<PAGE>
As filed with the Securities and Exchange Commission on February 2, 1999
Registration No. 333-______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________
AVT CORPORATION
(Exact name of Registrant as specified in its charter)
Washington 91-1190085
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11410 N.E. 122nd Way
Kirkland, Washington 98034
(Address of principal executive offices) (Zip code)
AVT Corporation 1989 Restated Stock Option Plan
(Full title of the plan)
ROGER A. FUKAI
Chief Financial Officer
AVT CORPORATION
11410 N.E. 122nd Way
Kirkland, Washington 98034
(425) 820-6000
(Name, address and telephone number of agent for service)
________________________
Copy to:
LINDA A. SCHOEMAKER
PERKINS COIE LLP
1201 Third Avenue, 48th Floor
Seattle, Washington 98101-3099
________________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Securities Amount to Be Proposed Maximum Proposed Maximum Amount of
to Be Registered Registered(1) Offering Price Per Share(2) Aggregate Offering Price(2) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share.............. 2,000,000 $27.06 $54,120,000 $15,045.36
====================================================================================================================================
</TABLE>
(1) Together with an indeterminate number of additional shares that may be
necessary to adjust the number of shares reserved for issuance under the
1989 Restated Stock Option Plan, as the result of any future stock split,
stock dividend or similar adjustment of the outstanding Common Stock of the
Registrant.
(2) Estimated pursuant to Rule 457 of the Securities Act of 1933, as amended,
solely for the purpose of calculating the amount of the registration fee.
The price per share is estimated to be $27.06 based on the average of the
high sales price ($27.25) and low sales price ($26.875) for the Registrant's
Common Stock as reported on the Nasdaq National Market on February 1, 1999.
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference into this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997, filed with the Securities and Exchange Commission (the
"Commission") on March 30, 1998 under Section 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), which contains audited financial
statements for the most recent fiscal year for which such statements have been
filed;
(b) All other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Exchange Act subsequent to the end of the fiscal year
covered by the Annual Report on Form 10-K referred to in (a) above; and
(c) The description of the Registrant's Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on November 11,
1994, under Section 12 of the Exchange Act, including any amendments or reports
filed for the purpose of updating such descriptions.
Any document filed by the Registrant pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date hereof and prior to the filing of a
post-effective amendment that indicates that the securities offered hereby have
been sold or that deregisters the securities covered hereby then remaining
unsold shall also be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof commencing on the respective date
on which such document is filed.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act (the "WBCA") authorize a court to award, or a corporation's
board of directors to grant, indemnification to directors, officers, employees
and agents of the Registrant and those serving at the Registrant's request in
similar positions in any other corporation, partnership, joint venture, trust or
other enterprise 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
"Securities Act"). Section 10 of the Registrant's Restated Bylaws provides for
indemnification of the Registrant's directors and officers against all expense,
liability and loss (including counsel fees, judgments, fines, ERISA excise taxes
or penalties and amounts to be paid in settlement) actually and reasonably
incurred in connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal, in which the director or officer is, was or becomes involved
by reason of the fact that the director or officer is or was a director or
officer of the Registrant, or that being or having been such a director or
officer or an employee of the Registrant, such director or officer is or was
serving at the request of the Registrant as a director, officer, partner,
trustee, employee or agent of another corporation or of a partnership, joint
venture, trust, employee benefit plan or other enterprise, whether the basis of
such proceeding is alleged action by the director or officer in an official
capacity as such a director, officer, partner, trustee, employee or agent or in
any other capacity while serving as such a director, officer, partner, trustee,
employee or agent. The director or officer is not indemnified for any action,
suit, claim or proceeding instituted by or at the direction of the director or
officer unless such action, suit, claim or proceeding is or was authorized by
the Registrant's Board of Directors or unless the action is to enforce the
rights of indemnification. No indemnity may be provided by the Registrant for
acts or omissions of the indemnitee finally adjudged to be intentional
misconduct or a knowing violation of law, for conduct of the indemnitee finally
adjudged to be in violation of Section 23B.08.310 of the WBCA, for any
transaction with respect to which it was finally adjudged that such indemnitee
personally received a benefit in money, property or services to which the
indemnitee was not legally entitled or if the corporation is otherwise
prohibited by applicable law from paying such indemnification.
Section 23B.08.320 of the WBCA authorizes a corporation to limit a
director's liability to the corporation or its shareholders for monetary damages
for acts or omissions as a director, except in certain circumstances involving
intentional misconduct, self-dealing or illegal corporate loans or
distributions, or any transaction from which the director personally receives a
benefit in money, property or services to which the director is not legally
entitled. Article 11 of the Registrant's
II-1
<PAGE>
Restated Articles of Incorporation provides for limitation of the director
liability to the maximum extent permitted by the WBCA.
