As filed with the Securities and Exchange Commission on April 26, 1999
Registration No. 333-_____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-------------------
CREDENCE SYSTEMS CORPORATION
(Exact name of issuer as specified in its charter)
DELAWARE 94-287-8499
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
215 Fourier Avenue, Fremont, California 94539
(Address of principal executive offices) (Zip Code)
-------------------
CREDENCE SYSTEMS CORPORATION
1993 Stock Option Plan
1994 Employee Stock Purchase Plan
(Full title of the plans)
-------------------
William G. Howard, Jr.
Chairman of the Board
Credence Systems Corporation
215 Fourier Avenue, Fremont, California 94539
(Name and address of agent for service)
(510) 657-7400
(Telephone number, including area code, of agent for service)
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities to be Registered Amount to be Offering Price Aggregate Amount of
Registered(1) per Share(2) Offering Price(2) Registration Fee
====================================== =================== ================= ================== ===================
<S> <C> <C> <C> <C>
1993 Stock Option Plan 1,407,818 shares $28.60 $40,263,595. $11,194.
- ---------------------- ------ ------------ --------
Common Stock, $0.001 par value
1994 Employee Stock Purchase Plan 300,000 shares $28.60 $ 8,580,000. $ 2,386.
- --------------------------------- ------ ------------ --------
Common Stock, $0.001 par value
Aggregate Registration Fee $13,580.
====================================== =================== ===================================== ===================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the Credence Systems
Corporation 1993 Stock Option Plan and the 1994 Employee Stock Purchase
Plan by reason of any stock dividend, stock split, recapitalization or
other similar transaction effected without the Registrant's receipt of
consideration which results in an increase in the number of the
Registrant's outstanding shares of Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the high
and low selling prices per share of the Registrant's Common Stock on April
22, 1999 as reported by the Nasdaq National Market.
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Certain Documents by Reference
-----------------------------------------------
Credence Systems Corporation (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange Commission (the
"SEC"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal
yea r ended October 31, 1998 filed with the SEC on January
29, 1999;
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended January 31, 1999 filed with the SEC on March 17,
1999; and
(c) The Registrant's Registration Statement No. 0-22366 on Form
8-A filed with the SEC on September 10, 1993, as amended on
October 21, 1993, 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 (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 Capital Stock
----------------------------
Inapplicable.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
Inapplicable.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
The Registrant's Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law. Delaware
law provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except for
liability for (i) any breach of their duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law, or (iv) any transaction from which
the director derived an improper personal benefit.
The Registrant's Bylaws provide that the Registrant shall
indemnify its directors and may indemnify its other officers and employees and
other agents to the fullest extent permitted by law. The Registrant believes
that indemnification under its Bylaws covers at least negligence and gross
II-5
negligence on the part of indemnified parties. The Registrant's Bylaws also
permit it to secure insurance on behalf of any officer, director, employee or
other agent to offset any liability arising out of his or her actions in such
capacity, regardless of whether the Bylaws would permit indemnification.
The Registrant has entered into agreements to indemnify its
directors and executive officers, in addition to indemnification provided for in
the Registrant's Bylaws. These agreements, among other things, indemnify the
Registrant's directors and executive officers for certain expenses (including
attorneys' fees), judgments, fines and settlement amounts incurred by any such
person in any action or proceeding, including any action by or in the right of
the Registrant, arising out of such person's services as a director or executive
officer of the Registrant, any subsidiary of the Registrant or any other company
or enterprise to which the person provides services at the request of the
Registrant.
Item 7. Exemption from Registration Claimed
-----------------------------------
Inapplicable.
Item 8. Exhibits
--------
<TABLE>
<CAPTION>
Exhibit Number Exhibit
-------------- -------
<S> <C>
4.0 Instruments Defining Rights of Stockholders. Reference is made to Registrant's Registration
Statement No. 0-22366 on Form 8-A, and the exhibits thereto, and Amendment No. 1 thereto,
which are incorporated herein by reference pursuant to Item 3(c) of this Registration Statement.
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 Credence Systems Corporation 1993 Stock Option Plan (as amended and restated through
March 24, 1999).
99.2* Form of Notice of Grant.
99.3* Form of Stock Option Agreement.
99.4* Addendum to Stock Option Agreement (Special Tax Elections).
99.5* Addendum to Stock Option Agreement (Limited Stock Appreciation Rights).
99.6* Addendum to Stock Option Agreement (Change in Control).
99.7* Addendum to Stock Option Agreement (Financial Assistance).
99.8** Form of Notice of Grant of Stock Option (Non-Employee Director).
99.9** Form of Stock Option Agreement (Non-Employee Director).
99.10 Credence Systems Corporation 1994 Employee Stock Purchase Plan (as amended and restated
through March 24, 1999).
99.11*** Form of Stock Purchase Agreement.
99.12*** Form of Enrollment/Change Form.
</TABLE>
* Exhibits 99.2 through 99.7 are incorporated herein by reference to
Exhibits 99.2 through 99.7, respectively, of Registrant's Registration Statement
No. 33-71856 on Form S-8 which was filed with the SEC on November 17, 1993.
** Exhibits 99.8 and 99.9 are incorporated herein by reference to Exhibits
99.8 and 99.9, respectively, of Registrant's Registration Statement No. 33-3806
on Form S-8 which was filed with the SEC on April 22, 1996.
*** Exhibits 99.11 and 99.12 are incorporated herein by reference to
Exhibits 99.2 and 99.3, respectively, of Registrant's Registration Statement No.
33-76542 which was filed with the SEC on March 17, 1994.
II-2
<PAGE>
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 the
registration statement; (2) that for the purpose of determining any liability
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 upon the termination of the 1993 Stock Option Plan or the 1994 Employee
Stock Purchase 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 and controlling persons of
the Registrant pursuant to the indemnification provisions summarized in Item 6
above, or otherwise, the Registrant has been advised that in the opinion of the
SEC such indemnification is against public policy as expressed in the 1933 Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
SIGNATURES
ursuant 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 Fremont, State of California, on this
26th day of April, 1999.
CREDENCE SYSTEMS CORPORATION
By /s/ DENNIS P. WOLF
---------------------------------------------
Dennis P. Wolf
Executive Vice President,
Chief Financial Officer and Secretary
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of CREDENCE
SYSTEMS CORPORATION, a Delaware corporation, do hereby constitute and appoint
Dennis P. Wolf and David A. Ranhoff, the lawful attorneys and agents, with full
power and authority to do any and all acts and things and to execute any and all
instruments which said attorney and agent determines may be necessary or
advisable or required to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules or regulations or requirements of the
Securities and Exchange Commission in connection with this Registration
Statement. Without limiting the generality of the foregoing power and authority,
the powers granted include the power and authority to sign the names of the
undersigned officers and directors in the capacities indicated below to this
Registration Statement, to any and all amendments, both pre-effective and
post-effective, and supplements to this Registration Statement, and to any and
all instruments or documents filed as part of or in conjunction with this
Registration Statement or amendments or supplements thereof, and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents, or
any 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/ DENNIS P. WOLF Executive Vice President, Chief Financial April 23, 1999
- ------------------------------ Officer and Secretary
Dennis P. Wolf Principal Financial and Accounting Officer)
/s/ DAVID A. RANHOFF Executive Vice President April 23, 1999
- ------------------------------
David A. Ranhoff
/s/ WILLIAM G. HOWARD, JR. Chairman of the Board April 23, 1999
- ------------------------------
William G. Howard, Jr.
/s/ JOS. C. HENKENS Director April 23, 1999
- ------------------------------
Jos C. Henkens
/s/ BERNARD V. VONDERSCHMITT Director April 23, 1999
- ------------------------------
Bernard V. Vonderschmitt
/s/ HENK J. EVENHUIS Director April 23, 1999
- ------------------------------
Henk J. Evenhuis
</TABLE>
II-4
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
CREDENCE SYSTEMS CORPORATION
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
<S> <C> <C> <C> <C> <C> <C>
4.0 Instruments Defining Rights of Stockholders. Reference is made to Registrant's Registration
Statement No. 0-22366 on Form 8-A, and the exhibits thereto, and Amendment No. 1 thereto,
which are incorporated herein by reference pursuant to Item 3(c) of this Registration Statement.
