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Exhibit 10.1
1989 STOCK PLAN OF
S3 INCORPORATED
(Amended and Restated Effective as of March 11, 1997)
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TABLE OF CONTENTS
Page
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SECTION 1. ESTABLISHMENT AND PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(d) Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(e) Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(f) Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(h) Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(i) Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(j) ISO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(k) Nonstatutory Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(l) Offeree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(m) Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(n) Optionee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(o) Outside Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(p) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(q) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(r) Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(s) Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(t) Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(u) Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(v) Stock Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(w) Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(x) Total and Permanent Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Committee Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Committee Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Outside Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Limitation On Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(d) Ten-Percent Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Attribution Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(f) Outstanding Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 5. STOCK SUBJECT TO PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Basic Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Additional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Stock Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Duration of Offers and Nontransferability of Rights . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Restrictions on Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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SECTION 7. TERMS AND CONDITIONS OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Exercisability and Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Nontransferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(g) Exercise of Options Upon Termination of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(h) Leaves of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(i) No Rights as a Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(j) Modification, Extension and Renewal of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(k) Restrictions on Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 8. PAYMENT FOR SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Surrender of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Services Rendered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Cashless Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 9. ADJUSTMENT OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Reorganizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Reservation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 10. LEGAL AND REGULATORY REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 11. NO EMPLOYMENT RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 12. DURATION AND AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Term of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Right to Amend or Terminate the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Effect of Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 13. EMPLOYEES BASED OUTSIDE OF THE UNITED STATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 14. EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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1989 STOCK PLAN OF
S3 INCORPORATED
(Amended and Restated Effective as of March 11, 1997)
SECTION 1. ESTABLISHMENT AND PURPOSE.
The Plan was established in 1989 to offer selected employees,
directors, advisers and consultants an opportunity to acquire a proprietary
interest in the success of the Company, or to increase such interest, by
purchasing Shares of the Company's Common Stock. The Plan provides both for
the direct award or sale of Shares and for the grant of Options to purchase
Shares. Options granted under the Plan may include Nonstatutory Options as
well as ISOs intended to qualify under Code section 422.
The Plan was again amended and restated effective January 1, 1994 to
increase the amount of shares authorized to be issued under the Plan, to
include changes to the Plan to conform the Plan to the deductibility
requirements of Code Section 162(m), to add automatic grant procedures for
non-employee directors and to authorize shares to be issued for such grants,
and to delete certain provisions that were required before the Company became a
public company. This amendment and restatement increases the amount of shares
authorized to be issued under the Plan by 1,500,000 shares.
SECTION 2. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of
the Company, as constituted from time to time.
(b) "Change in Control" means the occurrence of either of the
following events:
(i) A change in the composition of the Board of Directors, as a
result of which fewer than one-half of the incumbent directors are directors
who either:
(A) Had been directors of the Company 24 months prior to
such change; or
(B) Were elected, or nominated for election, to the Board of
Directors with the affirmative votes of at least a majority of the
directors who had been directors of the Company 24 months prior to
such change and who were still in office at the time of the election
or nomination; or
(ii) Any "person" (as such term is used in sections 13(d) and 14(d)
of the Exchange Act) by the acquisition or aggregation of securities is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the
Company's then outstanding securities ordinarily (and apart from rights
accruing under special circumstances) having the right to vote at elections
of directors (the "Base Capital Stock"); except that any change in the
relative beneficial ownership of the Company's securities by any person
resulting solely from a reduction in the aggregate number of outstanding
shares of Base Capital Stock, and any decrease thereafter in such person's
ownership of securities, shall be disregarded until such person increases in
any manner, directly or indirectly, such person's beneficial ownership of any
securities of the Company. For purposes of this Subsection (ii), the term
"person" shall not include an employee benefit plan maintained by the
Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Committee" shall mean the committee designated by the Board
of Directors, which is authorized to administer the Plan under Section 3
hereof. The Committee shall have membership composition
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which enables the Plan to qualify under Rule 16b-3 with regard to the grant of
Options or other rights under the Plan to persons who are subject to Section 16
of the Exchange Act.
