-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SW6f8GvQAePZCaHvLwe3dx4OqYW3pwJ8DhIHkf+vw7fH4sDJS2vdwtqb67EXxCBT iPQbDP8EdUzfDS8Zp7UoYg== /in/edgar/work/20000615/0000897101-00-000617/0000897101-00-000617.txt : 20000919 0000897101-00-000617.hdr.sgml : 20000919 ACCESSION NUMBER: 0000897101-00-000617 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20000615 EFFECTIVENESS DATE: 20000615 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MTS SYSTEMS CORP CENTRAL INDEX KEY: 0000068709 STANDARD INDUSTRIAL CLASSIFICATION: [3829 ] IRS NUMBER: 410908057 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-39388 FILM NUMBER: 655717 BUSINESS ADDRESS: STREET 1: 14000 TECHNOLOGY DR CITY: EDEN PRAIRIE STATE: MN ZIP: 55344-2290 BUSINESS PHONE: 6129374000 MAIL ADDRESS: STREET 1: 14000 TECHNOLOGY DR CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 FORMER COMPANY: FORMER CONFORMED NAME: RESEARCH INC DATE OF NAME CHANGE: 19670216 S-8 1 0001.txt As filed with the Securities and Exchange Commission on June 15, 2000. Registration No. 333-___________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------------------- MTS SYSTEMS CORPORATION (Exact name of registrant as specified in its charter) MINNESOTA 41-0908057 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 14000 TECHNOLOGY DRIVE, EDEN PRARIE, MINNESOTA 55344-9763 (Address of principal executive offices, including zip code) MTS SYSTEMS CORPORATION 1997 STOCK OPTION PLAN (Full title of the plan) Sidney W. Emery, Jr. Copy to: President and Chief Executive Officer John R. Houston MTS Systems Corporation Robins, Kaplan, Miller & Ciresi L.L.P. 14000 Technology Drive 2800 LaSalle Plaza Eden Prarie, Minnesota 55344-9763 800 LaSalle Avenue Minneapolis, Minnesota 55402 (Name and address of agent for service) (612) 349-8500 (612) 937-4000 (Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE ===================== ===================== ==================== ======================= ================== TITLE OF PROPOSED PROPOSED SECURITIES AMOUNT MAXIMUM MAXIMUM AMOUNT OF TO BE REGISTERED TO BE OFFERING PRICE AGGREGATE REGISTRATION REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE - --------------------- --------------------- -------------------- ----------------------- ------------------ Common Stock, $0.25 par value 2,500,000 shares $7.07 $17,675,000 $4,667 - --------------------- --------------------- -------------------- ----------------------- ------------------
(1) 1,500,000 shares (as adjusted to reflect the two-for-one stock split which occurred February 2, 1998) were registered on Form S-8 (No. 333-28661) on June 6, 1997 and 2,500,000 shares are being registered herewith. (2) Pursuant to Rule 457(c) and (h)(1), the per share price is estimated, solely for the purpose of determining the registration fee, based upon the average of the high and low prices for such common stock on June 12, 2000 as reported on The Nasdaq National Market. ================================================================================ INCORPORATION OF CONTENTS OF REGISTRATION STATEMENT BY REFERENCE A Registration Statement on Form S-8 (File No. 333-28661) was filed with the Securities and Exchange Commission (the "Commission") on June 6, 1997 covering the registration of 1,500,000 shares (adjusted to reflect a two-for-one stock split which occurred February 2, 1998) initially authorized for issuance under the MTS Systems Corporation 1997 Stock Option Plan (the "Plan"). Pursuant to General Instruction E of Form S-8, this Registration Statement is being filed to register an additional 2,500,000 shares authorized under the Plan. An amendment to the Plan to increase the reserved and authorized number of shares under the Plan by 2,500,000 was authorized by the Company's Board of Directors on November 3, 1999 and approved by the Company's shareholders on January 25, 2000. This Registration Statement should also be considered a post-effective amendment to the prior Registration Statement. The contents of the prior Registration Statement are incorporated herein by reference. PART I Pursuant to the Note to Part I of Form S-8, the information required by Items 1 and 2 of Form S-8 is not filed as part of this Registration Statement. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents have been filed by MTS Systems Corporation (the "Company") with the Securities and Exchange Commission and are incorporated by reference herein: a. The Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1999; b. The Definitive Proxy Statement dated December 22, 1999 for the 2000 Annual Meeting of Shareholders held on January 25, 2000; c. The Company's Quarterly Reports on Form 10-Q for the quarters ended December 31, 1999 and March 31, 2000; and the Company's Current Report on Form 8-K filed on October 15, 1999; and d. The description of the Company's capital stock under the heading "Comparison of Rights of Holders of MTS Common Stock and Holders of DSPT Common Stock -- Description of MTS Common Stock" contained in the Company's Registration Statement on Form S-4 (333-77277), filed with the Commission on April 28, 1999. All documents filed with the Commission by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 subsequent to 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 such securities then remaining to be sold, shall be deemed to be incorporated by reference herein and a part hereof from the date of filing of such documents. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. John R. Houston, Secretary of the Company is a partner of Robins, Kaplan, Miller & Ciresi L.L.P., which is the law firm passing on the validity of the securities issued under the Plan. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Company's Bylaws provide that any person who at any time shall serve or shall have served as a director, officer or employee of the Company, or of any other enterprise at the request of the Company, and the heirs, executors and administrators of such person, shall be indemnified by the Company in accordance with, and to the fullest extent permitted by, the provisions of the Minnesota Business Corporation Act. -2- Section 302A.521 of the Minnesota Business Corporation Act provides that a corporation shall indemnify a person made or threatened to be made a party to a proceeding by reason of the former or present official capacity of the person against judgments, penalties, fines (including, without limitation, excise taxes assessed against the person with respect to an employee benefit plan) settlements, and reasonable expenses, including attorneys' fees and disbursements, incurred by the person in connection with the proceeding, if, with respect to the acts or omissions of the person complained of in the proceeding, such person: (1) has not been indemnified by another organization or employee benefit plan; (2) acted in good faith; (3) received no improper personal benefit and Section 302A.255 (director conflicts of interest), if applicable, has been satisfied; (4) in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful; and (5) in the case of acts or omissions occurring in the official capacity for the corporation reasonably believed that the conduct was in the best interests of the corporation, or in the case of acts or omissions occurring in the official capacity for other, affiliated organizations, reasonably believed that the conduct was not opposed to the best interests of the corporation. The Company also maintains an insurance policy or policies to assist in funding indemnification of directors and officers for certain liabilities. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. The following exhibits are filed with this Registration Statement on Form S-8: EXHIBIT NUMBER DESCRIPTION - ------ ----------- 5.1 Opinion of Robins, Kaplan, Miller & Ciresi L.L.P. as to the legality of Common Stock of the Company (filed electronically herewith). 23.1 Consent of Arthur Andersen LLP (filed electronically herewith). 23.2 Consent of Robins, Kaplan, Miller & Ciresi L.L.P. (included in Exhibit 5.1). -3- 24.1 Power of Attorney (included on signature page). 99.1 The Company's 1997 Stock Option Plan, as amended (filed electronically herewith). ITEM 9. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act of 1934 (and, where applicable, each -4- filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the 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 Act and will be governed by the final adjudication of such issue. -5- SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Eden Prairie, State of Minnesota on June 13, 2000. MTS SYSTEMS CORPORATION By /s/ Sidney W. Emery, Jr. ------------------------------------------- Sidney W. Emery, Jr. Chief Executive Officer and President POWER OF ATTORNEY The undersigned officers and directors of MTS Systems Corporation hereby constitute and appoint Sidney W. Emery, Jr. and David E. Hoffman, or either of them, with power to act one without the other, our true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for us and in our stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this Registration Statement and all documents relating thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing necessary or advisable to be done in and about the premises, as fully to all intents purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on June 13, 2000. SIGNATURE TITLE /s/ Sidney W. Emery, Jr. President and Chief Executive Officer - ----------------------------- (Principal Executive Officer) and Director Sidney W. Emery, Jr. /s/ David E. Hoffman Chief Financial Officer (Principal Financial - ----------------------------- and Accounting Officer) David E. Hoffman /s/ Charles A. Brickman Director - ----------------------------- Charles A. Brickman - ----------------------------- Director Jean-Lou Chameau -6- SIGNATURE TITLE Director - ----------------------------- Bobby I. Griffin /s/ Russell A. Gullotti Director - ----------------------------- Russell