<PAGE> 1
As filed with the Securities and Exchange Commission on May 15, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------
PHARMACYCLICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3148201
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
995 EAST ARQUES AVENUE
SUNNYVALE, CALIFORNIA 94086
(Address of principal executive offices) (Zip Code)
----------
PHARMACYCLICS, INC.
1995 STOCK OPTION PLAN
EMPLOYEE STOCK PURCHASE PLAN
(Full title of the Plan)
----------
RICHARD A. MILLER, M.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PHARMACYCLICS, INC.
995 EAST ARQUES AVENUE, SUNNYVALE, CA 94086
(Name and address of agent for service)
(408) 774-0330
(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>
Amount to be Offering Price Aggregate Offering Amount of
Title of Securities to be Registered Registered(1) per Share Price Registration Fee(2)
==================================================================================================================================
<S> <C> <C> <C> <C>
1995 Stock Option Plan
Common Stock 602,042 shares $32.94 $19,831,263.48 $5,850.22
Employee Stock Purchase Plan
Common Stock 50,000 shares $32.94 $ 1,647,000 $ 485.87
Aggregate Filing Fee: 6,336.09
==================================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the 1995 Stock Option
Plan and Employee Stock Purchase Plan by reason of any stock dividend,
stock split, recapitalization or other similar transaction effected without
the Registrant's receipt of consideration which results in an increase in
the number of the outstanding shares of Registrant's Common Stock.
<PAGE> 2
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the high
and low selling prices per share of Registrant's Common Stock on May 11,
1998 as reported by the Nasdaq National Market.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The Registrant hereby incorporates by reference into this
Registration Statement the following documents previously filed with the
Securities and Exchange Commission ("SEC"):
(a) The Registrant's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997, filed with the SEC
on September 24, 1997;
(b) The Registrant's Quarterly Reports on Form 10-Q for
the periods ending September 30, 1997, December 31,
1997 and March 31, 1998 filed with the SEC on
November 13, 1997, February 17, 1998 and May 14,
1998, respectively, and
(c) The Registrant's Registration Statement No. 00-27066
on Form 8-A filed with the SEC on October 20, 1995
pursuant to Section 12 of the Securities Exchange Act
of 1934 (the "1934 Act"), which describes the terms,
rights and provisions applicable to the Registrant's
outstanding Common Stock.
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. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
Under Section 145 of the Delaware General Corporation Law, the
Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "1933 Act"). The Registrant's Bylaws
(the "Bylaws") provide that the Registrant shall indemnify its directors and
officers if such officer or director acted (i) in good faith, (ii) in a manner
reasonably believed to be in or not opposed to the best interests of the
Registrant, and (iii) with respect to any criminal action or proceeding, had no
reasonable cause to believe such conduct was unlawful. The Registrant believes
that indemnification under its Bylaws covers at least negligence and gross
negligence, and requires the Registrant to advance litigation expenses in the
case of stockholder derivative actions or other actions, against an undertaking
by the directors and officers to repay such advances if it is ultimately
determined that the director is not entitled to indemnification. The Bylaws
further provide that rights conferred under such Bylaws shall not be deemed to
be exclusive of any other right such persons may have or acquire under any
agreement, vote of stockholders or disinterested directors, or otherwise.
II-1
<PAGE> 4
In addition, the Registrant's Certificate of Incorporation
(the "Certificate of Incorporation") provides that, pursuant to Delaware law,
none of its directors shall be liable for monetary damages for breach of his or
her fiduciary duty of care to the Registrant and its stockholders. This
provision in the Certificate of Incorporation does not eliminate the duty of
care, and in appropriate circumstances equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws. The Certificate of Incorporation further
provides that the Registrant shall indemnify its directors and officers to the
fullest extent permitted by law and requires the Registrant to advance
litigation expenses in the case of stockholder derivative actions or other
actions, against an undertaking by the director to repay such advances if it is
ultimately determined that the director is not entitled to indemnification. The
Certificate of Incorporation also provides that rights conferred under such
Certificate of Incorporation shall not be deemed to be exclusive of any other
right such persons may have or acquire under any statute, the Certificate of
Incorporation, the Bylaws, agreement, vote of stockholders or disinterested
directors, or otherwise.
The Registrant has obtained a liability insurance policy for
the officers and directors that, subject to certain limitations, terms and
conditions, will insure them against losses arising from wrongful acts (as
defined by the policy) in their capacity as directors or officers.
In addition, the Registrant has entered into agreements to
indemnify its directors and certain of its officers in addition to the
indemnification provided for in the Certificate of Incorporation and Bylaws.
These agreements, among other things, indemnify the Registrant's directors and
certain of its officers for certain expenses (including attorneys fees),
judgments, fines and settlement amounts incurred by such person in any action or
proceeding, including any action by or in the right of the Registrant, on
account of services as a director or officer of the Registrant or as a director
or officer of any subsidiary of the Registrant, or as a director or officer of
any other company or enterprise that the person provides services to at the
request of the Registrant.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference
is made to Registrant's Registration Statement No.
00-27066 on Form 8-A, which is incorporated herein by
reference pursuant to Item 3(c).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Price Waterhouse LLP - Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1995 Stock Option Plan.
99.2* Form of Notice of Grant of Stock Option generally to be
used under the 1995 Stock Option Plan.
99.3 Form of Stock Option Agreement.
99.4 Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
</TABLE>
II-2
<PAGE> 5
<TABLE>
<S> <C>
99.5* Form of Addendum to Stock Option Agreement (Special Tax
Election).
99.6* Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Change in Control).
99.7 Form of Employee Stock Purchase Plan.
99.8* Form of Employee Stock Purchase Plan Enrollment/Change
Form.
99.9* Form of Stock Purchase Agreement.
</TABLE>
* Exhibits 99.2, 99.5, 99.6, 99.8 and 99.9 are incorporated herein by
reference to Exhibits 99.2, 99.5, 99.6, 99.12 and 99.13, respectively, of
Registrant's Registration Statement No. 33-98514 on Form S-8 which was filed
with the SEC on October 23, 1995.
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 1933 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 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; provided, however, that clauses
(1)(i) and (1)(ii) shall 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 this Registration Statement; (2) that
for the purpose of determining any liability under the 1933 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
Registrant's 1995 Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 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 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 1933 Act 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 SEC, such
indemnification is against public policy as expressed in the 1933 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 1933 Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 6
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 Sunnyvale, State of California, on
this 14th day of May, 1998.
PHARMACYCLICS, INC.
By: /s/Richard A. Miller, M.D.
-------------------------------------
Richard A. Miller, M.D.
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Pharmacyclics, Inc., a
Delaware corporation, do hereby constitute and appoint Richard A. Miller, M.D.
and Marc L. Steuer and each of them, the lawful attorneys-in-fact and agents
with full power and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, and any one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
that all said attorneys and agents, or any one of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Richard A. Miller, M.D President, Chief Executive May 14, 1998
- ----------------------------- Officer and Director (Principal
Richard A. Miller, M.D. Executive Officer)
/s/ Marc L. Steuer Vice President Business May 14, 1998
- ------------------------------ Development
Marc L. Steuer
</TABLE>
II-4
<PAGE> 7
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/Leiv Lea Vice President, Finance May 14, 1998
- --------------------------------- and Administration and Chief
Leiv Lea Financial Officer (Principal
Financial and Accounting Officer)
/s/Thomas D. Kiley Director May 14, 1998
- ---------------------------------
Thomas D. Kiley
/s/Joseph S. Lacob Director May 14, 1998
- ---------------------------------
Joseph S. Lacob
/s/Craig C. Taylor Director May 14, 1998
- ---------------------------------
Craig C. Taylor
Director May , 1998
- ---------------------------------
Joseph C. Scodari
/s/Brian A. Markison Director May 14, 1998
- ---------------------------------
Brian A. Markison
</TABLE>
II-5
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------ -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference
is made to Registrant's Registration Statement No.
00-27066 on Form 8-A, which is incorporated herein by
reference pursuant to Item 3(c).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Price Waterhouse LLP - Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1995 Stock Option Plan.
99.2* Form of Notice of Grant of Stock Option generally to be
used under the 1995 Stock Option Plan.
99.3 Form of Stock Option Agreement.
99.4 Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.5* Form of Addendum to Stock Option Agreement (Special Tax
Election).
99.6* Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Change in Control).
99.7 Form of Employee Stock Purchase Plan.
99.8* Form of Employee Stock Purchase Plan Enrollment/Change
Form.
99.9* Form of Stock Purchase Agreement.
</TABLE>
* Exhibits 99.2, 99.5, 99.6, 99.8 and 99.9 are incorporated herein by
reference to Exhibits 99.2, 99.5, 99.6, 99.12 and 99.13, respectively, of
Registrant's Registration Statement No. 33-98514 on Form S-8 which was filed
with the SEC on October 23, 1995.
<PAGE> 1
EXHIBIT 5
Opinion and Consent of Brobeck, Phleger & Harrison LLP
May 14, 1998
Pharmacyclics, Inc.
