<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ENCAD, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 95-3672088
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
6059 CORNERSTONE COURT
WEST SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices) (Zip code)
1993 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the Plan)
DAVID A. PURCELL
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ENCAD, INC.
6059 CORNERSTONE COURT, WEST SAN DIEGO, CALIFORNIA 92121
(619) 452-0882
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share Price Fee
----------- ----------- ---------- ----- ---
1993 EMPLOYEE STOCK PURCHASE PLAN
<S> <C> <C> <C> <C>
Common Stock,
$0.001 par value 120,000 shares $24.28 (2) $2,913,608(2) $859.51
Aggregate Filing Fee $859.51
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1993 Employee Stock Purchase
Plan, as amended by reason of any stock dividend, stock split,
recapitalization or any other similar transaction without receipt of
consideration which results in an increase in the number of outstanding
shares of Common Stock of ENCAD, Inc.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the high
and low selling prices per share of Common Stock of ENCAD, Inc. on January
29, 1998 as reported on the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
ENCAD, Inc. (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, 1996, as amended, filed with the SEC on March 28, 1997;
(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997,
filed with the SEC on May 5, 1997, August 8, 1997 and November 14,
1997, respectively; and
(c) The Registrant's Registration Statement No. 001-12652 on Form 8-A
filed with the SEC on December 6, 1993 in which the terms, rights and
provisions applicable to the Registrant's Common Stock are described.
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 SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Bylaws (the "Bylaws") provide that the Registrant shall,
to the fullest extent authorized by Delaware law, indemnify any director who is
made, or is threatened to be made, a party to an action or proceeding, whether
civil or criminal, administrative or investigative, by reason of being a
director of the Registrant or a predecessor corporation of the Registrant, or is
or was serving at the request of the Registrant as a director or officer of
another corporation; provided, however, that the Registrant shall indemnify any
such agent in connection with a proceeding initiated by such agent only if such
proceeding was authorized by the Registrant's Board of Directors (the "Board").
The Bylaws further provide that such indemnification provisions shall: (i) not
be deemed to be exclusive of any other rights to which those indemnified may be
entitled under any bylaw, agreement or vote of stockholder or disinterested
directors or otherwise, both as to action in their official capacities and as to
action in another capacity while holding such office, (ii) continue as to a
person who has ceased to be a director, and (iii) inure to the benefit of the
heirs, executors and administrators of such a person. The Bylaws provide that
the Registrant's obligation to
<PAGE>
provide indemnification shall be offset to the extent of any other source of
indemnification or any otherwise applicable insurance coverage under a policy
maintained by the Registrant or any other person. The Bylaws further provide
that the Board in its discretion shall have the power to indemnify any person,
other than a director, made a party to any action, suit or proceeding by reason
of the fact that he, his testator or intestate, is or was an officer or employee
of the corporation.
In addition, the Registrant's Certificate of Incorporation (the
"Certificate of Incorporation") provides that, pursuant to Delaware law, its
directors shall not be personally liable for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or involving intentional misconduct, (iii) for
knowing violations of law, (iv) for actions leading to improper personal benefit
to the director, and (iv) for unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided in Section 174 of Delaware General
Corporation Law.
The Registrant maintains a directors' and officers' liability insurance
policy that, subject to certain limitations, terms and conditions, will insure
the directors and officers of the Registrant against losses arising from
wrongful acts (as defined by the policy) in his or her capacity as a director or
officer.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
Exhibit No. Exhibit
- ----------- -------
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statement No. 001-12652 on Form 8-A,
which is incorporated herein by reference pursuant to Item 3(d)
of this Registration Statement.
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Deloitte & Touche, LLP, Independent Public
Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-5 of this
Registration Statement.
99.1 1993 Employee Stock Purchase Plan, as amended.
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933, as amended (the
"1933 Act"), (ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; PROVIDED, however, that clauses (1)(i) and (1)(ii)
shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the 1934
Act that are incorporated by reference into this Registration Statement; (2)
that for the purpose of determining any liability under the 1933 Act, each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof; and (3) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold upon the termination of the Registrant's 1993 Employee Stock Purchase
Plan, as amended.
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
<PAGE>
reference into this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers or controlling persons of the Registrant
pursuant to the indemnity provisions summarized in Item 6 or otherwise, the
Registrant has been informed that in the opinion of the 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.
<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 West San Diego, State of California on January 30,
1998.
