<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 17, 1999
REGISTRATION NO. 333-64931
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------
EVERCEL, INC.
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3691 06-1528142
(STATE OR JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
--------------------------
3 GREAT PASTURE ROAD
DANBURY, CONNECTICUT 06813
(203) 825-6000
(Address and Telephone Number of Principal Executive Offices)
------------------------------
3 GREAT PASTURE ROAD
DANBURY, CONNECTICUT 06813
(203) 825-6000
(Address of principal place of business or intended principal place of business)
------------------------------
JERRY D. LEITMAN
CHAIRMAN
EVERCEL, INC.
3 GREAT PASTURE ROAD
DANBURY, CONNECTICUT 06813
(203) 825-6000
(Name, address and telephone number of Agent for Service)
------------------------------
COPIES TO:
PHILIP J. FLINK, ESQUIRE MERRILL KRAINES, ESQUIRE
BROWN, RUDNICK, FREED & GESMER FULBRIGHT & JAWORSKI L.L.P.
One Financial Center 666 Fifth Avenue - 31st Floor
Boston, Massachusetts 02111 New York, New York 10103
(617) 856-8200 (212) 318-3000
--------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------------
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED UNIT PRICE FEE(1)
<S> <C> <C> <C> <C>
Rights(2)......................................... 1,489,000(3) -- -- --
Common Stock, $.01 par value...................... 1,697,350(4) $6.00 $10,184,100 2,973
</TABLE>
(1) Calculated pursuant to Rule 457(o). and previously paid.
(2) The Company is granting at no cost to holders of its outstanding Common
Stock transferable subscription rights ("Rights") to subscribe for and
purchase additional shares of the Company's Common Stock at $6.00 per share.
Stockholders will receive one Right for each share of Common Stock of the
Company held by them on the Record Date.
(3) Represents one Right for each share of Common Stock estimated to be
outstanding as of the Record Date, based upon one-third of the number of
shares of common stock of Energy Research Corporation outstanding as of
February 3, 1999 and an additional 100,000 Rights which may be issued in the
event of an increase in the number of shares of Common Stock outstanding as
of the Record Date.
(4) Represents one share of Common Stock issuable pursuant to the exercise of
each Right granted in respect of the shares of Common Stock estimated to be
outstanding as of the Record Date and an additional 208,350 shares which may
be issued pursuant to the Company's option to sell such shares to satisfy
oversubscriptions, if any or pursuant to the Underwriters' overallotment
option and an additional 100,000 shares which may be issued in the event of
an increase in the number of shares of Common Stock outstanding as of the
Record Date.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Ninth of the Registrant's Amended and Restated Certificate of
Incorporation eliminates the personal liability of directors to the Registrant
or its stockholders for monetary damages for breach of fiduciary duty to the
full extent permitted by Delaware law. Article Ninth also provides that the
Registrant may indemnify its officers and directors to the full extent permitted
by the Delaware General Corporation Law. Section 145 of the Delaware General
Corporation Law authorizes a corporation to indemnify directors, officers,
employees and agents of the corporation if such party acted in good faith in a
manner he believed to be in or not opposed to the best interest of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, as determined in
accordance with the Delaware General Corporation Law. Section 145 further
provides that indemnification shall be provided if the party in question is
successful on the merits or otherwise. The effect of these provisions is to
permit such indemnification by the Registrant for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act"). The Registrant also
expects to obtain directors and officers liability insurance.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The costs of issuance and distribution which will be borne by the Registrant
are as follows:
<TABLE>
<S> <C>
SEC Registration Fee............................................. 2,973
NASD Filing Fee.................................................. 1,450
Nasdaq Listing Fee............................................... 7,778
Blue Sky Fees and Expenses....................................... 25,000
Subscription Agent, Transfer Agent and Registrar Fees............ 25,000
Accounting Fees and Expenses..................................... 125,000
Legal Fees and Expenses.......................................... 375,000
Printing and Engraving........................................... 100,000