A. Gullotti /s/ Brendan C. Hegarty Director - ----------------------------- Brendan C. Hegarty /s/ Linda Hall Whitman Director - ----------------------------- Linda Hall Whitman, Ph.D -7- EX-5.1 2 0002.txt OPINION RE: LEGALITY EXHIBIT 5.1 OPINION OF ROBINS, KAPLAN, MILLER & CIRESI, L.L.P. ROBINS, KAPLAN, MILLER & CIRESI L.L.P. 2800 LaSalle Plaza 800 LaSalle Avenue Minneapolis, MN 55402-2015 June 13, 2000 MTS Systems Corporation 14000 Technology Drive Eden Prairie, MN 55344-9763 Re: REGISTRATION STATEMENT ON FORM S-8 1997 STOCK OPTION PLAN REGISTRATION OF 2,500,000 SHARES OF COMMON STOCK Ladies and Gentlemen: This opinion is furnished in connection with the registration under the Securities Act of 1933 on Form S-8 of 2,500,000 of Common Stock, $.25 par value, of MTS Systems Corporation (the "Company") offered to executives, managers, key technical and functional employees, directors and consultants pursuant to the MTS Systems Corporation 1997 Stock Option Plan (the "Plan"). We advise you that it is our opinion, based on our familiarity with the affairs of the Company and upon our examination of pertinent documents, that the 2,500,000 shares of Common Stock to be issued by the Company under the Plan will, when paid for and issued, be validly issued and lawfully outstanding, fully paid and nonassessable shares of Common Stock of the Company. The undersigned hereby consents to the filing of this opinion with the Securities and Exchange Commission as an Exhibit to the Registration Statement with respect to said shares of Common Stock under the Securities Act of 1933. Sincerely, /s/ Robins, Kaplan, Miller & Ciresi L.L.P. EX-23.1 3 0003.txt CONSENT OF INDEPENDENT PUBLIC ACCOUNTS EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our reports dated November 24, 1999, incorporated by reference in MTS Systems Corporation's Form 10-K for the year ended September 30, 1999 and to all reference to our Firm included in this registration statement. /s/ Arthur Andersen LLP Minneapolis, Minnesota, June 12, 2000 EX-99.1 4 0004.txt 1997 STOCK OPTION PLAN EXHIBIT 99.1 MTS SYSTEMS CORPORATION 1997 STOCK OPTION PLAN TABLE OF CONTENTS SECTION PAGE - ------- ---- 1. General Purpose of Plan; Definitions............................1 2. Administration..................................................3 3. Stock Subject to Plan...........................................4 4. Eligibility.....................................................4 5. Stock Options...................................................4 6. Transfer, Leave of Absence, etc.................................8 7. Amendments and Termination......................................9 8. General Provisions..............................................9 MTS SYSTEMS CORPORATION 1997 STOCK OPTION PLAN SECTION 1. General Purpose of Plan; Definitions. The name of this plan is the MTS Systems Corporation 1997 Stock Option Plan (the "Plan"). The purpose of the Plan is to enable MTS Systems Corporation (the "Company") and its Subsidiaries to retain and attract executives, managers, key technical and functional employees, directors and consultants who contribute to the Company's success by their ability, ingenuity and industry, and to enable such individuals to participate in the long-term success and growth of the Company by giving them a proprietary interest in the Company. For purposes of the Plan, the following terms shall be defined as set forth below: a. "Agreement" means an agreement by and between the Company and an optionee or recipient of an award under the Plan setting forth the terms and conditions of the option or award. b. "Board" means the Board of Directors of the Company as it may be comprised from time to time. c. "Cause" means a felony conviction of a participant or the failure of a participant to contest prosecution for a felony, willful misconduct, dishonesty or intentional violation of a statute, rule or regulation, any of which, in the judgment of the Company, is harmful to the business or reputation of the Company. d. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. e. "Committee" means the Committee referred to in Section 2 of the Plan. If at any time no Committee shall be in office, then the functions of the Committee specified in the Plan shall be exercised by the Board, unless the Plan specifically states otherwise. f. "Company" means MTS Systems Corporation, a corporation organized under the laws of the State of Minnesota (or any successor corporation). g. "Consultant" means any person, including an advisor, engaged by the Company or a Parent Corporation or Subsidiary of the Company to render services and who is compensated for such services and who is not an employee of the Company or any Parent Corporation or Subsidiary of the Company. A Non-Employee Director may serve as a Consultant. h. "Disability" means a physical or mental condition resulting from a bodily injury or disease or mental disorder rendering such person incapable of continuing