<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 4, 1998
REGISTRATION NO. 333-________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
VISIO CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
WASHINGTON 91-1448389
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
520 Pike Street, Suite 1800
SEATTLE, WASHINGTON 98101-4001
Address of principal executive offices, including zip code)
AMENDED AND RESTATED KASPIA SYSTEMS, INC. 1996 STOCK OPTION PLAN
(Full title of the plan)
JEREMY A. JAECH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
VISIO CORPORATION
520 PIKE STREET, SUITE 1800
SEATTLE, WASHINGTON 98101-4001
(206) 521-4500
(Name, address and telephone number, including area code, of agent for service)
______________________
COPIES TO:
SCOTT L. GELBAND
PERKINS COIE LLP
1201 THIRD AVENUE, 40TH FLOOR
SEATTLE, WASHINGTON 98101-3099
(206) 583-8888
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
TITLE OF SECURITIES NUMBER OF SHARES TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED(1)(2) OFFERING PRICE PER SHARE(3) AGGREGATE OFFERING PRICE(3) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par 4,525 $ 3.315 $ 15,000.38 $100
value per share: 22,012 3.316 $ 72,991.79
2,563 3.317 $ 8,501.47
1,582 3.319 $ 5,250.66
270 3.334 $ 900.18
445 4.976 $ 2,214.32
120 33.334 $ 4,000.08
------ -----------
Total: 31,517 $108,858.88
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to an Agreement and Plan of Merger dated as of July 10, 1998 (the
"Merger Agreement"), by and among the registrant, VMS-1, Inc. and Kaspia
Systems, Inc. ("Kaspia"), the registrant assumed all the outstanding options
to purchase common stock of Kaspia under the Amended and Restated Kaspia
Systems, Inc. 1996 Stock Option Plan (the "Assumed Options"), with
appropriate adjustments to the number of shares and exercise price of each
Assumed Option to reflect the ratio at which the Kaspia common stock was
converted into common stock of the registrant under the Merger Agreement.
(2) Together with an indeterminate number of additional shares that may be
necessary to adjust the number of shares reserved for issuance under the
Amended and Restated Kaspia Systems, Inc. 1996 Stock Option Plan as the
result of any future stock split, stock dividend or similar adjustment of
the outstanding Common Stock of the Registrant.
(3) Such shares are issuable upon exercise of outstanding options with fixed
exercise prices. Pursuant to Rule 457(h) under the Securities Act of 1933,
as amended, the aggregate offering price and the registration fee have been
computed upon the basis of the price at which the options may be exercised.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
(the "Commission") (File No. 0-26772) by the Company are hereby incorporated by
reference into this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1997;
(b) All other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since the end of the year covered by the Annual Report referred to in (a)
above; and
(c) The description of the Registrant's Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on September 15,
1995 under Section 12(g) of the Exchange Act.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date hereof and prior to the filing of a
post-effective amendment, which indicates that the securities offered hereby
have been sold or which deregisters the securities covered hereby then remaining
unsold, shall also be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof commencing on the respective
dates on which such documents are filed.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act authorize a court to award, or a corporation's board of
directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Section 10 of the Registrant's Restated Bylaws provides that
the Registrant shall indemnify its directors and officers to the maximum extent
permitted by applicable law, and that the Registrant may indemnify its employees
or agents to the fullest extent permitted by applicable law, or to such lesser
extent as the Registrant's board of directors may determine.
Pursuant to Section 10 of the Registrant's Restated Bylaws, the Registrant
has entered into an indemnification agreement with each of its executive
officers and directors wherein the Registrant agrees to hold harmless and
indemnify the officer or director to the fullest extent permitted by Washington
law.
