Registration No. 333-
As filed with the Securities and Exchange Commission on September 8, 2014
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BLUCORA, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 91-1718107 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
10900 NE 8th St., Suite 800
Bellevue, Washington 98004
(Address, including zip code and telephone number, of principal executive offices)
BLUCORA, INC. RESTATED 1996 FLEXIBLE STOCK INCENTIVE PLAN
(Full title of the plan)
Nathan W. Garnett
General Counsel and Secretary
Blucora, Inc.
10900 NE 8th St., Suite 800
Bellevue, Washington 98004
(425) 201-6100
(Name, address and telephone number, including area code, of agent for service)
Copy to:
Andrew Bor
Perkins Coie LLP
1201 Third Avenue, Suite 4900
Seattle, Washington 98101-3099
(206) 359-8000
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated filer | x | Accelerated filer | ¨ | |||
| Non-Accelerated filer | ¨ | Smaller reporting company | ¨ | |||
CALCULATION OF REGISTRATION FEE
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Title of Securities to be Registered |
Amount to be Registered (1) |
Proposed Maximum Offering Price Per Share (2) |
Proposed
Maximum
Offering Price (2) |
Amount of
Registration Fee |
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Common Stock, $0.0001 par value, of Blucora, Inc. |
1,804,432 | $15.74 | $28,401,759.68 | $3,658.15 | ||||
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| (1) | The number of shares of common stock, par value $0.0001 per share (“ Common Stock ”), stated above includes Common Stock, options, and other rights to acquire Common Stock under the Blucora, Inc. Restated 1996 Flexible Stock Incentive Plan. Pursuant to Rule 416(a) of the Securities Act of 1933, as amended (the “ Securities Act ”), this Registration Statement shall also cover any additional shares of the Registrant’s Common Stock that become issuable under the Blucora, Inc. Restated 1996 Flexible Stock Incentive Plan by reason of any stock dividend, stock split, recapitalization, or other similar transaction effected without receipt of consideration that increases the number of the Registrant’s outstanding shares of Common Stock. |
| (2) | This calculation is estimated solely for the purpose of determining the registration fee pursuant to Rule 457(c) and (h)(1) under the Securities Act on the basis of the average of the high and low prices of the Registrant’s Common Stock as reported on the NASDAQ Global Select Market on September 2, 2014. |
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
| Item 3. | Incorporation of Documents by Reference. |
The following documents previously filed by Blucora, Inc. (the “ Registrant ”) with the Securities and Exchange Commission (the “ SEC ” or the “ Commission ”) are hereby incorporated by reference in this Registration Statement, other than information in a report or document that is “furnished” and not “filed” pursuant to the applicable rules and regulations of the SEC:
| A. | The Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on February 27, 2014; |
| B. | The Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2014, filed with the SEC on May 1, 2014; |
| C. | The Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2014, filed with the SEC on August 7, 2014; |
| D. | The Registrant’s Current Reports on Form 8-K, filed with the SEC on February 12, 2014, February 20, 2014, March 26, 2014, May 8, 2014, May 21, 2014, June 25, 2014, August 15, 2014, and August 28, 2014, and the Registrant’s Amended Current Reports on Form 8-K/A filed on March 28, 2014 and August 27, 2014 (excluding any reports or portions thereof that are furnished under Item 2.02 or Item 7.01 and any exhibits included with such Items); |
| E. | All other reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) since December 31, 2013; and |
| F. | The description of the Registrant’s Common Stock contained in the Registrant’s registration statement on Form 8-A/A (File No. 000-25131) filed with the SEC on June 5, 2009, pursuant to Section 12 of the Exchange Act, including any amendment or report filed for the purpose of updating such description. |
All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act on or after the date of this Registration Statement (excluding any documents or portions of such documents that are furnished under Item 2.02 or Item 7.01 of a current report and any exhibits included with such Items), and prior to the filing of a post-effective amendment to this Registration Statement that indicate that all securities offered have been sold or that deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of 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 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 prior statement. Any such 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. |
None.
| Item 6. | Indemnification of Directors and Officers. |
Section 145 of the Delaware General Corporation Law (the “ DGCL ”) makes provision for the indemnification of officers and directors of corporations in terms sufficiently broad to indemnify the officers and directors of a corporation under certain circumstances from liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933, as amended (the “ Securities Act ”), and the Exchange Act. Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) in respect of certain unlawful dividend payments or stock redemptions or repurchases, or (iv) for any transaction from which the director derived an improper personal benefit.