to perform the employment 1 duties of such person at the Company as such duties existed immediately prior to the bodily injury, disease or mental disorder. i. "Fair Market Value" of Stock on any given date shall be determined by the Committee as follows: (a) if the Stock is listed for trading on one of more national securities exchanges, or is traded on the Nasdaq Stock Market, the last reported sales price on the principal such exchange or the Nasdaq Stock Market on the date in question, or if such Stock shall not have been traded on such principal exchange on such date, the last reported sales price on such principal exchange or the Nasdaq Stock Market on the first day prior thereto on which such Stock was so traded; or (b) if the Stock is not listed for trading on a national securities exchange or the Nasdaq Stock Market, but is traded in the over-the-counter market, including the Nasdaq Small Cap Market, the closing bid price for such Stock on the date in question, or if there is no such bid price for such Stock on such date, the closing bid price on the first day prior thereto on which such price existed; or (c) if neither (a) or (b) is applicable, by any means fair and reasonable by the Committee, which determination shall be final and binding on all parties. j. "Incentive Stock Option" means any Stock Option intended to be and designated as an "Incentive Stock Option" within the meaning of Section 422 of the Code. k. "Non-Employee Director" means a "Non-Employee Director" within the meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934. l. "Non-Qualified Stock Option" means any Stock Option that is not an Incentive Stock Option, and is intended to be and is designated as a "Non-Qualified Stock Option." m. "Outside Director" means a Director who: (a) is not a current employee of the Company or any member of an affiliated group which includes the Company; (b) is not a former employee of the Company who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year; (c) has not been an officer of the Company; (d) does not receive remuneration from the Company, either directly or indirectly, in any capacity other than as a director, except as otherwise permitted under Code Section 162(m) and regulations thereunder. For this purpose, remuneration includes any payment in exchange for good or services. This definition shall be further governed by the provisions of Code Section 162(m) and regulations promulgated thereunder. n. "Parent Corporation" means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of the corporations (other than the Company) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. o. "Retirement" means retirement from active employment with the Company and any Subsidiary or Parent Corporation of the Company on or after age 55. 2 p. "Stock" means the Common Stock, $.25 par value per share, of the Company. q. "Stock Option" means any option to purchase shares of Stock granted pursuant to Section 5 below. r. "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. SECTION 2. Administration. The Plan shall be administered by the Board of Directors or by a Committee appointed by the Board of Directors of the Company consisting of at least two Directors, all of whom shall be Outside Directors and Non-Employee Directors, who shall serve at the pleasure of the Board. The Committee shall have the power and authority to grant Stock Options to eligible employees, Consultants and members of the Board pursuant to the terms of the Plan. In particular, the Committee shall have the authority: (i) to select the members of the Board, officers and other key employees of the Company and its Subsidiaries and other eligible persons to whom Stock Options may from time to time be granted hereunder; (ii) to determine whether and to what extent Incentive Stock Options and Non-Qualified Stock Options are to be granted hereunder; (iii) to determine the number of shares to be covered by each such award granted hereunder; and (iv) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder (including, but not limited to, any restriction on any Stock Option); provided, however, that in the event of a merger or asset sale, the applicable provisions of Section 5(c) of the Plan shall govern the acceleration of the vesting of any Stock Option. The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable; to interpret the terms and provisions of the Plan and any award issued under the Plan (and any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may delegate to executive officers of the Company the authority to exercise the powers specified in (i), (ii), (iii), and (iv) above with respect to persons who are not either the chief executive officer of the Company or the four highest paid officers of the Company other than the chief executive officer. 