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As filed with the Securities and Exchange SEC on July 3, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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BIOCRYST PHARMACEUTICALS, INC.
(Exact name of issuer as specified in its charter)
--------------------
Delaware 62-1413174
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2190 Parkway Lake Drive, Birmingham, Alabama 35244
(Address of principal executive offices) (zip code)
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BIOCRYST PHARMACEUTICALS, INC.
1991 STOCK OPTION PLAN
(Full Title of the Plan)
--------------------
CHARLES E. BUGG, Ph.D.
Chairman of the Board and Chief Executive Officer
BIOCRYST PHARMACEUTICALS, INC.
2190 Parkway Lake Drive, Birmingham, Alabama 35244
(205) 444-4600
(Telephone number, including area code, of agent for service)
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed
Proposed Maximum
Amount to be Maximum Offering Aggregate Amount of
Title of Securities to be Registered Registered(1) Price per Share(2) Offering Price Registration Fee
- ------------------------------------ ------------- ------------------ -------------- ----------------
<S> <C> <C> <C> <C>
Options to Purchase Common Stock
(1991 Stock Option Plan) 1,000,000 N/A N/A N/A
Common Stock, $.01 par value
(1991 Stock Option Plan) 1,000,000 shares $13.5625 $13,562,500 $4,109.85
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</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1991 Stock Option Plan by
reason of any stock dividend, stock split, recapitalization or any other
similar transaction without receipt of consideration which results in an
increase in the number of the Registrant's outstanding shares of Common
Stock of BioCryst Pharmaceuticals, Inc.
(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 BioCryst
Pharmaceuticals, Inc. on June 30, 1997 as reported by the Nasdaq
National Market.
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
BioCryst Pharmaceuticals, Inc. (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange SEC (the "SEC"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 filed with the SEC on March 28, 1997.
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997 filed with the SEC on May 14, 1997.
(c) Registration Statement No. 0-23186 on Form 8-A filed with the SEC on
January 7, 1994, together with the amendment thereto filed with the
SEC on March 14, 1994, pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended, (the "1934 Act") in which there is
described the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
(d) Any similar report filed subsequently with the SEC and distributed
to the Registrant's stockholders.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a
court to award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933
(the "1933 Act"). Article Eight of the Registrant's Second Restated Certificate
of Incorporation provides for indemnification of its directors and officers and
permissible indemnification of employees and other agents to the maximum extent
permitted by the Delaware General Corporation Law. The Registrant has liability
insurance for its officers and directors.
Item 7. Exemption from Registration Claimed
II-1.
<PAGE>
Not Applicable.
Item 8. Exhibits
Exhibit Number Exhibit
- -------------- -------
4 Instruments Defining Rights of Stockholders. Reference is
made to Exhibits 3.1 and 3.2 to the Registrant's Form 10-Q
for the quarter ended June 30, 1995 dated August 11, 1995.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Auditors - Ernst & Young LLP.
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 1991 Stock Option Plan.
99.2* Form of Notice of Grant of Stock Option with Stock Option
Agreement.
99.3* Form of Notice of Grant of Stock Option with Stock Option
Agreement (Non-Employee Director Automatic Grant).
* Exhibits 99.2 and 99.3 are incorporated by reference to exhibits 99.2
and 99.3, respectively, to Registrant's Registration Statement on Form S-8
file No. 33-95062.
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this registration statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of the 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 the
registration statement, and (iii) 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; 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 the 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 at the termination of the Registrant's 1991 Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into the 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 foregoing provisions, or otherwise, the Registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act of 1933 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
II-2.
<PAGE>
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 of 1933 and will be governed by the final adjudication of such
issue.
II-3.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
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 Birmingham, State of Alabama, on this 3rd day
of July 1997.
BioCryst Pharmaceuticals, Inc.
By /s/ Charles E. Bugg
--------------------------------------
Charles E. Bugg, Ph.D., Chairman of
the Board and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of BioCryst
Pharmaceuticals, Inc., a Delaware corporation, do hereby constitute and appoint
Charles E. Bugg and Ronald E. Gray, 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 any one of them, determine may be necessary or advisable or required
to enable said corporation to comply with the Securities Act of 1933, as
amended, and any rules or regulation or requirements of the SEC in connection
with this Registration Statement. Without limiting the generality of the
foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement and to any and all instruments or documents filed as part
of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or any one 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 Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/s/ Charles E. Bugg
- ------------------------- Chairman of the Board and July 3, 1997
Charles E. Bugg, Ph.D. Chief Executive Officer
(Principal Executive Officer)
/s/ Ronald E. Gray
- ------------------------- Chief Financial Officer July 3, 1997
Ronald E. Gray (Principal Financial
and Accounting Officer)
II-4.
<PAGE>
/s/ J. Claude Bennett
- ------------------------- President, Chief Operating July 3, 1997
J. Claude Bennett, M.D. Officer and Director
/s/ John A. Montgomery
- ------------------------- Senior Vice President, July 3, 1997
John A. Montgomery, Ph.D. Secretary, Chief Scientific
Officer and Director
- ---------------------------- Director ______, 1997
Edwin A. Gee, Ph.D.
/s/ Zola P. Horovitz
- ---------------------------- Director July 3, 1997
Zola P. Horovitz, Ph.D.
- ---------------------------- Director ______, 1997
Lindsay A. Rosenwald, M.D.
/s/ William M. Spencer, III
- ---------------------------- Director July 3, 1997
William M. Spencer, III
/s/ Randolph C. Steer
- ---------------------------- Director July 3, 1997
Randolph C. Steer, M.D.
and Ph.D.
