<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1997
REGISTRATION NO. _________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KENTEK INFORMATION SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 22-2406249
(State of Incorporation) (I.R.S. Employer Identification No.)
2945 WILDERNESS PLACE
BOULDER, COLORADO 80301
(Address of Principal Executive Offices)
1992 STOCK OPTION PLAN
(Full Title of the Plan)
PHILIP W. SHIRES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
2945 WILDERNESS PLACE
BOULDER, COLORADO 80301
(303) 440-5500
(Name, Address and Telephone Number, Including Area Code, of Agent for Service)
COPIES TO:
KERRY J. HOUGHTON, ESQ.
COOLEY GODWARD LLP
2595 CANYON BOULEVARD, SUITE 250
BOULDER, COLORADO 80302-6737
(303) 546-4000
<PAGE> 2
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED SHARE (1) PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Stock Options and
Common Stock (par
value $.01) 536,214 $6.24 $3,345,975.36 $1,013.93
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rules 457(c) and (h)(1) based upon (i)
$6.01, the weighted average of the exercise prices (ranging from $3.24
to $6.63) of 485,015 options outstanding under the 1992 Stock Option
Plan, and (ii) $8.41, the average of the high and low prices of the
Registrant's Common Stock on October 22, 1997, as reported on The
Nasdaq Stock Market (National Market). The following chart
illustrates our calculation of the registration fee:
<TABLE>
<CAPTION>
TYPE OF SHARES NUMBER OF SHARES OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE
<S> <C> <C> <C>
Shares issuable pursuant
to options outstanding
under the 1992 Stock
Option Plan 485,015 $6.01 $2,914,940.15
Shares issuable upon
exercise of options
available for grant
under the 1992 Stock
Option Plan 51,199 $8.41 $430,583.59
</TABLE>
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
<PAGE> 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Kentek Information Systems, Inc. (the
"Registrant") with the Securities and Exchange Commission are incorporated by
reference into this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K (File No.
000-27814) for the fiscal year ended June 30, 1997.
(b) The description of the Registrant's Common Stock contained in
the Registrant's Registration Statement on Form 8-A.
(c) All reports and other documents hereafter filed by the
Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of a
post-effective amendment which indicates that all of the securities offered
hereby have been sold or which deregisters all such securities then remaining
unsold.
Any statement contained in a document incorporated, or deemed to be
incorporated, by reference herein or contained in this Registration Statement
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 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.
DESCRIPTION OF SECURITIES
Not applicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the
Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
The Registrant's Amended and Restated Certificate of Incorporation
provides for the elimination of liability for monetary damages for breach of
the directors' fiduciary duty of care to the Registrant and its stockholders.
These provisions do not eliminate the directors' duty of care and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to the Registrant, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
any transaction from which the director derived an improper personal benefit,
and for payment of dividends or approval of stock repurchases or redemptions
that are unlawful under Delaware law. The provision does not affect a
director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
1.
<PAGE> 4
The Registrant has entered into indemnification agreements with each
of its directors and executive officers under which the Registrant has
indemnified each of them against expenses and losses incurred for claims
brought against them by reason of their being a director or executive officer
of the Registrant, and the Registrant maintains directors' and officers'
liability insurance.
EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3(i).2 to the Registrant's Registration Statement on Form S-1
(Registration No. 333-1606)).
4.2 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit
3(ii).2 to the Registrant's Registration Statement on Form S-1 (Registration No. 333-
1606)).
4.3 Specimen stock certificate (incorporated by reference to Exhibit 4.2 to the
Registrant's Registration Statement on Form S-1 (Registration No. 333-1606)).
5.1 Opinion of Cooley Godward LLP.
10.1 1992 Stock Option Plan.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of BDO Seidman, LLP.
23.3 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24 Power of Attorney (included on page 4).
</TABLE>
2.
<PAGE> 5
UNDERTAKINGS
1. The Registrant hereby undertakes:
(a) 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;
(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)(i) and (a)(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
Securities and Exchange Commission pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(b) 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.
(c) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
2. The 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 the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant, 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.
<PAGE> 6
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 Boulder, State of Colorado, on the 27th day of
October, 1997.
KENTEK INFORMATION SYSTEMS, INC.
By: /s/ Philip W. Shires
------------------------------------
Philip W. Shires
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Philip W. Shires and Craig G. Lamborn,
and each of them, as 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
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents 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 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 substitutes or substitute, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Philip W. Shires President, Chief Executive Officer and October 27, 1997
- ------------------------- Director (Principal Executive Officer)
Philip W. Shires
/s/ Craig G. Lamborn Vice President, Finance and Administration October 27, 1997
- ------------------------- (Principal Financial and Accounting Officer)
Craig G. Lamborn
/s/ I. Jimmy Mayer Director October 27, 1997
- -------------------------
I. Jimmy Mayer
/s/ Howard L. Morgan Director October 27, 1997
- -------------------------
Howard L. Morgan
/s/ Justin J. Perreault Director October 27, 1997
- -------------------------
Justin J. Perreault
/s/ James H. Simons Director October 27, 1997
- -------------------------
James H. Simons
/s/ Sheldon Weinig Director October 27, 1997
- -------------------------
Sheldon Weinig
</TABLE>
4.
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3(i).2 to the Registrant's Registration Statement on Form S-1
(Registration No. 333-1606)).
4.2 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit
3(ii).2 to the Registrant's Registration Statement on Form S-1 (Registration No. 333-
1606)).
4.3 Specimen stock certificate (incorporated by reference to Exhibit 4.2 to the
Registrant's Registration Statement on Form S-1 (Registration No. 333-1606)).
5.1 Opinion of Cooley Godward LLP.
10.1 1992 Stock Option Plan.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of BDO Seidman, LLP.