995 East Arques Avenue
Sunnyvale, CA 94086
Re: PHARMACYCLICS, INC. (THE "COMPANY")
REGISTRATION STATEMENT FOR REGISTRATION
OF AN AGGREGATE OF 652,042 SHARES OF COMMON STOCK
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 602,042 shares of
Common Stock available for issuance under the Company's 1995 Stock Option Plan
and 50,000 shares of Common Stock available for issuance under the Company's
Employee Stock Purchase Plan. We advise you that, in our opinion, when such
shares have been issued and sold pursuant to the applicable provisions of the
Company's 1995 Stock Option Plan and the Company's Employee Stock Purchase
Plan, respectively and in accordance with the Registration Statement, such
shares will be validly issued, fully paid and nonassessable shares of the
Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated August 22, 1997 appearing on page
33 of Pharmacyclics, Inc.'s Annual Report Form 10-K for the year ended June 30,
1997.
PRICE WATERHOUSE LLP
San Jose, California
May 14, 1998
<PAGE> 1
EXHIBIT 99.1
PHARMACYCLICS, INC.
1995 STOCK OPTION PLAN
(AS AMENDED AND RESTATED THROUGH SEPTEMBER 11, 1997)
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1995 Stock Option Plan is intended to promote the
interests of Pharmacyclics, Inc., a Delaware corporation, by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to remain in the service of the Corporation.
Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.
II. STRUCTURE OF THE PLAN
Under the Plan, eligible persons may, at the discretion of the
Plan Administrator, be granted options to purchase shares of Common Stock.
III. ADMINISTRATION OF THE PLAN
A. The Primary Committee shall have sole and exclusive
authority to administer the Plan with respect to Section 16 Insiders.
B. Administration of the Plan with respect to all other
persons, may at the Board's discretion, be vested in the Primary Committee or a
Secondary Committee, or the Board may retain the power to administer the Plan
with respect to all such persons who are not Section 16 Insiders. The members of
the Secondary Committee may be Board members who are Employees eligible to
receive discretionary option grants or direct stock issuances under the Plan or
any stock option, stock appreciation, stock bonus or other stock plan of the
Corporation (or any Parent or Subsidiary).
C. Members of the Primary Committee or any Secondary Committee
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 also at any time
terminate the functions of any Secondary Committee and reassume all powers and
authority previously delegated to such committee.
<PAGE> 2
D. The Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue such
interpretations of, the provisions of the Plan and any outstanding options
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the Plan under
its jurisdiction or any option thereunder.
E. Service on the Primary Committee or the Secondary Committee
shall constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants made under the Plan.
IV. ELIGIBILITY
A. The persons eligible to participate in the Plan are as
follows:
(i) Employees,
(ii) non-employee members of the Board or the board of
directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors who
provide services to the Corporation (or any Parent or
Subsidiary).
B. The Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to the
provisions of the Plan) to determine, with respect to the option grants, which
eligible persons are to receive option grants, the time or times when such
option grants are to be made, the number of shares to be covered by each such
grant, the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times at which each option is to become
exercisable and the vesting schedule (if any) applicable to the option shares
and the maximum term for which the option is to remain outstanding.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 2,261,565
shares, subject to adjustment from time to time in accordance with the
provisions of this Section V. Such authorized share reserve is comprised of (i)
the number of shares which remained available for issuance, as of the Plan
Effective Date, under the Predecessor Plan as last approved by the Corporation's
stockholders prior to such date, including the shares subject to the outstanding
options incorporated into the Plan and any other shares which would have been
available for future option grants under the Predecessor Plan, (ii)
2.
<PAGE> 3
the automatic increase of 85,178 shares effected on January 2, 1996 and 91,503
shares effected in January, 1997 pursuant to Section V.B. below, (iii) the
750,000-share increase approved by the Board on August 1, 1996, subject to
approval by the stockholders at the 1996 Annual Meeting and (iv) the
500,000-share increase approved by the Board on September 11, 1997, subject to
approval by the stockholders at the 1997 Annual Meeting.
B. The number of shares of Common Stock available for issuance
under the Plan shall automatically increase on the first trading day of each
calendar year during the term of the Plan, beginning with the 1996 calendar
year, by an amount equal to one percent (1%) of the shares of Common Stock
outstanding on December 31 of the immediately preceding calendar year; but in no
event shall any such annual increase exceed 500,000 shares. No Incentive Options
may be granted on the basis of the additional shares of Common Stock resulting
from such annual increases.
C. No one person participating in the Plan may receive options
and separately exercisable stock appreciation rights for more than 750,000
shares of Common Stock in the aggregate over the term of the Plan.
D. Shares of Common Stock subject to outstanding options shall
be available for subsequent issuance under the Plan to the extent (i) the
options (including any options incorporated from the Predecessor Plan) expire or
terminate for any reason prior to exercise in full or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan (including unvested shares issued under
the Predecessor Plan) and subsequently repurchased by the Corporation, at the
original exercise price paid per share, pursuant to the Corporation's repurchase
rights under the Plan, shall be added back to the number of shares of Common
Stock reserved for issuance under the Plan and shall accordingly be available
for reissuance through one or more subsequent options under the Plan. Shares
subject to any stock appreciation rights exercised under the Plan and all shares
issued under the Plan (included shares issued upon exercise of options
incorporated from the Predecessor Plan), shall reduce on a share-for-share basis
the number of shares of Common Stock available for subsequent issuance under the
Plan. However, should the exercise price of an option under the Plan (including
any option incorporated from the Predecessor Plan) be paid with shares of Common
Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an option under the Plan, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised, and not by the net
number of shares of Common Stock issued to the holder of such option.
E. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the maximum number and/or class of securities for
which the share reserve is to increase automatically each year, (iii) the number
and/or class of securities for which any one person may be granted options and
separately exercisable stock appreciation
3.
<PAGE> 4
rights over the term of the Plan, and (iv) the number and/or class of securities
and the exercise price per share in effect under each outstanding option
(including any option incorporated from the Predecessor Plan) in order to
prevent the dilution or enlargement of benefits thereunder. The adjustments
determined by the Plan Administrator shall be final, binding and conclusive.
4.
<PAGE> 5
ARTICLE TWO
GRANT OF OPTIONS
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the
Plan Administrator but shall not be less than eighty-five percent (85%) of the
Fair Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due
upon exercise of the option and shall, subject to the provisions of Section I of
Article Three and the documents evidencing the option, be payable in one or more
of the forms specified below:
(i) cash or check made payable to the
Corporation,
(ii) shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date, or
(iii) to the extent the option is exercised for
vested shares, through a special sale and remittance procedure
pursuant to which the Optionee shall concurrently provide
irrevocable written instructions to (a) a Corporation-designated
brokerage firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus
all applicable Federal, state and local income and employment
taxes required to be withheld by the Corporation by reason of
such exercise and (b) the Corporation to deliver the certificates
for the purchased shares directly to such brokerage firm in order
to complete the sale.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
B. Exercise and Term of Options. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in excess
of ten (10) years measured from the option grant date.
5.
<PAGE> 6
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise of
any options held by the Optionee at the time of cessation of Service or death:
(i) Any option outstanding at the time of the
Optionee's cessation of Service for any reason shall remain exercisable
for such period of time thereafter as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option, but
no such option shall be exercisable after the expiration of the option
term.
(ii) Any option exercisable in whole or in part
by the Optionee at the time of death may be subsequently exercised by
the personal representative of the Optionee's estate or by the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution.
(iii) During the applicable post-Service
exercise period, the option may not be exercised in the aggregate for
more than the number of vested shares for which the option is
exercisable on the date of the Optionee's cessation of Service. Upon the
expiration of the applicable exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to
be outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's
cessation of Service, terminate and cease to be outstanding to the
extent it is not exercisable for vested shares on the date of such
cessation of Service.
(iv) Should the Optionee's Service be
terminated for Misconduct, then all outstanding options held by the
Optionee shall terminate immediately and cease to be outstanding.
(v) In the event of a Corporate Transaction,
the provisions of Section III of this Article Two shall govern the
period for which the outstanding options are to remain exercisable
following the Optionee's cessation of Service and shall supersede any
provisions to the contrary in this section.
2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the
option is to remain exercisable following the Optionee's cessation of
Service from the period otherwise in effect for that option to such
greater period of time as the Plan Administrator shall deem appropriate,
but in no event beyond the expiration of the option term, and/or
(ii) permit the option to be exercised, during
the applicable post-Service exercise period, not only with respect to
the number of
6.
<PAGE> 7
vested shares of Common Stock for which such option is exercisable at
the time of the Optionee's cessation of Service but also with respect
to one or more additional installments in which the Optionee would have
vested under the option had the Optionee continued in Service.
D. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.
F. Limited Transferability of Options. During the lifetime of
the Optionee, the option shall be exercisable only by the Optionee and shall not
be assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death. However, a Non-Statutory Option
may, in connection with the Optionee's estate plan, be assigned in whole or in
part during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
G. Beneficiary Designation. An Optionee may file a written
beneficiary designation indicating the person entitled to exercise Optionee's
outstanding options on the Optionee's behalf at the time of his/her death. Such
beneficiary designation may be changed by the Optionee at any time by filing the
appropriate form with the Plan Administrator.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Three shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to
Employees.
