<PAGE>
As filed with the Securities and Exchange Commission on August 19, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-----------------------
WESTERN STAFF SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1266151
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
301 LENNON LANE
WALNUT CREEK, CALIFORNIA 94598-2453
(Address of principal executive offices) (Zip Code)
------------------------
EXECUTIVE AND KEY EMPLOYEE NONSTATUTORY INCENTIVE STOCK OPTION PLAN
1996 STOCK OPTION/STOCK ISSUANCE PLAN
1996 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the Plans)
-----------------------
W. ROBERT STOVER
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
WESTERN STAFF SERVICES, INC.
301 LENNON LANE
WALNUT CREEK, CALIFORNIA 94598-2453
(Name and address of agent for service)
------------
(Telephone number, including area code, of agent for service)
(510) 930-5300
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
- ---------------------------------------------- ----------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Executive and Key Employee
Nonstatutory Incentive Stock Option Plan:
-----------------------------------------
Options to purchase Common Stock 14,803 N/A N/A N/A
Common Stock, $.01 par value 14,803 shares $14.25 $210,942.75 $ 72.74
1996 Stock Option/Stock
-----------------------
Issuance Plan:
-------------
Options to purchase Common Stock 1,033,812 N/A N/A N/A
Common Stock, $.01 par value 1,033,812 shares $14.25 $14,731,821 $5,079.93
1996 Employee Stock Purchase Plan:
---------------------------------
Common Stock, $.01 par value 500,000 shares $14.25 $ 7,125,000 $2,456.89
===============================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Executive and Key Employee
Nonstatutory Incentive Stock Option Plan, 1996 Stock Option/Stock Issuance
Plan and/or the 1996 Employee Stock Purchase 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 outstanding shares of Common Stock of Western Staff
Services, Inc.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the high
and low selling prices per share of Common Stock of Western Staff Services,
Inc. on August 5, 1996 as reported by the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
---------------------------------------
Western Staff Services, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's prospectus filed with the SEC on May 1, 1996 pursuant
to Rule 424(b) of the Securities Act of 1933, as amended (the "1933
Act"), in connection with the Registration Statement No. 33-85536 on
Form S-1, which includes the Registrant's audited financial statements
as of October 28, 1995 and October 27, 1994 and for the three fiscal
years for the period ended October 28, 1995;
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended April 13, 1996 filed with the Commission on June 14, 1996; and
(c) The Registrant's Registration Statement No. 00-24990 on Form 8-A filed
with the SEC on March 18, 1996 pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "1934 Act") which
describes the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
-------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
Section 145 of the Delaware General Corporation Law authorizes a
court to award, or a corporation's Board of Directors to grant, indemnification
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 1933 Act. The
Registrant's By-Laws provide for mandatory indemnification of its directors and
officers to the maximum extent permitted by the Delaware General Corporation
Law. The Registrant has entered into Indemnification Agreements with its
officers, directors and key employees. The Indemnification Agreements provide
such directors, officers and key employees with further indemnification to the
maximum extent permitted by the Delaware General Corporation Law. The
Registrant's Certificate of Incorporation also provides that, pursuant to
Delaware law, its directors shall not be liable for monetary damages to the
Registrant and its stockholders for a breach of their fiduciary duties as
directors, except for liability for any breach of a director's duty of loyalty
to the Registrant or its stockholders, acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law under Section
174 of the General Corporation Law of Delaware, or for any transaction from
which a director derives any improper personal benefit.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not Applicable.
Item 8. Exhibits
--------
Exhibit Number Exhibit
- -------------- -------
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statement No. 00-24990 on Form 8-A which
is incorporated herein by reference pursuant to Item 3(c).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit
5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Executive and Key Employee Nonstatutory Incentive Stock Option Plan.
99.2 Nonstatutory Stock Option Agreement (Form I).
99.3 Nonstatutory Stock Option Agreement (Form II).
99.4 1996 Stock Option/Stock Issuance Plan.
99.5 Form of Notice of Grant of Stock Option.
99.6 Form of Stock Option Agreement.
99.7 Form of Addendum to Stock Option Agreement (Involuntary Termination
Following a Corporate Transaction).
99.8 Form of Notice of Grant of Automatic Stock Option.
99.9 Form of Automatic Stock Option Agreement.
99.10 Form of Stock Issuance Agreement.
99.11 1996 Employee Stock Purchase Plan.
II-2
<PAGE>
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 this Registration Statement (or
the most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
--------
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Registrant's 1996
Stock Option/Stock Issuance Plan and/or 1996 Employee Stock Purchase Plan or
upon the expiration of all outstanding options under the Executive and Key
Employee Nonstatutory Incentive Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers, or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6 above
or otherwise, the Registrant has been advised that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Walnut Creek, State of California, on
this 15th day of August, 1996.
WESTERN STAFF SERVICES, INC.
By: /s/ W. Robert Stover
-------------------------------------
W. Robert Stover
Chairman of the Board of Directors and
Chief Executive Officer
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Western Staff Services,
Inc., a Delaware corporation, do hereby constitute and appoint Harvey L. Maslin
and Paul A. Norberg, and each of them, the lawful attorneys-in-fact and agents
with full power and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, 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 Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
that all said attorneys and agents, or any one of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ W. Robert Stover Chairman of the Board of Directors August 15, 1996
- --------------------
W. Robert Stover and Chief Executive Officer
(Principal Executive Officer)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Michael K. Phippen President, Chief Operating August 15, 1996
- ------------------------ Officer and Director
Michael K. Phippen
/s/ Harvey L. Maslin Vice Chairman of the Board August 15, 1996
- ------------------------ of Directors, Chief
Harvey L. Maslin Administrative Officer and
Director
/s/ Paul A. Norberg Executive Vice President, August 15, 1996
- ------------------------ Chief Financial Officer and
Paul A. Norberg Director (Principal Financial
Officer)
/s/ Dirk A. Sodestrom Vice President and Controller August 15, 1996
- ------------------------ (Principal Accounting Officer)
Dirk A. Sodestrom
/s/ Gilbert L. Sheffield Director August 15, 1996
- ------------------------
Gilbert L. Sheffield
/s/ Jack D. Samuelson Director August 15, 1996
- ------------------------
Jack D. Samuelson
</TABLE>
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
WESTERN STAFF SERVICES, INC.
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statement No. 00-24990 on Form 8-A which
is incorporated herein by reference pursuant to Item 3(c).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit
5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Executive and Key Employee Nonstatutory Incentive Stock Option Plan.
99.2 Nonstatutory Stock Option Agreement (Form I).
99.3 Nonstatutory Stock Option Agreement (Form II).
99.4 1996 Stock Option/Stock Issuance Plan.
99.5 Form of Notice of Grant of Stock Option.
99.6 Form of Stock Option Agreement.
99.7 Form of Addendum to Stock Option Agreement (Involuntary Termination
Following a Corporate Transaction).
99.8 Form of Notice of Grant of Automatic Stock Option.
99.9 Form of Automatic Stock Option Agreement.
99.10 Form of Stock Issuance Agreement.
99.11 1996 Employee Stock Purchase Plan.
<PAGE>
EXHIBIT 5
Opinion and consent of Brobeck, Phleger & Harrison LLP
<PAGE>
__________________, 1996
Western Staff Services, Inc.
301 Lennon Lane
Walnut Creek, California 94598-2453
Re: Registration Statement for Offering of
an aggregate of 1,548,615 Shares of Common Stock
------------------------------------------------
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of (i) 14,803 shares
of the Common Stock of Western Staff Services, Inc. (the "Company") under the
Company's Executive and Key Employee Nonstatutory Incentive Stock Option Plan,
(ii) 1,033,812 shares of Common Stock under the Company's 1996 Stock
Option/Stock Issuance Plan and (iii) 500,000 shares of Common Stock under the
Company's 1996 Employee Stock Purchase Plan. We advise you that, in our
opinion, when such shares have been issued and sold pursuant to the applicable
provisions of the Executive and Key Employee Nonstatutory Incentive Stock Option
Plan, the 1996 Stock Option/Stock Issuance Plan and the 1996 Employee Stock
Purchase Plan and in accordance with the Registration Statement, such shares
will be duly authorized, validly issued, fully paid and non-assessable shares of
the Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
Consent of Price Waterhouse LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated December 28, 1995, appearing on page
F-2 of Western Staff Services, Inc.'s Registration Statement (No. 33-85536) on
Form S-1.
PRICE WATERHOUSE LLP
San Francisco, California
August 15, 1996
<PAGE>
EXHIBIT 23.2
Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5
<PAGE>
EXHIBIT 24
Power of Attorney.
Reference is made to page II-4 of this Registration Statement
<PAGE>
EXHIBIT 99.1
Executive and Key Employee Nonstatutory Incentive Stock Option Plan
<PAGE>
WESTERN TEMPORARY SERVICES, INC.
EXECUTIVE AND KEY EMPLOYEE NONSTATUTORY
INCENTIVE STOCK OPTION PLAN
A NONQUALIFIED SECTION 83 PLAN
1. Purpose. The purpose of this Plan is to promote the interests of the
-------
Corporation and its shareholders by providing a method whereby executives and
other key employees of the Corporation and its subsidiaries may be encouraged to
invest in the Corporation's Common Stock on reasonable terms, and thereby
increase their proprietary interest in Corporation's business, encourage them to
remain in the employ of the Corporation and increase their personal interest in
its continued success and progress.
2. Administration.
--------------
a. This Plan shall be administered by the Board of Directors who may from
time to time issue orders or adopt resolutions, not inconsistent with the
provisions of this Plan, to interpret the provisions and supervise the
administration of the Plan. All determinations shall be by the affirmative vote
of a majority of the members of the Board of Directors at a meeting called for
such purpose, or reduced to writing and signed by a majority of the members of
the Board. Subject to the Corporation's By-Laws, all decisions made by the
Directors in selecting optionees, establishing the number of shares and terms
applicable to each option, and in construing the provisions of this Plan shall
be final, conclusive and binding on all persons including the Corporation,
shareholders, employee and optionees.
b. Each option shall be evidenced by an option agreement which shall
contain such terms and conditions as may be approved by the Board of Directors
and shall be signed by an officer of the Corporation and the employee.
c. If the laws relating to stock options are changed during the term of
this Plan, the Board of Directors shall have the power to alter the Plan to
conform to such changes in the law. The Board shall have such authority without
the necessity of obtaining further stockholder approval unless the changes
require such approval.
3. Eligibility. Options shall be granted only to executives and key employees
-----------
who, in the judgment of the Board of Directors, are responsible for the
management of the enterprise and who, at the time of the grant, are employees of
the Corporation or any subsidiary. The term "employees" means officers and
other employees of the Corporation, or any subsidiary, including officers who
are also directors of the Corporation or any subsidiary, but not including
directors who are not also officers.
<PAGE>
4. Shares Subject to the Plan. The Board of Directors may from time to time
--------------------------
provide for the option and sale in the aggregate of up to five hundred thousand
(500,000) shares of the Corporation's Common Stock (subject to adjustments
required by Section 10 of this Plan). If an option ceases to be exercisable, in
whole or in part, the shares representing such option shall continue to be
available under the Plan. Shares may be authorized unissued or reacquired
Common Stock. Counsel for the Corporation has advised the Board of Directors
that the existing shareholders of the Corporation do not have any pre-emptive
rights to unissued common stock. Therefore, the current shareholders of record
need not waive any rights relative thereto. The corporation shall not be
required, upon the exercise of any option, to issue or deliver any shares of
stock prior to the completion of such registration or other qualification of
such shares under any state or federal law, rule or regulation as the
Corporation shall determine to be necessary or desirable.
5. Price. The purchase price of the stock under each option shall be
-----
determined by the Board of Directors, but shall not be less than 100% of the
fair market value of the stock at the time of granting the option as determined
by the Board of Directors. The purchase price of each share on the exercise of
any option shall be paid in full in cash at the time of exercise, and a
certificate representing shares so purchased shall be delivered to the person
entitled thereto.
6. Duration of the Option. The option period shall not be less than two (2)
----------------------
years nor more than ten (10) years from the date the option is granted.
7. Exercise of the Option. Each optionee must remain in the employ of the
----------------------
Corporation or of any one or more of its subsidiaries for the minimum number of
years as established by the Board of Directors from the date the option is
granted before he can exercise any part thereof. However, an optionee's right
to exercise shall not be lost because he is subsequently transferred to the
employ of a subsidiary or affiliate of the Corporation, acquired by it after the
grant of his option. Thereafter, subject to the provisions of Sections 11 and
12 herein, options will be exercisable by the optionee giving written notice to
the Corporation thirty (30) days in advance that he intends to exercise the
option accompanied by his payment in full.
The exercise of any option will be contingent upon receipt from the
optionee, or other purchaser under Section 11 herein, of written representation
that at the time of such exercise it is his then present intention to acquire
the shares for investment and not with a view to, or for sale in connection
with, any distribution thereof; except that, in the case of a legal
representative of the optionee under Section 11 herein, "distribution" shall be
defined to exclude distribution by will or under the laws of descent and
distribution.
8. Nontransferability of Option. Each option granted under this Plan shall by
----------------------------
its terms be nontransferable by the optionee other than by will or the laws of
descent and distribution and shall be exercisable during his lifetime only by
him.
<PAGE>
9. Other Terms and Conditions. The Board of Directors shall have the power,
--------------------------
subject to the limitations contained herein, to fix any terms and conditions for
the grant or exercise of any option under this Plan. Nothing contained in this
Plan, nor in any option granted pursuant to this Plan, shall confer upon any
optionee any right to continued employment by the Corporation, nor limit in any
way the right of the Corporation to terminate his employment at any time.
10. Adjustment in the Case of Reorganization, Stock Splits, Stock Dividends,
------------------------------------------------------------------------
Etc.
- ----
a. In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger or consolidation, or the sale,
conveyance, lease or other transfer by the Corporation of all or substantially
all of its property, or any other change in the corporate structure or shares of
the Corporation, pursuant to any of which events the then outstanding shares of
the Corporation's Common Stock are split up or combined, or are changed into,
become exchangeable at the holder's election for, or entitle the holder thereof
to, other shares of stock of the Corporation or another corporation, the
aggregate number and kind of shares available under the Plan shall be adjusted
so that the number and kind of shares available shall be the number and kind of
shares as would have been received by the holders of the total number of shares
of Common Stock subject to the Plan had such shares been issued and outstanding
immediately prior to such reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, sales, transfer or other
change. The options granted under the Plan shall contain such provisions as are
consistent with the foregoing with respect to adjustments to be made in the
number and kind of shares covered by such options and in the option price per
share in the event of any such change. The Corporation shall give notice of any
adjustment to each holder of an option under this Plan.
b. In the event of the proposed dissolution or liquidation of the
Corporation, or in the event of a proposed sale of substantially all of the
assets of the Corporation, each option granted under the Plan shall terminate as
of a date to be fixed by the Board of Directors; provided, however, that not
less than thirty (30) days' written notice of the date so fixed shall be given
to each optionee, and each optionee shall have the right, during the period of
thirty (30) days preceding such termination, to exercise his option as to all of
the shares covered thereby, including shares as to which such option would not
otherwise be exercisable.
11. Termination of Employment. If an optionee shall cease to be employed by
-------------------------
the Corporation for any reason (except as provided in Paragraph 12 below) after
he shall have continuously been so employed for a minimum number of years for
vesting purposes to be determined by the Board of Directors from the date of
granting of his option, he may, but in no event later than the expiration date
specified in the option, exercise his vested option only to the extent he was
entitled to exercise it at the date of such termination.
<PAGE>
12. Retirement, Permanent Disability or Death. If an optionee shall cease to
-----------------------------------------
be employed for reason of retirement after obtaining a minimum age of 65 years
or an earlier age as otherwise determined by the Board of Directors, permanent
disability or death after he shall have continuously been so employed for a
minimum number of years or pro rata reduce the option as to the number of
shares, each as determined by the Board of Directors, from the date of granting
of his option, he may, but in no event later than the expiration date specified
in the option, exercise his option to the extent he was entitled to exercise it
at the date of such termination. In the event of death, the person or persons
to whom his rights under the option shall pass by his will or by the applicable
laws of descent and distribution to the extent that the optionee was entitled to
exercise such option on the date of his death; provided, however, that no such
option may be exercised after the expiration date specified therein.