(e) "Company" shall mean S3 Incorporated, a Delaware
corporation.
(f) "Employee" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors and (iii) an independent contractor or advisor who performs services
for the Company or a Subsidiary. Service as a member of the Board of Directors
or as an independent contractor or advisor shall be considered employment for
all purposes of the Plan except the second sentence of Section 4(a) and Section
4(b).
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(h) "Exercise Price" shall mean the amount for which one Share
may be purchased upon exercise of an Option, as specified by the Committee in
the applicable Stock Option Agreement.
(i) "Fair Market Value" shall mean (i) the closing price of a
Share on the principal exchange which the Shares are trading, on the date on
which the Fair Market Value is determined (if Fair Market Value is determined
on a date which the principal exchange is closed, Fair Market Value shall be
determined on the last immediately preceding trading day), or (ii) if the
Shares are not traded on an exchange but are quoted on the Nasdaq National
Market or a successor quotation system, the closing price on the date on which
the Fair Market Value is determined, or (iii) if the Shares are not traded on
an exchange or quoted on the Nasdaq National Market or a successor quotation
system, the fair market value of a Share, as determined by the Committee in
good faith. Such determination shall be conclusive and binding on all persons.
(j) "ISO" shall mean an employee incentive stock option
described in Code section 422.
(k) "Nonstatutory Option" shall mean an employee stock option
that is not an ISO.
(l) "Offeree" shall mean an individual to whom the Committee has
offered the right to acquire Shares under the Plan (other than upon exercise of
an Option).
(m) "Option" shall mean an ISO or Nonstatutory Option granted
under the Plan and entitling the holder to purchase Shares.
(n) "Optionee" shall mean an individual who holds an Option.
(o) "Outside Director" shall mean a member of the Board of
Directors who is not a common-law employee of the Company or of a Subsidiary.
(p) "Plan" shall mean this 1989 Stock Plan of S3 Incorporated,
as amended from time to time.
(q) "Purchase Price" shall mean the consideration for which one
Share may be acquired under the Plan (other than upon exercise of an Option),
as specified by the Committee.
(r) "Service" shall mean service as an Employee.
(s) "Share" shall mean one share of Stock, as adjusted in
accordance with Section 9 (if applicable).
(t) "Stock" shall mean the Common Stock of the Company.
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(u) "Stock Option Agreement" shall mean the agreement between
the Company and an Optionee which contains the terms, conditions and
restrictions pertaining to his Option.
(v) "Stock Purchase Agreement" shall mean the agreement between
the Company and an Offeree who acquires Shares under the Plan which contains
the terms, conditions and restrictions pertaining to the acquisition of such
Shares.
(w) "Subsidiary" shall mean any corporation, if the Company
and/or one or more other Subsidiaries own not less than 50 percent of the total
combined voting power of all classes of outstanding stock of such corporation.
A corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.
(x) "Total and Permanent Disability" shall mean that the
Optionee is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted, or can be expected to last, for a
continuous period of not less than six months.
SECTION 3. ADMINISTRATION.
(a) Committee Procedures. The Board of Directors shall
designate one of the members of the Committee as chairman. The Committee may
hold meetings at such times and places as it shall determine. The acts of a
majority of the Committee members present at meetings at which a quorum exists,
or acts reduced to or approved in writing by all Committee members, shall be
valid acts of the Committee.