B. Exercise Price. The exercise price per share shall not be
less than one hundred percent (100%) of the Fair Market Value per share of
Common Stock on the option grant date.
7.
<PAGE> 8
C. Dollar Limitation. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one (1) calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive
Option is granted is a 10% Stockholder, then the exercise price per share shall
not be less than one hundred ten percent (110%) of the Fair Market Value per
share of Common Stock on the option grant date, and the option term shall not
exceed five (5) years measured from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall NOT so accelerate
if and to the extent: (i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation (or parent
thereof) or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof), (ii) such option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested option shares at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.
C. The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options (and the automatic termination of one or more
outstanding repurchase rights with the immediate vesting of the shares of Common
Stock subject to those rights) upon the occurrence of a Corporate Transaction,
whether or not those options are to be assumed or replaced (or those repurchase
rights are to be assigned) in the Corporate Transaction.
8.
<PAGE> 9
D. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
E. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan on both an aggregate and per
Optionee basis following the consummation of such Corporate Transaction and (ii)
the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same.
F. Any options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time, shall automatically
accelerate (and any of the Corporation's outstanding repurchase rights which do
not otherwise terminate at the time of the Corporate Transaction shall
automatically terminate and the shares of Common Stock subject to those
terminated rights shall immediately vest in full) in the event the Optionee's
Service should subsequently terminate by reason of an Involuntary Termination
within eighteen (18) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for
fully-vested shares until the earlier of (i) the expiration of the option term
or (ii) the expiration of the one (1)-year period measured from the effective
date of the Involuntary Termination.
G. The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to (i) provide for the automatic acceleration of one
or more outstanding options (and the automatic termination of one or more
outstanding repurchase rights with the immediate vesting of the shares of Common
Stock subject to those rights) upon the occurrence of a Change in Control or
(ii) condition any such option acceleration (and the termination of any
outstanding repurchase rights) upon the subsequent Involuntary Termination of
the Optionee's Service within a specified period following the effective date of
such Change in Control. Any options accelerated in connection with a Change in
Control shall remain fully exercisable until the expiration or sooner
termination of the option term.
H. The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Option only to the extent the applicable One Hundred
Thousand Dollar limitation is not exceeded. To the extent such dollar limitation
is exceeded, the accelerated portion of such option shall be exercisable as a
Non-Statutory Option under the Federal tax laws.
I. The grant of options under the Plan shall in no way affect
the right of the Corporation 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.
9.
<PAGE> 10
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected option holders,
the cancellation of any or all outstanding options under the Plan (including
outstanding options incorporated from the Predecessor Plan) and to grant in
substitution new options covering the same or different number of shares of
Common Stock but with an exercise price per share based on the Fair Market Value
per share of Common Stock on the new option grant date.
V. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority
to grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.
B. The following terms shall govern the grant and exercise of
tandem stock appreciation rights:
(i) One or more Optionees may be granted the
right, exercisable upon such terms as the Plan Administrator may
establish, to elect between the exercise of the underlying option for
shares of Common Stock and the surrender of that option in exchange for
a distribution from the Corporation in an amount equal to the excess of
(A) the Fair Market Value (on the option surrender date) of the number
of shares in which the Optionee is at the time vested under the
surrendered option (or surrendered portion thereof) over (B) the
aggregate exercise price payable for such shares.
(ii) No such option surrender shall be
effective unless it is approved by the Plan Administrator. If the
surrender is so approved, then the distribution to which the Optionee
shall be entitled may be made in shares of Common Stock valued at Fair
Market Value on the option surrender date, in cash, or partly in shares
and partly in cash, as the Plan Administrator shall in its sole
discretion deem appropriate.
(iii) If the surrender of an option is rejected
by the Plan Administrator, then the Optionee shall retain whatever
rights the Optionee had under the surrendered option (or surrendered
portion thereof) on the option surrender date and may exercise such
rights at any time prior to the later of (A) five (5) business days
after the receipt of the rejection notice or (B) the last day on which
the option is otherwise exercisable in accordance with the terms of the
documents evidencing such option, but in no event may such rights be
exercised more than ten (10) years after the option grant date.
C. The following terms shall govern the grant and exercise of
limited stock appreciation rights:
(i) One or more Section 16 Insiders may be
granted limited stock appreciation rights with respect to their
outstanding options.
10.
<PAGE> 11
(ii) Upon the occurrence of a Hostile
Take-Over, each such individual holding one or more options with such a
limited stock appreciation right in effect shall have the unconditional
right (exercisable for a thirty (30)-day period following such Hostile
Take-Over) to surrender each such option to the Corporation, to the
extent the option is at the time exercisable for vested shares of Common
Stock. In return for the surrendered option, the Optionee shall receive
a cash distribution from the Corporation in an amount equal to the
excess of (A) the Take-Over Price of the shares of Common Stock which
are at the time vested under each surrendered option (or surrendered
portion thereof) over (B) the aggregate exercise price payable for such
shares. Such cash distribution shall be paid within five (5) days
following the option surrender date.
(iii) Neither the approval of the Plan
Administrator nor the consent of the Board shall be required in
connection with such option surrender and cash distribution.
(iv) The balance of the option (if any) shall
continue in full force and effect in accordance with the documents
evidencing such option.
11.
<PAGE> 12
ARTICLE THREE
MISCELLANEOUS
I. FINANCING
A. The Plan Administrator may permit any Optionee to pay the
option exercise price under the Plan by delivering a promissory note payable in
one or more installments. The terms of any such promissory note (including the
interest rate and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion. Promissory notes may be authorized with or
without security or collateral. In all events, the maximum credit available to
the Optionee may not exceed the sum of (i) the aggregate option exercise price
payable for the purchased shares plus (ii) any Federal, state and local income
and employment tax liability incurred by the Optionee in connection with the
option exercise.
B. The Plan Administrator may, in its discretion, determine
that one or more such promissory notes shall be subject to forgiveness by the
Corporation in whole or in part upon such terms as the Plan Administrator may
deem appropriate.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of options or stock appreciation rights under the Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any
or all holders of Non-Statutory Options under the Plan with the right to use
shares of Common Stock in satisfaction of all or part of the Taxes incurred by
such holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:
(i) Stock Withholding: The election to have the
Corporation withhold, from the shares of Common Stock otherwise issuable
upon the exercise of such Non-Statutory Option, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of
the Taxes (not to exceed one hundred percent (100%)) designated by the
holder.
(ii) Stock Delivery: The election to deliver to
the Corporation, at the time the Non-Statutory Option is exercised, one
or more shares of Common Stock previously acquired by such holder (other
than in connection with the option exercise triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not
to exceed one hundred percent (100%)) designated by the holder.
12.
<PAGE> 13
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on August 2, 1995 and
approved by the Corporation's stockholders on September 11, 1995. The Plan
became effective on the Plan Effective Date and serves as the successor to the
Predecessor Plan. On August 1, 1996, the Board authorized a 750,000-share
increase in the number of shares of Common Stock available for issuance under
the Plan; the increase was approved by the stockholders at the 1996 Annual
Stockholders Meeting.
B. The Plan was amended and restated by the Board on September
11, 1997 (the "1997 Restatement") to effect the following changes: (i) increase
the maximum number of shares of Common Stock authorized for issuance over the
term of the Plan by 500,000 shares, (ii) increase the maximum number of shares
of Common Stock for which options and separately exercisable stock appreciation
rights may be granted to any one individual to 750,000 shares, (iii) render the
non-employee Board members who are serving on the Primary Committee eligible to
receive option grants under the Plan, (iv) allow unvested shares issued under
the Plan and subsequently repurchased by the Corporation at the option exercise
price paid per share to be reissued under the Plan, (v) remove certain
restrictions on the eligibility of non-employee Board members to serve on the
Primary Committee and (vi) effect a series of additional changes to the
provisions of the Plan (including the stockholder approval requirements and the
transferability of Non-Statutory Options) in order to take advantage of the
recent amendments to Rule 16b-3 of the Securities and Exchange Commission which
exempts certain officer and director transactions under the Plan from the
short-swing liability provisions of the federal securities laws. The 1997
Restatement is subject to stockholder approval at the 1997 Annual Meeting, and
no option grants made on the basis of the 500,000-share increase shall become
exercisable in whole or in part unless and until the 1997 Restatement is
approved by the stockholders. Should such stockholder approval not be obtained,
then (i) any options granted on the basis of the 500,000- share increase shall
terminate without ever becoming exercisable for those shares, and no further
option grants shall be made on the basis of such share increase and (ii) the
maximum number of shares of Common Stock for which any one individual may be
granted options and separately exercisable stock appreciation rights shall
remain at 335,334 shares. In addition, none of the other changes effected by
1997 Restatement shall be implemented, except to the extent the Plan
Administrator otherwise deems it advisable to do so. However, in the absence of
such stockholder approval, option grants may continue to be made pursuant to the
provisions of the Plan as in effect immediately prior to the 1997 Restatement.
All option grants made prior to the 1997 Restatement shall remain outstanding in
accordance with the terms and conditions of the respective instruments
evidencing those options, and nothing in the 1997 Restatement shall be deemed to
modify or in any way affect those outstanding options. Subject to the foregoing
limitations, the Plan Administrator may make option grants under the Plan at any
time before the date fixed herein for the termination of the Plan.