13. Substitution for or Assumption of Options Granted by Others. The
-----------------------------------------------------------
Corporation may issue or assume any stock option in any transaction or
transactions upon such terms and conditions and, in the case of any option so
assumed, with such modifications or adjustments therein, as shall be determined
by the Board of Directors. Any such option so issued or assumed shall be deemed
to be an option granted under this Plan, notwithstanding that any provision of
this Plan would not, except for this Section 13, permit the grant of an option
having the terms and conditions, including the option price, of such option as
so issued or assumed.
14. Termination of the Plan. The Plan shall terminate ten years after its
-----------------------
approval by the holders of the Common Stock or adoption by the Board of
Directors, whichever is earlier. Options may be granted under this Plan at any
time and from time to time prior to its termination. Any option outstanding
under the Plan at the time of its termination shall remain in effect until the
option shall have been exercised or shall have expired.
15. Effective Date of the Plan. This Plan shall become effective September 11,
--------------------------
1989, subject to the ratification and approval by the favorable vote of the
holders of a majority of the Common Stock of the Corporation present, in person
or by proxy, and entitled to vote at a meeting of such stockholders.
<PAGE>
EXHIBIT 99.2
Nonstatutory Stock Option Agreement (Form I)
<PAGE>
WESTERN
TEMPORARY SERVICES, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
FORM I
This Nonstatutory Stock Option Agreement is made between Western
Temporary Services, Inc., a California corporation, hereinafter referred to as
"Western", and ___________________, hereinafter referred to as "the Employee".
WHEREAS, a Nonstatutory Stock Option Plan was approved by the
shareholders of Western, and Western desires to provide the Employee with an
opportunity to acquire a proprietary interest in the business of Western and,
through stock ownership, an increased personal interest in its continued success
and progress.
NOW, THEREFORE, in consideration of the mutual promises and other good
and valuable consideration, Western and the Employee agree as follows:
1. Option to Purchase. Western hereby grants to the Employee, as a
------------------
matter of separate inducement and agreement, and not in lieu of salary or any
other compensation for services, the option to purchase shares of Western's
capital stock on the terms and conditions hereinafter provided.
2. Number of Shares. The Employee is hereby granted an option on
----------------
____________________ to purchase __________________ (________) shares in
recognition of his employment with Western.
3. Vesting of Option. The option shall vest on
-----------------
_______________________, or the date of Western's initial public offering of its
capital stock, whichever occurs first. The option shall not be exercised until
vested.
4. Exercise of Option. The Employee may exercise the option granted
------------------
at any time within five (5) years subsequent to the vesting date. If the option
is not exercised within such five (5) year period, the option shall expire. To
exercise the option, the Employee must give written notice to Western thirty
(30) days in advance and in the manner specified in Paragraph 17 below that the
Employee intends to exercise the option. Such notice shall be accompanied by
the Employee's personal check (subject to collection) drawn to Western's order
in the amount of the exercise price and the executed Certificate of Shareholder
(see Paragraph 9 below). The option may not be exercised for a partial number
of shares, except as otherwise provided in Paragraph 7.B. below.
5. Exercise Price. The price per share shall equal the product of
--------------
the net book value per share of Western multiplied by four (4). The net book
value per share shall
<PAGE>
be calculated at the end of Western's fiscal year on October 28, 1989 (FY 1989),
which is the nearest fiscal year preceding the option grant date set forth in
Paragraph 2 above.
6. Western's Right of Purchase and Redemption. Until such time as
------------------------------------------
Western's capital stock is publicly traded, Western reserves the right to:
a. Purchase the Option. Western hereby reserves the right to
-------------------
purchase the option during the thirty (30) day notice period described in
Paragraph 4 above following the Employee giving notice that he intends to
exercise his option. If Western purchases the option, Western shall pay the
Employee a purchase price equal to the difference between (i) the number of
shares represented by the option in question multiplied by four (4) times the
current net book value per share of Western calculated at the end of the
preceding fiscal year and (ii) the exercise price per share. If Western
purchases the Employee's option or the option lapses, the Employee shall be
deemed to have been an option holder only, not a shareholder of Western.
b. Redeem the Shares. Western hereby reserves the right of
-----------------
first refusal to redeem the Employee's shares when the Employee or his personal
representative in the event of his death, directly or indirectly makes a bona
fide gift, sale or transfer of those shares in any manner whatsoever to another
person. In the event of a proposed gift, sale or transfer of the shares, the
Employee or his personal representative shall first tender the shares to
Western. The redemption price per share to be paid by Western would equal the
current net book value per share of Western calculated at the end of the
preceding fiscal year multiplied by four (4). Any gift, sale or transfer in
violation of the terms of this Agreement shall be null and void.
7. Employee Termination.
--------------------
a. Termination or Resignation. In the event the Employee is
--------------------------
terminated by Western (with or without just cause) or the Employee resigns
(voluntarily or involuntarily), any right to earn an option or any option
previously earned by the Employee, but not vested, shall expire when such
termination or resignation is effective.
b. Retirement, Permanent Disability or Death. In the event (i)
-----------------------------------------
the Employee retires after obtaining a minimum age of 65 years (or an earlier
age with written approval of Western's Board of Directors), (ii) resigns or is
terminated when certified by a physician to be permanently disabled as being
incapable to carry out substantially all of his job-related duties for more than
six (6) months, or (iii) dies, the option may partially vest. For the purpose
of this Paragraph 7.B. only, the option shall be deemed partially vested at the
rate of twenty percent (20%) per year for each full fiscal year of employment
following the date the option was granted. A partially vested option may not be
exercised prior to the normal vesting date as specified in Paragraph 3 above.
2.
<PAGE>
8. Spousal Interest. Any reference hereunder to option or share
----------------
capital of Western to be granted to or purchased by the Employee shall include
any community property or dower interest of such Employee's spouse. This
Agreement shall be contingent upon the written consent of the Employee's spouse
to the terms and conditions of this Agreement, if married. The form of the
consent is identified as Exhibit "A" at the end of this Agreement.
9. Contingency. The exercise of the option shall be contingent upon
-----------
the Employee or his heirs, estate or personal representative in the event of his
death, providing Western's Corporate Secretary in the manner specified in
Paragraph 17 below with a written representation known as an "Investment Letter"
to the effect that at the time the option is exercised it is his then present
intention to acquire the shares for investment and not with a view to, or for
sale in connection with, any distribution of such shares. The form of the
representation is set forth as Exhibit "B", which is attached hereto and
incorporated herein by this reference.
10. Share Certificate. Each share certificate, when issued, shall
-----------------
have conspicuously endorsed on its face the following words:
"The sale, transfer or hypothecation of these shares are subject to the
Western Temporary Services, Inc. Nonstatutory Stock Option Agreement
for Fiscal Year 1989."
A copy of this Agreement shall be delivered to the Corporate Secretary
of Western, and shall be shown by him to any person entitled by law to make
inquiry about it.
11. Termination. All rights granted by this Agreement including any
-----------
options, whether or not vested, in whole or in part, shall terminate upon:
a. The written agreement of all parties hereto,
b. The involuntary dissolution, bankruptcy or insolvency of
Western,
c. Any material misconduct by the Employee in the performance
of his duties contemplated by his employment contract with Western including a
material breach of such contract, or
d. Any material violation by the Employee of Western's
policies, rules and procedures as set forth in Western's Employee Handbook,
-----------------
Management Guide, or otherwise made known to the Employee.
- ----------------
12. Transfer of Shares. None of the shares of stock of Western held
------------------
by the Employee shall be transferred, encumbered, or in any way alienated except
under the terms
3.
<PAGE>
of this Agreement. The Employee shall have the right to vote his shares and
receive dividends, if any, paid on them until his shares are sold or transferred
as provided in this Agreement.
13. Further Acts and Documents. Each party to this Agreement shall
--------------------------
perform any further acts, and execute and deliver any documents that may be
reasonably necessary to carry out the provisions of this Agreement.
14. Amendments. The provisions of this Agreement may be waived,
----------
altered, amended or repealed, in whole or in part, but only by the written
consent of all the parties to this Agreement.
15. Inurement. This Agreement shall be binding upon and inure to the
---------
benefit of the parties hereto, including their respective heirs, estate, legal
representatives, successors and assigns.
16. Severability. It is the intent that each paragraph of this
------------
Agreement shall be viewed as separate and divisible. In the event that any
paragraph shall be held to be invalid, the remaining paragraphs hereof shall
continue to be in full force and effect.
17. Notices. Any notices required or authorized to be given by this
-------
Agreement shall be in written form and shall be deemed to have been sufficiently
given or served when sent, in written form, by registered or certified mail,
postage prepaid and return receipt requested, and addressed to the proper party
at the address for Western given below and the address for the Employee given on
the last page of this Agreement or such other address as one party shall
subsequently give to the other party in writing. If to Western:
Western Temporary Services, Inc.
Attn: Corporate Secretary
301 Lennon Lane
P. O. Box 9280
Walnut Creek, California 94598-9280
Notices so given shall be deemed to have been received by the addressee five (5)
days from the date of mailing. Any notice required or authorized to be given by
this Agreement shall be deemed to have been sufficiently given or served in
written form if personally delivered to the proper party or sent by telex,
facsimile transmission, telegraph or other wire services and actually received
by such party, and notice shall be effective upon the date received by such
party.
18. Choice of Law. This Agreement shall be construed in accordance
-------------
with, and governed by, laws of the State of California.
4.
<PAGE>
19. Gender. Whenever the masculine gender is used in this Agreement,
------
the same shall also include the female gender.
20. Waiver. No waiver by any party, express or implied, of any
------
breach of this Agreement by the other party shall be deemed to be a continuing
waiver or a consent to any subsequent breach hereof.
21. Attorneys' Fees and Costs. If any litigation arises between the
-------------------------
parties with respect to this Agreement or the subject matter thereof, the
prevailing party in such litigation shall be entitled to costs incurred and
reasonable attorneys' fees. Furthermore, the Employee shall indemnify and hold
Western harmless from and against any and all liabilities, costs or expenses,
including but not limited to, reasonable attorneys' fees and costs, resulting
from or arising out of any sale, transfer, pledge or other disposition of his
option or shares of Western's capital stock other than in accordance with the
terms and provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date opposite their respective signatures.
WESTERN:
Western Temporary Services, Inc.
Date: By:
-------------------------- --------------------------------------
EMPLOYEE:
Date:
-------------------------- -------------------------------------------
(signature)
-------------------------------------------
(street address)
-------------------------------------------
(city, state, zip)
5.
<PAGE>
EXHIBIT "A"
SPOUSE'S CONSENT
The undersigned, being the spouse of the above-mentioned Employee,
does hereby acknowledge that he or she has read the foregoing Agreement and
consents to the execution thereof by his or her spouse and agrees to be bound
thereby with respect to any community property or dower interest which he or she
may have in the option or capital stock of Western. The undersigned further
agrees that in the event of his or her death prior to that of his or her spouse,
the undersigned will not bequeath or otherwise dispose of any of his or her
community property or dower interest in the option or capital stock of western
to anyone other than his or her spouse. In the event that the undersigned
outlives her or her spouse, the undersigned agrees to join in any required
transfer of any option or stock from his or her spouse's estate and himself or
herself to Western in accordance with the foregoing Agreement.
Dated:
------------------------- -------------------------------------------
(Spouse 's Signature)
6.
<PAGE>
EXHIBIT "B"
WESTERN TEMPORARY SERVICES, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
FISCAL YEAR 1989
CERTIFICATE OF SHAREHOLDER
The undersigned, as a condition to purchase shares of capital (the
"Securities") of WESTERN TEMPORARY SERVICES, INC. ("Western"), hereby certifies
to Western as follows:
1. I am acquiring the Securities for my own account and not with a
view to or for sale in connection with any distribution of the Securities.
2. I recognize that the Securities have not been, nor do I have a
right to require that the Securities be, registered under the federal Securities
Act of 1933 or qualified under the California Corporate Securities Law of 1968,
that any disposition of the Securities is subject to restrictions imposed by
federal and state law, and that the certificates representing the Securities
will bear a restrictive legend. I recognize that no public market exists with
respect to the Securities and no representation has been made to me that such
public market will exist at a future date. I understand that the California
Commissioner of Corporations had made no finding or determination relating to
the fairness for investment of the Securities offered by Western and that the
Commissioner has not or will not recommend or endorse the Securities.
3. I have not seen or received any advertisement or general
solicitation with respect to the sale of the Securities.
4. The total consideration to be paid by me for the Securities is
set forth in the Western Temporary Services Nonstatutory Stock Option Agreement
for Fiscal Year 1989.
5. I acknowledge that during the course of this transaction before
purchasing the Securities, I have been provided with written information about
Western. I have been given the opportunity by Western to obtain any information
and ask questions concerning Western and the Securities, and to the extent that
I availed myself to that opportunity, I have received satisfactory information
and answers.
6. I believe by reason of my business and financial experience, that
I am capable of evaluating the merits and risks of this investment and of
protecting my own interest in connection with this investment.
7. I acknowledge that I have reached the age of majority in the
state in which I reside and have no need for liquidity in this investment and
can afford a complete loss of this investment.
8. I have a preexisting personal or business relationship with
Western in that I am an employee of Western.
<PAGE>
EXHIBIT 99.3
Nonstatutory Stock Option Agreement (Form II)
<PAGE>
WESTERN
TEMPORARY SERVICES
NONSTATUTORY STOCK OPTION AGREEMENT
FORM II
This Nonstatutory Stock Option Agreement is made between Western
Temporary Services, Inc., a California corporation, hereinafter referred to as
"Western", and the undersigned employee, hereinafter referred to as "the
Employee".
WHEREAS, a Nonstatutory Stock Option Plan was approved by the
shareholders of Western, and Western desires to provide the Employee with an
opportunity to acquire a proprietary interest in the business of Western and,
through stock ownership, an increased personal interest in its continued success
and progress.
NOW, THEREFORE, in consideration of the mutual promises and other good
and valuable consideration, Western and the Employee agree as follows:
1. Option to Purchase. Western hereby grants to the Employee, as a
------------------
matter of separate inducement and agreement, and not in lieu of salary or any
other compensation for services, the option to purchase shares of Western's
capital stock on the terms and conditions hereinafter provided.
2. Number of Shares. Depending upon the Employee's position with
----------------
Western, the Employee shall be granted an option to purchase the following
number of shares relative to the net profits before taxes and year-to-date
potential bad debt credits from the Employee's regional, area or office income
statement prepared in the ordinary course of business for the fiscal year ending
November 3, 1990 (FY 1990).
a. Regional Managers. One thousand (1,000) shares for each
-----------------
$100,000 of net profit before taxes and year-to-date potential bad debt credits
from the Employee's regional income statement prepared in the ordinary course of
business for the fiscal year ending November 3, 1990. If a regional manager is
also an area or branch manager, the regional manager in question would receive
whichever option is greater, but not both.
b. Area Managers. One thousand (1,000) shares for each
-------------
$100,000 of net profit before taxes and year-to-date potential bad debt credits
from the Employee's area or office income statements prepared in the ordinary
course of business for the fiscal year ending November 3, 1990. If an area
manager is also a branch manager, the area manager in question would receive
whichever option is greater, but not both.
c. Branch Managers and Multiple Branch Managers. Five
--------------------------------------------
hundred
<PAGE>
(500) shares for each $50,000 of net profit before taxes and year-to-date
potential bad debt credits from the Employee's office income statement(s)
prepared in the ordinary course of business for the fiscal year ending November
3, 1990.
The number of shares will not be prorated for any net profit less than
the amounts specified above. All overhead expenses including other incentives
will be deducted before computation of the net profit before taxes. If there is
an unusual item that significantly affects the fiscal year net profit, Western
hereby reserves the right to reallocate that item to the proper fiscal year, if
appropriate. For example, a recovery of a bad debt "write-off" from a previous
fiscal year would be excluded from the computation of net profit for the fiscal
year in question. The Employee must be employed by Western on a continuous
basis and hold one of the above positions for the same region, area or branch
office during the entire fiscal year 1990, from October 29, 1989 through and
including November 3, 1990. If the Employee is on an approved medical leave of
absence, (i) the leave of absence shall not exceed ninety (90) calendar days
during the fiscal year in question, and (ii) the Employee must be listed as the
regional, area or branch/multiple branch manager at the beginning of the next
succeeding fiscal year. No option shall be earned if the Employee is on a
personal leave of absence (nonmedical) at any time during the fiscal year in
question. The Employee must also be eligible to participate in Western's
Incentive Plan for fiscal year 1990 to be eligible hereunder. Regional, area or
branch/multiple branch managers with corporate staff or Shadelands training
office responsibilities are ineligible. If there is a dispute regarding any
interpretation of the computation or eligibility, the decision of Western's
President shall be final and binding.
