As filed with the Securities and Exchange Commission on June 26, 2006
Registration Statement No. 333- _____________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
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REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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AMDOCS LIMITED
(Exact name of registrant as specified in its charter)
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ISLAND OF GUERNSEY NOT APPLICABLE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
SUITE 5, TOWER HILL HOUSE LE BORDAGE
ST. PETER PORT, ISLAND OF GUERNSEY, GY1 3QT CHANNEL ISLANDS
(Address of registrant's principal executive offices)
1998 AMENDED AND RESTATED STOCK OPTION PLAN
OF QPASS INC.
(Full Title of the Plan)
AMDOCS, INC.
1390 TIMBERLAKE MANOR PARKWAY, CHESTERFIELD, MISSOURI 63017
ATTENTION: THOMAS G. O'BRIEN, TREASURER
(Name and address of agent for service)
(314) 212-8328
(Telephone Number, Including Area Code, of Agent For Service)
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THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
ROBERT A. SCHWED, ESQ.
WILMER CUTLER PICKERING HALE AND DORR LLP
399 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 937-7200
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CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered (1) Per Share Offering Price Registration Fee
------------------- -------------- ------------------ ---------------- ----------------
Ordinary Shares, L0.01 par value.. 297,772 $0.38 - $37.66 (2) $2,391,110 (2) $258
(1) Pursuant and subject to the terms of the Agreement and Plan of Merger,
dated as of April 17, 2006, by and among Amdocs Limited (the "Registrant"),
Amdocs Thesaurus, Inc., Qpass Inc. and Ray A. Rothrock, as Shareholders'
Agent, the Registrant assumed all of the outstanding options to purchase
common stock of Qpass Inc. under the Qpass Inc. 1998 Amended and Restated
Stock Option Plan held by individuals who continue to be employed by Qpass
following the merger. Such options now represent the right to purchase
Ordinary Shares of the Registrant, with appropriate adjustments to the
number of shares and exercise price of each assumed option. Pursuant to
Rule 416 of the Securities Act, this Registration Statement shall also
cover any additional Ordinary Shares that become issuable under the plan
being registered pursuant to this Registration Statement by reason of any
stock dividend, stock split, recapitalization or any other similar
transaction effected without the receipt of consideration that results in
an increase in the number of the Registrant's outstanding Ordinary Shares.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(h) of the Securities Act of 1933, as amended. The
price per share and aggregate offering price are calculated on the basis of
(a) $8.03, the weighted average exercise price of the 297,772 Ordinary
Shares subject to outstanding stock option grants under the 1998 Amended
and Restated Stock Option Plan, at prices ranging from $0.38 to $37.66.
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EXPLANATORY NOTE
This Registration Statement on Form S-8 is being filed to register Ordinary
Shares of Amdocs Limited (the "Registrant") issuable pursuant to the Qpass Inc.
("Qpass") 1998 Amended and Restated Stock Option Plan (the "Plan"). On May 31,
2006, a subsidiary of the Registrant completed a merger with Qpass on the terms
and conditions set forth in the Agreement and Plan of Merger, dated as of April
17, 2006, by and among the Registrant, Amdocs Thesaurus, Inc., Qpass and Ray A.
Rothrock, as shareholders' agent (the "Merger Agreement"). Pursuant to the
merger, Qpass became an indirect wholly owned subsidiary of the Registrant.
Pursuant to the terms of the Merger Agreement, the Registrant agreed to assume
all of the outstanding options to purchase shares of Qpass common stock issued
under the Plan that were held by individuals who continued to be employed by
Qpass following the merger. As of the effective time of the merger, these
options were converted automatically into options to purchase an aggregate of
297,772 the Registrant's Ordinary Shares based on a formula provided in the
Merger Agreement.
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION
The information required by Item 1 is included in documents sent or provided to
participants in the Plan covered by this Registration Statement pursuant to Rule
428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act").
