-----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, SMwS6noYzmwEcXwsGBK3C1Ytia/FGH+sY0NznK0/zAI0KDA2JoyHlfHGfPSDa3Qh fhSqO64/krEq7d0qxUHhcg== 0000950115-98-001915.txt : 19981228 0000950115-98-001915.hdr.sgml : 19981228 ACCESSION NUMBER: 0000950115-98-001915 CONFORMED SUBMISSION TYPE: S-8 POS PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19981224 EFFECTIVENESS DATE: 19981224 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDQUIST INC CENTRAL INDEX KEY: 0000884497 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 222531298 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 POS SEC ACT: SEC FILE NUMBER: 333-66447 FILM NUMBER: 98775513 BUSINESS ADDRESS: STREET 1: FIVE GREENTREE CENTRE STE 311 STREET 2: STATE HIGHWAY 73 N CITY: MARLTON STATE: NJ ZIP: 08053 BUSINESS PHONE: 6095968877 MAIL ADDRESS: STREET 1: 5 GREENTREE CENTRE SUITE 311 STREET 2: ATTN BRUCE VAN FOSSEN CITY: MARLTON STATE: NJ ZIP: 08053 S-8 POS 1 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on December 24, 1998 Registration No. 333-66447-01 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- Post-Effective Amendment No. 1 On FORM S-8 to FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933* ----------------------- MEDQUIST INC. ---------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) New Jersey 22-2531298 -------------------------------- --------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Five Greentree Centre Suite 311 Marlton, New Jersey 08053 -------------------------------------- (Address of Principal Executive Offices) The MRC Group, Inc. Amended and Restated 1992 Employee Stock Option Plan Stock Option Agreements with Edward L. Samek Amended and Restated Non-Qualified Stock Option Agreement with John Dayani -------------------------------------------------------------------------- (Full title of plans) John M. Suender, Senior Vice President, General Counsel and Secretary MedQuist Inc. Five Greentree Centre Suite 311 Marlton, New Jersey 08053 (609) 596-8877 Facsimile (609) 797-5949 ----------------------------------------- (name, address and telephone number, including area code, of agent for service) Copies of Communications to: Francis E. Dehel, Esquire Blank Rome Comisky & McCauley LLP One Logan Square Philadelphia, PA 19103 (215) 569-5500 Facsimile (215) 569-5555
CALCULATION OF REGISTRATION FEE ======================================================================================================================= Title Of Each Class Of Amount To Be Proposed Maximum Proposed Maximum Amount of Securities To Be Registered Registered(1) Offering Price Per Unit Offering Price Registration Fee ======================================================================================================================= Common Stock, no par value 1,555,931 (2) (2) $ (2) =======================================================================================================================
(1) In addition, pursuant to Rule 416(a) under the Securities Act of 1933, this Registration Statement also covers an indeterminate amount of shares as may be issued pursuant to stock splits, stock dividends and certain anti-dilution provisions contained in the Plan. (2) Not applicable. All filing fees payable in connection with the registration of the issuance of these securities were paid in connection with the filing of (a) preliminary proxy materials on Schedule 14A of MedQuist Inc. on September 25, 1998, and (b) the Registrant's Form S-4 Registration Statement (No.333-66447) on October 30, 1998. * Filed as a Post-Effective Amendment on Form S-8 to such Form S-4 Registration Statement pursuant to the procedure described in Part II under "Introductory Statement." PART I Information Required in the Section 10(a) Prospectus The documents containing the information specified in Part I of Form S-8 will be sent or given to participants in The MRC Group, Inc. Amended and Restated 1992 Employee Stock Option Plan, the Stock Option Agreements with Edward L. Samek, and the Amended and Restated Non-Qualified Stock Option Agreement with John Dayani (the "Plans") as specified by Rule 428(b)(1) promulgated by the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"). Such documents are not being filed with the Commission, but constitute (along with the documents incorporated by reference into this Registration Statement pursuant to Item 3 of Part II hereof) a prospectus that meets the requirements of Section 10(a) of the Securities Act. PART II Information Not Required in the Prospectus Introductory Statement MedQuist Inc. (the "Company" or the "Registrant") hereby amends its Registration Statement on Form S-4 (No. 333-66447) (the "Form S-4") by filing this Post-Effective Amendment No. 1 on Form S-8 (the "Amendment No. 1") with respect to up to 1,555,931 shares of the Registrant's common stock, without par value ("Common Stock" or "MedQuist Common Stock"), issuable in