<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
EAGLE POINT SOFTWARE CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction: $[ ]
(5) Total fee paid:
$[ ], equaling 1/50th of one percent of the proposed maximum
aggregate value of transaction.
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
================================================================================
<PAGE>
EAGLE POINT SOFTWARE CORPORATION
4131 Westmark Drive
Dubuque, Iowa 52002-2627
(319) 556-8392
Dear Stockholder:
On behalf of the Board of Directors and management of Eagle Point Software
Corporation, I cordially invite you to attend the 1997 Annual Meeting of
Stockholders of Eagle Point Software Corporation to be held at 3:00 p.m., local
time, on Tuesday, December 2, 1997, at the Eagle Point Software Corporate
Headquarters, 4131 Westmark Drive, Dubuque, Iowa.
The matters to be considered at the meeting are described in the accompanying
Proxy Statement. It is important that your shares be represented at the Annual
Meeting regardless of the number of shares you hold. You are urged to specify
your voting preference by marking, dating and signing the enclosed proxy card
and returning it in the enclosed business reply envelope. No postage is required
if mailed in the United States. If you wish to vote in accordance with the
Directors' recommendations, all you need to do is date and sign the proxy card
and return it in such envelope.
We hope you can attend the 1997 Annual Meeting, but in any event, please
complete and return the proxy card. If you do attend and wish to vote in person,
you may revoke your proxy at that time.
Sincerely,
Rodney L. Blum
Chairman
October 28, 1997
<PAGE>
EAGLE POINT SOFTWARE CORPORATION
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 2, 1997
The 1997 Annual Meeting of Stockholders (the "Annual Meeting") of Eagle Point
Software Corporation, a Delaware corporation (the "Company"), will be held at
3:00 p.m., local time, on Tuesday, December 2, 1997 at the Eagle Point Software
Corporate Headquarters, 4131 Westmark Drive, Dubuque, Iowa, for the purpose of
considering and acting upon the following matters:
1. To elect one director to the Board of Directors of the Company, to
serve for a three-year term;
2. To approve an amendment to the Eagle Point Software Corporation Stock
Option Plan which increases the number of shares from 1,000 to 4,000
for which each non-employee director shall be granted an option to
purchase immediately after each annual meeting of stockholders.
3. To ratify the appointment of Deloitte & Touche LLP as independent
accountants for the Company for the fiscal year ending June 30, 1998;
and
4. To transact such other business as may properly come before the Annual
Meeting or any postponement or adjournment thereof.
Stockholders of record at the close of business on October 17, 1997 are entitled
to receive notice of and to vote at the Annual Meeting or any postponement or
adjournment thereof. A list of such stockholders will be available for
examination by any stockholder for any purpose germane to the Annual Meeting,
during normal business hours, at the principal executive office of the Company,
4131 Westmark Drive, Dubuque, Iowa, 52002-2627, for a period of ten days prior
to the Annual Meeting.
The matters to be considered at the meeting are described in the accompanying
Proxy Statement. It is important that your shares be represented at the Annual
Meeting regardless of the number of shares you hold. You are urged to specify
your voting preference by marking, dating and signing the enclosed proxy card
and returning it in the enclosed business reply envelope. No postage is required
if mailed in the United States. If you wish to vote in accordance with the
Directors' recommendations, all you need do is date and sign the proxy card and
return it in such envelope.
By order of the Board of Directors,
Dennis J. George
Secretary
October 28, 1997
<PAGE>
EAGLE POINT SOFTWARE CORPORATION
PROXY STATEMENT
General Information
This Proxy Statement (the "Proxy Statement") is being furnished to the holders
of Common Stock, $.01 par value ("Common Stock"), of Eagle Point Software
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board" or
the "Board of Directors") for use at the 1997 Annual Meeting of Stockholders of
the Company to be held at 3:00 p.m., local time, on Tuesday, December 2, 1997,
at the Company's corporate headquarters, 4131 Westmark Drive, Dubuque, Iowa,
52002 and at any and all adjournments or postponements thereof (the "Annual
Meeting"). The Company's principal executive office is located at 4131 Westmark
Drive, Dubuque, Iowa 52002-2627.
Each holder of record of Common Stock at the close of business on October 17,
1997 (the "Record Date") is entitled to receive notice of and to vote at the
Annual Meeting. The holder of a majority of the shares of Common Stock
outstanding and entitled to vote must be present in person or represented by
proxy at the Annual Meeting in order for a quorum to be present. At the close of
business on the Record Date there were 4,805,654 shares of Common Stock
outstanding each of which entitles the registered holder thereof to one vote.
If you are unable to attend the Annual Meeting, you may vote by proxy. The proxy
holders will vote your shares according to your instructions. If you return a
properly signed and dated proxy card but do not mark a choice on one or more
items, your shares will be voted in accordance with the recommendations of the
Board for such items as set forth in this Proxy Statement. The proxy card gives
authority to the proxy holders to vote your shares in their discretion on any
other matter presented at the Annual Meeting. A proxy may indicate that all or a
portion of the shares represented by that proxy are not being voted by a
stockholder with respect to a particular matter. Any such non-voted shares will
be considered present for the purpose of determining the presence of a quorum.
You may revoke your proxy at any time prior to voting at the Annual Meeting by
delivering written notice to the Secretary of the Company, by submitting a
subsequently dated proxy or by attending and voting in person at the Annual
Meeting.
The Company will bear the cost of preparing, handling, printing and mailing this
Proxy Statement, the related proxy card and any additional material which may be
furnished to stockholders, as well as the actual expense incurred by brokerage
houses, fiduciaries and custodians in forwarding such materials to beneficial
owners of Common Stock held in their names. The solicitation of proxies will be
made by the use of the mail and through direct communication with certain
stockholders or their representatives by certain officers, directors or
employees of the Company who will receive no additional compensation therefore.
This Proxy Statement and the related proxy card are first being mailed to
stockholders of the Company on or about October 28, 1997.
1
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors consists of five persons and is divided into three
staggered classes, each class serving a three-year term. The term of the Class
III Director expires on the date of the Annual Meeting. The nominee for Class
III Director, if elected, will serve three years until the 2000 Annual Meeting
of Stockholders, or until a successor has been elected and qualified. The
current Class I and Class II Directors will continue in office until the 1998
and 1999 Annual Meetings of Stockholders, respectively.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the Class III nominee recommended by the Board of Directors. Directors
are elected by a plurality of the votes cast. Stockholders may not cumulate
their votes. In the event that any nominee of the Company is unable or declines
to serve as a director at the time of the Annual Meeting, the proxies will be
voted for any nominee who shall be designated by the present Board of Directors
to fill the vacancy. It is not expected that any nominee will be unable or will
decline to serve as a director. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them for the nominees recommended by the Board of Directors.
NOMINEES FOR DIRECTOR
Class III - Nominee to Serve Until 2000 Annual Meeting of Stockholders:
Rodney L. Blum, age 42, has been a Director of the Company since January 1990.
He joined the Company in January 1990 as its President and Chief Executive
Officer. From May 1988 until he joined the Company, he was Director of Sales and
Marketing of D.D.S., a provider of turn-key computer systems to the auto, large
truck and implement dealer markets. From 1980 until May 1988 he served in
various marketing and management positions at CyCare Systems, Incorporated, a
provider of computerized information processing systems to the healthcare
industry.
The Board of Directors unanimously recommends that stockholders vote FOR the
nominee listed above (Proposal 1).
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
Class I - Directors Serving Until 1998 Annual Meeting of Stockholders:
Dennis J. George, age 34, has been a Director of the Company since April 1989.
Since he joined the Company in April 1989, he has served as Vice President,
Chief Financial Officer, Treasurer and Secretary. During 1988 he was the
Financial Budget Analyst for the Ertl Company, a manufacturer of agricultural
model toys. During 1987 he served as Finance Manager for D.D.S., a provider of
turn-key computer systems to the auto, large truck and implement dealer markets.
Thomas O. Miller, age 46, has been a Director of the Company since August 30,
1995. He currently serves as President of Norand Corporation ("Norand"), a
manufacturer of hand-held data systems. From September 1995 until March 1997 he
served as Senior Vice President of Norand, from 1993 until September 1995 he
served as Vice President-Mobile Systems of Norand and from 1990 until 1992 he
served as Vice President-Marketing of Norand.
