<PAGE> 1
As filed with the Securities and Exchange Commission on August 14, 1996
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MATRIX PHARMACEUTICAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2957068
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
34700 CAMPUS DRIVE
FREMONT, CALIFORNIA 94555
(Address of principal executive offices) (Zip Code)
MATRIX PHARMACEUTICAL, INC.
1988 RESTRICTED STOCK PLAN
(Full title of the plan)
CRAIG R. MCMULLEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MATRIX PHARMACEUTICAL, INC.
34700 CAMPUS DRIVE, FREMONT, CALIFORNIA 94555
(Name and address of agent for service)
(510) 742-9900
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
---------- ------------- ------------ -------- ---
<C> <C> <C> <C> <C>
Options to Purchase
Common Stock
(1988 Restricted Stock Plan) 850,000 shares N/A N/A N/A
Common Stock,
$0.01 par value
(1988 Restricted Stock Plan) 850,000 shares $11 $9,350,000 $3,224.14
================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1988 Restricted Stock Plan
by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which
results in an increase in the number of the Registrant's outstanding
shares of Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the average of
the high and low selling prices per share of Common Stock of Matrix
Pharmaceutical, Inc. on August 13, 1996 as reported by the Nasdaq
National Market.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Matrix Pharmaceutical, 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 and filed with the Securities and
Exchange Commission on March 1, 1996;
b. The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarters ended March 31, 1996 and June 30, 1996, and filed
with the Securities and Exchange Commission on May 8, 1996 and
August 8, 1996, respectively; and
c. The Registrant's Registration Statement No. 0-19750 on Form
8-A filed with the Commission December 19, 1991, together with
Amendments No. 1 and No. 2 on Form 8 filed January 23, 1992
and January 27, 1992, respectively, in which there is
described the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 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. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for urposes of this Registration Statement to the extent that a
statement contained herein or in any subsequentlly filed document which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
II-2.
<PAGE> 3
Item 6. Indemnification of Directors and Officers
Pursuant to the Delaware General Corporation Law, the
Registrant has adopted provisions in its Restated Certificate of Incorporation
which eliminate the personal liability of its directors and officers to the
Registrant and its stockholders for monetary damages for breach of their
fiduciary duties in certain circumstances and which authorize the Registrant to
indemnify its directors, officers and other agents, by bylaw, agreement or
otherwise, to the fullest extent permitted by law. The Registrant's Bylaws
require the Registrant to indemnify its directors, officers, employees and other
agents to the fullest extent permitted by law.
The Registrant's Restated Certificate of Incorporation and
Bylaws expressly authorize the use of indemnification agreements and, with the
approval of its stockholders, the Registrant has entered into separate
Indemnification Agreements with its directors and certain of its officers. These
Indemnification Agreements may require the Registrant, among other things, to
indemnify directors and officers against certain liabilities that may arise by
reason of their status or service as directors and officers and to advance their
expenses incurred as a result of any proceeding against them as to which they
could be indemnified. The Registrant maintains an insurance policy covering
directors and officers, under which the insurer has agreed to pay, subject to
certain exclusions (including certain violations of securities laws) the amount
of insured claims made against the insured officers and directors of the
Registrant for wrongful acts that such officers or directors may otherwise be
required to pay or for which the Registrant is required to indemnify such
officers and directors.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit Number Exhibit
4.0 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration No. 0-19750 on Form 8-A
which is incorporated herein by reference pursuant to Item
3(c).
5. Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24. Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1988 Restricted Stock Plan.
99.2 Form of Stock Option Agreement with Notice of Grant -
Installment Option (incorporated by reference to Exhibit
99.2 of Registration Statement No. 33-79908).
99.3 Form of Stock Option Agreement with Notice of Grant
(incorporated by reference to Exhibit 28.2 of Registration
Statement No. 33-65547).
99.4 Form of Stock Purchase Agreement (incorporated by
reference to Exhibit 28.3 of Registration Statement No.
33-65547).
99.5 Form of Restricted Stock Purchase Agreement (incorporated
by reference to Exhibit 28.4 of Registration Statement No.
33-65547).
II-3.
<PAGE> 4
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 Securities Act of 1933, as amended (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 to such information in this Registration Statement; provided,
however, that clauses (1)(i) and (1)(ii) shall not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the 1934 Act that are incorporated by reference into 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 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 upon the termination of the Registrant's 1988 Restricted Stock 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 fide offering thereof.
C. Insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers or controlling persons of
the Registrant pursuant to the indemnification provisions summarized in Item 6
or otherwise, the Registrant has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-4.
<PAGE> 5
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 Fremont, State of California, on this 22nd day of
July, 1996.
MATRIX PHARMACEUTICAL, INC.
By /s/ Craig R. McMullen
---------------------------------------
Craig R. McMullen
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Matrix
Pharmaceutical, Inc., a Delaware corporation, do hereby constitute and appoint
Craig R. McMullen and James R. Glynn, and each of them, the lawful
attorneys-in-fact 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 either 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 either 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.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Craig R. McMullen President, Chief Executive July 22, 1996
- ------------------------------------ Officer and Director
Craig R. McMullen (Principal Executive Officer)
/s/ James R. Glynn Vice President and Chief Financial July 22, 1996
- ------------------------------------ Officer (Principal Financial
James R. Glynn and Accounting Officer)
</TABLE>
II-5.
