<PAGE>
As filed with the Securities and Exchange Commission on December 2, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MELTRONIX, INC.
(Formerly MICROELECTRONIC PACKAGING, INC.)
(Exact name of registrant as specified in its charter)
California 94-3142624
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9577 Chesapeake Drive, San Diego, CA 92123
(Address of principal executive offices) (Zip Code)
_______________
1993 Stock Option/Stock Issuance Plan
(Full title of the plan)
_______________
Andrew Wrobel
President and Chief Executive Officer
MELTRONIX, INC.
9577 Chesapeake Drive, San Diego, CA 92123
(Name and address of agent for service)
(858) 292-7000
(Telephone number, including area code, of agent for service)
_______________
Copies to:
Timothy J. Fitzpatrick, Esq.
Fisher Thurber LLP
4225 Executive Square, Suite 1600
La Jolla, CA 92037
(858) 535-9400
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================
Title of Proposed Maximum Proposed Maximum
Securities to Amount to be Offering Price per Aggregate Amount of
be Registered Registered/(1)/ Share/(2)/ Offering Price/(2)/ Registration Fee
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no
par value 2,309,368 $ 0.625 $ 1,443,355 $ 381.05
====================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1993 Stock Option/Stock
Issuance Plan by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the
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 Common Stock of
Meltronix, Inc. on November 26, 1999 as reported by the OTC Bulletin
Board.
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference.
---------------------------------------
Meltronix, Inc. (the "Registrant") hereby incorporates by reference into
this Registration Statement the following documents previously filed with the
Securities and Exchange Commission (the "Commission"):
a. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998, filed with the Commission on April 15, 1999, together with the amendment
thereto on Form 10K/A, filed with the Commission on September 21, 1999;
b. Our Quarterly Reports on Forms 10-Q for the fiscal quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999, filed with the Commission
on May 14, 1999, August 16, 1999 and September 21, 1999, respectively, together
with the amendments thereto on Forms 10-Q/A for both the March 31, 1999 and June
30, 1999 quarters filed on September 21, 1999;
c. All other documents filed pursuant to Sections 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended ("1934 Act"), since the end of the
1998 fiscal year covered by the Annual Reports referred to in (a) above; and
d. Our Registration Statement No. 0-23562 on Form 8-A filed with the
Commission on March 3, 1994, in which there is described the terms, rights and
provisions applicable to our 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 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
II-1
<PAGE>
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 California General Corporation Law provides that directors will
not be personally liable to us for monetary damages arising from a breach of
their fiduciary duty to us as directors, including such conduct during a merger
or tender offer, in certain circumstances. Such limitation does not affect
liability for any breach of a director's duty to us or our shareholders (i) with
respect to approval by the director of any transaction from which he or she
derives an improper personal benefit, (ii) with respect to acts or omissions
involving an absence of good faith, that he or she believes to be contrary to
the best interests of us or our shareholders, that involve intentional
misconduct or a knowing and culpable violation of law, that constitute an
unexcused pattern of inattention that amounts to an abdication of his or her
duty us or our shareholders, or that show a reckless disregard for his or her
duty to us or our shareholders in circumstances in which he or she was, or
should have been aware, in the ordinary course of performing his or her duties,
of a risk of serious injury to us or our shareholders, or (iii) based on
transactions between us and our directors or another corporation with
interrelated directors or on improper distributions, loans, or guarantees under
applicable sections of the California Corporations Code. Such limitations of
liability also do not affect the availability of equitable remedies such as
injunctive relief or rescission, although in certain circumstances equitable
relief may not be available as a practical matter. The limitation may relieve
the directors of monetary liability to us for grossly negligent conduct,
including conduct in situations involving attempted takeovers. No claim or
litigation is currently pending against our directors that would be affected by
the limitation of liability.
Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "1933 Act").
Our Amended and Restated Articles of Incorporation and our Bylaws provide for
indemnification of our directors and officers and other agents to the maximum
extent permitted by the California Corporations Code. We also maintain
insurance for the benefit of our directors and officers that insures such
persons against certain liabilities, including liabilities under the securities
laws. We have entered into an indemnification agreement with all of our
directors and officers whereby we will reimburse our directors and officers
against certain liabilities, including liabilities arising under the securities
laws.
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not Applicable.
II-2
<PAGE>
Item 8. Exhibits.
--------
Exhibit Number Exhibit
- -------------- -------
4 Instruments Defining Rights of Shareholders. Reference is
made to Registrant's Registration Statement No. 0-23562 on
Form 8-A, which is incorporated herein by reference pursuant
to Item 3(d).
5 Opinion and Consent of Fisher Thurber LLP.
23.1 Consent of Independent Auditors - BDO Seidman, LLP.
23.2 Consent of Fisher Thurber LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-5 of this
Registration Statement.
99.1 1993 Stock Option/Stock Issuance Plan.
99.2 Form of Notice of Grant of Stock Option./(1)/
99.3 Form of Stock Option Agreement.
99.4 Form of Addendum to Stock Option Agreement (Special Tax
Elections)./(1)/
99.5 Form of Notice of Grant of Stock Option (Non-Employee
Director Automatic Grant)./(1)/
99.6 Form of Stock Option Agreement (Non-Employee Director
Automatic Grant)./(1)/
99.7 Form of Stock Issuance Agreement./(1)/
__________________
(1) Incorporated by reference to the exhibit bearing the same number filed
with the Registrant's Registration Statement on Form S-8 filed on
February 25, 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 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of the 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 the
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the 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
II-3
<PAGE>
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 at the termination of the
Registrant's 1993 Stock Option/Stock Issuance 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 the 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 indemnification provisions summarized in Item 6 above, or
otherwise, the Registrant has been informed that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act, and
will be governed by the final adjudication of such issue.
SIGNATURES
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 Diego, State of California, on this 29th of
November, 1999.
MELTRONIX, INC.
By: /s/ ANDREW WROBEL
--------------------------------------------
Andrew Wrobel, President and Chief Executive
Officer, Director
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of Meltronix, Inc., a California
corporation, do hereby constitute and appoint Andrew Wrobel and Denis J.
Trafecanty, and each of them, the lawful attorneys and agents, with full power
of substitution and resubstitution, 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, and any 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 regulations or requirements of the 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.
