-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EHQD6bbavqyoPh62VkR6r8U48TZljHYGrlCMa2WKC4FIHQia5kFz1OmI57AhoROM 4pmxABUA6R64KGSL82Efgg== 0000891020-99-001698.txt : 19991018 0000891020-99-001698.hdr.sgml : 19991018 ACCESSION NUMBER: 0000891020-99-001698 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19991012 EFFECTIVENESS DATE: 19991012 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMAZON COM INC CENTRAL INDEX KEY: 0001018724 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 911646860 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-88825 FILM NUMBER: 99726981 BUSINESS ADDRESS: STREET 1: 1200 12TH AVENUE S SUITE 1200 CITY: SEATTLE STATE: WA ZIP: 98144 BUSINESS PHONE: 2062661000 MAIL ADDRESS: STREET 1: 1200 12TH AVENUE S SUITE 1200 CITY: SEATTLE STATE: WA ZIP: 98144 S-8 1 FORM S-8 REGISTRATION STATEMENT 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 12, 1999 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------- AMAZON.COM, INC. (Exact name of Registrant as specified in its charter) DELAWARE 91-1646860 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1200 - 12TH AVENUE SOUTH, SUITE 1200 SEATTLE, WASHINGTON 98144 (Address of principal executive offices, including zip code) CONVERGENCE CORPORATION STOCK OPTION PLAN (Full title of the plan) L. MICHELLE WILSON VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY AMAZON.COM, INC. 1200 - 12TH AVENUE SOUTH, SUITE 1200 SEATTLE, WASHINGTON 98144 (206) 266-1000 (Name, address and telephone number, including area code, of agent for service) ---------------------- COPY TO: SCOTT L. GELBAND PERKINS COIE LLP 1201 THIRD AVENUE, SUITE 4800 SEATTLE, WASHINGTON 98101-3099 ---------------------- CALCULATION OF REGISTRATION FEE
- ------------------------------------------- ----------------- ---------------- --------------- ------------ PROPOSED PROPOSED MAXIMUM MAXIMUM AMOUNT OF TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION TO BE REGISTERED REGISTERED(1)(2) PER SHARE(3) OFFERING PRICE FEE - ------------------------------------------- ----------------- ---------------- --------------- ------------ Common Stock, $0.01 par value per share 82,414 $3.108 $256,162.058 $71.22 - ------------------------------------------- ----------------- ---------------- --------------- ------------
(1) Pursuant to an Agreement and Plan of Merger dated as of August 23, 1999 (the "Merger Agreement"), by and among the Registrant, Caspian Acquisition, Inc., Convergence Corporation ("Convergence") and certain shareholders of Convergence, the Registrant assumed outstanding options to purchase capital stock of Convergence granted under the Convergence Corporation Stock Option Plan (the "Convergence Assumed Options"). Appropriate adjustments have been made to the number of shares and the per share exercise price of each Convergence Assumed Option to reflect the ratio at which Convergence capital stock was converted into Common Stock of the Registrant under the Merger Agreement. (2) Together with an indeterminate number of additional shares which may be necessary to adjust the number of shares reserved for issuance pursuant to the Convergence Corporation Stock Option Plan as the result of any future stock split, stock dividend or similar adjustment to the Registrant's outstanding Common Stock. (3) Shares are issuable upon exercise of outstanding options with fixed exercise prices. Pursuant to Rule 457(h) under the Securities Act of 1933, as amended, the proposed maximum aggregate offering price and the registration fee have been computed based on the weighted average exercise price for shares subject to the Convergence Assumed Options. 2 PART II INFORMATION REQUIRED IN REGISTRATION STATEMENT ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Securities and Exchange Commission (the "Commission") are hereby incorporated by reference in this Registration Statement: (a) The Registrant's Annual Report on Form 10-K for the year ended December 31, 1998; (b) The Registrant's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and June 30, 1999; (c) The Registrant's Current Reports on Form 8-K filed on August 27, 1998, October 26, 1998, January 5, 1999, January 27, 1999, January 28, 1999, January 29, 1999, February 4, 1999, March 29, 1999, March 30, 1999, April 27, 1999, April 29, 1999, May 12, 1999, May 19, 1999, June 10, 1999, June 11, 1999 and July 22, 1999; (d) The description of the Common Stock in the Registrant's Registration Statement on Form 8-A filed on May 2, 1997, under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including any amendments or reports for the purpose of updating such description; and (e) All other reports filed by the Registrant pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the Annual Report on Form 10-K referred to in (a) above. All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date