<PAGE>
As filed with the Securities and Exchange Commission on August 11, 1999
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
--------------------
SCHULER HOMES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 99-0293125
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
828 FORT STREET MALL, 4TH FLOOR
HONOLULU, HAWAII 96813
(Address of principal executive offices) (Zip Code)
--------------------
SCHULER HOMES, INC. 1992 STOCK OPTION PLAN
(Full title of the Plans)
--------------------
JAMES K. SCHULER
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
SCHULER HOMES, INC.
828 FORT STREET MALL, 4TH FLOOR, HONOLULU, HAWAII 96813
(Name and address of agent for service)
(808) 521-5661
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED (1) PRICE PER SHARE (2) OFFERING PRICE (2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Schuler Homes, Inc.
1992 STOCK OPTION PLAN
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Common Stock, $.01 par value..... 500,000 shares $7.31 $3,655,000 $1,016.09
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Schuler Homes, Inc. 1992 Stock
Option Plan by reason of any stock dividend, stock split, recapitalization
or other similar transaction effected without the Registrant's receipt of
consideration which results in an increase in the number of the outstanding
shares of Registrant's 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 Registrant's Common Stock on
August 5, 1999, as reported by the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Schuler Homes, Inc. (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Annual Report on Form 10-K and Form 10-K/A
for the fiscal year ended December 31, 1998, filed with the
SEC on March 31, 1999 and April 12, 1999, respectively;
(b) The Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999 filed with the SEC on
May 17, 1999; and
(c) The Registrant's Registration Statements No. 000-19891 on Form
8-A filed with the SEC on February 27, 1992 and March 1, 1993
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.
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. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is 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.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the state of Delaware
(the "Delaware Law") empowers a Delaware corporation to indemnify any persons
who are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of this duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
II-1
<PAGE>
In accordance with Delaware Law, the certificate of incorporation of
the Company contains a provision to limit the personal liability of the
directors of the Registrant for violations of their fiduciary duty. This
provision eliminates each director's liability to the Registrant or its
stockholders for monetary damages except (i) for any breach of the director's
duty of loyalty to the Registrant or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware Law providing for
liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions, or (iv) for any transaction from which a director
derived an improper personal benefit. The effect of this provision is to
eliminate the personal liability of directors for monetary damages for actions
involving a breach of their fiduciary duty of care, including any such actions
involving gross negligence.
Article 5 of the Bylaws of the Registrant provides for indemnification
of the officers and directors of the Registrant to the fullest extent permitted
by applicable law.
The Company has entered into indemnification agreements with its
directors and officers. These agreements provide substantially broader indemnity
rights than those provided under the Delaware Law and the Company's Bylaws. The
indemnification agreements are not intended to deny or otherwise limit
third-party or derivative suits against the Company or its directors or
officers, but if a director or officer were entitled to indemnity or
contribution under the indemnification agreement, the financial burden of a
third-party suit would be borne by the Company, and the Company would not
benefit from derivative recoveries against the director or officer. Such
recoveries would accrue to the benefit of the Company but would be offset by the
Company's obligations to the director or officer under the indemnification
agreement.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
Item 8. EXHIBITS
<TABLE>
<CAPTION>
Number Exhibit
- ------ -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made
to Registrant's Registration Statements No. 000-19891 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.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Schuler Homes, Inc. 1992 Stock Option Plan.
99.2* Form of Notice of Grant with Stock Option Agreement.
99.3* Form of Notice of Grant with Stock Option Agreement
(Non-Employee Director Automatic Grant).
</TABLE>
* Exhibits 99.2 and 99.3 are incorporated herein by reference to Exhibits
28.2 and 28.3, respectively, to Registrant's Registration Statement No.
033-53044, filed with the SEC on October 8, 1992.
Item 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change 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
II-2
<PAGE>
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 Schuler Homes, Inc. 1992 Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
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 advised that, in the opinion of the SEC, such indemnification is
against public policy as expressed in the 1933 Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Honolulu, State of Hawaii on this 11th day of
August, 1999.
