<PAGE> 1
As filed with the Securities and Exchange Commission on
Registration No. 333-__________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MOLECULAR DYNAMICS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-3050031
(State of incorporation) (I.R.S. Employer Identification No.)
928 EAST ARQUES AVE.,
SUNNYVALE, CA 94086
(Address of principal executive offices)
-----------------------
RESTATED 1987 STOCK OPTION PLAN
(Full title of the Plan)
-----------------------
JAY FLATLEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MOLECULAR DYNAMICS, INC.
928 EAST ARQUES AVE.,
SUNNYVALE, CA 94086
(408) 733-1222
(Name, address and telephone number, including area code, of agent for service)
-----------------------
Copy to:
Jeffrey Y. Suto
Venture Law Group
2800 Sand Hill Road
Menlo Park, California 94025
(415) 854-4488
(Calculation of Registration Fee on following page)
<PAGE> 2
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
Proposed Proposed Maximum
Maximum Amount Maximum Aggregate Amount of
to be Offering Price Offering Price Registration
Title of Securities to be Registered Registered(1) Per Share Fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock issuable upon exercise of
options granted pursuant to the Restated 250,000 Shares $6.25(2)(3) $1,562,500 $538.79
1987 Stock Option Plan
0.01 par value...........................
Options to Purchase
Common Stock, 250,000 Shares n/a n/a n/a
(under Restated 1987 Stock
Option Plan)
0.01 par value...........................
TOTAL 250,000 Shares $6.25 $1,562,500 $538.79
----- ----- ---------- -------
</TABLE>
- -----------------------
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under any of the Plans being
registered pursuant to this Registration Statement by reason of any
stock dividend, stock split, recapitalization or any other similar
transaction effected without the receipt of consideration which results
in an increase in the number of the Registrant's outstanding shares of
Common Stock.
(2) Computed in accordance with Rule 457(h) under the Securities Act of
1933 (the "Securities Act") solely for the purpose of calculating the
registration fee. Computation based on the weighted average per share
exercise price (rounded to nearest cent) of outstanding options under
the referenced plan, the shares issuable under which are registered
hereby.
(3) Estimated in accordance with Rule 457(h) under the Securities Act
solely for the purpose of calculating the registration fee. The
computation with respect to unissued options is based upon the average
high and low sale prices of the Common Stock as reported on the Nasdaq
National Market on July 31, 1996.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") are hereby incorporated by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 filed with the Commission on April 1, 1996 pursuant
to Section 13(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which contains audited financial statements for the
Registrant's latest fiscal year for which such statements have been filed and as
amended by Amendment No. 1 filed on April 5, 1996.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the Annual Report
referred to in (a) above.
(c) The description of the Registrant's Common Stock contained in
the Registrant's Registration Statement on Form 8-A filed with the Commission
under Section 12 of the Exchange Act on January 11, 1993 including any amendment
or report filed for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing such documents.
Item 4. DESCRIPTION OF SECURITIES. Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Certificate of Incorporation reduces the liability of
a director to the corporation or its shareholders for monetary damages for
breaches of his or her fiduciary duty of care to the fullest extent permissible
under Delaware law. The Bylaws of the Registrant further provide for
indemnification of corporate agents to the maximum extent permitted by the
Delaware General Corporation Law. In addition, the Registrant has entered into
Indemnification Agreements with its officers and directors.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable.
Item 8. EXHIBITS.
Exhibit
Number
5.1 Opinion of Venture Law Group, a Professional
Corporation.
23.1 Consent of Venture Law Group, a Professional
Corporation (included in Exhibit 5.1).
23.2 Consent of Independent Auditors.
24.1 Powers of Attorney.
99.1 Restated 1987 Stock Option Plan
<PAGE> 4
Item 9. UNDERTAKINGS.
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 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.
(2) that, for purposes of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(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 offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in 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.
Insofar as the indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in a successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the question has already been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
[Signature Pages Follow]
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, MOLECULAR DYNAMICS, INC., a corporation organized and existing under
the laws of the State of Delaware, 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 Sunnyvale, State of
California, on this 30th day of July, 1996.
MOLECULAR DYNAMICS, INC.