Miscellaneous.................................................... 12,799
---------
Total........................................................ 675,000
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
None
ITEM 27. EXHIBITS
Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------
<C> <S> <C>
1 Form of Standby Underwriting Agreement.*
3.1 Form of Amended and Restated Certificate of
Incorporation of the Company.*
3.2 Form of Restated By-laws of the Company.*
4.1 Form of Specimen Stock Certificate.*
4.2 Form of Subscription Certificate for the Rights.*
4.3 Form of Rights Agent Agreement between the Company
and Continental Stock Transfer & Trust Company.*
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------
<C> <S> <C>
4.4 Subscription Instructions, including Notice of
Guaranteed Delivery and Notice of Guaranteed
Payment.*
5 Opinion of Brown, Rudnick, Freed & Gesmer.*
8 Form of Opinion of Brown, Rudnick, Freed & Gesmer
regarding Tax Matters.*
10.1 Distribution Agreement between the Company and
ERC.*
10.2 Services Agreement between the Company and ERC.*
10.3 License Assistance Agreement between the Company
and ERC.*
10.4 Tax Sharing Agreement between the Company and
ERC.*
10.5 Evercel, Inc. 1998 Equity Incentive Plan.*
10.6 Technology Transfer and License Contract for Ni-Zn
Battery Technology among Xiamen ERC Battery
Corp. Ltd., Xiamen Daily-Used Chemicals Co., Ltd
and ERC dated May 29, 1998.+*
10.7 Cooperative Joint Venture Contract between Xiamen
Three Circles Co., Ltd. and ERC for the
establishment of Xiamen Three Circles--ERC
Battery Corp., Ltd dated July 7, 1998.+*
10.8 Technology Transfer and License Agreement for
Ni-Zn Battery Technology among Xiamen Three
Circles Co., Ltd. (formerly Xiamen Daily-Used
Chemicals Co., Ltd.), Nan Ya Plastics
Corporation and ERC dated February 21, 1998.+*
10.9 Employment Agreement between the Company and Allen
Charkey, dated as of December 15, 1998.*
10.10 $3,450,000 Line of Credit Note, dated February 5,
1999, issued by the Company in favor of ERC.*
10.11 Security Agreement dated, February 5, 1999,
between the Company and ERC.*
10.12 Trademark Security Agreement, dated February 5,
1999, between the Company and ERC.*
10.13 Patent Security Agreement, dated February 5, 1999,
between the Company and ERC.*
10.14 Loan Agreement, dated February 5, 1999, between
the Company and ERC.*
10.15 Lease dated January 15, 1999, between the Company
and Shelter Lee, LLC, including Guarantee of
Lease by ERC in favor of Shelter Lee, LLC.*
10.16 Promissory Note, dated December 22, 1998, between
First Union National Bank and the Company.*
10.17 Unconditional Guaranty by ERC in favor of First
Union National Bank, dated December 22, 1998.*
10.18 Pledge and Assignment Agreement between ERC and
First Union National Bank, dated December 22,
1998.*
10.19 Nonqualified Stock Option Agreement between the
Company and Jerry D. Leitman, dated as of
January 21, 1999.
23.1 Consent of KPMG LLP.*
23.2 Consent of Brown, Rudnick, Freed & Gesmer
(contained in Exhibit 5).*
24 Power of Attorney (contained in the signature page
to this Registration Statement).*
27 Financial Data Schedule.*
99 Form of letter to stockholders regarding
Distribution and Rights Offering.*
</TABLE>
- ------------------------
* Previously Filed.
+ Confidential treatment has been requested for portions of this document.
II-2
<PAGE>
ITEM 28. UNDERTAKINGS
(a) If the Registrant is registering securities under Rule 415 of the
Securities Act, the Registrant will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information 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 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
BONA FIDE offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) 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 provisions described under "Item 24.--Indemnification
of Directors and Officers" above, 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.
(c) The Registrant will provide to the underwriters, at the closing
specified in the underwriting agreement, certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
(d) In the event that the Registrant reoffers to the public any securities
not taken by security holders in the Rights Offering, the Registrant will
supplement the prospectus after the end of the subscription period, to include
the results of the subscription offer, the transactions by the underwriters
during the subscription period, the amount of unsubscribed securities that the
underwriters will purchase and the terms of any later reoffering. If the
underwriters make any public offering of the securities on terms different from
those on the cover page of the prospectus, the Registrant will file a
post-effective amendment to state the terms of the offering.