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 Credence Systems Corporation 1993 Stock Option Plan (as amended and restated through
March 24, 1999).
99.2* Form of Notice of Grant.
99.3* Form of Stock Option Agreement.
99.4* Addendum to Stock Option Agreement (Special Tax Elections).
99.5* Addendum to Stock Option Agreement (Limited Stock Appreciation Rights).
99.6* Addendum to Stock Option Agreement (Change in Control).
99.7* Addendum to Stock Option Agreement (Financial Assistance).
99.8** Form of Notice of Grant of Stock Option (Non-Employee Director).
99.9** Form of Stock Option Agreement (Non-Employee Director).
99.10 Credence Systems Corporation 1994 Employee Stock Purchase Plan (as amended and restated
through March 24, 1999).
99.11*** Form of Stock Purchase Agreement.
99.12*** Form of Enrollment/Change Form.
</TABLE>
* Exhibits 99.2 through 99.7 are incorporated herein by reference to
Exhibits 99.2 through 99.7, respectively, of Registrant's Registration Statement
No. 33-71856 on Form S-8 which was filed with the SEC on November 17, 1993.
** Exhibits 99.8 and 99.9 are incorporated herein by reference to Exhibits
99.8 and 99.9, respectively, of Registrant's Registration Statement No. 33-3806
on Form S-8 which was filed with the SEC on April 22, 1996.
*** Exhibits 99.11 and 99.12 are incorporated herein by reference to
Exhibits 99.2 and 99.3, respectively, of Registrant's Registration Statement No.
33-76542 which was filed with the SEC on March 17, 1994.
<PAGE>
EXHIBIT 5
OPINION OF BROBECK, PHLEGER & HARRISON LLP
April 23, 1999
Credence Systems Corporation
215 Fourier Avenue
Fremont, CA 94539
Re: Credence Systems Corporation Registration Statement on Form S-8
for an aggregate of 1,707,818 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to Credence Systems Corporation, a
Delaware corporation (the "Company"), in connection with the registration on
Form S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended, of an (i) additional 1,407,818 shares of the Company's common stock
("Common Stock") authorized for issuance under the Company's 1993 Stock Option
Plan (the "Option Plan") and (ii) an additional 300,000 shares of Common Stock
of the Company under the Company's 1994 Employee Stock Purchase Plan (the
"Purchase Plan").
This opinion is being furnishe d in accordance with the
requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the establishment
and amendment of the Option Plan and the Purchase Plan. Based on such review, we
are of the opinion that if, as and when the shares of Common Stock are issued
and sold (and the consideration therefor received) pursuant to the provisions of
option agreements duly authorized under the Option Plan and stock purchase
agreements under the Purchase Plan and in accordance with the Registration
Statement, such shares will be duly authorized, legally issued, fully paid and
non-assessable.
We consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement.
This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the Option Plan and the Purchase Plan or the shares of Common Stock
issuable under such plans.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the 1993 Stock Option Plan and the 1994 Employee Stock
Purchase Plan of Credence Systems Corporation, of our report dated April 23,
1999 with respect to the consolidated financial statements and schedule of
Credence Systems Corporation included in its Annual Report on Form 10-K for the
year ended October 31, 1998 filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Jose, California
April 23, 1999
<PAGE>
EXHIBIT 99.1
CREDENCE SYSTEMS CORPORATION
1993 STOCK OPTION PLAN
(As Amended and Restated through March 24, 1999)
ARTICLE ONE
-----------
GENERAL
-------
I. PURPOSE OF THE PLAN
A. This 1993 Stock Option Plan ("Plan") is intended to promote
the interests of Credence Systems Corporation, a Delaware corporation (the
"Corporation"), by providing (i) key employees (including officers) of the
Corporation (or its parent or subsidiary corporations) who are responsible for
the management, growth and financial success of the Corporation (or its parent
or subsidiary corporations), (ii) the non-employee members of the Corporation's
Board of Directors and (iii) consultants who provide valuable services to the
Corporation (or its parent or subsidiary corporations) with the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the service
of the Corporation (or its parent or subsidiary corporations).
B. The Discretionary Option Grant Program under this Plan
became effective on the first date on which the shares of the Corporation's
Common Stock were registered under Section 12(g) of the Securities Exchange Act
of 1934. Such date is hereby designated as the Effective Date for that program.
The Automatic Option Grant Program under this Plan became effective immediately
upon the execution and final pricing of the Underwriting Agreement for the
initial public offering of the Corporation's Common Stock. The execution date of
such Underwriting Agreement is hereby designated as the Effective Date of the
Automatic Option Grant Program.
C. This Plan shall serve as the successor to (i) the
Corporation's 1984 Incentive Stock Option Plan (the "1984 Plan") and (ii) the
ASIX Systems Corporation 1989 Stock Option Plan (the "ASIX Plan") which the
Corporation assumed in connection with its acquisition of ASIX Systems
Corporation by merger effected October 27, 1989. The 1984 Plan and ASIX Plan
shall be collectively referred to in this document as the "Predecessor Plans",
and no further option grants or stock issuances shall be made under the
Predecessor Plans from and after the Effective Date of this Plan. All options
outstanding under the Predecessor Plans on the Effective Date of the
Discretionary Option Grant Program 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 Corporation's Common Stock thereunder.
II. DEFINITIONS
A. For purposes of the Plan, the following definitions shall
be in effect:
Board: the Corporation's Board of Directors.
Code: the Internal Revenue Code of 1986, as amended.
Committee: the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Plan.
Common Stock: shares of the Corporation's common stock.
Change in Control: a change in ownership or control of
the Corporation effected through either of the following transactions:
1
<PAGE>
a. any person or related group of persons (other
than the Corporation or a person that directly or indirectly controls,
is controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders; or
b. there is a change in the composition of the
Board over a period of thirty-six (36) 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.
Corporate Transaction: any of the following stockholder-approved
transactions to which the Corporation is a party:
a. a merger or consolidation in which the
Corporation is not the surviving entity, except for a transaction the
principal purpose of which is to change the State in which the
Corporation is incorporated,
b. the sale, transfer or other disposition of
all or substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation, or
c. any reverse merger in which the Corporation
is the surviving entity but in which securities possessing more than
fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from those who held such securities immediately
prior to such merger.
Employee: an individual who performs services while in the employ
of the Corporation 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.
Fair Market Value: the fair market value per share of Common
Stock determined in accordance with the following provisions:
a. 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
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. If there is no reported closing price for the Common Stock on
the date in question, then the closing price on the last preceding
date for which such quotation exists shall be determinative of Fair
Market Value.
b. 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 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 on such exchange on the date in question,
then the Fair Market Value shall be the closing price on the exchange
on the last preceding date for which such quotation exists.
2
<PAGE>
First Trading Day: the first trading day of each fiscal year.
Hostile Take-Over: a change in ownership of the Corporation
effected through a transaction in which any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation) directly or
indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's stockholders
which the Board does not recommend such stockholders to accept.
1934 Act: the Securities Exchange Act of 1934, as amended
from time to time.
Optionee: any person to whom an option is granted under
either the Discretionary Option Grant or Automatic Option Grant Program in
effect under the Plan.
Plan Administrator: the Committee in its capacity as the
administrator of the Plan.
Permanent Disability or Permanently Disabled: the inability
of the Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.
Service: the performance of services on a periodic basis to
the Corporation (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the board of directors or a consultant or
advisor, except to the extent otherwise specifically provided in the applicable
stock option agreement.
Take-Over Price: the greater of (a) the Fair Market Value per
share of Common Stock on the date the option is surrendered to the Corporation
in connection with a Hostile Take-Over or (b) the highest reported price per
share of Common Stock paid by the tender offer or in effecting such Hostile
Take-Over. However, if the surrendered option is an incentive stock option under
the Federal tax laws, the Take-Over Price shall not exceed the clause (a) price
per share.