SCHULER HOMES, INC.
By: /s/ James K. Schuler
--------------------------------
James K. Schuler
Chairman of the Board, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Schuler Homes, Inc.,
a Delaware corporation, do hereby constitute and appoint James K. Schuler and
Pamela S. Jones 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 regulations or requirements of the Securities and Exchange
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 that all 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, as amended,
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>
Chairman of the Board, President and
Chief Executive Officer
/s/ James K. Schuler (Principal Executive Officer) August 11, 1999
- ---------------------------
James K. Schuler
Senior Vice President of Finance and
/s/ Pamela S. Jones Chief Financial Officer (Principal
- --------------------------- Financial Officer), Director August 11, 1999
Pamela S. Jones
Vice President of Finance and Chief
/s/ Douglas M. Tonokawa Accounting Officer (Principal Accounting
- --------------------------- Officer) August 11, 1999
Douglas M. Tonokawa
II-4
<PAGE>
/s/ Michael T. Jones
- --------------------------- Director
Michael T. Jones August 11, 1999
/s/ Bert T. Kobayashi, Jr.
- --------------------------- Director
Bert T. Kobayashi, Jr. August 11, 1999
- --------------------------- Director
Thomas A. Bevilacqua August _____, 1999
/s/ Martin T. Hart
- --------------------------- Director
Martin T. Hart August 11, 1999
</TABLE>
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
SCHULER HOMES, INC.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Exhibit
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<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made
to Registrant's Registration Statements No. 00-19891 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.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Schuler Homes, Inc. 1992 Stock Option Plan.
99.2* Form of Notice of Grant with Stock Option Agreement.
99.3* Form of Notice of Grant with Stock Option Agreement
(Non-Employee Director Automatic Grant).
</TABLE>
* Exhibits 99.2 and 99.3 are incorporated herein by reference to Exhibits
28.2 and 28.3, respectively, to Registrant's Registration Statement No.
033-53044, filed with the SEC on October 8, 1992.
<PAGE>
EXHIBIT 5
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP.
August 11, 1999
Schuler Homes, Inc.
828 Fort Street Mall, 4th Floor
Honolulu, HI 96813-4321
Re: Schuler Homes, Inc. (the "Company")
REGISTRATION STATEMENT FOR OFFERING OF AN AGGREGATE OF
500,000 SHARES OF COMMON STOCK
Ladies and Gentlemen:
We have acted as counsel to Schuler Homes, Inc., a Delaware
corporation (the "Company") in connection with the registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of an
aggregate of 500,000 additional shares of common stock (the "Shares") for
issuance under the Company's 1992 Stock Option Plan (the "Option Plan").
This opinion is being furnished in accordance with the
requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the amendment of
the Option Plan. Based on such review, we are of the opinion that, if, as and
when the Shares are issued and sold (and the consideration therefor received)
pursuant to the provisions of option agreements duly authorized under the Option
Plan and in accordance with the Registration Statement, such Shares will be duly
authorized, legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5
to the Registration Statement.
This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the Option Plan or the Shares issuable under such plans.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent
Auditors" in the Registration Statement (Form S-8 No. 333-__________)
pertaining to the Stock Option Plan of Schuler Homes, Inc. and to the
incorporation by reference therein of our report dated March 15, 1999, with
respect to the consolidated financial statements of Schuler Homes, Inc.
included in its Annual Report (Form 10-K) for the year ended December 31,
1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Honolulu, Hawaii
August 6, 1999
<PAGE>
SCHULER HOMES, INC.
1992 STOCK OPTION PLAN
(As Amended and Restated as of March 22, 1999)
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSES OF THE PLAN
A. This 1992 Stock Option Plan (the "Plan") is hereby adopted to promote
the interests of Schuler Homes, Inc., a Delaware corporation (the
"Corporation"), by providing a method whereby eligible individuals may be
offered the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to
remain in the 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:
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.
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.
