<PAGE>
As filed with the Securities and Exchange Commission on May 7, 1998.
Registration No. 333-______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
Registration Statement Under The Securities Act of 1933
STARMET CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-2506761
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2229 Main Street
Concord, Massachusetts 01742
(Address, including zip code, of principal executive offices)
1995 Directors' Stock Option Plan
1998 Stock Plan
(Full title of the plan)
Robert E. Quinn, President
Starmet Corporation
2229 Main Street
Concord, Massachusetts 01742
(Name and address of agent for service)
(978) 369-5410
(Telephone number, including area code, of agent for service)
copies to:
Thomas A. Wooters, Esq.
Peabody & Arnold LLP
50 Rowes Wharf
Boston, MA 02110
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Proposed maximum Amount
Title of Amount maximum aggregate of
securities to be offering price offering registration
to be registered registered per share price fee
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 370,000(1) $32.75(2) $9,857,860(2) $2,909.00(2)
par value $0.10
per share (issuable upon
exercise of options)
</TABLE>
- ----------
(1) The 370,000 shares of common stock, $0.10 par value per share ("Common
Stock"), shown are shares issued or issuable upon the exercise of options
issued or issuable pursuant to Starmet Corporation's (the "Corporation")
1995 Directors' Stock Option Plan (the "Directors' Plan") and 1998 Stock
Plan (the "Stock Plan," together with the Directors' Plan, the "Plans").
Pursuant to Rule 416(a) under the Securities Act of 1933, as amended, there
are also registered an undetermined number of additional shares which may be
issued if the anti-dilution provisions of the Plans become operative.
(2) The total number of shares of Common Stock to be registered includes, under
the 1995 Directors' Stock Option Plan, 6,000 shares of the Corporation's
Common Stock issuable upon the exercise of options at an exercise price of
$15.56 per share and 37,500 shares issuable upon exercise of options at
an exercise price of $23.67 per share and, under the 1998 Stock Plan,
200,000 shares issuable upon the exercise of options at an exercise price
of $23.67 per share. An additional 26,500 shares and 100,000 shares are
to be offered under the Directors' Plan and the Stock Plan, respectively,
at prices not presently determinable. Pursuant to Rule 457(c) and (h),
the offering price for these additional shares is estimated solely for
the purpose of determining the registration fee and is based on the
average of the high and low sale prices of the Common Stock, approximately
$33.50 and $32.00, respectively, as reported by the Nasdaq National Market
on May 1, 1998.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Corporation with the Securities and
Exchange Commission are incorporated in this Registration Statement by
reference:
(a) The Corporation's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997.
(b) The Corporation's Quarterly Report on Form 10-Q for fiscal quarter
ended December 31, 1997; and
(c) The description of the Corporation's Common Stock contained in the
Corporation's Registration Statement on Form 8-A, as amended.
All documents subsequently filed by the Corporation pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference herein and to be part hereof
from the date of filing of such documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The legality of the shares of Common Stock of the Corporation offered hereby
(the "Shares") will be passed upon for the Corporation by Peabody & Arnold LLP,
50 Rowes Wharf, Boston, Massachusetts 02110. Thomas A. Wooters, Esq., a partner
in Peabody & Arnold LLP and the Clerk of the Corporation, owns 8,200 shares of
the Common Stock and holds unvested options for 10,500 shares.
Item 6. Indemnification of Directors and Officers.
With respect to indemnification, Section 67 of Chapter 156B of the
Massachusetts General Laws provides:
"Indemnification of directors, officers, employees, and other agents of
a corporation, and persons who serve at its request as directors, officers,
employees or other agents of another organization, or who serve at its
request in any capacity with respect to any employee benefit plan, may be
provided by it to whatever extent shall be specified in or authorized by (i)
the articles of organization or (ii) a by-law adopted by the stockholders or
(iii) a vote adopted by the holders of a majority of shares of stock
entitled to vote on the election of directors. Except as the articles of
organization or by-laws otherwise require, indemnification of any persons
referred to in the preceding sentence who are not directors of the
corporation may be provided by it to the extent authorized by the directors.
Such indemnification may include payment by the corporation of expenses
incurred in defending a civil or criminal action or proceeding in advance of
the final disposition of such action or proceeding, upon receipt of any
undertaking by the person indemnified to repay such payment if he shall be
adjudicated to be not entitled to indemnification under this section which
undertaking may be accepted without reference to the financial ability of
such person to make repayment. Any such indemnification may be provided
although the person to be indemnified is no longer an officer, director,
employee or agent of the corporation or of such other organization or no
longer serves with respect to any such employee benefit plan.
No indemnification shall be provided for any person with respect to any
matter as to which he shall have been adjudicated in any proceeding not to
have acted in good faith in the reasonable belief that his action was in the
best interest of the corporation or to the extent that such matter relates
to service with respect to any employee benefit plan, in the best interests
of the participants or beneficiaries of such employee benefit plan.
The absence of any express provision for indemnification shall not
limit any right of indemnification existing independently of this section.
A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee, or other
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or other agent of another
organization or with respect to any employee benefit plan, against any
2
<PAGE>
liability incurred by him in any such capacity, or arising out of his status
as such, whether or not the corporation would have the power to indemnify
him against such liability.
Article 6A of the Corporation's Restated Articles of Organization
provides as follows:
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation may indemnify and hold harmless each director and each
officer or other employee of the Corporation against and from all loss, cost and
reasonable expenses hereafter incurred by him in the payment, settlement and
defense of any civil or criminal claim, action or proceeding (including appeals)
brought or threatened against him because he is or has been such director or
officer or other employee or because of any action alleged to have been taken or
omitted by him as such director or officer or other employee. The rights of
indemnification and exoneration occurring under this Article shall apply whether
or not such person continues to be a director or officer or other employee at
the time any such loss, cost or expense is suffered or incurred.
The Corporation may advance expenses to, or where appropriate may itself at
its expense undertake the defense of, such director or officer or other
employee; provided, however, that he shall have undertaken to repay or to
reimburse such expenses if it should ultimately be determined that he is not
entitled to indemnification under this provision.
Such indemnification shall be of right if (1) such director or officer or
other employee shall have been wholly successful, on the merits or otherwise,
with respect to such claim, action or proceeding, or (2) the stockholders of
this Corporation at the time the subject is first presented to them for
determination, by vote of the holders of a majority of the shares entitled to
vote (excluding from shares entitled to vote all those held by each person whose
conduct is under consideration) determined that such director or officer or
other employee acted in good faith for a purpose which be reasonably believed to
be in the best interest of the Corporation and had no reasonable cause to
believe that his conduct was unlawful. Subject to the next following paragraph,
no disposition of any such claim, action or proceeding shall preclude such
determination by the shareholders.
Such rights shall not apply in relation to any matters: (1) as to which such
director or officer or other employee shall be adjudged in final judgment in
such action or proceeding to be liable for wilful misconduct or for his own
negligence; or (2) as to which, if there is not final judgment, the stockholders
of this Corporation at the time the subject is first presented to them for
determination, by vote of the holders of a majority of the shares entitled to
vote (excluding from shares entitled to vote all those held by each person whose
conduct is under consideration) determine that such director, officer or other
employee has suffered or incurred such loss, cost, or expenses as the result of
his wilful misconduct or negligence; or (3) in the case of matters involving the
allegation of crime, as to which such director or officer or other employee
shall have been adjudged in such claim, suit or proceeding to have had
reasonable cause to believe that his conduct was unlawful; or (4) brought or
asserted by or in behalf of the Corporation.