23.3 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24 Power of Attorney (included on page 4).
</TABLE>
5.
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
October 27, 1997
Kentek Information Systems, Inc.
2945 Wilderness Place
Boulder, Colorado 80301
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Kentek Information Systems, Inc. (the "Registrant") of a
Registration Statement on Form S-8 (the "Registration Statement") with the
Securities and Exchange Commission covering the offering of up to 536,214
shares of the Registrant's Common Stock, $.01 par value, pursuant to the
Registrant's 1992 Stock Option Plan (the "Plan") (the "Shares").
In connection with this opinion, we have (i) examined the Registration
Statement and the related Prospectus, and (ii) reviewed the Registrant's
Certificate of Incorporation and Bylaws, as amended, and such other documents,
records, certificates, memoranda and other instruments as we deem necessary as
a basis for this opinion. We also have assumed the genuineness and authenticity
of all documents submitted to us as originals, the conformity to originals of
all documents submitted to us as copies thereof, and the due execution and
delivery of all documents where due execution and delivery are a prerequisite
to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when issued and sold in accordance with the Plan, the
Registration Statement and the related Prospectus, will be validly issued,
fully paid and nonassessable.
<PAGE> 2
Kentek Information Systems, Inc.
October 27, 1997
Page Two
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
By: /s/ James H. Carroll
--------------------------
James H. Carroll
<PAGE> 1
EXHIBIT 10.1
KENTEK INFORMATION SYSTEMS, INC.
1992 STOCK OPTION PLAN
(AMENDED AND RESTATED AS OF FEBRUARY 8, 1996)
1. PURPOSE.
The purpose of this 1992 Stock Option Plan (the "Plan") is to
encourage key personnel, including employees, officers, directors, consultants
and advisors, to remain in the employ or service of Kentek Information Systems,
Inc. (the "Company") and its present and future subsidiary corporations as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code") (sometimes collectively "Subsidiaries" and individually a "Subsidiary")
to attract new key personnel, and to encourage such key personnel to secure or
increase on reasonable terms their stock ownership in the Company. The Board of
Directors of the Company (the "Board") believes that the granting of stock
options ("Options") under the Plan will promote continuity of management and
increased incentive and personal interest in the welfare of the Company and aid
in securing its continued growth and financial success by those who are or may
become primarily responsible for shaping and carrying out the long range plans
of the Company. Options granted hereunder are intended to be either (a)
"incentive stock options" (which term, when used herein, shall have the meaning
ascribed thereto by the provisions of Section 422(b) of the Code) or (b)
options which are not incentive stock options ("non-statutory stock options")
or (c) a combination thereof, as determined by the Committee referred to in
Section 5 hereof (the "Committee") at the time of the grant thereof, except
that all Options granted pursuant to Section 22 hereof shall be non-statutory
stock options.
2. EFFECTIVE DATE OF THE PLAN.
The Plan was originally adopted by the Board on October 14, 1992, and
was approved by the stockholders of the Company ("stockholders") within twelve
months after that date. The Plan was amended and restated as of June 30, 1993,
and is hereby amended and restated for a second time as of February 8, 1996.
3. STOCK SUBJECT TO PLAN.
Following the closing of the Company's first underwritten public
offering of Common Stock and the automatic conversion of the Senior Convertible
Preferred Stock into Common Stock, the stock subject to the Plan shall consist
of 3,375,000 shares of Common Stock, $.01 par value, of the Company (the
"Common Stock") as the same may be adjusted from time to time pursuant to
Section 13 hereof. Such shares may, as the Board shall from time to time
determine, be either authorized but unissued shares of
1.
<PAGE> 2
Common Stock or issued shares of Common Stock which have been reacquired by the
Company. If any Option expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for the purposes of the Plan. There is hereby reserved for issuance
of Options 3,375,000 authorized but unissued shares of Common Stock, which
number of shares shall be from time to time (i) adjusted pursuant to Section 13
hereof and (ii) reduced to the extent that outstanding shares of the Common
Stock which shall have been reacquired by the Company are (without duplication)
(x) reserved for issuance pursuant to the Plan or (y) issued upon exercise of
Options.
4. ADMINISTRATION.
(a) Except as provided in paragraph (b) of this Section 4, or
otherwise specifically provided in the Plan, the Plan shall be administered by
the Stock Option Committee (the "Committee"). The Committee shall, except as
provided in said paragraph (b), or otherwise specifically provided in the Plan,
have complete authority, in its discretion, to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of the option agreements or certificates which
evidence Options, to determine the individuals (the "Participants") to whom and
the times and the prices at which Options shall be granted, the periods during
which Options shall be exercisable, the number of shares of the Common Stock to
be subject to Options and whether Options shall be incentive stock options or
non-statutory stock options and to make all other determinations necessary or
advisable for the administration of the Plan. In making such determinations,
the Committee may take into account the nature of the services rendered by the
respective Participants, their present and potential contributions to the
success of the Company and the Subsidiaries and such other factors as the
Committee in its discretion shall deem relevant. The Committee's determination
on the matters referred to in this paragraph (b) shall be conclusive. Any
dispute or disagreement which may arise under or as a result of or with respect
to any Option shall be determined by the Committee, in its sole discretion, and
any interpretations by the Committee of the terms of any Option shall be final,
binding and conclusive.
(b) The Board shall (and the Committee shall not) administer the
Plan to the extent that it relates to Options granted pursuant to the
provisions of Section 22 hereof to Outside Directors as defined in said Section
22. The Board shall have complete authority, in its discretion (and the
Committee shall have no authority), to interpret the Plan with respect to
Options granted to Outside Directors pursuant to Section 22 hereof, to
prescribe, amend and rescind rules and regulations relating to it with respect
to such Options, to determine the terms and provisions of the option agreements
or certificates which evidence such Options and to make all other
determinations necessary or advisable for the administration of the Plan with
respect to such Options; provided, however, that
2.