II. STRUCTURE OF THE PLAN
A. OPTION PROGRAMS. The Plan shall be divided into two separate
components: the Discretionary Option Grant Program described in Article Two and
the Automatic Option Grant Program described 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 Common Stock
in accordance with the provisions of Article Two. Under the Automatic Option
Grant Program, each eligible member of the Corporation's Board of Directors (the
"Board") will automatically receive an option grant 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 the
Discretionary Option Grant Program and
<PAGE>
the Automatic Option Grant Program and shall accordingly govern the interests
of all individuals under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by a committee ("Committee") of two (2)
or more Board members appointed by the Board. 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 Discretionary Option Grant Program and to make such determinations under
the Plan and any outstanding option as it may deem necessary or advisable.
Decisions of the Plan Administrator shall be final and binding on all parties
with an interest in any outstanding option under the Plan.
C. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the express terms and conditions of Article
Three.
IV. ELIGIBILITY FOR OPTION GRANTS
A. The persons eligible to participate in the Option Grant Program under
Article Two of the Plan shall be limited to the following:
(i) officers and other key employees of the Corporation (or
its parent or subsidiary corporations) who render services which contribute to
the management, growth and financial success of the Corporation (or its parent
or subsidiary corporations);
(ii) non-employee members of the Board (or its parent or
subsidiary corporations); and
(iii) those consultants or independent contractors who provide
valuable services to the Corporation (or its parent or subsidiary corporations).
B. Individuals eligible to participate in the Automatic Option Grant
Program shall be (i) those individuals who are serving as non-employee Board
members on the Effective Date or who are first elected or appointed as
non-employee Board members after such date, whether through appointment by
the Board or election by the Corporation's stockholders, and (ii) those
individuals who continue to serve as non-employee Board members after one or
more Annual Stockholders Meetings held after the Effective Date.
C. The Plan Administrator shall have full authority to determine which
eligible individuals are to receive discretionary option grants under the Plan,
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.
2
<PAGE>
V. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation 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 1,500,000 shares, including the
500,000-share increase approved by the Board on March 22, 1999, subject to
approval by the stockholders at the 1999 Annual Meeting.
B. No one person participating in the Plan may receive options or
separately exercisable stock appreciation rights for more than 500,000 shares of
Common Stock in the aggregate for each calendar year, beginning with the 1999
calendar year.
C. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the original exercise 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 options
under the Plan. Shares subject to any stock appreciation rights exercised under
the Plan shall reduce on a share-for-share basis the number of shares of Common
Stock available for subsequent issuance under the Plan. In addition, should the
exercise price of an option under the Plan be paid with shares of Common Stock
or should shares of Common Stock otherwise issuable under the Plan be withheld
by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an 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 issued to the holder of such option.
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 number and/or class of shares issuable under the Plan,
(ii) the number and/or class of shares for which any one person may be granted
options or separately exercisable stock appreciation rights under the Plan,
(iii) the number and/or class of shares and price per share in effect under each
outstanding option under the Plan and (iv) the number of shares of Common Stock
to be made the subject of each subsequent automatic grant. The purpose of such
adjustments to the outstanding options shall be to preclude the enlargement or
dilution of rights and benefits under such options.
3
<PAGE>
ARTICLE TWO
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 Corporation's order;
- 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);
- 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
Corporation's earnings for financial reporting purposes and valued at fair
market value on the Exercise Date and cash or cash equivalent; or
- the option price may also be paid through a broker-dealer sale and
remittance procedure pursuant to which the optionee shall provide (I)
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)
written instructions 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>
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 stock 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 on 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 stock exchange, then the fair market value shall be the
closing selling price per 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 in the
composite tape of transactions 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 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 stock exchange nor traded in the over-the-counter market,
then the fair market value shall be determined by the Plan 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 shall be exercisable only by the optionee and shall 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. Non-statutory options may, to
the extent permitted by the Plan Administrator, be assigned in whole or in part
during the Optionee's lifetime (i) as a gift to one or more members of the
Optionee's immediate family, to a trust in which the optionee and/or one or more
such family members hold more than fifty percent (50%) of the beneficial
interest or to an entity in which the optionee and/or one or more such family
members hold more than fifty percent (50%) of the voting interests or (ii)
pursuant to a domestic relations order. The
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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 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.