3. Vesting of Option. The option shall vest at the end of five (5)
-----------------
years on November 4, 1995, or the date of Western's initial public offering of
its capital stock, whichever occurs first. The option shall not be exercised
until vested.
4. Exercise of Option. The Employee may exercise the option granted
------------------
at any time within five (5) years subsequent to the vesting date. If the option
is not exercised within such five (5) year period, the option shall expire. To
exercise the option, the Employee must give written notice to Western thirty
(30) days in advance and in the manner specified in Paragraph 17 below that the
Employee intends to exercise the option. Such notice shall be accompanied by
the Employee's personal check (subject to collection) drawn to Western's order
in the amount of the exercise price and the executed Certificate of Shareholder
(see Paragraph 9 below). The option may not be exercised for a partial number
of shares, except as otherwise provided in Paragraph 7.B. below.
5. Exercise Price. The price per share shall equal the product of
--------------
the net book value per share of Western multiplied by four (4). The net book
value per share shall be calculated at the end of Western's fiscal year on
November 3, 1990 (FY 1990), when the option would be granted if earned.
<PAGE>
6. Western's Right of Purchase and Redemption. Until such time as
------------------------------------------
Western's capital stock is publicly traded, Western reserves the right to:
a. Purchase the Option. Western hereby reserves the right
-------------------
to purchase the option during the thirty (30) day notice period described in
Paragraph 4 above following the Employee giving notice that he intends to
exercise his option. If Western purchases the option, Western shall pay the
Employee a purchase price equal to the difference between (i) the number of
shares represented by the option in question multiplied by four (4) times the
current net book value per share of Western calculated at the end of the
preceding fiscal year and (ii) the exercise price per share. If Western
purchases the Employee's option or the option lapses, the Employee shall be
deemed to have been an option holder only, not a shareholder of Western.
b. Redeem the Shares. Western hereby reserves the right of
-----------------
first refusal to redeem the Employee's shares when the Employee or his personal
representative in the event of his death, directly or indirectly makes a bona
fide gift, sale or transfer of those shares in any manner whatsoever to another
person. In the event of a proposed gift, sale or transfer of the shares, the
Employee or his personal representative shall first tender the shares to
Western. The redemption price per share to be paid by Western would equal the
current net book value per share of Western calculated at the end of the
preceding fiscal year multiplied by four (4). Any gift, sale or transfer in
violation of the terms of this Agreement shall be null and void.
7. Employee Termination.
--------------------
a. Termination or Resignation. In the event the Employee
--------------------------
is terminated by Western (with or without just cause) or the Employee resigns
(voluntarily or involuntarily), any right to earn an option or any option
previously earned by the Employee, but not vested, shall expire when such
termination or resignation is effective.
b. Retirement, Permanent Disability or Death. In the event
-----------------------------------------
(i) the Employee retires after obtaining a minimum age of 65 years (or an
earlier age with written approval of Western's Board of Directors), (ii) resigns
or is terminated when certified by a physician to be permanently disabled as
being incapable to carry out substantially all of his job-related duties for
more than six (6) months, or (iii) dies, the option may partially vest. For the
purpose of this Paragraph 7.B. only, the option shall be deemed partially vested
at the rate of twenty percent (20%) per year for each full fiscal year of
employment following the date the option was granted. A partially vested option
may not be exercised prior to the normal vesting date as specified in Paragraph
3 above.
8. Spousal Interest. Any reference hereunder to option or share
----------------
capital of Western to be granted to or purchased by the Employee shall include
any community property or dower interest of such Employee's spouse. This
Agreement shall be contingent upon the written consent of the Employee's spouse
to the terms and conditions of this
<PAGE>
Agreement, if married. The form of the consent is identified as Exhibit "A" at
the end of this Agreement. If the Employee is unmarried, but subsequently
marries prior to the end of the fiscal year in question, the Employee shall then
deliver to Western's Corporate Secretary, in the manner specified in Paragraph
17 below, the written consent of his spouse on a form to be provided by Western.
9. Contingency. The exercise of the option shall be contingent upon
-----------
the Employee or his heirs, estate or personal representative in the event of his
death, providing Western's Corporate Secretary in the manner specified in
Paragraph 17 below with a written representation known as an "Investment Letter"
to the effect that at the time the option is exercised it is his then present
intention to acquire the shares for investment and not with a view to, or for
sale in connection with, any distribution of such shares. The form of the
representation is set forth as Exhibit "B", which is attached hereto and
incorporated herein by this reference.
10. Share Certificate. Each share certificate, when issued, shall
-----------------
have conspicuously endorsed on its face the following words:
"The sale, transfer or hypothecation of these shares are subject to
the Western Temporary Services, Inc. Nonstatutory Stock Option
Agreement for Fiscal Year 1990."
A copy of this Agreement shall be delivered to the Corporate Secretary
of Western, and shall be shown by him to any person entitled by law to make
inquiry about it.
11. Termination. All rights granted by this Agreement including any
-----------
options, whether or not vested, in whole or in part, shall terminate upon:
a. The written agreement of all parties hereto,
b. The involuntary dissolution, bankruptcy or insolvency of
Western,
c. Any material misconduct by the Employee in the performance
of his duties contemplated by his employment contract with Western including a
materia breach of such contract, or
d. Any material violation by the Employee of Western's
policies, rules and procedures as set forth in Western's Employee Handbook,
-----------------
Management Guide, or otherwise made known to the Employee.
- ----------------
12. Transfer of Shares. None of the shares of stock of Western held
------------------
by the Employee shall be transferred, encumbered, or in any way alienated except
under the terms of this Agreement. The Employee shall have the right to vote
his shares and receive
<PAGE>
dividends, if any, paid on them until his shares are sold or transferred as
provided in this Agreement.
13. Further Acts and Documents. Each party to this Agreement shall
--------------------------
perform any further acts, and execute and deliver any documents that may be
reasonably necessary to carry out the provisions of this Agreement.
14. Amendments. The provisions of this Agreement may be waived,
----------
altered, amended or repealed, in whole or in part, but only by the written
consent of all the parties to this Agreement.
15. Inurement. This Agreement shall be binding upon and inure to the
---------
benefit of the parties hereto, including their respective heirs, estate, legal
representatives, successors and assigns.
16. Severability. It is the intent that each paragraph of this
------------
Agreement shall be viewed as separate and divisible. In the event that any
paragraph shall be held to be invalid, the remaining paragraphs hereof shall
continue to be in full force and effect.
17. Notices. Any notices required or authorized to be given by this
-------
Agreement shall be in written form and shall be deemed to have been sufficiently
given or served when sent, in written form, by registered or certified mail,
postage prepaid and return receipt requested, and addressed to the proper party
at the address for Western given below and the address for the Employee given on
the last page of this Agreement or such other address as one party shall
subsequently give to the other party in writing. If to Western:
Western Temporary Services, Inc.
Attn: Corporate Secretary
301 Lennon Lane
P. O. Box 9280
Walnut Creek, California 94598-9280
Notices so given shall be deemed to have been received by the addressee five (5)
days from the date of mailing. Any notice required or authorized to be given by
this Agreement shall be deemed to have been sufficiently given or served in
written form if personally delivered to the proper party or sent by telex,
facsimile transmission, telegraph or other wire services and actually received
by such party, and notice shall be effective upon the date received by such
party.
18. Choice of Law. This Agreement shall be construed in accordance
-------------
with, and governed by, laws of the State of California.
19. Gender. Whenever the masculine gender is used in this Agreement,
------
the same shall also include the female gender.
<PAGE>
20. Waiver. No waiver by any party, express or implied, of any
------
breach of this Agreement by the other party shall be deemed to be a continuing
waiver or a consent to any subsequent breach hereof.
21. Attorneys' Fees and Costs. If any litigation arises between the
-------------------------
parties with respect to this Agreement or the subject matter thereof, the
prevailing party in such litigation shall be entitled to costs incurred and
reasonable attorneys' fees. Furthermore, the Employee shall indemnify and hold
Western harmless from and against any and all liabilities, costs or expenses,
including but not limited to, reasonable attorneys' fees and costs, resulting
from or arising out of any sale, transfer, pledge or other disposition of his
option or shares of Western's capital stock other than in accordance with the
terms and provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date opposite their respective signatures.
WESTERN:
Western Temporary Services, Inc.
Date: By:
-------------------------- -----------------------------------------
Date: By:
-------------------------- -----------------------------------------
EMPLOYEE:
Date:
-------------------------- --------------------------------------------
--------------------------------------------
(address)
-------------------------------------------
(city, state, zip)
<PAGE>
EXHIBIT A
SPOUSE'S CONSENT
The undersigned, being the spouse of the above-mentioned Employee,
does hereby acknowledge that he or she has read the foregoing Agreement and
consents to the execution thereof by his or her spouse and agrees to be bound
thereby with respect to any community property or dower interest which he or she
may have in the option or capital stock of Western. The undersigned further
agrees that in the event of his or her death prior to that of his or her spouse,
the undersigned will not bequeath or otherwise dispose of any of his or her
community property or dower interest in the option or capital stock of Western
to anyone other than his or her spouse. In the event that the undersigned
outlives his or her spouse, the undersigned agrees to join in any required
transfer of any option or stock from his or her spouse's estate and himself or
herself to Western in accordance with the foregoing Agreement.
Dated:
------------------------ --------------------------------------------
(Spouse's Signature)
<PAGE>
EXHIBIT 99.4
1996 Stock Option/Stock Issuance Plan
<PAGE>
WESTERN STAFF SERVICES, INC.
1996 STOCK OPTION/STOCK ISSUANCE PLAN
-------------------------------------
ARTICLE ONE
GENERAL
-------
I. PURPOSE OF THE PLAN
A. This 1996 Stock Option/Stock Issuance Plan (the "Plan") is
intended to promote the interests of Western Staff Services, Inc., a Delaware
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 Plan shall become 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 Plan Effective Date.
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
stockholders which the Board does not recommend such stockholders 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
<PAGE>
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, par value of
$0.01 per share.
CORPORATE TRANSACTION: either of the following stockholder-approved
transactions to which the Corporation is a party:
a. a merger or consolidation 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
transaction, or
b. the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation.
DOMESTIC RELATIONS ORDER: any judgment, decree or order (including
approval of a property settlement agreement) which provides or otherwise
conveys, pursuant to applicable State domestic relations laws (including
community property laws), marital property rights to any spouse or former spouse
of the Optionee.
EMPLOYEE: an individual who performs services while in the employ of
the Corporation or one or more parent or subsidiary corporations, subject to the
control and direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.
EXERCISE DATE: the date on which the Corporation shall have received
written notice of the option exercise.
FAIR MARKET VALUE: the Fair Market Value per share of Common Stock
determined in accordance with the following provisions:
- If the Common Stock is not at the time listed or admitted to trading
on any national stock exchange but is traded on the Nasdaq National
2.
<PAGE>
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, Inc. through 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.
- 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 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.
- For purposes of any option grants which are made at the time the
Underwriting Agreement for the initial public offering of the Common Stock
is executed and priced but prior to the time the Common Stock is first
traded on either a national securities exchange or the Nasdaq National
Market, the Fair Market Value per share of Common Stock shall be deemed to
be equal to the price per share at which the Common Stock is to be sold in
the initial public offering pursuant to the Underwriting Agreement.
HOSTILE TAKE-OVER: a change in ownership of the Corporation effected
through the following transaction:
a. the direct or indirect acquisition 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
stockholders which the Board does not recommend such stockholders to
accept, and
---
b. the acceptance of more than fifty percent (50%) of the securities so
acquired in such tender or exchange offer from holders other than the
officers and directors of the Corporation subject to the short-swing profit
restrictions of Section 16 of the 1934 Act.
3.
<PAGE>
INCENTIVE OPTION: a stock option which satisfies the requirements of
Code Section 422.
INVOLUNTARY TERMINATION: the termination of the Service of any
individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially reduces
his or her level of responsibility, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and participation in
corporate-performance based bonus or incentive programs) by more than
fifteen percent (15%) or (C) a relocation of such individual's place of
employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation without the
individual's consent.
MISCONDUCT: the commission of any act of fraud, embezzlement or
dishonesty by the Optionee or Participant, any unauthorized use or disclosure by
such person of confidential information or trade secrets of the Corporation (or
any parent or subsidiary), or any other intentional misconduct by such person
adversely affecting the business or affairs of the Corporation (or any parent or
subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
parent or subsidiary) may consider as grounds for the dismissal or discharge of
any Optionee, Participant or other person in the Service of the Corporation (or
any parent or subsidiary).
1934 ACT: the Securities and Exchange Act of 1934, as amended from
time to time.
NON-STATUTORY OPTION: a stock option not intended to meet the
requirements of Code Section 422.
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
4.
<PAGE>
continuous duration of twelve (12) months or more. However, solely for the
purposes of the Automatic Option Grant Program, Permanent Disability or
Permanently Disabled shall mean the inability of the non-employee Board member
to perform his or her usual duties as a Board member 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 of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.
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.
QUALIFIED DOMESTIC RELATIONS ORDER: a Domestic Relations Order which
substantially complies with the requirements of Code Section 414(p). The Plan
Administrator shall have the sole discretion to determine whether a Domestic
Relations Order is a Qualified Domestic Relations Order.
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.
SECTION 12(g) REGISTRATION DATE: the date on which the initial
registration of the Common Stock under Section 12(g) of the 1934 Act becomes
effective.
SERVICE: the performance of 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 of directors or an independent
consultant or advisor, except to the extent otherwise specifically provided in
the applicable stock option or stock issuance agreement.
TAKE-OVER PRICE: the greater of (a) the Fair Market Value per share of
-------
Common Stock on the date the particular option to purchase such stock is
surrendered to the Corporation in connection with a Hostile Take-Over or (b) the
highest reported price per share of Common Stock paid by the tender offeror in
effecting such Hostile Take-Over. However, if the surrendered option is an
Incentive Option, the Take-Over Price shall not exceed the clause (a) price per
share.
5.
<PAGE>
B. The following provisions shall be applicable in determining the
parent and subsidiary corporations of the Corporation:
Any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation shall be considered to be a
PARENT of the Corporation, provided each such corporation in the unbroken
chain (other than the Corporation) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be considered to
be a SUBSIDIARY of the Corporation, provided each such corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
III. STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be divided into three separate
--------------
components: the Discretionary Option Grant Program specified in Article Two, the
Automatic Option Grant Program specified in Article Three and the Stock Issuance
Program specified in Article Four. Under the Discretionary Option Grant
Program, eligible individuals may, at the discretion of the Plan Administrator,
be granted options to purchase shares of Common Stock in accordance with the
provisions of Article Two. Under the Automatic Option Grant Program, each
individual serving as a non-employee Board member on the Plan Effective Date and
each individual who first joins the Board as a non-employee director at any time
after such Plan Effective Date shall 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 Plan 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
per share not less than eighty-five percent (85%) of the fair market value per
share of Common Stock at the time of issuance or as a bonus for past services
rendered the Corporation or the Corporation's attainment of financial
objectives.
B. General Provisions. Unless the context clearly indicates
------------------
otherwise, the provisions of Articles One and Five shall apply to the
Discretionary Option Grant Program, the Automatic Option Grant Program and the
Stock Issuance Program and shall accordingly govern the interests of all
individuals under the Plan.
6.
<PAGE>
IV. ADMINISTRATION OF THE PLAN
A. The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. No non-employee Board member shall be eligible
to serve on the Primary Committee if such individual has, during the twelve
(12)-month period immediately preceding the date of his or her appointment to
the Committee or (if shorter) the period commencing with the Section 12(g)
Registration Date and ending with the date of his or her appointment to the
Primary Committee, received an option grant or direct stock issuance under the
Plan or any other stock option, stock appreciation, stock bonus or other stock
plan of the Corporation (or any parent or subsidiary), other than pursuant to
the Automatic Option Grant Program.
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 all such persons. The members of the
Secondary Committee may be Board members who are Employees eligible to receive
discretionary option grants or direct stock issuances under the Plan or any
other 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 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 stock 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.
7.
<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 no Plan Administrator shall exercise any discretionary functions with
respect to option grants made pursuant to that program.
