<PAGE>
As filed with the Securities and Exchange Commission on August 14, 1996
Registration No. 333-
===============================================================================-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MICREL, INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
CALIFORNIA 94-2526744
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1849 Fortune Drive
San Jose, California 95131
(Address of Principal Executive Office, Including Zip Code)
MICREL, INCORPORATED
1994 STOCK OPTION PLAN
(Full Title of the Plans)
Robert J. Barker
Chief Financial Officer
Micrel, Incorporated
1849 Fortune Drive
San Jose, California 95131
(Name and Address of Agent for Service)
(408) 944-0800
(Telephone Number, Including Area Code, of Agent for Service)
Copy to:
Michael C. Phillips, Esq.
Stephen J. Schrader, Esq.
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, California 94304
<TABLE>
<CAPTION>
=============================================================================================================
CALCULATION OF REGISTRATION FEE
=============================================================================================================
PROPOSED
TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER SHARE (1) AGGREGATE OFFERING PRICE (1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,000,000 $17.00 $17,000,000 $5,862
=============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rules 457(h) and (c) under the Securities Act of 1933, based
upon an average of the high and low prices of Micrel, Incorporated common
stock reported on the Nasdaq National Market on August 7, 1966.
In addition, pursuant to Rule 416(c) under the Securities Act, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described herein.
Page 1 of 6 Pages
Exhibit Index Located at Page 6
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
------------------------------------------------
In accordance with General Instruction E to Form S-8, the contents of
the Registrant's Registration Statement on Form S-8, Commission File No. 33-
90396, including exhibits thereto, are hereby incorporated by reference into
this Registration Statement, except as the same may be modified by the
information set forth herein.
Item 8. Exhibits.
---------
Exhibit
Number Description
------- -----------
4.1 Micrel, Incorporated 1994 Stock Option Plan
5.1 Opinion of Morrison & Foerster LLP
23.1 Consent of Counsel (included in Exhibit 5.1)
23.2 Consent of Deloitte & Touche LLP, Independent Auditors
(see page II-5)
25.1 Power of Attorney (see page II-3)
II-2
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Micrel, Incorporated, certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Jose, State of
California, on August 8, 1996.
MICREL, INCORPORATED
By: /s/ Raymond D. Zinn
--------------------
Raymond D. Zinn
President and Chief Executive Officer
POWER OF ATTORNEY
-----------------
Each person whose signature appears below constitutes and appoints
Raymond D. Zinn and Robert J. Barker, and each of them, as attorneys-in-fact,
each with the power of substitution, for him in any and all capacities, to sign
any amendment to this Registration Statement and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting to said attorneys-in-fact, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming the said attorney-
in-fact or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Capacity Date
- --------- -------- ----
/s/ Raymond D. Zinn President, Chief Executive August 8, 1996
- ----------------------------- Officer and Chairman of the
Raymond D. Zinn Board of Directors (Principal
Executive Officer)
/s/ Robert J. Barker Vice President, Finance and August 8, 1996
- ----------------------------- Chief Financial Officer
Robert J. Barker (Principal Financial and
Accounting Officer)
/s/ Warren H. Muller Vice President, Secretary and August 8, 1996
- ----------------------------- Director
Warren H. Muller
II-3
<PAGE>
Signature Capacity Date
- --------- -------- ----
/s/ George Kelly Director August 8, 1996
- -----------------------------
George Kelly
/s/ Dale L. Peterson Director July 30, 1996
- -----------------------------
Dale L. Peterson
/s/ Larry L. Hansen Director August 8, 1996
- -----------------------------
Larry L. Hansen
II-4
<PAGE>
Exhibit 23.2
------------
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
Micrel, Incorporated on Form S-8 of our reports dated January 24, 1996,
appearing in the Annual Report on Form 10-K of Micrel, Incorporated for the year
ended December 31, 1995.
DELOITTE & TOUCHE LLP
San Jose, California
August 12, 1996
II-5
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
Number Document
- ------ --------
4.1 Micrel, Incorporated 1994 Stock Option Plan
5.1 Opinion of Morrison & Foerster LLP
23.1 Consent of Counsel (included in Exhibit 5.1)
23.2 Consent of Deloitte & Touche LLP, Independent
Auditors (see page II-5)
25.1 Power of Attorney (see page II-3)
<PAGE>
EXHIBIT 4.1
MICREL, INCORPORATED 1994 STOCK OPTION PLAN
<PAGE>
MICREL, INCORPORATED
--------------------
1994 STOCK OPTION PLAN
----------------------
ARTICLE 1
PURPOSE
-------
The purpose of this 1994 Stock Option Plan (the "Plan") is to advance the
interests of MICREL, INCORPORATED, a California corporation (the "Company"), by
giving the Company's employees and others who perform substantial services on
behalf of the Company incentive through ownership of the Company's common stock
to continue in the service of the Company and thereby to help the Company
compete effectively with other enterprises for the services of qualified
individuals. This Plan is adopted under Section 408 of the California
Corporations Code.
ARTICLE 2
STOCK SUBJECT TO THE PLAN
-------------------------
Subject to adjustment as provided in Article 11, the Company is authorized
to issue options ("Options") to purchase up to 2,482,334 shares of its common
stock ("Shares"). Any unpurchased Shares that are subject to an Option that
terminates for any reason other than exercise shall, unless the Plan has been
terminated, become available for future grant under the Plan. The Company shall
at all times reserve for issuance pursuant to the Plan a number of its
authorized but unissued Shares equal to the number of Shares issuable under the
Plan. Exercise of an Option shall decrease the number of Shares available, both
for purposes of the Plan and for sale under the Option, by the number of Shares
as to which the Option is granted.
ARTICLE 3
TERM OF PLAN
------------
The Plan shall become effective upon its adoption by the Board of Directors
of the Company (the "Board"). Within 12 months after the date of such adoption,
the Plan shall be approved by the shareholders of the Company in the degree and
manner required under applicable state and federal law. No Option shall become
exercisable unless and until such shareholder approval has been obtained. Unless
sooner
-1-
<PAGE>
terminated under Article 10 or 11, the Plan shall terminate upon the earlier of
(a) the tenth anniversary of its adoption by the Board or (b) the date on which
all Shares available for issuance under the Plan have been issued. Any Option
outstanding under the Plan at the time of its termination shall remain in effect
in accordance with its terms and conditions and those of the Plan.
ARTICLE 4
PARTICIPANTS
------------
Section 4.1. Eligibility. The following persons shall be eligible to
----------- -----------
receive Options under the Plan: (a) any employee ("Employee") of the Company or
any present or future parent or subsidiary corporation of the Company
("Affiliate") as defined in Sections 424(e) and (f) of the Internal Revenue Code
of 1986, as amended (the "Code"), respectively, (b) any person who is engaged by
the Company or an Affiliate to render services and is compensated for such
services, but who is not an Employee ("Consultant") and (c) any director who is
not an Employee, whether compensated for such services or not ("Outside
Director"). Only Employees are eligible to receive Options that are intended to
be incentive options ("Incentive Options") within the meaning of Section 422 of
the Code. Employees, Consultants and Outside Directors are eligible to receive
Options that are not intended to be Incentive Options ("Nonstatutory Options").
Section 4.2. Participants. The Board shall have the authority in its sole
----------- ------------
discretion to select the Employees, Consultants and Outside Directors to whom
Options may from time to time be granted under the Plan ("Participants").
Section 4.3. Legal Representatives. As used in the Plan, the term
----------- ---------------------
"Participant" includes any person who acquires the legal right to exercise a
Participant's Options by reason of the death or incompetence of the Participant.