The Registrant has also entered into indemnity agreements pursuant to which
it has agreed, among other things, to indemnify its directors and executive
officers against certain liabilities. The Registrant also maintains an
insurance policy insuring its directors and officers against liability for
certain acts or omissions while acting in their official capacity.
The above discussion of the WBCA and the Registrant's Restated Bylaws and
Restated Articles of Incorporation is not intended to be exhaustive and is
qualified in its entirety by reference to such statute, the Restated Bylaws and
the Restated Articles of Incorporation.
Item 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------------ -----------------------------------------------------------------------------------
<C> <S>
5.1 Opinion of Perkins Coie LLP regarding legality of the Common Stock being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie LLP (included in its Opinion filed as Exhibit 5.1)
24.1 Power of Attorney (see Signature Page)
99.1 AVT Corporation 1989 Restated Stock Option Plan (as amended and restated on August
4, 1995, February 1, 1996, January 20, 1998 and March 24, 1998)
</TABLE>
Item 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
- -------- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Kirkland, state of Washington, on the 1st day of
February, 1999.
AVT CORPORATION
By /s/ RICHARD J. LAPORTE
----------------------
Richard J. LaPorte
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Richard
J. LaPorte and Roger A. Fukai, and each of them, as true and lawful attorneys-
in-fact and agents with full power of substitution and resubstitution, to sign
in the name and on behalf of such person, individually and in each capacity
stated below, any or all amendments (including pre-effective and post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
the 1st day of February, 1999 in the capacities indicated.
Signature Title
- --------- ------
/s/ RICHARD J. LAPORTE Chairman of the Board, President and Chief
- ---------------------- Executive Officer (Principal Executive Officer)
Richard J. LaPorte
/s/ ROGER A. FUKAI Executive Vice President of Finance and
- ---------------------- Administration and Chief Financial Officer
Roger A. Fukai (Principal Financial and Accounting Officer)
/s/ JAMES S. CAMPBELL Director
- ----------------------
James S. Campbell
/s/ ROBERT F. GILB Director
- ----------------------
Robert F. Gilb
/s/ ROBERT L. LOVELY Director
- ----------------------
Robert L. Lovely
/s/ WILLIAM L. TRUE Director
- ----------------------
William L. True
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Kirkland, state of Washington, on the 1st day of
February, 1999.
AVT CORPORATION
By /s/ Richard J. LaPorte
---------------------------
Richard J. LaPorte
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Richard
J. LaPorte and Roger A. Fukai, and each of them, as true and lawful attorneys-
in-fact and agents with full power of substitution and resubstitution, to sign
in the name and on behalf of such person, individually and in each capacity
stated below, any or all amendments (including pre-effective and post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
the 1st day of February, 1999 in the capacities indicated.
Signature Title
- --------- -----
/s/ Richard J. LaPorte Chairman of the Board, President and Chief
- ---------------------- Executive Officer (Principal Executive Officer)
Richard J. LaPorte
/s/ Roger A. Fukai Executive Vice President of Finance and
- ---------------------- Administration and Chief Financial Officer
Roger A. Fukai (Principal Financial and Accounting Officer)
/s/ James S. Campbell Director
- ----------------------
James S. Campbell
/s/ Robert F. Gilb Director
- ----------------------
Robert F. Gilb
/s/ Robert L. Lovely Director
- ----------------------
Robert L. Lovely
/s/ William L. True Director
- ----------------------
William L. True
II-5
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit
Number Description
- -------------- -----------------------------------------------------------------------------------
<C> <S>
5.1 Opinion of Perkins Coie LLP regarding legality of the Common Stock being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie LLP (included in its Opinion filed as Exhibit 5.1)
24.1 Power of Attorney (see Signature Page)
99.1 AVT Corporation 1989 Restated Stock Option Plan (as amended and restated on August
4, 1995; February 1, 1996, January 20, 1998 and March 24, 1998)
</TABLE>
<PAGE>
EXHIBIT 5.1
OPINION OF PERKINS COIE LLP REGARDING LEGALITY
OF THE COMMON STOCK BEING REGISTERED
February 1, 1999
AVT Corporation
11410 N.E. 112nd Way
Kirkland, WA 98034
Re: Registration Statement on Form S-8
Dear Gentlemen and Ladies:
We have acted as counsel to AVT Corporation (the "Company") in connection
with the preparation of a Registration Statement on Form S-8 (the "Registration
Statement"), which is being filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"), with respect to
2,000,000 shares of common stock, $.01 par value, of the Company (the "Shares").