/s/ William W. Featheringill
- ---------------------------- Director July 3, 1997
William W. Featheringill
- ---------------------------- Director ______, 1997
Joseph H. Sherrill, Jr.
II-5.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
BIOCRYST PHARMACEUTICALS, INC.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
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4 Instruments Defining Rights of Stockholders. Reference is made to
Exhibits 3.1 and 3.2 to the Registrant's Form 10-Q for the
quarter ended June 30, 1995 dated August 11, 1995.
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Auditors - Ernst & Young LLP.
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 1991 Stock Option Plan.
99.2* Form of Notice of Grant of Stock Option with Stock Option
Agreement.
99.3* Form of Notice of Grant of Stock Option with Stock Option
Agreement (Non-Employee Director Automatic Grant).
* Exhibits 99.2 and 99.3 are incorporated by reference to exhibits 99.2
and 99.3, respectively, to Registrant's Registration Statement on Form S-8 file
No. 33-95062.
Exhibit 5
Opinion and Consent of Brobeck, Phleger & Harrison LLP
July 3, 1997
BioCryst Pharmaceuticals, Inc.
2190 Parkway Lake Drive
Birmingham, Alabama 35244
Re: BioCryst Pharmaceuticals, Inc. Registration Statement for
Offering of 1,000,000 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 an additional
1,000,000 shares of Common Stock under the Company's 1991 Stock Option Plan (the
"Plan"). We advise you that, in our opinion, when such shares have been issued
and sold pursuant to the applicable provisions of the 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
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the BioCryst Pharmaceuticals, Inc. 1991 Stock Option
Plan of our report dated January 17, 1997, with respect to the financial
statements of BioCryst Pharmaceuticals, Inc. included in its Annual Report (Form
10-K) for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
Birmingham, Alabama
July 3, 1997
/s/ Ernst & Young LLP
Ernst & Young LLP
BIOCRYST PHARMACEUTICALS, INC.
1991 STOCK OPTION PLAN
AMENDED AND RESTATED EFFECTIVE MARCH 3, 1997
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSES OF THE PLAN
A. This 1991 Stock Option Plan (the "Plan") is intended to promote
the interests of BioCryst Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), by providing a method whereby (i) key employees (including officers
and directors) of the Company (or its parent or subsidiary corporations) who are
responsible for the management, growth and financial success of the Company (or
any parent or subsidiary corporations), (ii) non-employee members of the board
of directors of the Company (or any parent or subsidiary corporations) and (iii)
consultants and other independent contractors who provide valuable services to
the Company (or any parent or subsidiary corporations) may be offered the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company as an incentive for them to remain in the
service of the Company (or any parent or subsidiary corporations).
B. The Plan was originally adopted by the Company's Board of
Directors (the "Board") on November 22, 1991 as the successor to the Company's
1990 Stock Option Plan (the "1990 Plan"), and each option issued and outstanding
under the 1990 Plan at the time of such adoption of this Plan has been
incorporated into this Plan and treated as an outstanding option under this
Plan. However, each such incorporated option shall continue to be governed
solely by the terms and conditions of the agreement evidencing such grant, and
nothing in this Plan shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such options with respect to their acquisition of
shares of the Company's common stock thereunder.
C. The Plan was amended and restated in February 1993 to effect the
following changes: (i) divide the Plan into two separate incentive programs: the
Discretionary Option Grant Program and the Automatic Option Grant Program, (ii)
increase the number of shares of the Company's common stock available for
issuance under the Plan by 500,000 shares and (iii) expand the level of benefits
available
<PAGE>
under the Plan. The Board amended the Plan on December 23, 1993 to increase the
number of shares issuable under the Plan and subsequently amended and restated
the Plan in its entirety on February 8, 1994. The Board amended and restated the
Plan in its entirety on March 3, 1997 (the "Effective Date"), subject to
approval by the Company's stockholders at the 1997 Annual Stockholders Meeting.
The Plan as so amended and restated is set forth in this document.
D. For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the Company:
Any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company shall be considered to be a parent
corporation of the Company, provided each such corporation in the unbroken
chain (other than the Company) 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.
Each corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company shall be considered to be a
subsidiary of the Company, 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.
II. STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be divided into two separate
components: the Discretionary Option Grant Program specified in Article Two and
the Automatic Option Grant Program specified in Article Three. Under the
Discretionary Option Grant Program, eligible individuals may, at the discretion
of the Plan Administrator, be granted options to purchase shares of the
Company's common stock, par value $.01 per share (the "Common Stock") in
accordance with the provisions of Article Two. Under the Automatic Option Grant
Program, certain non-employee members of the Board will automatically receive a
special one-time option grant as well as periodic option grants to purchase
shares of Common Stock in accordance with the provisions of Article Three.
B. General Provisions. Unless the context clearly indicates
otherwise, the provisions of Articles One and Four of the Plan shall apply to
both the Discretionary Option Grant Program and the Automatic Option Grant
Program and shall accordingly govern the interests of all individuals under the
Plan.
- 2 -
<PAGE>
III. ADMINISTRATION OF THE PLAN
A. A committee of two (2) or more non-employee Board members
appointed by the Board (the "Primary Committee") shall have sole and exclusive
authority to administer the Discretionary Option Grant Program with respect to
Section 16 Insiders. For purposes of this Section, a Section 16 Insider shall
mean an officer or director of the Company subject to the short-swing profit
liabilities of Section 16 of the Securities Exchange Act of 1934 (the "1934
Act").