ARTICLE 5
GENERAL TERMS
-------------
Section 5.1. Option Agreement. Grants of Options shall be evidenced by a
----------- ----------------
written option agreement ("Option Agreement"), which shall contain the
provisions that the Plan requires and may contain additional provisions that do
not conflict with the Plan as the Board deems appropriate. Each Option Agreement
shall be signed by the Participant and an
-2-
<PAGE>
officer of the Company designated by the Board. The form of Option Agreement for
use pursuant to the Plan is attached hereto. The Board may modify said form as
it deems appropriate, subject to the provisions of the Plan. Option Agreements
need not have identical terms, but each Option Agreement shall be subject to the
Plan.
Section 5.2. Exercise Price.
----------- --------------
5.2.1. General Rule. The exercise price of each Option shall not be
----- ------------
less than the fair market value of the Shares, as the Board may determine, on
the date the Option is granted.
5.2.2. Ten Percent Shareholders. The exercise price of each Option
----- ------------------------
granted to a Participant who, at the time the Option is granted, owns, as that
term is defined in Section 424(d) of the Code, stock possessing more than 10% of
the combined voting power of all stock of the Company or of its Affiliates,
shall be at least 110% of the fair market value of the Shares, as the Board may
determine, on the date the Option is granted.
5.2.3. Determination of Fair Market Value. The Board's determination
----- ----------------------------------
of fair market value shall be final and conclusive for the purposes of the Plan.
In determining fair market value, the Board may, but is not obligated to, obtain
and rely upon an independent appraisal. If the Company's common stock is
publicly traded, the fair market value of the Shares as of any date shall be
determined as follows: (a) if such stock is listed on a stock exchange or
national market system, fair market value shall be the closing sales price of a
share of the Company's common stock (or the closing bid price if no sales were
reported), as quoted on such exchange or system for the last market trading day
before the time of determination; or (b) if such stock is quoted on the NASDAQ
System (but not on its National Market System) or regularly quoted by a
recognized securities dealer but selling prices are not reported, fair market
value shall be the mean between the high and low asked prices for such stock for
the last market trading day before the time of determination.
Section 5.3. Payment of Exercise Price; Taxes.
----------- --------------------------------
5.3.1. Form of Payment. The Participant shall pay the per Share
----- ---------------
exercise price in full at the time of exercise by bank cashier's check or, with
the approval of the Board, a promissory note, shares of common stock of the
Company, a notice of intent to purchase Shares upon exercise of Options
pursuant
-3-
<PAGE>
to a payroll deduction plan, or any combination of the foregoing such that the
aggregate fair market value of such consideration (as determined by the Board)
equals the total exercise price. Beginning on the date that a public market
exists for the Shares, as defined in Section 7.7, the Participant may pay the
exercise price in whole or in part by delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company the amount of sale or loan proceeds required to pay the exercise
price.
5.3.2. Promissory Notes. The Company may require a promissory note to be
----- ----------------
with full recourse, to be adequately secured by collateral other than the Shares
purchased, and to bear interest at market or above market rates (if such rates
are not usurious). It is the Company's policy not to accept promissory notes
except in unusual circumstances. Inability to pay cash is not necessarily an
unusual circumstance. Effective upon the date the Shares become "margin stock"
as defined in Federal Reserve Regulation G, any extension of credit to any
Participant for the purpose of exercising Options shall comply with such
Regulation G.
5.3.3. Withholding Taxes. The Participant shall pay by bank cashier's
----- -----------------
check or other form of payment acceptable to the Company, the amount of any
state or federal income or other tax that the Company is required to pay or
withhold upon exercise of an Option unless the incidence of such tax cannot
lawfully be placed on the Participant.
Section 5.4. Conditions to Exercise. No Option may be exercised if the
----------- ----------------------
transfer of Shares upon such exercise or the method of payment of consideration
for such Shares would constitute a violation of any applicable securities or
other law or regulation. Unless the Shares are registered under the Securities
Act of 1933 (the "Securities Act") and any applicable state securities law, as a
condition to exercising an Option, the Participant shall provide the Company
with such written assurances as the Company deems appropriate for the Option
grant and exercise to qualify for exemption from registration. Such assurances
may include, among others, a representation that the Participant intends to hold
the Shares for investment and not for distribution to the public. The Company
has no obligation to register the Options or Shares under the Securities Act or
any other law.
Section 5.5. No Employment Agreement. No Option Agreement, nor anything
----------- -----------------------
contained in the Plan, shall alter a Participant's status as an "at will"
employee of the Company, confer upon any Participant any right to continue in
the employ
-4-
<PAGE>
of the Company, or limit the right of the Company to terminate a Participant's
employment at any time and for any or no reason.
Section 5.6. Restrictions on Transfer. If transfer of the Shares is
----------- ------------------------
restricted under any applicable law, each certificate representing such Shares
shall bear a legend in form and substance satisfactory to the Company reflecting
that such Shares are so restricted. The Company may also place a notation on any
certificate representing Shares purchased upon exercise of an Incentive Option.
To enforce any restrictions on transfer of the Shares, the Company may set forth
in its stock transfer records a "stop transfer" order with respect to the
Shares. The Company shall not be liable for any refusal to transfer the Shares
on the books of the Company unless the transfer complies with all terms and
conditions of any restrictions imposed on such Shares.
Section 5.7. Cancellation of Option when Employment Terminates. If a
----------- -------------------------------------------------
Participant exercises an Option after his or her employment or other
relationship terminates, the Company may pay to the Participant an amount equal
to the then Current Market Price (as defined in Section 7.9) of the Shares less
the exercise price of the Shares in lieu of issuing such Shares. The Company
shall not be obligated to deliver such amount to the Participant unless the
Participant accepts such payment in full satisfaction of his or her rights under
the Option exercised. This Section shall be void and of no force and effect
beginning on the date when a public market exists for the Shares, as defined in
Section 7.7.
ARTICLE 6
TERMS OF OPTION AGREEMENTS
--------------------------
Section 6.1. Limitation on Incentive Option Grants. The aggregate fair
----------- -------------------------------------
market value (determined at the time the Option is granted) of the Shares for
which one or more Incentive Options granted under the Plan (or any other
incentive stock option plan of the Company or any Affiliate) become exercisable
by a Participant for the first time during any calendar year shall not exceed
$100,000 or such other amount as may be permitted under subsequent amendments to
Section 422 of the Code. To the extent that any two or more Incentive Options
violate this limitation, such excess Options shall be treated as Nonstatutory
Options. For purposes of this Section 6.1, Incentive Options shall be taken into
account in the order in which they were granted, and the fair market value of
the Shares shall be determined as of the time the Option with respect to such
Shares was granted.
-5-
<PAGE>
Section 6.2. Duration of Option.
----------- ------------------
6.2.1. General Rule. Except as provided in this
----- ------------
Section and Section 6.3, Options shall be exercisable only for so long as the
Participant has the same relationship with the Company as an Employee,
Consultant or Outside Director as the Participant had when the Option was
granted, but not longer than 10 years after the date the Option is granted.
6.2.2. Exercise Following Termination. Upon
----- ------------------------------
termination of a Participant's employment or other relationship with the Company
by reason of the Participant's death or disability (within the meaning of
Section 22(e)(3) of the Code), the Participant or the Participant's estate or
any person who acquires the right to exercise the option by bequest or
inheritance, may exercise the Option at any time within one year after such
termination, but only to the extent that the Option is exercisable on the date
of such termination and does not otherwise expire. Upon termination of a
Participant's employment or other relationship with the Company by reason of the
Participant's disability other than as defined in Section 22(e)(3) of the Code,
the Participant may exercise the Option at any time within 6 months after such
termination, but only to the extent that the Option is exercisable on the date
of such termination and does not otherwise expire. Upon termination of a
Participant's employment or other relationship with the Company for any other
reason, the Participant may exercise the Option at any time within 30 days after
such termination, but only to the extent that the Option is exercisable on the
date of such termination and does not otherwise expire. Employment shall not be
considered terminated in the case of (a) sick leave; (b) military leave; (c) any
other leave of absence approved by the Board, provided that such leave is for a
period of not more than 90 days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute; or (d) transfers between locations
of the Company or between the Company, its Affiliates or its successor. For
consultants, employment terminates when such Consultant ceases to render
services on a periodic basis to the Company or any Affiliate.