B. The following provisions shall be applicable in
determining the parent and subsidiary corporations of the Corporation:
Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation
shall be considered to be a parent of the Corporation,
provided each such corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the
other corporations in such chain.
Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation
shall be considered to be a subsidiary of the Corporation,
provided each such corporation (other than the last
corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one
of the other corporations in such chain.
3
<PAGE>
III. 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, non-employee members of the Corporation's Board of Directors (the
"Board") will receive periodic 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 shall apply to the
Discretionary Option Grant Program and the Automatic Option Grant Program and
shall accordingly govern the interests of all individuals under the Plan.
IV. ADMINISTRATION OF THE PLAN
A. The Discretionary Option Grant Program shall be
administered by the Committee. 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 rules
and regulations 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 thereunder
as it may deem necessary or advisable. Decisions of the Plan Administrator shall
be final and binding on all parties who have an interest in the Discretionary
Option Grant Program or any outstanding option 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.
V. OPTION GRANTS
A. The persons eligible to participate in the Discretionary
Option Grant Program under Article Two are as follows:
(i) officers and other key employees of the
Corporation (or it s parent or subsidiary corporations) who
render services which contribute to the management, growth and
financial success of the Corporation (or its parent or subsidiary
corporations);
(ii) non-employee Board members; and
(iii) those consultants who provide valuable
services to the Corporation (or its parent or subsidiary
corporations).
B. The Plan Administrator shall have full authority to
determine, with respect to the option grants made under the Plan, which eligible
individuals are to receive option grants, 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 Code Section 422
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.
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VI. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance
under the Plan and shall be drawn from either the Corporation's authorized but
unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Corporation on the open market. The maximum
number of shares of Common Stock that may be issued over the term of the Plan
shall not exceed 6,032,819 shares, subject to adjustment from time to time in
accordance with the provisions of this Section VI.
Such authorized share reserve reflects the 3-for-2 split of
the Corporation's outstanding Common Stock effected June 5, 1995 and the 1-for-3
reverse stock split of the Corporation's outstanding Common Stock effected
October 7, 1993, and is comprised of the following:
(i) the number of shares which remained
available for issuance, as of the Effective Date of the
Discretionary Option Grant Program, under the 1984 Plan as
last approved by the Corporation's stockholders, including
the shares subject to the outstanding options incorporated
into this Plan and any other shares which would have been
available for future option grant under the 1984 Plan as
last approved by the stockholders (estimated to be
1,931,757 shares in the aggregate on a post-split basis);
(ii) 143,244 shares (on a post-split basis)
subject to options outstanding under the ASIX Plan as of
the Effective Date and incorporated into this Plan;
(iii) an additional 300,000 share increase
(on a post-split basis) authorized by the Board under this
Plan and approved by the stockholders prior to the
Effective Date;
(iv) an additional 750,000-share increase
(on a post-split basis) authorized by the Board on
January 23, 1995 and approved by the stockholders at the
1995 Annual Stockholders Meeting;
(v) an additional 500,000-share increase
authorized by the Board on January 26, 1996 and approved
by the stockholders at the 1996 Annual Stockholders Meeting;
(vi) an additional 500,000-share increase
authorized by the Board on February 12, 1997 and approved
by the stockholders at the 1997 Annual Stockholders Meeting;
and
(vii) an additional 500,000-share increase
authorized by the Board on February 13, 1998 and approved
by the stockholders at the 1998 Annual Stockholders Meeting.
(viii) an additional 407,818-share increase
effected November 1, 1998 pursuant to the automatic share
increase provisions of Section VI.C. of this Article One.
(ix) an additional 1,000,000-share increase
authorized by the Board on January 22, 1999, and approved
by the stockholders at the 1999 Annual Stockholders Meeting.
B. To the extent one or more outstanding options under the
Predecessor Plans 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.
C. The number of shares of Common Stock reserved for issuance
under this Plan will automatically be increased on each First Trading Day,
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<PAGE>
beginning with the 1999 First Trading Day and continuing through the fiscal year
2003, by an amount equal to two percent (2%) of the total number of shares
outstanding on the last trading day of the immediately preceding fiscal year;
provided, however, that each such two percent (2%) annual increase shall be
limited to the extent necessary to assure that following such increase the sum
of the options outstanding under the Company's stock option plans plus the
shares available for issuance under all of the Company's stock option plans
(together, the "Option Shares") will not exceed fifteen percent (15%) of the sum
of the outstanding voting shares of the capital stock of the Company plus the
Option Shares.
D. No one person participating in the Plan may receive
options and separately exercisable stock appreciation rights for more than
1,000,000 shares (on a post-split basis) of Common Stock in the aggregate over
the remaining term of the Plan, subject to adjustment from time to time in
accordance with the provisions of this Section VI. For purposes of such
limitation, no stock options or stock appreciation rights granted prior to
January 1, 1995 shall be taken into account. The 250,000-share increase to such
limit authorized by the Board on January 22, 1999 was approved by stockholders
at the 1999 Annual Meeting.
E. Should one or more outstanding options under this Plan
(including outstanding options under the Predecessor Plans 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), then the shares subject to the portion
of each option not so exercised shall be available for subsequent option grants
under the Plan. Unvested shares issued under the Plan and subsequently
repurchased by the Corporation, at the original exercise price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants under the Plan. However, shares subject to any option
or portion thereof surrendered in accordance with Section V of Article Two or
Section III of Article Three shall reduce on a share-for-share basis the number
of shares of Common Stock available for subsequent option grants under the Plan.
Should the option price of an outstanding option under the Plan (including any
option incorporated from the Predecessor Plans) be paid with shares of Common
Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an outstanding stock 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 or
which vest under the stock issuance, and not by the net number of shares of
Common Stock actually issued.
F. Should any change be 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 Corporation'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 number
and/or class of securities for which any one person may be granted options and
separately exercisable stock appreciation rights under the Plan from and after
January 1, 1995, (iii) the number and/or class of securities for which automatic
option grants are to be subsequently made per newly-elected or continuing
non-employee 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 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 Predecessor Plans. 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.
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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 Corporation or its parent or
subsidiary corporations may only be granted non-statutory options. Each granted
option shall be evidenced by one or more instruments in the form approved by the
Plan Administrator; 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 but shall not be less than one hundred percent (100%) of the
Fair Market Value per share of Common Stock on the option grant date.
(2) The option price shall become immediately due upon
exercise of the option and, subject to the provisions of Section I of Article
Four and the instrument evidencing the grant, shall be payable in one of the
following alternative forms specified below:
- full payment in shares of Common Stock held for
the requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date (as such term is defined below);
- full payment in cash or check drawn to the
Corporation's order;
- full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date and cash or check drawn to the
Corporation's order; or
- full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (I) shall provide
irrevocable instructions to a designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate option price payable for the purchased
shares plus all applicable Federal and State income and employment
taxes required to be withheld by the Corporation in connection with
such purchase and (II) shall provide directives to the Corporation 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 the notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
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.
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<PAGE>
C. Limited Transferability of Options. During the lifetime of
the Optionee, Incentive Options shall be exercisable only by the Optionee and
shall not be assignable or transferable other than by will or by the laws of
descent and distribution following the Optionee's death. However, a
Non-Statutory Option may, in connection with the Optionee's estate plan, be
assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established exclusively
for one or more such family members. The assigned portion may only be exercised
by the person or persons who acquire a proprietary interest in the option
pursuant to the assignment. The terms applicable to the assigned portion shall
be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
D. 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) 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 or 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. Such exercise, however, must
occur prior to the earlier of (i) the third anniversary of the date of
the Optionee's death (or such shorter period determined by the Plan
Administrator and set forth in the instrument evidencing the grant) or
(ii) the specified expiration date of the option term. Upon the
occurrence of the earlier event, the option shall terminate and cease
to be outstanding.
- During the applicable post-Service period, the
option may not be exercised in the aggregate for more than the number
of shares (if any) in which the Optionee is vested at the time of
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 it 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
it is not otherwise at that time exercisable or in which Optionee is
not otherwise at that time vested.
- Under no circumstances, however, shall any such
option be exercisable after the specified expiration date of the
option term.