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
The written statement required by Item 2 is included in documents sent or
provided to participants in the Plan covered by this Registration Statement
pursuant to Rule 428(b)(1) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The Registrant is subject to the informational and reporting requirements of
Sections 13(a), 14, and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission"). The
following documents, which are on file with the Commission, are incorporated in
this registration statement by reference:
(a) The Registrant's latest annual report filed pursuant to Section 13(a)
or 15(d) of the Exchange Act or the latest prospectus filed pursuant to Rule
424(b) under the Securities Act that contains audited financial statements for
the Registrant's latest fiscal year for which such statements have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the document referred
to in (a) above.
(c) The description of the Registrant's Ordinary Shares contained in the
Registrant's Registration Statement on Form 8-A as filed with the Commission on
June 17, 1998, including any amendment or report filed for updating such
description.
All documents subsequently filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be part hereof
from the date of the filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for the purposes of this registration
statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
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.
Guernsey law permits a company's articles of association to provide for the
indemnification of officers and directors except to the extent that such a
provision may be held by the courts of Guernsey to be contrary to public policy
(for instance, for purporting to provide indemnification against the
consequences of committing a crime) and except to the extent that Guernsey law
prohibits the indemnification of any director against any specific provisions of
Guernsey Company law under which personal liability may be imposed or incurred.
Under the Registrant's Articles of Association, the Registrant is obligated to
indemnify any person who is made or threatened to be made a party to a legal or
administrative proceeding by virtue of being a director, officer or agent of the
Registrant, provided that it has no such obligation to indemnify any such
persons for any claims they incur or sustain by or through their own willful act
or default.
The Registrant has entered into an indemnity agreement with its directors and
some of its officers, under which it has agreed to pay the indemnified party the
amount of Loss (as defined therein) suffered by that party due to claims made
against that party for a Wrongful Act (as defined therein).
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The Exhibit Index immediately preceding the exhibits is incorporated herein by
reference.
ITEM 9. UNDERTAKINGS.
1. Item 512(a) of Regulation S-K. 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;
(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; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (i) and (ii) 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 the 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 which remain unsold at the termination of the
offering.
2. Item 512(b) of Regulation S-K. 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 Section
15(d) of the Exchange Act 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.
3. Item 512(h) of Regulation S-K. 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 Securities
and Exchange 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 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.
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 New York, State of New York, on this 26th day of
June, 2006.
AMDOCS LIMITED
By: /s/ Thomas G. O'Brien
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Thomas G. O'Brien
Treasurer and Secretary
Authorized U.S. Representative
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Amdocs Limited, hereby
severally constitute Bruce K. Anderson and Thomas G. O'Brien, and each of them
singly, our true and lawful attorneys with full power to them, and each of them
singly, to sign for us and in our names in the capacities indicated below, the
Registration Statement on Form S-8 filed herewith and any and all subsequent
amendments to said Registration Statement, and generally to do all such things
in our names and behalf in our capacities as officers and directors to enable
Amdocs Limited to comply with all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by said attorneys, or any of them, to said Registration Statement and any and
all amendments thereto.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
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/s/ Bruce K. Anderson Chairman of the Board June 26, 2006
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Bruce K. Anderson
/s/ Dov Baharav Director and Principal Executive Officer June 26, 2006
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Dov Baharav
/s/ Ron Moskovitz Principal Financial and Accounting Officer June 26, 2006
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Ron Moskovitz
/s/ Robert A. Minicucci Director June 26, 2006
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Robert A. Minicucci
/s/ Adrian Gardner Director June 26, 2006
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Adrian Gardner
/s/ Julian A. Brodsky Director June 26, 2006
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Julian A. Brodsky
/s/ Charles E. Foster Director June 26, 2006
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Charles E. Foster
/s/ Eli Gelman Director June 26, 2006
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Eli Gelman
/s/ James S. Kahan Director June 26, 2006
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James S. Kahan
/s/ Nehmeia Lemelbaum Director June 26, 2006
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Nehmeia Lemelbaum
/s/ John T. McLennan Director June 26, 2006
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John T. McLennan
/s/ Simon Olswang Director June 26, 2006
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Simon Olswang
Director June 26, 2006
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Mario Segal
EXHIBIT INDEX
Exhibit
Number Description
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5.1 Opinion of Carey Olsen.