The Shares may be issued pursuant to the Company's 1989 Restated Stock Option
Plan (the "Plan"). We have examined the Registration Statement and such
documents and records of the Company and other documents as we have deemed
relevant and necessary for the purpose of this opinion. In giving this opinion,
we are assuming the authenticity of all instruments presented to us as
originals, the conformity with originals of all instruments presented to us as
copies, and the genuineness of all signatures.
Based upon and subject to the foregoing, we are of the opinion that the
Shares that may be issued upon the exercise of stock options granted pursuant to
the Plan, upon the due execution by the Company and the registration by its
registrar of the Shares and the issuance thereof by the Company in accordance
with the terms of the Plan, and the receipt of the consideration therefor in
accordance with the terms of the Plan, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Perkins Coie LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ARTHUR ANDERSEN LLP
Seattle, Washington
January 28, 1999
<PAGE>
EXHIBIT 99.1
AVT CORPORATION 1989 RESTATED STOCK OPTION PLAN
-----------------------------------------------
APPLIED VOICE TECHNOLOGY, INC.
1989 RESTATED STOCK OPTION PLAN
As Restated on March 24, 1998
Section 1. Purpose
The purpose of the Applied Voice Technology, Inc. 1989 Restated Stock
Option Plan (this "Plan") is to provide a means whereby selected employees,
directors, officers, agents, consultants, advisors and independent contractors
of Applied Voice Technology, Inc. (the "Company"), or of any parent or
subsidiary (as defined in subsection 5.8 and referred to hereinafter as "related
corporations") thereof, may be granted incentive stock options and/or
nonqualified stock options to purchase the Common Stock (as defined in Section
3) of the Company, in order to attract and retain the services or advice of such
employees, directors, officers, agents, consultants, advisors and independent
contractors and to provide added incentive to such persons by encouraging stock
ownership in the Company.
Section 2. Administration
This Plan shall be administered by the Board of Directors of the Company
(the "Board") or, in the event the Board shall appoint and/or authorize a
committee to administer this Plan, by such committee. The administrator of this
Plan shall hereinafter be referred to as the "Plan Administrator." If and so
long as the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, the Board shall consider in selecting the Plan Administrator and
the membership of any committee acting as Plan Administrator of the Plan with
respect to any persons subject or likely to become subject to Section 16 under
the Exchange Act the provisions regarding (a) "outside directors" as
contemplated by Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), and (b) "nonemployee directors" as contemplated by Rule 16b-3
under the Exchange Act.
In the event a member of the Plan Administrator may be eligible, subject to
the restrictions set forth in Section 4, to participate in this Plan, no member
of the Plan Administrator shall vote with respect to the granting of an option
hereunder to himself or herself, as the case may be, and, if state corporate law
does not permit a committee to grant options to directors, then any option
granted under this Plan to a director for his or her services as such shall be
approved by the full Board.
The members of any committee serving as Plan Administrator shall be
appointed by the Board for such term as the Board may determine. The Board may
from time to time remove members from, or add members to, the committee.
Vacancies on the committee, however caused, shall be filled by the Board.
2.1 Procedures
The Board shall designate one of the members of the Plan Administrator as
chairman. The Plan Administrator may hold meetings at such times and places as
it shall determine. The acts of a majority of the
1989 RESTATED STOCK OPTION PLAN Page 1
<PAGE>
members of the Plan Administrator present at meetings at which a quorum exists,
or acts reduced to or approved in writing by all Plan Administrator members,
shall be valid acts of the Plan Administrator.
2.2 Responsibilities
Except for the terms and conditions explicitly set forth in this Plan, the
Plan Administrator shall have the authority, in its discretion, to determine all
matters relating to the options to be granted under this Plan, including
selection of the individuals to be granted options, the number of shares to be
subject to each option, the exercise price, and all other terms and conditions
of the options. Grants under this Plan need not be identical in any respect,
even when made simultaneously. The interpretation and construction by the Plan
Administrator of any terms or provisions of this Plan or any option issued
hereunder, or of any rule or regulation promulgated in connection herewith,
shall be conclusive and binding on all interested parties, so long as such
interpretation and construction with respect to incentive stock options
correspond to the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), the regulations thereunder and any amendments
thereto.
2.3 Bifurcation of Plan
Notwithstanding anything in this Plan to the contrary, the Board, in its
absolute discretion, may bifurcate this Plan so as to restrict, limit or
condition the application of any provision of this Plan to participants who are
subject to Section 16 of the Exchange Act without so restricting, limiting or
conditioning this Plan with respect to other participants.