hereof and prior to the filing of a post-effective amendment which indicates that the securities offered hereby have been sold or which deregisters the securities covered hereby then remaining unsold shall also be deemed to be incorporated by reference into this Registration Statement and to be a part hereof commencing on the respective dates on which such documents are filed. ITEM 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") provides that a corporation may indemnify its directors and officers, as well as other employees and individuals, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation--a "derivative action"), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification in which the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's charter, bylaws, disinterested director vote, stockholder vote, agreement or otherwise. Section 10 of the Registrant's Bylaws requires indemnification to the full extent permitted under Delaware law as it now exists or may hereafter be amended. Subject to any restrictions imposed by Delaware law, the Bylaws provide an unconditional right to indemnification for all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) actually and reasonably incurred or suffered by any person in II-1 3 connection with any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative (including, to the extent permitted by law, any derivative action) by reason of the fact that such person is or was serving as a director or officer of the Registrant or that, being or having been a director or officer of the Registrant, such person is or was serving at the request of the Registrant as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan. The Bylaws also provide that the Registrant may, by action of its Board of Directors, provide indemnification to its employees and agents with the same scope and effect as the foregoing indemnification of directors and officers. 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 for (i) any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) payments of unlawful dividends or unlawful stock repurchases or redemptions, or (iv) any transaction from which the director derived an improper personal benefit. Article 10 of the Registrant's Restated Certificate of Incorporation provides that to the full extent that the DGCL, as it now exists or may hereafter be amended, permits the limitation or elimination of the liability of directors, a director of the Registrant shall not be liable to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director. Any amendment to or repeal of such Article 10 shall not adversely affect any right or protection of a director of the Registrant for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. The Registrant has entered into certain indemnification agreements with its officers and directors. The indemnification agreements provide the Registrant's officers and directors with further indemnification, to the maximum extent permitted by the DGCL. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. ITEM 8. EXHIBITS
Exhibit Number Description - ------- ----------- 5.1 Opinion of Perkins Coie LLP 23.1 Consent of Perkins Coie LLP (included in opinion filed as Exhibit 5.1) 23.2 Consent of Ernst & Young LLP, Independent Auditors 23.3 Consent of Ernst & Young LLP, Independent Auditors 23.4 Consent of Deloitte & Touche LLP, Independent Auditors 23.5 Consent of PricewaterhouseCoopers LLP, Independent Accountants 23.6 Consent of PricewaterhouseCoopers LLP, Independent Accountants 24.1 Power of Attorney (see signature page) 99.1 Convergence Corporation Stock Option Plan
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: II-2 4 (a) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act"); (b) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and (c) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that paragraphs (1)(a) and (1)(b) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed 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 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 5 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on the 8th day of October, 1999. AMAZON.COM, INC. By: /s/ JEFFREY P. BEZOS --------------------------------- Jeffrey P. Bezos Chief Executive Officer and Chairman of the Board POWER OF ATTORNEY Each person whose individual signature appears below hereby authorizes Jeffrey P. Bezos, Joy D. Covey, Joseph Galli, Jr., Kelyn J. Brannon and L. Michelle Wilson, or any one of them, as attorneys-in-fact with full power of substitution, to execute in the name and on the behalf of each person, individually and in each capacity stated below, and to file, any and all amendments to this Registration Statement, including any and all post-effective amendments. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities indicated below on the 8th day of October, 1999.