23.1 Consent of Carey Olsen (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
24.1 Power of Attorney (included on the signature page of this Registration
Statement).
99.1 1998 Amended and Restated Stock Option Plan of Qpass Inc.
EXHIBIT 5.1
[Letterhead of Carey Olsen]
Amdocs Limited
Tower Hill House
The Bordage
St. Peter Port
Guernsey
26 June 2006
Dear Sirs:
RE: REGISTRATION STATEMENT ON FORM S-8
The following opinion is furnished to you in connection with the filing by
Amdocs Limited (the "Company") of its registration statement on Form S-8 (the
"Registration Statement"), under the Securities Act of 1933, as amended,
relating to the registration of 297,772 of its ordinary shares, L0.01 par value
(the "Shares"), issuable upon the exercise of certain stock options issued
pursuant to the Qpass Inc. ("Qpass") 1998 Amended and Restated Stock Option Plan
(the "Plan"), which was assumed by the Company in connection with its May 31,
2006 acquisition of Qpass.
In that connection, we have examined originals, or copies certified or otherwise
identified to our satisfaction, of all such documents, corporate records and
other instruments as we have deemed necessary or appropriate for the purposes of
this opinion, including the Plan, Articles of Association and Memorandum of
Association of the Company.
Based upon such examination, we are of opinion that:
1. The Company has been duly organized and validly exists as a
corporation under the laws of Guernsey, Channel Islands.
2. When issued and sold upon the exercise of options granted or pursuant
to awards made in accordance with the terms of the Plan as
contemplated by the Registration Statement, each of the Shares will be
validly issued, fully paid and non-assessable.
We express no opinion on any law other than the law of Guernsey as of the date
hereof.
We hereby consent to the use of this opinion as an exhibit to the Registration
Statement.
Yours faithfully,
/s/ CAREY OLSEN
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Carey Olsen
EXHIBIT 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-____________) pertaining to the 1998 Amended and Restated Stock
Option Plan of Qpass Inc., of our report dated November 3, 2005, with respect to
the consolidated financial statements and schedule of Amdocs Limited, included
in the Annual Report (Form 20-F) for the year ended September 30, 2005, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
New York, NY
June 26, 2006
EXHIBIT 99.1
QPASS INC.
1998 AMENDED AND RESTATED
STOCK OPTION PLAN
Adopted by the Board of Directors on February 2, 1998.
As amended by the Board of Directors on February 27, 1998 and approved by the
Shareholders on March 4, 1998.
As amended by the Board of Directors on June 4, 1998 and August 6, 1998 and
approved by the Shareholders on August 7, 1998.
As amended by the Board of Directors on November 16, 1998 and March 12, 1999 and
approved by the Shareholders on March 19, 1999.
As amended by the Board of Directors on April 26, 1999 and approved by the
Shareholders on June 10, 1999.
As amended by the Board of Directors on January 12, 2000.
As amended by the Board of Directors on February 7, 2000 and approved by the
Shareholders on February 11, 2000.
As amended by the Board of Directors on March 16, 2000 and approved by the
Shareholders on March 30, 2000.
As amended by the Board of Directors on April 7, 2000.
As amended by the Board of Directors on July 26, 2000 and approved by the
Shareholders on August 28, 2000.
As amended by the Board of Directors on September 21, 2000.
As amended by the Board of Directors on May 8, 2001 and approved by the
Shareholders on May 10, 2001.
As amended by the Board of Directors on October 12, 2001 and approved by the
Shareholders on November 27, 2001.
As amended by the Board of Directors on December 13, 2002 and approved by the
Shareholders on December 18, 2002.
As amended by the Board of Directors on February 20, 2004 and approved by the
Shareholders on February 23, 2004.
As amended by the Board of Directors on December 9, 2005 and approved by the
Shareholders on February 14, 2006.
QPASS INC.