Signatures Title Date
- ---------- ----- ----
/s/ ANDREW WROBEL President and Chief Executive November 29, 1999
- -------------------------
Andrew Wrobel Executive Officer, Director
(Principal Executive Officer)
/s/ DENIS J. TRAFECANTY Senior Vice President, Chief November 29, 1999
- -------------------------
Denis J. Trafecanty Financial Officer and
Secretary (Principal Financial
and Accounting Officer)
/s/ WONG LIN HONG Chairman of the Board November 30, 1999
- -------------------------
Wong Lin Hong of Directors
/s/ FRANK L. HOWLAND Director November 25, 1999
- -------------------------
Frank L. Howland
/s/ ANTHONY J.A. BRYAN Director November 30, 1999
- -------------------------
Anthony J.A. Bryan
/s/ WALDEMAR HEEB Director November 24, 1999
- -------------------------
Waldemar Heeb
/s/ JAMES WARING Director November 29, 1999
- -------------------------
James Waring
II-5
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Number Exhibit
4 Instruments Defining Rights of Shareholders. Reference is
made to Registrant's Registration Statement No. 0-23562 on
Form 8-A, which is incorporated herein by reference pursuant
to Item 3(d).
5 Opinion and Consent of Fisher Thurber LLP.
23.1 Consent of Independent Auditors - BDO Seidman, LLP.
23.2 Consent of Fisher Thurber LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-5 of this
Registration Statement.
99.1 1993 Stock Option/Stock Issuance Plan.
99.2 Form of Notice of Grant of Stock Option./(1)/
99.3 Form of Stock Option Agreement.
99.4 Form of Addendum to Stock Option Agreement (Special Tax
Elections)./(1)/
99.5 Form of Notice of Grant of Stock Option (Non-Employee
Director Automatic Grant)./(1)/
99.6 Form of Stock Option Agreement (Non-Employee Director
Automatic Grant)./(1)/
99.7 Form of Stock Issuance Agreement./(1)/
___________________
(1) Incorporated by reference to the exhibit bearing the same number filed
with the Registrant's Registration Statement on Form S-8 filed on
February 25, 1998.
II-6
<PAGE>
Exhibit 5
OPINION AND CONSENT OF FISHER THURBER LLP
November 30, 1999
Meltronix, Inc.
9577 Chesapeake Drive
San Diego, CA 92123
Re: Form S-8 Registration Statement for 1993
Stock Option/Stock Issuance Plan
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 (the "Registration
Statement") to be filed by you with the Securities and Exchange Commission on or
about December 2, 1999 to register a total of 2,309,368 shares of common stock,
no par value per share (the "Common Stock"), of Meltronix, Inc., a California
corporation (the "Company") for issuance pursuant to the Company's 1993 Stock
Option/Stock Issuance Plan (the "1993 Plan"), as amended.
For purposes of rendering this opinion, we have made such legal and factual
examinations as we have deemed necessary under the circumstances and, as part of
such examination, we have examined, among other things, originals and copies,
certified and otherwise, identified to our satisfaction, of such documents,
corporate records and other instruments as we have deemed necessary or
appropriate. For the purposes of such examination, we have assumed the
genuineness of all signatures on original documents and the conformity to
original documents of all copies submitted to us.
On the basis of and relying upon the foregoing examination and assumptions,
we are of the opinion that, assuming the Registration Statement shall have
become effective pursuant to the provisions of the Securities Act of 1933, as
amended, the shares of Common Stock being offered in the Registration Statement,
when issued and sold and the consideration therefore received pursuant to the
provisions of the option agreements duly authorized under the 1993 Plan and in
accordance with the Registration Statement, will be validly issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and any amendments thereto.
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
1993 Plan or the Common Stock.
Fisher Thurber LLP
By: /s/ David A. Fisher
----------------------------------------
David A. Fisher
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Meltronix, Inc.
San Diego, California
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of our report dated March 11, 1999 except for Note 14,
paragraph 19, which is as of April 14, 1999 and Notes 19 and 20 which are as of
September 2, 1999 relating to the consolidated financial statements and
schedules of Meltronix, Inc. (formerly known as Microelectronic Packaging, Inc.)
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998. Our report contains an explanatory paragraph regarding the
Company's ability to continue as a going concern.
BDO SEIDMAN, LLP
Costa Mesa, California
November 30, 1999
<PAGE>
Exhibit 99.1
MELTRONIX, INC.
1993 STOCK OPTION/STOCK ISSUANCE PLAN
-------------------------------------
(As Amended and Restated through May 17, 1999)
ARTICLE ONE
GENERAL
-------
I. PURPOSE OF THE PLAN.
-------------------
A. This 1993 Stock/Option Stock Issuance Plan (the "Plan"), is
intended to promote the interests of Meltronix, Inc., a California corporation
(the "Corporation"), by providing eligible individuals 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 April 12, 1994, 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 "1943 Act"). Such date is
hereby designated as the Plan Effective Date. 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 Automatic Grant Program Effective Date.
C. This May, 1999 restatement of the Plan shall become effective
immediately upon its adoption by the Board of Directors, subject, however, to
shareholder approval. The Plan shall be administered in compliance with the
applicable requirements of SEC Rule 16b-3, as in effect from time to time.
D. This Plan serves as the successor to the Corporation's 1988
Stock Option Plan (the "Predecessor Plan"), and no further option grants or
share issuances shall be made under the Predecessor Plan from and after the Plan
Effective Date. All outstanding stock options and unvested share issuances under
the Predecessor Plan on such Plan Effective Date are hereby incorporated into
this Plan and shall accordingly be treated as outstanding stock options and
unvested share issuances under this Plan. However, each outstanding option grant
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. All unvested shares of
Common Stock outstanding under the Predecessor Plan on the Plan Effective Date
shall continue to be governed solely by the express terms and conditions of the
instruments evidencing such issuances, and no provision of this Plan shall be
deemed to affect or modify the rights or obligations of the holders of such
unvested shares.
<PAGE>
II. DEFINITIONS.
-----------
A. For purposes of the Plan, the following definitions shall be
in effect:
Board: the Corporation's Board of Directors.
-----
Change in Control: a change in ownership or control of the
-----------------
Corporation effected through either of the following
transactions:
(i) 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 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's shareholders
which the Board does not recommend such shareholders to accept; or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for Board
membership, 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.
Code: the Internal Revenue Code of 1986, as amended.
----
Common Stock: shares of the Corporation's common stock.
------------
Corporate Transaction: any of the following shareholder-
---------------------
approved transactions to which the Corporation is a party:
(i) 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;
(ii) 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
(iii) any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's outstanding
securities are transferred to a person or persons different from those who held
such securities immediately prior to such merger.
