<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 17, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INHALE THERAPEUTIC SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 94-3134940
(State of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
150 INDUSTRIAL ROAD
SAN CARLOS, CALIFORNIA 94070
(650) 631-3100
(Address and telephone number of principal executive offices)
1998 NON-OFFICER EQUITY INCENTIVE PLAN
(Full title of the plans)
ROBERT B. CHESS AND AJIT S. GILL
CO-CHIEF EXECUTIVE OFFICERS
INHALE THERAPEUTIC SYSTEMS, INC.
150 INDUSTRIAL ROAD
SAN CARLOS, CALIFORNIA 94070
(650) 631-3100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
MARK P. TANOURY, ESQ.
COOLEY GODWARD LLP
3000 SAND HILL ROAD, BLDG. 3, SUITE 230
MENLO PARK, CALIFORNIA 94025
(650) 843-5000
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Stock Options and Common Stock
(par value $.0001).......... 1,500,000 $90.3125 $135,468,750 $35,763.75
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h). The price per share and aggregate
offering price are based upon the average of the high and low prices of
Registrant's Common Stock on March 15, 2000 as reported on Nasdaq National
Market.
Approximate date of commencement of proposed sale to the public:
as soon as practicable after this Registration Statement becomes effective.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Inhale Therapeutic Systems, Inc., a
Delaware corporation (the "COMPANY" or the "REGISTRANT") with the Securities and
Exchange Commission (the "COMMISSION"), are incorporated by reference into this
Registration Statement:
(a) The Company's Registration Statement on Form S-8 (SEC File No.
333-74669); and
(b) The Company's Registration Statement on Form S-8 (SEC File No.
333-65919).
2
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<C> <S>
2.1 (1) Agreement and Plan of Merger between Inhale Therapeutic
Systems, a California corporation, and Inhale Therapeutic
Systems (Delaware), Inc., a Delaware corporation
3.1 (1) Certificate of Incorporation of Registrant.
3.2 (1) Bylaws of the Registrant.
4.1 Reference is made to Exhibits 2.1, 3.1 and 3.2.
4.2 (2) Restated Investor Rights Agreement among the Registrant and
certain other persons named therein, dated April 29, 1993,
as amended October 29, 1993.
4.3 (2) Specimen stock certificate.
4.4 (3) Stock Purchase Agreement between the Registrant and Pfizer
Inc., dated January 18, 1995.
4.5 (4) Form of Purchase Agreement between the Registrant and the
individual Purchasers, dated January 28, 1997.
4.6 (5) Stock Purchase Agreement between the Registrant and Capital
Research and Management Company, dated December 8, 1998.
4.7 (6) Purchase Agreement among the Registrant and Lehman Brothers
Inc., Deutsche Bank Securities Inc. and U.S. Bancorp Piper
Jaffray Inc. dated October 6, 1999.
4.8 (6) Registration Rights Agreement among the Registrant and
Lehman Brothers Inc., Deutsche Bank Securities Inc. and
U.S. Bancorp Piper jaffray Inc., dated October 13, 1999.
4.9 (6) Indenture between the Registrant as Issuer and Chase
manhattan Bank and Trust Company, National Association, as
Trustee, dated October 13, 1999.
4.10(6) Form of Inhale Registration Rights Agreement, between Inhale
and Alliance Pharmaceutical Corp.
4.11(7) Purchase Agreement among the Registrant and Merrill Lynch &
Co., Merrill Lynch Pierce, Fenner & Smith Incorporated,
Deutsche Bank Securities Inc., Lehman Brothers inc., and
U.S. Bancorp Piper Jaffray inc., dated February 2, 2000.
4.12(7) Resale Registration Rights Agreement among Registrant and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Deutsche Bank Securities inc., Lehman
Brothers Inc., and U.S. Bancorp Piper Jaffray Inc., dated
February 8, 2000.
4.13(7) Indenture between Registrant as Issuer and Chase Manhattan
Bank and Trust Company, National Association, as Trustee,
dated February 8, 2000.
5.1 (8) Opinion of Cooley Godward LLP.
23.1 (8) Consent of Ernst & Young LLP, independent auditors.