ENCAD, INC.
By: /s/ DAVID A. PURCELL
-------------------------------------
David A. Purcell
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of ENCAD, Inc., a Delaware
corporation, do hereby constitute and appoint David A. Purcell and Richard A.
Plante and each of them, the lawful attorneys-in-fact and agents, with full
power and authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either one of them, determine
may be necessary or advisable or required to enable said corporation to comply
with the Securities Act of 1933, as amended, and any rules or regulation or
requirements of the Securities and Exchange Commission in connection with this
Registration Statement. Without limiting the generality of the foregoing power
and authority, the powers granted include the power and authority to sign the
names of the undersigned officers and directors in the capacities indicated
below to this Registration Statement, to any and all amendments, both
pre-effective and post-effective, and supplements to this Registration Statement
and to any and all instruments or documents filed as part of or in conjunction
with this Registration Statement or amendments or supplements thereto, and each
of the undersigned hereby ratifies and confirms all that said attorneys and
agents, or either one of them, shall do or cause to be done by virtue hereof.
This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/s/ DAVID A. PURCELL
- -------------------- Chairman and January 30, 1998
David A. Purcell Chief Executive Officer (Principal
Executive Officer)
<PAGE>
Signatures Title Date
- ---------- ----- ----
/s/ RICHARD A. PLANTE
- --------------------- President and January 30, 1998
Richard A. Plante Chief Operating Officer
/s/ TODD W. SCHMIDT
- -------------------- Vice President and January 30, 1998
Todd W. Schmidt Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ ROBERT V. ADAMS
- -------------------- Director January 30, 1998
Robert V. Adams
/s/ RONALD J. HALL
- -------------------- Director January 30, 1998
Ronald J. Hall
/s/ HOWARD L. JENKINS
- --------------------- Director January 30, 1998
Howard L. Jenkins
/s/ CHARLES E. VOLPE
- -------------------- Director January 30, 1998
Charles E. Volpe
/s/ CRAIG S. ANDREWS
- -------------------- Director January 30, 1998
Craig S. Andrews
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
ENCAD, INC.
<PAGE>
EXHIBIT INDEX
Exhibit
No. Exhibit
- ------- -------
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statement No. 00-112652 on Form 8-A,
which is incorporated herein by reference pursuant to Item 3(d) of
this Registration Statement.
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Deloitte & Touche LLP, Independent Public Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-5 of this
Registration Statement.
99.1 1993 Employee Stock Purchase Plan, as amended.
<PAGE>
EXHIBIT 5
Opinion and Consent of Brobeck, Phleger & Harrison LLP
January 29, 1998
ENCAD, Inc.
6059 Cornerstone Court, West
West San Diego, CA 92121
Re: ENCAD, Inc. (the "Company")
Registration Statement for Registration
of 120,000 Shares of Common Stock
---------------------------------
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 120,000 shares of
Common Stock for issuance under the Company's 1993 Employee Stock Purchase Plan,
as amended. We advise you that, in our opinion, when such shares have been
issued and sold pursuant to the applicable provisions of the Company's 1993
Employee Stock Purchase Plan, as amended, and in accordance with the
Registration Statement, such shares will be validly issued, fully paid and
non-assessable shares of the Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
Consent of Deloitte & Touche LLP, Independent Public Accountants
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
ENCAD, Inc. on Form S-8 of our report dated February 4, 1997, appearing in the
Annual Report on Form 10-K of ENCAD, Inc. for the year ended December 31, 1996.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
DELOITTE & TOUCHE LLP
San Diego, California
January 29, 1998
<PAGE>
EXHIBIT 99.1
1993 Employee Stock Purchase Plan, as amended
ENCAD, INC.
1993 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED, JULY 17, 1997)
I. PURPOSE
This ENCAD, Inc. 1993 Employee Stock Purchase Plan (the "Plan") is
intended to provide Qualifying Employees with the opportunity to acquire a
proprietary interest in the Company by accumulating amounts for the Employee's
Account through payroll deductions and the periodic application of such amounts
to the purchase of shares of the Company's Common Stock.
II. DEFINITIONS
For the purposes of plan administration, the following terms shall
have the meanings indicated:
ACT shall mean the Securities Act of 1933 (as amended).
ACCOUNT means the amount held for the benefit of a Participant
hereunder which Account shall be increased by any payroll deductions from the
Participant and will be decreased by amounts applied to the purchase of shares
or refunded to or for the benefit of the Participant hereunder.
