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As filed with the Securities and Exchange Commission on December 8, 1999
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
CATALYST SEMICONDUCTOR, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 77-0083129
<S> <C>
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
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1250 BORREGAS AVENUE, SUNNYVALE, CA 94089
(Address of principal executive offices) (Zip Code)
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CATALYST SEMICONDUCTOR, INC. STOCK OPTION PLAN
CATALYST SEMICONDUCTOR, INC. 1993 DIRECTOR STOCK OPTION PLAN
CATALYST SEMICONDUCTOR, INC. 1998 SPECIAL EQUITY INCENTIVE PLAN
(Full title of the Plans)
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RADU M. VANCO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CATALYST SEMICONDUCTOR, INC.
1250 BORREGAS AVENUE, SUNNYVALE, CA 94089
(Name and address of agent for service)
(408) 542-1000
(Telephone number, including area code, of agent for service)
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COPY TO:
PETER COHN
ORRICK, HERRINGTON & SUTCLIFFE LLP
1020 MARSH ROAD
MENLO PARK, CA 94025
(650) 614-7400
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF SECURITIES AMOUNT MAXIMUM MAXIMUM
TO BE TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED(3) PER SHARE OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 1,800,000(1) $1.5385(2) $1.7856(2) $ 848.52
(Stock Option Plan)
Common Stock, $0.001 par value 100,000(1) $1.5385(2) $1.7856(2) $ 47.14
(1993 Director Stock Option Plan)
Common Stock, $0.001 par value 3,500,000(1) $3.5385(2) $1.7856(2) $1,649.89
(1998 Special Equity Incentive
Plan)
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</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under any of the Plans by
<PAGE> 2
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 (the "1933 Act"). With respect to
6,623,817 shares which are subject to outstanding options to purchase
common stock of the Registrant under the referenced plans, the Proposed
Maximum Offering Price Per Share was estimated pursuant to Rule 457(h)
under which Rule the per share price of options to purchase stock under an
employee stock option plan may be estimated by reference to the exercise
price of such options. The weighted average exercise price of the 6,623,817
shares subject to outstanding options under the referenced plans to be
registered is $1.5385. With respect to 1,194,260 shares of the Registrant's
common stock available for future grant under the referenced plans, the
Proposed Maximum Offering Price Per Share was estimated pursuant to Rule
457(c) whereby the per share price was determined by reference to the
average between the high and low price reported in the OTC Bulletin Board
on December 6, 1999, which average was $3.1563. The numbers referenced
above in the column entitled "Proposed Maximum Aggregate Offering Price Per
Share" represents a weighted average of the foregoing estimates calculated
in accordance with Rules 457(h) and 457(c).
(3) Pursuant to Rule 429 of the 1933 Act, the prospectus delivered to
participants under the referenced plans also relates to an aggregate of
3,520,000 shares previously registered under Form S-8 Registration Nos.
333-62636 and 333-10041.
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This Registration Statement shall become effective immediately upon filing with
the Securities and Exchange Commission, and sales of the registered securities
will begin as soon as reasonably practicable after such effective date.
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GENERAL INFORMATION
Pursuant to Instruction E of the General Instructions to Form S-8, the
contents of the Registrant's Registration Statements on Form S-8 (SEC File No.
333-62636) filed on May 11, 1993 and (SEC File No. 333-10041) filed on August
12, 1996 are incorporated herein by reference.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The Registrant hereby incorporates by reference into this Registration
Statement the following documents previously filed with the Securities and
Exchange Commission (the "Commission"):
a. The Registrant's Annual Report on Form 10-K for the fiscal year ended
April 30, 1999, filed with the Commission on August 2, 1999 (with
amendments filed on August 30, 1999 and September 28, 1999);
b. The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended July 31, 1999, filed with the Commission on September 15, 1999;
c. The Registrant's periodic Current Reports on Form 8-K filed with the
Commission on May 21, 1999;
d. The Registrant's Registration Statement on Form 8-A filed with the
Commission on March 24, 1993, which provides a description of the
Registrant's Common Stock, including any amendments or reports filed
for the purpose of updating such description; and
All documents subsequently filed pursuant to Section 13(a), 13(c), 14 and
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 de-registers all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not applicable.
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Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") provides for the indemnification of directors, officers,
employees and other agents under certain circumstances. The Registrant's Bylaws
(the "Bylaws") require it to indemnify each of its officers and directors to the
fullest extent permitted by the Delaware Law against certain expenses,
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding arising by reason of the fact that
such person is or was an agent of Catalyst Semiconductor. In addition, the
Bylaws grant the Registrant the power to indemnify its employees and agents
under certain circumstances to the fullest extent permitted by Delaware Law
against certain expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding arising by
reason of the fact that such person is or was an agent of Catalyst
Semiconductor.
Article IX of the Registrant's Restated Certificate of Incorporation
provides that, to the fullest extent permitted by Delaware Law, the Registrant's
directors shall not be personally liable to Catalyst Semiconductor or the
Registrant's stockholders for monetary damages for breach of fiduciary duty as a
director.
The Registrant maintains directors' and officers' liability insurance
policies insuring its directors and officers against certain liabilities and
expenses incurred by them in their capacities as such, and insuring Catalyst
Semiconductor under certain circumstances, in the event that indemnification
payments are made by the Registrant to such directors and officers.
The Registrant has entered into indemnification agreements with its
officers and directors, pursuant to which the Registrant is obligated to
indemnify each officer and director against certain claims and expenses for
which the officer or director might be held liable.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
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Exhibit Number Exhibit
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4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statement on Form 8-A,
together with the exhibits thereto, which are incorporated
herein by reference pursuant to Item 3(d).
5 Opinion and Consent of Orrick, Herrington & Sutcliffe LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Orrick, Herrington & Sutcliffe LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-5 of this Registration Statement.
99.1 Catalyst Semiconductor, Inc. Stock Option Plan.
99.2 Catalyst Semiconductor, Inc. 1993 Director Stock Option Plan.
99.3 Catalyst Semiconductor, Inc. 1998 Special Equity Incentive Plan.
</TABLE>
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Item 9. Undertakings
A. The 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 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.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective 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
clauses is contained in periodic reports filed by Catalyst Semiconductor, Inc.
pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by
reference into this Registration Statement.
(2) that for the purpose of determining any liability 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.
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
B. The Registrant hereby undertakes that, for purposes of determining any
liability under the 1933 Act, each filing of our annual report pursuant to
Section 13(a) or Section 15(d) of the 1934 Act that is incorporated by reference
into this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers or controlling persons of Catalyst
Semiconductor, Inc. pursuant to the indemnification provisions summarized in
Item 6 or otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Catalyst
Semiconductor, Inc. of expenses incurred or paid by a director, officer, or
controlling person of Catalyst Semiconductor, Inc. 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Sunnyvale, State of California on this 8th day
of December 1999.
CATALYST SEMICONDUCTOR, INC.
By: /s/ Radu M. Vanco
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Radu M. Vanco
President, Chief Executive Officer
and Director
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Radu M. Vanco, his attorneys-in-fact,
with the power of substitution, for him in any and all capacities, to sign any
amendments to this Registration Statement on Form S-8, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
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.
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SIGNATURES TITLE DATE
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<S> <C> <C>
/s/ Radu M. Vanco President, Chief Executive Officer December 8, 1999
- ------------------------- (Principal Executive Officer) and Director
Radu M. Vanco
/s/ Thomas E. Gay III Vice President, Finance and Administration December 8, 1999
- ------------------------- and Chief Financial Officer (Principal Financial
Thomas E. Gay III Officer and Principal Accounting Officer)
/s/ Lionel M. Allan Director December 8, 1999
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Lionel M. Allan
/s/ Hideyuki Tanigami Director December 8, 1999
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Hideyuki Tanigami
/s/ Patrick Verderico Director December 8, 1999
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Patrick Verderico
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER THE
SECURITIES ACT OF 1933
CATALYST SEMICONDUCTOR, INC.
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EXHIBIT INDEX
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EXHIBIT NO. EXHIBIT
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4 Instruments Defining the Rights of Stockholders. Reference is made to
Registrant's Registration Statement on Form 8-A, together with the exhibits
thereto, which are incorporated herein by reference pursuant to Item 3(d).