The rights provided for herein shall not be deemed exclusive of any other
rights to which any such person may be otherwise entitled, nor shall this
provision restrict the right of the Corporation to indemnify or reimburse any
such person in any proper case even though not specifically provided for herein.
The rights provided for herein shall apply to persons who act of have acted at
the request of the Corporation as directors or officers of other corporations in
which this Corporation is or has been interested as an investor or a creditor. A
person may be entitled to indemnification as to some matters even though he is
not so entitled as to others.
Item 7. Exemption from Registration Claimed.
Not applicable.
3
<PAGE>
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
**4.1. 1995 Directors' Stock Option Plan.
*4.2. 1998 Stock Plan.
*4.3. Form of Directors' Stock Option Agreement.
*4.4. Form of Incentive Stock Option Agreement.
*4.5. Form of Non-Qualified Stock Option Agreement.
*5.1. Opinion of Peabody & Arnold LLP regarding legality.
*23.1. Consent of Arthur Andersen LLP.
*23.2. Consent of Peabody & Arnold LLP (included in its opinion filed as Exhibit 5.1).
*24.1. Power of Attorney (contained in signature page).
</TABLE>
- ----------
*Filed herewith.
**Previously filed as Exhibit 4(f) to the Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1995.
4
<PAGE>
Item 9. Undertakings
(a) The Corporation hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of the section
do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Corporation pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Corporation hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Corporation's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Corporation pursuant to the foregoing provisions, or otherwise, the
Corporation has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Corporation of expenses incurred or paid by a director, officer or
controlling person of the Corporation 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
Corporation 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 Act and will be governed by the final
adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Corporation
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 Town of Concord, Commonwealth of Massachusetts on this 5th
day of May, 1998.
STARMET CORPORATION
By: /s/ ROBERT E. QUINN
-------------------------------------
Robert E. Quinn, President and Chief
Executive Officer
6
<PAGE>
POWER OF ATTORNEY
The undersigned directors of Starmet Corporation hereby severally constitute
and appoint Robert E. Quinn our true and lawful attorney-in-fact and agent with
full power of substitution, to execute in our name and behalf in the capacities
indicated below any and all amendments to this Registration Statement to be
filed with the Securities and Exchange Commission and hereby ratify and confirm
all that such attorney-in-fact and agent shall lawfully do or cause to be done
by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ ROBERT E. QUINN
- ----------------------- Director, President and Chief Executive May 5, 1998
Robert E. Quinn Officer (Principal Executive Officer)
/s/ GEORGE J. MATTHEWS
- ----------------------- Chairman of the Board of Directors May 5, 1998
George J. Matthews
/s/ WILSON B. TUFFIN
- ----------------------- Vice Chairman May 5, 1998
Wilson B. Tuffin
/s/ FRANK H. BRENTON
- ----------------------- Director May 5, 1998
Frank H. Brenton
/s/ KENNETH A. SMITH
- ----------------------- Director May 5, 1998
Kenneth A. Smith
/s/ WILLIAM J. SHEA
- ----------------------- Director May 5, 1998
William J. Shea
/s/ JAMES M. SPIEZIO
- ----------------------- Vice President Finance and Administration May 5, 1998
James M. Spiezio (Principal Financial Officer)
/w/ THEODORE M. CROWELL
- ----------------------- Controller May 5, 1998
Theodore M. Crowell (Principal Accounting Officer)
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
<S> <C>
4.2. 1998 Stock Plan.
4.3. Form of Directors' Stock Option Agreement.
4.4. Form of Incentive Stock Option Agreement.
4.5. Form of Non-Qualified Stock Option Agreement.
5.1. Opinion of Peabody & Arnold LLP regarding legality.
23.1. Consent of Arthur Andersen LLP.
23.2. Consent of Peabody & Arnold LLP (included in its opinion filed as Exhibit 5.1).
24.1. Power of Attorney (contained in signature page).
</TABLE>
8
<PAGE>
STARMET CORPORATION
1998 STOCK PLAN
1. Purpose
The purpose of this plan (the "Plan") is to secure for Starmet Corporation
(the "Company") and its shareholders the benefits arising from capital stock
ownership by employees, officers and directors of, and consultants or advisors
to, the Company and its parent and subsidiary corporations who are expected to
contribute to the Company's future growth and success. Except where the context
otherwise requires, the term "Company" shall include the parent and all present
and future subsidiaries of the Company as defined in Sections 424(e) and 424(f)
of the Internal Revenue Code of 1986, as amended or replaced from time to time
(the "Code"). Those provisions of the Plan which make express reference to
Section 422 shall apply only to Incentive Stock Options (as that term is defined
in the Plan).
2. Type of Options and Grants; Administration
(a) Types of Options. Options granted pursuant to the Plan shall be
authorized by action of the board of directors of the Company (the "Board of
Directors"), or the Committee, as defined below, and may be either incentive
stock options ("Incentive Stock Options") meeting the requirements of Section
422 of the Code or non-statutory options which are not intended to meet the
requirements of Section 422 of the Code ("Non-Qualified Options").
(b) Purchase Rights. Pursuant to the Plan, eligible persons may be provided
with opportunities to make direct purchases of the Company's common stock
("Purchase Rights"). Purchase Rights shall be authorized by action of the Board
of Directors or the Committee, as defined below.
(c) Awards. Pursuant to the Plan, eligible persons may be provided with
awards of the Company's common stock ("Awards"). Awards shall be authorized by
action of the Board of Directors or the Committee, as defined below.
(d) Granting of An Option, Purchase Right or Award. Options and Purchase
Rights may be granted, and Awards may be made, under the Plan at any time on or
after February 20, 1998 and prior to February 19, 2008. The date of grant of an
option or Purchase Right, or provision of an Award, under the Plan will be the
date specified by the Board of Directors at the time it grants an option or
Purchase Right, or provides an Award; provided, however, that such date shall
not be prior to the date on which the Board of Directors acts to approve the
grant.
(e) Administration.
(i) The Plan will be administered by the Board of Directors of the
Company, whose construction and interpretation of the terms and provisions
of the Plan shall be final and conclusive. The Board of Directors may in its
sole discretion (a) grant
<PAGE>
options to purchase shares of the Company's common stock, $0.10 par value
per share ("Common Stock"), and issue shares upon exercise of such options
as provided in the Plan, (b) grant Purchase Rights and issue shares upon the
exercise of such Purchase Rights, and (c) make Awards and issue shares
pursuant to such Awards. The Board shall have authority, subject to the
express provisions of the Plan, to construe the respective option agreements
and the Plan, to prescribe, amend and rescind rules and regulations relating
to the Plan, to determine the terms and provisions of the respective option
agreements, which need not be identical, and to make all other
determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The Board of Directors may
correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any option agreement, purchase agreement or other agreement
in the manner and to the extent it shall deem expedient to carry the Plan
into effect and it shall be the sole and final judge of such expediency. No
director or person acting pursuant to authority delegated by the Board of
Directors shall be liable for any action or determination under the Plan
made in good faith. The Board of Directors may, to the full extent permitted
by or consistent with applicable laws or regulations (including, without
limitation, applicable state law and Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"), or any successor rule
("Rule 16b-3")), delegate any or all of its powers under the Plan to a
committee (the "Committee") appointed by the Board of Directors, and if the
Committee is so appointed all references to the Board of Directors in the
Plan shall mean and relate to such Committee.