<PAGE> 6
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Edward E. Luck Chairman of the Board July 22, 1996
- ------------------------------------
Edward E. Luck
/s/ J. Stephen Dolezalek Director July 22, 1996
- ---------------------------
J. Stephan Dolezalek
/s/ Alan E. Salzman Director July 22, 1996
- ------------------------------------
Alan E. Salzman
/s/ Richard D. Murdock Director July 22, 1996
- ---------------------------
Richard D. Murdock
/s/ John E. Lyons Director July 22, 1996
- ------------------------------------
John E. Lyons
/s/ Julius L. Pericola Director July 22, 1996
- ------------------------------------
Julius L. Pericola
</TABLE>
II-6.
<PAGE> 7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
MATRIX PHARMACEUTICAL, INC.
<PAGE> 8
EXHIBIT INDEX
Exhibit
Number Exhibit
4.0 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration No. 0-19750 on Form 8-A
which is incorporated herein by reference pursuant to Item
3(c).
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP, is contained
in Exhibit 5.
24. Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1988 Restricted Stock Plan.
99.2 Form of Stock Option Agreement with Notice of Grant -
Installment Option (incorporated by reference to Exhibit
99.2 of Registration Statement No. 33-79908).
99.3 Form of Stock Option Agreement with Notice of Grant
(incorporated by reference to Exhibit 28.2 of Registration
Statement No. 33-65547).
99.4 Form of Stock Purchase Agreement (incorporated by
reference to Exhibit 28.3 of Registration Statement No.
33-65547).
99.5 Form of Restricted Stock Purchase Agreement (incorporated
by reference to Exhibit 28.4 of Registration Statement No.
33-65547).
<PAGE> 1
Exhibit 5
Opinion and Consent of Brobeck, Phleger & Harrison LLP
August 13, 1996
Matrix Pharmaceutical, Inc.
34700 Campus Drive
Fremont, California 94555
Re: Registration Statement for Offering of
850,000 Shares of Common Stock
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 850,000 shares of
the Common Stock of Matrix Pharmaceutical, Inc. (the "Company") under the
Company's 1988 Restricted Stock 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 1988 Restricted Stock 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/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the Matrix Pharmaceutical, Inc. 1988
Restricted Stock Plan of our report dated January 26, 1996, with respect to the
consolidated financial statements of Matrix Pharmaceutical, Inc. included in
the Annual Report (Form 10-K) for the year ended December 31, 1995, filed with
the Securities and Exchange Commission.
ERNST & YOUNG LLP
Palo Alto, California
August 8, 1996
<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I...................................................................... 1
GENERAL............................................................... 1
1. PURPOSE OF THE PLAN................................. 1
2. STRUCTURE OF THE PLAN............................... 1
3. ADMINISTRATION OF THE PLAN.......................... 2
4. OPTION GRANTS AND SHARE ISSUANCES................... 2
5. STOCK SUBJECT TO THE PLAN........................... 3
ARTICLE II..................................................................... 4
OPTION GRANT PROGRAM.................................................. 4
1. TERMS AND CONDITIONS OF OPTIONS..................... 4
2. INCENTIVE OPTIONS................................... 7
3. STOCK APPRECIATION RIGHTS........................... 7
4. CORPORATE TRANSACTION............................... 8
5. CANCELLATION AND NEW GRANT OF OPTIONS............... 9
6. EXTENSION OF EXERCISE PERIOD........................ 9
ARTICLE III.................................................................... 10
STOCK ISSUANCE PROGRAM................................................ 10
1. TERMS AND CONDITIONS OF STOCK ISSUANCES............. 10
2. CORPORATE TRANSACTION............................... 12
ARTICLE IV..................................................................... 13
MISCELLANEOUS......................................................... 13
1. LOANS OR INSTALLMENT PAYMENTS ...................... 13
2. AMENDMENT OF THE PLAN AND AWARDS.................... 13
3. EFFECTIVE DATE AND TERM OF PLAN..................... 14
4. USE OF PROCEEDS..................................... 15
5. WITHHOLDING......................................... 15
6. REGULATORY APPROVALS................................ 15
7. NO EMPLOYMENT/SERVICE RIGHTS ....................... 15
</TABLE>
<PAGE> 2
MATRIX PHARMACEUTICAL, INC.
1988 RESTRICTED STOCK PLAN
(AMENDED THROUGH DECEMBER 14, 1995)
ARTICLE I
GENERAL
1. PURPOSE OF THE PLAN
(a) This 1988 Restricted Stock Plan (the "Plan") is intended to
promote the interests of Matrix Pharmaceutical, Inc., a Delaware corporation
(the "Corporation"), by providing incentives to eligible individuals to acquire
a proprietary interest, or otherwise increase their proprietary interest, in the
Corporation and to remain in the employ or service of the Corporation (or its
parent or subsidiary corporations).
(b) For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:
(i) Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be
considered to be a PARENT corporation of the Corporation, provided each
such corporation in the unbroken chain (other than the Corporation)
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(ii) Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation shall be
considered to be a SUBSIDIARY of the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
2. STRUCTURE OF THE PLAN
The Plan shall be divided into two separate components: the Option
Grant Program specified in Article II and the Stock Issuance Program specified
in Article III. Under the Option Grant Program, eligible individuals may be
granted options to purchase shares of the Corporation's Common Stock at a
discount of up to 15% of the fair market value of such shares on the grant date.
The Stock Issuance Program will allow eligible individuals to
purchase shares of the Corporation's Common Stock at discounts from the fair
market value of such shares of up to 15%. Such shares may be issued as
fully-vested shares or as shares to vest over time. Issuances may be effected
either through direct purchases or through the exercise of intervening option
grants.
Unless the context clearly indicates otherwise, the provisions of
Articles I and IV of the Plan shall apply to both the Option Grant Program and
the Stock Issuance Program and shall accordingly govern the interests of all
individuals in the Plan.
