-----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, OBWFeqw4EjOvZJ0g+HYfAUwWzHem6ESMiOiOwoClgziFftnPYARJZ02FanLqF0QF SJJKKpvb2HVq5/008jqICQ== 0000074697-98-000020.txt : 19981221 0000074697-98-000020.hdr.sgml : 19981221 ACCESSION NUMBER: 0000074697-98-000020 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19981218 EFFECTIVENESS DATE: 19981218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPTICAL COATING LABORATORY INC CENTRAL INDEX KEY: 0000074697 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 680164244 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-69157 FILM NUMBER: 98771530 BUSINESS ADDRESS: STREET 1: 2789 NORTHPOINT PKWY CITY: SANTA ROSA STATE: CA ZIP: 95407 BUSINESS PHONE: 7075456440 MAIL ADDRESS: STREET 1: 2789 NORTHPOINT PARKWAY CITY: SANTA ROSA STATE: CA ZIP: 95407-7397 S-8 1 As filed with the Securities and Exchange Commission on December 14, 1998 Registration No. ___________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------------------------------- OPTICAL COATING LABORATORY, INC. -------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 68-0164244 -------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2789 NORTHPOINT PARKWAY SANTA ROSA, CALIFORNIA 95407-7397 ---------------------------------- (Address of Principal Executive Offices) OPTICAL COATING LABORATORY, INC. 1998 INCENTIVE COMPENSATION PLAN -------------------------------- (Full title of the plan) CHARLES J. ABBE Optical Coating Laboratory, Inc. 2789 Northpoint Parkway Santa Rosa, California 95407-7397 ---------------------------------- (Name and address of agent for service) Copies to: JOHN V. ERICKSON Collette & Erickson 555 California Street San Francisco, California 94104 (415) 788-4646 -------------------------------------------------- CALCULATION OF REGISTRATION FEE ========================================================================= Proposed Proposed maximum maximum Amount offering aggregate Amount of Title of Securities to be price offering registration to be registered registered per unit (a) price (a) fee - ------------------------------------------------------------------------ Common Stock, $.01 par value 1,000,000 shares $19.875 $19,875,000 $6,022.73 ======================================================================== (a) Estimated solely for the purpose of determining the registration fee. Pursuant to Section 6(b) of the Securities Act of 1933 and Rule 457(c) of the Securities Act Rules, the computation of fees is based upon the average of the high and low prices on December 11, 1998, of the Common Stock as reported in The Wall Street Journal on December 14, 1998. The approximate date of commencement of the proposed sale of the securities to the public is as soon as practicable following the effective date of this Registration Statement. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The Company hereby incorporates by reference into this Registration Statement the following documents filed with the Commission: 1. The Company's annual report on Form 10-K for the fiscal year ended October 31, 1997 filed pursuant to Section 13(a) of the Exchange Act; 2. The Company's quarterly reports on Form 10-Q for the fiscal quarters ended January 31, 1998, April 30, 1998 and July 31, 1998, filed pursuant to Section 13(a) of the Exchange Act; 3. The Company's proxy statement dated March 3, 1998, filed pursuant to Section 14 of the Exchange Act; 4. The Company's Form 8-K dated November 18, 1998 filed pursuant to Item 5, Other Events, to report the sale of the assets of the MMG Division of OCLI Optical Coating Laboratory GmbH, the Company's 100% owned subsidiary in Germany. 5. The description of the Company's Common Stock, registered under Section 12 of the Exchange Act, which is contained in the Registration Statement filed under such Act, including any amendment or report filed for the purpose of updating such description. All reports and definitive proxy or information statements subsequently filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the filing of a post-effective amendment which indicates that all securities offered 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. See "Available Information." Any statement contained in a document incorporated or deemed to be incorporated herein by reference 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 other subsequently-filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. The Company will provide without charge to each person to whom a prospectus is delivered, upon request of such person, a copy of any or all of the foregoing documents incorporated herein by reference (other than exhibits to such documents not specifically incorporated by reference). Written or telephone requests should be directed to Optical Coating Laboratory, Inc., 2789 Northpoint Parkway, Santa Rosa, California 95407-7397 Telephone (707) 545-6440, Attention: Agie Navarro, Assistant Secretary. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. In June 1986, Delaware enacted legislation which authorizes corporations to eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breach or alleged breach of directors' fiduciary "duty of care." Under prior Delaware law, directors were accountable to corporations and their stockholders for monetary damages for conduct constituting gross negligence in the exercise of their duty of care. Although the new statute does not change directors' duty of care, it enables corporations to limit available relief to equitable remedies such as injunction or rescission. Numerous lawsuits alleging breach of directors' duty of care have been filed in connection with corporate mergers and acquisitions. The new statute permits corporations to limit available remedies of stockholders in connection with these transactions, as well as in other circumstances. The legislation has no effect on director's liability for (1) breach of the director's duty of loyalty, (2) acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, (3) a corporation's illegal payment of dividends, and (4) approval of any transaction from which the director derives an improper personal benefit. The statute will have no effect on claims arising under the federal securities laws. In connection with the Company's reincorporation in Delaware in November 1987, the Company included in its Certificate of Incorporation a provision limiting directors' liability to the greatest extent permitted by Delaware corporate law. In addition, the Certificate of Incorporation and the Company's Bylaws provide that the Company will indemnify its directors and officers to the fullest extent permitted under Delaware law, including circumstances in which indemnification is otherwise discretionary. The Company submitted these charter and Bylaw provisions to its stockholders, who approved them in March 1987. In addition, the Company has entered into separate Indemnification Agreements with its directors and officers to the full extent permitted by applicable law and the Company's Certificate of Incorporation. The general effect of the indemnification provisions of the Bylaws and the Indemnification Agreements is to require the Company, among other things, to indemnify its directors and officers against certain liabilities that may arise by reason of their status or service as directors or officers (provided the officer or director acted in good faith and in a manner he or she believed to be in or not opposed to the best interests of the Company and, with respect to a criminal proceeding, provided he or she had no reasonable cause to believe that the conduct was unlawful), and to advance their expenses (including attorneys' fees) incurred as a result of any proceeding against them as to which they could be indemnified. The Company believes that its charter and Bylaw provisions and the separate Indemnification Agreements are necessary to attract and retain qualified persons as directors and officers. At present, the Company is not aware of any threatened litigation or proceeding which could result in a claim for indemnification by any director or officer. Section 145 of the Delaware General Corporation Law provides for the indemnification of officers, directors and other corporate agents in terms sufficiently broad to indemnify such persons, under certain circumstances, for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. 4(a) Restated Certificate of Incorporation dated June 10, 1988. Incorporated by reference to Exhibit 4(a) of Registrant's Form 10-Q for the quarter ended July 31, 1988. 4(b) Bylaws. Incorporated by reference to Exhibit (3)(b) of the Registrant's Form 8-K under Item 5 dated November 2, 1987. 4(c) Rights Agreement between Registrant and ChaseMellon Shareholder Services L.L.C. dated December 16, 1997. Incorporated by reference to Exhibit 4.1 of Registrant's Form 10-K for the fiscal year ended October 31, 1997. 5* Opinion and consent of Collette & Erickson. 15(a)* Letter of Deloitte & Touche LLP regarding unaudited interim financial information. 15(b)* Letter of KPMG Peat Marwick LLP regarding unaudited interim financial information of Flex Products, Inc. 23(a)* Consent of Deloitte & Touche LLP. 23(b)* Consent of KPMG Peat Marwick LLP. 23(c)* Consent of Counsel (See Exhibit 5, above). 24 Power of Attorney (See page II-7). 28 Not Applicable 99* 1998 Incentive Compensation Plan. *Items not previously filed are designated by an asterisk. 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; (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) do not apply if the registration statement is on Form S-3 or Form S-8, and 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 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 Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities 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. (h) 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 Securities and Exchange 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 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. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Rosa and State of California, on the 14th day of December 1998. OPTICAL COATING LABORATORY, INC. By /s/CRAIG B. COLLINS ------------------------------------ Craig B. Collins Vice President, Finance and Chief Financial Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears above or below hereby appoints John V. Erickson, Joseph C. Zils or Craig B. Collins, or any of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him in his name, place and stead, in any and all capacities, to sign and file any and all amendments to this registration statement under the Securities Act of 1933, and all exhibits and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney- in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/HERBERT M. DWIGHT, JR. Chairman of the Board December 14, 1998 - ------------------------- Herbert M. Dwight, Jr. President, Chief Executive Officer /s/CHARLES J. ABBE and Director December 14, 1998 - ------------------------- Charles J. Abbe Vice President,Finance and /s/CRAIG B. COLLINS Chief Financial Officer December 14, 1998 - ------------------------- Craig B. Collins Corporate Controller and /s/HOLLY D. NEAL Chief Accounting Officer December 14, 1998 - ---------------------------- Holly D. Neal /s/DOUGLAS C. CHANCE Director December 14, 1998 - ---------------------------- Douglas C. Chance /s/SHOEI KATAOKA Director December 14, 1998 - ---------------------------- Shoei Kataoka /s/JOHN MCCULLOUGH Director December 14, 1998 - ---------------------------- John McCullough /s/JULIAN SCHROEDER Director December 14, 1998 - ---------------------------- Julian Schroeder /s/RENN ZAPHIROPOULOS Director December 14, 1998 - ---------------------------- Renn Zaphiropoulos INDEX TO EXHIBITS EXHIBIT NUMBER ---------------------EXHIBIT------------------- 4(a) Restated Certificate of Incorporation dated June 10, 1988. Incorporated by reference to Exhibit 4(a) of Registrant's Form 10-Q for the quarter ended July 31, 1988. 4(b) Bylaws. Incorporated by reference to Registrant's Form 8-K dated November 2, 1987. 4(c) Rights Agreement between Registrant and ChaseMellon Shareholder Services L.L.C. dated December 16, 1997. Incorporated by reference to Exhibit 4.1 of Registrant's Form 10-K for the fiscal year ended October 31, 1997. 5* Opinion and consent of Collette & Erickson. 15(a)* Letter of Deloitte & Touche LLP regarding unaudited interim financial information. 15(b)* Letter of KPMG Peat Marwick LLP regarding unaudited interim financial information of Flex Products, Inc. 23(a)* Consent of Deloitte & Touche LLP. 23(b)* Consent of KPMG Peat Marwick LLP. 23(c)* Consent of Counsel (See Exhibit 5, above). 24 Power of Attorney (See page II-7). 28 Not Applicable 99* 1998 Incentive Compensation Plan. *Items not previously filed are designated by an asterisk. EX-5 2 Exhibit 23 (c) December 11, 1998 Craig B. Collins, Vice President, Finance and Chief Financial Officer Optical Coating Laboratory, Inc. 2789 Northpoint Parkway Santa Rosa, California 95407-7397 RE: ISSUANCE OF SECURITIES ON FORM S-8 REGISTRATION STATEMENT ---------------------- Dear Mr. Collins: This letter is written to you in connection with the filing on or about December 11, 1998, of the Registration Statement on Form S-8 with the Securities and Exchange Commission for the purpose of registering Common Stock, $.01 par value, offered by Optical Coating Laboratory, Inc. (the "Company"), where shares were or are to be offered pursuant to the Company's 1998 Incentive Compensation Plan (the "Plan"). As counsel for the Company, we have examined, among other things, originals or copies identified to our satisfaction as being true copies of the above-referenced Registration Statement, Certificate of Incorporation and By-Laws of the Company, the corporate resolutions adopting the Plan authorizing the issuance of options, unrestricted stock bonuses, restricted stock bonuses, stock paid for with a recourse and non-recourse promissory note, and stock withholding to satisfy tax liabilities under the Plan, and other pertinent documents and instruments of the Company. In addition to such examination, we have obtained from Directors and Officers of the Company such other information and advice as we have deemed necessary for the purposes of this opinion. On the basis of the foregoing, and our examination and consideration of such other factual and legal matters as we have deemed appropriate in the premises, we are of the opinion that the shares to be registered will, when sold in accordance with the terms of the Plan, be legally issued, fully paid and non-assessable. We consent to the filing of this letter with the Securities and Exchange Commission as an exhibit to the aforementioned Registration Statement. Very truly yours, Collette & Erickson LLP JVE:rg OCLI 1.881 EX-23 3 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Optical Coating Laboratory, Inc. on From S-8 of our report dated December 19, 1997, appearing in the Annual Report on Form 10-K of Optical Coating Laboratory, Inc. for the year ended October 31, 1997. Deloitte & Touche LLP San Jose, California December 11, 1998 EX-15 4 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Optical Coating Laboratory, Inc. on From S-8 of our report dated December 19, 1997, appearing in the Annual Report on Form 10-K of Optical Coating Laboratory, Inc. for the year ended October 31, 1997. Deloitte & Touche LLP San Jose, California December 11, 1998 EX-23 5 EXHIBIT 23 To the Board of Directors and Stockholders Optical Coating Laboratory, Inc. We consent to the incorporation by reference in the registration statement, dated December 14, 1998, on Form S-8 of Optical Coating Laboratory, Inc. of our report dated November 26, 1997, relating to the balance sheets of Flex Products, Inc. as of November 2, 1997, and November 3, 