As filed with the Securities and Exchange Commission on December
23, 1997
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INFORMATION STORAGE DEVICES, INC.
(Exact name of registrant as specified in its charter)
California 77-0197173
(State or other jurisdiction (I.R.S. employer
of identification no.)
incorporation or organization)
2045 Hamilton Avenue
San Jose, California 95125
(Address of principal executive offices, including zip code)
1994 EQUITY INCENTIVE PLAN
1994 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plans)
Felix J. Rosengarten
Vice President, Finance and Administration and Chief Financial
Officer
2045 Hamilton Avenue
San Jose, California 95125
(408) 369-2400
(Name, address and telephone number, including area code, of
agent for service)
Copies to:
Bruce W. Jenett, Esq.
Katharine T. Schuda, Esq.
John F. Platz, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------
Amount Proposed Proposed
Title of to be Maximum Maximum Amount of
Securities to be Registered Offering Aggregate Registration
Registered Price Per Offering Fee
Share Price
- ---------------------------------------------------------------------
Common Stock, no
par value ... 800,000 (1) $____6.375 (2$ 5,100,00 $ 1,504.50_________
(2)
(1) Additional shares available for grant and not
subject to outstanding options as of December 19, 1997
under the Registrant's 1994 Equity Incentive Plan and 1994
Employee Stock Purchase Plan.
(2) Estimated as of December 19, 1997 pursuant to Rule
457(c) solely for the purpose of calculating the
amount of the registration fee.
<PAGE>
Statement Pursuant to General Instruction E
Pursuant to General Instruction E, the contents of the
Registrant's Form S-8 Registration Statement No. 33-90824 filed
on March 31, 1995 are hereby incorporated by reference.
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Item 8. Exhibits.
4.01 Registrant's 1994 Equity Incentive Plan, as
amended, and related documents.
4.02 Registrant's 1994 Employee Stock Purchase Plan.
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit
5.01).
23.02 Consent of Arthur Andersen LLP, independent Public
Accountants.
24.01 Power of Attorney (see page 3).
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-8 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of San Jose, State of California, on the 23 day of
December 1997.
INFORMATION STORAGE DEVICES, INC.
By: /s/ Felix J. Rosengarten
Felix J. Rosengarten
Vice President, Finance and
Administration
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose
signature appears below constitutes and appoints David L. Angel
and Felix J. Rosengarten, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution, for
him and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective
amendments) to this Registration Statement on Form S-8, and to
file the same with all exhibits thereto and all documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or his or
their 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.
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<S> <C> <C> <C>
Signature Title Date
Principal Executive Officer:
/s/ David L. Angel Chief Executive December 23, 1997
David L. Angel Officer and a Director
<PAGE>
Principal Financial Officer
and Accounting Officer:
/s/ Felix J. Rosengarten Vice President,Finance and December 23, 1997
Felix J. Rosengarten Administration and
Chief Financial Officer
Additional Directors:
/s/ Frederick B. Bamber Director December 23, 1997
Frederick B. Bamber
/s/ Eugene J. Flath Director December 23, 1997
Eugene J. Flath
/s/ Alan V. King Director December 23, 1997
Alan V. King
/s/ Eric J. Ochiltree Director December 23, 1997
Eric J. Ochiltree
/s/ Frederick L. Zieber Director December 23, 1997
Frederick L. Zieber
</TABLE>
<PAGE>
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Exhibit Index
Exhibit No. Description
4.01 Registrant's 1994 Equity
Incentive Plan, as amended, and
related documents.
4.02 Registrant's 1994 Employee Stock
Purchase Plan.
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP
(included in Exhibit 5.01).
23.02 Consent of Arthur Andersen LLP,
independent Public Accountants.
24.01 Power of Attorney (see page 3).
</TABLE>
<PAGE>
EXHIBIT 4.01
INFORMATION STORAGE DEVICES, INC.
1994-EQUITY-INCENTIVE-PLAN
As Adopted September 12, 1994
As Amended through December 3, 1997
1. PURPOSE. The purpose of the Plan is to provide
incentives to attract, retain and motivate eligible persons whose
present and potential contributions are important to the success
of the Company, its Parent, Subsidiaries and Affiliates, by
offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock
and Stock Bonuses. Capitalized terms not defined in the text are
defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to
Sections 2.2 and 18, the total number of Shares reserved and
available for grant and issuance pursuant to the Plan shall be
2,750,000 Shares. Any shares issuable upon exercise of options
granted pursuant to the 1987 Stock Option Plan (the "Prior Plan")
that expire or become unexercisable for any reason without having
been exercised in full, shall no longer be available for
distribution under the Prior Plan, but shall be available for
distribution under this Plan. Subject to Sections 2.2 and 18,
Shares shall again be available for grant and issuance in
connection with future Awards under the Plan that: (a) are
subject to issuance upon exercise of an Option but cease to be
subject to such Option for any reason other than exercise of such
Option, (b) are subject to an Award granted hereunder but are
forfeited or are repurchased by the Company at the original issue
price, or (c) are subject to an Award that otherwise terminates
without Shares being issued.
2.2 Adjustment of Shares. In the event that the
number of outstanding Shares is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision,
combination, reclassification or similar change in the capital
structure of the Company without consideration, then (a) the
number of Shares reserved for issuance under the Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding
Options, and (c) the number of Shares subject to other
outstanding Awards shall be proportionately adjusted, subject to
any required action by the Board or the shareholders of the
Company and compliance with applicable securities laws; provided,
however, that fractions of a Share shall not be issued but shall
either be paid in cash at Fair Market Value or shall be rounded
up to the nearest Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below)
may be granted only to employees (including officers and
directors who are also employees) of the Company or of a Parent
or Subsidiary of the Company. All other Awards may be granted to
employees, officers, directors, consultants, independent
contractors and advisors of the Company or any Parent, Subsidiary
or Affiliate of the Company; provided such consultants,
contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a
capital-raising transaction. No person shall be eligible to
receive more than 500,000 Shares at any time during the term of
this Plan pursuant to the grant of Awards hereunder. A person
may be granted more than one Award under the Plan.
<PAGE>
4. ADMINISTRATION.
4.1 Committee Authority. The Plan shall be
administered by the Committee or the Board acting as the
Committee. Subject to the general purposes, terms and conditions
of the Plan, and to the direction of the Board, the Committee
shall have full power to implement and carry out the Plan. The
Committee shall have the authority to:
(a) construe and interpret the Plan, any Award
Agreement and any other agreement or document
executed pursuant to the Plan;
(b) prescribe, amend and rescind rules and regulations
relating to the Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other
consideration subject to Awards;
(f) determine whether Awards will be granted singly, in
combination, in tandem with, in replacement of, or
as alternatives to, other Awards under the Plan or
any other incentive or compensation plan of the
Company or any Parent, Subsidiary or Affiliate of
the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment
of Awards;
(i) correct any defect, supply any omission, or
reconcile any inconsistency in the Plan, any Award
or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or
advisable for the administration of the Plan.