Employee: an individual who performs services while in the
--------
employ of the Corporation or one or more parent or subsidiary corporations,
subject to the control and direction
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<PAGE>
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:
(i) If the Common Stock is at the time traded on the
Nasdaq Electronic Bulletin Board, the Fair Market Value shall be the average of
the highest bid price and the lowest asked price per share on the date in
question, as such prices are reported by the National Association of Securities
Dealers through the Nasdaq Electronic Bulletin Board or any successor system. If
there are no reported bid or asked prices for the Common Stock on the date in
question, then the average of the highest bid price and the lowest asked price
on the last preceding date for which such quotations exist shall be
determinative of the Fair Market Value.
(ii) 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, as such
price is reported by the National Association of Securities Dealers through the
Nasdaq National Market or any successor system. 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
(iii) 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.
Optionee: a person to whom an option is granted under the
--------
Discretionary Option Grant or Automatic Option Grant Program.
Participant: a person who is issued Common Stock under the Stock
-----------
Issuance Program.
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.
Plan Administrator: the particular entity, whether the Primary
------------------
Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes or eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.
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<PAGE>
Primary Committee: the committee of two (2) or more non-employee
-----------------
Board members appointed by the Board to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to Section 16 Insiders.
Secondary Committee: a committee of two (2) or more Board members
-------------------
appointed by the Board to administer the Discretionary Option Grant and Stock
Issuance Programs with respect to eligible persons other than Section 16
Insiders.
Section 16 Insider: an officer or director of the Corporation
------------------
subject to the short-swing profit liabilities of Section 16 of the 1934 Act.
Service: the performance of services on a periodic basis for the
-------
Corporation (or any parent 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.
B. The following provisions shall be applicable in determining the
parent and subsidiary corporations of the Corporation:
(i) 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.
(ii) 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.
III. STRUCTURE OF THE PLAN.
---------------------
A. Stock Programs. The Plan shall be divided into three (3) separate
--------------
components: (i) the Discretionary Option Grant Program specified in Article Two;
(ii) the Automatic Option Grant Program specified in Article Three; and (iii)
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, each individual serving as an eligible non-employee Board member on the
Automatic Grant Program Effective Date and each individual who first joins the
Board as an eligible non-employee director after the Automatic Grant Program
Effective Date will at periodic intervals receive option grants to purchase
shares of Common Stock in accordance with the provisions of Article Three, with
the first such grants to be made on the Automatic Grant Program Effective Date.
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 eighty-five percent (85%) of the fair
-4-
<PAGE>
market value of the shares at the time of issuance or as a bonus for past
services rendered the Corporation.
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 interest of all
individuals under the Plan.
IV. ADMINISTRATION OF THE PLAN.
--------------------------
A. The Primary Committee shall have the sole and exclusive authority
to administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders, other than to those Section 16 Insiders who are
serving on the Primary Committee. The Board shall retain sole and exclusive
authority to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to members of the Primary Committee.
B. Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to participate in
those programs may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to such persons. The members of the
Secondary Committee may be individuals who are Employees eligible to receive
discretionary option grants or direct stock issuances under the Plan or any
stock option, stock appreciation, stock bonus or other stock plan of the
Corporation (or any parent or subsidiary).
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions
of any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for 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 options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Option Grant or Stock Issuance Program under its jurisdiction or
any option or stock issuance thereunder.
E. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.
-5-
<PAGE>
F. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the express terms and conditions of Article
Three, and the Plan Administrator shall exercise no discretionary functions with
respect to option grants made pursuant to that program.
V. OPTION GRANTS AND STOCK ISSUANCES.
---------------------------------
A. The persons eligible to participate in the Discretionary Option
Grant Program under Article Two and the Stock Issuance Program under Article
Four shall be limited to the following:
(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. The Plan Administrator shall have full authority to determine: (i)
with respect to the option grants made under the Discretionary Option Grant
Program, 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") that satisfies the
requirements of Section 422 of the Code 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.
C. Approval by the Plan Administrator of an option grant under the
Discretionary Option Grant Program shall constitute approval by such Plan
Administrator of the subsequent exercise, and payment of the exercise price of,
such option in accordance with the terms and conditions thereof.
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 seven million (7,000,000) shares, subject to adjustment from time to time
in accordance with the provisions of this Section VI. Such authorized share
reserve includes the two million two hundred thousand (2,200,000)-share increase
authorized by the Board on November 21, 1996,the one million eight hundred
thousand (1,800,00)-share increase authorized
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<PAGE>
by the Board on April 10, 1997, and the two million three hundred nine thousand
three hundred sixty-eight (2,309,368)-share increase authorized by the Board on
May 17, 1999. To the extent one or more outstanding options under the
Predecessor Plan incorporated into this Plan are subsequently exercised, the
number of shares issued with respect to such option shall reduce, on a
share-for-share basis, the number of shares available for issuance under this
Plan.
B. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than two million (2,000,000) shares of Common Stock in the aggregate per
calendar year, beginning at any time after May 17, 1999.
C. Should one or more outstanding options under this Plan (including
outstanding options under the Predecessor Plan incorporated into this Plan)
expire or terminate for any reason prior to exercise in full (including any
option canceled 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
repurchased by the Corporation at the original option or issue price paid per
share shall be added back to the share reserve and shall accordingly be made
available for subsequent issuance under the Plan. However, should the exercise
price of an outstanding 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 outstanding option under the Plan or the vesting of a direct
share issuance made 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 share issuance,
and not by the net number of shares of Common Stock actually issued to the
holder of such option or share issuance.
D. Should any change be made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to: (i) the maximum number and/or class of
securities issuable under the Plan; (ii) the number and/or class of securities
for which any one person may be granted options, separately exercisable stock
appreciation rights and direct stock issuances per calendar year; (iii) the
number and/or class of securities for which automatic option grants are to be
subsequently made per eligible non-employee Board member under the Automatic
Option Gant Program; (iv) the number and/or class of securities and price per
share in effect under each option outstanding under either the Discretionary
Option Grant or Automatic Option Grant Program; and (v) the number and/or class
of securities and price per share in effect under each outstanding option
incorporated into this Plan from the Predecessor 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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<PAGE>
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 the 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 in accordance with the following provisions:
(i) The option price per share of Common Stock subject to
an Incentive Option shall in no event be less than one hundred percent (100%) of
the Fair Market Value of such Common Stock on the grant date.
(ii) The option price per share of Common Stock subject to a
non-statutory stock option shall in no event be less than eighty-five percent
(85%) of the Fair Market Value of such Common Stock on the grant date.