<PAGE> 3
the Board shall not have any authority relating to whom or the times or the
prices at which such Options shall be granted to Outside Directors, the periods
during which such Options shall be exercisable, or the number of shares of the
Common Stock to be subject to such Options (except as provided in Section 13
hereof and except with respect to, at such time as the Common Stock shall be
publicly traded, the fixing of the method by which the fair market value of a
share of the Common Stock shall be determined as contemplated by Section 22
hereof). The Board's determination on the matters referred to in this paragraph
(b) shall be conclusive. Any dispute or disagreement which may arise under or
as a result of, or with respect to any Option granted pursuant to said Section
22 shall be determined by the Board, in its sole discretion, and any
interpretation by the Board of the terms of any such Option shall be final,
binding and conclusive.
5. COMMITTEE.
The Committee shall consist of two or more members of the Board, both
or all of whom shall be "disinterested persons" within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and may also be, in the discretion of the Board, "outside
directors" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder. In addition, the Board may appoint a separate Committee
consisting of two or more outside directors within the meaning of Section
162(m) of the Code to grant options to the Chief Executive Officer and the four
other highest compensated officers of the Company. The Committee shall be
appointed by the Board to serve at the pleasure of the Board, which may at any
time and from time to time remove any members of the Committee, with or without
cause, appoint additional members to the Committee and fill vacancies, however
caused, in the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members present at a duly called meeting of the Committee at
which a quorum is present. Any decision or determination of the Committee
reduced to writing and signed by all of the members of the Committee shall be
fully as effective as if it had been made at a meeting duly called and held.
6. ELIGIBILITY.
(a) An Option may be granted only to (1) key employees of the
Company or a Subsidiary (including officers and/or directors), (2) directors of
the Company who are not employees of (but who may be officers and/or
consultants or advisors for) the Company or a Subsidiary, (3) consultants or
advisors hired by the Company or a Subsidiary to provide, on a regular basis,
consulting or other services for the Company or a Subsidiary and (4) employees
of a corporation which has been acquired by the Company or a Subsidiary,
whether by way of exchange or purchase of stock, purchase of assets, merger or
reverse merger, or otherwise, who hold options with respect to the stock of
such
3.
<PAGE> 4
corporation which the Company has agreed to assume; provided, however, that no
Option shall be granted pursuant to the Plan to an Outside Director, for his
services as a director except pursuant to Section 22 hereof.
(b) If Section 162(m) of the Code applies to the Plan, no person
shall be eligible to be granted Options covering more than 1,687,500 shares of
the Company's Common Stock in any calendar year.
7. OPTION PRICES.
(a) Except as otherwise provided in Section 21 hereof, the initial
per share option price of any Option which is an incentive stock option shall
not be less than the fair market value of a share of the Common Stock on the
date such Option is granted; provided, however, that, in the case of a
Participant who owns more than 10% of the Common Stock at the time an Option
which is an incentive stock option is granted to him, the initial per share
option price shall not be less than 110% of the fair market value of a share of
the Common Stock on the date such Option is granted.
(b) Except as otherwise provided in Sections 21 or 22 hereof, the
initial per share option price of any Option which is a non-statutory stock
option shall not be less than 50% of the fair market value of a share of the
Common Stock on the date such Option is granted.
(c) Except as otherwise provided in Section 22 hereof and the next
sentence of this paragraph (c), for all purposes of the Plan, the fair market
value of a share of the Common Stock on any date shall be determined in good
faith by the Committee. In the event the Common Stock shall be publicly traded,
fair market value shall be determined by the Committee in the same manner as
provided for the determination of fair market value in the case of a grant of
an Option to an Outside Director pursuant to Section 22 hereof, except that the
Committee shall make the determination provided for in the last sentence of
Section 22(b)(ii) rather than the Board.
(d) In no event shall the per share option price of any Option
(including without limitation, any Option granted pursuant to Sections 21 or 22
hereof or as adjusted pursuant to Section 13 hereof) be less than the par value
of such share.
8. OPTION TERM.
Participants shall be granted Options (other than pursuant to Section
22 hereof) for such term as the Committee shall determine, not in excess
(including all modifications, extensions and renewals thereof) of ten years
from the date of the granting thereof; provided, however, that, except as
otherwise provided in Section 21 hereof, in the case of a Participant who owns
more than 10% of the Common Stock at the time an Option
4.
<PAGE> 5
which is an incentive stock option is granted to him, the term with respect to
such Option shall not be in excess of five years from the date of the granting
thereof; provided, further, however, that Options shall in any event terminate
at such earlier times as are specifically provided in the Plan.
9. LIMITATION ON AMOUNT OF INCENTIVE STOCK OPTIONS GRANTED.
Except as otherwise provided in Section 21 hereof, the aggregate fair
market value of the shares of the Common Stock for which any Participant may be
granted incentive stock options which are exercisable for the first time in any
calendar year (whether under the terms of the Plan or any other stock option
plan of the Company) shall not exceed $100,000; provided, however, that the
Options or portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as non-statutory stock options.