As permitted by the DGCL, the Registrant’s Restated Certificate of Incorporation, as amended (the “ Charter ”), provides that, to the fullest extent permitted by the DGCL, no director shall be personally liable to the Registrant or to its stockholders for monetary damages for breach of fiduciary duty as a director. The effect of this provision in the Charter is to eliminate the rights of the Registrant and its stockholders (through stockholders’ derivative suits on behalf of the Registrant) to recover monetary damages against a director for breach of fiduciary duty as a director thereof (including breaches resulting from negligent or grossly negligent behavior) except in the situations described in clauses (i)-(iv), inclusive, above. These provisions will not alter the liability of directors under federal securities laws. The Charter also provides that any amendment or repeal of the right of indemnification provided under the Charter will not be adversely affected for acts or omissions occurring prior to such amendment or repeal.
The Registrant’s Amended and Restated Bylaws, as amended (“ Bylaws ”), provide for indemnification of the Registrant’s officers and directors to the maximum extent permitted by the DGCL and establish such right to be a contract right. The Bylaws also provide that expenses incurred by an officer or director of the Registrant (acting in his or her capacity as such) in defending any such action, suit, or proceeding in advance of its final disposition shall be paid by the Registrant, subject to DGCL requirements. The Bylaws also provide that indemnification provided for in the Bylaws shall not be deemed exclusive of any other rights to which the indemnified party may be entitled, and that the Registrant may purchase and maintain insurance to protect itself and any such person against any such expenses, liability, and loss, whether or not the Registrant would have the power to indemnify such person against such expenses, liability, or loss under the DGCL or the Bylaws.
In addition, the Registrant has entered into contractual indemnification agreements with each director and certain officers of the Registrant, as designated by the Registrant’s Board of Directors, to indemnify such individuals to the full extent permitted by law. These agreements also address certain procedural and substantive matters that are not covered, or are covered in less detail, in the Bylaws or by the DGCL. The Registrant also provides indemnity insurance pursuant to which officers and directors are indemnified or insured against liability or loss under certain circumstances, which may include liability or related loss under the Securities Act and the Exchange Act.
| Item 7. | Exemption from Registration Claimed. |
Not applicable.
| Item 8. | Exhibits. |
|
Exhibit
|
Description |
|
| 5.1* | Opinion of Perkins Coie LLP | |
| 23.1* | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm | |
| 23.2* | Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm | |
| 23.3* | Consent of Perkins Coie LLP (included in Exhibit 5.1) | |
| 24.1* | Power of Attorney (included on the signature page to this Registration Statement) | |
| 99.1* | Restated 1996 Flexible Stock Incentive Plan, as amended and restated effective as of November 18, 2011 and updated June 5, 2012 | |
| * | Filed herewith |
| ITEM 9. | Undertakings. |
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(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 (A)(1)(i) and (A)(1)(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 this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in 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.
C. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the 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 Bellevue, State of Washington, on September 8, 2014.
| BLUCORA INC. | ||
| By: |
/s/ Nathan W. Garnett |
|
| Nathan W. Garnett | ||
| General Counsel and Secretary | ||
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Eric M. Emans and Nathan W. Garnett, or either of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her in any and all capacities, to sign any amendments (including post-effective amendments) to this Registration Statement and to file the same, with all exhibits thereto and all documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, or either of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
|
Signature |
Title |
Date |
||
|
/s/ William J. Ruckelshaus William J. Ruckelshaus |
Chief Executive Officer, President and Director (Principal Executive Officer) |
September 8, 2014 | ||
|
/s/ Eric M. Emans Eric M. Emans |
Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
September 8, 2014 | ||
|
/s/ John E. Cunningham, IV John E. Cunningham, IV |
Chairman | September 8, 2014 | ||
|
/s/ David H. S. Chung David H. S. Chung |
Director | September 8, 2014 | ||
|
/s/ Lance G. Dunn Lance G. Dunn |
Director | September 8, 2014 | ||
|
/s/ Steven W. Hooper Steven W. Hooper |
Director | September 8, 2014 | ||
|
/s/ Elizabeth J. Huebner Elizabeth J. Huebner |
Director | September 8, 2014 | ||
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/s/ Andrew M. Snyder Andrew M. Snyder |
Director | September 8, 2014 | ||
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/s/ Christopher W. Walters Christopher W. Walters |
Director | September 8, 2014 | ||
INDEX TO EXHIBITS
|
Exhibit
|
Description |
|
| 5.1* | Opinion of Perkins Coie LLP | |
| 23.1* | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. | |
| 23.2* | Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm | |
| 23.3* | Consent of Perkins Coie LLP (included in Exhibit 5.1) | |
| 24.1* | Power of Attorney (included on the signature page to this Registration Statement). | |
| 99.1* | Restated 1996 Flexible Stock Incentive Plan, as amended and restated effective as of November 18, 2011 and updated June 5, 2012 | |
| * | Filed herewith |
Exhibit 5.1
Opinion of Perkins Coie LLP
Perkins Coie LLP
1201 Third Avenue, Suite 4900
Seattle, WA 98101-3099
Phone: 206 359-8000
Fax: 206 359-9000
www.perkinscoie.com
September 8, 2014
Blucora, Inc.