V. ELIGIBILITY
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 members of the Board other than those serving
as Plan Administrator; and
(iii) those consultants or other independent advisors who provide
valuable services to the Corporation (or its parent or subsidiary
corporations).
B. The non-employee Board members serving as Plan Administrator shall
not be eligible during such period of service to participate in the
- ---
Discretionary Option Grant and Stock Issuance Programs or in any other stock
option, stock purchase, stock bonus or other stock plan of the Corporation (or
its parent or subsidiary corporations). Such individuals shall, however, be
eligible to receive automatic option grants pursuant to the provisions of
Article Three.
C. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to the
provisions of the Plan) to determine, (i) with respect to the option grants
under the Discretionary Option Grant Program, which eligible persons are to
receive option grants, the time or times when such option grants are to be made,
the number of shares to be covered by each such grant, the status of the granted
option as either an Incentive Option or a Non-Statutory Option, the time or
times at which each option is to become exercisable, the vesting schedule (if
any) applicable to the option shares and the maximum term for which the option
is to remain outstanding and (ii) with respect to stock issuances under the
Stock Issuance Program, which eligible persons are to receive stock issuances,
the time or times when such issuances are to be made, the number of shares to be
issued to each Participant, the vesting schedule (if any) applicable to the
issued shares and the consideration to be paid for such shares.
8.
<PAGE>
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 1,033,812 shares, subject to adjustment from time to time in accordance
with the provisions of this Section VI.
B. No one person participating in the Plan may receive stock options,
separately exercisable stock appreciation rights and direct stock issuances for
more than 500,000 shares of Common Stock in the aggregate per calendar year.
C. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full (including any option
cancelled in accordance with the cancellation-regrant provisions of Section IV
of Article Two of the Plan), then the shares subject to the portion of each
option not so exercised shall be available for subsequent issuance under the
Plan. Shares subject to any stock appreciation rights exercised under the Plan
and all share issuances under the Plan, whether or not the shares are
subsequently repurchased by the Corporation pursuant to its repurchase rights
under the Plan, shall reduce on a share-for-share basis the number of shares of
Common Stock available for subsequent issuance under the Plan. In addition,
should the exercise price of an outstanding option under the 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 maximum number and/or class of
securities for which any one individual participating in the Plan may be granted
stock options, separately exercisable stock appreciation rights and direct stock
issuances in the aggregate 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 Grant Program and
(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. Such adjustments to the outstanding options are to be
effected in a manner which shall preclude
9.
<PAGE>
the enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.
10.
<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 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 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);
11.
<PAGE>
(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 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, state and local 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.
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.
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
(including death or Permanent Disability) while holding one or more
outstanding options under this Article Two, then none of those options
shall (except to the extent otherwise provided pursuant to subparagraph 2
below) remain exercisable for more than a twelve (12)-month period (or such
shorter period determined by the Plan Administrator and set forth in the
instrument evidencing the grant) measured from the date of such cessation
of Service.
(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
12.
<PAGE>
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. However, the right to exercise such option
shall lapse upon the earlier of (i) the first anniversary of the date of
-------
the Optionee's death (or such shorter period determined by the Plan
Administrator and set forth in the instrument evidencing the grant) or (ii)
the specified expiration date of the option term. Accordingly, upon the
occurrence of the earlier event, the option shall terminate and cease to
remain outstanding.
(iii) Under no circumstances 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 such option shall terminate and cease to remain
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 remain 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 (i) the Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee under this
Article Two shall terminate immediately and cease to remain outstanding.
2. The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:
(i) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service from the
period otherwise in effect for that option to such greater period of time
as the Plan Administrator shall deem appropriate, but in no event beyond
the expiration of the option term, and/or
(ii) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of vested
shares of Common Stock for which such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or
13.
<PAGE>
more additional installments in which the Optionee would have vested under
the option had the Optionee continued in Service.
D. Stockholder Rights.
------------------
An Optionee shall have no stockholder rights with respect to any
shares covered by the option until such individual shall have exercised the
option, paid the option price for the purchased shares and become the holder of
record of those shares.
E. Limited Transferability
-----------------------
During the lifetime of the Optionee, the option shall be
exercisable only by the Optionee and shall not be assignable or transferable
other than by will or by the laws of descent and distribution following the
Optionee's death. However, a Non-Statutory Option may be assigned in whole or in
part during the Optionee's lifetime in accordance with the terms of a Qualified
Domestic Relations Order. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
such Qualified Domestic Relations Order. The terms applicable to the assigned
portion shall be the same as those in effect for the option immediately prior to
such assignment and shall be set forth in such documents issued to the assignee
as the Plan Administrator may deem appropriate.
F. Repurchase Rights.
-----------------
The shares of Common Stock acquired upon the exercise of any
Article Two option grant may be subject to repurchase by the Corporation in
accordance with the following provisions:
(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
14.
<PAGE>
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 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
designated as "non-statutory" options when issued under the Plan shall not be
---
subject to such terms and conditions.
A. Dollar Limitation. The aggregate Fair Market Value (determined as
-----------------
of the respective date or dates of grant) of the Common Stock for which one or
more options granted to any Employee under this Plan (or any other option plan
of the Corporation or its parent or subsidiary corporations) may for the first
time become exercisable as incentive stock options under the Federal tax laws
during any one calendar year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000). To the extent the Employee holds two (2) or more such
options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability of such options as incentive
stock options under the Federal tax laws shall be applied on the basis of the
order in which such options are granted. Should the number of shares of Common
Stock for which any Incentive Option first becomes exercisable in any calendar
year exceed the applicable One Hundred Thousand Dollar ($100,000) limitation,
then that option may nevertheless be exercised in that calendar year for the
excess number of shares as a non-statutory option under the Federal tax laws.
B. 10% Stockholder. If any individual to whom an Incentive Option is
---------------
granted is the owner of stock (as determined under Section 424(d) of the Code)
possessing ten percent (10%) or more of the total combined voting power of all
classes of stock of the Corporation or any one of its parent or subsidiary
corporations, then the option price per share shall not be less than one hundred
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.
15.
<PAGE>
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any Corporate Transaction, each option which is at
the time outstanding under this Article Two shall automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to such option and
may be exercised for all or any portion of such shares. However, an outstanding
option under this Article Two shall NOT so accelerate if and to the extent: (i)
such option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation or parent thereof or to be replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof, (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the option spread
existing at the time of the Corporate Transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to such option,
or (iii) the acceleration of such option is subject to other limitations imposed
by the Plan Administrator at the time of the option grant. The determination of
option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. 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 on both an aggregate and per
participant basis following the consummation of the Corporate Transaction shall
be appropriately adjusted.
D. The Plan Administrator shall have full power and authority to
grant options under the Discretionary Option Grant Program which will
automatically accelerate in whole or in part in the event the Optionee's Service
subsequently terminates by reason of an Involuntary Termination within a
designated period (not to exceed twelve (12) months) following the effective
date of any Corporate Transaction in which those options are assumed or replaced
and do not otherwise accelerate. Any options so accelerated shall remain
exercisable for fully-vested shares until the earlier of (i) the expiration of
-------
the option term or (ii) the expiration of the twelve (12-month period measured
from the effective date of the Involuntary Termination. In addition, the Plan
Administrator may provide that one or more of the Corporation's outstanding
repurchase rights with respect to shares held by the Optionee at the time of
such Involuntary Termination shall immediately terminate in whole or in part,
and the shares subject to those terminated rights shall accordingly vest.
16.
<PAGE>
E. The Plan Administrator shall have full power and authority to
grant options under the Discretionary Option Grant Program which will
automatically accelerate in whole or in part in the event the Optionee's Service
subsequently terminates by reason of an Involuntary Termination within a
designated period (not to exceed twelve (12) months) following the effective
date of any Change in Control. Each option so accelerated shall remain
exercisable for fully-vested shares until the earlier of (i) the expiration of
-------
the option term or (ii) the expiration of the twelve (12)-month period measured
from the effective date of the Involuntary Termination. In addition, the Plan
Administrator may provide that one or more of the Corporation's outstanding
repurchase rights with respect to shares held by the Optionee at the time of
such Involuntary Termination shall immediately terminate in whole or in part,
and the shares subject to those terminated rights shall accordingly vest.
F. The portion of any Incentive Option accelerated in connection with
a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Qualified
Option under the Federal tax laws.
G. The outstanding options 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.
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 and to
grant in substitution new options under the Plan covering the same or different
numbers of shares of Common Stock but with an option price per share not less
than (i) one hundred percent (100%) of the Fair Market Value per share of Common
Stock 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 10% Stockholder or (iii) eighty-five percent (85%)
of such Fair Market Value in the case of all other grants.
V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more Optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under this Article Two in exchange for a distribution
from the Corporation in an amount equal to the excess of (i) the Fair Market
Value (on the option surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate exercise price payable for such vested
shares.
17.
<PAGE>
B. No surrender of an option shall be effective hereunder unless it
is approved by the Plan Administrator. If the surrender is so approved, then
the distribution to which the Optionee shall accordingly become entitled under
this Section V may be made in shares of Common Stock valued at Fair Market Value
on the option surrender date, in cash, or partly in shares and partly in cash,
as the Plan Administrator shall in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
-----
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.
D. One or more officers of the Corporation subject to the short-swing
profit restrictions of the 1934 Act may, in the Plan Administrator's sole
discretion, be granted limited stock appreciation rights in tandem with their
outstanding options under this Article Two. Upon the occurrence of a Hostile
Take-Over, the officer shall have a thirty (30)-day period in which he or she
may surrender any outstanding options with such a limited stock appreciation
right in effect for at least six (6) months to the Corporation, to the extent
such option is at the time exercisable for fully vested shares of Common Stock.
The officer shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of the
vested shares of Common Stock at the time subject to each surrendered option (or
surrendered portion of such option) over (ii) the aggregate exercise price
payable for such shares. The cash distribution shall be made within five (5)
days following the date the option is surrendered to the Corporation, and
neither the approval of the Plan Administrator nor the consent of the Board
shall be required in connection with the option surrender and cash distribution.
Any unsurrendered portion of the option shall continue to remain outstanding and
become exercisable in accordance with the terms of the instrument evidencing
such grant.
E. The shares of Common Stock subject to any option surrendered for
an appreciation distribution pursuant to this Section V shall NOT be available
for subsequent issuance under the Plan.
18.
<PAGE>
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
------------------------------
I. ELIGIBILITY
A. Eligible Optionees. 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 Plan 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 stockholders. 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.
B. Limitation. Except for the option grants to be made pursuant to
----------
the provisions of this Automatic Option Grant Program, Eligible Directors who
are serving as the Plan Administrator shall not be eligible during such period
---
of service to receive any additional option grants or stock issuances under this
Plan or any other stock plan of the Corporation (or any parent or subsidiary
corporation).
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants shall be made under this Article Three
-----------
on the dates specified below:
1. Initial Grant. Each Eligible Director who is a non-employee
-------------
Board member on the Plan Effective Date and each Eligible Director who is first
elected or appointed as a non-employee Board member after such date shall
automatically be granted, on the Plan Effective Date or on the date of such
initial election or appointment (as the case may be), a Non-Statutory Option to
purchase 1,000 shares of Common Stock upon the terms and conditions of this
Article Three. In no event, however, shall a non-employee Board member be
eligible to receive such an initial option grant if such individual has at any
time been in the prior employ of the Corporation (or any parent or subsidiary
corporation).
2. Annual Grant. On the date of each Annual Stockholders
------------
Meeting, beginning with the 1997 Annual Meeting, each individual who will
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 1,000
shares of Common Stock upon the terms and conditions of this Article Three,
provided he or she has served as a non-employee Board member for at least six
(6) months. There shall be no limit on the number of such annual option grants
any one Eligible Director may receive over his or her period of Board service,
19.
<PAGE>
and non-employee Board members who have previously been in the employ of the
Corporation (or any parent or subsidiary corporation) shall be eligible to
receive such annual option grants over their period of continued 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.
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 fully
--------------
exercisable for the option shares upon the Optionee's completion of one year of
Board service measured from the automatic grant date. The exercisability of
each automatic grant outstanding under
20.
<PAGE>
this Article Three shall be accelerated as provided in Section II.G and Section
III of this Article Three.
F. Limited Transferability. During the lifetime of the Optionee, the
-----------------------
option shall be exercisable only by the Optionee and shall not be assignable or
transferable other than by will or by the laws of descent and distribution
following the Optionee's death. However, the option may also assigned in whole
or in part during the Optionee's lifetime in accordance with the terms of a
Qualified Domestic Relations Order. The assigned portion may only be exercised
by the person or persons who acquire a proprietary interest in the option
pursuant to such Qualified Domestic Relations Order. The terms applicable to
the assigned portion shall be the same as those in effect for the option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Corporation may deem appropriate.
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 twelve (12)-month 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 twelve (12) months after
cessation of Board service, then 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 twelve (12) months after the
date of the Optionee's cessation of Board service.
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 twelve (12)-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.
21.
<PAGE>
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. Stockholder Rights. The holder of an automatic option grant under
------------------
this Article Three shall have none of the rights of a stockholder with respect
to any shares subject to such option until such individual shall have exercised
the option, paid the exercise price for the purchased shares and become the
holder of record of those shares.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, each automatic option
grant at the time outstanding under this Article Three shall automatically
accelerate so that each such option shall, immediately prior to the specified
effective date for the Corporate Transaction, become fully exercisable with
respect to the total number of shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares.
Immediately after the consummation of the Corporate Transaction, all automatic
option grants under this Article Three shall terminate and cease to be
outstanding, except to the extent assumed by the successor entity or its parent
company.
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 such 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. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
option held by him or her under this Article Three for a period of at least six
(6) months. The Optionee shall in return be entitled to a cash distribution
from the Corporation in an amount equal to the excess of (i) the Take-Over Price
of the shares of Common Stock at the time subject to the surrendered option
(whether or not the option is otherwise at the time exercisable for those
shares) over (ii) the aggregate exercise price payable for such shares. Such
cash distribution shall be paid within five (5) days following the surrender of
the option to the Corporation. Neither the approval of the Plan Administrator
nor the consent of the Board shall be required in connection with such option
surrender and cash distribution. The shares of Common Stock subject to each
option surrendered in connection with the Hostile Take-Over shall NOT be
available for subsequent issuance under the Plan.
22.
<PAGE>
D. 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.
IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS
The provisions of this Automatic Option Grant Program, together with
the automatic option grants outstanding under this Article Three, may not be
amended at intervals more frequently than once every six (6) months, other than
to the extent necessary to comply with applicable Federal income tax laws and
regulations.
V. REMAINING TERMS
The remaining terms of each option granted under the Automatic Option
Grant Program shall be the same as the terms in effect for option grants made
under the Discretionary Option Grant Program.
23.
<PAGE>
ARTICLE FOUR
STOCK ISSUANCE PROGRAM
----------------------
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate purchases without any intervening stock option
grants. The issued shares shall be evidenced by a Stock Issuance Agreement
("Issuance Agreement") that complies with the terms and conditions of this
Article Four.
A. Consideration.
-------------
1. Shares of Common Stock drawn from the Corporation's
authorized but unissued shares of Common Stock ("Newly Issued Shares") shall be
issued under the Stock Issuance Program for one or more of the following items
of consideration which the Plan Administrator may deem appropriate in each
individual instance:
a. full payment in cash or check made payable to the
Corporation's order;
b. 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
c. past services rendered to the Corporation or any parent or
subsidiary corporation.
2. Newly Issued Shares 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 eighty-five percent (85%) of such Fair
Market Value.
3. Shares of Common Stock reacquired by the Corporation and
held as treasury shares ("Treasury Shares") may be issued under the Stock
Issuance Program for such consideration (including one or more of the items of
consideration specified in subparagraph 1 above) as the Plan Administrator may
deem appropriate, whether such consideration is in an amount less than, equal to
or greater than the Fair Market Value of the Treasury Shares at the time of
issuance. Treasury Shares may, in lieu of any cash consideration, be issued
subject to such vesting requirements tied to the Participant's period of future
Service or the Corporation's attainment of specified performance objectives as
the Plan Administrator may establish at the time of issuance.
24.
<PAGE>
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:
a. the Service period to be completed by the Participant or
the performance objectives to be achieved by the Corporation,
b. the number of installments in which the shares are to
vest,
c. the interval or intervals (if any) which are to lapse
between installments, and
d. the effect which death, Permanent Disability or other
event designated by the Plan Administrator is to have upon the vesting
schedule,
shall be determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.
2. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to him or her under the Plan,
whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration or by reason of any 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.
3. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock under the Stock Issuance
Program, then those shares shall be immediately surrendered to the Corporation
for cancellation, and the Participant shall have no further stockholder rights
with respect to those shares. To the extent the surrendered shares were
previously issued to the Participant for consideration paid in cash or cash
equivalent (including the Participant's purchase-money promissory note), the
Corporation shall repay to the Participant the cash consideration paid for the
surrendered shares and shall cancel the unpaid principal balance of any
outstanding
25.
<PAGE>
purchase-money note of the Participant attributable to such surrendered shares.
The surrendered shares may, at the Plan Administrator's discretion, be retained
by the Corporation as Treasury Shares or may be retired to authorized but
unissued share status.
4. The Plan Administrator may in its discretion elect to waive
the surrender and cancellation of one or more unvested shares of Common Stock
(or other assets attributable thereto) which would otherwise occur upon the non-
completion of the vesting schedule applicable to such shares. Such waiver shall
result in the immediate vesting of the Participant's interest in the shares of
Common Stock as to which the waiver applies. Such waiver may be effected at any
time, whether before or after the Participant's cessation of Service or the
attainment or non-attainment of the applicable performance objectives.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. Upon the occurrence of any Corporate Transaction, all unvested
shares of Common Stock at the time outstanding under this Stock Issuance Program
shall immediately vest in full and the Corporation's repurchase/cancellation
rights shall terminate, except to the extent: (i) any such is expressly assigned
to the successor corporation (or parent thereof) in connection with the
Corporate Transaction or (ii) such termination is precluded by other limitations
imposed in the Issuance Agreement.
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase/cancellation rights remain outstanding under the
Stock Issuance Program, to provide that those rights shall automatically
terminate in whole or in part, and the shares of Common Stock subject to those
terminated rights shall immediately vest, in the event the Participant's Service
should subsequently terminate by reason of an Involuntary Termination within
twelve (12) months following the effective date of any Corporate Transaction in
which those repurchase/cancellation rights are assigned to the successor
corporation (or parent thereof).
C. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase/cancellation rights remain outstanding under the
Stock Issuance Program, to provide that those rights shall automatically
terminate in whole or in part, and the shares of Common Stock subject to those
terminated rights shall immediately vest, in the event the Participant's Service
should subsequently terminate by reason of an Involuntary Termination within
twelve (12) months following the effective date of any Change in Control.
III. TRANSFER RESTRICTIONS/SHARE ESCROW
A. Unvested shares may, in the Plan Administrator's discretion, be
held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing such unvested shares. To the extent an
escrow arrangement is utilized, the unvested shares and
26.
<PAGE>
any securities or other assets distributed 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 the distributed
securities or assets) vests. If the unvested shares are issued directly to the
Participant, the restrictive legend on the certificates for such shares shall
read substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND
ARE ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS
AND (II) CANCELLATION OR REPURCHASE IN THE EVENT THE
REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) CEASES
TO REMAIN IN THE CORPORATION'S SERVICE. SUCH TRANSFER
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 ________________, 199__,
A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION."
B. The Participant shall have no right to transfer any unvested
shares of Common Stock issued to him or her under the Stock Issuance Program.
For purposes of this restriction, the term "transfer" shall include (without
limitation) any sale, pledge, assignment, encumbrance, gift or other disposition
of such shares, whether voluntary or involuntary. Upon any such attempted
transfer, the unvested shares shall immediately be cancelled in accordance with
substantially the same procedure in effect under Section I.B.3 of this Article
Four, and neither the Participant nor the proposed transferee shall have any
rights with respect to such cancelled shares. However, the Participant shall
have the right to make a gift of unvested shares acquired under the Stock
Issuance Program to his or her spouse or issue, including adopted children, or
to a trust established for such spouse or issue, provided the donee of such
shares delivers to the Corporation a written agreement to be bound by all the
provisions of the Stock Issuance Program and the Issuance Agreement applicable
to the gifted shares.
27.
<PAGE>
ARTICLE FIVE
MISCELLANEOUS
-------------
IV. 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 at the
time such option price or purchase price becomes due and payable. Loans or
installment payments may be authorized with or without security or collateral.
In all events, the maximum credit available to the Optionee or Participant may
not exceed the option or purchase price of the acquired shares (less the par
value of such shares) plus any Federal, state and local income and employment
tax liability incurred by the Optionee or Participant in connection with the
acquisition of such shares.
B. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under this financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Plan Administrator may deem appropriate.
V. 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, (i) 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, and (ii) any amendment made
to the Automatic Option Grant Program (or any options outstanding thereunder)
shall be in compliance with the limitation of Section IV of Article Three. In
addition, the Board may not, without the approval of the Corporation's
stockholders, amend the Plan to (i) materially increase the maximum number of
shares issuable under the Plan or the number of shares for which options may be
granted to newly elected or continuing Eligible Directors under Article Three of
the Plan or the maximum number of shares for which any one individual
participating in the Plan may be granted stock options, separately exercisable
stock appreciation rights and direct stock issuances in
28.
<PAGE>
the aggregate per calendar year, except for permissible adjustments under
Section VI.C. of Article One, (ii) materially modify the eligibility
requirements for Plan participation or (iii) materially increase the benefits
accruing to Plan participants.
B. (i) Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant Program and (ii) shares of Common Stock may
be issued under the Stock Issuance Program, which are in both instances in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under the Discretionary Option Grant
Program or the Stock Issuance Program are held in escrow until stockholder
approval is obtained for a sufficient increase in the number of shares available
for issuance under the Plan. If such stockholder approval is not obtained
within twelve (12) months 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.
VI. TAX WITHHOLDING
A. 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.
B. 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 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:
1. 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.
2. Stock Delivery: The Plan Administrator may, in its
--------------
discretion, provide the holder of the non-statutory option or the unvested
29.
<PAGE>
shares with the election to deliver to the Corporation, at the time the
non-statutory option is exercised or the shares vest, one or more shares of
Common Stock previously acquired by such individual (other than in
connection with the option exercise or share vesting triggering the 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.
VII. EFFECTIVE DATE AND TERM OF PLAN
A. Provided this Plan is approved by the Corporation's stockholders
on or before the Plan Effective Date, this Plan shall become effective
immediately upon such Plan Effective Date.
B. The Plan shall terminate upon the earlier of (i) ten (10) years
-------
following the Plan Effective Date 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 issuance.
VIII. USE OF PROCEEDS
Any cash 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.
IX. 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.
30.
<PAGE>
X. 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.
XI. 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.
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.
31.
<PAGE>
EXHIBIT 99.5
Form of Notice of Grant of Stock Option
<PAGE>
WESTERN STAFF SERVICES, INC.
NOTICE OF GRANT OF STOCK OPTION
-------------------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Western Staff Services, Inc. (the
"Corporation"):
Optionee: 1-
--------
Grant Date: 2-
----------
Vesting Commencement Date: 3-
-------------------------
Exercise Price: $4- per share
--------------
Number of Option Shares: 5- shares
-----------------------
Expiration Date: 6-
---------------
Type of Option: ______ Incentive Stock Option
--------------
______ Non-Statutory Stock Option
Exercise Schedule: The Option shall become exercisable with respect to (i)
-----------------
twenty-five percent (25%) of the Option Shares upon Optionee's completion
of one (1) year of Service measured from the Vesting Commencement Date and
(ii) the balance of the Option Shares in thirty-six (36) successive equal
monthly installments upon Optionee's completion of each month of Service
over the thirty-six (36) month period measured from the first anniversary
of the Vesting Commencement Date. In no event shall the Option become
exercisable for any additional Option Shares after Optionee's cessation of
Service.
Optionee understands and agrees that the Option is granted subject to and
in accordance with the terms of the Western Staff Services, Inc. 1996 Stock
Option/Stock Issuance Plan (the "Plan"). Optionee further agrees to be bound by
the terms of the Plan and the terms of the Option as set forth in the Stock
Option Agreement attached hereto as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the official prospectus
for the Plan in the form attached hereto as Exhibit B. A copy of the Plan is
available upon request made to the Corporate Secretary at the Corporation's
principal offices.
<PAGE>
No Employment or Service Contract. Nothing in this Notice or in the
---------------------------------
attached Stock Option Agreement or in the Plan shall confer upon Optionee any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining Optionee) or of Optionee, which
rights are hereby expressly reserved by each, to terminate Optionee's Service at
any time for any reason, with or without cause.
Definitions. All capitalized terms in this Notice shall have the meaning
-----------
assigned to them in this Notice or in the attached Stock Option Agreement.
________________________, 199__
Date
WESTERN STAFF SERVICES, INC.
By: __________________________________
Title: _______________________________
______________________________________
OPTIONEE
Address: _____________________________
______________________________________
ATTACHMENTS
- -----------
EXHIBIT A - STOCK OPTION AGREEMENT
EXHIBIT B - PLAN SUMMARY AND PROSPECTUS
2.
<PAGE>
EXHIBIT A
---------
STOCK OPTION AGREEMENT
----------------------
<PAGE>
EXHIBIT B
---------
PLAN SUMMARY AND PROSPECTUS
---------------------------
<PAGE>
EXHIBIT 99.6
Form of Stock Option Agreement
<PAGE>
WESTERN STAFF SERVICES, INC.
STOCK OPTION AGREEMENT
----------------------
RECITALS
- --------
A. The Corporation has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or the board
of directors of any Parent or Subsidiary and consultants and other independent
advisors who provide services to the Corporation (or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
---------------
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a term of ten (10) years
-----------
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be neither
-----------------------
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, if this option is designated a
Non-Statutory Option in the Grant Notice, then this option may also be assigned
in whole or in part during Optionee's lifetime in accordance with the terms of a
Qualified Domestic Relations Order. The assigned portion shall be exercisable
only by the person or persons who acquire a proprietary interest in the option
pursuant to such Qualified Domestic Relations Order. The terms applicable to
the assigned portion shall be the same as those in effect for this option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Plan Administrator may deem appropriate.
4. DATES OF EXERCISE. This option shall become exercisable for the
-----------------
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes
<PAGE>
exercisable for such 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 or 6.
5. CESSATION OF SERVICE. The option term specified in Paragraph 2
--------------------
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(i) Should Optionee cease to remain in Service for any reason
(other than death, Permanent Disability or Misconduct) while this option is
outstanding, then Optionee shall have a period of three (3) months
(commencing with the date of such cessation of Service) during which to
exercise this option, but in no event shall this option be exercisable at
any time after the Expiration Date.
(ii) Should Optionee die while this option is outstanding, then
the personal representative of Optionee's estate or the person or persons
to whom the option is transferred pursuant to Optionee's will or in
accordance with the laws of descent and distribution shall have the right
to exercise this option. Such right shall lapse, and this option shall
cease to be outstanding, upon the earlier of (A) the expiration of the
-------
twelve (12)-month period measured from the date of Optionee's death or (B)
the Expiration Date.
(iii) Should Optionee cease Service by reason of Permanent
Disability while this option is outstanding, then Optionee shall have a
period of twelve (12) months (commencing with the date of such cessation of
Service) during which to exercise this option. In no event shall this
option be exercisable at any time after the Expiration Date.
(iv) Should Optionee's Service be terminated for Misconduct,
then this option shall terminate immediately and cease to remain
outstanding.
(v) During the applicable post-Service exercise period, this
option may not be exercised in the aggregate for more than the number of
vested Option Shares for which the option is exercisable at the time of
Optionee's cessation of Service. Upon the expiration of such exercise
period or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding for any vested Option Shares for
which the option has not been exercised. However, this option shall,
immediately upon Optionee's cessation of Service for any reason, terminate
and cease to be outstanding with respect to any Option Shares in which
Optionee is not otherwise at that time vested or for which this option is
not otherwise at that time exercisable.
2.
<PAGE>
6. SPECIAL ACCELERATION OF OPTION.
------------------------------
(a) This option, to the extent outstanding at the time of a
Corporate Transaction but not otherwise fully exercisable, shall automatically
accelerate so that this option shall, immediately prior to the effective date of
the Corporate Transaction, become exercisable for all of the Option Shares at
the time subject to this option and may be exercised for any or all of those
Option Shares as fully-vested shares of Common Stock. 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 to be 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 on the Option
Shares at the time of the Corporate Transaction (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 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) Immediately following the Corporate Transaction, this option,
to the extent not previously exercised, shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof) in connection with the Corporate Transaction.
(c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
--------
(d) This Agreement shall not in any 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.
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
---------------------------
Common Stock 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, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise in order
to reflect such change and thereby a dilution or enlargement of benefits
hereunder.
3.
<PAGE>
8. STOCKHOLDER RIGHTS. The holder of this option shall not have any
------------------
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased 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 any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a Notice of
Exercise for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) a promissory note payable to the Corporation, but
only to the extent authorized by the Plan Administrator in accordance
with Paragraph 13;
(C) shares of Common Stock held by Optionee (or any other
person or persons exercising the option) 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; or
(D) to the extent this option is exercised for vested Option
Shares, through a special sale and remittance procedure pursuant to
which Optionee (or any other person or persons exercising the option)
shall concurrently provide irrevocable written instructions (I) to 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 by the Corporation by reason of such exercise
and (II) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete
the sale transaction.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must
4.
<PAGE>
accompany the Notice of Exercise delivered to the
Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee)
have the right to exercise this option.
(iv) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction
of all Federal, state and local income and employment tax withholding
requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
------------------------------------
(a) The exercise of this option and the issuance of the 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 stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) 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, however, shall use its best efforts to obtain all such
approvals.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
----------------------
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.
12. 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 at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the
5.
<PAGE>
Grant Notice. All notices shall be deemed effective upon personal delivery or
upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.
13. FINANCING. The Plan Administrator may, in its absolute
---------
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a promissory note
payable to the Corporation. The terms of any such promissory note (including
the interest rate, the requirements for collateral and the terms of repayment)
shall be established by the Plan Administrator in its sole discretion.
14. 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 terms 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.
15. GOVERNING LAW. The interpretation, performance and enforcement
-------------
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
16. 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 stockholder approval be issued under the Plan, then this option shall be
void with respect to those excess shares, unless stockholder 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.
17. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event
--------------------------------------------------
this option is designated an Incentive 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 Option if (and to the extent) this option is
exercised for one or more Option Shares: (A) more than three (3) months
after the date Optionee ceases to be an Employee for any reason other than
death or Permanent Disability or (B) more than twelve (12) months after the
date Optionee ceases to be an Employee by reason of Permanent Disability.
(b) No installment under this option shall qualify for favorable
tax treatment as an Incentive Option if (and to the extent) the aggregate
Fair Market Value (determined at the Grant Date) of the Common Stock for
which such installment first becomes exercisable hereunder would,
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 any other Incentive Options granted to Optionee prior to the
Grant Date (whether under the Plan or any other option plan of
6.
<PAGE>
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 such One Hundred Thousand Dollar
($100,000) limitation be exceeded in any calendar year, this option shall
nevertheless become exercisable for the excess shares in such calendar year
as a Non-Statutory Option.
(c) Should the exercisability of this option be accelerated upon
a Corporate Transaction, then this option shall qualify for favorable tax
treatment as an Incentive Option only to the extent the aggregate Fair
Market Value (determined at the Grant Date) of the 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 Common
Stock or other securities for which this option or one or more other
Incentive 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
applicable One Hundred Thousand Dollar ($100,000) limitation be exceeded in
the calendar year of such Corporate Transaction, 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 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 Options
shall be applied on the basis of the order in which such options are
granted.
18. LEAVE OF ABSENCE. The following provisions shall apply upon the
----------------
Optionee's commencement of an authorized leave of absence:
(a) The exercise schedule in effect under the Grant Notice shall
be frozen as of the first day of the authorized leave, and the option shall
not become exercisable for any additional installments of the Option Shares
during the period Optionee remains on such leave.
(b) Should Optionee resume active Employee status within sixty
(60) days after the start date of the authorized leave, Optionee shall, for
purposes of the exercise schedule set forth in the Grant Notice, receive
Service credit for the entire period of such leave. If Optionee does not
resume active Employee status within such sixty (60)-day period, then no
Service credit shall be given for the period of the leave.
7.