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):
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- The optionee shall be deemed to remain in the Service of the
Corporation for so long as such individual renders services on a periodic
basis to the Corporation (or any parent or subsidiary corporation) in the
capacity of an Employee, a non-employee member of the Board or an
independent consultant or advisor.
- The optionee shall be considered to be an Employee for so long as
such individual 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 no stockholder rights with respect to any shares
covered by the option until such individual shall have exercised the option,
paid the option price for the purchased shares and been issued a stock
certificate for such shares.
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 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 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 Corporation 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.
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 Corporation 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 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 Corporation is not
the surviving entity, except for a transaction the principal purpose of which is
to change the State of the Corporation's incorporation, or
(ii) any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's outstanding
securities are transferred to holders different from those who held such
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 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 by a comparable cash incentive program of the successor
corporation based on the option spread at the time of the Corporate Transaction,
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
comparability under clause (i) or (ii) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. Upon 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
issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such 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 grant of options under this Article Two 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.
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E. 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 upon the
occurrence of the Change in Control. The Plan Administrator shall also have
full power and authority to condition any such option acceleration 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
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934 ("1934 Act")) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer; 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) cease, by reason of one
or more proxy contests for the election of Board members, 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 exercisability as incentive stock options under the Federal tax
laws of any options accelerated under this Section III in connection with a
Corporate Transaction or Change in Control shall remain subject to the dollar
limitation of Section II.
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 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
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establish, to surrender all or part of an unexercised option under this
Article Two in exchange for a distribution from the Corporation 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 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 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 Two. Upon the
occurrence of a Hostile Take-Over, each outstanding option with such a limited
stock appreciation right shall automatically be cancelled 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 Take-Over Price of the shares of Common Stock at
the time subject to the cancelled option (whether or not the option is otherwise
at the time exercisable for such shares) over (ii) the aggregate exercise price
payable for such shares. The cash distribution payable upon such cancellation
shall be made within five (5) days following the consummation of the Hostile
Take-Over. Neither the approval of the Plan Administrator nor the consent of
the Board shall be required in connection with such option cancellation and cash
distribution.
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 Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation) directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer which the Board
does not recommend the Corporation's 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 date of cancellation, 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
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effecting such Hostile Take-Over. However, if the cancelled 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 or
cancelled 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 Corporation, (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
Corporation 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 and state 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 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.
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
A. ELIGIBLE OPTIONEES. The individuals eligible to receive automatic
option grants pursuant to the provisions of this Article Three shall be limited
to the following:
(i) each individual who is serving as a non-employee member
of the Board on the Effective Date; and
(ii) each individual who is first appointed or elected as a
non-employee Board member at any time after the Effective Date.
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II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. GRANT DATES. Option grants will be made under this Article Three on
the dates specified below:
(i) Each individual who first becomes a non-employee Board
member at any time after the Effective Date of this Plan, whether through
election at an Annual Stockholders Meeting or through appointment by the Board,
shall automatically be granted, at the time of such initial election or
appointment, a non-statutory stock option to purchase 20,000 shares of Common
Stock upon the terms and conditions of this Article Three.
(ii) On the date of each Annual Stockholders Meeting held
after the Effective Date, beginning with the 1993 Annual Stockholders
Meeting, each individual who is at the time serving as a non-employee member
of the Board shall automatically be granted at that meeting, whether or not
such individual is standing for re-election as a Board member at that
particular meeting, a non-statutory option under the Plan to purchase 5,000
shares of Common Stock, provided such individual has served as a non-employee
Board member for at least six (6) months prior to the date of such meeting.
(iii) In no event shall any Board member be granted options to
purchase greater than 45,000 shares of Common Stock in the aggregate.
The 20,000-share limitation on the initial automatic option grants and
5,000-share limitation on the subsequent automatic option grants to be made to
each non-employee Board member shall be subject to periodic adjustment pursuant
to the applicable provisions of paragraph V.C of Article One.
