As filed with the Securities and Exchange Commission on July 19, 1996
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------------
VODAVI TECHNOLOGY, INC.
(Exact name of Registrant as specified in its charter)
------------------------------------------------------
Delaware 86-0789350
- --------------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
8300 Raintree Drive
Scottsdale, Arizona 85260
(Address of Principal executive offices)(zip code)
----------------------
VODAVI TECHNOLOGY, INC.
Amended and Restated 1994 Stock Option Plan
(Full Title of the Plan)
----------------------
Glenn R. Fitchet, President
VODAVI TECHNOLOGY, INC.
8300 Raintree Drive, Scottsdale, Arizona 85260
(602) 443-6000
(Telephone number, including area code, of agent for service)
----------------------
This Registration Statement shall become effective immediately upon filing with
the Securities and Exchange Commission, and sales of the registered securities
will begin as soon as reasonably practicable after such effective date.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
Proposed maximum Proposed maximum
Title of Securities to be Amount to be offering price per aggregate offering Amount of
Registered registered(1) share price registration fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 268,000 Shares $ 6.00 $1,608,000 $ 554.48
Common Stock 237,500 Shares 4.00 950,000 327.59
Common Stock 15,000 Shares 7.00 105,000 36.21
Common Stock 12,000 Shares 6.25 75,000 25.86
Common Stock 317,500 Shares 7.00(2) 2,222,500 766.38
--------------- ---------- ------
Total 850,000 Shares $4,960,500 $1,710.52
===============================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Amended and Restated 1994
Stock Option Plan by reason of any stock dividend, stock split,
recapitalization or any other similar transaction without receipt of
consideration which results in an increase in the number of outstanding
shares of Common Stock of Vodavi Technology, Inc.
(2) Calculated solely for purposes of this offering under Rules 457(c) and
457(h) of the Securities Act of 1933, as amended, on the basis of the
average of the high and low sales prices for shares of Common Stock of
Vodavi Technology, Inc. on July 12, 1996.
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
---------------------------------------
Vodavi Technology, Inc. (the "Registrant") hereby incorporates
by reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's latest annual report filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), or the latest prospectus filed
pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), that contains audited financial statements
for the Registrant's latest fiscal year for which such
statements have been filed;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the 1934 Act since the end of the fiscal year covered by the
document referred to in (a) above; and
(c) The description of the Registrant's Capital Stock contained in
the Registrant's Registration Statement on Form 8-A (No.
0-26912) filed with the Commission on October 3, 1995 and
declared effective October 6, 1995.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the
date of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents.
Item 4. Description of Securities
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
The firm of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, a professional association, Phoenix, Arizona, has acted as counsel for
the Registrant in the preparation of this Registration Statement. As of July 17,
1996, certain members of such firm beneficially owned a total of 2,000 shares of
the Registrant's Common Stock.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
The Amended Certificate of Incorporation of the Registrant
requires the Registrant to indemnify and advance expenses and certain other
liabilities arising out of conduct on behalf of the Registrant, to the fullest
extent permitted by the Delaware General Corporation Law, to each person who is
or was a director, officer or agent of the Registrant, or who serves or served
any other enterprise or organization at the request of the Registrant (an
"Indemnitee"). However, the Registrant's Amended Certificate of Incorporation
prohibits indemnification with respect to proceedings or claims initiated or
brought voluntarily by a director, officer, or other representative of the
Registrant against the Registrant unless such proceeding or claim is approved by
the Registrant's Board of Directors.
Under Delaware law, to the extent that an Indemnitee is
successful on the merits in defense of a suit or proceeding brought against him
or her by reason of the fact that he or she is or was a director, officer or
agent of the Registrant, or serves or served any other enterprise or
organization at the request of the Registrant, the Registrant shall
II.1
<PAGE>
indemnify him or her against expenses (including attorneys' fees actually and
reasonably incurred in connection with such action).
If unsuccessful in defense of a third-party civil suit or a
criminal suit, or if such a suit is settled, an Indemnitee may be indemnified
under Delaware law against both (i) expenses, including attorney's fees, and
(ii) judgments, fines and amounts paid in settlement if he or she acted in good
faith and in a manner he or she reasonably believed to be in, or not opposed to,
the best interests of the Registrant and, with respect to any criminal action,
had no reasonable cause to believe his or her conduct was unlawful.
If unsuccessful in defense of a suit brought by or in the
right of the Registrant, where the suit is settled, an Indemnitee may be
indemnified under Delaware law only against expenses (including attorney's fees)
actually and reasonably incurred in the defense or settlement of the suit if he
or she acted in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interests of the Registrant except that if the
Indemnitee is adjudged to be liable for negligence or misconduct in the
performance of his or her duty to the Registrant, he or she cannot be made whole
even for expenses unless a court determines that he or she is fully and
reasonably entitled to indemnification for such expenses.
Also under Delaware law, expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the Registrant in advance of the final disposition of the suit, action or
proceeding upon receipt of an undertaking by or on behalf of the officer or
director to repay such amount if it is ultimately determined that he or she is
not entitled to be indemnified by the Registrant. The Registrant may also
advance expenses incurred by other employees and agents of the Registrant upon
such terms and conditions, if any, that the Board of Directors of the Registrant
deems appropriate.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not applicable.
Item 8. Exhibits
--------
<TABLE>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
5 Opinion and consent of O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears, a professional association
10.9 Vodavi Technology, Inc. Amended and Restated 1994 Stock Option Plan
23.1 Consent of Independent Public Accountants - Arthur Andersen LLP
23.2 Consent of O'Connor, Cavanagh, Anderson, Killingsworth
& Beshears, P.A. is contained in Exhibit 5
24 Power of Attorney. Reference is made to page II.4 of the Registration
Statement
</TABLE>
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 the
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 the 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 and of the
II.2
<PAGE>
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 the Registration Statement or any material change to such
information in the Registration Statement; provided, however, that clauses
(1)(i) and (1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act
that are incorporated by reference into the 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; and
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
Vodavi Technology, Inc. Amended and Restated 1994 Stock Option Plan.
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 Section 15(d) of
the 1934 Act that is incorporated by reference into the 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 of 1933 may be permitted to directors, officers or
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,
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 Scottsdale, State of Arizona, on July 17, 1996.
VODAVI TECHNOLOGY, INC.
By: /s/ Glenn R. Fitchet
-------------------------------------------
Glenn R. Fitchet, President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints jointly and severally, Steven
A. Sherman and Glenn R. Fitchet, and each of them, as his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Position Date
--------- -------- ----
<S> <C> <C>
/s/ Steven A. Sherman Chairman of the Board July 17, 1996
- -------------------------------
Steven A. Sherman
/s/ Glenn R. Fitchet President and Director July 17, 1996
- ------------------------------- (Principal Executive Officer)
Glenn R. Fitchet
/s/ Gregory K. Roeper Vice President - Finance, July 17, 1996
- ------------------------------- Chief Financial Officer, and
Gregory K. Roeper Treasurer (Principal Financial
and Accounting Officer)
- ------------------------------- Director July __, 1996
Nam K. Woo
/s/ Stephen A McConnell Director July 17, 1996
- -------------------------------
Stephen A McConnell
/s/ Gilbert H. Engels Director July 17, 1996
- -------------------------------
Gilbert H. Engels
</TABLE>
II.4
Exhibit 5
The Law Offices of
O'CONNOR, CAVANAGH, ANDERSON, KILLINGSWORTH & BESHEARS
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012
Telephone: (602) 263-2400
Fax: (602) 263-2900
July 19, 1996
Vodavi Technology, Inc.
8300 E. Raintree Drive
Scottsdale, Arizona 85260
Re: Registration Statement on Form S-8
Vodavi Technology, Inc.