1998 AMENDED AND RESTATED
STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this 1998 Amended and Restated
Stock Option Plan are to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to
Employees and Consultants of the Company and its Subsidiaries and to promote the
success of the Company's business. Options granted under the Plan may be
incentive stock options (as defined under Section 422 of the Code) or
non-statutory stock options, as determined by the Administrator at the time of
grant of an option and subject to the applicable provisions of Section 422 of
the Code, as amended, and the regulations promulgated thereunder.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees appointed
pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means Qpass Inc., a Washington corporation.
(g) "Consultant" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company or any Parent or
Subsidiary whether compensated for such services or not.
(h) "Continuous Status as an Employee or Consultant" means the absence
of any interruption or termination of service as an Employee or Consultant.
Continuous Status as an Employee or Consultant shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other
leave of absence approved by the Administrator, provided that such leave is for
a period of not more than ninety (90) days, unless re-employment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or (iv)
in the case of transfers between locations of the Company or between the
Company, its Subsidiaries or their respective successors. For purposes of this
Plan, a change in status from an Employee to a Consultant or
from a Consultant to an Employee will not constitute an interruption of
Continuous Status as an Employee or Consultant.
(i) "Employee" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company, with the
status of employment determined based upon such minimum number of hours or
periods worked as shall be determined by the Administrator in its discretion,
subject to any requirements of the Code. The payment of a director's fee by the
Company to a director shall not be sufficient to constitute "employment" of such
director by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Fair Market Value" means, as of any date, the fair market value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation System ("Nasdaq"), its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported), as quoted
on such system or exchange, or the exchange with the greatest volume of trading
in Common Stock for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is quoted on the Nasdaq (but not on the
National Market thereof) or regularly quoted by a recognized securities dealer
but selling prices are not reported, its Fair Market Value shall be the mean
between the high bid and low asked prices for the Common Stock for the last
market trading day prior to the time of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(l) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable option agreement.
(m) "Listed Security" means any security of the Company that is listed
or approved for listing on a national securities exchange or designated or
approved for designation as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.
(n) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable option
agreement.
(o) "Option" means a stock option granted pursuant to the Plan.
-2-
(p) "Option Agreement" means a written agreement between an Optionee
and the Company reflecting the terms of an Option granted under the Plan and
includes any documents attached to such Option Agreement, including, but not
limited to, a notice of stock option grant and a form of exercise notice.
(q) "Optioned Stock" means the Common Stock subject to an Option.
(r) "Optionee" means an Employee or Consultant who receives an Option.
(s) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code, or any successor provision.
(t) "Plan" means this 1998 Amended and Restated Stock Option Plan.
(u) "Reporting Person" means an officer, director, or greater than ten
percent (10%) shareholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.
(v) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
as the same may be amended from time to time, or any successor provision.
(w) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(x) "Stock Exchange" means any stock exchange or consolidated stock
price reporting system on which prices for the Common Stock are quoted at any
given time.
(y) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is 15,692,794 shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock. If an Option should expire
or become unexercisable for any reason without having been exercised in full,
the unpurchased Shares that were subject thereto shall, unless the Plan shall
have been terminated, become available for future grant under the Plan. In
addition, any shares of Common Stock which are retained by the Company upon
exercise of an Option in order to satisfy the exercise price for such Option or
any withholding taxes due with respect to such exercise shall be treated as not
issued and shall continue to be available under the Plan. Shares repurchased by
the Company pursuant to any repurchase right which the Company may have shall
not be available for future grant under the Plan.
-3-
4. ADMINISTRATION OF THE PLAN
(a) Initial Plan Procedure. Prior to the date, if any, upon which the
Company becomes subject to the Exchange Act, the Plan shall be administered by
the Board or a committee appointed by the Board.
(b) Plan Procedure After the Date, if any, Upon Which the Company
Becomes Subject to the Exchange Act.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect to directors,
non-director officers and Employees or Consultants who are not Reporting
Persons.
