<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1996
REGISTRATION NO. 333-____________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
SHAMAN PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-3095806
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
213 EAST GRAND AVENUE
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(Address of principal executive offices) (zip code)
SHAMAN PHARMACEUTICALS, INC.
1992 STOCK OPTION PLAN
(Full Title of the Plan)
Lisa A. Conte
President and Chief Executive Officer
SHAMAN PHARMACEUTICALS, INC.
213 East Grand Avenue, South San Francisco, California 94080
(Name and address, including zip code, of agent for service)
(415) 952-7070
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Proposed Proposed
Maximum Offering Maximum
Title of Securities Amount to be Price per Aggregate Amount of
to be Registered Registered(1) Share(2) Offering Price Registration Fee
<S> <C> <C> <C> <C>
Options to purchase Common Stock 450,000 N/A N/A N/A
Common Stock, $0.001 par value 450,000 shares $6.25 $2,812,500 $970
===================================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1992 Stock Option Plan by
reason of any stock dividend, stock split, recapitalization or any
other similar transaction without receipt of consideration which
results in an increase in the number of outstanding shares of Common
Stock of Shaman Pharmaceuticals, Inc.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the average of
the high and low selling prices per share of Common Stock of Shaman
Pharmaceuticals, Inc. on July 24, 1996 as reported by the Nasdaq
National Market.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Shaman Pharmaceuticals, Inc. (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange Commission (the
"Commission"):
(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;
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1996 filed with the Commission on May
14, 1996; and
(c) The Registrant's Registration Statement No. 0-21022 on Form
8-A filed with the Commission on December 18, 1992, as amended
by Amendments Nos. 1, 2 and 3 filed on January 19, January 21
and January 26, 1993, respectively, in which there is
described the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act") after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated by reference
into this Registration Statement and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Pursuant to the General Corporation Law of Delaware ("Delaware
Law"), the Registrant has adopted provisions in its Amended and Restated
Certificate of Incorporation which eliminate the personal liability of each
member of the Registrant's Board of Directors to the Registrant and its
stockholders for monetary damages for breach of such Board member's fiduciary
duties in certain circumstances and authorize the Registrant to indemnify its
Board members, officers and other agents, by bylaw, agreement or otherwise, to
the fullest extent permitted by law. The Registrant's Bylaws require the
Registrant to indemnify its Board members and permit the Registrant to indemnify
its officers, employees and other agents to the fullest extent permitted by
Delaware Law.
<PAGE> 3
The Registrant's Amended and Restated Certificate of
Incorporation expressly authorizes the use of indemnification agreements. The
Registrant has entered into such indemnification agreements with all of its
officers and Board members. The form of such agreements was approved by the
Registrant's stockholders in January 1993.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 0-21022 on
Form 8-A and Amendments Nos. 1, 2 and 3 thereto, which are
incorporated herein by reference pursuant to Item 3(c) of
this Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II.4 of this
Registration Statement.
99.1 Shaman Pharmaceuticals, Inc. 1992 Stock Option Plan.
99.2* Form of Notice of Grant with Stock Option Agreement.
99.3* Form of Addendum to Stock Option Agreement (Special Tax
Elections).
99.4* Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Rights).
99.5** Form of Non-Employee Director Automatic Stock Option
Agreement.
</TABLE>
- ----------------------
* Exhibits 99.2, 99.3 and 99.4 are incorporated herein by reference to
Exhibits 28.2, 28.3 and 28.4, respectively, to Registrant's
Registration Statement No. 33-66450 filed with the Commission on July
23, 1993.
** Exhibit 99.5 is incorporated herein by reference to Exhibit 99.5 to
Registrant's Registration Statement No. 33-93938 filed with the
Commission on June 26, 1995.
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement (i) to include any prospectus required
by Section 10(a)(3) of the Securities Act of 1933, as amended (the "1933 Act"),
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement,
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement; provided,
however, that clauses (1)(i) and (1)(ii) shall not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the 1934 Act that are incorporated by reference into this
Registration Statement; (2) that for the purpose of determining any liability
II-2
<PAGE> 4
under the 1933 Act each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and (3) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the Registrant's 1992 Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers or controlling persons of
the Registrant pursuant to the indemnity provisions summarized in Item 6 or
otherwise, the Registrant has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 5
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 South San Francisco, State of California, on
this 29th day of July 1996.
SHAMAN PHARMACEUTICALS, INC.
By: /s/ Lisa A. Conte
-----------------------------------
Lisa A. Conte
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of Shaman
Pharmaceuticals, Inc., a Delaware corporation, do hereby constitute and appoint
Lisa A. Conte and Barbara Evans Goodrich and each of them, the lawful
attorneys-in-fact and agents, with full power and authority to do any and all
acts and things and to execute any and all instruments which said attorneys and
agents, and any one of them, determine may be necessary or advisable or required
to enable said corporation to comply with the Securities Act of 1933, as
amended, and any rules or regulation or requirements of the Securities and
Exchange Commission in connection with this Registration Statement. Without
limiting the generality of the foregoing power and authority, the powers granted
include the power and authority to sign the names of the undersigned officers
and directors in the capacities indicated below to this Registration Statement,
to any and all amendments, both pre-effective and post-effective, and
supplements to this Registration Statement and to any and all instruments or
documents filed as part of or in conjunction with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby ratifies
and confirms all that said attorneys and agents, or any one of them, shall do or
cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Lisa A. Conte President, Chief Executive July 29, 1996
- ----------------------- Officer and Director (Principal -------------
Lisa A. Conte Executive Officer)
</TABLE>
II-4
<PAGE> 6
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Barbara Evans Goodrich Principal Financial Officer July 29, 1996
- -------------------------- (Principal Financial and
Barbara Evans Goodrich Accounting Officer)
/s/ G. Kirk Raab Chairman of the Board July 29, 1996
- -------------------------
G. Kirk Raab
/s/ Herbert H. McDade, Jr. Director July 29, 1996
- --------------------------
Herbert H. McDade, Jr.