6.2.3. Effect of Change of Relationship. If a
----- --------------------------------
Participant's employment or other relationship with the Company is terminated
but the Participant continues to be eligible under Section 4.1 of the Plan, the
Board may, in its sole discretion, elect to permit one or more of the
Participant's Options to continue as if the Participant's employment or other
relationship had not terminated, except that any such continued Option shall be
a Nonstatutory Stock Option if the Participant is no longer an Employee.
6.2.4. Ten Percent Shareholders. Any Option granted to
----- ------------------------
a Participant who, at the time the Option is granted, owns, as that term is
defined in Section 424(d) of the Code, stock possessing more than 10% of the
combined voting power of all stock of the Company or of its Affiliates, shall be
-6-
<PAGE>
exercisable as described in this Section 6.2, but for no longer than 5 years
after the date the Option is granted.
Section 6.3. Excercisability. All Options granted under
----------- ---------------
the Plan shall be come exercisable at a rate that, when considered in
conjunction with all other then unexercisable options to purchase common stock
of the Company held by the optionee, is not slower than in cumulative annual
increments of 20% per year from the date of grant. Nothing in the Plan requires
Options to be exercisable immediately upon grant.
Section 6.4. Exercise of Option. To exercise an Option for
----------- ------------------
all or part of the Shares, the Participant must do the following; (a) Provide
the Chief Financial Officer of the Company with a written notice of exercise
that specifies the number of Shares for which the Option is being exercised (in
increments of not less than 100 or the total number of Shares subject to all of
the Participant's then exercisable Options); (b) Pay the total exercise price
for that number of Shares and any withholding taxes as provided in section 5.3;
(c) Provide the Company with any written representations as required under
Section 5.4; and (d) Furnish to the Company appropriate documentation that the
person(s) exercising the Option, if other than the Participant named in the
Option Agreement, have the right to do so.
Section 6.5. Transferability of Option. Options shall be
----------- -------------------------
transferable only by will or the laws of descent and distribution. Only the
Participant may exercise the Options during the Participant's lifetime, except
as provided in subsection 6.2.2. Any other purported transfer or assignment of
any Option shall be void and of no effect, and shall give the Company the right
to terminate such Option as of the date of such purported transfer or
assignment.
Section 6.6. Notice of Disqualifying Disposition of
----------- --------------------------------------
Incentive Options. Participants shall give the Company written notice of any
- -----------------
disposition of any Share acquired pursuant to exercise of an Incentive Option if
such disposition occurs before the second anniversary of the date the Option was
granted or the first anniversary of the date of purchase of the Share disposed
of, whichever occurs later. A disposition includes any sale, exchange, gift, or
other transfer or attempted transfer of legal title. The notice shall include
the Participant's name, the number of Shares disposed of and the dates and
prices the Shares were both acquired and disposed of.
Section 6.7. Adjustments to Option Rights. Subject to the
----------- ----------------------------
general limitations of the Plan, the Board may adjust the
-7-
<PAGE>
exercise price, term, or any other provision of an Option by cancelling and
regranting the Option or by amending or substituting the Option. Options that
have been so adjusted may have higher or lower exercise prices, have longer or
shorter terms, or be subject to different rights and restrictions than prior
Options. The Board may also adjust the number of Options granted to a
Participant by cancelling outstanding Options or granting additional Options.
Except for adjustments necessary to ensure compliance with any applicable state
or federal law, or adjustments deemed appropriate to reflect a change in a
Participant's duties, employment status, or other relationship with the Company,
no such adjustment shall impair a Participant's rights under any Option
Agreement without the consent of the Participant.
Section 6.8. Identification of Incentive Options. Each Option Agreement
----------- -----------------------------------
shall state whether or not the Option is intended to qualify as an Incentive
Option. If only a portion of an Option is intended to so qualify, (a) the Option
Agreement shall so state, and (b) the Option Agreement shall not require that
the number of Incentive Options exercised reduces the size of the Nonstatutory
Option portion, or vice-versa.
ARTICLE 7
SHARE REPURCHASE RIGHT
----------------------
Section 7.1. Right to Repurchase Shares. In the event the Participant's
----------- --------------------------
employment or other relationship with the Company is terminated for any reason,
with or without cause, the Company or its assignee may, without the necessity of
notice from the Participant, purchase all, or upon Participant's consent part
of, the Participant's Shares under the terms and conditions of this Article 7
(the "Share Repurchase Right").
Section 7.2. Termination of Employment or Other Relationship. For purposes
----------- -----------------------------------------------
of the Plan, the phrase "employment or other relationship" refers to the
Participant's employment or other relationship with the Company on the date the
Option is granted, as follows:
(a) If the Participant was a full-time Employee, the Participant's
employment will be deemed terminated for the purpose of the Plan if the
Participant becomes a part-time Employee, a Consultant or Outside Director.
(b) If the Participant was a part-time Employee, the Participant's
employment will be deemed terminated for the
-8-
<PAGE>
purpose of the Plan if the Participant becomes a Consultant or Outside Director
but not if the Participant becomes a full-time Employee.
(c) If the Participant was a Consultant or Outside Director, the
Participant's relationship will be deemed terminated for the purpose of the
Plan if the nature of such relationship changes, unless the Participant becomes
a full-time Employee.
Section 7.3. Exercise of Share Repurchase Option. The Company or its
----------- -----------------------------------
assignee shall exercise the Share Repurchase Right by giving written notice (the
"Repurchase Notice") to the Participant. If some or all of the Participant's
Shares are held by a transferee when the Participant's employment or other
relationship with the Company terminates, the Company may repurchase the
transferred Shares by giving a Repurchase Notice to the transferee. The purchase
price of the Shares shall be the greater of their exercise price or their
Current Market Price determined as of the date the Participant's employment or
other relationship with the Company terminates. The Share Repurchase Right shall
expire 60 days after the Participant gives written notice to the Company of its
right to purchase the Shares, but in any event no longer than 90 days from
termination or any other event of which the Company has actual notice.
Section 7.4. Effect of Failure to Exercise Share Repurchase Right. If the
----------- ----------------------------------------------------
Company declines to exercise the Share Repurchase Right after a deemed
termination of a Participant's employment or other relationship with the
Company, it may exercise the Share Repurchase Right upon a subsequent
termination of the new employment or other relationship.
Section 7.5. Payment for Shares and Return of Shares. Shares shall be
----------- ---------------------------------------
deemed repurchased when the Participant or other holder of the Shares receives a
Repurchase Notice. All rights accorded a holder of such Shares, other than
the right to payment therefor, shall cease at that time. Upon delivery of a
Repurchase Notice, the Company shall as soon as practicable thereafter
deliver the purchase price to the Company's transfer agent. The Company
shall pay the purchase price of any Shares so purchased upon tender of the
certificates representing such Shares to the Company's transfer agent. For
purposes of the foregoing, cancellation of any promissory note of the
Participant to the Company shall be treated as payment to the Participant
in cash to the extent of the unpaid principal and any accrued interest
cancelled.
-9-
<PAGE>
Section 7.6. Assignment of Share Repurchase Right. The Company may
----------- ------------------------------------
assign the Share Repurchase Right to one or more persons as may be selected by
the Board.
Section 7.7. Termination of a Share Repurchase Right. The Share
----------- ---------------------------------------
Repurchase Right shall terminate when a public market exists for the Shares. A
public market shall be deemed to exist if any of the Company's shares of common
stock have been registered under Section 5 of the Securities Act or Section 12
of the Securities Exchange Act of 1934 (the "Exchange Act"), and (a) such stock
is listed on a national securities exchange or national market system or (b)
such stock is traded in the over-the-counter market and prices therefore are
published daily for 90 days in a recognized financial journal.
Section 7.8. Legends. Unless a public market exists for the Shares, each
----------- -------
certificate representing the Shares shall bear a legend in form and substance
satisfactory to the Company to the effect that the Shares are subject to the
Share Repurchase Right.
