<PAGE>
As filed with the Securities and Exchange Commission on June 21, 1999
Registration No. 333-_____________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
QRS CORPORATION
(Exact name of issuer as specified in its charter)
DELAWARE 68-0102251
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1400 MARINA WAY SOUTH, RICHMOND CALIFORNIA 94804
(Address of principal executive offices) (Zip Code)
-----------------
QRS CORPORATION
SPECIAL NON-OFFICER STOCK OPTION PLAN
(Full title of the plans)
-----------------
JOHN S. SIMON
CHIEF EXECUTIVE OFFICER AND DIRECTOR
QRS CORPORATION
1400 MARINA WAY SOUTH
RICHMOND, CALIFORNIA 94804
(Name and address of agent for service)
(510) 215-5000
(Telephone number, including area code, of agent for service)
-----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities to be Registered Amount to be Offering Aggregate Amount of
Registered(1) Price Offering Price Registration Fee
per Share
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SPECIAL NON-OFFICER STOCK OPTION 150,000 shares $75.88 $11,382,000 $3,164.20(2)
PLAN
Common Stock, $0.001 par value
Aggregate Registration Fee $3,164.20
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the Registrant's
Special Non-Officer Stock Option Plan by reason of any stock dividend,
stock split, recapitalization or other similar transaction effected
without the Registrant's receipt of consideration which results in an
increase in the number of the Registrant's outstanding shares of Common
Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the average of
the high and low selling prices per share of the Registrant's Common
Stock on June 14, 1999 as reported by the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
QRS Corporation (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 filed with the SEC on March 24, 1999;
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999 filed with the SEC on May 17, 1999
and as amended on May 19, 1999; and
(c) The Registrant's Registration Statement on Form 8-A filed with
the SEC on June 18, 1993 pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in
which there is described the terms, rights and provisions
applicable to the Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 (the "1934 Act") after the date of this Registration
Statement and prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained herein or in
any subsequently filed document which also is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
Item 4. DESCRIPTION OF CAPITAL STOCK
Inapplicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Inapplicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law.
Delaware law provides that directors of a corporation will not be personally
liable for monetary damages for breach of their fiduciary duties as
directors, except for liability for (i) any breach of their duty of loyalty
to the corporation or its stockholders, (ii) any acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) the unlawful payment of dividends or any unlawful stock
repurchases or redemptions, as provided in Section 174 of the Delaware
General Corporation Law, or (iv) any transaction from which the director
derived an improper personal benefit.
The Registrant's Bylaws provide that the Registrant shall
indemnify its directors and may indemnify its other officers and employees
and other agents to the fullest extent permitted by law. The Registrant
believes that indemnification under its Bylaws covers at least negligence and
gross negligence on the part of indemnified parties. The Registrant's Bylaws
also permit it to secure insurance on behalf of any officer, director,
II-1
<PAGE>
employee or other agent for any liability arising out of his or her actions
in such capacity, regardless of whether the Bylaws have the power to
indemnify him or her against such liability under the General Corporation Law
of Delaware. The Registrant currently has secured such insurance on behalf of
its directors and officers.
The Registrant has entered into agreements to indemnify its
directors and executive officers, in addition to the indemnification to which
they are entitled under the Registrant's Bylaws. These agreements, among
other things, indemnify the Registrant's directors and executive officers for
certain expenses (including attorneys' fees), judgments, fines and settlement
amounts incurred by any such person in any action or proceeding, including
any action by or in the right of the Registrant, arising out of such person's
services as a director or executive officer of the Registrant, any subsidiary
of the Registrant or any other company or enterprise to which the person
provides services at the request of the Registrant.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Inapplicable.
Item 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT
- -------------- -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made
to Registrant's Registration Statement on Form 8-A, and the
exhibits thereto, which are incorporated herein by reference
pursuant to Item 3(c) of this Registration Statement.
5 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Deloitte & Touche LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 QRS Corporation Special Non-Officer Stock Option Plan (as
amended and restated on February 15, 1999).
99.2* Form of Notice of Grant of Stock Option.
99.3* Form of Stock Option Agreement.
99.4* Form of Addendum to Stock Option Agreement (Involuntary
Termination upon a Corporate Transaction or Change in Control).
</TABLE>
* Exhibits 99.2 through 99.4 are incorporated herein by reference to
Exhibits 99.2 through 99.4, respectively, of Registrant's Registration
Statement No. 333-66837 on Form S-8 which was filed with the SEC on November 5,
1998.
Item 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement; (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933, as amended (the
"1933 Act"), (ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; PROVIDED, however, that clauses (1)(i) and (1)(ii)
shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the 1934
Act that are incorporated by reference into the registration statement;
(2) that for the purpose of determining any liability under the 1933 Act each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof; and (3) to remove from registration by means of a post-
II-2
<PAGE>
effective amendment any of the securities being registered which remain
unsold upon the termination of the Special Non-Officer Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the indemnification provisions summarized in
Item 6 above, or otherwise, the Registrant has been advised that in the
opinion of the SEC such indemnification is against public policy as expressed
in the 1933 Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Richmond, State of
California, on this 18th day of June, 1999.
QRS CORPORATION
By /s/ John S. Simon
------------------------------------
John S. Simon
Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of QRS CORPORATION,
a Delaware corporation, do hereby constitute and appoint John S. Simon and
Peter Papano, the lawful attorneys and agents, with full power and authority
to do any and all acts and things and to execute any and all instruments
which said attorney and agent determines may be necessary or advisable or
required to enable said corporation to comply with the Securities Act of
1933, as amended, and any rules or regulations or requirements of the
Securities and Exchange Commission in connection with this Registration
Statement. Without limiting the generality of the foregoing power and
authority, the powers granted include the power and authority to sign the
names of the undersigned officers and directors in the capacities indicated
below to this Registration Statement, to any and all amendments, both
pre-effective and post-effective, and supplements to this Registration
Statement, and to any and all instruments or documents filed as part of or in
conjunction with this Registration Statement or amendments or supplements
thereof, and each of the undersigned hereby ratifies and confirms all that
said attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ John S. Simon
- ----------------------- Chief Executive Officer and Director June 18, 1999
John S. Simon (Principal Executive Officer)
II-4
<PAGE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Peter Papano
- ----------------------- Vice President, Finance, Chief Financial, June 18, 1999
Peter Papano Officer and Secretary (Principal Financial
and Accounting Officer)
/s/ Peter R. Johnson
- ----------------------- Chairman of the Board of Directors June 18, 1999
Peter R. Johnson
/s/ Tania Amochaev
- ----------------------- Director June 18, 1999
Tania Amochaev
/s/ Steven D. Brooks
- ----------------------- Director June 18, 1999
Steven D. Brooks
/s/ John P. Dougall
- ----------------------- Director June 18, 1999
John P. Dougall
/s/ H. Lynn Hazlett
- ----------------------- Director June 18, 1999
H. Lynn Hazlett
/s/ Philip Schlein
- ----------------------- Director June 18, 1999
Philip Schlein
/s/ Garth Saloner
- ----------------------- Director June 18, 1999
Garth Saloner
/s/ Garen K. Staglin
- ----------------------- Director June 18, 1999
Garen K. Staglin
</TABLE>
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
QRS CORPORATION
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made
to Registrant's Registration Statement on Form 8-A, and the
exhibits thereto, which are incorporated herein by reference
pursuant to Item 3(c) of this Registration Statement.
5 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Deloitte & Touche LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 QRS Corporation Special Non-Officer Stock Option Plan (as
amended and restated on February 15, 1999).
99.2* Form of Notice of Grant of Stock Option.
99.3* Form of Stock Option Agreement.