23.2 (8) Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1 (8) Power of Attorney. Reference is made to the signature page.
99.1 (8) Registrant's 1998 Non-Officer Equity Incentive Plan, as
amended.
</TABLE>
- ------------------------
(1) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998.
(2) Incorporated by reference to the indicated exhibit in Inhale's Registation
Statement on Form S-1 (No. 33-75942), as amended.
(3) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-1 (No. 33-89502), as amended.
(4) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-3 (No. 333-20787), as amended.
3
<PAGE>
(5) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-3 (No. 333-68897), as amended.
(6) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-3 (No. 333-94161), as amended.
(7) Incorporated by reference to the indicated exhibit in Inhale's Annual Report
on Form 10-K for the year ended December 31, 1999, as amended.
(8) Filed herewith.
4
<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 San Carlos, County of San Mateo, State of California,
on the 16th day of March 2000.
<TABLE>
<S> <C> <C>
INHALE THERAPEUTIC SYSTEMS, INC.
By /s/ ROBERT B. CHESS
------------------------------------------
Robert B. Chess
CO-CHIEF EXECUTIVE OFFICER,
CHAIRMAN AND DIRECTOR
By /s/ AJIT S. GILL
------------------------------------------
Ajit S. Gill
CO-CHIEF EXECUTIVE OFFICER,
PRESIDENT AND DIRECTOR
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert B. Chess and Ajit S. Gill, and each or any
one of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ROBERT B. CHESS Co-Chief Executive Officer,
------------------------------------------- Chairman and Director (Co- March 16, 2000
Robert B. Chess Principal Executive Officer)
/s/ AJIT S. GILL Co-Chief Executive Officer,
------------------------------------------- President and Director (Co- March 16, 2000
Ajit S. Gill Principal Executive Officer)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Chief Financial Officer and
/s/ BRIGID A. MAKES Vice President Finance &
------------------------------------------- Administration (Principal March 16, 2000
Brigid A. Makes Financial and Accounting
Officer)
/s/ MARK J. GABRIELSON
------------------------------------------- Director March 16, 2000
Mark J. Gabrielson
/s/ JAMES B. GLAVIN
------------------------------------------- Director March 16, 2000
James B. Glavin
/s/ JOHN S. PATTON
------------------------------------------- Director March 16, 2000
John S. Patton
/s/ MELVIN PERELMAN
------------------------------------------- Director March 16, 2000
Melvin Perelman
/s/ IRWIN LERNER
------------------------------------------- Director March 16, 2000
Irwin Lerner
</TABLE>
5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE NUMBER
- --------------------- ----------- ------------
<C> <S> <C>
2.1(1) Agreement and Plan of Merger between Inhale Therapeutic
Systems, a California corporation, and Inhale Therapeutic
Systems (Delaware), Inc., a Delaware corporation
3.1(1) Certificate of Incorporation of Registrant.
3.2(1) Bylaws of the Registrant.
4.1 Reference is made to Exhibits 2.1, 3.1 and 3.2.
4.2(2) Restated Investor Rights Agreement among the Registrant and
certain other persons named therein, dated April 29, 1993,
as amended October 29, 1993.
4.3(2) Specimen stock certificate.
4.4(3) Stock Purchase Agreement between the Registrant and Pfizer
Inc., dated January 18, 1995.
4.5(4) Form of Purchase Agreement between the Registrant and the
individual Purchasers, dated January 28, 1997.
4.6(5) Stock Purchase Agreement between the Registrant and Capital
Research and Management Company, dated December 8, 1998.
4.7(6) Purchase Agreement among the Registrant and Lehman Brothers
Inc., Deutsche Bank Securities Inc. and U.S. Bancorp Piper
Jaffray Inc. dated October 6, 1999.
4.8(6) Registration Rights Agreement among the Registrant and
Lehman Brothers Inc., Deutsche Bank Securities Inc. and
U.S. Bancorp Piper Jaffray Inc., dated October 13, 1999.
4.9(6) Indenture between the Registrant as Issuer and Chase
Manhattan Bank and Trust Company, National Association, as
Trustee, dated October 13, 1999.