<PAGE> 3
3. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by a committee ("Committee") of
two (2) or more members of the Corporation's Board of Directors appointed by the
Board. No Board member shall be eligible to serve on the Committee if such
individual has, within the twelve (12)-month period immediately preceding the
date he or she is to be appointed to the Committee, received an option grant or
stock issuance under this Plan or any other stock plan of the Company (or any
parent or subsidiary corporation), other than pursuant to the automatic option
grant program in effect for non-employee Board members under the Corporation's
1991 Director Stock Option Plan. Members of the Committee shall serve for such
period of time as the Board may determine and shall be subject to removal by the
Board at any time.
(b) The Committee as Plan Administrator shall have full power and
authority (subject to the express provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for the proper administration
of the Plan and to make such determinations under the Plan and any outstanding
option grants or share issuances as it may deem necessary or advisable.
Decisions of the Plan Administrator shall be final and binding on all parties
with an interest in the Plan.
(c) Service on the Committee shall constitute service as a Board
member, and members of the Committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on the
Committee. No member of the Committee shall be liable for any act or omission
made in good faith with respect to the Plan or any option granted under the
Plan.
4. OPTION GRANTS AND SHARE ISSUANCES
(a) The persons eligible to receive share issuances under the Stock
Issuance Program ("Participant") and/or option grants pursuant to the Option
Grant Program ("Optionee") are as follows:
(i) key employees (including officers) of the Corporation (or
its parent or subsidiary corporations) who render services which
contribute to the success and growth of the Corporation (or its parent
or subsidiary corporations) or which may reasonably be anticipated to
contribute to the future success and growth of the Corporation (or its
parent or subsidiary corporations); and
(ii) those consultants or independent contractors who provide
valuable services to the Corporation (or its parent or subsidiary
corporations).
(b) Non-employee members of the Board shall not be eligible to
participate in this Plan or in any other stock option, stock purchase, stock
bonus or other stock plan of the Corporation (or its parent or subsidiary
corporations). However, non-employee members of the Board shall be eligible to
receive automatic option grants pursuant to the provisions of the Corporation's
1991 Director Stock Option Plan.
(c) The Plan Administrator shall have full authority to determine,
(I) with respect to the option grants made under the Plan, the number of shares
to be covered by each grant, the time or times at which each granted option is
to become exercisable, the option price, and the maximum term for which the
option may remain outstanding and (II) with respect to share issuances under the
Stock Issuance Program, the number of shares to be issued to each Participant,
the vesting schedule (if any) to be applicable to the issued shares, and the
purchase price to be paid by the individual for such shares.
(d) The Plan Administrator shall have the absolute discretion to
grant options in accordance with Article II of the Plan and/or to effect share
issuances in accordance with Article III of the Plan.
2.
<PAGE> 4
5. STOCK SUBJECT TO THE PLAN
(a) The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired common stock ("Common
Stock"). The maximum number of shares issuable over the term of the Plan shall
not exceed 2,869,048 shares*, subject to adjustment as provided in Section 5(b).
Should an outstanding option under the Plan expire or terminate for any reason
prior to exercise in full, the shares subject to the portion of the option not
so exercised will be available for subsequent option grants and share issuances
under the Plan. In no event may any one individual participating in the Plan be
granted stock options, separately exercisable stock appreciation rights and
direct stock issuances for more than 750,000 shares of Common Stock in the
aggregate over the remaining term of the Plan, subject to adjustment from time
to time in accordance with paragraph 5(b) of this Article I. For purposes of
such limitation, no stock options, stock appreciation rights or direct stock
issuances granted prior to January 1, 1994 shall be taken into account. Shares
subject to an option (or portion of an option) surrendered or cancelled in
accordance with Section 3 of Article II of the Plan and shares repurchased by
the Corporation pursuant to its repurchase rights under the Plan shall not be
available for subsequent option grants or share issuances under the Plan.
(b) If any change is made to the Common Stock issuable under the
Plan by reason of any stock dividend, stock split, combination of shares,
recapitalization, or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, then appropriate
adjustments will be made to (i) the number and/or class of shares issuable under
the Plan, (ii) the maximum number and/or class of shares for which stock
options, separately exercisable stock appreciation rights and direct stock
issuances may be granted to any one participant in the aggregate after December
31, 1993, and (iii) the number and/or class of shares and the option price per
share in effect under each outstanding option in order to prevent the dilution
or enlargement of rights and benefits under such options. The adjustments
determined by the Plan Administrator will be final, binding and conclusive.
(c) Common Stock issuable under the Plan, whether under the Option
Grant Program or the Stock Issuance Program, may be subject to such restrictions
on transfer, repurchase rights or other restrictions as are determined by the
Plan Administrator.
- --------
*Adjusted to reflect the 2.1-for-1 reverse stock split of the outstanding Common
Stock effected in January 1992. Reflects an 850,000-share increase authorized
for issuance under the Plan approved by the Board on December 14, 1995. From and
after February 29, 1996, not more than 2,324,907 shares may be issued under the
Plan.
3.
<PAGE> 5
ARTICLE II
OPTION GRANT PROGRAM
1. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action
of the Plan Administrator and may, at the Plan Administrator's discretion, be
either incentive stock options qualified under Internal Revenue Code Section 422
("Incentive Options") or non-statutory options which do not so qualify.
Individuals who are not employees of the Corporation or its parent or subsidiary
corporations may only be granted non-statutory options. Each granted option
shall be evidenced by one or more instruments in the form approved by the Plan
Administrator; provided, however, that each such instrument shall comply with
the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section 2 of this Article II.