99.4* Form of Addendum to Stock Option Agreement (Involuntary
Termination upon a Corporate Transaction or Change in Control).
</TABLE>
* Exhibits 99.2 through 99.4 are incorporated herein by reference to
Exhibits 99.2 through 99.4, respectively, of Registrant's Registration
Statement No. 333-66837 on Form S-8 which was filed with the SEC on November 5,
1998.
<PAGE>
EXHIBIT 5
OPINION OF BROBECK, PHLEGER & HARRISON LLP
June 16, 1999
QRS Corporation
1400 Marina Way South
Richmond, CA 94804
Re: QRS Corporation Registration Statement on Form S-8 for an additional
150,000 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to QRS Corporation, a Delaware corporation
(the "Company"), in connection with the registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of an
additional 150,000 shares of common stock (the "Common Stock") and related
stock options under the Company's Special Non-Officer Stock Option Plan (the
"Plan").
This opinion is being furnished in accordance with the requirements
of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the establishment and
amendment of the Plan. Based on such review, we are of the opinion that if,
as and when the shares of Common Stock are issued and sold (and the
consideration therefor received) pursuant to the provisions of the option
agreements or direct stock issuances duly authorized under the Plan and in
accordance with the Registration Statement, such shares will be duly
authorized, legally issued, fully paid and non-assessable.
We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
This opinion letter is rendered as of the date first written above
and we disclaim any obligation to advise you of facts, circumstances, events
or developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the Plan or the shares of Common Stock issuable under such Plan.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of QRS Corporation on Form S-8 of our report dated January 28, 1999,
appearing in the Annual Report on Form 10-K of QRS Corporation for the year
ended December 31, 1998.
DELOITTE & TOUCHE LLP
San Jose, California
June 16, 1999
<PAGE>
QRS CORPORATION
1993 STOCK OPTION/STOCK ISSUANCE PLAN
(AS AMENDED AND RESTATED FEBRUARY 15, 1999)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1993 Stock Option/Stock Issuance Plan ("Plan") is intended
to promote the interests of QRS Corporation, a Delaware corporation (the
"Corporation"), by providing (i) key employees (including officers) of the
Corporation (or its parent or subsidiary corporations) who are responsible
for the management, growth and financial success of the Corporation (or its
parent or subsidiary corporations), (ii) the non-employee members of the
Corporation's Board of Directors and (iii) consultants and other independent
contractors who provide valuable services to the Corporation (or its parent
or subsidiary corporations) with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in the service of the
Corporation (or its parent or subsidiary corporations).
B. The Discretionary Option Grant and Stock Issuance Programs
under this Plan became effective on the date on which the shares of the
Corporation's Common Stock were first registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). Such date is
hereby designated as the Effective Date for those two programs. The
Automatic Option Grant Program under this Plan became effective immediately
upon the execution and final pricing of the Underwriting Agreement for the
initial public offering of the Corporation's Common Stock. The execution
date of such Underwriting Agreement is hereby designated as the Effective
Date of the Automatic Option Grant Program.
C. This Plan shall serve as the successor to the Corporation's
amended and restated 1990 Stock Option Plan (the "1990 Plan"), and no
further option grants or stock issuances shall be made under the 1990 Plan from
and after the Effective Date of this Plan. All options outstanding under the
1990 Plan on the Effective Date of the Discretionary Option Grant Program are
hereby incorporated into this Plan and shall accordingly be treated as
outstanding options under this Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the express terms and
conditions of the instrument evidencing such grant, and no provision of this
Plan shall be deemed to affect or otherwise modify the rights or obligations
of the holders of such incorporated options with respect to their acquisition
of shares of the Corporation's Common Stock thereunder.
II. DEFINITIONS
A. For purposes of the Plan, the following definitions shall be in
effect:
BOARD: the Corporation's Board of Directors.
<PAGE>
CODE: the Internal Revenue Code of 1986, as amended.
COMMITTEE: the committee of two (2) or more non-employee Board
members appointed by the Board to administer the Plan.
COMMON STOCK: shares of the Corporation's common stock.
CHANGE IN CONTROL: a change in ownership or control of the
Corporation effected through either of the following transactions:
a. any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the
Corporation's stockholders; or
b. there is a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a
majority of the Board members (rounded up to the next whole number)
ceases, by reason of one or more proxy contests for the election of
Board members, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or
nomination was approved by the Board.
CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:
a. a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal
purpose of which is to change the State in which the Corporation is
incorporated,
b. the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation, or
c. any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different
from those who held such securities immediately prior to such merger.
2
<PAGE>
EMPLOYEE: an individual who performs services while in the employ
of the Corporation or one or more parent or subsidiary corporations, subject
to the control and direction of the employer entity not only as to the work
to be performed but also as to the manner and method of performance.
FAIR MARKET VALUE: the fair market value per share of Common Stock
determined in accordance with the following provisions:
a. If the Common Stock is not at the time listed or admitted to
trading on any national stock exchange but is traded on the Nasdaq
National Market, the Fair Market Value shall be the closing selling
price per share on the date in question, as such price is reported by
the National Association of Securities Dealers on the Nasdaq National
Market. If there is no reported closing selling price for the Common
Stock on the date in question, then the closing selling price on the
last preceding date for which such quotation exists shall be
determinative of Fair Market Value.
b. If the Common Stock is at the time listed or admitted to
trading on any national stock exchange, then the Fair Market Value
shall be the closing selling price per share on the date in question on
the exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no
reported sale of Common Stock on such exchange on the date in question,
then the Fair Market Value shall be the closing selling price on the
exchange on the last preceding date for which such quotation exists.
HOSTILE TAKE-0VER: a change in ownership of the Corporation
effected through the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning of Rule
13d-3 of the Securities Exchange Act of 1934, as amended) of securities
possessing more than fifty percent (50%) of the total combined voting power
of the Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders which the Board does
not recommend such stockholders to accept.
OPTIONEE: any person to whom an option is granted under either the
Discretionary Option Grant or Automatic Option Grant Program in effect under
the Plan.
PARTICIPANT: any person who receives a direct issuance of Common
Stock under the Stock Issuance Program in effect under the Plan.
3
<PAGE>
PLAN ADMINISTRATOR: the Committee in its capacity as the
administrator of the Plan.
PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the
Optionee or the Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more.
SERVICE: the performance of services on a periodic basis to the
Corporation (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the board of directors or an independent
consultant or advisor, except to the extent otherwise specifically provided
in the applicable stock option or stock issuance agreement.
TAKE-OVER PRICE: the GREATER of (a) the Fair Market Value per
share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (b) the highest
reported price per share of Common Stock paid by the tender offeror in
effecting such Hostile Take-Over. However, if the surrendered option is an
incentive stock option under the Federal tax laws, the Take-Over Price shall
not exceed the clause (a) price per share.
The following provisions shall be applicable in determining the
parent and subsidiary corporations of the Corporation:
Any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation shall be considered to be
a PARENT of the Corporation, provided each such corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the
other corporations in such chain.
Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be
considered to be a SUBSIDIARY of the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
4
<PAGE>
III. STRUCTURE OF THE PLAN
A. STOCK PROGRAMS. The Plan shall be divided into three separate
components: the Discretionary Option Grant Program specified in Article Two,
the Automatic Option Grant Program specified in Article Three and the Stock
Issuance Program specified in Article Four. Under the Discretionary Option
Grant Program, eligible individuals may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common Stock in
accordance with the provisions of Article Two. Under the Automatic Option
Grant Program, non-employee members of the Corporation's Board of Directors
(the "Board") will receive at periodic intervals special option grants to
purchase shares of Common Stock in accordance with the provisions of Article
Three. Under the Stock Issuance Program, eligible individuals may be issued
shares of Common Stock directly, either through the immediate purchase of
such shares at a price not less than the Fair Market Value of the shares at
the time of issuance or as a bonus tied to the performance of services or the
Corporation's attainment of financial objectives, without any cash payment
required of the recipient.