4.2 Committee Discretion. Any determination made
by the Committee with respect to any Award shall be made in its
sole discretion at the time of grant of the Award or, unless in
contravention of any express term of the Plan or Award, at any
later time, and such determination shall be final and binding on
the Company and all persons having an interest in any Award under
the Plan. The Committee may delegate to one or more officers of
the Company the authority to grant an Award under the Plan to
Participants who are not Insiders of the Company.
<PAGE>
4.3 Composition of Committee. If two or more
members of the Board are Outside Directors, the Committee shall
be comprised of at least two members of the Board, all of whom
are Outside Directors.
5. OPTIONS. The Committee may grant Options to
eligible persons and shall determine whether such Options shall
be Incentive Stock Options within the meaning of the Code
("ISOs") or Nonqualified Stock Options ("NQSOs"), the number of
Shares subject to the Option, the Exercise Price of the Option,
the period during which the Option may be exercised, and all
other terms and conditions of the Option, subject to the
following:
5.1 Form of Option Grant. Each Option granted
under the Plan shall be evidenced by an Award Agreement which
shall expressly identify the Option as an ISO or NQSO ("Stock
Option Agreement"), and be in such form and contain such
provisions (which need not be the same for each Participant) as
the Committee shall from time to time approve, and which shall
comply with and be subject to the terms and conditions of the
Plan.
5.2 Date of Grant. The date of grant of an Option
shall be the date on which the Committee makes the determination
to grant such Option, unless otherwise specified by the
Committee. The Stock Option Agreement and a copy of the Plan
will be delivered to the Participant within a reasonable time
after the granting of the Option.
5.3 Exercise Period. Options shall be exercisable
within the times or upon the events determined by the Committee
as set forth in the Stock Option Agreement; provided, however,
that no Option shall be exercisable after the expiration of ten
(10) years from the date the Option is granted, and provided
further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or
any Parent or Subsidiary of the Company
("Ten Percent Shareholder") shall be exercisable after the
expiration of five (5) years from the date the ISO is granted.
The Committee also may provide for the exercise of Options to
become exercisable at one time or from time to time, periodically
or otherwise, in such number or percentage as the Committee
determines.
5.4 Exercise Price. The Exercise Price shall be
determined by the Committee when the Option is granted and may be
not less than 85% of the Fair Market Value of the Shares on the
date of grant; provided that (i) the Exercise Price of an ISO
shall be not less than 100% of the Fair Market Value of the
Shares on the date of grant and (ii) the Exercise Price of any
ISO granted to a Ten Percent Shareholder shall not be less than
110% of the Fair Market Value of the Shares on the date of
grant. Payment for the Shares purchased may be made in
accordance with Section 8 of the Plan.
5.5 Method of Exercise. Options may be exercised
only by delivery to the Company of a written stock option
exercise agreement (the "Exercise Agreement") in a form approved
by the Committee (which need not be the same for each
Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares, if any, and such
representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as
may be required or desirable by the Company to comply with
applicable securities laws, together with payment in full of the
Exercise Price for the number of Shares being purchased.
<PAGE>
5.6 Termination. Notwithstanding the exercise
periods set forth in the Stock Option Agreement, exercise of an
Option shall always be subject to the following:
(a) If the Participant is Terminated for any reason
except death or Disability, then Participant may
exercise such Participant's Options only to the
extent that such Options would have been
exercisable upon the Termination Date no later than
three (3) months after the Termination Date (or
such shorter time period as may be specified in the
Stock Option Agreement), but in any event, no later
than the expiration date of the Options.
(b) If the Participant is terminated because of death
or Disability (or the Participant dies within three
(3) months of such termination), then Participant's
Options may be exercised only to the extent that
such Options would have been exercisable by
Participant on the Termination Date and must be
exercised by Participant (or Participant's legal
representative or authorized assignee) no later
than twelve (12) months after the Termination Date
(or such shorter time period as may be specified in
the Stock Option Agreement), but in any event no
later than the expiration date of the Options.
5.7 Limitations on Exercise. The Committee may
specify a reasonable minimum number of Shares that may be
purchased on any exercise of an Option, provided that such
minimum number will not prevent Participant from exercising the
Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair
Market Value (determined as of the date of grant) of Shares with
respect to which ISOs are exercisable for the first time by a
Participant during any calendar year (under the Plan or under any
other incentive stock option plan of the Company or any Parent or
Subsidiary of the Company) shall not exceed $100,000. If the
Fair Market Value of Shares on the date of grant with respect to
which ISOs are exercisable for the first time by a Participant
during any calendar year exceeds $100,000, the Options for the
first $100,000 worth of Shares to become exercisable in such
calendar year shall be ISOs and the Options for the amount in
excess of $100,000 that become exercisable in that calendar year
shall be NQSOs. In the event that the Code or the regulations
promulgated thereunder are amended after the Effective Date of
the Plan to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISOs, such different
limit shall be automatically incorporated herein and shall apply
to any Options granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The
Committee may modify, extend or renew outstanding Options and
authorize the grant of new Options in substitution therefor,
provided that any such action may not, without the written
consent of Participant, impair any of Participant's rights under
any Option previously granted. Any outstanding ISO that is
modified, extended, renewed or otherwise altered shall be treated
in accordance with Section 424(h) of the Code. The Committee may
reduce the Exercise Price of outstanding Options without the
consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under
Section 5.4 of the Plan for Options granted on the date the
action is taken to reduce the Exercise Price.
<PAGE>
5.10 No Disqualification. Notwithstanding any
other provision in the Plan, no term of the Plan relating to ISOs
shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be exercised, so
as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify
any ISO under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an
offer by the Company to sell to an eligible person Shares that
are subject to restrictions. The Committee shall determine to
whom an offer will be made, the number of Shares the person may
purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares shall be subject, and all other
terms and conditions of the Restricted Stock Award, subject to
the following:
6.1 Form of Restricted Stock Award. All purchases
under a Restricted Stock Award made pursuant to the Plan shall be
evidenced by an Award Agreement ("Restricted
Stock Purchase Agreement") that shall be in such form (which need
not be the same for each Participant) as the Committee shall from
time to time approve, and shall comply with and be subject to the
terms and conditions of the Plan. The offer of Restricted Stock
shall be accepted by the Participant's execution and delivery of
the Restricted Stock Purchase Agreement and full payment for the
Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person.