(e) If the Registrant relies on Rule 430A under the Securities Act, the
Registrant will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1), or (4), or 497(h)
II-3
<PAGE>
under the Securities Act as part of this registration statement as of the
time the Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
BONA FIDE offering of those securities.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has duly caused this Amendment No. 3 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the Town of Danbury, State of Connecticut, on February 17,
1999.
EVERCEL, INC.
By: /s/ JERRY D. LEITMAN
-----------------------------------------
Jerry D. Leitman
Acting President and
Chief Executive Officer
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
AMENDMENT NO. 2 TO THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES STATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JERRY D. LEITMAN
- ------------------------------ Principal Executive February 17, 1999
Jerry D. Leitman Officer and Director
*
- ------------------------------ Principal Financial and February 17, 1999
Joseph G. Mahler Accounting Officer
*
- ------------------------------ Director February 17, 1999
Bernard S. Baker
*
- ------------------------------ Director February 17, 1999
Thomas L. Kempner
*
- ------------------------------ Director February 17, 1999
William A. Lawson
*
- ------------------------------ Director February 17, 1999
Warren D. Bagatelle
*
- ------------------------------ Director February 17, 1999
Richard M.H. Thompson
*
- ------------------------------ Director February 17, 1999
James D. Gerson
*
- ------------------------------ Director February 17, 1999
Allen Charkey
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ JERRY D. LEITMAN
-------------------------
Jerry D. Leitman
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
EVERCEL, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
Pursuant to
1998 EQUITY INCENTIVE PLAN
Nonqualified Stock Option Agreement (the "Agreement") made effective as of
the 21st day of January, 1999, between Evercel, Inc., a Delaware corporation
(the "Company"), and Jerry D. Leitman (the "Optionee"), pursuant to the
Company's 1998 Equity Incentive Plan, as it may be amended from time to time
(the "1998 Plan").
W I T N E S S E T H:
WHEREAS, on September 29, 1998, the Company adopted and the sole
shareholder of the Company approved, the 1998 Plan which provides for the
issuance of stock options; and
WHEREAS, the Company and the Optionee desire to enter into an agreement
whereby the Company will grant the Optionee an option to purchase shares of the
Common Stock, $.01 par value, of the Company (the "Stock");
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the Company and the Optionee
hereby mutually covenant and agree as follows:
1. GRANT OF OPTION.
Pursuant to the terms and conditions of the 1998 Plan and this Agreement,
the Company hereby grants to the Optionee an option to purchase (the "Option"),
as provided in Section 3 hereof, all or any part of a total of 83,333 shares of
Stock, 33,333 shares of which shall be vested shares and 50,000 of which shall
be restricted (unvested) shares ("Restricted Shares") subject to the restriction
described in Section 3 hereof (together, the "Option Shares"). Notwithstanding
anything to the contrary contained herein, the Option shall be cancelled and
shall be null and void for all purposes if the planned spin-off of 100% of the
Common Stock of the Company to the shareholders of Energy Research Corporation
("ERC"), the parent of the Company, has not been effected on or prior toApril
30, 1999.
2. PURCHASE PRICE.
The price at which the Option Shares may be purchased shall be $6.00 per
share (the "Option Exercise Price").
-1-
<PAGE>
3. EXERCISE OF OPTION; RESTRICTED SHARES.
(a) Subject to the provisions of Section 4 hereof, the Option may be
exercised, in whole or in part, at any time after February 22, 1999, but
prior to 5:00 p.m., Eastern time on March 22, 1999 or such later date to
which the Company may extend the expiration of the Rights issued to its
shareholders contemporaneously herewith (the "Expiration Date").
(b) Reference is hereby made to the Employment Agreement between ERC
and the Optionee, dated as of August 1, 1997 (the "Employment Agreement").