(ii) Committee Action. The Committee may select one of its members as
its chairman, and shall hold meetings at such time and places as it may
determine. Acts by a majority of the Committee, or acts reduced to or
approved in writing by a majority of the members of the Committee, shall be
the valid acts of the Committee. All references in this Plan to the
Committee shall mean the Board if no Committee has been appointed. From time
to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies however caused,
or remove all members of the Committee and thereafter directly administer
the Plan.
(iii) Grant of Options, Purchase Rights and Awards to Board Members.
Options, or Purchase Rights may be granted, and Awards may be made, to
members of the Board consistent with the provisions of paragraph 2(e)(i)
above, if applicable. All grants of options and Purchase Rights, and
provisions of Awards, to members of the Board shall in all other respects be
made in accordance with the provisions of this Plan applicable to other
eligible persons. Consistent with the provisions of paragraph 2(e)(i) above,
members of the Board who are either (a) eligible for options, Purchase
Rights or Awards pursuant to the Plan or (b) have been granted options or
Purchase Rights, or provided with Awards, may vote on any matters affecting
the administration of the Plan or the grant of any options or Purchase
Rights, or provision of any Awards, pursuant to the Plan, except that no
such member shall act upon the granting to himself of options or Purchase
Rights, or provision of Awards, but any such
<PAGE>
member may be counted in determining the existence of a quorum at any
meeting of the Board during which action is taken with respect to the
granting to him of options or Purchase Rights, or provision of Awards.
(f) Applicability of Rule 16b-3. Those provisions of the Plan which make
express reference to Rule 16b-3 shall apply only to such persons as are required
to file reports under Section 16(a) of the Exchange Act (a "Reporting Person").
3. Eligibility
(a) General. Options or Purchase Rights may be granted, and Awards may be
made, to persons who are, at the time of grant or award, employees, officers or
directors of, or consultants or advisors to, the Company; provided, that the
class of employees to whom Incentive Stock Options may be granted shall be
limited to employees of the Company eligible to receive Incentive Stock Options
under the Code. A person who has been granted an option, Purchase Right or Award
may, if he or she is otherwise eligible, be granted additional options, Purchase
Rights or Awards if the Board of Directors shall so determine.
(b) Grants to Directors and Officers. From and after the registration of the
Common Stock of the Company under the Exchange Act, an option, Purchase Right or
Award made to a director or an officer of the Company (as the terms "director"
and "officer" are defined for purposes of Rule 16b-3) shall satisfy the
following condition:
The timing of the grant, the exercise or purchase price of the option,
Purchase Right or Award and the number of shares subject to the option,
Purchase Right or Award shall be determined either (i) by the full Board of
Directors, or (ii) by a Committee that is composed solely of two or more
Non-Employee Directors (as hereinafter defined). For the purposes of the
Plan, a director shall be deemed to be a "Non- Employee Director" only if
such person qualifies as a "Non-Employee Director" within the meaning of
Rule 16b-3, as such term is interpreted from time to time.
4. Stock Subject to Plan
Subject to adjustment as provided in Section 15 below, the maximum number of
shares of Common Stock of the Company which may be issued and sold under the
Plan is three hundred thousand (300,000) shares. If an option, Purchase Right or
Award granted under the Plan shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares subject to such option,
Purchase Right or Award shall again be available for subsequent grants under the
Plan. If shares issued upon exercise of an option, Purchase Right or Award under
the Plan are tendered to the Company in payment of the exercise price of an
option, Purchase Right or Award granted under the Plan, such tendered shares
shall again be available for subsequent grants under the Plan; provided, that in
no event shall (i) the total number of shares issued pursuant to the exercise of
Incentive Stock Options under the Plan, on a cumulative basis, exceed the
maximum number of shares authorized for issuance under the Plan exclusive of
shares made available for issuance pursuant to this sentence or (ii) the total
number of shares issued pursuant to the exercise of
<PAGE>
options, Purchase Rights or Awards by Reporting Persons, on a cumulative basis,
exceed the maximum number of shares authorized for issuance under the Plan
exclusive of shares made available for issuance pursuant to this sentence.
5. Forms of Agreements
As a condition to the grant of an option, Purchase Right or Award under the
Plan, each recipient of an option, Purchase Right or Award shall execute an
option agreement, purchase agreement, stock restriction agreement or other
agreement in such form not inconsistent with the Plan as may be approved by the
Board of Directors. Such agreements may differ among recipients.
6. Purchase Price
(a) General. The purchase price per share of stock deliverable upon the
exercise of an option, Purchase Right or Award shall be determined by the Board
of Directors; provided, that in the case of an Incentive Stock Option, the
exercise price shall not be less than 100% of the fair market value of such
stock, as determined by the Board of Directors, at the time of grant of such
option, or less than 110% of such fair market value in the case of options
described in Section 11(b).
(b) Payment of Purchase Price. Options, Purchase Rights or Awards granted
under the Plan may provide for the payment of the exercise price by delivery of
cash or a check to the order of the Company in an amount equal to the exercise
price of such options, Purchase Rights or Awards, or, to the extent provided in
the applicable option agreement, (i) by delivery to the Company of shares of
Common Stock of the Company already owned by the recipient having a fair market
value equal in amount to the exercise price of the options, Purchase Rights or
Awards being exercised, (ii) at the discretion of the Board of Directors and
consistent with applicable law, through the delivery of an assignment to the
Company of a sufficient amount of the proceeds from the sale of the Common Stock
acquired upon exercise of an option, Purchase Right or Award and an
authorization to the broker or selling agent to pay that amount to the Company,
which sale shall be at the participant's direction at the time of exercise,
(iii) by any other means (including, without limitation, by delivery of a
promissory note of the recipient payable on such terms as are specified by the
Board of Directors) which the Board of Directors determines are consistent with
the purpose of the Plan and with applicable laws and regulations (including,
without limitation, the provisions of Rule 16b-3 and Regulation T promulgated by
the Federal Reserve Board), or (iv) by any combination of such methods of
payment. The fair market value of any shares of the Company's Common Stock or
other non-cash consideration which may be delivered upon exercise of an option,
Purchase Right or Award shall be determined by the Board of Directors.
(c) Determination of Fair Market Value. If, at the time an option or
Purchase Right is granted, or an Award is provided, under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be equal to
the closing price on the day prior to the date of grant or, if the prices or
quotes discussed in this sentence are unavailable for such date, the
<PAGE>
last business day for which such prices or quotes are available prior to the
date such option or Purchase Right is granted, or such Award is provided, and
shall mean (i) the average (on that date) of the high and low prices of the
Common Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common
Stock on the Nasdaq Stock Market, if the Common Stock is not then traded on a
national securities exchange; or (iii) the average of the closing bid and asked
prices last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the Nasdaq
Stock Market. However, if the Common Stock is not publicly traded at the time an
option or Purchase Right is granted, or an Award is provided, under the Plan,
"fair market value" shall be deemed to be the fair value of the Common Stock as
determined by the Board of Directors or Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Company's capital stock in
private transactions negotiated at arm's length.
7. Exercise Period
Each option, Purchase Right or Award and all rights thereunder shall expire
on such date as shall be set forth in the applicable agreement, except that, in
the case of an Incentive Stock Option, such date shall not be later than ten
years after the date on which the option is granted and, in all cases, options
shall be subject to earlier termination as provided in the Plan.
8. Exercise of Options, Purchase Rights or Awards
Each option, Purchase Right or Award granted under the Plan shall be
exercisable either in full or in installments at such time or times and during
such period as shall be set forth in the agreement evidencing such option,
Purchase Right or Award, subject to the provisions of the Plan.