By: /s/ Jay Flatley
----------------------------
Jay Flatley
President, Chief Executive Officer, Acting
Chief Financial Officer and Director
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jay Flatley and Lynne Wagoner, jointly
and severally, his or her attorneys-in-fact and agents, each with the power of
substitution and resubstitution, for him or her and in his or her name, place or
stead, in any and all capacities, to sign any amendments to this Registration
Statement on Form S-8, and to file such amendments, together with exhibits and
other documents in connection therewith, with the Securities and Exchange
Commission, granting to each attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully as he or she might or could do in
person, and ratifying and confirming all that the attorneys-in-fact and agents,
or his or her substitute or substitutes, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jay Flatley President and Chief Executive Officer, July 30, 1996
- ------------------------------------ Acting Chief Financial Officer, and
Jay Flatley Director (Principal Executive and
Financial Officer)
/s/ Lynne Wagoner Director of Finance (Principal July 30, 1996
- ------------------------------------ Accounting Officer)
Lynne Wagoner
/s/ James Schlater Chairman of the Board of Directors July 30, 1996
- ------------------------------------
James Schlater
/s/ Robert Keeley Director July 30, 1996
- ------------------------------------
Robert Keeley
/s/ Janice M. LeCocq Director July 30, 1996
- ------------------------------------
Janice M. LeCocq
Director July ___, 1996
- ------------------------------------
Jack Lloyd
/s/ C. Woodrow Rea, Jr. Director July 30, 1996
- ------------------------------------
C. Woodrow Rea, Jr.
</TABLE>
<PAGE> 7
INDEX TO EXHIBITS
Number
-------
5.1 Opinion of Venture Law Group, a Professional Corporation
23.1 Consent of Venture Law Group, a Professional Corporation
(included in Exhibit 5.1).
23.2 Consent of Independent Auditors
24.1 Powers of Attorney
99.1 Restated 1987 Stock Option Plan
<PAGE> 1
EXHIBIT 5.1
July 30, 1996
Molecular Dynamics, Inc.
928 East Arques Ave.
Sunnyvale, CA 94086
Registration Statement on Form S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about August 5, 1996 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of a total of 250,000 shares of your Common
Stock (the "Shares") reserved for issuance under the Restated 1987 Stock Option
Plan (the "Plan"). As your legal counsel, we have examined the proceedings taken
and are familiar with the proceedings proposed to be taken by you in connection
with the sale and issuance of the Shares under the Plan.
It is our opinion that, when issued and sold in the manner referred to
in the Plan and pursuant to the respective agreement which accompanies each
grant under the Plan, the Shares will be legally and validly issued, fully paid
and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and any amendments to it.
Sincerely,
VENTURE LAW GROUP
/s/ Venture Law Group
JYS
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
[On Accountant Firm's Letterhead]
We consent to incorporation by reference in the Registration Statement on Form
S-8 of our report dated January 29, 1996, related to the consolidated balance
sheets of Molecular Dynamics, Inc., and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1995 which report appears in the December 31, 1995 annual report on
Form 10-K of Molecular Dynamics, Inc.
/s/ KPMG Peat Marwick
KPMG Peat Marwick
San Francisco, California
July 30, 1996
<PAGE> 1
EXHIBIT 99.1
MOLECULAR DYNAMICS, INC.
RESTATED 1987 STOCK OPTION PLAN
(AMENDED THROUGH FEBRUARY 7, 1996)
ARTICLE ONE
GENERAL
I. PURPOSES OF THE PLAN
This Restated 1987 Stock Option Plan (the "Plan") is intended to
promote the interests of Molecular Dynamics, Inc., a Delaware corporation (the
"Corporation"), by providing incentives to eligible individuals to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation and remain in the employ or service of the Corporation (or its
parent or subsidiary corporations). This restatement of the Plan was adopted by
the Board on March 12, 1992 and approved by the Corporation's stockholders in
April 1992. The Discretionary Option Grant Program in effect under Article Two
became effective on the first date on which the shares of the Corporation's
common stock were registered under Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"). Such date shall be designated as the
Effective Date of the Discretionary Option Grant Program. The Automatic Option
Grant Program in effect under Article Three became effective immediately upon
the execution of the Underwriters Agreement between the Corporation and the
underwriters of the initial public offering of the Company's common stock. The
execution date of such Underwriters Agreement is hereby designated as the
Effective Date of such Automatic Option Grant Program.