The Restricted Shares shall be forfeited to the Corporation without payment
of consideration to the Optionee in the event that the Optionee ceases to
be employed by ERC for any reason other than (i) a termination by the
Optionee of the Optionee's employment with ERC for good reason pursuant to
Section 7.1 of the Employment Agreement or (ii) a termination by ERC of the
Optionee's employment with ERC without cause pursuant to Section 7.4 of the
Employment Agreement (the "Restriction"). Except as provided in Section
6(b) hereof, the Restriction shall terminate and the Restricted Shares
shall become fully vested with respect to 16,667 Restricted Shares on each
of August 4, 1999 and August 4, 2000 and, with respect to 16,666 Restricted
Shares on August 4, 2001. Notwithstanding anything to the contrary
contained herein, except as provided in Section 6(b) hereof, the
Restriction shall terminate immediately and all Restricted Shares shall
become fully vested upon a "change of control" of ERC as defined in Section
7.1 of the Employment Agreement or a change of control of the Company,
using such definition with regard to the Company. The parties agree that
this section 3(b) shall be construed in a manner consistent with the
Employment Agreement and the Stock Option Agreement between ERC and the
Optionee, dated as of August 1, 1997.
4. TERMINATION.
(a) The Option hereby granted shall terminate and be of no force or
effect as of the earlier of the following:
(i) The Expiration Date;
(ii) The date of the termination of the Optionee's employment
with the Company and/or with ERC for cause.
Notwithstanding the foregoing, in the case of termination for cause, the
right to exercise this Option shall terminate on the date of termination of
employment and may be terminated on such earlier date as the Company may
specify, and such date may be set so as to prevent the Optionee from further
exercising any portion of this Option.
(b) Any determination made by the Committee with respect to any matter
referred to in this Section 4 shall be final and conclusive on all persons
affected thereby. Employment by the Company shall be deemed to include
employment of Optionee by, and to continue during any period in which
Optionee is in the employment of, a subsidiary of the Company.
-2-
<PAGE>
5. NONTRANSFERABILITY; PERSONS ABLE TO EXERCISE.
The Option may not be transferred other than by will or the laws of descent
and distribution. During the life of the Optionee, only the Optionee may
exercise this Option. If the Optionee dies while still affiliated with the
Company, or during the periods specified in Section 3, this Option may be
exercised by his executors, administrators, legatees or distributees, provided
that such person or persons comply with the provisions of this Agreement
applicable to the Optionee.
6. METHOD OF EXERCISING OPTION.
(a) The Option granted in this Option Agreement may be exercised in
whole or in part by the delivery by the Optionee (or his personal
representative) of written notice to the Chief Financial Officer of the
Company, on any business day, specifying the number of shares which the
Optionee wishes to purchase and including payment of the Option Exercise
Price as provided below, provided that the Company may modify or augment
these requirements in its sole discretion. In the event this Option is
exercised by any person other than the Optionee, the notice shall be
accompanied by appropriate proof of the right of such person to exercise
this Option. If approved by the Committee, in its sole discretion, payment
may also be made as follows:
(i) through the delivery of shares of Stock of the Company
already owned by the Optionee with a Fair Market Value equal to the
Option Exercise Price, provided that the Optionee must have owned at
least such number of shares for at least six months; or
(ii) through the reduction of the shares of Stock that the
Optionee would be entitled to receive upon exercise of the Option,
such shares to be valued at their Fair Market Value on the date of
exercise, less their Option Exercise Price, provided that the Optionee
must otherwise have owned at least the number of shares by which the
Option Shares are being reduced for at least six months; or
(iii) by any combination of the foregoing.
For purposes of this Section 6, the Fair Market Value of Stock so delivered
or utilized shall be the fair market value of the Stock as determined in the
manner established by the Company from time to time. If approved by the
Committee, in its sole discretion, the Optionee may engage in a successive
exchange (or series of exchanges) in which Stock that the Optionee is entitled
to receive upon the exercise of the Option may be simultaneously utilized as
payment for the exercise of an additional option or options.
(b) Notwithstanding the foregoing, the Optionee may pay the Option
Exercise Price for some or all of the Restricted Shares by delivery to the
Company of a non-recourse promissory note in the form attached hereto as
Exhibit A (the "Note") in the full amount of the
-3-
<PAGE>
Option Exercise Price with respect to the Restricted Shares to be
purchased. The Note shall provide that, at such time as the Restriction
with respect to the Restricted Shares would terminate pursuant to Section 3
hereof, the Optionee shall have the right to pay the applicable installment
of the Note (i.e. the Note shall be payable in three installments
corresponding to the three vesting dates set forth herein). Notwithstanding
anything to the contrary contained herein, until the Optionee pays the
applicable installment of the Note, the Restriction with respect to the
Restricted Shares shall be maintained. In the event that the Note is not
fully repaid on or before August 4, 2001, the Optionee shall forfeit the
Restricted Shares back to the Company for no consideration.