B. GENERAL PROVISIONS. Unless the context clearly indicates
otherwise, the provisions of Articles One and Five shall apply to the
Discretionary Option Grant Program, the Automatic Option Grant Program and the
Stock Issuance Program and shall accordingly govern the interests of all
individuals under the Plan.
IV. ADMINISTRATION OF THE PLAN
A. Both the Discretionary Option Grant Program and the Stock Issuance
Program shall be administered by the Committee. Members of the Committee
shall serve for such period of time as the Board may determine and shall be
subject to removal by the Board at any time.
B. The Committee as Plan Administrator shall have full power and
authority (subject to the express provisions of the Plan) to establish rules and
regulations for the proper administration of the Discretionary Option Grant
and Stock Issuance Programs and to make such determinations under, and issue
such interpretations of, the provisions of such programs and any outstanding
option grants or stock issuances thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator shall be final and binding on
all parties who have an interest in the Discretionary Option Grant or Stock
Issuance Program or any outstanding option or share issuance thereunder.
C. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the express terms and conditions of Article
Three, and the Committee as Plan Administrator shall exercise no
discretionary functions with respect to option grants made pursuant to that
program.
5
<PAGE>
V. OPTION GRANTS AND STOCK ISSUANCES
A. The persons eligible to participate in the Discretionary Option
Grant Program under Article Two or the Stock Issuance Program under Article Four
are as follows:
(i) officers and other key employees of the Corporation
(or its parent or subsidiary corporations) who render services which
contribute to the management, growth and financial success of the
Corporation (or its parent or subsidiary corporations);
(ii) non-employee Board members; and
(iii) those consultants or other independent contractors who
provide valuable services to the Corporation (or its parent or
subsidiary corporations).
B. Non-employee Board members shall also be eligible to receive
automatic option grants pursuant to the provisions of Article Three.
C. The Plan Administrator shall have full authority to determine, (I)
with respect to the option grants made under the Plan, which eligible
individuals are to receive option grants, the number of shares to be covered by
each such grant, the status of the granted option as either an incentive stock
option ("Incentive Option") which satisfies the requirements of Code Section
422 or a non-statutory option not intended to meet such requirements, the time
or times at which each granted option is to become exercisable and the maximum
term for which the option may remain outstanding and (II), with respect to
stock issuances under the Stock Issuance Program, the number of shares to be
issued to each Participant, the vesting schedule (if any) to be applicable to
the issued shares, and the consideration to be paid by the individual for
such shares.
VI. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance under
the Plan and shall be drawn from either the Corporation's authorized but
unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Corporation on the open market. The
maximum number of shares of Common Stock which may be issued over the term of
the Plan shall not exceed 2,600,000 shares, subject to adjustment from time
to time in accordance with the provisions of this Section V. Such authorized
share reserve is comprised of (i) the number of shares which remained
available for issuance, as of the Effective Date, under the 1990 Plan as last
approved by the Corporation's stockholders prior to such Effective Date,
including the shares subject to the outstanding options incorporated into
this Plan and any other shares which would have been available for future
option grant under the 1990 Plan as last approved by the stockholders
(estimated to be 722,000 shares in the aggregate), (ii) an increase of
128,000 shares authorized by the Board under this Plan as of the Effective
Date, (iii) an additional increase of 500,000 shares authorized by the Board
on February 27, 1995 and approved by the stockholders at the 1995 Annual
Meeting, (iv) a further increase of an
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additional 500,000 shares authorized by the Board on February 16, 1996 and
approved by the stockholders at the 1996 Annual Meeting, (v) an additional
increase of another 350,000 shares authorized by the Board on February 16,
1998 and approved by the stockholders at the 1998 Annual Meeting and (vi) an
additional increase of 400,000 shares authorized by the Board on February 15,
1999, subject to stockholder approval at the 1999 Annual Meeting.
B. To the extent one or more outstanding options under the 1990 Plan
which have been incorporated into this Plan are subsequently exercised, the
number of shares issued with respect to each such option shall reduce, on a
share-for-share basis, the number of shares available for issuance under this
Plan.
C. Should one or more outstanding options under this Plan
(including outstanding options under the 1990 Plan incorporated into this
Plan) expire or terminate for any reason prior to exercise in full (including
any option cancelled in accordance with the cancellation-regrant provisions
of Section IV of Article Two of the Plan), then the shares subject to the
portion of each option not so exercised shall be available for subsequent
option grants under the Plan. Unvested shares issued under the Plan and
subsequently cancelled or repurchased by the Corporation, at the original
option exercise or direct issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and
shall accordingly be available for reissuance through one or more subsequent
option grants or direct stock issuances under the Plan. However, the shares
subject to any option or portion thereof surrendered in accordance with
Section IV of Article Two or Section III of Article Three shall reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent option grants under the Plan. In addition, should the exercise
price of an option under the Plan (including any option incorporated from the
Predecessor Plan) be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Corporation
in satisfaction of the withholding taxes incurred in connection with the
exercise of an option or the vesting of a stock issuance under the Plan, then
the number of shares of Common Stock available for issuance under the Plan
shall be reduced by the gross number of shares for which the option is
exercised or which vest under the stock issuance, and not by the net number
of shares of Common Stock issued to the holder of such option or stock
issuance.
D. In no event may any one individual participating in the Plan be
granted stock options, separately exercisable stock appreciation rights and
direct stock issuances for more than 500,000 shares in the aggregate over the
term of the Plan. However, any stock options, stock appreciation rights or
direct stock issuances granted prior to January 1, 1994 shall not be taken into
account for purposes of such limitation.
E. Should any change be made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class
of securities issuable under the Plan, (ii) the maximum number
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and/or class of securities for which any one individual participating in the
Plan may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances in the aggregate over the term of the Plan,
(iii) the number and/or class of securities for which automatic option grants
are to be subsequently made per non-employee Board member under the Automatic
Option Grant Program, (iv) the number and/or class of securities and price
per share in effect under each option outstanding under either the
Discretionary Option Grant or Automatic Option Grant Program and (v) the
number and/or class of securities and price per share in effect under each
outstanding option incorporated into this Plan from the 1990 Plan. Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be
final, binding and conclusive.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Option Grant Program
shall be authorized by action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Options or non-statutory
options. Individuals who are not Employees of the Corporation or its parent
or subsidiary corporations may only be granted non-statutory options. Each
granted option shall be evidenced by one or more instruments in the form
approved by the Plan Administrator; PROVIDED, however, that each such
instrument shall comply with the terms and conditions specified below. Each
instrument evidencing an Incentive Option shall, in addition, be subject to
the applicable provisions of Section II of this Article Two.
A. OPTION PRICE.
1. The option price per share shall be fixed by the Plan
Administrator but in no event shall be less than one hundred percent (100%)
of the Fair Market Value of such Common Stock on the grant date.
2. The option price shall become immediately due upon
exercise of the option and, subject to the provisions of Section I of Article
Five and the instrument evidencing the grant, shall be payable in one of the
following alternative forms specified below:
- full payment in cash or check drawn to the Corporation's
order;
- full payment in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date (as such term is defined below);
- full payment in a combination of shares of Common Stock held
for the requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market Value
on the Exercise Date and cash or check drawn to the Corporation's order; or
- full payment through a broker-dealer sale and remittance
procedure pursuant to which the Optionee (I) shall provide irrevocable
instructions to a designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
option price payable for the purchased shares plus all applicable Federal
and State income and
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employment taxes required to be withheld by the Corporation in connection
with such purchase and (II) shall provide directives to the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale transaction.
