<PAGE>
As filed with the Securities and Exchange Commission on November 20, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
VALENCE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
--------------------
DELAWARE 77-0214673
(State of Incorporation) (I.R.S. Employer
Identification No.)
--------------------
301 CONESTOGA WAY
HENDERSON, NV 89015
(702) 558-1000
(Address of principal executive offices)
--------------------
1997 NON-OFFICER STOCK OPTION PLAN
--------------------
LEV M. DAWSON
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT
VALENCE TECHNOLOGY, INC.
301 CONESTOGA WAY
HENDERSON, NV 89015
(702) 558-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
Copies to:
ANDREI M. MANOLIU, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CA 94306-2155
(650) 843-5000
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF SECURITIES TO AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
BE REGISTERED REGISTERED PRICE PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Stock Options and
Common Stock
(par value $.001) 3,000,000 $7.66 $22,980,000 $6,388.44
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- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h). The price per share and
aggregate offering price are based upon the average of the high and low
prices of Registrant's Common Stock on November 18, 1998 as reported on the
Nasdaq National Market.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Valence Technology, Inc. (the
"Company") with the Securities and Exchange Commission are incorporated by
reference into this Registration Statement:
(a) The Company's latest annual report on Form 10-K filed pursuant to
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(b) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual reports.
(c) The description of the Company's Common Stock which is contained
in a registration statement on Form 8-A filed under the Exchange Act,
including any amendment or report filed for the purpose of updating such
description.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a
part of this registration statement from the date of the filing of such
reports and documents.
DESCRIPTION OF SECURITIES
Not applicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the Company
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act. The Company's Bylaws also provide that the Company will indemnify its
directors and executive officers and may indemnify its other officers,
employees and other agents to the fullest extent permitted by Delaware law.
The Company's Restated Certificate of Incorporation ("Restated
Certificate") provides that the liability of its directors for monetary
damages shall be eliminated to the fullest extent permissible under Delaware
law. Pursuant to Delaware law, this includes elimination of liability for
monetary damages for breach of the directors' fiduciary duty of care to the
Company and its stockholders. These provisions do not eliminate the
directors' duty of care and, in appropriate circumstances, equitable remedies
such as injunctive or other forms of non-monetary relief will remain
available under Delaware law. In addition, each director will continue to be
subject to liability for breach of the director's duty of loyalty to the
Company, for act or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any transaction from which the
director derived an improper personal benefit, and for payment of dividends
or approval of stock repurchases or redemptions that are unlawful under
Delaware law. The provision also does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
The Company has entered into agreements with its directors and officers
that require the Company to indemnify such persons to the fullest extent
authorized or permitted by the provisions of the Restated Certificate and
Delaware law against expenses, judgments, fines, settlements and other
amounts actually and responsibly incurred (including expenses of a derivative
action) in connection with any proceeding, whether actual or threatened, to
which any such person may be made a party by reason of the fact that such
person is or was a director, officer, employee or other agent of the Company
or any of its affiliated enterprise. Delaware law permits such
indemnification, provided such person acted in good faith and in a manner
such person reasonably believed to be in
1
<PAGE>
or not opposed to the best interest of the Company and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The indemnification agreements also set forth certain
procedures that will apply in the event of a claim for indemnification
thereunder. In addition, the Company maintains director and officer
liability insurance which, subject to certain exceptions and limitations,
insures directors and officers for any alleged breach of duty, neglect,
error, misstatement, misleading statement, omission or act in their
respective capacities as directors and officer of the Company.
At present, there is no pending litigation or proceeding involving a
director or officer of the Company as to which indemnification is being
sought nor is the Company aware of any threatened litigation that may result
in claims for indemnification by any officer or director.
EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
EXHIBITS
EXHIBIT
NUMBER
- -------
5.1 Opinion of Cooley Godward LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this
Registration Statement
24.1 Power of Attorney is contained on the signature pages.
99.1 1997 Non-Officer Stock Option Plan
UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) (Section 230.424(b) of this chapter) if, in the aggregate,
the changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
2
<PAGE>
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) do 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 issuer pursuant to
section 13 or section 15(d) of the Exchange Act that are incorporated by
reference herein.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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 Henderson, State of Nevada, on
November 20, 1998.