Section 7.9. "Current Market Price".
----------- ----------------------
7.9.1. Definition. "Current Market Price" means:
----- ----------
(a) If securities of the same class are publicly traded on an active
market of substantial depth, the recent market price of such securities.
(b) If securities of the same class have not been so publicly
traded, the price at which securities of reasonably comparable corporations (if
any) in the same industry are being traded, subject to appropriate adjustments
for the dissimilarities between the corporations being compared.
(c) In the absence of any reliable indicator under subsection (a) or
subsection (b), the earnings history, book value and prospects of the Company in
the light of market conditions generally.
7.9.2. Reference to Net Book Value. Net book value per share of the
----- ---------------------------
common stock of the Company shall be determined on a fully-diluted basis as of
the last day of the preceding fiscal year, as determined in accordance with
generally accepted accounting principles by the independent accountants of the
Company based on their review, but not necessarily an audit, of the Company's
financial statements. Net book value shall be calculated using the historical
cost of
-10-
<PAGE>
the Company's assets as reflected on its financial statements, net of any book
depreciation reflected on the financial statements. Net book value shall not
include any unrealized gain or loss on the Company's assets or the value, if
any, of the Company's goodwill or other assets that are not reflected in its
financial statements.
7.9.3. Effect on Time Periods. For purposes of the Plan, the date
----- ----------------------
the Participant's employment or other relationship is deemed to terminate shall
be deemed to be not earlier than the date the accountants deliver their written
determination of such net book value to the Company.
ARTICLE 8
RIGHT OF FIRST REFUSAL
----------------------
Section 8.1. Restriction on Transfer. Except as expressly permitted in
----------- -----------------------
an Option Agreement or the Plan, a Participant shall not transfer, encumber or
dispose of any Shares or any interest in the Shares.
Section 8.2. Right of First Refusal. In the event the Participant
----------- ----------------------
proposes to sell, exchange, transfer, pledge or otherwise dispose of any Shares
(whether voluntarily or involuntarily) (collectively referred to sometimes
herein as a "Transfer"), the Company or its assignees shall have the right to
purchase such Shares under the terms and conditions of this Article 8 (the
"Right of First Refusal").
Section 8.3. Notice of Proposed Transfer. Before any proposed Transfer
----------- ---------------------------
of any Shares the Participant must deliver to the Company at its principal
office (a) a written notice describing the proposed Transfer and stating the
name of the proposed transferee, the number of Shares to be transferred, and the
consideration for which the Shares are to be transferred ("Transfer Notice") and
(b) a written offer signed by the proposed transferee (if the proposed transfer
is voluntary) to acquire the Shares on the terms specified in the Transfer
Notice, subject only to the Right of First Refusal.
Section 8.4. Exercise of Right of First Refusal. If the Company
----------- ----------------------------------
exercises the Right of First Refusal, the Company and the Participant shall
immediately consummate the sale of the Shares to the Company at the purchase
price and on the terms set forth in the Transfer Notice. To exercise the Right
of First Refusal, the Company shall deliver to the Participant a notice of
exercise of the Right of First Refusal within 60 days after the date the Company
receives the Transfer Notice. Shares shall
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<PAGE>
be deemed purchased by the Company when the Participant or other holder of the
Shares receives such notice of exercise of the Right of First Refusal. All
rights accorded a holder of such Shares, other than the right to payment
therefor, shall cease at that time. The Company shall pay the purchase price of
any Shares so purchased within 5 business days after tender of the certificates
representing such Shares to the Company's transfer agent. For this purpose,
cancellation of any promissory note from the Participant to the Company shall be
treated as payment to the Participant in cash to the extent of the unpaid
principal and any accrued interest cancelled. If the Company purchases any
Shares pursuant to the Right of First Refusal, it must purchase all of the
Shares proposed to be transferred.
Section 8.5. Exchanges or Other Transfers. When the consideration
----------- ----------------------------
specified in a Transfer Notice is property other than cash, the Company may
nonetheless pay the purchase price for the Shares in cash. If the consideration
so specified has a readily ascertainable fair market value, the purchase price
of the Shares shall be an amount equal to the fair market value of such
consideration; otherwise, if the Participant (a) agrees that the purchase price
for the Shares shall be the Current Market Price of the Shares determined as of
the date the Company receives the Transfer Notice; or (b) does not agree that
the purchase price for the Shares shall be the Current Market Price, then the
purchase price shall be the value of such consideration as determined by a
mutually acceptable third party appraiser, the fees for which shall be shared
equally by the parties.
Section 8.6. Failure to Exercise Right of First Refusal. If the Company
----------- ------------------------------------------
fails to exercise in full the Right of First Refusal within 60 days from the
date the Company receives the Transfer Notice, the Participant may not later
than 120 days following delivery to the Company of the Transfer Notice, conclude
a Transfer of the Shares to the proposed transferee named in the Transfer Notice
on the terms and conditions described in the Transfer Notice. Any proposed
Transfer on terms and conditions different from those described in the Transfer
Notice, as well as any subsequent proposed Transfer by the Participant, shall
again be subject to the Right of First Refusal and shall require compliance by
the Participant with the procedure described in this Article 8.
Section 8.7. Transferees of the Transfer Shares. All transferees of any
----------- ----------------------------------
Shares or any interest therein, other than the Company, shall be required as a
condition of such Transfer to agree in writing (in a form satisfactory to the
Company) that such transferee shall receive and hold such Shares or interests
subject to the provisions of the Plan, including without
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<PAGE>
limitation Articles 7 and 8 providing for the Share Repurchase Right and the
Right of First Refusal. Any sale or Transfer of any Shares shall be void unless
the provisions of this Article 8 are met.
Section 8.8. Special Transfers.
----------- -----------------
8.8.1. Creditors' Proceedings. Upon any proposed Transfer of the
----- ----------------------
Shares in connection with any receivership, bankruptcy, extension, readjustment,
stay, composition, or other creditors' proceeding regarding a Participant, or
the taking of any of the Shares by legal process (such as levy of execution),
the Right of First Refusal shall expire 60 days after the Company receives a
Transfer Notice from the Participant; provided, however, that the Company may
not exercise its Right of First Refusal during the pendency of a bankruptcy
proceeding filed under Title 11 of the United States Code to the extent not
permitted to do so by 11 U.S.C. Section 365. If the Company or its assignees
does not exercise the Right of First Refusal, the Shares may be transferred only
pursuant to the proceeding or transaction that gave rise to the Right of First
Refusal. Shares transferred pursuant to this subsection shall continue to be
subject to the provisions of the Option Agreement and the Plan, including
without limitation Articles 7 and 8 of the Plan.
8.8.2. Dissolution of Marriage. Shares transferred pursuant to a
----- -----------------------
distribution of Shares by a Participant to his or her spouse as such spouse's
marital, joint, or community property pursuant to a decree of divorce or
property settlement agreement shall continue to be subject to the provisions of
the Option Agreement and the Plan, including without limitation Articles 7 and 8
of the Plan.
8.8.3. Pledge. A Participant may pledge Shares to the Company or a
----- ------
bank or other financial institution if the pledge or security agreement under
which the Shares are pledged specifies that the pledgee shall not sell or
transfer the Shares (other than to the Participant on termination of the pledge)
without first offering them to the Company pursuant to Section 8.2.
8.8.4. Family Transfers. A Participant may transfer Shares to the
----- ----------------
Participant's spouse, any parent, step-parent, child, or grandchild of the
Participant or the Participant's spouse, any other relative of the Participant
or the Participant's spouse approved by the Board, or any trust for the
exclusive benefit of the Participant or any such person, without first offering
the same to the Company pursuant to Section 8.2. Shares so transferred shall
remain subject to the Option Agreement and the Plan. The Right of First Refusal
under subsection 8.8.1 shall then arise when the transferee (as opposed to the
Participant) proposes a Transfer in connection
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<PAGE>
with a creditor's proceeding. The Share Repurchase Right shall arise when the
Participant's employment or other similar relationship terminates, regardless of
whether the Shares have been transferred.