- 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 makes
any unauthorized use or disclosure of confidential information or
trade secrets of the Corporation 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.
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<PAGE>
(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 of vested shares for which the
option would otherwise have become exercisable had such cessation of Service not
occurred.
(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.
E. 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.
F. Repurchase Rights. The shares of Common Stock acquired upon
the exercise of any Article Two option grant may be subject to repurchase by the
Corporation 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 Corporation shall have the right to repurchase any or all of
those unvested shares at the option price paid per share. The terms and
conditions upon which such repurchase right shall be exercisable (including
the period and procedure for exercise and the appropriate vesting schedule
for the purchased shares) shall be established by the Plan Administrator
and set forth in the instrument evidencing such repurchase right.
b. All of the Corporation'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 a Corporate Transaction, 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 Corporation'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.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to
all Incentive Options granted under this Article Two. Incentive Options may only
be granted to individuals who are Employees of the Corporation. Options which
are specifically designated as "non-statutory" options when issued under the
Plan shall not be subject to such terms and conditions.
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<PAGE>
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 under this Plan (or any other option plan of the
Corporation or its parent or subsidiary corporations) may for the first time
become exercisable as incentive stock options under the Federal tax laws during
any one calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (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 Corporation or any one of
its parent or subsidiary corporations, then the option price per share shall not
be less than one hundred and ten percent (110%) of the Fair Market Value per
share of Common Stock on the grant date, and the option term shall not exceed
five (5) years, measured from the grant date.
Except as modified by the preceding provisions of this Section
II, the provisions of 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 Corporate Transaction, 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. Upon the consummation of the Corporate Transaction, all
outstanding options under this Article Two shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.
C. Each outstanding option under this Article Two which is
assumed in connection with the Corporate Transaction or is otherwise to continue
in effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issued to the option holder, in consummation of such Corporate
Transaction, had such person exercised the option immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the option
price payable per share, provided the aggregate option price payable for such
securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.
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D. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to provide (upon such terms as it may deem appropriate) for the
automatic acceleration of one or more outstanding options under this Article Two
which are assumed or replaced in the Corporate Transaction and do not otherwise
accelerate at that time, in the event the Optionee's Service should subsequently
terminate within a designated period following the effective date of such
Corporate Transaction.
E. The grant of options under this Article Two shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
F. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the option is granted or at any time while the
option is outstanding, to provide for the automatic acceleration of one or more
outstanding options under this Article Two (and the termination of one or more
of the Corporation's outstanding repurchase rights under this Article Two) upon
the occurrence of the Change in Control. The Plan Administrator shall also have
full power and authority to condition any such option acceleration (and the
termination of any outstanding repurchase rights) upon the subsequent
termination of the Optionee's Service within a specified period following the
Change in Control.
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. Any Incentive Options accelerated under this Section III in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as incentive stock options under the Federal tax laws only to the
extent the applicable dollar limitation of Section II of this Article Two is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
option shall be exercisable as a non-statutory option under the Federal tax
laws.
IV. 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
IV, one or more Optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under this Article Two in exchange for a distribution
from the Corporation in an amount equal to the excess of (i) the Fair Market
Value (on the option surrender date) of the shares of Common Stock in which the
Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate option price payable for such vested
shares.
B. No surrender of an option shall be effective hereunder unless
it is approved by the Plan Administrator. If the surrender is so approved, then
the distribution to which the Optionee shall accordingly become entitled under
this Section IV 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 deems 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.
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<PAGE>
D. One or more officers of the Corporation subject to the short-
swing profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under the Plan. Upon the occurrence of a
Hostile Take-Over, the officer will have a thirty (30)-day period in which he or
she may surrender any outstanding options with such a limited stock appreciation
right to the Corporation, to the extent such options are at the time exercisable
for fully-vested shares of Common Stock. The officer shall in return be entitled
to a cash distribution from the Corporation in an amount equal to the excess of
(i) the Take-Over Price of the vested shares of Common Stock at the time subject
to each surrendered option over (ii) the aggregate option price payable for such
vested shares. The cash distribution payable upon such option surrender shall be
made within five (5) days following the consummation of the Hostile Take-Over.
The Plan Administrator shall, at the time the limited stock appreciation right
is granted, pre-approve the subsequent exercise of that right in accordance with
the terms and conditions of this Section IV.D. Accordingly, no additional
approval of the Plan Administrator or the Board shall be required at the time of
the actual option surrender and cash distribution. Any unsurrendered portion of
the option shall continue to remain outstanding and become exercisable in
accordance with the terms of the instrument evidencing such grant.
E. The shares of Common Stock subject to any option surrendered
for an appreciation distribution pursuant to this Section IV shall not be
available for subsequent option grant under the Plan.
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ARTICLE THREE
-------------
AUTOMATIC OPTION GRANT PROGRAM
------------------------------
I. ELIGIBILITY
A. Eligible Directors. 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 Automatic
Option Grant Program, whether through appointment by the Board or election by
the Corporation's stockholders, and (ii) those individuals who continue to serve
as non-employee Board members at one or more Annual Stockholders Meetings held
after such Effective Date, whether or not they commenced their Board service
prior to the Effective Date. Any non-employee Board member eligible to
participate in the Automatic Option Grant Program pursuant to the foregoing
criteria shall be designated an Eligible Director for purposes of this Plan.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Effective Date. The terms and conditions of this Article Three
reflect the amendment to the Automatic Option Grant Program effected by the
January 22, 1999 restatement of the Plan and became effective upon stockholder
approval of such restatement at the 1999 Annual Meeting. Accordingly, such
stockholder approval constitutes approval of each option granted under the
amended Automatic Option Grant Program at or after the date of that Annual
Meeting and the subsequent exercise of that option in accordance with the terms
and conditions of this Article Three.
B. Grant Dates. Options shall be granted under the Automatic Option
Grant Program in accordance with the following provisions:
(i) Each Eligible Director shall automatically
be granted, at the time of his or her initial election or
appointment as a non-employee Board member, a non-statutory
stock option to purchase 10,000/1/ shares of Common Stock
upon the terms and conditions of this Article Three.
(ii) On the date of each Annual Stockholders
Meeting, beginning with the 1999 Annual Meeting, each
individual who is to continue as an Eligible Director shall
automatically be granted, whether or not such individual is
standing for re-election as a Board member at that particular
meeting, a non-statutory stock option to purchase an
additional 5,000/2/ shares of Common Stock upon the terms
and conditions of this Article Three, provided he or she has
served as a non-employee Board member for at least six (6)
months. There shall be no limit on the number of 5,000-share
option grants any one Eligible Director may receive over his
or her period of Board service.
The number of shares for which the automatic grants are to be made
to each newly-elected or continuing Eligible Director shall be subject to
periodic adjustment pursuant to the applicable provisions of Section VI.D of
Article One.
C. Option Price. For each option grant made under this Automatic Option
Grant Program, the option price per share shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the automatic grant
date.
D. Payment. The option price shall be payable in one of the alternative
forms specified below:
- ----------------------
/1/ Reflects the 3-for-2 split of the Common Stock effected by the Corporation
on June 5, 1995.
/2/ Reflects the 3-for-2 split of the Common Stock effected by the Corporation
on June 5, 1995.
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(i) full payment in cash or check made payable
to the Corporation's order; or
(ii) full payment in shares of Common Stock
held for the requisite period necessary to avoid a charge
to the Corporation's reported earnings and valued at Fair
Market Value on the Exercise Date; or
(iii) full payment in a combination of shares
of Common Stock held for the requisite period necessary to
avoid a charge to the Corporation's reported earnings and
valued at Fair Market Value on the Exercise Date and cash or
check payable to the Corporation's order; or
(iv) full payment through a sale and remittance
procedure pursuant to which the non-employee Board member
(I) shall provide irrevocable instructions to a designated
brokerage firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover
the aggregate option price payable for the purchased shares
and shall (II) concurrently provide directives to the
Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete
the sale transaction.
The Exercise Date shall be the date on which notice of the option
exercise is delivered to the Corporation. Except to the extent the sale and
remittance procedure is utilized for the exercise of the option, payment of the
option price for the purchased shares must accompany the exercise notice.