connection with the following plans (the "Plans") of The MRC Group, Inc. ("MRC"): The MRC Group, Inc. Amended and Restated 1992 Employee Stock Option Plan, Stock Option Agreements with Edward L. Samek and Amended and Restated Non-Qualified Stock Option Agreement with John Dayani. All such shares of Common Stock were previously included in the Form S-4. On December 10, 1998, Mercury Acquisition Corporation, a Missouri corporation and a wholly owned subsidiary of the Registrant ("Sub"), was merged with and into MRC (the "Merger") pursuant to an Agreement and Plan of Merger dated September 18, 1998, among the Registrant, Sub and MRC (the "Merger Agreement"). As a result of the Merger, each outstanding share of MRC common stock and preferred stock (with certain specified exceptions) was converted into shares of Common Stock of the Registrant pursuant to the exchange ratios set forth in the Merger Agreement. Also as a result of the Merger, each outstanding unexpired option to purchase shares of MRC common stock (a "MRC Stock Option"),was converted into an option to purchase MedQuist Common Stock ("MedQuist Stock Options"). Each holder of MRC Stock Options received a number of MedQuist Stock Options equal to (i) the number of shares of MRC Common Stock issuable upon the exercise of such holder's MRC Stock Options multiplied by (ii) 0.5163. Any fractional shares of MedQuist Common Stock resulting from such multiplication was rounded to the nearest whole share. The exercise price for the MedQuist Stock Options equals (A) the exercise price of the MRC Stock Option for which the MedQuist Stock Option was converted and issued divided by (B) 0.5163. Such exercise price was rounded to the nearest whole cent. The stock options to be registered hereunder have been assumed by the Registrant pursuant to the Merger Agreement. These options were originally granted to the officers, employees, directors and consultants of MRC under the Plans. The designation of Amendment No. 1 as Registration No. 333-66447-01 denotes that Amendment No. 1 relates only to the Common Stock issuable pursuant to the Plans, and that this is the first Post-Effective Amendment to the S-4 filed with respect to such shares. Item 3. Incorporation of Certain Documents by Reference. The Registrant hereby incorporates by reference in this Registration Statement the following documents: (a) Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997; and (b) All other reports filed by the Registrant pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") since December 31, 1997; and (c) The description of the Registrant's Common Stock, which is incorporated by reference from the Registrant's Registration Statement on Form 8-K filed with the Commission on March 11, 1992; and (d) Registrant's Registration Statement on Form S-3 filed with the Securities and Exchange Commission on December 24, 1998. All documents subsequently filed by the Registrant with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date hereof, and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold hereunder, shall be deemed incorporated by reference into this Registration Statement and to be a part hereof from the date of the filing of such documents. Item 4. Description of Securities. Not Applicable. Item 5. Interests of Named Experts and Counsel. A. Fred Ruttenberg, a partner in Blank Rome Comisky & McCauley LLP, is a director of the Company. Mr. Ruttenberg is the beneficial owner of 93,570 shares of MedQuist Common Stock. Item 6. Indemnification of Directors and Officers. Section 14A:3-5 of the NJBCA permits each New Jersey business corporation to indemnify its directors, officers, employees and agents against expenses and liability for each such person's acts taken in his or her capacity as a director, officer, employee or agent of the corporation if such actions were taken in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal proceeding, if he or she had no reasonable cause to believe his or her conduct was unlawful. Article 10 of MedQuist's By-laws provides for indemnification for its directors and officers, to the full extent permitted by applicable law, including, but not limited to, Section 14A:3-5 of the NJBCA. MedQuist maintains insurance to cover its directors and officers for liabilities which may be incurred by its directors and officers in the performance of their duties. Item 7. Exemption from Registration Claimed. Not Applicable. Item 8. Exhibits. The following exhibits are filed as part of this Registration Statement or, where so indicated have been previously filed and are incorporated herein by reference. Exhibit Number Description -------------- ----------- 5.1 Opinion of Blank Rome Comisky & McCauley LLP 23.1 Consent of Blank Rome Comisky & McCauley LLP (included in Exhibit 5.1) 23.2 Consent of Arthur Andersen LLP 23.3 Consent of Arthur Andersen LLP 23.4 Consent of Skoda, Minotti, Reeves & Co. 24.1 Power of Attorney (included on signature page) 99.1 The MRC Group, Inc. Amended and Restated 1992 Employee 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; (i) To include any prospectus required by section 10(a) (3) of the Securities Act of 1933, as amended (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. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (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 paragraph (a)(1)(i) and (a)(1)(ii) do not apply if the Registration Statement is on Form S-3 or S-8 and 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 Securities Exchange Act of 1934, as amended, (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 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 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 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. 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 this Post-Effective Amendment No. 1 on Form S-8 to Form S-4 Registration Statement and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Marlton and the State of New Jersey, as of December 23, 1998. MEDQUIST INC. By: /s/ David A. Cohen ------------------------------------ David A. Cohen Chairman and Chief Executive Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David A. Cohen and John R. Emery, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments (including, without limitation, post-effective amendments) to this Registration Statement and any registration statement filed under Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their 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, this Post-Effective Amendment No. 1 on Form S-8 to Form S-4 Registration Statement has been signed by the following persons as of December 23, 1998 in the capacities indicated: Signatures Title ---------- ----- /s/ David A. Cohen - -------------------------------------- Chairman and Chief Executive Officer David A. Cohen (principal executive officer) /s/ John R. Emery - -------------------------------------- Senior Vice President, Treasurer and John R. Emery Chief Financial Officer (principal financial officer and principal accounting officer) /s/ John A. Donohoe, Jr. - -------------------------------------- President, Chief Operating Officer John A. Donohoe, Jr. and Director /s/ James R. Emshoff - -------------------------------------- Director James R. Emshoff [EXECUTIONS CONTINUED ON FOLLOWING PAGE] Signatures Title ---------- ----- /s/ William T. Carson - -------------------------------------- Director William T. Carson /s/ Richard J. Censits - -------------------------------------- Director Richard J. Censits /s/ John T. Casey - -------------------------------------- Director John T. Casey /s/ A. Fred Ruttenberg - -------------------------------------- Director A. Fred Ruttenberg /s/ John H. Underwood - -------------------------------------- Director John H. Underwood /s/ Terrence J. Mulligan - -------------------------------------- Director Terrence J. Mulligan /s/ R. Timothy Stack - -------------------------------------- Director R. Timothy Stack /s/ Edward L. Samek - -------------------------------------- Director Edward L. Samek /s/ Bruce K. Anderson - -------------------------------------- Director Bruce K. Anderson /s/ Richard H. Stowe - -------------------------------------- Director Richard H. Stowe EXHIBIT INDEX 5.1 Opinion of Blank Rome Comisky & McCauley LLP 23.1 Consent of Blank Rome Comisky & McCauley LLP (included in Exhibit 5.1) 23.2 Consent of Arthur Andersen LLP 23.3 Consent of Arthur Andersen LLP 23.4 Consent of Skoda, Minotti, Reeves & Co. 24.1 Power of Attorney (included in Signature Page) 99.1 The MRC Group, Inc. Amended and Restated 1992 Employee Stock Option Plan EX-5.1 2 OPINION OF BLANK ROME COMISKY & MCCAULEY LLP EXHIBIT 5.1 Opinion of Blank Rome Comisky & McCauley LLP December 23, 1998 MedQuist Inc. Five Greentree Centre Suite 311 Marlton, NJ 08053 Re: MedQuist Inc. Registration Statement on Form S-8 ------------------------------------------------ Gentlemen: We have acted as counsel to MedQuist Inc. (the "Company") in connection with the Registration Statement on Form S-8 (the "Registration Statement") filed by the Company with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, relating to the offer and sale of up to 1,555,931 shares of common stock, no par value (the "Common Stock"), by the Company pursuant to The MRC Group, Inc. Amended and Restated 1992 Employee Stock Option Plan, Stock Option Agreements with Edward L. Samek and the Amended and Restated Non-Qualified Stock Option Agreement with John Dayani (the "Plans"). This opinion is furnished pursuant to the requirements of Item 601(b)(5) of Regulation S-K. In rendering this opinion, we have examined only the following documents: (i) the Company's Amended and Restated Certificate of Incorporation and Bylaws, (ii) resolutions adopted by the Board of Directors of the Company, (iii) the Registration