as to fifty percent (50%) of the Shares subject to the First Option on each
anniversary of its date of grant, provided that the Optionee continues to
serve as a Director on such dates.
(vi) The terms of a Subsequent Option granted
hereunder shall be as follows:
(A) the term of the Subsequent Option shall be
ten (10) years.
(B) the Subsequent Option shall be exercisable
only while the Outside Director remains a Director of the Company, except as
set forth in Section 8 hereof.
3.
<PAGE>
(C) the exercise price per Share shall
be 100% of the fair market value per Share on the date of grant of the
Subsequent Option. In the event that the date of grant of the Subsequent
Option is not a trading day, the exercise price per Share shall be the Fair
Market Value on the next trading day immediately following the date of grant
of the Subsequent Option.
(D) the Subsequent Option shall become
exercisable as to fifty percent (50%) of the Shares subject to the Subsequent
Option on each anniversary of its date of grant, provided that the Optionee
continues to serve as a Director on such dates.
(vii) In the event that any Option granted under the
Plan would cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options to exceed the Pool, then
the remaining Shares available for Option grant shall be granted under
Options to the Outside Directors on a pro rata basis. No further grants shall
be made until such time, if any, as additional Shares become available for
grant under the Plan through action of the Board or the shareholders to
increase the number of Shares which may be issued under the Plan or through
cancellation or expiration of Options previously granted hereunder.
5. ELIGIBILITY. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof. An Outside Director who has been granted an Option may, if he
or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the
Director or the Company may have to terminate his or her directorship at any
time.
6. TERM OF PLAN. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the shareholders of
the Company as described in Section 16 of the Plan. It shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 11
of the Plan.
7. FORM OF CONSIDERATION. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of
payment, shall consist of (i) cash, (ii) check, (iii) other shares which (x)
in the case of Shares acquired upon exercise of an Option, have been owned by
the Optionee for more than six (6) months on the date of surrender, and (y)
have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised, (iv)
delivery of a properly executed exercise notice together with such other
documentation as the Company and the broker, if applicable, shall require to
effect an exercise of the Option and delivery to the Company of the sale or
loan proceeds required to pay the exercise price, or (v) any combination of
the foregoing methods of payment.
4.
<PAGE>
8. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times as are set forth
in Section 4 hereof; provided, however, that no Options shall be exercisable
until shareholder approval of the Plan in accordance with Section 16 hereof
has been obtained.
An Option may not be exercised for a fraction of a Share.
Any Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms
of the Option by the person entitled to exercise the Option and full payment
for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may consist of any consideration and
method of payment allowable under Section 7 of the Plan. Until the issuance
(as evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. A share certificate for the
number of Shares so acquired shall be issued to the Optionee as soon as
practicable after exercise of the Option. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes
of the Plan and for sale under the Option, by the number of Shares as to
which the Option is exercised.
(b) RULE 16b-3. Options granted to Outside Directors must
comply with the applicable provisions of Rule 16b-3 promulgated under the
Exchange Act or any successor thereto and shall contain such additional
conditions or restrictions as may be required thereunder to qualify Plan
transactions, and other transactions by Outside Directors that otherwise
could be matched with Plan transactions, for the maximum exemption from
Section 16 of the Exchange Act.
(c) TERMINATION OF CONTINUOUS STATUS AS A DIRECTOR. In the
event an Optionee's Continuous Status as a Director terminates for any
reason, or no reason, (other than upon the Optionee's death), the Optionee
shall have the right to exercise the Option as to all of the Optioned Stock,
including Shares as to which it would not otherwise be exercisable, for a
period of twenty-four (24) months following the date of such termination (but
in no event later than the expiration of the Option's ten (10) year term). To
the extent that the Optionee does not exercise such Option within the time
specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of an Optionee's death,
the Optionee's estate or a person who acquired the right to exercise the
Option by bequest or inheritance may exercise the Option as to all of the
Optioned Stock, including Shares as to which it would not otherwise be
exercisable, for a period of twenty-four (24) months following the date of
death (but in no event later than the expiration of the Option's ten (10)
year term). To the extent that
5.