If such person does not execute and deliver the Restricted Stock
Purchase Agreement along with full payment for the Shares to the
Company within thirty (30) days, then the offer shall terminate,
unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares
sold pursuant to a Restricted Stock Award shall be determined by
the Committee and shall be at least 85% of the Fair Market Value
of the Shares on the date the Restricted Stock Award is granted,
except in the case of a sale to a Ten Percent Shareholder, in
which case the Purchase Price shall be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance
with Section 8 of the Plan.
6.3 Restrictions. Restricted Stock Awards shall
be subject to such restrictions as the Committee may impose. The
Committee may provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions, in
whole or part, based on length of service, performance or such
other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an
award of Shares (which may consist of Restricted Stock) for
services rendered to the Company or any Parent, Subsidiary or
Affiliate of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent,
Subsidiary or Affiliate of the Company pursuant to an Award
Agreement (the "Stock Bonus Agreement") that shall be in such
<PAGE>
form (which need not be the same for each Participant) as the
Committee shall from time to time approve, and shall comply with
and be subject to the terms and conditions of the Plan. A Stock
Bonus may be awarded upon satisfaction of such performance goals
as are set out in advance in the Participant's individual Award
Agreement (the "Performance Stock Bonus Agreement") that shall be
in such form (which need not be the same for each Participant) as
the Committee shall from time to time approve, and shall comply
with and be subject to the terms and conditions of the Plan.
Stock Bonuses may vary from Participant to Participant and
between groups of Participants, and may be based upon the
achievement of the Company, Parent, Subsidiary or Affiliate
and/or individual performance factors or upon such other criteria
as the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee shall
determine the number of Shares to be awarded to the Participant
and whether such Shares shall be Restricted Stock. If the Stock
Bonus is being earned upon the satisfaction of performance goals
pursuant to a Performance Stock Bonus Agreement, then the
Committee shall determine: (a) the nature, length and starting
date of any period during which performance is to be measured
(the "Performance Period") for each Stock Bonus; (b) the
performance goals and criteria to be used to measure the
performance, if any; (c) the number of Shares that may be awarded
to the Participant; and (d) the extent to which such Stock
Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock
Bonuses that are subject to different Performance Periods and
different performance goals and other criteria. The number of
Shares may be fixed or may vary in accordance with such
performance goals and criteria as may be determined by the
Committee. The Committee may adjust the performance goals
applicable to the Stock Bonuses to take into account changes in
law and accounting or tax rules and to make such adjustments as
the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances
to avoid windfalls or hardships.
7.3 Form of Payment. The earned portion of a
Stock Bonus may be paid currently or on a deferred basis with
such interest or dividend equivalent, if any, as the Committee
may determine. Payment may be made in the form of cash, whole
Shares, including Restricted Stock, or a combination thereof,
either in a lump sum payment or in installments, all as the
Committee shall determine.
7.4 Termination During Performance Period. If a
Participant is Terminated during a Performance Period for any
reason, then such Participant shall be entitled to payment
(whether in Shares, cash or otherwise) with respect to the Stock
Bonus only to the extent earned as of the date of Termination in
accordance with the Performance Stock Bonus Agreement, unless the
Committee shall determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased
pursuant to the Plan may be made in cash (by check) or, where
expressly approved for the Participant by the Committee and where
permitted by law:
(a) by cancellation of indebtedness of the Company to
the Participant;
<PAGE>
(b) by surrender of shares that either: (1) have been
owned by Participant for more than six (6) months
and have been paid for within the meaning of SEC
Rule 144 (and, if such shares were purchased from
the Company by use of a promissory note, such note
has been fully paid with respect to such shares);
or (2) were obtained by Participant in the public
market;
(c) by tender of a full recourse promissory note having
such terms as may be approved by the Committee and
bearing interest at a rate sufficient to avoid
imputation of income under Sections 483 and 1274 of
the Code; provided, however, that Participants who
are not employees of the Company shall not be
entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral
other than the Shares; provided, further, that the
portion of the Purchase Price equal to the par
value of the Shares, if any, must be paid in cash.
(d) by waiver of compensation due or accrued to
Participant for services rendered;
(e) by tender of property;
(f) with respect only to purchases upon exercise of an
Option, and provided that a public market for the
Company's stock exists:
(1) through a "same day sale" commitment from
Participant and a broker-dealer that is a
member of the National Association of
Securities Dealers (a "NASD Dealer") whereby
the Participant irrevocably elects to exercise
the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price,
and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward
the Exercise Price directly to the Company; or
(2) through a "margin" commitment from Participant
and a NASD Dealer whereby Participant
irrevocably elects to exercise the Option and
to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly
to the Company;
or
(g) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the
Participant pay for Shares purchased under the Plan by
authorizing a guarantee by the Company of a third-party loan to
the Participant.
<PAGE>
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to
be issued in satisfaction of Awards granted under the Plan, the
Company may require the Participant to remit to the Company an
amount sufficient to satisfy federal, state and local withholding
tax requirements prior to the delivery of any certificate or
certificates for such Shares. Whenever, under the Plan, payments
in satisfaction of Awards are to be made in cash, such payment
shall be net of an amount sufficient to satisfy federal, state,
and local withholding tax requirements.
9.2 Stock Withholding. When, under applicable tax
laws, a Participant incurs tax liability in connection with the
exercise or vesting of any Award that is subject to tax
withholding and the Participant is obligated to pay the Company
the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by
electing to have the Company withhold from the Shares to be
issued that number of Shares having a Fair Market Value equal to
the minimum amount required to be withheld, determined on the
date that the amount of tax to be withheld is to be determined.
All elections by a Participant to have Shares withheld for this
purpose shall be made in accordance with the requirements
established by the Committee and be in writing in a form
acceptable to the Committee.
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant shall
have any of the rights of a shareholder with respect to any
Shares until the Shares are issued to the Participant. After
Shares are issued to the Participant, the Participant shall be a
shareholder and have all the rights of a shareholder with respect
to such Shares, including the right to vote and receive all
dividends or other distributions made or paid with respect to
such Shares; provided, that if such Shares are Restricted Stock,
then any new, additional or different securities the Participant
may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in
the corporate or capital structure of the Company shall be
subject to the same restrictions as the Restricted Stock;
provided, further, that the Participant shall have no right to
retain such stock dividends or stock distributions with respect
to Shares that are repurchased at the Participant's original
Purchase Price pursuant to Section 12.
10.2 Financial Statements. The Company shall
provide financial statements to each Participant prior to such
Participant's purchase of Shares under the Plan, and to each
Participant annually during the period such Participant has
Awards outstanding; provided, however, the Company shall not be
required to provide such financial statements to Participants
whose services in connection with the Company assure them access
to equivalent information.