10. EXERCISE OF OPTIONS.
(a) Except for Options granted pursuant to Section 22 hereof, a
Participant may exercise each Option granted to him in such installments as the
Committee shall determine at the time of the grant thereof; provided, however,
that, unless the Committee shall otherwise determine, a Participant may not
exercise an Option (except for Options granted pursuant to Section 22 hereof)
prior to the first anniversary of the date of the granting of such Option to
him and a Participant may (i) during the period commencing on the first
anniversary of the date of the granting of such Option to him and ending on the
day preceding the second anniversary of such date, exercise such Option with
respect to one-third of the shares granted thereby, (ii) during the period
commencing on such second anniversary and ending on the day preceding the third
anniversary of the date of the granting of such Option, exercise such Option
with respect to two-thirds of the shares granted thereby and (iii) during the
period commencing on such third anniversary, exercise such Option with respect
to all of the shares granted thereby; provided, further, however, that,
notwithstanding any other provision of the Plan or any agreement to the
contrary, no Option except an Option granted pursuant to Section 21 hereof,
shall be exercisable until the date which is six months after the date on which
such Option is granted.
(b) Except as hereinbefore or in Sections 21 or 22 hereof
otherwise set forth, an Option may be exercised either in whole at any time or
in part from time to time.
(c) The Committee may, in its discretion, and subject to the last
provision of paragraph (a) of this Section 10, permit any outstanding Option to
be exercised, in whole or in part, prior to the time when it would otherwise be
exercisable in accordance with the provision of paragraph (a) of this Section
10.
5.
<PAGE> 6
(d) An Option may be exercised only by a written notice of intent
to exercise such Option with respect to a specific number of shares of the
Common Stock and payment to the Company in cash or by check of the amount of
the option price for the number of shares of the Common Stock so specified;
provided, however, that with respect to an Option which is not an Outside
Director Option, with the consent of the Committee, and with respect to an
Option which is an Outside Director Option, with the Consent of the Board, all
or any portion of such payment may be made in kind by the delivery of shares of
the Common Stock having a fair market value on the date of delivery equal to
the portion of the option price so paid; provided, further, however, that,
subject to the requirements of Regulation T (as in effect from time to time)
promulgated under the Securities Exchange Act of 1934, the Committee, or the
Board, as the case may be, may, in the event that shares of the Common Stock
shall be publicly traded, implement procedures to allow a broker chosen by a
Participant to make payment of all or any portion of the option price payable
upon the exercise of an Option and to receive, on behalf of such Participant,
all or any portion of the shares of the Common Stock issuable upon such
exercise.
11. RESTRICTIONS ON TRANSFERABILITY.
(a) An Option which is an incentive stock option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Option is
granted only by such person. An Option which is a non-statutory stock option
shall not be transferable except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order satisfying the
requirements of Rule 16b-3 adopted pursuant to the Exchange Act and the rules
thereunder (a "QDRO"), and shall be exercisable during the lifetime of the
person to whom the Option is granted only by such person or any transferee
pursuant to a QDRO. The person to whom the Option is granted may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Participant, shall
thereafter be entitled to exercise the Option.
(b) (i) Subject to the provisions of subparagraph (v) of this
Section 11(b), shares of Common Stock shall not be issued on the exercise of an
Option unless the Participant executes and delivers to the Company an agreement
granting to the Company the right, but not the obligation, to repurchase the
shares acquired by such Participant in the manner hereinafter set forth.
(ii) (A) Each Participant shall agree not to sell,
assign, pledge, mortgage, hypothecate, create a security interest in or lien
upon, encumber, give, place in trust or in any other manner transfer title or
rights to, or otherwise encumber, any of the shares of Common Stock acquired by
such Participant pursuant to the Plan or any other shares acquired by such
Participant on, or with respect to, or in exchange for, such shares
6.
<PAGE> 7
(or on, or with respect to, or in exchange for any shares so acquired) by way
of dividend, recapitalization, merger, consolidation, reorganization or capital
adjustment, of the Company, or otherwise (the shares so acquired pursuant to an
Option and all such other shares being hereafter sometimes referred to as
"Shares") except as hereinafter provided. In the event that a Participant
desires to transfer all of such Participant's Shares and has received a bona
fide written offer from a third party to purchase all such Shares for a
consideration consisting of money (payable at one time) such Participant shall:
(x) first, offer to sell (except as hereinafter provided) all Shares owned by
such Participant to the Company at the price and upon the terms of payment
stated in the bona fide written offer; and (y) if, within 30 days from the date
of the offer to the Company, the Company does not accept the offer or rejects
the offer, then such Participant may accept the bona fide written offer from
the third party. Notwithstanding the requirement that a Participant desiring to
sell any Shares must first offer to sell all Shares owned by such Participant
in accordance with this Section 11(b), if the Board shall so agree, the
Participant need offer to sell only the Shares which are the subject of a bona
fide written offer for less than all the Shares of such Participant. Any offer
given pursuant to this Section 11(b) shall be in writing and include a copy of
the bona fide written offer from the third party signed by such third party and
shall include the name, address and principal business of such third party. No
offer shall be considered bona fide, if the third party is a competitor of the
Company or is other than for cash. No Shares may be sold to a third party
unless and until the 30-day period specified above following delivery of the
notice shall have expired without receipt by the Participant of a written
notice of acceptance of the offer. Any acceptance must be by written notice to
the Participant and failure to accept within the 30-day period specified shall
constitute rejection. If the Participant becomes entitled to transfer the
Shares of such Participant to a third party, such Participant may effect such
transfer only during a period of 30 days commencing upon the expiration of the
30-day period from the date of the offer to sell to the Company and, further,
such transfer may be made only to the third party named in the notice and upon
the terms set forth in such notice, or on other terms not more favorable to the
third party, and if the transfer does not occur within that period, the offered
Shares shall again become subject to the foregoing restrictions upon transfer.