<PAGE>
the Optionee's estate or a person who acquired the right to exercise such
Option does not exercise such Option within the time specified herein, the
Option shall terminate.
9. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION,
MERGER, ASSET SALE OR CHANGE OF CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required
action by the shareholders of the Company, the number of Shares covered by
each outstanding Option, the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share covered by each such outstanding
Option, and the number of Shares issuable pursuant to the automatic grant
provisions of Section 4 hereof shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification
of the Common Stock, or any other increase or decrease in the number of
issued Shares effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares subject
to an Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has
not been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option may be assumed or an
equivalent option may be substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event the Option is
assumed or substituted, the assumed or substituted Option shall become fully
vested and exercisable for a period of twenty-four (24) months in the event
the Optionee ceases to serve as a member of any of the boards of directors of
the Company, the successor company, or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent options, each
outstanding Option shall become fully vested and exercisable, including as to
Shares as to which it would not otherwise be exercisable. If an Option
becomes fully vested and exercisable in the event of a merger or sale of
assets, the Board shall notify the Optionee that the Option shall be fully
exercisable for a period of thirty (30) days from the date of such notice,
and the Option shall terminate upon the expiration of such period. For the
purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the Option confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of
6.
<PAGE>
assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by
the holders of a majority of the outstanding Shares).
11. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. Except as set forth in
Section 4, the Board may at any time amend, alter, suspend, or discontinue
the plan, but no amendment, alteration, suspension, or discontinuation shall
be made which would impair the rights of any Optionee under any grant
theretofore made, without his or her consent. In addition, to the extent
necessary and desirable to comply with Rule 16b-3 under the Exchange Act (or
any other applicable law or regulation), the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment
or termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. TERM OF GRANTING OPTIONS. The date of grant of an Option shall,
for all purposes, be the date determined in accordance with Section 4 hereof.
13. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and
the issuance and delivery of such Shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, state securities laws, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares, if, in the opinion of counsel for the Company, such a representation
is required by any of the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any
Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
14. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
15. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
7.
<PAGE>
16. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject
to approval by the shareholders of the Company at or prior to the first
annual meeting of shareholders held subsequent to the granting of an Option
hereunder. Such shareholder approval shall be obtained in the degree and
manner required under applicable state and federal law.
8.
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VESTAR, INC.
1988 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees, Consultants
and Outside Directors of the Company, and to promote the success of the
Company's business.
Options granted hereunder may be either "incentive stock options," as
defined in Section 422A of the Internal Revenue Code of 1986, as amended, or
"nonstatutory stock options," at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. DEFINITIONS. As used herein, the following definitions , shall
apply:
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1996, as
amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean Vestar, Inc., a Delaware corporation.
(e) "CONSULTANT" shall mean any person who is engaged by the
Company or any Subsidiary to render consulting services and is compensated for
such consulting services; provided, however, that the term Consultant shall not
include Directors who are not compensated for their services or are paid only a
Director's fee by the Company.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE, CONSULTANT, OR DIRECTOR"
shall mean the absence of any interruption or termination of service as an
Employee, Consultant, or Director. Continuous Status as an Employee, Consultant,
or Director shall not be considered interrelated in the case of sick leave,
military leave, or any other leave of absence approved by the Board; provided
that such leave is for a period of not more than 90 days or reemployment upon
the expiration of such leave is guaranteed by contract or statute.
(g) "Director" shall mean a member of the Board.
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(h) "DISINTERESTED PERSON" shall have the meaning set forth in
Rule 16b---3(d)(3) as promulgated by the Securities and Exchange Commission
under Section 16(b) of the Exchange Act, as such rule is amended from time to
time and as interpreted by the Securities and Exchange Commission.