SIGNATURE TITLE --------- ----- /s/ JEFFREY P. BEZOS Chief Executive Officer and Chairman of the Board - -------------------------------- (Principal Executive Officer) Jeffrey P. Bezos /s/ WARREN C. JENSON Senior Vice President and Chief Financial Officer - -------------------------------- (Principal Financial Officer) Warren C. Jenson /s/ KELYN J. BRANNON Vice President, Finance and Chief Accounting - -------------------------------- Officer (Principal Accounting Officer) Kelyn J. Brannon /s/ TOM A. ALBERG Director - -------------------------------- Tom A. Alberg /s/ SCOTT D. COOK Director - -------------------------------- Scott D. Cook /s/ L. JOHN DOERR Director - -------------------------------- L. John Doerr /s/ JOSEPH GALLI, JR. Director, President and Chief Operating Officer - -------------------------------- Joseph Galli, Jr. /s/ PATRICIA Q. STONESIFER Director - -------------------------------- Patricia Q. Stonesifer
II-4 6 INDEX TO EXHIBITS
Exhibit Number Description - ------- ----------- 5.1 Opinion of Perkins Coie LLP 23.1 Consent of Perkins Coie LLP (included in opinion filed as Exhibit 5.1) 23.2 Consent of Ernst & Young LLP, Independent Auditors 23.3 Consent of Ernst & Young LLP, Independent Auditors 23.4 Consent of Deloitte & Touche LLP, Independent Auditors 23.5 Consent of PricewaterhouseCoopers LLP, Independent Accountants 23.6 Consent of PricewaterhouseCoopers LLP, Independent Accountants 24.1 Power of Attorney (see signature page) 99.1 Convergence Corporation Stock Option Plan
EX-5.1 2 OPINION OF PERKINS COIE LLP 1 EXHIBIT 5.1 PERKINS COIE LLP A LAW PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS 1201 THIRD AVENUE, SUITE 4800, SEATTLE, WASHINGTON 98101-3099 TELEPHONE: 206 583-8888 FACSIMILE: 206 583-8500 October 10, 1999 Amazon.com, Inc. 1200 - 12th Avenue S., Suite 1200 Seattle, Washington 98144 Re: Registration Statement on Form S-8 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 82,414 shares of Common Stock, par value $0.01 per share, which may be issued under the Convergence Corporation Stock Option Plan (the "Plan"). We have examined the Registration Statement and such documents and records of the Company and other documents as we have deemed relevant and 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 on and subject to the foregoing, we are of the opinion that any shares that may be issued pursuant to the Plan have been duly authorized and that, upon the due execution by the Company and the registration by its registrar of such shares, the sale thereof by the Company 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 validly issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ Perkins Coie LLP EX-23.2 3 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.2 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the Convergence Corporation Stock Option Plan of our report dated January 22, 1999, except for Note 11 as to which the date is February 10, 1999, with respect to the consolidated financial statements and schedule of Amazon.com, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 1998, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP ERNST & YOUNG LLP Seattle, Washington October 8, 1999 EX-23.3 4 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.3 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the Convergence Corporation Stock Option Plan of our report dated May 12, 1999, with respect to the consolidated financial statements of Accept.com for the year ended December 31, 1998, included in the Current Report (Form 8-K) of Amazon.com, Inc. filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP ERNST & YOUNG LLP San Jose, California October 8, 1999 EX-23.4 5 CONSENT OF DELOITTE & TOUCHE LLP 1 EXHIBIT 23.4 CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in this Registration Statement of Amazon.com, Inc. on Form S-8 of our report dated February 6, 1998, on the financial statements of Junglee Corp. as of December 31, 1997 and 1996 and for the year ended December 31, 1997 and for the period from June 3, 1996 (inception) to December 31, 1996, appearing in the Current Report on Form 8-K of Amazon.com, Inc. filed August 27, 1998. /s/ Deloitte & Touche LLP San Jose, California October 8, 1999 EX-23.5 6 CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 EXHIBIT 23.5 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of Amazon.com, Inc. of our report dated May 3, 1999, relating to the financial statements of e-Niche Incorporated, which appears in the Current Report on Form 8-K of Amazon.com, Inc. filed May 12, 1999. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts October 8, 1999 EX-23.6 7 CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 EXHIBIT 23.6 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 (No. 333-_____) of our report dated April 23, 1999, relating to the financial statements of Alexa Internet, appearing in the Current Report on Form 8-K of Amazon.com, Inc. filed May 12, 1999. /s/ PricewaterhouseCoopers LLP San Francisco, California October 8, 1999 EX-99.1 8 CONVERGENCE CORPORATION STOCK OPTION PLAN 1 EXHIBIT 99.1 CONVERGENCE CORPORATION STOCK OPTION PLAN ARTICLE 1 - PURPOSE This Stock Option Plan (the "Plan") is intended to provide incentives to employees of Convergence Corporation (the "Company") and its present and future subsidiaries (as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code")) by providing them with opportunities to purchase stock in the Company pursuant to the exercise of options. Options granted under the Plan may be either "incentive stock options" complying with, and subject to, the terms and conditions of Section 422 of the Code, or may be non-statutory stock options, as may be designated at the time of grant. ARTICLE 2 - ADMINISTRATION OF THE PLAN The Plan shall be administered by the Board of Directors (the "Board") of the Company or by the Stock Option Committee (the "Committee") of the Board of Directors of the Company. The word "Board" wherever used herein shall be deemed to mean "Board or Committee," unless otherwise expressly provided. Acts by a majority of the Board at a meeting, or acts approved in writing by all the members of the Board, shall be the valid acts of the Board. Subject to the terms of the Plan, and subject to such overall policies with respect thereto established from time to time by the Board, the Board shall have authority to determine the time or times at which options shall be granted, the persons to whom options shall be granted, the number of shares covered by each option, the price per share specified in each option, the time or times when each option shall become exercisable and the duration of the exercise period or periods, and all other terms and provisions of each option and each instrument by which each option shall be evidenced. All determinations and interpretations made by the Board with respect to the Plan and each option granted thereunder shall be binding and conclusive on all interested parties unless otherwise determined by the Board. The Board may from time to time adopt such rules and regulations for carrying out the Plan as it may determine in its sole discretion. No member of the Board shall be liable with respect to any action or determination made in good faith regarding the Plan or any option granted under it. ARTICLE 3 - ELIGIBLE PERSONS Options may be granted to such officers and other employees of the Company or its subsidiaries (as defined in Section 424(f) of the Code) as may from time to time be determined by the Board. The granting of any option to a person shall neither entitle such person to, nor disqualify him from, participation in any other grant of options pursuant to this Plan or any other plan. Directors of the Company or its subsidiaries, whether or not they are officers or employees of the Company, shall also be eligible to receive options under the Plan. In addition, options may be granted to consultants to the Company. ARTICLE 4 - STOCK The stock subject to the options granted hereunder shall be shares of the Company's authorized but unissued shares of common stock or shares of common stock reacquired by the Company, including shares purchased in the open market ("Common Stock"). The maximum number of shares which are hereby reserved for issuance and may be issued pursuant to this Plan is two hundred thousand (200,000), subject to adjustment as provided in Article 13. In the event any option granted under the Plan shall expire, terminate or be cancelled for any reason without having been exercised in full, or shall cease for any reason to be exercisable in whole or in 2 part, the unpurchased shares subject thereto, to the extent the option ceases to be exercisable, shall again be available under the Plan. If at the time of exercise of an option granted hereunder, substantially all of the Company's issued and outstanding shares of common stock are subject to stock restriction or shareholder agreements requiring that shares of common stock first be offered to the Company or first be offered to other shareholders of common stock prior to sale, then the issuance of stock upon exercise of an option granted shall be conditioned on the execution of a stock restriction or shareholder agreement, in the then current form, by the holder of the option. ARTICLE 5 - GRANT OF OPTIONS Options may be granted to eligible persons in such number and at such times during the term of the Plan as the Board shall determine; provided, however, that the aggregate fair market value (determined as of the time the option is granted) of the shares with respect to which incentive stock options are exercisable for the first time by the recipient during any calendar year shall not exceed $100,000. ARTICLE 6 - MINIMUM PRICE OF OPTIONS In the case of an incentive stock option, the price per share shall not be less than 100% (110% in the case of a 10% shareholder as defined in Sections 422(b)(6), 424(d) and related sections of the Code) of the fair market value per share of Common Stock on the date the option is granted. Fair market value shall be determined by the Board in accordance with applicable income tax regulations. In the case of a non-tax qualified stock option, the price per share shall be as determined by the Board and may be less than, equal to, or greater than the fair market value per share of Common Stock on the date the option is granted. ARTICLE 7 - DURATION OF OPTIONS Subject to earlier termination as provided in Articles 9 and 10, each option shall expire on the date specified by the Board, but not more than ten years from its date of grant. The Board may extend the term of any previously granted option provided that such option, as extended, expires not more than ten years from its original date of grant as provided above. However, in the case of an incentive stock option granted to a 10% stockholder as defined in Sections 422(b)(6), 424(d) and related sections of the Code, the term of the option shall be no more than five (5) years from the date of grant. ARTICLE 8 - RESTRICTIONS ON EXERCISE OF OPTIONS Subject to the provisions of Articles 5 and 9 through 12, each option granted under the Plan shall be exercisable as follows: A. The option shall either be fully exercisable at the time of grant or shall become exercisable in such installments as the Board may determine, which installments may be cumulative or noncumulative as the Board may determine. B. Once an installment becomes exercisable it shall remain exercisable until expiration or termination of the option, unless otherwise specified by the Board. C. Each option may be exercised from time to time, in whole or in part, up to the total number of shares with respect to which it is then exercisable. D. The Board shall have the right to accelerate the date of exercise of any installment for any reason. 