For purposes of the Plan, the following provisions shall be applicable
in determining the parent and subsidiary corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be considered
to be a PARENT corporation of the Corporation, provided each such corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(ii) Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation shall be
considered to be a SUBSIDIARY, of the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
II. ADMINISTRATION OF THE PLAN
A. The Plan shall be comprised of two separate programs: (i) the
Discretionary Option Grant Program under Article Two pursuant to which option
grants may be made to key employees and consultants at the discretion of the
Plan Administrator and (ii) the Automatic Option Grant Program under Article
Three pursuant to which option grants will automatically be
<PAGE> 2
made to non-employee members of the Board of Directors at periodic intervals
upon the express terms and provisions of the Article Three program.
B. The Discretionary Option Grant Program shall be administered
by one or more committees comprised of members of the Corporation's Board of
Directors (the "Board"). The primary committee (the "Primary Committee") shall
be comprised of two or more non-employee Board members and shall have sole and
exclusive authority to grant stock options and stock appreciation rights under
the Discretionary Option Grant Program to officers and employee-directors of the
Company subject to the short-swing profit restrictions of the Federal securities
laws. Stock options may be granted under the Discretionary Option Grant Program
to all other eligible employees and consultants by either the Primary Committee
or a second committee comprised of one or more Board members (the "Secondary
Committee"). No Board member shall be eligible to serve on the Primary Committee
if such individual has, within the relevant period designated below, received an
option grant or stock issuance under this Plan (other than pursuant to the
Automatic Option Grant Program in effect under Article Three) or under any other
stock plan of the Corporation (or any parent or subsidiary corporation):
(i) for each of the initial members of the Primary
Committee, the period commencing with the Effective Date of the Discretionary
Option Grant Program and ending with the date of his or her appointment to the
Primary Committee, or
(ii) for any successor or substitute member, the twelve
(12)-month period immediately preceding the date of his or her appointment to
the Primary Committee or (if shorter) the period commencing with the Effective
Date of the Discretionary Option Grant Program and ending with the date of his
or her appointment to the Primary Committee.
Members of the Primary Committee and the 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.
C. Subject to the limited authority provided the Secondary
Committee to effect option grants in accordance with the provisions of Section
II.B of this Article One, the Primary Committee shall serve as the Plan
Administrator and 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, and issue such interpretations
of, such program and any outstanding option thereunder as it may deem necessary
or advisable. Decisions of the Plan Administrator shall be final and binding on
all parties who have an interest in the Discretionary Option Grant Program or
any outstanding option.
D. Service on the Primary or Secondary Committee shall constitute
service as a Board member, and members of either committee shall accordingly be
entitled to full indemnification and reimbursement as Board members for their
service on the committee. No member of either committee shall be liable for any
act or omission made in good faith with respect to the Plan or any option
granted under the Plan.
-2-
<PAGE> 3
E. Administration of the Automatic Option Grant Program shall be
self-executing, and the Plan Administrator shall not exercise any discretionary
functions under such program.
III. ELIGIBILITY FOR OPTION GRANTS
A. The persons eligible to receive option grants under the Plan
shall be limited to the following individuals:
(i) key employees (including officers and directors) of
the Corporation (or its parent or subsidiary corporations) who render services
which contribute to the success and growth of the Corporation (or its parent or
subsidiary corporations) or which may reasonably be anticipated to contribute to
the future success and growth of the Corporation (or its parent or subsidiary
corporations);
(ii) the non-employee members of the board of directors of
any subsidiary corporations; and
(iii) those consultants or independent contractors who
provide valuable services to the Corporation (or its parent or subsidiary
corporations).
From and after the Effective Date of the Automatic Option Grant
Program, the non-employee members of the Board shall not be eligible to receive
grants under the Discretionary Option Grant Program but shall be eligible to
receive automatic option grants pursuant to Article Three of the Plan.
B. 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 subject to each such grant, the
status of the granted option as either an incentive stock option ("Incentive
Option") designed to satisfy the requirements of Internal Revenue Code Section
422 or a non-statutory, option not intended to meet such requirements, the time
or times at which the option is to become exercisable, and the maximum term for
which the option is to remain outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired Common Stock. The aggregate
number of shares which may be issued over the term of the Plan shall not exceed
3,504,500 shares.1 The total number of shares issuable under the Plan shall be
subject to adjustment from time to time in accordance with the provisions of
this Section IV.
- -----------------
1 Includes the 250,000 share increase authorized by the Board on February 7,
1996 and approved at the 1996 Annual Stockholders Meeting. All of the
references to the number of shares issuable under the Plan have been adjusted
to reflect the 3-for-5 reverse stock split effected March 12, 1992.