2. The option price shall become immediately due upon the 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:
(i) full payment in cash or check drawn to the
Corporation's order; (ii) 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);
(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
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
(iv) full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee shall provide irrevocable
written instructions to: (I) a
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<PAGE>
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate option
price payable for the purchased shares plus all applicable Federal and state
income and employment taxes required to be withheld by the Corporation in
connection with such purchase; and (II) 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 used 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. During the
lifetime of the Optionee, the option shall be exercisable only by the Optionee
and shall not be assignable or transferable by the Optionee other than by will
or by the laws of descent and distribution following Optionee's death.
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.
(i) Should an Optionee cease Service for any reason (other than
death) while holding one or more outstanding options under this Article Two,
then none of those options shall remain exercisable for more than a ninety (90)-
day 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.
(ii) 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: (A) six (6) months
-------
measured from the date of the Optionee's death; or (B) the specified expiration
date of the option term. Upon the occurrence of the earlier event, the option
shall terminate.
(iii) Under no circumstance shall any such option be exercisable
after the specified expiration date of the option term.
(iv) During the applicable post-Service exercise 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 his or her 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
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<PAGE>
such option shall terminate and cease to be outstanding with respect to any
vested shares for which the option 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 the option is not otherwise at that time exercisable or in which the
Optionee is not otherwise vested.
(v) Should: (A) the Optionee's Service be terminated for
misconduct (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement); or (B) the Optionee makes any unauthorized
use or disclosure of confidential information or trade secrets of the
Corporation or its parent or subsidiary corporations, then in any such event all
outstanding options held by the Optionee under this Article Two shall terminate
immediately and cease to be outstanding.
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 in which Optionee would have
otherwise vested had such cessation of Service not occurred.
D. Shareholder Rights. An Optionee shall have no shareholder 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. 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:
(i) 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.
(ii) 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: (A) any such repurchase right is
expressly assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction; or (B) such termination is precluded
by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
(iii) The Plan Administrator shall have the discretionary
authority, exercisable either before or after the Optionee's cessation of
Service, to cancel the Corporation's
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<PAGE>
outstanding repurchase rights with respect to one or more shares purchased or
purchasable by the Optionee under this Article Two 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. Options which are specifically
designed 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 (determined as of
-----------------
the respective date or dates of grant) of the Common Stock for which one or more
options granted to any Employee after December 31, 1986, under this Plan (or any
other option plan of the Corporation or its parent or subsidiary corporations)
may for the first time become exercisable as incentive stock options under the
Federal tax laws during any one calendar year shall not exceed the sum of One
Hundred Thousand Dollars ($100,000.00). 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 ($100,000.00)
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. Ten Percent (10%) Shareholder. If any individual to whom an
-----------------------------
Incentive Option is granted is the owner of stock (as determined under Section
424(d) of the 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 is parent
or subsidiary corporations, then the option price per share shall not be less
than one hundred 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 corporations or parent thereof or to be replaced with a
comparable option to purchase shares of the capital stock of the successor
-11-
<PAGE>
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. Immediately following the consummation of the Corporate
Transaction, all outstanding options under this Article Two shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation or its parent company.
C. Each outstanding option under this Article Two which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for such
--------
securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.
D. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to provide (upon such terms as it may deem appropriate) for the
automatic acceleration of one or more outstanding options granted under the Plan
that are assumed or replaced in a Corporate Transaction and do not otherwise
accelerate at that time, in the event the Optionee's Service should subsequently
terminate within a designated period following the effective date of such
Corporate Transaction.
E. The grant of options under this Article Two shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
F. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options under this Article Two (and the termination of one or
more of the Corporation's outstanding repurchase rights under this Article Two)
upon the occurrence of a 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.
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<PAGE>
H. The exercisability as incentive stock option under the Federal
tax laws of any options accelerated under this Section III in connection with a
Corporation Transaction or Change in Control shall remain subject to the dollar
limitation of Section II of this Article Two. To the extent such dollar
limitation is exceeded, the accelerated option shall be exercisable as a
non-statutory option under the Federal tax laws.
IV. CANCELLATION AND REGRANT OF OPTIONS.
-----------------------------------
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under this Article Two (including
outstanding options under the Predecessor Plan incorporated into this Plan) and
to grant in substitution new options under the Plan covering the same or
different numbers or shares of Common Stock but with an option price per share
not less than: (i) one hundred percent (100%) of the Fair Market Value on the
new grant date in the case of a grant of an Incentive Option; (ii) one hundred
ten percent (110%) of such Fair Market Value in the case of a grant of an
Incentive Option to a ten percent (10%) Shareholder; or (iii) eighty-five
percent (85%) of such Fair Market Value in the case of all other grants.
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
------------------------------
I. ELIGIBILITY.
-----------
The individuals eligible to receive automatic option grants pursuant
to the provisions of this Article Three program shall be limited to those
individuals who are serving as non-employee Board members on the Automatic Grant
Program Effective Date or who are first elected or appointed as non-employee
Board members on or after such Effective Date, whether through appointment by
the Board or election by the Corporation's shareholders. Each 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
the Plan.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS.
------------------------------------------------
A. Grant Dates. Subject to shareholder approval of the amendments to
-----------
the Plan adopted by the Board on November 21, 1996 and May 17, 1999, option
grants shall be made under this Article Three on the dates specified below:
1. Initial Grant. Each Eligible Director who is first elected
-------------
or appointed as a non-employee Board member on or after May 17, 1999, shall
automatically be granted, on the date of such initial election or appointment
(as the case may be), a Non-Statutory Option to purchase forty thousand (40,000)
shares of Common Stock upon the terms and conditions of this Article Three.
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<PAGE>
2. Annual Grant. On the date of each Annual Shareholders
------------
Meeting, beginning with the 2000 Annual Meeting, each individual who is to
continue to serve as an Eligible Director shall automatically be granted,
whether or not such individual is standing for re-election as a Board member at
that Annual Meeting, a Non-Statutory Option to purchase an additional thirty
thousand (30,000) shares of Common Stock upon the terms and conditions of this
Article Three. There shall be no limit on the number of such thirty thousand
(30,000)-share option grants any one Eligible Director may receive over his or
her period of Board service.
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 drawn to the Corporation's
order;
(ii) 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);
(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
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
(iv) full payment through a sale and remittance procedure
pursuant to which the Optionee shall provide irrevocable written instructions
to: (I) a Corporation-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 (II) 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 C, 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 specified
above is used for the exercise of the option for vested shares, payment of the
exercise 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) equal and successive annual installments over the
Optionee's period of continued service as a Board member, with the first such
installment to become exercisable one (1) year after the automatic grant date.