Statement and (iv) the Plan. We have not performed any independent investigation other than the document examination described. Our opinion is therefore qualified in all respects by the scope of that document examination. We have assumed and relied, as to questions of fact and mixed questions of law and fact, on the truth, completeness, authenticity and due authorization of all certificates, documents, and records examined and the genuineness of all signatures. This opinion is limited to the laws of the State of New Jersey. Based upon and subject to the foregoing, we are of the opinion that the shares of Common Stock of the Company which are being offered and sold by the Company pursuant to the Registration Statement and the Plan, when sold in the manner and for the consideration contemplated by the Registration Statement and the Plan, will be legally issued, fully paid and non-assessable. We hereby consent to the filing of this opinion as an Exhibit to the Registrant Statement. Sincerely, BLANK ROME COMISKY & McCAULEY LLP EX-23.2 3 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.2 Consent of Arthur Andersen LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated December 22, 1998 on the supplemental consolidated financial statements of MedQuist Inc. and Subsidiaries included in the S-3 Registration Statement of MedQuist Inc. and our report dated September 18, 1998 on the restated consolidated financial statements of MedQuist Inc. and Subsidiaries included in Item 5 in MedQuist Inc.'s Form 10-Q for the period ended September 30, 1998, and to all references to our Firm included in this registration statement. /s/ ARTHUR ANDERSEN LLP -------------------------- Philadelphia, PA December 22, 1998 EX-23.3 4 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.3 Consent of Arthur Andersen LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our reports (i) dated March 3, 1998 (except with respect to the matters discussed in Note 11, as to which the date is September 18, 1998), on the consolidated financial statements of The MRC Group, Inc. and Subsidiary included on pages F-27 through F-46 of the S-4 Registration Statement of MedQuist Inc. for the years ended December 31, 1995, 1996 and 1997 and (ii) dated May 1, 1998, on the financial statements of Medical Records Corp. included on pages F-60 through F-66 of the S-4 Registration Statement of MedQuist Inc. for the period ended July 19, 1996, all of which are incorporated by reference in the Form 8-K of MedQuist Inc. dated December 15, 1998 and to all references to our Firm included in this registration statement. /s/ ARTHUR ANDERSEN LLP ------------------------ Cleveland, Ohio, December 22, 1998 EX-23.4 5 CONSENT OF SKODA, MINOTTI, REEVES & CO. EXHIBIT 23.4 Consent of Skoda, Minotti, Reeves & Co. CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated February 16, 1996 (except with respect to the matters discussed in Note 2, as to which the date is May 26, 1998) on the combined financial statements of Medical Records Corp. and Affiliate included on pages F-53 through F-59 of the S-4 Registration Statement of MedQuist Inc. for the year ended December 31, 1995, all of which are incorporated by reference in the Form 8-K of MedQuist Inc. dated December 15, 1998, and to all references to our Firm included in this registration statement. /s/ SKODA, MINOTTI, REEVES & CO. --------------------------------- Mayfield Village, Ohio, December 22, 1998 EX-99.1 6 1992 EMPLOYEE STOCK OPTION PLAN EXHIBIT 99.1 THE MRC GROUP, INC. AMENDED AND RESTATED 1992 EMPLOYEE STOCK OPTION PLAN 1. Purpose. The purpose of this plan (the "Plan") is to secure for The MRC Group, Inc. (the "Company"), and its shareholders the benefits arising from capital stock ownership by certain key advisors, consultants, employees and members of the Board of Directors ("Directors") of the Company and its subsidiary (as defined in Section 17 hereof), if any, who are expected to contribute to the Company's future growth and success. 2. Types of Awards and Administration. a. Types of Awards. Options granted pursuant to the Plan shall be as specified herein and authorized by action of the Board of Directors of the Company (or a Committee designated by the Board of Directors) and may be either incentive stock options ("Incentive Stock Options") meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or non-qualified stock options which are not intended to meet the requirements of Section 422. b. Administration. The Plan will be administered by the Board of Directors of the Company, whose construction and interpretation of the terms and provisions of the Plan shall be final and conclusive. The Board of Directors may in its sole discretion, subject to the terms of this Plan, grant options to purchase shares of the Company's Common Stock and issue shares upon exercise of such options, as provided in the Plan. The Board shall have authority, subject