-3-
<PAGE> 4
B. In no event may the maximum number of shares of Common Stock
for which any one individual participating in the Plan may be granted stock
options and separately exercisable stock appreciation rights exceed 1,500,000
shares in the aggregate over the remaining term of the Plan. For purposes of
this limitation, no stock options or stock appreciation rights granted prior to
January 1, 1994 shall be taken into account. Such limitation shall be subject to
periodic adjustment in accordance with the provisions of this Section IV.
C. Should an option expire or terminate for any reason prior to
exercise or surrender in full (including options 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 or surrendered
shall be available for subsequent option grants under the Plan. Shares subject
to any option or portion thereof surrendered in accordance with Section V of
Article Two of the Plan and Section III of Article Three of the Plan and all
share issuances under the Plan, whether or not the shares are subsequently
repurchased by the Corporation pursuant to its repurchase rights under the Plan,
shall reduce on a share-for-share basis the number of shares of Common Stock
available for subsequent option grants under the Plan. In addition, should the
exercise price of an outstanding option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an outstanding option under the Plan, 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, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, 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
and separately exercisable stock appreciation rights after December 31, 1993,
(III) the number and/or class of securities and the price per share in effect
under each outstanding option under the Discretionary Option Grant Program, (IV)
the number and/or class of securities per non-employee Board member for which
automatic option grants are subsequently to be made under the Automatic Option
Grant Program, and (V) the number and/or class of securities and the price per
share in effect under each automatic grant outstanding under the Automatic
Option Grant Program. Such adjustments to the outstanding options are to be
effected in a manner which shall preclude the enlargement or dilution of rights
and benefits under such options. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.
-4-
<PAGE> 5
ARTICLE TWO
DISCRETIONARY OPTION GRANTS
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 of the Corporation or its parent or subsidiary
corporations may only be granted non-statutory options. Each granted option
shall be evidenced by one or more instruments in the form approved by the Plan
Administrator. Each such instrument, however, shall 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
Article Two and the instrument evidencing the grant, be payable in one of the
alternative forms specified below:
(i) full payment in cash or check payable to the
Corporation; or
(ii) full payment in shares of Common Stock held
by the optionee for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at fair
market value on the Exercise Date (as such term is defined below); or
(iii) full payment in a combination of shares of
Common Stock held by the optionee for the requisite period necessary to avoid a
charge to the Corporation's earnings for financial reporting purposes and valued
at fair market value on the Exercise Date and cash or check drawn to the
Corporation's order; or
(iv) full payment through a broker-dealer sale
and remittance procedure pursuant to which the optionee shall provide
irrevocable written instructions (I) to a Corporation-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) to the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale.
-5-
<PAGE> 6
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 subparagraph 1 or 2 above (and for all other valuation
purposes under the Plan) shall be determined in accordance with the following
provisions:
(i) If the Common Stock is traded on the Nasdaq National
Market, the fair market value shall be the closing selling price per share of
Common Stock on the date in question, as such price is reported by the National
Association of Securities Dealers through the Nasdaq National Market or any
successor system. If there is no closing selling price for the Common Stock on
the date in question, the closing selling price on the last preceding date for
which such quotation exists shall be determinative of fair market value.
(ii) If the Common Stock is at the time listed or admitted
to trading on any 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 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.
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 stock option agreement
evidencing such option. However, no such option shall have a maximum term in
excess of ten (10) years measured 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
effected by will or by the laws of descent and distribution following the
optionee's death.
C. Effect of Termination of Service.
1. Should the optionee cease Service for any reason
other than death (including permanent disability as defined in Internal Revenue
Code Section 22(e)(3)) while holding one or more outstanding options under this
Article Two, then such option or options shall not (except to the extent
otherwise provided pursuant to subparagraph 4 below) remain exercisable for more
than a twelve (12) month period (or such shorter period determined by the Plan
Administrator and set forth in the instrument evidencing the grant) following
the date of such cessation of Service. In no event, however, shall any such
option be exercisable after the specified expiration date of the option term.
Each such option shall, during such twelve (12) month or shorter period, be
exercisable only to the extent of the number of vested shares of
-6-
<PAGE> 7
Common Stock (if any) for which the option is exercisable on the date of the
optionee's cessation of Service. Upon the expiration of such twelve (12) month
or shorter period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be exercisable. Each such option, however,
shall immediately terminate and cease to be outstanding, at the time of the
optionee's cessation of Service, with respect to any shares of Common Stock for
which such option is not otherwise at that time exercisable or in which the
optionee is not otherwise at that time vested.