E. Option Term. Each automatic grant under this Article Three shall
have a maximum term of ten (10) years measured from the automatic grant date.
F. Exercisability. The initial 10,000-share automatic option grant made
to each newly-elected or appointed Board member shall become exercisable for
twelve and one-half percent (12.5%) of the option shares upon the Optionee's
completion of six (6) months of Board service measured from the automatic grant
date and shall become exercisable for the balance of the option shares in a
series of fourteen (14) equal and successive quarterly installments upon the
Optionee's completion of each additional three (3)-month period of Board service
thereafter. Each 5,000-share automatic option grant made to a continuing Board
member shall become exercisable in a series of four (4) equal and successive
annual installments over the Optionee's period of service on the Board, with the
first such installment to become exercisable one year after the automatic grant
date. The exercisability of each outstanding automatic grant shall be subject to
acceleration in accordance with the provisions of Section II.G and Section III
of this Article Three.
G. Limited Transferability of Options. Each automatic option grant may,
in connection with the Optionee's estate plan, be assigned in whole or in part
during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
H. Termination of Board Service.
(1) Should the Optionee cease service as a Board member for any
reason (other than death or Permanent Disability) while holding one or more
automatic option grants under this Article Three, then such individual shall
have a six (6)-month period following the date of such cessation of Board
service 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.
14
<PAGE>
(2) Should the Optionee die 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 such 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.
(3) Should the Optionee die or become permanently disabled while
serving as a Board member, then each automatic option grant held by such
Optionee under this Article Three shall accelerate in full, and the Optionee (or
the representative of the Optionee's estate or the person or persons to whom the
option is transferred upon the Optionee's death) shall have a twelve (12)-month
period following the date of the Optionee's cessation of Board service in which
to exercise each such option for any or all of the shares of Common Stock
subject to that option at the time of such cessation of Board service.
(4) In no event shall any automatic grant under this Article
Three remain exercisable after the specified expiration date of the ten
(10)-year option term. Upon the expiration of the applicable post-service
exercise period under subparagraph 1, 2 or 3 above or (if earlier) upon the
expiration of the ten (10)-year option term, the automatic grant shall terminate
and cease to be outstanding for any unexercised shares for which the option was
otherwise exercisable at the time of the Optionee's cessation of Board service.
I. 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 option price for the purchased shares.
J. Remaining Terms. The remaining terms of each option granted under
the Automatic Option Grant Program shall be the same as the terms in effect for
option grants made under the Discretionary Option Grant Program.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, 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. Upon the
consummation of the Corporate Transaction, all automatic option grants under
this Article Three shall terminate and cease to be outstanding.
B. In connection with any Change in Control of the Corporation, 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.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender each option held by him or
her under this Article Three to the Corporation, to the extent such option has
been outstanding for a period of at least six (6) months. The Optionee shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the shares of Common Stock at
the time subject to the surrendered option (whether or not the option is
otherwise at the time exercisable for such shares) over (ii) the aggregate
option price payable for such shares. Such cash distribution shall be paid
within five (5) days following the consummation of the Hostile Take-Over.
Stockholder approval of this January 22, 1999 restatement of the Plan at the
1999 Annual Meeting constitutes pre-approval of each such option surrender right
granted at or after the date of that Annual Meeting and the subsequent exercise
15
<PAGE>
of that right in accordance with the terms and provisions of this Section III.C.
No additional approval of any Plan Administrator or the Board shall be required
at the time of the actual option surrender and cash distribution.
D. The shares of Common Stock subject to each option surrendered in
connection with the Hostile Take-Over shall not be available for subsequent
option grant under this Plan.
E. The automatic option grants outstanding under this Article Three
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
16
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ARTICLE FOUR
------------
MISCELLANEOUS
-------------
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any Optionee
(including an Optionee who is an officer of the Corporation) in the exercise of
one or more options granted to such Optionee under the Discretionary Option
Grant Program, including the satisfaction of any Federal and State income and
employment tax obligations arising therefrom, by (i) authorizing the extension
of a loan from the Corporation 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) shall be upon such terms as
the Plan Administrator specifies in the applicable option agreement or otherwise
deems appropriate under the circumstances. Loans or installment payments may be
authorized with or without security or collateral. However, the maximum credit
available to the Optionee may not exceed the option price of the acquired shares
plus any Federal and State income and employment tax liability incurred by the
Optionee in connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under this financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Plan Administrator may deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. 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, no such amendment or modification shall adversely affect rights and
obligations with respect to options at the time outstanding under the Plan,
unless the Optionee consents to such amendment. In addition, certain amendments
may require stockholder approval pursuant to applicable laws or regulations.
B. Options to purchase shares of Common Stock may be granted under
the Discretionary Option Grant Program which are in excess of the number of
shares then available for issuance under the Plan, provided any excess shares
actually issued under such program are held in escrow until stockholder approval
is obtained for a sufficient increase in the number of shares available for
issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess option grants are made,
then (i) any unexercised excess options shall terminate and cease to be
exercisable and (ii) the Corporation shall promptly refund the purchase price
paid for any excess shares actually issued under the Plan and held in escrow,
together with interest (at the applicable Short Term Federal Rate) for the
period the shares were held in escrow.
III. TAX WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon the
exercise of stock options for such shares or the vesting of such shares under
the Plan shall be subject to the satisfaction of all applicable Federal, State
and local income and employment tax withholding requirements.
The Plan Administrator may, in its discretion and in accordance with
the provisions of this Section III 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 (other than the automatic grants made pursuant to Article
Three of the Plan) or unvested shares under the Plan with the right to use
shares of the Corporation's Common Stock in satisfaction of all or part of the
Federal, State and local income and employment tax liabilities incurred by such
holders in connection with the exercise of their options or the vesting of their
shares (the "Taxes"). Such right may be provided to any such holder in either or
both of the following formats:
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<PAGE>
a. Stock Withholding: The holder of the non-statutory
option or unvested shares may be provided with the election to
have the Corporation withhold, from the shares of Common
Stock otherwise issuable upon the exercise of such non-statutory
option or the vesting of such shares, a portion of those 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 holder.
b. Stock Delivery: The Plan Administrator may, in its
discretion, provide the holder of the non-statutory option or
unvested shares purchased thereunder with the election to
deliver to the Corporation, at the time the non-statutory
option is exercised or the shares vest, one or more shares of
Common Stock previously acquired by such individual (other than
in connection with the option exercise or share vesting
triggering the Taxes) with an aggregate Fair Market Value equal
to the percentage of the Taxes incurred in connection with such
option exercise or share vesting (not to exceed one hundred
percent (100%)) designated by the holder.
IV. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan was initially adopted by the Board on August 31, 1993 and
approved by the stockholders in October 1993. As of the applicable Effective
Date for each of the equity incentive programs in effect hereunder, this Plan,
as successor to the Predecessor Plans, became effective for each such program,
and no further option grants or stock issuances shall be made under the
Predecessor Plans from and after such Effective Date. The Plan was subsequently
amended by the Board on January 23, 1995 to (i) increase by 750,000/3/ the
number of shares of Common Stock issuable under the Plan, (ii) limit the number
of shares of Common Stock for which any one participant may be granted stock
options and separately exercisable stock appreciation rights under the Plan to
750,0003/ shares, exclusive of any stock options or stock appreciation rights
granted prior to January 1, 1995 and (iii) provide that the option price per
share for all non-statutory stock options granted from and after January 1, 1995
shall not be less than one hundred percent (100%) of the Fair Market Value of
the Common Stock on the grant date. The January 23, 1995 amendment was approved
by the stockholders at the 1995 Annual Meeting held on March 27, 1995. On
January 26, 1996, the Board authorized an additional 500,000-share increase in
the number of shares of Common Stock available for issuance under the Plan and
in February 1996, the Board adopted an amendment to the Plan (the "February 1996
Amendment") which increased the number of shares of Common Stock for which
option grants are to be made annually under the Automatic Option Grant Program
to continuing non-employee Board members from 2,500 shares to 3,500 shares per
individual. Both the January 26, 1996 and February 1996 Amendments were approved
by the Corporation's stockholders at the 1996 Annual Meeting. The Plan was
subsequently amended on February 12, 1997 (the "February 1997 Amendment") to
effect the following changes: (i) increase the number of shares of Common Stock
authorized for issuance over the term of the Plan by an additional 500,000
shares, (ii) allow unvested shares issued under the Plan and subsequently
repurchased by the Corporation at the option exercise price paid per share to be
reissued under the Plan and (iii) effect a series of technical changes to the
provisions of the Plan (including stockholder approval requirements) in order to
take advantage of the recent amendments to Rule 16b-3 of the Securities Exchange
Act of 1934 which exempts certain officer and director transactions under the
Plan from the short-swing liability provisions of the federal securities laws.