4.10(6) Form of Inhale Registration Rights Agreement, between Inhale
and Alliance Pharmaceutical Corp.
4.11(7) Purchase Agreement among the Registrant and Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Deutsche Bank Securities Inc., Lehman Brothers Inc., and
U.S. Bancorp Piper Jaffray Inc., dated February 2, 2000.
4.12(7) Resale Registration Rights Agreement among Registrant and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Deutsche Bank Securities Inc., Lehman
Brothers Inc., and U.S. Bancorp Piper Jaffray Inc., dated
February 8, 2000.
4.13(7) Indenture between Registrant as Issuer and Chase Manhattan
Bank and Trust Company, National Association, as Trustee,
dated February 8, 2000.
5.1(8) Opinion of Cooley Godward LLP.
23.1(8) Consent of Ernst & Young LLP, independent auditors.
23.2(8) Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1(8) Power of Attorney. Reference is made to the signature page.
99.1(8) Registrant's 1998 Non-Officer Equity Incentive Plan, as
amended.
</TABLE>
- ------------------------
(1) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998.
(2) Incorporated by reference to the indicated exhibit in Inhale's Registation
Statement on Form S-1 (No. 33-75942), as amended.
6
<PAGE>
(3) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-1 (No. 33-89502), as amended.
(4) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-3 (No. 333-20787), as amended.
(5) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-3 (No. 333-68897), as amended.
(6) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-3 (No. 333-94161), as amended.
(7) Incorporated by reference to the indicated exhibit in Inhale's Annual Report
on Form 10-K for the year ended December 31, 1999, as amended.
(8) Filed herewith.
7
<PAGE>
EXHIBIT 5.1
March 16, 2000
Inhale Therapeutic Systems, Inc.
150 Industrial Road
San Carlos, California 94070
Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Inhale Therapeutic Systems, Inc., a Delaware corporation (the
"COMPANY") of a Registration Statement on Form S-8 (the "REGISTRATION
STATEMENT") with the Securities and Exchange Commission covering the offering of
up to 1,500,000 shares of the Company's Common Stock, $0.0001 par value (the
"SHARES"), pursuant to its 1998 Non-Officer Equity Incentive Plan, as amended
(the "PLAN").
In connection with this opinion, we have examined the Registration Statement
and related Prospectus, your Certificate of Incorporation and By-laws, as
amended, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a basis for this opinion. We have assumed
the genuineness and authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as copies thereof,
and the due execution and delivery of all documents where due execution and
delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the
opinion that the Shares, when sold and issued in accordance with the Plan, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain deferred
payment arrangements, which will be fully paid and nonassessable when such
deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
<TABLE>
<S> <C> <C>
Very truly yours,
COOLEY GODWARD LLP
By: /s/ MARK P. TANOURY
-----------------------------------------
Mark P. Tanoury
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
(Form S-8) pertaining to the 1998 Non-Officer Equity Incentive Plan of Inhale
Therapeutic Systems, Inc. of our report dated January 24, 2000, with respect to
the financial statements of Inhale Therapeutic Systems, Inc. included in its
Annual Report (Form 10-K/A) for the year ended Decmber 31, 1999 which is
incorporated by reference in the Registration Statements (Form S-8 Nos.
333-65919 and 333-74669) filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
March 16, 2000
<PAGE>
EXHIBIT 99.1
INHALE THERAPEUTIC SYSTEMS, INC.
1998 NON-OFFICER EQUITY INCENTIVE PLAN
ADOPTED: AUGUST 18, 1998
AMENDED: FEBRUARY 23, 1999
AMENDED: DECEMBER 14, 1999
STOCKHOLDER APPROVAL NOT REQUIRED
TERMINATION DATE: NONE
1. Purposes.
(A) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive Stock
Awards are the Employees and Consultants of the Company and its Affiliates who
are neither Officers nor Directors.
(B) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a means
by which eligible recipients of Stock Awards may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of the
following Stock Awards: (i) Nonstatutory Stock Options, (ii) stock appreciation
rights, (iii) stock bonuses and (iv) rights to acquire restricted stock.