Class II - Directors Serving Until 1999 Annual Meeting of Stockholders:
John F. Biver, age 42, has been a Director of the Company since he co-founded
the Company in 1983. He has served as Vice President-Civil Division since
January 1990. Prior to founding the Company, he was a registered
2
<PAGE>
Professional Engineer with the civil engineering firm of Wright, Kilby, Sejkoara
and Associates.
James P. Hickey, age 40, has been a Director of the Company since August 30,
1995. Since 1989, Mr. Hickey has been a Principal of William Blair & Company, an
investment banking firm.
DIRECTORS - MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors met five times during the fiscal year ended June 30, 1997
("Fiscal 1997"), four times pursuant to regularly scheduled meetings and one
time pursuant to a special meeting. No director attended fewer than 75 percent
of the meetings of the Board and committees thereof on which he served.
The Board of Directors has established two committees: an Audit Committee and a
Compensation Committee. As of June 30, 1997 and as of the date of this Proxy
Statement, the Audit Committee is comprised of Messrs. George, Hickey and
Miller. The Audit Committee reviews the results and scope of the audit and other
services provided by the Company's independent accountants and recommends the
appointment of independent accountants to the Board of Directors. See
"Ratification of Appointment of Independent Accountants." The Audit Committee
met one time during Fiscal 1997.
As of June 30, 1997 and as of the date of this Proxy Statement, the Compensation
Committee is comprised of Messrs. Hickey and Miller. The Compensation Committee
makes recommendations regarding the compensation arrangements for top management
and key employees of the Company. The Compensation Committee met one time during
Fiscal 1997.
Directors who are employees of the Company receive no compensation for serving
as directors. Those directors who are not employees of the Company ("Outside
Directors") do not receive an annual fee for serving as directors, but are
reimbursed for out-of-pocket expenses incurred in connection with attending
meetings. In addition, each Outside Director participates in the Stock Option
Plan. Upon election to the Board, any new Outside Director will receive an
option to purchase 2,000 shares of Common Stock with a per share exercise price
equal to the average of the high and low sales prices of a share of Common Stock
as reported on The Nasdaq Stock Market on the day such stock option is granted.
In addition, on the date of each annual meeting of stockholders of the Company,
each person who is an Outside Director immediately after such meeting will
receive an option to purchase 1,000 shares (4,000 shares if Proposal 2 to amend
the Stock Option Plan is approved at the Annual Meeting) of Common Stock with a
per share exercise price equal to the average of the high and low sales prices
of a share of Common Stock as reported on The Nasdaq Stock Market on the day
such option is granted. As such, after the 1996 Annual Meeting, each Outside
Director received option to purchase 1,000 shares of common stock at an exercise
price of $6.00 representing the average of the high and low sales prices of a
share of Common Stock as reported on The Nasdaq Stock Market on the day such
option was granted. Each stock option granted to Outside Directors under the
Stock Option Plan is immediately exercisable.
The Board of Directors has no nominating committee. Selection of nominees for
the Board is made by the entire Board of Directors. The names of potential
nominees for the Company's Board should be directed to the Company's Secretary,
Dennis J. George, at 4131 Westmark Drive, Dubuque, Iowa, 52002-2627.
3
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The following table (the "Compensation Table") sets forth the aggregate
compensation for the past three fiscal years of the individual who served as
Chief Executive Officer during Fiscal 1997 and the four other most highly
compensated executive officers for Fiscal 1997 (collectively, the "Named
Executive Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long-Term
Compensation
Annual Compensation Awards
--------------------- ------
Securities
Fiscal Underlying
Name and Principal Position Year Salary ($) Bonus ($) Options (#)
- - --------------------------- ---- ---------- --------- -----------
<S> <C> <C> <C> <C>
Rodney L. Blum 1997 $140,000 $ 1,579 -
Chairman, President and Chief 1996 116,766 46,588 -
Executive Officer 1995 95,262 77,552 -
John F. Biver 1997 107,000 1,004 -
Vice President-Civil Division 1996 90,376 23,269 -
1995 78,857 61,040 -
Dennis J. George 1997 99,000 1,020 -
Vice President, Chief Financial 1996 78,208 30,006 -
Officer, Treasurer and Secretary 1995 55,150 46,969 -
Edward T. Graham 1997 50,000 23,833 8,475
Vice President- 1996 50,000 16,171 -
Emerging Business Units 1995 50,000 9,518 50,000
William P. Le May 1997 50,000 6,719 5,575
Chief Technology Officer 1996 66,015 1,840 500
1995 60,228 1,590 3,500
</TABLE>
Option Grants
The following table sets forth information with respect to individual grants of
options that were made during Fiscal 1997 to each of the Named Executive
Officers and the potential realizable value of these options assuming five
percent and ten percent rates/(1)/ of compound appreciation in the market value
of the Common Stock over the term of the option grants. The table also relates
those values to the gains that would be realized by all holders of Common Stock
if those rates of appreciation were achieved. The Company has never granted
stock appreciation rights.
4
<PAGE>
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
---------------------------------
Individual Grants/(2)/ Potential Realizable Value at
----------------- Assumed Annual Rates of Stock
Price Appreciation for Option Term
-----------------------------------
Name Number of Securities Percent of Exercise Expiration 5% ($)/(1)/ 10%($)/(1)/
---- Underlying Total Options Price Date ----------- -----------
Options Granted to ($/Sh) ----
Granted (#) Employees ------
----------- in Fiscal
Year
----
<S> <C> <C> <C> <C> <C> <C>
Rodney L. Blum - - - - - -
John F. Biver - - - - - -
Dennis J. George - - - - - -
Edward T. Graham 1,875 1.4% $5.875 8/1/06 $6,928/(3)/ $17,556/(3)/
Edward T. Graham 3,750 2.8% $4.000 10/24/06 $9,433/(4)/ $23,906/(4)/
Edward T. Graham 1,570 1.2% $4.063 1/23/07 $4,011/(5)/ $10,165/(5)/
Edward T. Graham 1,280 0.9% $3.125 5/1/07 $2,516/(6)/ $6,375/(6)/
William P. Le May 875 0.6% $5.875 8/1/06 $3,233/(3)/ $8,193/(3)/
William P. Le May 3,750 2.8% $4.000 10/24/06 $9,433/(4)/ $23,906/(4)/
William P. Le May 481 0.4% $4.063 1/23/07 $1,229/(5)/ $3,114/(5)/
William P. Le May 469 0.3% $3.125 5/1/07 $922/(6)/ $2,336/(6)/
</TABLE>
- - --------------
/(1)/ Amounts reflect assumed rates of appreciation set forth in the Securities
and Exchange Commission's executive compensation disclosure rules. Actual
gains, if any, on stock option exercises depend on future performance of
the Company's Common Stock and overall stock market conditions. No
assurance can be given that the amounts reflected in these columns will
be achieved.
/(2)/ Upon a sale of substantially all of the business and assets of the
Company, each outstanding option will become exercisable in full.
/(3)/ The future hypothetical value of one share of Common Stock based on a
fair market value of $5.875 on August 1, 1996, and assumed rates of
appreciation of five percent and ten percent through August 1, 2006,
would be $9.570 and $15.238, respectively.
/(4)/ The future hypothetical value of one share of Common Stock based on a
fair market value of $4.00 on October 24, 1996, and assumed rates of
appreciation of five percent and ten percent through October 24, 2006,
would be $6.516 and $10.375, respectively.
/(5)/ The future hypothetical value of one share of Common Stock based on a
fair market value of $4.063 on January 23, 1997, and assumed rates of
appreciation of five percent and ten percent through January 23, 2007,
would be $6.617 and $10.537, respectively.
/(6)/ The future hypothetical value of one share of Common Stock based on a
fair market value of $3.125 on May 1, 1997, and assumed rates of
appreciation of five percent and ten percent through May 1, 2007, would
be $5.090 and $8.105, respectively.
5
<PAGE>
Aggregated Option Exercises/(1)/ in Last Fiscal Year
and Fiscal Year End Option Values
--------------------------------------
<TABLE>
<CAPTION>
Value of Unexercised In-The-Money
Number of Unexercised Options at June 30, 1997
Options at June 30, 1997 (based upon $4.563 per share)
<S> <C> <C> <C> <C>
Name Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------
Rodney L. Blum - - - -
John F. Biver - - - -
Dennis J. George - - - -
Edward T. Graham 23,076 35,399 - $4,734
William P. Le May 375 9,200 - $3,024
- - -----------------
</TABLE>
/(1)/ No options were exercised in Fiscal 1997.
