-----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, C/eCsJIAZ/zXtXECILc40lI6DIQ+uNDUCxIazJHaAWOjQwrZA9q1jF0mJSeihBdI 44oQsB32xMrYIBujZFq5iQ== 0000074697-99-000018.txt : 19990906 0000074697-99-000018.hdr.sgml : 19990906 ACCESSION NUMBER: 0000074697-99-000018 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19990903 EFFECTIVENESS DATE: 19990903 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: 333-86527 FILM NUMBER: 99706180 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 September 3, 1999 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) 1999 EMPLOYEE STOCK PURCHASE PLAN --------------------------------- 1999 INCENTIVE COMPENSATION PLAN -------------------------------- 1999 DIRECTOR STOCK PLAN ------------------------ (Full title of the plan(s)) 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 1,024,000 shares $74.50 $76,288,000 $23,118.00 ======================================================================== (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 September 2, 1999, of the Common Stock as reported in The Wall Street Journal on September 3, 1999. 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 following documents, which we have filed with the Securities & Exchange Commission (the "SEC"), are incorporated by reference into this Registration Statement: 1. Our annual report on Form 10-K for the fiscal year ended October 31, 1998, filed pursuant to Section 13(a) of the Exchange Act; 2. Our quarterly reports on Form 10-Q for the fiscal quarters ended January 31, 1999 and April 30, 1999, filed pursuant to Section 13(a) of the Exchange Act; 3. Our current reports on Form 8-K dated November 18, 1998, December 22, 1998 and May 19, 1999, filed pursuant to Section 13(a) of the Exchange Act; 4. Our proxy statement dated March 4, 1999, filed pursuant to Section 14 of the Exchange Act; 5. The description of our capital stock contained in our registration statement on Form 8-A, as amended by our amendment to the registration statement on Form 8-A/A filed on May 5, 1999; and 6. Our registration statement (Reg. No. 333-76853) filed on Form S-3 on April 22, 1999, as amended by our amendments to the registration statement on Form S-3 filed on May 7, 1999 and May 18, 1999 and the final prospectus filed pursuant to Rule 424(b)(4) dated May 20, 1999. All documents that we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Registration Statement and before the termination of the offering of the common stock offered pursuant to this Registration Statement shall be deemed incorporated by reference into this Registration Statement and to be a part of this Registration Statement from the respective dates of filing such documents. We will provide without charge to each person to whom a copy of a prospectus is delivered, upon such person's written or oral request, a copy of any or all of the information incorporated by reference in this Registation Statement (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into the information that this Registration Statement incorporates). Requests should be directed to Optical Coating Laboratory, Inc., 2789 Northpoint Parkway, Santa Rosa, California 95407-7397, Attention: Agie Navarro, telephone number (707) 525-7072. Any statement contained in a document incorporated or deemed to be incorporated by reference in this Registration Statement shall be deemed modified, superseded or replaced for purposes of this Registration Statement to the extent that a statement contained in this Registration Statement or in any subsequently filed document that also is or is deemed to be incorporated by reference in this Registration Statement modifies, supersedes or replaces such statement. Any statement so modified, superseded or replaced shall not be deemed, except as so modified, superseded or replaced, to constitute a part of this Registration Statement. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The indemnification and liability of our directors and officers are governed by Delaware law. Under Section 145 of the General Corporation Law of the State of Delaware, corporations have broad powers to indemnify their directors and officers against liabilities that may incur in such capacities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). Delaware law also permits 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." While Delaware law does not eliminate the directors' duty of care, it enables corporations to limit available relief to equitable remedies such as injunction or rescission. These provisions have 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, (4) approval of any transaction from which the director derives an improper personal benefit, or (5) on claims arising under other laws, such as the federal securities laws. In connection with the our reincorporation in Delaware in November 1987, we included in our Certificate of Incorporation a provision limiting directors' liability to the greatest extent permitted by Delaware corporate law. In addition, our Certificate of Incorporation and our Bylaws provide that we will indemnify our directors and officers to the fullest extent permitted under Delaware law, including circumstances in which indemnification is otherwise discretionary. We submitted these charter and Bylaw provisions to our stockholders, who approved them in March 1987. In addition, we have entered into separate Indemnification Agreements with our directors and officers to the full extent permitted by applicable law and our Certificate of Incorporation. The general effect of the indemnification provisions of the Bylaws and the Indemnification Agreements is to require us, among other things, to indemnify our 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 our best interests 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. We believe that our charter and Bylaw provisions and the separate indemnification Agreements are necessary to attract and retain qualified persons as directors and officers. At present, we are not aware of any threatened litigation or proceeding which could result in a claim for indemnification by any director or officer. 