For purposes of this subparagraph (2), the Exercise Date shall
be the date on which written notice of the option exercise is delivered to
the Corporation. Except to the extent the sale and remittance procedure is
utilized in connection with the exercise of the option, payment of the option
price for the purchased shares must accompany such notice.
B. TERM AND EXERCISE OF OPTIONS. Each option granted under this
Discretionary Option Grant Program shall be exercisable at such time or times
and during such period as is determined by the Plan Administrator and set
forth in the instrument evidencing the grant. No such option, however, shall
have a maximum term in excess of ten (10) years from the grant date.
C. TERMINATION OF SERVICE.
1. The following provisions shall govern the exercise period
applicable to any outstanding options held by the Optionee at the time of
cessation of Service or death.
- Should an Optionee cease Service for any reason (including
death or Permanent Disability) while holding one or more outstanding
options under this Article Two, then none of those options shall (except
to the extent otherwise provided pursuant to subparagraph C.(3) below)
remain exercisable for more than a thirty-six (36)-month period (or such
shorter period determined by the Plan Administrator and set forth in the
instrument evidencing the grant) measured from the date of such cessation
of Service.
- Any option held by the Optionee under this Article Two and
exercisable in whole or in part on the date of his or her death may be
subsequently exercised by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred
pursuant to the Optionee's will or in accordance with the laws of descent
and distribution. Such exercise, however, must occur prior to the EARLIER
of (i) the third anniversary of the date of the Optionee's death (or such
shorter period determined by the Plan Administrator and set forth in the
instrument evidencing the grant) or (ii) the specified expiration date of
the option term. Upon the occurrence of the earlier event, the option
shall terminate and cease to be outstanding.
- During the applicable post-Service period, the option may not
be exercised in the aggregate for more than the number of shares (if any)
in which the Optionee is vested at the time of cessation of Service. Upon
the expiration of the limited post-Service exercise period or (if earlier)
upon the specified expiration date of the option term, each such option
shall terminate and
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cease to be outstanding with respect to any vested shares for which it has
not otherwise been exercised. However, each outstanding option shall
immediately terminate and cease to be outstanding, at the time of the
Optionee's cessation of Service, with respect to any shares for which it
is not otherwise at that time exercisable or in which Optionee is not
otherwise vested.
- Under no circumstances, however, shall any such option be
exercisable after the specified expiration date of the option term.
- Should (i) the Optionee's Service be terminated for misconduct
(including, but not limited to, any act of dishonesty, willful misconduct,
fraud or embezzlement) or (ii) the Optionee make any unauthorized use or
disclosure of confidential information or trade secrets of the Corporation
or its parent or subsidiary corporations, then in any such event all
outstanding options held by the Optionee under this Article Two shall
terminate immediately and cease to be outstanding.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited post-Service exercise
period applicable under subparagraph (1) above, not only with respect to the
number of vested shares of Common Stock for which each such option is
exercisable at the time of the Optionee's cessation of Service but also with
respect to one or more subsequent installments of vested shares for which the
option would otherwise have become exercisable had such cessation of Service
not occurred.
(3) The Plan Administrator shall also have full power and
authority to extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service or death from the
limited period in effect under subparagraph (1) above to such greater period
of time as the Plan Administrator shall deem appropriate. In no event, however,
shall such option be exercisable after the specified expiration date of the
option term.
D. STOCKHOLDER RIGHTS. An Optionee shall have no stockholder
rights with respect to any shares covered by the option until such individual
shall have exercised the option and paid the option price for the purchased
shares.
E. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, a Non-Statutory
Option may, in connection with the Optionee's estate plan, be assigned in whole
or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant
to the assignment. The terms
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applicable to the assigned portion shall be the same as those in effect for
the option immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Plan Administrator may deem
appropriate.
F. REPURCHASE RIGHTS. The shares of Common Stock acquired upon
the exercise of any Article Two option grant may be subject to repurchase by the
Corporation in accordance with the following provisions:
a. The Plan Administrator shall have the discretion to
authorize the issuance of unvested shares of Common Stock under this
Article Two. Should the Optionee cease Service while holding such
unvested shares, the Corporation shall have the right to repurchase any or
all of those unvested shares at the option price paid per share. The terms
and conditions upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the
Plan Administrator and set forth in the instrument evidencing such
repurchase right.
b. All of the Corporation's outstanding repurchase rights
under this Article Two shall automatically terminate, and all shares
subject to such terminated rights shall immediately vest in full, upon the
occurrence of a Corporate Transaction, except to the extent: (i) any such
repurchase right is expressly assigned to the successor corporation (or
parent thereof) in connection with the Corporate Transaction or (ii) such
termination is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is issued.
c. The Plan Administrator shall have the discretionary
authority, exercisable either before or after the Optionee's cessation of
Service, to cancel the Corporation's outstanding repurchase rights with
respect to one or more shares purchased or purchasable by the Optionee
under this Discretionary Option Grant Program and thereby accelerate the
vesting of such shares in whole or in part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees of the Corporation. Options which
are specifically designated as "non-statutory" options when issued under the
Plan shall NOT be subject to such terms and conditions.
A. DOLLAR LIMITATION. The aggregate Fair Market Value (determined
as of the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee under this Plan (or any other option
plan of the Corporation or its parent or subsidiary corporations) may for the
first time become exercisable as incentive stock options under the Federal tax
laws during any one calendar year shall not exceed the sum of One
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Hundred Thousand Dollars ($100,000). To the extent the Employee holds two
(2) or more such options which become exercisable for the first time in the
same calendar year, the foregoing limitation on the exercisability of such
options as incentive stock options under the Federal tax laws shall be
applied on the basis of the order in which such options are granted. Should
the number of shares of Common Stock for which any Incentive Option first
becomes exercisable in any calendar year exceed the applicable One Hundred
Thousand Dollar ($100,000) limitation, then that option may nevertheless be
exercised in that calendar year for the excess number of shares as a
non-statutory option under the Federal tax laws.
B. 10% STOCKHOLDER. If any individual to whom an Incentive Option
is granted is the owner of stock (as determined under Section 424(d) of the
Internal Revenue Code) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Corporation or any one
of its parent or subsidiary corporations, then the option price per share
shall not be less than one hundred and ten percent (110%) of the Fair Market
Value per share of Common Stock on the grant date, and the option term shall
not exceed five (5) years, measured from the grant date.
Except as modified by the preceding provisions of this Section II,
the provisions of Articles One, Two and Five of the Plan shall apply to all
Incentive Options granted hereunder.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any Corporate Transaction, each option which is
at the time outstanding under this Article Two shall automatically accelerate
so that each such option shall, immediately prior to the specified effective
date for the Corporate Transaction, become fully exercisable with respect to
the total number of shares of Common Stock at the time subject to such option
and may be exercised for all or any portion of such shares. However, an
outstanding option under this Article Two shall NOT so accelerate if and to
the extent: (i) such option is, in connection with the Corporate Transaction,
either to be assumed by the successor corporation or parent thereof or to be
replaced with a comparable option to purchase shares of the capital stock of
the successor corporation or parent thereof, (ii) such option is to be
replaced with a cash incentive program of the successor corporation which
preserves the option spread existing at the time of the Corporate Transaction
and provides for subsequent payout in accordance with the same vesting
schedule applicable to such option, or (iii) the acceleration of such option
is subject to other limitations imposed by the Plan Administrator at the time
of the option grant. The determination of option comparability under clause
(i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.