11. TRANSFERABILITY. Awards granted under the Plan,
and any interest therein, shall not be transferable or assignable
by Participant, and may not be made subject to execution,
attachment or similar process, otherwise than by will or by the
laws of descent and distribution or as consistent with the
specific Plan and Award Agreement provisions relating thereto.
During the lifetime of the Participant an Award shall be
exercisable only by the Participant, and any elections with
respect to an Award, may be made only by the Participant.
<PAGE>
12. RESTRICTIONS ON SHARES. At the discretion of the
Committee, the Company may reserve to itself and/or its
assignee(s) in the Award Agreement (a) a right of first refusal
to purchase all Shares that a Participant (or a subsequent
transferee) may propose to transfer to a third party, and/or (b)
a right to repurchase a portion of or all Shares held by a
Participant following such Participant's Termination at any time
within ninety (90) days after the later of Participant's
Termination Date and the date Participant purchases Shares under
the Plan, for cash or cancellation of purchase money
indebtedness, at: (A) with respect to Shares that are "Vested"
(as defined in the Award Agreement), the higher of: (l)
Participant's original Purchase Price, or (2) the Fair Market
Value of such Shares on Participant's Termination Date, provided,
that such right of repurchase (i) must be exercised as to all
such "Vested" Shares unless a Participant consents to the
Company's repurchase of only a portion of such "Vested" Shares
and (ii) terminates when the Company's securities become publicly
traded; or (B) with respect to Shares that are not "Vested" (as
defined in the Award Agreement), at the Participant's original
Purchase Price.
13. CERTIFICATES. All certificates for Shares or other
securities delivered under the Plan shall be subject to such
stock transfer orders, legends and other restrictions as the
Committee may deem necessary or advisable, including restrictions
under any applicable federal, state or foreign securities law, or
any rules, regulations and other requirements of the SEC or any
stock exchange or automated quotation system upon which the
Shares may be listed.
14. ESCROW; PLEDGE OF SHARES. To enforce any
restrictions on a Participant's Shares, the Committee may require
the Participant to deposit all certificates representing Shares,
together with stock powers or other instruments of transfer
approved by the Committee, appropriately endorsed in blank, with
the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the
Committee may cause a legend or legends referencing such
restrictions to be placed on the certificates. Any Participant
who is permitted to execute a promissory note as partial or full
consideration for the purchase of Shares under the Plan shall be
required to pledge and deposit with the Company all or part of
the Shares so purchased as collateral to secure the payment of
Participant's obligation to the Company under the promissory
note; provided, however, that the Committee may require or accept
other or additional forms of collateral to secure the payment of
such obligation and, in any event, the Company shall have full
recourse against the Participant under the promissory note
notwithstanding any pledge of the Participant's Shares or other
collateral. In connection with any pledge of the Shares,
Participant shall be required to execute and deliver a written
pledge agreement in such form as the Committee shall from time to
time approve. The Shares purchased with the promissory note may
be released from the pledge on a prorata basis as the promissory
note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may,
at any time or from time to time, authorize the Company, with the
consent of the respective Participants, to issue new Awards in
exchange for the surrender and cancellation of any or all
outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash,
Shares (including Restricted Stock) or other consideration, based
on such terms and conditions as the Committee and the Participant
shall agree.
<PAGE>
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An
Award shall not be effective unless such Award is in compliance
with all applicable federal and state securities laws, rules and
regulations of any governmental body, and the requirements of any
stock exchange or automated quotation system upon which the
Shares may then be listed, as they are in effect on the date of
grant of the Award and also on the date of exercise or other
issuance. Notwithstanding any other provision in the Plan, the
Company shall have no obligation to issue or deliver certificates
for Shares under the Plan prior to (a) obtaining any approvals
from governmental agencies that the Company determines are
necessary or advisable, and/or (b) completion of any registration
or other qualification of such shares under any state or federal
law or ruling of any governmental body that the Company
determines to be necessary or advisable. The Company shall be
under no obligation to register the Shares with the SEC or to
effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or
automated quotation system, and the Company shall have no
liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in the Plan or
any Award granted under the Plan shall confer or be deemed to
confer on any Participant any right to continue in the employ of,
or to continue any other relationship with, the Company or any
Parent, Subsidiary or Affiliate of the Company or limit in any
way the right of the Company or any Parent, Subsidiary or
Affiliate of the Company to terminate Participant's employment or
other relationship at any time, with or without cause.
18. CORPORATE TRANSACTIONS.
18.1 Corporate Transactions. In the event of a
Corporate Transaction (as defined in this Section 18.1), the
exercisability of each Option shall be automatically accelerated
so that each Option shall, immediately before the specified
effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of Shares and may be
exercised for all or any portion of such Shares; provided, that
an Option shall not be accelerated if and to the extent that 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.
The determination of comparability shall be made by the Board or
the Committee, and the Board or the Committee's determination
shall be final, binding and conclusive. Upon the consummation of
a Corporate Transaction, all outstanding Options shall, to the
extent not previously exercised or assumed by the successor
corporation or its parent, terminate and cease to be exercisable.
"Corporate Transaction" means (i) a merger or
acquisition 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), (ii) the
sale, transfer or other disposition of all or substantially all
of the assets of the Company or (iii) any other corporate
reorganization or business combination that is not approved by
the Board and in which the beneficial ownership of 50% or more of
the Company's outstanding voting stock is transferred.
18.2 Dissolution. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify
the Optionee at least fifteen (15) days prior to such proposed
action. To the extent that Options have not been previously
exercised, such Options will terminate immediately prior to the
consummation of such proposed action.
<PAGE>
18.3 Assumption of Awards by the Company. The
Company, from time to time, also may substitute or assume
outstanding awards granted by another company, whether in
connection with an acquisition of such other company or
otherwise, by either (a) granting an Option under this Plan in
substitution of such other company's Option, or (b) assuming such
Option as if it had been granted under this Plan if the terms of
such assumed Option could be applied to an Option granted under
this Plan. Such substitution or assumption shall be permissible
if the holder of the substituted or assumed Option would have
been eligible to be granted an Option under the Plan if the other
company had applied the rules of the Plan to such grant. In the
event the Company assumes an Option granted by another company,
the terms and conditions of such Option shall remain unchanged
(except that the Exercise Price and the number and nature of
Shares issuable upon exercise of any such option will be adjusted
appropriately pursuant to Section 424(a) of the Code). In the
event the Company elects to grant a new Option rather than
assuming an existing option, such new Option may be granted with
a similarly adjusted Exercise Price.