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. 4(d) First Amendment to Rights Agreement between Registrant and ChaseMellon Shareholder Services, L.L.C., dated December 15, 1998. Incorporated by reference to Exhibit 4.2 of Registrant's Registration Statement on Form S-3 (Reg. No. 333-76853). 5* Opinion and consent of Collette & Erickson LLP. 15* Letter of Deloitte & Touche LLP regarding unaudited interim financial information. 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(a)* 1999 Employee Stock Purchase Plan 99(b)* 1999 Incentive Compensation Plan 99(c)* 1999 Director Stock 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 3rd day of September 1999. 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 September 3, 1999 - ---------------------------- Herbert M. Dwight, Jr. President, Chief Executive Officer /s/CHARLES J. ABBE and Director September 3, 1999 - ---------------------------- Charles J. Abbe Vice President, Finance /s/CRAIG B. COLLINS and Chief Financial Officer September 3, 1999 - ---------------------------- Craig B. Collins Corporate Controller /s/HOLLY D. NEAL and Chief Accounting Officer September 3, 1999 - ---------------------------- Holly D. Neal /s/DOUGLAS C. CHANCE Director September 3, 1999 - ---------------------------- Douglas C. Chance /s/SHOEI KATAOKA Director September 3, 1999 - ---------------------------- Shoei Kataoka /s/JOHN MCCULLOUGH Director September 3, 1999 - ---------------------------- John McCullough /s/JULIAN SCHROEDER Director September 3, 1999 - ---------------------------- Julian Schroeder /s/RENN ZAPHIROPOULOS Director September 3, 1999 - ---------------------------- 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. 4(d) First Amendment to Rights Agreement between Registrant and ChaseMellon Shareholder Services, L.L.C., dated December 15, 1998. Incorporated by reference to Exhibit 4.2 of Registrant's Registration Statement on Form S-3 (Reg. No. 333-76853). 5* Opinion and consent of Collette & Erickson LLP. 15* Letter of Deloitte & Touche LLP regarding unaudited interim financial information. 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(a)* 1999 Employee Stock Purchase Plan. 99(b)* 1999 Incentive Compensation Plan. 99(c)* 1999 Director Stock Plan *Items not previously filed are designated by an asterisk. EX-5 2 September 3, 1999 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 August 30, 1999, of the Registration Statement on Form S-8 with the Securities and Exchange Commission for the purpose of registering 1,024,000 shares of Common Stock, $.01 par value, offered by Optical Coating Laboratory, Inc. (the "Company"), where 400,000 shares were or are to be offered pursuant to the Company's 1999 Employee Stock Purchase Plan, 600,000 shares were or are to be offered pursuant to the Company's 1999 Incentive Compensation Plan and 24,000 shares were or are to be offered pursuant to the Company's 1999 Director Stock Plan (the 1999 Employee Stock Purchase Plan, the 1999 Incentive Compensation Plan and the 1999 Director Stock Plan collectively referred to herein as the "Plans"). 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 Plans and 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 Plans, 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 Plans, 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-15 3 Optical Coating Laboratory, Inc. Santa Rosa, California We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Optical Coating Laboratory, Inc. and subsidiaries for the periods ended January 31, 1999, and April 30, 1999 as indicated in our reports dated February 18, 1999 and May 19, 1999, respectively; because we did not perform an audit, we expressed no opinion on that information. We are aware that our reports referred to above, which were included in your Quarterly Reports on Form 10-Q for the quarters ended January 31, 1999, and April 30, 1999 are being used in this Registration Statement on Form S-8. We also are aware that the aforementioned reports, pursuant to Rule 436(c) under the Securities Act of 1933, are not considered a part of the 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 that Act. Deloitte & Touche LLP San Jose, California September 3, 1999 EX-23 4 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Optical Coating Laboratory, Inc. on Form S-8 of our report dated December 22, 1998 (January 8, 1999 as to Note 5), appearing in the Annual Report on Form 10-K of Optical Coating Laboratory, Inc. for the year ended October 31, 1998, and to the use of our report dated December 22, 1998 (January 8, 1999 as to paragraph 8 of Note 6 and February 22, 1999 as to Note 15), appearing in Registration Statement No. 333-76853 on Form S-3 and the related prospectus dated May 20, 1999. Deloitte & Touche LLP San Jose, California September 3, 1999 EX-23 5 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Optical Coating Laboratory, Inc. on Form S-8 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, stockholders' equity and cash flows for the years then ended, which report appears in the October 31, 1998, annual report on Form 10-K of Optical Coating Laboratory, Inc. KPMG San Francisco, California September 3, 1999 EX-99 6 OPTICAL COATING LABORATORY, INC. 1999 EMPLOYEE STOCK PURCHASE PLAN The following constitute the provisions of the 1999 Employee Stock Purchase Plan of Optical Coating Laboratory, Inc. ("OCLI"). 1. Purpose. The purpose of the Plan is to provide employees of OCLI and its Designated Subsidiaries with an opportunity to purchase Common Stock through accumulated payroll deductions. It is the intention of OCLI to have the Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. 2. Definitions. (a) "Board" shall mean the Board of Directors of OCLI. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Committee" shall mean a committee of members of the Board appointed by the Board. (d) "Common Stock" shall mean OCLI Common Stock. (e) "Company" shall mean OCLI, a Delaware corporation. (f) "Compensation" shall mean all salary, wages (including amounts elected to be deferred by the employee, that would otherwise have been paid, under any cash or deferred arrangement established by the Company), overtime pay, commissions, bonuses and any other remuneration paid directly to the employee, but excluding the cost of employee benefits paid for by the Company, education or tuition reimbursements, imputed income arising under any Company group insurance or benefit program, traveling expenses, business and moving expense reimbursements, income recognized in connection with stock options, contributions made by the Company under any employee benefit plan, and similar items of compensation. (g) "Designated Subsidiary" shall mean any Subsidiary, which has been designated by the Board or the Committee from time to time in its sole discretion as eligible to participate in the Plan. (h) "Employee" shall mean any individual who is an Employee of the Company or a Designated Subsidiary for tax purposes whose customary employment is at least twenty (20) hours per week. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company. (i) "Enrollment Date" shall mean the first day of each Offering Period. (j) "Exercise Date" shall mean the last day of each Purchase Period. (k) "Fair Market Value" on a given date shall be determined by the Committee or Board in its discretion based on the closing price of the Common Stock for such date (or, in the event that the Common Stock is not traded on such date, on the immediately preceding trading date), as reported by the National Association of Securities Dealers Automated Quotation (NASDAQ) National Market System or, if such price is not reported, the mean of the bid and asked prices per share of the Common Stock as reported by NASDAQ or, in the event the Common Stock is listed on a stock exchange, the Fair Market Value per share shall be the closing price on such exchange on such date (or, in the event that the Common Stock is not traded on such date, on the immediately preceding trading date), as reported in The Wall Street Journal. (l) "Offering Periods" shall mean the periods of approximately twelve (12) months during which an option granted pursuant to the Plan may be exercised, commencing on the first Trading Day on or after January 1 and July 1 of each year and terminating on the last Trading Day in the periods ending twelve months later (December 31 and June 30, respectively); provided, however, the first Offering Period under the Plan shall commence on the first Trading Day on or after August 1, 1999 and end on the last Trading Day on or before June 30, 2000. The duration and timing of Offering Periods may be changed pursuant to Section 4 of this Plan. (m) "Plan" shall mean this Employee Stock Purchase Plan. (n) "Purchase Price" shall mean an amount equal to 85% of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower. (o) "Purchase Period" shall mean the approximately six month period commencing after one Exercise Date and ending with the next Exercise Date, where the first Purchase Period under the Plan shall commence on the first Trading Day on or after August 1, 1999. Purchase Periods under the Plan will end on the last Trading Day in the period ending on or before June 30 and December 31 each year. The first Purchase Period under the Plan shall end on the last Trading Day in the period ending December 31, 1999. (p) "Reserves" shall mean the number of shares of Common Stock covered by each option under the Plan which have not yet been exercised and the number of shares of Common Stock which have been authorized for issuance under the Plan but not yet placed under option. (q) "Subsidiary" shall mean a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary. (r) "Trading Day" shall mean a day on which the NASDAQ is open for trading. 3. Eligibility. (a) Any Employee who shall be employed by the Company or a Designated Subsidiary on a given Enrollment Date shall be eligible to participate in the Plan. (b) Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) to the extent that, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Subsidiary, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans of the Company and its subsidiaries accrues at a rate which exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the fair market value of the shares at the time such option is granted) for each calendar year in which such option is outstanding at any time. 4. Offering Periods. The Plan shall be implemented by consecutive, overlapping Offering Periods with a new Offering Period commencing on the first Trading Day on or after January 1 and July 1 each year, or on such other date as the Board or the Committee shall determine, and continuing thereafter until terminated in accordance with Section 20 hereof; provided, however, that the first Offering Period under the Plan shall commence with the first Trading day on or after August 1, 1999 and end on the last Trading Day on or before June 30, 2000. The Board or the Committee shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without stockholder approval if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected thereafter. 