Section 3. Shares Subject to This Plan
The shares subject to this Plan shall be the Company's Common Stock (the
"Common Stock"), currently authorized but unissued or subsequently acquired by
the Company. Subject to adjustment as provided in Section 7, the aggregate
amount of Common Stock to be delivered upon the exercise of all options granted
under this Plan shall not exceed 2,850,000. If any option granted under this
Plan shall expire or be surrendered, exchanged for another option, canceled or
terminated for any reason without having been exercised in full, the unpurchased
shares subject thereto shall thereupon again be available for purposes of this
Plan, including for replacement options which may be granted in exchange for
such expired, surrendered, exchanged canceled or terminated options.
Section 4. Eligibility
An incentive stock option may be granted only to an individual who, at the
time the option is granted, is an employee of the Company or a related
corporation. A nonqualified stock option may be granted to any employee,
director, officer, agent, consultant, advisor or independent contractor of the
Company or any related corporation, whether an individual or an entity. Any
party to whom an option is granted under this Plan shall be referred to
hereinafter as an "Optionee."
Section 5. Terms and Conditions of Options
Options granted under this Plan shall be evidenced by written agreements
which shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and which are not inconsistent with this
Plan. Notwithstanding the foregoing, options shall include or incorporate by
reference the following terms and conditions:
5.1 Number of Shares and Price
The maximum number of shares that may be purchased pursuant to the exercise
of each option and the price per share at which such option is exercisable (the
"exercise price") shall be as established by the Plan
1989 RESTATED STOCK OPTION PLAN Page 2
<PAGE>
Administrator; provided, however, that the maximum number of shares with respect
to which an option or options may be granted to any Optionee in any one fiscal
year of the Company shall not exceed 480,000 shares (the "Maximum Annual
Optionee Grant"); and provided, further, that the Plan Administrator shall act
in good faith to establish an exercise price which shall be not less than the
fair market value per share of the Common Stock at the time the option is
granted with respect to incentive stock options and also provided that, with
respect to incentive stock options granted to greater than 10% shareholders, the
exercise price shall be as required by subsection 6.1.
5.2 Term and Maturity
Subject to the restrictions contained in Section 6 with respect to granting
incentive stock options to greater than 10% shareholders, the term of each
incentive stock option shall be as established by the Plan Administrator and, if
not so established, shall be 10 years from the date it is granted but in no
event shall it exceed 10 years. The term of each nonqualified stock option
shall be as established by the Plan Administrator and, if not so established,
shall be 10 years. To ensure that the Company or a related corporation will
achieve the purpose and receive the benefits contemplated by this Plan, any
option granted to any Optionee hereunder shall, unless the condition of this
sentence is waived or modified in the agreement evidencing the option or by
resolution adopted at any time by the Plan Administrator, be exercisable
according to the following schedule:
<TABLE>
<CAPTION>
Period of Optionee's Continuous Relationship
With the Company or Related Corporation From
the Date the Option Is Granted Portion of Total Option Which Is Exercisable
------------------------------------------------ --------------------------------------------------
<S> <C>
after one year 25%
Each month of service completed thereafter An additional 2.0833%
after four years 100%
</TABLE>
5.3 Exercise
Subject to the vesting schedule described in subsection 5.2, each option
may be exercised in whole or in part at any time and from time to time;
provided, however, that no fewer than 100 shares (or the remaining shares then
purchasable under the option, if less than 100 shares) may be purchased upon any
exercise of option hereunder and that only whole shares will be issued pursuant
to the exercise of any option. An Option shall be exercised by delivery to the
Company of notice of the number of shares with respect to which the option is
exercised, together with payment of the exercise price.
5.4 Payment of Exercise Price
Payment of the option exercise price shall be made in full at the time the
notice of exercise of the option is delivered to the Company and shall be in
cash, bank certified or cashier's check, or personal check (unless at the time
of exercise the Plan Administrator in a particular case determines not to accept
a personal check) for the shares being purchased.