Employment Agreements
The Company has entered into employment agreements ("Executive Employment
Agreements") with each of Rodney L. Blum, John F. Biver and Dennis J. George to
serve as its President and Chief Executive Officer, Vice President-Civil
Division and Vice President, Chief Financial Officer, Secretary and Treasurer,
respectively. Mr. Blum, Mr. Biver and Mr. George (each an "Executive Employee")
received annual salaries of $140,000, $107,000 and $99,000, respectively in
Fiscal 1997, and each are entitled to participate in the Company's bonus program
for executive officers. Each Executive Employee's salary is subject to change as
determined by the Compensation Committee of the Board of Directors. None of the
Executive Employment Agreements contain a specified expiration date, although
the Company may terminate each such agreement at any time upon thirty days'
written notice to the Executive Employee, and each Executive Employee may
terminate his respective agreement at any time upon thirty days' written notice
to the Company.
If an Executive Employment Agreement is terminated by virtue of an Executive
Employee's disability, such Executive Employee will be entitled to receive a
lump sum payment equal to one and one-half times the cumulative compensation
payable to him for the twelve months immediately proceeding the effective date
of termination. If an Executive Employment Agreement is terminated by virtue of
an Executive Employee's death, such Executive Employee will be entitled to
receive a lump sum payment equal to two times the cumulative compensation
payable to him for the twelve month period immediately preceding his death. If
an Executive Employment Agreement is terminated for any other reason, other than
for any act of theft, embezzlement, or other documented proof of material
dishonesty, such Executive Employee will be entitled to receive a lump sum
payment equal to two times the cumulative compensation payable to him for the
twelve month period immediately preceding such termination.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Eagle Point's Compensation Philosophy
The Company recognizes that the success of its business is based on the
performance of its employees, and that its employees are the Company's primary
asset. With that understanding, the Compensation Committee of the Board of
Directors applies the following operating principles in its duties as
administrator of the compensation of the Company's management and key employees:
1. Be competitive in all aspects of compensation and consistently
demonstrate a willingness to pay levels of compensation that are
necessary to attract and retain highly qualified executives.
6
<PAGE>
2. Award stock options to executives in order to align management's and
stockholders' interests.
3. Provide variable compensation opportunities based on the financial
performance of the Company - when objectives are met or exceeded, the
incentive awards can be attractive.
4. Adhere to a compensation strategy that effectively balances short- and
long-term goals of the Company.
Compensation Policies for Executive Officers
The Compensation Committee of the Board, presently comprised of two Outside
Directors, makes executive compensation decisions. In making these decisions,
the Committee considers recommendations made by the Company's senior management
team. Key components of the Company's executive compensation decisions include:
1. Base salary - designed to comprise approximately 60% to 70% of
potential compensation.
2. Cash bonus/stock option awards - designed to help provide a direct
link between executive compensation and the individual's role in
helping the Company attain quarterly and annual performance measures.
The Committee believes this type of executive compensation structure effectively
serves the interests of both the Company and its stockholders. The Committee
also believes the program allows the Company to attract and retain outstanding
executives, and motivate these executives to perform at the highest levels.
CEO Compensation
Mr. Rodney L. Blum has served as the Company's CEO since January 1990. In
Fiscal 1997 Mr. Blum received a salary of $140,000. Mr. Blum's compensation is
substantially related to the Company's performance pursuant to the Company's
bonus program for its executive officers - Mr. Blum is eligible to receive a
bonus payment if certain financial objectives for the Company are met. Mr.
Blum's compensation during Fiscal 1997 reflects the strategic importance of Mr.
Blum to the Company and his anticipated future contributions toward achievement
of the Company's growth objectives.
The foregoing report has been furnished by the Committee.
The Compensation Committee of the Board of Directors
James P. Hickey
Thomas O. Miller
7
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS
AND PRINCIPAL STOCKHOLDERS
The following table sets forth information as of October 1, 1997 concerning the
beneficial ownership of Common Stock for each Director, the Named Executive
Officers, all Directors and Executive Officers as a group, and each holder of 5%
or more of the Company's Common Stock. Unless otherwise noted, the listed
persons have sole voting and investment power with respect to the shares held in
their names, subject to community property laws if applicable. The table does
not include options which are not exercisable within 60 days.
<TABLE>
<CAPTION>
Name of Number % of total
Beneficial Holder of Shares/(1)/ Outstanding Shares
- - ----------------- -------------- ------------------
<S> <C> <C>
John F. Biver* 1,239,816 25.80%
Rodney L. Blum* 953,704 19.85
Dennis J. George* 381,480 7.94
James P. Hickey 7,000/(2)/ --
Thomas O. Miller 5,000/(2)/ --
Edward T. Graham* 29,858/(3)/ --
William P. Le May* 1,294/(4)/ --
Brent A. Straka* 3,945/(5)/ --
All Directors and Executive
Officers as a group (7 persons) 2,622,097/(6)/ 54.56
</TABLE>
- - ---------------------
/(1)/ Based on the number of shares outstanding at, or acquirable within, 60
days of October 1, 1997.
/(2)/ Includes 5,000 shares which may be acquired under options which are
currently exercisable or which will be exercisable within 60 days of
October 1, 1997.
/(3)/ Includes 23,358 shares which may be acquired under options which are
currently exercisable or which will be exercisable within 60 days of
October 1, 1997.
/(4)/ Includes 607 shares which may be acquired under options which are
currently exercisable or which will be exercisable within 60 days of
October 1, 1997.
/(5)/ Includes 588 shares which may be acquired under options which are
currently exercisable or which will be exercisable within 60 days of
October 1, 1997.
/(6)/ Includes 29,553 shares which executive officers and directors have the
right to acquire under options which are currently exercisable or which
will be exercisable within 60 days of October 1, 1997.
* Principal address of such beneficial holder is c/o Eagle Point Software
Corporation, 4131 Westmark Drive, Dubuque, Iowa 52002-2627.
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder
return since the Common Stock became publicly traded on June 16, 1995 with the
Nasdaq Computer & Data Processing Index (the "Computer Index") and with The
Nasdaq Stock Market - U.S. Index (the "Nasdaq Index"). The comparison is based
on the assumption that $100.00 was invested on June 16, 1995 in each of the
Company's Common Stock, the Computer Index and the Nasdaq Index.
Note: The stock price performance shown below is not necessarily indicative of
future price performance.
COMPARISON OF 24 MONTH CUMULATIVE TOTAL RETURN*
AMONG EAGLE POINT SOFTWARE CORPORATION, THE NASDAQ STOCK MARKET-US INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
8
<PAGE>
[GRAPH APPEARS HERE]
*$100 INVESTED ON 6/16/95 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
<TABLE>
<CAPTION>
Cumulative Total Return
6/16/95 6/30/95 6/30/96 6/30/97
<S> <C> <C> <C> <C> <C>
Eagle Point Software Corporation EGPT 100 131 54 35
NASDAQ STOCK MARKET - US INAS 100 103 132 160
NASDAQ COMPUTER & DATA PROCESSING INAD 100 104 138 174
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
James P. Hickey, an Outside Director of the Company since August 1995, is a
Principal of William Blair & Company, L.L.C., an investment banking firm
("William Blair"). William Blair was one of the managing underwriters of the
Company's initial public offering of Common Stock in June 1995. The Company
currently maintains a no-fee money market account with William Blair.
APPROVAL OF AMENDMENT TO THE
EAGLE POINT SOFTWARE CORPORATION STOCK OPTION PLAN
(Proposal 2)
BACKGROUND
The Board of Directors is proposing for stockholder approval at the Annual
Meeting an amendment to the Stock Option Plan which increases the number of
shares from 1,000 to 4,000 for which each non-employee director (an "Outside
Director") shall be granted an option to purchase after each annual meeting of
stockholders. The Stock Option Plan will not be amended in any other way.
The Stock Option Plan was originally approved by the Company's stockholders in
June 1995 in connection with the Company's initial public offering of Common
Stock. The proposed amendment will not increase the total number of shares of
Common Stock issuable under the Stock Option Plan.