3 ARTICLE 9 - TERMINATION OF RELATIONSHIP WITH COMPANY If an optionee ceases to be an employee, director or consultant of the Company or any subsidiary, for any reason other than death, disability (within the meaning of Section 22(e)(3) of the Code), or termination for cause, the options held by the optionee may be exercised to the extent they were exercisable on the date the optionee ceased to be an employee, director or consultant of the Company or any subsidiary; but no further installments of such options will become exercisable, and each such option shall terminate on the date one month following the date the optionee ceased to be an employee, director or consultant of the Company (but not later than the expiration date specified in the option). The foregoing one-month period following the date the optionee ceases to be an employee, director or consultant of the Company may be extended by an additional period of no longer than two months by the Board in its sole discretion. If an optionee is terminated as an employee, director or consultant of the Company for cause, all his options shall terminate immediately and be of no further force or effect. Whether authorized leaves of absence or absence on military or governmental service constitute termination for the purposes of the Plan shall be conclusively determined by the Board. Nothing in the Plan or in any option granted hereunder shall be deemed to give any optionee the right to continue in the employ of the Company or any of its subsidiaries or shall be deemed to interfere in any way with the right of the Company to terminate any optionee's employment at any time for any reason. Options granted under the Plan shall not be affected by any change of employment among the Company and its subsidiaries so long as the optionee continues to be an employee of the Company or one of its subsidiaries (as defined in Section 424(f) of the Code). ARTICLE 10 - DISABILITY; DEATH If an optionee becomes disabled (within the meaning of Section 22(e)(3) of the Code), his options may be exercised to the extent they were exercisable on the date he ceased to an employee, director or consultant of the Company or any subsidiary; but no further installments of such options will become exercisable, and each such option shall terminate on the date one year following the date the optionee ceased to be an employee, director or consultant of the Company (but not later than its specified expiration date). If an optionee dies while an employee, director or consultant of the Company or during the one month (or extended) period referred to in Article 9 or the one year period referred to above in this Article 10, his options may be exercised to the extent they were exercisable on the date of his death (or the date the optionee ceased to be an employee, director or consultant, whichever first occurred), by his estate, or duly appointed representative, or beneficiary who acquires the options by will or by the laws of descent and distribution, but no further installments of such options will become exercisable; and each such option shall terminate on the date one year following the date of the optionee's death (but not later than its specified expiration date). ARTICLE 11 - ASSIGNABILITY No option shall be assignable or transferable by the optionee except by will or by the laws of descent and distribution, and during the lifetime of the optionee each option shall be exercisable only by him. ARTICLE 12 - TERMS AND CONDITIONS OF OPTIONS Options shall be evidenced by instruments (which need not be identical) in such forms as the Board may from time to time approve. Such instruments shall conform to the terms and conditions set forth in Articles 6 through 11 and may contain such other provisions not inconsistent with the Plan, including restrictions applicable to shares of Common Stock issuable upon exercise of options granted under the Plan, as the Board deems advisable. The Company shall not be obligated to deliver any shares unless and until, in the opinion of the 4 Company's counsel, all applicable federal and state laws and regulations have been complied with, nor, in the event the outstanding common stock is at the time listed upon any stock exchange, unless and until the shares to be delivered have been listed, or authorized to be added to the list upon official notice of issuance, upon such exchange, nor unless and until all other legal matters in connection with the issuance and delivery of shares have been approved by the Company's counsel. Without limiting the generality of the foregoing, the Company may require from the optionee such investment representation or such agreement, if any, as counsel for the Company may consider necessary in order to comply with applicable securities laws, including the Securities Acts of 1933 and 1934. The Company shall use its best efforts to effect any such compliance and listing, and the optionee shall take any action reasonably requested by the Company in such regard. ARTICLE 13 - ADJUSTMENTS Upon the happening of any of the following described events, an optionee's rights under options granted hereunder shall be adjusted as hereinafter provided: A. in the event shares of Common Stock of the Company shall be subdivided or combined into a greater or smaller number of shares or if, upon a merger, consolidation, reorganization, split-up, liquidation, combination, recapitalization or the like of the Company, the shares of the Company's Common Stock shall be exchanged for other securities of the Company or of another corporation, each optionee shall be entitled to purchase, subject to the terms and conditions herein stated and to the terms and conditions of each individual option, such number of shares of Common Stock or amount of other securities of the Company or such other corporation as were exchangeable for the number of shares of Common Stock of the Company which such optionee would have been entitled to purchase except for such action, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination, or