5 Opinion and Consent of Orrick, Herrington & Sutcliffe LLP.
23.1 Consent of PricewaterhouseCoopers, LLP, Independent Accountants.
23.2 Consent of Orrick, Herrington & Sutcliffe LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-5 of this Registration Statement.
99.1 Catalyst Semiconductor, Inc. Stock Option Plan.
99.2 Catalyst Semiconductor, Inc. 1993 Director Stock Option Plan.
99.3 Catalyst Semiconductor, Inc. 1998 Special Equity Incentive Plan.
</TABLE>
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EXHIBIT 5
OPINION AND CONSENT OF ORRICK, HERRINGTON & SUTCLIFFE LLP
December 7, 1999
Catalyst Semiconductor, Inc.
1250 Borregas Avenue
Sunnyvale, CA 94089
RE: Catalyst Semiconductor, Inc.
Registration Statement on Form S-8 for Offering of
4,600,000 Shares of Common Stock
Ladies and Gentlemen:
In connection with your registration of an aggregate of 5,400,000 shares of the
common stock of Catalyst Semiconductor, Inc. (the "Company") on Form S-8 under
the Securities Act of 1933, as amended, we advise you that, in our opinion, when
such shares have been issued and sold pursuant to the provisions of the
Company's Stock Option Plan and the Company's 1993 Director Stock Option Plan
and the Company's 1998 Special Equity Incentive Plan, respectively, and in
accordance with the Registration Statement, such shares will be duly authorized,
validly issued, fully paid and non-assessable shares of the Company's common
stock.
We hereby consent to filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Orrick, Herrington & Sutcliffe LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated June 24, 1999 relating to the
financial statements, which appear in Catalyst Semiconductor, Inc.'s Annual
Report on Form 10-K for the year ended May 2, 1999.
/s/ PricewaterhouseCoopers LLP
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PricewaterhouseCoopers LLP
San Jose, California
December 7, 1999
<PAGE> 1
EXHIBIT 99.1
CATALYST SEMICONDUCTOR, INC. STOCK OPTION PLAN
<PAGE> 2
CATALYST SEMICONDUCTOR, INC.
STOCK OPTION PLAN
AS AMENDED AND RESTATED ON DECEMBER 3, 1998
This Stock Option Plan is an amendment and restatement of the Catalyst
Semiconductor, Inc., Founders' Stock Option Plan.
1. Purpose of the Plan. The purpose of this Stock Option Plan is to
enable the Company to provide incentive to eligible employees, consultants and
officers whose present and potential contributions are important to the
continued success of the Company, to afford these individuals the opportunity to
acquire a proprietary interest in the Company, and to enable the Company to
enlist and retain in its employment qualified personnel for the successful
conduct of its business. It is intended that this purpose will be effected
through the granting of (a) stock options, (b) stock purchase rights, and (c)
stock appreciation rights.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or such of its Committees as
shall be administering the Plan, in accordance with Section 8 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under applicable securities laws, Delaware
corporate law and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 8 of the Plan.
(f) "Common Stock" means the Common Stock, $.001 par value, of the
Company.
(g) "Company" means Catalyst Semiconductor, Inc., a Delaware
corporation, and its predecessor Catalyst Semiconductor, Inc., a Delaware
corporation.
(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
(i) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship is not interrupted or terminated by the
Company, or any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered
<PAGE> 3
interrupted in the case of: (i) any leave of absence approved by the
Administrator, including sick leave, military leave, or any other personal
leave; provided, however, that for purposes of Continuous Status as an Employee
or Consultant, no such leave may exceed ninety (90) days, unless reemployment
upon the expiration of such leave is guaranteed by contract (including written
Company policies) or statute or unless (in the case of Options and Rights other
than Incentive Stock Options) the Administrator has expressly designated a
longer leave period during which (for purposes of such Options or Rights)
Continuous Status as an Employee or Consultant shall continue; or (ii) transfers
between locations of the Company or between the Company, its Parent, its
Subsidiaries or its successor; and provided further that any vesting or lapsing
of the Company's right to repurchase Shares at their original purchase price
shall cease on the ninety-first (91st) consecutive day of any leave of absence
approved by the Administrator and shall not recommence until such date, if any,
upon which the Consultant or Optionee resumes his or her service with the
Company.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
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<PAGE> 4
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(o) "Listed Security" means any security of the Company which is
listed or approved for listing on a national security exchange or designated or
approved for designation as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.
(p) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(q) "Nonstatutory Stock Option" means any Option that is not an
Incentive Stock Option.
(r) "Notice of Grant" means a written notice evidencing certain terms
and conditions of an individual Option, Stock Purchase Right, SAR or Long-Term
Performance Award grant. The Notice of Grant is part of the Option Agreement,
the SAR Agreement and the Long-Term Performance Award Agreement.
(s) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(t) "Option" means a stock option granted pursuant to the Plan.
(u) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(v) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(w) "Optioned Stock" means the Common Stock subject to an Option or
Right.
(x) "Optionee" means an Employee or Consultant who holds an
outstanding Option or Right.
(y) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(z) "Plan" means this Stock Option Plan, formerly the Founders' Stock
Option Plan.
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<PAGE> 5
(aa) "Restricted Stock" means shares of Common Stock subject to a
Restricted Stock Purchase Agreement acquired pursuant to a grant of Stock
Purchase Rights under Section 6 below.
(bb) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
(cc) "Right" means and includes SARs, Long-Term Performance Awards and
Stock Purchase Rights granted pursuant to the Plan.
(dd) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor rule thereto, as in effect when discretion is being exercised with
respect to the Plan.
(ee) "SAR" means a stock appreciation right granted pursuant to
Section 5 of the Plan.
(ff) "SAR Agreement" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual SAR grant. The
SAR Agreement is subject to the terms and conditions of the Plan.
(gg) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(hh) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 7 of the Plan, as evidenced by a Notice of Grant.
(ii) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(jj) "10% Stockholder" means the owner of Common Stock (as determined
under Section 424(d) of the Code) possessing more than 10% of the total combined
voting power of all classes of stoke of the company or any Parent or Subsidiary
of the Company.
3. Shares Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the total number of Shares reserved and available for distribution
under the Plan is 5,130,000 Shares. Subject to Section 10 of the Plan, if any
Shares that have been optioned under an Option cease to be subject to such
Option (other than through exercise of the Option), or if any Option or Right
granted hereunder is forfeited or any such award otherwise terminates prior to
the issuance of Common Stock to the participant, the shares that were subject to
such Option or Right shall again be available for distribution in connection
with future Option or right grants under the Plan; provided, however, that
Shares that have actually been issued under the Plan, whether upon exercise of
an Option or Right, shall not in any event be returned to the Plan and shall not
become available for future distribution under the Plan.
-4-
<PAGE> 6
4. Eligibility. Nonstatutory Stock Options and Rights may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been granted
an Option or Right may be granted additional Options or Rights.
5. Limitation on Grants to Employees. Subject to adjustment as provided
in this Plan, the maximum number of Shares which may be subject to Options or
Rights granted to any one Employee under this Plan for any fiscal year of the
Company shall be 1,000,000. In connection with his or her initial employment, an
Employee may be granted up to an additional 250,000 Shares, which Shares do not
count against the 1,000,000 limitation.
6. Options and SARs.
(a) Options. The Administrator, in its discretion, may grant Options
to eligible participants and shall determine whether such Options shall be
Incentive Stock Options or Nonstatutory Stock Options. Each Option shall be
evidenced by a Notice of Grant which shall expressly identify the Options as
Incentive Stock Options or as Nonstatutory Stock Options, and be in such form
and contain such provisions as the Administrator shall from time to time deem
appropriate. Without limiting the foregoing, the Administrator may at any time
authorize the Company, with the consent of the respective recipients, to issue
new Options or Rights in exchange for the surrender and cancellation of
outstanding Options or Rights. Option agreements shall contain the following
terms and conditions:
(i) Exercise Price; Number of Shares. The per Share exercise
price for the Shares issuable pursuant to an Option shall be such price as is
determined by the Administrator; provided that in the case of an Incentive Stock
Option, the price shall be no less than 100% of the Fair Market Value of the
Common Stock on the date the Option is granted, subject to any additional
conditions set out in Section 6(a)(iv) below; provided, further, that in the
case of any Option (A) granted to any person, who at the time of the grant of
such Option, owns stock representing more than 10% of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
price shall be no less than 110% of the Fair Market Value of the Common Stock on
the date the Option is granted, or (B) granted to any person the price shall be
no less than 85% of the Fair Market Value of the Common Stock on the date the
Option is granted.
