-----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, BcXFPlH3BcOCl3fOH8RU9HHc41it6XuhQBdi7JPWLiEezByjHSu9nLpgFTTrvYBo 85CmsKvd+tVx4ez4MV76oA== 0000950151-97-000167.txt : 19970602 0000950151-97-000167.hdr.sgml : 19970602 ACCESSION NUMBER: 0000950151-97-000167 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19970530 EFFECTIVENESS DATE: 19970530 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TARGETED GENETICS CORP /WA/ CENTRAL INDEX KEY: 0000921114 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 911549568 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-28151 FILM NUMBER: 97617228 BUSINESS ADDRESS: STREET 1: 1100 OLIVE WAY STREET 2: STE 100 CITY: SEATTLE STATE: WA ZIP: 98101 BUSINESS PHONE: 2066237612 MAIL ADDRESS: STREET 1: 1100 OLIVE WAY STREET 2: STE 100 CITY: SEATTLE STATE: WA ZIP: 98101 S-8 1 FORM S-8 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1997 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------- TARGETED GENETICS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) WASHINGTON 91-1549568 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 1100 OLIVE WAY, SUITE 100 SEATTLE, WASHINGTON 98101 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES (ZIP CODE)) TARGETED GENETICS CORPORATION STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS (FULL TITLE OF THE PLAN) -------------------------- H. STEWART PARKER CHIEF EXECUTIVE OFFICER TARGETED GENETICS CORPORATION 1100 OLIVE WAY, SUITE 100 SEATTLE, WASHINGTON 98101 (206) 623-7612 (NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ---------------------- COPY TO: STEPHEN M. GRAHAM PERKINS COIE 1201 THIRD AVENUE, 40TH FLOOR SEATTLE, WASHINGTON 98101-3099 (206) 583-8463 ----------------------
CALCULATION OF REGISTRATION FEE - ---------------------------- -------------- ------------------------ -------------------------- ------------------ TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TO BE REGISTERED REGISTERED OFFERING PRICE PER AGGREGATE OFFERING PRICE REGISTRATION FEE (1) SHARE (2) - ---------------------------- -------------- ------------------------ -------------------------- ------------------ Common Stock, par value $.01 per share 180,000 $3.00 $540,000 $163.62 - ---------------------------- -------------- ------------------------ -------------------------- ------------------
(1) Includes an indeterminate number of additional shares that may be issued to adjust the number of shares issued pursuant to such nonemployee director benefit plan as the result of any future stock split, stock dividend or similar adjustment of the Registrant's outstanding common stock. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended. The price per share is estimated to be $3.00, based on the average of the high sales price ($3-1/8) and the low sales price ($2-7/8) for the Registrant's common stock in the over-the-counter market on May 28, 1997, as reported by the Nasdaq National Market. 2 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents are hereby incorporated by reference in this Registration Statement: (a) The Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, filed with the Securities and Exchange Commission (the "Commission"), on March 17, 1997, which contains audited financial statements for the most recent fiscal year for which such statements have been filed; (b) The Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and filed with the Commission on May 9, 1997; and (c) The description of the Registrant's Common Stock contained in the Registration Statement on Form 8-A filed with the Commission on April 26, 1994, under Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including any amendments or reports filed for the purpose of updating such description. All documents filed by the Registrant pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date hereof and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters the securities covered hereby then remaining unsold shall also be deemed to be incorporated by reference into this Registration Statement and to be a part hereof commencing on the respective dates on which such documents are filed. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS Sections 23B.08.500 through 23B.08.600 of the Washington Business Corporation Act authorize a court to award, or a corporation's board of directors to grant, indemnification to directors and officers on terms sufficiently broad to permit indemnification under certain circumstances for liability arising under the Securities Act of 1933, as amended (the "Securities Act"). Section 10 of the Registrant's Amended and Restated Bylaws provide for indemnification of the Registrant's directors, officers, employees and agents to the maximum extent permitted by Washington law. Section 23B.08.320 of the Washington Business Corporation Act authorizes a corporation to limit a director's liability to the corporation or its shareholders for monetary damages for acts or omissions as a director, except in certain circumstances involving intentional misconduct, self dealing or illegal corporate loans or distributions, or any transaction from which the director personally received a benefit in money, property or services to which the director is not legally entitled. Article 