The purposes of the Stock Option Plan are to align the interests of the
stockholders of the Company and the recipients of stock options granted under
the Stock Option Plan by increasing the proprietary interest of such recipients
in the Company's growth and success and to advance the interests of the Company
by attracting and retaining officers and other key employees and well-qualified
persons who are not officers or employees of the Company for service as Outside
Directors. The Board of Directors determined that the proposed amendment is
consistent with and will serve to further these goals.
The Stock Option Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, and is not intended to be and does not
qualify as a pension, profit sharing or other "qualified" plan under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code").
In order to approve the proposal to amend the Stock Option Plan, a majority of
the stockholders in attendance at the Annual Meeting, in person or by proxy,
must vote in favor of this proposal. Abstentions will have the same effect as
votes against the proposal. Non-voted shares will not be considered in
attendance for the vote on this proposal.
9
<PAGE>
The Board of Directors unanimously recommends that stockholders vote FOR
approval of the proposal to amend the Stock Option Plan (Proposal 2).
DESCRIPTION OF THE STOCK OPTION PLAN
Adoption; Amendment; Termination
The Board of Directors may amend the Stock Option Plan at any time, subject to
any requirement of stockholder approval required by applicable law, rule or
regulation including Rule 16b-3 under the Securities Exchange Act of 1934,
Section 422 of the Code and Section 162(m) of the Code. No such amendment may
impair the rights of a holder of an outstanding stock option granted under the
Stock Option Plan without the consent of such holder.
The Stock Option Plan will terminate on May 1, 2005, but may be terminated
earlier by the Board of Directors. Termination of the Stock Option Plan will
not affect the terms or conditions of any stock option granted under the Stock
Option Plan prior to such termination date. No stock options may be granted
under the Stock Option Plan after its termination.
Administration
The Stock Option Plan is administered by the Board of Directors. The Board of
Directors will be authorized to interpret the Stock Option Plan and its
application, and, subject to the terms of the Stock Option Plan, to establish
such rules and regulations as it deems necessary or desirable for the
administration of the Stock Option Plan and it may impose, incidental to the
grant of a stock option thereunder, conditions with respect to such grant, such
as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions will be conclusive and
binding on all parties.
The Board of Directors will be authorized to select eligible officers and other
key employees of the Company for participation in the Stock Option Plan and,
subject to the terms of the Stock Option Plan, to determine the terms and
conditions of each stock option granted under the Stock Option Plan.
Securities Offered
The maximum number of shares of Common Stock available under the Stock Option
Plan will remain at 750,000, subject to appropriate adjustment by the Board of
Directors in the event of a stock split, stock dividend or other similar change
in capitalization.
Shares of Common Stock delivered upon the exercise of a stock option granted
under the Stock Option Plan may be treasury shares, authorized and unissued
shares, or a combination thereof.
No person will have any right as a stockholder of the Company with respect to
any shares of Common Stock which are subject to a stock option granted under the
Stock Option Plan until such person becomes a stockholder of record with respect
to such shares of Common Stock.
Stock options granted under the Stock Option Plan may be either ISOs or non-
qualified stock options. An ISO is a stock option granted in accordance with
Section 422 of the Code and which is intended by the Board of Directors to
constitute an incentive stock option. A non-qualified stock option is a stock
option which is not an ISO.
10
<PAGE>
Eligibility to Participate
Participation in the Stock Option Plan will remain limited to (i) such officers
and other key employees of the Company as the Board of Directors selects from
time to time and (ii) Outside Directors.
No officer or employee of the Company has, nor will have, any right to
participate in the Stock Option Plan. Neither the Stock Option Plan nor any
stock option granted thereunder confers upon any person any right to continued
employment by the Company or affects in any manner the right of the Company to
terminate the employment of any person at any time without liability thereunder.
Grants of Stock Options to Officers and Other Key Employees of the Company
The Board of Directors will continue to determine which officers and other key
employees of the Company will receive grants of stock options under the Stock
Option Plan and, subject to the limitations described below, will continue to
determine the number of shares of Common Stock subject to each such stock
option, the purchase price per share of Common Stock subject thereto, the period
during which such stock option may be exercised, whether such stock option will
become exercisable in cumulative or non-cumulative installments and in part or
in full at any time and whether such stock option is intended to constitute an
ISO.
Purchase Price. The purchase price per share of Common Stock subject to a stock
option granted under the Stock Option Plan may not be less than 100% of the Fair
Market Value (as hereinafter defined) of a share of Common Stock on the date of
grant of such stock option.
Under the Stock Option Plan, the "Fair Market Value" of a share of Common Stock
on a given date is the average of the high and low transaction prices of a share
of Common Stock as reported on the Nasdaq Stock Market on such date.
Limitations on Number of Shares Subject to Stock Options. To the extent
required by Section 162(m) of the Code, and the rules and regulations
thereunder, the maximum number of shares of Common Stock with respect to which
stock options may be granted under the Stock Option Plan during any fiscal year
of the Company to any person will remain at 250,000.
Limitations on Period of Exercisability of ISOs. An ISO may not be exercisable
later than ten years after its date of grant. If an ISO is granted to a Ten
Percent Holder, such ISO may not be exercised later than five years after its
date of grant.
Change of Control. Upon a Change of Control (as defined in the Stock Option
Plan) each outstanding stock option granted under the Stock Option Plan will
continue to become fully exercisable.
Exercise of a Stock Option Following Termination of Optionee's Employment.
Unless otherwise provided in the agreement relating to a stock option granted
under the Stock Option Plan to an officer or other key employee of the Company,
the following rules continue to apply in the case of an optionee's termination
of employment with the Company.
If an optionee's employment with the Company terminates by reason of the
disability of such optionee, each stock option granted under the Stock Option
Plan to such optionee will become fully exercisable and may thereafter be
exercised for a period of no more than one year after the date of such
termination of employment, but in no event after the expiration of such stock
option. If an optionee retires on or after age 65 and after the completion of
five years of employment with the Company, each non-qualified stock option
granted under the Stock Option Plan to such optionee will become fully
exercisable and may thereafter be exercised for a period of no more than one
year after the date of retirement, but in no event after the expiration of such
stock option. Each ISO granted under the
11
<PAGE>
Stock Option Plan to such optionee will be exercisable only to the extent
exercisable on the date of retirement and may thereafter be exercised for a
period of no more than three months after such date, but in no event after the
expiration of such ISO. If an optionee's employment with the Company is
terminated because of the death of such optionee, each stock option granted
under the Stock Option Plan to such optionee will become fully exercisable and
may thereafter be exercised for a period of no more than one year after the date
of death, but in no event after the expiration of such stock option. If an
optionee's employment with the Company terminates for any other reason, each
stock option granted under the Stock Option Plan to such optionee will be
exercisable only to the extent exercisable on the date of termination of
employment and may thereafter be exercised for a period of no more than three
months after such date, but in no event after the expiration of such option;
provided, that if such optionee's employment with the Company is terminated for
Cause, all stock options granted under the Stock Option Plan and held by such
optionee will terminate automatically on the effective date of such optionee's
termination of employment. For purposes of the Stock Option Plan, "Cause" means
any act of dishonesty, commission of a felony, significant activities harmful to
the reputation of the Company, refusal to perform or substantial disregard of
duties properly assigned or significant violation of any statutory or common law
duty of loyalty to the Company.
If an optionee dies during the one-year or three-month periods following
termination of employment described above, each stock option granted under the
Stock Option Plan to such optionee will be exercisable only to the extent
exercisable on the date of death and may thereafter be exercised for a period of
no more than one year after the date of death, but in no event after the
expiration of such stock option.
Grants of Stock Options to Outside Directors
The Stock Option Plan will continue to provide for the grant of an option to
purchase 2,000 shares of Common Stock to each person commencing service as an
Outside Director, such grant to be made on the date such service commences. No
such grant will be made if a person becomes an Outside Director by reason of a
termination of employment with the Company. The Stock Option Plan, as it is
proposed to be amended, will now provide that on the date of each annual meeting
of stockholders of the Company, each person who is an Outside Director
immediately after such meeting will also be granted an option to purchase 4,000
shares of Common Stock. Stock options granted under the Stock Option Plan to
Outside Directors will continue to be non-qualified stock options and have a per
share purchase price equal to the Fair Market Value of a share Common Stock on
the date of grant.
