<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
___________
NPS PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
___________
DELAWARE 87-0439579
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
___________
420 CHIPETA WAY
SALT LAKE CITY, UTAH 84108-1256
(801) 583-4939
(Address and telephone number of principal executive offices)
___________
1998 STOCK OPTION PLAN
(Full title of the plan)
JAMES U. JENSEN, ESQ.
VICE PRESIDENT, CORPORATE DEVELOPMENT AND LEGAL AFFAIRS
NPS PHARMACEUTICALS, INC.
420 CHIPETA WAY
SALT LAKE CITY, UTAH 84108-1256
(801) 583-4939
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
___________
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TITLE OF SECURITIES TO BE REGISTERED AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
SHARE (1) PRICE (1)
- ---------------------------------------------------------------------------------------------------------------------
Common Stock (par value $ .001) 1,000,000 $10.6875 $10,687,500 $2,821.50
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h)(l). The price per share and
aggregate offering price are based upon the average of the high and low
prices of the Registrant's Common Stock on January 5, 2000 as reported on
the Nasdaq Stock Market.
- --------------------------------------------------------------------------------
1
<PAGE>
PART II: INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
In accordance with General Instruction E to Form S-8, the contents of NPS
Pharmaceuticals, Inc., a Delaware corporation (the "Company") Registration
Statements filed with the Securities and Exchange Commission ("SEC"), on Form S-
8, Commission file No. 33-79622 and file No. 333-512, including exhibits
thereto, are hereby incorporated by reference into this Registration Statement,
except as the same may be modified by the information set forth herein.
The following documents filed by the Company with the SEC are incorporated by
reference into this Registration Statement:
(a) The Company's Annual Report on Form 10-K for the year ended December 31,
1998.
(b) The Company's quarterly reports on Form 10-Q for the quarters ended March
31, 1999, June 30, 1999 and September 30, 1999.
(c) The Company's current reports on Form 8-K filed on October 1, 1999,
November 12, 1999 and November 18, 1999.
(d) The description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A, filed May 23, 1994, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
any amendment or report filed for the purpose of updating such description;
and the description of the Preferred Share Purchase Rights contained in the
Company's Registration statement on Form 8-K, filed December 19, 1996,
under the Exchange Act, including any amendment or report filed for the
purpose of updating such description.
(e) 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.
ITEM 8. EXHIBITS
EXHIBIT NO. DESCRIPTION
5.1 Opinion of Counsel
23.4 Consent of Independent Auditors
23.5 Consent of Counsel (included in Exhibit 5.1, Opinion of Counsel)
24.2 Power of Attorney (contained on the signature pages)
99.5 1998 Stock Option Plan
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Salt Lake, County of Salt Lake, State of Utah, on the
7th day of January, 2000.
NPS PHARMACEUTICALS, INC.
By: /s/ James U. Jensen
--------------------------------------------------
James U. Jensen, Vice President Corporate
Development and Legal Affairs and Secretary
3
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Hunter
Jackson, Ph.D., and James U. Jensen, J.D. his true and lawful attorneys-in-fact
and agents, each acting alone, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and all 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 and about the premises, 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, each acting alone, or his
substitute or substitutes, may lawfully 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>
President, Chief Executive Officer and January 7, 2000
Chairman of the Board
- --------------------
Hunter Jackson
Vice President, Finance, Chief Financial January 7, 2000
Officer and Treasurer
- --------------------
Robert K. Merrell
Vice President, Corporate Development January 7, 2000
and
- -------------------- Legal Affairs, Secretary and Director
James U. Jensen
January 7, 2000
Director
- --------------------
Santo J. Costa
January 7, 2000
Director
- --------------------
James G. Groninger
January 7, 2000
Director
- --------------------
Joseph Klein, III
January 7, 2000
Director
- --------------------
Donald E. Kuhla
January 7, 2000
Director
- --------------------
Thomas N. Parks
January 7, 2000
____________________ Director
Peter G. Tombros
</TABLE>
4
<PAGE>
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION
5.1 Opinion of Counsel
23.4 Consent of Independent Auditors
23.5 Consent of Counsel (included in Exhibit 5.1, Opinion of Counsel)
24.2 Power of Attorney (contained on the signature pages)
99.5 1998 Stock Option Plan
5
<PAGE>
EXHIBIT 5.1
OPINION OF COUNSEL
<PAGE>
WOODBURY & KESLER
a Professional Corporation, Attorneys at Law
265 East 100 South, Suite 300
Salt Lake City, Utah 84110
(801) 364-1100
September 22, 1998
NPS Pharmaceuticals, Inc.