10900 NE 8th St., Suite 800
Bellevue, WA 98004
| Re: | Registration Statement on Form S-8 of Shares of Common Stock, |
| $0.0001 | par value per share, of Blucora, Inc. |
Ladies and Gentlemen:
We have acted as counsel to you in connection with the preparation of a Registration Statement on Form S-8 (the “ Registration Statement ”) under the Securities Act of 1933, as amended (the “ Act ”), which you are filing with the Securities and Exchange Commission with respect to up to 1,804,432 additional shares of common stock, $0.0001 par value per share (the “ Shares ”), that may be issued pursuant to the Blucora, Inc. Restated 1996 Flexible Stock Incentive Plan (the “ Plan ”).
We have examined the Registration Statement, and such documents and records of Blucora, Inc. as we have deemed necessary for the purpose of this opinion. In giving this opinion, we are assuming the authenticity of all instruments presented to us as originals, the conformity with originals of all instruments presented to us as copies and the genuineness of all signatures.
Based upon and subject to the foregoing, we are of the opinion that any original issuance Shares that may be issued pursuant to the Plan have been duly authorized and that, upon the registration by its registrar of the Shares and the issuance thereof by Blucora, Inc. in accordance with the terms of the Plan, and the receipt of consideration therefor in accordance with the terms of the Plan, such Shares will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Perkins Coie LLP
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the Blucora, Inc. Restated 1996 Flexible Stock Incentive Plan of our reports dated February 27, 2014, with respect to the consolidated financial statements of Blucora, Inc. and the effectiveness of internal control over financial reporting of Blucora, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 2013, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Seattle, Washington
September 8, 2014
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated March 9, 2012 (and March 7, 2013 as to the 2011 amounts in Note 12), appearing in the Annual Report on Form 10-K of Blucora, Inc. for the year ended December 31, 2013.
/s/ DELOITTE & TOUCHE LLP
Seattle, Washington
September 8, 2014
Exhibit 99.1
BLUCORA, INC.