The Notice of Grant shall specify the number of Shares to which
it pertains.
(ii) Vesting Period and Exercise Dates. At the time an Option is
granted, the Administrator will determine the terms and conditions to be
satisfied before Shares may be purchased, including the dates on which Shares
subject to the Option may first be purchased. As to any Option the Administrator
may specify vesting requirements and/or performance criteria with respect to the
Company and/or the Optionee; provided that such Option shall become exercisable
at the rate of at least 20% per year over five years from the date the Option is
granted. In the event that any of the Shares issued upon exercise of an Option
should be subject to a right of repurchase in the Company's favor, such
repurchase right shall lapse at
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<PAGE> 7
the rate of at least 20% per year over five years from the date the Option is
granted. At the time an Option is granted, the Administrator shall fix the
period within which the Option may be exercised, which shall not be earlier than
the end of the vesting period, if any, nor, in the case of an Incentive Stock
Option, later than ten (10) years, from the date of grant.
(iii) Form of Payment. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist entirely of:
(1) cash;
(2) check;
(3) promissory note;
(4) other Shares which (1) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (2) have a Fair Market Value on the date of
surrender not greater than the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(5) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and any broker
approved by the Company, if applicable, shall require to effect an exercise of
the Option and delivery to the Company of the sale or loan proceeds required to
pay the exercise price;
(6) any combination of the foregoing methods of payment; or
(7) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
(iv) Special Incentive Stock Option Provisions. In addition to
the foregoing, Options granted under the Plan which are intended to be Incentive
Stock Options under Section 422 of the Code shall be subject to the following
terms and conditions:
(1) Dollar Limitation. To the extent that the aggregate
Fair Market Value of (a) the Shares with respect to which Options designated as
Incentive Stock Options plus (b) the shares of stock of the Company, Parent and
any Subsidiary with respect to which other incentive stock options are
exercisable for the first time by an Optionee during any calendar year under all
plans of the Company and any Parent and Subsidiary exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of the
preceding sentence, (a) Options shall be taken into account in the order in
which they were granted, and (b) the Fair Market Value of the Shares shall be
determined as of the time the Option or other incentive stock option is granted.
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<PAGE> 8
(2) 10% Stockholder. If any Optionee to whom an Incentive
Stock Option is to be granted pursuant to the provisions of the Plan is, on the
date of grant, a 10% Stockholder, then the following special provisions shall be
applicable to the Option granted to such individual:
(a) The per Share Option price of Shares subject to
such Incentive Stock Option shall not be less than 110% of the Fair Market Value
of Common Stock on the date of grant; and
(b) The Option shall not have a term in excess of five
(5) years from the date of grant.
Except as modified by the preceding provisions of this subsection 6(a) (iv) and
except as otherwise limited by Section 422 of the Code, all of the provisions of
the Plan shall be applicable to the Incentive Stock Options granted hereunder.
(v) Other Provisions. Each Option granted under the Plan may
contain such other terms, provisions, and conditions not inconsistent with the
Plan as may be determined by the Administrator.
(vi) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
(b) SARs.
(i) In Connection with Options. At the sole discretion of the
Administrator, SARs may be granted in connection with all or any part of an
Option, either concurrently with the grant of the Option or at any time
thereafter during the term of the Option. The following provisions apply to SARs
that are granted in connection with Options:
(1) The SAR shall entitle the Optionee to exercise the SAR
by surrendering to the Company unexercised a portion of the related Option. The
Optionee shall receive in Exchange from the Company an amount equal to the
excess of (1) the Fair Market Value on the date of exercise of the SAR of the
Common Stock covered by the surrendered portion of the related Option over (2)
the exercise price of the Common Stock covered by the surrendered portion of the
related Option. As to any SAR granted prior to the date, if ever, upon which the
Common Stock becomes a Listed Security the exercise price shall be no less than
is required by any applicable law, rule or regulation (including the California
Corporate Securities Law). Notwithstanding the foregoing, the Administrator may
place limits on the amount that may be paid upon exercise of an SAR; provided,
however, that such limit shall not restrict the exercisability of the related
Option.
(2) When an SAR is exercised, the related Option, to the
extent surrendered, shall cease to be exercisable.
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<PAGE> 9
(3) An SAR shall be exercisable only when and to the extent
that the related Option is exercisable and shall expire no later than the date
on which the related Option expires.
(4) An SAR may only be exercised at a time when the Fair
Market Value of the Common Stock covered by the related Option exceeds the
exercise price of the Common Stock covered by the related Option.
(ii) Independent of Options. At the sole discretion of the
Administrator, SARs may be granted without related Options. The following
provisions apply to SARs that are not granted in connection with Options:
(1) The SAR shall entitle the Optionee, by exercising the
SAR, to receive from the Company an amount equal to the excess of (1) the Fair
Market Value of the Common Stock covered by the exercised portion of the SAR, as
of the date of such exercise, over (2) the Fair Market Value of the Common Stock
covered by the exercised portion of the SAR, as of the last market trading date
prior to the date on which the SAR was granted; provided, however, that the
Administrator may place limits on the aggregate amount that may be paid upon
exercise of an SAR.
(2) SARs shall be exercisable, in whole or in part, at such
times as the Administrator shall specify in the Optionee's SAR agreement.
(iii) Form of Payment. The Company's obligation arising upon
the exercise of an SAR may be paid in Common Stock or in cash, or in any
combination of Common Stock and cash, as the Administrator, in its sole
discretion, may determine. Shares issued upon the exercise of an SAR shall be
valued at their Fair Market Value as of the date of exercise.
(c) Method of Exercise.
(i) Procedure for Exercise; Rights as a Stockholder. Any Option
or SAR granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator and as shall be permissible under
the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option or SAR shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option or SAR by the person entitled to exercise the Option or SAR
and full payment for the Shares with respect to which the Option is exercised
has been received by the Company. Full payment may, as authorized by the
Administrator (and, in the case of an Incentive Stock Option, determined at the
time of grant) and permitted by the Option Agreement consist of any
consideration and method of payment allowable under subsection 6(a)(iii) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
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<PAGE> 10
notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 9 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter shall be available, both for purposes
of the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised. Exercise of an SAR in any manner shall, to the extent
the SAR is exercised, result in a decrease in the number of Shares which
thereafter shall be available for purposes of the Plan, and the SAR shall cease
to be exercisable to the extent it has been exercised.
(ii) Rule 16b-3. Options and SARs granted to individuals subject
to Section 16 of the Exchange Act ("Insiders") must comply with the applicable
provisions of Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.
(iii) Termination of Employment or Consulting Relationship. In
the event an Optionee's Continuous Status as an Employee or Consultant
terminates (other than upon the Optionee's death or Disability), the Optionee
may exercise his or her Option or SAR, but only within such period of time as is
determined by the Administrator at the time of grant, not to exceed six (6)
months (three (3) months in the case of an Incentive Stock Option) but not less
than thirty (30) days from the date of such termination, and only to the extent
that the Optionee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of the term of such Option or SAR as
set forth in the Option or SAR Agreement). To the extent that Optionee was not
entitled to exercise an Option or SAR at the date of such termination, and to
the extent that the Optionee does not exercise such Option or SAR (to the extent
otherwise so entitled) within the time specified herein, the Option or SAR shall
terminate.
(iv) Disability of Optionee. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option or SAR, but
only within six (6) months from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option or SAR as set forth in the Option or SAR Agreement). To the extent that
Optionee was not entitled to exercise an Option or SAR at the date of such
termination, and to the extent that the Optionee does not exercise such Option
or SAR (to the extent otherwise so entitled) within the time specified herein,
the Option or SAR shall terminate.