Attn: James U. Jensen
420 Chipeta Way
Salt Lake City, Utah 84108
Re: Legal Opinion Letter Pursuant to the filing by NPS Pharmaceuticals,
Inc. ("NPS") of a Registration Statement on Form S-8
Dear Jim,
You have requested our opinion with respect to certain matters in
connection with the filing by NPS of a Registration Statement on Form S-8 with
the Securities and Exchange Commission covering the issuance of up to 1,000,000
shares of the Company's Common Stock, $.001 par value (the "Shares"), pursuant
to the Company's 1998 Stock Option Plan (the "Plan").
In connection with this opinion, we have examined the following documents:
. Registration Statement;
. 1998 Stock Option Plan;
. Amended and Restated Certificate of Incorporation and Bylaws, as
amended;
. Resolutions of the Board of Directors dated March 3, 1998;
. Resolutions of the Board of Directors dated May 20, 1998;
. Minutes of the 1998 Annual Shareholders Meeting held May 20, 1998;and
. such other records, certificates, memoranda and instruments as we
deemed 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 and
the Registration Statement, will be validly issued, fully paid, and
nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
WOODBURY & KESLER, P.C.
/s/ Nicholas E. Hales
Nicholas E. Hales
Vice President
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
<PAGE>
Consent of Independent Auditors
The Board of Directors
NPS Pharmaceuticals, Inc.:
We consent to the use of our report incorporated herein by reference in the
registration statement.
Salt Lake City, Utah
January 6, 2000
<PAGE>
EXHIBIT 99.5
1998 STOCK OPTION PLAN
<PAGE>
NPS PHARMACEUTICALS, INC.
1998 STOCK OPTION PLAN
1. GENERAL.
a. Purpose. The 1998 Stock Option Plan has been established by the
-------
Company to provide a means by which employees, directors, and
consultants of the Company and its Affiliates may be given the
opportunity to benefit from increases in value of NPS stock through
the granting of Options. NPS seeks to (a) retain the services of
present employees, directors, and consultants; (b) secure and retain
the services of new employees, directors, and consultants; and (c)
provide incentives for such persons to exert maximum efforts for the
success of the Company and thereby promote the long-term interest of
the Company, including the growth in value of the Company's equity and
enhancement of long-term stockholder return.
b. Types of Options. The Company intends that the Options issued under
----------------
the Plan shall, in the discretion of the Board or any Board Committee
(see paragraph 3.2), be either Incentive Stock Options or Nonstatutory
Stock Options (defined below).
c. Definitions. Unless otherwise defined, capitalized terms shall have
-----------
the meaning set forth in Section 2.
2. DEFINITIONS.
a. Affiliate means any parent corporation or subsidiary corporation of
---------
the Company, whether now or hereafter existing, as those terms are
defined in Sections 424(e) and (f) respectively, of the Code.
b. Board means the Board of Directors of the Company.
-----
c. Code means the Internal Revenue Code of 1986, as amended.
----
4. Committee means a Committee appointed by the Board in accordance with
---------
paragraph 3.2 herein.
5. Company means NPS Pharmaceuticals, Inc., a Delaware corporation.
-------
6. Consultant means any person (including an advisor) engaged by the
----------
Company or an Affiliate to render consulting services under
arrangements intended to compensate such person for such services. The
term "Consultant" shall not include a Director who is paid only a
director's fee by the Company or who is not compensated by the Company
for services as a Director.
7. Continuous Status as an Employee, Director, or Consultant means the
---------------------------------------------------------
employment or relationship as an Employee, Director, or Consultant is
not interrupted or terminated by the Company or any Affiliate. The
Board, in its sole discretion, may determine whether
<PAGE>
Continuous Status as an Employee, Director, or Consultant shall be
considered interrupted in the case of:
i. any leave of absence approved by the Board, including sick leave,
military leave, or any other personal leave; provided, however,
that for purposes of Incentive Stock Options, any such leave may
not exceed 90 days unless reemployment upon the expiration of
such leave is guaranteed by contract (including certain Company
policies) or statute; or
ii. transfers between locations of the Company or between the
Company, Affiliates or its successor.