The February 1997 Amendment was approved by the stockholders at the 1997 Annual
Meeting. All option grants made prior to the February 1997 Amendment shall
remain outstanding in accordance with the terms and conditions of the respective
instruments evidencing those options or issuances, and nothing in the February
1997 Amendment shall be deemed to modify or in any way affect those outstanding
options or issuances. The Plan was subsequently amended on February 13, 1998
(the "February 1998 Amendment") to effect the following changes: (i) increase
the number of shares of Common Stock authorized for issuance over the term of
the Plan by an additional 500,000 shares, and (ii) implement an automatic share
increase feature, pursuant to which the number of shares available for issuance
over the term of the Plan shall automatically increase on the first trading day
of each fiscal year, beginning with the 1999 fiscal year and continuing through
the fiscal year 2003, by an amount equal to two percent (2%) of the total number
of shares of Common Stock outstanding on the last trading day of the immediately
preceding fiscal year. The February 1998 Amendment was approved by the
- -------------------------
/3/ Reflects the 3-for-2 split of the Common Stock effected by the Corporation
on June 5, 1995
18
<PAGE>
stockholders at the 1998 Annual Meeting. The Plan was again amended by the Board
on January 22, 1999 (the "January 1999 Amendment"), to (i) increase the number
of shares of Common Stock authorized for issuance over the term of the Plan by
an additional 1,000,000 shares, (ii) increase the limit on the maximum number of
shares of Common Stock for which any one participant may be granted stock
options and separately exercisable stock appreciation rights after December 31,
1994 from 750,000 to 1,000,000 shares in the aggregate and (iii) increase the
size of the annual grants to non employee Board members under the Automatic
Option Grant Program from 3,500 to 5,000 shares. The January 1999 Amendment was
approved by the stockholders at the 1999 Annual Meeting, and no option grants
were made on the basis of the January 1999 Amendment before the January 1999
Amendment was so approved. Subject to the foregoing limitations, the Plan
Administrator may make option grants under the Plan at any time before the date
fixed herein for the termination of the Plan.
B. Each option issued and outstanding under the Predecessor Plans
immediately prior to the Effective Date of the Discretionary Option Grant
Program was 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.
C. The option/vesting 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 Predecessor Plans on the Effective Date of the
Discretionary Option Grant Program but which do not otherwise provide for such
acceleration.
D. The Plan shall terminate upon the earlier of (i) August 30, 2003
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. Upon such plan termination, all outstanding
option grants shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such grants.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants under the Plan shall be used for general corporate
purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option or
stock appreciation right under the Plan and the issuance of Common Stock upon
the exercise of the stock options or stock appreciation rights granted hereunder
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the stock
options and stock appreciation rights granted under it, and the Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and State securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which stock of the same class is then listed.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation 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 Corporation (or any parent or subsidiary corporation)
for any period of specific duration, and the Corporation (or any parent or
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<PAGE>
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. Except to the extent otherwise expressly provided in the Plan, 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 exercise of options
and the vesting of shares shall be governed by the laws of the State of
California without resort to that State conflict-of-laws rules.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation 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.
20
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EXHIBIT 99.10
-------------
CREDENCE SYSTEMS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
(As Amended and Restated Through March 24, 1999)
1. Purpose Of the Plan
The Credence Systems Corporation 1994 Employee Stock Purchase
Plan (the "Plan") is intended to provide a suitable means by which eligible
employees of the Credence Systems Corporation (the "Company") may accumulate,
through voluntary, systematic payroll deductions, amounts regularly credited to
their account to be applied to the purchase of shares of the common stock, par
value $0.001, of the Company (the "Common Stock") pursuant to the exercise of
options granted from time to time hereunder. The Plan provides employees with
the opportunities to acquire proprietary interests in the Company, and will also
provide them with additional incentives to continue their employment and promote
the best interests of the Company. Options granted under the Plan are intended
to qualify under Section 423 of the Internal Revenue Code of 1986, as amended
(the "Code").
2. Shares of Stock Subject to the Plan
Subject to the provisions of Section 12, the maximum number of
shares of Common Stock which may be issued on the exercise of options granted
under the Plan is limited to 800,000 shares of the Company's Common Stock. Such
share reserve includes (i) the initial share reserve of 300,000/1/ shares;
(ii) an additional 200,000 share increase authorized by the Board on February
12, 1997 and approved by the stockholders at the 1997 Annual Meeting; and (iii)
an additional 300,000 share increase authorized by the Board on January 22, 1999
and approved by the stockholders at the 1999 Annual Meeting.
Any shares subject to an option under the Plan, which option
for any reason expires or is terminated unexercised as to such shares, shall
again be available for issuance on the exercise of other options granted under
the Plan. Shares delivered on the exercise of options may, at the election of
the Board of Directors of the Company, be authorized but previously unissued
Common Stock or Common Stock reacquired by the Company, or both.
3. Administration
The Plan shall be administered by the Compensation Committee
of the Board of Directors of the company (the "Committee"), which shall be
composed of not less than two members of the Board of Directors of the Company,
all of whom shall be ineligible to participate in this Plan and shall otherwise
qualify as disinterested persons for purposes of Rule 16b-3 (c) (2) (i)
promulgated by the Securities and Exchange Commission. Subject to the provisions
- ----------------
/1/ Reflects the 3-for-2 split of the Corporation's outstanding Common
Stock effected June 5, 1995.
1
<PAGE>
of the Plan, the Committee shall have full discretion and exercise power (i) to
determine the terms and conditions under which the shares shall be offered and
corresponding options shall be granted under the Plan for the Purchase Period
(as defined in Section 6) consistent with the provisions of the Plan, and (ii)
to resolve all questions relating to the administration of the Plan.
The interpretation and application by the Committee of any
provision of the Plan shall be final and conclusive on all employees and others
persons having, or claiming to have, an interest under the Plan. The Committee
may, in its discretion, establish such rules and guidelines relating to the Plan
as it may deem desirable.
The Committee may employ such legal counsel, consultant and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant and any
computation received from any such counsel or consultant or agent. The Committee
shall keep minutes of its actions under the Plan.
No member of the Board of Directors or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any options granted hereunder.
4. Eligibility to Participate
The persons eligible to participate in this Plan shall be all
employees (including officers) of the Company, or any participating affiliate,
who have been actively employed by the Company, or such affiliate, for thirty
(30) consecutive days as of the first day of any Purchase Period, but excluding
employees whose customary employment is for not more than five (5) months in any
calendar year or twenty (20) hours or less per week. An employee who is eligible
to participate in this Plan pursuant to the foregoing sentence is hereinafter
referred to as an "Employee". A participating affiliate, for purposes of the
Plan, shall include any now existing or hereafter established parent or
subsidiary corporation of the Company, as determined in accordance with Code
Sections 424(e) and 424(f), which elects with the consent of the Company's Board
of Directors, to extend the benefits of the Plan to its eligible employees.
Nothing contained in the Plan shall confer upon any Employee
any right to continue in the employ of the Company or any of its affiliates, or
interfere in any way with the right of the Company or any of its affiliates to
terminate his employment at any time.