RESTATED 1996 FLEXIBLE STOCK INCENTIVE PLAN
(as amended and restated effective as of November 8, 2011, and updated June 5, 2012)
| 1. | Establishment, Purpose, and Definitions. |
| (a) | There is hereby adopted the Restated 1996 Flexible Stock Incentive Plan (the “ Plan ”) of Blucora, Inc., a Delaware corporation (the “ Company ”). |
| (b) | The purpose of the Plan is to provide a means whereby eligible individuals (as defined in paragraph 4, below) can acquire Common Stock of the Company (the “ Stock ”). The Plan provides employees (including officers and directors who are employees) of the Company and of its Affiliates an opportunity to purchase shares of Stock pursuant to options which may qualify as incentive stock options (referred to as “ incentive stock options ”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “ Code ”), and employees, officers, directors, independent contractors, and consultants of the Company and of its Affiliates an opportunity to purchase shares of Stock pursuant to options which are not described in Section 422 or 423 of the Code (referred to as “ nonqualified stock options ”). The Plan also provides for the sale or bonus of Stock to eligible individuals in connection with the performance of services for the Company or its Affiliates. The Plan also provides for the grant of restricted stock units (“ RSUs ”) to eligible individuals in connection with the performance of services for the Company or its Affiliates. Finally, the Plan authorizes the grant of stock appreciation rights (“ SARs ”), either separately or in tandem with stock options, entitling holders to cash compensation measured by appreciation in the value of the Stock. |
| (c) | The term “ Affiliates ” as used in the Plan means parent or subsidiary corporations, as defined in Sections 424(e) and (f) of the Code (but substituting “the Company” for “employer corporation”), including parents or subsidiaries which become such after adoption of the Plan. |
| 2. | Administration of the Plan. |
| (a) |
The Plan shall be administered by the Board of Directors of the Company (the “ Board ”) or a committee or committees (which term includes subcommittees) appointed by, and consisting of one or more members of, the Board (the “ Plan Administrator ”). If and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in selecting the Plan Administrator and the membership of any committee acting as Plan Administrator, with respect to any persons subject or likely to become subject to Section 16 of the Exchange Act, the provisions regarding (i) “outside directors” as contemplated by Section 162(m) of the Code and (ii) “nonemployee directors” as |
| contemplated by Rule 16b-3 under the Exchange Act. The Board may delegate the responsibility for administering the Plan with respect to designated classes of eligible Participants to different committees consisting of one or more members of the Board, subject to such limitations as the Board or the Plan Administrator deems appropriate. Committee members shall serve for such term as the Board may determine, subject to removal by the Board at any time. |
| (b) | The Plan Administrator shall determine which eligible individuals (as defined in paragraph 4, below) shall be granted options under the Plan, the timing of such grants, the terms thereof (including any restrictions on the Stock), and the number of shares subject to such options. |
| (c) | The Plan Administrator may amend the terms of any outstanding option granted under this Plan, but any amendment which would adversely affect the Optionee’s rights under an outstanding option shall not be made without the Optionee’s written consent. The Plan Administrator may, with the Optionee’s written consent, cancel any outstanding stock option or accept any outstanding stock option in exchange for a new option. Notwithstanding the foregoing, any change or adjustment to an incentive stock option shall not, without the Optionee’s written consent, be made in a manner so as to constitute a “modification” that would cause such incentive stock option to fail to continue to qualify as an incentive stock option. |
| (d) | The Plan Administrator shall also determine which eligible individuals (as defined in paragraph 4, below) shall be issued Stock, SARs or RSUs under the Plan, the timing of such grants, the terms thereof (including any restrictions), and the number of shares, SARs or RSUs to be granted. The Stock and/or RSUs shall be issued for such consideration (if any) as the Plan Administrator deems appropriate. Stock issued subject to restrictions shall be evidenced by a written agreement (the “ Restricted Stock Purchase Agreement ” or the “ Restricted Stock Bonus Agreement ”). RSUs shall be issued subject to such restrictions as evidenced by a written agreement (the “ Restricted Stock Unit Agreement ”). The Plan Administrator may amend any Restricted Stock Purchase Agreement, Restricted Stock Bonus Agreement or Restricted Stock Unit Agreement, but any amendment which would adversely affect the stockholder’s rights to the Stock shall not be made without his or her written consent. |
| (e) | The Plan Administrator shall have the sole authority, in its absolute discretion to adopt, amend, and rescind such rules and regulations as, in its opinion, may be advisable for the administration of the Plan, to construe and interpret the Plan, the rules and the regulations, and the instruments evidencing options, Stock or RSUs granted under the Plan and to make all other determinations deemed necessary or advisable for the administration of the Plan. All decisions, determinations, and interpretations of the Plan Administrator shall be binding on all participants. |
Page 2
| 3. | Stock Subject to the Plan. |