8. Day of Determination means the date of the occurrence of an event that
--------------------
requires the determination of the Fair Market Value of an award made
hereunder.
9. Director means a member of the Board.
--------
10. Disability means total and permanent disability as defined in Section
----------
22(e)(3) of the Code.
11. Employee means any person, including Officers and Directors, employed
--------
by the Company or any Affiliate. Neither service as a Director nor
payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
12. Exchange Act means the Securities Exchange Act of 1934, as amended.
------------
13. Fair Market Value means, as of any date, the value of the common stock
-----------------
of the Company as determined as follows:
i. If the common stock is listed on any established stock exchange
or a national market system, including without limitation, the
National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("Nasdaq") System, the Fair
Market Value of a share of common stock shall be the closing
price for such stock on the Day of Determination as quoted on
such system as reported in the Wall Street Journal or such other
source as the Board deems reliable. In the event the Day of
Determination falls on a date that the Nasdaq system is closed,
then the Fair Market Value shall be the closing sales price for
such stock on the last market trading day prior to the Day of
Determination as quoted on such system as reported in the Wall
Street Journal or such other source as the Board deems reliable.
ii. If the common stock is quoted on Nasdaq (but not on the National
Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair
Market Value of a share of common stock shall be the mean between
the bid and asked prices for the common stock on the last market
trading day prior to the day of determination, as reported in the
Wall Street Journal or such other source as the Board deems
reliable;
iii. In the absence of an established market for the common stock, the
Fair Market Value shall be determined in good faith by the Board.
<PAGE>
14. Incentive Stock Option (or "ISO") means an Option intended to qualify
---------------------------------
as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
15. Non-Employee Director means a Director who is considered to be a "Non-
---------------------
Employee Director" in accordance with Rule 16b-3(b)(3), or any other
applicable rules, regulations or interpretations of the Securities and
Exchange Commission.
16. Nonstatutory Stock Option (or "NSO") means an Option not intended to
------------------------------------
qualify or not eligible to qualify as an ISO or an ISO which,
subsequent to its date of grant, no longer qualifies as an ISO under
Section 422 of the Code.
17. Officer means a person who is an officer of the Company within the
-------
meaning of Section 16a-1(f) of the Exchange Act and the rules and
regulations promulgated thereunder.
18. Option means a stock option granted pursuant to the Plan.
------
19. Option Agreement means a written agreement between the Company and an
----------------
Optionee evidencing the terms and conditions of an individual Option
grant.
20. Optionee means an Employee, Director, or Consultant who holds an
--------
outstanding Option.
21. Outside Director means a Director who is considered to be an "Outside
----------------
Director" in accordance with Section 162(m) of the Code, or any other
applicable Code sections, regulations, or interpretations of the IRS.
22. Plan means this 1998 Stock Option Plan.
----
23. Rule 16b-3 means Rule 16b-3 of the Exchange Act or any successor to
----------
Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
24. Securities Act means the Securities Act of 1933, as amended.
--------------
3. ADMINISTRATION.
1. Powers and Authority. The Plan shall be administered by or under the
--------------------
direction of the Board unless and until the Board delegates
administration to a Committee, as provided in paragraph 3.2. 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: (a) which of the persons eligible
under the Plan shall be granted Options; (b) when and how Options
shall be granted; (c) whether an Option shall be intended to
qualify as an ISO; (d) the provisions of each Option granted
(which need not be identical) including the time or times when a
person shall be permitted to receive stock pursuant to the
exercise of such Option; (e) whether a person shall be permitted
to exercise such Option; and (f) the number of shares with
respect to which Options shall be granted to each such person.
<PAGE>
ii. To construe and interpret the Plan and 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 Section 12.
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.
2. Delegation. The Board may delegate administration of the Plan to a
----------
Board committee composed of not fewer than two members (the
"Committee"). All members of the Committee shall be Outside Directors
or Non-Employee Directors, to the extent necessary to comply with the
applicable provisions of Rule 16b-3 and Section 162(m). 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 in such event, 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. Director Status. Any requirement that an administrator of the Plan be
---------------
a Non-Employee Director or an Outside Director shall not apply if the
Board or the Committee expressly declares that such requirement shall
not apply.
4. SHARES SUBJECT TO THE PLAN.
1. Available Shares. Subject to the provisions of Section 11, the number
----------------
of shares that may be issued pursuant to Options granted hereunder
shall not exceed in the aggregate 1,000,000 shares of the Company's
common stock.