1996, and the related statements of operations and cash flows for the years then ended, which report appears in the October 31, 1997, annual report on Form 10-K of Optical Coating Laboratory, Inc. KPMG Peat Marwick LLP San Francisco, California December 4, 1998 EX-15 6 EXHIBIT 15 To the Board of Directors and Stockholders Optical Coating Laboratory, Inc. With respect to the registration statement, dated December 14, 1998, on Form S-8 of Optical Coating Laboratory, Inc., we acknowledge our awareness of the use therein of our reports dated February 17, 1997, May 14, 1997, and August 15, 1997, related to our reviews of the interim balance sheets and related statements of operations and cash flows of Flex Products, Inc. for the three month periods ended February 2, 1997, May 3, 1997 and August 2, 1997, respectively. Pursuant to Rule 436(c) under the Securities Act of 1933, such reports are not considered part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of sections 7 and 11 of the Act. KPMG Peat Marwick LLP San Francisco, California December 4, 1998 EX-99 7 EXHIBIT 99 ---------- OPTICAL COATING LABORATORY, INC. 1998 INCENTIVE COMPENSATION PLAN -------------------------------- PART 1. PLAN PURPOSE, ADMINISTRATION AND ELIGIBILITY I. PURPOSE The purpose of the 1998 Incentive Compensation Plan (the "Plan") of Optical Coating Laboratory, Inc. (the "Company") is to encourage ownership in the Company by key personnel whose long-term employment is considered essential to the Company's continued progress and thus to provide them with a further incentive to continue in the employ of the Company. In adopting the Plan, the Board of Directors has determined that the additional incentive provided by the Plan to those employees whose efforts have the most effect on the Company's success will promote the welfare of the Stockholders in general. II. ADMINISTRATION The members of the Compensation and Stock Option Committee, acting as a separate committee (the "Committee"), consisting of three or more directors of the Company who are not eligible to participate in the Plan, shall supervise and administer the Plan. The Committee shall, from time to time, give authority to the Chief Executive Officer or President of the Company to grant stock options ("Stock Options") or stock awards ("Stock Awards"), to designate the employees of the Company who shall be granted Stock Options and Stock Awards under the Plan and to determine the amount and nature of the award to be granted to each such employee. All questions of interpretation of the Plan or of any Stock Options or Stock Awards issued under it shall be determined by the Committee and such determination shall be final and binding upon all persons having an interest in the Plan. Any or all powers and discretion vested in the Committee under this Plan may be exercised by any subcommittee so authorized by the Committee. III. PARTICIPATION IN THE PLAN Employees who are also officers of the Corporation shall not be eligible as recipients of Stock Options or Stock Awards under the plan nor shall any Director of the Corporation be eligible under the Plan. IV. STOCK SUBJECT TO THE PLAN The maximum number of shares which may be optioned or awarded under the Plan shall be One Million (1,000,000) shares of the Company's Common Stock. The limitation on the number of shares which may be optioned or awarded under the Plan shall be subject to adjustment as provided in Section XVII of the Plan. The grant of a Stock Award not pursuant to a Stock Option under the Plan shall be subject to such restrictions as the Committee shall determine to be appropriate, including, but not limited to, restrictions on resale, repurchase provisions, special vesting requirements or forfeiture provisions. If any outstanding Stock Option under the Plan for any reason expires or is terminated without having been exercised in full, or if any Stock Awards are forfeited, the forfeited share or shares allocable to the unexercised portion of such Stock Option shall again become available for grant pursuant to the Plan. Upon the grant of a Stock Award or the exercise of a Stock Option, the Company may issue new shares or reissue shares previously repurchased by or on behalf of the Company. PART 2. STOCK OPTIONS V. NON-QUALIFIED STOCK OPTIONS Any Stock Option granted under the Plan shall be designated by the Committee as a non-qualified stock option within the meaning of Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"). VI. TERMS OF STOCK OPTIONS Each Stock Option granted under the Plan shall be for a period determined by the Committee, or its designee, not to exceed ten (10) years from the date of grant, shall be evidenced by a stock option agreement between the Company and the person to whom such Stock Option is granted and shall be subject to the following additional terms and conditions: A. CONTINUATION OF EMPLOYMENT. An employee to whom such Stock Option is granted must agree in writing, as a condition to the granting of the Stock Option, that he or she will remain in the employ of the Company following the date of granting of the Stock Option for a period of twelve (12) months before any portion of the Stock Option can be exercised. B. EXERCISE OF THE STOCK OPTION. Prior to its termination, such Stock Option may be