B. Administration of the Discretionary Option Grant Program with
respect to all other persons eligible to participate in that program may, at the
Board's discretion, be vested in the Primary Committee or another committee of
two (2) or more non-employee Board members appointed by the Board (the
"Secondary Committee"), or the Board may retain the power to administer that
program with respect to all such persons.
C. Members of the Primary Committee and any Secondary 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.
D. Each Plan Administrator (whether the Primary Committee, the Board
or the Secondary Committee) shall, within the scope of its administrative
functions under the Plan, 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 as it may deem
necessary or advisable. Decisions of the Plan Administrator within the scope of
its administrative functions under the Plan shall be final and binding on all
parties with an interest in any outstanding option under the Plan.
E. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the express terms and conditions of Article
Three, and the Committee shall exercise no discretionary functions under that
program.
IV. ELIGIBILITY FOR OPTION GRANTS
A. The persons eligible to participate in the Discretionary Option
Grant Program under Article Two of the Plan shall be limited to the following:
(i) officers and other key employees of the Company (or its
parent or subsidiary corporations) who render services which contribute to
the management, growth and financial success of the Company (or its parent
or subsidiary corporations);
- 3 -
<PAGE>
(ii) those consultants or independent contractors who provide
valuable services to the Company (or its parent or subsidiary
corporations); and
(iii) non-employee members of the Board (or the board of
directors of its parent or subsidiary corporations).
B. Only non-employee Board members shall be eligible to receive
automatic option grants pursuant to the provisions of Article Three.
C. The Plan Administrator shall have full authority to determine
which eligible individuals are to receive option grants under the Discretionary
Option Grant Program, the number of shares to be covered by each such grant,
whether the granted option is to be an incentive stock option ("Incentive
Option") which satisfies the requirements of Section 422 of the Internal Revenue
Code or a non-statutory option not intended to meet such requirements, the time
or times at which each such option is to become exercisable, and the maximum
term for which the option is to remain outstanding.
V. STOCK SUBJECT TO THE PLAN
A. Shares of the Company's Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Company's authorized
but unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Company on the open market. The maximum
number of shares of Common Stock which may be issued over the term of the Plan
shall not exceed 3,000,000 shares, subject to adjustment from time to time in
accordance with the provisions of this Section V. Such authorized share reserve
includes (i) the increase of 500,000 shares of Common Stock authorized by the
Board on February 8, 1994, (ii) the increase of 500,000 shares of Common Stock
authorized by the Board on March 16, 1995 and (iii) the increase of 1,000,000
shares of Common Stock authorized by the Board on March 4, 1997, subject to
stockholder approval at the 1997 Annual Stockholders Meeting.
B. In no event shall the number of shares of Common Stock for which
any one individual participating in the Plan may be granted stock options exceed
1,000,000 shares over the remaining term of the Plan. For purposes of such
limitation, however, no stock options granted prior to the date the Common Stock
was first registered under Section 12 of the 1934 Act (the "Section 12(g)
Registration Date") shall be taken into account.
C. Should an outstanding option under this Plan expire or terminate
for any reason prior to exercise in full (including any option cancelled in
accordance with the cancellation-regrant provisions of Section IV of Article Two
of the Plan), the shares subject to the portion of the option not so exercised
shall be available for subsequent option grant under the Plan. Unvested shares
issued under the Plan and subsequently repurchased by the
- 4 -
<PAGE>
Corporation, at the original issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants under the Plan. However, should the exercise price of an outstanding
option under the Plan be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Company in
satisfaction of the withholding taxes incurred in connection with the exercise
of an outstanding option under the Plan, then the number of shares of Common
Stock available for issuance under the Plan shall be reduced by the gross number
of shares for which the option is exercised, and not by the net number of shares
of Common Stock actually issued to the option holder.
D. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one individual participating in the Plan may be granted
stock options under the Plan from and after the Section 12(g) Registration Date,
(iii) the number and/or class of securities and price per share in effect under
each outstanding option under the Plan, and (iv) the number and/or class of
securities for which automatic option grants are subsequently to be made per
non-employee Board member under the Automatic Option Grant Program. The purpose
of such adjustments to the outstanding options shall be to preclude the
enlargement or dilution of rights and benefits under such options.
- 5 -
<PAGE>
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to this Article Two shall be authorized by
action of the Plan Administrator and may, at the Plan Administrator's
discretion, be either Incentive Options or non-statutory options. Individuals
who are not Employees may only be granted non-statutory options under this
Article Two. Each option granted shall be evidenced by one or more instruments
in the form approved by the Plan Administrator. Each such instrument shall,
however, comply with the terms and conditions specified below, and each
instrument evidencing an Incentive Option shall, in addition, be subject to the
applicable provisions of Section II of this Article Two.
A. Option Price.
1. The option price per share shall be fixed by the Plan
Administrator. In no event, however, shall the option price per share be less
than eighty-five percent (85%) of the fair market value per share of Common
Stock on the date of the option grant.
2. The option price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section VI of this Article
Two and the instrument evidencing the grant, be payable as follows:
- full payment in cash or check drawn to the Company's order;
- full payment in shares of Common Stock held by the optionee
for the requisite period necessary to avoid a charge to the Company's
earnings for financial reporting purposes and valued at fair market value
on the Exercise Date (as such term is defined below);
- full payment through a combination of shares of Common Stock
held by the optionee for the requisite period necessary to avoid a charge
to the Company's earnings for financial reporting purposes and valued at
fair market value on the Exercise Date and cash or cash equivalent; or
- 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 Company, out of
the sale proceeds available on the settlement date,
- 6 -
<PAGE>
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 Company in connection with
such purchase and (II) shall provide written directives to the Company to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale transaction.