19. ADOPTION AND SHAREHOLDER APPROVAL. The Plan shall
become effective on the closing of the first registration of the
Company's Common Stock for sale to the public under the
Securities Act (the "Effective Date"). The Plan shall be
approved by the shareholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws,
within twelve (12) months before or after the date the Plan is
adopted by the Board. Upon the Effective Date, the Board may
grant Awards pursuant to the Plan; provided, however, that: (a)
no Option may be exercised prior to initial shareholder approval
of the Plan; (b) no Option granted pursuant to an increase in the
number of Shares approved by the Board shall be exercised prior
to the time such increase has been approved by the shareholders
of the Company; and (c) in the event that shareholder approval of
the increase is not obtained within the time period provided
herein, all Awards granted hereunder pursuant to such increase
shall be canceled, any Shares issued pursuant to any Award made
pursuant to such increase shall be canceled and any purchase of
Shares hereunder pursuant to such increase shall be rescinded.
20. TERM OF PLAN. The Plan will terminate ten (10)
years from the date the Plan is adopted by the Board or, if
earlier, the date of shareholder approval.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at
any time terminate or amend the Plan in any respect, including
without limitation amendment of any form of Award Agreement or
instrument to be executed pursuant to the Plan; provided,
however, that the Board shall not, without the approval of the
shareholders of the Company, amend the Plan in any manner that
requires such shareholder approval pursuant to the Code or the
regulations promulgated thereunder as such provisions apply to
ISO plans.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption
of the Plan by the Board, the submission of the Plan to the
shareholders of the Company for approval, nor any provision of
the Plan shall be construed as creating any limitations on the
power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without
limitation, the granting of stock options and bonuses otherwise
than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
<PAGE>
23. DEFINITIONS. As used in the Plan, the following
terms shall have the following meanings:
"Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, another
corporation, where "control" (including the terms "controlled by"
and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management
and policies of the corporation, whether through the ownership of
voting securities, by contract or otherwise.
"Award" means any award under the Plan, including
any Option, Restricted Stock or Stock Bonus.
"Award Agreement" means, with respect to each
Award, the signed written agreement between the Company and the
Participant setting forth the terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Committee" means the committee appointed by the
Board to administer the Plan, or if no committee is appointed,
the Board.
"Company" means Information Storage Devices, Inc.,
a corporation organized under the laws of the State of
California, or any successor corporation.
"Disability" means a disability, whether temporary
or permanent, partial or total, within the meaning of Section
22(e)(3) of the Code, as determined by the Committee.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exercise Price" means the price at which a holder
of an Option may purchase the Shares issuable upon exercise of
the Option.
<PAGE>
"Fair Market Value" means, as of any date, the
value of a share of the Company's Common Stock determined as
follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq
National Market on the last trading day prior to
the date of determination as reported in The Wall
Street Journal;
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, its
closing price on the last trading day prior to the
date of determination on the principal national
securities exchange on which the Common Stock is
listed or admitted to trading as reported in The
Wall Street Journal;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities
exchange, the average of the closing bid and asked
prices on the last trading day prior to the date of
determination as reported by The Wall Street
Journal; or
(d) if none of the foregoing is applicable, by the
Board in good faith.
"Insider" means an officer or director of the
Company or any other person whose transactions in the Company's
Common Stock are subject to Section 16 of the Exchange Act.
"Outside Director" means any director who is not
(a) a current employee of the Company or any Parent, Subsidiary
or Affiliate of the Company, (b) a former employee of the Company
or any Parent, Subsidiary or Affiliate of the Company who is
receiving compensation for prior services (other than benefits
under a tax-qualified pension plan), (c) a current or former
officer of the Company or any Parent, Subsidiary or Affiliate of
the Company or (d) currently receiving compensation for personal
services in any capacity, other than as a director, from the
Company or any Parent, Subsidiary or Affiliate of the Company;
provided, however, that at such time as the term "Outside
Director", as used in Section 162(m) is defined in regulations
promulgated under Section 162(m) of the Code, "Outside Director"
shall have the meaning set forth in such regulations, as amended
from time to time and as interpreted by the Internal Revenue
Service.
"Option" means an award of an option to purchase
Shares pursuant to Section 5.
"Parent" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the
Company, if at the time of the granting of an Award under the
Plan, each of such corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
<PAGE>
"Participant" means a person who receives an Award
under the Plan.
"Plan" means this Information Storage Devices, Inc.
1994 Equity Incentive Plan, as amended from time to time.
"Restricted Stock Award" means an award of Shares
pursuant to Section 6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933,
as amended.
"Shares" means shares of the Company's Common Stock
reserved for issuance under the Plan, as adjusted pursuant to
Sections 2 and 15, and any successor security.
"Stock Bonus" means an award of Shares, or cash in
lieu of Shares, pursuant to Section 7.
"Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company if, at the time of granting of the Award, each of the
corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
"Termination" or "Terminated" means, for purposes
of the Plan with respect to a Participant, that the Participant
has ceased to provide services as an employee, director,
consultant, independent contractor or adviser, to the Company or
a Parent, Subsidiary or Affiliate of the Company, except in the
case of sick leave, military leave, or any other leave of absence
approved by the Committee, provided, that such leave is for a
period of not more than ninety (90) days, or reinstatement upon
the expiration of such leave is guaranteed by contract or
statute. The Committee shall have sole discretion to determine
whether a Participant has ceased to provide services and the
effective date on which the Participant ceased to provide
services (the "Termination Date").
<PAGE>
EXHIBIT 4.02
INFORMATION STORAGE DEVICES, INC.
1994 EMPLOYEE STOCK PURCHASE PLAN
As Adopted on September 12, 1994
As Amended through December 3, 1997
1. ESTABLISHMENT OF PLAN. Information Storage Devices,
Inc. (the "Company") proposes to grant options for purchase of the
Company's Common Stock to eligible employees of the Company and its
Subsidiaries (as hereinafter defined) pursuant to this Employee
Stock Purchase Plan (this "Plan"). For purposes of this Plan,
"Parent Corporation" and "Subsidiary" (collectively,
"Subsidiaries") shall have the same meanings as "parent
corporation" and "subsidiary corporation" in Sections 424(e) and
424(f), respectively, of the Internal Revenue Code of 1986, as
amended (the "Code"). The Company intends the Plan to qualify as
an "employee stock purchase plan" under Section 423 of the Code
(including any amendments to or replacements of such Section), and
the Plan shall be so construed. Any term not expressly defined in
the Plan but defined for purposes of Section 423 of the Code shall
have the same definition herein. A total of 170,000 shares of the
Company's Common Stock is reserved for issuance under the Plan.
Such number shall be subject to adjustments effected in accordance
with Section 14 of the Plan.