(v) Death of Optionee. Notwithstanding Sections 5(c)(iii) and
5(c)(iv) above, in the event of an Optionee's death during Optionee's Continuous
Status as an Employee or Consultant, the Optionee's estate or a person who
acquired the right to exercise the deceased Optionee's Option or SAR by bequest
or inheritance may exercise the Option or SAR, but only within six (6) months
(or such longer period, not to exceed twelve (12) months, as the Option or SAR
Agreement may provide) following the date of death, and only to the extent that
the
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<PAGE> 11
Optionee was entitled to exercise it at the date of death (but in no event later
than the expiration of the full term of such Option or SAR as set forth in the
Option or SAR Agreement). To the extent that Optionee was not entitled to
exercise an Option or SAR at the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option or SAR (to the extent otherwise so entitled)
within the time specified herein, the Option or SAR shall terminate.
7. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that the offeree shall be entitled to
purchase, the price to be paid, and the time within which the offeree must
accept such offer, which shall in no event exceed thirty (30) days from the date
upon which the Administrator made the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a Restricted Stock Purchase
Agreement in the form determined by the Administrator. As to any Stock Purchase
Right, the price shall be no less than 85% of the Fair Market Value on the date
the Administrator made the determination to grant the Stock Purchase Right or,
in the case of a Stock Purchase Right granted to any person, who at the time of
the grant of such Stock Purchase Right, owns stock representing more than 10% of
the total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary, the price shall be no less than 100% of the Fair Market
Value of the Common Stock on the date the Administrator made the determination
to grant the Stock Purchase Right.
(b) Repurchase Option. Unless the Administrator determines otherwise,
the Restricted Stock Purchase Agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine; provided, that with respect to an Optionee who is
not an Officer, Director or Consultant of the Company or of any Parent or
Subsidiary of the Company, it shall lapse at a minimum rate of 20% per year.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
(d) Rule 16b-3. Stock Purchase Rights granted to Insiders, and Shares
purchased by Insiders in connection with Stock Purchase Rights, shall be subject
to any restrictions applicable thereto in compliance with Rule 16b-3. An Insider
may only purchase Shares pursuant to the grant of a Stock Purchase Right, and
may only sell Shares purchased
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<PAGE> 12
pursuant to the grant of a Stock Purchase Right, during such time or times as
are permitted by Rule 16b-3.
(e) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 9
of the Plan.
8. Administration.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3
and Applicable Laws, the Plan may (but need not) be administered by different
administrative bodies with respect to (A) Directors who are employees, (B)
Officers who are not Directors and (C) Employees who are neither Directors nor
Officers.
(ii) Administration with respect to Directors and Officers. With
respect to grants of Options and Rights to eligible participants who are
Officers or Directors of the Company, the Plan shall be administered by (A) the
Board, if the Board may make grants under the Plan in compliance with Rule
16b-3, or (B) a Committee designated by the Board to administer the Plan, which
Committee shall be constituted (1) in such a manner as to permit grants under
the Plan to comply with Rule 16b-3 and (2) in such a manner as to satisfy the
Applicable Laws.
(iii) Administration with Respect to Other Persons. With respect
to grants of Options to eligible participants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board or (B)
a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws.
(iv) General. Once a Committee has been appointed pursuant to
subsection (ii) or (iii) of this Section 8(a), such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of a Committee
appointed under subsection (ii), to the extent permitted by Rule 16b-3.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
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<PAGE> 13
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom Options and
Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and Rights
or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option and Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options or Rights may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Right or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator,
in its sole discretion, shall determine;
(vii) to construe and interpret the terms of the Plan;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(ix) to determine whether and under what circumstances an Option
or Right may be settled in cash instead of Common Stock or Common Stock instead
of cash;
(x) to reduce the exercise price of any Option or Right;
(xi) to modify or amend each Option or Right (subject to Section
15 of the Plan);
(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Right previously
granted by the Administrator;
(xiii) to institute an Option Exchange Program;
(xiv) to determine the terms and restrictions applicable to
Options and Rights and any Restricted Stock; and
(xv) to make all other determinations deemed necessary or
advisable for administering the Plan.
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<PAGE> 14
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Rights.
9. Non-Transferability of Options. Options and Rights may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Right, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
Options or Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Right, the maximum number of
Shares of Common Stock for which Options and Rights to any Employee under
Section 5 of the Plan as well as the price per share of Common Stock covered by
each such outstanding Option or Right, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or Right
has not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option or Right shall terminate
as of a date fixed by the Board and give each Optionee the right to exercise his
or her Option or Right as to all or any part of the Optioned Stock, including
Shares as to which the Option or Right would not otherwise be exercisable.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Right shall be assumed or an
equivalent Option or Right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation does not agree to assume the Option or to substitute an equivalent
option, the Administrator shall, in lieu of such assumption or substitution,
provide for the Optionee to have the right to exercise the Option or Right as to
all or a portion of the Optioned
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<PAGE> 15
Stock, including Shares as to which it would not otherwise be exercisable. If
the Administrator makes an Option or Right exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee that the Option or Right shall be exercisable for a period
of not less than fifteen (15) days from the date of such notice, and the Option
or Right will terminate upon the expiration of such period. For the purposes of
this paragraph, the Option or Right shall be considered assumed if, immediately
following the merger or sale of assets, the Option or Right confers the right to
purchase, for each Share of Optioned Stock subject to the Option or Right
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon the exercise of
the Option or Right, for each Share of Optioned Stock subject to the Option or
Right, to be solely common stock of the successor corporation or its Parent
equal in Fair Market Value to the per share consideration received by holders of
Common Stock in the merger or sale of assets.
11. Date of Grant. The date of grant of an Option or Right shall be, for
all purposes, the date on which the Administrator makes the determination
granting such Option or Right, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.
12. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Right unless the exercise of such Option or Right and
the issuance and delivery of such Shares shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
Applicable Laws, and the requirements of any stock exchange or quotation system
upon which the Shares may then be listed or quoted, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
Option or Right, the Company may require the person exercising such Option or
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required.
13. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall
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<PAGE> 16
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered
by an Option or Right exceeds, as of the date of grant, the number of Shares
which may be issued under the Plan without additional stockholder approval, such
Option or Right shall be void with respect to such excess Optioned Stock, unless
stockholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section 15(b)
of the Plan.
14. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such stockholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
16. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 162(m) or 422 of the Code (or any successor rule
or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock is
listed or quoted). At such time as the Company has a Listed Security, the
further proviso in Section 6(a)(i) and the last sentence of Section 7(a) may be
deleted without shareholder approval. Such stockholder approval, if required,
shall be obtained in such a manner and to such a degree as is required by the
applicable law, rule or regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
17. Taxation Upon Exercise of Option or Right. At the discretion of the
Administrator, Optionees may satisfy withholding obligations as provided in this
Section 17. When an Optionee incurs tax liability in connection with an Option
or Right, which tax liability is subject to withholding under applicable tax
laws, the Optionee may satisfy the tax withholding obligation by one or some
combination of the following methods: (a) by cash payment, or (b) out of
Optionee's current compensation, or (c) by surrendering to the Company Shares
which (i) in the case of Shares previously acquired from the Company, have been
owned by the Optionee for more than six months on the date of surrender, and
(ii) have a fair market value on
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<PAGE> 17
the date of surrender equal to or less than the amount required to be withheld,
or (d) by electing to have the Company withhold from the Shares to be issued
upon exercise of the Option or Right that number of Shares having a fair market
value equal to the amount required to be withheld. For this purpose, the fair
market value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the "Tax Date").
If the Optionee is an Insider, any surrender of previously owned Shares to
satisfy tax withholding obligations arising upon exercise of this Option must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or disapproval of
the Administrator;
(d) if the Optionee is an Insider, the election must comply with the
applicable provisions of Rule 16b-3 and shall be subject to such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
In the event the election to have Shares withheld is made by an Optionee
and the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the Optionee shall receive the full
number of Shares with respect to which the Option is exercised but such Optionee
shall be unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.
18. Term of the Plan. The Plan shall expire, and no further Options shall
be granted pursuant to the Plan, on December 31, 2002.
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<PAGE> 1
EXHIBIT 99.2
CATALYST SEMICONDUCTOR, INC. 1993 DIRECTOR STOCK OPTION PLAN
<PAGE> 2
CATALYST SEMICONDUCTOR, INC.