exercised by the person then entitled to do so, at such time or times and in such amounts as shall be specified in the stock option agreement. A Stock Option is exercised (i) by giving written notice of exercise to the Company, specifying the number of full shares of Common Stock to be purchased and accompanied by full payment of the option price; provided, however, that to the extent authorized by the Committee, an optionee may make all or any portion of any payment due to the Company upon exercise of a Stock Option by delivery of any property (including securities of the Company or promissory notes) other than cash, so long as such property constitutes valid consideration for the Common Stock under applicable law; and (ii) by giving assurances satisfactory to the Company that the shares of Common Stock to be purchased upon such exercise are being purchased for investment and not with a view to resale in connection with any distribution of such shares in violation of the Securities Act of 1933; provided, however, that in the event the Common Stock subject to the Stock Option is registered under the Securities Act of 1993, as amended, or in the event a resale of such Common Stock without such registration would otherwise be permissible, this condition shall be inoperative if in the opinion of counsel for the Company such condition is not required under the Securities Act of 1933, or any other applicable law, regulation or rule of any governmental agency. C. OPTION PRICE. The Option Price of each Stock Option shall be determined by the Committee but shall not be less than one hundred percent (100%) of the fair market value of the Company's Common Stock at the time of granting the Stock Option. D. TERMINATION OF THE STOCK OPTION. To the extent not previously exercised, each Stock Option shall terminate on the date fixed therefor in the stock option agreement; provided, however, that (i) in the event that an employee who has been granted a Stock Option ceases to be employed by the Company or a subsidiary for any reason other than death, the Stock Option shall terminate to the extent the employee fails to exercise the Stock Option within the time period fixed by the Committee at the time of grant, but only to the extent his or her rights to exercise such Stock Option have accrued pursuant to the terms hereof and have not previously been exercised at the date of such termination; provided, however, that if such employee shall have his or her employment terminated for cause, the Stock Option shall terminate simultaneously with such employee's effective date of termination, and any unexercised portion of the Stock Option shall thereupon expire; and (ii) in the event the employee shall die while in the employ of the Company or after the termination of his employment for any reason other than for cause, and shall not have exercised the Stock Option, it shall be exercisable at any time within the period fixed by the Committee at the time of its grant, by the executors or administrators of the employee by bequest or inheritance. Termination of employment "for cause", as used herein, shall mean discharge by the Company or any of its subsidiaries for (i) dishonesty, (ii) commission of a crime, or (iii) divulging trade secrets to competitors or others not entitled to receive them. The foregoing provisions shall apply with equal force and effect and equivalent meaning, with such changes as may be necessary, to a director who has been granted options hereunder. E. STOCK OPTIONS NOT TRANSFERABLE. Any Stock Option shall be nontransferable by the optionee otherwise than by will or the laws of descent and distribution, and shall be exercisable during the optionee's lifetime only by the optionee, or in the event of death, by the optionee's representative or any person designated by the optionee in his stock option agreement. F. QUALIFICATION OF STOCK. The right to exercise the Stock Options shall be further subject to the requirement that if at any time the Board of Directors determines, in its discretion, that the listing, registration or qualification of the shares covered by the Stock Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority, is necessary or desirable as a condition of, or in connection with, the granting of such Stock Option or the purchase of shares thereunder, the Stock Option may not be exercised, in whole or in part, unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board of Directors, in its sole discretion. G. RESTRICTION ON INCENTIVE STOCK OPTIONS. No option designated as an ISO entitled to special tax treatment under Code Section 422A may be granted under the Plan. H. PROCEEDS FROM SALE OF STOCK. The proceeds of sale of all shares of Stock issued from time to time upon the exercise of options granted pursuant to the Plan shall be added to the general funds of the Company and as such shall be used from time to time for such corporate purposes as the Board of Directors of the Company may determine. I. OTHER PROVISIONS. The stock option agreement may contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Committee in its sole discretion. VII. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify, extend or renew outstanding Stock Options granted under the Plan, or accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options in substitution therefor (to the extent not theretofore exercised). Notwithstanding the foregoing, however, no modification of any Stock Option shall, without the consent of the employee, alter or impair any rights or obligations under any Stock Option theretofore granted under the Plan. PART 3. STOCK AWARDS VIII. STOCK AWARD DETERMINATION The Committee, or its designee, may grant an eligible employee Stock Awards at such times and in such amounts as the Committee, or its designee, may designate which in its opinion fully reflect the performance level and potential of such employee. Such awards shall be made in accordance with such guidelines as the Committee may from time to time adopt. Stock Awards shall be independent of any grant of any Stock Option under this Plan, and shall be made subject to such restrictions as the Committee may determine to be appropriate. IX. PAYMENT OF STOCK AWARDS A. No employee shall have the right to receive payment of any Stock Award until notified of the amount of such award, in writing, by the Committee or its authorized delegate. B. An award of Common Stock may be subject to restrictions ("Restricted Stock") or acquired by the employee by delivery of a recourse or non-recourse promissory note ("Loan Stock"), and certificates for such shares will be deposited in escrow with the Company's Secretary. The employee shall retain all rights in the Restricted Stock or Loan Stock while it is held in escrow including, but not limited to, voting rights and the right to receive dividends, except that the employee shall not have the right to transfer or assign such shares until all restrictions pertaining to such shares are terminated and all loans paid in full, at which time the applicable stock certificates shall be released from escrow and delivered to the employee by the Company's Secretary. C. The Committee may permit, on such terms as it deems appropriate, use of Restricted Stock or Loan Stock as partial or full payment upon exercise of a stock option under any stock option of a Company plan or this Plan. In the event shares of Restricted Stock or Loan Stock are so tendered as consideration for the exercise of an option, a number of the shares issued upon the exercise of said option, equal to the number of shares of Restricted Stock or Loan Stock used as consideration therefor, shall be subject to the same conditions as the Restricted Stock or Loan Stock so submitted plus any additional conditions that may be imposed by the Committee. X. DURATION OF RESTRICTIONS AND TERMS OF PROMISSORY NOTES The Committee will establish the period or periods after which the conditions on Restricted Stock will lapse and the terms of any promissory notes relating to Loan Stock. XI. DEATH OR TOTAL AND PERMANENT DISABILITY OF A PARTICIPATING EMPLOYEE HOLDING RESTRICTED STOCK By written notice to the Company, an employee who has received a grant of Restricted Stock may designate one or more persons (and from time to time change such designation) who, by reason of his death, shall acquire the right to receive any vested but unpaid Stock Awards held by the employee at the time of his death. Such Stock Awards shall be paid to the designated representative at such time and in such manner as if the employee were living. In the event of total and permanent disability of an employee who has participated in the Plan, any unpaid but vested Stock Award shall be paid to the employee if legally competent or to other legally designated guardian or representative if the employee is legally incompetent. After the death or total and permanent disability of an employee, the Committee may in its sole discretion at any time terminate restrictions upon stock awarded to the employee. A request to the Committee for the termination of restrictions or the acceleration of payments not yet due may be made by the employee's beneficiary or representative, or by a totally and permanently disabled employee. If at the time of the employee's death, there is no effective beneficiary designation as to all or some portion of the awards hereunder, such awards or such portion thereof shall be paid to or on the order of the legal representative of the employee's estate. In the event of uncertainty as to the interpretation or effect of any notice of designation, the Committee's decision with respect thereto shall be conclusive. XII. RESTRICTIONS AND FORFEITURE OF STOCK AWARDS The Company's obligation to deliver stock certificates held in escrow is subject to the condition that the employee remain an active employee of the Company for the entire deferral and/or restriction period, including mandatory and optional deferrals. If the employee fails to meet this condition, the employee's right to any such unpaid amounts or undelivered stock certificates shall be forfeited. This provision may be waived by the Committee in exceptional circumstances. PART 4. STOCK WITHHOLDING XIII. USE OF SHARES TO SATISFY TAX LIABILITY Agreements with employees implementing this Plan may permit an employee who has been granted Restricted Stock, Stock Options or Loan Stock to elect that the tax liability arising from the lapse of restrictions on Restricted Stock, exercise of Stock Options, or payment of a non-recourse note used to purchase