The Plan Administrator can determine at any time before exercise that
additional forms of payment will be permitted. Unless the Plan Administrator
determines otherwise, an option may be exercised by:
(a) delivery of shares of Common Stock of the Company held by an
Optionee having a fair market value equal to the exercise price, such fair
market value to be determined in good faith by the Plan Administrator; provided,
however, that payment in stock held by an Optionee shall not be made unless the
stock shall have been owned by the Optionee for a period of at least six months;
1989 RESTATED STOCK OPTION PLAN Page 3
<PAGE>
(b) delivery of a full-recourse promissory note executed by the
Optionee; provided that (i) such note delivered in connection with an incentive
stock option shall, and such note delivered in connection with a nonqualified
stock option may, in the sole discretion of the Plan Administrator, bear
interest at a rate specified by the Plan Administrator but in no case less than
the rate required to avoid imputation of interest (taking into account any
exceptions to the imputed interest rules) for federal income tax purposes, (ii)
the Plan Administrator in its sole discretion shall specify the term and other
provisions of such note at the time an incentive stock option is granted or at
any time prior to exercise of a nonqualified stock option, (iii) the Plan
Administrator may require that the Optionee pledge to the Company for the
purpose of securing the payment of such note the shares of Common Stock to be
issued to the Optionee upon exercise of the option and may require that the
certificate representing such shares be held in escrow in order to perfect the
Company's security interest, and (iv) the Plan Administrator in its sole
discretion may at any time restrict or rescind this right upon notification to
the Optionee; or
(c) delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker, all in accordance with the regulations of
the Federal Reserve Board, to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price and any federal, state or local
withholding tax obligations that may arise in connection with the exercise.
5.5 Withholding Tax Requirement
The Company or any related corporation may require an Optionee to pay the
Company the amount of taxes required by any government to be withheld or
otherwise deducted and paid with respect to such payment. Subject to the Plan
and applicable law and unless the Plan Administrator determines otherwise, the
Optionee may satisfy withholding obligations, in whole or in part, by paying
cash, by electing to have the Company withhold shares of Common Stock or by
transferring shares of Common Stock to the Company, in such amounts as are
equivalent to the fair market value of the withholding obligation. The Company
shall have the right to withhold from any shares of Common Stock issuable
pursuant to the exercise of an option or from any cash amounts otherwise due or
to become due from the Company to the Optionee an amount equal to such taxes.
The Company or any related corporation shall have the right to retain and
withhold from any payment of cash or shares of Common Stock under this Plan the
amount of taxes required by any government to be withheld or otherwise deducted
and paid with respect to such payment.
5.6 Holding Periods
5.6.1 Securities and Exchange Act Section 16
If an individual subject to Section 16 of the Exchange Act sells shares of
Common Stock obtained upon the exercise of a stock option within six months
after the date the option was granted, such sale may result in short-swing
profit recovery under Section 16(b) of the Exchange Act.
5.6.2 Taxation of Stock Options
In order to obtain certain tax benefits afforded to incentive stock options
under Section 422 of the Code, an Optionee must hold the shares issued upon the
exercise of an incentive stock option for two years after the date of grant of
the option and one year from the date of exercise. An Optionee may be subject
to the alternative minimum tax at the time of exercise of an incentive stock
option.
The Plan Administrator may require an Optionee to give the Company prompt
notice of any disposition of shares acquired by the exercise of an incentive
stock option prior to the expiration of such holding periods.
Tax advice should be obtained by an Optionee when exercising any option and
prior to the disposition of the shares issued upon the exercise of any option.
1989 RESTATED STOCK OPTION PLAN Page 4
<PAGE>
5.7 Transferability of Options
Options granted under this Plan and the rights and privileges conferred
hereby may not be transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will or by the
applicable laws of descent and distribution and shall not be subject to
execution, attachment or similar process. During an Optionee's lifetime, any
options granted under this Plan are personal to him or her and are exercisable
solely by such Optionee. Any attempt to transfer, assign, pledge, hypothecate
or otherwise dispose of any option under this Plan or of any right or privilege
conferred hereby, contrary to the Code or to the provisions of this Plan, or the
sale or levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void. Notwithstanding the foregoing, to the
extent permitted by Section 422 of the Code and other applicable law and
regulation, the Plan Administrator may permit an Optionee to (i) during the
Optionee's lifetime, designate a person who may exercise the option after the
Optionee's death by giving written notice of such designation to the Company
(such designation may be changed from time to time by the Optionee by giving
written notice to the Company revoking any earlier designation and making a new
designation) or (ii) with respect to nonqualified stock options, transfer the
option and the rights and privileges conferred hereby.