/s/ M. David Titus Director July 29, 1996
- --------------------------
M. David Titus
/s/ John A. Young Director July 29, 1996
- --------------------------
John A. Young
</TABLE>
II-5
<PAGE> 7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
SHAMAN PHARMACEUTICALS, INC.
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statement No. 0-21022 on Form 8-A and
Amendments No. 1, 2 and 3 thereto, which are incorporated herein
by reference pursuant to Item 3(c) of this Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit
5.
24 Power of Attorney. Reference is made to page II.4 of this
Registration Statement.
99.1 Shaman Pharmaceuticals, Inc. 1992 Stock Option Plan.
99.2* Form of Notice of Grant with Stock Option Agreement.
99.3* Form of Addendum to Stock Option Agreement (Special Tax
Elections).
99.4* Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Rights).
99.5** Form of Non-Employee Director Automatic Stock Option Agreement.
</TABLE>
- ----------------------
* Exhibits 99.2, 99.3 and 99.4 are incorporated herein by reference to
Exhibits 28.2, 28.3 and 28.4, respectively, to Registrant's
Registration Statement No. 33-66450 filed with the Commission on July
23, 1993.
** Exhibit 99.5 is incorporated herein by reference to Exhibit 99.5 to
Registrant's Registration Statement No. 33-93938 filed with the
Commission on June 26, 1995.
<PAGE> 1
EXHIBIT 5
Opinion and consent of Brobeck, Phleger & Harrison LLP
July 29, 1996
SHAMAN PHARMACEUTICALS, INC.
213 East Grand Avenue
South San Francisco, CA 94080
RE: SHAMAN PHARMACEUTICALS, INC. -- REGISTRATION STATEMENT FOR
OFFERING OF 450,000 SHARES OF COMMON STOCK
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 450,000 shares of
the Common Stock of Shaman Pharmaceuticals, Inc. (the "Company") to be issued
under the Company's 1992 Stock Option Plan (the "Plan"). We advise you that, in
our opinion, when such shares have been issued and sold pursuant to the
provisions of the Plan and in accordance with the Registration Statement, such
shares will be validly issued, fully paid and nonassessable shares of the
Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Shaman Pharmaceuticals, Inc. 1992 Stock Option
Plan of our report dated January 5, 1996, with respect to the financial
statements of Shaman Pharmaceuticals, Inc. included in its Annual Report (Form
10-K) for the year ended December 31, 1995, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Palo Alto, California
July 29, 1996
<PAGE> 1
Exhibit 99.1
SHAMAN PHARMACEUTICALS, INC.
1992 STOCK OPTION PLAN
(AS RESTATED AND AMENDED THROUGH JANUARY 31, 1996)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1992 Stock Option Plan ("Plan") is intended to promote
the interests of Shaman Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), by providing a method whereby eligible individuals may be offered
the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company as an incentive for them to remain in the
service of the Company (or its parent or subsidiary corporations).
B. The Plan became effective on the date on which shares of
the Company's common stock were first registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). Such date is
hereby designated as the Effective Date of the Plan.
C. This Plan shall serve as the successor to the Company's
1990 Stock Option Plan (the "1990 Plan"), and no further option grants shall be
made under the 1990 Plan from and after the Effective Date of this Plan. All
options outstanding under the 1990 Plan on such Effective Date are hereby
incorporated into this Plan and shall accordingly be treated as outstanding
options under this Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the express terms and conditions of the
instrument evidencing such grant, and no provision of this Plan shall be deemed
to affect or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of the
Company's common stock thereunder or their exercise of any outstanding stock
appreciation rights thereunder.
D. For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the Company:
Any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company shall be considered to be a
PARENT of the Company, provided each such corporation in the unbroken
chain (other than the Company) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations
in such chain.
<PAGE> 2
Each corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company shall be considered to be a
SUBSIDIARY of the Company, provided each such corporation (other than
the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
II. STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be divided into two separate
components: the Discretionary Option Grant Program specified in Article Two and
the Automatic Option Grant Program specified in Article Three. Under the
Discretionary Option Grant Program, eligible individuals may, at the discretion
of the Plan Administrator, be granted options to purchase shares of Common Stock
in accordance with the provisions of Article Two. Under the Automatic Option
Grant Program, certain non-employee members of the Company's Board of Directors
(the "Board") will at periodic intervals automatically receive special option
grants to purchase shares of Common Stock in accordance with the provisions of
Article Three.
B. General Provisions. Unless the context clearly indicates
otherwise, the provisions of Articles One and Four of the Plan shall apply to
both the Discretionary Option Grant Program and the Automatic Option Grant
Program and shall accordingly govern the interests of all individuals under the
Plan.
III. ADMINISTRATION OF THE PLAN
A. The Discretionary Option Grant Program shall be
administered by a committee ("Committee") of two (2) or more non-employee Board
members appointed by the Board. No Board member shall be eligible to serve on
the Committee if such individual has, within the relevant period designated
below, received an option grant under this Plan or any other stock plan of the
Company (or any parent or subsidiary corporation), other than pursuant to the
Automatic Option Grant Program:
(i) for each of the initial members of the Committee,
the period commencing with the Effective Date of the Plan and ending
with the date of his or her appointment to the 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 Committee or (if shorter) the period commencing with
the Effective Date of the Plan and ending with the date of his or her
appointment to the Committee.