(a) Option Price.
(1) The option price per share shall be fixed by the Plan
Administrator, but in no event shall the option price per share be less
than eighty-five percent (85%) of the fair market value of a share of
Common Stock on the date of the option grant.
(2) The option price will become immediately due upon exercise
of the option and, subject to the provisions of Article IV, Section 1
and the instrument evidencing the grant, will be payable in one of the
following alternative forms:
(A) full payment in cash or check payable to the
Corporation; or
(B) full payment in shares of Common Stock held by
the Optionee for the requisite period necessary to avoid a
charge to the Corporation's earnings for financial reporting
purposes and valued at fair market value on the Exercise Date
(as such term is defined below); or
(C) full payment in a combination of shares of Common
Stock held by the Optionee for the requisite period necessary
to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at fair market value on the
Exercise Date and cash or check payable to the Corporation; or
(D) full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (I) shall
provide irrevocable written instructions to a designated
brokerage firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover
the aggregate option price payable for the purchased shares
plus all applicable Federal and State income and employment
taxes required to be withheld by the Corporation in connection
with such purchase and (II) shall provide written directives
to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to
complete the sale transaction.
4.
<PAGE> 6
For purposes of this subsection (a)(2), the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
(3) For purposes of subsection (1) above (and for all other
valuation purposes under the Plan), the fair market value of a share of Common
Stock on any relevant date under the Plan 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 stock exchange but is traded on the
Nasdaq National Market System, the fair market value will be
the closing selling price of one share of Common Stock on the
date in question, as such price is reported by the National
Association of Securities Dealers through the Nasdaq National
Market System or any successor system. If there is no reported
closing selling price for the Common Stock on the date in
question, then the closing selling price on the last preceding
date for which such quotation exists shall be determinative of
fair market value.
(B) If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the fair
market value will be the closing selling price of one share of
Common Stock on the date in question on the stock exchange
determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted on
such exchange. If there is no reported sale of Common Stock on
such exchange on the date in question, then the fair market
value will be the closing selling price on the exchange on the
last preceding date for which such quotation exists.
(b) Term and Exercise of Options. Each option granted under
the Plan will be exercisable at such time or times and during such period as is
determined by the Plan Administrator and set forth in the stock option agreement
evidencing such grant. However, no option granted under this Plan will have a
term in excess of ten (10) years measured from the grant date. During the
lifetime of the Optionee, the option will be exercisable only by the Optionee
and will not be assignable or transferable by the Optionee otherwise than by
will or by the laws of descent and distribution following the Optionee's death.
(c) Effect of Termination of Service.
(1) Should an Optionee cease to remain in Service for any
reason (including death or permanent disability as defined in Section 22(e)(3)
of the Internal Revenue Code) while the holder of one or more outstanding
options under the Plan, then such option or options shall in no event remain
exercisable for more than a twelve (12) month period (or such shorter period as
is determined by the Plan Administrator and set forth in the option agreement)
following the date of such cessation of Service (and under no circumstances
shall any such option be exercisable after the specified expiration date of the
option term). Each such option shall, during such twelve (12) month or shorter
period, be exercisable only to the extent of the number of shares (if any) for
which the option is exercisable on the date of such cessation of Service. Upon
the expiration of such twelve (12) month or shorter period or (if earlier) upon
the expiration of the option term, the option shall terminate and cease to be
exercisable.
(2) Any option granted to an Optionee under the Plan and
exercisable in whole or in part on the date of the Optionee's death may be
subsequently exercised, but only to the extent of the number of shares (if any)
for which the option is exercisable on the date of the Optionee's cessation of
Service (less any shares subsequently purchased by the Optionee thereunder prior
to death), by the personal representative of the Optionee's estate or by the
person or persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution, provided and
only if such
5.
<PAGE> 7
exercise occurs prior to the earlier of (i) the first anniversary of the date of
the Optionee's death or (ii) the specified expiration date of the option term.
Upon the occurrence of the earlier event, the option shall terminate and cease
to be exercisable.
(3) The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time the option
remains outstanding, to permit one or more options granted under this Article II
to be exercised, during the applicable exercise period under subparagraph (1) or
(2) above, not only for the number of shares for which each such option is
exercisable at the time of the optionee's cessation of Service but also for one
or more subsequent installments of purchasable shares for which the option would
otherwise have become exercisable had such cessation of Service not occurred.
(4) For purposes of the foregoing provisions of this
Section 1(c), an Optionee shall be deemed to remain in SERVICE for so long as
such individual renders services to the Corporation or any parent or subsidiary
corporation on a periodic basis in the capacity of an Employee or an independent
consultant or advisor. The Optionee shall be deemed to be an Employee of the
Corporation for so long as the Optionee remains in the employ of the Corporation
or one or more of its parent or subsidiary corporations, subject to the control
and direction of the employer entity not only as to the work to be performed but
also as to the manner and method of performance.
(d) Stockholder Rights. An Optionee shall have none of the
rights of a stockholder with respect to any shares covered by the option until
such Optionee has exercised the option, paid the option price for the purchased
shares and been issued a stock certificate for the purchased shares.
(e) Repurchase Rights. The shares of Common Stock acquired
upon the exercise of options granted under the Plan may be subject to one or
more repurchase rights of the Corporation in accordance with the following
provisions:
(1) The Plan Administrator may in its discretion
subject one or more shares of Common Stock issued under this Article II
to repurchase by the Corporation. Any such repurchase right shall be
exercisable by the Corporation, at the option price paid per share, for
any or all unvested shares of Common Stock held by the Optionee under
this Article II at the time of his or her cessation of Service. The
specific terms and conditions upon which such repurchase right shall be
so exercisable by the Corporation, including the establishment of the
appropriate vesting schedule and other provision for the expiration of
such right in one or more installments over the optionee's period of
Service, shall be determined by the Plan Administrator and set forth in
the instrument evidencing such right.