(c) As soon as practical after receipt of this notice and payment, the
Company shall deliver a certificate or certificates representing the Option
Shares registered in the name of the person or persons exercising this
Option. All shares purchased upon the exercise of this Option and payment
of the full Option Exercise Price will be fully paid and nonassessable.
Notwithstanding the foregoing, the Restricted Shares shall be held by the
Company until the Restriction has lapsed and until full payment has been
received by the Company, including repayment of the Note, if applicable.
Certificates evidencing shares of Common Stock issued upon exercise of the
Option may contain such legends reflecting any restrictions upon transfer
of the shares evidenced thereby as in the opinion of counsel to the Company
may be necessary to the lawful and proper issuance of such certificates. In
the event of any failure to take and pay for the number of shares of Common
Stock specified in the notice of exercise on the date stated therein, the
Option shall become inoperative as to such number of shares, but shall
continue with respect to any remaining shares of Common Stock subject to
the Option as to which exercise has not yet been made. Delivery of the
shares of Common Stock may be made at the office of the Company or at the
office of a transfer agent appointed for the transfer of shares of Common
Stock.
7. STOCK ADJUSTMENTS.
If there shall be any change in the Common Stock through stock split, stock
dividend, merger, consolidation, reorganization, recapitalization, exchange or
similar change in the Common Stock, the Committee shall make the following
adjustments as may be necessary (the type or types of adjustment to be
determined in the sole discretion of the Committee) to prevent dilution of the
rights of the Optionee with respect to the aggregate member of shares of Common
Stock for which Options are granted and the exercise price of said Options: (i)
adjust the Option Exercise Price to be paid for any or all such shares subject
to the then outstanding Option, (ii) adjust the number of underlying shares (or
such other security as is designated by the Committee) subject to any or all of
the then outstanding Option or (iii) make any other equitable adjustments or
take such other equitable action as the Committee, in its discretion, shall deem
appropriate. Such adjustment or actions shall be conclusive and binding for all
purposes. In the event of a change in the Common Stock which is limited to a
change in the designation thereof to "Capital Stock" or other similar
designation, or to a change in the par value thereof, or from par value to no
par value, without increase or decrease in the number of issued shares, the
shares resulting from any such change shall be deemed to be Common Stock within
the meaning of this Agreement.
-4-
<PAGE>
8. CHANGE IN CONTROL.
If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company is liquidated or sells or otherwise disposes of all or substantially
all of its assets to another corporation while unexercised options remain
outstanding under the Plan after the effective date of such merger,
consolidation or sale, as the case may be, Optionee shall be entitled, upon
exercise of such option, to receive in lieu of shares of Stock, shares of such
stock or other securities as the holders of shares of Stock received pursuant to
the terms of the merger, consolidation or sale.
9. RELATIONSHIP WITH THE COMPANY.
(a) NO RIGHTS OTHER THAN THOSE EXPRESSLY CREATED. Neither this
Agreement nor any action taken hereunder shall be construed as (i) giving
the Optionee any right to be retained in the employ of, or continue to be
affiliated with, the Company, (ii) giving the Optionee any equity or
interest of any kind in any assets of the Company, or (iii) creating a
trust of any kind or a fiduciary relationship of any kind between the
Optionee and the Company. As to any claim for any unpaid amounts under this
Agreement, any person having a claim for payments shall be an unsecured
creditor. The Optionee shall not have any of the rights of a stockholder
with respect to any Option Shares until such time as this Option has been
exercised and Option Shares have been issued. Upon the issuance of the
Restricted Shares, the Optionee shall have all rights of a stockholder with
respect to the Restricted Shares, other than as expressly set forth herein.
(b) CONFIDENTIALITY. The Optionee agrees (i) not to disclose any trade
or secret data or any other confidential information acquired during
employment by the Company or a Subsidiary or otherwise, and (ii) not to
interfere with the employment of any employee of the Company or a
Subsidiary.