5. Participation in the Plan
An Employee may participate in the Plan only as of the
beginning of the Purchase Period. If an employee becomes eligible to participate
in the Plan after the commencement of a Purchase Period, that Employee may not
participate in the Plan until the beginning of the next Purchase Period. A copy
of the Plan will be furnished to each Employee prior to the beginning of the
first Purchase Period during which he may participate in the Plan. To
participate in the Plan, an employee must deliver (or cause to be delivered) to
the Company, within seven (7) days prior to the commencement of the first
Purchase Period during which participation in the Plan is desired, a contingent
subscription for Common Stock and authorization for payroll deductions to effect
2
<PAGE>
the purchase of Common Stock (hereinafter called a "Participation Election"). In
the Participation Election an Employee must:
(i) authorize payroll deductions within the limits
prescribed in Sections 8 and 9 and specify the
percentage to be deducted regularly from his
Compensation (as defined in Section 8);
(ii) elect and authorized the purchase by him for each
Purchase Period of a specific number of shares of
Common Stock on the Exercise Date (as defined in
Section 7) with respect to the applicable Purchase
Period, provided that such specific number of shares
shall not exceed a total of seven hundred fifty
shares in any Purchase Period;
(iii) furnish the exact name or names and address or
addresses in which the stock certificates for Common
Stock purchased by him under the Plan are to be
issued; and
(iv) agree to notify the company if he should dispose of
Common Stock purchased through the Plan within two
(2) years of the commencement of the Purchase Period
in which he purchased the Common Stock.
Stock certificates for shares of Common Stock purchased under
the Plan may be issued in the Employee's name or, if so designated by the
Employee, in his name and the name of another person who is a member of his
family, with right of survivorship; for this purpose the "family" of an Employee
shall include only his spouse, his ancestors and lineal descendants and his
brothers and sisters.
An Employee need not, and may not, make a down payment in
order to participate in the Plan.
Participation in the Plan is entirely voluntary, and a
participating Employee may withdraw from participation, as provided in Section
15, during any Purchase Period at any time prior to the Exercise Date for such
Purchase Period.
6. Purchase Period: Grant of Options
Each Purchase Period under the Plan shall commence on the
first day of a calendar half (or, for the first Purchase Period, such date
established by the Committee following the effective date specified in Section
20) and end on the last day of such calendar half, and shall include all pay
periods ending within it. For this purpose, calendar halves begin on January 1
and July 1. During each Purchase Period, participating employees shall
accumulate credits to a bookkeeping account maintained by the Company
(hereinafter referred to As a "Stock Purchase Account") through payroll
deductions to be made at the close of each pay period for the purchase of shares
of Common stock under the Plan. For each Purchase Period, the Company shall
grant options to participating Employees with respect to the number of shares of
Common Stock (subject to the provisions of sections 2, 5, 11 and 12) which shall
be purchasable through the application of the amounts credited to such
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<PAGE>
Employee's Stock Purchase Account at the purchase price per share determined on
the Exercise Date for the Purchase Period (such number of shares to be subject
to reduction in the event of a pro rata apportionment provided for in Section
17).
7. Exercise Dates, and Purchase Prices
The last business day of each Purchase Period shall constitute
the "Exercise Date" for such Purchase Period. Subject to the provisions of
Section 12, the purchase price per share of Common Stock to be purchased on an
Exercise Date pursuant to the exercise of options granted for the Purchase
Period, through the application of amounts credited during such Purchase Period
to the Stock Purchase Accounts of participating Employees, shall be the lesser
of:
(A) an amount equal to 85% of the Fair Market Value of
the Common Stock at the time such option is granted
(i.e., the first day of the Purchase Period), or
(B) an amount equal to 85% of the Fair Market Value of
the Common Stock at the time each option is exercised
(i.e., the Exercise Date).
For purposes of the Plan, the Fair Market Value of a share of
Common Stock on any date shall be (i) if the Common Stock is traded on an
established securities market, the mean between the high and low prices of such
Common Stock for such date, and (ii) if the Common Stock is not so traded, an
amount determined by the committee in good faith and based upon such factors as
it deems relevant to such determination.
8. Payroll Deductions - Authorization and Amount
Employees shall authorize in their Participation Elections
from 1% to 10% (in whole percentage increments) of their Compensation to which
such election relates (subject to the limitations of Section 9). For purposes of
the Plan, the "Compensation" of an Employee for any Purchase Period shall mean
the gross amount of his base pay on the basis of his regular, straight-time
hourly, weekly or monthly rate for the number of hours normally worked,
exclusive of overtime, sales commissions, bonuses, shift premiums and other
forms of compensation.
By delivering to the Company within seven (7) days prior to
the commencement of the next Purchase Period a revised Participation Election, a
participating Employee may change the amount to be deducted from his
Compensation during the next Purchase Period, subject to the limitations of
Sections 8 and 9.
A participating Employee's authorization for payroll
deductions will remain in effect for the duration of the Plan, subject to the
provisions of Sections 11 and 14, unless his election to purchase Common Stock
shall have been terminated pursuant to the provisions of section 13, the amount
of the deduction is changed, as provided in this Section 8, or the Employee
withdraws or is considered to have withdrawn from the Plan under Section 15 or
16.
Prior to the split of the Common Stock effected June 5, 1996,
the maximum number of shares of Common Stock purchasable per participant on any
4
<PAGE>
one purchase date under the Purchase Plan was limited to 500 shares. To reflect
such stock split, the limit has been increased to 750 shares per participant for
each purchase date after May 26, 1995.
All amounts credited to the Stock Purchase Accounts of
participating Employees shall be held in the general funds of the Company but
shall be used from time to time in accordance with the provisions of the Plan.
9. Limitations on the Granting of Options
Anything in the Plan to the contrary notwithstanding, no
participating employee may be granted an option which permits his rights to
purchase Common Stock under all employee stock purchase plans of the Company and
its parent and subsidiary companies (if any) to accrue at a rate which exceeds
$25,000 of the Fair Market Value of such Common Stock (determined at the time
such option is granted) for each calendar year in which such option is
outstanding at any time. For purposes of this Section 9:
(i) the right to purchase stock under an option accrues
when the option (or any portion thereof) first
becomes exercisable during the calendar year;
(ii) the right to purchase stock under an option accrues
at the rate provided in the option, but in no case
may such rate exceed $25,000 of the Fair Market Value
of such stock (determined at the time such option is
granted) for any one calendar year; and
(iii) a right to purchase stock which has accrued under one
option granted pursuant to the Plan may not be
carried over to any other option.
No participating Employee may be granted an option hereunder
if such Employee, immediately after the option is granted, owns (within the
meaning of Section 423 (b) (3) of the Code) stock possessing five (5) percent or
more of the total combined voting power or value of all classes of stock of the
Company or of its parent or subsidiary corporation. For purposes of the Plan,
the terms "parent corporation" and "subsidiary corporation" shall have the
respective meanings set forth in section 424 of the Code.
10. Stock Purchase Amounts
The amount deducted from the Compensation of each
participating Employee shall be credited to his individual Stock Purchase
Account. Employees participating in the Plan may not make direct cash payments
to their Stock Purchase Accounts.
Following the close of each Purchase period, the Company will
furnish to each participating Employee a statement of that Employee's individual
Stock Purchase account. This statement shall show (i) the total amount of
payroll deductions for the Purchase Period just closed, (ii) the number of full
shares (and the purchase price per share) of Common Stock purchased, pursuant to
the provisions of Section 11, by the participating Employee for the Purchase
Period, and (iii) any remaining balance of payroll deductions which are to be
5
<PAGE>
refunded to the Employee following the close of the Purchase Period (or carried
forward to the next Purchase Period in the case of amounts representing
fractional shares).
11. Issuance and Purchase of Common Stock
Shares of Common Stock may be purchased by a participating
Employee only on the Exercise Date for each Purchase Period; and the options
which the Company grants to participating Employees for the purchase of Common
Stock for a Purchase Period may be exercised only on the Exercise Date. No
fractional shares of Common Stock may be purchased hereunder. The purchase price
per share shall be determined as set forth in Section 7.