Stock options granted to Outside Directors under the Stock Option Plan will
continue to be fully exercisable upon grant and expire ten years thereafter. If
an Outside Director ceases for any reason to be a member of the Board, each
stock option granted under the Stock Option Plan and held by such Outside
Director may thereafter be exercised by such Outside Director no later than one
year after the Outside Director ceases to be a member of the Board, but in no
event after the expiration of such stock option. If an Outside Director dies
during the one year period following the date on which such Outside Director
ceases to be a member of the Board, each stock option granted under the Stock
Option Plan to such Outside Director may thereafter be exercised for a period of
no more than one year after the date of death, but in no event after the
expiration of such stock option.
Exercise of Stock Options; Non-transferability; Designation of Beneficiaries
An exercisable stock option granted under the Stock Option Plan will continue to
be exercisable only with respect to a whole number of shares of Common Stock.
On October 1, 1997 the closing price of a share of Common Stock as reported by
The Nasdaq Stock Market was $3.50. No stock option granted under the Stock
Option Plan may be transferred other than by will or the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company and each such stock option may be exercised during an optionee's
lifetime only by such optionee or such optionee's legal representative or
similar person. Each optionee may file with the Board of Directors a written
designation of one or more persons as such optionee's beneficiary or
beneficiaries (both primary and contingent) in the event of such optionee's
death.
12
<PAGE>
Federal Income Tax Consequences
The following is a brief overview of the United States federal income tax
consequences of participation in the Stock Option Plan, as it is proposed to be
amended, and should not be relied upon as being a complete statement. It does
not address the state or local tax aspects of participation in the Stock Option
Plan.
Grant of Option. An optionee will continue to not recognize taxable income upon
the grant of a stock option under the Stock Option Plan.
Exercise of Non-Qualified Option. An optionee will continue to recognize
compensation taxable as ordinary income, and the Company generally will continue
to be allowed a corresponding deduction for federal income tax purposes, in an
amount equal to the excess of the fair market value, on the date of exercise of
a non-qualified option, of the shares of Common Stock acquired over the purchase
price therefor.
Exercise of Incentive Stock Options. An optionee will continue to not recognize
any taxable income by reason of exercise of an ISO, and the Company will
continue to not be allowed any deduction with respect to such exercise at such
time. However, the excess, if any, of the fair market value, at the time of
exercise, of the Common Stock acquired upon such exercise over the purchase
price therefor will continue to be included in alternative minimum taxable
income subject to the alternative minimum tax.
Income Tax Withholding. The taxable compensation recognized by the optionee
upon the exercise of a stock option will continue to be subject to withholding
of tax by the Company.
RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTS
(Proposal 3)
The Board of Directors has appointed Deloitte & Touche LLP as independent
accountants of the Company for the fiscal year ending June 30, 1998. If a
majority of the stockholders in attendance at the Annual Meeting, in person or
by proxy, fail to ratify the appointment, the appointment of other independent
accountants will be considered by the Board of Directors. Abstentions will have
the same effect as votes against the proposal. Non-voted shares will not be
considered in attendance for the vote on this proposal. Deloitte & Touche LLP
has audited the Company's financial statements since the fiscal year ended June
30, 1992. Representatives of Deloitte & Touch LLP are expected to be at the
Annual Meeting and will be available to respond to appropriate questions.
Deloitte & Touche LLP will also have the opportunity to make a statement at the
Annual Meeting if they desire to do so.
The Board of Directors unanimously recommends that stockholders vote FOR
approval of the proposal to ratify the appointment of Deloitte & Touche LLP as
independent accountants for the Company for the fiscal year ending June 30, 1998
(Proposal 3).
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Company no
later than June 27, 1998. Such proposals may be included in next year's Proxy
Statement if they comply with certain rules and regulations promulgated by the
Securities and Exchange Commission. The Company's By-laws set forth additional
requirements and procedures regarding the submission by stockholders of matters
for consideration at an annual meeting of stockholders.
13
<PAGE>
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10 percent of a registered class of the Company's equity
securities ("Reporting Persons") to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Reporting Persons are
required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on its
review of such reports and written representations from certain Reporting
Persons, the Company believes that, during Fiscal 1997, its Reporting Persons
complied with all filing requirements applicable to them.
ANNUAL REPORT TO STOCKHOLDERS
The Company's 1997 Annual Report for Fiscal 1997 accompanies this Proxy
Statement.
A copy of the Company's Annual Report on Form 10-K for Fiscal 1997 filed with
the Securities and Exchange Commission, without exhibits, will be provided
without charge to any stockholder submitting a request therefor to:
Dennis J. George
Vice President, Chief Financial Officer, Treasurer and Secretary
Eagle Point Software Corporation
4131 Westmark Drive
Dubuque, Iowa 52002-2627
Telephone: (319) 556-8392
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the Annual
Meeting, but if any other matters should properly come before the Annual
Meeting, it is intended that the persons named in the accompanying proxy card
will vote on such matters in accordance with their best judgment.
14
<PAGE>
PROXY
EAGLE POINT SOFTWARE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 2, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Eagle Point Software Corporation (the
"Company") does hereby acknowledge receipt of Notice of said Annual meeting and
the accompanying Proxy Statement and does hereby constitute and appoint Rodney
L. Blum and Dennis J. George, or either of them, with full power of
substitution, to vote all shares of stock of the Company that the undersigned is
entitled to vote, as fully as the undersigned could do if personally present, at
the Annual Meeting of Stockholders of the Company to be held on Tuesday,
December 2, 1997 at 3:00 p.m. (local time) at Eagle Point Software Headquarters,
4131 Westmark Drive, Dubuque IA 52002 and at any adjournment thereof, as
follows:
This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this Proxy will be voted for
the nominee listed in Proposal 1, for Proposal 2 to approve the amendment to the
Eagle Point Software Corporation Stock Option Plan and for Proposal 3 to approve
Deloitte & Touche LLP.
(Please date and sign on reverse side)
<PAGE>
A [X] Please mark your votes as in this example
WITHHOLD
AUTHORITY
For all nominees for all nominees
listed at right listed Nominee: Rodney L. Blum
1. Election
of Class III
Directors [_] [_]
(Instructions: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below.)
- - ----------------------------------------------------------------
2. Proposal to approve an amendment to the Eagle Point Software Corporation
Stock Option Plan which increases the number of shares from 1,000 to 4,000
for which each non-employee director shall be granted an option to purchase
immediately after each annual meeting of stockholders.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Proposal to approve the appointment of Deloitte & Touche, LLP as the
independent public accountants of the Company.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. As such proxies may in their discretion determine upon such other matters as
may properly come before the meeting.
THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN AND, IN THE
ABSENCE OF SUCH INSTRUCTIONS SHALL BE VOTED FOR THE NOMINEE LISTED ABOVE AND IN
FAVOR OF PROPOSAL 2 AND PROPOSAL 3. IF OTHER BUSINESS IS PRESENTED AT SAID
MEETING, THIS PROXY SHALL BE VOTED ON THOSE MATTERS IN ACCORDANCE WITH THE BEST
JUDGMENT OF THE NAMED PROXIES.
You are urged to mark, sign, date and return your proxy card without delay in
the return envelope provided for that purpose which requires no postage if
mailed in the United States.
Signature: ___________________ ___________________________ Date: ________, 1997
(SIGNATURE IF HELD JOINTLY)
NOTE: When signing the proxy, please take care to have the signature conform to
the stockholder's name as it appears on this side of the proxy. If shares
are registered in the names of two or more persons, each person should
sign. Executors, administrators, trustees and guardians should so
indicate when signing. Corporations and partnerships should sign in their
full corporate or partnership names by a duly authorized person.
<PAGE>
Amended and Restated
Eagle Point Software Corporation Stock Option Plan
I. INTRODUCTION
1.1 Purposes. The purposes of the Stock Option Plan (the "Plan") of Eagle
Point Software Corporation, a Delaware corporation (the "Company") and its
subsidiaries from time to time (individually a "Subsidiary" and collectively the
"Subsidiaries") are to align the interests of the Company's stockholders and the
recipients of options under this Plan by increasing the proprietary interest of
such recipients in the Company's growth and success and to advance the interests
of the Company by attracting and retaining officers and other key employees and
well-qualified persons who are not officers or employees of the Company for
service as directors of the Company. For purposes of this Plan, references to
employment by the Company shall also mean employment by a Subsidiary.