(B) Notwithstanding the foregoing, a Participant
shall have the right to transfer all or part of such Participant's Shares (and
the transferor shall also have the right to transfer all or part of such
transferor's Shares) to such Participant's spouse or issue or a trust for the
benefit of any of them, by gift, bequest or the laws of descent and
distribution; provided, however, that under no circumstances shall any Shares
by so transferred, unless prior to the transfer, the transferee has executed
and delivered to the Company, in a form acceptable to the Board, an agreement,
wherein such transferee agrees to be bound by all the terms and provisions of
this Section 11(b) to the same extent as if such transferee were the
Participant.
7.
<PAGE> 8
(iii) The closing of any such repurchase by the Company
shall occur within 20 days after notification by the Company to the Participant
that it desires to exercise its right to repurchase Shares. Payment of the
purchase price shall be made at the closing, at which time the Participant
shall deliver stock certificates representing the Shares being purchased by the
Company duly endorsed, together with any applicable stamp taxes. Such Shares
shall be free and clear of all liens, charges, security interests and
encumbrances of any nature whatsoever.
(iv) Each certificate issued representing Shares and each
certificate issued in exchange therefor or upon transfer of such certificate
shall, in the discretion of the Committee, except that in the case of Options
granted pursuant to Section 22 hereof, in the discretion of the Board, bear the
following legend or any portion thereof:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act") or any state securities laws, and accordingly may
not be sold, transferred, pledged, or otherwise disposed of or
encumbered in the absence of an effective registration
statement as to the same or unless Kentek Information Systems,
Inc. (the "Company") receives an opinion of counsel to the
Company or an opinion of counsel to the holder hereof
satisfactory to the Company that an exemption from said
registration is available, and except in compliance with the
terms and conditions specified in the 1992 Stock Option Plan
of the Company, copies of which are on file at the principal
office of the Company, and no transfer of such shares shall be
valid or effective, nor shall the Company be required to
transfer such shares of record, until such conditions have
been fulfilled. The sale, transfer, pledge, assignment,
granting of a security interest or other dispositions or
encumbrance of Shares represented by this certificate is
subject to the prior right of purchase by the Company."
(v) The restrictions set forth in subparagraphs (i), (ii)
and (iii) of this Section 11(b) shall terminate, at such time as the Company
shall have a public offering of any Common Stock. The Committee may, in its
sole and absolute discretion, except that in the case of Options granted
pursuant to Section 22 hereof, the Board may, in its sole and absolute
discretion, at any time, and from time to time, waive or terminate any of the
provisions of this Section 11(b) and may, in its sole and absolute discretion,
at any time, and from time to time, waive any of the provisions of any
agreement to be entered into with a Participant provided for in this Section
11(b) or terminate any such agreement with respect to such provisions.
8.
<PAGE> 9
12. TERMINATION OF SERVICE.
Subject to the last sentence of this Section 12, in the event a
Participant ceases to be in the employ or service of the Company and the
Subsidiaries for any reason other than death, retirement as an employee of the
Company or a Subsidiary on or after age 65 for employees of the Company, or
permanent disability, whether voluntarily or otherwise, each Option granted to
such Participant shall immediately terminate except to the extent it is
exercisable on the date of such termination of employment or service, and to
such extent shall terminate upon the earlier to occur of (i) the expiration of
90 days after such termination of employment or service or (ii) the expiration
date specified in such Option. Subject to the last sentence of this Section 12,
in the event a Participant's employment or service with the Company and the
Subsidiaries terminates by reason of such Participant's death or permanent
disability or by reason of such Participant's retirement as an employee of the
Company or a Subsidiary on or after age 65 for employees of the Company, each
Option granted to such Participant shall immediately terminate except that any
Option granted to such Participant at least six months prior to the date of
such retirement, death, or permanent disability shall become immediately
exercisable in full and shall be exercisable until the earlier to occur of (i)
the expiration of six months after the date of such death, permanent disability
or retirement or (ii) the expiration date specified in such Option.
Notwithstanding the foregoing, the termination of an Option granted pursuant to
Section 22 hereof by reason of the failure of the Participant to whom such
Option was granted to be reelected an Outside Director shall not, of itself,
affect any Options then held by such person in any other capacity. The
Committee may in its sole and absolute discretion determine in any specific
case whether a leave of absence of a Participant constitutes the cessation of
employment or service. An Option which is an incentive stock option shall be
treated as a non-statutory stock option in the event the Option is not
exercised within 90 days of (i) a Participant's retirement as an employee of
the Company or a Subsidiary on or after age 65 for employees of the Company or
(ii) the ninety-first day of a Participant's leave of absence, unless the
Participant's reemployment rights are guaranteed by law or by contract. Except
with respect to Options granted pursuant to Section 22 hereof, the Committee
may, and with respect to Options granted pursuant to Section 22 hereof, the
Board may, at any time prior to the termination of an Option, in its sole and
absolute discretion, extend said 90 days or six months period, as the case may
be, with respect to such Option for such period or periods not beyond the
expiration date specified in such Option as it may determine.
13. ADJUSTMENT OR TERMINATION UPON CERTAIN CHANGES.
In the event of any merger, consolidation, reorganization,
recapitalization, spin-off, stock dividend, or stock split or other change in
the corporate structure or capitalization affecting the Common Stock,
appropriate adjustments shall be made by the Board in the aggregate number and
kind of shares or other securities or property subject to the Plan,
9.
<PAGE> 10
and the number and kind of shares or other securities or property subject to
outstanding and to subsequent Option grants and the per share option price
thereof to reflect such changes. Any such adjustment (including, if the Board
shall determine that no adjustment is appropriate, its failure to make an
adjustment) shall be effective and binding for all purposes of the Plan and of
each outstanding Option. No adjustment provided for in this Section 13 shall
require the Company to sell a fractional share under any Option. In the event
of the dissolution or liquidation of the Company, or a merger or consolidation
in which the Company is not the surviving corporation, all outstanding Options
shall terminate unless assumed by another corporation in which event the
Participants shall have only such rights as shall be provided for in the
agreement of assumption.