(b) Committee Responsibilities. Subject to the provisions of
the Plan, the Committee shall have full authority and discretion to take the
following actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan;
(iv) To determine when Shares are to be awarded or offered for sale
and when Options are to be granted under the Plan;
(v) To select the Offerees and Optionees;
(vi) To determine the number of Shares to be offered to each Offeree
or to be made subject to each Option;
(vii) To prescribe the terms and conditions of each award or sale of
Shares, including (without limitation) the Purchase Price, the vesting of the
award (including accelerating the vesting of awards) and to specify the
provisions of the Stock Purchase Agreement relating to such award or sale;
(viii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, the vesting or duration of
the Option (including accelerating the vesting of the Option), to determine
whether such Option is to be classified as an ISO or as a Nonstatutory
Option, and to specify the provisions of the Stock Option Agreement relating
to such Option;
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(ix) To amend any outstanding Stock Purchase Agreement or Stock
Option Agreement, subject to applicable legal restrictions and to the consent
of the Offeree or Optionee who entered into such agreement;
(x) To prescribe the consideration for the grant of each Option or
other right under the Plan and to determine the sufficiency of such
consideration;
(xi) To determine the disposition of each Option or other right under
the Plan in the event of an Optionee's or Offeree's divorce or dissolution of
marriage;
(xii) To determine whether Options or other rights under the Plan
will be granted in replacement of other grants under an incentive or other
compensation plan of an acquired business;
(xiii) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Stock Option Agreement or any Stock Purchase
Agreement; and
(xiv) To take any other actions deemed necessary or advisable for
the administration of the Plan.
Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions and limitations as it may deem appropriate,
except that the Committee may not delegate its authority with regard to the
selection for participation of or the granting of Options or other rights under
the Plan to persons subject to Section 16 of the Exchange Act. All decisions,
interpretations and other actions of the Committee shall be final and binding
on all Offerees, all Optionees, and all persons deriving their rights from an
Offeree or Optionee. No member of the Committee shall be liable for any action
that he has taken or has failed to take in good faith with respect to the Plan,
any Option, or any right to acquire Shares under the Plan.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only Employees shall be eligible for
designation as Optionees or Offerees by the Committee. In addition, only
individuals who are employed as common-law employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.
(b) Outside Directors. Any other provision of the Plan
notwithstanding, the participation of Outside Directors in the Plan shall be
subject to the following restrictions:
(i) Outside Directors shall only be eligible for the grant of
Nonstatutory Options as described in this Section 4(b).
(ii) Each Outside Director shall automatically be granted a
Nonstatutory Option to purchase 40,000 Shares (subject to adjustment under
Section 9) as a result of their appointment as an Outside Director. Upon the
conclusion of each regular annual meeting of the Company's shareholders
following the meeting at which they were appointed, each Outside Director who
will continue serving as a member of the Board thereafter shall receive a
Nonstatutory Option to purchase 20,000 Shares (subject to adjustment under
Section 9). All such Nonstatutory Options shall vest and become exercisable
at the rate of 25% upon each one-year anniversary of the date the option is
granted to the Outside Director.
(iii) All Nonstatutory Options granted to an Outside Director under
this Section 4(b) shall also become exercisable in full in the event of (A)
the termination of such Outside Director's
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service because of death or Total and Permanent Disability or (B) a Change in
Control of the Company.
(iv) The Exercise Price of all Nonstatutory Options granted to an
Outside Director under this Section 4(b) shall be equal to 100% of the Fair
Market Value of a Share on the date of grant, payable in one of the forms
described in Sections 8(a), (b) and (d).
(v) All Nonstatutory Options granted to an Outside Director under
this Section 4(b) shall terminate on the earliest of (A) the 10th anniversary
of the date of grant of such Nonstatutory Options, (B) the date 90 days after
the termination of such Outside Director's service for any reason other than
death, Total and Permanent Disability or voluntary retirement as an Outside
Director at or after the age of 60, or (C) the date 12 months after the
termination of such Outside Director's service because of death, Total and
Permanent Disability or voluntary retirement as an Outside Director at or
after the age of 60.
(c) Limitation On Grants. No Employee shall be granted Options
to purchase more than 1,500,000 Shares in any fiscal year of the Company.
(d) Ten-Percent Shareholders. An Employee who owns more than 10
percent of the total combined voting power of all classes of outstanding stock
of the Company or any of its Subsidiaries shall not be eligible for the grant
of an ISO unless such grant satisfies the requirements of Code section
422(c)(6).