VALENCE TECHNOLOGY, INC.
By /s/ Lev M. Dawson
----------------------------------------
Lev M. Dawson
Chairman of the Board,
Chief Executive Officer and President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Lev M. Dawson and Joseph Hendrickson,
and each or any one of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Lev M. Dawson
- ------------------------- Chairman of the Board, Chief November 20, 1998
Lev M. Dawson Executive Officer and
President (Principal
Executive Officer and
Principal Financial and
Accounting Officer)
/s/ Carl E. Berg
- ------------------------- Director November 20, 1998
Carl E. Berg
/s/ Bert C. Roberts, Jr.
- ------------------------- Director November 20, 1998
Bert C. Roberts, Jr.
/s/ Alan F. Shugart
- ------------------------- Director November 20, 1998
Alan F. Shugart
</TABLE>
5
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
5.1 Opinion of Cooley Godward LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1
to this Registration Statement
24.1 Power of Attorney is contained on the signature pages.
99.1 1997 Non-Officer Stock Option Plan
6
<PAGE>
EXHIBIT 5.1
November 20, 1998
Valence Technology, Inc.
301 Conestoga Way
Henderson, Nevada 89015
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Valence Technology, Inc. (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 3,000,000 shares of the
Company's Common Stock, $.001 par value, (the "Shares") pursuant to its 1997
Non-Officer Stock Option Plan (the "Plan").
In connection with this opinion, we have examined the Registration Statement
and related Prospectus, your Certificate of Incorporation and By-laws, as
amended, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a basis for this opinion. We have
assumed the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plan, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain
deferred payment arrangements, which will be fully paid and nonassessable
when such deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Matthew B. Hemington
--------------------------
Matthew B. Hemington
7
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Valence Technology, Inc. and subsidiaries (companies in the development
stage) (the "Company") on Form S-8 to register three million shares of
common stock and common stock options, of our report, which includes an
explanatory paragraph regarding the Company's ability to continue as a going
concern, dated May 8, 1998, on our audits of the consolidated financing
statements of the Company as of March 29, 1998 and March 30, 1997, and for
the period from March 3, 1989 (date of inception) to March 29, 1998 and for
each of the years ending March 29, 1998, March 30, 1997 and March 31, 1996,
which report is included in this annual report on Form 10-K.
PricewaterhouseCoopers LLP
San Jose, California
November 20, 1998
1.
<PAGE>
Exhibit 99.1
VALENCE TECHNOLOGY, INC.
NON-OFFICER STOCK OPTION PLAN
1. PURPOSE
(a) The purpose of the Plan is to provide a means by which selected key
employees, who are not officers or directors of Valence Technology, Inc., a
Delaware corporation (the "COMPANY"), and consultants to the Company, and its
Affiliates, as defined in subparagraph 1(b), may be given an opportunity to
purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are
defined in Sections 424(e) and (f), respectively, of the Internal Revenue
Code of 1986, as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now employed by or serving as consultants to the Company, to secure
and retain the services of new employees/persons capable of filling such
positions, and to provide incentives for such persons to exert maximum
efforts for the success of the Company.
(d) The Company intends that the options issued under the Plan shall be
options which do not qualify as "incentive stock options", as that term is
used in Section 422 of the Code ("Supplemental Stock Options").
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to
a committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine
all questions of policy and expediency that may arise in the administration
of the Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted options; when and how the option shall be
granted; the provisions of each option granted (which need not be identical),
including the time or times during the term of each option within which all
or portions of such option may be exercised; and the number of shares for
which an option shall be granted to each such person.
<PAGE>
(ii) To construe and interpret the Plan, options granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement, in
a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan as provided in paragraph 10.
(iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of
the Company.