B. Upon the consummation of the Corporate Transaction, all
outstanding options under this Article Two shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.
C. Each outstanding option under this Article Two which is assumed
in connection with the Corporate Transaction or is otherwise to continue in
effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issued to the option holder, in
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consummation of such Corporate Transaction, had such person exercised the
option immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to the option price payable per share,
PROVIDED the aggregate option price payable for such securities shall remain
the same. In addition, the class and number of securities available for
issuance under the Plan following the consummation of the Corporate
Transaction shall be appropriately adjusted.
D. The Plan Administrator shall have the discretion, exercisable
either in advance of any actually-anticipated Corporate Transaction or at the
time of an actual Corporate Transaction, to provide (upon such terms as it
may deem appropriate) for the automatic acceleration of one or more
outstanding options under this Article Two which are assumed or replaced in
the Corporate Transaction and do not otherwise accelerate at that time, in
the event the Optionee's Service should subsequently terminate within a
designated period following the effective date of such Corporate Transaction.
The Plan Administrator may also structure one or more option grants under
this Article Two so that those options will automatically accelerate at the
time of a Corporate Transaction, whether or not those options are to be
assumed or replaced by successor corporation.
E. The grant of options under this Article Two shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
F. The Plan Administrator shall have the discretionary authority,
exercisable either in advance of any actually-anticipated Change in Control
or at the time of an actual Change in Control, to provide for the automatic
acceleration of one or more outstanding options under this Article Two (and
the termination of one or more of the Corporation's outstanding repurchase
rights under this Article Two) upon the occurrence of the Change in Control.
The Plan Administrator shall also have full power and authority to condition
any such option acceleration (and the termination of any outstanding
repurchase rights) upon the subsequent termination of the Optionee's Service
within a specified period following the Change in Control.
G. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of
the option term.
H. The exercisability as incentive stock options under the Federal
tax laws of any options accelerated under this Section III in connection with
a Corporate Transaction or Change in Control shall remain subject to the
dollar limitation of Section II of this Article Two.
IV. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this
Section IV, one or more Optionees may be granted the right, exercisable upon
such terms and conditions as the Plan Administrator may establish, to
surrender all or part of an unexercised option under this Article Two in
exchange for a distribution from the Corporation in an amount equal to the
excess of (i) the Fair Market Value
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(on the option surrender date) of the number of shares in which the Optionee
is at the time vested under the surrendered option (or surrendered portion
thereof) over (ii) the aggregate option price payable for such vested shares.
B. No surrender of an option shall be effective hereunder unless it
is approved by the Plan Administrator. If the surrender is so approved, then
the distribution to which the Optionee shall accordingly become entitled
under this Section IV may be made in shares of Common Stock valued at Fair
Market Value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator deems appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee
had under the surrendered option (or surrendered portion thereof) on the
option surrender date and may exercise such rights at any time prior to the
LATER of (i) five (5) business days after the receipt of the rejection notice
or (ii) the last day on which the option is otherwise exercisable in
accordance with the terms of the instrument evidencing such option, but in no
event may such rights be exercised more than ten (10) years after the date of
the option grant.
D. One or more officers of the Corporation subject to the
short-swing profit restrictions of the Federal securities laws may, in the
Plan Administrator's sole discretion, be granted limited stock appreciation
rights in tandem with their outstanding options under the Plan. Upon the
occurrence of a Hostile Take-Over, the officer will have a thirty (30)-day
period in which he or she may surrender any outstanding options with such a
limited stock appreciation right to the Corporation, to the extent such
options are at the time exercisable for fully-vested shares of Common Stock.
The officer shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of
the vested shares of Common Stock at the time subject to each surrendered
option over (ii) the aggregate exercise price payable for such vested shares.
The cash distribution payable upon such option surrender shall be made
within five (5) days following the consummation of the Hostile Take-Over. At
the time such limited stock appreciation right is granted, the Plan
Administrator shall pre-approve the subsequent exercise of that right in
accordance with the terms of this Paragraph D. Accordingly, no further
approval of the Plan Administrator or the Board shall be required at the time
of the actual option surrender and cash distribution. Any unsurrendered
portion of the option shall continue to remain outstanding and become
exercisable in accordance with the terms of the instrument evidencing such
grant.
E. The shares of Common Stock subject to any option surrendered for
an appreciation distribution pursuant to this Section IV shall NOT be
available for subsequent option grant under the Plan.
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ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
The following provisions set forth the terms and conditions of the
Automatic Option Grant Program as amended by the Board on February 15, 1999,
subject to stockholder approval at the 1999 Annual Meeting. Stockholder
approval of the February 15, 1999 restatement shall also constitute
pre-approval of each option grant made under this amended Automatic Option
Grant Program on or after the date of the 1999 Annual Stockholders Meeting
and the subsequent exercise of that option in accordance with the terms of
such program as set forth below.
I. ELIGIBILITY
The individuals eligible to receive automatic option grants pursuant
to the provisions of this Article Three program shall be limited to (i) those
individuals who are first elected or appointed as non-employee Board members
after the date of the 1999 Annual Stockholders Meeting, whether through
appointment by the Board or election by the Corporation's stockholders, and
(ii) those individuals who continue to serve as non-employee Board members at
one or more Annual Stockholders Meetings, beginning with the 1999 Annual
Stockholders Meeting. In no event, however, shall a clause (i) non-employee
Board member be eligible to participate in the Automatic Option Grant Program
if such individual has at any time been in the prior employ of the
Corporation (or any parent or subsidiary corporation). Any non-employee
Board member eligible to participate in the Automatic Option Grant Program
pursuant to the foregoing criteria shall be designated an Eligible Director
for purposes of this Plan.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. GRANT DATES. Option grants shall be made under this Article
Three on the dates specified below:
(i) On the date of the 1999 Annual Stockholders Meeting,
each individual who is to continue to serve as a non-employee Board
member shall automatically be granted at that meeting, whether or not
such individual is standing for re-election as a Board member at that
particular meeting, a non-statutory stock option to purchase an
additional 5,000 shares of Common Stock upon the terms and conditions
of this Article Three, provided such individual has served as a
non-employee Board member for at least six (6) months prior to the date
of such meeting.
(ii) Each Eligible Director who first becomes a
non-employee Board member after the date of the 1999 Annual
Stockholders Meeting, whether through election by the Corporation's
stockholders or appointment by the Board, shall automatically be
granted, at the time of such initial election or appointment, a
non-statutory stock option to purchase 10,000 shares of Common Stock
upon the terms and conditions of the Article Three.
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(iii) On the first trading day in January each year,
beginning with calendar year 2000, each individual who is at the time
serving as a non-employee Board member will automatically be granted an
option to purchase 10,000 shares of Common Stock, and each individual
who is also at the time serving as a Chairperson of any Board committee
will automatically be granted a second option for an additional 10,000
shares, provided in each instance that such individual has served as a
non-employee Board member for at least six (6) months. There shall be
no limit on the number of such 10,000-share option grants any one
non-employee Board member or Chairperson may receive over his or her
period of Board Service.
The number of shares for which the automatic grants are to
be made to each newly elected or continuing Eligible Director shall be
subject to periodic adjustment pursuant to the applicable provisions of
Section V.C of Article One.
B. EXERCISE PRICE. The exercise price per share of Common Stock
subject to each automatic option grant made under this Article Three shall be
equal to one hundred percent (100%) of the Fair Market Value per share of
Common Stock on the automatic grant date.