3 All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and Plan participants. SECTION 3. Stock Subject to Plan. The total number of shares of Stock reserved and available for distribution under the Plan shall be 4,000,000. Such shares may consist, in whole or in part, of authorized and unissued shares. Upon a stock-for-stock exercise of a Stock Option or upon the withholding of stock for the payment of the option price or taxes, only the net number of shares issued to the Optionee shall be used to calculate the number of shares remaining available for distribution under the Plan. If any shares that have been optioned cease to be subject to Stock Options, such shares shall again be available for distribution in connection with future awards under the Plan. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, other change in corporate structure affecting the Stock, or spin-off or other distribution of assets to shareholders, such substitution or adjustment shall be made in the aggregate number of shares reserved for issuance under the Plan, in the number and option price of shares subject to outstanding options granted under the Plan, as may be determined to be appropriate by the Committee, in its sole discretion, provided that the number of shares subject to any award shall always be a whole number. SECTION 4. Eligibility. Executives, managers, key technical and functional employees of the Company and Subsidiaries, members of the Board of Directors and Consultants who are responsible for or contribute to the management, growth and profitability of the business of the Company and its Subsidiaries are eligible to be granted Stock Options under the Plan. The optionees under the Plan shall be selected from time to time by the Committee, in its sole discretion, from among those eligible, and the Committee shall determine, in its sole discretion, the number of shares covered by each award. Notwithstanding the foregoing, no person shall receive grants of Stock Options under this Plan which exceed 100,000 shares during any fiscal year of the Company. SECTION 5. Stock Options. Any Stock Option granted under the Plan shall be in such form as the Committee may from time to time approve. The Stock Options granted under the Plan may be of two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock Options shall be granted under the Plan after November 22, 2006. 4 The Committee shall have the authority to grant any optionee Incentive Stock Options, Non-Qualified Stock Options, or both types of options. To the extent that any option does not qualify as an Incentive Stock Option, it shall constitute a separate Non-Qualified Stock Option. Anything in the Plan to the contrary notwithstanding, no term of this Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify either the Plan or any Incentive Stock Option under Section 422 of the Code. The preceding sentence shall not preclude any modification or amendment to an outstanding Incentive Stock Option, whether or not such modification or amendment results in disqualification of such Stock Option as an Incentive Stock Option, provided the optionee consents in writing to the modification or amendment. Options granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable. (a) Option Price. The option price per share of Stock purchasable under a Stock Option shall be determined by the Committee at the time of grant. In no event shall the option price per share of Stock purchasable under an Incentive Stock Option or a Non-Qualified Stock Option be less than 100% of Fair Market Value on the date the option is granted. If an employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is granted to such employee, the option price shall be no less than 110% of the Fair Market Value of the Stock on the date the option is granted. (b) Option Term. The term of each Stock Option shall be fixed by the Committee, but no Incentive Stock Option shall be exercisable more than seven years after the date the option is granted. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is granted to such employee, the term of such option shall be no more than five years from the date of grant. (c) Exercisability. Stock Options shall be exercisable at such time or times as determined by the Committee at or after grant, subject to the restrictions stated in Section 5(b) above. If the Committee provides, in its discretion, that any option is exercisable only in installments, the Committee may waive such installment exercise provisions at any time. Notwithstanding anything contained in the Plan to the contrary, the Committee may, in its discretion, extend or vary the term of any Stock Option or any installment thereof, whether or not the optionee is then employed by the Company, if such action is deemed to be in the best interests of the Company; provided, however, that in the event of a merger or sale of assets, the provisions of this Section 5(c) shall govern vesting acceleration. Notwithstanding the foregoing, unless the Stock Option provides otherwise, any Stock Option granted under this Plan shall be exercisable in full, without regard to any installment exercise provisions, for