(2) All of the Corporation's outstanding repurchase
rights shall automatically terminate, and all shares subject to such
terminated rights shall immediately vest in full, upon the occurrence
of any Corporate Transaction under Section 4 of this Article II, except
to the extent: (i) any such repurchase right is, in connection with
such Corporate Transaction, to be assigned to the successor corporation
(or parent thereof) or (ii) such termination is precluded by other
limitations imposed by the Plan Administrator at the time the
repurchase right is granted.
(3) The Plan Administrator shall have the
discretionary authority, exercisable either before or after the
optionee's cessation of Service, to cancel the Company's outstanding
repurchase rights with respect to one or more shares purchased or
purchasable by the optionee under this Article II and thereby
accelerate the vesting of such shares in connection with the optionee's
cessation of Service.
6.
<PAGE> 8
2. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees of the Corporation. Options which are
specifically designated as "non-statutory" options when issued under the Plan
shall not be subject to such terms and conditions.
(a) Option Price. The option price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the fair market value of a share of Common Stock on the date
of grant.
(b) Dollar Limitation. The aggregate fair market value (determined
as of the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee under this Plan (or any other option
plan of the Corporation or its parent or subsidiary corporations) may for the
first time become exercisable as Incentive Options during any one calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two or more such options which become exercisable for
the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as incentive stock options under the Federal tax
laws shall be applied on the basis of the order in which such options were
granted.
(c) 10% Stockholder. If any individual to whom an Incentive Option
is granted is at the time of such grant the owner of stock (as determined under
Section 424(d) of the Internal Revenue Code) possessing 10% or more of the total
combined voting power of all outstanding classes of stock of the Corporation or
any parent or subsidiary corporation, then the option price per share shall not
be less than one hundred and ten percent (110%) of the fair market value per
share of the Common Stock on the grant date, and the option term shall not
exceed five (5) years, measured from the grant date.
Except as modified by the preceding provisions of this Section 2,
all the provisions of the Plan shall be applicable to the Incentive Options
granted hereunder.
3. STOCK APPRECIATION RIGHTS
(a) One or more Optionee may, upon such terms and conditions as the
Plan Administrator 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 surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option or portion thereof
over (ii) the aggregate option price payable for such vested shares. No
surrender of an option, however, shall be effective unless it is approved by the
Plan Administrator. If the surrender is so approved, then the distribution to
which the option holder shall accordingly become entitled under this subsection
3(a) may be made in shares of Common Stock valued at fair market value at date
of surrender, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
(b) If the surrender of an option is rejected by the Plan
Administrator, then the option holder shall retain whatever rights the option
holder had under the surrendered option (or surrendered portion thereof) on the
surrender date and may exercise such rights at any time prior to the later of
(i) the expiration of the 5 business-day period following receipt by the option
holder of the rejection notice or (ii) the last day on which the option is
otherwise exercisable in accordance with the terms of the instrument evidencing
such option, but in no event may such rights be exercised at any time after ten
(10) years following the date of the option grant.
7.
<PAGE> 9
(c) Notwithstanding the foregoing provisions of this Section 3, 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 this Article II. Each outstanding option with
such a limited stock appreciation right in effect for at least six (6) months
shall automatically be cancelled, to the extent exercisable for vested shares of
Common Stock, upon the occurrence of a Hostile Take-Over, and the Optionee shall
in return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the fair market value (on the cancellation date) of
the number of shares in which the Optionee is at the time vested under the
cancelled option or cancelled portion over (ii) the aggregate option price
payable for such vested shares. Such cash distribution shall be made within five
(5) days following the consummation of the Hostile Take-Over. Neither the
approval of the Plan Administrator nor the consent of the Board shall be
required in connection with such option cancellation and cash distribution. The
balance (if any) of each such option shall continue in full force and effect in
accordance with the terms and conditions of the instrument evidencing such
grant.
(d) For purposes of Section 3(c) above, 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) acquires
ownership 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 stockholders which
the Board does not recommend such stockholders 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 officers and directors of the
Corporation who participate in this Plan or the Corporation's 1991 Director
Stock Option Plan.
(e) The shares of Common Stock subject to any option surrendered or
cancelled for an appreciation distribution pursuant to this Section V shall NOT
be available for subsequent option grants or share issuances under the Plan.
4. CORPORATE TRANSACTION
(a) In the event of one or more of the following
stockholder-approved transactions ("Corporate Transaction"):
(i) 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 incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in liquidation or
dissolution of the Corporation; or
(iii) any reverse merger in which the Corporation is acquired
but continues in existence as a separate entity,
each outstanding option under the Plan shall automatically
accelerate so that each such option shall, immediately prior to the
specified effective date for such Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock
at the time subject to such option and may be exercised for all or any
portion of such shares. However, an outstanding option shall not so
accelerate if and to the extent: (i) such option is, in connection with
the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or to be replaced with a comparable
option to purchase shares of the capital stock of the successor
corporation or parent thereof or (ii) the acceleration of such option
is subject to other applicable limitations imposed by the Plan
Administrator in the relevant option agreement. The
8.
<PAGE> 10
determination of comparability under clause (i) or clause (ii) above shall be
made by the Plan Administrator, and its determination shall be final and
conclusive.