(i) "EMPLOYEE" shall mean any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(j) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
(k) "INCENTIVE STOCK OPTION" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422A of the
Code.
(l) "NONSTATUTORY STOCK OPTION" shall mean an Option not
intended to qualify as an Incentive Stock Option.
(m) "OPTION" shall mean a stock option granted pursuant to the
Plan.
(n) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.
(o) "OPTIONEE" shall mean an Employee, Consultant, or Outside
Director who receives an Option.
(p) "OUTSIDE DIRECTOR" shall mean a Director who is not an
Employee.
(q) "PARENT" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 425(e) of the Code.
(r) "PLAN" shall mean this 1988 Stock Option Plan.
(s) "SHARE" shall mean a share of the Common Stock, as adjusted
in accordance with Section 10 of the Plan.
(t) "SUBSIDIARY" shall mean a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 425(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 10
of the Plan, the maximum aggregate number of shares which
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may be granted pursuant to this Plan is 2,198,500 Shares of Common Stock. The
Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan. Repurchased Shares shall not become available for future
grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. This Plan shall be administered by the Board or
by a committee appointed by the Board which shall not have less than three Board
members (in either case, the "Administrator"). No Option shall be granted to a
Director of the Company except (i) by the Board when a majority of the members
of the Board, and a majority of the Directors acting in the matter, are
Disinterested Persons, or (ii) by the Administrator when the Administrator is
composed of three or more persons having full authority to act in thc matter and
each member of the Administrator is a Disinterested Person. No Option shall be
granted to an officer of the Company except (i) by the Board, or (ii) the
Administrator when the Administrator is composed solely of three or more
Directors, or is composed of three or more persons having full authority to act
in the matter and each member of the Administrator is a Disinterested Person.
The Administrator may delegate nondiscretionary administrative duties to such
Employees of the Company as it deems proper. No member of the Administrator
shall be liable for any act or omission on such member's own part, including but
not limited to the exercise of any power or discretion given to such member
under this Plan, except for those acts or omissions resulting from such member's
own gross negligence or willful misconduct.
(b) Notwithstanding any Plan provision to the contrary, all
grants of Options to Outside Directors shall be made strictly in accordance with
the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options.
(ii) Each Outside Director shall be automatically
granted an Option to purchase 40,000 Shares or such lesser number of Shares
as the Administrator shall determine at the time of grant upon the date on
which such person first becomes an Outside Director, whether through election
by the shareholders of the Company or appointment by the Board to fill a
vacancy.
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(iii) The terms of an Option granted hereunder shall be
as follows:
(A) the term of the Option shall be five (5)
years;
(B) the Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth
in Section 8(d) hereof;
(C) the exercise price per Share shall be 100%
of the fair market value per Share on the date of grant of the Option; and
(D) the Option shall become exercisable in
installments cumulatively with respect to one-fourth (1/4th) of the Optioned
Stock on the first day of the second, third, fourth and fifth fiscal years
beginning after the date of grant of such Option; provided, however, that in
no event shall any Option be exercisable prior to obtaining shareholder
approval of the Plan in accordance with Section 14 hereof.
(c) AUTHORITY OF THE ADMINISTRATOR. Subject to the provisions
of the Plan, the Administrator shall have the authority, in its discretion: (i)
to grant Incentive Stock Options in accordance with Section 422A of the Code, or
Nonstatutory Stock Options; (ii) to determine, upon review of relevant
information and in accordance with Section 7(b) of the Plan, the fair market
value of the Common Stock; (iii) to determine the exercise price per share of
Options to be granted, which exercise price shall be determined in accordance
with Section 7(a) of the Plan; (iv) to reduce the exercise price of any Option
to the then current fair market value if the fair market value of the Optioned
Stock shall have declined since the date the Option was granted, subject to the
consent of the Optionee; (v) to determine the Employees or Consultants to whom,
and the time or times at which, Options shall be granted; (vi) to determine the
number of shares to be represented by each Option; (vii) to interpret the Plan;
(viii) to prescribe, amend and rescind rules and regulations relating to the
Plan; (ix) to determine the terms and provisions of each Option (which need not
be identical) and, with the consent of the holder thereof, modify or amend each
Option; (x) to accelerate or defer (with the consent of the Optionee) the
exercise date of any Option, consistent with the provisions of Section 5 of the
Plan; (xi) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted by
the Board; and (xii) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
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<PAGE>
(d) EFFECT OF BOARD'S DECISION. All decisions, determinations
and interpretations of the Board shall be final and binding on all Optionees and
any other holders of any Options granted under the Plan.