(ii) Administration With Respect to Reporting Persons. With
respect to grants of Options to Employees who are Reporting Persons, such grants
shall be made by (A) the Board if the Board may make grants to Reporting Persons
under the Plan in compliance with Rule 16b-3, or (B) a Committee designated by
the Board to make grants to Reporting Persons under the Plan, which Committee
shall be constituted in such a manner as to permit grants under the Plan to
comply with Rule 16b-3. Once appointed, such Committee shall continue to serve
in its designated capacity until otherwise directed by the Board. From time to
time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies, however caused, and remove all members
of the committee and thereafter directly make grants to Reporting Persons under
the Plan, all to the extent permitted by Rule 16b-3.
(iii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Options to Employees or Consultants who are
not Reporting Persons, the Plan shall be administered by (A) the Board or (B) a
committee designated by the Board, which committee shall be constituted in such
a manner as to satisfy the legal requirements relating to the administration of
incentive stock option plans, if any, of state corporate and securities laws, of
the Code and of any applicable Stock Exchange (the "Applicable Laws"). Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan
and in the case of a Committee, the specific duties delegated by the Board to
such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any Stock Exchange, the Administrator
shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(k) of the Plan;
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(ii) to select the Consultants and Employees to whom Options may
from time to time be granted hereunder;
(iii) to determine whether and to what extent Options are granted
hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each such option granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any option granted hereunder;
(vii) to determine whether and under what circumstances an Option
may be settled in cash under Section 9(f) instead of Common Stock;
(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(ix) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(x) in order to fulfill the purposes of the Plan and without
amending the Plan, to modify grants of Options to participants who are foreign
nationals or employed outside of the United States in order to recognize
differences in local law, tax policies or customs.
(c) Effect of Administrator's Decision. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Optionees.
5. ELIGIBILITY
(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he or she is
otherwise eligible, be granted additional Options.
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
-5-
(c) For purposes of Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares subject to an Incentive Stock Option shall be determined as
of the date of the grant of such Option.
(d) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with such Optionee's right or the Company's right
to terminate his or her employment or consulting relationship at any time, with
or without cause.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company as described in Section 18 of the Plan. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 14 of the
Plan.
7. TERM OF OPTION. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement. However, in the case of an Option granted to
an Optionee who, at the time the Option is granted, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant thereof or such shorter term as may be provided in
the Option Agreement.
8. OPTION EXERCISE PRICE AND CONSIDERATION
(a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option that is:
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price
shall be no less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option that is:
(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price
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shall be no less than one hundred ten percent (110%) of the Fair Market Value
per Share on the date of the grant.
(B) granted to any person, the per Share exercise price
shall be no less than eighty-five percent (85%) of the Fair Market Value per
Share on the date of grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (i) cash, (ii)
certified check or money order, (iii) promissory note, (iv) other Shares that
(x) in the case of Shares acquired upon exercise of an Option, have been owned
by the Optionee for more than six months on the date of surrender or such other
period as may be required to avoid a charge to the Company's earnings, and (y)
have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which such Option shall be exercised, (v)
authorization for the Company to retain from the total number of Shares as to
which the Option is exercised that number of Shares having a Fair Market Value
on the date of exercise equal to the exercise price for the total number of
Shares as to which the Option is exercised, (vi) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price and any applicable income or employment taxes, (vii) delivery of
an irrevocable subscription agreement for the Shares that irrevocably obligates
the option holder to take and pay for the Shares not more than twelve months
after the date of delivery of the subscription agreement, (viii) any combination
of the foregoing methods of payment, or (ix) such other consideration and method
of payment for the issuance of Shares to the extent permitted under Applicable
Laws. In making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
9. EXERCISE OF OPTION
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator and reflected in the Option Agreement which
may include vesting requirements and/or including performance criteria with
respect to the Company and/or the Optionee. Notwithstanding the above, in the
case of an Option granted to an officer, director or Consultant of the Company
or any Parent or Subsidiary of the Company, the Option may become fully
exercisable, or a repurchase right, if any, in favor of the Company shall lapse,
at any time or during any period established by the Administrator.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and the Company has
received full payment for the Shares with
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respect to which the Option is exercised. Full payment may, as authorized by the
Board, consist of any consideration and method of payment allowable under
Section 8(b) of the Plan. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Optioned Stock, not withstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares that thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment or Consulting Relationship. Subject to
Section 9(c), in the event of termination of an Optionee's Continuous Status as
an Employee or Consultant with the Company, such Optionee may, but only within
three (3) months (or such other period of time not less than thirty (30) days as
is determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option and not
exceeding three (3) months) after the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent that the Optionee
was entitled to exercise it at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate. No
termination shall be deemed to occur and this Section 9(b) shall not apply if
(i) the Optionee is a Consultant who becomes an Employee; or (ii) the Optionee
is an Employee who becomes a Consultant.