| (a) | An aggregate of not more than 21,852,309 shares of Stock shall be available for the grant of stock options or the issuance of Stock under the Plan. If an option is surrendered (except surrender for shares of Stock) or for any other reason ceases to be exercisable in whole or in part, the shares which were subject to such option but as to which the option had not been exercised shall continue to be available under the Plan. Any Stock which is 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 option exercise shall be treated as issued to the Optionee and will thereafter not be available under the Plan. If any outstanding RSUs lapse, expire, terminate or are cancelled without having been settled in full, the shares of Stock allocable to the lapsed, expired, terminated or cancelled portion of such RSUs shall continue to be available under the Plan. Any Stock which is retained by the Company in order to satisfy any withholding taxes due with respect to the vesting or settlement of RSUs shall be treated as issued to the holder of such RSUs and will thereafter not be available under the Plan. |
| (b) | If there is any change in the Stock subject to the Plan, an Option Agreement, a Restricted Stock Purchase Agreement, a Restricted Stock Bonus Agreement, a Restricted Stock Unit Agreement, or a SAR Agreement through merger, consolidation, reorganization, recapitalization, reincorporation, stock split, stock dividend, or other change in the capital structure of the Company, appropriate adjustments shall be made by the Plan Administrator in order to preserve but not to increase the benefits to the individual, including adjustments to the aggregate number, kind and price per share of shares subject to the Plan, an Option Agreement, a Restricted Stock Purchase Agreement, a Restricted Stock Bonus Agreement, a Restricted Stock Unit Agreement, or a SAR Agreement. |
| 4. | Eligible Individuals. Individuals who shall be eligible to have granted to them the options, Stock, RSUs, or SARs provided for by the Plan shall be such employees, officers, directors, independent contractors and consultants of the Company or an Affiliate as the Plan Administrator, in its discretion, shall designate from time to time. Notwithstanding the foregoing, only employees of the Company or an Affiliate (including officers and directors who are bona fide employees) shall be eligible to receive incentive stock options. |
| 5. | The Option Price. |
| (a) | The exercise price of the Stock covered by each incentive stock option shall be not less than the per share fair market value of such Stock on the date the option is granted. The exercise price of the Stock covered by each nonqualified stock option shall be as determined by the Plan Administrator. In the case of a nonqualified stock option intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, the per share exercise price of the Stock shall be no less than 100% of the fair market value per share of the Stock on the date of grant. Notwithstanding the foregoing, in the case of an incentive stock option granted to a person possessing more than ten percent of the combined voting power of the Company or an Affiliate, the exercise price shall be not less than 110 percent of the fair market value of the Stock on the date the option is granted. The exercise price of an option shall be subject to adjustment to the extent provided in paragraph 3(b), above. |
Page 3
| (b) | The fair market value shall be as established in good faith by the Plan Administrator or (i) if the Stock is listed on the Nasdaq National Market, the fair market value shall be the closing selling price for the stock as reported by the Nasdaq National Market for a single day or (ii) if the Stock is listed on the New York Stock Exchange or the American Stock Exchange, the fair market value shall be the closing selling price for the Stock as such price is officially quoted in the composite tape of transactions on such exchange for a single trading day. If there is no such reported price for the Stock for the date in question, then such price on the last preceding date for which such price exists shall be determinative of the fair market value. |
| 6. | Terms and Conditions of Options. |
| (a) | Each option granted pursuant to the Plan will be evidenced by a written Stock Option Agreement executed by the Company and the person to whom such option is granted. |
| (b) | The Plan Administrator shall determine the term of each option granted under the Plan; provided, however, that the term of an incentive stock option shall not be for more than 7 years and that, in the case of an incentive stock option granted to a person possessing more than ten percent of the combined voting power of the Company or an Affiliate, the term shall be for no more than five years. |
| (c) | In the case of incentive stock options, the aggregate fair market value (determined as of the time such option is granted) of the Stock with respect to which incentive stock options are exercisable for the first time by an eligible employee in any calendar year (under this Plan and any other plans of the Company or its Affiliates) shall not exceed $100,000. In the event the Optionee holds two or more such options that become exercisable for the first time in the same calendar year, such limitation shall be applied on the basis of the order in which such options are granted. |
| (d) | The Stock Option Agreement may contain such other terms, provisions and conditions not inconsistent with this Plan as may be determined by the Plan Administrator. If an option, or any part thereof is intended to qualify as an incentive stock option, the Stock Option Agreement shall contain those terms and conditions which are necessary to so qualify it. |
| (e) | The following limitations shall apply to grants of stock options: |