a period specified by the Committee, but not to exceed sixty (60) days, prior to the 5 occurrence of any of the following events: (i) dissolution or liquidation of the Company other than in conjunction with a bankruptcy of the Company or any similar occurrence, (ii) any merger, consolidation, acquisition, separation, reorganization, or similar occurrence, where the Company will not be the surviving entity or (iii) the transfer of substantially all of the assets of the Company or 20% or more of the outstanding Stock of the Company. The grant of an option pursuant to the Plan shall not limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, exchange or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. (d) Method of Exercise. Stock Options may be exercised in whole or in part at any time during the option period by giving written notice of exercise to the Company specifying the number of shares to be purchased. Such notice shall be accompanied by payment in full of the purchase price, either by certified or bank check, or by any other form of legal consideration deemed sufficient by the Committee and consistent with the Plan's purpose and applicable law, including promissory notes or a properly executed exercise notice together with irrevocable instructions to a broker acceptable to the Company to promptly deliver to the Company the amount of sale or loan proceeds to pay the exercise price. As determined by the Committee at the time of grant or exercise, in its sole discretion, payment in full or in part may also be made in the form of unrestricted Stock already owned by the optionee (which in the case of Stock acquired upon exercise of an option have been owned for more than six months on the date of surrender), provided, however, that, in the case of an Incentive Stock Option, the right to make a payment in the form of already owned shares may be authorized only at the time the option is granted. No shares of Stock shall be issued until full payment therefor has been made. An optionee shall generally have the rights to dividends and other rights of a shareholder with respect to shares subject to the option when the optionee has given written notice of exercise, has paid in full for such shares, and, if requested, has given the representation described in paragraph (a) of Section 8. (e) Non-transferability of Options. (i) Subject to Section 5(e)(ii) below, no Stock Option shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the optionee's lifetime, only by the optionee. (ii) The Committee may, in its discretion, authorize all or a portion of the options to be granted to an optionee to be on terms which permit transfer by such optionee to (a) the spouse, children or grandchildren of the optionees ("Immediate Family Members"), (b) a trust or trusts for the exclusive benefit of such Immediate Family Members, or (c) a partnership or partnerships in which such Immediate Family Members are the only partners, provided that (i) there may be no consideration for any such transfer, (ii) the stock option agreement pursuant to which such options are granted must be approved by the Committee, and must expressly provide for transferability in a manner consistent with this Section 5(e)(ii), and (iii) 6 subsequent transfers of transferred options shall be prohibited except those in accordance with Section 5(e)(i). Following transfer, any such options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that the term "optionee" herein shall in such event be deemed to refer to the transferee, except that the events of termination of employment of Sections 5(f), 5(g), 5(h) and 5(i) hereof shall continue to be applied with respect to the original optionee, following which the options shall be exercisable by the transferee only to the extent, and for the periods specified in such Sections. (f) Termination by Death. If an optionee's employment by the Company and any Subsidiary or Parent Corporation terminates by reason of death, any Stock Option may thereafter be immediately exercised, without regard to any vesting requirements or periods previously established, by the legal representative of the estate or by the legatee of the optionee under the will of the optionee, for a period of three (3) years from the date of such death or until the expiration of the stated term of the option, whichever period is shorter. In the event of termination of employment by reason of death, if an Incentive Stock Option (ISO) is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, the option will thereafter be treated as a Non-Qualified Stock Option (NQO). (g) Termination by Reason of Disability. If an optionee's employment by the Company and any Subsidiary or Parent Corporation terminates by reason of Disability, any Stock Option held by such optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after three years from the date of such termination of employment or the expiration of the stated term of the option, whichever period is