B. EXERCISE PRICE. The exercise price per share 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
Corporation's order;
(ii) full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's reported
earnings and valued at fair market value on the Exercise Date (as such term is
defined below);
(iii) full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the Corporation's
reported earnings and valued at fair market value on the Exercise Date and cash
or check payable to the Corporation's order; or
(iv) the option price may also be paid through a broker-dealer
sale and remittance procedure pursuant to which the optionee shall provide
irrevocable written instructions (I) to the designated broker-dealer to effect
the immediate sale of the purchased shares and remit to the Corporation, out of
the sale proceeds an amount equal to the aggregate
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option price payable for the purchased shares plus all applicable Federal and
State income and employment taxes required to be withheld by the Corporation
by reason of such purchase and (II) to the Corporation to deliver the
certificates for the purchased shares directly to such broker-dealer.
For purposes of this subparagraph, the Exercise Date shall be the date on
which written notice of the option exercise is delivered to the Corporation, and
the fair market value per share of Common Stock on any relevant date shall be
determined in accordance with the provisions of paragraph 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 exercise price for the
purchased shares must accompany such 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. Each automatic option became exercisable with respect
to 25% of the option shares upon completion of one (1) year of Board service
measured from the option grant date and with respect to the balance of the
option shares in a series of successive, equal monthly installments over the
thirty-six (36) month period thereafter, provided the Optionee remains in Board
service through that date.
F. EFFECT OF TERMINATION OF BOARD MEMBERSHIP.
1. Should the optionee cease to be a Board member for any reason
(other than death) while holding an automatic option grant under this Article
Three, then such optionee shall have a six (6)-month period following the date
of such cessation of Board membership in which to exercise such option for any
or all of the vested shares of Common Stock for which the option is exercisable
at the time the optionee ceases service as a Board member.
2. Should the optionee die while serving as a Board member or during
the six (6)-month period following his or her cessation of Board service, then
the option may subsequently be exercised, for any or all of the vested shares of
Common Stock for which the option is exercisable at the time of the optionee's
cessation of Board membership, 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, however, occur within six (6) months after the date of
the optionee's death.
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 exercise period in
accordance with subparagraphs 1 and 2 above or (if earlier) upon the expiration
of the ten (10)-year option term, the automatic grant shall terminate and cease
to be exercisable.
G. STOCKHOLDER RIGHTS. The holder of an automatic option grant under
this Article Three shall have no stockholder rights with respect to any shares
covered by such option until such individual shall have exercised the option,
paid the exercise price for the purchased shares and been issued a stock
certificate for such shares.
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H. REMAINING TERMS. The remaining terms and conditions of each automatic
option grant shall be as the terms in effect for option grants made under the
Option Grant Program.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of a Corporate Transaction (as such term is defined in
Section III.A of Article Two), then the shares of Common Stock at the time
subject to each outstanding option but not otherwise vested shall automatically
vest in full so that each such option shall, immediately prior to the specified
effective date for the Corporate Transaction, become fully exercisable for all
of the shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares as fully-vested shares of Common
Stock. Upon 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 (as such term is defined in
Paragraph V.E of Section III of Article Two above), the shares of Common Stock
at the time subject to each outstanding option but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to
the specified effective date for the Change in Control, become fully exercisable
for all of the shares of Common Stock at the time subject to such option and may
be exercised for all or any portion of such shares as fully-vested shares of
Common Stock.
C. Upon the occurrence of a Hostile Take-Over, each outstanding automatic
option grant shall automatically be cancelled in return for a cash distribution
from the Corporation in an amount equal to the excess of (i) the Take-Over Price
of the shares of Common Stock at the time subject to the cancelled option
(whether or not the option is otherwise at the time exercisable for such shares)
over (ii) the aggregate exercise price payable for such shares. The cash
distribution payable upon such cancellation shall be made within five (5) days
following the consummation of the Hostile Take-Over. Neither the approval of
the Plan Administrator nor the consent of the Board shall be required in
connection with such option cancellation and cash distribution.