The exercisability of each automatic grant outstanding under this Article Three
shall be accelerated as provided in Section II.G and Section III of this Article
Three.
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<PAGE>
F. Non-Transferability. During the lifetime of the Optionee, each
-------------------
automatic option grant shall be exercisable only by the Optionee and shall not
be assignable or transferable by the Optionee other than by will or by the laws
of descent and distribution following Optionee's death.
G. Effect of Termination of Board Membership.
-----------------------------------------
1. Should the Optionee cease to serve as a Board member for any
reason (other than death or Permanent Disability) while holding one or more
automatic option grants under this Article Three, then such individual shall
have a ninety (90)-day period following the date of such cessation of Board
membership in which to exercise each such option for any or all of the shares of
Common Stock for which that option is exercisable at the time of such cessation
of Board service. Each such option shall immediately terminate and cease to be
outstanding, at the time of such cessation of Board service, with respect to any
shares for which the option is not otherwise at that time exercisable.
2. Should the Optionee die within ninety (90) days after the
cessation of Board service, than any 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 membership (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 six (6) months after the date
of the Optionee's death.
3. Should the Optionee die or become Permanently Disabled while
serving as a Board member, then any 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 six (6)-month
period following the date of the Optionee's cessation of Board membership in
which to exercise such option for any or all of the shares of Common Stock
subject to the option at the time of such cessation of Board membership.
4. In no event shall any automatic grant under this Article
Three remain exercisable after the 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 membership.
H. Shareholder Rights. The holder of an automatic option grant under
------------------
this Article Three shall have none of the rights of a shareholder 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.
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<PAGE>
I. Remaining Terms. The remaining terms and conditions of each
---------------
automatic option grant shall be as set forth in the form Director Automatic
Grant Agreement attached hereto as Exhibit "A" and incorporated herein by
reference.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL.
---------------------------------------
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 those shares as
fully-vested shares. Immediately after 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, 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 those shares as fully-vested
shares. Any option accelerated in connection with the Change in Control shall
remain fully exercisable until the expiration or sooner termination of the
option term.
C. 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.
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 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:
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<PAGE>
(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. Shares of Common Stock may, in the absolute discretion of
the Plan Administrator be issued for consideration with a value less than one
hundred percent (100%) of the Fair Market Value of such shares at the time of
issuance, but in no event less than eight-five percent (85%) of such Fair Market
Value.
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 shareholder 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,
reclassification of Common Stock or other similar change in the Corporation's
capital structure or by reason of any Corporate 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.
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<PAGE>
3. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock under the Plan, then those
shares shall be immediately surrendered to the Corporation for cancellation, and
the Participant shall have no further shareholder 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.
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.
II. CORPORATE TRANSACTIONS/CHANGE IN CONTROL.
----------------------------------------
A. Upon the occurrence of any Corporate Transaction, all unvested
shares of Common Stock at the time outstanding under the Stock Issuance Program
shall immediately vest in full, except to the extent the Plan Administrator
imposes limitations in the Issuance Agreement which preclude such accelerated
vesting in whole or in part.
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the shares are issued under the Stock Issuance
Program or at any time while the issued shares remain unvested, to provide for
the immediate and automatic vesting of one or more of those shares at the time
of a 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. TRANSFER RESTRICTIONS/SHARE ESCROW.
----------------------------------
A. Unvested shares may, in the Plan Administrators' 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
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<PAGE>
INTEREST) CEASES TO REMAIN IN THE CORPORATION'S SERVICE.
SUCH TRANSFER 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 canceled, and
neither the Participant nor the proposed transferee shall have any rights with
respect to those 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.
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, any loan made to a consultant or other non-
employee advisor must be secured by property other than the purchased shares of
Common Stock. In all events, 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
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<PAGE>
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, amendments to
the Plan shall be subject to shareholder approval to the extent required under
applicable law or regulation.
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 shareholder
approval is obtained for a sufficient increase in the number of shares available
for issuance under the Plan. If such shareholder approval is not obtained
within twelve (12) months 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 tax 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 Rule 16b-3 of the Securities and Exchange Commission),
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 Common Stock in satisfaction of all or part
of the Federal, state and local income and employment tax liabilities incurred
by such holders in connection with the exercise of
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<PAGE>
their options or the vesting of their shares (the "Taxes"). Such right may be
provided to any such holder in either or both of the following formats:
(i) Stock Withholding. The holder of the non-statutory option
-----------------
or unvested shares may be provided with the election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such non-statutory option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the
applicable Taxes (not to exceed one hundred percent (100%)) designated by the
holder.
(ii) 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 of share vesting triggering the Taxes) with an aggregate Fair
Market Value equal to the percentage of the Taxes incurred in connection with
such option exercise or share vesting (not to exceed one hundred percent (100%))
designated by the holder.
IV. EFFECTIVE DATE AND TERM OF PLAN.
-------------------------------
A. This Plan, as successor to the Predecessor Plan, became effective
as of the Plan Effective Date, and no further option grants or stock issuances
shall be made under the Predecessor Plan from and after the Plan Effective Date.
B. Each stock option grant outstanding under the Predecessor Plan
immediately prior to the Plan Effective Date was incorporated into this Plan and
is 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. Each
unvested share of Common Stock outstanding under the Predecessor Plan on the
Plan Effective Date shall continue to be governed solely by the terms and
conditions of the instrument evidencing such share issuance, and nothing in this
Plan shall be deemed to affect or otherwise modify the rights or obligations of
the holder of such unvested shares.
C. The option/vesting acceleration provisions of Section III of
Article Two and Section II of Article Four relating to Corporate Transactions
and Changes in Control may, in the Plan Administrator's discretion, be extended
to one or more stock options or unvested share issuances which are outstanding
under the Predecessor Plan on the Plan Effective Date but which do not otherwise
provide for such acceleration.
D. The Plan was amended by the Board on June 5, 1995, to increase
the number of shares of Common Stock authorized for issuance under the Plan by
an additional one hundred ten thousand (110,000) shares, and the Plan was
further amended by the Board on February 29, 1996, to: (i) increase the number
of shares of Common Stock authorized for issuance under the Plan by an
additional one hundred ninety thousand (190,000) shares; and (ii) establish a
five hundred thousand (500,000)-share limit on the aggregate number of shares of
Common Stock for which any one
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<PAGE>
participant may be issued stock options and direct stock issuances over the
remaining term of the Plan. Each of the above amendments was approved by the
shareholders at the 1996 Annual Meeting.