10. COMPLIANCE WITH LAWS.
(a) WITHHOLDING OF TAXES. Pursuant to applicable federal, state, local
or foreign laws, the Company may be required to collect or withhold income
or other taxes from Optionee upon the grant of this Option, the exercise of
this Option, or at some other time. The Company may require, as a condition
to the exercise of this Option, or demand, at such other time as it may
consider appropriate, that the Optionee pay the Company the amount of any
taxes which the Company may determine is required to be collected or
withheld, and the Optionee shall comply with the requirement or demand of
the Company. Such tax obligations may be paid in whole or in part in shares
of Stock, including shares retained from the exercise of the Option
creating the tax obligations, provided that the Optionee has owned at least
such number of shares for at least six months, valued at their Fair Market
Value (determined as provided in Section 6 hereof) on the date of payment.
The Company and its affiliates may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to the
Optionee.
-5-
<PAGE>
(b) SECURITIES LAW COMPLIANCE. Upon exercise (or partial exercise) of
this Option, the Optionee shall make such representations and furnish such
information as may, in the opinion of counsel for the Company, be
appropriate to permit the Company to issue or transfer the Option Shares in
compliance with the provisions of applicable federal or state securities
laws. The Company, in its discretion, may postpone the issuance and
delivery of Option Shares upon any exercise of this Option until completion
of such registration or other qualification of such shares under any
federal or state laws, or stock exchange listing, as the Company may
consider appropriate. The Company may require that prior to the issuance or
transfer of Option Shares upon exercise of this Option, the Optionee enter
into a written agreement to comply with any restrictions on subsequent
disposition that the Company deems necessary or advisable under any
applicable federal and state securities laws. Certificates of Stock issued
hereunder may be legended to reflect such restrictions.
(c) GENERAL. No Option Shares shall be issued upon exercise of this
Option unless and until the Company is satisfied, in its sole discretion,
that there has been compliance with all legal requirements applicable to
the issuance of such Option Shares.
11. MISCELLANEOUS.
(a) PROVISIONS OF THE PLAN. The Option hereby granted is expressly
subject to all of the terms and conditions contained in this Agreement and
in the 1998 Plan, except those which are expressly applicable only to
Incentive Stock Options (as defined in the 1998 Plan) and the 1998 Plan is
hereby incorporated herein by reference. All capitalized terms not defined
in this Agreement have the meanings specified in the 1998 Plan. This stock
option is not intended to be an Incentive Stock Option, as that term is
described in Section 422 of the Internal Revenue Code of 1986, as amended.
(b) DISCRETION OF THE COMMITTEE. Unless otherwise explicitly provided,
the Committee shall make all determinations required to be made hereunder,
including determinations required to be made by the Company, and shall
interpret all provisions of this Agreement, as it deems necessary or
desirable, in its sole and unfettered discretion. Such determinations and
interpretations shall be binding and conclusive to the Company and the
Optionee. The Committee, in its sole discretion, is authorized to
accelerate the time at which this Option may be exercised.
(c) RESERVATION OF SHARES. During the term of this Option, the Company
shall at all times reserve and keep available shares of Stock sufficient to
satisfy the requirements of this Option.
(d) AMENDMENT. This Agreement may only be modified or amended by a
writing signed by both parties, unless the Committee determines that the
proposed modification or amendment would not materially and adversely
affect the Optionee, in which case the Optionee's consent shall not be
required for such modification or amendment.
-6-
<PAGE>
(e) NOTICES. Any notices required to be given under this Agreement
shall be sufficient if in writing and if hand-delivered or if sent by first
class mail and addressed as follows:
if to the Company:
Evercel, Inc.
3 Great Pasture Road
Danbury, Connecticut
Attention: Chief Financial Officer
if to the Optionee:
Jerry D. Leitman
-----------------------
-----------------------
-----------------------
or to such other address as either party may designate under the provisions
hereof.
(f) SUCCESSORS AND ASSIGNS. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company.
(g) APPLICABLE LAW. All rights and obligations under this Agreement
shall be governed by the laws of the State of Delaware.
(h) PARAGRAPH HEADINGS. The paragraph headings used in this Agreement
are for convenience of reference only, and are not to be construed as part
of this Option.
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under seal effective as of the date written on the first page of this
Agreement.
EVERCEL, INC.
By: /s/ Joseph G. Mahler
-----------------------------
Joseph G. Mahler, Treasurer
/s/ Jerry D. Leitman
----------------------------
Jerry D. Leitman
-7-