(b) Upon the consummation of the Corporate Transaction, all outstanding
options under the Plan shall immediately terminate and cease to be exercisable,
except to the extent assumed by the successor corporation or parent thereof.
(c) The exercisability as incentive stock options under the Federal tax
laws of any options accelerated in connection with the Corporate Transaction
shall remain subject to the applicable dollar limitation of Section 2(b).
(d) If the outstanding options under the Plan are assumed by the
successor corporation (or parent thereof) in the Corporate Transaction or are
otherwise to continue in effect following such Corporate Transaction, then each
such assumed or continuing option shall, immediately after such Corporate
Transaction, be appropriately adjusted to apply and pertain to the number and
class of securities or other property which would have been issued to the option
holder, in consummation of the Corporate Transaction, had the option been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to the option price payable per share, provided
the aggregate option price payable for such securities or other property shall
remain the same. In addition, the number and class of securities or other
property available for issuance under the Plan following the consummation of
such Corporate Transaction shall be appropriately adjusted.
(e) The grant of options under this Plan shall 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.
5. CANCELLATION AND NEW GRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any
time and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than (i) eighty-five percent (85%) of the fair market value of the Common Stock
on such grant date or (ii) one hundred percent (100%) of such fair market value
in the case of an Incentive Option.
6. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority,
exercisable in its sole discretion, to extend, either at the time the option is
granted or at any time while the option remains outstanding, the period of time
for which the option is to remain exercisable following the Optionee's cessation
of Service from the twelve (12) month or shorter period set forth in the option
agreement to such greater period of time as the Plan Administrator shall deem
appropriate; provided, however, that in no event shall such option be
exercisable at any time after the specified expiration date of the option term.
9.
<PAGE> 11
ARTICLE III
STOCK ISSUANCE PROGRAM
1. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares may be issued under the Stock Issuance Program either through
direct and immediate purchases without any intervening option grant under the
Option Grant Program or upon the subsequent exercise of outstanding options
under the Option Grant Program. The issued shares will be evidenced by a
Restricted Stock Purchase Agreement ("Purchase Agreement") that complies with
each of the terms and conditions of this Article III.
(a) Share Price
(1) The purchase price per share will be fixed by the Plan
Administrator, but in no event will it be less than eighty-five percent (85%) of
the fair market value of the shares at the time of issuance. Such fair market
value shall be determined in accordance with Article II, Section (1)(a)(3).
(2) Shares shall be issued under this Article III for such
consideration as the Plan Administrator shall from time to time determine,
provided that in no event shall shares be issued for consideration other than:
(A) cash or check payable to the Corporation; or
(B) promissory note payable to the Corporation's order,
which may be subject to cancellation by the Corporation
in whole or in part upon such terms and conditions as
the Plan Administrator shall specify.
(b) Vesting Schedule
(1) The interest of a Participant in the shares of Common
Stock issued to him or her under this Article III may, in the absolute
discretion of the Plan Administrator, be fully and immediately vested upon
issuance or may vest in one or more installments in accordance with the vesting
provisions of subsection (b)(4). Except as otherwise provided in subsection
(b)(2), the Participant may not transfer any of the Common Stock in which he or
she does not have a vested interest; accordingly, all unvested shares issued to
the Participant under this Article III Plan shall bear the restrictive legend
specified in subsection (c)(1), until such legend is removed in accordance with
subsection (c)(2). The Participant, however, shall have all the rights of a
stockholder with respect to the issued shares of Common Stock, whether or not
such shares are vested. Accordingly, the Participant shall have the right to
vote such shares and to receive any regular cash dividends or other
distributions paid or made with respect to such shares. Any new, substituted or
additional securities or other property (including money paid other than as a
regular cash dividend) which the holder of unvested Common Stock may have the
right to receive by reason of a stock dividend, stock split, stock combination,
recapitalization or similar transaction affecting the Corporation's outstanding
securities without receipt of consideration, or in the event of the conversion
of the Corporation's outstanding Common Stock into cash or other shares or
securities of the Corporation or any other corporation as a result of a merger,
consolidation, liquidation or other reorganization involving the Corporation
shall be issued to such holder, subject to (i) the same vesting requirements
under subsection (b)(4) applicable to his or her unvested Common Stock and (ii)
such escrow arrangements as the Plan Administrator shall deem appropriate.
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<PAGE> 12
(2) As used in this Article III, the term "transfer" shall
include (without limitation) any sale, pledge, encumbrance, gift or other
disposition of any unvested shares acquired under the Stock Issuance Program.
However, the Participant shall have the right to make a gift of one or more of
such unvested shares to his or her spouse, parents or children or to a trust
established for such spouse, parents or children, provided the donee of such
shares delivers to the Corporation a written agreement to be bound by all the
provisions of the Plan and other instruments executed by the Participant to
evidence his or her prior acquisition of such shares. Any gift made in
accordance with the foregoing limitations shall not trigger the exercise of the
Corporation's repurchase rights under subsection (b)(3).
(3) In the event a Participant should, while his or her
interest in the acquired shares remains unvested, (i) attempt to transfer (other
than by way of a permissible gift under subsection (b)(2)) any of the unvested
shares or any interest therein or (ii) cease to remain in Service (as defined in
Section 1(c)(4) of Article II) for any reason whatsoever, then the Corporation
shall have the right to repurchase the unvested shares at the original purchase
price paid by the Participant and the Participant shall thereafter have no
further stockholder rights with respect to the repurchased shares.