II-1
<PAGE>
The Registrant has agreed to indemnify the officer or director against any and
all losses, claims, damages, liabilities or expenses incurred in connection with
any actual, pending or threatened action, suit, claim or proceeding, whether
civil, criminal, administrative or investigative and whether formal or informal,
in which the officer or director is, was or becomes involved by reason of the
fact that the officer or director is or was a director, officer, employee or
agent of the Registrant or that, being or having been such a director, officer,
employee or agent, the officer or director is or was serving at the Registrant's
request as a director, officer, employee, trustee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan, whether the basis of
such proceeding is alleged action (or inaction) by the officer or director in an
official capacity or in any other capacity, unless such action, suit, claim or
proceeding was not authorized by the Registrant's board of directors. No
indemnity pursuant to the indemnification agreement shall be provided by the
Registrant: (i) on account of any suit in which a final, unappealable judgment
is rendered against the officer or director for an accounting of profits made
from the purchase or sale by the officer or director of securities of the
Registrant in violation of the provisions of Section 16(b) of the Exchange Act;
(ii) for damages that have been paid directly to the officer or director by an
insurance carrier under a policy of directors' and officers' liability insurance
maintained by the Registrant; (iii) on account of an officer's or director's
conduct that is finally adjudged to have been intentional misconduct, or a
knowing violation of law or RCW 23B.08.310 or any successor provision of the
statute, or a transaction from which the officer or director derived benefit in
money, property or services to which the officer or director is not legally
entitled; or (iv) if a final decision by a court having jurisdiction in the
matter determines such indemnification is unlawful.
Section 23B.08.320 of the Washington Business Corporation Act authorizes a
corporation to limit a director's personal liability to the corporation or its
shareholders for monetary damages for conduct as a director, except in
circumstances involving intentional misconduct, a knowing violation of law,
unlawful distributions, or any transaction from which the director will
personally receive a benefit in money, property or services to which the
director is not legally entitled. Article 11 of the Registrant's Fourth
Restated Articles of Incorporation contains provisions implementing, to the
fullest extent permitted by Washington law, such limitations on a director's
liability to the Registrant and its shareholders.
The Company also maintains directors' and officers' liability insurance
policies for the benefit of its directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------
<S> <C>
5.1 Opinion of Perkins Coie LLP regarding legality of the Common Stock
being registered
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Perkins Coie LLP (included in the opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 Amended and Restated Kaspia Systems, Inc. 1996 Stock Option Plan
</TABLE>
II-2
<PAGE>
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefits plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Seattle, State of Washington, on July 31, 1998.
VISIO CORPORATION
By: /s/ Jeremy A. Jaech
------------------------------------
Jeremy A. Jaech
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Jeremy A. Jaech and Theodore C. Johnson and each of them as attorneys-in-fact,
with full power of substitution, to execute in the name and on behalf of such
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments with the Securities and Exchange Commission or any regulatory
authority.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on July 31, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Jeremy A. Jaech Chairman of the Board, President and Chief Executive
- ------------------------------------------ Officer (Principal Executive Officer)
Jeremy A. Jaech
/s/ Steve M. Gordon Chief Financial Officer and Senior Vice President,
- ------------------------------------------ Finance and Administration (Principal Financial and
Steve M. Gordon Accounting Officer)
/s/ Theodore C. Johnson Executive Vice President, Chief Technology Officer,
- ------------------------------------------ and Director
Theodore C. Johnson
/s/ Tom A. Alberg Director
- ------------------------------------------
Tom A. Alberg
/s/ Thomas H. Byers Director
- ------------------------------------------
Thomas H. Byers
/s/ John R. Johnston Director
- ------------------------------------------
John R. Johnston
/s/ Douglas J. Mackenzie Director
- ------------------------------------------
Douglas Mackenzie
/s/ Scott Oki Director
- ------------------------------------------
Scott Oki
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ------------------------------------------------------------------
<S> <C>
5.1 Opinion of Perkins Coie LLP regarding legality of the Common Stock
being registered
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Perkins Coie LLP (included in the opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 Amended and Restated Kaspia Systems, Inc. 1996 Stock Option Plan
</TABLE>
<PAGE>
EXHIBIT 5.1
August 3, 1998
Visio Corporation
520 Pike Street, Suite 1800
Seattle, Washington 98101-4001
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen and Ladies:
We have acted as counsel to Visio Corporation (the "Company") in connection
with the preparation of a Registration Statement on Form S-8 (the "Registration
Statement") which is being filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"), with respect to 31,517
shares of common stock, $.01 par value, of the Company (the "Shares"). The
Shares may be issued pursuant to the Amended and Restated Kaspia Systems, Inc.