9. Nontransferability of Options
Incentive Stock Options, and all options granted to Reporting Persons, shall
not be assignable or transferable by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the optionee, shall be exercisable only by
the optionee; provided, that Non-Qualified Options may be transferred pursuant
to a qualified domestic relations order (as defined in the Internal Revenue Code
of 1986, as amended).
10. Effect of Termination of Employment or Other Relationship
(a) Except as provided in Section 11(d), or in subsection (b) below, with
respect to Incentive Stock Options, and subject to the provisions of the Plan,
the Board of Directors shall determine the period of time during which a
recipient may exercise an option, Purchase Right or Award following (i) the
termination of the recipient's employment or other relationship with the Company
or (ii) the death or disability of the recipient. Such periods
<PAGE>
shall be set forth in the agreement evidencing such option, Purchase Right or
Award.
(b) Subject to Sections 11(d) and 25 below, if a grantee of an Incentive
Stock Option ceases to be employed by the Company other than by reason of death
or disability, as defined in Section 11(d), no further installments of his
Incentive Stock Options shall become exercisable, and his Incentive Stock
Options shall terminate no later than three (3) months from the date of
termination of his employment, but in no event later than on their specified
expiration dates, except to the extent that such Incentive Stock Options (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to Section 22. Employment shall be considered as continuing
uninterrupted during any bona fide leave of absence (such as those attributable
to illness, military obligations or governmental service) provided that the
period of such leave does not exceed ninety (90) days or, if longer, any period
during which such grantee's right to reemployment is guaranteed by statute. A
bona fide leave of absence with the written approval of the Board of Directors
shall not be considered an interruption of employment under the Plan, provided
that such written approval contractually obligates the Company to continue the
employment of the grantee after the approved period of absence. Incentive Stock
Options granted under the Plan shall not be affected by any change of employment
within or among the Company, so long as the grantee continues to be an employee
of the Company. Nothing in the Plan shall be deemed to give any grantee of any
option, Purchase Right or Award the right to be retained in employment or other
service by the Company for any period of time.
11. Incentive Stock Options
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options granted under the
Plan shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive Stock Option
is to be granted under the Plan is, at the time of the grant of such option,
the owner of stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company (after taking into account the
attribution of stock ownership rules of Section 424(d) of the Code), then
the following special provisions shall be applicable to the Incentive Stock
Option granted to such individual:
(i) The purchase price per share of the Common Stock subject to
such Incentive Stock Option shall not be less than 110% of the fair
market value of one share of Common Stock at the time of grant; and
(ii) The option exercise period shall not exceed five years from
the date of grant.
<PAGE>
(c) Dollar Limitation. For so long as the Code shall so provide,
options granted to any employee under the Plan (and any other incentive
stock option plans of the Company) which are intended to constitute
Incentive Stock Options shall not constitute Incentive Stock Options to the
extent that such options, in the aggregate, become exercisable for the first
time in any one calendar year for shares of Common Stock with an aggregate
fair market value (determined as of the respective date or dates of grant)
of more than $100,000.
(d) Termination of Employment, Death or Disability. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee
is, and has been continuously since the date of grant of his or her option,
employed by the Company, except that:
(i) an Incentive Stock Option may, subject to Section 25 below, be
exercised within the period of three (3) months after the date the
optionee ceases to be an employee of the Company (or within such lesser
period as may be specified in the applicable option agreement);
provided that the agreement with respect to such option may designate a
longer exercise period and that the exercise after such three-month
period shall be treated as the exercise of a Non- Qualified Option
under the Plan;
(ii) if the optionee dies while in the employ of the Company, or
within three (3) months after the optionee ceases to be such an
employee, the Incentive Stock Option may be exercised by the person to
whom it is transferred by will or the laws of descent and distribution
within the period of twelve (12) months after the date of death (or
within such lesser period as may be specified in the applicable option
agreement); and
(iii) if the optionee becomes disabled while in the employ of the
Company, the Incentive Stock Option may be exercised within the period
of one year after the date the optionee ceases to be such an employee
because of such disability (or within such lesser period as may be
specified in the applicable option agreement). For the purposes of the
Plan, the term "disabled" or "disability" shall mean "permanent and
total disability" as defined in Section 22(e)(3) of the Code.
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
12. Additional Provisions
(a) Additional Provisions. The Board of Directors may, in its sole
discretion, include additional provisions in agreements covering options,
Purchase Rights or Awards granted under the Plan, including without limitation
restrictions on transfer, repurchase rights,
<PAGE>
commitments to pay cash bonuses, to make, arrange for or guaranty loans or to
transfer other property to recipients upon exercise of options, Purchase Rights
or Awards, or such other provisions as shall be determined by the Board of
Directors; provided that such additional provisions shall not be inconsistent
with any other term or condition of the Plan and such additional provisions
shall not cause any Incentive Stock Option granted under the Plan to fail to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code.
(b) Acceleration, Extension, Etc. Subject to any accounting considerations
with respect to "Accounting for Business Combinations" pursuant to Accounting
Principles Board Opinion No. 16, the Board of Directors may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular
option, Purchase Right or Award granted under the Plan may be exercised or (ii)
extend the dates during which all, or any particular, option, Purchase Right or
Award granted under the Plan may be exercised; provided that no such extension
shall be permitted if it would cause the Plan to fail to comply with Section 422
of the Code or such option, Purchase Right or Award to fail to comply with Rule
16b-3.
13. General Restrictions
(a) Investment Representations. The Company may require any person to whom
an option, Purchase Right or Award is granted, as a condition of exercising such
option, Purchase Right or Award, to give written assurances in substance and
form satisfactory to the Company to the effect that such person is acquiring the
Common Stock subject to the option, Purchase Right or Award for his or her own
account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws, or with covenants or representations made by the Company in
connection with any public offering of its Common Stock.
(b) Compliance With Securities Laws. Each option, Purchase Right or Award
shall be subject to the requirement that if, at any time, counsel to the Company
shall determine that the listing, registration or qualification of the shares
subject to such option, Purchase Right or Award upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
or regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition is necessary as a condition of, or in
connection with, the issuance or purchase of shares thereunder, such option,
Purchase Right or Award may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board of Directors. Nothing herein shall be deemed to require the Company to
apply for or to obtain such listing, registration or qualification, or to
satisfy such condition.
(c) Lock-up. By accepting any option, Purchase Right or Award granted under
the Plan, each person thereby agrees that if the Company offers any of its
Common Stock for sale pursuant to a registration statement under the Securities
Act, such person will not, without the prior written consent of the Company,
offer, sell, contract to sell or otherwise dispose of, directly or indirectly,
any shares purchased upon exercise of any option, Purchase Right or
<PAGE>
Award granted under the Plan for a period of 180 days after the effective date
of such registration statement.
14. Rights as a Shareholder
The holder of an option, Purchase Right or Award shall have no rights as a
shareholder with respect to any shares covered by the option, Purchase Right or
Award (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) until the date of issue of a
stock certificate to him or her for such shares. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
15. Adjustment Provisions for Recapitalizations and Related Transactions
(a) General. If, through or as a result of any merger, consolidation, sale
of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (i) the outstanding shares of Common Stock
are increased, decreased or exchanged for a different number or kind of shares
or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, an
appropriate and proportionate adjustment may be made in (x) the maximum number
and kind of shares reserved for issuance under the Plan, (y) the number and kind
of shares or other securities subject to any then outstanding options, Purchase
Rights or Awards under the Plan, and (z) the price for each share subject to any
then outstanding options, Purchase Rights or Awards under the Plan, without
changing the aggregate purchase price as to which such options, Purchase Rights
or Awards remain exercisable. Notwithstanding the foregoing, no adjustment shall
be made pursuant to this Section 15 if such adjustment would cause the Plan to
fail to comply with Section 422 of the Code or any option, Purchase Right or
Award to fail to comply with Rule 16b-3.