2. Forfeited or Canceled Shares. Any shares of stock for which an Option
----------------------------
has been granted under the Plan that are forfeited because of the
failure to meet an Option grant contingency or condition shall again
be available for delivery pursuant to new grants under the Plan. To
the extent any shares of stock covered by an Option are not delivered
to an Optionee or beneficiary because the award is forfeited or
canceled, or the shares of stock are not delivered because the award
is settled in cash, such shares shall not be deemed to have been
delivered for purposes of determining the maximum number of shares of
stock available for delivery under the Plan.
3. Payment with Shares. If the exercise price of any Option granted under
-------------------
the Plan is satisfied by tendering shares of stock to the Company (by
either actual delivery or by attestation), only the number of shares
of stock issued net of the shares of stock tendered shall be deemed
delivered for purposes of determining the maximum number of shares of
stock available for delivery under the Plan.
4. Plan Limits. Shares of stock delivered under the Plan in settlement,
-----------
assumption, or substitution of outstanding awards (or obligations to
grant future awards) under the plans or arrangements of another entity
shall not reduce the maximum number of shares of
<PAGE>
stock available for delivery under the Plan, to the extent that such
settlement, assumption, or substitution is a result of the Company or
Affiliate acquiring another entity (or an interest in another entity).
Subject to the provisions of Section 11, the maximum number of shares
that may be covered by grants to any one individual shall be 750,000
shares during any three consecutive calendar years.
5. ELIGIBILITY.
1. Option Type. ISOs may be granted only to Employees. NSOs may be
-----------
granted to Employees, Directors, or Consultants.
2. Section 16 Compliance. No Officer or Director shall be eligible for
---------------------
the benefits of the Plan unless at the time discretion is exercised in
the selection of an Officer or Director as a person to whom Options
may be granted, or in the determination of the number of shares which
may be covered by Options granted to the Officer or Director, the Plan
otherwise complies with the requirements of Rule 16b-3. This paragraph
5.2 shall not apply if the Board or Committee expressly declares that
it shall not apply.
6. OPTION PROVISIONS. Each Option shall be in such form and shall contain such
terms and conditions as the Board 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:
1. Term. No Option shall be exercisable after the expiration of ten years
----
from the date it was granted.
2. Price. The exercise price of each Option shall be not less than 100%
-----
of the Fair Market Value of the stock subject to the Option on the
date the Option is granted.
3. Consideration. The purchase price of stock acquired pursuant to an
-------------
Option shall be paid, to the extent permitted by applicable statutes
and regulations:
i. in cash; or
ii. by delivery of already-owned shares of common stock of the
Company or a combination of cash and already-owned shares of
common stock of the Company; or
iii through surrender of shares of common stock available for
exercise under the Option, valued at their Fair Market Value on
the date of exercise and owned free and clear of any liens,
claims, encumbrances, or security interests; or
iv. 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 paragraph 6.4; or
v. pursuant to a broker assisted exercise same-day sales program; or
<PAGE>
vi. as required in the discretion of the Board or the Committee,
either at the time of the grant or exercise of the Option; or
vii any combination of 6.3.1 through 6.3.6 above.
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.
4. Transferability.
---------------
i. Incentive Stock Options. In order for an Option to qualify for
treatment as an ISO, it may not be transferable except by will or
by the laws of descent and distribution. In the event an Optionee
transfers such Option, such transfer shall constitute a
disqualifying event and the Option shall no longer qualify as an
ISO but shall be considered a NSO under the terms of this Plan.
ii. Nonstatutory Stock Option. The Board or Committee may, in its
discretion, authorize all or a portion of the NSOs to be granted
to an Optionee to be on terms that permit transfer by such
Optionee to (a) the spouse, children, or grandchildren of the
Optionee ("Immediate Family Members"), (b) a trust or trusts for
the exclusive benefit of such Immediate Family Members, or (c) a
partnership in which such Immediate Family Members are the only
partners, provided that (i) there may be no consideration for any
such transfer, (ii) the Option Agreement pursuant to which such
Options are granted must expressly provide for transferability in
a manner consistent with this Section, (iii) subsequent transfers
of transferred Options shall be prohibited except those occurring
by will or the laws of descent and distribution, and (iv) the
Options shall continue to be subject to all the terms and
conditions that applied prior to transfer in the same manner and
to the same extent as non-transferred Options, including
paragraphs 6.5 through 6.9. The Options shall be exercisable by
the transferee only to the extent, and for the periods specified
in such sections. The Company expressly disclaims any obligation
to provide notice to a transferee of the termination of the
Option.
iii. Unless transfer by an Optionee is specifically provided for in an
Option Agreement, a NSO shall not be transferable except by will
or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act, or the
rules thereunder (a "QDRO"), and shall be exercisable during the
lifetime of the person to whom the NSO is granted only by such
person or any transferee pursuant to a QDRO.