2.
<PAGE> 3
Members of the Committee shall serve for such period
of time as the Board may determine and shall be subject to removal by the Board
at any time.
B. The Committee as Plan Administrator shall have full power
and authority (subject to the express provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for the proper administration
of the Discretionary Option Grant Program and to make such determinations under,
and issue such interpretations of, the provisions of such program and any
outstanding option grants 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
thereunder.
C. Administration of the Automatic Option Grant Program shall
be self-executing in accordance with the express terms and conditions of
Article Three, and the Committee as Plan Administrator shall exercise no
discretionary functions with respect to option grants made pursuant to that
program.
IV. OPTION GRANTS
A. The persons eligible to participate in the Discretionary
Option Grant Program under Article Two of the Plan shall be limited to the
following:
(i) officers and other key employees of the Company (or
its parent or subsidiary corporations) who render services which
contribute to the management, growth and financial success of the
Company (or its parent or subsidiary corporations);
(ii) non-employee members of the Board;
(iii) non-employee members of the board of directors
of any parent or subsidiary corporation; and
(iv) those consultants or other independent advisors
who provide valuable services to the Company (or its parent or
subsidiary corporations).
B. However, members of the Committee while serving as the Plan
Administrator shall not be eligible to receive any stock options, stock
appreciation rights, direct stock issuances or other stock awards under this
Plan or any other stock plan of the Company or its parent or subsidiary
corporations, other than pursuant to the Automatic Option Grant Program under
Article Three.
C. The Plan Administrator shall have full authority to
determine the eligible individuals who are to receive option grants under the
Discretionary Option Grant
3.
<PAGE> 4
Program, the number of shares to be covered by each such grant, the status of
the granted option as either an incentive stock option ("Incentive Option")
which satisfies the requirements of Section 422 of the Internal Revenue Code or
a non-statutory option not intended to meet such requirements, the time or times
at which each granted option is to become exercisable and the maximum term for
which the option may remain outstanding.
V. STOCK SUBJECT TO THE PLAN
A. Shares of the Company's common stock (the "Common Stock")
shall be available for issuance under the Plan and shall be drawn from either
the Company's authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Company on the open
market. The maximum number of shares of Common Stock which may be issued over
the term of the Plan shall not exceed 3,016,660(1) shares, subject to adjustment
from time to time in accordance with the provisions of this Section V. Such
authorized share reserve includes the number of shares which remained available
for issuance under the 1990 Plan as of the Effective Date, including the shares
subject to the outstanding options incorporated into this Plan and any other
shares available for future option grant under the 1990 Plan as of such
Effective Date. Such share reserve also includes (i) the increase of 107,166
shares authorized by the Board in May 1992 and subsequently approved by the
stockholders in August 1992, (ii) the increases of 250,000 shares and 176,166
shares authorized by the Board in November 1992 and December 1992, respectively,
and subsequently approved in the aggregate by the stockholders in December 1992,
(iii) the increase of 1,000,000 shares authorized by the Board in May 1993 and
subsequently approved by the stockholders at the 1994 Annual Stockholders
Meeting, (iv) the increase of 545,000 shares authorized by the Board in February
1995 and approved by the stockholders at the 1995 Annual Stockholders Meeting
and (v) the increase of 450,000 shares authorized by the Board in January 1996
and subsequently approved by the stockholders at the 1996 Annual Stockholders
Meeting. To the extent one or more outstanding options under the 1990 Plan which
have been incorporated into this Plan are subsequently exercised, the number of
shares issued with respect to each such option shall reduce, on a
share-for-share basis, the number of shares available for issuance under this
Plan. In no event may any one individual participating in the Plan be granted
stock options and separately exercisable stock appreciation rights for more than
500,000 shares of Common Stock (including the 250,000-share increase authorized
by the Board in January 1996 and subsequently approved by the stockholders at
the 1996 Annual Meeting) over the remaining term of the Plan. For purposes of
this limitation, any stock options or stock appreciation rights granted prior to
December 31, 1993 shall not be taken into account.
- --------
(1) Such share reserve gives effect to the 1-for-3 reverse stock split of the
Common Stock effected in connection with the reincorporation of the Company in
Delaware and the associated exchange of three (3) shares of the California
corporation's common stock for one (1) share of the Delaware corporation's
common stock on January 25, 1993.
4.
<PAGE> 5
B. Should one or more outstanding options under this Plan
(including outstanding options under the 1990 Plan incorporated into this Plan)
expire or terminate for any reason prior to exercise in full (including any
option cancelled in accordance with the cancellation-regrant provisions of
Section IV of Article Two of the Plan), then the shares subject to the portion
of each option not so exercised shall be available for subsequent option grant
under the Plan. Shares subject to any option or portion thereof surrendered or
cancelled in accordance with Section V of Article Two or Section III of Article
Three and all share issuances under the Plan, whether or not the shares are
subsequently repurchased by the Company 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 (including any option
incorporated from the 1990 Plan) be paid with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the
Company in satisfaction of the withholding taxes incurred in connection with the
exercise of an outstanding option under the Plan, then the number of shares of
Common Stock available for issuance under the Plan shall be reduced by the gross
number of shares for which the option is exercised, and not by the net number of
shares of Common Stock actually issued to the option holder.
C. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Company's receipt
of consideration, then appropriate adjustments shall be made to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities for which any one individual participating in
the Plan may be granted stock options and separately exercisable stock
appreciation rights after December 31, 1993, (iii) the number and/or class of
securities for which automatic option grants are to be subsequently made to each
newly-elected or continuing Board member under the Automatic Option Grant
Program, (iv) the number and/or class of securities and price per share in
effect under each option outstanding under either the Discretionary Option Grant
or Automatic Option Grant Program under the Plan and (v) the number and/or class
of securities and price per share in effect under each outstanding option
incorporated into this Plan from the 1990 Plan. 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.