C. PAYMENT.
The exercise price shall be payable in one of the
alternative forms specified below:
(i) full payment in cash or check made payable to the
Corporation's order; or
(ii) full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's
reported earnings and valued at Fair Market Value on the Exercise Date;
or
(iii) full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Corporation's reported earnings and valued at Fair Market Value on the
Exercise Date and cash or check payable to the Corporation's order; or
(iv) full payment through a sale and remittance procedure
pursuant to which the non-employee Board member (I) shall provide
irrevocable written instructions to a designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price payable
for the purchased shares and shall (II) concurrently provide written
directives to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete
the sale transaction.
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The Exercise Date shall be the date on which written notice of the
option exercise is delivered to the Corporation. Except to the extent the
sale and remittance procedure is utilized for the exercise of the option,
payment of the option price for the purchased shares must accompany the
exercise notice.
D. OPTION TERM. Each automatic grant under this Article Three shall
have a maximum term of ten (10) years measured from the automatic grant date.
E. EXERCISABILITY. Each automatic grant shall become exercisable in
a series of four (4) successive equal annual installments over the Optionee's
period of service on the Board, with the first such installment to become
exercisable six (6) months after the automatic grant date. The exercisability
of each automatic grant shall be subject to acceleration in accordance
with the provisions of Section II.G and Section III of this Article Three.
F. LIMITED-TRANSFERABILITY. During the lifetime of the Optionee,
each automatic option grant, together with the limited stock appreciation
right pertaining to such option, shall be exercisable only by the Optionee
and shall not be assignable or transferable by the Optionee other than (i) a
transfer of the option effected by will or by the laws of descent and
distribution following Optionee's death or (ii) an assignment of the option
in whole or in part during the Optionee's lifetime to one or more members of
the Optionee's immediate family or to a trust established exclusively for one
or more such family members, to the extent such assignment is effected for
estate planning purposes. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the
same as those in effect for the option immediately prior to such assignment
and shall be set forth in such documents issued to the assignee as the
Plan Administrator may deem appropriate.
G. TERMINATION OF BOARD SERVICE.
1. Should the Optionee cease service as a Board member cease
for any reason (other than death or Permanent Disability) while holding one or
more automatic option grants under this Article Three, then such individual
shall have a six (6)-month period following the date of such cessation of
Board service in which to exercise each such option for any or all of the
shares of Common Stock for which the option is exercisable at the time of
such cessation of Board service. However, each such option shall immediately
terminate and cease to be outstanding, at the time of such cessation of Board
service, with respect to any shares for which the option is not otherwise at
that time exercisable.
2. Should the Optionee die within six (6) months after
cessation of Board service, then each outstanding automatic option grant held
by the Optionee at the time of death may subsequently be exercised, for any
or all of the shares of Common Stock for which such option is exercisable at
the time of the Optionee's cessation of Board service (less any option shares
subsequently purchased by the Optionee prior to death), by the personal
representative of the Optionee's estate or by the person or persons to whom
the option is transferred pursuant to the Optionee's will or in accordance
with the laws of descent and distribution. Any such exercise must occur
within twelve (12) months after the date of the Optionee's death.
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3. Should the Optionee die or become permanently disabled
while serving as a Board member, then each automatic option grant held by
such Optionee under this Article Three shall accelerate in full, and the
Optionee (or the representative of the Optionee's estate or the person or
persons to whom the option is transferred upon the Optionee's death) shall
have a twelve (12)-month period following the date of the Optionee's
cessation of Board service in which to exercise each such option for any or
all of the shares of Common Stock subject to that option at the time of such
cessation of Board service.
4. In no event shall any automatic grant under this
Article Three remain exercisable after the specified expiration date of the
ten (10)-year option term. Upon the expiration of the applicable post-service
exercise period under subparagraph 1, 2 or 3 above or (if earlier) upon the
expiration of the ten (10)-year option term, the automatic grant shall
terminate and cease to be outstanding for any unexercised shares for which the
option was otherwise exercisable at the time of the Optionee's cessation of
Board service.
H. STOCKHOLDER RIGHTS. The holder of an automatic option grant
under this Article Three shall have none of the rights of a stockholder with
respect to any shares subject to such option until such individual shall have
exercised the option and paid the exercise price for the purchased shares.
I. REMAINING TERMS. The remaining terms and conditions of each
automatic option grant shall be as set forth in the prototype Non-statutory
Stock Option Agreement attached as Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, each automatic option
grant at the time outstanding under this Article Three shall automatically
accelerate so that each such option shall, immediately prior to the specified
effective date for the Corporate Transaction, become fully exercisable with
respect to the total number of shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares. Upon
the consummation of the Corporate Transaction, all automatic option grants
under this Article Three shall terminate and cease to be outstanding.
B. In connection with any Change in Control of the Corporation,
each automatic option grant at the time outstanding under this Article Three
shall automatically accelerate so that each such option shall, immediately
prior to the specified effective date for the Change in Control, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for all or any portion of
such shares.
C. The Optionee shall have the right, exercisable at any time
during the thirty (30)-day period immediately following a Hostile Take-Over,
to surrender each option held by him or her under this Article Three to the
Corporation. The Optionee shall in return be entitled to a cash distribution
from the Corporation in an amount equal to the excess of (i) the Take-Over
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Price of the shares of Common Stock at the time subject to the surrendered
option (whether or not the option is otherwise at the time exercisable for
such shares) over (ii) the aggregate exercise price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
consummation of the Hostile Take-Over. Stockholder approval of this 1999
Restatement at the 1999 Annual Meeting shall constitute pre-approval of each
such option surrender right granted under this Automatic Option Grant Program
on or after the date of such Annual Meeting and the subsequent exercise of
each such right in accordance with the terms and provisions of this Section
III.C. No additional approval or consent of the Plan Administrator or the
Board shall be required at the time of the actual option surrender and cash
distribution.
D. The shares of Common Stock subject to each option surrendered in
connection with the Hostile Take-Over shall NOT be available for subsequent
option grant under this Plan.
E. The automatic option grants outstanding under this Article Three
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
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ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares may be issued under the Stock Issuance Program through direct
and immediate purchases without any intervening stock option grants. The
issued shares shall be evidenced by a Stock Issuance Agreement ("Issuance
Agreement") that complies with the terms and conditions of this Article Four.
A. CONSIDERATION.
1. Shares of Common Stock drawn from the Corporation's
authorized but unissued shares of Common Stock ("Newly Issued Shares") shall
be issued under the Stock Issuance Program for one or more of the following
items of consideration which the Plan Administrator may deem appropriate
in each individual instance:
(i) cash or check drawn to the Corporation's order;
(ii) a promissory note payable to the Corporation's order
in one or more installments, which may be subject to cancellation in
whole or in part upon terms and conditions established by the Plan
Administrator; or
(iii) past services rendered to the Corporation or any
parent or subsidiary corporation.
2. All Newly Issued Shares shall be issued for consideration
with a value less not less than one-hundred percent (100%) of the Fair Market
Value of such shares at the time of issuance.
3. Shares of Common Stock reacquired by the Corporation and
held as treasury shares ("Treasury Shares") may be issued under the Stock
Issuance Program for such consideration (including one or more of the items
of consideration specified in subparagraph 1. above) as the Plan
Administrator may deem appropriate, provided such consideration is in an
amount not less than the Fair Market Value of the Treasury Shares at the time
of issuance. Treasury Shares may, in lieu of any cash consideration, be
issued subject to such vesting requirements tied to the Participant's period
of future Service or the Corporation's attainment of specified performance
objectives as the Plan Administrator may establish at the time of issuance.
The Treasury Share provisions shall be in effect only for such period or
periods (if any) during which the Corporation is incorporated under the laws
of the State of Delaware.
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B. VESTING PROVISIONS.