(e) Attribution Rules. For purposes of Subsection (d) above, in
determining stock ownership, an Employee shall be deemed to own the stock
owned, directly or indirectly, by or for his brothers, sisters, spouse,
ancestors and lineal descendants. Stock owned, directly or indirectly, by or
for a corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries.
(f) Outstanding Stock. For purposes of Subsection (d) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding stock" shall not include shares
authorized for issuance under outstanding options held by the Employee or by
any other person.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares offered under the Plan shall be
authorized but unissued Shares or treasury Shares. The aggregate number of
Shares which may be issued under the Plan (upon exercise of Options or other
rights to acquire Shares) shall not exceed 19,510,253 Shares. The Company has
reserved an additional 600,000 Shares exclusively for grants of Options to
Outside Directors described in Section 4(b). Effective January 1, 1997 and on
each January 1 thereafter for the remaining term of the Plan, the aggregate
number of Shares which may be issued under the Plan to individuals other than
Outside Directors (upon exercise of Options or other rights to acquire Shares)
shall be increased by a number of Shares equal to 3 1/4 percent of the total
number of Shares of the Common Stock of the Company outstanding at the end of
the most recently concluded calendar year. Any Shares that have been reserved
but not issued as Shares or Options during any calendar year shall remain
available for grant during any subsequent calendar year. Notwithstanding the
foregoing, no more than 8,900,000 Shares shall be available for the grant of
ISOs for the remaining term of the Plan. The aggregate number of Shares which
may be issued under the Plan shall at all times be subject to adjustment
pursuant to Section 9. The number of Shares which are subject to Options or
other rights outstanding at any time under the Plan shall not exceed the number
of Shares which then remain available for issuance under the Plan. The
Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
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(b) Additional Shares. In the event that any outstanding Option
or other right for any reason expires or is canceled or otherwise terminated,
the Shares allocable to the unexercised portion of such Option or other right
shall again be available for the purposes of the Plan. If Shares are forfeited
before any dividends have been paid with respect to the Shares, then such
Shares shall again be available for award or sale under the Plan.
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) Stock Purchase Agreement. Each award or sale of Shares
under the Plan (other than upon exercise of an Option) shall be evidenced by a
Stock Purchase Agreement between the Offeree and the Company. Such award or
sale shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a
Stock Purchase Agreement. The provisions of the various Stock Purchase
Agreements entered into under the Plan need not be identical.
(b) Duration of Offers and Nontransferability of Rights. Any
right to acquire Shares under the Plan (other than an Option) shall
automatically expire if not exercised by the Offeree within 30 days after the
grant of such right was communicated to him by the Committee. Such right shall
not be transferable and shall be exercisable only by the Offeree to whom such
right was granted.
(c) Purchase Price. The Purchase Price shall be determined by
the Committee at its sole discretion. The Purchase Price shall be payable in
one of the forms described in Sections 8(a) and (c).
(d) Withholding Taxes. As a condition to the purchase of
Shares, the Offeree shall make such arrangements as the Committee may require
for the satisfaction of any federal, state or local withholding tax obligations
that may arise in connection with such purchase.
(e) Restrictions on Transfer of Shares. Any Shares awarded or
sold under the Plan shall be subject to such special forfeiture conditions,
rights of repurchase, rights of first refusal and other transfer restrictions
as the Committee may determine. Such restrictions shall be set forth in the
applicable Stock Purchase Agreement and shall apply in addition to any general
restrictions that may apply to all holders of Shares.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the
Plan shall be evidenced by a Stock Option Agreement between the Optionee and
the Company. Such Option shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and conditions
which are not inconsistent with the Plan and which the Committee deems
appropriate for inclusion in a Stock Option Agreement. The provisions of the
various Stock Option Agreements entered into under the Plan need not be
identical.