5. Participation. (a) An eligible Employee may become a participant in the Plan by completing a subscription agreement authorizing payroll deductions in the form provided by the Company and filing it with the Company's Office of Human Resources prior to the applicable Enrollment Date. (b) Payroll deductions for a participant shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof. 6. Payroll Deductions. (a) At the time a participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each pay day during the Offering Period in an amount not exceeding ten percent (10%) of the Compensation which he or she receives on each pay day during the Offering Period; provided, however, that the aggregate of such payroll deductions during the Offering Period shall not exceed ten percent (10%) of the participant's aggregate Compensation during said Offering Period. (b) All payroll deductions made for a participant shall be credited to his or her account under the Plan and shall be withheld in whole percentages only. A participant may not make any additional payments into such account. (c) A participant may discontinue his or her participation in the Plan as provided in Section 10 hereof, or may increase or decrease the rate of his or her payroll deductions during the Offering Period by completing or filing with the Company a new subscription agreement authorizing a change in payroll deduction rate. The Company may, in its discretion, limit the number of participation rate changes during any Purchase Period. The change in rate shall be effective with the first full payroll period following five (5) business days after the Company's receipt of the new subscription agreement unless the Company elects to process a given change in participation more quickly. A participant's subscription agreement shall remain in effect for successive Purchase Periods unless terminated as provided in Section 10 hereof. (d) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(3) and (8) of the Code and Section 3(b) hereof, a participant's payroll deductions may be decreased to zero percent (0%) at any time during a Purchase Period. Payroll deductions shall recommence at the rate provided in such participant's subscription agreement at the beginning of the first Purchase Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in Section 10 hereof. (e) At the time the option is exercised, in whole or in part, or at the time some or all of the Company's Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company's federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock. At any time, the Company may, but shall not be obligated to, withhold from the participant's compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Employee. 7. Grant of Option. On the Enrollment Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of the Company's Common Stock determined by dividing such Employee's payroll deductions accumulated prior to such Exercise Date and retained in the participant's account as of the Exercise Date by the applicable Purchase Price; provided that such purchase shall be subject to the limitations set forth in Sections 3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof. 8. Exercise of Option. Unless a participant withdraws from the Plan as provided in Section 10 hereof, his or her option for the purchase of shares shall be exercised automatically on the Exercise Date, and the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares shall be purchased; any payroll deductions accumulated in a participant's account which are not sufficient to purchase a full share shall be retained in the participant's account for the subsequent Purchase Period of Offering Period, subject to earlier withdrawal by the participant as provided in Section 10 hereof. Any other monies left over in a participant's account after the Exercise Date shall be returned to the participant. During a participant's lifetime, a participant's option to purchase shares hereunder is exercisable only by him or her. 9. Delivery. As promptly as practicable after each Exercise Date on which a purchase of shares occurs, the Company shall arrange the delivery to each participant (or his or her brokerage account), of a certificate representing the shares purchased upon exercise of his or her option, or the Company shall establish some other means for such participants to receive ownership of the shares. 10. Withdrawal. (a) A participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by giving written notice to the Company in the form to be provided by the Company. All of the participant's payroll deductions credited to his or her account shall be paid to such participant promptly after receipt of notice of withdrawal and such participant's option for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of shares shall be made for such Offering Period. If a participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the participant delivers to the Company a new subscription agreement. (b) A participant's withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the participant withdraws. (c) To the extent permitted by any applicable laws, regulations or stock exchange rules, if the Fair Market Value of the Common Stock on any Exercise Date in an Offering Period is lower than the Fair Market Value of the Common Stock on the Enrollment Date of such Offering Period, than all participants in such Offering Period shall be automatically withdrawn from such Offering Period immediately after the exercise of their option on such Exercise Date and automatically re-enrolled in the immediately following Offering Period as of the first date thereof. 11. Termination of Employment. Upon a participant's ceasing to be an Employee, for any reason, he or she shall be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant's account during the Offering Period but not yet used to exercise the option shall be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15 hereof, and such participant's option shall be automatically terminated. 12. Interest. No interest shall accrue on the payroll deductions of a participant in the Plan. 13. Stock. (a) The maximum number of shares of the Company's Common Stock which shall be made available for sale under the Plan shall be four hundred thousand (400,000) shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 19 hereof. If, on a given Exercise Date, the number of shares with respect to which options are to be exercised exceeds the number of shares then available under the Plan, the Company shall make a pro rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable. (b) The participant shall have no interest or voting right in shares covered by his option until such option has been exercised. (c) Shares to be delivered to a participant under the Plan shall be registered in the name of the participant or in the name of the participant and his or her spouse. 