(b) Board Authority to Make Adjustments. Any adjustments under this Section
15 will be made by the Board of Directors, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final, binding
and conclusive. No fractional shares will be issued under the Plan on account of
any such adjustments.
16. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the Company,
the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company may, in its discretion, take
any one or more of the following actions, as to outstanding options, Purchase
Rights or Awards: (i) provide that such options, Purchase Rights or Awards shall
be assumed, or equivalent options, Purchase Rights or Awards shall be
substituted, by the acquiring or
<PAGE>
succeeding corporation (or an affiliate thereof), provided that any such options
substituted for Incentive Stock Options shall meet the requirements of Section
424(a) of the Code, (ii) upon written notice to the recipient provide that all
unexercised options, Purchase Rights or Awards will terminate immediately prior
to the consummation of such transaction unless exercised by the recipient within
a specified period following the date of such notice, (iii) terminate all
options, Purchase Rights and Awards in exchange for a cash payment equal to the
excess of the fair market value of the shares subject to such options, Purchase
Rights and Awards (to the extent then exercisable) over the exercise price
thereof, (iv) terminate all options, Purchase Rights and Awards in exchange for
the right to participate in any stock option or other employee benefit plan of
any successor corporation (giving proper credit to any grantee of an option,
Purchase Right or Award for that portion of any option, Purchase Right and Award
which has otherwise vested and become exercisable prior to any such
consolidation, merger or sale of all or substantially all of the assets of the
Company), (v) in the event of a merger under the terms of which holders of the
Common Stock of the Company will receive upon consummation thereof a cash
payment for each share surrendered in the merger (the "Merger Price"), make or
provide for a cash payment to the recipient equal to the difference between (A)
the Merger Price times the number of shares of Common Stock subject to such
outstanding options, Purchase Rights or Awards (to the extent then exercisable
at prices not in excess of the Merger Price) and (B) the aggregate exercise
price of all such outstanding options, Purchase Rights or Awards in exchange for
the termination of such options, Purchase Rights or Awards, or (vi) provide that
all or any portion of outstanding options, Purchase Rights or Awards shall
become exercisable in full immediately prior to such event. The foregoing
actions are subject in all instances to the approval of the Board of Directors
and any accounting considerations for any acquisition which is required to be
treated as a "pooling of interests" transaction pursuant to the Accounting
Principles Board ("APB") Opinion No. 16, if any discretionary action by the
Board of Directors would otherwise preclude the Company from accounting for any
such transaction as a "pooling of interests" under APB Opinion No. 16.
(b) Substitute Options, Purchase Rights or Awards. The Company may grant
options, Purchase Rights or Awards under the Plan in substitution for options,
Purchase Rights or Awards held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options, Purchase Rights or Awards be granted
on such terms and conditions as the Board of Directors considers appropriate in
the circumstances.
(c) Provisions Of This Section 16 Not In Limitation of Specific Terms In
Option, Purchase Right or Award Instruments. Notwithstanding subparagraphs (a)
and (b) of this Section 16, in the event that an instrument evidencing an
option, Purchase Right or Award shall provide for a result that is more
favorable to the holder of such instrument than the actions permitted to be
taken by the Board of Directors pursuant to subparagraph (a) of this Section 16
upon the occurrence of any of the events set forth therein, such instrument
shall control. Without limiting the foregoing but subject to the last sentence
of subparagraph (a) of
<PAGE>
this Section 16, the Board of Directors may, in its discretion, take any action
that is more favorable to the holder of an option, Purchase Right or Award than
the provision which is provided in the instrument evidencing such option,
Purchase Right or Award.
17. Modification of Incentive Stock Options
Notwithstanding the foregoing, any adjustments made pursuant to Sections 15
or 16 with respect to Incentive Stock Options shall be made only after the Board
of Directors, after consulting with counsel for the Company, determines whether
such adjustments would constitute a "modification" of such Incentive Stock
Options (as that term is defined in Section 424 of the Code) or would cause any
adverse tax consequences for the holders of such Incentive Stock Options. If the
Board of Directors determines that such adjustments made with respect to
Incentive Stock Options would constitute a modification of such Incentive Stock
Options, it may, in its discretion, refrain from making such adjustments.
18. Dissolution or Liquidation
Except as otherwise provided in Section 16, in the event of the proposed
dissolution or liquidation of the Company, each option, Purchase Right and Award
will terminate immediately prior to the consummation of such proposed action or
at such other time and subject to such other conditions as shall be determined
by the Board of Directors.
19. Issuances of Securities
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares subject to options, Purchase Rights or Awards. No
adjustments shall be made for dividends paid in cash or in property other than
securities of the Company.
20. Fractional Shares
No fractional shares shall be issued under the Plan and the grantee of an
option, Purchase Right or Award shall receive from the Company cash in lieu of
the fair market value of such fractional shares.
21. Conditions and Restrictions
If any person or entity owning restricted Common Stock obtained by exercise
of an option, Purchase Right or Award made hereunder receives shares or
securities or cash in connection with a corporate transaction described in
Sections 15 or 16 above as a result of owning such restricted Common Stock, such
shares or securities or cash shall be subject to all of the conditions and
restrictions applicable to the restricted Common Stock with respect to which
such shares or securities or cash were issued, unless otherwise determined by
the Board of Directors.
<PAGE>
22 Conversion of Incentive Stock Options into Non-Qualified Options; Termination
of Incentive Stock Options
The Board of Directors, at the written request or with the written consent
of any grantee of an Incentive Stock Option, may, in its discretion, take such
actions as may be necessary to convert such grantee's Incentive Stock Options
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such Incentive Stock Options, regardless of whether the
grantee is an employee of the Company at the time of such conversion. Such
actions may include, but shall not be limited to, extending the exercise period
or reducing the exercise price of the appropriate installments of such Incentive
Stock Options. At the time of such conversion, the Board of Directors (with the
consent of the grantee) may impose such conditions on the exercise of the
resulting Non-Qualified Options as the Board of Directors in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any grantee the right to have
such grantee's Incentive Stock Options converted into Non-Qualified Options, and
no such conversion shall occur until and unless the Board of Directors takes
appropriate action.
23. Governmental Regulation
The Company's obligation to sell and deliver shares of the Common Stock
under this Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance or sale of such shares.
24. Notice to Company of Disqualifying Disposition
By accepting an Inventive Stock Option granted under the Plan, each grantee
of an Incentive Stock Option thereby agrees to notify the Company in writing
immediately after such grantee makes a Disqualifying Disposition of any Common
Stock acquired pursuant to the exercise of an Incentive Stock Option. Generally,
a Disqualifying Disposition is any disposition (including any sale) of such
Common Stock occurring on or before the later of the date (a) two years after
the date the employee was granted the Incentive Stock Option, or (b) one year
after the date the employee acquired Common Stock by exercising the Incentive
Stock Option.