BASE SALARY means the basic earnings paid to a Participant by
Participating Companies plus any pre-tax contributions made by the Participant
to any Code Section 401(k) salary deferral plan or any Code Section 125
Cafeteria benefit program (now existing or hereafter established). Base Salary
shall not include (I) overtime payments, bonuses, commissions, profit-sharing
distributions and other incentive-type payments or (II) contributions (other
than Code Section 401(k) or Code Section 125 contributions) made on the
Participant's behalf under any employee benefit or welfare plan (now existing or
hereafter established).
BOARD means the Company's Board of Directors.
CODE means the Internal Revenue Code of 1986, as amended from time to
time.
COMPANY means ENCAD, Inc., a California corporation, and any corporate
successor to all or substantially all of the assets or voting stock of ENCAD,
Inc. which adopts the Plan.
COMMON STOCK means shares of the Company's Common Stock.
CORPORATE AFFILIATE means any company which is a parent or subsidiary
corporation of the Company (as determined in accordance with Code Section 424),
including any parent or subsidiary corporation which becomes such after the
Effective Date.
EFFECTIVE DATE means the first day of the term of this Plan as set
forth in Article XI.A which is scheduled to commence upon the effective date of
the S-8 Registration Statement covering the shares of Common Stock issuable
under the Plan. However, for any Corporate Affiliate which becomes a
Participating Company in the
<PAGE>
Plan after the first day of the initial option period, a subsequent Effective
Date shall be designated with respect to participation by its Qualifying
Employees.
ENTRY DATE means the date on which a Participant first joins the
option period in effect under the Plan.
PARTICIPANT means any Eligible Employee of a Participating Company who
has enrolled and is actively participating in the Plan.
PARTICIPATING COMPANY means the Company and any Corporate Affiliate
designated from time to time by the Board.
QUALIFYING EMPLOYEE means any person who is engaged, on a
regularly-scheduled basis of at least twenty (20) hours per week, in the
rendition of personal services to the Company, or any Participating company in
exchange for amounts which constitute wages under Section 3121(a) of the Code,
provided that no person who owns (within the meaning of Code Section 424(d)) or
holds outstanding options or other rights to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or any of its Corporate affiliates shall be a Qualifying
Employee.
QUARTER means a calendar quarter and (except for the first Quarter of
the initial option period or as otherwise designated by the Plan Administrator),
each Quarter shall begin on the first business day of the Quarter and shall end
on the last business day of such Quarter. The first Quarter of the initial
option period under this Plan shall commence on the Effective Date and shall end
on March 31, 1994.
SERVICE means the period during which an individual remains a
Qualifying Employee and all periods of Service shall be measured from such
individual's most recent date of hire by the Company or such Corporate
Affiliate.
III. ADMINISTRATION
The Plan shall be administered by the Board or by a committee
comprised of two (2) or more Board members appointed from time to time by the
Board (the "Plan Administrator"). The Plan Administrator shall have full
authority to administer the Plan, including authority to interpret and construe
any provision of the Plan. Decisions of the Plan Administrator shall be final
and binding on all parties who have an interest in the Plan.
IV. OPTION PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive option periods during the term of the Plan
until the maximum number of shares of Common Stock available for issuance under
the Plan shall have been issued.
B. The initial option period will begin on the Effective Date and
will end on the last business day in December, 1994. Subsequent option periods
shall coincide with calendar years.
C. Each Participant will have purchase rights as set forth in
Article VII for each option period, the purchase price for which shall be
collected through payroll deductions and which purchase rights shall be
exercised in successive installments each Quarter within the option period.
D. the acquisition of Common Stock through participation in the Plan
for any option period shall neither limit nor require the acquisition of Common
Stock by the Participant in any subsequent option period.
V. ELIGIBILITY AND PARTICIPATION
A. Each Qualifying Employee shall be eligible to participate in an
option period under the Plan in accordance with the following provisions:
<PAGE>
- All Qualifying Employees on the Effective Date may enter the
initial option period on the Effective Date by enrolling in accordance
with Section V.C. below.
- A Qualifying Employee who was not previously eligible to
enter an option period may enter that option period on the first day
of any of the Quarters following the date such Qualifying Employee
becomes eligible by enrolling in accordance with Section V.C. below.