14. PURCHASE FOR INVESTMENT, WITHHOLDING, WAIVERS AND NOTICE OF
DISPOSITION.
(a) Unless the shares to be issued upon the exercise of an Option
by a Participant shall be registered prior to the issuance thereof under the
Securities Act of 1933, as amended (the "Securities Act"), or, unless the
Committee, or in the case of Options granted pursuant to Section 22 hereof, the
Board, shall otherwise determine, such Participant will be required, as a
condition of the Company's obligation to issue such shares, to give a
representation in writing that he is acquiring such shares for his own account
as an investment and not with a view to, or for offer or sale in connection
with, the distribution of any thereof.
(b) In the event of the death of a Participant, a condition of
exercising any Option shall be the delivery to the Company of such tax waivers
and other documents as the Committee, or in the case of Options granted
pursuant to Section 22 hereof, the Board, shall determine.
(c) Each Participant shall be required, as a condition of
exercising any non-statutory stock option, to make such arrangements with the
Company with respect to withholding as the Committee may determine.
(d) Each Participant shall agree to notify the Company upon such
Participant's sale or other disposition of any stock issued to such Participant
upon exercise of an incentive stock option within two years from the grant of
such option or within one year after the issuance to such Participant of such
stock (each a "Premature Disposition"), stating the date and manner of such
Premature Disposition and the amount, if any, realized upon such Premature
Disposition. Each Participant shall agree to pay to the Company, or that the
Company shall be entitled to withhold from any amount due such Participant from
the Company, any amounts required by law to be withheld on account of such
Premature Disposition.
10.
<PAGE> 11
15. NO STOCKHOLDER STATUS.
Neither any Participant nor the legal representatives, legatees or
distributees of such Participant shall be or be deemed to be the holder of any
share of the Common Stock covered by an Option unless and until a certificate
for such share has been issued. Upon payment of the purchase price thereof, a
share issued upon exercise of an Option shall be fully paid and non-assessable.
16. NO RESTRICTION ON CORPORATE ACTS.
Neither the existence of the Plan nor any Option shall in any way
affect the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate act or
proceeding whether of a similar character or otherwise.
17. MODIFICATION, EXTENSION AND RENEWALS OF OPTIONS.
(a) The Committee shall have the power to modify, extend or renew
outstanding Options, other than those granted pursuant to Section 22 hereof,
and authorize the grant of new Options in substitution therefor and the Board
shall have the power to modify outstanding Options granted pursuant to Section
22 hereof, provided that such power may not be exercised by the Committee or
the Board in a manner which would (i) alter or impair any rights or obligations
under any Option previously granted without the written consent of the optionee
or (ii) if securities of the Company are then subject to Section 16 of the
Exchange Act adversely affect the qualification of the Plan or any other
stock-related plan of the Company under Rule 16b-3 adopted pursuant to the
Exchange Act, or any successor provision; provided, however, that if the
securities of the Company shall then be subject to said rule, none of the
foregoing actions by the Committee may be taken without the prior approval of
the Board except to the extent that the right of the Board to grant such prior
approval would adversely affect the qualification of the Plan or any other
stock-related plan of the Company under said rule and to that extent such
approval shall not be required.
(b) Shares subject to an Option canceled under this Section 17
shall continue to be counted against the maximum award of Options permitted to
be granted pursuant to Section 6(b) of the Plan. The repricing of an Option
under this Section 17, resulting in a reduction of the exercise price, shall be
deemed to be a cancellation of the original Option and the grant of a
substitute Option; in the event of such repricing, both the original and
11.
<PAGE> 12
the substituted Options shall be counted against the maximum awards of Options
permitted to be granted pursuant to Section 6(b) of the Plan. The provisions of
this Section 17(b) shall be applicable only to the extent required by Section
162(m) of the Code.
18. NO EMPLOYMENT RIGHT.
Neither the existence of the Plan nor the grant of any Option shall
require the Company or any Subsidiary to continue any Participant in the employ
or other service of the Company or such Subsidiary.
19. AMENDMENT OF THE PLAN.
The Board may at any time make such modifications of the Plan as it
shall deem advisable; provided, however, that the Board may not without further
approval of the affirmative vote or consent of holders of such number of shares
of stock of the Company entitled to vote thereon as shall be required to
approve the same pursuant to the Company's certificate of incorporation, and as
otherwise may be required by law, increase the number of shares of the Common
Stock as to which Options may be granted under the Plan (as adjusted in
accordance with the provisions of Section 13 hereof), or to any Outside
Director pursuant to Section 22 hereof (as so adjusted), or change the class of
persons eligible to participate in the Plan or the class of directors eligible
to receive Options pursuant to Section 22 hereof, or change the manner of
determining the option prices which would result in a decrease in the option
price, or, except as provided in Sections 12 and 17 hereof, extend the period
during which an Option may be granted or exercised, or change the Plan in any
other way if such change requires stockholder approval in order for the Plan to
satisfy the requirements of Section 422 of the Code or to comply with the
requirements of Rule 16b-3. The Board may in its sole discretion submit any
other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations promulgated thereunder regarding
the exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers. It is
expressly contemplated that the Board may amend the Plan in any respect the
Board deems necessary or advisable to provide Participants with the maximum
benefits provided or to be provided under the provisions of the Code and the
regulations promulgated thereunder relating to incentive stock options and/or
to bring the Plan and/or Options which are incentive stock options granted
under it into compliance therewith. No termination or amendment of the Plan
may, without the consent of the Participant to whom any Option shall
theretofore have been granted, adversely affect the rights of such Participant
under such Option.
12.