E. The Plan was amended on November 21, 1996, to effect the
following changes: (i) increase the number of shares of Common Stock authorized
for issuance over the term of the Plan by an additional two million two hundred
thousand (2,200,000) shares; (ii) render the non-employee Board members eligible
to receive option grants under the Discretionary Option Grant Program; (iii)
provide for administration of the Plan by either a Primary Committee, Secondary
Committee or the Board; (iv) allow unvested shares issued under the Plan and
subsequently repurchased by the Company at the option exercise price or issue
price paid per share to be reissued under the Plan; (v) amend the Automatic
Option Grant Program to: (a) provide for special option grants to be made to
eligible Board members on November 21, 1996; (b) increase the number of shares
of Common Stock for which Options are to be granted to non-employee Board
members on their initial election or appointment; and (c) increase the number of
shares of Common Stock for which options are to be granted on an annual basis to
non-employee Board members upon their re-election to the Board at each Annual
Shareholders Meeting, beginning with the 1997 Annual Meeting; and (v) effect a
series of technical changes to the provisions of the Plan in order to take
advantage of the recent amendments to Rule 16b-3 of the Securities Exchange Act
of 1934 which exempts certain officer and director transactions under the Plan
from the short-swing liability provisions of the federal securities laws.
F. On April 10, 1997, the Board again amended and restated the Plan
to increase the number of shares of Common Stock reserved for issuance over the
term of the Plan by an additional one million eight hundred thousand (1,800,000)
shares.
G. Both the November 21, 1996 and the April 10, 1997 amendments were
approved by the shareholders at the 1997 Annual Meeting.
H. The Plan was also amended on May 17, 1999 to effect the following
changes: (i) increase the maximum number of shares of Common Stock authorized
for issuance over the term of the 1993 Plan from 4,690,632 to 7,000,000 shares;
(ii) increase the maximum number of options, stock appreciation rights and
direct stock issuances to any one person per calendar year to 2,000,000 shares
of Common Stock from 500,000 shares of Common Stock; and (iii) amend the
Automatic Option Grant Program to increase the number of shares of Common Stock
for which option grants are to be made to each new non-employee Board member
from 15,000 to 40,000 shares and to increase the number of shares for which
option grants are to be made annually to each continuing non-employee Board
member from 10,000 to 30,000 shares.
I. The May 17, 1999 amendments were approved by the shareholders on
October 15, 1999.
J. All option grants made prior to the May 17, 1999, amendments
shall remain outstanding in accordance with the terms and conditions of the
respective instruments evidencing those options, and nothing in the May 17,
1999, amendments shall be deemed to modify or in any way affect those
outstanding options. Subject to the foregoing limitations, the Plan
Administrator
-22-
<PAGE>
may make option grants under the Plan at any time before the date fixed herein
for the termination of the Plan.
K. The Plan shall terminate upon the earlier of: (i) December 8,
-------
2003; or (ii) the date on which all shares available for issuance under the Plan
shall have been issued pursuant to the exercise 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 option grants and unvested share 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 such proceeds received by the Corporation from the sale of shares
pursuant to option grants or share issuances under the Plan shall be used for
general corporate purposes.
VI. REGULATORY APPROVALS.
--------------------
A. The implementation of the Plan, the granting of any option under
the Plan, the issuance of any shares under the Stock Issuance Program, and the
issuance of Common Stock upon the exercise or surrender of the option grants
made hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it, and the Common Stock issued
pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which stock of the same class is then listed.
VII. NO EMPLOYMENT/SERVICE RIGHTS.
----------------------------
Neither the action of the Corporation in establishing the Plan, nor
any action taken by the Plan Administrator hereunder, nor any provision of the
Plan shall be construed so as to grant any individual the right to remain in the
employ or service of the Corporation (or any parent or subsidiary corporation)
for any period of specific duration, and the Corporation (or any parent or
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. 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.
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<PAGE>
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, as such laws are applied to contracts entered into and performed in
such State.
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.
-24-
<PAGE>
Exhibit 99.3
MICROELECTRONIC PACKAGING, INC.
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
- --------
A. The Corporation's 1993 Stock Option/Stock Issuance Plan, as amended
and restated through April 10, 1997 (the "Plan"), has been implemented for the
purpose of attracting and retaining the services of key employees (including
officers and directors), non-employee Board members and consultants and other
independent advisors.
B. Optionee is an individual who is to render valuable services to the
Corporation or one or more parent or subsidiary corporations, and this Agreement
is executed pursuant to, and is intended to carry out the purposes of, the Plan
in connection with the grant of a stock option to purchase shares of the
Corporation's common stock ("Common Stock") under the Plan.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set
---------------
forth in this Agreement, the Corporation hereby grants to Optionee, as of the
grant date (the "Grant Date") specified in the accompanying Notice of Grant of
Stock Option (the "Grant Notice"), a stock option to purchase up to that number
of shares of the Corporation's Common Stock (the "Option Shares") as is
specified in the Grant Notice. Such Option Shares shall be purchasable from
time to time during the option term at the exercise price (the "Exercise Price")
specified in the Grant Notice.
2. Option Term. This option shall expire at the close of business on the
-----------
expiration date (the "Expiration Date") specified in the Grant Notice, unless
sooner terminated in accordance with Paragraph 5 or 6.
3. Limited Transferability. This option shall be exercisable only by
-----------------------
Optionee during Optionee's lifetime and shall not be transferable or assignable
by Optionee other than by will or by the laws of descent and distribution
following Optionee's death.
4. Exercisability. This option shall become exercisable for the Option
--------------
Shares in accordance with the exercise schedule specified in the Grant Notice.
As the option becomes exercisable for one or more installments, those
installments shall accumulate, and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of the
option term under Paragraph 5, 6 or 19. In no event shall this option become
exercisable for any additional Option Shares following Optionee's cessation of
Service.