11 of the Registrant's Amended and Restated Articles of Incorporation contains provisions implementing, to the fullest extent permitted by Washington law, such limitations on a director's liability to the Registrant and its shareholders. The Registrant has entered into an Indemnification Agreement with each of the Registrant's executive officers and directors in which the Registrant agrees to hold harmless and indemnify the officer or director to the fullest extent permitted by Washington law. Under these Indemnification Agreements, the officer or director is not indemnified for any action, suit, claim or proceeding instituted by or at the direction of the officer or director unless such action, suit, claim or proceeding is or was authorized by the Registrant's Board of Directors or unless the action is to enforce the provisions of the Indemnification Agreement. No indemnity pursuant to the Indemnification Agreements shall be provided by the Registrant on account of any suit in which a final, unappealable judgment is rendered against an executive officer or director for an accounting of profits made from the purchase or sale by the executive officer or director of securities of the Registrant in violation of the provisions of Section 16(b) of the Exchange Act, and amendments thereto, or for damages that have been paid directly to the executive officer or director by an insurance carrier under a policy of directors' and officers' liability insurance maintained by the Registrant. II-1 3 ITEM 8. EXHIBITS
Exhibit Number Description - --------------------- ------------------------------------------------------ 5.1 Opinion of counsel regarding legality of the Common Stock being registered 23.1 Consent of Ernst & Young LLP (see page II-6) 24.1 Power of Attorney (see Signature Page) 99.1 Targeted Genetics Corporation Stock Option Plan for Nonemployee Directors
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: (a) To include any prospectus required by Section 10(a)(3) of the Securities Act; (b) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) that, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and (c) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that paragraphs (1)(a) and (1)(b) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered that 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, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the II-2 4 securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, state of Washington, on May 28, 1997. TARGETED GENETICS CORPORATION By: /S/ H. Stewart Parker --------------------------------------- H. Stewart Parker President and Chief Executive Officer POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints H. Stewart Parker and James A. Johnson, or either of them, his or her attorneys-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Registration Statement, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on May 28, 1997. SIGNATURE TITLE President, Chief Executive Officer and /S/ H. Stewart Parker Director (Principal Executive Officer) - --------------------------- /S/ H. Stewart Parker Vice President, Finance and Chief Financial /S/ James A. Johnson Officer,Treasurer and Secretary - --------------------------- (Principal Financial and Accounting Officer) James A. Johnson /S/ Jack L. Bowman - --------------------------- Director Jack L. Bowman /S/Jeremy Curnock Cook - --------------------------- Director Jeremy Curnock Cook /S/ Stephen A. Duzan - --------------------------- Director Stephen A. Duzan /S/ James D. Grant - --------------------------- Director James D. Grant /S/ Donald E. O'Neill - --------------------------- Director Donald E. O'Neill /S/ Mark Richmond - --------------------------- Director Mark Richmond /S/ Martin P. Sutter - --------------------------- Director Martin P. Sutter II-4 6 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement on Form S-8 pertaining to the Targeted Genetics Corporation Stock Option Plan for Nonemployee Directors of our report dated February 7, 1997 with respect to the consolidated financial statements Targeted Genetics Corporation included in its Annual Report (Form 10-K) for the year ended December 31, 1996, filed with the Securities and Exchange Commission. ERNST & YOUNG, LLP Seattle, Washington May 29, 1997 II-5 7 INDEX TO EXHIBITS
Exhibit Number Description - ------------------- -------------------------------------------------------- 5.1 Opinion of counsel regarding legality of the Common Stock being registered 23.1 Consent of Ernst & Young LLP (see page II-5) 24.1 Power of Attorney (see Signature Page) 99.1 Targeted Genetics Corporation Stock Option Plan for Nonemployee Directors