5.
<PAGE> 6
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Option Grant
Program 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 Company 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; provided, however, that each such instrument shall comply
with the terms and conditions specified below. 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 accordance with the following provisions:
(i) The option price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one
hundred percent (100%) of the fair market value of such Common Stock on
the grant date.
(ii) The option price per share of the Common Stock
subject to a non-statutory stock option shall be determined by the Plan
Administrator in its sole discretion and may be less than, equal to or
greater than the fair market value of such Common Stock on the grant
date.
(2) The option price shall become immediately due
upon exercise of the option and, subject to the provisions of Section VI of this
Article Two and the instrument evidencing the grant, shall be payable in one of
the following alternative forms specified below:
- full payment in cash or check drawn to the
Company's order;
- full payment in shares of Common Stock held by the
optionee for the requisite period necessary to avoid a charge to the
Company's earnings for financial reporting purposes and valued at fair
market value on the Exercise Date (as such term is defined below);
6.
<PAGE> 7
- full payment in a combination of shares of Common
Stock of the Company held by the optionee for the requisite period
necessary to avoid a charge to the Company's earnings for financial
reporting purposes and valued at fair market value on the Exercise Date
and cash or check drawn to the Company's order; or
- full payment through a broker-dealer sale and
remittance procedure pursuant to which the optionee (I) shall provide
irrevocable written instructions to a Company-designated brokerage firm
to effect the immediate sale of the purchased shares and remit to the
Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate option price payable for the
purchased shares plus all applicable Federal and State income and
employment taxes required to be withheld by the Company in connection
with such purchase and (II) shall provide written directives to the
Company to deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale transaction.
For purposes of this subparagraph (2), the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Company. 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
shall be determined in accordance with the following provisions:
- If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded on the
Nasdaq National Market, the fair market value shall be the closing
selling price per share on the date in question, as such price is
reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no reported
closing selling price for the Common Stock on the date in question,
then the closing selling price on the last preceding date for which
such quotation exists shall be determinative of fair market value.
- If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then the fair
market value shall be the closing selling price per share on the date
in question on the exchange determined by the Plan Administrator to be
the primary market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such exchange. If there
is no reported sale of Common Stock
7.
<PAGE> 8
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 Discretionary Option Grant Program shall be exercisable at such time or
times and during such period as is determined by the Plan Administrator and set
forth in the instrument evidencing the grant. No such option, however, shall
have a maximum term in excess of ten (10) years from the grant date. During the
lifetime of the optionee, the option, together with any stock appreciation
rights pertaining to such option, shall be exercisable only by the optionee and
shall not be assignable or transferable by the optionee except for a transfer of
the option effected by will or by the laws of descent and distribution following
the optionee's death.
C. Termination of Service.
(1) The following provisions shall govern the
exercise period applicable to any outstanding options held by the optionee at
the time of cessation of Service or death.
- Should an optionee cease Service for any reason
(including death or permanent disability as defined in Section 22(e)(3)
of the Internal Revenue Code) while holding one or more outstanding
options under this Article Two, then none of those options shall
(except to the extent otherwise provided pursuant to subparagraph C.(3)
below) remain exercisable for more than a thirty-six (36)-month period
(or such shorter period determined by the Plan Administrator and set
forth in the instrument evidencing the grant) measured from the date of
such cessation of Service.
- Any option held by the optionee under this Article
Two and exercisable in whole or in part on the date of his/her death
may be subsequently exercised by the personal representative of the
optionee's estate or by the person or persons to whom the option is
transferred pursuant to the optionee's will or in accordance with the
laws of descent and distribution. Any exercise, however, must occur
prior to the earlier of (i) the third anniversary of the date of the
optionee's death 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.
- Under no circumstances, however, shall any such
option be exercisable after the specified expiration date of the option
term.
- During the applicable post-Service exercise period,
the option may not be exercised in the aggregate for more than the
number of
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<PAGE> 9
shares (if any) in which the optionee is vested at the time of his/her
cessation of Service. Upon the expiration of the limited post-Service
exercise period or (if earlier) upon the specified expiration date of
the option term, each such option shall terminate and cease to be
outstanding with respect to any vested shares for which the option has
not otherwise been exercised. However, each outstanding option shall
immediately terminate and cease to be outstanding, at the time of the
optionee's cessation of Service, with respect to any shares for which
the option is not otherwise at that time exercisable or in which the
optionee is not otherwise vested.
- Should (i) the optionee's Service be terminated for
misconduct (including, but not limited to, any act of dishonesty,
willful misconduct, fraud or embezzlement) or (ii) the optionee make
any unauthorized use or disclosure of confidential information or trade
secrets of the Company or its parent or subsidiary corporations, then
in any such event all outstanding options held by the optionee under
this Article Two shall terminate immediately and cease to be
outstanding.
(2) The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the optionee
under this Article Two to be exercised, during the limited post-Service exercise
period applicable under subparagraph (1) 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 in which the optionee would
otherwise have vested had he/she continued in Service.
(3) 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) 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.
(4) For purposes of the foregoing provisions of this Section
I.C (and for all other purposes under the Discretionary Option Grant Program):
- The optionee shall (except to the extent otherwise
specifically provided in the applicable stock option or stock purchase
agreement) be deemed to remain in the SERVICE of the Company for so
long as such individual renders services on a periodic basis to the
Company (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the Board or an independent
consultant or advisor.