B. A Qualifying Employee who does not enroll for an option period on
the first date such Qualifying Employee is permitted to enroll hereunder may
subsequently enroll in the next or any following option period.
C. To enroll in the Plan, a Qualifying Employee must complete the
enrollment forms prescribed by the Plan Administrator and file such forms with
the Plan Administrator (or its designate) on or before the date such Qualifying
Employee is first permitted to enter the Option Period.
D. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Base Salary paid to the Participant during each Quarter of
the option period, up to a maximum of ten percent (10%) of Base Salary. The
deduction rate so authorized shall continue in effect for the remainder of the
option period, except to the extent such rate is changed in accordance with the
following guidelines:
- The Participant may, at any time during a Quarter, reduce
the rate of payroll deduction. Such reduction shall become effective
as soon as possible after filing of the requisite reduction form with
the Plan Administrator (or its designate), but the Participant may not
effect more than one such reduction during the same Quarter.
- The Participant may, prior to the commencement of any new
Quarter within the option period, increase or decrease the rate of
payroll deduction for the new Quarter by filing the appropriate form
with the Plan Administrator (or its designate). The new rate shall
become effective as of the first day of the next Quarter.
Payroll deductions will automatically cease upon the termination
of the Participant's purchase right in accordance with the applicable provisions
of Section VII below.
VI. STOCK SUBJECT TO PLAN
A. The maximum number of shares of Common Stock which may be issued
under the Plan shall be 520,000 shares of Common Stock (subject to adjustment
under Section VI.B below).
B. In the event any change is made to the Company's outstanding
Common Stock by reason of any stock dividend, stock split, combination of shares
or other change affecting such outstanding Common Stock as a class without
receipt of consideration, then appropriate adjustments shall be made by the Plan
Administrator to (i) the class and maximum number of shares issuable over the
term of the Plan, (ii) the class and maximum number of shares purchasable per
Participant during any one option period, and (iii) the class and number of
shares and the price per share in effect under each purchase right at the time
outstanding under the Plan. Such adjustments shall be designed to preclude the
dilution or enlargement of rights and benefits under the Plan.
VII. PURCHASE RIGHTS
Each Participant in a particular option period shall have the right to
purchase shares of Common Stock in a series of successive quarterly installments
during such option period on the terms and conditions set forth below (the
"Purchase Rights"). Each Participant shall execute a purchase agreement
embodying such terms and conditions and such other provisions (not inconsistent
with the Plan) as the Plan Administrator may require.
<PAGE>
PURCHASE PRICE. The Purchase Rights shall be exercised at the end of
each Quarter at a purchase price equal to eighty-five percent (85%) of the LOWER
of (i) the fair market value per share of the Common Stock on the Participant's
Entry Date or (ii) the fair market value per share of the Common Stock on the
last business day of the Quarter. However, for each Participant whose Entry
Date is other than the first day of the option period, the amount determined
under clause (I) shall not be less than the fair market value of the Common
Stock on the first day of such option period.
VALUATION. For purposes of determining the fair market value per
share of Common Stock on any relevant date, the following procedures shall be in
effect:
- If fair market value is to be determined on or after the
date of the Common Stock is first registered under Section 12(g) of
the Securities Exchange Act of 1934, then the fair market value shall
be the closing selling price on that date, as officially quoted on the
NASDAQ National Market System, or if there is no quoted selling price
for such date, then the closing selling price on the next preceding
day for which there does exist such a quotation.
- If fair market value is to be determined prior to such
Section 12(g) registration of the Common Stock, then the fair market
value of the Common Stock on such date shall be determined by the Plan
Administrator after taking into account such factors as the Plan
Administrator deems appropriate.
NUMBER OF PURCHASABLE SHARES. The number of shares purchasable by a
Participant each Quarter shall be the number of whole shares obtained by
dividing the amount in Participant's Account at the end of such Quarter by the
purchase price in effect for the Quarter. However, no Participant may, during
any one option period, purchase more than 2,000 shares of Common Stock (subject
to adjustment under Section VI.B).
Notwithstanding the above, no participant shall have the right to
purchase shares of Common Stock to the extent that, immediately after the grant,
such Participant would own (within the meaning of Code Section 424(d)) or hold
outstanding options or other rights to purchase, stock possessing five percent
(5%) or more of the total combined voting power or value of all classes of stock
of the Company or any of its Corporate Affiliates.