2. Any option under the Plan held by the optionee at the
time of death may be subsequently exercised, but only to the extent of the
number of vested shares of Common Stock (if any) for which the option is
exercisable on the date of the optionee's cessation of 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, however, be effected
prior to the earlier of (i) the third anniversary of the date of the optionee's
cessation of Service (or such shorter period determined by the Plan
Administrator and specified in the instrument evidencing the grant) or (ii) the
specified expiration date of the option term. Upon the occurrence of the earlier
event, the option shall terminate and cease to be outstanding.
3. 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 outstanding options
under this Article Two to be exercised, during the limited post-Service exercise
period applicable under subparagraph 1 or 2 above, not only with respect to the
number of vested shares of Common Stock 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 vested shares for which the
option would otherwise have become exercisable had such cessation of Service not
occurred.
4. The Plan Administrator shall also have full power and
authority to extend the period of time for which the option is to remain
exercisable following the optionee's cessation of Service or death from the
limited period in effect under subparagraph 1 or 2 above to such greater period
of time as the Plan Administrator shall deem appropriate. In no event, however,
shall such option be exercisable after the specified expiration date of the
option term.
5. For purposes of the foregoing provisions of this
Section I of Article Two (and all other provisions of the Plan), unless it is
specifically provided otherwise in the option agreement evidencing the option
grant and/or the purchase agreement evidencing the shares purchased under such
option, the optionee shall be deemed to remain in SERVICE 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 of directors 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.
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D. Shareholder Rights.
An optionee shall have not have any stockholder rights with respect to
any shares subject to 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 Corporation
in accordance with the following provisions:
1. 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 Corporation
shall have the right to repurchase any or all of 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.
2. All of the Corporation's outstanding repurchase rights shall
automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, upon the occurrence of any Corporate Transaction under
Section III of this Article Two, except to the extent: (i) any such repurchase
right is expressly 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.
3. The Plan Administrator shall have the discretionary authority,
exercisable either before or after the optionee's cessation of Service, to
cancel the Company's outstanding repurchase rights with respect to one or more
shares purchased or purchasable by the optionee under this Article Two 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. 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 per share of 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 under this Article Two (or under any
other option plan of the Corporation or its
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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 thereof 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 any option under this Article Two become first exercisable in any
calendar year for shares of Common Stock in excess of such One Hundred Thousand
Dollar ($100,000) limitation, then that option may nevertheless be exercised in
that 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 option is to be
granted pursuant to the provisions of the Plan is on the date of grant the owner
of stock (as determined under Section 424(d) of the Internal Revenue Code)
possessing 10% or more of the total combined voting power of all classes of
stock of the Corporation or any one of its parent or subsidiary corporations
(such person to be herein referred to as a 10% Stockholder), 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, all
the provisions of the Plan shall be applicable to the Incentive Options granted
hereunder.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any of the following stockholder-approved
transactions to which the Corporation is a party (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,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in liquidation or dissolution
of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which fifty percent (50%) or more of the Corporation's
outstanding voting stock is transferred to persons different from those who held
the stock immediately prior to such merger,
each option at the time outstanding under this Article Two but
otherwise not fully exercisable shall automatically accelerate so that such
option shall, immediately prior to the specified effective date for such
Corporate Transaction, become fully exercisable for all the shares of Common
Stock at the time subject to such option and may be exercised for all or any
portion of such shares. However, an outstanding option shall not so accelerate
if and to the extent (i) such option is to be assumed by the successor
corporation or parent thereof or replaced with a comparable option to purchase
shares of the capital stock of such successor corporation or
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parent, (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) such acceleration
is subject to other limitations imposed by the Plan Administrator in the
relevant option agreement. Option comparability under clause (i) shall be
determined 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 issued 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 on both an aggregate and per
participant basis following the consummation of the Corporate Transaction shall
be appropriately adjusted.
D. The grant of options under this Plan shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
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 (and the
termination of one or more of the Corporation'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 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 fifty percent (50%) or more of the total combined
voting power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept; or
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(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 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 a majority 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 of this Article Two.