25. No Exercise of an Option, Purchase Right or Award if Engagement or
Employment Terminated for Cause
If the employment of a grantee of an option, Purchase Right or Award is
terminated by his voluntary resignation or by the Company for "Cause," any
option, Purchase Right or Award shall terminate on the date of such termination
and such option, Purchase Right or Award shall thereupon not be exercisable to
any extent whatsoever. "Cause" is conduct, as determined by the Board of
Directors, involving one or more of the following: (i) gross misconduct by the
grantee which is materially injurious to the Company; or (ii) the commission of
an act of embezzlement, fraud or deliberate disregard of the rules or policies
<PAGE>
of the Company which results in material economic loss, damage or injury to the
Company; or (iii) the unauthorized disclosure of any trade secret or
confidential information of the Company or any third party who has a business
relationship with the Company or the violation of any noncompetition covenant or
assignment of inventions obligation with the Company; or (iv) the commission of
any act which induces any customer or prospective customer of the Company to
break a contract with the Company or to decline to do business with the Company;
or (v) the conviction of the grantee of a felony involving any financial
impropriety or which would materially interfere with the grantee's ability to
perform his or her services for the Company or otherwise be injurious to the
Company; or (vi) the failure of the grantee to perform in a material respect his
or her employment obligations without proper cause. In making such
determination, the Board of Directors shall act fairly and in utmost good faith.
For the purposes of this Section 25, termination of employment shall be deemed
to occur when the grantee receives notice that his employment is terminated.
26. No Special Employment Rights
Nothing contained in the Plan or in any options, Purchase Rights or Award
shall confer upon any recipient any right with respect to the continuation of
his or her employment by the Company or interfere in any way with the right of
the Company at any time to terminate such employment or to increase or decrease
the compensation of the recipient.
27. Other Employee Benefits
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option, Purchase Right or Award or
the sale of shares received upon such exercise will not constitute compensation
with respect to which any other employee benefits of such employee are
determined, including, without limitation, benefits under any bonus, pension,
profit-sharing, life insurance or salary continuation plan, except as otherwise
specifically determined by the Board of Directors.
28. Amendment of the Plan
(a) The Board of Directors may at any time, and from time to time, modify or
amend the Plan in any respect, except that if at any time the approval of the
shareholders of the Company is required under Section 422 of the Code or any
successor provision with respect to Incentive Stock Options the Board of
Directors may not effect such modification or amendment without such approval.
(b) The termination or any modification or amendment of the Plan shall not,
without the consent of a recipient, affect his or her rights under an option,
Purchase Right or Award previously granted to him or her. With the consent of
the recipient affected, the Board of Directors may amend outstanding agreements
governing an option, Purchase Right or Award in a manner not inconsistent with
the Plan. The Board of Directors shall have the right to amend or modify (i) the
terms and provisions of the Plan and of any outstanding Incentive Stock Options
granted under the Plan to the extent necessary to qualify any or all such
<PAGE>
options for such favorable federal income tax treatment (including deferral of
taxation upon exercise) as may be afforded incentive stock options under Section
422 of the Code and (ii) the terms and provisions of the Plan and of any
outstanding options, Purchase Rights or Awards to the extent necessary to
qualify any or all such options, Purchase Rights or Awards for an exemption
under Rule 16b-3.
29. Withholding
(a) The Company shall have the right, as a condition of option exercise or
share transfer, to require payment by the option holder to the Company or to
deduct from payments of any kind otherwise due to the option holder any federal,
state, local, or foreign taxes of any kind required by law to be withheld with
respect to any shares issued upon exercise of options, Purchase Rights or Awards
under the Plan or the subsequent transfer of any shares so issued. Subject to
the prior approval of the Company, which may be withheld by the Company in its
sole discretion, the recipient may elect to satisfy such obligations, in whole
or in part, (i) by causing the Company to withhold shares of Common Stock
otherwise issuable pursuant to the exercise of an option, Purchase Right or
Award or (ii) by delivering to the Company shares of Common Stock already owned
by the recipient. The shares so delivered or withheld shall have a fair market
value equal to such withholding obligation. The fair market value of the shares
used to satisfy such withholding obligation shall be determined by the Company
as of the date that the amount of tax to be withheld is to be determined. A
recipient who has made an election pursuant to this Section 29(a) may only
satisfy his or her withholding obligation with shares of Common Stock which are
not subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.
(b) Notwithstanding the foregoing, in the case of a Reporting Person, no
election to use shares for the payment of withholding taxes shall be effective
unless made in compliance with any applicable requirements of Rule 16b-3.
30. Cancellation and New Grant of Options, Purchase Rights or Awards, Etc.
The Board of Directors shall have the authority to effect, at any time and
from time to time, with the consent of the affected recipients, (i) the
cancellation of any or all outstanding options, Purchase Rights or Awards under
the Plan and the grant in substitution therefor of new options, Purchase Rights
or Awards under the Plan covering the same or different numbers of shares of
Common Stock and having an exercise price per share which may be lower or higher
than the exercise price per share of the cancelled options, Purchase Rights or
Awards or (ii) the amendment of the terms of any and all outstanding options,
Purchase Rights or Awards under the Plan to provide an exercise price per share
which is higher or lower than the then-current exercise price per share of such
outstanding options, Purchase Rights or Awards.
31. Effective Date and Duration of the Plan
(a) Effective Date. The Plan shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become exercisable
<PAGE>
unless and until the Plan shall have been approved by the Company's
shareholders. If such shareholder approval is not obtained within twelve months
after the date of the Board's adoption of the Plan, no options previously
granted under the Plan shall be deemed to be Incentive Stock Options and no
Incentive Stock Options shall be granted thereafter. Amendments to the Plan not
requiring shareholder approval shall become effective when adopted by the Board
of Directors; amendments requiring shareholder approval (as provided in Section
28) shall become effective when adopted by the Board of Directors, but no
Incentive Stock Option granted after the date of such amendment shall become
exercisable (to the extent that such amendment to the Plan was required to
enable the Company to grant such Incentive Stock Option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any Incentive Stock
Options granted on or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular option. Subject to this limitation, options,
Purchase Rights or Awards may be granted under the Plan at any time after the
effective date and before the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with Section 16, the
Plan shall terminate, with respect to Incentive Stock Options only, upon the
earlier of (i) the close of business on the day next preceding the tenth
anniversary of the date of its adoption, by the Board of Directors, or (ii) the
date on which all shares available for issuance under the Plan shall have been
issued pursuant to the exercise or cancellation of options granted under the
Plan. Unless sooner terminated in accordance with Section 16, the Plan shall
terminate with respect to options, Purchase Rights or Awards which are not
Incentive Stock Options on the date specified in (ii) above. If the date of
termination is determined under (i) above, then options, Purchase Rights or
Awards outstanding on such date shall continue to have force and effect in
accordance with the provisions of the instruments evidencing such options,
Purchase Rights or Awards.
32. Provision for Foreign Participants
The Board of Directors may, without amending the Plan, modify options,
Purchase Rights or Awards granted to participants who are foreign nationals or
employed outside the United States to recognize differences in laws, rules,
regulations or customs of such foreign jurisdictions with respect to tax,
securities, currency, employee benefit or other matters.
Adopted by the Board of Directors on February 20, 1998
<PAGE>
Optionee: [NAME]
STARMET CORPORATION
DIRECTOR STOCK OPTION AGREEMENT
DIRECTOR STOCK OPTION AGREEMENT made and entered into as of [DATE OF OPTION
GRANT], by and between STARMET CORPORATION, a Massachusetts corporation
(hereinafter referred to as the "Company"), and [NAME], residing at [ADDRESS].