For purposes of this subparagraph 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. The fair market value per share of Common Stock on any
relevant date under the Plan shall be determined in accordance with the
following provisions:
- If the Common Stock is not at the time listed or admitted to
trading on any national securities exchange but is traded in the
over-the-counter market, the fair market value shall be the mean between
the highest bid and lowest asked prices (or, if such information is
available, the closing selling price) per share of Common Stock on the
date in question in the over-the-counter market, as such prices are
reported by the National Association of Securities Dealers through the
Nasdaq National Market or any successor system. If there are no reported
bid and asked prices (or closing selling price) for the Common Stock on
the date in question, then the mean between the highest bid price and
lowest asked price (or the closing selling price) on the last preceding
date for which such quotations exist shall be determinative of fair market
value.
- If the Common Stock is at the time listed or admitted to
trading on any national securities exchange, then the fair market value
shall be the closing selling price per share of Common Stock on the date
in question on the securities exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common Stock on the exchange on
the date in question, then the fair market value shall be the closing
selling price on the exchange on the last preceding date for which such
quotation exists.
- If the Common Stock is at the time neither listed nor
admitted to trading on any securities exchange nor traded in the
over-the-counter market, then the fair market value shall be determined by
the Plan
- 7 -
<PAGE>
Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
B. Term and Exercise of Options.
Each option granted under this Article Two shall be
exercisable at such time or times, during such period, and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
instrument evidencing the option grant. No such option, however, shall have a
maximum term in excess of ten (10) years from the grant date. During the
lifetime of the optionee, the option, together with any stock appreciation
rights pertaining to such option, shall be exercisable only by the optionee and
shall not be assignable or transferable by the optionee except for a transfer of
the option by will or by the laws of descent and distribution following the
optionee's death. However, the Plan Administrator shall have the discretion to
provide that a non-statutory option may, in connection with the optionee's
estate plan, be assigned in whole or in part during the optionee's lifetime to
one or more members of the optionee's immediate family or to a trust established
exclusively for one or more such family members. The assigned portion may only
be exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
C. Termination of Service.
1. Except to the extent otherwise provided pursuant to Section
VII of this Article Two, the following provisions shall govern the exercise
period applicable to any options held by the optionee at the time of cessation
of Service or death.
- Should the optionee cease to remain in Service for any
reason other than death or permanent disability, then the period for which
each outstanding option held by such optionee is to remain exercisable
shall be limited to the three (3)-month period following the date of such
cessation of Service.
- In the event such Service terminates by reason of permanent
disability (as defined in Section 22(e)(3) of the Internal Revenue Code),
then the period for which each outstanding option held by the optionee is
to remain exercisable shall be limited to the twelve (12)-month period
following the date of such cessation of Service.
- Should the optionee die while in Service or during the three
(3)-month period following his or her cessation of Service, then the
period for which each of his or her outstanding options is to remain
exercisable shall be
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limited to the twelve (12)-month period following the date of the
optionee's death. During such limited period, the option may be exercised
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.
- Under no circumstances, however, shall any such option be
exercisable after the specified expiration date of the option term.
- Each such option shall, during such limited exercise period,
be exercisable for any or all of the shares for which the option is
exercisable on the date of the optionee's cessation of Service. Upon the
expiration of such limited exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to be
exercisable. However, each outstanding option shall immediately terminate
and cease to remain outstanding, at the time of the optionee's cessation
of Service, with respect to any shares for which the option is not
otherwise at that time exercisable or in which the optionee is not
otherwise vested.
- Should (i) the optionee's Service be terminated for
misconduct (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement) or (ii) the optionee make any
unauthorized use or disclosure of confidential information or trade
secrets of the Company or its parent or subsidiary corporations, then in
any such event all outstanding options held by the optionee under this
Article Two shall terminate immediately and cease to be exercisable.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the optionee
under this Article Two to be exercised, during the limited period of
exercisability provided under subparagraph 1 above, not only with respect to the
number of shares for which each such option is exercisable at the time of the
optionee's cessation of Service but also with respect to one or more subsequent
installments of purchasable shares for which the option would otherwise have
become exercisable had such cessation of Service not occurred.
3. For purposes of the foregoing provisions of this Section
I.C (and for all other purposes under the Plan):
- The optionee shall be deemed to remain in the Service of the
Company for so long as such individual renders services on a periodic
basis to the Company (or any parent or subsidiary corporation) in the
capacity of an Employee, a non-employee member of the board of directors
or an independent consultant or advisor, unless
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the agreement evidencing the applicable option grant specifically states
otherwise.
- The optionee shall be considered to be an Employee for so
long as such individual remains in the employ of the Company 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 no stockholder rights with respect to any
shares covered by the option until such individual shall have exercised the
option and paid the option price for the purchased shares.
E. Repurchase Rights.
The shares of Common Stock acquired upon the exercise of
options granted under this Article Two may be subject to repurchase by the
Company in accordance with the following provisions:
(a) The Plan Administrator shall have the discretion to
authorize the issuance of unvested shares of Common Stock under this
Article Two. Should the optionee cease Service while holding such unvested
shares, the Company shall have the right to repurchase any or all those
unvested shares at the option price paid per share. The terms and
conditions upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the
Plan Administrator and set forth in the instrument evidencing such
repurchase right.
(b) All of the Company'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 III of this Article Two, except to the extent:
(i) any such repurchase right is expressly be assigned to the successor
corporation (or parent thereof) in connection with the Corporate
Transaction or (ii) such termination is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is
issued.