<PAGE>
(c) If the option is designated as an Incentive Stock Option in
the Grant Notice, then the following additional provision shall apply:
If the leave of absence continues for more than ninety (90)
days, then the option shall automatically convert to a Non-Statutory
Option under the federal tax laws on the ninety-first (91st) day of
such leave, unless the Optionee's reemployment rights are guaranteed
by statute or by written agreement. Following any such conversion of
the option, all subsequent exercises of such option, whether effected
before or after Optionee's return to active Employee status, shall
result in an immediate taxable event, and the Corporation shall be
required to collect from Optionee the federal, state and local income
and employment withholding taxes applicable to such exercise.
(d) In no event shall this option become exercisable for any
additional Option Shares or otherwise remain outstanding if Optionee does
not resume Employee status prior to the Expiration Date of the option term.
8.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Western Staff Services, 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 1996 Stock Option/Stock Issuance Plan on
____________________, 199___.
Concurrently with the delivery of this Exercise Notice to 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 (or other documents) 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 payment of the Exercise
Price for any Purchased Shares in which I am at the time vested.
______________________, 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: ______________________________________
Employee Number: ______________________________________
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
---------
B. BOARD shall mean the Corporation's Board of Directors.
-----
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
D. COMMON STOCK shall mean the Corporation's common stock, with par value
------------
of $0.01 per share.
E. CORPORATE TRANSACTION shall mean either of the following stockholder-
---------------------
approved transactions to which the Corporation is a party:
(i) a merger or consolidation 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 transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation.
F. CORPORATION shall mean Western Staff Services, Inc., a Delaware
-----------
corporation.
G. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or order
------------------------
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.
H. EMPLOYEE shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
I. EXERCISE DATE shall mean the date on which the option shall have been
-------------
exercised in accordance with Paragraph 9 of the Agreement.
J. EXERCISE PRICE shall mean the exercise price per share as specified in
--------------
the Grant Notice.
A-1.
<PAGE>
K. EXPIRATION DATE shall mean the date on which the option expires as
---------------
specified in the Grant Notice.
L. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as the price is reported by
the National Association of Securities Dealers on the Nasdaq National
Market or any successor system. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock 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 closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
M. GRANT DATE shall mean the date of grant of the option as specified in
----------
the Grant Notice.
N. GRANT NOTICE shall mean the Notice of Grant of Stock Option
------------
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. INCENTIVE OPTION shall mean an option which satisfies the requirements
----------------
of Code Section 422.
P. MISCONDUCT shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive
of all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).
A-2.
<PAGE>
Q. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
R. NOTICE OF EXERCISE shall mean the notice of exercise in the form
------------------
attached hereto as Exhibit I.
S. OPTION SHARES shall mean the number of shares of Common Stock subject
-------------
to the option as specified in the Grant Notice.
T. OPTIONEE shall mean the person to whom the option is granted as
--------
specified in the Grant Notice.
U. PARENT shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
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.
V. PERMANENT DISABILITY shall mean the inability of Optionee to engage in
--------------------
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
W. PLAN shall mean the Corporation's 1996 Stock Option/Stock Issuance
----
Plan.
X. PLAN ADMINISTRATOR shall mean either the Board or a committee of Board
------------------
members, to the extent the committee is at the time responsible for the
administration of the Plan.
Y. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic Relations
----------------------------------
Order which substantially complies with the requirements of Code Section 414(p).
The Plan Administrator shall have the sole discretion to determine whether a
Domestic Relations Order is a Qualified Domestic Relations Order.
Z. SERVICE shall mean the Optionee's performance of services for the
-------
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor.
AA. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
--------------
Stock Exchange.
AB. SUBSIDIARY shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty
A-3.
<PAGE>
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-4.
<PAGE>
EXHIBIT 99.7
Form of Addendum to Stock Option Agreement
(Involuntary Termination Following a Corporate Transaction)
<PAGE>
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are hereby made
a part of, that certain Stock Option Agreement dated 2~ (the "Option Agreement")
by and between Western Staff Services, Inc. (the "Corporation") and 1~
("Optionee") evidencing the stock option (the "Option") granted on such date to
Optionee under the terms of the Corporation's 1996 Stock Option/Stock Issuance
Plan, and such provisions shall be effective immediately. All capitalized terms
in this Addendum, to the extent not otherwise defined herein, shall have the
meanings assigned to them in the Option Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CORPORATE TRANSACTION
1. To the extent the Option is, in connection with a Corporate
Transaction, to be assumed or replaced with a comparable option in accordance
with Paragraph 6 of the Option Agreement, the Option shall not accelerate upon
the occurrence of that Corporate Transaction, and the Option shall accordingly
continue, over Optionee's period of Service after the Corporate Transaction, to
become exercisable for the Option Shares in one or more installments in
accordance with the provisions of the Option Agreement. However, immediately
upon an Involuntary Termination of Optionee's Service within twelve (12) months
following such Corporate Transaction, the Option, to the extent outstanding at
the time but not otherwise fully exercisable, shall automatically accelerate so
that the Option shall become immediately exercisable for all the Option Shares
at the time subject to the Option and may be exercised for any or all of those
Option Shares as fully vested shares. The Option shall remain so exercisable
until the earlier of (i) the Expiration Date or (ii) the expiration of the one
-------
(1)-year period measured from the date of the Involuntary Termination.
2. For purposes of this Addendum, an INVOLUNTARY TERMINATION shall mean
the termination of Optionee's Service by reason of:
(i) Optionee's involuntary dismissal or discharge by the Corporation
for reasons other than Misconduct, or
(ii) Optionee's voluntary resignation following (A) a change in
Optionee's position with the Corporation (or Parent or Subsidiary employing
Optionee) which materially reduces Optionee's level of responsibility, (B)
a reduction in Optionee's level of compensation (including base salary,
fringe benefits and participation in any corporate-performance based bonus
or incentive programs) by more than fifteen percent (15%) or
<PAGE>
(C) a relocation of Optionee's place of employment by more than fifty (50)
miles, provided and only if such change, reduction or relocation is
effected by the Corporation without Optionee's consent.
3. The provisions of Paragraph 1 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within twelve (12) months after the Corporate
Transaction and shall supersede any provisions to the contrary in Paragraph 5 of
the Option Agreement.
IN WITNESS WHEREOF, Western Staff Services, Inc. has caused this
Addendum to be executed by its duly-authorized officer, and Optionee has
executed this Addendum, all as of the Effective Date specified below.
WESTERN STAFF SERVICES, INC.
By: _____________________________
Title: __________________________
_________________________________
1~, OPTIONEE
EFFECTIVE DATE: ______________, 199__
2.
<PAGE>
EXHIBIT 99.8
Form of Notice of Grant of Automatic Stock Option
<PAGE>
WESTERN STAFF SERVICES. INC.
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
----------------------------------------
AUTOMATIC STOCK OPTION
----------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Western Staff Services, Inc. (the
"Corporation"):
Optionee: 1~
--------
Grant Date: 2~
----------
Exercise Price: $3~ per share
--------------
Number of Option Shares: 4~ shares
-----------------------
Expiration Date: 5~
---------------
Type of Option: Non-Statutory Stock Option
--------------
Exercise Schedule: The option shall become fully exercisable for the Option
-----------------
Shares upon Optionee's completion of one (1) year of service as a member of
the Corporation's Board of Directors (the "Board") measured from the Grant
Date. In no event shall the Option become exercisable for any additional
Option Shares after Optionee's cessation of Board service.
Optionee understands and agrees that the Option is granted subject to and
in accordance with the terms of the automatic option grant program under the
Western Staff Services, Inc. 1996 Stock Option/Stock Issuance Plan (the "Plan").
Optionee further agrees to be bound by the terms of the Plan and the terms of
the Option as set forth in the Automatic Stock Option Agreement attached hereto
as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the official prospectus
for the Plan in the form attached hereto as Exhibit B. A copy of the Plan is
available upon request made to the Corporate Secretary at the Corporation's
principal offices.
Definitions. All capitalized terms in this Notice shall have the meaning
-----------
assigned to them in this Notice or in the attached Automatic Stock Option
Agreement.
<PAGE>
No Impairment of Rights. Nothing in this Notice or the attached
-----------------------
Automatic Stock Option Agreement or in the Plan shall interfere with or
otherwise restrict in any way the rights of the Corporation and the
Corporation's stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.
DATED: __________________, 199___
WESTERN STAFF SERVICES, INC.
By:
-----------------------------------------
Title:
--------------------------------------
--------------------------------------------
OPTIONEE
--------------------------------------------
Address:
--------------------------------------------
ATTACHMENTS
- -----------
EXHIBIT A - STOCK OPTION AGREEMENT
EXHIBIT B - PLAN SUMMARY AND PROSPECTUS
2.
<PAGE>
EXHIBIT A
---------
AUTOMATIC STOCK OPTION AGREEMENT
--------------------------------
<PAGE>
EXHIBIT B
---------
PLAN SUMMARY AND PROSPECTUS
---------------------------
<PAGE>
EXHIBIT 99.9
Form of Automatic Stock Option Agreement
<PAGE>
WESTERN STAFF SERVICES, INC.
AUTOMATIC STOCK OPTION AGREEMENT
--------------------------------
RECITALS
- --------
A. The Corporation has implemented an automatic option grant program
under the Plan pursuant to which eligible non-employee members of the Board will
automatically receive special option grants at periodic intervals over their
period of Board service in order to provide such individuals with a meaningful
incentive to continue to serve as members of the Board.
B. Optionee is an eligible non-employee Board member, and this Agreement
is executed pursuant to, and is intended to carry out the purposes of, the Plan
in connection with the automatic option grant to purchase shares of Common Stock
under the Plan.
C. The granted option is intended to be a non-statutory option which does
not meet the requirements of Section 422 of the Internal Revenue Code.
- ---
D. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
---------------
of the Grant Date, a Non-Statutory Option to purchase up to the number of Option
Shares specified in the Grant Notice. The Option Shares shall be purchasable
from time to time during the option term specified in Paragraph 2 at the
Exercise Price.
2. OPTION TERM. This option shall have a term of ten (10) years
-----------
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5, 6 or 7.
3. LIMITED TRANSFERABILITY. This option shall be neither
-----------------------
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, this option may be assigned in
whole or in part during Optionee's lifetime in accordance with the terms of a
Qualified Domestic Relations Order. The assigned portion of the option shall be
exercisable only by the person or persons who acquire a proprietary interest in
the option pursuant to such Qualified Domestic Relations Order. The terms
applicable to the assigned portion shall be the same as those in effect for this
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Corporation may deem appropriate.
<PAGE>
4. EXERCISABILITY. This option shall become exercisable for the
--------------
Option Shares in one or more installments as specified in the Exercise Schedule
set forth in the Grant Notice. As the option becomes exercisable for such
installments, those installments shall accumulate and the option shall remain
exercisable for the accumulated installments until the Expiration Date or the
sooner termination of the option term under Paragraph 5, 6 or 7.
5. CESSATION OF BOARD SERVICE. Should Optionee's service as a Board
--------------------------
member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
(i) Should Optionee cease to serve as a Board member
for any reason (other than death or Permanent Disability) while
holding this option, then the period for exercising this option
shall be reduced to twelve (12)-month period (commencing with
the date of such cessation of Board service), but in no event
shall this option be exercisable at any time after the
Expiration Date. During such limited period of exercisability,
this option may not be exercised in the aggregate for more than
the number of Option Shares (if any) for which the option is
exercisable on the date Optionee ceases service as a Board
member. Upon the earlier of (A) the expiration of such twelve
(12)-month period or (B) the specified Expiration Date, the
option shall terminate and cease to be exercisable with
respect to any exercisable Option Shares for which the option
has not been exercised.
(ii) Should Optionee die during the twelve (12)-month period
following his or her cessation of Board service, then the personal
representative of Optionee's estate or the person or persons to whom the
option is transferred pursuant to Optionee's will or in accordance with the
laws of descent and distribution shall have the right to exercise this
option for any or all of the Option Shares in which Optionee is vested at
the time of Optionee's cessation of Board service (less any Option Shares
purchased by Optionee after such cessation of Board service but prior to
death). Such right of exercise shall terminate, and this option shall
accordingly cease to be exercisable for such vested Option Shares, upon the
earlier of (i) the expiration of the twelve (12)-month period measured from
-------
the date of Optionee's cessation of Board service or (ii) the specified
Expiration Date of the option term.
(iii) Should Optionee cease service as a Board
member by reason of death or Permanent Disability, then this
option shall immediately become exercisable for all the Option
Shares at the time subject to this option so that Optionee (or
the personal representative of Optionee's estate or the person
or persons to whom the option is transferred upon Optionee's
death) shall have the right to exercise this option for any or
all of
2.
<PAGE>
those Option Shares as fully-vested shares of Common Stock at
any time prior to the earlier of (A) the expiration of the
-------
twelve (12)-month period measured from the date of Optionee's
death or Permanent Disability or (B) the specified Expiration
Date.
(iv) Upon Optionee's cessation of Board service for
any reason other than death or Permanent Disability, this
option shall immediately terminate and cease to be outstanding
with respect to any and all Option Shares for which this option
is not otherwise at that time exercisable in accordance with
the normal Exercise Schedule or the special acceleration
provisions of Paragraph 6 or 7 below.
6. CORPORATE TRANSACTION.
---------------------
(a) In the event of a Corporate Transaction, this option, to the
extent outstanding but not otherwise fully exercisable, shall automatically
accelerate so that this option shall, immediately prior to the effective date of
such Corporate Transaction, become exercisable for all the Option Shares at the
time subject to the option and may be exercised for any or all of those Option
Shares as fully-vested shares of Common Stock. Immediately following the
Corporate Transaction, this option shall terminate and cease to be exercisable
except to the extent assumed by the successor corporation (or parent thereof) in
connection with such Corporate Transaction.
(b) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
--------
7. CHANGE IN CONTROL/HOSTILE TAKE-OVER.
-----------------------------------
(a) In the event of a Change in Control, this option, to the
extent outstanding but not otherwise fully exercisable, shall automatically
accelerate so that this option shall, immediately prior to the effective date of
such Change in Control, become exercisable for all the Option Shares at the time
subject to the option and may be exercised for any or all of those Option Shares
as fully-vested shares of Common Stock. This option shall, immediately prior to
the effective date of a Change in Control, automatically accelerate and become
exercisable for all the Option Shares at the time subject to this option, and
this option may thereupon be exercised for any or all of those Option Shares as
fully-vested shares of Common Stock. This option shall remain exercisable for
such fully-
3.
<PAGE>
vested Option Shares until the earliest to occur of (i) the Expiration Date,
(ii) the sooner termination of this option in accordance with Paragraph 5 or 6
or (iii) the surrender of the option in connection with a Hostile Take-Over.
(b) Provided this option has been outstanding for at least six
(6) months prior to the occurrence of a Hostile Take-Over, Optionee shall have
the unconditional right (exercisable during the thirty (30)-day period
immediately following the consummation of such Hostile Take-Over) to surrender
this option to the Corporation in exchange for a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of the
Option Shares at the time subject to the surrendered option (whether or not
those Option Shares are otherwise at the time vested) over (ii) the aggregate
Exercise Price payable for such shares. This Paragraph 7(b) limited stock
appreciation right shall in all events terminate upon the expiration or sooner
termination of the option term and may not be assigned or transferred by
Optionee.
(c) To exercise the Paragraph 7(b) limited stock appreciation
right, Optionee must, during the applicable thirty (30)-day exercise period,
provide the Corporation with written notice of the option surrender in which
there is specified the number of Option Shares as to which the Option is being
surrendered. Such notice must be accompanied by the return of Optionee's copy of
this Agreement, together with any written amendments to such Agreement. The cash
distribution shall be paid to Optionee within five (5) days following such
delivery date, and no approval or consent of the Board shall be required in
connection with such option surrender and cash distribution. Upon receipt of
such cash distribution, this option shall be cancelled with respect to the
Option Shares subject to the surrendered option (or the surrendered portion) and
Optionee shall cease to have any further right to acquire those Option Shares
under this Agreement. The option shall, however, remain outstanding for the
balance of the Option Shares (if any) in accordance with the terms of this
Agreement, and the Corporation shall accordingly issue a new stock option
agreement (substantially in the same form as this Agreement) for those remaining
Option Shares.
8. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
---------------------------
Common Stock 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, appropriate adjustments shall be made to (i) the number and/or
class of securities subject to this option and (ii) the Exercise Price in order
to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
9. STOCKHOLDER RIGHTS. The holder of this option shall not have any
------------------
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
4.