5. ELIGIBILITY.
(a) Options may be granted only to Employees, Consultants,
or Outside Directors. Incentive Stock Options may be granted only to
Employees. An Employee or Consultant who has been granted an Option may, if
he is otherwise eligible, be granted an additional Option or Options.
(b) No Incentive Stock Option may be granted to an Employee
which, when aggregated with all other Incentive Stock Options granted to such
Employee by the Company or any Parent or Subsidiary, would result in Shares
having an aggregate fair market value (determined for each Share as of the date
of grant of the Option covering such Share) in excess of $100,000 becoming first
available for purchase upon exercise of one or more Incentive Stock Options
during any calendar year.
(c) Section 5(b) of the Plan shall apply only to an Incentive
Stock Option evidenced by an "Incentive Stock Option Agreement" which sets forth
the intention of the Company and the Optionee that such Option shall qualify as
an Incentive Stock Option. Section 5(b) of the Plan shall not apply to any
Option evidenced by a "Nonstatutory Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall be a
Nonstatutory Stock Option.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment with, consulting relationship with, or
membership on the Board of, the Company, nor shall it interfere in any way with
his right or the Company's right to terminate such employment, consulting
relationship, or membership on the Board at any time.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 14 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. EXERCISE PRICE AND CONSIDERATION.
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<PAGE>
(a) The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of any Incentive Stock Option granted to
any Employee, the per Share exercise price shall be no less than 100% of the
fair market value per Share on the date of grant; in the event that the Board
shall reduce the exercise price to an amount not less than the then fair market
value of the Optioned Stock, the exercise price shall be no less than 100% of
the fair market value as of the date of that reduction.
(ii) In the case of any Option other than an Incentive
Stock Option, the per Share exercise price shall be no less than 85% of the fair
market value per Share on the date of grant; in the event that the Board shall
reduce the exercise price to an amount not less than the then fair market value
of the Optioned Stock, the exercise price shall be no less than 85% of the fair
market value as of the date of that reduction.
(iii) In the case of any Option granted to any person who,
at the time of the grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the fair market value per Share on the date of grant.
(b) For purposes of the Plan, the fair market value shall be
determined by the Board in its discretion; provided, however, that where there
is a public market for the Common Stock, the fair market value per Share shall
be the mean of the last reported bid and asked prices of the Common Stock for
the last trading day prior to the date of determination, as reported in The Wall
Street Journal (or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation (NASDAQ) System) or, in
the event the Common Stock is listed on a stock exchange or reported on the
NASDAQ National Market System, the fair market value per Share shall be the
closing bid price on such exchange or on the NASDAQ National Market System on
the last trading day prior to the date of determination, as reported in The Wall
Street Journal.
(c) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be as
determined by the Board and may consist entirely of (i) cash, (ii) check, (iii)
promissory note, (iv) other Shares of Common Stock (which, if acquired from the
Company, have been held for at least six months prior to such exercise) by the
Optionee and having a fair market value on the date of surrender equal to the
aggregate exercise
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<PAGE>
price of the Shares as to which said Option shall be exercised, (v)
authorization from the Company to retain from the total number of Shares as
to which the Option is exercised that number of Shares having a fair market
value on the date of exercise equal to the exercise price for the total
number of Shares as to which the Option is exercised (which transaction may
be accomplished with the assistance of a broker, (vi) delivery of a properly
executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company the amount of sale on loan proceeds to pay
the exercise price, any combination of the foregoing methods of payment, or
(viii) such other consideration and method of payment for the issuance of
Shares to the extent permitted under Sections 408 and 409 of the California
General Corporation Law.