A participating Employee who purchased Common Stock, pursuant
to the exercise of options granted under the Plan, shall purchase as many full
shares as shall be stated in the Participation Election that the Employee has
completed, subject to the limitations set forth in Sections 5, 8, 9, 12 and 17;
provided that in no event may shares be purchased other than by application of
the balance in the Stock Purchase Account on the Exercise Date and that in no
event may a participating Employee purchase a greater number of shares than
would be purchasable at the purchase price determined in accordance with Section
7 through the application of the balance in his Stock Purchase Account on the
Exercise Date for the Purchase Period to which the option relates. Any balance
remaining in such a participating Employee's Stock Purchase Account following an
Exercise Date shall be refunded to the Employee as soon as practicable
thereafter; provided, however, that the participating Employee may elect to
carry over any such balance representing a fractional share to the next
succeeding Purchase Period.
Certificates for Common Stock so purchased shall be delivered
to the employee as soon as practicable.
All rights as an owner of shares of the Common Stock purchased
under the Plan shall accrue to the participating Employee who purchased the
shares effective as of the Exercise Date on which the amounts credited to his
Stock Purchase Account were applied to the purchase of the shares; and such
Employee shall not have any rights as a shareholder prior to such Exercise Date
by reason of his having elected to purchase such shares.
12. Dilutions or Other Adjustment
If the Company is a party to any merger or consolidation, or
undergoes any separation, reorganization (other than a reincorporation in
another state), or liquidation, then the options outstanding under the Plan
shall be exercised immediately prior to the effective date of such transaction,
and such date shall accordingly qualify as an Exercise Date under Section 7. In
addition, in the event of a reclassification, stock split, combination of
shares, separation (including a spin-off), dividend on shares of the Common
Stock payable in stock, or other similar change in capitalization or in the
corporate structure of the shares of the Common Stock of the Company, the
Committee shall conclusively determine the appropriate adjustment in the
purchase price and other terms of purchase for shares subject to outstanding
Participation Elections for the Purchase Period occurring at such time, in the
number and kind of shares or other securities which may by purchased for such
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Purchase Period, in the aggregate number of shares which may be purchased under
the Plan, and in the maximum number and kind of shares which may be purchased
per Employee in any Purchase Period. Any such adjustment in the shares or other
securities subject to the outstanding options granted to such Employee
(including any adjustments in the option price) shall be made in such manner as
not to constitute a modification as defined by Section 424(h)(3) of the Code and
only to the extent permitted by Sections 423 and 424 of the Code.
13. No Assignment of Plan Rights or of Purchased Stock
An Employee must promptly advise the Company if a disposition
shall be made of any shares of Common Stock purchased by him under the Plan if
such disposition shall have occurred within two years of the commencement of the
Purchase Period in which he purchased such shares.
A participating Employee's privilege to purchase Common Stock
under the Plan can be exercised only by him; and he cannot purchase Common Stock
for someone else, although he may designate (in accordance with the provisions
of Section 5) that stock certificates of Common Stock purchased by the Employee
be issued in the joint names of the Employee and a family member.
An Employee participating in the Plan may not sell, transfer,
pledge, or assign to any other person any interest, privilege or right under the
Plan or in any amounts credited to his Stock Purchase Account; and if this
provision shall be violated, his election to purchase Common Stock shall
terminate, and the only right remaining thereunder will be to have paid to the
person entitled thereto the amount then credited to the Employee's Stock
Purchase Account.
14. Suspension of Deductions
A participating Employee's payroll deductions under the Plan
shall be suspended if on account of a leave of absence, layoff or other reason a
participating Employee does not have sufficient Compensation in any payroll
period to permit payroll deductions authorized under the Plan to be made in
full. The suspension will last until the participating Employee again has
sufficient Compensation to permit such payroll deductions to be made in full;
but if the suspension shall not have been removed by the Exercise Date for the
Purchase Period in which it began, shares will be purchased to the extent that
the employee contributed funds prior to the suspension of deductions. In the
event of voluntary withdrawal or termination of employment, funds will be
returned to the employee as provided in Section 15.
15. Withdrawal from, and Reparticipation in the Plan
During any Purchase Period a participating Employee may
withdraw from the Plan at any time prior to the Exercise Date for the Purchase
Period; and, subject to, and in accordance with the provisions of Sections 5 and
8, he may again participate in the Plan at the beginning of any Purchase Period
subsequent to the Purchase Period in which he withdrew. Withdrawal of a
participating Employee shall be effected by written notification prior to such
Exercise Date to the Company on a form which the Company shall provide for this
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purpose ("Notice of Withdrawal"). In the event a participating Employee shall
withdraw from the Plan, all amounts then credited to his Stock Purchase Account
shall be returned as soon as practicable after his Notice of Withdrawal shall
have been received.
If an Employee's payroll deductions shall be interrupted by
any legal process, a Notice of Withdrawal will be considered as having been
received on the day the interruption shall occur.
16. Termination of Participation
A participating Employee's right to continue participation in
the Plan will terminate upon the earliest to occur of (i) the Company's
termination of the Plan, (ii) the Employee's transfer to ineligible employment
status, or (iii) retirement, disability, death or other termination of
employment with the Company. Upon the termination of an Employee's right to
continue participation in the Plan on account of the occurrence of any of the
foregoing events, all amounts then credited to the individuals Stock Purchase
Account not already used for the purchase of Common Stock will be repaid as soon
as practicable. Such repayments shall be made to the participating Employee
unless the termination of participation occurred by reason of such Employee's
death, in which event such repayment shall be made to such Employee's
beneficiary. For this purpose, an Employee's beneficiary shall be the person,
persons or entity designated by the Employee on a form prescribed by and
delivered to the Company or, in the absence of an effective beneficiary
designation, the Employee's estate; provided, however, that the determination of
the Employee's beneficiary hereunder shall be subject to any applicable
community property or other laws.
17. Apportionment of Stock
If at any time shares of Common Stock authorized for purposes
of the Plan shall not be available in sufficient number to meet the purchase
requirements under all outstanding Participation elections, the Committee shall
apportion the remaining available shares among the participating Employees on a
pro rata basis. In no case shall any apportionment of shares be made with
respect to a participating Employee's election to purchase unless such election
is then in effect (subject only to any suspension provided for in the Plan). The
Committee shall give notice of such apportionment and of the method of
apportionment used to each participating Employee to whom shares shall have been
apportioned.
18. Government Regulations
The Plan, and the obligation of the Company to issue, sell and
deliver Common Stock under the Plan are subject to all applicable laws and to
all applicable rules, regulations and approvals of government agencies.
19. Amendment or Termination
The Board of Directors of the Company may at any time amend,
suspend or terminate the Plan; provided, however, that no amendment (other than
an amendment authorized by Section 12) may be made increasing the maximum number
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of shares of Common Stock which may be issued pursuant to the Plan, reducing the
minimum purchase price at which shares may be purchased hereunder, extending the
maximum period during which shares may be purchased hereunder or changing the
class of employees eligible to participate hereunder; without the approval of
the holders of a majority of the outstanding voting shares of the Company.
20. Effective Date
The Purchase Plan became effective upon adoption by the Board
on January 20, 1994, was approved by the Company's stockholders at the 1994
Annual Meeting. The Purchase Plan was subsequently amended by the Board on
February 12, 1997 to (i) increase the maximum number of shares of Common Stock
authorized for issuance over the term of the plan from 300,000 to 500,000 shares
and (ii) extend the termination date of the Purchase Plan from December 31, 1998
to December 31, 2003. The February 1997 Amendment was approved by the
stockholders at the 1997 Annual Meeting. The Purchase Plan was again amended by
the Board on January 22, 1999 to increase the maximum number of shares of Common
Stock authorized for issuance over the term of the Purchase Plan from 500,000
shares, to 800,000 shares. The January 1999 Amendment was approved by the
stockholders at the 1999 Annual Meeting. No purchase rights were granted, and no
shares of Common Stock were issued, on the basis of such 300,000 share increase
before such stockholder approval was obtained.
21. Termination
The Plan shall terminate on December 31, 2003. Any unexpired
Purchase Period that commenced prior to such termination date shall forthwith
expire on such termination date, which shall be deemed the Exercise Date for
such Purchase Period.