(4) Any shares of Common Stock issued under the Stock
Issuance Program which are not vested at the time of such issuance shall vest in
one or more installments thereafter. The elements of the vesting schedule,
namely the number of installments in which the shares are to vest, the interval
or intervals (if any) which are to lapse between installments and the effect
which death, disability or other event designated by the Plan Administrator is
to have upon the vesting schedule, shall be determined by the Plan Administrator
and shall be specified in the Purchase Agreement executed by the Corporation and
the Participant at the time of issuance of the unvested shares.
(5) The Plan Administrator may in its discretion elect not
to exercise, in whole or in part, its repurchase rights with respect to any
unvested Common Stock or other assets which would otherwise at the time be
subject to repurchase pursuant to the provisions of subsection (b)(3). Such an
election may be made at any time the repurchase right is outstanding and shall
result in the immediate vesting of the Participant's interest in the shares of
Common Stock as to which the election applies.
(c) Stock Legends
(1) Each certificate representing unvested shares of Common
Stock (or other securities) issued under the Plan shall bear a restrictive
legend substantially as follows:
"The securities represented by this certificate are unvested
and subject to repurchase by the Corporation pursuant to the provisions
of the Restricted Stock Purchase Agreement between the Corporation and
the registered holder of the securities (or his predecessor in
interest). Such agreement grants certain repurchase rights to the
Corporation in the event the registered holder (or his predecessor in
interest) terminates his employment or service with the Corporation
prior to vesting in the securities. A copy of such agreement is on file
at the principal office of the Corporation."
(2) As the interest of the Participant vests with respect to
any stock certificate representing shares acquired under the Stock Issuance
Program, the Corporation shall, upon the Participant's delivery of such
certificate during the period or periods designated each year by the Plan
Administrator, issue a new certificate for the vested shares without the
restrictive legend of subsection (c)(1) and a second certificate for the balance
of the shares with such legend. If the Participant's shares are held in escrow
at the time of vesting, then the stock certificates for the vested shares shall
be released from escrow (without the restrictive legend of subsection (c)(1))
and delivered to the Participant during the period or periods designated by the
Plan Administrator at least semi-annually for such purpose and promptly upon
Participant's cessation of Service. If
11.
<PAGE> 13
the Corporation repurchases any unvested shares of the Participant pursuant to
the provisions of subsection (b)(3), the Corporation shall at the time the
repurchase is effected deliver a new certificate, without the restrictive legend
of subsection (c)(1), representing the number of shares (if any) in which the
Participant is vested and which are accordingly no longer subject to repurchase
by the Corporation pursuant to the provisions of subsection (b)(3).
2. CORPORATE TRANSACTION
All of the Corporation's outstanding repurchase rights under this
Article III shall automatically terminate, and all shares of Common Stock
subject to such repurchase rights shall immediately vest in full, upon the
occurrence of a Corporate Transaction, except to the extent: (i) the
Corporation's outstanding repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with the Corporate Transaction or
(ii) the termination of such repurchase rights and the acceleration of vesting
are precluded by other limitations imposed by the Plan Administrator under the
terms of the applicable Purchase Agreements.
12.
<PAGE> 14
ARTICLE IV
MISCELLANEOUS
1. LOANS OR INSTALLMENT PAYMENTS
(a) The Plan Administrator may, in its discretion, assist any
Optionee or Participant (including an Optionee or Participant who is an officer
of the Corporation) in the exercise of one or more options granted to such
Optionee under the Article II Option Grant Program or the purchase of one or
more shares issued to such Participant under the Article III Stock Issuance
Program by (i) authorizing the extension of a loan from the Corporation to such
Optionee or Participant or (ii) permitting the Optionee or Participant to pay
the option price or purchase price for the purchased Common Stock in
installments over a period of years. The terms of any such loan or installment
method of payment (including the interest rate and terms of repayment) shall be
upon such terms as the Plan Administrator shall specify in the stock option
agreement or restricted stock purchase agreement. Such loans and installment
payments may be made or permitted with or without security or collateral.
However, the maximum credit available to the Optionee or Participant may not
exceed the sum of (i) the aggregate option price or purchase price payable for
the purchased shares (less the par value) plus (ii) any federal and state income
and employment tax liability incurred by the Optionee or Participant in
connection with such exercise or purchase.
(b) The Plan Administrator may, in its absolute discretion,
determine that one or more loans extended under subsection (a) above shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Plan Administrator in its discretion deems appropriate.
2. AMENDMENT OF THE PLAN AND AWARDS
(a) The Board has the power and authority to amend or modify the
Plan in any or all respects whatsoever; provided, however, that no such
amendment or modification may adversely affect the rights and obligations of the
option holders with respect to their outstanding options under the Plan, nor
adversely affect the rights of any Participant with respect to any unvested
shares of Common Stock issued under the Plan prior to such Board action, unless
the Optionee or Participant consents to such amendment. In addition, the Board
may not, without the approval of the Corporation's stockholders, amend the Plan
to (i) materially increase the maximum number of shares issuable under the Plan
or the aggregate number of shares for which any one individual participating in
the Plan may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances after December 13, 1995, except for
permissible adjustments under paragraph 5(b) of Article I, (ii) materially
increase the benefits accruing to individuals who participate in the Plan, or
(iii) materially modify the eligibility requirements for participation in the
Plan.
(b) (i) Options to purchase shares of Common Stock may be granted
under the Option Grant Program and (ii) shares of Common Stock may be issued
under the Stock Issuance Program, which are in excess of the number of shares
then available for issuance under the Plan, provided (A) 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 or the issuance of any such
shares and is thereafter submitted to the Corporation's shareholders for
approval and (B) any excess shares actually issued under the Option Grant
Program or the Stock Issuance Program are held in escrow until such stockholder
approval is obtained. If such stockholder approval is not obtained within twelve
(12) months from the date the share-increase amendment is adopted by the Board,
then (i) any unexercised options granted on the basis of such increase shall
terminate and cease to be exercisable and (ii) the Corporation shall promptly
refund to the Participants the purchase price paid for any excess shares issued
under the Plan and held in escrow, together with interest (at the interest rate
necessary to avoid the imputation of interest income under the Federal tax laws)
for the period the shares were held in escrow.