(c) Disability of Optionee
(i) Notwithstanding Section 9(b) above, in the event of
termination of an Optionee's Continuous Status as an Employee or Consultant as a
result of his or her total and permanent disability (within the meaning of
Section 22(e)(3) of the Code), such Optionee may, but only within twelve (12)
months from the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.
(ii) In the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of a disability which does not
fall within the meaning of total and permanent disability (as set forth in
Section 22(e)(3) of the Code), such Optionee may, but only within six (6) months
from the date of such termination (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), exercise
the
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Option to the extent otherwise entitled to exercise it at the date of such
termination. However, to the extent that such Optionee fails to exercise an
Option which is an Incentive Stock Option ("ISO") (within the meaning of Section
422 of the Code) within three (3) months of the date of such termination, the
Option will not qualify for ISO treatment under the Code. To the extent that the
Optionee does not exercise such Option to the extent so entitled within six (6)
months from the date of termination, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an Optionee during
the period of Continuous Status as an Employee or Consultant, or within thirty
(30) days following the termination of the Optionee's Continuous Status as an
Employee or Consultant, the Option may be exercised, at any time within six (6)
months following the date of death (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent the Optionee was entitled to
exercise the Option at the date of death or, if earlier, the date of termination
of the Continuous Status as an Employee or Consultant. To the extent that
Optionee was not entitled to exercise the Option at the date of death or
termination, as the case may be, or if Optionee does not exercise such Option to
the extent so entitled within the time specified herein, the Option shall
terminate.
(e) Rule 16b-3. Options granted to Reporting Persons shall comply with
Rule 16b-3 and shall contain such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption for Plan
transactions.
10. WITHHOLDING TAX OBLIGATION
(a) As a condition of the exercise of an Option granted under the
Plan, the Participant (or in the case of the Participant's death, the person
exercising the Option) shall make such arrangements as the Administrator may
require for the satisfaction of any applicable federal, state, local or foreign
withholding tax obligations that may arise in connection with the exercise of
Option and the issuance of Shares. The Company shall not be required to issue
any Shares under the Plan until such obligations are satisfied.
(b) In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Option.
(c) This Section 10(c) shall apply only after the date, if any, upon
which the Common Stock becomes a Listed Security. In the case of Participant
other than an Employee (or in the case of an Employee where the next payroll
payment is not sufficient to satisfy such tax obligations, with respect to any
remaining tax obligations), in the absence of any other arrangement and to the
extent permitted under the applicable laws, the Participant shall be deemed to
have elected to have the Company withhold from the Shares to be issued upon
exercise of the Option that number of Shares having a Fair Market Value
determined as of the applicable Tax Date (as defined below) equal to the minimum
statutory withholding rates for
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federal and state tax purposes, including payroll taxes, applicable to the
exercise. For purposes of this Section 10, the Fair Market Value of the Shares
to be withheld shall be determined on the date that the amount of tax to be
withheld is to be determined under the applicable laws (the "Tax Date").
(d) If permitted by the Administrator, in its discretion, a
Participant may satisfy his or her tax withholding obligations upon exercise of
an Option by surrendering to the Company Shares that (i) in the case of Shares
previously acquired from the Company, have been owned by the Participant for
more than six (6) months on the date of surrender, and (ii) have a Fair Market
Value determined as of the applicable Tax Date equal to the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
applicable to the exercise.