1996 Stock Option Plan (the "Plan").
We have examined the Registration Statement and such documents and records
of the Company and other documents as we have deemed necessary for the purpose
of this opinion. In giving this opinion, we are assuming the authenticity of
all instruments presented to us as originals, the conformity with originals of
all instruments presented to us as copies and the genuineness of all signatures.
Based upon and subject to the foregoing, we are of the opinion that the
Shares that may be issued pursuant to the Plan have been duly authorized and
that, upon the due execution by the Company and the registration by its
registrar of the Shares, the sale thereof by the Company in accordance with the
terms of the Plan, and the receipt of the consideration therefor in accordance
with the terms of the Plan, the Shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
Perkins Coie LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Amended and Restated Kaspia Systems, Inc. 1996
Stock Option Plan of our report dated October 24, 1997, with respect to the
financial statements and schedule of Visio Corporation included in its Annual
Report (Form 10-K) for the fiscal year ended September 30, 1997, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Seattle, Washington
August 3, 1998
<PAGE>
EXHIBIT 99.1
AMENDED AND RESTATED
KASPIA SYSTEMS, INC.
1996 STOCK OPTION PLAN
----------------------
Adopted Effective May 10, 1996
Amended and Restated Effective November 13, 1996
Amended and Restated Effective July 22, 1997
1. PURPOSE
(a) The purpose of the Kaspia Systems, Inc. 1996 Stock Option Plan as
amended (the "Plan") is to provide a means whereby selected eligible employees
and officers and directors of and consultants to Kaspia Systems, Inc., a
Delaware corporation (the "Company"), and its Affiliates, if any, as defined
below, may be given a favorable opportunity to acquire common stock of the
Company (the "Common Stock"), thereby encouraging such persons to accept or
continue a qualifying relationship with the Company; increasing the interest of
such persons in the Company's welfare through participation in the growth and
value of the Common Stock; and furnishing such persons with an incentive to
improve operations and increase profits of the Company. The terms "Affiliate"
or "Affiliates" as used in the Plan shall mean any parent corporation or
subsidiary corporation of the Company, as those terms are defined in Sections
424(e) and (f) of the Internal Revenue Code of 1986, as amended (the "Code").
(b) To accomplish the foregoing objectives, this Plan provides a means
whereby employees, directors, and consultants may receive options to purchase
Common Stock.
2. STOCK OPTIONS
Stock options granted pursuant to the Plan may, at the discretion of the
Board of Directors of the Company, be granted either as an Incentive Stock
Option ("ISO") or as a Nonstatutory Stock Option ("NSO"). An ISO shall mean an
option described in Section 422 of the Code. An NSO shall mean any option not
meeting the requirements of Section 422 of the Code. An option designated as an
NSO will not be treated as an ISO.
3. ADMINISTRATION
The Board of Directors (the "Board"), whose authority shall be plenary,
shall administer the Plan, unless and until such time as the Board delegates
administration of the Plan pursuant to subsection 3(b), below.
(a) The Board, whose determinations shall be conclusive, shall have
the power, subject to and within the limits of the express provisions of the
Plan:
(i) To grant options pursuant to the Plan.
(ii) To determine from time to time which of the eligible persons
described in Section 5, below, shall be granted options under the Plan, the
number of shares for which each option shall be granted, the term of each
granted option and the time or times during the term of each option
<PAGE>
within which all or portions of each option may be exercised (which at the
Board's discretion may be accelerated, if allowed under applicable law).
(iii) To construe and interpret the Plan and options granted
under it and to establish, amend, and revoke rules and regulations for its
administration. The Board, in the exercise of this power, shall generally
determine all questions of policy and expediency that may arise and may correct
any defect, omission or inconsistency in the Plan or in any option agreement
with respect to the Plan in a manner and to the extent it shall deem necessary
or expedient to make the Plan fully effective.
(iv) To grant options in exchange for cancellation of options
granted earlier at different exercise prices; provided, however, nothing
contained herein shall empower the Board to grant an ISO under conditions or
pursuant to terms that are inconsistent with the requirements of subsection
4(b), below, or Section 422 of the Code.
(v) To prescribe the terms and provisions of each option granted
(which need not be identical) and the form of written instrument that shall
constitute the option agreement.
(vi) To amend the Plan as provided in Section 11, below.
(vii) Generally, to exercise such powers and to perform such acts
as are deemed necessary or expedient to promote the best interests of the
Company.