5. Vesting. 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). The Option Agreement may provide that 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 became vested but was not fully exercised. The
Option may be subject to such other terms and conditions on
<PAGE>
the time or times when it may be exercised (which may be based on
performance criteria) as the Board may deem appropriate. The
provisions of this paragraph 6.5 are subject to any Option provisions
governing the minimum number of shares as to which an Option may be
exercised.
6. Securities Law Compliance. The Company may require any Optionee, or
-------------------------
any person to whom an Option is transferred under paragraph 6.4, as a
condition of exercising any such Option, (a) 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 (b) 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 (i) 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, or (ii) 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.
7. Termination of Employment or Relationship as an Employee, Director, or
----------------------------------------------------------------------
Consultant. In the event an Optionee's Continuous Status as an
----------
Employee, Director, or Consultant terminates (other than upon the
Optionee's death or Disability), the Optionee may exercise his or her
Option, but only within such period of time as is determined by the
Board, and only to the extent that the Optionee was entitled to
exercise at the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option
Agreement). In the case of an ISO, the Board shall determine such
period of time (in no event to exceed three months from the date of
termination) when the Option is granted. If, at the date of
termination, the Optionee is not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the
Option shall revert to the Plan. If, after termination, the Optionee
does not exercise his or her Option within the time specified in the
Option Agreement, the Option shall terminate, and the shares covered
by such Option shall revert to the Plan.
8. Disability of Optionee. In the event an Optionee's Continuous Status
----------------------
as an Employee, Director, or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option,
but only within twelve months from the date of such termination (or
such shorter period specified in the Option Agreement), and only to
the extent that the Optionee was entitled to exercise at the date of
such termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). If, at the
date of termination, the Optionee is not entitled to exercise his or
her entire Option, the shares covered by the unexercisable portion of
the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the shares covered by such
Option shall revert to the Plan.
9. Death of Optionee. In the event of the death of an Optionee, the
-----------------
Option may be exercised, at any time within eighteen months following
the date of death (or such shorter period
<PAGE>
specified in the Option Agreement, but in no event later than the
expiration of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to
the extent the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled
to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to the Plan. If,
after death, the Optionee's estate or a person who acquired the right
to exercise the Option by bequest or inheritance, or by assignment as
provided herein, does not exercise the Option within the time
specified herein, the Option shall terminate, and the shares covered
by such Option shall revert to the Plan.
10. Early Exercise. The Option Agreement may, but need not, include a
--------------
provision whereby the Optionee may elect at any time while an
Employee, Director, or Consultant to exercise the Option as to any
part or all of the shares subject to the Option prior to the full
vesting of the Option. Any nonvested shares so purchased may be
subject to a repurchase right in favor of the Company or to any other
restriction the Board determines to be appropriate.
11. Withholding. To the extent provided by the terms of an Option
-----------
Agreement, 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:
i. cash payment; or
ii. authorizing the Company to withhold shares from the shares of the
common stock otherwise issuable to the participant as a result of
the exercise of the Option; or
iii delivering to the Company owned and unencumbered shares of the
common stock of the Company.
7. NO REPRICING, CANCELLATION, OR RE-GRANT OF OPTIONS. Except for certain
adjustments due to corporate transactions described in Section 11, the
exercise price for any outstanding Option granted under the Plan may not be
decreased after the Day of Determination for such Option grant nor may an
outstanding Option granted under the Plan be surrendered to the Company as
consideration in exchange for the grant of a new Option with a lower
exercise price.
8. COVENANTS OF THE COMPANY.
1. Stock Availability. During the terms of the Option granted under the
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Plan, the Company shall keep available at all times the number of
shares of stock required to satisfy such grants up to the number of
shares of stock authorized under the Plan.
2. Authority. The Company shall seek to obtain from each regulatory
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commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of stock acquired under
the grants, provided, however, that this undertaking shall not require
the Company to register under the Securities Act either 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 under such Options unless and until
such authority is obtained.