1.2 Administration. This Plan shall be administered by a committee (the
"Committee") designated by the Board of Directors of the Company (the "Board")
consisting of two or more members of the Board, provided, that if options are
granted hereunder, the grant of which is intended to be exempt from Section
16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
each of the members of the Committee at the time of such grant shall be a
"disinterested person" within the meaning of Rule 16b-3 under the Exchange Act.
The Committee shall, subject to the terms of this Plan, select eligible
officers and other key employees for participation in this Plan and shall
determine the number of shares of Common Stock subject to each option granted
hereunder, the exercise price of such option, the time and conditions of
exercise of such option and all other terms and conditions of such option,
including, without limitation, the form of the option agreement. The Committee
shall, subject to the terms of this Plan, interpret this Plan and the
application thereof, establish rules and regulations it deems necessary or
desirable for the administration of this Plan and may impose, incidental to the
grant of an option, conditions with respect to the grant, such as limiting
competitive employment or other activities. All such interpretations, rules,
regulations and conditions shall be conclusive and binding on all parties. Each
option hereunder shall be evidenced by a written agreement (an "Agreement")
between the Company and the optionee setting forth the terms and conditions
applicable to such option.
The Committee may delegate some or all of its power and authority hereunder
to the Chief Executive Officer or other executive officer of the Company as the
Committee deems appropriate; provided, however, that the Committee may not
delegate its power and authority with regard to the selection for participation
in this Plan of an officer or other person subject to Section 16 of the Exchange
Act or decisions concerning the timing, pricing or amount of an option grant to
such an officer or other person.
No member of the Board of Directors or Committee, and neither the Chief
Executive Officer nor other executive officer to whom the Committee delegates
any of its power and authority hereunder, shall be liable for any act, omission,
interpretation, construction or determination made in connection with this Plan
in good faith, and the members of the Board of Directors and the Committee and
the Chief Executive Officer or other executive officer shall be entitled to
indemnification and reimbursement by the Company in
<PAGE>
respect of any claim, loss, damage or expense (including attorneys" fees)
arising therefrom to the full extent permitted by law and under any directors'
and officers' liability insurance that may be in effect from time to time.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by a majority of the members of the Committee without a meeting.
1.3 Eligibility. Participants in this Plan shall consist of such officers
and other key employees of the Company and its Subsidiaries as the Committee in
its sole discretion may select from time to time. The Committee's selection of
a person to participate in this Plan at any time shall not require the Committee
to select such person to participate in this Plan at any other time. Each
Independent Director (as such term is defined in Section 3.1) of the Company
shall be eligible to participate in this Plan only in accordance with Section
III.
1.4 Shares Available. Subject to adjustment as provided in Section 4.7,
750,000 shares of the common stock, $.01 par value, of the Company ("Common
Stock"), shall be available for grants of options under this Plan, reduced by
the sum of the aggregate number of shares of Common Stock which become subject
to outstanding options. To the extent that shares of Common Stock subject to an
outstanding option are not issued or delivered by reason of the expiration,
termination, cancellation or forfeiture of such option or by reason of the
delivery or withholding of shares of Common Stock to pay all or a portion of the
exercise price of such option, or to satisfy all or a portion of the tax
withholding obligations relating to such option, then such shares of Common
Stock shall again be available under this Plan.
Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or authorized and
issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.
To the extent required by Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), and the rules and regulations thereunder, the
maximum number of shares of Common Stock with respect to which options may be
granted during any fiscal year of the Company to any person shall be 250,000,
subject to adjustment as provided in Section 4.7.
II. STOCK OPTIONS
2.1 Grants of Stock Options. The Committee may, in its discretion, grant
options to purchase shares of Common Stock to such eligible persons as may be
selected by the Committee. Each option, or portion thereof, that is not an
incentive stock option, shall be a non-qualified stock option. An incentive
stock option shall mean an option to purchase shares of Common Stock that meets
the requirements of Section 422 of the Code, or any successor provision, which
is intended by the Committee to constitute an incentive stock option. Each
incentive stock option shall be granted within ten years of the effective date
of this Plan. To the extent that the aggregate Fair Market Value (determined as
of the date of grant) of shares of Common Stock with respect to which options
designated as incentive stock options are exercisable for the first time by a
participant during any calendar year (under this Plan or any other plan of the
Company, or any parent or Subsidiary) exceeds the amount (currently $100,000)
established by the
<PAGE>
Code, such options shall constitute non-qualified stock options. "Fair Market
Value" shall mean the average of the high and low transaction prices of a share
of Common Stock as reported on The Nasdaq Stock Market on the date as of which
such value is being determined or, if there shall be no reported transactions on
such date, on the next preceding date for which transactions were reported;
provided that for dates on or before the date of the closing of the initial
public offering of the Common Stock, Fair Market Value shall mean the initial
public offering price of the Common Stock; and provided, further, that if Fair
Market Value for any date cannot be determined as above provided, Fair Market
Value shall be determined by the Committee by whatever means or method as the
Committee, in the good faith exercise of its discretion, shall at such time deem
appropriate.
2.2 Terms of Stock Options. Options shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. The number of shares of Common
Stock subject to an option and the purchase price per share of Common Stock
purchasable upon exercise of the option shall be determined by the Committee;
provided, however, that the purchase price per share of Common Stock purchasable
upon exercise of a non-qualified stock option or an incentive stock option shall
not be less than 100% of the Fair Market Value of a share of Common Stock on the
date of grant of such option; provided further, that if an incentive stock
option shall be granted to any person who, at the time such option is granted,
owns capital stock possessing more than ten percent of the total combined voting
power of all classes of capital stock of the Company (or of any parent or
Subsidiary) (a "Ten Percent Holder"), the purchase price per share of Common
Stock shall be the price (currently 110% of Fair Market Value) required by the
Code in order to constitute an incentive stock option.
(b) Option Period and Exercisability. The period during which an option
may be exercisable shall be determined by the Committee; provided, however, that
no incentive stock option shall be exercisable later than ten years after its
date of grant; provided further, that if an incentive stock option shall be
granted to a Ten Percent Holder, such option shall not be exercised later than
five years after its date of grant. The Committee may, in its discretion,
establish other conditions which shall be satisfied or met as a condition to the
grant of an option or to the exercisability of all or a portion of an option.
The Committee shall determine whether an option shall become exercisable in
cumulative or non-cumulative installments and in part or in full at any time.
An exercisable option, or portion thereof, may be exercised only with respect to
whole shares of Common Stock.
(c) Method of Exercise. An option may be exercised (i) by giving written
notice to the Company specifying the number of whole shares of Common Stock to
be purchased and accompanied by payment therefor in full (or arrangement made
for such payment to the Company's satisfaction) either (A) in cash, (B) by
delivery of previously owned whole shares of Common Stock (which the optionee
has held for at least six months prior to the delivery of such shares or which
the optionee purchased on the open market and for which the optionee has good
title, free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable by reason of such exercise, (C) by authorizing the Company to withhold
whole shares of Common Stock which would otherwise be delivered upon exercise of
the option having a Fair Market Value, determined as of the date of exercise,
equal to the aggregate purchase price payable by reason of such exercise, (D) in
<PAGE>
cash by a broker-dealer acceptable to the Company to whom the optionee has
submitted an irrevocable notice of exercise or (E) a combination of (A), (B) and
(C), in each case to the extent set forth in the Agreement relating to the
option and (ii) by executing such documents as the Company may reasonably
request. The Committee shall have sole discretion to disapprove of an election
pursuant to any of clauses (B)-(E) and in the case of an optionee who is subject
to Section 16 of the Exchange Act, the Company may require that the method of
making such payment be in compliance with Section 16 and the rules and
regulations thereunder. Any fraction of a share of Common Stock which would be
required to pay such purchase price shall be disregarded and the remaining
amount due shall be paid in cash by the optionee. No certificate representing
Common Stock shall be delivered until the full purchase price therefor has been
paid.
2.3 Termination of Employment.
(a) Disability. Subject to paragraph (f) below and Section 4.8 and
unless otherwise specified in the Agreement relating to an option, if an
optionee's employment with the Company terminates by reason of Disability, each
option held by such optionee shall become fully exercisable and may thereafter
be exercised by such optionee (or such optionee's legal representative or
similar person) until and including the earliest to occur of (i) the date which
is one year (or such other period as set forth in the Agreement relating to such
option) after the effective date of such optionee's termination of employment
and (ii) the expiration date of the term of such option. For purposes of this
Plan, "Disability" shall mean the inability of an optionee substantially to
perform such optionee's duties and responsibilities for a continuous period of
at least six months.