1. Shares of Common Stock issued under the Stock Issuance
Program may, in the absolute discretion of the Plan Administrator, be fully
and immediately vested upon issuance or may vest in one or more installments
over the Participant's period of Service. The elements of the vesting
schedule applicable to any unvested shares of Common Stock issued under the
Stock Issuance Program, namely:
(i) the Service period to be completed by the Participant
or the performance objectives to be achieved by the Corporation,
(ii) the number of installments in which the shares are to
vest,
(iii) the interval or intervals (if any) which are to lapse
between installments, and
(iv) the effect which death, Permanent Disability or other
event designated by the Plan Administrator is to have upon the vesting
schedule,
shall be determined by the Plan Administrator and incorporated into the
Issuance Agreement executed by the Corporation and the Participant at the
time such unvested shares are issued.
2. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to him or her under the Plan,
whether or not his or her interest in those shares is vested. Accordingly,
the Participant shall have the right to vote such shares and to receive any
regular cash dividends paid on such shares. Any new, additional or different
shares of stock or other property (including money paid other than as a
regular cash dividend) which the Participant may have the right to receive
with respect to his or her unvested shares by reason of any stock dividend,
stock split, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration or by reason of any Corporation
Transaction shall be issued, subject to (i) the same vesting requirements
applicable to his or her unvested shares and (ii) such escrow arrangements as
the Plan Administrator shall deem appropriate.
3. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock under the Stock Issuance
Program, then those shares shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the
surrendered shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participant's
purchase-money promissory note), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to such surrendered shares. The surrendered
shares may, at the Plan Administrator's
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discretion, be retained by the Corporation as Treasury Shares or may be
retired to authorized but unissued share status. Treasury Shares will only be
an available election during the period or periods (if any) the Corporation
is incorporated under the laws of the State of Delaware.
4. The Plan Administrator may in its discretion elect to
waive the surrender and cancellation of one or more unvested shares of Common
Stock (or other assets attributable thereto) which would otherwise occur upon
the non-completion of the vesting schedule applicable to such shares. Such
waiver shall result in the immediate vesting of the Participant's interest in
the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
II. CORPORATE TRANSACTIONS/CHANGE IN CONTROL
A. Upon the occurrence of any Corporate Transaction, all of the
Corporation's outstanding repurchase rights under this Article Three shall
automatically terminate, and all shares subject to such terminated rights
shall immediately vest in full, except to the extent: (i) any such repurchase
right is expressly assigned to the successor corporation (or parent thereof)
in connection with the Corporate Transaction or (ii) such termination is
precluded by other limitations imposed by the Plan Administrator at the time
the repurchase right is issued.
B. The Plan Administrator shall have the discretionary authority,
exercisable either in advance of any actually-anticipated Change in Control
or at the time of an actual Change in Control, to provide for the immediate
and automatic vesting of one or more unvested shares outstanding under the
Stock Issuance Program at the time of such Change in Control. The Plan
Administrator shall also have full power and authority to condition any such
accelerated vesting upon the subsequent termination of the Participant's
Service within a specified period following the Change in Control.
III. SHARE ESCROW/TRANSFER RESTRICTIONS
A. Unvested shares may, in the Plan Administrator's discretion, be
held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing such unvested shares. To the extent an
escrow arrangement is utilized, the unvested shares and any securities or
other assets issued with respect to such shares (other than regular cash
dividends) shall be delivered in escrow to the Corporation to be held until
the Participant's interest in such shares (or other securities or assets)
vests. Alternatively, if the unvested shares are issued directly to the
Participant, the restrictive legend on the certificates for such shares shall
read substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
UNVESTED AND ARE ACCORDINGLY SUBJECT TO (I) CERTAIN
TRANSFER RESTRICTIONS AND (II) CANCELLATION OR
REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN
THE CORPORATION'S SERVICE. SUCH TRANSFER
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RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH
CANCELLATION OR REPURCHASE ARE SET FORTH IN A STOCK
ISSUANCE AGREEMENT BETWEEN THE CORPORATION AND
THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN
INTEREST) DATED ______________, ____, A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION."
B. The Participant shall have no right to transfer any unvested
shares of Common Stock issued to him or her under the Stock Issuance Program.
For purposes of this restriction, the term "transfer" shall include (without
limitation) any sale, pledge, assignment, encumbrance, gift, or other
disposition of such shares, whether voluntary or involuntary. Upon any such
attempted transfer, the unvested shares shall immediately be cancelled in
accordance with substantially the same procedure in effect under Section
I.B.3 of this Article Four, and neither the Participant nor the proposed
transferee shall have any rights with respect to such cancelled shares.
However, the Participant shall have the right to make a gift of unvested
shares acquired under the Stock Issuance Program to his or her spouse or
issue, including adopted children, or to a trust established for such spouse
or issue, provided the donee of such shares delivers to the Corporation a
written agreement to be bound by all the provisions of the Stock Issuance
Program and the Issuance Agreement applicable to the gifted shares.
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ARTICLE FIVE
MISCELLANEOUS
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any
Optionee or Participant (including an Optionee or Participant who is an
officer of the Corporation) in the exercise of one or more options granted to
such Optionee under the Discretionary Option Grant Program or the purchase of
one or more shares issued to such Participant under the Stock Issuance
Program, including the satisfaction of any Federal and State income and
employment tax obligations arising therefrom, by (i) authorizing the
extension of a loan from the Corporation to such Optionee or Participant or
(ii) permitting the Optionee or Participant to pay the option price or
purchase price for the purchased Common Stock in installments over a period
of years. The terms of any loan or installment method of payment (including
the interest rate and terms of repayment) shall be upon such terms as the Plan
Administrator specifies in the applicable option or issuance agreement or
otherwise deems appropriate under the circumstances. Loans or installment
payments may be authorized with or without security or collateral. However,
the maximum credit available to the Optionee or Participant may not exceed
the option or purchase price of the acquired shares plus any Federal and
State income and employment tax liability incurred by the Optionee or
Participant in connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute discretion,
determine that one or more loans extended under this financial assistance
program shall be subject to forgiveness by the Corporation in whole or in
part upon such terms and conditions as the Plan Administrator may deem
appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to
amend or modify the Plan (or any component thereof) in any or all respects
whatsoever. However, no such amendment or modification shall adversely affect
rights and obligations with respect to options at the time outstanding under
the Plan, nor adversely affect the rights of any Participant with respect to
Common Stock issued under the Stock Issuance Program prior to such action,
unless the Optionee or Participant consents to such amendment. In addition,
certain amendments may require stockholder approval pursuant to applicable
laws or regulations.
B. (i) Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant Program and (ii) shares of Common Stock
may be issued under the Stock Issuance Program, which are in both instances
in excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under the Discretionary Option
Grant Program or the Stock Issuance Program are held in escrow until
stockholder approval is obtained for a sufficient increase in the number of
shares available for issuance under the Plan. If such stockholder approval is
not obtained within twelve (12) months
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after the date the first such excess option grants or excess share issuances
are made, then (I) any unexercised excess options shall terminate and cease
to be exercisable and (II) the Corporation shall promptly refund the purchase
price paid for any excess shares actually issued under the Plan and held in
escrow, together with interest (at the applicable Short Term Federal Rate)
for the period the shares were held in escrow.
III. TAX WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon
the exercise of stock options for such shares or the vesting of such shares
under the Plan shall be subject to the satisfaction of all applicable
Federal, State and local income and employment tax withholding requirements.