C. The Plan shall serve as the successor to the Predecessor
Plan, and no further option grants shall be made under the Predecessor Plan
after the Plan Effective Date. All options outstanding under the Predecessor
Plan as of such date shall be incorporated into the Plan and treated as
outstanding options under the Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the terms of the documents
evidencing such option, and no provision of the Plan shall be deemed to affect
or otherwise modify the rights or obligations
13.
<PAGE> 14
of the holders of such incorporated options with respect to their acquisition of
shares of Common Stock.
D. The option/vesting acceleration provisions of Article Two
relating to Corporate Transactions and Changes in Control may, in the Plan
Administrator's discretion, be extended to one or more options incorporated from
the Predecessor Plan which do not otherwise provide for such acceleration.
E. The Plan shall terminate upon the earliest of (i) August 1,
2005, (ii) the date on which all shares available for issuance under the Plan
shall have been issued pursuant to the exercise of the options under the Plan,
(iii) the termination of all outstanding options in connection with a Corporate
Transaction, or (iv) termination by the Board. Upon such Plan termination, all
options outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the documents evidencing such
options.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to options or stock appreciation rights at the time outstanding under
the Plan unless the Optionee consents to such amendment or modification. In
addition, certain amendments shall be subject to stockholder approval as
required by applicable laws or regulations.
B. Options to purchase shares of Common Stock may be granted
under the Plan that are in excess of the number of shares then available for
issuance under the Plan, provided any excess shares actually issued under the
Plan are held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees the exercise price paid for any excess shares issued
under the Plan and held in escrow, together with interest (at the applicable
Short Term Federal Rate) for the period the shares were held in escrow, and such
shares shall thereupon be automatically cancelled and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
or stock appreciation right under the Plan and the issuance of any shares of
Common Stock upon the exercise of any option or stock appreciation right shall
be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction
14.
<PAGE> 15
over the Plan, the options and stock appreciation rights granted under it and
the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued
or delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws, including
the filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.
15.
<PAGE> 16
APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a period
of thirty-six (36) consecutive months or less such that a majority of
the Board members ceases, by reason of one or more contested elections
for Board membership, to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or
(B) have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in
clause (A) who were still in office at the time the Board approved such
election or nomination.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction; or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. CORPORATION shall mean Pharmacyclics, Inc., a Delaware corporation.
A-1.
<PAGE> 17
G. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
H. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise.
I. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If there
is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) For purposes of option grants made on the date the
Underwriting Agreement is executed and the initial public offering
price of the Common Stock is established, the Fair Market Value shall
be deemed to be equal to the established initial offering price per
share.
J. HOSTILE TAKE-OVER shall mean a change in ownership of the
Corporation effected through the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-
3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's stockholders
which the Board does not recommend such stockholders to accept.
K. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
L. INVOLUNTARY TERMINATION shall mean the termination of the Service of
any individual which occurs by reason of:
A-2.
<PAGE> 18
(i) such individual's involuntary dismissal or discharge by
the Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially
reduces his or her level of responsibility, (B) a reduction in his or
her level of compensation (including base salary, fringe benefits and
participation in corporate-performance based bonus or incentive
programs) by more than fifteen percent (15%) or (C) a relocation of
such individual's place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected
by the Corporation without the individual's consent.
M. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by such
person adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee or other person in the Service of the Corporation (or any Parent
or Subsidiary).
N. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
O. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
P. OPTIONEE shall mean any person to whom an option is granted under
the Plan.
Q. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
R. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
S. PLAN shall mean the Corporation's 1995 Stock Option Plan, as set
forth in this document.
T. PLAN ADMINISTRATOR shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Plan with respect to one or more classes of eligible persons, to
the extent such entity is carrying out its administrative functions under the
Plan with respect to the persons under its jurisdiction.
A-3.
<PAGE> 19
U. PLAN EFFECTIVE DATE shall mean October 23, 1995, the date on which
the Underwriting Agreement was executed and the initial public offering price of
the Common Stock was established.
V. PREDECESSOR PLAN shall mean the Corporation's existing 1992 Stock
Option Plan.
W. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the Plan with
respect to Section 16 Insiders.
X. SECONDARY COMMITTEE shall mean a committee of two (2) or more Board
members appointed by the Board to administer the Plan with respect to eligible
persons other than Section 16 Insiders.
Y. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
Z. SECTION 12(g) REGISTRATION DATE shall mean the first date on which
the Common Stock is registered under Section 12(g) of the 1934 Act.
AA. SERVICE shall mean the provision of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, or a
consultant or independent advisor, except to the extent otherwise specifically
provided in the documents evidencing the option grant.
AB. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.
AC. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
AD. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market Value
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.
AE. TAXES shall mean the Federal, state and local income and employment
tax liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of those options or the
vesting of those shares.
AF. 10% STOCKHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
A-4.
<PAGE> 20
AG. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
A-5.
<PAGE> 1
EXHIBIT 99.3
PHARMACYCLICS, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, consultants and other independent advisors who
provide services to the Corporation (or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee,
as of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, if this option is designated a
Non-Statutory Option in the Grant Notice, then this option may, in connection
with the Optionee's estate plan, be assigned in whole or in part during
Optionee's lifetime to one or more members of the Optionee's family or to a
trust established for the exclusive benefit of one or more such family members.
The assigned portion shall be exercisable only by the person or persons who
acquire a proprietary interest in the option pursuant to such assignment. The
term applicable to the assigned portion shall be the same as those in effect for
this option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.
<PAGE> 2
4. DATES OF EXERCISE. This option shall become exercisable for
the Option Shares in one or more installments as specified in the Grant Notice.
As the option becomes exercisable for such installments, those installments
shall accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. CESSATION OF SERVICE. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be outstanding)
prior to the Expiration Date should any of the following provisions become
applicable:
(i) Should Optionee cease to remain in Service for
any reason (other than death, Permanent Disability, or Misconduct)
while this option is outstanding, then Optionee shall have a period of
three (3) months (commencing with the date of such cessation of
Service) during which to exercise this option, but in no event shall
this option be exercisable at any time after the Expiration Date.
(ii) Should Optionee die while this option is
outstanding, then the personal representative of Optionee's estate or
the person or persons to whom the option is transferred pursuant to
Optionee's will or in accordance with the laws of descent and
distribution shall have the right to exercise this option. Such right
shall lapse and this option shall cease to be outstanding upon the
earlier of (i) the expiration of the twelve (12)-month period measured
from the date of Optionee's death or (ii) the Expiration Date.
(iii) Should Optionee cease Service by reason of
Permanent Disability while this option is outstanding, then Optionee
shall have a period of twelve (12) months (commencing with the date of
such cessation of Service) during which to exercise this option. In no
event shall this option be exercisable at any time after the Expiration
Date.
(iv) Should Optionee's Service be terminated for
Misconduct, then this option shall terminate immediately and cease to
remain outstanding.
(v) During the limited period of post-Service
exercisability, this option may not be exercised in the aggregate for
more than the number of vested Option Shares for which the option is
exercisable at the time of Optionee's cessation of Service. Upon the
expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be
outstanding for any vested Option Shares for which the option has not
been exercised. To the extent Optionee is not vested in the Option
Shares at the
2.
<PAGE> 3
time of Optionee's cessation of Service, this option shall immediately
terminate and cease to be outstanding with respect to those shares.
(vi) In the event of a Corporate Transaction, the
provisions of Paragraph 6 shall govern the period for which this option
is to remain exercisable following Optionee's cessation of Service and
shall supersede any provisions to the contrary in this paragraph.
6. SPECIAL ACCELERATION OF OPTION.
(a) In the event of a Corporate Transaction, the
exercisability of this option, to the extent outstanding at such time but not
otherwise fully exercisable, shall automatically accelerate so that this option
shall, immediately prior to the effective date of the Corporate Transaction,
become exercisable for any or all of the Option Shares at the time subject to
this option as fully-vested shares of Common Stock. No such acceleration of this
option, however, shall occur if and to the extent: (i) this option is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation (or parent thereof) or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation (or parent
thereof) or (ii) this option is to be replaced with a cash incentive program of
the successor corporation which preserves the spread existing on the Option
Shares for which this option is not exercisable at the time of the Corporate
Transaction (the excess of the Fair Market Value of such Option Shares over the
aggregate Exercise Price payable for such shares) and provides for subsequent
pay-out in accordance with the same exercise schedule in effect for the option
pursuant to the option exercise schedule set forth in the Grant Notice. The
determination of option comparability under clause (i) shall be made by the Plan
Administrator, and such determination shall be final, binding and conclusive.
(b) Immediately following the Corporate Transaction,
this option, to the extent not previously exercised, shall terminate and cease
to be outstanding, except to the extent assumed by the successor corporation (or
parent thereof) in connection with the Corporate Transaction.
(c) If this option is assumed in connection with a
Corporate Transaction, then this option shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply to the number and class
of securities which would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such
Corporate Transaction, and appropriate adjustments shall also be made to the
Exercise Price, provided the aggregate Exercise Price shall remain the same.