(b) Retirement. Subject to paragraph (f) below and Section 4.8 and unless
otherwise specified in the Agreement relating to an option, if an optionee's
employment with the Company terminates by reason of retirement on or after age
65 and after the optionee has completed at least five years of employment with
the Company, each option held by such optionee shall become fully exercisable
and may thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is one year (or such other period as set forth in the
Agreement relating to such option) after the effective date of such optionee's
termination of employment and (ii) the expiration date of the term of such
option.
(c) Death. Subject to paragraph (f) below and Section 4.8 and unless
otherwise specified in the Agreement relating to an option, if an optionee's
employment with the Company terminates by reason of death, each option held by
such optionee shall become fully exercisable and may thereafter be exercised by
such optionee's executor, administrator, legal representative, beneficiary or
similar person, as the case may be, until and including the earliest to occur of
(i) the date which is one year (or such other period as set forth in the
Agreement relating to such option) after the date of death and (ii) the
expiration date of the term of such option.
(d) Other Termination. Subject to paragraph (f) below and Section 4.8 and
unless otherwise specified in the Agreement relating to an option, if an
optionee's employment with the Company terminates for any reason other than
Disability, retirement on or after age 65 after completion of at least five
years of employment with the Company or death, each option held by such optionee
shall be exercisable only to the extent that such option is exercisable on the
effective date of such optionee's termination of employment
<PAGE>
and may thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months (or such other period as set forth in the
Agreement relating to such option) after the effective date of such optionee's
termination of employment and (ii) the expiration date of the term of such
option; provided that if such optionee's employment is terminated for Cause, all
options held by such optionee shall terminate automatically on the effective
date of such optionee's termination of employment. For purposes of this Plan,
"Cause" shall mean any act of dishonesty, commission of a felony, significant
activities harmful to the reputation of the Company or any of its Subsidiaries,
refusal to perform or substantial disregard of duties properly assigned or
significant violation of any statutory or common law duty of loyalty to the
Company or any of its Subsidiaries.
(e) Death Following Termination of Employment. Subject to paragraph (f)
below and Section 4.8 and unless otherwise specified in the Agreement relating
to an option, if an optionee dies during the one year period following
termination of employment by reason of Disability, or if an optionee dies during
the one year period following termination of employment by reason of retirement
on or after age 65 after completion of at least five years of employment with
the Company, or if an optionee dies during the three month period following
termination of employment for any other reason other than Disability or
retirement on or after age 65 after completion of at least five years of
employment with the Company (or, in each case, such other period as the
Committee may specify in the Agreement relating to an option), each option held
by such optionee shall be exercisable only to the extent that such option is
exercisable on the date of such optionee's death and may thereafter be exercised
by such optionee's executor, administrator, legal representative, beneficiary or
similar person, as the case may be, until and including the earliest to occur of
(i) the date which is one year (or such other period as set forth in the
Agreement relating to such option) after the date of death and (ii) the
expiration date of the term of such option.
(f) Termination of Employment - Incentive Stock Options. Subject to
Section 4.8 and unless otherwise specified in the Agreement relating to the
option, if the employment with the Company of a holder of an incentive stock
option terminates by reason of Permanent and Total Disability (as defined in
Section 22(e)(3) of the Code), each incentive stock option held by such optionee
shall become fully exercisable and may thereafter be exercised by such optionee
(or such optionee's legal representative or similar person) until and including
the earliest to occur of (i) the date which is one year (or such shorter period
as set forth in the Agreement relating to such option) after the effective date
of such optionee's termination of employment by reason of Permanent and Total
Disability and (ii) the expiration date of the term of such option.
Subject to Section 4.8 and unless otherwise specified in the Agreement
relating to the option, if the employment with the Company of a holder of an
incentive stock option terminates by reason of death, each incentive stock
option held by such optionee shall become fully exercisable and may thereafter
be exercised by such optionee's executor, administrator, legal representative,
beneficiary or similar person until and including the earliest to occur of (i)
the date which is one year (or such shorter period as set forth in the Agreement
relating to such option) after the date of death and (ii) the expiration date of
the term of such option.
Subject to Section 4.8 and unless otherwise specified in the Agreement
relating to the option, if the employment with the Company of a holder of an
incentive stock option terminates for any reason other
<PAGE>
than Permanent and Total Disability or death, each incentive stock option held
by such optionee shall be exercisable only to the extent such option is
exercisable on the effective date of such optionee's termination of employment,
and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months after the effective date of such optionee's
termination of employment and (ii) the expiration date of the term of such
option; provided that if such optionee's employment is terminated for Cause, all
incentive stock options held by such optionee shall terminate automatically on
the effective date of such optionee's termination of employment.
Subject to Section 4.8 and unless otherwise specified in the Agreement
relating to the option, if the holder of an incentive stock option dies during
the one-year period following termination of employment by reason of Permanent
and Total Disability (or such shorter period as set forth in the Agreement
relating to such option), or if the holder of an incentive stock option dies
during the three-month period following termination of employment for any reason
other than Permanent and Total Disability or death, each incentive stock option
held by such optionee shall be exercisable only to the extent such option is
exercisable on the date of the optionee's death and may thereafter be exercised
by the optionee's executor, administrator, legal representative, beneficiary or
similar person until and including the earliest to occur of (i) the date which
is one year (or such shorter period as set forth in the Agreement relating to
such option) after the date of death and (ii) the expiration date of the term of
such option.
III. PROVISIONS RELATING TO INDEPENDENT DIRECTORS
3.1 Eligibility. Each member of the Board of Directors of the Company who
is not an employee, either full-time or part-time, of the Company or a
Subsidiary (an "Independent Director") shall be granted options to purchase
shares of Common Stock in accordance with this Section III.
3.2 Grants of Stock Options. Each Independent Director shall be granted
non-qualified stock options as follows:
(a) Time of Grant. Each person who is an Independent Director on the date
of the closing of the initial public offering of the Common Stock shall be
granted an option to purchase 2,000 shares of Common Stock at a purchase price
per share equal to the Fair Market Value of the Common Stock on the date of
grant of such option. Each person who begins to serve as an Independent
Director following the date of the closing of the initial public offering of the
Common Stock shall be granted an option to purchase 2,000 shares of Common Stock
on the date such service commences at a purchase price per share equal to the
Fair Market Value of the Common Stock on the date of grant of such option,
provided, however, that such grant shall not be made to a person who becomes an
Independent Director by reason of termination of employment with the Company or
any Subsidiary. On the date of each annual meeting of stockholders of the
Company following the closing of the initial public offering of the Common
Stock, each person who is an Independent Director immediately after such meeting
of stockholders shall be granted an option to purchase 4,000 shares of Common
Stock at a purchase price per share equal to the Fair Market Value of the Common
Stock on the date of grant of such option.
(b) Option Period and Exercisability. Each option granted under this
Article III shall be fully exercisable on and after its date of grant. Each
option granted under this Article III shall expire ten years
<PAGE>
after its date of grant. An exercisable option, or portion thereof, may be
exercised in whole or in part only with respect to whole shares of Common Stock.
Options granted under this Article III shall be exercisable in accordance with
Section 2.2(c).
(c) Termination of Directorship. If the holder of an option granted under
this Article III shall cease to be a member of the Board of Directors of the
Company for any reason, each such option held by such optionee may thereafter be
exercised by such optionee (or such optionee's legal representative or similar
person) until and including the earliest to occur of (i) the date which is one
year after the date such optionee ceased to be a member of the Board of
Directors of the Company and (ii) the expiration date of the term of such
option.
(d) Death Following Termination of Directorship. If the holder of an
option granted under this Article V dies during the one year period following
the date on which such optionee ceased to be a member of the Board of Directors
of the Company, each such option may thereafter be exercised by the optionee's
executor, administrator, legal representative, beneficiary or similar person, as
the case may be, until and including the earliest to occur of (i) the date which
is one year after the date of death and (ii) the expiration date of the term of
such option.