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 therefor new options under this Article Two covering the
same or different numbers of shares of Common Stock but having an option price
per share not less than (i) eighty-five percent (85%) of the fair market value
of the Common Stock on the new grant date or (ii) one hundred percent (100%) of
such fair market value in the case of an Incentive Option or (iii) one hundred
and ten percent (110%) of such fair market value in the case of an Incentive
Option granted to a 10% Stockholder.
V. SURRENDER OF OPTIONS
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 Corporation equal in amount to the excess of (i) the fair market value
(on the option surrender date) of the shares of Common Stock 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 date of
surrender and may exercise such rights at any time
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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
(or five (5) years in the case of a 10% Stockholder) 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 effected at any time when the Corporation's
outstanding Common Stock is registered under Section 12(g) of the 1934 Act, each
outstanding option with such a limited stock appreciation right in effect for at
least six (6) months shall automatically be cancelled, to the extent such option
is at the time exercisable for fully-vested shares of Common Stock. 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 vested shares of
Common Stock at the time subject to the cancelled option (or cancelled portion
of such option) 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. The
balance of the option (if any) 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 (i) any
person or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing
fifty percent (50%) or more of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders which the Board does not recommend
such stockholders to accept and (ii) more than fifty percent (50%) of the
securities so acquired in such tender or exchange offer are accepted from
holders other than the officers and directors of the Corporation subject to the
short-swing profit restrictions of Section 16 of the 1934 Act.
THE TAKE-OVER PRICE per share shall be deemed to be equal to the
greater of (a) the fair market value per share of Common Stock on the option
cancellation 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 of Common
Stock paid by the tender offeror in 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.
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VI. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may assist any optionee in the exercise
of one or more options under this Article Two by (i) authorizing the extension
of a loan to such optionee from the Corporation or (ii) permitting the optionee
to pay the option price for the purchased Common Stock in installments over a
period of years. The terms of any loan or installment method of payment
(including the interest rate and terms of repayment) shall be established by the
Plan Administrator in its sole discretion. Loans and installment payments may be
granted without security or collateral, but the maximum credit available to the
optionee shall not exceed the sum of (i) the aggregate option price payable for
the purchased shares (less the par value thereof) plus (ii) any Federal and
State income and employment tax liability incurred by the optionee in connection
with the exercise of the option.
B. The Plan Administrator may, in its absolute discretion,
determine that one or more loans extended under subsection A above shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Plan Administrator in its discretion deems appropriate.
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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:
(1) each individual who is serving as a non-employee
member of the Board on the Effective Date of the Automatic Option Grant Program,
and
(2) each individual who is first appointed or elected as
a non-employee Board member at any time after such Effective Date.
B. Limitation. Except for the option grants to be made pursuant
to the provisions of this Article Three, non-employee Board members shall not be
eligible to receive any additional option grants under this Plan or any other
stock plan of the Corporation (or its subsidiary corporations).
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 on or after the 1994 Annual Stockholders Meeting,
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 10,000
shares of Common Stock upon the terms and conditions of this Article Three.
(ii) On the date of each Annual Stockholders Meeting,
beginning with the 1994 Annual Meeting, each individual who is at the time
re-elected as a non-employee Board member shall automatically be granted a
nonstatutory option under this Article Three to purchase an additional 3,500
shares of the Common Stock, provided such individual has served as a Board
member for at least six (6) months prior to such automatic grant date.
The 10,000-share limitation and the 3,500-share limitation on the
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 IV.C of Article One. There shall be no limit on the number of
3,500-share option grants any one non-employee Board member may receive under
this Article Three during his or her period of Board service.
B. Exercise Price. The exercise price per share of
Common Stock subject to each automatic option grant made under this Article
Three after the Effective Date shall be equal to one hundred percent (100%) of
the fair market value per share of Common Stock on the
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automatic grant date, as determined in accordance with the valuation provisions
of Section I.A.3 of Article Two.
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; or
(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); or
(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 earnings for financial reporting purposes and valued at fair
market value on the Exercise Date and cash or check drawn to the Corporation's
order; or
(iv) full payment through a broker-dealer sale
and remittance procedure pursuant to which the optionee shall provide
irrevocable written instructions (A) to a Corporation-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 and (B) to the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale.
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.
E. Exercisability.
1. The initial 10,000-share automatic grants shall each
become exercisable for the option shares in four (4) installments as follows:
(i) The option shall immediately upon grant be
exercisable for twenty-five percent (25%) of the option shares.