W I T N E S S E T H :
WHEREAS, The Board of Directors of the Company, on November 20, 1995,
approved the Starmet Corporation Directors' Stock Option Plan to issue stock
options to directors of the Company (hereinafter referred to as the "Plan"); and
WHEREAS, the Optionee is one of the designated directors eligible to
participate in the Plan and has been granted an option to purchase common stock
of the Company; and
WHEREAS, the Company and the Optionee wish to evidence and confirm the terms
of said grant of option;
NOW, THEREFORE, in consideration of the mutual promises and representations
herein contained, and other good and valuable consideration.
1. Confirming of Option Grant. The Company hereby evidences and confirms its
grant to the Optionee on [DATE OF OPTION GRANT], of an option to purchase
[NUMBER OF SHARES] shares of the Company's Common Stock at an option exercise
price of $[EXERCISE PRICE] per share.
2. Expiration of Option. The option evidenced by this Agreement shall expire
on [EXPIRATION DATE].
3. Time of Exercise. Subject to the provisions hereof, the option evidenced
hereby may be exercised at any time after one year from the date of grant and on
or before the expiration date of the option, except that the option shall not be
exercised with respect to more than one-third (1/3) of the shares before two
years from the date of grant, nor with respect to more than two-thirds (2/3) of
the shares before three years from the date of grant.
4. Who May Exercise. During the lifetime of the Optionee, the option
evidenced by this Agreement may be exercised only by him.
<PAGE>
5. Acceptance of Option. The Optionee shall have up to sixty (60) calendar
days after this option is granted in which to accept said option, which
acceptance must be in writing and may be endorsed on the signature page of this
option. If the option is accepted, such interim period of time shall be
considered a part of the period of expiration as provided in Section 3 hereof.
6. Manner of Exercise. The option evidenced by this Agreement may be
exercised by:
(a) giving written notice of intent to exercise the option with respect
to a specified number of full shares;
(b) exercising as to not less than one hundred (100) shares at any one
time unless the number of shares to be purchased upon such exercise is the
total number of shares as to which the option may be exercised at the time;
(c) making full payment to the Company of the amount of the option
exercise price for the number of shares with respect to which the option is
then exercised in cash (by a certified check, bank draft or money order) or
in common stock of the Company valued at the fair market value on the date
of the exercise;
(d) executing an undertaking to furnish or execute such documents as
the Company, in its discretion, shall deem necessary (i) to evidence such
exercise, in whole or in part, of the option evidenced by this Agreement,
(ii) to determine whether registration is then required under the Securities
Act of 1933, as then in effect, or (iii) to comply with or satisfy the
requirements of the Securities Act of 1933 or any other law as then in
effect;
(e) executing an undertaking to give the Company prompt written notice
in such form as the Company, in its discretion, shall deem advisable, of the
disposition of any shares of stock acquired by the exercise of the option.
(f) representing in writing that the Optionee is of full age and that
stock purchased by him under the option is to be and is being purchased for
investment and not with a view to the distribution thereof.
7. Notice. Each notice, payment and representation as provided by Section 6
hereof shall be delivered or mailed, by certified or registered mail, addressed
to Starmet Corporation, 2229 Main Street, Concord, Massachusetts 01742, and any
notice hereunder to the Optionee shall be addressed to him at his address
heretofore shown on the first page of this Agreement, subject to the right of
either party to designate at any time hereafter in writing, some other address.
8. Exercise in the Event of Death. If an Optionee shall die prior to the
expiration date fixed for his option, such option may be exercised to the extent
that it could have been exercised by the Optionee at the date of his death by
his executor or administrator or the person or persons to whom the option is
transferred by will or the applicable laws of descent and distribution at any
time prior to such expiration date or within twelve (12) months after the death
of the Optionee,
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<PAGE>
whichever shall occur first.
9. Transferability. No option granted under the Plan shall be transferable
or assignable, other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Internal
Revenue Code of 1986, as amended. A written beneficiary designation with respect
to dispositions upon death does not constitute a "transfer" prohibited by the
Plan.
10. Changes in Common Stock. The number of shares of common stock covered by
this option, and the price per share thereof, shall be adjusted by the Committee
or by the Board of Directors of the Company to reflect, as may be deemed
appropriate by said Board or Committee, any stock dividend, stock split, share
combination, exchange of shares, recapitalization, merger, consolidation,
separation, reorganization, liquidation or other change in capital structure, of
or by the Company. All adjustments so made shall be final and binding upon the
Optionee.
11. Rights as Shareholders. No Optionee shall have any rights as a
shareholder with respect to any shares subject to this option prior to the
issuance or transfer of the shares on the stock books of the Company. Except as
provided in Section 10 hereof, no adjustment shall be made for dividends or
other rights for which the record date is prior to the issuance or transfer of
such certificate or certificates.
12. Law Governing. This Agreement is made in the Commonwealth of
Massachusetts and shall be construed and enforced in accordance with and
governed by the laws of said Commonwealth.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its duly authorized representatives and the Optionee has duly signed this
Agreement.
Starmet Corporation
By:
--------------------------
Robert E. Quinn, President
Accepted:
Date:
----------------
- ---------------------
Optionee
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<PAGE>
UNDERTAKING
The undersigned, in connection with the exercise of an option granted by
Starmet Corporation, hereof agrees:
1. To furnish or execute such documents as Starmet Corporation (the
"Company") in its discretion, shall reasonably require as further evidence of
the exercise of the option, to determine whether registration is required under
the Securities Act of 1933, as amended from time to time, or to comply with or
satisfy the requirements of the Securities Act of 1933 or any other applicable
federal or state law or regulation.
2. The undersigned further represents that he is of full age and that the
stock purchased by him as being purchased for investment for his own account and
not with a view to, or in connection with a disposition of the stock. The
undersigned further acknowledges that he has received, or has been given access
to all financial and other information about the Company required by the
undersigned to evaluate his investment in the Company. The undersigned further
acknowledges that he is aware of the risks of investment in the Company and that
he is financially able to undertake such risks, including the risk of loss of
his entire investment. The undersigned further acknowledges that the shares of
stock may not be transferred by him unless registered under the Securities Act
of 1933 or unless, in the opinion of counsel satisfactory to the Company, an
exemption from registration is available. The undersigned agrees that an
appropriate legend reflecting the foregoing may be placed on the certificate for
his shares.
IN WITNESS WHEREOF, this undertaking has been executed this ___ day of
_________, 19__.
-------------------------
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<PAGE>
Optionee: [NAME]
STARMET CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
1. Grant of Option. Starmet Corporation, a Massachusetts corporation,
whose principal place of business is at 2229 Main Street, Concord, Massachusetts
01742 (the "Company"), hereby grants to [NAME OF OPTIONEE], an individual whose
address is set forth below the optionee signature line (the "Optionee"), an
option, pursuant to the Company's 1998 Stock Plan (the "Plan"), to purchase an
aggregate of [NUMBER OF SHARES] shares of common stock, $.10 par value per
share, of the Company ("Common Stock") at a price of $[EXERCISE PRICE] per
share, purchasable as set forth in and subject to the terms and conditions of
this option agreement (this "Agreement") and the Plan. Except where the context
otherwise requires, the term "Company" shall include the parent and all present
and future subsidiaries of the Company as defined in Sections 424(e) and 424(f)
of the Internal Revenue Code of 1986, as amended or replaced from time to time
(the "Code"). The Plan has been approved by the stockholders of the Company. No
rights and obligations of the parties pursuant to this Agreement shall conflict
with such stockholder approval.