IV. GENERAL
4.1 Effective Date and Term of Plan. This Plan shall be submitted to the
stockholders of the Company for approval and, if approved by the affirmative
vote of a majority of the shares of Common Stock, shall become effective on the
date of such approval. In the event that this Plan is not approved by the
stockholders of the Company, this Plan and any options granted hereunder shall
be null and void and of no force or effect. This Plan shall terminate on May 1,
2005 unless terminated earlier by the Board. Termination of this Plan shall not
affect the terms or conditions of any option granted prior to termination.
Options may be granted hereunder at any time prior to the termination of
this Plan, provided that no option may be granted later than ten years after the
effective date of this Plan.
4.2 Amendments. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation including Rule 16b-3 under the Exchange Act, Section 422 of
the Code and Section 162(m) of the Code; provided, that this Plan shall not be
amended in a manner which fails to comply with Rule 16b-3(c)(2)(ii)(B) under
Section 16 of the Exchange Act. No amendment may impair the rights of a holder
of an outstanding option without the consent of such holder.
4.3 Agreement. No option shall be valid until an Agreement is executed by
the Company and the optionee and, upon execution by the Company and the optionee
and delivery of the Agreement to the Company, such option shall be effective as
of the effective date set forth in the Agreement.
4.4 Non-Transferability. No option hereunder shall be transferable other
than (i) by will or the laws of descent and distribution or pursuant to
beneficiary designation procedures approved by the Company or (ii) except in the
case of an incentive stock option, as otherwise permitted under Rule 16b-3
<PAGE>
under the Exchange Act as set forth in the Agreement relating to such option.
Except to the extent permitted by the foregoing sentence, each option may be
exercised during the optionee's lifetime only by the optionee or the optionee's
legal representative or similar person. Except as permitted by the second
preceding sentence, no option hereunder shall be sold, transferred, assigned,
pledged, hypothecated, encumbered or otherwise disposed of (whether by operation
of law or otherwise) or be subject to execution, attachment or similar process.
Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any option hereunder, such option and all rights
thereunder shall immediately become null and void.
4.5 Tax Withholding. The Company shall have the right to require, prior
to the issuance or delivery of any shares of Common Stock, payment by the
optionee of any Federal, state, local or other taxes which may be required to be
withheld or paid in connection with an option hereunder. An Agreement may
provide that (i) the Company shall withhold whole shares of Common Stock which
would otherwise be delivered upon exercise of the option having an aggregate
Fair Market Value determined as of the date the obligation to withhold or pay
taxes arises in connection with the option (the "Tax Date") in the amount
necessary to satisfy any such obligation or (ii) the optionee may satisfy any
such obligation by any of the following means: (A) a cash payment to the
Company, (B) delivery to the Company of previously owned whole shares of Common
Stock (which the optionee has held for at least six months prior to the delivery
of such shares or which the optionee purchased on the open market and for which
the optionee has good title, free and clear of all liens and encumbrances)
having an aggregate Fair Market Value determined as of the Tax Date, equal to
the amount necessary to satisfy any such obligation, (C) authorizing the Company
to withhold whole shares of Common Stock which would otherwise be delivered upon
exercise of the option having an aggregate Fair Market Value determined as of
the Tax Date, (D) a cash payment by a broker-dealer acceptable to the Company to
whom the optionee has submitted an irrevocable notice of exercise or (E) any
combination of (A), (B) and (C), in each case to the extent set forth in the
Agreement relating to the option; provided, however, that the Committee shall
have sole discretion to disapprove of an election pursuant to any of clauses
(B)-(E) and that in the case of an optionee who is subject to Section 16 of the
Exchange Act, the Company may require that the method of satisfying any such
obligation be in compliance with Section 16 and the rules and regulations
thereunder. An Agreement may provide for shares of Common Stock to be delivered
or withheld having a Fair Market Value in excess of the minimum amount required
to be withheld, but not in excess of the amount determined by applying the
optionee's maximum marginal tax rate. Any fraction of a share of Common Stock
which would be required to satisfy such an obligation shall be disregarded and
the remaining amount due shall be paid in cash by the optionee.
4.6 Restrictions on Shares. Each option hereunder shall be subject to the
requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
option upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of shares
thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any option hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
<PAGE>
4.7 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding option, the purchase
price per security, and the number of securities subject to each option to be
granted to Independent Directors pursuant to Article III shall be appropriately
adjusted by the Committee, such adjustments to be made in the case of
outstanding options without an increase in the aggregate purchase price. The
decision of the Committee regarding any such adjustment shall be final, binding
and conclusive. If any adjustment would result in a fractional security being
(i) available under this Plan, such fractional security shall be disregarded, or
(ii) subject to an option under this Plan, the Company shall pay the optionee,
in connection with the first exercise of the option in whole or in part,
occurring after such adjustment, an amount in cash determined by multiplying (A)
the fraction of such security (rounded to the nearest hundredth) by (B) the
excess, if any, of (x) the Fair Market Value on the exercise date over (y) the
exercise price of the option.
4.8 Change in Control. (a) Notwithstanding any provision in this Plan or
any Agreement, in the event of a Change in Control, all outstanding options
shall immediately be exercisable in full.
(b) "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (a "person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act, of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of 35% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); excluding, however, the
following: (A) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or exchanged was
acquired directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (D)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this Section 4.8(b); provided
further, that for purposes of clause (B), if any Person (other than the Company
or any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company) shall become the
beneficial owner of 35% or more of the Outstanding Company Common Stock or 35%
or more of the Outstanding Company Voting Securities by reason of an acquisition
by the Company, and such Person shall, after such acquisition by the Company,
become the beneficial owner of any additional shares of the Outstanding Company
Common Stock or any additional Outstanding Company Voting Securities and such
beneficial ownership is publicly announced, such additional beneficial ownership
shall constitute a Change in Control;
(2) individuals who, as of the date hereof, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute at least a
majority of such Board; provided that any individual who becomes a director of
the Company subsequent to the date hereof whose election, or nomination for
<PAGE>
election by the Company's stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board shall be deemed a
member of the Incumbent Board; and provided further, that any individual who was
initially elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the
Board shall not be deemed a member of the Incumbent Board;
(3) approval by the stockholders of the Company of a reorganization,
merger or consolidation or sale or other disposition of all or substantially all
of the assets of the Company (a "Corporate Transaction"); excluding, however, a
Corporate Transaction pursuant to which (i) all or substantially all of the
individuals or entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 60% of, respectively, the outstanding shares of common
stock, and the combined voting power of the outstanding securities of such
corporation entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Corporate Transaction (including,
without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
indirectly) in substantially the same proportions relative to each other as
their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (ii) no Person (other than: the Company; any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; the corporation resulting from such
Corporate Transaction; and any Person which beneficially owned, immediately
prior to such Corporate Transaction, directly or indirectly, 35% or more of the
Outstanding Company Common Stock or the Outstanding Company Voting Securities,
as the case may be) will beneficially own, directly or indirectly, 35% or more
of, respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of the
outstanding securities of such corporation entitled to vote generally in the
election of directors and (iii) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction; or
(4) approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company.
4.9 No Right of Participation or Employment. No person shall have any
right to participate in this Plan. Neither this Plan nor any option granted
hereunder shall confer upon any person any right to continued employment by the
Company, any Subsidiary or any affiliate of the Company or affect in any manner
the right of the Company, any Subsidiary or any affiliate of the Company to
terminate the employment of any person at any time without liability hereunder.
4.10 Rights as Stockholder. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock which are
subject to an option hereunder until such person becomes a stockholder of record
with respect to such shares of Common Stock.
4.11 Designation of Beneficiary. Each optionee may file with the
Committee a written designation of one or more persons as such optionee's
beneficiary or beneficiaries (both primary and
<PAGE>
contingent) in the event of the optionee's death. To the extent an outstanding
option granted hereunder is exercisable, such beneficiary or beneficiaries shall
be entitled to exercise such option.
Each beneficiary designation shall become effective only when filed in writing
with the Committee during the optionee's lifetime on a form prescribed by the
Committee. The spouse of a married optionee domiciled in a community property
jurisdiction shall join in any designation of a beneficiary other than such
spouse. The filing with the Committee of a new beneficiary designation shall
cancel all previously filed beneficiary designations.
If an optionee fails to designate a beneficiary, or if all designated
beneficiaries of an optionee predecease the optionee, then each outstanding
option hereunder held by such optionee, to the extent exercisable, may be
exercised by such optionee's executor, administrator, legal representative or
similar person.
4.12 Governing Law. This Plan, each option hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.