Gentlemen:
As legal counsel to Vodavi Technology, Inc., a Delaware
corporation (the "Company") we have assisted in the preparation of the Company's
Registration Statement on Form S-8 (the "Registration Statement") to be filed
with the Securities and Exchange Commission on or about July 19, 1996 in
connection with the registration under the Securities Act of 1933, as amended,
of 850,000 shares of Common Stock, par value $0.01 per share, of the Company
(the "Shares") issuable pursuant to the Company's Amended and Restated 1994
Stock Option Plan (the "Plan"). The facts, as we understand them, are set forth
in the Registration Statement.
With respect to the opinion set forth below, we have examined
originals, certified copies, or copies otherwise identified to our satisfaction
as being true copies, only of the following:
A. The Certificate of Incorporation of the Company, as filed
with the Secretary of State of the State of Delaware on March 10, 1994 and as
subsequently amended;
B. The Bylaws of the Company, as amended through the date
hereof;
C. Resolutions of the Board of Directors of the Company dated
February 26, 1996, adopting the amendments to and restatement of the Plan as of
that date;
D. Minutes of the May 24, 1996 Annual Meeting of Shareholders
of the Company, at which the shareholders approved the amended and restated Plan
as adopted by the Board of Directors; and
E. The Registration Statement.
<PAGE>
Vodavi Technology, Inc.
July 19, 1996
Page 2
Subject to the assumptions that (i) the documents and
signatures examined by us are genuine and authentic and (ii) the persons
executing the documents examined by us have the legal capacity to execute such
documents, and subject to the further limitations and qualifications set forth
below, it is our opinion that the Shares, when issued and sold in accordance
with the terms of the Plan, will be validly issued, fully paid and
nonassessable.
Please be advised that we are members of the State Bar of
Arizona, and our opinion is limited to the legality of matters under the laws of
the State of Arizona and the General Corporation Laws of the State of Delaware.
Further, our opinion is based solely upon existing laws, rules and regulations,
and we undertake no obligation to advise you of any changes that may be brought
to our attention after the date hereof.
We hereby expressly consent to any reference to our firm in
the Registration Statement, inclusion of this Opinion as an exhibit to the
Registration Statement, and to the filing of this Opinion with any other
appropriate governmental agency.
Very truly yours,
O'Connor, Cavanagh, Anderson, Killingsworth
& Beshears, A Professional Association
Exhibit 10.9
VODAVI TECHNOLOGY, INC.
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
(As amended through February 26, 1996)
ARTICLE I
General
1.1 Purpose of Plan; Term
(a) Adoption. On December 29, 1994, the Board of Directors
(the "Board") of Vodavi Technology, Inc., a Delaware corporation (the
"Company"), adopted a stock option plan to be known as the Vodavi Technology,
Inc. Stock Option Plan (the "Original Plan"). The Original Plan was subsequently
approved the stockholders of the Company on July 12, 1995. On February 26, 1996,
the Board adopted this amended and restated stock option plan whereby the
Automatic Grant Program was added, additional shares of Stock were authorized to
be issued, and certain other technical changes were made. The amended and
restated plan shall be known as the Vodavi Technology, Inc. 1994 Stock Option
Plan and shall be referred to as the "Plan" herein.
(b) Defined Terms. All initially capitalized terms used hereby
shall have the meaning set forth in Article V hereto.
(c) General Purpose. The Plan shall be divided into two
programs: the Discretionary Grant Program and the Automatic Grant Program.
(i) Discretionary Grant Program. The purpose of the
Discretionary Grant Program is to further the interests of the Company and its
stockholders by encouraging key persons associated with the Company (or Parent
or Subsidiary Corporations) to acquire shares of the Company's Stock, thereby
acquiring a proprietary interest in its business and an increased personal
interest in its continued success and progress. Such purpose shall be
accomplished by providing for the discretionary granting of options to acquire
the Company's Stock ("Discretionary Options"), the direct granting of the
Company's Stock ("Stock Awards"), the granting of stock appreciation rights
("SARs"), or the granting of other cash awards ("Cash Awards") (Stock Awards,
SARs and Cash Awards shall be collectively referred to herein as "Discretionary
Awards").
(ii) Automatic Grant Program. The purpose of the
Automatic Grant Program is to promote the interests of the Company by providing
non-employee members of the Company's Board of Directors (the "Board") the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company and to thereby have an increased personal
interest in its continued success and progress. Such purpose shall be
accomplished by providing for the automatic grant of options to acquire the
Company's Stock ("Automatic Options").
(d) Character of Options. Discretionary Options granted under
this Plan to employees of the Company (or Parent or Subsidiary Corporations)
that are intended to qualify as an "incentive stock option" as defined in Code
section 422 ("Incentive Stock Option") will be specified in the applicable stock
option agreement. All other Options granted under this Plan will be nonqualified
options.
1
<PAGE>
(e) Rule 16b-3 Plan. If the Company becomes subject to the
reporting requirements of the Securities Exchange Act of 1934, the Plan is
thereafter intended to comply with all applicable conditions of Rule 16b-3 (and
all subsequent revisions thereof) promulgated under the 1934 Act. In such
instance, to the extent any provision of the Plan or action by a Plan
Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by such Plan Administrator. In
addition, the Board may amend the Plan from time to time as it deems necessary
in order to meet the requirements of any amendments to Rule 16b-3 without the
consent of the shareholders of the Company.
(f) Duration of Plan. The term of the Plan is 10 years
commencing on the date of adoption of the Original Plan by the Board as
specified in Section 1.1(a) hereof. No Option or Award shall be granted under
the Plan unless granted within 10 years of the adoption of the Original Plan by
the Board, but Options or Awards outstanding on that date shall not be
terminated or otherwise affected by virtue of the Plan's expiration.
1.2 Stock and Maximum Number of Shares Subject to Plan.
(a) Description of Stock and Maximum Shares Allocated. The
shares of stock subject to the provisions of the Plan and issuable upon the
grant of Stock Awards or upon the exercise of SARs or Options granted under the
Plan are shares of the Company's common stock, $.001 par value per share (the
"Stock"), which may be either unissued or treasury shares. The Company may not
issue more than 650,000 shares of Stock pursuant to the Plan, unless the Plan is
amended as provided in Section 1.3 or the maximum number of shares subject to
the Plan is adjusted as provided in Section 4.1.
(b) Calculation of Available Shares. The number of shares of
Stock available under the Plan shall be reduced: (i) by any shares of Stock
issued (including any shares of Stock withheld for tax withholding requirements)
upon exercise of an Option and (ii) by any shares of Stock issued (including any
shares of Stock withheld for tax withholding requirements) upon the grant of a
Stock Award or the exercise of an SAR.
(c) Restoration of Unpurchased Shares. If an Option or SAR
expires or terminates for any reason prior to its exercise in full and before
the term of the Plan expires, the shares of Stock subject to, but not issued
under, such Option or SAR shall, without further action or by or on behalf of
the Company, again be available under the Plan.
1.3 Approval; Amendments.
(a) Approval by Stockholders. This amended and restated Plan
shall be submitted to the stockholders of the Company for their approval at a
regular or special meeting to be held within 12 months after the adoption of the
Plan by the Board. Stockholder approval shall be evidenced by the affirmative
vote of the holders of a majority of the shares of the Company's Common Stock
present in person or by proxy and voting at the meeting. The date such
stockholder approval has been obtained shall be referred to herein as the
"Effective Date." If not approved by the stockholders, the Original Plan shall
continue in effect. Any Discretionary Options or Awards outstanding prior the
adoption by the Board of the amended and restated Plan shall remain valid and
unchanged.