(d) Upon an Involuntary Termination of Optionee's
Service within eighteen (18) months following a Corporate Transaction in which
this option is assumed or replaced, the exercisability of this option, to the
extent outstanding at such time but not otherwise
3.
<PAGE> 4
fully exercisable, shall automatically accelerate so that this option shall
immediately become fully exercisable for all the Option Shares at the time
subject to this option as fully-vested shares of Common Stock and may be
exercised for any or all of those shares at any time prior to the earlier of (i)
the Expiration Date or (ii) the expiration of the one (1)-year period measured
from the effective date of the Involuntary Termination.
(e) This Agreement shall not in any way affect the
right of the Corporation 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.
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to
the Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. STOCKHOLDER RIGHTS. The holder of this option shall not
have any stockholder rights with respect to the Option Shares until such person
shall have exercised the option, paid the Exercise Price and become a holder of
record of the purchased shares.
9. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect to
all or any part of the Option Shares for which this option is at the time
exercisable, Optionee (or any other person or persons exercising the option)
must take the following actions:
(i) Execute and deliver to the Corporation a
Notice of Exercise for the Option Shares for which the option is
exercised.
(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:
(A) cash or check made payable to
the Corporation;
(B) a promissory note payable to
the Corporation, but only to the extent authorized by the Plan
Administrator in accordance with Paragraph 13;
4.
<PAGE> 5
(C) shares of Common Stock held by
Optionee (or any other person or persons exercising the
option) for the requisite period necessary to avoid a charge
to the Corporation's earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date; or
(D) through a special sale and
remittance procedure pursuant to which Optionee (or any other
person or persons exercising the option) shall concurrently
provide irrevocable written instructions (a) to a
Corporation-designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Corporation, out
of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Exercise Price payable
for the purchased shares plus all applicable Federal, state
and local income and employment taxes required to be withheld
by the Corporation by reason of such exercise and (b) to the
Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete
the sale transaction.
Except to the extent the sale and remittance
procedure is utilized in connection with the option exercise,
payment of the Exercise Price must accompany the Notice of
Exercise delivered to the Corporation in connection with the
option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if
other than Optionee) have the right to exercise this option.
(iv) Make appropriate arrangements with the
Corporation (or Parent or Subsidiary employing or retaining Optionee)
for the satisfaction of all Federal, state and local income and
employment tax withholding requirements applicable to the option
exercise.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any
fractional shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of
the Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all
5.
<PAGE> 6
applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq National Market, if applicable)
on which the Common Stock may be listed for trading at the time of such exercise
and issuance.
(b) The inability of the Corporation to obtain
approval from any regulatory body having authority deemed by the Corporation to
be necessary to the lawful issuance and sale of any Common Stock pursuant to
this option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. The Corporation, however, shall use its best efforts to
obtain all such approvals.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee, Optionee's assigns and the legal representatives, heirs
and legatees of Optionee's estate.
12. NOTICES. Any notice required to be given or delivered to
the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation at its principal corporate offices. Any notice
required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated below Optionee's signature line on the
Grant Notice. All notices shall be deemed effective upon personal delivery or
upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.
13. FINANCING. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a promissory note.
The terms of any such promissory note (including the interest rate, the
requirements for collateral and the terms of repayment) shall be established by
the Plan Administrator in its sole discretion.
14. CONSTRUCTION. This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects limited
by and subject to the terms of the Plan. All decisions of the Plan Administrator
with respect to any question or issue arising under the Plan or this Agreement
shall be conclusive and binding on all persons having an interest in this
option.
15. GOVERNING LAW. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.
16. EXCESS SHARES. If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may without stockholder approval be issued under the Plan, then this
option shall be void with respect to such excess
6.
<PAGE> 7
shares, unless stockholder approval of an amendment sufficiently increasing the
number of shares of Common Stock issuable under the Plan is obtained in
accordance with the provisions of the Plan.
17. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the
event this option is designated an Incentive Option in the Grant Notice, the
following terms and conditions shall also apply to the grant:
(i) This option shall cease to qualify for
favorable tax treatment as an Incentive Option if (and to the extent)
this option is exercised for one or more Option Shares: (i) more than
three (3) months after the date Optionee ceases to be an Employee for
any reason other than death or Permanent Disability or (ii) more than
twelve (12) months after the date Optionee ceases to be an Employee by
reason of Permanent Disability.
(ii) No installment under this option shall
qualify for favorable tax treatment as an Incentive Option if (and to
the extent) the aggregate Fair Market Value (determined at the Grant
Date) of the Common Stock for which such installment first becomes
exercisable hereunder would, when added to the aggregate value
(determined as of the respective date or dates of grant) of any earlier
installments of the Common Stock and any other securities for which
this option or any other Incentive Options granted to Optionee prior to
the Grant Date (whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars
($100,000) in the aggregate. Should such One Hundred Thousand Dollar
($100,000) limitation be exceeded in any calendar year, this option
shall nevertheless become exercisable for the excess shares in such
calendar year as a Non-Statutory Option.
(iii) Should the exercisability of this option
be accelerated upon a Corporate Transaction, then this option shall
qualify for favorable tax treatment as an Incentive Option only to the
extent the aggregate Fair Market Value (determined at the Grant Date)
of the Common Stock for which this option first becomes exercisable in
the calendar year in which the Corporate Transaction occurs does not,
when added to the aggregate value (determined as of the respective date
or dates of grant) of the Common Stock or other securities for which
this option or one or more other Incentive Options granted to Optionee
prior to the Grant Date (whether under the Plan or any other option
plan of the Corporation or any Parent or Subsidiary) first become
exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. Should the applicable One Hundred
Thousand Dollar ($100,000) limitation be exceeded in the calendar year
of such Corporate Transaction, the option may
7.
<PAGE> 8
nevertheless be exercised for the excess shares in such calendar year
as a Non-Statutory Option.
(iv) Should Optionee hold, in addition to this
option, one or more other options to purchase Common Stock which become
exercisable for the first time in the same calendar year as this
option, then the foregoing limitations on the exercisability of such
options as Incentive Options shall be applied on the basis of the order
in which such options are granted.
8.
<PAGE> 9
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Pharmacyclics, Inc. (the "Corporation")
that I elect to purchase ________shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $ ________per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
under the Corporation's 1995 Stock Option Plan on _______________, 199__ .
Concurrently with the delivery of this Exercise Notice to
the Corporation, I shall hereby pay to the Corporation the Exercise Price for
the Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
, 199
- ------------------------- -
Date
--------------------------------------------
Optionee
Address:
------------------------------------
--------------------------------------------
Print name in exact manner
it is to appear on the
stock certificate: --------------------------------------------
Address to which certificate
is to be sent, if different
from address above: --------------------------------------------
--------------------------------------------
Social Security Number:
--------------------------------------------
Employee Number:
--------------------------------------------
<PAGE> 10
APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.
F. CORPORATION shall mean Pharmacyclics, Inc., a Delaware corporation.
G. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
H. EXERCISE DATE shall mean the date on which the option shall have
been exercised in accordance with Paragraph 9 of the Agreement.
I. EXERCISE PRICE shall mean the exercise price per share as specified
in the Grant Notice.
J. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.
K. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
A-1.
<PAGE> 11
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as the
price is reported by the National Association of Securities Dealers on
the Nasdaq National Market or any successor system. If there is no
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
L. GRANT DATE shall mean the date of grant of the option as specified
in the Grant Notice.
M. GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
N. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
O. INVOLUNTARY TERMINATION shall mean the termination of Optionee's
Service which occurs by reason of:
(i) Optionee's dismissal or discharge by the Corporation for
reasons other than Misconduct, or
(ii) Optionee's voluntary resignation following (A) a change in
Optionee's position with the Corporation (or Parent or Subsidiary
employing Optionee) which materially reduces Optionee's level of
responsibility, (B) a reduction in Optionee's level of compensation
(including base salary, fringe benefits and participation in
corporate-performance based bonus or incentive programs) by more than
fifteen percent (15%) or (C) a relocation of Optionee's place of
employment by more than fifty (50) miles, provided and only if such
change, reduction or relocation is effected by the Corporation without
Optionee's consent.
A-2.
<PAGE> 12
P. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
Optionee or any other individual in the Service of the Corporation (or any
Parent or Subsidiary).
Q. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
R. NOTICE OF EXERCISE shall mean the notice of exercise in the form
attached hereto as Exhibit I.
S. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option as specified in the Grant Notice.
T. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
U. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. PERMANENT DISABILITY shall mean the inability of Optionee to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
W. PLAN shall mean the Corporation's 1995 Stock Option Plan.
X. PLAN ADMINISTRATOR shall mean either the Board or a committee of
Board members, to the extent the committee is at the time responsible for the
administration of the Plan.
Y. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
A-3.
<PAGE> 13
Z. STOCK EXCHANGE shall mean the American Stock Exchange or the New
York Stock Exchange.
AA. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-4.