(viii) To take appropriate action to cause any option granted
hereunder to cease to be an ISO; provided, however, no such action may be taken
by the Board without the written consent of the affected optionee.
(b) The Board may, by resolution, delegate administration of the Plan
(including, without limitation, the Board's powers under subsection 3(b) above)
to a committee acting under the authority of the Board. In the event that the
Company has registered any equity security under Section 12 of the Securities
and Exchange Act of 1934, as amended (the "Act"), such committee shall consist
of not less than two (2) members of the Board each of whom shall be a
"disinterested person" and an "outside director". A member of the Board is a
"disinterested person" if at the time she exercises discretion in administering
the Plan she is not eligible and has not at any time within one year prior
thereto been eligible for selection as a person to whom stock may be allocated
or to whom stock options or stock appreciation rights may be granted pursuant to
the Plan or any other plan of the Company (or Affiliate) entitling the
participants therein to acquire stock, stock options or stock appreciation
rights of the Company or (Affiliate), or if she otherwise satisfies the
requirements of a "disinterested person" within the meaning of Rule 16b-3 of the
Act. A member of the Board is an "outside director" if she is not a current
employee of the Corporation (or Affiliate), is not a former employee of the
Corporation (or Affiliate) who is receiving compensation for prior services, was
not an officer of the Corporation (or Affiliate) at any time, and currently is
not receiving compensation for personal services to the Corporation (or
Affiliate) in any capacity other than as a member of the Board, or if she
otherwise satisfies the requirements of an "outside director" as such term is
defined for purposes of Section 162(m) of the Code. The Board shall have
complete discretion to determine the composition, structure, form, term and
operation of any committee established to administer the Plan. The Board at any
time may revest in the Board the administration of the Plan.
<PAGE>
4. SHARES SUBJECT TO PLAN AND TO OPTION
(a) Subject to the provisions of Section 10, below (relating to adjustments
upon changes in stock), the stock which may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate two million five hundred
thousand (2,500,000) shares of the Company's authorized Common Stock and may be
unissued shares, reacquired shares, or shares bought on the market for the
purpose of issuance under the Plan. If any options granted under the Plan shall
for any reason terminate or expire without having been exercised in full, the
stock not purchased under such options shall be available again for the purpose
of the Plan.
(b) If the aggregate fair market value of stock with respect to which ISOs
are exercisable for the first time by any individual during any calendar year
exceeds the amount provided in Section 422(d) of the Code, such options
representing stock in excess of the Section 422(d) annual limitation shall be
deemed to be a grant of an NSO to the extent of such excess.
5. ELIGIBILITY
(a) All employees of the Company and its Affiliates are eligible to receive
ISOs and only employees of the Company and its Affiliates may be granted ISOs.
Directors of the Company who are not also employees of the Company shall not be
eligible for ISOs, but are eligible for NSOs. Employees and independent
contractors shall also be eligible for NSOs.
(b) No option issued under the Plan, may be granted to a person who, at the
time such option would be granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of outstanding capital
stock of the Company or its Affiliate unless the option price is at least one
hundred percent (100%) in the case of an NSO, one hundred ten percent (110%) in
the case of an ISO, of the fair market value of the stock subject to the option
and such option by its terms is not exercisable after five (5) years from the
date such option is granted. Any employee may hold more than one (1) option at
any time. For purposes of this subsection 3(b), in determining stock ownership,
an optionee shall be considered as owning the voting capital stock owned,
directly or indirectly, by or for his brothers and sisters, spouse, ancestors
and lineal descendants. Voting capital stock owned, directly or indirectly, by
or for a corporation, partnership, estate or trust shall be considered as being
owned proportionately by or for its shareholders, partners or beneficiaries, as
applicable. Common Stock with respect to which any such optionee holds an
option shall not be counted. Additionally, for purposes of this subsection
3(b), outstanding capital stock shall include all capital stock actually issued
and outstanding immediately after the grant of the option to the optionee.
Outstanding capital stock shall not include capital stock authorized for issue
under outstanding options held by the optionee or by any other person.