<PAGE> 13
20. EXPIRATION AND TERMINATION OF THE PLAN.
The Plan shall terminate on October 13, 2002, or at such earlier time
as the Board may determine. Options may be granted under the Plan at any time
and from time to time prior to its termination. Any Option outstanding under
the Plan at the time of the termination of the Plan shall remain in effect
until such Option shall have been exercised or shall have (subject to the last
sentence of Section 12 hereof) terminated or expired in accordance with its
terms.
21. OPTIONS GRANTED IN CONNECTION WITH ACQUISITION.
In connection with the acquisition by the Company or a Subsidiary of
another corporation which will become a Subsidiary or division of the Company
(such corporation being hereafter referred to as an "Acquired Subsidiary"),
Options may be granted to employees and other personnel of an Acquired
Subsidiary in exchange for then outstanding options to purchase securities of
the Acquired Subsidiary. Such Options may be granted at such option prices, may
be exercisable immediately or at any time or times either in whole or in part,
and may contain such other provisions not inconsistent with the Plan, as the
Committee, in its sole and absolute discretion, shall deem appropriate at the
time of the granting of such Options.
22. OPTIONS FOR OUTSIDE DIRECTORS.
(a) Notwithstanding any other provision of the Plan, a director of
the Company (including, without limitation, a director who is a consultant or
advisor to the Company or a Subsidiary) who is not an employee of the Company
or a Subsidiary (an "Outside Director") shall be eligible to receive an Option
pursuant to the Plan, for his services to the Company in his capacity as a
director, only in accordance with the terms and conditions of this Section 22.
Except as otherwise specifically provided in the Plan (including without
limitation Section 4(b) hereof and this Section 22), each such Option shall be
subject to all of the provisions of the Plan. An Outside Director who is also a
consultant or advisor to the Company or a Subsidiary may also receive Options
(not pursuant to this Section 22) for his services as a consultant or advisor.
Nothing in the Plan shall limit or preclude the grant of an option to purchase
stock of the Company to an Outside Director otherwise than pursuant to the
Plan.
(b) (i) So long as shares of the Common Stock are not
publicly traded, and so long as a Mandatory Conversion has not occurred, (i) on
the first business day of January 1994 and on the first business day of January
of each year thereafter, each Outside Director shall automatically be granted
an Option to purchase 3,000 shares of the Senior Preferred, and (ii) if an
Outside Director shall first become an Outside Director after June 30, 1993, or
after the first business day of any year thereafter, such Outside
13.
<PAGE> 14
Director shall automatically be granted on the first business day on which such
Outside Director shall be an Outside Director, an Option to purchase the number
(calculated to the nearest one hundred shares) of shares of Senior Preferred
equal to 3,000 multiplied by a fraction, the numerator of which shall be the
number of calendar months remaining in such calendar year and the denominator
of which shall be twelve (12). The per share option price for each such Option
granted to any Outside Director shall be the greater of (i) $1.00 per share of
Senior Preferred, and (ii) the book value thereof, which book value with
respect to any such Option granted during the first ten months of any calendar
year shall mean the book value thereof as at June 30 of the prior calendar
year, and with respect to any such Option granted during the last two months of
any calendar year shall mean the book value thereof as at June 30 of such
calendar year; provided that the per share option price for each such Option
granted prior to November 1, 1994 (including, without limitation, Options
granted in exchange for other Options) shall be $1.00 per share of Senior
Preferred.
(ii) In the event that shares of the Common Stock shall
become publicly traded, (i) on the first business day of January of each year
thereafter, each Outside Director shall automatically be granted an Option to
purchase 40,500 shares of Common Stock, and (ii) if an Outside Director shall
first become an Outside Director after the first business day of January in any
such year, such Outside Director shall automatically be granted on the first
business day on which such Outside Director shall be an Outside Director, an
Option to purchase the number (calculated to the nearest 100 shares) of shares
of Common Stock equal to 40,500 multiplied by a fraction, the numerator of
which shall be the number of calendar months remaining in such calendar year
and the denominator of which shall be twelve (12). The per share option price
of each Option granted to an Outside Director pursuant to the provisions of
this Section 22(b)(ii) shall be equal to the greater of (i) the fair market
value of a share of the Common Stock on the date such Option is granted or (ii)
such price which shall be the lowest per share price at which the Company could
issue such Option without causing the anti-dilution provisions, if any, of any
convertible securities or rights or warrants to purchase Common Stock or
convertible securities outstanding at the time of the grant of such Option, to
become effective. For the purposes of this Section 22(b)(ii), fair market value
of a share of Common Stock shall mean, as of the date on which such fair market
value is to be determined, the closing price of a share of Common Stock as
reported in the Wall Street Journal (or a publication or reporting service
deemed equivalent to the Wall Street Journal for such purpose by the Board) for
the over-the-counter market or any national securities exchange and other
securities market which at the time are included in the stock price quotations
of such publication. If no such sale is so reported for such date, fair market
value shall mean the average of the latest bid and asked prices so reported for
such date. In the event that the Board shall determine such stock price
quotation is not representative of fair market value, the Board may determine
fair market value in such a manner as it shall deem appropriate under the
circumstances.
14.
<PAGE> 15
(c) The term of each Option granted to an Outside Director shall
be ten years.
(d) An Option granted pursuant to this Section 22 shall be
exercisable as to all shares of the Common Stock covered thereby commencing on
the date six months after the date on which such Option is granted.
(e) The provisions of this Section 22 may not be amended except by
the vote of a majority of the members of the Board and by the vote of a
majority of the members of the Board who are not Outside Directors, and the
provisions of this Section 22 shall not be amended more than once every six
months, other than to comport with changes in the Code or the regulations or
rules thereunder.