EX-5.1 2 OPINION OF COUNSEL 1 Perkins Coie A Law Partnership Including Professional Corporations 1201 Third Avenue, 40th Floor Seattle, Washington 98101-3099 Telephone:(206)583-8888 - Facsimile:(206)583-8500 EXHIBIT 5.1 May 29, 1997 Targeted Genetics Corporation Suite 100 1100 Olive Way Seattle, WA 98101 RE: REGISTRATION STATEMENT ON FORM S-8 Gentlemen and Ladies: We have acted as counsel to Targeted Genetics Corporation (the "Company") in connection with the preparation of a Registration Statement on Form S-8 (the "Registration Statement") which is being filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to 180,000 shares of common stock, $.01 par value, of the Company (the "Shares"). The Shares may be issued pursuant to the Targeted Genetics Corporation Stock Option Plan for Nonemployee Directors (the "Plan"). We have examined the Registration Statement and such documents and records of the Company and other documents as we have deemed necessary for the purpose of this opinion. Based upon and subject to the foregoing, we are of the opinion that the Shares that may be issued upon the exercise of stock options granted or to be granted pursuant to the Plan have been duly authorized and that, upon the due execution by the Company and the registration by its registrar of the Shares and the sale thereof by the Company in accordance with the terms of the Plan, and the receipt of the consideration therefor in accordance with the terms of the Plan, the Shares will be validly issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, Perkins Coie EX-99.1 3 TARGETED GENETICS CORPORATION STOCK OPTION PLAN 1 EXHIBIT 99.1 TARGETED GENETICS CORPORATION STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS AMENDED AND RESTATED ON JANUARY 14, 1997 SECTION 1 PURPOSES The purpose of the Targeted Genetics Corporation Stock Option Plan for Nonemployee Directors (this "Plan") is to attract and retain the services of experienced and knowledgeable nonemployee directors for Targeted Genetics Corporation (the "Company") and to provide added incentive to such directors by providing an opportunity for stock ownership in the Company. SECTION 2 ADMINISTRATION The administrator of this Plan (the "Plan Administrator") shall be the Board of Directors of the Company (the "Board"). Subject to the terms of this Plan, the Plan Administrator shall have the power to construe the provisions of this Plan, to determine all questions arising hereunder and to adopt and amend such rules and regulations for the administration of this Plan as it may deem desirable. SECTION 3 SHARES SUBJECT TO THE PLAN Subject to adjustment in accordance with Section 6 hereof, the total number of shares of the Company's common stock (the "Common Stock") for which options may be granted under this Plan is 300,000 (the "Shares"). The Shares shall be shares currently authorized but unissued or subsequently acquired by the Company and shall include shares representing the unexercised portion of any option granted under this Plan which expires or terminates without being exercised in full. SECTION 4 ELIGIBILITY 4.1 ELIGIBLE DIRECTORS Each member of the Board elected or appointed who is not otherwise an employee of the Company or any parent or subsidiary corporation (an "Eligible Director") shall be eligible to participate in this Plan. 4.2 INITIAL GRANTS Immediately following his or her initial election or appointment to the Board, each Eligible Director shall automatically receive an option to purchase 15,000 Shares. 4.3 ANNUAL GRANTS Each Eligible Director continuing service as an Eligible Director immediately following an Annual Meeting of Shareholders shall automatically receive an option to purchase 5,000 Shares immediately following each year's Annual Meeting of Shareholders as an annual grant; provided that an Eligible Director who has received an initial grant of 15,000 Shares on such date shall not receive an annual grant until the next Annual Meeting. 4.4 AVAILABILITY OF SHARES No grant shall be made under this Plan if the effect of such grant would be to obligate the Company to issue more Shares than are reserved under Section 3. If insufficient Shares are reserved under Section 3 to fully fund one or more grants to be made under this Section 4 on the same date of grant, then the Shares 2 available shall be divided by the number of Eligible Directors then entitled to a grant and each such Eligible Director shall be granted an option for that number of Shares. SECTION 5 OPTION TERMS Each option granted to an Eligible Director under this Plan and the issuance of Shares hereunder shall be subject to the following terms: 5.1 OPTION AGREEMENT Each option shall be evidenced by an option agreement (an "Agreement") duly executed on behalf of the Company. Each Agreement shall comply with and be subject to the terms and conditions of this Plan. Any Agreement may contain such other terms, provisions and conditions not inconsistent with this Plan as may be determined by the Plan Administrator. 5.2 OPTION EXERCISE PRICE The option exercise price for an option shall be the closing price, or if there is no closing price, the mean between the high and the low sale price of shares of Common Stock on the Nasdaq Stock Market on the day the option is granted or, if no Common Stock was traded on such date, on the next succeeding day on which Common Stock is so traded. 5.3 VESTING AND EXERCISABILITY Each option granted to an Eligible Director shall vest and become exercisable in accordance with the following schedule: -2- 3
Period of Eligible Director's Continuous Service as a Director With the Company From the Date the Option is Granted Portion of Total Option Which Is Exercisable - ------------------------------------------------- ---------------------------------------------- Less than twelve months 0% Twelve months 33-1/3% Twenty-four months 66-2/3% Thirty-six months 100%