5.8 Termination of Relationship
If the Optionee's relationship with the Company or any related corporation
ceases for any reason other than termination for cause, death or total
disability, and unless by its terms the option sooner terminates or expires,
then the Optionee may exercise, for a three-month period, that portion of the
Optionee's option which is exercisable at the time of such cessation, but the
Optionee's option shall terminate at the end of such period following such
cessation as to all shares for which it has not theretofore been exercised,
unless such provision is waived in the agreement evidencing the option. If, in
the case of an incentive stock option, an Optionee's relationship with the
Company or any related corporation changes (i.e., from employee to nonemployee,
such as a consultant), such change shall constitute a termination of an
Optionee's employment with the Company or any related corporation and the
Optionee's incentive stock option shall terminate in accordance with this
subsection 5.8. Upon the expiration of the three-month period following
cessation of employment in the case of an incentive stock option, or at any time
prior to the expiration of the option in the case of a nonqualified stock
option, the Plan Administrator shall have sole discretion in a particular
circumstance to extend the exercise period following such cessation to any date
up to the termination or expiration of the option. If, however, in the case of
an incentive stock option, the Optionee does not exercise the Optionee's option
within three months after cessation of employment, the option will no longer
qualify as an incentive stock option under the Code.
If an Optionee is terminated for cause, each option granted hereunder shall
automatically terminate as of the first discovery by the Company of any reason
for termination for cause, and such Optionee shall thereupon have no right to
purchase any shares pursuant to such option. "Termination for cause" shall mean
dismissal for dishonesty, conviction or confession of a crime (except minor
violations), fraud, misconduct or disclosure of confidential information. If an
Optionee's relationship with the Company or any related corporation is suspended
pending an investigation of whether or not the Optionee shall be terminated for
cause, the Optionee's rights under each option granted hereunder likewise shall
be suspended during the period of investigation.
If an Optionee's relationship with the Company or any related corporation
ceases because of a total disability, the Optionee's option shall not terminate
or, in the case of an incentive stock option, cease to be treated as an
incentive stock option until the end of the 12-month period following such
cessation (unless by its terms it sooner terminates or expires). As used in
this Plan, the term "total disability" refers to a mental or physical impairment
of the Optionee which is expected to result in death or which has lasted or is
expected to last for a continuous period of 12 months or more and which causes
the Optionee to be unable, in the opinion of the Company and two independent
physicians, to perform his or her duties for the Company and to be engaged in
any substantial gainful activity. Total disability shall be deemed to have
occurred on the first day
1989 RESTATED STOCK OPTION PLAN Page 5
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after the Company and the two independent physicians have furnished their
opinion of total disability to the Plan Administrator.
Options granted under the Plan shall not be affected by any change of
relationship with the Company so long as the Optionee continues to be an
employee, director, officer, agent, consultant, advisor or independent
contractor of the Company or of a related corporation; however, a change in an
Optionee's status from an employee to a nonemployee (e.g., consultant or
independent contractor) shall result in the termination of an outstanding
incentive stock option held by such Optionee. The Plan Administrator, in its
absolute discretion, may determine all questions of whether particular leaves of
absence constitute a termination of services; provided, however, that with
respect to incentive stock options, such determination shall be subject to any
requirements contained in the Code. The foregoing notwithstanding, with respect
to incentive stock options, employment shall not be deemed to continue beyond
the first 90 days of such leave, unless the Optionee's reemployment rights are
guaranteed by statute or by contract.
As used herein, the term "related corporation," when referring to a
subsidiary corporation, shall mean any corporation (other than the Company) in,
at the time of the granting of the option, an unbroken chain of corporations
ending with the Company, if stock possessing 50% or more of the total combined
voting power of all classes of stock of each of the corporations other than the
Company is owned by one of the other corporations in such chain. When referring
to a parent corporation, the term "related corporation" shall mean any
corporation in an unbroken chain of corporations ending with the Company if, at
the time of the granting of the option, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
5.9 Death of Optionee
If an Optionee dies while he or she has a relationship with the Company or
any related corporation or within the three-month period (or 12-month period in
the case of totally disabled Optionees) following cessation of such
relationship, any option held by such Optionee to the extent that the Optionee
would have been entitled to exercise such option, may be exercised within one
year after his or her death by the personal representative of his or her estate
or by the person or persons to whom the Optionee's rights under the option shall
pass (i) by will or by the applicable laws of descent and distribution or (ii)
by a designation or transfer pursuant to Section 5.7.
5.10 No Status as Shareholder
Neither the Optionee nor any party to which the Optionee's rights and
privileges under the option may pass shall be, or have any of the rights or
privileges of, a shareholder of the Company with respect to any of the shares
issuable upon the exercise of any option granted under this Plan unless and
until such option has been exercised.
5.11 Continuation of Relationship
Nothing in this Plan or in any option shall confer upon any Optionee any
right to continue in the employ or other relationship of the Company or of a
related corporation, or to interfere in any way with the right of the Company or
of any such related corporation to terminate his or her employment or other
relationship with the Company at any time.