(C) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. Definitions.
(A) "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(B) "BOARD" means the Board of Directors of the Company.
(C) "CODE" means the Internal Revenue Code of 1986, as amended.
(D) "COMMITTEE" means a Committee appointed by the Board in accordance with
subsection 3(c).
(E) "COMMON STOCK" means the common stock of the Company.
(F) "COMPANY" means Inhale Therapeutic Systems, Inc., a Delaware
corporation.
(G) "CONSULTANT" means any person, including an advisor, (i) engaged by the
Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include Directors of
the Company
(H) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director of the
Company will not constitute an interruption of Continuous Service. The Board or
the chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence approved by that party, including sick leave, military
leave or any other personal leave.
(I) "DIRECTOR" means a member of the Board of Directors of the Company.
<PAGE>
(J) "DISABILITY" means the permanent and total disability of a person within
the meaning of Section 22(e)(3) of the Code.
(K) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.
(L) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(M) "FAIR MARKET VALUE" means, as of any date, the value of the Common Stock
determined as follows:
(I) If the Common Stock is listed on any established stock exchange or
traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in THE WALL STREET JOURNAL or such other
source as the Board deems reliable.
(II) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(N) "NONSTATUTORY STOCK OPTION" means an option not intended to qualify as
an Incentive Stock Option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(O) "OFFICER" means (i) a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder and (ii) any other person designated by the Company as an
officer.
(P) "OPTION" means a Nonstatutory Stock Option granted pursuant to the Plan.
(Q) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(R) "OPTIONHOLDER" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(S) "PARTICIPANT" means a person to whom a Stock Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding Stock
Award.
(T) "PLAN" means this Inhale Therapeutic Systems, Inc. 1998 Non-Officer
Equity Incentive Plan.
(U) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.
(V) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(W) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock appreciation right, a stock bonus and a right to acquire
restricted stock.
(X) "STOCK AWARD AGREEMENT" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
3. Administration.
(A) ADMINISTRATION BY BOARD. The Board will administer the Plan unless and
until the Board delegates administration to a Committee, as provided in
subsection 3(c).
2
<PAGE>
(B) POWERS OF BOARD. The board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(I) To determine from time to time which of the persons eligible under
the Plan shall be granted Stock Awards; when and how each Stock Award shall
be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive stock pursuant to a Stock Award; and the number of shares with
respect to which a Stock Award shall be granted to each such person.
(II) To construe and interpret the Plan and Stock Awards granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(III) To amend the Plan or a Stock Award as provided in Section 12.
(IV) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the
Company that are not in conflict with the provisions of the Plan.
(C) DELEGATION TO COMMITTEE. The Board may delegate administration of the
Plan to a Committee or Committees of one or more members of the Board, and the
term "Committee" shall apply to any person or persons to whom such authority has
been delegated. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan.
4. Shares Subject to the Plan.
(A) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate three million five hundred
twenty-five thousand (3,525,000) shares of Common Stock.
(B) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full (or vested in the case of Restricted Stock), the stock
not acquired under such Stock Award shall revert to and again become available
for issuance under the Plan. Shares subject to stock appreciation rights
exercised in accordance with the Plan shall not be available for subsequent
issuance under the Plan. If any Common Stock acquired pursuant to a Stock Award
shall for any reason be reacquired by the Company, the stock (having already
been issued) shall not revert to and again become available for reissuance under
the Plan.
(C) SOURCE OF SHARES. The stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.
5. Eligibility.
Stock Awards may be granted only to Employees and Consultants who are
neither Officers nor Directors.
3
<PAGE>
6. Option Provisions.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(A) EXERCISE PRICE. The Board shall determine the exercise price of each
Option.
(B) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently) by delivery to the Company of other Common Stock, according to a
deferred payment or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other Common Stock) with the Participant
or in any other form of legal consideration that may be acceptable to the Board;
provided, however, that at any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the Delaware
General Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(C) TRANSFERABILITY. An Option shall be transferable to the extent
provided in the Option Agreement. If the Option does not provide for
transferability, then the Option shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder. Notwithstanding the
foregoing provisions of this subsection 6(c), the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.