(c) The Board may delegate administration of the Plan to a committee or
committees ("Committee") of one or more members of the Board, if
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board (and references in this Plan to the Board shall
thereafter be to the Committee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 9 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate three million (3,000,000)
shares of the Company's common stock. If any option granted under the Plan
shall for any reason expire or otherwise terminate without having been
exercised in full, the stock not purchased under such option shall again
become available for the Plan.
(b) The stock subject to the Plan may be unissued shares of reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY
Options may be granted only to (i) employees who are not officers or
(ii) consultants to the Company or its Affiliates.
5. OPTION PROVISIONS
Each option shall be in such form and shall contain such terms and
conditions as the Board or the Committee shall deem appropriate. The
provisions of separate options need not be identical, but each option shall
include (through incorporation of provisions hereof by reference in the
option or otherwise) the substance of each of the following provisions:
<PAGE>
(a) The term of any option shall not be greater than ten (10) years
from the date it was granted.
(b) The exercise price of each option shall be not less than one
hundred percent (100%) of the fair market value of the stock subject to the
option on the date the option is granted.
(c) The purchase price of stock acquired pursuant to an option shall be
paid, to the extent pertained by applicable statutes and regulations, either:
(i) in cash at the time the option is exercised, or
(ii) at the discretion of the Board or the Committee, either at
the time of the grant or exercise of the option,
(1) by delivery to the Company of other common stock of the
Company,
(2) according to a deferred payment or other arrangement
(which may include, without limiting the generality of the foregoing, the use
of other common stock of the Company) with the person to whom the option is
granted or to whom the option is transferred pursuant to subparagraph 5(d),
or
(3) in any other form of legal consideration that may be
acceptable to the Board or the Committee. In the case of any deferred
payment arrangement, interest shall be payable at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts other
than amounts stated to be interest under the deferred payment arrangement.
(d) An option shall not be transferable except by will or by the laws
of descent and distribution, and shall be exercisable during the lifetime of
the person to whom the option is granted only by such person.
Notwithstanding the foregoing, the person to whom the option is granted may,
be delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
optionee, shall thereafter be entitled to exercise the option.
(e) The total number of shares of stock subject to an option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). From time to time during each of such installment periods, the option
may become exercisable ("vest") with respect to some or all of the shares
allotted to that period, and may be exercised with respect to some or all of
the shares allotted to such period and/or any prior period as to which the
option was not fully exercised. During the remainder of the term of the
option (if its term extends beyond the end of the installment periods), the
option may be exercised from time to time with respect to any shares then
remaining subject to the
<PAGE>
option. The provisions of, this subparagraph 5(e) are subject to any option
provisions governing the minimum number of shares as to which an option may
be exercised.
(f) The Company may require any optionee, or any person to whom an option
is transferred under subparagraph 5(d), as a condition of exercising any such
option,
(i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with
the purchaser representative, the merits and risks of exercising the option;
and
(ii) to give written assurances satisfactory to the Company
stating that such person is acquiring the stock subject to the option for
such person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances
given pursuant to such requirements, shall be inoperative if
(1) the issuance of the shares upon the exercise of the
option has been registered under a then currently effective registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), or
(2) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.
(g) An option shall terminate three (3) months after termination of the
optionee's employment or relationship as a consultant or director with the
Company or an Affiliate, unless
(i) such termination is due to such person's permanent and total
disability, within the meaning of Section 422 (c)(7) of the Code, in which
case the option may, but need not, provide that it may be exercised at any
time within one (1) year following such termination of employment or
relationship as a consultant; or
(ii) the optionee dies while in the employ of or while serving as
a consultant to the Company or an Affiliate, or within not more than three
(3) months after termination of such relationship, in which case the option
may, but need not, provide that it may be exercised at any time within
eighteen (18) months following the death of the optionee by the person or
persons to whom the optionee's rights under such option pass by will or by
the laws of descent and distribution; or
(iii) the option by its terms specifies either
<PAGE>
(1) that it shall terminate sooner than three (3) months after
termination of the optionee's employment or relationship as a consultant, or
(2) that it may be exercised more than three (3) months after
termination of such relationship with the Company or an Affiliate.