6. TERMS OF OPTIONS
Options granted pursuant to the Plan need not be identical, but each option
shall be granted within ten (10) years from the date the Plan is adopted by the
Board or approved by the shareholders, whichever is earlier, shall specify the
number of shares to which it pertains and shall be subject to the following
terms and conditions:
(a) The purchase price of each option shall be determined by the
administrator of the Plan at the time the option is granted, but shall in no
event, except as otherwise set forth in Section 5, above, be less than eighty-
five percent (85%) in the case of an NSO, or one hundred percent (100%) in the
case of an ISO, of the fair market value of the stock subject to the option on
the date the option is granted. For all purposes of the Plan, the fair market
value of the Common Stock shall be, if the Stock is
<PAGE>
publicly traded, its closing bid price on NASDAQ or the over-the-counter market,
or if is traded on another exchange, the last price at which it traded on such
exchange. If the stock is not publicly traded, the fair market value shall be
such value as is determined in good faith by the Board of Directors by taking
into consideration the following factors: the Company's net worth, prospective
earning power and dividend-paying capacity, and other relevant factors.
"Other relevant factors" include the goodwill of the business; the
economic outlook in the particular industry; the Company's position in the
industry and its management; the degree of control of the business represented
by the block of stock to be valued; and the values of securities of corporations
engaged in the same or similar lines of business which are listed on a stock
exchange. In addition to the relevant factors described above, consideration
shall also be given to nonoperating assets including proceeds of life insurance
policies payable to or for the benefit of the Company, to the extent such
nonoperating assets have not been taken into account in the determination of net
worth, prospective earning power, and dividend-earning capacity.
(b) Except as otherwise set forth in Section 5, above, the term of any
option shall not be greater than ten (10) years from the date it was granted.
(c) An option by its terms, shall not be transferable otherwise than
by will or the laws of descent and distribution and may be exercisable, during
the lifetime of the option holder, only by the individual to whom the option is
granted. Notwithstanding the above, if an employee is determined to be
incompetent by a court of proper jurisdiction, her legal representative may
exercise the option on her behalf.
(d) Each option shall vest according to the following vesting
schedule: (1) twenty-five percent (25%) of the options will vest after an
employee has been employed by the Company for one year, and (2) the remaining
seventy-five percent (75%) of the options granted will vest monthly over the
succeeding 36 months on the same day of the month as the initial twenty-five
percent (25%) of the option grant vested. In the event that the Company enters
into a merger, acquisition, or other business combination in which the Company's
stockholders before such event do not have a majority interest in the surviving
entity after such event, all unvested options will vest.
(e) Options under the Plan may be exercised by a participant
regardless of whether she is employed by the Company or an Affiliate at the time
of exercise.
(f) Upon the termination of a participant's employment (defined as the
date the participant is no longer employed by either the Company or any of its
Affiliates), her rights to exercise an option then held by her shall be only as
follows:
(i) If a participant's employment is terminated for any reason
other than death of the participant, she may, within not less than three (3)
months following such termination, or within such longer period as the Board may
fix, exercise the option to the extent such option was exercisable by the
participant on the date of termination of his employment, or to the extent
otherwise specified by the Board, which may so specify at a time that is
subsequent to the date of the termination of his employment, provided, the date
of exercise is in no event after the expiration of the term of the option.
However, if the participant's employment is terminated due to the "Disability"
(within the meaning of Section 22(e) of the Code) of the participant, then this
paragraph 6(f) (i) shall apply to such participant by substituting twelve (12)
months for three months; provided, further, that if the participant lives in
California and such participant's employment is terminated due to
<PAGE>
a "disability" which is less than total and permanent under the Code rules and
regulations, then the period within which the option may be exercised shall be
extended by six months.
(ii) If a participant's employment is terminated by death, his
estate shall have the right for a period of not less than twelve (12) months
following the date of death, or for such longer period as the Board may fix, to
exercise the option to the extent the participant was entitled to exercise such
option on the date of death, or to the extent otherwise specified by the Board,
which may so specify, at a time that is subsequent to the date of death,
provided the actual date of exercise is in no event after the expiration of the
term of the option. A participant's estate shall mean his legal representative
or any person who acquires the right to exercise an option by reason of the
participant's death.
(g) Options may also contain such other provisions, which shall not be
inconsistent with any of the foregoing terms, as the Board shall deem
appropriate. No option, however, nor anything contained in the Plan, shall
confer upon any employee any right to continue in the employ of the Company (or
Affiliate) nor limit in any way the right of the Company (or Affiliate) to
terminate her employment at any time.