8.8.5. Time Periods. For purposes of this subsection, the date of the
----- ------------
event giving rise to the Right of First Refusal and the date the Company is
deemed to receive notice of such event shall be deemed to be not earlier than
the date the accountants deliver to the Company their written determination of
net book value for determining the Current Market Price, if applicable.
Section 8.9. Assignment of the Right of First Refusal. The Company may
----------- ----------------------------------------
assign the Right of First Refusal to one or more persons as may be selected by
the Board.
Section 8.10. Termination of Right of First Refusal. The Right of First
------------ -------------------------------------
Refusal shall terminate when a public market exists for the Shares, as defined
in Section 7.7.
Section 8.11. Legends. Unless a public market exists for the Shares, each
------------ -------
certificate representing the Shares shall bear a legend in form and substance
satisfactory to the Company to the effect that the Shares are subject to the
Right of First Refusal.
ARTICLE 9
SHARE ESCROW
------------
Section 9.1. Escrow. As security for the faithful performance of the
----------- ------
Option Agreement, and to ensure the availability of the Shares for delivery upon
exercise of the Share Repurchase Option or the Right of First Refusal, the
Company may require a Participant to deposit each certificate representing
Shares with the secretary of the Company, or such other person as the Board may
designate ("Escrow Agent"), along with two stock assignments duly endorsed (with
date and number of shares blank). The Company may require the signatures to be
guaranteed by a national bank or a member of a national Stock Exchange. The
Escrow Agent shall then hold the certificates pursuant to the instructions set
forth in this Article and as they may be modified in any Option Agreement.
Section 9.2. Copies of Notices. The Participant and the Company shall
----------- -----------------
give the Escrow Agent a copy of any Transfer Notice, Repurchase Notice, notice
from the Participant advising the Company of its right to purchase the Shares,
or any other
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<PAGE>
notice required or permitted under Article 7 or 8 at the same time they deliver
such notices to the intended parties. The Company shall deliver the purchase
price of Shares held in escrow to the Escrow Agent instead of to the holder of
the Shares.
Section 9.3. Delivery of Shares and Purchase Price. Promptly upon receipt
----------- -------------------------------------
of a Repurchase Notice or notice that the Company or its assignee is exercising
the Right of First Refusal, the Escrow Agent shall (a) date the stock
assignments necessary for the transfer in question, (b) fill in the number of
Shares being transferred, and (c) deliver the same, together with the
certificate evidencing the Shares to be transferred, to the transfer agent of
the Company's common stock. The Escrow Agent shall deliver the purchase price to
the Participant promptly after receiving it from the Company or its assignee.
Section 9.4. Attorney-in-Fact. Each Participant, by accepting the Option
----------- ----------------
Agreement, irrevocably constitutes and appoints the Escrow Agent as
Participant's attorney-in-fact and agent to execute all documents necessary or
appropriate to transfer Shares as contemplated in this Article.
Section 9.5. Ownership of the Shares. Each Participant shall have the full
----------- -----------------------
right to vote all Shares held in the escrow and shall receive all distributions
with respect to such Shares for so long as such Participant is the record owner
of the Shares.
Section 9.6. Release of Certificates. Upon each Participant's written
----------- -----------------------
request, the Escrow Agent shall release the Share certificates and stock
assignments with respect thereto if, and to the extent that, the restrictions on
transfer of the Shares set forth in Articles 7 and 8 terminate.
Section 9.7. Powers and Rights of Escrow Agent.
----------- ---------------------------------
9.7.1. Escrow Agent's Reliance. The Escrow Agent shall be obligated
----- -----------------------
only to perform such duties as are specifically set forth in the Plan and any
applicable Option Agreement. The Escrow Agent may rely and shall be protected in
relying or refraining from acting on any instrument the Escrow Agent reasonably
believes to be genuine and to have been signed or presented by the proper party
or parties. The Escrow Agent shall not be personally liable for any act or
omission as Escrow Agent or as attorney-in-fact for Participant while acting
reasonably and in good faith. Any act or omission pursuant to the advice of
counsel shall be deemed to be reasonable and in good faith.
-15-
<PAGE>
9.7.2. Third-Party Beneficiary. The Escrow Agent is an intended
----- -----------------------
third-party beneficiary of the Plan.
9.7.3. Warnings and Court Order. The Escrow Agent is expressly
----- ------------------------
authorized to disregard any and all warnings given by any party to the escrow or
by any other person, other than orders or process of courts or arbitrators
provided for in the Plan or the Option Agreement. The Escrow Agent is expressly
authorized to comply with and obey orders, judgments, or decrees of any court or
the arbitrators provided for in the Plan. The Escrow Agent shall not be liable
to any person by reason of such compliance, notwithstanding any such order,
judgment, or decree being subsequently reversed, modified, annulled, set aside,
vacated, or found to have been entered without jurisdiction.
9.7.4. Counsel to Escrow Agent. The Escrow Agent may employ legal
----- -----------------------
counsel and such other experts as the Escrow Agent deems necessary in connection
with its duties and may pay such experts reasonable compensation.
9.7.5. Resignation. The Escrow Agent may resign by giving 10 days
----- -----------
written notice to the Company.
9.7.6. Further Instructions. If the Escrow Agent reasonably requires
----- --------------------
other or further instruments in connection with the escrow, the Company and the
affected Participant shall furnish such instructions.
9.7.7. Fees. The Company shall pay all of the Escrow Agent's fees and
----- ----
expenses in such amount as the Company and the Escrow Agent may agree.
ARTICLE 10
ADMINISTRATION AND AMENDMENT OF THE PLAN
----------------------------------------
Section 10.1. Administration. The Plan shall be administered by the Board
------------ --------------
and/or by a duly appointed committee of the Board having such powers as the
Board may delegate to such committee. All references to the Board in the Plan
shall also mean the committee if one has been appointed.
Section 10.2. Rights and Powers. Subject to the Plan and, in the case of a
------------ -----------------
Committee, the specific rights and powers delegated by the Board to such
committee, the Board shall have the authority and discretion to:
(a) determine who shall be a Participant;
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<PAGE>
(b) determine when Options are granted;
(c) determine the terms and conditions of Option Agreements (which terms
and conditions may differ among Agreements);
(d) interpret the Plan;
(e) adopt rules and regulations for implementing the Plan; and
(f) take such other action as is appropriate to the administration of the
Plan.
All decisions, determinations, and interpretations of the Board shall be final
and binding on all Participants.
Section 10.3. Termination; Amendment. The Board may from time to time
------------ ----------------------
suspend the Plan, terminate the Plan or amend the Plan as it deems desirable,
without further action on the part of the shareholders of the Company. The
approval of the shareholders shall be required, however, to (a) increase the
total number of Shares that may be issued under this Plan (except as otherwise
provided herein); (b) change the description of the persons eligible to be
Participants; or (c) change the minimum exercise price. Except as provided in
Article 11, or in an Option Agreement, the suspension, termination, or amendment
of this Plan shall not, without the consent of the Participant, alter or impair
any rights of the Participant under any Option Agreement.
ARTICLE 11
ADJUSTMENT OF AND CHANGES IN STOCK
---------------------------------
Section 11.1. Recapitalizations. If the number of the Company's outstanding
------------ -----------------
shares of common stock is changed by any stock dividend, stock split, reverse
stock split, combination or reclassification, the number of Shares subject to
the Plan and to Options outstanding, and the exercise price for such Shares,
shall be equitably adjusted as determined by the Board.
Section 11.2. Liquidation. In the event of the proposed liquidation or
------------ -----------
dissolution of the Company, the Company shall notify the Participants at least
10 days before such proposed action is taken. All unexercised Options shall
terminate immediately before such event.
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<PAGE>
Section 11.3. Reorganization in Which the Company Disappears.