14. Administration. The Board or the Committee shall administer the Plan. The Board or the Committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding, decision and determination made by the Board or the Committee shall, to the full extent permitted by law, be final and binding upon all parties. 15. Designation of Beneficiary. (a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant's account under the Plan in the event of such participant's death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant's account under the Plan in the event of such participant's death prior to exercise of the option. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective. (b) Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant's death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 16. Transferability. Neither payroll deductions credited to a participant's account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof. 17. Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. 18. Reports. Individual accounts shall be maintained for each participant in the Plan. Statements of account shall be given to participating Employees at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any. 19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Asset Sale. (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the Reserves, the maximum number of shares each participant may purchase each Purchase Period (pursuant to Section 7), as well as the price per share and the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration". Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and shall terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Board. The New Exercise Date shall be before the date of the Company's proposed dissolution or liquidation. The Board shall notify each participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the participant's option has been changed to the New Exercise Date and that the participant's option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof. (c) Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each outstanding option shall be assumed or an equivalent option substituted by the successor corporation or a parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the option, any Purchase Periods then in progress shall be shortened by setting a new Exercise Date (the "New Exercise Date") and any Offering Periods then in progress shall end on the New Exercise Date. The New Exercise Date shall be before the date of the Company's proposed sale or merger. The Board shall notify each participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the participant's option has been changed to the New Exercise Date and that the participant's option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof. 20. Amendment or Termination. a) The Board may at any time and for any reason terminate or amend the Plan. Except as provided in Section 19 hereof, no such termination can affect options previously granted, provided that an Offering Period may be terminated by the Board on any Exercise Date if the Board determines that the termination of the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 19 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company shall obtain stockholder approval in such a manner and to such a degree as required. (b) Without stockholder consent and without regard to whether any participant rights may be considered to have been "adversely affected," the Board (or the Committee) shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company's processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant's Compensation, and establish such other limitations or procedures as the Board (or the Committee) determines in its sole discretion advisable which are consistent with the Plan. 21. Notices. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. 22. Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law. 23. Term of Plan. The Plan shall become effective upon its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 20 hereof. OPTICAL COATING LABORATORY, INC. 1999 EMPLOYEE STOCK PURCHASE PLAN SUBSCRIPTION AGREEMENT ____Original Application Enrollment Date:________ ____Change in Payroll Deduction Rate ____Change of Beneficiary (ies) 1. _____________________ hereby elects to participate in the Optical Coating Laboratory, Inc. 1999 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and subscribes to purchase shares of the Company's Common Stock in accordance with this Subscription Agreement and the Employee Stock Purchase Plan. 2. I hereby authorize payroll deductions from each paycheck in the amount of ___% of my Compensation on each payday (from 1 to 10%) during the Offering Period in accordance with the Employee Stock Purchase Plan. (Please note that no fractional percentages are permitted.) 3. I understand that said payroll deductions shall be accumulated for the purchase of shares of Common Stock at the applicable Purchase Price determined in accordance with the Employee Stock Purchase Plan. I understand that if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise my option. 