(c) The Plan Administrator shall have the discretionary
authority, exercisable either before or after the optionee's cessation of
Service, to cancel the Corporation's outstanding repurchase rights with
respect to one or more shares purchased or purchasable by the
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optionee under this Discretionary Option Grant Program and thereby
accelerate the vesting of such shares in whole or in part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees of the Company. 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 such Common Stock on the grant
date.
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 after December 31, 1986 under
this Plan (or any other option plan of the Company or its parent or
subsidiary corporations) may for the first time become exercisable as
incentive stock options under the Federal tax laws 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 are granted. Should the number of shares of
Common Stock for which any Incentive Option first becomes exercisable in
any calendar year exceed the applicable One Hundred Thousand Dollar
($100,000) limitation, then that option may nevertheless be exercised in
such calendar year for the excess number of shares as a non-statutory
option under the Federal tax laws.
C. 10% Stockholder. If any individual to whom an Incentive Option is
granted is 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 classes of stock of the Company or any one of its parent or
subsidiary corporations, 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 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 II,
the provisions of Articles One, Two and Four of the Plan shall apply to all
Incentive Options granted hereunder.
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III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any of the following stockholder-approved
transactions (a "Corporate Transaction"):
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State of the Company's incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in liquidation or
dissolution of the Company, or
(iii) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of
the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from the persons holding
those securities immediately prior to such merger,
then the exercisability of each option outstanding under this
Article Two shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for the 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 under this Article Two
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 be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof, (ii) such option is to be replaced with a cash incentive program of the
successor corporation which preserves the option spread existing at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of grant. The determination of option comparability under clause (i)
above shall be made by the Plan Administrator, and its determination shall be
final, binding and conclusive.
B. Immediately after the consummation of the Corporate Transaction,
all outstanding options under this Article Two shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.
C. Each outstanding option under this Article Two which is assumed
in connection with the Corporate Transaction or is otherwise to continue in
effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issued
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to the option holder, in consummation of such Corporate Transaction, had such
person exercised the option 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 shall
remain the same. In addition, the class and number of securities available for
issuance under the Plan following the consummation of the Corporate Transaction
shall be appropriately adjusted.
D. The Plan Administrator shall have the discretion, exercisable
either in advance of any actually-anticipated Corporate Transaction or at the
time of an actual Corporate Transaction, to provide (upon such terms as it may
deem appropriate) for (i) the automatic acceleration of one or more outstanding
options granted under the Plan which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time and/or (ii) the
subsequent termination of one or more of the Company's outstanding repurchase
rights which are assigned in connection with the Corporate Transaction and do
not otherwise terminate at that time, in the event the optionee's Service should
subsequently terminate within a designated period following such Corporate
Transaction.
E. The grant of options under this Article Two shall in no way
affect the right of the Company 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.
F. The Plan Administrator shall have the discretionary authority,
exercisable either in advance of any actually-anticipated Change in Control or
at the time of an actual Change in Control, to provide for the automatic
acceleration of one or more outstanding options under this Article Two (and the
immediate termination of one or more of the Company's outstanding repurchase
rights under this Article Two) upon the occurrence of the Change in Control. The
Plan Administrator shall also have full power and authority to condition any
such option acceleration (and the termination of any outstanding repurchase
rights) upon the subsequent termination of the optionee's Service within a
specified period following the Change in Control.
F. For purposes of this Section III, a Change in Control shall be
deemed to occur in the event:
(i) any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Company) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities
pursuant to a tender or exchange offer made directly to the Company's
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<PAGE>
stockholders which the Board does not recommend such stockholders to
accept; or
(ii) there is a change in the composition of the Board over a
period of twenty-four (24) consecutive months or less such that a majority
of the Board members (rounded up to the next whole number) ceases, by
reason of one or more contested elections for Board membership, to be
comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least
two-thirds of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board.
G. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term.
H. The portion of any Incentive Option accelerated under this
Section III in connection with a Corporate Transaction or Change in Control
shall remain exercisable as an incentive stock option under the Federal tax laws
only to the extent the dollar limitation of Section II of this Article Two is
not exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a non-statutory option under the
Federal tax laws.
IV. CANCELLATION AND REGRANT 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 this Article Two (including
outstanding options under the 1990 Plan incorporated into this Plan) and to
grant in substitution 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 eighty-five percent (85%) of the fair market value of the Common Stock on
the new grant date (or one hundred percent (100%) of such fair market value in
the case of an Incentive Option).
V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under this Article Two in exchange for a distribution
from the Company in an amount equal to the excess of (i) the fair market value
(on the option surrender date) of the number of shares in which the optionee is
at the time vested under
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<PAGE>
the surrendered option (or surrendered portion thereof) over (ii) the aggregate
option price payable for such vested shares.
B. No surrender of an option shall be effective hereunder unless it
is approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the optionee shall accordingly become entitled under this
Section V may be made in shares of Common Stock valued at fair market value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the optionee shall retain whatever rights the optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt 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 more than ten (10) years after the date of the option grant.
D. One or more officers of the Company 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 Two. Upon the
occurrence of a Hostile Take-Over effected at any time after the Company's
outstanding Common Stock is registered under Section 12(g) of the 1934 Act, the
officer shall have a thirty (30)-day period in which he or she may surrender any
outstanding options with such a limited stock appreciation right, to the extent
such option is at the time exercisable for fully vested shares of Common Stock.