1993 DIRECTOR STOCK OPTION PLAN
AS AMENDED AND RESTATED ON SEPTEMBER 8, 1999
1. Purpose of the Plan. The purpose of this 1993 Director Stock Option
Plan is to attract and retain highly qualified personnel to serve as Outside
Directors of the Company.
All options granted hereunder shall be "non-statutory stock options."
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means Catalyst Semiconductor, Inc., a Delaware
corporation, and its predecessor corporation Catalyst Semiconductor, Inc., a
California corporation.
(e) "Continuous Status as a Director" means the absence of any
interruption or termination of service as a Director.
(f) "Director" means a member of the Board.
(g) "Employee" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the date of determination, or, if
not a market trading day, on the last market trading day prior to the date of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable;
<PAGE> 3
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the date of determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(j) "Option" means a stock option granted pursuant to the Plan.
(k) "Optioned Stock" means the Common Stock subject to an Option.
(l) "Optionee" means an Outside Director who receives an Option.
(m) "Outside Director" means a Director who is not an Employee.
(n) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(o) "Plan" means this 1993 Director Stock Option Plan.
(p) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(q) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 320,000 Shares (the "Pool") of Common Stock (which number
gives effect to a one-for-nine reverse stock split of the Shares approved by the
Board in March 1993 ("Post-Split")). The Shares may be authorized but unissued,
or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administrator. Except as otherwise required herein, the Plan
shall be administered by the Board.
(b) Procedure for Grants. The provisions set forth in this Section
4(b) shall not be amended more than once every six months, other than to comply
with changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the rules
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<PAGE> 4
thereunder. All grants of Options hereunder shall be automatic and
non-discretionary and shall be made strictly in accordance with the following
provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.
(ii) Each new Outside Director who shall first join the Board on
or after March 1, 1993 (including any new Outside Director who shall have first
joined the Board of Catalyst Semiconductor, Inc., a California corporation,
subsequent to March 1, 1993), shall automatically be granted an Option to
purchase 20,000 Post-Split Shares upon the date on which such person first
becomes an Outside Director, whether through election by the stockholders of the
Company, appointment by the Board to fill a vacancy, or termination of
employment by the Company while remaining as a Director (a "One-Time Grant"). In
addition, on April 1, 1994, and on each April 1 thereafter during the term of
this Plan, each Outside Director who shall have been an Outside Director for at
least six (6) months as of such date shall automatically receive an Option to
purchase 7,500 Post-Split Shares (an "Annual Grant").
(iii) The terms of each Option granted hereunder shall be as
follows:
(A) the term of the Option shall be five (5) years;
(B) the Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Section 8
hereof;
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Option;
(D) each Annual Grant and One-Time Grant shall become
exercisable in installments cumulatively as to one-third of the Optioned Stock
on each anniversary of the date of grant, so that 100% of the Optioned Stock
granted under any such grant shall be exercisable in full three (3) years after
the date of grant of the Option, assuming in each case Continuous Status as a
Director.
(iv) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased upon exercise of Options to exceed the Pool, then
each such automatic grant shall be for that number of Shares determined by
dividing the total number of Shares remaining available for grant by the number
of Outside Directors entitled to receive Options on the grant date. No further
grants shall be made until such time, if any, as additional Shares become
available for grant under the Plan through action of the shareholders to
increase the number of Shares which may be issued under the Plan or through
cancellation or expiration of Options previously granted hereunder.
(c) Powers of the Board. Subject to the provisions and restrictions
of the Plan, the Board shall have the authority, in its discretion: (i) to
determine, upon review of
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<PAGE> 5
relevant information and in accordance with Section 2(i) of the Plan, the Fair
Market Value of the Common Stock; (ii) to interpret the Plan; (iii) to
prescribe, amend and rescind rules and regulations relating to the Plan; (iv) to
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted hereunder; and (v) to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
(d) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final.
5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 16 of the Plan. It shall continue in effect
until April 30, 2003, unless sooner terminated under Section 11 of the Plan.
7. Consideration. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of (i) cash, (ii) check, (iii)
promissory note, (iv) other shares which have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised and which, in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than 12 months
on the date of surrender, (v) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds required to pay the exercise price,
(vi) delivery of an irrevocable subscription agreement for the Shares which
irrevocably obligates the Optionee to take and pay for the Shares not more than
12 months after the date of delivery of the subscription agreement, (vii) any
combination of the foregoing methods of payment, or (viii) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under applicable law.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4(b) hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
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<PAGE> 6
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 10 of the
Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Continuous Status as a Director. In the event an
Optionee's Continuous Status as a Director terminates (other than upon the
Optionee's death or total and permanent disability (as defined in Section
22(e)(3) of the Code)), the Optionee may exercise his or her Option, but only
within 90 days from the date of such termination, and only to the extent that
the Optionee was entitled to exercise it at the date of such termination (but in
no event later than the expiration of its five-year term). To the extent that
the Optionee was not entitled to exercise an Option at the date of such
termination, and to the extent that the Optionee does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.
(c) Disability of Optionee. In the event Optionee's Continuous Status
as a Director terminates as a result of total and permanent disability (as
defined in Section 22(e)(3) of the Code), the Optionee may exercise his or her
Option, but only within six months from the date of such termination, and only
to the extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of its five-year term).
To the extent that the Optionee was not entitled to exercise an Option at the
date of termination, or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of an Optionee's death while a
Director, the Optionee's estate or a person who acquired the right to exercise
the Option by bequest or inheritance may exercise the Option, but only within
one year following the date of death, and only to the extent that the Optionee
was entitled to exercise it at the date of death (but in no event later than the
expiration of its five-year term). To the extent that the Optionee was not
entitled to exercise an Option at the date of death, and to the extent that the
Optionee's estate or a person
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<PAGE> 7
who acquired the right to exercise such Option does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option
shall terminate.
9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will, by the laws of descent or distribution or pursuant to a qualified domestic
relations order, and may be exercised, during the lifetime of the Optionee, only
by the Optionee or a permitted transferee.
10. Adjustments.
(a) Changes in Capitalization. In the event that the stock of the
Company is changed by reason of any stock split, reverse stock split,
recapitalization, or other change in the capital structure of the Company, or
converted into or exchanged for other securities as a result of any merger,
consolidation or reorganization, or in the event that the outstanding number of
shares of stock of the Company is increased through payment of a stock dividend,
appropriate proportionate adjustments shall be made in the number and class of
shares of stock subject to the Plan, the number and class of shares subject to
any Option outstanding under the Plan, and the exercise price of any such
outstanding Option; provided, however, that the Company shall not be required to
issue fractional shares as a result of any such adjustment. Any such adjustment
shall be made upon approval by the Board, whose determination shall be
conclusive. If there is any other change in the number or type of the
outstanding shares of stock of the Company, or of any other security into which
such stock shall have been changed or for which it shall have been exchanged,
and if the Board in its sole discretion determines that such change equitably
requires an adjustment in the Options then outstanding under the Plan, such
adjustment shall be made in accordance with the determination of the Board. No
adjustments shall be required by reason of the issuance or sale by the Company
for cash or other consideration of additional shares of its stock or securities
convertible into or exchangeable for shares of its stock.
(b) Change in Control. In the event of a "Change in Control" of the
Company, as defined in paragraph (c) below, then the following provisions shall
apply:
(i) Any Option outstanding on the date of such Change in Control
("Outstanding Option") that is not yet exercisable and vested on such date shall
become fully exercisable and vested;
(ii) Each Outstanding Option shall be assumed by the successor
corporation (if any) or by a Parent or Subsidiary of the successor corporation
(if any);
(iii) Each Outstanding Option shall remain exercisable by the
Optionee for a period of at least ninety (90) days from the date of the Change
in Control; and
(iv) Each Optionee with an Outstanding Option shall be provided
with written notice of the period of exercisability provided for in subsection
(b)(iii) above promptly after the date of the Change in Control by the Company
or by the entity surviving after the Change in Control.