to the express provisions of the Plan and all applicable securities laws, rules and regulations, to construe the respective option agreements and the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of the respective option agreements (which need not be identical), to advance the lapse of any waiting or installment periods and exercise dates, and to make all other determinations in the judgment of the Board of Directors necessary or desirable for the administration of the Plan. The Board of Directors may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any option agreement in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. No director shall be liable for any action or determination made in good faith. The Board of Directors may, to the full extent permitted by law, delegate any or all of its powers under the Plan to a committee (the "Committee") appointed by the Board of Directors, and if the Committee is so appointed all references to the Board of Directors in the Plan shall mean and relate to such Committee. c. Indemnification. In addition to such other rights of indemnification as they may have as Directors or as members of the Committee, members of the Board of Directors and of the Committee shall be indemnified by the Company against reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any option (and/or related right) granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company), or paid by them in satisfaction of a judgment of any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for negligence or misconduct in his duties; provided that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer the Company, in writing, the opportunity at its own expense, to handle and defend the same. 3. Eligibility. Incentive Stock options shall be granted only to persons who are, at the time of grant, full-time employees of the Company or Subsidiary, if any. No person shall be granted an Incentive Stock Option under the Plan who, at the time such option is granted, owns, directly or indirectly, Common Stock of the Company possessing more than 10% of the total combined voting power of all classes of stock of the Company or Subsidiary, unless the requirements of paragraph (b) of Section 11 are satisfied. Non-qualified options may be granted to officers, full-time employees, Directors and consultants to the Company or any subsidiary. A person who has been granted an option under the Plan ("Optionee") may, if he or she is otherwise eligible, be granted additional options if the Board of Directors shall so determine. 4. Stock Subject to Plan. Subject to adjustment as provided in Section 13 and 14 below, the maximum number of shares of Common Stock of the Company which may be issued and sold under the Plan is 5,714,286 shares. Such shares may be authorized and unissued shares or may be shares issued and thereafter acquired by the Company. If an option granted under the Plan shall expire or terminate for any reason without having been exercised in full, the unpurchased shares subject to such option shall again be available for subsequent option grants under the Plan. Stock issuable upon exercise of an option granted under the Plan may be subject to such restrictions on transfer, repurchase rights or other restrictions as shall be determined by the Board of Directors. 5. Forms of Options. As a condition to the grant of an option under the Plan, each recipient of an option shall execute an option agreement, in such form not inconsistent with the Plan as shall be specified by the Board of Directors at the time such option is granted. 6. Purchase Price. a. General. The purchase price per share of stock deliverable upon the exercise of an option shall be determined by the Board of Directors, provided, however, that in the case of an Incentive Stock Option, the exercise price shall not be less than 100% of the fair market value of such stock on the date of grant of such option, or less than 110% of such fair market value in the case of options described in paragraph (b) of Section 11. In the case of a Non-Qualified stock option, the exercise price shall be determined by the Board of Directors in their discretion on the date of grant of such option. As used herein, "fair market value" on a given date shall mean the average of the highest and lowest selling price per share on the principal securities exchange (or the Nasdaq National Market) if the Common Stock is so traded; or if not so traded, "fair market value" shall mean the average of closing "bid" and "ask" prices for one share of the Common Stock of the Company as quoted on Nasdaq or a successor quotation system, or on such other public market system as the Common Stock of the Company is then listed, or in the event such quotations are not available, "fair market value" shall be determined in the good faith discretion of the Board of Directors. b. Payment of Purchase Price. Options granted under the Plan may provide for the payment of the exercise price by delivery of (i) cash, (ii) a check to the order of the Company in an amount equal to the exercise price of such options, (iii) shares of Common Stock of the Company already owned by the Optionee for at least six (6) months prior to the date the Optionee tenders such shares, having a fair market value equal in amount to the exercise price of the options being exercised, or 2 (iv) by any combination of such methods of payment, as permitted by applicable law. The fair market value of any shares of the Company's Common Stock which may be delivered upon exercise of an option shall be determined in the manner specified above. 