(e) Any election or deemed election by a Participant to have Shares
withheld to satisfy tax withholding obligations under Section 10 (c) or (d)
above shall be irrevocable as to the particular Shares as to which the election
is made and shall be subject to the consent or disapproval of the Administrator.
Any election by a Participant under Section 10(d) above must be made on or prior
to the applicable Tax Date.
(f) In the event an election to have Shares withheld is made by a
Participant and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Participant shall receive
the full number of Shares with respect to which the Option is exercised but such
Participant shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the applicable Tax Date.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or that have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per share of Common Stock covered by each
such outstanding Option, 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, recapitalization or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued 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.
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(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action. To the extent it has
not been previously exercised, the Option will terminate immediately prior to
the consummation of such proposed action.
(c) Change in Control Transactions. In the event of one or more of the
following transactions (a "Change in Control Transaction"):
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Company's incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in complete liquidation or
dissolution of the Company, or
(iii) any reverse merger in which the Company is the surviving
entity but in which all of the Company's outstanding voting stock is transferred
to the acquiring entity or its wholly-owned subsidiary,
then the vesting of each outstanding Option shall be accelerated such that (A)
fifty percent (50%) of the unvested shares of Common Stock covered by such
Option shall be fully vested upon consummation of the Change in Control
Transaction if the Optionee has completed at least six (6) months of service for
the Company measured from the Optionee's vesting commencement date previously
approved by the Board or (B) twenty-five percent (25%) of the unvested shares of
Common Stock covered by such Option shall be fully vested upon consummation of
the Change in Control Transaction if the Optionee has completed at least three
(3) months but not more than six (6) months of service for the Company measured
from the Optionee's vesting commencement date previously approved by the Board.
The acceleration of such Option is subject to limitations imposed by the
Administrator at the time of grant.
12. NON-TRANSFERABILITY OF OPTIONS. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised or purchased
during the lifetime of the Optionee, only by the Optionee.
13. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board;
provided, however, that in the case of any Incentive Stock Option, the grant
date shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or the date of commencement
of the Optionee's employment relationship with the Company. Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
so granted within a reasonable time after the date of such grant.
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14. AMENDMENT AND TERMINATION OF THE PLAN
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made that would impair the rights of any Optionee under
any grant theretofore made, without his or her consent. In addition, to the
extent necessary and desirable to comply with Rule 16b-3 or with Section 422 of
the Code (or any other applicable law or regulation, including the requirements
of any Stock Exchange), the Company shall obtain shareholder approval of any
Plan amendment in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. No amendment or termination of
the Plan shall adversely affect Options already granted, unless mutually agreed
otherwise between the Optionee and the Board, which agreement must be in writing
and signed by the Optionee and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any Stock Exchange.
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 law.
16. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
17. AGREEMENTS. Options shall be evidenced by written agreements in such
form as the Administrator shall approve from time to time.
18. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any Stock Exchange upon which the Common Stock is listed. All Options
issued under the Plan shall become void in the event such approval is not
obtained.
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19. INFORMATION AND DOCUMENTS TO OPTIONEES. To the extent required by
Applicable Laws, the Company shall provide financial statements at least
annually to each Optionee during the period such Optionee has one or more
Options outstanding, and in the case of an individual who acquired Shares
pursuant to the Plan, during the period such individual owns such Shares. The
Company shall not be required to provide such information if the issuance of
Options under the Plan is limited to key employees whose duties in connection
with the Company assure their access to equivalent information. In addition, at
the time of issuance of any securities under the Plan, the Company shall provide
to the Optionee a copy of the Plan and any agreement(s) pursuant to which
securities granted under the Plan are issued.
20. AWARDS GRANTED TO CALIFORNIA RESIDENTS. If required pursuant to
Applicable Law, options granted under the Plan to persons resident in California
shall be subject to the provision set forth below, and if such provision
conflicts with the Plan, the provision shall govern the terms of such Options.
"With respect to an Option issued to any California Recipient who is not an
officer, director or consultant, such Option shall become exercisable, or any
repurchase option in favor of the Company shall lapse, at the rate of at least
20% per year over five years from the date the award is granted."
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