<PAGE>
9. USE OF PROCEEDS FROM STOCK. Proceeds from the exercise of Options under
the Plan shall constitute general funds of the Company.
10. MISCELLANEOUS.
1. Acceleration. The Board or the Committee shall have the power to
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accelerate the time at which an Option may first be exercised or the
time during which an Option or any part thereof will vest,
notwithstanding the provisions in the Option Agreement stating the
time at which it may first be exercised or the time during which it
will vest.
2. Ownership Rights. Neither an Optionee nor any person to whom an Option
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is transferred under paragraph 6.4 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.
3. Employment Rights. Nothing in the Plan or any instrument executed
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pursuant thereto shall confer upon any Employee, Director, Consultant,
Optionee, or other holder of Options any right to continue in the
employ of the Company or any Affiliate (or to continue acting as a
Director or Consultant) or shall affect the right of the Company or
any Affiliate to terminate the employment or relationship as a
Director or Consultant of any Employee, Director, Consultant, or
Optionee with or without cause.
4. ISO Value Limit. To the extent that the aggregate Fair Market Value
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(determined at the time of grant) of stock with respect to which ISOs
granted after 1998 are exercisable for the first time by any Optionee
during any calendar year under all plans of the Company and its
Affiliates exceeds $100,000, the Options or portions thereof which
exceed such limit (according to the order in which they were granted)
shall be treated as NSOs.
11. ADJUSTMENTS UPON CHANGES IN STOCK AND CORPORATE TRANSACTIONS.
1. Stock Adjustments. If any change is made in the stock subject to the
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Plan, or subject to any Option (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property
other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or
otherwise), the Plan and outstanding Options will be appropriately
adjusted in the class(es) and maximum number of shares subject to the
Plan and the class(es) and number of shares and price per share of
stock subject to outstanding Options.
2. Corporate Transactions. In the event of: (a) a dissolution or
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liquidation or sale of all or substantially all of the assets of the
Company; (b) a merger or consolidation in which the Company is not the
surviving corporation; or (c) 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, the Board in its sole discretion and to the
extent permitted by applicable law may direct as to all or any of the
Option(s) outstanding under the Plan that: (i) any surviving
corporation shall assume such Options or shall substitute similar
Options; (ii) such Options shall continue in full force and effect; or
(iii) the duration of time during which such Options become vested or
may
<PAGE>
be exercised shall be accelerated and any outstanding unexercised
rights under any such Options terminated, if not exercised prior to
such event.
12. AMENDMENT OF THE PLAN.
1. Amendments. The Board at any time, and from time to time, may amend
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the Plan. However, as provided in Section 11, no amendment shall be
effective unless approved by the stockholders of the Company within
twelve months before or after the adoption of the amendment, where the
amendment will:
i. Increase the number of shares reserved for Options under the
Plan;
ii. Modify the requirements as to eligibility for participation in
the Plan to the extent such modification requires stockholder
approval in order for the Plan to satisfy the requirements of
Sections 162(m) and 422 of the Code;
iii. Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the
requirements of Section 422 of the Code or to comply with the
requirements of Rule 16b-3 or Nasdaq or other applicable
securities exchange listing requirements;
iv. Decrease the minimum exercise price set forth in paragraph 6.2;
or
v. Remove the limitation provided in Section 7.
2. Compliance. It is expressly contemplated that the Board may amend the
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Plan in any respect the Board deems necessary or advisable to provide
under the provisions of the Code and the regulations promulgated
thereunder relating to ISOs and/or to bring the Plan and/or ISOs
granted under it into compliance therewith.
3. Consent. Rights and obligations under any Option granted before
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amendment of the Plan shall not be altered or impaired by any
amendment of the Plan unless (a) the Company requests the consent of
the person to whom the Option was granted and (b) such person consents
in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
1. Termination. The Board may suspend or terminate the Plan at any time.
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Unless sooner terminated, the Plan shall terminate on midnight, May
31, 2008. No Options may be granted under the Plan while the Plan is
suspended or after it is terminated.
2. Rights and Obligations. Any Options 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 holder of the Options.
14. EFFECTIVE DATE OF PLAN. The Plan shall become effective as determined by
the Board, but no Options granted under the Plan shall be exercisable
unless and until the Plan has been approved by the stockholders of the
Company.