7. Option Period. Each option and all rights thereunder shall be expressed to expire on such date as the Board of Directors shall determine, but in no event after the expiration of ten (10) years from the day on which the option is granted (subject to the special limitations set forth in paragraph (b) of Section 11), and shall be subject to earlier termination as provided in the Plan. 8. Exercise of Options. Each option may be exercisable, in part or in full, at any time and from time-to-time, and subject to such conditions and restrictions as determined by the Board of Directors and as set forth herein or in the agreement evidencing such option, during a ten (10) year period following the date of grant thereof (subject to the special limitations set forth in paragraph (b) of Section 11). To the extent that an option to purchase shares is not exercised by an Optionee when it becomes initially exercisable, it shall not expire but shall be carried forward and shall be exercisable, on a cumulative basis, until the expiration of the exercise period. 9. Nontransferability of Options. No option granted under the Plan shall be assignable or transferable by the person to whom it is granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income Security Act, or the rules thereunder; provided, however, that if so provided in the instrument evidencing the option, the Board of Directors, or the Committee, as the case may be, may permit any Optionee to transfer the option during his lifetime to one or more members of his family, to one or more trusts for the benefit of one or more members of his family or to one or more entities owned solely by family members, provided that no consideration is paid for the transfer and that such transfer would not result in the loss of any exemption under Rule 16b-3 promulgated under the Securities Act of 1933, as amended, for any option that the Board of Directors or the Committee, as the case may be, does not permit to be so transferred. The transferee of an option shall be subject to all restrictions, terms, and conditions applicable to the option prior to its transfer, except that the option shall not be further transferable inter vivos by the transferee. The Board of Directors or the Committee, as the case may be, may impose on any transferable option and on the Common Stock to be issued upon the exercise of the option such limitations and conditions as the Board of Directors or the Committee, as the case may be, deems appropriate. 10. Effect of Termination of Employment. For all purposes of the Plan and any option or purchase right granted hereunder, "employment" shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations (or any successor regulations). No option may be exercised unless, at the time of such exercise, the Optionee is, and has been continuously since the date of grant of his or her option, employed by the Company or a subsidiary, except that if and to the extent the option agreement so provides: a. The option may be exercised within the period of three months after the date the Optionee ceases to be an employee of any of the foregoing entities (or within such shorter or longer period as may be specified or provided for in the option agreement; provided, however, that the exercise of the option shall not be less than thirty (30) days after the termination of employment of the Optionee); provided, however, that in no event may an option be exercised after the expiration date of the option. 3 b. If the Optionee dies while in the employ of the Company, a Parent Corporation or a Subsidiary or within three months after the Optionee ceases to be such an employee, the option may be exercised by the person to whom it is transferred by will or the laws of descent and distribution within the period of one year after the date of death (or within such shorter or longer period as may be specified or provided for in the option agreement or instrument, but in no event shall the period be less than six (6) months after the date of death); provided, however, that in no event may an option be exercised after the expiration date of the option. c. If the Optionee becomes "disabled" while in the employ of the Company, a Parent Corporation or a Subsidiary, the option may be exercised within the period of one year after the date the Optionee ceases to be an employee of any of the foregoing entities because of such disability (or within such shorter or longer period as may be specified or provided for in the option agreement or instrument but in no event shall the period be less than six (6) months after the date the Optionee ceases to be an employee because of such disability); provided, however, that in no event may any option be exercised after the expiration date of the option. For purposes of this Plan, the Optionee shall be considered "disabled" if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment, which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months. 