2
<PAGE>
(b) Commencement of Programs. The Automatic Grant Program will
not be effective until the Effective Date. The Discretionary Grant Program is
effective immediately, but if the Plan is not approved by the stockholders
within 12 months after its adoption by the Board, any Discretionary Options or
Awards issued after the date of the adoption of the amended and restated Plan
shall remain valid and unchanged only to the extent that such Discretionary
Options or Awards contain terms such that they could have been issued under the
Original Plan. To the extent that such Discretionary Options or Awards could not
have been issued under the Original Plan, such Discretionary Options and Awards
will automatically terminate and be forfeited to the same extent and with the
same effect as though the amended and restated Plan had never been adopted.
(c) Amendments to Plan. The Board may, without action on the
part of the Company's stockholders, make such amendments to, changes in and
additions to the Plan as it may, from time to time, deem necessary or
appropriate and in the best interests of the Company; provided, the Board may
not, without the consent of the applicable Optionholder, take any action which
disqualifies any Discretionary Option previously granted under the Plan for
treatment as an Incentive Stock Option or which adversely affects or impairs the
rights of the Optionholder of any Discretionary Option outstanding under the
Plan, and further provided that, except as provided in Article IV hereof, the
Board may not, without the approval of the Company's stockholders, (i) increase
the aggregate number of shares of Stock subject to the Plan, (ii) reduce the
exercise price at which Discretionary Options may be granted or the exercise
price at which any outstanding Discretionary Option may be exercised, (iii)
extend the term of the Plan, (iv) change the class of persons eligible to
receive Discretionary Options or Discretionary Awards under the Plan, or (v)
materially increase the benefits accruing to participants under the Plan. In
addition, the provisions set forth in Article III hereof shall not be amended
more than once every six months other than to comport with changes in the Code,
the Employee Retirement Income Security Act, or the rules thereunder.
Notwithstanding the foregoing, Discretionary Options or Discretionary Awards may
be granted under this Plan to purchase shares of Stock in excess of the number
of shares then available for issuance under the Plan if (A) an amendment to
increase the maximum number of shares issuable under the Plan is adopted by the
Board prior to the initial grant of any such Option or Award and within one year
thereafter such amendment is approved by the Company's stockholders and (B) each
such Discretionary Option or Discretionary Award granted does not become
exercisable or vested, in whole or in part, at any time prior to the obtaining
of such stockholder approval.
ARTICLE II
Discretionary Grant Program
2.1 Participants; Administration.
(a) Eligibility and Participation. Discretionary Options and
Discretionary Awards may be granted only to persons ("Eligible Persons") who at
the time of grant are (i) key personnel (including officers and directors) of
the Company or Parent or Subsidiary Corporations, or (ii) consultants or
independent contractors who provide valuable services to the Company or Parent
or Subsidiary Corporations; provided that (1) if a Senior Committee exists, the
members of that Senior Committee shall be ineligible, during their tenure on the
Senior Committee, to be granted Discretionary Options or Discretionary Awards
under the Plan or to be granted or awarded equity securities of the Company
pursuant to any other plan of the Company or its affiliates except pursuant to
the Automatic Grant Program or as otherwise allowed by Rule 16b-3(c)(2)(i)
promulgated under the 1934 Act, and (2) Incentive Stock Options may only be
granted to key personnel of the Company (and its Parent or Subsidiary
Corporation)
3
<PAGE>
who are also employees of the Company (or its Parent or Subsidiary Corporation),
and (3) the maximum number of shares of stock with respect to which Options or
SARs may be granted to any employee during the term of the Plan shall not exceed
50 percent of the shares of stock covered by the Plan. A Plan Administrator
shall have full authority to determine which Eligible Persons in its
administered group are to receive Discretionary Option grants under the Plan,
the number of shares to be covered by each such grant, whether or not the
granted Discretionary Option is to be an Incentive Stock Option, the time or
times at which each such Discretionary Option is to become exercisable, and the
maximum term for which the Discretionary Option is to be outstanding. A Plan
Administrator shall also have full authority to determine which Eligible Persons
in such group are to receive Discretionary Awards under the Discretionary Grant
Program and the conditions relating to such Discretionary Award.
(b) General Administration. The Eligible Persons under the
Discretionary Grant Program shall be divided into two groups and there shall be
a separate administrator for each group. One group will be comprised of Eligible
Persons that are Affiliates. For purposes of this Plan, the term "Affiliates"
shall mean all "officers" (as that term is defined in Rule 16a-1(f) promulgated
under the 1934 Act) and directors of the Company and all persons who own ten
percent or more of the Company's issued and outstanding equity securities.
Initially, the power to administer the Discretionary Grant Program with respect
to Eligible Persons that are Affiliates shall be vested with the Board. At any
time, however, the Board may vest the power to administer the Discretionary
Grant Program with respect to Persons that are Affiliates exclusively with a
committee (the "Senior Committee") comprised of two or more Disinterested
Directors which are appointed by the Board. The administration of all Eligible
Persons that are not Affiliates ("Non-Affiliates") shall be vested exclusively
with the Board. The Board, however, may at any time appoint a committee (the
"Employee Committee") of two or more persons who are members of the Board and
delegate to such Employee Committee the power to administer the Discretionary
Grant Program with respect to the Non-Affiliates. In addition, the Board may
establish an additional committee or committees of persons who are members of
the Board and delegate to such other committee or committees the power to
administer all or a portion of the Discretionary Grant program with respect to
all or a portion of the Eligible Persons. Members of the Senior Committee,
Employee Committee or any other committee allowed hereunder shall serve for such
period of time as the Board may determine and shall be subject to removal by the
Board at any time. The Board may at any time terminate all or a portion of the
functions of the Senior Committee, the Employee Committee, or any other
committee allowed hereunder and reassume all or a portion of powers and
authority previously delegated to such committee. The Board in its discretion
may also require the members of the Senior Committee, the Employee Committee or
any other committee allowed hereunder to be "outside directors" as that term is
defined in any applicable regulations promulgated under Code section 162(m).
(c) Plan Administrators. The Board, the Employee Committee,
Senior Committee, and/or any other committee allowed hereunder, whichever is
applicable, shall be each referred to herein as a "Plan Administrator." Each
Plan Administrator shall have the authority and discretion, with respect to its
administered group, to select which Eligible Persons shall participate in the
Discretionary Grant Program, to grant Discretionary Options or Discretionary
Awards under the Discretionary Grant Program, to establish such rules and
regulations as they may deem appropriate with respect to the proper
administration of the Discretionary Grant Program and to make such
determinations under, and issue such interpretations of, the Discretionary Grant
Program and any outstanding Discretionary Option or Discretionary Award as they
may deem necessary or advisable. Unless otherwise required by law or specified
by the Board with respect to any committee, decisions among the members of a
Plan Administrator shall be by majority vote. Decisions of a Plan Administrator
shall be final and binding on
4
<PAGE>
all parties who have an interest in the Discretionary Grant Program or any
outstanding Discretionary Option or Discretionary Award.
(d) Guidelines for Participation. In designating and selecting
Eligible Persons for participation in the Discretionary Grant Program, a Plan
Administrator shall consult with and give consideration to the recommendations
and criticisms submitted by appropriate managerial and executive officers of the
Company. A Plan Administrator also shall take into account the duties and
responsibilities of the Eligible Persons, their past, present and potential
contributions to the success of the Company and such other factors as a Plan
Administrator shall deem relevant in connection with accomplishing the purpose
of the Plan.
2.2 Terms and Conditions of Discretionary Options
(a) Allotment of Shares. A Plan Administrator shall determine
the number of shares of Stock to be optioned from time to time and the number of
shares to be optioned to any Eligible Person (the "Optioned Shares"). The grant
of a Discretionary Option to a person shall neither entitle such person to, nor
disqualify such person from, participation in any other grant of Options or
Stock Awards under this Plan or any other stock option plan of the Company.