(ii) The option shall become exercisable for an
additional twenty-five percent (25%) of the option shares upon the optionee's
completion of twelve (12) months of continuous Board service measured from the
automatic grant date.
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(iii) The option shall become exercisable for an
additional twenty-five percent (25%) of the option shares upon the optionee's
completion of twenty-four (24) months of continuous Board service measured from
the automatic grant date.
(iv) The option shall become exercisable for the
final twenty-five percent (25%) of the option shares upon the optionee's
completion of thirty-six (36) months of continuous Board service measured from
the automatic grant date.
As the option becomes exercisable for one or more installments of the
option shares, the installments shall accumulate, and the option shall remain
exercisable for the accumulated installments until the expiration or sooner
termination of the option term. The option, however, shall not become
exercisable for any additional option shares following the optionee's cessation
of Board service for any reason.
2. Each 3,500-share automatic grant shall become
exercisable upon the optionee's completion of twelve (12) months of continuous
Board service measured from the automatic grant date. The option, however, shall
not become exercisable for any additional option shares following the optionee's
cessation of Board service.
F. Non-Transferability. During the lifetime of the optionee, the
option, 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 except for a transfer of the option effected by
will or by the laws of descent and distribution following the optionee's death.
G. Effect of Termination of Board Membership.
1. Should the optionee cease to be 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 membership 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 the optionee's cessation of 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 each automatic option grant held by such optionee at the
time of his or her death may subsequently be exercised, for any or all of the
shares of Common Stock for which the option was exercisable at the time of the
optionee's cessation of Board membership (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, however, occur within twelve (12) 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 limited post-service exercise
period under subparagraph 1 or 2 above or (if
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earlier) upon the expiration of the ten (10)-year option term, the automatic
grant shall terminate and cease to be outstanding. However, each automatic
option grant held by the optionee at the time of his or her cessation of Board
service shall immediately terminate and cease to be outstanding with respect to
any option shares for which such option is not otherwise at that time
exercisable.
H. Stockholder Rights. The holder of an automatic option grant
under this Article Three shall have no stockholder rights 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.
I. Remaining Terms. The remaining terms and conditions of each
automatic option grant shall be as set forth in the prototype Non-Employee
Director Automatic Grant Agreement attached as Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction (as such term is
defined in Section III of Article Two), each automatic option grant at the time
outstanding under this Article Three but not otherwise fully exercisable shall
automatically accelerate so that 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. Upon the consummation of the
Corporate Transaction, all automatic option grants under this Article Three
shall terminate and cease to be outstanding.
B. In the event of any Change in Control (as such term is defined
in Section III of Article Two), each automatic option grant at the time
outstanding under this Article Three but not otherwise fully exercisable shall
automatically accelerate so that 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 those shares. Each such automatic grant
accelerated in connection with the Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.
C. Upon the occurrence of a Hostile Take-Over (as such term is
defined in Section V of Article Two), each automatic option grant which has been
outstanding under this Article Three for a period of at least six (6) months
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 option 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.
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D. For purposes of this Article Three, the Take-Over Price per
share shall be deemed to be equal to the greater of (i) the fair market value
per share of Common Stock on the option cancellation date, as determined
pursuant to the valuation provisions of paragraph I.A.3 of Article Two, or (ii)
the highest reported price per share of Common Stock paid by the tender offeror
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.
IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS
The provisions of this Automatic Option Grant Program, including any
automatic option grants outstanding under this Article Three, may not be amended
at intervals more frequently than once every six (6) months, other than to the
extent necessary to comply with applicable Federal income tax laws and
regulations.
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ARTICLE FOUR
MISCELLANEOUS
1. 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, (i) 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 and (ii) any amendment to the Automatic Option Grant Program (or
any options outstanding thereunder) shall be made in compliance with the
limitation of Section IV of Article Three. In addition, the Board shall not,
without the approval of the Corporation's stockholders, (i) increase the maximum
number of shares issuable under the Plan or the maximum number of shares for
which any one participant may be granted stock options and separately
exercisable stock appreciation rights after December 31, 1993, except for
permissible adjustments under Section IV of Article One, (ii) materially modify
the eligibility requirements for the grant of options under the Plan or (iii)
otherwise materially increase the benefits accruing to participants under the
Plan.
II. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan was initially adopted by the Board on December 16,
1987, and approved by the Corporation's stockholders on December 14, 1988. The
Plan was subsequently amended by the Board in May 1990 and in April 1991 to
increase the total number of shares issuable under the Plan by 300,000 shares
and 450,000 shares (adjusted to reflect the 3-for-5 reverse stock split effected
March 12, 1992), respectively, and such amendments were approved by the
stockholders in May 1990 and August 1991, respectively. The Board restated the
Plan on March 12, 1992 to increase the number of shares of Common Stock issuable
under the Plan by 500,000 shares with such increase to become effective upon the
Effective Date of the Discretionary Option Grant Program. The stockholders
approved such restatement in April 1992. Article One, Section II of the Plan was
subsequently amended to permit the establishment of a secondary committee to
administer the Plan. Such amendment became effective on the February 17, 1993
date of its approval by the Board.
B. On February 8, 1994, the Board amended the Plan to (i)
increase the number of shares available for issuance pursuant to the Plan by
500,000 shares, (ii) impose a limitation on the maximum number of shares of
Common Stock for which any one participant in the Plan may be granted stock
options and separately exercisable stock appreciation rights after December 31,
1993 and (iii) increase the number of shares of Common Stock for which option
grants are to be made under the Automatic Grant Program to each newly elected or
re-elected non-employee Board member. The amendment was approved by the
stockholders at the 1994 Annual Stockholders Meeting. On February 8, 1995, the
Board approved an amendment to the Plan to increase the total number of shares
issuable thereunder by 750,000 shares. The amendment was approved at the 1995
Annual Stockholders Meeting.
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<PAGE> 20
C. Except as provided in paragraph D below, the provisions of the
Discretionary Option Grant Program shall apply only to options granted under the
Plan from and after the Effective Date of that program. All options issued and
outstanding under the Plan immediately prior to such Effective Date shall
continue to be governed by the terms and conditions of the Plan (and the
respective instruments evidencing each such option) as in effect on the date
each such option was previously granted, and nothing in this restatement shall
be deemed to affect or otherwise modify the rights or obligations of the holders
of such options with respect to their acquisition of shares of Common Stock
thereunder.
D. The option acceleration provisions of Section III of Article
Two relating to Corporate Transactions and Changes in Control may, in the Plan
Administrator's discretion, be extended to one or more outstanding stock options
under the Plan which were granted prior to the Effective Date of the
Discretionary Option Grant Program and which do not otherwise provide for such
acceleration.
E. The sale and remittance procedure authorized for the exercise
of outstanding options under this Plan shall be available for all options
granted under the Discretionary Option Grant Program on or after the Effective
Date of that program and all non-statutory options outstanding under the Plan on
such Effective Date. The Plan Administrator may also allow such procedure to be
utilized in connection with one or more disqualifying dispositions of Incentive
Option shares effected after the Effective Date, whether such Incentive Options
were granted on or before such Effective Date.
F. Unless sooner terminated in accordance with Section III of
Article Two or Section III of Article Three, the Plan shall terminate upon the
earlier of (i) December 15, 1997, 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 options granted hereunder. If the date of
termination is determined under clause (i) above, then each option outstanding
on such date shall thereafter continue to have force and effect in accordance
with the provisions of the instrument evidencing such option.
G. Options to purchase shares of Common Stock may be granted
under the Plan which are 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 available
for issuance under the Plan.
III. 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.
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IV. WITHHOLDING
The Corporation's obligation to deliver shares upon the exercise or
surrender of any options granted under Article Two or Article Three shall be
subject to the satisfaction of all applicable federal, state and local income
and employment tax withholding requirements.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option or
surrender right 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.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan, unless and until, in the opinion of counsel for the
Corporation (or its successor in the event of any Corporate Transaction), there
shall have been compliance with all applicable requirements of the federal and
state securities laws and the applicable regulations of any securities exchange
on which stock of the same class is then listed, and all other requirements of
law or of any regulatory bodies having jurisdiction over such issuance and
delivery.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing this Plan, nor
any action taken by the Board or the Plan Administrator hereunder, nor any
provision of this Plan shall be construed so as to grant any individual the
right to remain in the employ or Service of the Corporation (or any parent or
subsidiary corporation) for any period of specific duration, and the Corporation
(or any parent or subsidiary corporation retaining the services of such
individual) may terminate such individual's employment or Sentence at any time
and for any reason, with or without cause.
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EXHIBIT A
NON-EMPLOYEE DIRECTOR AUTOMATIC OPTION GRANT AGREEMENT