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<PAGE> 8
(c) Definition of "Change in Control". For purposes of this Section
10, a "Change in Control" means the happening of any of the following:
(i) when any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee), is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than fifty (50%) of the combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of directors; or
(ii) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or
(iii) the stockholders of the Company approve an agreement for
the sale or disposition by the Company of all or substantially all the Company's
assets; or
(iv) a change in the composition of the Board occurring as a
result of any one meeting of the stockholders of the Company, as a result of
which fewer than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either are (A) directors of the Company as
of the date the Plan is approved by the stockholders, or (B) elected, or
nominated for election, to the Board of Directors of the Company with the
affirmative votes of at least a majority of the Incumbent Directors at the time
of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company).
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act (or any other applicable law or regulation), the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall
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<PAGE> 9
be given to each Outside Director to whom an Option is so granted within a
reasonable time after the date of such grant.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws and the requirements of any stock exchange or
market system upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the first granting of an Option
hereunder. Such stockholder approval shall be obtained in the degree and manner
required under applicable state and federal law.
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<PAGE> 1
EXHIBIT 99.3
CATALYST SEMICONDUCTOR, INC. 1998 SPECIAL EQUITY INCENTIVE PLAN
<PAGE> 2
APPENDIX II
CATALYST SEMICONDUCTOR, INC.
1998 SPECIAL EQUITY INCENTIVE PLAN
1. Purpose of the Plan. The purpose of this 1998 Special Equity Incentive
Plan is to enable the Company to provide incentive to eligible employees,
consultants, officers and directors whose present and potential contributions
are important to the continued success of the Company, to afford these
individuals the opportunity to acquire a proprietary interest in the Company,
and to enable the Company to enlist and retain in its employment qualified
personnel for the successful conduct of its business. It is intended that this
purpose will be effected through the granting of (a) stock options, (b) stock
purchase rights, (c) stock appreciation rights, and (d) long-term performance
awards.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or such of its Committees as
shall be administering the Plan, in accordance with Section 8 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under applicable securities laws, Delaware
corporate law and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 9 of the Plan.
(f) "Common Stock" means the Common Stock, $.001 par value, of the
Company.
(g) "Company" means Catalyst Semiconductor, Inc., a Delaware
corporation, and its predecessor Catalyst Semiconductor, Inc., a California
corporation.
(h) "Consultant" means any person, including an advisor, (i) engaged
by the Company or a Parent or Subsidiary to render services or perform under a
contract and who is compensated for such services or performance or (ii) who
serves the Company as a Director.
(i) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship is not interrupted or terminated by the
Company, or any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Administrator, including sick leave, military leave, or
any other personal leave; provided, however, that for purposes of Continuous
Status as an Employee or Consultant, no such leave may exceed ninety (90) days,
<PAGE> 3
unless reemployment upon the expiration of such leave is guaranteed by contract
(including written Company policies) or statute or unless (in the case of
Options and Rights other than Incentive Stock Options) the Administrator has
expressly designated a longer leave period during which (for purposes of such
Options or Rights) Continuous Status as an Employee or Consultant shall
continue; or (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor; and provided further
that any vesting or lapsing of the Company's right to repurchase Shares at their
original purchase price shall cease on the ninety-first (91st) consecutive day
of any leave of absence approved by the Administrator and shall not recommence
until such date, if any, upon which the Consultant or Optionee resumes his or
her service with the Company.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
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(o) "Listed Security" means any security of the Company which is
listed or approved for listing on a national security exchange or designated or
approved for designation as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.
(p) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(q) "Long-Term Performance Award" means an award under Section 8
below. A Long-Term Performance Award shall permit the recipient to receive a
cash or stock bonus (as determined by the Administrator) upon satisfaction of
such performance factors as are set out in the recipient's individual grant.
Long-term Performance Awards will be based upon the achievement of Company,
Subsidiary and/or individual performance factors or upon such other criteria as
the Administrator may deem appropriate.
(r) "Long-Term Performance Award Agreement" means a written agreement
between the Company and an Optionee evidencing the terms and conditions of an
individual Long-Term Performance Award grant. The Long-Term Performance Award
Agreement is subject to the terms and conditions of the Plan.
(s) "Nonstatutory Stock Option" means any Option that is not an
Incentive Stock Option.
(t) "Notice of Grant" means a written notice evidencing certain terms
and conditions of an individual Option, Stock Purchase Right, SAR or Long-Term
Performance Award grant. The Notice of Grant is part of the Option Agreement,
the SAR Agreement and the Long-Term Performance Award Agreement.
(u) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(v) "Option" means a stock option granted pursuant to the Plan.
(w) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(x) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(y) "Optioned Stock" means the Common Stock subject to an Option or
Right.
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<PAGE> 5
(z) "Optionee" means an Employee or Consultant who holds an
outstanding Option or Right.
(aa) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(bb) "Plan" means this 1998 Special Equity Incentive Plan.
(cc) "Restricted Stock" means shares of Common Stock subject to a
Restricted Stock Purchase Agreement acquired pursuant to a grant of Stock
Purchase Rights under Section 6 below.
(dd) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
(ee) "Right" means and includes SARs, Long-Term Performance Awards and
Stock Purchase Rights granted pursuant to the Plan.
(ff) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor rule thereto, as in effect when discretion is being exercised with
respect to the Plan.
(gg) "SAR" means a stock appreciation right granted pursuant to
Section 5 of the Plan.
(hh) "SAR Agreement" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual SAR grant. The
SAR Agreement is subject to the terms and conditions of the Plan.
(ii) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(jj) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 7 of the Plan, as evidenced by a Notice of Grant.
(kk) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(ll) "10% Stockholder" means the owner of Common Stock (as determined
under Section 424(d) of the Code) possessing more than 10% of the total combined
voting power of all classes of stoke of the company or any Parent or Subsidiary
of the Company.
3. Shares Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the total number of Shares reserved and available for distribution
under the Plan is 3,500,000 Shares. Subject to Section 11 of the Plan, if any
Shares that have been optioned under an Option cease to be subject to such
Option (other than through exercise of the Option), or if any Option or Right
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<PAGE> 6
granted hereunder is forfeited or any such award otherwise terminates prior to
the issuance of Common Stock to the participant, the shares that were subject to
such Option or Right shall again be available for distribution in connection
with future Option or right grants under the Plan; provided, however, that
Shares that have actually been issued under the Plan, whether upon exercise of
an Option or Right, shall not in any event be returned to the Plan and shall not
become available for future distribution under the Plan.
4. Eligibility. Nonstatutory Stock Options and Rights may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been granted
an Option or Right may be granted additional Options or Rights.
5. Limitation on Grants to Employees. Subject to adjustment as provided
in this Plan, the maximum number of Shares which may be subject to Options or
Rights granted to any one Employee under this Plan for any fiscal year of the
Company shall be 2,000,000. In connection with his or her initial employment, an
Employee may be granted up to an additional 250,000 Shares, which Shares do not
count against the 2,000,000 limitation.
6. Options and SARs.
(a) Options. The Administrator, in its discretion, may grant Options
to eligible participants and shall determine whether such Options shall be
Incentive Stock Options or Nonstatutory Stock Options. Each Option shall be
evidenced by a Notice of Grant which shall expressly identify the Options as
Incentive Stock Options or as Nonstatutory Stock Options, and be in such form
and contain such provisions as the Administrator shall from time to time deem
appropriate. Without limiting the foregoing, the Administrator may at any time
authorize the Company, with the consent of the respective recipients, to issue
new Options or Rights in exchange for the surrender and cancellation of
outstanding Options or Rights. Option agreements shall contain the following
terms and conditions:
(i) Exercise Price; Number of Shares. The per Share exercise
price for the Shares issuable pursuant to an Option shall be such price as is
determined by the Administrator; provided, further, that in the case of an
Incentive Stock Option, the price shall be no less than 100% of the Fair Market
Value of the Common Stock on the date the Option is granted, subject to any
additional conditions set out in Section 6(a)(iv) below.
The Notice of Grant shall specify the number of Shares to which
it pertains.
(ii) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator will determine the terms and conditions to be
satisfied before Shares may be purchased, including the dates on which Shares
subject to the Option may first be purchased. The Administrator may specify that
an Option may not be exercised until the completion of the service period
specified at the time of grant (any such period is referred to herein as the
"waiting period"); provided that as to any grant made prior to the date, if
ever, upon which the Common Stock becomes a Listed Security the waiting period
shall be no slower than
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<PAGE> 7
required by any applicable law, rule or regulation (including the California
Corporate Securities Law). At the time an Option is granted, the Administrator
shall fix the period within which the Option may be exercised, which shall not
be earlier than the end of the waiting period, if any, nor, in the case of an
Incentive Stock Option, later than ten (10) years, from the date of grant.