exchange; B. notwithstanding any other provision of the Plan, in the event of a merger or consolidation in which the Company is not the surviving corporation or which results in the acquisition of substantially all of the Company's outstanding shares by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of substantially all the Company's assets, then if the Board so determines, all outstanding options shall terminate, provided that at least twenty (20) days prior to the effective date of any such merger, consolidation or sale of assets, the Board shall either (1) make all outstanding options exercisable immediately prior to consummation of such merger, consolidation or sale of assets or (2) if there is a surviving or acquiring corporation, arrange, subject to consummation of the merger, consolidation or sale of assets, to have that corporation or affiliate of that corporation grant to optionees replacement awards, which awards in the case of incentive stock options shall satisfy, in the discretion of the Board, the requirements of Section 424(a) of the Code; and C. in the event the Company shall issue any of its shares as a stock dividend upon or with respect to the shares of stock of the class which shall at the time be subject to option hereunder, each optionee upon exercising such an option shall be entitled to receive (for the purchase price paid upon such exercise) the shares as to which he is exercising his option and, in addition thereto (at no additional cost), such number of shares of the class or classes in which such stock dividend or dividends were declared or paid, and such amount of cash in lieu of fractional shares, as he would have received if he had been the holder of the shares as to which he is exercising his option at all times between the date of the granting of such option and the date of its exercise. Upon the happening of any of the foregoing events, the class and aggregate number of shares set forth in Article 4 hereof which are reserved for issuance pursuant to the Plan or are subject to options which have heretofore been or may hereafter be granted under the Plan shall also be appropriately adjusted to reflect the events specified in paragraph A and C above. 5 The Board (but not the Committee) shall determine the adjustments to be made under this Article 13, and its determination shall be conclusive and binding on all interested parties. Each person who receives an incentive stock option agrees to notify the Board in writing immediately after he makes a disqualifying disposition of any shares received pursuant to the exercise of the option. The phrase "disqualifying disposition" means any disposition (including any sale) of shares before the later of (a) two years after the optionee was granted the option under which the optionee acquired such shares, or (b) one year after the participant acquired the shares by exercising the option. ARTICLE 14 - EXERCISE OF OPTIONS An option (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office address, identifying the option being exercised, specifying the number of shares as to which such option is being exercised and accompanied by full payment of the purchase price therefor in United States Dollars, in cash or by certified or bank check. Unless the Board otherwise determines, no adjustment shall be made for dividends or similar rights for which the record date occurs after the exercise of the option but prior to the date such stock certified is issued. In no case may a fraction of a share be purchased or issued under the Plan. ARTICLE 15 - TERMINATION AND AMENDMENTS The Plan shall expire on January 15, 2007 (except as to options outstanding on that date). Options may be granted under the Plan prior to the date of stockholder approval of the Plan but such options shall be granted subject to, and may not be exercised until after, such approval. The Board (but not the Committee) may terminate or amend the Plan in any respect at any time, except that, without the approval of the stockholders (a) the total number of shares that may be issued under the Plan may not be increased (except by adjustment pursuant to Article 13); (b) the provisions of Article 3, regarding eligibility, may not be modified; (c) the provisions of Article 6, regarding the exercise price at which shares may be offered pursuant to options, may not be modified (except by adjustment pursuant to Article 13); and (d) the expiration date of the Plan may not be extended. No action of the Board or stockholders, however, may, without the consent of an optionee, substantially impair his rights under any option previously granted to him; and no amendment may cause any incentive stock options previously granted or to be granted under the Plan to cease to qualify as incentive stock options in accordance with the terms and conditions of the Plan. ARTICLE 16 - INCOME TAX WITHHOLDING Federal, state or local law may require the withholding of taxes applicable to compensation income resulting from the exercise of an option. The Board may, in its discretion and subject to such rules as it may adopt, permit an optionee to pay all or a portion of the federal, state or local withholding taxes arising in connection with the exercise of an option by electing or (i) have the Company withhold shares of Common Stock or (ii) deliver to the Company other previously owned shares of Common Stock. The fair market value of the shares of Common Stock retained by or delivered to the Company under any of the foregoing elections shall be determined as of the date of exercise of the option. 6 ARTICLE 17 - GOVERNMENTAL REGULATION The Plan and the grant and exercise of options thereunder, and the Company's obligation to sell and deliver shares of the Company's Common Stock under such options, shall be subject to all applicable laws (including tax laws), rules and regulations. A true copy. By: John W. Avery Secretary -----END PRIVACY-ENHANCED MESSAGE-----