<PAGE>
10. 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 any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a Notice of
Exercise for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the Corporation,
(B) shares of Common Stock held by Optionee (or any
other person or persons exercising the option) 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, or
(C) through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable written
instructions (I) to 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 taxes required to be withheld by the Corporation by reason of
such exercise and (II) to the Corporation to deliver the certificates
for the purchased shares directly to such brokerage firm in order to
complete the sale.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise delivered to the
Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if other
than Optionee) have the right to exercise this option.
5.
<PAGE>
(iv) Make appropriate arrangements with the Corporation
for the satisfaction of all Federal, state and local income tax withholding
requirements applicable to the option exercise.
(b) As soon after the Exercise Date as practical, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
11. NO IMPAIRMENT OF RIGHTS. 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. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.
12. COMPLIANCE WITH LAWS AND REGULATIONS.
------------------------------------
(a) The exercise of this option and the issuance of the 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 stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) 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, however, shall use its best efforts to obtain all such
approvals.
13. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
----------------------
in Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.
14. 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 at its principal corporate offices. Any notice required to
be given or delivered to Optionee shall be in writing and addressed to Optionee
at the address indicated below
6.
<PAGE>
Optionee's signature line on the Grant Notice. All notices shall be deemed
effective upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
15. CONSTRUCTION. This Agreement and the option evidenced hereby are
------------
made and granted pursuant to the automatic option grant program in effect under
the Plan and are in all respects limited by and subject to the terms of such
program.
16. GOVERNING LAW. The interpretation, performance and enforcement
-------------
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
7.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Western Staff Services, 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 1996 Stock Option/Stock Issuance Plan on
____________________, 199___.
Concurrently with the delivery of this Exercise Notice to 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 (or other documents) 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 payment of the Exercise
Price for any Purchased Shares.
Date , 199__
---------------
-------------------------------------------------
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:
----------------------------
8.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Automatic Stock Option Agreement.
---------
B. BOARD shall mean the Corporation's Board of Directors.
-----
C. CHANGE IN CONTROL shall mean 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
stockholders which the Board does not recommend such stockholders 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 the Board approved such election or nomination.
D. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
E. COMMON STOCK shall mean the Corporation's common stock.
------------
F. CORPORATE TRANSACTION shall mean either of the following stockholder-
---------------------
approved transactions to which the Corporation is a party:
(i) a merger or consolidation 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
transaction, or
A-1.
<PAGE>
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
G. CORPORATION shall mean Western Staff Services, Inc., a Delaware
-----------
corporation.
H. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or order
------------------------
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable state domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of Optionee.
I. EXERCISE DATE shall mean the date on which the option shall have been
-------------
exercised in accordance with Paragraph 10 of the Agreement.
J. EXERCISE PRICE shall mean the exercise price per share as specified in
--------------
the Grant Notice.
K. EXERCISE SCHEDULE shall mean the schedule specified in the Grant
-----------------
Notice, pursuant to which the option is to become exercisable for the Option
Shares in a series of annual installments over the Optionee's period of Board
service, subject to acceleration in accordance with the provisions of the
Agreement.
L. EXPIRATION DATE shall mean the date on which the option expires as
---------------
specified in the Grant Notice.
M. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the average of the high and low
selling prices per share of Common Stock on the date in question, as such
prices are reported by the National Association of Securities Dealers on
the Nasdaq National Market or any successor system. If there are no
selling prices quoted for the Common Stock on the date in question, then
the Fair Market Value shall be the average of the high and low selling
prices on the last preceding date for which such quotations exist.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the average of the high and low selling
prices per share of Common Stock on the date in question on the Stock
Exchange serving as the primary market for the Common Stock, as such prices
are officially quoted in the composite tape of transactions on such
A-2.
<PAGE>
exchange. If there are no selling prices quoted for the Common Stock on
the date in question, then the Fair Market Value shall be the average of
the high and low selling prices on the last preceding date for which such
quotations exist.
N. GRANT DATE shall mean the date of grant of the option as specified in
----------
the Grant Notice.
O. GRANT NOTICE shall mean the Notice of Grant of Non-Employee Director
------------
Automatic Stock Option accompanying the Agreement, pursuant to which Optionee
has been informed of the basic terms of the option evidenced hereby.
P. HOSTILE TAKE-OVER shall mean a change in ownership of the Corporation
-----------------
effected through the following transaction:
(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
stockholders which the Board does not recommend such stockholders to
accept, and
---
(ii) more than fifty percent (50%) of the acquired securities are
accepted from persons other than the officers and directors of the
Corporation subject to the short-swing profit restrictions of Section 16 of
the 1934 Act.
Q. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
--------
R. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
S. NOTICE OF EXERCISE shall mean the written notice of the option
------------------
exercise on the form provided by the Corporation for such purpose.
T. OPTION SHARES shall mean the number of shares of Common Stock subject
-------------
to the option as specified in the Grant Notice.
U. OPTIONEE shall mean the person to whom the option is granted as
--------
specified in the Grant Notice.
A-3.
<PAGE>
V. PERMANENT DISABILITY shall mean the inability of Optionee to perform
--------------------
his or her usual duties as a Board member 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.
W. PLAN shall mean the Corporation's 1996 Stock Option/Stock Issuance
----
Plan.
X. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic Relations
----------------------------------
Order which substantially complies with the requirements of Code Section 414(p).
The Plan Administrator shall have the sole discretion to determine whether a
Domestic Relations Order is a Qualified Domestic Relations Order.
Y. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
--------------
Stock Exchange.
12.
<PAGE>
EXHIBIT 99.10
Form of Stock Issuance Agreement
<PAGE>
WESTERN STAFF SERVICES, INC.
STOCK ISSUANCE AGREEMENT
------------------------
AGREEMENT made as of this ______ day of _____________ 199___, by and
between Western Staff Services, Inc., a Delaware corporation, and
_____________________________, a Participant in the Corporation's 1996 Stock
Option/Stock Issuance Plan.
All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement or in the attached Appendix.
A. PURCHASE OF SHARES
------------------
1. PURCHASE. Participant hereby purchases _____________ unvested
--------
shares of Common Stock (the "Purchased Shares") pursuant to the provisions of
the Stock Issuance Program at the purchase price of $______ per share (the
"Purchase Price").
2. PAYMENT. Concurrently with the delivery of this Agreement to the
-------
Corporation, Participant shall pay the Purchase Price for the Purchased Shares
in cash or check payable to the Corporation and shall deliver a duly-executed
blank Assignment Separate from Certificate (in the form attached hereto as
Exhibit I) with respect to the Purchased Shares.
3. STOCKHOLDER RIGHTS. Until such time as the Corporation exercises
------------------
the Repurchase Right, Participant (or any successor in interest) shall have all
the rights of a stockholder (including voting, dividend and liquidation rights)
with respect to the Purchased Shares, subject, however, to the transfer
restrictions of Article B.
4. COMPLIANCE WITH LAW. Under no circumstances shall shares of
-------------------
Common Stock or other assets be issued or delivered to Participant pursuant to
the provisions of this Agreement unless, in the opinion of counsel for the
Corporation or its suc cessors, there shall have been compliance with all
applicable requirements of the Federal and state securities laws, all applicable
listing requirements of any stock exchange (or the Nasdaq National Market if
applicable) on which the Common Stock is at the time listed for trading and all
other requirements of law or of any regulatory bodies having jurisdiction over
such issuance and delivery.
B. TRANSFER RESTRICTIONS
---------------------
1. RESTRICTION ON TRANSFER. Except for any Permitted Transfer,
-----------------------
Participant shall not transfer, assign, encumber or otherwise dispose of any of
the Purchased Shares which are subject to the Repurchase Right.
<PAGE>
2. RESTRICTIVE LEGEND. The stock certificates for the Purchased
------------------
Shares shall be endorsed with the following restrictive legend:
"The shares represented by this certificate are
unvested and are subject to a repurchase right granted to
the Corporation and accordingly may not be sold, assigned,
transferred, encumbered, or in any manner disposed of
except in conformity with the terms of a written agreement
dated ____________, 199__ between the Corporation and the
registered holder of the shares (or the predecessor in
interest to the shares). A copy of such agreement is
maintained at the Corporation's principal corporate offices."
3. TRANSFEREE OBLIGATIONS. Each person (other than the
----------------------
Corporation) to whom the Purchased Shares are transferred by means of a
Permitted Transfer must, as a condition precedent to the validity of such
transfer, acknowledge in writing to the Corporation that such person is bound by
the provisions of this Agreement and that the transferred shares are subject to
the Repurchase Right to the same extent such shares would be so subject if
retained by Participant.
C. REPURCHASE RIGHT
----------------
1. GRANT. The Corporation is hereby granted the right (the
-----
"Repurchase Right"), exercisable at any time during the ninety (90)-day period
following the date Participant ceases for any reason to remain in Service, to
repurchase at the Purchase Price all or any portion of the Purchased Shares in
which Participant is not, at the time of his or her cessation of Service, vested
in accordance with the Vesting Schedule (such shares to be hereinafter referred
to as the "Unvested Shares").
2. EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall
--------------------------------
be exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the ninety (90)-day exercise period. The notice
shall indicate the number of Unvested Shares to be repurchased and the date on
which the repurchase is to be effected, such date to be not more than thirty
(30) days after the date of such notice. The certificates representing the
Unvested Shares to be repurchased shall be delivered to the Corporation prior to
the close of business on the date specified for the repurchase. Concurrently
with the receipt of such stock certificates, the Corporation shall pay to Owner,
in cash or cash equivalents (including the cancellation of any purchase-money
indebtedness), an amount equal to the Purchase Price previously paid for the
Unvested Shares which are to be repurchased from Owner.
3. TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right
-----------------------------------
shall terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph C.2. In addition, the Repurchase Right shall
terminate and cease to be exercisable with respect to any and all Purchased
Shares in which Participant vests in accordance with the following Vesting
Schedule:
2.
<PAGE>
(i) Upon Participant's completion of one (1) year of Service
measured from ______________, 199__, Participant shall acquire a vested
interest in, and the Repurchase Right shall lapse with respect to, twenty-
five percent (25%) of the Purchased Shares.
(ii) Participant shall acquire a vested interest in, and the
Repurchase Right shall lapse with respect to, the remaining Purchased
Shares in successive equal monthly installments upon Participant's
completion of each additional month of Service over the thirty-six (36)-
month period measured from the initial vesting date under subparagraph (i)
above.
4. RECAPITALIZATION. Any new, substituted or additional
----------------
securities or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with respect to
the Purchased Shares shall be immediately subject to the Repurchase Right, but
only to the extent the Purchased Shares are at the time covered by such right.
Appropriate adjustments to reflect such distribution shall be made to the number
and/or class of Purchased Shares subject to this Agreement and to the price per
share to be paid upon the exercise of the Repurchase Right in order to reflect
the effect of any such Recapitalization upon the Corporation's capital
structure; provided, however, that the aggregate purchase price shall remain the
--------
same.
5. CORPORATE TRANSACTION.
---------------------
(a) Immediately prior to the consummation of any Corporate
Transaction, the Repurchase Right shall automatically lapse in its entirety,
except to the extent the Repurchase Right is assigned to the successor
corporation (or parent thereof) in connection with the Corporate Transaction.
(b) To the extent the Repurchase Right remains in effect
following a Corporate Transaction, such right shall apply to the new capital
stock or other property (including any cash payments) received in exchange for
the Purchased Shares in consummation of the Corporate Transaction, but only to
the extent the Purchased Shares are at the time covered by such right.
Appropriate adjustments shall be made to the price per share payable upon
exercise of the Repurchase Right to reflect the effect of the Corporate
Transaction upon the Corporation's capital structure; provided, however, that
--------
the aggregate purchase price shall the same.
(c) The Repurchase Right shall automatically lapse in its
entirety, and all the Purchased Shares shall immediately vest in full, upon an
Involuntary Termination of Participant's Service within twelve (12) months
following the effective date of a Corporate Transaction in which the Repurchase
Right has been assigned.
3.
<PAGE>
D. SPECIAL TAX ELECTION
--------------------
1. SECTION 83(B) ELECTION . Under Code Section 83, the excess of
-----------------------
the fair market value of the Purchased Shares on the date any forfeiture
restrictions applicable to such shares lapse over the Purchase Price paid for
such shares will be reportable as ordinary income on the lapse date. For this
purpose, the term "forfeiture restrictions" includes the right of the
Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right.
Participant may elect under Code Section 83(b) to be taxed at the time the
Purchased Shares are acquired, rather than when and as such Purchased Shares
cease to be subject to such forfeiture restrictions. Such election must be
filed with the Internal Revenue Service within thirty (30) days after the date
of this Agreement. Even if the fair market value of the Purchased Shares on the
date of this Agreement equals the Purchase Price paid (and thus no tax is
payable), the election must be made to avoid adverse tax consequences in the
future. THE FORM FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT II HERETO.
PARTICIPANT UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE
THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE
FORFEITURE RESTRICTIONS LAPSE.
2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS
---------------------
PARTICIPANT'S SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY
ELECTION UNDER CODE SECTION 83(B), EVEN IF PARTICIPANT REQUESTS THE CORPORATION
OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.
E. GENERAL PROVISIONS
------------------
1. ASSIGNMENT. The Corporation may assign the Repurchase Right to
----------
any person or entity selected by the Board, including (without limitation) one
or more stockholders of the Corporation.
2. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement
---------------------------------
or in the Plan shall confer upon Participant any right to continue in Service
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Participant) or of Participant, which rights are hereby expressly
reserved by each, to terminate Participant's Service at any time for any reason,
with or without cause.
3. NOTICES. Any notice required to be given under this Agreement
-------
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.
4.
<PAGE>
4. NO WAIVER. The failure of the Corporation in any instance to
---------
exercise the Repurchase Right shall not constitute a waiver of any other
repurchase rights that may subsequently arise under the provisions of this
Agreement or any other agreement between the Corporation and Participant. No
waiver of any breach or condition of this Agreement shall be deemed to be a
waiver of any other or subsequent breach or condition, whether of like or
different nature.
5. CANCELLATION OF SHARES. If the Corporation shall make
----------------------
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement). Such shares shall be
deemed purchased in accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement.
6. GOVERNING LAW. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of California without resort
to that State's conflict-of-laws rules.
7. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
----------------------
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and upon Participant, Participant's assigns and the legal
representatives, heirs and legatees of Participant's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
5.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
WESTERN STAFF SERVICES, INC.
By:
----------------------------------------------
Title:
-------------------------------------------
Address:
-----------------------------------------
-----------------------------------------
PARTICIPANT
Address:
-----------------------------------------
6.
<PAGE>
EXHIBIT I
---------
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED ______________________ hereby sell(s), assign(s)
and transfer(s) unto Western Staff Services, Inc. (the "Corporation"),
______________________ (_______) shares of the Common Stock of the Corporation
standing in his or her name on the books of the Corporation represented by
Certificate No. ___________________ herewith and do(es) hereby irrevocably
constitute and appoint _______________________________ Attorney to transfer the
said stock on the books of the Corporation with full power of substitution in
the premises.
Dated: ________________
Signature
--------------------------------------------
INSTRUCTION: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Participant.
7.
<PAGE>
EXHIBIT II
SECTION 83(B) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
-------------------------------------------
Address:
----------------------------------------
Taxpayer Ident. No.:
----------------------------
(2) The property with respect to which the election is being made is
____________ shares of the common stock of Western Staff Services, Inc.
(3) The property was issued on _____________, 199___.
(4) The taxable year in which the election is being made is the calendar year
199__.
(5) The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if for
any reason taxpayer's employment with the issuer is terminated. The
issuer's repurchase right lapses in a series of installments over a four
(4)-year period ending on ________________________, 199___.
(6) The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never
lapse) is $____________ per share.
(7) The amount paid for such property is $____________ per share.
(8) A copy of this statement was furnished to Western Staff Services, Inc. for
whom taxpayer rendered the services underlying the transfer of property.
(9) This statement is executed on ________________________, 199__.
Spouse (if any)
-------------------------
Taxpayer
- -----------------------------------------
This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Issuance Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Participant must retain two (2) copies of the completed form for filing with his
or her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
8.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Issuance Agreement.
---------
B. BOARD shall mean the Corporation's Board of Directors.
-----
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
D. COMMON STOCK shall mean the Corporation's common stock.
------------
E. CORPORATE TRANSACTION shall mean either of the following stockholder-
---------------------
approved transactions:
(i) a merger or consolidation 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 transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation.