------------ ----------------------------------------------
11.3.1. Notice of Reorganization. The Company shall give each
------ ------------------------
holder of Options at least 10 days prior written notice of (a) a sale of all or
substantially all of the Company's assets, (b) any reorganization, merger, or
consolidation of the Company with any other corporation in which the Company is
not the surviving entity (except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated), or (c) any
other corporate reorganization or business combination in which the beneficial
ownership of 50% or more of the Company's voting securities outstanding is
transferred.
11.3.2. Right to Cancel Options. If an exercisable Option is not
------ -----------------------
exercised within 5 days before such event, the Company may cancel the Option by
paying the Participant an amount equal to the fair market value of the
consideration that the Participant would receive in exchange for the Shares
underlying the Option, less the exercise price of the Option.
11.3.3. Expiration of Options. Unless a successor corporation or
------ ---------------------
parent or subsidiary thereof assumes the unexercised Options or substitutes
options to purchase substantially equivalent securities of the successor or its
parent or subsidiary for the Options outstanding at the time of the closing of
such event, all outstanding Options shall terminate upon such event.
Section 11.4. Reorganizations In Which Company Survives. Upon any other
------------ -----------------------------------------
merger or consolidation of the Company in which there is any adjustment in the
common stock of the Company outstanding immediately before such merger or
consolidation, there shall be substituted for each Share then subject to the
Plan, the number and kind of shares of stock or other securities or property
into which each outstanding share of common stock of the Company is converted by
such merger or consolidation.
Section 11.5. Other Changes. Upon any other relevant change in the
------------ -------------
capitalization of the Company, the Board may provide for an equitable adjustment
in the number of Shares then subject to the Plan, to any Options granted under
the Plan, and to the exercise price for such Shares as it deems appropriate.
Section 11.6. No Fractional Shares. No right to purchase fractional
------------ --------------------
Shares shall result from any adjustment in
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<PAGE>
Options pursuant to this Article. Upon any such adjustment, the Shares subject
to Options of each Participant shall be rounded down to the nearest whole Share.
The Company shall give notice of any adjustment to each holder of Options that
have been so adjusted. Such adjustment (whether or not such notice is given)
shall be effective and binding for all purposes of the Plan.
ARTICLE 12
SUSPENSION OF OPTIONS TO SATISFY SECURITIES LAWS
------------------------------------------------
Section 12.1. Power to Suspend. The Board may suspend the
------------ ----------------
exercisability of outstanding Options from time to time if appropriate to
satisfy an exemption from registration under the Securities Act (such as SEC
Rule 504) or any state securities law.
Section 12.2. Minimum Period. The minimum period of suspension shall
------------ --------------
be long enough to ensure that, under applicable federal or state securities
regulations (such as SEC Rule 502(a)), sales of stock made before the suspension
will not be integrated with sales made after the suspension.
Section 12.3. Maximum Period. The maximum period of suspension shall
------------ --------------
only be so long as needed to ensure that, under applicable federal or state
securities regulations (such as SEC Rule 504(b)(2)(i)), sales made before the
suspension will not be aggregated with sales made after the suspension, unless
the Board, in its discretion, determines that such aggregation will not be
detrimental to the best interests of the Company or the Participants.
Section 12.4. Option Grants During Suspension. The Company may
------------ -------------------------------
continue to grant Options during a period of suspension, provided that such
Options are not exercisable until after the suspension.
Section 12.5. Option Termination During Period of Suspension. If an
------------ ----------------------------------------------
outstanding Option terminates during a period of suspension or during the 90 day
period after the suspension, the Optionee shall have until 90 days after the
suspension to exercise the Option, but in no event later than 10 years after the
date of grant.
Section 12.6. Allocation of Exercise Rights Before Suspension. If the
------------ -----------------------------------------------
Board believes that a number of Participants wish to exercise Options to an
extent that would result in non-compliance with an applicable federal or state
securities exemption, the Board may limit the right to exercise outstanding
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<PAGE>
Options and allocate such right among the Participants in a manner that the
Board determines to be fair.
Section 12.7. All Options Must Be Suspended. The Board shall not suspend
------------ -----------------------------
any Options granted pursuant to this Plan under this Article unless it suspends
all such outstanding Options.
Section 12.8. Advice of Counsel. The Board may rely upon advice of
------------ -----------------
counsel in determining whether to suspend exercisability of the outstanding
Options and in determining the period of suspension. Nothing contained in this
Plan requires the Board to determine the length of the suspension in advance.
Section 12.9. Sunset Provision. This Article shall be void and of no
------------ ----------------
force and effect beginning on the date the Company becomes subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act.
ARTICLE 13
REQUIREMENTS OF OTHER LAWS
--------------------------
Section 13.1. Section 16 of the Exchange Act. In the event that the
------------ ------------------------------
Company becomes subject to Section 16 of the Exchange Act, the Plan shall then
be administered in accordance with Rule 16b-3 promulgated under the Exchange
Act, or any successor rule. Unless the Board determines otherwise in a specific
case, Options granted to persons subject to Section 16(b) of the Exchange Act
must comply with Rule 16b-3, shall not be exercisable in whole or in part until
the expiration of six months after the date of grant and shall contain such
additional conditions or restrictions as may be required to qualify for the
maximum exemption from Section 16 with respect to Plan transactions. The
provisions of this Section shall be in addition to those of Section 10.1. In
the event of a conflict between this Section and Section 10.1, this Section
shall control. In no event shall anything in this Section 13.1 apply before the
Company becomes subject to Section 16 of the Exchange Act.
Section 13.2. Automatic Grants to Outside Directors.
------------ -------------------------------------
13.2.1 Option Grant. Effective upon the date that the Company
------ ------------
becomes subject to Section 16 of the Exchange Act, each individual who is
elected to serve as an Outside Director at the first Annual Meeting of the
Company's shareholders held thereafter shall, on the date of such Annual
Meeting, automatically be granted a Nonstatutory Option to
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<PAGE>
purchase 5,000 Shares upon the terms and conditions specified below. On the
date of each subsequent Annual Meeting, each Outside Director who is elected at
such Annual Meeting (including any individual who may have already received one
or more automatic option grants) shall automatically be granted a Nonstatutory
Option to purchase an additional 5,000 Shares upon the terms and conditions
specified below.
13.2.2. Terms of Options. The terms and conditions that apply to
------ ----------------
each such automatic grant shall be as follows: (i) the per Share exercise price
shall be equal to the fair market value per Share on the date of grant; (ii) the
term of the Option shall be 5 years; (iii) the Options shall be exercisable in
cumulative increments of 25% per year commencing on the first anniversary of the
date of grant; and (iv) all other terms and conditions of the Option shall be as
set forth in the Company's then current form of Option Agreement.
Notwithstanding the provisions of Section 10.3, this Section shall not be
amended more often than once every six months, except as otherwise permitted by
Rule 16b-3.
13.2.3 No Other Grants. Except for the automatic grants under this
------ ---------------
Section, those members of the Board who serve on the Board committee that
administers the Plan under Sections 10.1 and 13.1 of the Plan shall not be
eligible to receive any additional Options under the Plan or any other stock
plan of the Company or any Affiliate, except as permitted by Rule 16b-3. The
provisions of this Section shall apply notwithstanding any provisions of the
Plan to the contrary, including without limitation, Sections 4.1, 4.2 and 10.2.
In no event shall anything in this Section 13.2 apply before the Company becomes
subject to Section 16 of the Exchange Act.
Section 13.3. Section 162(m) of the Code. In the event the Company
------------ --------------------------
becomes subject to Section 162(m) of the Code, unless the Board determines
otherwise in a specific case, Options granted to persons subject to Section
162(m) of the Code must comply with Section 162(m) and the regulations
promulgated thereunder and shall contain such additional conditions or
restrictions as may be required thereunder. The provisions of this Section
shall be in addition to those of Sections 10.1 and 13.1. In the event of a
conflict between this Section and Section 10.1, this Section shall control.