2 PURPOSE. The purpose of the Plan is to provide
employees of the Company and Subsidiaries designated by the Board
of Directors of the Company (the "Board") as eligible to
participate in the Plan with a convenient means of acquiring an
equity interest in the Company through payroll deductions, to
enhance such employees' sense of participation in the affairs of
the Company and Subsidiaries, and to provide an incentive for
continued employment.
3. ADMINISTRATION. This Plan may be administered by
the Board or a committee appointed by the Board (the "Committee").
As used in this Plan, references to the "Committee" shall mean
either such committee or the Board if no committee has been
established. Subject to the provisions of the Plan and the
limitations of Section 423 of the Code or any successor provision
in the Code, all questions of interpretation or application of the
Plan shall be determined by the Board and its decisions shall be
final and binding upon all participants. Members of the Board
shall receive no compensation for their services in connection with
the administration of the Plan, other than standard fees as
established from time to time by the Board for services rendered by
Board members serving on Board committees. All expenses incurred
in connection with the administration of the Plan shall be paid by
the Company.
4. ELIGIBILITY. Any employee of the Company or the
Subsidiaries is eligible to participate in an Offering Period (as
hereinafter defined) under the Plan except the following:
(a) employees who are not employed by the Company or
Subsidiaries fifteen (15) days before the beginning of such
Offering Period;
(b) employees who are customarily employed for less than
twenty (20) hours per week;
<PAGE>
(c) employees who are customarily employed for less than
five (5) months in a calendar year;
(d) employees who, together with any other person whose
stock would be attributed to such employee pursuant to Section
424(d) of the Code, own stock or hold options to purchase stock or
who, as a result of being granted an option under the Plan with
respect to such Offering Period, would own stock or hold options to
purchase stock possessing 5 percent or more of the total combined
voting power or value of all classes of stock of the Company or any
of its Subsidiaries.
5. OFFERING DATES. The Offering Periods of the Plan
(the "Offering Period") shall be of 6 months duration commencing
February 1 and August 1 of each year and ending on July 31 and
January 31 respectively, during which payroll deductions of the
participant are accumulated under this Plan. The first day of each
Offering Period is referred to as the "Offering Date". The last
business day of each Offering Period is referred to as the
"Purchase Date". The Board shall have the power to change the
duration of Offering Periods with respect to future offerings
without shareholder approval if such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first
Offering Period to be affected.
6. PARTICIPATION IN THE PLAN. Eligible employees may
become participants in an Offering Period under the Plan on the
first Offering Date after satisfying the eligibility requirements
by delivering a subscription agreement to the Company's or
Subsidiary's (whichever employs such employee) treasury department
(the "Treasury Department") not later than the 15th day of the
month before such Offering Date unless a later time for filing the
subscription agreement authorizing payroll deductions is set by the
Board for all eligible employees with respect to a given Offering
Period. An eligible employee who does not deliver a subscription
agreement to the Treasury Department by such date after becoming
eligible to participate in such Offering Period shall not
participate in that Offering Period or any subsequent Offering
Period unless such employee enrolls in the Plan by filing a
subscription agreement with the Treasury Department not later than
the 15th day of the month preceding a subsequent Offering Date.
Once an employee becomes a participant in an Offering Period, such
employee will automatically participate in the Offering Period
commencing immediately following the last day of the prior Offering
Period unless the employee withdraws from the Plan or terminates
further participation in the Offering Period as set forth in
Section 11 below. Such participant is not required to file any
additional subscription agreement in order to continue
participation in the Plan.
7. GRANT OF OPTION ON ENROLLMENT. Enrollment by an
eligible employee in the Plan with respect to an Offering Period
will constitute the grant (as of the Offering Date) by the Company
to such employee of an option to purchase on the Purchase Date up
to that number of shares of Common Stock of the Company determined
by dividing the amount accumulated in such employee's payroll
deduction account during such Offering Period by the lower of (i)
eighty-five percent (85%) of the fair market value of a share of
the Company's Common Stock on the Offering Date or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company's
Common Stock on the Purchase Date; provided, however, that the
number of shares of the Company's Common Stock subject to any
option granted pursuant to this Plan shall not exceed the lesser of
(a) the maximum number of shares set by the Board pursuant to
Section 10(c) below with respect to the applicable Offering Period,
or (b) the maximum number of shares which may be purchased pursuant
to Section 10(b) below with respect to the applicable Offering
Period. Fair market value of a share of the Company's Common Stock
shall be determined as provided in Section 8 hereof.
<PAGE>
8. PURCHASE PRICE. The purchase price per share at
which a share of Common Stock will be sold in any Offering Period
shall be eighty-five percent (85%) of the lesser of:
(a) The fair market value on the Offering Date; or
(b) The fair market value on the Purchase Date.
For purposes of the Plan the term "fair market value" on
a given date shall mean the fair market value of the Company's
Common Stock as determined by the Board in its sole discretion,
exercised in good faith; provided, however, that where there is a
public market for the Common Stock, the fair market value per share
shall be the average of the closing bid and asked prices of the
Common Stock on the last trading day prior to the date of
determination, as reported in The Wall Street Journal (or if not so
reported, as otherwise reported by the Nasdaq Stock Market), or, in
the event the Common Stock is listed on a stock exchange or on the
Nasdaq National Market, the fair market value per share shall be
the closing price on the exchange or on the Nasdaq National Market
on the last trading date prior to the date of determination as
reported in The Wall Street Journal.
9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL
DEDUCTIONS; ISSUANCE OF SHARES.
(a) The purchase price of the shares is accumulated by
regular payroll deductions made during each Offering Period. The
deductions are made as a percentage of the participant's
compensation in one percent (1%) increments not less than two
percent (2%), nor greater than ten percent (10%), not to exceed
$25,000 per year or such lower limit set by the Committee.
Compensation shall mean all W-2 compensation, including, but not
limited to base salary, wages, commissions, overtime, shift
premiums and bonuses, plus draws against commissions; provided,
however, that for purposes of determining a participant's
compensation, any election by such participant to reduce his or her
regular cash remuneration under Sections 125 or 401(k) of the Code
shall be treated as if the participant did not make such election.
Payroll deductions shall commence on the first payday following the
Offering Date and shall continue to the end of the Offering Period
unless sooner altered or terminated as provided in the Plan.
(b) A participant may lower (but not increase) the rate
of payroll deductions during an Offering Period by filing with the
Treasury Department a new authorization for payroll deductions, in
which case the new rate shall become effective for the next payroll
period commencing more than fifteen (15) days after the Treasury
Department's receipt of the authorization and shall continue for
the remainder of the Offering Period unless changed as described
below. Such change in the rate of payroll deductions may be made
at any time during an Offering Period, but not more than one change
may be made effective during any Offering Period. A participant
may increase or decrease the rate of payroll deductions for any
subsequent Offering Period by filing with the Treasury Department a
new authorization for payroll deductions not later than the 15th
day of the month before the beginning of such Offering Period.