(D) VESTING GENERALLY. The total number of shares of Common Stock subject
to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(d) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.
(E) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder's Continuous Service (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder does not exercise his or her Option within
the time specified in the Option Agreement, the Option shall terminate.
(F) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionholder's Continuous Service (other than upon the Optionholder's death or
Disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in subsection 6(a) or (ii) the expiration of three
months (or such longer or shorter period specified in the Option Agreement)
after the termination of the Optionholder's Continuous Service during which the
exercise of the Option would not be in violation of such registration
requirements.
4
<PAGE>
(G) DISABILITY OF OPTIONHOLDER. In the event an Optionholder's Continuous
Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period specified in the
Option Agreement) or (ii) the expiration of the term of the Option as set forth
in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.
(H) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise the Option as of the date of death) by the
Optionholder's estate, by a person who acquired the right to exercise the Option
by bequest or inheritance or by a person designated to exercise the option upon
the Optionholder's death pursuant to subsection 6(c), but only within the period
ending on the earlier of (1) the date eighteen (18) months following the date of
death (or such longer or shorter period specified in the Option Agreement) or
(2) the expiration of the term of such Option as set forth in the Option
Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.
(I) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares subject to the Option prior to the full vesting of the Option. Any
unvested shares so purchased may be subject to an unvested share repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate.
(J) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board to make or not to make grants of Options hereunder, the Board shall have
the authority (but not an obligation) to include as part of any Option Agreement
a provision entitling the Optionholder to a further Option (a "Re-Load Option")
in the event the Optionholder exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option Agreement.
Any such Re-Load Option shall (i) provide for a number of shares equal to the
number of shares surrendered as part or all of the exercise price of such
Option; (ii) have an expiration date that is the same as the expiration date of
the Option the exercise of which gave rise to such Re-Load Option; and (iii)
have an exercise price that is equal to one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option. Notwithstanding the foregoing, a Re-Load Option
shall be subject to the same exercise price and term provisions heretofore
described for Options under the Plan.
There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load
Option shall be subject to the availability of sufficient shares under
subsection 4(a) and shall be subject to such other terms and conditions as the
Board may determine that are not inconsistent with the express provisions of the
Plan regarding the terms of Options.
7. Provisions of Stock Awards other than Options.
(A) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of stock bonus agreements may change from time to time,
and the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of
5
<PAGE>
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:
(I) CONSIDERATION. A stock bonus shall be awarded in consideration for
past services actually rendered to the Company or an Affiliate for its
benefit.
(II) VESTING. Shares of Common Stock awarded under the stock bonus
agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined
by the Board.
(III) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the event a
Participant's Continuous Service terminates, the Company may reacquire any
or all of the shares of Common Stock held by the Participant that have not
vested as of the date of termination under the terms of the stock bonus
agreement.
(IV) TRANSFERABILITY. Rights to acquire shares under the stock bonus
agreement shall be transferable by the Participant only upon such terms and
conditions as are set forth in the stock bonus agreement, as the Board shall
determine in its discretion, so long as stock awarded under the stock bonus
agreement remains subject to the terms of the stock bonus agreement.
(B) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:
(I) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement.
(II) CONSIDERATION. The purchase price of stock acquired pursuant to
the restricted stock purchase agreement shall be paid either: (1) in cash at
the time of purchase; (2) at the discretion of the Board, according to a
deferred payment or other arrangement with the Participant; or (3) in any
other form of legal consideration that may be acceptable to the Board in its
discretion; provided, however, that at any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by
deferred payment.
(III) VESTING. Shares of Common Stock acquired under the restricted
stock purchase agreement may, but need not, be subject to a share repurchase
option in favor of the Company in accordance with a vesting schedule to be
determined by the Board.
(IV) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the event a
Participant's Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant that have not vested as of the date of termination under the
terms of the restricted stock purchase agreement.
(V) TRANSFERABILITY. Rights to acquire shares under the restricted
stock purchase agreement shall be transferable by the Participant only upon
such terms and conditions as are set forth in the restricted stock purchase
agreement, as the Board shall determine in its discretion, so long as stock
awarded under the restricted stock purchase agreement remains subject to the
terms of the restricted stock purchase agreement.