9.
<PAGE> 10
- The optionee shall be considered to be an EMPLOYEE
for so long as he or she remains in the employ of the Company or one or
more parent or subsidiary corporations, subject to the control and
direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.
D. Stockholder Rights.
An optionee shall have no stockholder rights with
respect to any shares covered by the option until such individual shall have
exercised the option and paid the option price for the purchased shares.
E. Repurchase Rights.
The shares of Common Stock acquired upon the exercise of any
Article Two option grant may be subject to repurchase by the Company in
accordance with the following provisions:
(a) The Plan Administrator shall have the discretion
to authorize the issuance of unvested shares of Common Stock under this
Article Two. Should the optionee cease Service while holding such
unvested shares, the Company shall have the right to repurchase any or
all 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.
(b) All of the Company's outstanding repurchase
rights under this Article Two 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
accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
(c) The Plan Administrator shall have the
discretionary authority, exercisable either before or after the
optionee's cessation of Service, to cancel the Company's outstanding
repurchase rights with respect to one or more shares purchased or
purchasable by the optionee under this Discretionary Option Grant
Program and thereby accelerate the vesting of such shares in whole or
in part at any time.
10.
<PAGE> 11
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable
to all Incentive Options granted under this Article Two. Incentive Options may
only be granted to individuals who are Employees of the Company. Options which
are specifically designated as "non-statutory" options when issued under the
Plan shall not be subject to such terms and conditions.
A. Dollar Limitation. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common Stock for
which one or more options granted to any Employee after December 31, 1986 under
this Plan (or any other option plan of the Company or its parent or subsidiary
corporations) may for the first time become exercisable as incentive stock
options under the Federal tax laws during any one calendar year shall not exceed
the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee
holds two (2) or more such options which become exercisable for the first time
in the same calendar year, the foregoing limitation on the exercisability of
such options as incentive stock options under the Federal tax laws shall be
applied on the basis of the order in which such options are granted. Should the
number of shares of Common Stock for which any Incentive Option first becomes
exercisable in any calendar year exceed the applicable One Hundred Thousand
Dollar ($100,000) limitation, then that option may nevertheless be exercised in
that calendar year for the excess number of shares as a non-statutory option
under the Federal tax laws.
B. 10% Stockholder. If any individual to whom an Incentive
Option is granted is the owner of stock (as determined under Section 424(d) of
the Internal Revenue Code) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Company or any one of its
parent or subsidiary corporations, then the option price per share shall not be
less than one hundred and ten percent (110%) of the fair market value per share
of Common Stock on the grant date, and the option term shall not exceed five (5)
years, measured from the grant date.
Except as modified by the preceding provisions of this Section
II, the provisions of Articles One, Two and Four of the Plan shall apply to all
Incentive Options granted hereunder.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any of the following stockholder-approved
transactions (a "Corporate Transaction") to which the Company is a party:
(i) a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Company's incorporation,
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<PAGE> 12
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Company in complete
liquidation or dissolution of the Company, or
(iii) any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Company's
outstanding securities are transferred to person or persons different
from those who held such securities immediately prior to such merger,
then each option which is at the time outstanding under this
Article Two shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become fully exercisable with respect to the total number of shares of Common
Stock at the time subject to such option and may be exercised for all or any
portion of such shares. However, an outstanding option under this Article Two
shall not so accelerate if and to the extent: (i) such option is, in connection
with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof, (ii) such option is to be replaced with a cash incentive program of the
successor corporation which preserves the option spread existing at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option, or (iii) the acceleration
of such option is subject to other limitations imposed by the Plan Administrator
at the time of the option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.
B. Immediately following 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.
12.
<PAGE> 13
D. The grant of options under this Article Two shall in no way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
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 Company's outstanding repurchase
rights under this Article Two) upon the occurrence of the Change in Control. The
Plan Administrator shall also have full power and authority to condition any
such option acceleration (and the termination of any outstanding repurchase
rights) upon the subsequent termination of the optionee's Service within a
specified period following the Change in Control.
F. For purposes of this Section III, a Change in Control shall
be deemed to occur in the event:
(i) any person or related group of persons (other
than the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) directly
or indirectly acquires beneficial ownership (within the meaning of Rule
13d-3 of the 1934 Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding
securities pursuant to a tender or exchange offer made directly to the
Company's stockholders which the Board does not recommend such
stockholders to accept; or
(ii) there is a change in the composition of the
Board over a period of twenty-four (24) consecutive months or less such
that a majority of the Board members 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.
13.
<PAGE> 14
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under this Article Two (including
outstanding options under the 1990 Plan incorporated into this Plan) and to
grant in substitution new options under the Plan covering the same or different
numbers of shares of Common Stock but with an option price per share based on
the fair market value of the Common Stock on the date of the new grant.
V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in
its discretion to implement the stock appreciation right provisions of this
Section V, one or more optionees may be granted the right, exercisable upon such
terms and conditions as the Plan Administrator may establish, to surrender all
or part of an unexercised option under this Article Two in exchange for a
distribution from the Company in an amount equal to the excess of (i) the fair
market value (on the option surrender date) of the number of shares in which the
optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate option price payable for such vested
shares.
B. No surrender of an option shall be effective hereunder
unless it is approved by the Plan Administrator. If the surrender is so
approved, then the distribution to which the optionee shall accordingly become
entitled under this Section V may be made in shares of Common Stock valued at
fair market value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the optionee shall retain whatever rights the optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.
D. One or more officers of the Company subject to the
short-swing profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under the Plan. Upon the occurrence of a
Hostile Take-Over effected at any time when the Company'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
14.