4. I have received a copy of the complete Employee Stock Purchase Plan prospectus. I understand that my participation in the Employee Stock Purchase Plan is in all respects subject to the terms of the Plan. I understand that my ability to exercise the option under this Subscription Agreement is subject to the Company's stockholder approval of the Employee Stock Purchase Plan. 5. Shares purchased for me under the Employee Stock Purchase Plan should be issued in the name(s) of (Employee or Employee and Spouse only): ------------------------------ ------------------------------ 6. I understand that if I dispose of any shares received by me pursuant to the Plan within 2 years after the Enrollment Date (the first day of the Offering Period during which I purchased such shares) or one year after the Exercise Date, I will be treated for federal income tax purposes as having received ordinary income at the time of such disposition in an amount equal to the excess of the fair market value of the shares at the time such shares were purchased by me over the price which I paid for the shares. I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY DISPOSITION OF MY SHARES AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF THE COMMON STOCK. The Company may, but will not be obligated to, withhold from my compensation the amount necessary to meet any applicable withholding obligation including any withholding necessary to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by me. If I dispose of such shares at any time after the expiration of the 2-year and 1-year holding periods, I understand that I will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal to the lesser of (1) the excess of the fair market value of the shares at the time of such disposition over the purchase price which I paid for the shares, or (2) 15% of the fair market value of the shares on the first day of the Offering Period. The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain. 7. I hereby agree to be bound by the terms of the Employee Stock Purchase Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Employee Stock Purchase Plan. 8. In the event of my death, I hereby designate the following as my beneficiary(ies) to receive all payments and shares due me under the Employee Stock Purchase Plan: NAME: (Please print) _________________________________________________________ (First) (Middle) (Last) Relationship: Address: Employee's Social Security Number: Employee's Address: I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME. Dated: -------------------------- Signature of Employee ---------------------- Spouse's Signature (If beneficiary otherthan spouse) OPTICAL COATING LABORATORY, INC. 1999 EMPLOYEE STOCK PURCHASE PLAN NOTICE OF WITHDRAWAL The undersigned participant in the Offering Period of the Optical Coating Laboratory, Inc. 1999 Employee Stock Purchase Plan which began on __________________, 19__ (the "Enrollment Date") hereby notifies the Company that he or she hereby withdraws from the Offering Period. The undersigned hereby directs the Company to pay to the undersigned as promptly as practicable all the payroll deductions credited to his or her account with respect to such Offering Period. The undersigned understands and agrees that his or her option for such Offering Period will be automatically terminated. The undersigned understands further that no further payroll deductions will be made for the purchase of shares in the current Offering Period and the undersigned shall be eligible to participate in succeeding Offering Periods only by delivering to the Company a new Subscription Agreement. Name and Address of Participant: Signature: _________________________________ Date: _________________________________ EX-99 7 O P T I C A L C O A T I N G L A B O R A T O R Y , I N C . 1 9 9 9 I N C E N T I V E C O M P E N S A T I O N P L A N PART 1. PLAN PURPOSE, ADMINISTRATION AND ELIGIBILITY I. PURPOSE The purpose of this 1999 Incentive Compensation Plan (the "Plan") of Optical Coating Laboratory, Inc. (the "Company") is to encourage ownership in the Company by 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 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, designate the employees of the Company who shall be granted stock options ("Stock Options") or stock awards ("Stock Awards") under the Plan and the amount and nature of the award to be granted to each such employee; provided however, at least 50% of all stock options and stock awards granted under the Plan shall be made to employees of the Company who are not officers or directors of the Company. 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 All employees of the Company, including officers and directors, are eligible to participate in the Plan. IV. STOCK SUBJECT TO THE PLAN The maximum number of shares, which may be optioned or awarded under the Plan, shall be 600,000 shares of OCLI Common Stock. The limitation on the number of shares that may be optioned or awarded under the Plan shall be subject to adjustment as provided in Section XVII of the Plan. At least 50% of all Stock Options and Stock Awards granted under the Plan shall be made to employees of the Company who are not officers or directors of the Company. 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 AND INCENTIVE STOCK OPTIONS Any Stock Option granted under the Plan shall be designated by the Committee as a non-qualified stock option or as an incentive stock option ("ISO") within the meaning of Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"). No ISO shall be granted hereunder unless the Stockholders of the Company approve the Plan within twelve (12) months before or after the date the Plan is adopted. VI. TERMS OF STOCK OPTIONS Each Stock Option granted under the Plan shall be for a period determined by the Committee 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 therefor; 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 under 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 shall cease to be employed by the Company or a subsidiary for any reason other than death, the Stock Option shall terminate to the extent such employee shall fail to exercise such 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 shall determine, 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. LIMITATION ON INCENTIVE STOCK OPTIONS. No option designated by the Committee as an ISO entitled to special tax treatment under Code Section 422A may be granted under the Plan if such grant, together with any applicable prior grants, would exceed any maximum established under the Code for ISO's that may be granted to a single employee. Should it be determined that any such ISO granted under the Plan exceeds such maximum, the excess portion of such ISO shall be reclassified as a non-qualified option not entitled to special tax treatment under Section 422A of the Code. 