Loan Stock be satisfied by the Company's withholding from the shares to be delivered to the employee that number of shares the fair market value of which is closest to, without exceeding, such tax liability. For purposes of this paragraph, "tax liability" shall mean the minimum federal and state income taxes required to be withheld from such compensation income arising from the transaction, or, in the discretion of the Company, such greater amount of taxes (including taxes other than income taxes) that are required to be withheld from such compensation. An employee's election under an Agreement with the Company permitting such election shall be made in writing to the Company at least three (3) days prior to the event giving rise to the employee's tax liability. An employee who is subject to the requirements of Section 16(b) of the Securities Exchange Act of 1934 ("Section 16(b)") desiring to elect the treatment provided for herein shall give such written notice of the same to the Company as legal counsel for the Company shall determine is required. PART 5. GENERAL PROVISIONS XIV. ASSIGNMENTS The rights and benefits under this Plan may not be assigned except for the designation of a beneficiary as provided in Sections VI and XI. XV. TIME FOR GRANTING STOCK OPTIONS OR STOCK AWARDS All Stock Options and Stock Awards subject to this Plan shall be granted, if at all, not later than ten (10) years after the adoption of this Plan by the Company's Board of Directors. XVI. LIMITATION OF RIGHTS A. NO RIGHT TO A STOCK OPTION OR STOCK AWARD . Nothing in the Plan shall be construed to give any employee of the Company any right to be granted a Stock Option or Stock Award. B. NO EMPLOYMENT RIGHT. Neither the Plan, nor the granting of a Stock Option or Stock Award nor any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will employ an optionee for any period of time or in any position, or at any particular rate of compensation. C. NO STOCKHOLDERS' RIGHTS FOR STOCK OPTIONS. An optionee shall have no rights as a Stockholder with respect to the shares covered by his or her Stock Options until the date of issuance of a stock certificate upon exercise of the Stock Option. XVII. CHANGES IN PRESENT STOCK In the event of any merger, consolidation, reorganization, recapitalization, stock dividend, stock split, or other change in the corporate structure or capitalization affecting the Company's present Common Stock, appropriate adjustment shall be made by the Board of Directors, in its sole discretion, in the number and kind of shares which are or may become subject to Stock Options and Stock Awards granted or to be granted hereunder, and in the option price of shares which are subject to Stock Options granted hereunder. XVIII. EFFECTIVE DATE OF THE PLAN The Plan shall take effect on the date of adoption by the Board of Directors of the Company. Stock Options and Stock Awards may be granted under the Plan at any time after the adoption of the Plan by the Board of Directors of the Company and prior to the termination of the Plan. XIX. AMENDMENT OF THE PLAN The Board of Directors of the Company may suspend or discontinue the Plan or revise or amend it in any respect whatsoever, including, but not limited to, changing the number of shares subject to the Plan, designating the classification of employees eligible to receive Stock Options or Stock Awards and materially increasing the benefits accruing to participants under the Plan. XX. NOTICE Any written notice to the Company required by any of the provisions of this Plan shall be addressed to the Secretary of the Company and shall become effective when it is received. XXI. COMPANY BENEFIT PLANS Nothing contained in this Plan shall prevent the employee, prior to death or the employee's dependents or beneficiaries after the employee's death, from receiving, in addition to any awards provided for under this Plan and any salary, any payments under a Company retirement plan or which may be otherwise payable or distributable to such employee, or to the employee's dependents or beneficiaries under any other plan or policy of the Company or otherwise. XXII. UNFUNDED PLAN Insofar as it provides for Stock Awards, this Plan shall be unfunded. Although bookkeeping accounts may be established with respect to employees who are granted Stock Awards under this Plan, any such accounts will be used merely as a bookkeeping convenience. Except for the holding of Restricted Stock and Loan Stock in escrow pursuant to Section IX B, the Company shall not be required to segregate any assets which may at any time be represented by Stock Awards, nor shall this Plan be construed as providing for such segregation, nor shall the Company nor the Board nor the Committee be deemed to be a trustee of shares or cash to be awarded under the Plan. Any liability of the Company to any employee with respect to a Stock Award under this Plan shall be based solely upon any contractual obligations which may be created by the Plan and any agreement consistent with this Plan; no such obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation which may be created by this Plan. XXIII. GOVERNING LAW This Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of California and construed accordingly. -----END PRIVACY-ENHANCED MESSAGE-----