<PAGE>
(c) All payroll deductions made for a participant are
credited to his or her account under the Plan and are deposited
with the general funds of the Company. No interest accrues on the
payroll deductions. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll
deductions.
(d) On each Purchase Date, so long as the Plan remains
in effect and provided that the participant has not submitted a
signed and completed withdrawal form before that date which
notifies the Company that the participant wishes to withdraw from
that Offering Period under the Plan and have all payroll deductions
accumulated in the account maintained on behalf of the participant
as of that date returned to the participant, the Company shall
apply the funds then in the participant's account to the purchase
of whole shares of Common Stock reserved under the option granted
to such participant with respect to the Offering Period to the
extent that such option is exercisable on the Purchase Date. The
purchase price per share shall be as specified in Section 8 of the
Plan. Any cash remaining in a participant's account after such
purchase of shares shall be refunded to such participant in cash,
without interest; provided, however, that any amount remaining in
such participant's account on a Purchase Date which is less than
the amount necessary to purchase a full share of Common Stock of
the Company shall be carried forward, without interest, into the
next Offering Period. In the event that the Plan has been
oversubscribed, all funds not used to purchase shares on the
Purchase Date shall be returned to the participant, without
interest. No Common Stock shall be purchased on a Purchase Date on
behalf of any employee whose participation in the Plan has
terminated prior to such Purchase Date.
(e) As promptly as practicable after the Purchase Date,
the Company shall arrange the delivery to each participant of a
certificate representing the shares purchased upon exercise of his
option.
(f) During a participant's lifetime, such participant's
option to purchase shares hereunder is exercisable only by him or
her. The participant will have no interest or voting right in
shares covered by his or her option until such option has been
exercised. Shares to be delivered to a participant under the Plan
will be registered in the name of the participant or in the name of
the participant and his or her spouse.
10. LIMITATIONS ON SHARES TO BE PURCHASED.
(a) No employee shall be entitled to purchase stock
under the Plan at a rate which, when aggregated with his or her
rights to purchase stock under all other employee stock purchase
plans of the Company or any Subsidiary, exceeds $25,000 in fair
market value, determined as of the Offering Date (or such other
limit as may be imposed by the Code) for each calendar year in
which the employee participates in the Plan.
(b) No more than two hundred percent (200%) of the
number of shares determined by using eighty-five percent (85%) of
the fair market value of a share of the Company's Common Stock on
the Offering Date as the denominator may be purchased by a
participant on any single Purchase Date.
<PAGE>
(c) No employee shall be entitled to purchase more than
the Maximum Share Amount (as defined below) on any single Purchase
Date. Not less than thirty (30) days prior to the commencement of
any Offering Period, the Board may, in its sole discretion, set a
maximum number of shares which may be purchased by any employee at
any single Purchase Date (hereinafter the "Maximum Share Amount").
In no event shall the Maximum Share Amount exceed the amounts
permitted under Section 10(b) above. If a new Maximum Share Amount
is set, then all participants must be notified of such Maximum
Share Amount not less than fifteen (15) days prior to the
commencement of the next Offering Period. Once the Maximum Share
Amount is set, it shall continue to apply with respect to all
succeeding Purchase Dates and Offering Periods unless revised by
the Board as set forth above.
(d) If the number of shares to be purchased on a
Purchase Date by all employees participating in the Plan exceeds
the number of shares then available for issuance under the Plan,
the Company will make a pro rata allocation of the remaining shares
in as uniform a manner as shall be practicable and as the Board
shall determine to be equitable. In such event, the Company shall
give written notice of such reduction of the number of shares to be
purchased under a participant's option to each participant affected
thereby.
(e) Any payroll deductions accumulated in a
participant's account which are not used to purchase stock due to
the limitations in this Section 10 shall be returned to the
participant as soon as practicable after the end of the Offering
Period, without interest.
11. WITHDRAWAL.
(a) Each participant may withdraw from an Offering
Period under the Plan by signing and delivering to the Treasury
Department notice on a form provided for such purpose. Such
withdrawal may be elected at any time at least fifteen (15) days
prior to the end of an Offering Period.
(b) Upon withdrawal from the Plan, the accumulated
payroll deductions shall be returned to the withdrawn participant,
without interest, and his or her interest in the Plan shall
terminate. In the event a participant voluntarily elects to
withdraw from the Plan, he or she may not resume his or her
participation in the Plan during the same Offering Period, but he
or she may participate in any Offering Period under the Plan which
commences on a date subsequent to such withdrawal by filing a new
authorization for payroll deductions in the same manner as set
forth above for initial participation in the Plan.
12. TERMINATION OF EMPLOYMENT. Termination of a
participant's employment for any reason, including retirement,
death or the failure of a participant to remain an eligible
employee, immediately terminates his or her participation in the
Plan. In such event, the payroll deductions credited to the
participant's account will be returned to him or her or, in the
case of his or her death, to his or her legal representative,
without interest. For purposes of this Section 12, an employee
will not be deemed to have terminated employment or failed to
remain in the continuous employ of the Company in the case of sick
leave, military leave, or any other leave of absence approved by
the Board; provided that such leave is for a period of not more
than ninety (90) days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
13. RETURN OF PAYROLL DEDUCTIONS. In the event a
participant's interest in the Plan is terminated by withdrawal,
termination of employment or otherwise, or in the event the Plan is
terminated by the Board, the Company shall promptly deliver to the
participant all payroll deductions credited to his account. No
interest shall accrue on the payroll deductions of a participant in
the Plan.
<PAGE>
14. CAPITAL CHANGES. Subject to any required action by
the shareholders of the Company, the number of shares of Common
Stock covered by each option under the Plan which has not yet been
exercised and the number of shares of Common Stock which have been
authorized for issuance under the Plan but have not yet been placed
under option (collectively, the "Reserves"), as well as the price
per share of Common Stock covered by each option under the Plan
which has not yet been exercised, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split or the payment of a stock
dividend (but only on the Common Stock) or any other increase or
decrease in the number of shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose
determination shall be final, binding and conclusive. Except as
expressly provided herein, no issue by the Company of shares of
stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of
Common Stock subject to an option.