(C) STOCK APPRECIATION RIGHTS.
6
<PAGE>
(I) AUTHORIZED RIGHTS. The following three types of stock appreciation
rights shall be authorized for issuance under the Plan:
(1) TANDEM RIGHTS. A "Tandem Right" means a stock appreciation right
granted appurtenant to an Option that is subject to the same terms and
conditions applicable to the particular Option grant to which it pertains
with the following exceptions: The Tandem Right shall require the holder
to elect between the exercise of the underlying Option for shares of
Common Stock and the surrender, in whole or in part, of such Option for
an appreciation distribution. The appreciation distribution payable on
the exercised the Tandem Right shall be in cash (or, if so provided, in
an equivalent number of shares of Common Stock based on Fair Market Value
on the date of the Option surrender) in an amount up to the excess of
(a) the Fair Market Value (on the date of the Option surrender) of the
number of shares of Common Stock covered by that portion of the
surrendered Option in which the Optionholder is vested over (b) the
aggregate exercise price payable for such vested shares.
(2) CONCURRENT RIGHTS. A "Concurrent Right" means a stock
appreciation right granted appurtenant to an Option that applies to all
or a portion of the shares of Common Stock subject to the underlying
Option and that is subject to the same terms and conditions applicable to
the particular Option grant to which it pertains with the following
exceptions: A Concurrent Right shall be exercised automatically at the
same time the underlying Option is exercised with respect to the
particular shares of Common Stock to which the Concurrent Right pertains.
The appreciation distribution payable on an exercised Concurrent Right
shall be in cash (or, if so provided, in an equivalent number of shares
of Common Stock based on Fair Market Value on the date of the exercise of
the Concurrent Right) in an amount equal to such portion as determined by
the Board at the time of the grant of the excess of (a) the aggregate
Fair Market Value (on the date of the exercise of the Concurrent Right)
of the vested shares of Common Stock purchased under the underlying
Option that have Concurrent Rights appurtenant to them over (b) the
aggregate exercise price paid for such shares.
(3) INDEPENDENT RIGHTS. An "Independent Right" means a stock
appreciation right granted independently of any Option but which is
subject to the same terms and conditions applicable to an Option with the
following exceptions: An Independent Right shall be denominated in share
equivalents. The appreciation distribution payable on the exercised
Independent Right shall be not greater than an amount equal to the excess
of (a) the aggregate Fair Market Value (on the date of the exercise of
the Independent Right) of a number of shares of Company stock equal to
the number of share equivalents in which the holder is vested under such
Independent Right, and with respect to which the holder is exercising the
Independent Right on such date, over (b) the aggregate Fair Market Value
(on the date of the grant of the Independent Right) of such number of
shares of Company stock. The appreciation distribution payable on the
exercised Independent Right shall be in cash or, if so provided, in an
equivalent number of shares of Common Stock based on Fair Market Value on
the date of the exercise of the Independent Right.
(II) EXERCISE. To exercise any outstanding stock appreciation right,
the holder shall provide written notice of exercise to the Company in
compliance with the provisions of the Stock Award Agreement evidencing such
right. No limitation shall exist on the aggregate amount of cash payments
that the Company may make under the Plan in connection with the exercise of
a stock appreciation right.
8. Covenants of the Company.
(A) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
7
<PAGE>
(B) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any stock issued or issuable pursuant to any such
Stock Award. If, after reasonable efforts, the Company is unable to obtain from
any such regulatory commission or agency the authority that counsel for the
Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell stock upon exercise of such Stock Awards unless and until such authority is
obtained.
9. Use of Proceeds from Stock.
Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.
10. Miscellaneous.
(A) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.
(B) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Stock Award unless and until such Participant has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.
(C) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant or other holder of Stock Awards any right to continue to serve
the Company or an Affiliate in the capacity in effect at the time the Stock
Award was granted or shall affect the right of the Company or an Affiliate to
terminate (i) the employment of an Employee with or without notice and with or
without cause or (ii) the service of a Consultant pursuant to the terms of such
Consultant's agreement with the Company or an Affiliate.