8. OPTIONS.
(a) GRANTING OF OPTIONS. Each Option shall be evidenced by a
written Stock Option Agreement, in form satisfactory to the Company, executed by
the Company and the person to whom such option is granted, and no option may be
exercised, in whole or in part, until such written agreement has been so
executed; provided, however, that the failure by the Company, the Optionee, or
both to execute such an agreement shall not invalidate the granting of an
Option. The agreement shall specify whether each Option it evidences is a
Nonstatutory Stock Option or an Incentive Stock Option.
The Administrator may approve the grant of Options under this Plan to
persons who are expected to become Employees of, or Consultants to, the Company,
but are not Employees or Consultants at the date of approval. In such cases, the
Option shall be deemed granted, without further approval, on the date the
grantee becomes an Employee or Consultant and must satisfy all requirements of
this Plan for Options granted on that date.
(b) OPTION GRANT DATE. Except in the case of advance approvals
described in (a) above, the date of grant of an Option under this Plan shall be
the date as of which the Administrator approves the grant. No Option shall be
exercisable, however, until a written stock Option agreement in form
satisfactory to the Company is executed by the Company and the Optionee.
(c) TERM OF OPTION. The term of each Option shall be ten (10)
years from the date of grant thereof or such shorter term as may be provided in
the Stock Option Agreement. However, in the case of an Option granted to an
Optionee who, at the time the Option is granted, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant
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<PAGE>
thereof or shorter time as may be provided in the Stock Option Agreement.
(d) EXERCISE OF OPTION.
(i) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan.
An Option may be exercisable over a period of time or may be immediately
exercisable as determined by the Board and may grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
Optionee's employment with the Company for any reason (including death or
disability). The purchase price for shares repurchased pursuant to the
repurchase option shall be the original price paid by the Optionee and may be
paid by cancellation of any indebtedness of the Optionee to the Company. The
repurchase option shall lapse at such a rate as the Board may determine.
Notwithstanding any other provisions of this Plan, no Option may be
exercised after the expiration of the term of the Option as set forth in the
Stock Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. For purposes of the preceding sentence, full payment may, as authorized
by the Board, consist of any consideration and method of payment allowable under
Section 7(c) of the Plan, and may also be made by delivering a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds to pay the exercise
price. Once the Option is deemed to be exercised, the Optionee shall have rights
equivalent to those of a shareholder, and shall be a shareholder when his
purchase is entered upon the records of the duly authorized transfer agent of
the Company. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Option is exercised, except as provided
in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter shall be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
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<PAGE>
(ii) TERMINATION OF STATUS AS AN EMPLOYEE, CONSULTANT OR
OUTSIDE DIRECTOR. Subject to Sections 8(d)(ii) and (iii) below, if all
individual ceases to serve as an Employee, Consultant, or Outside Director (as
the case may be), he may, but only within (A) three (3) months (or such other
period as is determined by the Administrator at the time of grant of the Option,
but no less than three (3) months) in the case of all Incentive Stock Options
and for Optionees who are not subject to Section 16(b) of the Exchange Act, and
(B) twelve (12) months (or such other period as is determined by the
Administrator at the time of grant of the Option, but no less than three (3)
months) in the case of an Optionee subject to Section 16(b) of the Exchange Act,
exercise his Option to the extent that he was entitled to exercise it at the
date of such termination. To the extent that he was not entitled to exercise the
Option at the date of such termination, or if he does not exercise such Option
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate. Notwithstanding the foregoing, the Administrator may, with the
Optionee's consent, extend the period within which the Option may be exercised
following termination.