(b) Exercise Price. Upon the grant of any Discretionary
Option, a Plan Administrator shall specify the option price per share. If the
Discretionary Option is intended to qualify as an Incentive Stock Option under
the Code, the option price per share may not be less than 100 percent of the
fair market value per share of the stock on the date the Discretionary Option is
granted (110 percent if the Discretionary Option is granted to a stockholder who
at the time the Discretionary Option is granted owns or is deemed to own stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or of any Parent or Subsidiary Corporation). The
determination of the fair market value of the Stock shall be made in accordance
with the valuation provisions of Section 4.5 hereof.
(c) Individual Stock Option Agreements. Discretionary Options
granted under the Plan shall be evidenced by option agreements in such form and
content as a Plan Administrator from time to time approves, which agreements
shall substantially comply with and be subject to the terms of the Plan,
including the terms and conditions of this Section 2.2. As determined by a Plan
Administrator, each option agreement shall state (i) the total number of shares
to which it pertains, (ii) the exercise price for the shares covered by the
Option, (iii) the time at which the Options vest and become exercisable and (iv)
the Option's scheduled expiration date. The option agreements may contain such
other provisions or conditions as a Plan Administrator deems necessary or
appropriate to effectuate the sense and purpose of the Plan, including covenants
by the Optionholder not to compete and remedies for the Company in the event of
the breach of any such covenant.
(d) Option Period. No Discretionary Option granted under the
Plan that is intended to be an Incentive Stock Option shall be exercisable for a
period in excess of 10 years from the date of its grant (five years if the
Discretionary Option is granted to a shareholder who at the time the
Discretionary Option is granted owns or is deemed to own stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company or of any Parent or any Subsidiary Corporation), subject to earlier
termination in the event of termination of employment, retirement or death of
the Optionholder. A Discretionary Option may be exercised in full or in part at
any time or from time to time
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during the term of the Discretionary Option or provide for its exercise in
stated installments at stated times during the Option's term.
(e) Vesting; Limitations. The time at which Options may be
exercised with respect to an Optionholder shall be in the discretion of that
Optionholder's Plan Administrator. Notwithstanding the foregoing, to the extent
a Discretionary Option is intended to qualify as an Incentive Stock Option, the
aggregate fair market value (determined as of the respective date or dates of
grant) of the Stock for which one or more Options granted to any person under
this Plan (or any other option plan of the Company or its Parent or Subsidiary
Corporations) may for the first time become exercisable as Incentive Stock
Options during any one calendar year shall not exceed the sum of $100,000
(referred to herein as the "$100,000 Limitation"). To the extent that any person
holds two or more Options which become exercisable for the first time in the
same calendar year, the foregoing limitation on the exercisability as an
Incentive Stock Option shall be applied on the basis of the order in which such
Options are granted.
(f) No Fractional Shares. Options shall be exercisable only
for whole shares; no fractional shares will be issuable upon exercise of any
Discretionary Option granted under the Plan.
(g) Method of Exercise. To exercise a Discretionary Option, an
Optionholder (or in the case of an exercise after an Optionholder's death, such
Optionholder's executor, administrator, heir or legatee, as the case may be)
must take the following action:
(i) execute and deliver to the Company a written
notice of exercise signed in writing by the person exercising the Discretionary
Option specifying the number of shares of Stock with respect to which the
Discretionary Option is being exercised;
(ii) pay the aggregate Option Price in one of the
alternate forms as set forth in Section 2.2(h) below; and
(iii) furnish appropriate documentation that the
person or persons exercising the Discretionary Option (if other than the
Optionholder) has the right to exercise such Option.
As soon as practical after the Exercise Date, the Company will mail or deliver
to or on behalf of the Optionholder (or any other person or persons exercising
this Discretionary Option under the Plan) a certificate or certificates
representing the Stock acquired upon exercise of the Discretionary Option.
(h) Payment Price. The aggregate Option Price shall be payable
in one of the alternative forms specified below:
(i) Full payment in cash or check made payable to the
Company's order; or
(ii) Full payment in shares of Stock held for the
requisite period necessary to avoid a charge to the Company's reported earnings
and valued at fair market value on the Exercise Date (as determined in
accordance with Section 4.5 hereof); or
(iii) If a cashless exercise program has been
implemented by the Board, full payment through a sale and remittance procedure
pursuant to which the Optionholder (A) shall provide irrevocable written
instructions to a designated brokerage firm to effect the immediate sale of the
Optioned
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Shares to be purchased and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the Optioned Shares to be purchased and (B) shall
concurrently provide written directives to the Company to deliver the
certificates for the Optioned Shares to be purchased directly to such brokerage
firm in order to complete the sale transaction.
(i) Rights of a Stockholder. An Optionholder shall not have
any of the rights of a stockholder with respect to Optioned Shares until such
individual shall have exercised the Option and paid the Option Price for the
Optioned Shares. No adjustment will be made for dividends or other rights for
which the record date is prior to the date such stock certificate is issued.
(j) Repurchase Right. The Plan Administrator may, in its sole
discretion, set forth other terms and conditions upon which the Company (or its
assigns) shall have the right to repurchase shares of Stock acquired by an
Optionholder pursuant to a Discretionary Option. Any repurchase right of the
Company shall be exercisable by the Company (or its assignees) upon such terms
and conditions as the Plan Administrator may specify in the Stock Repurchase
Agreement evidencing such right. The Plan Administrator may also in its
discretion establish as a term and condition of one or more Discretionary
Options granted under the Plan that the Company shall have a right of first
refusal with respect to any proposed sale or other disposition by the
Optionholder of any shares of Stock issued upon the exercise of such
Discretionary Options. Any such right of first refusal shall be exercisable by
the Company (or its assigns) in accordance with the terms and conditions set
forth in the Stock Repurchase Agreement.
(k) Termination of Service. If any Optionholder ceases to be
in Service to the Company for a reason other than permanent disability or death,
such Optionholder must, within 90 days after the date of termination of such
Service, but in no event after the Option's stated expiration date, exercise
some or all of the Discretionary Options that the Optionholder was entitled to
exercise on the date the Optionholder's Service terminated; provided, that if
the Optionholder is discharged for Cause or commits acts detrimental to the
Company's interests after the Service of the Optionholder has been terminated,
then the Option will thereafter be void for all purposes. "Cause" shall mean a
termination of Service based upon a finding by the applicable Plan Administrator
that the Optionholder: (i) has committed a felony involving dishonesty, fraud,
theft or embezzlement; (ii) after written notice from the Company has repeatedly
failed or refused, in a material respect, to follow reasonable policies or
directives established by the Company; (iii) after written notice from the
Company, has willfully and persistently failed to attend to material duties or
obligations; (iv) has performed an act or failed to act, which, if he were
prosecuted and convicted, would constitute a theft of money or property of the
Company; or (v) has misrepresented or concealed a material fact for purposes of
securing employment with the Company. If any Optionholder ceases to be in
Service to the Company by reason of permanent disability within the meaning of
section 22(e)(3) of the Code (as determined by the applicable Plan
Administrator), the Optionholder will have 12 months after the date of
termination of Service, but in no event after the stated expiration date of the
Optionholder's Discretionary Options, to exercise Discretionary Options that the
Optionholder was entitled to exercise on the date the Optionholder's Service
terminated as a result of the disability.
(l) Death of Optionholder. If an Optionholder dies while in
the Company's Service, any Discretionary Options that the Optionholder was
entitled to exercise on the date of death will be exercisable within six months
after such date or until the stated expiration date of the Optionholder's
Option, whichever occurs first, by the person or persons ("successors") to whom
the Optionholder's rights pass under a will or by the laws of descent and
distribution. As soon as practicable after receipt by the Company of such notice
and of payment in full of the Option Price, a certificate or certificates
representing
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the Optioned Shares shall be registered in the name or names specified by the
successors in the written notice of exercise and shall be delivered to the
successors.