The officer shall in return be entitled to a cash distribution from the Company
in an amount equal to the excess of (i) the Take-Over Price of the vested shares
of Common Stock at the time subject to each surrendered option (or surrendered
portion of such option) over (ii) the aggregate exercise price payable for those
vested shares. The cash distribution shall be made within five (5) days
following the date the option is surrendered to the Company, and neither the
approval of the Plan Administrator nor the consent of the Board shall be
required in connection with the option surrender and cash distribution. Any
unsurrendered portion of the option shall continue to remain outstanding and
become exercisable in accordance with the terms of the instrument evidencing
such grant.
E. For purposes of Section V.D, the following definitions shall be
in effect:
A Hostile Take-Over shall be deemed to occur in the event any
person or related group of persons (other than the Company or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Company) directly or indirectly acquires beneficial ownership (within
the
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meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Company's outstanding
securities pursuant to a tender or exchange offer made directly to the Company's
stockholders which the Board does not recommend such stockholders to accept.
The Take-Over Price per share shall be deemed to be equal to
the greater of (a) the fair market value per share on the option surrender date,
as determined pursuant to the valuation provisions of Section I.A.3 of this
Article Two, or (b) the highest reported price per share paid in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (a) price per share.
F. The shares of Common Stock subject to any option surrendered for
an appreciation distribution pursuant to this Section V shall not be available
for subsequent option grant under the Plan.
VI. LOANS OR GUARANTEE OF LOANS
The Plan Administrator may assist any optionee (including any
officer) in the exercise of one or more outstanding options under this Article
Two by (a) authorizing the extension of a loan to such optionee from the
Company, (b) permitting the optionee to pay the option price for the purchased
Common Stock in installments over a period of years or (c) authorizing a
guarantee by the Company of a third-party loan to the optionee. The terms of any
loan, installment method of payment or guarantee (including the interest rate
and terms of repayment) will be established by the Plan Administrator in its
sole discretion. Loans, installment payments and guarantees may be granted
without security or collateral (other than to optionees who are consultants or
independent contractors, in which event the loan must be adequately secured by
collateral other than the purchased shares), but the maximum credit available to
the optionee shall not exceed the sum of (i) the aggregate option price (less
par value) of the purchased shares plus (ii) any Federal, State and local income
and employment tax liability incurred by the optionee in connection with the
exercise of the option.
VII. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to extend the period of time for which any option
granted under this Article Two is to remain exercisable following the optionee's
cessation of Service or death from the limited period in effect under Section
I.C.1 of this Article Two to such greater period of time as the Plan
Administrator shall deem appropriate; provided, however, that in no event shall
such option be exercisable after the specified expiration date of the option
term.
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ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
Eligible Optionees. The individuals eligible to receive automatic
option grants pursuant to the provisions of this Article Three program shall be
(i) those individuals who first become non-employee Board members, whether
through appointment by the Board or election by the Company's stockholders,
after the Effective Date, provided they have not otherwise been in the prior
employ of the Company (or any parent or subsidiary corporation) and (ii) those
individuals serving as non-employee Board members on the Effective Date,
including individuals who first became non-employee Board members prior to the
Effective Date or who have otherwise not been in the employ of the Company.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants shall be made under this Article Three
on the dates specified below
1. Initial Grant. Each individual who first becomes a
non-employee Board member on or after the Effective Date, whether through
election by the Company's stockholders or appointment by the Board, shall
automatically be granted, at the time of such initial election or appointment, a
non-statutory stock option to purchase 40,000 shares of Common Stock upon the
terms and conditions of this Article Three.
2. Special Grants.
- Each non-employee Board member whose fourth
anniversary of the last option grant under the Automatic Option Grant Program
(as in effect prior to the Effective Date) will occur in 1999 shall
automatically be granted, on the date of the 1997 Annual Stockholders Meeting, a
non-statutory stock option to purchase 7,500 shares of Common Stock upon the
terms and conditions of this Article Three.
- Each non-employee Board member whose fourth
anniversary of the last option grant under the Automatic Option Grant Program
(as in effect prior to the Effective Date) will occur in 1998 shall
automatically be granted, on the date of the 1997 Annual Stockholders Meeting, a
non-statutory stock option to purchase 3,750 shares of Common Stock upon the
terms and conditions of this Article Three.
- Each non-employee Board member whose fourth
anniversary of the last option grant under the Automatic Option Grant Program
(as in effect prior to the Effective Date) will occur in 1997 shall
automatically be granted, on the date of the 1997 Annual Stockholders Meeting, a
non-statutory stock option
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to purchase 40,000 shares of Common Stock upon the terms and conditions of this
Article Three.
3. Periodic Grants. Each individual who is to continue to
serve as a non-employee Board member shall automatically be granted additional
non-statutory stock options under this Article Three, each for 40,000 shares of
Common Stock, at successive four (4)-year intervals over such period of
continued service. The first such additional grant shall be made at the Annual
Stockholders Meeting held in the calendar year in which occurs the fourth
anniversary of the grant date of the first 40,000-share option grant under
Section II.A.1 or Section II.A.2 of this Article Three or the fourth anniversary
of the grant date of the last 25,000-share option grant prior to the Effective
Date, and additional option grants for 40,000 shares shall be made to such
individual at every fourth Annual Stockholders Meeting thereafter provided such
individual is to continue to serve as a non-employee Board member after such
meeting.
B. Exercise Price. The exercise price per share of each automatic
option grant made under this Article Three shall be equal to one hundred percent
(100%) of the fair market value per share of Common Stock on the automatic grant
date.