(iii) DISABILITY. In the event of the total and permanent
disability (as defined in Section 22(e)(3) of the Code) of an Optionee while the
Optionee is then an Employee, Consultant, or Director (as the case may be), he
may, but only within six (6) months (or such other period of time as determined
by the Administrator) from the date of such disability (as determined by the
Administrator) exercise his Option in full. In the event of the total and
permanent disability of an Optionee who at the time thereof is not then an
Employee, Consultant, or Director (as the case may be), he may, but only within
six (6) months (or such other period of time as determined by the Administrator)
from the date of termination, exercise his Option to the extent he was entitled
to exercise it at the date of such termination. To the extent that he was not
entitled to exercise the Option at the date of termination, or if he does not
exercise such Option (which he was entitled to exercise) within the time
specified herein, the Option shall terminate.
(iv) DEATH OF OPTIONEE. In the event of the death of an
Optionee while the Optionee is then an Employee, Consultant, or Director (as the
case may be), the Option shall be exercisable in full at any time within six (6)
months (or such other period of time as determined by the Administrator, but no
less than six (6) months) following the date of death, by the Optionee's estate
or by the person who acquired the rights to exercise the Option by bequest or
inheritance In the event of the death of the Optionee who at the time of death
is not then an Employee, Consultant, or Director (as the case may be), the
Option may be exercised at any time within six (6) months (or such other period
of time as determined by the Administrator, but
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no less than six (6) months) following the date of death, by the Optionee's
estate or by a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of death.
(e) STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS.
When an Optionee incurs tax liability in connection with the exercise of an
Option, which tax liability is subject to tax withholding under applicable tax
laws, and the Optionee is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the Optionee may satisfy the withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
upon exercise of the Option that number of Shares having a fair market value
equal to the amount required to be withheld. The fair market value of the Shares
to be withheld shall be determined on the date that the amount of tax to be
withheld is to be determined (the "Tax Date"), in accordance with paragraph 7(b)
of the Plan.
All elections by an Optionee to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Committee and shall be
subject to the following restrictions:
(i) the election must be made on or prior to the
applicable Tax Date;
(ii) once made, the election shall be irrevocable as to
the particular Shares of the Option as to which the election is made;
(iii) all elections shall be subject to the consent or
disapproval of the Administrator;
(iv) if the Optionee is an officer or Director of the
Company or other person whose transactions in the Company's Common Stock are
subject to Section 16(b) of the Exchange Act (collectively "Insiders"), the
election may not be made within six (6) months of the date of grant of the
Option; provided, however, that this limitation shall not apply in the event
that death or disability of the Optionee occurs prior to the expiration of the
six-month period; and
(v) if the Optionee is an Insider, the election must be
made either six (6) months prior to the Tax Date (as determined in accordance
with Section 83 of the Code) or in the 10-day period beginning on the third day
following the release of the Company's quarterly or annual summary statement of
sales and earnings.
In the event the election to have Shares withheld is made by an Optionee
who is an Insider and the Tax Date is deferred until six
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months after exercise of the Option because no election is filed under
Section 83(b) of the Code, the Optionee shall receive the full number of
Shares with respect to which the Option is exercised but such Optionee shall
be unconditionally obligated to tender back to the Company the proper number
of Shares on the Tax Date.
(f) LIMITATION ON NUMBER OF OPTIONS IN ANY FISCAL YEAR.
(i) No person may be granted, in any fiscal year of the
Company, options to purchase more than 150,000 shares of the common stock of the
Company.
(ii) Notwithstanding subsection (a) to the contrary in
connection with his or her initial employment, an employee may be granted
options to purchase up to an additional 150,000 shares of common stock of the
Company which shall not be included in the limitation set forth in subsection
(a).
(iii) The limitations set forth in this Section 8(f) shall
be adjusted proportionately in connection with any change in the Company's
capitalization as described in Section 10.