(m) Other Plan Provisions Still Applicable. If a Discretionary
Option is exercised upon the termination of Service or death of an Optionholder
under this Section 2.2, the other provisions of the Plan will continue to apply
to such exercise, including the requirement that the Optionholder or its
successor may be required to enter into a Stock Repurchase Agreement.
(n) Definition of "Service". For purposes of this Plan, unless
it is evidenced otherwise in the option agreement with the Optionholder, the
Optionholder is deemed to be in "Service" to the Company so long as such
individual renders continuous services on a periodic basis to the Company (or to
any Parent or Subsidiary Corporation) in the capacity of an employee, director,
or an independent consultant or advisor. In the discretion of the applicable
Plan Administrator, an Optionholder will be considered to be rendering
continuous services to the Company even if the type of services change, e.g.,
from employee to independent consultant. The Optionholder will be considered to
be an employee for so long as such individual remains in the employ of the
Company or one or more of its Parent or Subsidiary Corporations.
2.3 Terms and Conditions of Stock Awards
(a) Eligibility. All Eligible Persons shall be eligible to
receive Stock Awards. The Plan Administrator of each administered group shall
determine the number of shares of Stock to be awarded from time to time to any
Eligible Person in such group. Except as provided otherwise in this Plan, the
grant of a Stock Award to a person (a "Grantee") shall neither entitle such
person to, nor disqualify such person from participation in, any other grant of
options or awards by the Company, whether under this Plan or under any other
stock option or award plan of the Company.
(b) Award for Services Rendered. Stock Awards shall be granted
in recognition of an Eligible Person's services to the Company. The grantee of
any such Stock Award shall not be required to pay any consideration to the
Company upon receipt of such Stock Award, except as may be required to satisfy
any applicable corporate law, employment tax and/or income tax withholding
requirements.
(c) Conditions to Award. All Stock Awards shall be subject to
such terms, conditions, restrictions, or limitations as the applicable Plan
Administrator deems appropriate, including, by way of illustration but not by
way of limitation, restrictions on transferability, requirements of continued
employment, individual performance or the financial performance of the Company,
or payment by the recipient of any applicable employment or withholding taxes.
Such Plan Administrator may modify or accelerate the termination of the
restrictions applicable to any Stock Award under the circumstances as it deems
appropriate.
(d) Award Agreements. A Plan Administrator may require as a
condition to a Stock Award that the recipient of such Stock Award enter into an
award agreement in such form and content as that Plan Administrator from time to
time approves.
2.4 Terms and Conditions of SARs
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(a) Eligibility. All Eligible Persons shall be eligible to
receive SARs. The Plan Administrator of each administered group shall determine
the SARs to be awarded from time to time to any Eligible Person in such group.
The grant of an SAR to a person shall neither entitle such person to, nor
disqualify such person from participation in, any other grant of options or
awards by the Company, whether under this Plan or under any other stock option
or award plan of the Company.
(b) Award of SARs. Concurrently with or subsequent to the
grant of any Discretionary Option to purchase one or more shares of Stock, the
Plan Administrator may award to the Optionholder with respect to each share of
Stock underlying the Discretionary Option, a related SAR permitting the
Optionholder to be paid any appreciation on that Stock in lieu of exercising the
Option. In addition, a Plan Administrator may award to any Eligible Person an
SAR permitting the Eligible Person to be paid the appreciation on a designated
number of shares of the Stock, whether or not such Shares are actually issued.
(c) Conditions to SAR. All SARs shall be subject to such
terms, conditions, restrictions or limitations as the applicable Plan
Administrator deems appropriate, including, by way of illustration but not by
way of limitation, restrictions on transferability, requirements of continued
employment, individual performance, financial performance of the Company, or
payment by the recipient of any applicable employment or withholding taxes. Such
Plan Administrator may modify or accelerate the termination of the restrictions
applicable to any SAR under the circumstances as it deems appropriate.
(d) SAR Agreements. A Plan Administrator may require as a
condition to the grant of an SAR that the recipient of such SAR enter into an
SAR agreement in such form and content as that Plan Administrator from time to
time approves.
(e) Exercise. An Eligible Person who has been granted a SAR
may exercise such SAR subject to the conditions specified in the SAR agreement
by the Plan Administrator.
(f) Amount of Payment. The amount of payment to which the
grantee of an SAR shall be entitled upon the exercise of each SAR shall be equal
to the amount, if any, by which the fair market value of the specified shares of
Stock on the exercise date exceeds the fair market value of the specified shares
of Stock on the date the Discretionary Option related to the SAR was granted or
became effective, or, if the SAR is not related to any Option, on the date the
SAR was granted or became effective.
(g) Form of Payment. The SAR may be paid in either cash or
Stock, as determined in the discretion of the applicable Plan Administrator and
set forth in the SAR agreement. If the payment is in Stock, the number of shares
to be paid to the participant shall be determined by dividing the amount of the
payment determined pursuant to Section 2.4(f) by the fair market value of a
share of Stock on the exercise date of such SAR. As soon as practical after
exercise, the Company shall deliver to the SAR grantee a certificate or
certificates for such shares of Stock.
(h) Termination of Employment; Death. Sections 2.2(k) and (l),
applicable to Options, shall apply equally to SARs.
2.5 Other Cash Awards
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(a) In General. The Plan Administrator of each administered
group shall have the discretion to make other awards of cash to Eligible Persons
in such group ("Cash Awards"). Such Cash Awards may relate to existing Options
or to the appreciation in the value of the Stock or other Company securities.
(b) Conditions to Award. All Cash Awards shall be subject to
such terms, conditions, restrictions or limitations as the applicable Plan
Administrator deems appropriate, and such Plan Administrator may require as a
condition to such Cash Award that the recipient of such Cash Award enter into an
award agreement in such form and content as the Plan Administrator from time to
time approves.
ARTICLE III
Automatic Grant Program
3.1 Eligible Directors under the Automatic Grant Program. The Automatic
Grant Program shall commence as of the date set forth in Section 1.3(b) hereof.
The persons eligible to participate in the Automatic Grant Program shall be
limited to non-employee Board members ("Eligible Directors"). Persons who are
eligible under the Automatic Grant Program may also be eligible to receive
Discretionary Options or Discretionary Awards under the Discretionary Grant
Program or option grants or direct stock issuances under other plans of the
Company.
3.2 Terms and Conditions of Automatic Option Grants.
(a) Amount and Date of Grant. During the term of this Plan,
grants of Automatic Options shall be made to each Eligible Director
("Optionholder") as follows:
(i) Annual Grants. Each year on the Annual Grant Date
an Automatic Option to acquire 5,000 shares of Stock shall be granted to each
Eligible Director for so long as there are shares of Stock available under
Section 1.2 hereof. The "Annual Grant Date" shall be the date of the Company's
annual stockholders meeting commencing as of the next annual meeting occurring
after the Effective Date. Any Person that was granted an Automatic Option under
Section 3.2(a)(ii) hereof within 90 days of an Annual Grant Date shall be
ineligible to receive an Automatic Option Grant pursuant to this Section
3.2(a)(i) on such Annual Grant Date.
(ii) Initial New Director Grants. On the Initial
Grant Date, every new member of the Board who is an Eligible Director and has
not previously received an Automatic Option grant under this Section 3.2(a)(ii)
shall be granted an Automatic Option to acquire 5,000 shares of Stock for so
long as there are shares of Stock available under Section 1.2 hereof. The
"Initial Grant Date" shall be the date that an Eligible Director is first
appointed or elected to the Board. Any Eligible Director that was granted an
Automatic Option on the Effective Date pursuant to Section 3.2(a)(iii) shall be
ineligible to receive an Automatic Option grant pursuant to this Section
3.2(a)(ii).