<PAGE> 15
exercisable for fully-vested shares of Common Stock. The optionee shall in
return be entitled to a cash distribution from the Company in an amount equal to
the excess of (i) the Take-Over Price of the 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 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
Company or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Company) acquires directly or
indirectly beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Company's outstanding securities
pursuant to a tender or exchange offer made directly to the Company's
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 Company's officers and directors 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 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.
VI. LOANS OR INSTALLMENT PAYMENTS
The Plan Administrator may, in its discretion, assist any
optionee (including an optionee who is an officer or director of the Company) in
the exercise of one or more options granted to such optionee under this Article
Two, including the satisfaction of any Federal and State income and employment
tax obligations arising therefrom, by
15.
<PAGE> 16
(i) authorizing the extension of a loan from the Company to such optionee 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) will be upon such terms as the Plan Administrator specifies in the
applicable option agreement or otherwise deems appropriate under the
circumstances. Loans and installment payments may be granted with or without
security or collateral. However, the maximum credit available to the optionee
shall not exceed the sum of (i) the aggregate option price of the purchased
shares plus (ii) any Federal and State income and employment tax liability
incurred by the optionee in connection with the exercise of the option.
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 program
shall be limited to (i) those individuals who are first elected or appointed as
non-employee Board members on or after the Effective Date of this Plan, whether
through appointment by the Board or election by the Company's stockholders,
provided they have not otherwise been in the prior employ of the Company (or any
parent or subsidiary corporation), and (ii) those individuals who are re-elected
as non-employee Board members at one or more Annual Stockholder Meetings held
after the Effective Date, whether or not such individuals are otherwise serving
as non-employee Board members on the Effective Date.
B. Limitation. Except for the option grants to be made
pursuant to the provisions of this Automatic Option Grant Program, the
non-employee Board members who serve on the Committee acting as Plan
Administrator shall not, during the period of such Committee service, be
eligible to receive any additional option grants under this Plan or option
grants or stock issuances under any other stock plan of the Company (or its
parent or subsidiaries).
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants shall be made under this Article
Three on the dates specified below:
(i) Each individual who first becomes a non-employee
Board member on or after the Effective Date of this Plan, whether
through election by the Company's stockholders or appointment by the
Board shall automatically be granted, at the time of such initial
election or appointment, a non-statutory stock option to purchase
20,000 shares of Common Stock upon
16.
<PAGE> 17
the terms and conditions of this Article Three, provided such
individual has not otherwise been in the prior employ of the Company or
any parent or subsidiary corporation.
(ii) On the date of each Annual Stockholders Meeting
held after February 24, 1995, each individual who is to continue to
serve as a non-employee Board member and who has served in such
capacity for at least six (6) months shall automatically be granted,
whether or not such individual is standing for re-election as a Board
member at that Annual Meeting, a non-statutory stock option to
purchase, upon the terms and conditions of this Article Three, that
number of shares of Common Stock determined by dividing $50,000 by the
average closing selling price per share of the Common Stock for the
thirty (30) trading days immediately preceding the date of such Annual
Meeting. In no event, however, shall the number of shares subject to
such option be greater than 7,500 or less than 5,000. There shall be no
limit on the number of such annual automatic option grants any one
non-employee Board member may receive over his/her continued period of
Board service.
The number of shares subject to the automatic option grants to
be made to each newly-elected or continuing non-employee Board member shall be
subject to periodic adjustment pursuant to the applicable provisions of Section
V.C of Article One.
B. Exercise Price. The exercise price per share of each
automatic option grant made under this Article Three shall be equal to one
hundred percent (100%) of the fair market value per share of Common Stock on the
automatic grant date.
C. Payment.
The exercise price shall be payable in one of the
alternative forms specified below:
(i) full payment in cash or check made payable to the
Company's order; or
(ii) full payment in shares of Common Stock held for
the requisite period necessary to avoid a charge to the Company's
reported earnings and valued at fair market value on the Exercise Date
(as such term is defined below); or
(iii) full payment in a combination of shares of
Common Stock held for the requisite period necessary to avoid a charge
to the Company's reported earnings and valued at fair market value on
the Exercise Date and cash or check payable to the Company's order; or
17.
<PAGE> 18
(iv) full payment through a sale and remittance
procedure pursuant to which the non-employee Board member (I) shall
provide irrevocable written instructions to a Company-designated
brokerage firm to effect the immediate sale of the purchased shares and
remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price
payable for the purchased shares and shall (II) concurrently provide
written directives to the Company to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete
the sale transaction.
For purposes of this subparagraph C, the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Company, and the fair market value per share of Common Stock on any relevant
date shall be determined in accordance with the provisions of Section I.A.(3) of
Article Two. Except to the extent the sale and remittance procedure specified
above is utilized for the exercise of the option, payment of the option price
for the purchased shares must accompany the exercise notice.
D. Option Term. Each automatic grant under this Article Three
shall have a maximum term of ten (10) years measured from the automatic grant
date.
E. Exercisability. Each automatic grant shall become
exercisable for the option shares in a series of twenty-four (24) equal and
successive monthly installments over the optionee's period of service on the
Board, with the first such installment to become exercisable one (1) month after
the automatic grant date. The option shall not become exercisable for any
additional option shares following the optionee's cessation of Board service for
any reason.
F. Non-Transferability. During the lifetime of the optionee,
each automatic option grant, together with the limited stock appreciation right
pertaining to such option, shall be exercisable only by the optionee and shall
not be assignable or transferable by the optionee other than a transfer of the
option effected by will or by the laws of descent and distribution following
optionee's death.