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, and no modification of or substitution for any Stock Option shall have the effect of reducing the option exercise price for such Stock Option. PART 3. STOCK AWARDS VIII. STOCK AWARD DETERMINATION The Committee may grant an eligible employee Stock Awards at such times and in such amounts as the Committee 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 remains 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. The Committee in exceptional circumstances may waive this provision. 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 a grantee 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 this Plan; provided, however, no ISO shall be granted under the Plan unless the Plan is approved by the Stockholders of the Company within twelve (12) months before or after the date the Plan is adopted. 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 eligible to be distributed 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 that 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. EX-99 8 OPTICAL COATING LABORATORY, INC. 1999 DIRECTOR STOCK PLAN PART 1. PLAN PURPOSE, ADMINISTRATION AND ELIGIBILITY I. PURPOSE The purpose of this 1999 Director Stock Plan (the "Plan") of Optical Coating Laboratory, Inc. (the "Company") is to encourage ownership in the Company by outside directors of the Company (each, a "Non-Employee Director," or collectively, the "Non-Employee Directors") whose continued services are considered essential to the Company's continued progress and to provide them with a further incentive to remain as directors of the Company. II. ADMINISTRATION The full Board of Directors (the "Board") of the Company shall supervise and administer the Plan. The Board shall, from time to time, designate the Non-Employee Directors of the Company who shall be granted stock options ("Stock Options") or stock awards ("Stock Awards") under the Plan and the amount and nature of the award to be granted to each such director. The Board may adopt such rules or guidelines as it deems appropriate to implement the Plan. All questions of interpretation of the Plan or of any Stock Options or Stock Awards issued under it shall be determined by the Board and such determination shall be final and binding upon all persons having an interest in the Plan. III. PARTICIPATION IN THE PLAN Each member of the Board who is not an employee of the Company shall be eligible to participate in the Plan. IV. STOCK SUBJECT TO THE PLAN The maximum number of shares, which may be optioned or awarded under the Plan, shall be TWENTY-FOUR THOUSAND (24,000) shares of the Company's Common Stock. The limitation on the number of shares that may be optioned or awarded under the Plan shall be subject to adjustment as provided in Section XV 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 Board 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 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 Board 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. 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 therefor; provided, however, that to the extent authorized by the Board, 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 that have been held by the optionee for at least six months or full recourse promissory notes bearing a market rate of interest) 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 1933, 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. B. OPTION PRICE. The option price under each Stock Option shall be determined by the Board 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. C. 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 a Non-Employee Director who has been granted a Stock Option shall cease to be a Non-Employee Director of the Company or a subsidiary for any reason other than death, the Stock Option shall terminate to the extent such Non-Employee Director shall fail to exercise such Stock Option within the time period fixed by the Board, 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 Non-Employee Director shall have his or her directorship terminated for cause the Stock Option shall terminate simultaneously with such Non-Employee Director's effective date of removal or resignation, and any unexercised portion of the Stock Option shall thereupon expire; and (ii) in the event the Non-Employee Director shall die while acting as a Non-Employee Director of the Company or after the termination of his or her directorship 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 Board at the time of its grant, by the executors or administrators of the Non-Employee Director by bequest or inheritance. Termination of a Non- Employee Director "for cause", as used herein, shall mean removal from office by the Company, any of its subsidiaries, or the Company's or any of its shareholders for (i) dishonesty, (ii) commission of a crime, or (iii) divulging trade secrets to competitors or others not entitled to receive them. D. 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. E. QUALIFICATION OF STOCK. The right to exercise the Stock Options shall be further subject to the requirement that if at any time the Board shall determine, 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 in its sole discretion. F. LIMITATION ON INCENTIVE STOCK OPTIONS. No option designated by the Board as an ISO entitled to special tax treatment under Code Section 422A may be granted under the Plan. G. 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 the Company may determine. H. 