<PAGE> 1
EXHIBIT 99.4
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Option Agreement dated 2~ (the "Option
Agreement") by and between Pharmacyclics, Inc. (the "Corporation") and 1~
("Optionee") evidencing the stock option granted on such date to Optionee under
the terms of the Corporation's 1995 Stock Option Plan, and such provisions shall
be effective immediately. All capitalized terms in this Addendum, to the extent
not otherwise defined herein, shall have the meanings assigned to them in the
Option Agreement.
LIMITED STOCK APPRECIATION RIGHT
1. Optionee is hereby granted a limited stock appreciation
right in tandem with the option, exercisable upon the terms set forth below:
(i) Optionee shall have the unconditional right
exercisable at any time during the thirty (30)-day period immediately
following a Hostile TakeOver to surrender the option to the
Corporation, to the extent the option is at the time exercisable for
vested shares of Common Stock. In return for the surrendered option,
Optionee shall receive a cash distribution from the Corporation in an
amount equal to the excess of (A) the Take-Over Price of the shares of
Common Stock which are at the time vested under the surrendered option
(or surrendered portion) over (B) the aggregate Exercise Price payable
for such shares.
(ii) To exercise this limited stock appreciation right,
Optionee must, during the applicable thirty (30)-day exercise period,
provide the Corporation with written notice of the option surrender in
which there is specified the number of Option Shares as to which the
option is being surrendered. Such notice must be accompanied by the
return of Optionee's copy of the Option Agreement, together with any
written amendments to such Agreement. The cash distribution shall be
paid to Optionee within five (5) days following such delivery date, and
neither the approval of the Plan Administrator nor the consent of the
Board shall be required in connection with such option surrender and
cash distribution. Upon receipt of such cash distribution, the option
shall be cancelled with respect to the Option Shares for which the
option has been surrendered, and Optionee shall cease to have any
further right to acquire those Option Shares under the Option
Agreement. The option shall, however, remain outstanding and
exercisable for the balance of the Option Shares (if any) in accordance
with the terms of the Option Agreement, and the Corporation shall issue
a new stock option agreement (substantially in the same form of the
surrendered Option Agreement) for those remaining Option Shares.
<PAGE> 2
(iii) In no event may this limited stock appreciation
right be exercised when there is not a positive spread between the Fair
Market Value of the Option Shares and the aggregate Exercise Price
payable for such shares. This limited stock appreciation right shall in
all events terminate upon the expiration or sooner termination of the
option term and may not be assigned or transferred by Optionee.
2. For purposes of this Addendum, the following definitions
shall be in effect:
(i) A HOSTILE TAKE-OVER shall be deemed to occur in the
event (A) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept.
(ii) The TAKE-OVER PRICE per share shall be deemed to be
equal to the greater of (A) the Fair Market Value per Option Share on
the option surrender date or (B) the highest reported price per share
of Common Stock paid by the tender offeror in effecting the Hostile
Take-Over. However, if the surrendered option is designated as an
Incentive Option in the Grant Notice, then the Take-Over Price shall
not exceed the clause (A) price per share.
2.
<PAGE> 3
IN WITNESS WHEREOF, Pharmacyclics, Inc. has caused this Addendum to be
executed by its duly-authorized officer, and Optionee has executed this
Addendum, all as of the Effective Date specified below.
PHARMACYCLICS, INC.
By:
--------------------------------------------------------
Title:
-----------------------------------------------------
-----------------------------------------------------------
1~, OPTIONEE
-----------------------------------------------------------
EFFECTIVE DATE: , 199
--------------- -
3.
<PAGE> 1
EXHIBIT 99.7
PHARMACYCLICS, INC.
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED THROUGH SEPTEMBER 11, 1997)
I. PURPOSE
This Pharmacyclics, Inc. Employee Stock Purchase Plan (the
"Plan") is intended to provide eligible employees of the Corporation and one or
more of its Corporate Affiliates with the opportunity to acquire a proprietary
interest in the Corporation through participation in a plan designed to qualify
as an employee stock purchase plan under Section 423 of the Code.
II. DEFINITIONS
For purposes of administration of the Plan, the following
terms shall have the meanings indicated:
BOARD means the Board of Directors of the Corporation.
CODE means the Internal Revenue Code of 1986, as amended.
COMMON STOCK means shares of the Corporation's common stock.
CORPORATE AFFILIATE means any parent or subsidiary corporation
of the Corporation (as determined in accordance with Code Section 424),
including any parent or subsidiary corporation which becomes such after the
Effective Time.
CORPORATION means Pharmacyclics, Inc., a Delaware corporation,
and any corporate successor to all or substantially all of the assets or voting
stock of Pharmacyclics, Inc. which shall by appropriate action adopt the Plan.
EFFECTIVE TIME means the time at which the Underwriting
Agreement for the initial public offering of the Common Stock is executed and
finally priced. The initial offering period under the Plan shall start at the
time of such execution and pricing of the Underwriting Agreement. Any Corporate
Affiliate which becomes a Participating Corporation in the Plan after such
Effective Time shall designate a subsequent Effective Time with respect to its
employee-Participants.
<PAGE> 2
ELIGIBLE EARNINGS means the (i) regular base salary paid to a
Participant by one or more Participating Companies during such individual's
period of participation in the Plan, plus (ii) any pre-tax contributions made by
the Participant to any Code Section 401(k) salary deferral plan or any Code
Section 125 cafeteria benefit program now or hereafter established by the
Corporation or any Corporate Affiliate, plus (iii) all of the following amounts
to the extent paid in cash: overtime payments, bonuses, commissions,
profit-sharing distributions and other incentive-type payments. However,
Eligible Earnings shall NOT include any contributions (other than Code Section
401(k) or Code Section 125 contributions) made on the Participant's behalf by
the Corporation or any Corporate Affiliate to any deferred compensation plan or
welfare benefit program now or hereafter established.
ELIGIBLE EMPLOYEE means any person who is on a regular basis
expected to work more than twenty (20) hours per week for more than five (5)
months per calendar year for the Corporation or any other Participating
Corporation as an employee for earnings considered wages under Section 3121(a)
of the Code.
ENTRY DATE means the date an Eligible Employee first joins the
offering period in effect under the Plan. The earliest Entry Date under the Plan
shall be the Effective Time.
FAIR MARKET VALUE means, for the Effective Time at which the
initial offering period under the Plan begins, the price per share at which the
Common Stock is to be sold in the initial public offering of the Common Stock
pursuant to the Underwriting Agreement. For any subsequent date under the Plan
on which the Common Stock is registered under Section 12(g) of the 1934 Act and
traded on the open market, Fair Market Value means the closing selling price per
share of the Common Stock on such date, as officially quoted on the principal
securities exchange on which the Common Stock is at the time traded or, if not
traded on any securities exchange, the closing selling price per share of the
Common Stock on such date, as reported on the Nasdaq National Market. If there
are no sales of the Common Stock on such day, then the closing selling price per
share on the next preceding day for which such closing selling price is quoted
shall be determinative of Fair Market Value.
1933 ACT means the Securities Act of 1933, as amended.
1934 ACT means the Securities Exchange Act of 1934, as
amended.
PARTICIPANT means any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.
PARTICIPATING CORPORATION means the Corporation and such
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan, as of the Effective Time, are listed in
attached Schedule A.
2.
<PAGE> 3
PLAN ADMINISTRATOR shall have the meaning given such term in
Article III.
SEMI-ANNUAL ENTRY DATE means the first business day of May and
November each calendar year within an offering period in effect under the Plan.
The earliest Semi-Annual Entry Date under the Plan shall be the Effective Time.
SEMI-ANNUAL PERIOD OF PARTICIPATION means each semi-annual
period for which the Participant actually participates in an offering period in
effect under the Plan. There shall be a maximum of four (4) semi-annual periods
of participation within each offering period. The first such semi-annual period
(which may actually be more or less than six (6) months for the initial offering
period) shall extend from the Effective Time through the last business day in
April 1996. Subsequent semi-annual periods shall be measured from the first
business day of November to the last business day of April and from the first
business day of May to the last business day of October.
SEMI-ANNUAL PURCHASE DATE means the last business day of April
and October each calendar year on which shares of Common Stock are automatically
purchased for Participants under the Plan. The initial Semi-Annual Purchase Date
shall be April 30, 1996.
III. ADMINISTRATION
The Plan shall be administered by a committee of two (2) or
more non-employee Board members appointed by the Board (the "Plan
Administrator"). The Plan Administrator shall have sole and exclusive authority
to administer the Plan, interpret and construe any provision of the Plan and
adopt such rules and regulations for administering the Plan as it may deem
necessary in order to comply with the requirements of Code Section 423.
Decisions of the Plan Administrator shall be final and binding on all parties
who have an interest in the Plan.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under
the Plan through a series of successive offering periods until such time as (i)
the maximum number of shares of Common Stock available for issuance under the
Plan shall have been purchased or (ii) the Plan shall have been sooner
terminated in accordance with Subsection I of Article VII, Subsection A of
Article IX or Subsection B of Article X.
B. Each offering period shall have a maximum duration of
twenty-four (24) months, except that the first offering period may have a
duration of up to twenty-seven (27) months. The duration of each offering period
shall be designated by the Plan Administrator prior to the start date. However,
the initial offering period shall run from the Effective Time to the last
business day of October 1997. The next offering period shall commence on the
first business
3.