(iii) Initial Existing Director Grants. On the
commencement date of the Automatic Grant Program, each Eligible Director shall
be granted an Automatic Option to acquire 5,000 shares of Stock.
(b) Exercise Price. The exercise price per share of Stock (the
"Optioned Shares") subject to each Automatic Option grant shall be equal to 100
percent of the fair market value per share of
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the Stock on the date the Automatic Option was granted as determined in
accordance with the valuation provisions of Section 4.5 hereof (the "Option
Price").
(c) Vesting. Each Automatic Option grant shall vest and become
exercisable on the first anniversary of the date of such grant; provided that
Automatic Options granted pursuant to Sections 3.2(a)(i) or (iii) shall vest and
become exercisable on the earlier of (i) the first anniversary of the date of
such grant or (ii) the day prior to the next regularly held annual meeting of
the Company's stockholders. Each Automatic Option shall only vest and become
exercisable if the Optionholder has not ceased serving as a Board member as of
such vesting date.
(d) Method of Exercise. In order to exercise an Automatic
Option with respect to any vested Optioned Shares, an Optionholder (or in the
case of an exercise after an Optionholder's death, such Optionholder's executor,
administrator, heir or legatee, as the case may be) must take the following
action:
(i) execute and deliver to the Company a written
notice of exercise signed in writing by the person exercising the Automatic
Option specifying the number of shares of Stock with respect to which the
Automatic Option is being exercised;
(ii) pay the aggregate Option Price in one of the
alternate forms as set forth in Section 3.2(e) below; and
(iii) furnish appropriate documentation that the
person or persons exercising the Automatic Option (if other than the
Optionholder) has the right to exercise such Option.
As soon as practicable after the Exercise Date, the Company shall mail or
deliver to or on behalf of the Optionholder (or any other person or persons
exercising the Automatic Option in accordance herewith) a certificate or
certificates representing the Stock for which the Automatic Option has been
exercised in accordance with the provisions of this Plan. In no event may any
Automatic Option be exercised for any fractional shares.
(e) Payment Price. The aggregate Option Price shall be payable
in one of the alternative forms specified below:
(i) full payment in cash or check made payable to the
Company's order; or
(ii) full payment in shares of Stock held for the
requisite period necessary to avoid a charge to the Company's reported earnings
and valued at fair market value on the Exercise Date (as determined in
accordance with Section 4.5 hereof); or
(iii) if a cashless exercise program has been
implemented by the Board, full payment through a sale and remittance procedure
pursuant to which the Optionholder (A) shall provide irrevocable written
instructions to a designated brokerage firm to effect the immediate sale of the
Optioned Shares to be purchased and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the Optioned Shares to be purchased and (B)
shall concurrently provide written directives to the Company to deliver the
certificates for the Optioned Shares to be purchased directly to such brokerage
firm in order to complete the sale transaction.
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(f) Term of Option. Each Automatic Option shall expire on the
tenth anniversary of the date on which an Automatic Option grant was made
("Expiration Date"). Except as provided in Article IV hereof, should an
Optionholder's service as a Board member cease prior to the Expiration Date for
any reason while an Automatic Option remains outstanding and unexercised, then
the Automatic Option term shall immediately terminate and the Automatic Option
shall cease to be outstanding in accordance with the following provisions:
(i) The Automatic Option shall immediately terminate
and cease to be outstanding for any shares of Stock which were not vested at the
time of the Optionholder's cessation of Board service.
(ii) Should an Optionholder cease, for any reason
other than death, to serve as a member of the Board, then the Optionholder shall
have 90 days measured from the date of such cessation of Board service in which
to exercise the Options which vested prior to the time of such cessation of
Board service. In no event, however, may any Automatic Option be exercised after
the Expiration Date of such Option.
(iii) Should an Optionholder die while serving as a
Board member or within 90 days after cessation of Board service, then the
personal representative of the Optionholder's estate (or the person or persons
to whom the Automatic Option is transferred pursuant to the Optionholder's will
or in accordance with the laws of descent and distribution) shall have a 90 day
period measured from the date of the Optionholder's cessation of Board service
in which to exercise the Options which vested prior to the time of such
cessation of Board service. In no event, however, may any Automatic Option be
exercised after the Expiration Date of such Option.
(g) Rights of a Stockholder. An Optionholder shall not have
any of the rights of a stockholder with respect to Optioned Shares until such
individual shall have exercised the Option and paid the Option Price for the
Optioned Shares. No adjustment will be made for dividends or other rights for
which the record date is prior to the date such stock certificate is issued.
ARTICLE IV
Miscellaneous
4.1 Capital Adjustments. The aggregate number of shares of Stock
subject to the Plan, the number of shares of Stock covered by outstanding
Options and Awards, the number of shares of Stock covered by unissued Automatic
Options, and the price per share stated in all outstanding Options and Awards
shall be proportionately adjusted for any increase or decrease in the number of
outstanding shares of Stock of the Company resulting from a subdivision or
consolidation of shares or any other capital adjustment or the payment of a
stock dividend or any other increase or decrease in the number of such shares
effected without the Company's receipt of consideration therefor in money,
services or property.
4.2 Mergers, Etc. If the Company is the surviving corporation in any
merger or consolidation (not including a Corporate Transaction), any Option or
Award granted under the Plan shall pertain to and apply to the securities to
which a holder of the number of shares of Stock subject to the Option or Award
would have been entitled prior to the merger or consolidation. Except as
provided in Section 4.3 hereof, a dissolution or liquidation of the Company
shall cause every Option or Award outstanding hereunder to terminate.
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4.3 Corporate Transaction. In the event of stockholder approval of a
Corporate Transaction, (a) all unvested Automatic Options shall automatically
accelerate and immediately vest so that each outstanding Option shall, one week
prior to the specified effective date for the Corporate Transaction, become
fully exercisable for all of the Optioned Shares and (b) the Plan Administrator
shall have the discretion and authority, exercisable at any time, to provide for
the automatic acceleration of one or more of the outstanding Discretionary
Options or Discretionary Awards granted by it under the Plan. Upon the
consummation of the Corporate Transaction, all Options shall, to the extent not
previously exercised, terminate and cease to be outstanding.
4.4 Change in Control.
(a) Automatic Grant Program. In the event of a Change in
Control, all unvested Automatic Options shall automatically accelerate and
immediately vest so that each outstanding Automatic Option shall, immediately
prior to the effective date of such Change in Control, become fully exercisable
for all of the Optioned Shares. Thereafter, each Automatic Option shall remain
exercisable until the Expiration Date of such Option.
(b) Discretionary Grant Program. In the event of a Change in
Control, a Plan Administrator shall have the discretion and authority,
exercisable at any time, whether before or after the Change in Control, to
provide for the automatic acceleration of one or more outstanding Discretionary
Options or Discretionary Awards granted by it under the Plan upon the occurrence
of such Change in Control. A Plan Administrator may also impose limitations upon
the automatic acceleration of such Options or Awards to the extent it deems
appropriate. Any Options or Awards accelerated upon a Change in Control will
remain fully exercisable until the expiration or sooner termination of the
Option term.
(c) Incentive Stock Option Limits. The exercisability of any
Discretionary Options which are intended to qualify as Incentive Stock Options
and which are accelerated by the Plan Administrator in connection with a pending
Corporation Transaction or Change in Control shall, except as otherwise provided
in the discretion of the Plan Administrator and the Optionholder, remain subject
to the $100,000 Limitation and vest as quickly as possible without violating the
$100,000 Limitation.