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 Board in its sole discretion. VII. MODIFICATION OF OPTIONS Subject to the terms and conditions and within the limitations of the Plan, the Board may accelerate the vesting period of outstanding Stock Options granted under the Plan but may make no other modifications to Stock Options previously granted under the Plan. PART 3. STOCK AWARDS VIII. STOCK AWARD DETERMINATION The Board may grant an eligible Non-Employee Director Stock Awards at such times and in such amounts as the Board may designate which, in its opinion, fully reflect the value of the corporate guidance given by such Non-Employee Director. Such awards shall be made in accordance with such guidelines as the Board 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 Board may determine to be appropriate. IX. PAYMENT OF STOCK AWARDS A. No Non-Employee Director shall have the right to receive payment of any Stock Award until notified of the amount of such award, in writing, by the Board. B. An award of Common Stock may be subject to restrictions ("Restricted Stock") and certificates for such shares will be deposited in escrow with the Company's Secretary. The Non-Employee Director shall retain all rights in the Restricted Stock while it is held in escrow including, but not limited to, voting rights and the right to receive dividends, except that the Non-Employee Director shall not have the right to transfer or assign such shares until all restrictions pertaining to such shares are terminated, at which time the applicable stock certificates shall be released from escrow and delivered to the Non-Employee Director by the Company's Secretary. The Board will establish the period or periods after which the conditions on Restricted Stock will lapse. X. DEATH OR TOTAL AND PERMANENT DISABILITY OF A PARTICIPATING NON- EMPLOYEE DIRECTOR HOLDING RESTRICTED STOCK By written notice to the Company, a Non-Employee Director 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 Non-Employee Director 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 Non-Employee Director were living. In the event of total and permanent disability of a Non-Employee Director who has participated in the Plan, any unpaid but vested Stock Award shall be paid to the Non-Employee Director if legally competent or to other legally designated guardian or representative if the Non- Employee Director is legally incompetent. After the death or total and permanent disability of a Non- Employee Director, the Board may in its sole discretion at any time terminate restrictions upon stock awarded to the Non-Employee Director. A request to the Board for the termination of restrictions or the acceleration of payments not yet due may be made by the Non- Employee Director's beneficiary or representative, or by a totally and permanently disabled Non-Employee Director. If at the time of the Non-Employee Director'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 Non-Employee Director's estate. In the event of uncertainty as to the interpretation or effect of any notice of designation, the Board 's decision with respect thereto shall be conclusive. XI. RESTRICTIONS AND FORFEITURE OF STOCK AWARDS The Company's obligation to deliver stock certificates held in escrow is subject to the condition that the Non-Employee Director remains a director of the Company for the entire deferral and/or restriction period, including mandatory and optional deferrals. If the Non-Employee Director fails to meet this condition, the Non-Employee Director's right to any such unpaid amounts or undelivered stock certificates shall be forfeited. The Board, in exceptional circumstances, may waive this provision. PART 4. GENERAL PROVISIONS XII. 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 X. XIII. 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. XIV. LIMITATION OF RIGHTS A. NO RIGHT TO A STOCK OPTION OR STOCK AWARD. Nothing in the Plan shall be construed to give any Non-Employee Director 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 retain a Non- Employee Director for any period of time, 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. XV. 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. XVI. 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 this Plan. XVII. 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 directors eligible to receive Stock Options or Stock Awards and materially increasing the benefits accruing to participants under the Plan; provided, however, the Board shall not take any such action with respect to the Plan which would have the effect of modifying any stock option previously granted under the Plan other than to accelerate the vesting of such previously granted stock options. XVIII. 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. XIX. COMPANY BENEFIT PLANS Nothing contained in this Plan shall prevent the Non-Employee Director prior to death, or the Non-Employee Director's dependents or beneficiaries after the Non-Employee Director'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 eligible to be distributed to such Non-Employee Director, or to the Non-Employee Director's dependents or beneficiaries under any other plan or policy of the Company or otherwise. XX. UNFUNDED PLAN Insofar as it provides for Stock Awards, this Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Non-Employee Directors 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 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 be deemed to be a trustee of shares or cash to be awarded under the Plan. Any liability of the Company to any Non-Employee Director 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 shall be required to give any security or bond for the performance of any obligation that may be created by this Plan. XXI. COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT It is the Company's intent that the Plan comply in all respects with Rule 16b-3. If any provision of this Plan is found not to be in compliance with such rule and regulations, the provision shall be deemed null and void, and the remaining provisions of the Plan shall continue in full force and effect. All transactions under this Plan shall be executed in accordance with the requirements of Section 16 of the Exchange Act and regulations promulgated thereunder. The Board may, in its sole discretion, modify the terms and conditions of this Plan in response to and consistent with any changes in applicable law, rule or regulation. XXII. 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-----