G. Effect of Termination of Board Membership.
1. Should the optionee cease to serve as a Board
member for any reason (other than death) while holding one or more automatic
option grants under this Article Three, then such optionee shall have a six
(6)-month period following the date of such cessation of Board 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 such cessation of Board
service. Each such option shall immediately terminate and cease to be
outstanding, at the time of such cessation of Board service, with respect to any
shares for which the option is not otherwise at that time exercisable.
18.
<PAGE> 19
2. Should the optionee die while serving as a member
of the Board or within six (6) months after cessation of Board service, then
each outstanding automatic option grant held by the optionee at the time of
death may subsequently be exercised, for any or all of the shares of Common
Stock for which the option is exercisable at the time of the optionee's
cessation of Board service (less any option shares subsequently purchased by the
optionee prior to death), by the personal representative of the optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the optionee's will or in accordance with the laws of descent and distribution.
Any such exercise must occur within twelve (12) months after the date of the
optionee's death. However, each such automatic option grant shall immediately
terminate and cease to be outstanding, at the time of the optionee's cessation
of Board service, with respect to any option shares for which it was not
otherwise exercisable at that time.
3. In no event shall any automatic option grant under
this Article Three remain exercisable after the specified expiration date of the
ten (10)-year option term. Upon the expiration of the applicable post-service
exercise under subparagraph 1 or 2 above or (if earlier) upon the expiration of
the ten (10)-year option term, the automatic option grant shall terminate and
cease to be outstanding for any unexercised shares for which the option was
exercisable at the time of the optionee's cessation of Board service.
H. Stockholder Rights. The holder of an automatic option grant
under this Article Three shall have none of the rights of a stockholder with
respect to any shares subject to such option until such individual shall have
exercised the option and paid the exercise price for the purchased shares.
I. Remaining Terms. The remaining terms and conditions of each
automatic option grant shall be as set forth in the prototype Non-statutory
Stock Option Agreement attached as Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-
OVER
A. In the event of any of the following stockholder-approved
transactions to which the Company is a party (a "Corporate Transaction"):
(i) a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Company's incorporation,
(ii) the sale, transfer or disposition of all or
substantially all of the assets of the Company in liquidation or
dissolution of the Company, or
19.
<PAGE> 20
(iii) any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Company's
outstanding securities are transferred to person or persons different
from those who held such securities immediately prior to such merger,
the exercisability of each automatic option grant at
the time outstanding under this Article Three shall automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to such option and
may be exercised for all or any portion of such shares. Immediately following
the consummation of the Corporate Transaction, all automatic option grants under
this Article Three shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation or its parent company.
B. In connection with any Change in Control of the Company,
the exercisability of each automatic option grant at the time outstanding under
this Article Three shall automatically accelerate so that each such option
shall, immediately prior to the specified effective date for the Change in
Control, become fully exercisable with respect to the total number of shares of
Common Stock at the time subject to such option and may be exercised for all or
any portion of such shares at any time prior to the expiration or sooner
termination of the option term. For purposes of this Article Three, a Change in
Control shall be deemed to occur in the event:
(i) any person or related group of persons (other
than the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) directly
or indirectly acquires beneficial ownership (within the meaning of Rule
13d-3 of the Securities Exchange Act of 1934, as amended) of securities
possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's stockholders which the
Board does not recommend such stockholders to accept; or
(ii) there is a change in the composition of the
Board over a period of twenty-four (24) consecutive months or less such
that a majority of the Board members 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.
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C. Upon the occurrence of a Hostile Take-Over, each option
granted under this Article Three which has been outstanding for a period of at
least six (6) months shall automatically be cancelled, and the optionee shall in
return be entitled to a cash distribution from the Company in an amount equal to
the excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to the 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. Such cash distribution shall be paid within five (5) days
following the consummation of the Hostile Take-Over. Neither the approval of the
Plan Administrator nor the consent of the Board shall be required in connection
with such option cancellation and cash distribution.
D. For purposes of this Section III, 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 Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which the
Board does not recommend such stockholders to accept 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 Company's officers and directors 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 Article Two, or (b) the highest reported price per share
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
option grant under this Plan.
F. The automatic option grants outstanding under this Article
Three shall in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
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IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS
A. Limited Amendments. The provisions of this Automatic Option
Grant Program, together with the 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.
ARTICLE FOUR
MISCELLANEOUS
I. AMENDMENT OF THE PLAN AND AWARDS
The Board has complete and exclusive power and authority to
amend or modify the Plan (or any component thereof) in any or all respects
whatsoever. However, (i) no such amendment or modification shall, without the
consent of the Company's stockholders, adversely affect rights and obligations
with respect to options at the time outstanding under the Plan and (ii) any
amendment made to the Automatic Option Grant Program (or any options outstanding
thereunder) shall be in compliance with the limitation of Section IV of Article
Three. In addition, the Board may not, without the approval of the Company's
stockholders, amend the Plan to (i) materially increase the maximum number of
shares issuable under the Plan, the maximum number of shares for which any one
individual may be granted stock options and separately exercisable stock
appreciation rights after December 31, 1993, or the number of shares for which
options may be granted to newly-elected or continuing non-employee Board members
under Article Three of the Plan, except for permissible adjustments under
Section V.C. of Article One, (ii) materially modify the eligibility requirements
for plan participation or (iii) materially increase the benefits accruing to
plan participants.
II. TAX WITHHOLDING
The Company's obligation to deliver shares or cash upon the
exercise of stock options or stock appreciation rights granted under the Plan
shall be subject to the satisfaction of all applicable Federal, State and local
income tax and employment tax withholding requirements.