the shorter. In the event of termination of employment by reason of Disability, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, the option will thereafter be treated as a Non-Qualified Stock Option. (h) Termination by Reason of Retirement. If an optionee's employment by the Company and any Subsidiary or Parent Corporation terminates by reason of Retirement, any Stock Option held by such optionee may thereafter be exercised in full, but, except as provided in the next sentence, may not be exercised after three years from the date of such termination of employment or the expiration of the stated term of the option, whichever period is the shorter. Options granted on or after December 1, 1998, shall, upon termination by reason of Retirement, be exercisable in full for the stated term of the option. In the event of termination of employment by reason of Retirement, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, the option will thereafter be treated as a Non-Qualified Stock Option. (i) Other Termination. If an optionee's continuous status as an employee terminates (other than upon the optionee's death, Disability or Retirement), any Stock Option held by such optionee may thereafter be exercised to the extent it was exercisable at the time of such termination, but may not be exercised after 90 days after such termination, or the expiration of the stated term of 7 the option, whichever period is the shorter. In the event of termination of employment by reason other than death, Disability or Retirement and if pursuant to its terms an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, the option will thereafter be treated as a Non-Qualified Stock Option. In the event an Optionee's employment with the Company or any Subsidiary or Parent Corporation is terminated for Cause, all unexercised Stock Options granted to such Optionee shall immediately terminate. (j) Annual Limit on Incentive Stock Options. The aggregate Fair Market Value (determined as of the time the Stock Option is granted) of the Common Stock with respect to which an Incentive Stock Option under this Plan or any other plan of the Company and any Subsidiary or Parent Corporation is exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. (k) Directors Who Are Not Employees. Each person who (i) is not an employee of the Company, any Parent Corporation or any Subsidiary and (ii) is elected or re-elected as a director by the Board or the shareholders subsequent to November 22, 1996 and prior to December 1, 1998 shall automatically be granted an Option to purchase up to 3,000 shares of Stock, and after December 1, 1998, 4,000 shares of Stock (the actual number of which shall be determined by the Committee upon such election or re-election) as of the date of such election or re-election, at an option price per share equal to 100% of the Fair Market Value of a share of Stock on the date of such election or re-election. All such Options shall be designated as Non-Qualified Stock Options and shall be subject to the same terms and provisions as are then in effect with respect to the grant of Non-Qualified Stock Options to officers and key employees of the Company, except that (i) the term of each such Option shall be five (5) years (four (4) years for options issued before December 3, 1997) after the date of grant, and (ii) the Option shall become exercisable as to all or any part of the shares subject to the Option beginning six (6) months after the date the option is granted. Subject to the foregoing, all provisions of this Plan not inconsistent with the foregoing shall apply to Options granted pursuant to this Section 5(k). The maximum aggregate number of shares as to which Options may be granted to Non-Employee Directors under this Plan shall be 180,000 shares. SECTION 6. Transfer, Leave of Absence, etc. For purposes of the Plan, the following events shall not be deemed a termination of employment: (a) a transfer of an employee from the Company to a Parent Corporation or Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or from one Subsidiary to another; (b) a leave of absence, approved in writing by the Committee, for military service or sickness, or for any other purpose approved by the Company if the period of such leave does not exceed ninety (90) days (or such longer period as the Committee may approve, in its sole discretion); and 8 (c) a leave of absence in excess of ninety (90) days, approved in writing by the Committee, but only if the employee's right to reemployment is guaranteed either by a statute or by contract, and provided that, in the case of any leave of absence, the employee returns to work within 30 days after the end of such leave. SECTION 7. Amendments and Termination. The Board may at any time amend, alter, or discontinue the Plan, but no amendment, alteration, or discontinuation shall be made (i) which would impair the rights of an optionee or participant under any award theretofore granted without the optionee's or