(iii) Form of Payment. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist entirely of:
(1) cash;
(2) check;
(3) promissory note;
(4) other Shares which (1) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (2) have a Fair Market Value on the date of
surrender not greater than the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(5) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and any broker
approved by the Company, if applicable, shall require to effect an exercise of
the Option and delivery to the Company of the sale or loan proceeds required to
pay the exercise price;
(6) any combination of the foregoing methods of payment; or
(7) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
(iv) Special Incentive Stock Option Provisions. In addition to
the foregoing, Options granted under the Plan which are intended to be Incentive
Stock Options under Section 422 of the Code shall be subject to the following
terms and conditions:
(1) Dollar Limitation. To the extent that the aggregate
Fair Market Value of (a) the Shares with respect to which Options designated as
Incentive Stock Options plus (b) the shares of stock of the Company, Parent and
any Subsidiary with respect to which other incentive stock options are
exercisable for the first time by an Optionee during any calendar year under all
plans of the Company and any Parent and Subsidiary exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of the
preceding sentence, (a) Options shall be taken into account in the order in
which they were granted, and (b) the Fair Market Value of the Shares shall be
determined as of the time the Option or other incentive stock option is granted.
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<PAGE> 8
(2) 10% Stockholder. If any Optionee to whom an Incentive
Stock Option is to be granted pursuant to the provisions of the Plan is, on the
date of grant, a 10% Stockholder, then the following special provisions shall be
applicable to the Option granted to such individual:
(a) The per Share Option price of Shares subject to
such Incentive Stock Option shall not be less than 110% of the Fair Market Value
of Common Stock on the date of grant; and
(b) The Option shall not have a term in excess of
five (5) years from the date of grant.
Except as modified by the preceding provisions of this subsection 6(a) (iv) and
except as otherwise limited by Section 422 of the Code, all of the provisions of
the Plan shall be applicable to the Incentive Stock Options granted hereunder.
(v) Other Provisions. Each Option granted under the Plan may
contain such other terms, provisions, and conditions not inconsistent with the
Plan as may be determined by the Administrator.
(vi) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
(b) SARs.
(i) In Connection with Options. At the sole discretion of the
Administrator, SARs may be granted in connection with all or any part of an
Option, either concurrently with the grant of the Option or at any time
thereafter during the term of the Option. The following provisions apply to SARs
that are granted in connection with Options:
(1) The SAR shall entitle the Optionee to exercise the SAR
by surrendering to the Company unexercised a portion of the related Option. The
Optionee shall receive in Exchange from the Company an amount equal to the
excess of (1) the Fair Market Value on the date of exercise of the SAR of the
Common Stock covered by the surrendered portion of the related Option over (2)
the exercise price of the Common Stock covered by the surrendered portion of the
related Option. As to any SAR granted prior to the date, if ever, upon which the
Common Stock becomes a Listed Security the exercise price shall be no less than
is required by any applicable law, rule or regulation (including the California
Corporate Securities Law). Notwithstanding the foregoing, the Administrator may
place limits on the amount that may be paid upon exercise of an SAR; provided,
however, that such limit shall not restrict the exercisability of the related
Option.
(2) When an SAR is exercised, the related Option, to the
extent surrendered, shall cease to be exercisable.
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<PAGE> 9
(3) An SAR shall be exercisable only when and to the extent
that the related Option is exercisable and shall expire no later than the date
on which the related Option expires.
(4) An SAR may only be exercised at a time when the Fair
Market Value of the Common Stock covered by the related Option exceeds the
exercise price of the Common Stock covered by the related Option.
(ii) Independent of Options. At the sole discretion of the
Administrator, SARs may be granted without related Options. The following
provisions apply to SARs that are not granted in connection with Options:
(1) The SAR shall entitle the Optionee, by exercising the
SAR, to receive from the Company an amount equal to the excess of (1) the Fair
Market Value of the Common Stock covered by the exercised portion of the SAR, as
of the date of such exercise, over (2) the Fair Market Value of the Common Stock
covered by the exercised portion of the SAR, as of the last market trading date
prior to the date on which the SAR was granted; provided, however, that the
Administrator may place limits on the aggregate amount that may be paid upon
exercise of an SAR.
(2) SARs shall be exercisable, in whole or in part, at such
times as the Administrator shall specify in the Optionee's SAR agreement.
(iii) Form of Payment. The Company's obligation arising upon the
exercise of an SAR may be paid in Common Stock or in cash, or in any combination
of Common Stock and cash, as the Administrator, in its sole discretion, may
determine. Shares issued upon the exercise of an SAR shall be valued at their
Fair Market Value as of the date of exercise.
(c) Method of Exercise.
(i) Procedure for Exercise; Rights as a Stockholder. Any Option
or SAR granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator and as shall be permissible under
the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option or SAR shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option or SAR by the person entitled to exercise the Option or SAR
and full payment for the Shares with respect to which the Option is exercised
has been received by the Company. Full payment may, as authorized by the
Administrator (and, in the case of an Incentive Stock Option, determined at the
time of grant) and permitted by the Option Agreement consist of any
consideration and method of payment allowable under subsection 6(a)(iii) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
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<PAGE> 10
notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter shall be available, both for purposes
of the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised. Exercise of an SAR in any manner shall, to the extent
the SAR is exercised, result in a decrease in the number of Shares which
thereafter shall be available for purposes of the Plan, and the SAR shall cease
to be exercisable to the extent it has been exercised.
(ii) Rule 16b-3. Options and SARs granted to individuals subject
to Section 16 of the Exchange Act ("Insiders") must comply with the applicable
provisions of Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.
(iii) Termination of Employment or Consulting Relationship. In
the event an Optionee's Continuous Status as an Employee or Consultant
terminates (other than upon the Optionee's death or Disability), the Optionee
may exercise his or her Option or SAR, but only within such period of time as is
determined by the Administrator at the time of grant, not to exceed six (6)
months (three (3) months in the case of an Incentive Stock Option) from the date
of such termination, and only to the extent that the Optionee was entitled to
exercise it at the date of such termination (but in no event later than the
expiration of the term of such Option or SAR as set forth in the Option or SAR
Agreement). To the extent that Optionee was not entitled to exercise an Option
or SAR at the date of such termination, and to the extent that the Optionee does
not exercise such Option or SAR (to the extent otherwise so entitled) within the
time specified herein, the Option or SAR shall terminate.
(iv) Disability of Optionee. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option or SAR, but
only within six (6) months from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option or SAR as set forth in the Option or SAR Agreement). To the extent that
Optionee was not entitled to exercise an Option or SAR at the date of such
termination, and to the extent that the Optionee does not exercise such Option
or SAR (to the extent otherwise so entitled) within the time specified herein,
the Option or SAR shall terminate.
(v) Death of Optionee. Notwithstanding Sections 5(c)(iii) and
5(c)(iv) above, in the event of an Optionee's death during Optionee's Continuous
Status as an Employee or Consultant, the Optionee's estate or a person who
acquired the right to exercise the deceased Optionee's Option or SAR by bequest
or inheritance may exercise the Option or SAR, but only within six (6) months
(or such lesser period as the Option or SAR Agreement may provide, or such
longer period, not to exceed twelve (12) months, as the Option or SAR Agreement
may
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<PAGE> 11
provide) following the date of death, and only to the extent that the Optionee
was entitled to exercise it at the date of death (but in no event later than the
expiration of the full term of such Option or SAR as set forth in the Option or
SAR Agreement). To the extent that Optionee was not entitled to exercise an
Option or SAR at the date of death, and to the extent that the Optionee's estate
or a person who acquired the right to exercise such Option does not exercise
such Option or SAR (to the extent otherwise so entitled) within the time
specified herein, the Option or SAR shall terminate.
7. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that the offeree shall be entitled to
purchase, the price to be paid, and the time within which the offeree must
accept such offer, which shall in no event exceed thirty (30) days from the date
upon which the Administrator made the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a Restricted Stock Purchase
Agreement in the form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines otherwise,
the Restricted Stock Purchase Agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine. As to any grant made prior to the date, if ever,
upon which the Common Stock becomes a Listed Security the repurchase option
shall lapse no more slowly than required by any applicable law (including the
California Corporate Securities Law).