(h) Subject to any required action by the Company's shareholders, if
the Company shall be the surviving corporation in any merger or consolidation,
each outstanding option shall pertain and apply to the securities to which a
holder of the number of shares subject to the option would have been entitled,
provided, the excess of the aggregate fair market value of the shares subject to
the option immediately after such merger or consolidation over the aggregate
option price of such shares is not more than the excess of the aggregate fair
market value of all shares subject to the option immediately before such merger
or consolidation over the aggregate option price of such shares. A dissolution
or liquidation of the Company or a merger or consolidation in which the Company
is not the surviving corporation shall cause each outstanding option to
terminate, unless the surviving corporation in the case of a merger or
consolidation assumes outstanding options or replaces them with substitute
options and (i) the excess of the aggregate fair market value of the shares
subject to the option immediately after the substitution or assumption over the
aggregate option price of such shares is not more than the excess of the
aggregate fair market value of all shares subject to the option immediately
before such substitution or assumption over the aggregate option price of such
shares; and (ii) the new option or the assumption of the old option does not
give the employee additional benefits which she did not have under the old
option.
7. PAYMENTS AND LOANS UPON EXERCISE
(a) The purchase price of stock sold pursuant to an option shall be paid
either in full in cash or by certified check at the time the option is exercised
or to the extent permitted under the applicable provisions of Delaware General
Corporation Law, pursuant to any deferred payment arrangement that the Board in
its discretion may approve; provided, however, that any interest to be paid by
an optionee in connection with any such deferred payment arrangement shall be
charged interest at the applicable federal rate as defined in Section 1274(d) of
the Code.
(b) The Company may make loans or guarantee loans made by an appropriate
financial institution to individual optionees, including officers, on such terms
as may be approved by the Board for the purpose of financing the exercise of
options granted under the Plan and the payment of any taxes that may be due by
reason of such exercise.
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(c) In addition, if and to the extent authorized by the Board, optionees
may make all or any portion of any payment due to the Company upon exercise of
an option by delivery of any property (including securities of the Company)
other than cash, so long as such property constitutes valid consideration for
the stock under applicable law.
(d) Where the Company has or will have a legal obligation to withhold taxes
relating to the exercise of any stock option, such option may not be exercised,
in whole or in part, unless such tax obligation is first satisfied in a manner
satisfactory to the Company.
8. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to options granted under the Plan
shall be used for general corporate purposes.
9. STOCK TRANSFER RESTRICTIONS; REPURCHASE PROVISIONS
Stock issued pursuant to the exercise of options granted under the Plan
shall be subject to those stock transfer restrictions and repurchase provisions
which shall be set forth in a Stock Restriction Agreement (the "Agreement"),
substantially in the form attached hereto as Exhibit A. Each individual shall
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be required to execute the Agreement prior to receiving his shares.
10. ADJUSTMENTS OF AND CHANGES IN THE STOCK
Subject to the provisions set forth in subsection 6(h), above, in the event
the shares of Common Stock of the Company, as presently constituted, shall be
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, split-up, combination
of shares, or otherwise), or if the number of shares of Common Stock of the
Company shall be increased through the payment of a stock dividend, then there
shall be substituted for or added to each share of Common Stock of the Company
theretofore appropriated or thereafter subject or which may become subject to an
option under the Plan, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock of the Company
shall be so changed, or for which each such share shall be exchanged or to which
each such share shall be entitled, as the case may be. Outstanding options
shall also be amended as to price and other terms if necessary to reflect the
foregoing events. In the event there shall be any other change in the number or
kind of the outstanding shares of Common Stock of the Company, or of any stock
or other securities into which such Common Stock shall have been changed, or for
which it shall have been exchanged, then if the Board of Directors shall, in its
sole discretion, determine that such change equitably requires an adjustment in
any option theretofore granted or which may be granted under the Plan, such
adjustment shall be made in accordance with such determination. No right to
purchase fractional shares shall result from any adjustment in options pursuant
to this Section 10. In case of any such adjustment, the shares subject to the
option shall be rounded down to the nearest whole share. Notice of any
adjustment shall be given by the Company to each holder of an option which shall
have been so adjusted and such adjustment (whether or not such notice is given)
shall be effective and binding for all purposes of the Plan.