<PAGE> 4
day of November 1997, and subsequent offering periods shall commence as
designated by the Plan Administrator.
C. The Participant shall be granted a separate purchase right
for each offering period in which he or she participates. The purchase right
shall be granted on the Entry Date on which such individual first joins the
offering period in effect under the Plan and shall be automatically exercised in
successive semi-annual installments on the last business day of April and
October of each year. Accordingly, each purchase right may be exercised up to
two (2) times each year it remains outstanding.
D. No purchase rights granted under the Plan shall be
exercised, and no shares of Common Stock shall be issued hereunder, until such
time as (i) the Plan shall have been approved by the stockholders of the
Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any securities exchange on which the Common Stock is listed for trading and all
other applicable requirements established by law or regulation.
E. The Participant's acquisition of Common Stock under the
Plan on any Semi-Annual Purchase Date shall neither limit nor require the
Participant's acquisition of Common Stock on any subsequent Semi-Annual Purchase
Date, whether within the same or a different offering period.
V. ELIGIBILITY AND PARTICIPATION
A. Each Eligible Employee of a Participating Corporation shall
be eligible to participate in the Plan in accordance with the following
provisions:
- An individual who is an Eligible Employee on the start date
of the initial offering period under the Plan shall be eligible to
commence participation in any offering period under the Plan on the
start date of that offering period or on any subsequent SemiAnnual
Entry Date within that offering period on which he/she remains an
Eligible Employee.
- An individual who becomes an Eligible Employee after the
start date of the initial offering period shall be eligible to commence
participation in any offering period under the Plan on any Semi-Annual
Entry Date within that offering period on which he/she remains an
Eligible Employee, provided he/she has completed ninety (90) days of
Service with the Corporation or any Corporate Affiliate on or prior to
such date.
4.
<PAGE> 5
- The date on which an individual first joins an offering
period shall be deemed to be such individual's Entry Date for the
offering period, and on that date such individual shall be granted
his/her purchase right for that offering period.
B. In order to participate in the Plan for a particular
offering period, the Eligible Employee must complete the enrollment forms
prescribed by the Plan Administrator (including a purchase agreement and a
payroll deduction authorization) and file such forms with the Plan Administrator
(or its designate) on or before his/her scheduled Entry Date. However, for each
Participant whose Entry Date is deemed to be the start date of the initial
offering period, the requisite enrollment forms must be filed within ten (10)
business days following such start date; otherwise, the Entry Date for that
Participant shall be the first Semi-Annual Entry Date following the filing of
such enrollment forms.
C. The payroll deduction authorized by the Participant for
purposes of acquiring shares of Common Stock under the Plan may be any multiple
of one percent (1%) of the Eligible Earnings paid to the Participant during each
Semi-Annual Period of Participation within the offering period, up to a maximum
of ten percent (10%). The deduction rate so authorized shall continue in effect
for the remainder of the offering period, except to the extent such rate is
changed in accordance with the following guidelines:
- The Participant may, at any time during a Semi-Annual Period
of Participation, reduce his/her rate of payroll deduction to become
effective as soon as possible after filing of the requisite reduction
form with the Plan Administrator. The Participant may not, however,
effect more than one (1) such reduction per Semi-Annual Period of
Participation.
- The Participant may, prior to the commencement of any new
Semi-Annual Period of Participation within the offering period,
increase the rate of his/her payroll deduction by filing the
appropriate form with the Plan Administrator. The new rate (which may
not exceed the ten percent (10%) maximum) shall become effective as of
the first day of the first Semi-Annual Period of Participation
following the filing of such form.
D. Payroll deductions will automatically cease upon the
termination of the Participant's purchase right in accordance with the
applicable provisions of Section VII below.
VI. STOCK SUBJECT TO PLAN
A. The Common Stock purchasable by Participants under the Plan
shall, solely in the discretion of the Plan Administrator, be made available
from either authorized but unissued shares of Common Stock or from shares of
Common Stock reacquired by the Corporation, including shares of Common Stock
purchased on the open market. The total number of shares
5.
<PAGE> 6
which may be issued under the Plan shall not exceed 100,000 shares (subject to
adjustment under Section VI.B below). Such share reserve is comprised of (i) the
initial 50,000-share reserve approved by the Board and the stockholders prior to
the Effective Time and (ii) the additional 50,000-share increase approved by the
Board, subject to stockholder approval at the 1997 Annual Stockholders Meeting.
B. In the event any change is made to the Corporation's
outstanding Common Stock by reason of any stock dividend, stock split, exchange
or combination of shares, recapitalization or any other change affecting the
Common Stock as a class without the Corporation's receipt of consideration,
appropriate adjustments shall be made by the Plan Administrator to (i) the class
and maximum number of securities issuable in the aggregate over the term of the
Plan, (ii) the class and maximum number of securities purchasable per
Participant on any one (1) Semi-Annual Purchase Date and (iii) the class and
number of securities and the price per share in effect under each purchase right
at the time outstanding under the Plan. Such adjustments shall be designed to
preclude the dilution or enlargement of rights and benefits under the Plan.
VII. PURCHASE RIGHTS
Each Eligible Employee who participates in the Plan for a
particular offering period shall have the right to purchase shares of Common
Stock, in a series of successive semi-annual installments during such offering
period, upon the terms and conditions set forth below and shall execute a
purchase agreement embodying such terms and conditions and such other provisions
(not inconsistent with the Plan) as the Plan Administrator may deem advisable.
A. PURCHASE PRICE. Common Stock shall be purchasable on each
SemiAnnual Purchase Date within the offering period at a purchase price equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the Participant's Entry Date into that offering period or (ii)
the Fair Market Value per share on that Semi-Annual Purchase Date. However, for
each Participant whose Entry Date is other than the start date of the offering
period, the clause (i) amount shall in no event be less than the Fair Market
Value of the Common Stock on the start date of that offering period.
B. NUMBER OF PURCHASABLE SHARES. The number of shares
purchasable per Participant on each Semi-Annual Purchase Date during the
offering period shall be the number of whole shares obtained by dividing the
amount collected from the Participant through payroll deductions during the
Semi-Annual Period of Participation ending with that Semi-Annual Purchase Date
(together with any carryover deductions from the preceding Semi-Annual Period of
Participation) by the purchase price in effect for the Semi-Annual Purchase Date
(as determined in accordance with Subsection A above). However, the maximum
number of shares of Common Stock purchasable per Participant on any Semi-Annual
Purchase Date shall not exceed One Thousand (1,000) shares, subject to periodic
adjustment under Section VI.B.
6.
<PAGE> 7
Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would, immediately after
the grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any of its Corporate Affiliates.
C. PAYMENT. Payment for Common Stock purchased under the Plan
shall be effected by means of the Participant's authorized payroll deductions.
Such deductions shall begin with the first pay day following the Participant's
Entry Date into the offering period and shall (unless sooner terminated by the
Participant) continue through the pay day ending with or immediately prior to
the last day of the offering period. However, for each Participant whose Entry
Date is deemed to be the start date of the initial offering period, payroll
deductions shall begin with the first pay day occurring more than five (5) days
after his/her filing of the requisite enrollment forms. The amounts so collected
shall be credited to the Participant's book account under the Plan, but no
interest shall be paid on the outstanding balance credited to such account. The
amounts collected from a Participant will not be held in any segregated account
or trust fund and may be commingled with the general assets of the Corporation
and used for general corporate purposes.
D. TERMINATION OF PURCHASE RIGHT. The following provisions
shall govern the termination of outstanding purchase rights:
- A Participant may, at any time on or before the fifth (5th)
business day preceding the next Semi-Annual Purchase Date, terminate
his/her outstanding purchase right under the Plan by filing the
prescribed notification form with the Plan Administrator (or its
designate). No further payroll deductions shall be collected from the
Participant with respect to the terminated purchase right, and any
payroll deductions collected for the Semi-Annual Period of
Participation in which such termination occurs shall, at the
Participant's election, be immediately refunded or held for the
purchase of shares on the Semi-Annual Purchase Date immediately
following such termination. If no such election is made at the time
such purchase right is terminated, then the payroll deductions
collected with respect to the terminated right shall be refunded as
soon as possible.
- The termination of such purchase right shall be irrevocable,
and a Participant may not subsequently rejoin the offering period for
which the terminated purchase right was granted. In order to resume
participation in any subsequent offering period, such individual must
re-enroll in the Plan (by making a timely filing of a new stock
purchase agreement and enrollment form) on or before the date he or she
is first eligible to join the new offering period.
- Should a Participant cease to remain an Eligible Employee
for any reason (including death, disability or change in status) while
his/her purchase right remains
7.
<PAGE> 8
outstanding, then that purchase right shall immediately terminate, and
such individual (or the personal representative of the estate of a
deceased Participant) shall have the following election with respect to
the payroll deductions made to date in the Semi-Annual Period of
Participation in which such cessation of Eligible Employee status
occurs:
1) to withdraw all of those deductions, or
2) to have such funds held for the purchase of shares
on the next Semi-Annual Purchase Date.