This subparagraph 5(g) shall not be construed to extend the term of any
option or to permit anyone to exercise the option after expiration of its
term, nor shall it be construed to increase the number of shares as to which
any option is exercisable from the amount exercisable on the date of
termination of the optionee's employment or relationship as a consultant.
(h) The option may, but need not, include a provision whereby the optionee
may elect at any time during the term of his or her employment or relationship
as a consultant with the Company or any Affiliate to exercise the option as to
any part or all of the shares subject to the option prior to the stated vesting
date of the option or of any installment or installments specified in the
option. Any shares so purchased from any unvested installment or option may be
subject to a repurchase right in favor of the Company or to any other
restriction the Board or the Committee determines to be appropriate.
(i) To the extent provided by the terms of an option, the optionee may
satisfy any federal, state or local tax withholding obligation relating to the
exercise of such option by any of the following means or by a combination of
such means: (1) tendering a cash payment; (2) authorizing the Company to
withhold from the shares of the common stock otherwise issuable to the
participant as a result of the exercise of the option a number of shares having
a fair market value less than or equal to the amount of the withholding fax
obligation; or (3) delivering to the Company owned and unencumbered shares of
the common stock having a fair market value less than or equal to the amount of
the withholding tax obligation.
6. COVENANTS OF THE COMPANY
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options, the Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the options granted
under the Plan; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any option granted
under the Plan or any stock issued or issuable pursuant to any such option. If,
after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such options unless and until such authority is obtained.
<PAGE>
7. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to options granted under the Plan
shall constitute general funds of the Company.
8. MISCELLANEOUS
(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 5(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Nothing in the Plan or any instrument executed or option granted
pursuant thereto shall confer upon any eligible employee or optionee any right
to continue in the employ of the Company or any Affiliate (or to continue acting
as a consultant) or shall affect the right of the Company or any Affiliate to
terminate the employment or consulting relationship of any eligible employee or
optionee with or without cause. In the event that an optionee is permitted or
otherwise entitled to take a leave of absence, the Company shall have the
unilateral right to
(i) determine whether such leave of absence will be treated as a
termination of employment for purposes of paragraph 5(g) hereof and
corresponding provisions of any outstanding options, and
(ii) suspend or otherwise delay the time or times at which the
shares subject to the option would otherwise vest.
9. ADJUSTMENTS UPON CHANGES IN STOCK
(a) if any change is made in the stock subject to the Plan, or subject to
any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stack split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), then the Plan and
outstanding options shall be appropriately adjusted:
(i) in the class(es) and maximum number of shares subject to the
Plan; and
(ii) in the class(es) and number of shares and price per share of
stock subject to outstanding options.
(b) in the event of:
(i) a merger or consolidation in which the Company is not the
surviving corporation; or
<PAGE>
(ii) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; then to
the extent permitted by applicable law:
(a) any surviving corporation shall assume any options
outstanding under the Plan or shall substitute similar options for those
outstanding under the Plan, or
(b) such options shall continue in full force and effect. In
the event any surviving corporation refuses to assume such options, refuses
to continue such options in full force and effect, or refuses to substitute
similar options for those outstanding under the Plan, then all such vested
options shall be terminated if not exercised prior to such event, and all
such unvested options shall terminate upon such event. In the event of a
dissolution or liquidation of the Company, all vested options outstanding
under the Plan shall terminate if not exercised prior to such event, and all
unvested options outstanding under the Plan shall terminate upon such event.
10. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 9 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary
for the Plan to satisfy the requirements of any Nasdaq or securities exchange
listing requirements.
(b) Rights and obligations under any option granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the
option was granted and
(ii) such person consents in writing.
11. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board. No options may be granted under the Plan while
the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the consent of the person to whom the option was
granted.
<PAGE>
12. EFFECTIVE DATE OF PLAN
The Plan shall become effective as determined by the Board.
ADOPTED BY THE BOARD OF DIRECTORS ON OCTOBER 3, 1997