The Plan Administrator may, in its discretion and in accordance with
the provisions of this Section III of Article Five and such supplemental
rules as the Plan Administrator may from time to time adopt (including the
applicable safe-harbor provisions of SEC Rule 16b-3), provide any or all
holders of non-statutory options (other than the automatic grants made
pursuant to Article Three of the Plan) or unvested shares under the Plan with
the right to use shares of the Corporation's Common Stock in satisfaction of
all or part of the Federal, State and local income and employment withholding
taxes to which such holders may become subject in connection with the
exercise of their options or the vesting of their shares (the "Withholding
Taxes"). Such right may be provided to any such holder in either or both of
the following formats:
(a) STOCK WITHHOLDING: The holder of the non-statutory option or
unvested shares may be provided with the election to have the
Corporation withhold, from the shares of Common Stock otherwise
issuable upon the exercise of such non-statutory option or the
vesting of such shares, a portion of those shares with an aggregate
Fair Market Value equal to the percentage of the applicable
Withholding Taxes (not to exceed one hundred percent (100%))
designated by the holder.
(b) STOCK DELIVERY: The Plan Administrator may, in its discretion,
provide the holder of the non-statutory option or the unvested
shares with the election to deliver to the Corporation, at the time
the non-statutory option is exercised or the shares vest, one or
more shares of Common Stock previously acquired by such individual
(other than in connection with the option exercise or share vesting
triggering the Withholding Taxes) with an aggregate Fair Market
Value equal to the percentage of the Withholding Taxes incurred in
connection with such option exercise or share vesting (not to exceed
one hundred percent (100%)) designated by the holder.
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IV. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan as successor to the Corporation's 1990 Stock Option
Plan became effective as of the applicable Effective Date for each of the
equity incentive programs in effect hereunder, and no further option grants
or stock issuances shall be made under the 1990 Plan from and after such
Effective Date. Each option issued and outstanding under the 1990 Plan
immediately prior to the Effective Date of the Discretionary Option Grant
Program shall be incorporated into this Plan and treated as an outstanding
option under this Plan, but each such option shall continue to be governed
solely by the terms and conditions of the instrument evidencing such grant,
and nothing in this Plan shall be deemed to affect or otherwise modify the
rights or obligations of the holders of such options with respect to their
acquisition of shares of Common Stock thereunder.
B. The option/vesting acceleration provisions of Section III of
Article Two relating to Corporate Transactions and Changes in Control may, in
the Plan Administrator's discretion, be extended to one or more stock options
outstanding under the 1990 Plan on the Effective Date of the Discretionary
Option Grant Program, but which do not otherwise provide for such
acceleration.
C. The Plan was subsequently amended by the Board on February 27,
1995 to increase the number of shares of Common Stock authorized for issuance
under the Plan by an additional 500,000 shares, and such amendment was
approved by the stockholders at the 1995 Annual Meeting on May 22, 1995. The
Plan was further amended by the Board on February 16, 1996 to increase the
number of shares of Common Stock authorized for issuance under the Plan by
another 500,000 shares, subject to stockholder approval at the 1996 Annual
Meeting.
D. In February 1998, the Board further amended and restated the
Plan (the "February 1998 Restatement") to effect the following revisions: (i)
increase the number of shares of Common Stock reserved for issuance over the
term of the Plan by an additional 350,000 shares to 2,200,000 shares, (ii)
render the non-employee Board members (including those serving on as the Plan
Administrator) eligible to receive option grants under the Discretionary
Option Grant and Stock Issuance Programs, (iii) allow unvested shares issued
under the Plan and subsequently repurchased by the Corporation at the option
exercise or direct issue price paid per share to be reissued under the Plan,
(iv) remove certain restrictions on the eligibility of non-employee Board
members to serve as Plan Administrator, and (v) effect a series of additional
changes to the provisions of the Plan (including the stockholder approval
requirements and the option transferability restrictions) in order to take
advantage of the recent amendments to Rule 16b-3 of the Securities and
Exchange Commission which exempts certain officer and director transactions
under the Plan from the short-swing liability provisions of the federal
securities laws. The February 1998 Restatement was approved by the
stockholders at the 1998 Annual Meeting. All option grants and stock
issuances made prior to the February 1998 Restatement shall remain
outstanding in accordance with the terms and conditions of the respective
instruments evidencing those options or issuances, and nothing in the
February 1998 Restatement shall be deemed to modify or in any way affect
those outstanding options or issuances.
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E. In February 1999, the Board further amended and restated the
Plan (the "February 1999 Restatement") to effect the following revisions: (i)
increase the number of shares of Common Stock reserved for issuance over the
term of the Plan by an additional 400,000 shares to 2,600,000 shares, (ii)
increase the number of shares of Common Stock subject to both the initial and
annual option grants made to non-employee Board members under the Automatic
Option Grant Program from 5,000 shares to 10,000 shares, (iii) implement new
automatic option grant for an additional 10,000 shares to be made each year
to each non-employee Board member serving as the Chairperson of any Board
committee and (iv) change the date on which the annual automatic option
grants are to be made to the non-employee Board members and Chairpersons from
the date of the Annual Stockholders Meeting to the first trading day in
January each year, beginning with calendar year 2000. The February 1999
Restatement is subject to stockholder approval at the 1999 Annual Meeting,
and no option grants made on the basis of the February 1999 Restatement shall
become exercisable in whole or in part, and no shares of Common Stock shall
be issued on the basis of such restatement, unless and until such stockholder
approval is obtained. All option grants and stock issuances made prior to the
February 1999 Restatement shall remain outstanding in accordance with the
terms and conditions of the respective instruments evidencing those options
or issuances, and nothing in the February 1999 Restatement shall be deemed to
modify or in any way affect those outstanding options or issuances. Subject
to the foregoing limitations, the Plan Administrator may make option grants
and direct stock issuances under the Plan at any time before the date fixed
herein for the termination of the Plan.
F. The Plan shall terminate upon the earlier of (i) December 31,
2003 or (ii) the date on which all shares available for issuance under the
Plan shall have been issued or cancelled pursuant to the exercise, surrender
or cash-out of the options granted under the Plan or the issuance of shares
(whether vested or unvested) under the Stock Issuance Program. If the date of
termination is determined under clause (i) above, then all options grants and
unvested stock issuances outstanding on such date shall thereafter continue to
have force and effect in accordance with the provisions of the instruments
evidencing such grants or issuances.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants or stock issuances under the Plan shall be
used for general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock
option or stock appreciation right under the Plan, the issuance of any shares
under the Stock Issuance Program, and the issuance of Common Stock upon the
exercise of the stock options or stock appreciation rights granted hereunder
shall be subject to the Corporation's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the stock options and stock appreciation rights granted under it, and the
Common Stock issued pursuant to it.
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B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance
with all applicable requirements of Federal and State securities laws,
including the filing and effectiveness of the Form S-8 registration statement
for the shares of Common Stock issuable under the Plan, and all applicable
listing requirements of any securities exchange on which stock of the same
class is then listed.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor
any action taken by the Plan Administrator hereunder, nor any provision of
the Plan shall be construed so as to grant any individual the right to remain
in the employ or service of the Corporation (or any parent or subsidiary
corporation) for any period of specific duration, and the Corporation (or any
parent or subsidiary corporation retaining the services of such individual)
may terminate such individual's employment or service at any time and for any
reason, with or without cause.
VIII. MISCELLANEOUS PROVISIONS
A. Except to the extent otherwise expressly provided in the Plan,
the right to acquire Common Stock or other assets under the Plan may not be
assigned, encumbered or otherwise transferred by any Optionee or Participant.
B. The provisions of the Plan relating to the exercise of options
and the vesting of shares shall be governed by the laws of the State of
California without resort to that State conflict-of-laws rules.
C. The provisions of the Plan shall inure to the benefit of, and
be binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.
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