If no such election is made within the thirty (30)-day period
following such cessation of Eligible Employee status or (if earlier) prior to
the next Semi-Annual Purchase Date, then the collected payroll deductions shall
be refunded as soon as possible. In no event, however, may any payroll
deductions be made on the Participant's behalf following his/her cessation of
Eligible Employee status.
E. STOCK PURCHASE. Shares of Common Stock shall automatically
be purchased on behalf of each Participant (other than Participants whose
payroll deductions have previously been refunded in accordance with the
Termination of Purchase Right provisions in Subsection D above) on each
Semi-Annual Purchase Date. The purchase shall be effected by applying each
Participant's payroll deductions for the Semi-Annual Period of Participation
ending on such Semi-Annual Purchase Date (together with any carryover deductions
from the preceding Semi-Annual Period of Participation) to the purchase of whole
shares of Common Stock (subject to the limitation on the maximum number of
purchasable shares imposed under Subsection B of this Article VII) at the
purchase price in effect for that Semi-Annual Purchase Date. Any payroll
deductions not applied to such purchase because they are not sufficient to
purchase a whole share shall be held for the purchase of Common Stock on the
next Semi-Annual Purchase Date. However, any payroll deductions not applied to
the purchase of Common Stock by reason of the limitation on the maximum number
of shares purchasable by the Participant on the Semi-Annual Purchase Date shall
be promptly refunded to the Participant.
F. PRORATION OF PURCHASE RIGHTS. Should the total number of
shares of Common Stock which are to be purchased pursuant to outstanding
purchase rights on any particular date exceed the number of shares then
available for issuance under the Plan, the Plan Administrator shall make a
pro-rata allocation of the available shares on a uniform and nondiscriminatory
basis, and the payroll deductions of each Participant, to the extent in excess
of the aggregate purchase price payable for the Common Stock pro-rated to such
individual, shall be refunded to such Participant.
G. RIGHTS AS STOCKHOLDER. A Participant shall have no
stockholder rights with respect to the shares subject to his/her outstanding
purchase right until the shares are actually purchased on the Participant's
behalf in accordance with the applicable provisions of the Plan.
8.
<PAGE> 9
No adjustments shall be made for dividends, distributions or other rights for
which the record date is prior to the date of such purchase.
A Participant shall be entitled to receive, as soon as
practicable after each SemiAnnual Purchase Date, a stock certificate for the
number of shares purchased on the Participant's behalf. Such certificate may,
upon the Participant's request, be issued in the names of the Participant and
his/her spouse as community property or as joint tenants with right of
survivorship. Alternatively, the Participant may request the issuance of such
certificate in "street name" for immediate deposit in a Corporation-designated
brokerage account.
H. ASSIGNABILITY. No purchase right granted under the Plan
shall be assignable or transferable by the Participant other than by will or by
the laws of descent and distribution following the Participant's death, and
during the Participant's lifetime the purchase right shall be exercisable only
by the Participant.
I. BENEFICIARY DESIGNATION. A Participant may file a written
beneficiary designation indicating the person entitled to receive any shares
purchased or purchasable on the Participant's behalf at the time of his/her
death or to obtain a cash refund of any existing payroll deductions held on the
deceased Participant's behalf under the Plan. Such beneficiary designation may
be changed by the Participant at any time by filing the appropriate form with
the Plan Administrator. In the event there is no validly-designated beneficiary
under the Plan living at the time of the Participant's death, the Corporation
shall deliver such shares and/or cash refund to the executor or administrator of
the Participant's estate or, if (to the knowledge of the Corporation) no such
executor or administrator has been appointed, the Corporation shall deliver such
shares and/or cash refund to the Participant's spouse or if no spouse is living,
to the children of the Participant in equal shares.
J. CHANGE IN OWNERSHIP. Should any of the following
transactions (a "Change in Ownership") occur during the offering period:
- a merger or consolidation in which the Corporation is not
the surviving entity, except for a transaction the principal purpose of
which is to change the State in which the Corporation is incorporated,
- the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation, or
- any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%)
of the total combined voting power of the Corporation's outstanding
securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such merger,
9.
<PAGE> 10
then all outstanding purchase rights under the Plan shall
automatically be exercised, immediately prior to the effective date of such
Change in Ownership, by applying the payroll deductions of each Participant for
the Semi-Annual Period of Participation in which such Change in Ownership occurs
to the purchase of whole shares of Common Stock at eighty-five percent (85%) of
the lower of (i) the Fair Market Value of the Common Stock on the Participant's
Entry Date into the offering period in which such Change in Ownership occurs or
(ii) the Fair Market Value of the Common Stock immediately prior to the
effective date of such Change in Ownership. However, the applicable share
limitations of Articles VII and VIII shall continue to apply to any such
purchase, and the clause (i) amount above shall not, for any Participant whose
Entry Date for the offering period is other than the start date of that offering
period, be less than the Fair Market Value of the Common Stock on such start
date.
The Corporation shall use its best efforts to provide at least
ten (10)-days prior written notice of the occurrence of any Change in Ownership,
and Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights in accordance with the applicable
provisions of this Article VII.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to
acquire Common Stock pursuant to any purchase right outstanding under this Plan
if and to the extent such accrual, when aggregated with (i) rights to purchase
Common Stock accrued under any other purchase right outstanding under this Plan
and (ii) similar rights accrued under other employee stock purchase plans
(within the meaning of Code Section 423) of the Corporation or its Corporate
Affiliates, would otherwise permit such Participant to purchase more than
Twenty-Five Thousand Dollars ($25,000) worth of stock of the Corporation or any
Corporate Affiliate (determined on the basis of the Fair Market Value of such
stock on the date or dates such rights are granted) for each calendar year such
rights are at any time outstanding.
B. For purposes of applying such accrual limitations, the
right to acquire Common Stock pursuant to each purchase right outstanding under
the Plan shall accrue as follows:
- The right to acquire Common Stock under each such purchase
right shall accrue in a series of successive semi-annual installments
as and when the purchase right first becomes exercisable for each such
installment on the last business day of each SemiAnnual Period of
Participation for which the right remains outstanding.
- No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire Common Stock
under one (1) or more other purchase rights at a rate equal to
Twenty-Five Thousand Dollars ($25,000) worth of Common Stock
(determined
10.
<PAGE> 11
on the basis of the Fair Market Value on the date or dates of grant)
for each calendar year during which one (1) or more of those purchase
rights were at any time outstanding.
- If by reason of such accrual limitations, any purchase right
of a Participant does not accrue for a particular Semi-Annual Period of
Participation, then the payroll deductions which the Participant made
during that Semi-Annual Period of Participation with respect to such
purchase right shall be promptly refunded.
C. In the event there is any conflict between the provisions
of this Article VIII and one (1) or more provisions of the Plan or any
instrument issued thereunder, the provisions of this Article VIII shall be
controlling.
IX. AMENDMENT AND TERMINATION
A. The Board may alter, amend, suspend or discontinue the Plan
following the close of any Semi-Annual Period of Participation. However, the
Board may not, without the approval of the Corporation's stockholders:
- materially increase the maximum number of shares issuable
under the Plan or the maximum number of shares purchasable per
Participant on any one (1) SemiAnnual Purchase Date, except that the
Plan Administrator shall have the authority, exercisable without such
stockholder approval, to effect adjustments to the extent necessary to
reflect changes in the Corporation's capital structure pursuant to
Subsection B of Article VI; or
- alter the purchase price formula so as to reduce the
purchase price payable for the shares purchasable under the Plan; or
- materially increase the benefits accruing to Participants
under the Plan or materially modify the requirements for eligibility to
participate in the Plan.
B. The Corporation shall have the right, exercisable in the
sole discretion of the Plan Administrator, to terminate all outstanding purchase
rights under the Plan immediately following the close of any Semi-Annual Period
of Participation. Should the Corporation elect to exercise such right, then the
Plan shall terminate in its entirety. No further purchase rights shall
thereafter be granted or exercised, and no further payroll deductions shall
thereafter be collected, under the Plan.
X. GENERAL PROVISIONS
A. The Plan was adopted by the Board on August 2, 1995 and
became effective at the Effective Time. The Plan was amended and restated by the
Board on September
11.
<PAGE> 12
11, 1997 to increase the share reserve by 50,000 shares, subject to stockholder
approval at the 1997 Annual Stockholders Meeting.
B. The Plan shall terminate upon the earlier of (i) the last
business day in October, 2005, (ii) the date on which all shares available for
issuance under the Plan shall have been sold pursuant to purchase rights
exercised under the Plan, or (iii) the date the Board terminates the Plan.
C. All costs and expenses incurred in the administration of
the Plan shall be paid by the Corporation.
D. Neither the action of the Corporation in establishing the
Plan, nor any action taken under the Plan by the Board or the Plan
Administrator, nor any provision of the Plan itself shall be construed so as to
grant any person the right to remain in the employ of the Corporation or any of
its Corporate Affiliates for any period of specific duration, and such person's
employment may be terminated at any time, with or without cause.
E. The provisions of the Plan shall be governed by the laws of
the State of California without resort to that State's conflict-of-laws rules.
12.