participant's consent, (ii) without the approval of the stockholders of the Company, cause the Plan to no longer comply with Rule 16b-3 under the Securities Exchange Act of 1934, Section 422 of the Code or any other regulatory requirements, or (iii) without the approval of the stockholders of the Company, result in a repricing of any award or option theretofore granted hereunder. The Committee may amend the terms of any award or option theretofore granted, prospectively or retroactively to the extent such amendment is consistent with the terms of this Plan, but no such amendment shall impair the rights of any holder without his or her consent except to the extent authorized under the Plan. SECTION 8. General Provisions. (a) The Committee may require each person purchasing shares pursuant to a Stock Option under the Plan to represent to and agree with the Company in writing that the optionee is acquiring the shares without a view to distribution thereof. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. (b) Nothing contained in this Plan shall prevent the Board of Directors from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of the Plan shall not confer upon any employee of the Company or any Subsidiary any right to continued employment with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or a Subsidiary to terminate the employment of any of its employees at any time. (c) Each participant shall, no later than the date as of which any part of the value of an award first becomes includable as compensation in the gross income of the participant for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under the Plan shall be conditional on such payment or arrangements and the Company and Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the participant. With respect to any award under the Plan, if the terms of such award so permit, a 9 participant may elect by written notice to the Company to satisfy part or all of the withholding tax requirements associated with the award by (i) authorizing the Company to retain from the number of shares of Stock that would otherwise be deliverable to the participant, or (ii) delivering to the Company from shares of Stock already owned by the participant, that number of shares having an aggregate Fair Market Value equal to part or all of the tax payable by the participant under this Section 8(c). Any such election shall be in accordance with, and subject to, applicable tax and securities laws, regulations and rulings. (d) At the time of grant, the Committee may provide in connection with any grant made under this Plan that the shares of Stock received as a result of such grant shall be subject to a repurchase right in favor of the Company, pursuant to which the participant shall be required to offer to the Company upon termination of employment for any reason any shares that the participant acquired under the Plan, with the price being the then Fair Market Value of the Stock or, in the case of a termination for Cause, an amount equal to the cash consideration paid for the Stock, subject to such other terms and conditions as the Committee may specify at the time of grant. The Committee may, at the time of the grant of an award under the Plan, provide the Company with the right to repurchase, or require the forfeiture of, shares of Stock acquired pursuant to the Plan by any participant who, at any time within two years after termination of employment with the Company or any Subsidiary or Parent Corporation, directly or indirectly competes with, or is employed by a competitor of, the Company. (e) The Plan is expressly made subject to the approval by shareholders of the Company. If the Plan is not so approved by the shareholders on or before one year after this Plan's adoption by the Board of Directors, this Plan shall not come into effect. The offering of the shares hereunder shall be also subject to the effecting by the Company of any registration or qualification of the shares under any federal or state law or the obtaining of the consent or approval of any governmental regulatory body which the Company shall determine, in its sole discretion, is necessary or desirable as a condition to or in connection with, the offering or the issue or purchase of the shares covered thereby. The Company shall make every reasonable effort to effect such registration or qualification or to obtain such consent or approval. - ----------------------------------- Adopted by the Board of Directors on November 22, 1996. Adopted by the Shareholders of the Company on January 28, 1997. Amended Section 5(k) by Board of Directors on December 3, 1997. Amended Section 5(h) and (k) by Board of Directors on December 1, 1998 Amended Section 5(f) and 5(d) by Board of Directors on August 17, 1999. Amended Sections 7 and 3 by the Board of Directors on November 30, 1999 (and Amendment to Section 3 adopted by the Shareholders of the Company on January 25, 2000). 10 -----END PRIVACY-ENHANCED MESSAGE-----