23. OPTIONS EXERCISABLE FOR SENIOR PREFERRED.
This Section 23 shall become inoperative upon the closing of the
Company's first underwritten public offering of Common Stock and the automatic
conversion of the Senior Convertible Preferred Stock into Common Stock.
Notwithstanding any other provision of the Plan:
(a) All Options granted under the Plan on or after June 30, 1993
(the "Transition Date"), including Options for Outside Directors granted
pursuant to Section 22 hereof, shall be exercisable (subject to the terms and
conditions of the Plan) for shares of Senior Convertible Preferred Stock, par
value $.05 per share (the "Senior Preferred"), instead of for shares of Common
Stock, and no Options to purchase Common Stock shall be granted after the
Transition Date. Options granted on or after the Transition Date are referred
to herein as "New Options" and Options granted at any time prior to the
Transition Date are referred to herein as the "Old Options," and the term
"Options" shall mean either New Options or Old Options, or both, as appears
from the context.
(b) On and after the Transition Date, (i) all outstanding New
Options and shares of Senior Preferred (and all Senior Conversion Shares (as
defined below)) received upon exercise of New Options shall be subject to all
the terms and conditions of the Plan, provided that with respect to such New
Options and shares of Senior Preferred, wherever in the Plan the term "Common
Stock" appears (other than in Section 22(b)), such term shall be deemed amended
and replaced with the term "Senior Preferred," and (ii) all outstanding Old
Options and shares of Common Stock received upon exercise of Old Options, shall
continue to be subject to the terms and conditions of the Plan. "Senior
Conversion Shares" means shares of Series A Convertible Preferred Stock, par
value $.01 per share ("Series A Preferred"), and Common Stock, into which
Senior Preferred is convertible, including shares of Common Stock into which
such Series A Preferred is convertible.
15.
<PAGE> 16
(c) On and after the Transition Date, the stock subject to the
Plan shall consist of: (i) the number of shares of Common Stock which shall be
subject to Old Options outstanding on the Transition Date, as the same may be
adjusted from time to time pursuant to Section 13 hereof, which number of
shares of Common Stock shall be reduced to the extent that the holders of Old
Options shall exchange said Old Options for New Options as hereinafter
provided, and to the extent that said Old Options otherwise shall expire or
terminate for any reason, and (ii) 2,433,443 shares of Senior Preferred, in
each case as the same may be adjusted from time to time pursuant to Section 13
hereof. Such shares of Common Stock and Senior Preferred may, as the Board
shall from time to time determine, be either authorized but unissued shares of
Common Stock or Senior Preferred, or issued shares of Common Stock or Senior
Preferred, as the case may be, which have been acquired by the Company. If any
New Option expires or terminates for any reason without having been exercised
in full (except upon any conversion of all outstanding shares of Senior
Preferred), the unpurchased shares of Senior Preferred subject thereto shall
again be available for the purposes of the Plan. There is hereby reserved for
issuance of New Options 2,433,443 authorized but unissued shares of Senior
Preferred, which number of shares shall be from time to time (i) adjusted
pursuant to Section 13 hereof and (ii) reduced to the extent that outstanding
shares of Senior Preferred which shall have been acquired by the Company are
(without duplication) (x) reserved for issuance pursuant to the Plan or (y)
issued upon exercise of New Options.
(d) (i) On and after the Transition Date, and prior to August
31, 1993, each outstanding Old Option shall, with the consent of the holder
thereof, be exchanged for a New Option having the same terms and conditions as
such Old Option except that (i) the number of shares of Senior Preferred which
shall be subject to such New Option shall be 75% of the number of shares of
Common Stock which were subject to such Old Option, rounded down to the nearest
whole number of shares of Senior Preferred, and (ii) the purchase price for
such shares of Senior Preferred shall be as provided in the last sentence of
Section 22(b)(i) hereof. Without intending to limit in any way the authority of
the Committee to grant New Options, the Committee may at any time on and after
the Transition Date grant New Options in exchange for options to purchase
Common Stock outstanding on the Transition Date that were granted by the
Company (i) pursuant to the 1982 Stock Option Plan of the Company, as amended,
or (ii) other than pursuant to the Plan or the 1982 Stock Option Plan, upon
consent in any such exchange by the holder of the options that are to be
exchanged, and such New Options may have such terms and conditions as the
Committee and such holder may agree (subject to the terms and conditions of the
Plan), including without limitation with respect to the number of shares of
Senior Preferred subject to such New Option, the exercise price thereof, and
the exercisability and vesting thereof.
(ii) Upon any conversion of all outstanding shares of
Senior Preferred pursuant to the certificate of incorporation of the Company
(as it may be amended from
16.
<PAGE> 17
time to time) (a "Mandatory Conversion"), each New Option shall be converted
into an option for the number of shares of Common Stock and at an exercise
price adjusted as provided for in the Company's certificate of incorporation.
(e) For purposes of this Section 23, the term "Shares" as defined
in the first sentence of Section 11(b)(ii)(A), when used with respect to shares
of Senior Preferred only, shall be deemed to include without limitation all
Senior Conversion Shares.
17.
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Kentek Information Systems, Inc. on Form S-8 of our report dated August 8,
1997, appearing in the Annual Report on Form 10-K of Kentek Information Systems,
Inc. for the year ended June 30, 1997.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
October 27, 1997
Denver, Colorado
<PAGE> 1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Kentek Information Systems, Inc.
Boulder, Colorado
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement, of our report dated August
9, 1996, relating to the 1996 and 1995 consolidated financial statements of
Kentek Information Systems, Inc. and subsidiaries appearing in the Company's
Annual Report on Form 10-K for its fiscal year ended June 30, 1997.
BDO Seidman, LLP
/s/ BDO Seidman, LLP
October 30, 1997