PAYMENT. Payment for the Common Stock purchased under the Plan shall
be effected by means of the Participant's authorized payroll deductions. Such
deductions shall begin on the first pay day coincident with or immediately
following the Participant's Entry Date into the option period and shall (unless
sooner terminated by the Participant) continue through the pay day ending with
or immediately prior to the last day of the option period. The amounts so
collected shall be credited to the Participant's Account under the Plan, but no
interest shall be paid on the balance from time to time outstanding in such
Account. The amounts collected from a Participant may be comingled with the
general assets of the Company and may be used for general corporate purposes.
TERMINATION OF PURCHASE RIGHT. The following provisions shall govern
the termination of outstanding purchase rights:
(i) A participant may, at any time prior to the last five (5)
business days of the Quarter, terminate his/her outstanding purchase
right under the Plan by filing the prescribed notification form with
the Plan Administrator (or its designate). Nor further payroll
deductions shall be collected from the Participant with respect to the
terminated purchase right, and any payroll deductions collected for
the current Quarter shall, at the Participant's election, be
immediately refunded or held for the purchase of shares on the end of
the Quarter. If no such election is made, then such funds shall be
refunded as soon as possible after the close of such Quarter.
(ii) After the termination of purchase rights for an option
period, the Participant may not subsequently rejoin that option
period. In order to resume participation in any subsequent option
period, such individual must re-enroll in the Plan for that option
period.
<PAGE>
(iii) If a Participant ceases to be a Qualifying Employee
during an option period then all payroll deductions shall terminate
and the Participant (or the personal representative of the estate of a
deceased Participant) shall have the following election, exercisable
up until the end of the Quarter in which the Participant ceases to be
a Qualifying Employee:
- to withdraw in cash all of the Participant's payroll
deductions for such Quarter, or
- to have such funds held for the purchase of shares at
the end of the Quarter.
If no such election is made, then all funds in the
Participant's account shall be refunded at the close of such Quarter.
STOCK PURCHASE. Subject to the limitations set forth herein, funds
held in a Participant's Account at the end of a Quarter (and which are not
required to be refunded hereunder) shall be applied to the purchase of whole
shares of Common Stock for the Participant on the last business day of the
Quarter at the purchase price in effect for such Quarter. Any payroll
deductions not applied to such purchase because they are not sufficient to
purchase a whole share shall be held for the purchase of Common Stock in the
next Quarter. Any payroll deductions not applied to the purchase of Common Stock
for any other reason shall be promptly refunded to the Participant.
PRORATION OF PURCHASE RIGHTS. If the total number of shares of Common
Stock which would otherwise be purchased hereunder on any date exceed the number
of shares then available for issuance under the Plan, the Plan Administrator
shall make a pro-rata allocation of the available shares to Participants on a
uniform and nondiscriminatory basis.
RIGHTS AS STOCKHOLDER. A Participant shall have no stockholder rights
with respect to the shares subject to his/her outstanding purchase right until
the shares are actually purchased on the Participant's behalf in accordance with
the applicable provisions of the Plan. No adjustments shall be made for
dividends, distributions or other rights for which the record date is prior to
the date of such purchase.
A Participant shall not be entitled to receive a stock certificate for
the number of shares purchased, or sell any shares purchased, within a period of
less than six (6) months from the time of purchase. Such certificate may, upon
the Participant's request, be issued in the names of the Participant and his/her
spouse as community property or as joint tenants with right of survivorship.
ASSIGNABILITY. No purchase right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the Participant's death, and during the
Participant's lifetime the purchase right shall be exercisable only the
Participant.
CHANGE IN OWNERSHIP. Should the Company or its stockholders enter
into an agreement to dispose of all or substantially all of the assets or
outstanding capital stock of the Company by means of:
(i) a sale, merger or other reorganization in which the
Company will not be the surviving corporation (other than a
reorganization effected primarily to change the State in which the
Company is incorporated), or
(ii) a reverse merger in which the Company is the surviving
corporation but in which more than 50% of the Company's outstanding
voting stock is transferred to holders different from those who held
the stock immediately prior to the reverse merger,
then all outstanding purchase rights under the Plan shall
automatically be exercised immediately prior to the consummation of such sale,
merger, reorganization or reverse merger by applying the amounts in each
Participant's Account to the purchase of whole shares of Common Stock at
eighty-five percent (85%) of the LOWER
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of (i) the fair market value of the Common Stock on the Participant's Entry Date
into the option period in which such transaction occurs or (ii) the fair market
value of the Common Stock immediately prior to the consummation of such
transaction. However, the applicable share limitations of Articles VII and VIII
shall continue to apply to any such purchase, and the clause (i) amount above
shall not, for any Participant whose Entry Date for the option period is other
than the start date of such option period, be less than the fair market value of
the Common Stock on such start date.