5.4 TIME AND MANNER OF EXERCISE OF OPTION Each option may be exercised in whole or in part at any time and from time to time; provided, however, that no fewer than 20% of the Shares purchasable under the option (or the remaining Shares then purchasable under the option, if less than 20%) may be purchased upon any exercise of any option hereunder and that only whole Shares will be issued pursuant to the exercise of any option. Any option may be exercised by giving written notice, signed by the person exercising the option, to the Company stating the number of Shares with respect to which the option is being exercised, accompanied by payment in full for such Shares, which payment may be in whole or in part (a) in cash or by check, (b) in shares of Common Stock already owned for at least six months by the person exercising the option, valued at fair market value at the time of such exercise, or (c) by delivery of a properly executed exercise notice, together with irrevocable instructions to a broker, to properly deliver to the Company the amount of sale or loan proceeds to pay the exercise price, all in accordance with the regulations of the Federal Reserve Board. 5.5 TERM OF OPTIONS Each option shall expire ten years from the date of the granting thereof, but shall be subject to earlier termination as follows: (a) In the event that an Optionee ceases to be a director of the Company for any reason other than the death of the Optionee, the unvested portion of the options granted to such Optionee shall terminate immediately and the vested portion of the options granted to such Optionee may be exercised by him or her only within three months after the date such Optionee ceases to be a director of the Company. (b) In the event of the death of an Optionee, whether during the Optionee's service as a director or during the three-month period referred to in Section 5.5(a), the unvested portion of the options granted to such Optionee shall terminate immediately and the vested portion of the options granted to such Optionee shall be exercisable, and such options shall expire unless exercised within twelve months after the date of the Optionee's death, by the legal representatives or the estate of such Optionee, by any person or persons whom the Optionee shall have designated in writing on forms prescribed by and filed with the Company or, if no such designation has been made, by the person or persons to whom the Optionee's rights have passed by will or the laws of descent and distribution. -3- 4 5.6 TRANSFERABILITY During an Optionee's lifetime, an option may be exercised only by the Optionee. Options granted under this Plan and the rights and privileges conferred thereby shall not be subject to execution, attachment or similar process and may not be transferred, assigned, pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by (a) will or by the applicable laws of descent and distribution, or (b) by gift or other transfer to either (i) a spouse or other immediate family member or (ii) any trust or estate in which the Optionee or such Optionee's spouse or other immediate family member has a substantial beneficial interest. In addition, an Optionee may designate in writing during the Optionee's lifetime a beneficiary to receive and exercise options in the event of the Optionee's death (as provided in Section 5.5(b)). Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any option under this Plan or of any right or privilege conferred thereby, contrary to the provisions of this Plan, or the sale or levy or any attachment or similar process upon the rights and privileges conferred hereby, shall be null and void. 5.7 HOLDING PERIOD If an individual subject to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") sells shares of Common Stock obtained upon the exercise of any option granted under this Plan within six (6) months after the date the option was granted, such sale may result in short-swing profit recovery under Section 16(b) of the Exchange Act. 5.8 PARTICIPANT'S OR SUCCESSOR'S RIGHTS AS SHAREHOLDER Neither an Optionee nor the Optionee's successor in interest shall have any rights as a shareholder of the Company with respect to any Shares subject to an option granted to the Optionee until such person becomes a holder of record of such Shares. 5.9 LIMITATION AS TO DIRECTORSHIP Neither this Plan, nor the granting of an option, nor any other action taken pursuant to this Plan shall constitute or be evidence of any agreement or understanding, express or implied, that an Optionee has a right to continue as a director for any period of time or at any particular rate of compensation. 