5.12 Modification and Amendment of Option
Subject to the requirements of Code Section 422 with respect to incentive
stock options and to the terms and conditions and within the limitations of this
Plan, the Plan Administrator may modify or amend any outstanding option granted
under this Plan. The modification or amendment of an outstanding option shall
not, without the consent of the Optionee, impair or diminish any of his or her
rights or any of the obligations
1989 RESTATED STOCK OPTION PLAN Page 6
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of the Company under such option. Except as otherwise provided in this Plan, no
outstanding option shall be terminated without the consent of the Optionee.
5.13 Limitation on Value for Incentive Stock Options
As to all incentive stock options granted under the terms of this Plan, to
the extent that the aggregate fair market value of the shares (determined at the
time the incentive stock option is granted) with respect to which incentive
stock options are exercisable for the first time by the Optionee during any
calendar year (under this Plan and all other incentive stock option plans of the
Company, a related corporation or a predecessor corporation) exceeds $100,000,
such options shall be treated as nonqualified stock options. The previous
sentence shall not apply if the Internal Revenue Service issues a public rule,
issues a private ruling to the Company, any Optionee or any legatee, personal
representative or distributee of an Optionee or issues regulations changing or
eliminating such annual limit.
Section 6. Greater Than 10% Shareholders
6.1 Exercise Price and Term of Incentive Stock Options
If an incentive stock option is granted under this Plan to any employee who
owns more than 10% of the total combined voting power of all classes of stock of
the Company or any related corporation, the term of such incentive stock options
shall not exceed five years and the exercise price shall be not less than 110%
of the fair market value of the shares at the time the incentive stock option is
granted. This provision shall control notwithstanding any contrary terms
contained in an option agreement or any other document.
6.2 Attribution Rule
For purposes of subsection 6.1, in determining stock ownership, an employee
shall be deemed to own the shares owned, directly or indirectly, by or for his
or her brothers, sisters, spouse, ancestors and lineal descendants. Shares
owned, directly or indirectly, by or for a corporation, partnership, estate or
trust shall be deemed to be owned proportionately by or for its shareholders,
partners or beneficiaries. If an employee or a person related to the employee
owns an unexercised option or warrant to purchase shares of the Company, the
shares subject to that portion of the option or warrant which is unexercised
shall not be counted in determining stock ownership. For purposes of this
Section 6, shares owned by an employee shall include all shares actually issued
and outstanding immediately before the grant of the incentive stock option to
the employee.
Section 7. Adjustments Upon Changes in Capitalization
The aggregate number and class of shares for which options may be granted
under this Plan, the Maximum Annual Optionee Grant set forth in Section 5.1, the
number and class of shares covered by each outstanding option and the exercise
price per share thereof (but not the total price), shall all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock of the Company resulting from a split-up or consolidation of shares or any
like capital adjustment, or the payment of any stock dividend.
7.1 Effect of Liquidation or Reorganization
7.1.1 Cash, Stock or Other Property for Stock
Except as provided in subsection 7.1.2, upon a merger (other than a merger
of the Company in which the holders of shares of Common Stock immediately prior
to the merger have the same proportionate ownership of shares of Common Stock in
the surviving corporation immediately after the merger), consolidation,
acquisition of property or stock, separation, reorganization (other than a mere
reincorporation or the creation of a holding company) or liquidation of the
Company, as a result of which the shareholders of
1989 RESTATED STOCK OPTION PLAN Page 7
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the Company receive cash, stock or other property in exchange for or in
connection with their shares of Common Stock, any option granted hereunder shall
terminate, but the Optionee shall have the right immediately prior to any such
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to exercise such Optionee's option in whole or in
part whether or not the vesting requirements set forth in the option agreement
have been satisfied; provided that such acceleration will not occur if, in the
opinion of the Company's outside accountants, such acceleration would render
unavailable "pooling of interests" accounting treatment for any reorganization,
merger or consolidation of the Company for which pooling of interests accounting
treatment is sought by the Company.
7.1.2 Conversion of Options on Stock for Stock Exchange
If the shareholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock in
any transaction involving a merger (other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation
or reorganization (other than a mere reincorporation or the creation of a
holding company), all options granted hereunder shall be converted into options
to purchase shares of Exchange Stock unless the Company and the corporation
issuing the Exchange Stock, in their sole discretion, determine that any or all
such options granted hereunder shall not be converted into options to purchase
shares of Exchange Stock but instead shall terminate in accordance with the
provisions of subsection 7.1.1. The amount and price of converted options shall
be determined by adjusting the amount and price of the options granted hereunder
in the same proportion as used for determining the number of shares of Exchange
Stock the holders of the shares of Common Stock receive in such merger,
consolidation, acquisition of property or stock, separation or reorganization.