13.
<PAGE> 15
3. EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan was initially adopted by the Board on September 2, 1988
and approved by the Corporation's stockholders on February 28, 1989. On May 30,
1991, the Board approved a 523,809-share increase ** in the number of shares of
Common Stock issuable under the Plan, and the Plan was restated in its entirety
on September 6, 1991. Both the 523,809-share increase and the September 1991
restatement of the Plan were approved by the stockholders in January 1992. On
April 8, 1992, the Board adopted a new restatement of the Plan to (i) conform
the Plan to the requirements of Rule 16b-3 under the Federal securities laws,
(ii) revise the events in which an acceleration of options would occur and (iii)
provide that the non-employee members of the Board would no longer be eligible
to participate in the Plan. The stockholders approved the amendment and
restatement on May 11, 1993. On March 15, 1994, the Board amended the Plan to
(i) increase the number of shares issuable thereunder by 450,000 shares and (ii)
limit the number of shares of Common Stock for which any one individual may be
granted stock options, stock appreciation rights and direct stock issuances in
the aggregate under the Plan after December 31, 1993 to a maximum of twenty five
percent (25%) of the number of shares from time to time authorized for issuance
under the Plan (the "25% Limit"). The stockholders approved the amendment on May
24, 1994. The Board amended the Plan on December 14, 1995 to (i) increase the
maximum number of shares of Common Stock issuable thereunder by an additional
850,000 shares and (ii) replace the 25% Limit on the maximum number of shares
for which any one individual may be granted stock options, stock appreciation
rights and direct stock issuances in the aggregate after December 31, 1993 with
a specific limit of 750,000 shares. The 850,000-share increase became effective
when adopted by the Board. The new 750,000 share limit on the maximum number of
shares for which any one individual may be granted stock options, stock
appreciation rights and direct stock issuances in the aggregate under the Plan
became effective when adopted by the Board on December 14, 1995. The
stockholders approved the amendment on May 16, 1996.
(b) The provisions of each restatement of the Plan shall apply only
to options granted under the Plan from and after the effective date of that
restatement. All options issued and outstanding under the Plan immediately prior
to each such restatement shall continue to be governed by the terms and
conditions of the Plan (and the instrument evidencing each such option) as in
effect on the date each such option was previously granted, and nothing in that
restatement shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such options with respect to the acquisition of
shares of Common Stock thereunder.
(c) The sale and remittance procedure authorized for the exercise of
outstanding options under the Plan shall be available for all options granted
under the Plan on or after the effective date of the September 1991 restatement
and all non-statutory options outstanding under the Plan on such effective date.
The Plan Administrator may also allow such procedure to be utilized in
connection with one or more disqualifying dispositions of Incentive Option
shares effected after the effective date of the September 1991 restatement.
(d) Unless sooner terminated in accordance with a Corporate
Transaction, the Plan shall terminate upon the earlier of (i) September 2, 1998
or (ii) the date on which all shares available for issuance under the Plan shall
have been issued or cancelled pursuant to the exercise, surrender or cash-out of
the options granted under the Option Grant Program and the issuance or
repurchase of shares under the Stock Issuance Program. If the date of
termination is determined under clause (i) above, then no options outstanding on
such date under Article II and no unvested shares issued and outstanding on such
date under Article III shall be affected by the termination of the Plan, and
each such outstanding option and unvested share issuance will thereafter
continue to have force and effect in accordance with the provisions of the stock
option agreement
- --------
**Adjusted to reflect the 2.1-for-1 reverse stock split to the outstanding
Common Stock effected in January 1992.
14.
<PAGE> 16
evidencing each such Article II option and the purchase agreement evidencing
each such unvested share issuance under Article III.
4. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the issuance of
shares of Common Stock hereunder will be used for general corporate purposes.
5. WITHHOLDING
The Corporation's obligation to deliver shares upon the exercise or
surrender of any options granted under Article II or upon the purchase of any
shares issued under Article III shall be subject to the satisfaction of all
applicable federal, state and local income and employment tax withholding
requirements.
6. REGULATORY APPROVALS
(a) The implementation of the Plan, the granting of any stock option
or stock appreciation right under the Option Grant Program, the issuance of any
shares under the Stock Issuance Program, and the issuance of Common Stock upon
the exercise or surrender of the stock options or stock appreciation rights
granted hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options and stock appreciation rights granted under it, and
the Common Stock issued pursuant to it.
(b) No shares of Common Stock or other assets shall be issued or
delivered under the Plan, unless and until, in the opinion of counsel for the
Corporation (or its successor in the event of any Corporate Transaction), there
shall have been compliance with all applicable requirements of the Federal and
state securities exchange on which stock of the same class is then listed, and
all other requirements of law or of any regulatory bodies having jurisdiction
over such issuance and delivery.
7. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing this Plan, nor
any action taken by the Board of the Plan Administrator hereunder, nor any
provision of this Plan shall be construed so as to grant any individual the
right to remain in the employ or service of the Corporation (or any parent or
subsidiary corporation) for any period of specific duration, and the Corporation
(or any parent or subsidiary corporation retaining the services of such
individual) may terminate such individual's employment or service at any time
and for any reason, with or without cause.
16.