5.10 REGULATORY APPROVAL AND COMPLIANCE The Company shall not be required to issue any certificate or certificates for Shares upon the exercise of an option granted under this Plan, or record as a holder of record of Shares the name of the individual exercising an option under this Plan, without obtaining to the complete satisfaction of the Plan Administrator the approval of all regulatory bodies deemed necessary by the Plan Administrator, and without complying, to the Plan Administrator's complete satisfaction, with all rules and regulations under federal, state or local law deemed applicable by the Plan Administrator. SECTION 6 CAPITAL ADJUSTMENTS 6.1 RECAPITALIZATION The aggregate number and class of shares for which options may be granted under this Plan, the number and class of shares covered by each outstanding option and the exercise price per share thereof (but not the total price), shall all be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock of the Company resulting from a split or consolidation of shares or any like capital adjustment, or the payment of any stock dividend. -4- 5 6.2 EFFECT OF LIQUIDATION OR REORGANIZATION Upon a merger (other than a merger of the Company in which the holders of shares of Common Stock immediately prior to the merger have the same proportionate ownership of shares of Common Stock in the surviving corporation immediately after the merger), consolidation, acquisition of property or stock, separation, reorganization (other than a mere reincorporation or the creation of a holding company) or liquidation of the Company (each a "corporate transaction"), as a result of which the shareholders of the Company receive cash, stock or other property in exchange for or in connection with their shares of Common Stock, then the Optionee shall have the right immediately prior to any such merger, consolidation, acquisition of property or stock, reorganization or liquidation to exercise such option in whole or in part whether or not the vesting requirements set forth in the option agreement have been satisfied. To the extent such option is not exercised, it shall terminate, except that in the event of a corporate transaction in which the shareholders of the Company receive capital stock of another corporation in exchange for their shares of Common Stock, such unexercised option shall be assumed or an equivalent option shall be substituted by the successor corporation or a parent or subsidiary of such successor corporation. Any such assumed or equivalent option shall be 100% vested and exercisable with respect to the total number of shares purchasable under such option; provided that such acceleration will not occur if, in the opinion of the Company's outside accountants, such acceleration would render unavailable "pooling of interests" accounting treatment for such transaction for which pooling of interests accounting treatment is sought by the Company. Upon a merger of the Company in which the holders of Common Stock immediately prior to the merger have the same proportionate ownership of Common Stock in the surviving corporation immediately after the merger, a mere reincorporation or the creation of a holding company, each option outstanding under the Plan shall be assumed or an equivalent option shall be substituted by the successor corporation or a parent or subsidiary of such corporation, and the vesting schedule set forth in the option agreement shall continue to apply to such assumed or equivalent option. 6.3 FRACTIONAL SHARES In the event of any adjustment in the number of shares covered by any option, any fractional shares resulting from such adjustment shall be disregarded and each such option shall cover only the number of full shares resulting from such adjustment. SECTION 7 EXPENSES All costs and expenses of the adoption and administration of this Plan shall be borne by the Company; none of such expenses shall be charged to any Optionee. SECTION 8 COMPLIANCE WITH RULE 16B-3 It is the intention of the Company that this Plan comply in all respects with the requirements for a "formula plan" within the meaning attributed to that term for purposes of Rule 16b-3 promulgated under Section 16(b) of the Exchange Act. Therefore, if any Plan provision is later found not to be in compliance with such requirements, that provision shall be deemed null and void, and in all events this Plan shall be construed in favor of its meeting such requirements. SECTION 9 TERMINATION AND AMENDMENT The Board may amend, terminate or suspend this Plan at any time, in its sole and absolute discretion; provided, however, that if required to qualify this Plan as a formula plan for purposes of Rule 16b-3 under Section 16(b) of the Exchange Act, no amendment may be made more than once every six months that would change the amount, price, timing or vesting of the options, other than to comply with changes in the Internal -5- 6 Revenue Code of 1986, as amended, or the rules and regulations thereunder; provided further that no amendment that would (a) increase the number of Shares that may be issued under this Plan, or (b) otherwise require shareholder approval under any applicable law or regulation shall be made without the approval of the Company's shareholders. SECTION 10 DURATION This Plan shall continue in effect until March 2, 2004 unless it is sooner terminated by action of the Board or the Company's shareholders, but such termination shall not affect the then-outstanding terms of any options. Adopted by the Company's Board of Directors on March 2, 1994 and approved by the Company's shareholders on March 23, 1994. Amended and restated by the Board on October 17, 1996. Amended and restated by the Board on January 14, 1997. -6- -----END PRIVACY-ENHANCED MESSAGE-----