(b) Number of Shares. Each Stock Option Agreement shall specify
the number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 9. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) Exercise Price. Each Stock Option Agreement shall specify
the Exercise Price. The Exercise Price of an ISO shall not be less than 100
percent of the Fair Market Value of a Share on the date of grant, except as
otherwise provided in Section 4(d). Subject to the preceding sentence, the
Exercise Price under any Option shall be determined by the Committee at its
sole discretion. The Exercise Price shall be payable in one of the forms
described in Sections 8(a), (b) and (d).
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(d) Withholding Taxes. As a condition to the exercise of an
Option, the Optionee shall make such arrangements as the Committee may require
for the satisfaction of any federal, state or local withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Committee may require for the satisfaction of any
federal, state or local withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability and Term. Each Stock Option Agreement shall
specify the date when all or any installment of the Option is to become
exercisable. The Stock Option Agreement shall also specify the term of the
Option. The term shall not exceed 10 years from the date of grant, except as
otherwise provided in Section 4(d). Subject to the preceding three sentences,
the Committee at its sole discretion shall determine when all or any
installment of an Option is to become exercisable and when an Option is to
expire.
(f) Nontransferability. During an Optionee's lifetime, his
Option(s) shall be exercisable only by him and shall not be transferable. In
the event of an Optionee's death, his Option(s) shall not be transferable other
than by will or by the laws of descent and distribution.
(g) Exercise of Options Upon Termination of Service. Each Stock
Option Agreement shall set forth the extent to which the Optionee shall have
the right to exercise the Option following termination of the Optionee's
Service with the Company and its Subsidiaries, and the right to exercise the
Option of any executors or administrators of the Optionee's estate or any
person who has acquired such Option(s) directly from the Optionee by bequest or
inheritance. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of Service.
(h) Leaves of Absence. An Optionee's Service shall be deemed to
continue while the Optionee is on military leave, sick leave or other bona fide
leave of absence (as determined by the Committee). The foregoing
notwithstanding, in the case of an ISO granted under the Plan, Service shall
not be deemed to continue beyond the first 90 days of such leave, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
(i) No Rights as a Stockholder. An Optionee, or a transferee of
an Optionee, shall have no rights as a stockholder with respect to any Shares
covered by his Option until the date of the issuance of a stock certificate for
such Shares. No adjustments shall be made, except as provided in Section 9.
(j) Modification, Extension and Renewal of Options. Within the
limitations of the Plan, the Committee may modify, extend or renew outstanding
options or may accept the cancellation of outstanding options (to the extent
not previously exercised), whether or not granted hereunder, in return for the
grant of new Options at the same or a different price. The foregoing
notwithstanding, no modification of an Option shall, without the consent of the
Optionee, impair his rights or increase his obligations under such Option.
(k) Restrictions on Transfer of Shares. Any Shares issued upon
exercise of an Option shall be subject to such special forfeiture conditions,
rights of repurchase, rights of first refusal and other transfer restrictions
as the Committee may determine. Such restrictions shall be set forth in the
applicable Stock Option Agreement and shall apply in addition to any general
restrictions that may apply to all holders of Shares.
SECTION 8. PAYMENT FOR SHARES.
(a) General Rule. The entire Purchase Price or Exercise Price
of Shares issued under the Plan shall be payable in lawful money of the United
States of America at the time when such Shares are purchased, except as
provided in Subsections (b), (c) and (d) below.
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(b) Surrender of Stock. To the extent that a Stock Option
Agreement so provides, payment may be made all or in part with Shares which
have already been owned by the Optionee or his representative for more than 12
months and which are surrendered to the Company in good form for transfer.
Such Shares shall be valued at their Fair Market Value on the date when the new
Shares are purchased under the Plan.
(c) Services Rendered. At the discretion of the Committee,
Shares may be awarded under the Plan in consideration of services rendered to
the Company or a Subsidiary prior to the award. If Shares are awarded without
the payment of a Purchase Price in cash, the Committee shall make a
determination (at the time of the award) of the value of the services rendered
by the Offeree and the sufficiency of the consideration to meet the
requirements of Section 6(c).