11. AMENDMENT OF THE PLAN
The Board at any time and from time to time, may amend the Plan, subject to
the limitation, however, that, except as provided in Section 10 (relating to
adjustments upon changes in stock), no amendment shall be effective, unless
approved, within twelve (12) months before or after the date of such
<PAGE>
amendment's adoption, by the vote or written consent of a majority of the
outstanding shares of the Company entitled to vote, where such amendment will:
(a) increase the number of shares reserved for options under the Plan;
(b) materially modify the requirements of Section 5 as to eligibility
for participation in the Plan; or
(c) materially increase the benefits accruing to participants under
the Plan.
It is expressly contemplated that the Board may amend the Plan in any
respect necessary to provide the Company's employees with the maximum benefits
provided or to be provided under Section 422 of the Code and the regulations
promulgated thereunder relating to employee incentive stock options and/or to
bring the plan or options granted under it into compliance therewith.
Rights and obligations under any option granted before any amendment of the
Plan shall not be altered or impaired by amendment of the Plan, except with the
consent, which may be obtained in any manner deemed by the Board to be
appropriate, of the person to whom the option was granted.
12. TERMINATION OR SUSPENSION OF THE PLAN
The Board at any time may suspend or terminate the Plan. The Plan, unless
sooner terminated, shall terminate at the end of ten (10) years from the date
the Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. An option may not be granted under the Plan while the
Plan is suspended or after it is terminated.
Rights and obligations under any option granted while the Plan is in effect
shall not be altered or impaired by suspension or termination of the Plan,
except with the consent of the person to whom the option was granted, which may
be obtained in any manner that the Board deems appropriate.
13. TIME OF GRANTING OPTIONS
The date of grant of an option hereunder shall, for all purposes, be the
date on which the Board (or committee under authority of the Board) makes the
determination granting such option.
14. LISTING, QUALIFICATION OR APPROVAL OF STOCK; APPROVAL OF OPTIONS
All options granted under the Plan are subject to the requirement that if
at any time the Board shall determine in its discretion that the listing or
qualification of the shares of stock subject thereto on any securities exchange
or under any applicable law, or the consent or approval by any governmental
regulatory body or the shareholders of the Company, is necessary or desirable as
a condition of or in connection with the issuance of shares under the option,
the option may not be exercised in whole or in part, unless such listing,
qualification, consent or approval shall have been effected or obtained free of
any condition not acceptable to the Board.
15. BINDING EFFECT OF CONDITIONS
The conditions and stipulations hereinabove contained or in any option
granted pursuant to the Plan shall be and constitute a covenant running with all
of the shares of the Company owned by the participant at any time, directly or
indirectly whether the same have been issued or not, and those shares
<PAGE>
of the Company owned by the participant shall not be sold, assigned or
transferred by any person save and except in accordance with the terms and
conditions herein provided, and the participant shall agree to use his best
efforts to cause the officers of the Company to refuse to record on the books of
the Company any assignment or transfer made or attempted to be made, except as
provided in the Plan and to cause said officers to refuse to cancel old
certificates or to issue or deliver new certificates therefor where the
purchaser or assignee has acquired certificates for the stock represented
thereby, except strictly in accordance with the provisions of this Plan.
16. EFFECTIVE DATE OF PLAN
The Plan shall become effective as determined by the Board but no options
granted under it shall be exercisable until the Plan has been approved by the
vote or written consent of the holders of a majority of the outstanding shares
of the Company entitled to vote. If such shareholder approval is not obtained
within twelve (12) months before or after the date of the Board's adoption of
the Plan, then all options previously granted under the Plan shall terminate,
and no further options shall be granted and no shares shall be issued. Subject
to such limitation, the Board may grant options under the Plan at any time after
the effective date and before the date fixed herein for termination of the Plan.
17. GENDER
The use of any gender specific pronoun or similar term is intended to be
without legal significance as to gender.
18. FINANCIAL REPORTS
The Company shall provide financial and other information regarding the
Company, on an annual or more frequent basis, to each individual holding an
outstanding option under the Plan as required pursuant to Section 260.140.46 of
Title 10, California Code of Regulations.