11. Incentive Stock Options. Options granted under the Plan which are intended to be Incentive Stock Options shall be specifically designated as Incentive Stock Options and shall be subject to the following additional terms and conditions: a. Limitation. The aggregate fair market value (determined as of the respective date or dates of grant) of the Common Stock which may be made the subject of Incentive Stock Options granted under the Plan (and under any other stock option plans of the Company, and any Parent Corporation and Subsidiary) to any employee, which first become exercisable in any one calendar year shall not exceed the sum of $100,000 or such greater amount as may be permitted under subsequent amendments to the Code. b. 10% Shareholder. If an employee to whom an Incentive Stock Option is to be granted under the Plan is at the time of the grant of such option the owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any Parent corporation or any Subsidiary, then the purchase price per share of the Common Stock subject to such Incentive Stock Option shall not be less than one hundred ten percent (110%) of the fair market value of one share of Common Stock of the Company at the time of grant and the Incentive Stock Option shall have a maximum term of five years. c. Maximum Grant. No individual may be granted options in any calendar year, whether an Incentive Stock Option or a non-qualified stock option, to purchase more than 714,286 shares of Common Stock. Except as modified by the preceding provisions of this Section 11, all the provisions of the Plan shall be applicable to Incentive Stock Options granted hereunder. 12. Rights as a Shareholder. The holder of an option shall have no rights as a shareholder with respect to any shares covered by the option until the date of issue of a stock certificate to him or her 4 for such shares. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 13. Recapitalization. In the event that the outstanding shares of Common Stock of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any recapitalization, reclassification, stock split, stock dividend, combination or subdivision, appropriate adjustment shall be made in the number and kind of shares available under the Plan and under any options granted under the Plan. Such adjustment to outstanding options shall be made without change in the total price applicable to the unexercised portion of such options, and a corresponding adjustment in the applicable option price per share shall be made. No such adjustment shall be made which would, within the meaning of any applicable provisions of the Code, constitute a modification, extension or renewal of any option or a grant of additional benefits to the holder of an option. 14. Reorganization. In case the Company is merged or consolidated with another corporation and the Company is not the surviving corporation, or in case the acquiring corporation is not assuming the obligations of the Company with respect to its outstanding options, or in the case all or substantially all of the assets or more than fifty percent (50%) of the outstanding voting stock of the Company is acquired by another corporation (unless all voting stock acquired by said corporation is acquired directly from the Company), or in the case of a reorganization or liquidation of the Company, the Board of Directors of the Company, or the board of directors of any corporation assuming the obligations of the Company, shall, as to outstanding options, either (i) make appropriate provision for the protection of any such outstanding options by the substitution on an equitable basis of appropriate stock of the Company, or of the merged, consolidated or otherwise reorganized corporation which will be issuable in respect to the shares of Common Stock of the Company, provided that no additional benefits shall be conferred upon Optionees or offerees as a result of such substitution, and the excess of the aggregate fair market value of the shares subject to the options immediately after such substitution over the purchase price thereof is not more than the excess of the aggregate fair market value of the shares subject to such options immediately before such substitution over the purchase price thereof, or (ii) upon written notice to the Optionees or offerees, provide that all unexercised non-expired options granted under the Plan shall immediately accelerate the Exercisability Date(s) to the date of written notice and further all said options must be exercised within a specified number of days (which shall not be less than thirty) of the date of such notice or they will be terminated. In any such case, the Board of Directors may, in its discretion, accelerate the Exercisability Date(s) of outstanding options. 