The Company shall use its best efforts to provide at least ten (10)
days advance written notice of the occurrence of any such sale, merger,
reorganiation or reverse merger, an Participants shall, following the receipt of
such notice, have the right to terminate their outstanding purchase rights in
accordance with the applicable provisions of this Article VII.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right outstanding under this Plan and
(ii) similar rights accrued under other employee stock purchase plans (within
the meaning of Section 423 of the Code) of the Company or its Corporate
Affiliates, would otherwise permit such Participant to purchase more than
$25,000 worth of stock of the Company or any Corporate Affiliate (determined on
the basis of the fair market value of such stock on the date or dates such
rights are granted to the Participant) for each calendar year such rights are at
any time outstanding.
B. For purposes of applying such accrual limitations, the right to
acquire Common Stock pursuant to each purchase right outstanding under the Plan
shall accrue as follows:
(i) The right to acquire Common Stock under each such
purchase right shall accrue in a series of successive quarterly
installments as and when the purchase right first becomes exercisable
for each quarterly installment on the last business day of each
Quarter for which the right remains outstanding.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire $25,000 worth
of Common Stock (determined on the basis of the fair market value on
the date or dates of grant) pursuant to one or more purchase rights
held by the Participant during such calendar year.
(iii) If, by reason of such accrual limitations, any purchase
right of a Participant does not accrue for a particular Quarter, then
the payroll deductions which the Participant made during that Quarter
with respect to such purchase right shall be promptly refunded.
C. In the event there is any conflict between the provisions of this
Article VIII and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article VIII shall be controlling.
IX. STATUS OF PLAN UNDER FEDERAL TAX LAWS
The Plan is designed to qualify as an employee stock purchase plan
under Code Section 423.
X. AMENDMENT AND TERMINATION
A. The Board may alter, amend, suspend or discontinue the Plan
following the close of any quarter. However, the Board may not, without the
approval of the Company's stockholders:
(i) materially increase the number of shares issuable under
the Plan or the maximum number of shares which may be purchased per
Participant during any one option period under the Plan,
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except that the Plan Administrator shall have the authority,
exercisable without such stockholder approval, to effect adjustments
to the extent necessary to reflect changes in the Company's capital
structure pursuant to Section VI.B;
(ii) alter the purchase price formula so as to reduce the
purchase price payable for the shares issuable under the Plan; or
(iii) materially increase the benefits accruing to Participants
under the Plan or materially modify the requirements for eligibility
to participate in the Plan.
B. The Company shall have the right, exercisable in the sole
discretion of the Plan Administrator, to terminate all outstanding purchase
rights under the Plan immediately following the close of any Quarter. Should
the Company elect to exercise such right, then the Plan shall terminate in its
entirety. No further purchase rights shall thereafter be granted or exercised,
and no further payroll deductions shall thereafter be collected, under the Plan.
XI. GENERAL PROVISIONS
A. The term of this Plan shall commence on the effective date of the
S-8 Registration Statement covering the Common Stock issuable under the Plan,
PROVIDED that the term shall not commence, and no shares of the Common Stock
shall be issued hereunder, until (i) the Plan shall have been approved by the
stockholders; (ii) the Company shall have complied with all applicable
requirements, all applicable listing requirements of any securities exchange on
which shares of the Common Stock are listed and all other applicable
requirements established by law or regulation and the Plan Administrator shall
have determined to commence granting Purchase Rights hereunder. In the event
stockholder approval is not obtained, or Company compliance with the Act is not
effected, within twelve (12) months after the date on which the Plan is adopted
by the Board, the Plan shall terminate and have no further force or effect.
B. The Plan shall terminate on December 31, 2003.
C. All costs and expenses incurred in the administration of the Plan
shall be paid by the Company.
D. Neither the action of the Company in establishing the Plan, nor
any action taken under the Plan by the Board or the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the
right to remain in the employ of the Company or any Corporate Affiliate for any
period, and such person's employment may be terminated at any time, with or
without cause.