| (i) | No individual shall be granted, in any fiscal year of the Company, stock options to purchase more than 800,000 shares of Stock. |
| (ii) | In connection with his or her initial service, an individual may be granted stock options to purchase up to an additional 800,000 shares of Stock which shall not count against the limit set forth in subsection (i) above. |
Page 4
| (iii) | The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization. |
| (iv) | If a stock option is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 16), the cancelled stock option will be counted against the limits set forth in subsections (i) and (ii) above. For this purpose, if the exercise price of a stock option is reduced, the transaction will be treated as a cancellation of the stock option and the grant of a new stock option. |
| 7. | Terms and Conditions of Stock Purchases and Bonuses. |
| (a) | Each sale or grant of stock pursuant to the Plan will be evidenced by a written Restricted Stock Purchase Agreement or Restricted Stock Bonus Agreement executed by the Company and the person to whom such stock is sold or granted. |
| (b) | The Restricted Stock Purchase Agreement or Restricted Stock Bonus Agreement may contain such other terms, provisions and conditions consistent with this Plan as may be determined by the Plan Administrator, including not by way of limitation, restrictions on transfer, forfeiture provisions, repurchase provisions and vesting provisions. To the extent required by applicable law, any right of the Company to repurchase stock granted pursuant to a restricted stock purchase or restricted stock bonus at the original purchase price, if the right is assignable, the assignee must pay the Company upon assignment of the right cash equal to the difference between the original price and fair value if the original purchase price is less than fair value. |
| (c) | The purchase price of Stock sold hereunder pursuant to a Restricted Stock Purchase Agreement shall be the price determined by the Plan Administrator on the date the right to purchase Stock is granted; provided, however that (i) such price shall not be less than 85% of the per share fair market value of such Stock on the date the right to purchase Stock is granted and (ii) to the extent required by applicable law, in the case of any person who owns Company stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, such price shall be 100% of the per share fair market value of such Stock at the time the right to purchase Stock is granted, or at the time the purchase is consummated. |
| 8. | Terms and Conditions of RSUs. |
| (a) | RSUs may be granted at any time as determined by the Plan Administrator. Each RSU grant will be evidenced by a Restricted Stock Unit Agreement that will specify such other terms and conditions as the Plan Administrator, in its sole discretion, will determine, including all terms, conditions, and restrictions related to the grant, the number of RSUs and the form of payout, which, subject to Section 8(d), may be left to the discretion of the Plan Administrator. |
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| (b) | The Plan Administrator, in its sole discretion, will set vesting criteria (which may be based on the participant’s continuous employment or service with the Company or its Affiliates and may include performance objectives based upon the achievement of Company-wide, departmental or individual goals, Company performance relative to selected other companies, or any other basis determined by the Plan Administrator) which, depending on the extent to which the criteria are met, will determine the number of RSUs that will be paid out to the participant. After the grant of RSUs, the Plan Administrator, in its sole discretion, may reduce or waive any restrictions for such RSUs. |
| (c) | Upon meeting the applicable vesting criteria (including without limitation, achievement of any applicable performance objectives), the participant will be entitled to receive a payout as specified in the Restricted Stock Unit Agreement. Notwithstanding the foregoing, at any time after the grant of RSUs, the Plan Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout. |
| (d) | Payment of earned RSUs will be made as soon as practicable after the date(s) set forth in the Restricted Stock Unit Agreement. The Administrator, in its sole discretion, may pay earned RSUs in cash, shares of Stock or a combination thereof. |
| (e) | On the date set forth in the Restricted Stock Unit Agreement, all unearned RSUs will be forfeited to the Company. |
| 9. | Terms and Conditions of SARs. The Plan Administrator may, under such terms and conditions as it deems appropriate, authorize the issuance of SARs evidenced by a written SAR agreement (which, in the case of tandem options, may be part of the option agreement to which the SAR relates) executed by the Company and the person to whom such SAR is granted. The SAR agreement may contain such terms, provisions and conditions consistent with this Plan as may be determined by the Plan Administrator. |
| 10. | Use of Proceeds. Cash proceeds realized from the sale of Stock under the Plan shall constitute general funds of the Company. |
| 11. | Amendment, Suspension, or Termination of the Plan. |
| (a) | The Board may at any time amend, suspend or terminate the Plan as it deems advisable; provided that such amendment, suspension or termination complies with all applicable requirements of state and federal law, including any applicable requirement that the Plan or an amendment to the Plan be approved by the Company’s stockholders, and provided further that, except as provided in paragraph 3(b), above, the Board shall in no event amend the Plan in the following respects without the consent of stockholders then sufficient to approve the Plan in the first instance: |