The Plan Administrator may, in its discretion and in
accordance with the provisions of this Section II of Article Four and such
supplemental rules as the Plan Administrator may from time to time adopt
(including the applicable safe-harbor provisions of SEC Rule 16b-3), provide any
or all holders of non-statutory options under the Plan (other than the automatic
grants made pursuant to Article Three of the Plan) with the right to use shares
of the Company's Common Stock in satisfaction of all or part of the Federal,
State and local income tax and employment tax liabilities incurred by such
holders in connection with the exercise of their options (the "Taxes"). Such
right may be provided to any such option holder in either or both of the
following formats:
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1. Stock Withholding: The holder of the non-statutory option
may be provided with the election to have the Company withhold, from
the shares of Common Stock otherwise issuable upon the exercise of such
non-statutory option, a portion of such shares with an aggregate fair
market value equal to the percentage of the applicable Taxes (not to
exceed one hundred percent (100%)) designated by the option holder.
2. Stock Delivery: The Plan Administrator may, in its
discretion, provide the holder of the non-statutory option with the
election to deliver, at the time the non-statutory option is exercised,
one or more shares of Common Stock already held by such individual with
an aggregate fair market value equal to the percentage of the Taxes
incurred in connection with such option exercise (not to exceed one
hundred percent (100%)) designated by the option holder.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan first became effective on the Effective Date and
serves as the successor to the Company's 1990 Stock Option Plan. No further
option grants shall be made under the 1990 Plan from and after the Effective
Date.
B. On May 26, 1993, the Board amended the Plan to increase the
number of shares issuable thereunder by 1,000,000 shares. The 1,000,000-share
increase was approved by the Company's stockholders at the 1994 Annual
Stockholders Meeting. On March 28, 1994, the Board further amended the Plan to
impose a limitation on the maximum number of shares for which any one individual
participating in the Plan may be granted stock options and separately
exercisable stock appreciation rights.
C. On February 24, 1995, the Board amended the Plan to
increase the number of shares of Common Stock issuable thereunder by 545,000
shares. The 545,000- share increase was approved by the Company's stockholders
at the 1995 Annual Stockholders Meeting.
D. On February 24, 1995, the Board further amended the Plan to
increase the number of shares of Common Stock for which automatic option grants
are to be made to continuing non-employee Board members on the date of each
Annual Stockholders Meeting held after February 24, 1995. The amendment was
approved by the Company's stockholders at the 1995 Annual Stockholders Meeting.
E. On August 21, 1995, the Board amended the Plan to extend
the eligibility provisions of the Discretionary Option Grant Program to all
non-employee Board members other than those at the time serving on the Committee
acting as the Plan Administrator. The amendment was approved by the Company's
stockholders at the 1996 Annual Stockholders Meeting.
23.
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F. In January 1996, the Board adopted an amendment to the Plan
which (i) increased the number of shares of Common Stock available for issuance
under the Plan by an additional 450,000 shares and (ii) increased the maximum
number of shares for which any one individual may be granted stock options and
separately exercisable stock appreciation rights over the remaining term of the
Plan by an additional 250,000 shares of Common Stock. The amendment was approved
by the Company's stockholders at the 1996 Annual Stockholders Meeting.
G. Each option issued and outstanding under the 1990 Plan
immediately prior to the Effective Date shall be incorporated into this Plan and
treated as an outstanding option under this Plan, but each such option shall
continue to be governed solely by the terms and conditions of the instrument
evidencing such grant, and nothing in this Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such options with
respect to their acquisition of shares of Common Stock thereunder.
H. The sale and remittance procedure authorized for the
exercise of outstanding options under this Plan shall be available for all
options granted under this Plan on or after the Effective Date and for all
non-statutory options outstanding under the 1990 Plan and incorporated into this
Plan. The Plan Administrator may also allow such procedure to be utilized in
connection with one or more disqualifying dispositions of Incentive Option
shares effected after the Effective Date, whether such Incentive Options were
granted under this Plan or the 1990 Plan.
I. 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 stock options
which are outstanding under the 1990 Plan on the Effective Date of this Plan but
which do not otherwise provide for such acceleration.
J. The Plan shall terminate upon the earlier of (i) December
31, 2002 or (ii) the date on which all shares available for issuance under the
Plan shall have been issued or cancelled pursuant to the exercise, surrender or
cash-out of the options granted under the Plan. If the date of termination is
determined under clause (i) above, then all option grants outstanding on such
date shall thereafter continue to have force and effect in accordance with the
provisions of the instruments evidencing such grants.
K. 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.
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IV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of
shares pursuant to options granted under the Plan shall be used for general
corporate purposes.
V. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option
thereunder and the issuance of stock upon the exercise or surrender of the
option grants made hereunder shall be subject to the Company's procurement of
all approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it, and the stock issued pursuant to
it.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Company in establishing the Plan,
nor any action taken by the Plan Administrator hereunder, nor any provision of
the Plan shall be construed so as to grant any individual the right to remain in
the employ or service of the Company (or any parent or subsidiary corporation)
for any period of specific duration, and the Company (or any parent or
subsidiary corporation retaining the services of such individual) may terminate
such individual's employment or service at any time and for any reason, with or
without cause.
VIII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the
Plan may not be assigned, encumbered or otherwise transferred by any optionee.
B. The provisions of the Plan relating to the vesting and
termination of outstanding options shall be governed by the laws of the State of
California, as such laws are applied to contracts entered into and performed in
such State.
C. The provisions of the Plan shall inure to the benefit of,
and be binding upon, the Company and its successors or assigns, whether by
Corporate Transaction or otherwise, and the optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.
25.
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EXHIBIT A
NON-STATUTORY STOCK OPTION AGREEMENT
AUTOMATIC OPTION GRANT PROGRAM