(iv) If any option is cancelled, the cancelled option
will be included in the limit set forth in subsection (a). If the exercise price
of an option is reduced, the transaction will be treated as a cancellation of
the option and the grant of a new option.
9. NON-TRANSFERABILITY OF OPTIONS. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee or holder only by such Optionee.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to
any required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of
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consideration." Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except
as expressly provided herein, no issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company,
any outstanding Options shall terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Board, and may give each Optionee the
right to exercise his Option as to all or any part Of the Common Stock subject
to such Option, including Shares as to which the Option would not otherwise be
exercisable. In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. If the consideration to be paid by such successor
corporation in such sale of assets or merger consists entirely of cash, then
such successor's obligation under the preceding sentence may be satisfied by
granting to optionees the right to receive, in lieu of the shares issuable upon
exercise of the Option, an amount of cash equal to the difference between the
per Share exercise price of the Option and the cash consideration per share that
holders of Common Stock received in such sale of assets or merger, provided that
any such right to receive cash may be payable at such time or times and upon
such conditions as are provided generally with respect to Options. In the event
that such successor corporation refuses to assume the Option or to substitute an
equivalent option, the Board shall, in lieu Of such assumption or substitution,
provide for the Optionee to have the right to exercise the Option as to all of
the Optioned Stock, including Shares as to which the Option would not otherwise
be exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and the Option will
terminate upon the expiration of such period.
11. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the shareholders of the Company in the manner described in Section 14 of the
Plan:
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(i) any increase in the number of Shares subject to the
Plan, other than in connection with an adjustment under Section 10 of the Plan;
(ii) any change in the designation of the class of
persons eligible to be granted Options; or
(iii) any material increase in the benefits accruing to
participants under the Plan.
(b) SHAREHOLDER APPROVAL. If any amendment requiring
shareholder approval under Section 11(a) of the Plan is made subsequent to the
first registration of any class of equity security by the Company under Section
12 of the Exchange Act, such shareholder approval shall be solicited as
described in Section 14(a) of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Board and
the Optionee, which agreement must be in writing and signed by the Company and
the Optionee.
12. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, the securities laws of any state, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
13. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's
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counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the
failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
14. SHAREHOLDER APPROVAL.
(a) Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date
the Plan is adopted. If such shareholder approval is obtained at a duly held
shareholders' meeting, it must be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company, or if such
shareholder approval is obtained by written consent, it must be obtained by the
unanimous written consent of all shareholders of the Company; provided, however,
that approval at a meeting or by written consent may be obtained by a lesser
degree of shareholder approval if the Board determines, in its discretion after
consultation with the Company's legal counsel, that such a lesser degree of
shareholder approval will comply with all applicable laws and will not adversely
affect the qualification of Options granted under the Plan under Section 422A of
the Code.
(b) If and in the event that the Company registers any class of
equity securities pursuant to Section 12 of the Exchange Act, any required
approval of the shareholders of the Company obtained after such registration
shall be solicited substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder.
(c) If any required approval by the shareholders of the Plan
itself or of any amendment thereto is solicited at any time otherwise than in
the manner described in Section 14(b) hereof, then the Company shall, at or
prior to the first annual meeting of shareholders held subsequent to the later
of (1) the first registration of any class of equity securities of the Company
under Section 12 of the Exchange Act or (2) the granting of an Option hereunder
to an officer or director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote
for the Plan substantially the same information which would be required (if
proxies to be voted with respect to approval or disapproval of the Plan or
amendment were then being solicited) by the rules and regulations in effect
under Section 14(a) of the Exchange Act at the time such information is
furnished; and
(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred
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to in subsection (i) hereof not later than the date on which such information
is first sent or given to shareholders.
15. INFORMATION TO OPTIONEES. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
provided to all shareholders of the Company. The Company shall not be required
to provide such information if the issuance of Options under the Plan is limited
to key Employees whose duties in connection with the Company assure their access
to equivalent information.
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