1
<PAGE>
5. Cessation of Service. The option term specified in Paragraph 2 shall
--------------------
terminate (and this option shall cease to remain outstanding) prior to the
Expiration Date in accordance with the following provisions:
a. This option shall immediately terminate and cease to remain
outstanding for any Option Shares for which it is not exercisable at the
time of Optionee's cessation of Service (as defined below).
b. Should Optionee cease Service for any reason other than death
while this option remains outstanding, then Optionee shall have a ninety
(90)-day period measured from the date of such cessation of Service in
which to exercise this option to the extent outstanding at the time. In no
event, however, may this option be exercised at any time after the
specified Expiration Date of the option term.
c. Should Optionee die while in Service or during the ninety (90)-day
period following his or her cessation of Service, then the personal
representative of Optionee's estate or the person or persons to whom this
option is transferred pursuant to Optionee's will or in accordance with the
laws of descent and distribution shall have the right to exercise the
option to the extent outstanding at the time. Such right shall lapse, and
this option shall terminate and cease to remain outstanding, upon the
earlier of (i) the expiration of the six (6)-month period measured from the
-------
date of Optionee's death or (ii) the Expiration Date.
d. During the applicable period of post-Service exercisability under
subparagraphs b through c above, this option may not be exercised in the
aggregate for more than the number of Option Shares (if any) for which this
option is, at the time of Optionee's cessation of Service, exercisable in
accordance with either the normal exercise provisions specified in the
Grant Notice or the special acceleration provisions of Paragraph 6 of this
Agreement.
e. Should (i) Optionee's Service be terminated for misconduct
(including, but not limited to, any act of dishonesty, willful misconduct,
fraud or embezzlement) or (ii) Optionee make any unauthorized use or
disclosure of confidential information or trade secrets of the Corporation
or any parent or subsidiary, then in any such event this option shall
terminate immediately and cease to be outstanding.
f. For purposes of this Agreement, the following definitions shall be
in effect:
Optionee shall be deemed to remain in Service for so long as such
individual performs services on a periodic basis for the Corporation (or
any parent or subsidiary corporation) in the capacity of an Employee, a
non-employee member of the Board or an independent consultant or advisor.
2
<PAGE>
Optionee shall be considered to be an Employee for so long as such
individual performs services while in the employ of the Corporation or any
parent or subsidiary, 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.
A corporation shall be considered to be a subsidiary of the
Corporation if it is a member of an unbroken chain of corporations
beginning with the Corporation, provided each such corporation in the
unbroken chain (other than the last corporation) owns, at the time of
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.
A corporation shall be considered to be a parent of the Corporation if
it is a member of an unbroken chain ending with the Corporation provided
each such corporation in the unbroken chain (other than the Corporation)
owns, at the time of 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.
6. Corporate Transaction/Change in Control.
---------------------------------------
a. In the event of any of the following shareholder-approved
transactions to which the Corporation is a party (a "Corporate Transaction"):
(1) 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,
(2) 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
(3) 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 the persons holding
those securities immediately prior to such merger,
this option, to the extent outstanding at such time but not otherwise
fully exercisable, shall automatically accelerate so that this option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become exercisable for all the Option Shares at the time subject to this option
and may be exercised for all or any portion of such shares as fully- vested
shares. No such acceleration of this option, however, shall occur if and to the
extent: (i) this option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation or parent thereof or replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof or (ii) this option is to be replaced with a cash
incentive program of the successor corporation which preserves the spread
existing at the time of the
3
<PAGE>
Corporate Transaction on the Option Shares for which this option is not
otherwise at the time exercisable (the excess of the Fair Market Value of those
Option Shares over the aggregate Exercise Price payable for such shares) and
provides for subsequent pay-out in accordance with the same vesting schedule in
effect for those Option Shares pursuant to the option exercise schedule set
forth in the Grant Notice. The determination of option comparability under
clause (i) shall be made by the Plan Administrator, and such determination shall
be final, binding and conclusive.
b. This option shall terminate immediately after the consummation of
such Corporate Transaction, except to the extent the option is expressly assumed
by the successor corporation or parent thereof.
c. This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
7. Adjustment in Option Shares.
---------------------------
a. In the event any change is 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 effected without the Corporation's receipt
of consideration, the Plan Administrator shall make appropriate adjustments to
(i) the number and/or class of securities subject to this option and (ii) the
Exercise Price payable per share in order to prevent any dilution or enlargement
of rights and benefits hereunder. Such adjustments shall be final, binding and
conclusive.
b. If this option is to be assumed in connection with any Corporate
Transaction under Paragraph 6 or is otherwise to continue outstanding, then this
option shall, immediately after such Corporate Transaction, be appropriately
adjusted to apply and pertain to the number and class of securities which would
have been issued to Optionee in the consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Exercise Price payable per
share, provided the aggregate Exercise Price payable hereunder shall remain the
--------
same.
8. Privilege of Stock Ownership. The holder of this option shall not
----------------------------
have any of the rights of a shareholder with respect to the Option Shares until
such individual shall have exercised the option and paid the Exercise Price for
the purchased Option Shares.
9. Manner of Exercising Option.
---------------------------
a. In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time exercisable, Optionee
(or in the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
4
<PAGE>
(1) Deliver to the Corporate Secretary of the Corporation an executed
notice of exercise in substantially the form of Exhibit I to this Agreement (the
"Exercise Notice") in which there is specified the number of Option Shares to be
purchased under the exercised option.
(2) Pay the aggregate Exercise Price for the purchased shares through
one or more of the following alternatives:
(a) full payment in cash or by check made payable to the
Corporation's order;
(b) 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);
(c) full payment through 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 payable to the
Corporation's order; or
(d) full payment effected through a broker-dealer sale and
remittance procedure pursuant to which Optionee shall provide concurrent
irrevocable instructions to (i) a Corporation-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 plus all applicable Federal, state and local income and
employment taxes required to be withheld in connection with such purchase
and (ii) the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale
transaction.
(3) Furnish to the Corporation appropriate documentation that the
person or persons exercising this option (if other than Optionee) have the right
to exercise the option.
(4) Make appropriate arrangements with the Corporation (or Parent or
Subsidiary employing or retaining Optionee) for satisfaction of all Federal,
state and local income and employment tax withholding requirements applicable to
the option exercise.
b. For purposes of this Agreement, the Exercise Date shall be the date on
which the executed Exercise Notice shall have been delivered to the Corporation.
Except to the extent the sale and remittance procedure specified above is
utilized in connection with the option exercise, payment of the Exercise Price
for the purchased shares must accompany such Exercise Notice.
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<PAGE>
c. For all valuation purposes under this Agreement, the Fair Market
Value per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:
(1) If the Common Stock is at the time traded on the Nasdaq
Electronic Bulletin Board, the Fair Market Value shall be the average of
the highest bid price and the lowest asked price per share on the date in
question, as such prices are reported by the National Association of
Securities Dealers on the Nasdaq Electronic Bulletin Board. If there are
no reported bid or asked prices for the Common Stock on the date in
question, then the average of the highest bid price and the lowest asked
price on the last preceding date for which such quotations exist shall be
determinative of the Fair Market Value.