(d) Cashless Exercise. To the extent that a Stock Option
Agreement so provides, payment may be made all or in part by delivery (on a
form prescribed by the Committee) of an irrevocable direction to a securities
broker to sell Shares and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
SECTION 9. ADJUSTMENT OF SHARES.
(a) General. In the event of a subdivision of the outstanding
Stock, a declaration of a dividend payable in Shares, a declaration of a
dividend payable in a form other than Shares in an amount that has a material
effect on the value of Shares, a combination or consolidation of the
outstanding Stock (by reclassification or otherwise) into a lesser number of
Shares, a recapitalization or a similar occurrence, the Committee shall make
appropriate adjustments in one or more of (i) the number of Shares available
for future grants under Section 5, (ii) the number of Shares covered by each
outstanding Option, (iii) the Exercise Price under each outstanding Option,
(iv) the number of shares covered by each outstanding award or (v) the Purchase
Price of each outstanding award.
(b) Reorganizations. In the event that the Company is a party
to a merger or other reorganization, outstanding Options shall be subject to
the agreement of merger or reorganization. Such agreement may provide for the
assumption of outstanding Options by the surviving corporation or its parent or
for their continuation by the Company (if the Company is a surviving
corporation); provided, however, that if assumption or continuation of the
outstanding Options is not provided by such agreement then the Committee shall
have the option of offering the payment of a cash settlement equal to the
difference between the amount to be paid for one Share under such agreement and
the Exercise Price, in all cases without the Optionees' consent.
(c) Reservation of Rights. Except as provided in this Section
9, an Optionee or Offeree shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any dividend or
any other increase or decrease in the number of shares of stock of any class.
Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
SECTION 10. LEGAL AND REGULATORY REQUIREMENTS.
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations and the regulations of any stock exchange on which the
Company's securities may then be
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listed, and the Company has obtained the approval or favorable ruling from any
governmental agency which the Company determines is necessary or advisable.
SECTION 11. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any right or Option granted under the Plan,
shall be construed to give any person any right to become, to be treated as, or
to remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.
SECTION 12. DURATION AND AMENDMENTS.
(a) Term of the Plan. The amended and restated Plan, as set
forth herein, shall become effective on March 11, 1997. The Plan shall
terminate automatically 10 years after its adoption by the Board of Directors
and may be terminated on any earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of
Directors may amend the Plan at any time and from time to time except that the
provisions of Section 4(b) relating to the amount, price and timing of the
Option grants to Outside Directors shall not be amended more than once in any
six-month period after the Plan becomes effective, except as may be required by
the Code or ERISA. Rights and obligations under any Option granted before
amendment of the Plan shall not be materially altered, or impaired adversely,
by such amendment, except with consent of the person to whom the Option was
granted. An amendment of the Plan shall be subject to the approval of the
Company's stockholders only to the extent required by applicable laws,
regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be
issued or sold under the Plan after the termination thereof, except upon
exercise of an Option granted prior to such termination. The termination of
the Plan, or any amendment thereof, shall not affect any Share previously
issued or any Option previously granted under the Plan.
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SECTION 13. EMPLOYEES BASED OUTSIDE OF THE UNITED STATES.
Notwithstanding any provision of the Plan to the contrary, in order
to foster and promote achievement of the purposes of the Plan or to comply with
provisions of laws or regulations in other countries in which the Company and
its Subsidiaries operate or have employees, the Committee, in its sole
discretion, shall have the power and authority to (i) determine which Employees
outside the United States are eligible to participate in the Plan, (ii) modify
the terms and conditions of any Options granted to Employees outside the United
States and (iii) establish subplans, modified option exercise procedures and
other terms and procedures to the extent such actions may be necessary or
advisable.
SECTION 14. EXECUTION.
To record the adoption of the amended and restated Plan by the Board
of Directors effective as of March 11, 1997, the Company has caused its
authorized officer to execute the same.
S3 INCORPORATED
By /s/ GARY J. JOHNSON
-------------------------------
Gary J. Johnson
President and
Chief Executive Officer
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