F. CORPORATION shall mean Western Staff Services, Inc., a Delaware
-----------
corporation.
G. INVOLUNTARY TERMINATION shall mean the termination of Participant's
-----------------------
Service which occurs by reason of:
(i) Participant's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) Participant's voluntary resignation following (A) a change in
Participant's position with the Corporation which materially reduces
Participant's level of responsibility, (B) a reduction in Participant's
level of compensation (including base salary, fringe benefits and
participation in corporate-performance based bonus or incentive programs)
by more than fifteen percent (15%) or (C) a relocation of Participant's
place of employment by more than fifty (50) miles, provided and only if
such change, reduction or relocation is effected by the Corporation without
Participant's consent.
A-1.
<PAGE>
H. MISCONDUCT shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by Participant, any unauthorized use or disclosure by Participant
of confidential information or trade secrets of the Corporation (or any Parent
or Subsidiary), or any other intentional misconduct by Participant adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
Participant or any other person in the Service of the Corporation (or any Parent
or Subsidiary).
I. OWNER shall mean Participant and all subsequent holders of the
-----
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Participant.
J. PARENT shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
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.
K. PARTICIPANT shall mean the person to whom shares are issued under the
-----------
Stock Issuance Program.
L. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
------------------
Purchased Shares, provided and only if Participant obtains the Corporation's
--------------------
prior written consent to such transfer, (ii) a transfer of title to the
Purchased Shares effected pursuant to Participant's will or the laws of
intestate succession following Participant's death or (iii) a transfer to the
Corporation in pledge as security for any purchase-money indebtedness incurred
by Participant in connection with the acquisition of the Purchased Shares.
M. PLAN shall mean the Corporation's 1996 Stock Option/Stock Issuance
----
Plan.
N. PLAN ADMINISTRATOR shall mean either the Board or a committee of Board
------------------
members, to the extent the committee is at the time responsible for
administration of the Plan.
O. PURCHASE PRICE shall have the meaning assigned to such term in
--------------
Paragraph A.1.
P. PURCHASED SHARES shall have the meaning assigned to such term in
----------------
Paragraph A.1.
Q. RECAPITALIZATION shall mean 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.
A-2.
<PAGE>
R. REORGANIZATION shall mean any of the following transactions:
--------------
(i) a merger or consolidation in which the Corporation is not the
surviving entity,
(ii) a sale, transfer or other disposition of all or substantially
all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the surviving
entity but in which the Corporation's outstanding voting securities are
transferred in whole or in part to a person or persons different from the
persons holding those securities immediately prior to the merger, or
(iv) any transaction effected primarily to change the state in which
the Corporation is incorporated or to create a holding company structure.
S. REPURCHASE RIGHT shall mean the right granted to the Corporation in
----------------
accordance with Article C.
T. SERVICE shall mean the Participant's performance of services for the
-------
Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or a consultant or independent advisor.
U. STOCK ISSUANCE PROGRAM shall mean the Stock Issuance Program under the
----------------------
Plan.
V. SUBSIDIARY shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
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.
W. VESTING SCHEDULE shall mean the vesting schedule specified in
----------------
Paragraph C.3, subject to the acceleration provisions upon an Involuntary
Termination following a Corporate Transaction.
X. UNVESTED SHARES shall have the meaning assigned to such term in
---------------
Paragraph C.1.
A-3.
<PAGE>
EXHIBIT 99.11
1996 Employee Stock Purchase Plan
<PAGE>
WESTERN STAFF SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
----------------------------
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests
of Western Staff Services, Inc. by providing eligible employees with the
opportunity to acquire a proprietary interest in the Corporation through
participation in a payroll-deduction based employee stock purchase plan designed
to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares of Common Stock
purchased 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 Five Hundred
Thousand (500,000) shares.
B. Should any change be made to the Common Stock 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, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date and (iii) the number and class of
securities and the price per share in effect under each outstanding purchase
right in order to prevent the dilution or enlargement of benefits thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
<PAGE>
B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date. The initial offering period shall commence on the first business
day in October 1996 and terminate on the last business day in June 1998. The
next offering period shall commence on the first business day in July 1998 and
terminate on the last business day in June 2000. Subsequent offering periods
shall commence as designated by the Plan Administrator.
C. Each offering period shall be comprised of a series of one or more
successive Purchase Intervals. Purchase Intervals shall run from the first
business day in January each year to the last business day in June of the same
year and from the first business day in July each year to the last business day
in December of the following year. However, the first Purchase Interval in
effect under the initial offering period shall commence on the first business
day in October 1996 and terminate on the last business day in December 1996.
D. Should the Fair Market Value per share of Common Stock on any
Purchase Date within an offering period be less than the Fair Market Value per
share of Common Stock on the start date of that offering period, then that
offering period shall automatically terminate immediately after the purchase of
shares of Common Stock on such Purchase Date, and a new offering period shall
commence on the next business day following such Purchase Date. The new
offering period shall have a duration of twenty four (24) months, unless a
shorter duration is established by the Plan Administrator within five (5)
business days following the start date of that offering period.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of
any offering period under the Plan may enter that offering period on such start
date or on any subsequent Semi-Annual Entry Date within that offering period,
provided he or she remains an Eligible Employee.
B. Each individual who first becomes an Eligible Employee after the
start date of an offering period may enter that offering period on any
subsequent Semi-Annual Entry Date within that offering period on which he or she
is an Eligible Employee.
C. The date an individual enters an offering period shall be
designated his or her Entry Date for purposes of that offering period.
D. To participate in the Plan for a particular offering period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date.
2.
<PAGE>
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock during an offering period may be any
multiple of one percent (1%) of the Base Salary paid to the Participant during
each Purchase Interval within that offering period, up to a maximum of ten
percent (10%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:
(i) The Participant may, at any time during the offering period,
reduce his or her rate of payroll deduction to become effective as soon as
possible after filing the appropriate form with the Plan Administrator.
The Participant may not, however, effect more than one (1) such reduction
per Purchase Interval.
(ii) The Participant may, prior to the commencement of any new
Purchase Interval within the offering period, increase the rate of his or
her payroll deduction by filing the appropriate form with the Plan
Administrator. The new rate (which may not exceed the ten percent (10%)
maximum) shall become effective as of the start date of the first Purchase
Interval following the filing of such form.
B. Payroll deductions shall begin on the first pay day following the
Participant's Entry Date into the offering period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of that offering period. The amounts so
collected shall be credited to the Participant's book account under the Plan,
but no interest shall be paid on the balance from time to time outstanding in
such account. The amounts collected from the Participant shall not be held in
any segregated account or trust fund and may be commingled with the general
assets of the Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the termination
of the Participant's purchase right in accordance with the provisions of the
Plan.
D. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.
VII. PURCHASE RIGHTS
A. GRANT OF PURCHASE RIGHT. A Participant shall be granted a
-----------------------
separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Participant's Entry
Date into the offering period and shall provide the Participant with the right
to purchase shares of Common Stock, in a series of successive
3.
<PAGE>
installments over the remainder of such offering period, upon the terms set
forth below. The Participant shall execute a stock purchase agreement embodying
such terms and such other provisions (not inconsistent with the Plan) as the
Plan Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Corporation
or any Corporate Affiliate.
B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be
------------------------------
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant (other than Participants whose payroll deductions
have previously been refunded pursuant to the Termination of Purchase Right
provisions below) on each such Purchase Date. The purchase shall be effected by
applying the Participant's payroll deductions for the Purchase Interval ending
on such Purchase Date to the purchase of whole shares of Common Stock at the
purchase price in effect for the Participant for that Purchase Date.
C. PURCHASE PRICE. The purchase price per share at which Common
--------------
Stock will be purchased on the Participant's behalf on each Purchase Date within
the offering period shall not be less than eighty-five percent (85%) of the
lower of (i) the Fair Market Value per share of Common Stock on the
- -----
Participant's Entry Date into that offering period or (ii) the Fair Market Value
per share of Common Stock on that Purchase Date. However, for each Participant
whose Entry Date is other than the start date of the offering period, the clause
(i) amount shall in no event be less than the Fair Market Value per share of
Common Stock on the start date of that offering period.
D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common
----------------------------
Stock purchasable by a Participant on each Purchase Date during the offering
period shall be the number of whole shares obtained by dividing the amount
collected from the Participant through payroll deductions during the Purchase
Interval ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed seven hundred fifty (750) shares, subject to periodic adjustments in the
event of certain changes in the Corporation's capitalization.
E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not applied to
-------------------------
the purchase of shares of Common Stock on any Purchase Date because they are
not sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date shall be promptly refunded.
4.
<PAGE>
F. TERMINATION OF PURCHASE RIGHT. The following provisions shall
-----------------------------
govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next scheduled
Purchase Date in the offering period, terminate his or her outstanding
purchase right by filing the appropriate form with the Plan Administrator
(or its designate), and no further payroll deductions shall be collected
from the Participant with respect to the terminated purchase right. Any
payroll deductions collected during the Purchase Interval in which such
termination occurs shall, at the Participant's election, be immediately
refunded or held for the purchase of shares on the next Purchase Date. If
no such election is made at the time such purchase right is terminated,
then the payroll deductions collected with respect to the terminated right
shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the offering
period for which the terminated purchase right was granted. In order to
resume participation in any subsequent offering period, such individual
must re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before his or her scheduled Entry Date into that
offering period.
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in status)
while his or her purchase right remains outstanding, then that purchase
right shall immediately terminate, and all of the Participant's payroll
deductions for the Purchase Interval in which the purchase right so
terminates shall be immediately refunded. However, should the Participant
cease to remain in active service by reason of an approved unpaid leave of
absence, then the Participant shall have the right, exercisable up until
the last business day of the Purchase Interval in which such leave
commences, to (a) withdraw all the payroll deductions collected to date on
his or her behalf for that Purchase Interval or (b) have such funds held
for the purchase of shares on his or her behalf on the next scheduled
Purchase Date. In no event, however, shall any further payroll deductions
be collected on the Participant's behalf during such leave. Upon the
Participant's return to active service, his or her payroll deductions under
the Plan shall automatically resume at the rate in effect at the time the
leave began, unless the Participant withdraws from the Plan prior to his or
her return.
G. CORPORATE TRANSACTION. Each outstanding purchase right shall
---------------------
automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the Purchase Interval in which such Corporate Transaction occurs to the
purchase of whole shares of Common
5.
<PAGE>
Stock at a purchase price per share not less than eighty-five percent (85%) of
the lower of (i) the Fair Market Value per share of Common Stock on the
-----
Participant's Entry Date into the offering period in which such Corporate
Transaction occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Corporate Transaction. However,
the applicable limitation on the number of shares of Common Stock purchasable
per Participant shall continue to apply to any such purchase, and the clause (i)
amount above shall not, for any Participant whose Entry Date for the offering
period is other than the start date of that offering period, be less than the
Fair Market Value per share of Common Stock on that start date.
The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Corporate Transaction,
and Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
H. PRORATION OF PURCHASE RIGHTS. Should the total number of shares
----------------------------
of Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. ASSIGNABILITY. The purchase right shall be exercisable only by
-------------
the Participant and shall not be assignable or transferable by the Participant.
J. STOCKHOLDER RIGHTS. A Participant shall have no stockholder
------------------
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value per share on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.
6.
<PAGE>
B. For purposes of applying such accrual limitations to the purchase
rights granted under the Plan, the following provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding
purchase right shall accrue in a series of installments on each successive
Purchase Date during the offering period on which such right remains
outstanding.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire Common Stock under
one (1) or more other purchase rights at a rate equal to Twenty-Five
Thousand Dollars ($25,000) worth of Common Stock (determined on the basis
of the Fair Market Value per share on the date or dates of grant) for each
calendar year such rights were at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Interval, then the payroll
deductions which the Participant made during that Purchase Interval with respect
to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on April 25, 1996 and shall
become effective on the first business day in October 1996, provided no purchase
--------
rights granted under the Plan shall be exercised, and no shares of Common Stock
shall be issued hereunder, until (i) the Plan shall have been approved by the
stockholders of the Corporation and (ii) the Corporation shall have complied
with all applicable requirements of the 1933 Act (including the registration of
the shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In the event such
stockholder approval is not obtained, or such compliance is not effected, within
twelve (12) months after the date on which the Plan is adopted by the Board, the
Plan shall terminate and have no further force or effect, and all sums collected
from Participants during the initial offering period hereunder shall be
refunded.
B. Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest of (i) the last business day in June 2006, (ii) the date on
--------
which all shares
7.
<PAGE>
available for issuance under the Plan shall have been sold pursuant to purchase
rights exercised under the Plan or (iii) the date on which all purchase rights
are exercised in connection with a Corporate Transaction. No further purchase
rights shall be granted or exercised, and no further payroll deductions shall be
collected, under the Plan following such termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any
time to become effective immediately following the close of any Purchase
Interval. However, the Board may not, without the approval of the Corporation's
stockholders, (i) materially increase the number of shares of Common Stock
issuable under the Plan or the maximum number of shares purchasable per
Participant on any one Purchase Date, except for permissible adjustments in the
event of certain changes in the Corporation's capitalization, (ii) alter the
purchase price formula so as to reduce the purchase price payable for the shares
of Common Stock purchasable under the Plan or (iii) materially increase the
benefits accruing to Participants under the Plan or materially modify the
requirements for eligibility to participate in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
C. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.
8.
<PAGE>
SCHEDULE A
----------
CORPORATIONS PARTICIPATING IN
EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE TIME
------------------------
Western Staff Services, Inc.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. BASE SALARY shall mean the (i) regular base salary paid to a
-----------
Participant by one or more Participating Companies during such individual's
period of participation in one or more offering periods under the Plan plus (ii)
any pre-tax contributions made by the Participant to any Code Section 401(k)
salary deferral plan or any Code Section 125 cafeteria benefit program now or
hereafter established by the Corporation or any Corporate Affiliate. The
following items of compensation shall NOT be included in Base Salary: (i) all
overtime payments, bonuses, commissions (other than those functioning as base
salary equivalents), profit-sharing distributions and other incentive-type
payments and (ii) any and all contributions (other than Code Section 401(k) or
Code Section 125 contributions) made on the Participant's behalf by the
Corporation or any Corporate Affiliate under any employee benefit or welfare
plan now or hereafter established.
B. BOARD shall mean the Corporation's Board of Directors.
-----
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
D. COMMON STOCK shall mean the Corporation's common stock.
------------
E. CORPORATE AFFILIATE shall mean any parent or subsidiary
-------------------
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.
F. CORPORATE TRANSACTION shall mean either of the following
---------------------
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation 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 transaction, or
(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.
G. CORPORATION shall mean Western Staff Services, Inc., a Delaware
-----------
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Western Staff Services, Inc. which shall by
appropriate action adopt the Plan.
A-1.
<PAGE>
H. ELIGIBLE EMPLOYEE shall mean any person who is employed by a
-----------------
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).
I. ENTRY DATE shall mean the date an Eligible Employee first
----------
commences participation in the offering period in effect under the Plan. The
earliest Entry Date under the Plan shall be the first business day in October
1996.
J. FAIR MARKET VALUE per share of Common Stock on any relevant date
-----------------
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock 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 closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
K. 1933 ACT shall mean the Securities Act of 1933, as amended.
--------
L. PARTICIPANT shall mean any Eligible Employee of a Participating
-----------
Corporation who is actively participating in the Plan.
M. PARTICIPATING CORPORATION shall mean the Corporation and such
-------------------------
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan as of the Effective Time are listed in
attached Schedule A.
N. PLAN shall mean the Corporation's Employee Stock Purchase Plan, as
----
set forth in this document.
A-2.
<PAGE>
O. PLAN ADMINISTRATOR shall mean the committee of two (2) or more
------------------
Board members appointed by the Board to administer the Plan.
P. PURCHASE DATE shall mean the last business day of each Purchase
-------------
Interval. The initial Purchase Date shall be December 31, 1996.
Q. PURCHASE INTERVAL shall mean each successive six (6)-month period
-----------------
within the offering period at the end of which there shall be purchased shares
of Common Stock on behalf of each Participant.
R. SEMI-ANNUAL ENTRY DATE shall mean the first business day in
----------------------
January and July each year on which an Eligible Employee may first enter an
offering period.
S. STOCK EXCHANGE shall mean either the American Stock Exchange or
--------------
the New York Stock Exchange.
A-3.