(2) If the Common Stock is not at the time listed or admitted to
trading on any national securities 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.
(3) If the Common Stock is at the time listed or admitted to
trading on any national securities exchange, then the Fair Market Value
shall be the closing selling price per share on the date in question on the
securities 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.
d. As soon as practical after receipt of the Exercise Notice, the
Corporation shall mail or deliver to or on behalf of Optionee (or any other
person or persons exercising this option in accordance herewith) a certificate
or certificates representing the purchased Option Shares.
e. In no event may this option be exercised for any fractional
share.
10. Governing Law. The interpretation, performance and enforcement of
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this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws provisions.
11. Compliance with Laws and Regulations. The exercise of this option and
------------------------------------
the issuance of Option Shares upon such exercise shall be subject to compliance
by the Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any securities exchange on which
shares of the Corporation's Common Stock may be listed at the time
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<PAGE>
of such exercise and issuance. In connection therewith, the Optionee represents
that, either alone or with his or her purchaser representative, he or she has
such knowledge and experience in financial and business matters that he or she
is capable of evaluating the merits and risks of the prospective investment.
12. Successors and Assigns. Except to the extent otherwise provided in
----------------------
Paragraph 3 or 5, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs and legal
representatives of Optionee and the successors and assigns of the Corporation.
13. Liability of Corporation. The inability of the Corporation to obtain
------------------------
approval from any regulatory body having authority deemed by the Corporation to
be necessary to the lawful issuance and sale of any Common Stock pursuant to
this option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. The Corporation shall use its best efforts to obtain all
such approvals.
14. No Employment/Service Contract. Nothing in this Agreement or in the
------------------------------
Plan shall confer upon Optionee any right to continue in the Service of the
Corporation (or any parent or subsidiary employing or retaining Optionee) for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any such parent or subsidiary) or of
Optionee, which rights are hereby expressly reserved by each party, to terminate
Optionee's Service at any time for any reason whatsoever, with or without cause.
15. Notices. Any notice required to be given or delivered to the
-------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation in care of the Corporate Secretary at the Corporation's
principal offices at 9350 Trade Place, San Diego, California 92126. Any notice
required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated on the Grant Notice. All notices shall be
deemed to have been given or delivered upon personal delivery or upon deposit in
the U.S. mail, by registered or certified mail, postage prepaid and properly
addressed to the party to be notified.
16. Construction. This Agreement and the option evidenced hereby are made
------------
and granted pursuant to the Plan and are in all respects limited by and subject
to the express terms and provisions of the Plan. All decisions of the Plan
Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an interest
in this option.
17. Additional Terms Applicable to an Incentive Stock Option. In the
--------------------------------------------------------
event this option is designated an incentive stock option in the Grant Notice,
the following terms and conditions shall also apply to the grant:
a. This option shall cease to qualify for favorable tax treatment as
an incentive stock option under the Federal tax laws if (and to the extent) this
option is exercised for one or more
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<PAGE>
Option Shares more than three (3) months after the date Optionee ceases to be
an Employee for any reason other than death.
b. If this option is to become exercisable in a series of
installments as indicated in the Grant Notice, no such installment shall qualify
for favorable tax treatment as an incentive stock option under the Federal tax
laws if (and to the extent) the aggregate Fair Market Value (determined at the
Grant Date) of the shares of the Corporation's Common Stock for which such
installment first becomes exercisable hereunder will, when added to the
aggregate value (determined as of the respective date or dates of grant) of the
Common Stock or other securities for which this option or one or more other
incentive stock options granted to Optionee prior to the Grant Date (whether
under the Plan or any other option plan of the Corporation or any parent or
subsidiary) first become exercisable during the same calendar year, exceed One
Hundred Thousand Dollars ($100,000) in the aggregate. Should the number of
shares of Common Stock for which this option first becomes exercisable in any
calendar year exceed the applicable One Hundred Thousand Dollar ($100,000)
limitation, the option may nevertheless be exercised for those excess shares in
such calendar year as a non-statutory option.
c. Should the exercisability of this option be accelerated upon a
Corporate Transaction in accordance with Paragraph 6, then this option shall
qualify for favorable tax treatment as an incentive stock option under the
Federal tax laws only to the extent the aggregate Fair Market Value (determined
at the Grant Date) of the number of shares of the Corporation's Common Stock for
which this option first becomes exercisable in the calendar year in which the
Corporate Transaction occurs does not, when added to the aggregate value
(determined as of the respective date or dates of grant) of the shares of Common
Stock or other securities for which this option or one or more other incentive
stock options granted to Optionee prior to the Grant Date (whether under the
Plan or any other option plan of the Corporation or any parent or subsidiary)
first become exercisable during the same calendar year, exceed One Hundred
Thousand Dollars ($100,000) in the aggregate. Should the number of shares of
Common Stock for which this option first becomes exercisable in the calendar
year of such Corporate Transaction exceed the applicable One Hundred Thousand
Dollar ($100,000) limitation, the option may nevertheless be exercised for the
excess shares in such calendar year as a non-statutory option.
d. Should Optionee hold, in addition to this option, one or more
other options to purchase shares of the Corporation's Common Stock which become
exercisable for the first time in the same calendar year as this option, then
the foregoing limitations 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.
18. Excess Shares. If the Option Shares covered by this Agreement exceed,
-------------
as of the Grant Date, the number of shares of Common Stock which may without
shareholder approval be issued under the Plan, then this option shall be void
with respect to those excess shares, unless shareholder approval of an amendment
sufficiently increasing the number of shares of Common Stock issuable under the
Plan is obtained in accordance with the provisions of the Plan.
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<PAGE>
EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Microelectronic Packaging, Inc. (the "Corporation") that I
elect to purchase ____________________ shares of the Corporation's Common Stock
(the "Purchased Shares") at the option exercise price of $_____ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
under the Corporation's 1993 Stock Option/Stock Issuance Plan on
____________________, 199__ to purchase up to ___________ shares of the
Corporation's Common Stock.
Concurrently with the delivery of this Exercise Notice to the Corporate
Secretary of the Corporation, I shall hereby pay to the Corporation the Exercise
Price for the Purchased Shares in accordance with the provisions of my agreement
with the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker-dealer sale and remittance
procedure specified in my agreement to effect the payment of the Exercise Price
for the Purchased Shares.
________________, 199__
Date
_____________________________________
Optionee
Address: ____________________________
____________________________
Print name in exact manner it is to
appear on the stock certificate: ___________________________________
Address to which certificate is to be
sent, if different from address above: ___________________________________
Social Security Number: ___________________________________
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