C. Payment. The exercise price shall be payable in one of the
alternative forms specified below:
(i) full payment in cash or check made payable to the
Company's order; or
(ii) full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Company's reported
earnings and valued at fair market value on the Exercise Date (as such
term is defined below); or
(iii) full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the Company's
reported earnings and valued at fair market value on the Exercise Date and
cash or check payable to the Company's order; or
(iv) full payment through a sale and remittance procedure
pursuant to which the non-employee Board member (I) shall provide
irrevocable written instructions to a designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the Company, out
of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased shares and
shall (II) concurrently provide written directives to the Company to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale transaction.
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<PAGE>
For purposes of this subparagraph C, the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the Company,
and the fair market value per share of Common Stock on any relevant date after
the Underwriting Execution Date shall be determined in accordance with the
provisions of Section I.A.(3) of Article Two. Except to the extent the sale and
remittance procedure specified above is utilized for the exercise of the option,
payment of the option price for the purchased shares must accompany the exercise
notice.
D. Option Term. Each automatic grant under this Article Three shall
have a maximum term of ten (10) years measured from the automatic grant date.
E. Exercisability.
1. Each 7,500 share automatic grant made on the date of the
1997 Annual Stockholders Meeting shall become exercisable for 1/24th of the
option shares upon the optionee's completion of each month of Board service over
the twenty-four (24)-month period measured from the automatic grant date. The
option shall not become exercisable for any additional option shares following
the optionee's cessation of Board service for any reason.
2. Each 3,750 share automatic grant made on the date of the
1997 Annual Stockholders Meeting shall become exercisable for 1/12th of the
option shares upon the optionee's completion of each month of Board service over
the twelve (12)-month period measured from the automatic grant date. The option
shall not become exercisable for any additional option shares following the
optionee's cessation of Board service for any reason.
3. Each 40,000-share automatic grant (and each 25,000-share
automatic grant not fully-vested on the Effective Date) shall become exercisable
for (i) twenty-five percent (25%) of the option shares upon the optionee's
completion of one year of Board service measured from the automatic grant date
and for (ii) an additional 1/48th of the option shares upon the optionee's
completion of each additional month of Board service over the thirty-six
(36)-month period immediately thereafter. The option shall not become
exercisable for any additional option shares following the optionee's cessation
of Board service for any reason.
F. Non-Transferability. During the lifetime of the optionee, each
automatic option grant, together with the limited stock appreciation right
pertaining to such option, shall be exercisable only by the optionee and shall
not be assignable or transferable by the optionee other than a transfer of the
option effected by will or by the laws of descent and distribution following the
optionee's death or an assignment in connection with the optionee's estate plan,
to one or more members of the optionee's immediate family or to a trust
established exclusively for one or more such family members. The assigned
portion may only
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be exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
G. Cessation of Board Service.
1. Should the optionee cease to serve as a Board member for
any reason (other than death) while holding one or more automatic option grants
under this Article Three, then such optionee shall have a six (6)-month period
following the date of such cessation of Board service in which to exercise each
such option for any or all of the shares of Common Stock for which the option is
exercisable at the time of such cessation of Board service. Each such option
shall immediately terminate and cease to be outstanding, at the time of such
cessation of Board service, with respect to any shares for which the option is
not otherwise at that time exercisable.
2. Should the optionee die while serving as a member of the
Board or within six (6) months after cessation of Board service, then each
outstanding automatic option grant held by the optionee at the time of death may
subsequently be exercised, for any or all of the shares of Common Stock for
which the option is exercisable at the time of the optionee's cessation of Board
service (less any option shares subsequently purchased by the optionee 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. Any such exercise must
occur within twelve (12) months after the date of the optionee's death. However,
each such automatic option grant shall immediately terminate and cease to be
outstanding, at the time of the optionee's cessation of Board service, with
respect to any option shares for which it was not otherwise exercisable at that
time.
3. In no event shall any automatic grant under this Article
Three remain exercisable after the specified expiration date of the ten
(10)-year option term. Upon the expiration of the applicable post-service
exercise under subparagraph 1 or 2 above or (if earlier) upon the expiration of
the ten (10)-year option term, the automatic grant shall terminate and cease to
be outstanding for any unexercised shares for which the option was exercisable
at the time of the optionee's cessation of Board service.
H. Stockholder Rights. The holder of an automatic option grant under
this Article Three shall have none of the rights of a stockholder with respect
to any shares subject to such option until such individual shall have exercised
the option and paid the exercise price for the purchased shares.
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I. Remaining Terms. The remaining terms and conditions of each
automatic option grant shall be as set forth in the prototype Non-statutory
Stock Option Agreement attached as Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any of the following stockholder-approved
transactions to which the Company is a party (a "Corporate Transaction"):
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State of the Company's incorporation,
(ii) the sale, transfer or disposition of all or substantially
all of the assets of the Company in liquidation or dissolution of the
Company, or
(iii) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of
the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from the persons holding
those securities immediately prior to such merger,
the exercisability of each automatic option grant at the time
outstanding under this Article Three shall automatically accelerate so that each
such option shall, immediately prior to the specified effective date for the
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. Immediately after the
consummation of the Corporate Transaction, all automatic option grants under
this Article Three shall terminate and cease to be outstanding.
B. In connection with any Change in Control of the Company, the
exercisability of each automatic option grant at the time outstanding under this
Article Three shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for the Change in Control,
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. For purposes of this Article Three, a Change in Control
shall be deemed to occur in the event:
(i) any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Company) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act, as amended) of securities
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possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's stockholders which the Board
does not recommend such stockholders to accept; or
(ii) there is a change in the composition of the Board over a
period of twenty-four (24) consecutive months or less such that a majority
of the Board members (rounded up to the next whole number) ceases, by
reason of one or more contested elections for Board membership, to be
comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least
two-thirds of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board.