This Section and Section 13.1 shall be construed so that there is no conflict
between them. In no event shall anything in this Section 13.3 apply before the
Company becomes subject to Section 162(m) of the Code.
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<PAGE>
Section 13.4. Limit on Option Grants. Effective upon the date that the
------------ ----------------------
Company becomes subject to Section 162(m) of the Code, the maximum number of
Shares for which any Participant may be granted Options in any calendar year is
300,000 Shares. The provisions of this Section shall apply notwithstanding any
provisions of the Plan to the contrary, including without limitation, Sections
4.1, 4.2 and 10.2.
Section 13.5. Shareholder Approval. To the extent necessary and
------------ --------------------
desirable to comply with Rule 16b-3 or with Section 162(m) or 422 of the Code
(or any other law or regulation applicable now or in the future, including the
requirements of the NASD or an established stock exchange), the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such
a degree as required. The provisions of this Section are in addition to those
of Section 10.3.
ARTICLE 14
INFORMATION TO PARTICIPANTS
---------------------------
Section 14.1. Information Provided. The Company shall provide to
------------ --------------------
Participant on a periodic basis (but not less than annually), financial
statements of the Company. The Company may provide other information regarding
the Company as determined by the Board in its discretion.
Section 14.2. Information Confidential. No Participant shall disclose
------------ ------------------------
any confidential information about the Company disclosed to the Participant in
his or her capacity as a holder of Options. A Participant may, however,
disclose such information to his or her legal and financial advisers in
connection with advice to be rendered by them to the Participant, or to any
transferee of the Shares, but only if the advisor or transferee agrees not to
further disclose such information or to use the information for the benefit of
anyone other than the Participant, the transferee as a holder of the Shares, or
the Company.
ARTICLE 15
TAX STATUS
----------
The Company does not, by way of the Plan, any document, Option Agreement,
or otherwise, represent or warrant to any person, including the Participants,
that the grant or exercise of an Option or the subsequent disposition of Shares
obtained by the exercise of an Option pursuant to the Plan, or any other aspect
of the Plan, will have any particular tax effect.
-22-
<PAGE>
ARTICLE 16
MISCELLANEOUS
-------------
Section 16.1. Additional Actions and Documents. Each Participant shall
------------ --------------------------------
execute and deliver such further documents and instruments and shall take such
other further actions as may be required or appropriate to carry out the intent
and purposes of the Plan or any Option Agreement.
Section 16.2. Successors and Assigns. All obligations imposed upon the
------------ ----------------------
Participants and all rights granted to the Company under the Plan, including
without limitation the provisions of Articles 7 and 8, shall be binding upon
each Participant's heirs, legal representatives, successors and assigns. The
Plan, and the Option Agreement with each Participant, shall be the sole and
exclusive source of any and all rights that a Participant and his or her heirs,
legal representatives, or successors shall have in respect to the Plan or any
Options granted hereunder.
Section 16.3. No Third-Party Beneficiaries. Nothing in the Plan or any
------------ ----------------------------
Option Agreement is or shall be intended to confer any rights or remedies on any
persons other than the Company and the Participants and their respective
successors and assigns, other than an Escrow Agent appointed pursuant to Article
9. Nothing in the Plan or any Option Agreement is or shall be intended to
relieve or discharge the obligation or liability of any third persons to any
Participant. No provision of the Plan or any Option Agreement shall give any
third person any right of subrogation or action over or against the Company or
any Participant.
Section 16.4. Amendments, Waivers, and Consents. Except as provided in
------------ ---------------------------------
the Plan, no Option Agreement shall be amended except in a writing signed by the
Participant and the Company. No waiver or consent shall be binding except in a
writing signed by the party making the waiver or giving the consent. No waiver
of any provision of an Option Agreement or consent to any action shall
constitute a waiver of any other provision or consent to any other action,
whether or not similar. No waiver or consent shall constitute a continuing
waiver or consent, except to the extent specifically set forth in writing. For
the protection of all parties, amendments, waivers, and consents concerning
Option Agreements that are not in writing and signed by the party to be bound
may be enforced only if they are detrimentally relied upon and proved by clear
and convincing evidence. Such evidence may not include the alleged reliance.
Section 16.5. Notice. Any notice, instruction, or communication required
------------ ------
or permitted to be given under the Plan
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<PAGE>
or any Option Agreement to any party shall be in writing (which may include
telex, telegram, telecopier, or other similar form of reproduction) and shall be
deemed given when actually received or, if earlier, five days after deposit in
the United States Mail by certified mail, return receipt requested, postage
prepaid, or two days after deposit with a nationally recognized air courier,
fees prepaid, addressed to the principal office or residence of such party as
shown on the books of the Company, or to such other address as such party may
request by written notice. The Company and each Participant shall make an
ordinary, good faith effort to ensure that the person to be given notice
actually receives such notice.
Section 16.6. Arbitration. At the request of any party, any and all
------------ -----------
disputes or controversies of law, fact, or any kind arising from or relating to
the Plan or any Option Agreement shall be decided by binding arbitration in
accordance with the commercial rules of the American Arbitration Association
(except to the extent such rules are inconsistent with the provisions of this
Section). Such arbitration shall also comply with the California Arbitration
Act, except that discovery will be allowed for a period of up to three months.
Such discovery shall be conducted in accordance with the California Code of
Civil Procedure. At the request of any party, the arbitrators, attorneys,
parties to the arbitration, witnesses, experts, court reporters, or other
persons present at the arbitration shall agree in writing to maintain the strict
confidentiality of the arbitration proceedings. Arbitration shall be conducted
by a single, neutral arbitrator or, at the election of any party, three neutral
arbitrators, appointed in accordance with the commercial rules of the American
Arbitration Association. The award of the arbitrator shall be enforceable
according to the applicable provisions of the California Code of Civil
Procedure. Notwithstanding the foregoing, a party may apply to a court of
competent jurisdiction for emergency relief in the form of a temporary
restraining order pending final determination of a claim through arbitration in
accordance with this Section. The parties shall share the costs of arbitration
equally.
Section 16.7. Jurisdiction and Venue. Each Participant consents to the
------------ ----------------------
personal jurisdiction of all federal and state courts in the state of the
Participant's employment, and agrees that venue shall lie exclusively in the
county of the Participant's employment if the Participant is an Employee or
former Employee at the time of the dispute, or otherwise in the county of the
Company's principal place of business.
Section 16.8. Governing Law. The rights and obligations of the parties
------------ -------------
shall be governed by, and the Plan and each Option Agreement shall be construed
and enforced in
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<PAGE>
accordance with, the laws of the State of California, excluding its conflict of
laws rules to the extent such rules would apply the law of another jurisdiction.
Incentive Options granted under the Plan shall be interpreted and administered
in accordance with Section 422 of the Code. If any provision is susceptible of
more than one interpretation, it shall be interpreted in a manner consistent
with the Plan being an incentive stock option plan. If any provision of the
Plan or any Option Agreement is found by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions shall continue to be fully
effective.
Section 16.9. Plan Governs. If there is any inconsistency between the
------------ ------------
Plan and any documents related to the Plan, including any Option Agreement, the
Plan shall govern. Nothing in the Plan shall be construed to constitute, or be
evidence of, any right in favor of any person to receive Options hereunder or
any obligation on the part of the Company to issue Options with respect to its
common stock.
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<PAGE>
MICREL, INCORPORATED
STOCK OPTION AGREEMENT
PURSUANT TO THE 1994 STOCK OPTION PLAN
- ---------------------------------- ----------------------------------
Participant
----------------------------------
Address
This Stock Option Agreement, dated as of the Date of Grant set forth below,
is entered into between Micrel, Incorporated, a California corporation and the
Participant named above pursuant to the Micrel, Incorporated 1994 Stock Option
Plan. Capitalized terms not defined in this Agreement are defined in the Plan.