4.5 Calculation of Fair Market Value of Stock. The fair market value of
a share of Stock on any relevant date shall be determined in accordance with the
following provisions:
(a) If the Stock is not at the time listed or admitted to
trading on any stock exchange but is traded in the over-the-counter market, the
fair market value shall be the mean between the highest bid and lowest asked
prices (or, if such information is available, the closing selling price) per
share of Stock on the date in question in the over-the-counter market, as such
prices are reported by the National Association of Securities Dealers through
its Nasdaq system or any successor system. If there are no reported bid and
asked prices (or closing selling price) for the Stock on the date in question,
then the mean between the highest bid price and lowest asked price (or the
closing selling price) on the last preceding date for which such quotations
exist shall be determinative of fair market value.
(b) If the Stock is at the time listed or admitted to trading
on any stock exchange, then the fair market value shall be the closing selling
price per share of Stock on the date in question on the stock exchange
determined by the Board to be the primary market for the Stock, as such price is
officially quoted in the composite tape of transactions on such exchange. If
there is no reported sale of Stock on
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such exchange on the date in question, then the fair market value shall be the
closing selling price on the exchange on the last preceding date for which such
quotation exists.
(c) If the Stock at the time is neither listed nor admitted to
trading on any stock exchange nor traded in the over-the-counter market, then
the fair market value shall be determined by the Board after taking into account
such factors as the Board shall deem appropriate, including one or more
independent professional appraisals.
4.6 Use of Proceeds. The proceeds received by the Company from the sale
of Stock pursuant to the exercise of Options or Awards hereunder, if any, shall
be used for general corporate purposes.
4.7 Cancellation of Options. Each Plan Administrator shall have the
authority to effect, at any time and from time to time, with the consent of the
affected Optionholders, the cancellation of any or all outstanding Discretionary
Options granted under the Plan by that Plan Administrator and to grant in
substitution therefore new Discretionary Options under the Plan covering the
same or different numbers of shares of Stock as long as such new Discretionary
Options have an exercise price per share of Stock no less than the minimum
exercise price as set forth in Section 2.2(b) hereof on the new grant date.
4.8 Regulatory Approvals. The implementation of the Plan, the granting
of any Option or Award hereunder, and the issuance of Stock upon the exercise of
any such Option or Award shall be subject to the procurement by the Company of
all approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the Options or Awards granted under it and the Stock issued
pursuant to it.
4.9 Indemnification. In addition to such other rights of
indemnification as they may have, the members of a Plan Administrator shall be
indemnified and held harmless by the Company, to the extent permitted under
applicable law, for, from and against all costs and expenses reasonably incurred
by them in connection with any action, legal proceeding to which any member
thereof may be a party by reason of any action taken, failure to act under or in
connection with the Plan or any rights granted thereunder and against all
amounts paid by them in settlement thereof or paid by them in satisfaction of a
judgment of any such action, suit or proceeding, except a judgment based upon a
finding of bad faith.
4.10 Plan Not Exclusive. This Plan is not intended to be the exclusive
means by which the Company may issue options or warrants to acquire its Stock,
stock awards or any other type of award. To the extent permitted by applicable
law, any such other option, warrants or awards may be issued by the Company
other than pursuant to this Plan without shareholder approval.
4.11 Company Rights. The grants of Options shall in no way affect the
right of the Company to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
4.12 Assignment. The right to acquire Stock or other assets under the
Plan may not be assigned, encumbered or otherwise transferred by any
Optionholder except as specifically provided herein. No Option or Award granted
under the Plan or any of the rights and privileges conferred thereby shall be
assignable or transferable by an Optionholder or grantee other than by will or
the laws of descent and distribution, and such Option or Award shall be
exercisable during the Optionholder's or grantee's lifetime only by the
Optionholder or grantee. Notwithstanding the foregoing, any Options or Awards
granted
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pursuant to the Discretionary Grant Program may be assigned, encumbered or
otherwise transferred by the Optionholder or grantee if specifically allowed by
the Plan Administrator upon the grant of such Option or Award. The provisions of
the Plan shall inure to the benefit of, and be binding upon, the Company and its
successors or assigns, and the Optionholders, the legal representatives of their
respective estates, their respective heirs or legatees and their permitted
assignees.
4.13 Securities Restrictions
(a) Legend on Certificates. All certificates representing
shares of Stock issued under the Plan shall be endorsed with a legend reading as
follows:
The shares of Common Stock evidenced by this
certificate have been issued to the registered owner
in reliance upon written representations that these
shares have been purchased solely for investment.
These shares may not be sold, transferred or assigned
unless in the opinion of the Company and its legal
counsel such sale, transfer or assignment will not be
in violation of the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
(b) Private Offering for Investment Only. The Options and
Awards are and shall be made available only to a limited number of present and
future key executives, directors and employees who have knowledge of the
Company's financial condition, management and its affairs. The Plan is not
intended to provide additional capital for the Company, but to encourage
ownership of Stock among the Company's key personnel. By the act of accepting an
Option or Award, each grantee agrees (i) that, any shares of Stock acquired will
be solely for investment not with any intention to resell or redistribute those
shares and (ii) such intention will be confirmed by an appropriate certificate
at the time the Stock is acquired if requested by the Company. The neglect or
failure to execute such a certificate, however, shall not limit or negate the
foregoing agreement.
(c) Registration Statement. If a Registration Statement
covering the shares of Stock issuable under the Plan as filed under the
Securities Exchange Act of 1933, as amended, and as declared effective by the
Securities Exchange Commission, the provisions of Sections 4.14(a) and (b) shall
terminate during the period of time that such Registration Statement, as
periodically amended, remains effective.
4.14 Tax Withholding.
(a) General. The Company's obligation to deliver Stock under
the Plan shall be subject to the satisfaction of all applicable federal, state
and local income tax withholding requirements.
(b) Shares to Pay for Withholding. The Board may, in its
discretion and in accordance with the provisions of this Section 4.15(b) and
such supplemental rules as it may from time to time adopt (including the
applicable safe-harbor provisions of SEC Rule 16b-3), provide any or all
Optionholders or Grantees with the right to use shares of Stock in satisfaction
of all or part of the federal, state and local income tax liabilities incurred
by such Optionholders or Grantees in connection with the receipt of Stock
("Taxes"). Such right may be provided to any such Optionholder or Grantee in
either or both of the following formats:
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(i) Stock Withholding. An Optionholder or Grantee may
be provided with the election, which may be subject to approval by the Plan
Administrator, to have the Company withhold, from the Stock otherwise issuable,
a portion of those shares of Stock with an aggregate fair market value equal to
the percentage of the applicable Taxes (not to exceed 100 percent) designated by
the Optionholder or Grantee.
(ii) Stock Delivery. The Board may, in its
discretion, provide the Optionholder or Grantee with the election to deliver to
the Company, at the time the Option is exercised or Stock is awarded, one or
more shares of Stock previously acquired by such individual (other than pursuant
to the transaction triggering the Taxes) with an aggregate fair market value
equal to the percentage of the taxes incurred in connection with such Option
exercise or Stock Award (not to exceed 100 percent) designated by the
Optionholder or Grantee.
4.15 Governing Law. The Plan shall be governed by and all questions
hereunder shall be determined in accordance with the laws of the State of
Arizona.
ARTICLE V
Definitions
The following capitalized terms used in this Plan shall have the
meaning described below:
"Affiliates" shall mean all "executive officers" (as that term is
defined in Rule 16a-1(f) promulgated under the 1934 Act) and directors of the
Company and all persons who own ten percent or more of the Company's issued and
outstanding Stock.
"Annual Grant Date" shall mean the date of the Company's annual
stockholder meeting.
"Automatic Grant Program" shall mean that program set forth in Article
III of this Agreement pursuant to which non-employee members of the Board are
automatically granted Options upon certain events.
"Automatic Option Grant" shall mean those automatic option grants made
on the Annual Grant Date, on the Initial Grant Date, and on the Effective Date.