(D) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring stock under any Stock Award, (i) to give
written assurances satisfactory to the Company as to the Participant's knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Participant is acquiring the stock
subject to the Stock Award for the Participant's own account and not with any
present intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares upon the exercise or acquisition
of stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act or (2) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.
(E) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means (in addition to the Company's
right to withhold from any compensation paid to the Participant by the Company)
or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares from the shares
8
<PAGE>
of the Common Stock otherwise issuable to the participant as a result of the
exercise or acquisition of stock under the Stock Award; or (iii) delivering to
the Company owned and unencumbered shares of the Common Stock.
(F) CANCELLATION AND RE-GRANT OF OPTIONS. The Board shall have the
authority to effect, at any time and from time to time, (i) the repricing of any
outstanding Options under the Plan and/or (ii) with the consent of any adversely
affected holders of Options, the cancellation of any outstanding Options under
the Plan and the grant in substitution therefor of new Options under the Plan
covering the same or different numbers of shares of Common Stock. The exercise
price per share shall be not less than that specified under the Plan for newly
granted Stock Awards. Notwithstanding the foregoing, the Board may grant an
Option with an exercise price lower than that set forth above if such Option is
granted as part of a transaction to which Section 424(a) of the Code applies.
11. Adjustments upon Changes in Stock.
(A) CAPITALIZATION ADJUSTMENTS. If any change is made in the stock subject
to the Plan, or subject to any Stock Award, without the receipt of consideration
by the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to
subsection 4(a), and the outstanding Stock Awards will be appropriately adjusted
in the class(es) and number of securities and price per share of stock subject
to such outstanding Stock Awards. Such adjustments shall be made by the Board,
the determination of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be treated as
a transaction "without receipt of consideration" by the Company.)
(B) CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then such Stock Awards shall be
terminated if not exercised (if applicable) prior to such event.
(C) CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (i) a sale of substantially all of the assets of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then any surviving
corporation or acquiring corporation shall assume any Stock Awards outstanding
under the Plan or shall substitute similar stock awards (including an award to
acquire the same consideration paid to the stockholders in the transaction
described in this subsection 11(c)) for those outstanding under the Plan. In the
event any surviving corporation or acquiring corporation refuses to assume such
Stock Awards or to substitute similar stock awards for those outstanding under
the Plan, then with respect to Stock Awards held by Participants whose
Continuous Service has not terminated, the vesting of such Stock Awards (and, if
applicable, the time during which such Stock Awards may be exercised) shall be
accelerated in full, and the Stock Awards shall terminate if not exercised (if
applicable) at or prior to such event. With respect to any other Stock Awards
outstanding under the Plan, such Stock Awards shall terminate if not exercised
(if applicable) prior to such event.
(D) CHANGE IN CONTROL--SECURITIES ACQUISITION. In the event of an
acquisition by any person, entity or group within the meaning of Section 13(d)
or 14(d) of the Exchange Act, or any comparable successor provisions (excluding
any employee benefit plan, or related trust, sponsored or maintained by the
Company or an Affiliate) of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of Directors, then with
respect to Stock Awards held by Participants whose Continuous Service has not
terminated, the vesting of
9
<PAGE>
such Stock Awards (and, if applicable, the time during which such Stock Awards
may be exercised) shall be accelerated in full.
12. Amendment of the Plan and Stock Awards.
(A) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan; provided however, that the rights under any Stock Award shall
not be impaired by any amendment of the Plan unless (i) the Company requests the
consent of the Participant and (ii) the Participant consents in writing.
(B) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.
13. Termination or Suspension of the Plan.
(A) PLAN TERM. The Board may suspend or terminate the Plan at any time. No
Stock Awards may be granted under the Plan while the Plan is suspended or after
it is terminated.
(B) NO IMPAIRMENT OF RIGHTS. Rights and obligations under any Stock Award
granted while the Plan is in effect shall not be impaired by suspension or
termination of the Plan, except with the written consent of the Participant.
14. Effective Date of Plan.
The Plan shall become effective upon adoption by the Board.
10