| (i) | To increase the maximum number of shares subject to incentive stock options issued under the Plan; or |
| (ii) | To change the designation or class of persons eligible to receive incentive stock options under the Plan. |
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| (b) | No option may be granted nor any Stock issued under the Plan during any suspension or after the termination of the Plan, and no amendment, suspension or termination of the Plan shall, without the affected individual’s consent, alter or impair any rights or obligations under any option previously granted under the Plan. The Plan shall terminate with respect to the grant of incentive stock options on April 10, 2006, unless previously terminated by the Board pursuant to this paragraph 11. |
| 12. | The Plan Administrator shall establish and set forth in each instrument that evidences an option whether the option will continue to be exercisable, and the terms and conditions of such exercise, if an Optionee ceases to be employed by, or to provide services to, the Company or an Affiliate, which provisions may be waived or modified by the Plan Administrator at any time. |
| 13. | Assignability. Each option granted pursuant to this Plan shall, during Optionee’s lifetime, be exercisable only by him, and the option shall not be transferable by Optionee by operation of law or otherwise other than by will or the laws of descent and distribution. Notwithstanding the foregoing, and to the extent permitted by Section 422 of the Code, the Plan Administrator, in its sole discretion, may permit such transfer, assignment and exercisability and may permit an Optionee to designate a beneficiary who may exercise the option after the Optionee’s death; provided, however, that any option so transferred or assigned shall be subject to all the same terms and conditions contained in the instrument evidencing the option. Stock subject to a Restricted Stock Purchase Agreement, a Restricted Stock Bonus Agreement, or a Restricted Stock Unit Agreement shall be transferable only as provided in such applicable agreement. |
| 14. | Payment Upon Exercise of Options. |
| (a) |
Payment of the purchase price upon exercise of any option granted under this Plan shall be made in cash, a certified check, bank draft, postal or express money order payable to the order of the Company, provided, however, that the Plan Administrator, in its sole discretion, may permit an Optionee to pay the option price in whole or in part (i) tendering (either actually or, if and so long as the Stock is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shares of Stock owned by the Optionee for at least six months (or any shorter period necessary to avoid a charge to the Company’s earnings for financial reporting purposes) on the day prior to the exercise date equal to the aggregate option exercise price; (ii) if and so long as the stock is registered under Section 12(b) or 12(g) of the Exchange Act, by delivery on a form prescribed by the Plan Administrator of an irrevocable direction to a securities broker approved by the Plan Administrator to sell shares and deliver all or a portion of the proceeds to the Company in payment for the Stock; (iii) by delivery of the Optionee’s promissory note with such full recourse, interest, security, and redemption provisions as the Plan Administrator in its discretion determines appropriate; or (iv) in any combination of the foregoing. The amount of any promissory note delivered in connection with an incentive stock option shall bear interest at a rate specified by the Plan Administrator but in no case less than the rate required to avoid imputation of interest (taking into account any exceptions to the imputed interest rules) for federal income tax purposes. In addition, the Plan Administrator, in its sole discretion, may authorize the surrender by an Optionee of all or part of an unexercised option |
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| and authorize a payment in consideration thereof of an amount equal to the difference between the aggregate fair market value of the Stock subject to such option and the aggregate option price of such Stock. In the Plan Administrator’s discretion, such payment may be made in cash, shares of Stock with a fair market value on the date of surrender equal to the payment amount, or some combination thereof. The purchase price for shares purchased under an option may also be paid by such other consideration as the Plan Administrator may permit. |
| (b) | In the event that the exercise price is satisfied by the Plan Administrator retaining from the shares of Stock otherwise to be issued to Optionee shares of Stock having a value equal to the exercise price, the Plan Administrator may issue Optionee an additional option, with terms identical to this option agreement, entitling Optionee to purchase additional Stock in an amount equal to the number of shares so retained. |
| 15. | Withholding Taxes. |
| (a) | No Stock shall be granted or sold under the Plan to any participant, no RSU shall be settled through the issuance of Stock, and no SAR may be exercised, until the participant has made arrangements acceptable to the Plan Administrator for the satisfaction of federal, state, and local income and social security tax withholding obligations, including without limitation obligations incident to the receipt of Stock under the Plan, the lapsing of restrictions applicable to such Stock, the failure to satisfy the conditions for treatment as incentive stock options under applicable tax law, or the receipt of cash payments. Upon exercise of a stock option, the lapsing of any restriction on stock, or the settlement of any RSU, issued under the Plan, the Company may satisfy its withholding obligations by withholding from the Optionee or requiring the stockholder to surrender shares of the Company’s Stock sufficient to satisfy federal, state, and local income and social security tax withholding obligations. |