Pursuant to the Plan, the Company grants an Option to the Participant to
purchase shares of the common stock of the Company as follows:
Grant Number
----------------------------------
Date of Grant
----------------------------------
Exercise Price Per Share $
----------------------------------
Total Number of Shares Granted
----------------------------------
Total Exercise Price $
----------------------------------
Type of Option ______ Incentive Option
______ Nonstatutory Option
Term
----------------------------------
Expiration Date
----------------------------------
Subject to the provisions of this Agreement and the Plan, the Options
become exercisable in cumulative installments as set
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<PAGE>
forth below. Exercisable Options may be exercised from time to time until the
Expiration Date set forth above or termination of the Options as set forth in
the Plan.
Date on Which
Options First Become
Number of Shares Exercisable
---------------- -----------
During the Participant's lifetime, the Option is exercisable only by the
Participant. The form of Exercise Notice and Agreement is attached hereto as
Exhibit A. The Option or this Agreement shall not be sold, pledged, assigned,
transferred or disposed of in any manner other than by will or by the laws of
descent or distribution. Any attempted sale, pledge, assignment, transfer or
other disposition of the Option shall be void and of no effect.
If the Participant is an Employee, the Participant's status as an "at-will"
Employee is not affected by the Plan or this Agreement. The Company's right to
terminate the Participant's employment is not limited or restricted by this
Agreement or the Plan.
The Participant and the Company agree that this Option is granted under and
governed by the terms and conditions of the Plan, which is attached to and made
a part of this Agreement. The Plan imposes substantial restrictions on the
Options and the Shares. PLEASE NOTE THAT PURSUANT TO SECTION 6.2.2 OF THE PLAN
AN EMPLOYEE WHOSE TERMINATION OF EMPLOYMENT IS DUE TO TEMPORARY DISABILITY IS
PERMITTED UP TO 6 MONTHS TO EXERCISE OTHERWISE EXERCISABLE OPTIONS. PARTICIPANT
UNDERSTANDS THAT EXERCISE OF AN OPTION MORE THAN 90 DAYS AFTER TERMINATION UNDER
THIS LIMITED SITUATION WOULD REQUIRE TREATING THE OPTION AS A NONSTATUTORY
OPTION FOR TAX PURPOSES. THE COMPANY RECOMMENDS THAT PARTICIPANT CONSULT WITH A
TAX ADVISOR REGARDING THIS MATTER.
By signing this Agreement, the Participant acknowledges that Optionee has read
and understood the Plan and agrees to be bound by it and this Agreement,
including the provisions of Articles 7 and 8 of the Plan.
OPTIONEE: MICREL, INCORPORATED
By:
- ---------------------------------- ----------------------------------
Signature
Title:
- ---------------------------------- -------------------------------
Print Name
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<PAGE>
EXHIBIT A
---------
EXERCISE NOTICE AND AGREEMENT
-----------------------------
Micrel, Incorporated
1849 Fortune Drive
San Jose, CA 95131
Attention: Chief Financial Officer
Re: Exercise of Stock Option Pursuant to
1994 Stock Option Plan
1. Exercise of Option. Pursuant to the Micrel, Incorporated 1994 Stock
------------------
Option Plan (the "Plan") and the Stock Option Agreement ("Option Agreement")
entered into as of ______________________, 199__ between ______________________
("Participant") and Micrel, Incorporated, a California corporation (the
"Company"), Participant hereby elects, effective as of today, _________________,
to exercise Participant's option to purchase ___________ shares of common stock
(the "Shares") of the Company.
2. Payment; Taxes. Enclosed is Participant's check in the amount of
--------------
$____________, which is the full exercise price for the Shares. Participant
agrees to make appropriate arrangements with the Company for payment of
Participant's tax obligation as a result of this Option exercise.
3. Deemed Date of Exercise. The date of exercise shall be deemed to be
-----------------------
the first date (after which an Exercise Notice is filed with the Company) upon
which Shares become eligible for transfer to the Participant under applicable
state and federal laws and regulatory requirements.
4. Compliance with Laws. Participant understands and acknowledges that
--------------------
the purchase and sale of the Shares may be subject to approval under the state
and federal securities laws and other laws and, notwithstanding any other
provision of the Option Agreement to the contrary, the exercise of any rights to
purchase Shares is expressly conditioned upon approval (if necessary) and
compliance with all such laws.
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<PAGE>
5. Representations of Participant. Participant represents and warrants
------------------------------
to the Company, as follows:
(a) Participant has received, read and understood the Plan and the
Option Agreement and agrees to abide by and be bound by their terms and
conditions.
(b) The Options exercised herewith are exercisable according to the
schedule in the Option Agreement.
(c) Participant is aware of the business affairs and financial
condition of the Company and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the Shares.
(d) Participant is acquiring the Shares for investment for
Participant's own account only and not with a view to, for resale in connection
with, any "distribution" thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act").
(e) Participant acknowledges and understands that the Shares are
"restricted Securities" and have not been registered under the Securities Act in
reliance upon a specific exemption from registration. Participant acknowledges
that such exemption depends upon, among other things, the bona fide nature of
Participant's investment intent as expressed herein. Participant further
understands that the Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Participant further acknowledges and understands that
the Company is under no obligation to register the Shares. Participant
understands that the certificate representing the Shares will bear a legend that
prohibits the transfer of the Shares unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company, and any other legend required under applicable state securities law.
(f) Participant is aware of the adoption of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly from the
Company in a nonpublic offering, subject to the satisfaction of certain
conditions. Participant further understands that if the applicable requirements
of Rule 701 or Rule 144 are not satisfied, the sale of the Shares will require
registration under the Securities Act or compliance with a registration
exemption. Participant understands that no assurances can be given that any such
registration exemption will be available.
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<PAGE>
(g) Participant further agrees that Participant is acquiring the
Shares in accordance with and subject to the terms of the Option Agreement and
the Plan, including the Share Repurchase Right and the Right of First Refusal,
to all of which Participant expressly assents.
6. Refusal to Transfer. The Company shall not be required (i) to transfer
-------------------
on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement, the Option Agreement or
the Plan or (ii) to treat as owner of such Shares or to accord the right to vote
or receive dividends to any purchaser or other transferee to whom such Shares
shall have been so transferred.
7. Tax Consultation. Participant understands that Participant may suffer
----------------
adverse tax consequences as a result of Participant's purchase or disposition of
the Shares. Participant represents that Participant has consulted with any tax
consultants Participant deems advisable in connection with the purchase or
disposition of the Shares and that Participant is not relying on the Company for
any tax advice.
8. Entire Agreement. The Plan and the Option Agreement are incorporated
----------------
herein by reference. This Agreement, the Plan and the Option Agreement
constitute the entire agreement of the parties and supersede in their entirety
all prior undertakings and agreements of the Company and the Participant with
respect to the subject matter hereof.
Submitted by: Accepted by:
PARTICIPANT: MICREL, INCORPORATED
By:
-----------------------------------
Its:
- ----------------------------------- -----------------------------------
(Signature)
Address:
- -------
- -----------------------------------
- -----------------------------------
Social Security Number:
- -----------------------
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<PAGE>
EXHIBIT 5.1
August 12, 1996
Micrel, Incorporated
1849 Fortune Drive
San Jose, California 95131
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
Micrel, Incorporated, a California corporation (the "Company"), with the
Securities and Exchange Commission on August 14, 1996 (the "Registration
Statement"), relating to the registration under the Securities Act of 1933, as
amended, of 1,000,000 shares of the Company's Common Stock, no par value (the
"Stock"). The Stock is reserved for issuance pursuant to options granted or to
be granted under the Company's 1994 Stock Option Plan. As counsel to the
Company, we have examined the proceedings taken by the Company in connection
with the registration of the Stock.
It is our opinion that the Stock, when issued and sold in the manner
described in the Registration Statement and the related Prospectus, will be
legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us in the Registration
Statement and any amendments thereto.
Very truly yours,
MORRISON & FOERSTER LLP