In the event of the proposed dissolution or liquidation
of the Company, the Offering Period will terminate immediately
prior to the consummation of such proposed action, unless otherwise
provided by the Board. The Board may, in the exercise of its sole
discretion in such instances, declare that the options under the
Plan shall terminate as of a date fixed by the Board and give each
participant the right to exercise his or her option as to all of
the optioned stock, including shares which would not otherwise be
exercisable. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of
the Company with or into another corporation, each option under the
Plan shall be assumed or an equivalent option shall be substituted
by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise
of its sole discretion and in lieu of such assumption or
substitution, that the participant shall have the right to exercise
the option as to all of the optioned stock. If the Board makes an
option exercisable in lieu of assumption or substitution in the
event of a merger or sale of assets, the Board shall notify the
participant that the option shall be fully exercisable for a period
of twenty (20) days from the date of such notice, and the option
will terminate upon the expiration of such period.
The Board may, if it so determines in the exercise of its
sole discretion, also make provision for adjusting the Reserves, as
well as the price per share of Common Stock covered by each
outstanding option, in the event that the Company effects one or
more reorganizations, recapitalizations, rights offerings or other
increases or reductions of shares of its outstanding Common Stock,
or in the event of the Company being consolidated with or merged
into any other corporation.
15. NONASSIGNABILITY. Neither payroll deductions
credited to a participant's account nor any rights with regard to
the exercise of an option or to receive shares under the Plan may
be assigned, transferred, pledged or otherwise disposed of in any
way (other than by will, the laws of descent and distribution or as
provided in Section 22 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall
be without effect.
<PAGE>
16. REPORTS. Individual accounts will be maintained for
each participant in the Plan. Each participant shall receive
promptly after the end of each Offering Period a report of his or
her account setting forth the total payroll deductions accumulated,
the number of shares purchased, the per share price thereof and the
remaining cash balance, if any, carried forward to the next
Offering Period.
17. NOTICE OF DISPOSITION. Each participant shall notify
the Company if the participant disposes of any of the shares
purchased in any Offering Period pursuant to this Plan if such
disposition occurs within two (2) years from the Offering Date or
within one (1) year from the Purchase Date on which such shares
were purchased (the "Notice Period"). Unless such participant is
disposing of any of such shares during the Notice Period, such
participant shall keep the certificates representing such shares in
his or her name (and not in the name of a nominee) during the
Notice Period. The Company may, at any time during the Notice
Period, place a legend or legends on any certificate representing
shares acquired pursuant to the Plan requesting the Company's
transfer agent to notify the Company of any transfer of the
shares. The obligation of the participant to provide such notice
shall continue notwithstanding the placement of any such legend on
the certificates.
18. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Plan
nor the grant of any option hereunder shall confer any right on any
employee to remain in the employ of the Company or any Subsidiary,
or restrict the right of the Company or any Subsidiary to terminate
such employee's employment.
19. EQUAL RIGHTS AND PRIVILEGES. All eligible employees
shall have equal rights and privileges with respect to the Plan so
that the Plan qualifies as an "employee stock purchase plan" within
the meaning of Section 423 or any successor provision of the Code
and the related regulations. Any provision of the Plan which is
inconsistent with Section 423 or any successor provision of the
Code shall, without further act or amendment by the Company or the
Board, be reformed to comply with the requirements of Section 423.
This Section 19 shall take precedence over all other provisions in
the Plan.
20. NOTICES. All notices or other communications by a
participant to the Company under or in connection with the Plan
shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.
21. TERM; SHAREHOLDER APPROVAL. This Plan shall become
effective on the date that it is adopted by the Board. This Plan
shall be approved by the shareholders of the Company, in any manner
permitted by applicable corporate law, within twelve (12) months
before or after the date this Plan is adopted by the Board. No
purchase of shares pursuant to the Plan shall occur prior to such
shareholder approval. The Plan shall continue until the earlier to
occur of termination by the Board, issuance of all of the shares of
Common Stock reserved for issuance under the Plan or ten (10) years
from the adoption of the Plan by the Board.
<PAGE>
22. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such
participant's death subsequent to the end of an Offering Period but
prior to delivery to him of such shares and cash. In addition, a
participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan
in the event of such participant's death prior to a Purchase Date.
(b) Such designation of beneficiary may be changed by
the participant at any time by written notice. In the event of the
death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such shares or cash
to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may
deliver such shares or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other
person as the Company may designate.
23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON
SALE OF SHARES. Shares shall not be issued with respect to an
option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed, and shall
be further subject to the approval of counsel for the Company with
respect to such compliance.
24. APPLICABLE LAW. The Plan shall be governed by the
substantive laws (excluding the conflict of laws rules) of the
State of California.
25. AMENDMENT OR TERMINATION OF THE PLAN. The Board may
at any time amend, terminate or the extend the term of the Plan,
except that any such termination cannot affect options previously
granted under the Plan, nor may any amendment make any change in an
option previously granted which would adversely affect the right of
any participant, nor may any amendment be made without approval of
the shareholders of the Company obtained in accordance with Section
21 hereof within twelve (12) months of the adoption of such
amendment (or earlier if required by Section 21) if such amendment
would:
(a) increase the number of shares that may be issued
under the Plan; or
(b) change the designation of the employees (or class of
employees) eligible for participation in the Plan.
<PAGE>
EXHIBIT 5.01
December 16, 1997
Information Storage Devices, Inc.
2045 Hamilton Avenue
San Jose, CA 95125
Gentlemen/Ladies:
At your request, we have examined the Registration Statement
on Form S-8 (the "Registration Statement") to be filed by you
with the Securities and Exchange Commission on or about
December 16, 1997 in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 800,000
shares of your Common Stock (the "Common Stock") to be sold by
you pursuant to the (i) stock options and/or awards granted or to
be granted by you under your 1994 Equity Incentive Plan, as
amended (the "Incentive Plan"), and your 1994 Employee Stock
Purchase Plan, as amended (the "Purchase Plan").
As your counsel, we have examined the proceedings taken by
you in connection with (i) the amendment of the Incentive Plan
and the granting of options and/or awards thereunder, and (ii)
the amendment of the Purchase Plan.
It is our opinion that the 800,000 shares of Common Stock
that may be issued and sold by you pursuant (i) to the stock
options and/or awards granted or to be granted under the
Incentive Plan, when issued and sold in the manner referred to in
the relevant Prospectus associated with the Registration
Statement, the Incentive Plan and accompanying stock options
and/or awards, and (ii) the Purchase Plan, when issued and sold
in the manner referred to in the relevant Prospectus associated
with the Registration Statement and the Purchase Plan, will be
legally issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to all references to
us, if any, in the Registration Statement and any amendments
thereto which have been approved by us.
Very truly yours,
/s/ Fenwick & West LLP
<PAGE>
EXHIBIT 23.02
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form S-8 Registration
Statement of our report dated January 15, 1997 included in
Information Storage Devices, Inc.'s filing on Form 10-K dated
March 21, 1997.
/s/Arthur Andersen
ARTHUR ANDERSEN LLP
San Jose, California
December 23, 1997