The converted options shall be fully vested whether or not the vesting
requirements set forth in the option agreement have been satisfied; provided
that such acceleration will not occur if, in the opinion of the Company's
outside accountants, such acceleration would render unavailable "pooling of
interests" accounting treatment for any reorganization, merger or consolidation
of the Company for which pooling of interests accounting treatment is sought by
the Company.
7.2 Fractional Shares
In the event of any adjustment in the number of shares covered by any
option, any fractional shares resulting from such adjustment shall be
disregarded and each such option shall cover only the number of full shares
resulting from such adjustment.
7.3 Determination of Board to Be Final
All Section 7 adjustments shall be made by the Board, and its determination
as to what adjustments shall be made, and the extent thereof, shall be final,
binding and conclusive. Unless an Optionee agrees otherwise, any change or
adjustment to an incentive stock option shall be made in such a manner so as not
to constitute a "modification" as defined in Code Section 425(h) and so as not
to cause his or her incentive stock option issued hereunder to fail to continue
to qualify as an incentive stock option as defined in Code Section 422(b).
Section 8. Securities Regulation
Shares shall not be issued with respect to an option granted under this
Plan unless the exercise of such option and the issuance and delivery of such
shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance, including the
availability, if applicable, of an exemption from registration for the issuance
and sale of any shares hereunder. Inability of the Company to
1989 RESTATED STOCK OPTION PLAN Page 8
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obtain, from any regulatory body having jurisdiction, the authority deemed by
the Company's counsel to be necessary for the lawful issuance and sale of any
shares hereunder or the unavailability of an exemption from registration for the
issuance and sale of any shares hereunder shall relieve the Company of any
liability in respect of the nonissuance or sale of such shares as to which such
requisite authority shall not have been obtained.
As a condition to the exercise of an option, the Company may require the
Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order
against any shares of stock may be placed on the official stock books and
records of the Company, and a legend indicating that the stock may not be
pledged, sold or otherwise transferred, unless an opinion of counsel is provided
(concurred in by counsel for the Company) stating that such transfer is not in
violation of any applicable law or regulation, may be stamped on stock
certificates in order to assure exemption from registration. The Plan
Administrator may also require such other action or agreement by the Optionees
as may from time to time be necessary to comply with the federal and state
securities laws. THIS PROVISION SHALL NOT OBLIGATE THE COMPANY TO UNDERTAKE
REGISTRATION OF THE OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as the stock
subject to options granted hereunder be listed on a national securities
exchange, all stock issued hereunder if not previously listed on such exchange
shall be authorized by that exchange for listing thereon prior to the issuance
thereof.
Section 9. Amendment and Termination
9.1 Board Action
The Board may at any time suspend, amend or terminate this Plan, provided
that, to the extent required for compliance with Section 422 of the Code or by
any applicable law or regulation, the Company's shareholders must approve any
amendment which will:
(a) increase the number of shares that may be issued under this
Plan;
(b) modify the requirements as to eligibility for participation
in this Plan; or
(c) otherwise require shareholder approval under any applicable
law or regulation.
Such shareholder approval must be obtained within 12 months of the adoption
by the Board of such amendment.
Any amendment made to this Plan which would constitute a "modification" to
incentive stock options outstanding on the date of such amendment, shall not be
applicable to such outstanding incentive stock options, but shall have
prospective effect only, unless the Optionee agrees otherwise.
9.2 Termination of Plan
This Plan shall remain in effect unless terminated by the Board or the
shareholders and incentive stock options may be granted for up to ten years from
the date of any amendment adopted by the Board and the shareholders of the
Company, which, for tax purposes, is deemed to be the adoption of a new plan.
No option may be granted after termination or during any suspension of this
Plan. The amendment or termination of this Plan shall not, without the consent
of the option holder, impair or diminish any rights or obligations under any
option theretofore granted under this Plan.
1989 RESTATED STOCK OPTION PLAN Page 9
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Section 10. Effectiveness of This Plan
This Plan shall become effective upon adoption by the Board so long as it
is approved by the Company's shareholders at any time within 12 months of such
adoption of this Plan or, if earlier, and to the extent required for compliance
with Rule 16b-3 under the Exchange Act, at the next annual meeting of
shareholders after adoption by the Board.
1989 RESTATED STOCK OPTION PLAN Page 10