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
(d) Rule 16b-3. Stock Purchase Rights granted to Insiders, and Shares
purchased by Insiders in connection with Stock Purchase Rights, shall be subject
to any restrictions applicable thereto in compliance with Rule 16b-3. An Insider
may only purchase Shares pursuant to the grant of a Stock Purchase Right, and
may only sell Shares purchased pursuant to the grant of a Stock Purchase Right,
during such time or times as are permitted by Rule 16b-3.
(e) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the
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<PAGE> 12
Company. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the Stock Purchase Right is exercised, except
as provided in Section 10 of the Plan.
8. Long-Term Performance Awards.
(a) Administration. Long-Term Performance Awards are cash or stock
bonus awards that may be granted either alone or in addition to other awards
granted under the Plan. Such awards shall be granted for no cash consideration.
The Administrator shall determine the nature, length and starting date of any
performance period (the "Performance Period") for each Long-Term Performance
Award, and shall determine the performance or employment factors, if any, to be
used in the determination of Long-Term Performance Awards and the extent to
which such Long-Term Performance Awards are valued or have been earned.
Long-Term Performance Awards may vary from participant to participant and
between groups of participants and shall be based upon the achievement of
Company, Subsidiary, Parent and/or individual performance factors or upon such
other criteria as the Administrator may deem appropriate. Performance Periods
may overlap and participants may participate simultaneously with respect to
Long-Term Performance Awards that are subject to different Performance Periods
and different performance factors and criteria. Long-Term Performance Awards
shall be confirmed by, and be subject to the terms of, a Long-Term Performance
Award agreement. The terms of such awards need not be the same with respect to
each participant.
At the beginning of each Performance Period, the Administrator may
determine for each Long-Term Performance Award subject to such Performance
Period the range of dollar values or number of shares of Common Stock to be
awarded to the participant at the end of the Performance Period if and to the
extent that the relevant measures of performance for such Long-Term Performance
Award are met. Such dollar values or number of shares of Common Stock may be
fixed or may vary in accordance with such performance or other criteria as may
be determined by the Administrator.
(b) Adjustment of Awards. The Administrator may adjust the
performance factors applicable to the Long-Term Performance Awards to take into
account changes in legal, accounting and tax rules and to make such adjustments
as the Administrator deems necessary or appropriate to reflect the inclusion or
exclusion of the impact of extraordinary or unusual items, events or
circumstances in order to avoid windfalls or hardships.
9. Administration.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3
and Applicable Laws, the Plan may (but need not) be administered by different
administrative bodies with respect to (A) Directors who are employees, (B)
Officers who are not Directors and (C) Employees who are neither Directors nor
Officers.
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<PAGE> 13
(ii) Administration with respect to Directors and Officers. With
respect to grants of Options and Rights to eligible participants who are
Officers or Directors of the Company, the Plan shall be administered by (A) the
Board, if the Board may make grants under the Plan in compliance with Rule
16b-3, or (B) a Committee designated by the Board to administer the Plan, which
Committee shall be constituted (1) in such a manner as to permit grants under
the Plan to comply with Rule 16b-3 and (2) in such a manner as to satisfy the
Applicable Laws.
(iii) Administration with Respect to Other Persons. With respect
to grants of Options to eligible participants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board or (B)
a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws.
(iv) General. Once a Committee has been appointed pursuant to
subsection (ii) or (iii) of this Section 9(a), such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of a Committee
appointed under subsection (ii), to the extent permitted by Rule 16b-3.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom Options and
Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and Rights
or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option and Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options or Rights may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Right or the shares of
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<PAGE> 14
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vii) to construe and interpret the terms of the Plan;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(ix) to determine whether and under what circumstances an Option
or Right may be settled in cash instead of Common Stock or Common Stock instead
of cash;
(x) to reduce the exercise price of any Option or Right;
(xi) to modify or amend each Option or Right (subject to Section
16 of the Plan);
(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Right previously
granted by the Administrator;
(xiii) to institute an Option Exchange Program;
(xiv) to determine the terms and restrictions applicable to
Options and Rights and any Restricted Stock; and
(xv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Rights.
10. Non-Transferability of Options. Options and Rights may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Right, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
Options or Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Right, the maximum number of
Shares of Common Stock for which Options and Rights to any Employee under
Section 5 of the Plan as well as the price per share of Common Stock covered by
each such outstanding Option or Right, shall be proportionately adjusted for any
increase or
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<PAGE> 15
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option or Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or Right
has not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option or Right shall terminate
as of a date fixed by the Board and give each Optionee the right to exercise his
or her Option or Right as to all or any part of the Optioned Stock, including
Shares as to which the Option or Right would not otherwise be exercisable.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Right shall be assumed or an
equivalent Option or Right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation does not agree to assume the Option or to substitute an equivalent
option, the Administrator shall, in lieu of such assumption or substitution,
provide for the Optionee to have the right to exercise the Option or Right as to
all or a portion of the Optioned Stock, including Shares as to which it would
not otherwise be exercisable. If the Administrator makes an Option or Right
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option or
Right shall be exercisable for a period of not less than fifteen (15) days from
the date of such notice, and the Option or Right will terminate upon the
expiration of such period. For the purposes of this paragraph, the Option or
Right shall be considered assumed if, immediately following the merger or sale
of assets, the Option or Right confers the right to purchase, for each Share of
Optioned Stock subject to the Option or Right immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets was not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation and the participant, provide for
the consideration to be received upon the exercise of the Option or Right, for
each Share of Optioned Stock subject to the Option or Right, to be solely common
stock of the successor corporation or its Parent equal in Fair Market Value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.
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<PAGE> 16
12. Date of Grant. The date of grant of an Option or Right shall be, for
all purposes, the date on which the Administrator makes the determination
granting such Option or Right, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.
13. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Right unless the exercise of such Option or Right and
the issuance and delivery of such Shares shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
Applicable Laws, and the requirements of any stock exchange or quotation system
upon which the Shares may then be listed or quoted, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
Option or Right, the Company may require the person exercising such Option or
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required.
14. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered
by an Option or Right exceeds, as of the date of grant, the number of Shares
which may be issued under the Plan without additional stockholder approval, such
Option or Right shall be void with respect to such excess Optioned Stock, unless
stockholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section 16(b)
of the Plan.
15. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such stockholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
17. Amendment and Termination of the Plan.
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<PAGE> 17
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 162(m) or 422 of the Code (or any successor rule
or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock is
listed or quoted). Such stockholder approval, if required, shall be obtained in
such a manner and to such a degree as is required by the applicable law, rule or
regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
18. Taxation Upon Exercise of Option or Right. At the discretion of the
Administrator, Optionees may satisfy withholding obligations as provided in this
Section 18. When an Optionee incurs tax liability in connection with an Option
or Right, which tax liability is subject to withholding under applicable tax
laws, the Optionee may satisfy the tax withholding obligation by one or some
combination of the following methods: (a) by cash payment, or (b) out of
Optionee's current compensation, or (c) by surrendering to the Company Shares
which (i) in the case of Shares previously acquired from the Company, have been
owned by the Optionee for more than six months on the date of surrender, and
(ii) have a fair market value on the date of surrender equal to or less than the
amount required to be withheld, or (d) by electing to have the Company withhold
from the Shares to be issued upon exercise of the Option or Right that number of
Shares having a fair market value equal to the amount required to be withheld.
For this purpose, the fair market value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be determined
(the "Tax Date").
If the Optionee is an Insider, any surrender of previously owned Shares to
satisfy tax withholding obligations arising upon exercise of this Option must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or disapproval of
the Administrator;
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<PAGE> 18
(d) if the Optionee is an Insider, the election must comply with the
applicable provisions of Rule 16b-3 and shall be subject to such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
In the event the election to have Shares withheld is made by an Optionee
and the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the Optionee shall receive the full
number of Shares with respect to which the Option is exercised but such Optionee
shall be unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.
19. Term of the Plan. The Plan shall expire, and no further Options
shall be granted pursuant to the Plan, on September 22, 2008.
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