| (b) | In the event that such withholding is satisfied by the Company or the Optionee’s employer retaining from the shares of Stock otherwise to be issued to Optionee shares of Stock having a value equal to such withholding tax, the Plan Administrator may issue Optionee an additional option, with terms identical to the option agreement under which the option was received, entitling Optionee to purchase additional Stock in an amount equal to the number of shares so retained. |
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| 16. | Corporate Transaction. |
| (a) | For purposes of this Section 16, a “ Corporate Transaction ” shall include any of the following stockholder-approved transactions to which the Company is a party: |
| (i) | a merger or consolidation in which the Company is not the surviving entity, except for (1) a transaction the principal purpose of which is to change the state of the Company’s incorporation, or (2) a transaction in which the Company’s stockholders immediately prior to such merger or consolidation hold (by virtue of securities received in exchange for their shares in the Company) securities of the surviving entity representing more than fifty percent (50%) of the total voting power of such entity immediately after such transaction; |
| (ii) | the sale, transfer or other disposition of all or substantially all of the assets of the Company unless the Company’s stockholders immediately prior to such sale, transfer or other disposition hold (by virtue of securities received in exchange for their shares in the Company) securities of the purchaser or other transferee representing more than fifty percent (50%) of the total voting power of such entity immediately after such transaction; or |
| (iii) | any reverse merger in which the Company is the surviving entity but in which the Company’s stockholders immediately prior to such merger do not hold (by virtue of their shares in the Company held immediately prior to such transaction) securities of the Company representing more than fifty percent (50%) of the total voting power of the Company immediately after such transaction. |
| (b) | In the event of any Corporate Transaction, any outstanding option, SAR, or RSU shall terminate and any restricted stock shall be reconveyed to or repurchased by the Company immediately prior to the specified effective date of the Corporate Transaction; provided, however, that to the extent permitted by applicable law and unless otherwise determined by the Plan Administrator in its discretion (and reflected in the applicable written agreement evidencing the grant of the award), any unvested option, SAR, RSU or any restricted stock shall vest and become exercisable as to 25% of the unvested shares, or become nonforfeitable as to 25% of the forfeitable shares, as applicable, immediately prior to the specified effective date of the Corporate Transaction. Notwithstanding the foregoing, options, SARs, RSUs or restricted stock shall not terminate if, in connection with the Corporate Transaction, they are to be assumed or substituted by the successor corporation or its parent company. Unless otherwise determined by the Plan Administrator in its discretion (and reflected in the applicable written agreement evidencing the grant of the award), if options, SARs, RSUs or restricted stock are not assumed or substituted by the successor corporation or its parent pursuant to options, SARs, RSUs or restricted stock agreements providing substantially equal value and having substantially equivalent provisions as the options, SARs, RSUs or restricted stock granted pursuant to this Plan, such options, SARs, RSUs or restricted stock shall vest and become exercisable or nonforfeitable, as applicable, as to an additional 25% of the unvested shares or forfeitable shares, immediately prior to the specified effective date of the Corporate Transaction. |
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| 17. | Stockholder Approval. This Plan shall only become effective with regard to incentive stock options upon its approval by a majority of the stockholders voting (in person or by proxy) at a stockholders’ meeting held within 12 months of the Board’s adoption of the Plan. The Plan Administrator may grant incentive stock options under the Plan prior to the stockholders’ meeting, but until stockholder approval of the Plan is obtained, no incentive stock option shall be exercisable. |
| 18. | Information to Plan Participants. The Company shall provide to each Plan participant, during any period for which said participant has one or more options or SARs or shares acquired pursuant to the Plan outstanding, copies of annual reports of the Company issued during said period. |
| 19. | No Trust or Fund . The Plan is intended to constitute an “unfunded” plan. Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Optionee, and no Optionee shall have any rights that are greater than those of a general unsecured creditor of the Company. |
| 20. | Severability . If any provision of the Plan or any option is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any option under any law deemed applicable by the Plan Administrator, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Plan Administrator’s determination, materially altering the intent of the Plan or the option, such provision shall be stricken as to such jurisdiction, person or option, and the remainder of the Plan and any such option shall remain in full force and effect. |
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