D. For purposes of this Article Three, Hostile Take-Over shall have the
meaning assigned to such term in paragraph V.E of Section III of Article Two.
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 date of cancellation, as determined
pursuant to the valuation provisions of paragraph 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
issuance under this Plan.
F. The automatic option grants outstanding under this Article Three 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.
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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 Corporation'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 (including the applicable safe-harbor
provisions of SEC Rule 16b-3) provide any or all holders of outstanding option
grants under the Plan with the election to have the Corporation withhold, from
the shares of Common Stock otherwise issuable upon the exercise of such options,
one or more 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 and state withholding taxes ("Taxes") incurred in connection with the
acquisition of such shares. In lieu of such direct withholding, one or more
optionees may also be granted the right to deliver shares of Common Stock to the
Corporation in satisfaction of such Taxes. The withheld or delivered shares
shall be valued at the fair market value on the applicable determination date
for such Taxes or such other date required by the applicable safe-harbor
provisions of SEC Rule 16b-3.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan became effective in January 1992 at the time of the
Corporation's initial public offering (the "Effective Date").
The Plan was amended and restated on March 22, 1999 to effect the following
changes: (i) increase the number of shares of Common Stock available for
issuance by 500,000 shares; (ii) impose a limit on the maximum number of shares
for which any one individual may be granted options and separately exercisable
stock appreciation rights over the term of the Option Plan; (iii) render the
non-employee Board members eligible to receive option grants under the
Discretionary Option Grant Program; (iv) eliminate the restriction that the
individuals who serve as Plan Administrator may not receive any discretionary
option grants from the Corporation while serving as Plan Administrator or during
the twelve month period preceding appointment as Plan Administrator; (v) require
stockholder approval of future amendments to the Plan only to the extent
necessary to satisfy applicable laws or regulations; (vi) allow the shares
issued under the Plan which are subsequently reacquired by the Corporation
pursuant to the Corporation's exercise of its repurchase rights to be added back
to the share reserve available for future issuance under the Plan; (vii) extend
the term of the Plan to March 21, 2009; and (viii) effect a
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series of additional changes to the provisions of the Plan (including the
transferability of non-statutory stock options and the elimination of the six
(6)-month holding period requirement as a condition to the exercise of stock
appreciation rights) in order to take advantage of the recent amendments to
Rule 16b-3 of the Securities and Exchange Commission which exempts certain
officer and director transactions under the Plan from the short-swing
liability provisions of the Federal securities laws. If such stockholder
approval is not obtained at the 1999 Annual Meeting, then (i) any options
previously granted on the basis of the 500,000-share increase shall
terminate, and no further options based on such increase shall be granted,
(ii) non-employee Board members shall not be eligible to receive option
grants under the Discretionary Option Grant Program, (iii) shares of Common
Stock reacquired by the Corporation shall not be added back to the reserve
available for issuance under the Plan and (iv) the Plan will terminate on
January 29, 2002. Those options granted under the Plan which are not based
on such increase shall remain outstanding in accordance with the terms and
conditions of the respective agreements evidencing such options, whether or
not the requisite stockholder approval of the share increase is obtained.
Subject to the foregoing limitations, the Plan Administrator may grant
options under the Plan at any time before the date fixed herein for
termination of the Plan.
B. The Plan shall terminate upon the earlier of (i) March 21, 2009 or
(ii) the date on which all shares available for issuance under the Plan have
been issued as vested shares pursuant to the exercise of options granted under
Article Two or Article Three. If the date of termination is determined under
clause (i) above, then no options outstanding on such date shall be affected by
the termination of the Plan, and such securities shall thereafter continue to
have force and effect in accordance with the provisions of the stock option
agreements evidencing such options.
C. Options may be granted under this Plan to purchase shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided each option granted 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 Corporation 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 Corporation 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 Corporation in establishing or restating the
Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the restated Plan shall be construed so as to grant any individual
the right to remain in the employ or service of the
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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.
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