15. No Special Employment Rights. Nothing contained in the Plan or in any option granted under the Plan shall confer upon any option holder any right with respect to the continuation of his or her employment by the Company (or any Parent Corporation or Subsidiary) or interfere in any way with the right of the Company (or any Parent Corporation or Subsidiary), subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of the option holder from the rate in existence at the time of the grant of an option. Whether an authorized leave of absence, or absence in military or government service, shall constitute termination of employment shall be determined by the Board of Directors at the time. 16. Other Employee Benefits. The amount of any compensation deemed to be received by an employee as a result of the exercise of an option, or the sale of shares received upon such exercise will not constitute "earnings" with respect to which any other employee benefits of such employee are 6 determined, including without limitation benefits under any pension, profit sharing, life insurance or salary continuation plan. 17. Definition of Subsidiary. The term "Subsidiary" as used in the Plan shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 18. Amendment of the Plan. The Board of Directors may at any time and from time-to-time modify or amend the Plan in any respect, except that without the approval of the shareholders of the Company, the Board of Directors may not (a) materially increase the benefits accruing to individuals who participate in the Plan, (b) materially increase the maximum number of shares which may be issued under the Plan (except for permissible adjustments provided in the Plan), (c) materially modify the requirements as to eligibility for participation in the Plan or (d) modify or amend the Plan if shareholder approval is required under Section 162(m) of the Code in order for any compensation related to options granted under the Plan to not be subject to the limitation on deductibility of Section 162(m). The termination or any modification or amendment of the Plan shall not, without the consent of an Optionee, affect his or her rights under an option previously granted to him or her. With the consent of the Optionee affected, the Board of Directors may amend outstanding option agreements in a manner not inconsistent with the Plan. The Board of Directors shall have the right to amend or modify the terms and provisions of the Plan and of any outstanding Incentive Stock Options granted under the Plan to the extent necessary to qualify any or all such options for such favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of the Code. 19. Withholding. The Company's obligation to deliver shares upon the exercise of any option granted under the Plan shall be subject to the option holder's satisfaction of all applicable federal, state and local income and employment tax withholding requirements. 20. Effective Date and Duration of the Plan. a. Effective Date. The Plan shall become effective when adopted by the Board of Directors, but no Incentive Stock Option granted under the Plan shall become exercisable unless and until the Plan shall have been approved by the Company's shareholders. If such shareholder approval is not obtained within twelve months after the date of the Board's adoption of the Plan, any Incentive Stock Options previously granted under the Plan shall terminate and no further Incentive Stock Options shall be granted. Subject to this limitation, options may be granted under the Plan at any time after the effective date and before the date fixed for termination of the Plan. b. Termination. Unless sooner terminated in accordance with Section 13, the Plan shall terminate upon the earlier of (i) the close of business on the day next preceding the tenth anniversary of the date of adoption by the Board of Directors of this Amended and Restated 1992 Stock Option Plan, or (ii) the date on which all shares available for issuance under the Plan shall have been issued pursuant to the exercise or cancellation of options granted under the Plan. If the date of termination is determined under (i) above, then options outstanding on such date shall continue to have force and effect in accordance with the provisions of the instruments evidencing such options. -----END PRIVACY-ENHANCED MESSAGE-----