"Automatic Options" shall mean those Options granted pursuant to the
Automatic Grant Program.
"Awards" shall mean the Discretionary Awards and the Automatic Awards.
"Board" shall mean the Board of Directors of the Company.
"Cash Award" shall mean an award to be paid in cash and granted under
Section 2.5 hereunder.
"Change in Control" shall mean and include the following transactions
or situations:
(i) A sale, transfer, or other disposition by the Company
through a single transaction or a series of transactions of securities of the
Company representing 30 percent or more of the combined voting power of the
Company's then outstanding securities to any "Unrelated Person" or "Unrelated
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Persons" acting in concert with one another. For purposes of this Section, the
term "Person" shall mean and include any individual, partnership, joint venture,
association, trust corporation, or other entity (including a "group" as referred
to in Section 13(d)(3) of the 1934 Act). For purposes of this Section, the term
"Unrelated Person" shall mean and include any Person other than the Company, a
wholly-owned subsidiary of the Company, or an employee benefit plan of the
Company.
(ii) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of the Company to an Unrelated Person or Unrelated Persons acting in
concert with one another.
(iii) A change in the ownership of the Company through a
single transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of the Company representing at
least 30 percent of the combined voting power of the Company's then outstanding
securities. For purposes of this Section, the term "Beneficial Owner" shall have
the same meaning as given to that term in Rule 13d-3 promulgated under the Act,
provided that any pledgee of voting securities is not deemed to be the
Beneficial Owner thereof prior to its acquisition of voting rights with respect
to such securities.
(iv) Any consolidation or merger of the Company with or into
an Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of the Company immediately prior to the
consolidation or merger are the Beneficial Owners of securities of the surviving
corporation representing at least 50 percent of the combined voting power of the
surviving corporation's then outstanding securities.
(v) During any period of two years, individuals who, at the
beginning of such period, constituted the Board of Directors of the Company
cease, for any reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was approved by the
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period.
(vi) A change in control of the Company of a nature that would
be required to be reported in response to item 6(e) of Schedule 14A of
Regulation 14A promulgated under the 1934 Act, or any successor regulation of
similar import, regardless of whether the Company is subject to such reporting
requirement.
Notwithstanding any provision hereof to the contrary, the filing of a
proceeding for the reorganization of the Company under Chapter 11 of the General
Bankruptcy Code or any successor or other statute of similar import shall not be
deemed to be a Change of Control for purposes of this Plan.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean Vodavi Technology, Inc., a Delaware corporation.
"Corporate Transaction" shall mean (a) a merger or consolidation in
which the Company is not the surviving entity, except for a transaction the
principal purposes of which is to change the state in which the Company is
incorporated; (b) the sale, transfer of or other disposition of all or
substantially all of the assets of the Company and complete liquidation or
dissolution of the Company, or (c) any reverse merger in which the Company is
the surviving entity but in which the securities possessing more than 50 percent
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of the total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such securities
immediately prior to such merger.
"Discretionary Award" shall mean a Stock Award, SAR or Cash Award under
the Discretionary Grant Program.
"Discretionary Grant Program" shall mean the program described in
Article II of this Agreement pursuant to which certain Eligible Persons are
granted Options or Awards in the discretion of the Plan Administrator.
"Discretionary Options" shall mean options granted under the
Discretionary Grant Program.
"Disinterested Directors" shall mean those Directors who satisfy the
definition of "Disinterested Person" under Rule 16b-3(c)(2)(i) promulgated under
the 1934 Act.
"Effective Date" shall mean the date that the Plan has been approved by
the stockholders as required by Section 1.3(a) hereof.
"Eligible Directors" shall mean, with respect to the Automatic Grant
Program, those persons who are non-employee Board members.
"Eligible Persons" shall mean, with respect to the Discretionary Grant
Program, those persons who, at the time that the Discretionary Option or
Discretionary Award is granted, are (i) key personnel (including officers and
directors) of the Company or Parent or Subsidiary Corporations, or (ii)
consultants or independent contractors who provide valuable services to the
Company or Parent or Subsidiary Corporations; provided that if a Senior
Committee is formed pursuant to Section 2.1(b) hereof, the members of that
Committee shall not be included as "Eligible Persons" under the Discretionary
Grant Program during their tenure on the Senior Committee.
"Employee Committee" shall mean that committee appointed by the Board
to administer the Plan with respect to the Non-Affiliates and comprised of one
or more persons who are members of the Board.
"Exercise Date" shall be the date on which written notice of the
exercise of an Option is delivered to the Company in accordance with the
requirements of the Plan.
"Expiration Date" shall be the 10-year anniversary of the date on which
an Automatic Option Grant was made.
"Grantee" shall mean an Eligible Person or Eligible Director that has
received an Award.
"Incentive Stock Option" shall mean a Discretionary Option that is
intended to qualify as an "inventive stock option" under Code section 422.
"Initial Grant Date" shall mean the date that an Eligible Director is
first appointed or elected to the Board.
"Non-Affiliates" shall mean all persons who are not Affiliates.
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"$100,000 Limitation" shall mean the limitation in which the aggregate
fair market value (determined as of the respective date or dates of grant) of
the Stock for which one or more Options granted to any person under this Plan
(or any other option plan of the Company or any Parent or Subsidiary
Corporation) may for the first time be exercisable as Incentive Stock Options
during any one calendar year shall not exceed the sum of $100,000.
"Optionholder" shall mean an Eligible Person or Eligible Director to
whom Options have been granted.
"Optioned Shares" shall be those shares of Stock to be optioned from
time to time to any Eligible Person or Eligible Directors.
"Option Price" shall mean the option price per share as specified by
the Plan Administrator or by the terms of the Plan.
"Options" shall mean options granted under the Plan to acquire Stock.
"Parent Corporation" shall mean any corporation in the unbroken chain
of corporations ending with the employer corporation, where, at each link of the
chain, the corporation and the link above owns at least 50 percent of the
combined total voting power of all classes of the stock in the corporation in
the link below.
"Plan" shall mean this stock option plan for Vodavi Technology, Inc.
"Plan Administrator" shall mean (a) either the Board, the Senior
Committee, or any other committee, whichever is applicable, with respect to the
administration of the Discretionary Grant Program as it relates to Affiliates
and (b) either the Board, the Employee Committee, or any other committee,
whichever is applicable, with respect to the administration of the Discretionary
Grant Program as it relates to Non-Affiliates.
"SAR" shall mean stock appreciation rights granted pursuant to Section
2.4 hereof.
"Senior Committee" shall mean that committee appointed by the Board to
administer the Discretionary Grant Program with respect to the Affiliates and
comprised of two or more Disinterested Directors.
"Service" shall have the meaning set forth in Section 2.2(n) hereof.
"Stock" shall mean shares of the Company's common stock, $.001 par
value per share, which may be unissued or treasury shares, as the Board may from
time to time determine.
"Stock Awards" shall mean Stock directly granted under the
Discretionary Grant Program.
"Subsidiary Corporation" shall mean any corporation in the unbroken
chain of corporations starting with the employer corporation, where, at each
link of the chain, the corporation and the link above owns at least 50 percent
of the combined voting power of all classes of stock in the corporation below.
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EXECUTED as of the 26TH day of February, 1996.
Vodavi Technology, Inc.
By: /s/ Glenn R. Fitchet
-----------------------
Name: Glenn R. Fitchet
-----------------------
Its: President
-----------------------
ATTESTED BY:
/s/ Kent R. Burgess
- ------------------------
Secretary
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Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 2, 1996,
included in Vodavi Technology, Inc.'s Form 10-K for the year ended December 31,
1995, and to all references to our firm included in this registration statement.
/s/ Arthur Andersen LLP
Phoenix, Arizona
July 16, 1996.