C. Upon the occurrence of a Hostile Take-Over, the optionee shall
have a thirty (30)-day period in which to surrender to the Company each option
held by him or her under this Article Three. The optionee shall in return be
entitled to a cash distribution from the Company in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to the surrendered option (whether or not the option is otherwise at the
time exercisable for those shares) over (ii) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within five (5)
days following the surrender of the option to the Company, and neither the
approval of the Plan Administrator nor the consent of the Board shall be
required in connection with such option surrender and cash distribution. Any
unsurrendered portion of the option shall continue to remain outstanding and
become exercisable in accordance with the terms of the instrument evidencing
such grant. The shares of Common Stock subject to each option surrendered in
connection with the Hostile Take-Over shall not be available for subsequent
issuance under the Plan.
D. For purposes of this Section III, the following definitions shall
be in effect:
A Hostile Take-Over shall be deemed to occur in the event any
person or related group of persons (other than the Company or a person
that directly or indirectly controls, is controlled by, or is under common
control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act, as amended)
of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders
which the Board does not recommend such stockholders to accept.
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<PAGE>
The Take-Over Price per share shall be deemed to be equal to
the greater of (a) the fair market value per share of Common Stock on the
option surrender date, as determined pursuant to the valuation provisions
of Section I.A.3 of Article Two, or (b) the highest reported price per
share paid in effecting such Hostile Take-Over.
E. The shares of Common Stock subject to each option cancelled in
connection with the Hostile Take-Over shall not be available for subsequent
option grant under this Plan.
F. The automatic option grants outstanding under this Article Three
shall in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
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<PAGE>
ARTICLE FOUR
MISCELLANEOUS
I. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever. However, no such
amendment or modification shall, without the consent of the holders, adversely
affect rights and obligations with respect to options at the time outstanding
under the Plan. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
II. TAX WITHHOLDING
A. The Company's obligation to deliver shares or cash upon the
exercise of stock options or stock appreciation rights granted under the Plan
shall be subject to the satisfaction of all applicable Federal, State and local
income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion and upon such terms
and conditions as it may deem appropriate provide any or all holders of
outstanding option grants under the Plan (other than the automatic option grants
under Article Three) with the election to have the Company withhold, from the
shares of Common Stock otherwise issuable upon the exercise of such options, a
portion of such shares with an aggregate fair market value equal to the
designated percentage (any multiple of 5% specified by the optionee) of the
Federal, State and local income and employment taxes (the "Taxes") incurred in
connection with the acquisition of such shares. In lieu of such direct
withholding, one or more optionees may also be granted the right to deliver
shares of Common Stock to the Company in satisfaction of such Taxes. Any
withheld or delivered shares shall be valued at their fair market value on the
applicable determination date for such Taxes.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan, as restated and amended in this document, became
effective on the Effective Date set forth in Section I.C of Article One. Each
option issued and outstanding under the Plan immediately prior to such Effective
Date shall continue to be governed solely by the terms and conditions of the
agreement evidencing such grant, and nothing in this restatement of the Plan
shall be deemed to affect or otherwise modify the rights or obligations of the
holders of such options with respect to their acquisition of shares of Common
Stock thereunder. The Plan Administrator shall, however, have full power and
authority, under such circumstances as the Plan Administrator may deem
appropriate, to extend one or more features of this restatement to any options
outstanding on the Effective Date.
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<PAGE>
B. The sale and remittance procedure authorized for the exercise of
outstanding options under the Plan shall be available for all options granted
under this Plan on or after November 22, 1991 (the date of initial adoption of
the Plan) and for all non-statutory options outstanding under the 1990 Stock
Option Plan and incorporated into this Plan. 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 November 22, 1991,
whether such Incentive Options were granted under this Plan or the 1990 Stock
Option Plan.
C. Unless sooner terminated in accordance with Section III of
Article Two, the Plan shall terminate upon the earlier of (i) the expiration of
the ten (10) year period measured from the date of the Board's initial adoption
of the Plan 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 hereunder. If the date of termination is
determined under clause (i) above, then any options outstanding on such date
shall continue to have force and effect in accordance with the provisions of the
agreements evidencing those options.
D. Options may be granted under the Plan to purchase shares of
Common Stock in excess of the number of shares at the time available for
issuance, provided each granted option is not to become exercisable, in whole or
in part, at any time prior to stockholder approval of an amendment authorizing a
sufficient increase in the number of shares issuable under the Plan.
IV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.
V. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option
hereunder, and the issuance of stock upon the exercise or surrender of any such
option shall be subject to the procurement by the Company of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the options granted under it and the stock issued pursuant to it.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Company in establishing or restating the
Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the Plan shall be construed so as to grant any individual the right
to remain in the employ or service of the Company (or any parent or subsidiary
corporation) for any period of specific duration, and the Company (or any parent
or subsidiary corporation retaining the services of such
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<PAGE>
individual) may terminate such individual's employment or service at any time
and for any reason, with or without cause.
VII. MISCELLANEOUS PROVISIONS
A. Except to the extent otherwise expressly provided in the Plan,
the right to acquire Common Stock or other assets under the Plan may not be
assigned, encumbered or otherwise transferred by any optionee.
B. The provisions of the Plan relating to the exercise of options
and the vesting of shares shall be governed by the laws of the State of Alabama
without resort to that State's conflict-of-laws provisions, as such laws are
applied to contracts entered into and performed in such State.
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