2. Incentive Stock Option. This option is intended to qualify as an
incentive stock option ("Incentive Stock Option") within the meaning of Section
422 of the Code. Any provision of this Agreement or the Plan which conflicts
with the requirements of qualification as an Incentive Stock Option under the
Code is null and void to the extent of such conflict and any ambiguities shall
be resolved so that this option qualifies as an Incentive Stock Option.
3. Exercise of Option and Provisions for Termination.
(a) Vesting Schedule. Except as otherwise provided in this
Agreement, this option may be exercised as to one-third (1/3rd) of the total
number of shares from and after one year from the date of grant, as to
two-thirds (2/3rds) of the total number of shares from and after two years from
the date of grant, and as to the whole number of shares from and after three
years from the date of grant and prior to the tenth anniversary of the date of
grant (hereinafter the "Expiration Date").
(b) Exercise Procedure. Subject to the conditions set forth in
this Agreement, this option shall be exercised by the Optionee's delivery of
written notice of exercise to the Company, specifying the number of shares to be
purchased and the purchase price to be paid therefor and accompanied by payment
in full in accordance with Section 4. Such exercise shall be effective upon
receipt by the Company of such written notice together with the required
payment. The Optionee may purchase less than the number of shares covered
hereby, provided that no partial exercise of this option may be for any
fractional share or for less than one whole share.
<PAGE>
(c) Continuous Employment Required. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Optionee, at the time he or she exercises this option, is, and has been at all
times since the date of grant of this option, an employee of the Company. For
all purposes of this option, (i) "employment" shall be defined in accordance
with the provisions of Section 1.421-7(h) of the Income Tax Regulations or any
successor regulations, and (ii) if this option shall be assumed or a new option
substituted therefor in a transaction to which Section 424(a) of the Code
applies, employment by such assuming or substituting corporation (hereinafter
called the "Successor Corporation") shall be considered for all purposes of this
option to be employment by the Company.
(d) Exercise Period Upon Termination of Employment. If the
Optionee ceases to be employed by the Company for any reason, then, except as
provided in paragraphs (e) and (f) below, the right to exercise this option
shall terminate three months after such cessation (but in no event after the
Expiration Date), provided that this option shall be exercisable only to the
extent that the Optionee was entitled to exercise this option on the date of
such cessation. Notwithstanding the foregoing, if the Optionee, prior to the
Expiration Date, materially violates any non-competition or confidentiality
provisions of any agreement between the Optionee and the Company, the right to
exercise this option shall terminate immediately upon such violation.
(e) Exercise Period Upon Death or Disability. If the Optionee
dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Expiration Date while he or she is an employee of the Company, or
if the Optionee dies within three months after the Optionee ceases to be an
employee of the Company (other than as the result of a discharge for "cause" as
specified in paragraph (f) below), this option shall be exercisable, within the
period of one year following the date of death or disability of the Optionee
(but in no event after the Expiration Date), by the Optionee or by the person to
whom this option is transferred by will or the laws of descent and distribution,
provided that this option shall be exercisable only to the extent that this
option was exercisable by the Optionee on the date of his or her death or
disability. Except as otherwise indicated by the context, the term "Optionee",
as used in this option, shall be deemed to include the estate of the Optionee or
any person who acquires the right to exercise this option by bequest or
inheritance or otherwise by reason of the death of the Optionee.
(f) Discharge for Cause. If the Optionee, prior to the
Expiration Date, ceases his or her employment with the Company because he or she
is discharged for "Cause" (as defined below), the right to exercise this option
shall terminate immediately upon such cessation of employment. "Cause" is
conduct, as determined by the Board of Directors, involving one or more of the
following: (i) gross misconduct by the optionee which is materially injurious to
the Company; or (ii) the commission of an act of embezzlement, fraud or
deliberate disregard of the rules or policies of the Company which results in
material economic loss, damage or injury to the Company; or (iii) the
unauthorized disclosure of any trade secret or confidential information of the
Company or any third party who has a business
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<PAGE>
relationship with the Company or the violation of any noncompetition covenant or
assignment of inventions obligation with the Company; or (iv) the commission of
any act which induces any customer or prospective customer of the Company to
break a contract with the Company or to decline to do business with the Company;
or (v) the conviction of the optionee of a felony involving any financial
impropriety or which would materially interfere with the optionee's ability to
perform his or her services for the Company or otherwise be injurious to the
Company; or (vi) the failure of the optionee to perform in a material respect
his or her employment obligations without proper cause. In making such
determination, the Board of Directors shall act fairly and in utmost good faith.
For the purposes of this subsection (f), termination of employment shall be
deemed to occur when the optionee receives notice that his or her employment is
terminated.
4. Payment of Purchase Price.
(a) Method of Payment. Payment of the purchase price for
shares purchased upon exercise of this option shall be made (i) by delivery to
the Company of cash or a certified or bank check to the order of the Company in
an amount equal to the purchase price of such shares, (ii) subject to the
consent of the Company, by delivery to the Company of shares of Common Stock of
the Company then owned by the Optionee having a fair market value equal in
amount to the purchase price of such shares, (iii) subject to the consent of the
Company, by the delivery of an assignment to the Company of a sufficient amount
of the proceeds from the sale of the Common Stock acquired upon exercise of this
option and an authorization to the broker or selling agent to pay that amount to
the Company, which sale shall be at the Optionee's direction at the time of
exercise, (iv) by any other means (including, without limitation, by delivery of
a promissory note of the Optionee payable on such terms as are specified by the
Board of Directors) which the Board of Directors determines are consistent with
the purpose of the Plan and with applicable laws and regulations (including,
without limitation, the provisions of Rule 16b-3 under the Securities Exchange
Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (v)
by any combination of such methods of payment.
(b) Valuation of Shares or Other Non-Cash Consideration
Tendered in Payment of Purchase Price. For the purposes hereof, unless a
recognized market value is available, the fair market value of any share of the
Company's Common Stock or other non-cash consideration which may be delivered to
the Company in exercise of this option shall be determined in good faith by the
Board of Directors of the Company.
(c) Delivery of Shares Tendered in Payment of Purchase Price.
If the Optionee exercises this option by delivery of shares of Common Stock of
the Company, the certificate or certificates representing the shares of Common
Stock of the Company to be delivered shall be duly executed in blank by the
Optionee or shall be accompanied by a stock power duly executed in blank
suitable for purposes of transferring such shares to the
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<PAGE>
Company. Fractional shares of Common Stock of the Company will not be accepted
in payment of the purchase price of shares acquired upon exercise of this
option.
(d) Restrictions on Use of Option Stock. Notwithstanding the
foregoing, no shares of Common Stock of the Company may be tendered in payment
of the purchase price of shares purchased upon exercise of this option if the
shares to be so tendered were acquired within twelve (12) months before the date
of such tender through the exercise of an option granted under the Plan or any
other stock option or restricted stock plan of the Company.
5. Delivery of Shares; Compliance With Securities Laws, Etc.
(a) General. The Company shall, upon payment of the option
price for the number of shares purchased and paid for, make prompt delivery of
such shares to the Optionee; provided that if any law or regulation requires the
Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action.
(b) Listing, Qualification, Etc. This option shall be subject
to the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject hereto
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board of Directors. Nothing herein shall be deemed to
require the Company to apply for, effect or obtain such listing, registration,
qualification, or disclosure, or to satisfy such other condition.
6. Nontransferability of Option. This option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process except that this option may
be transferred as provided in paragraph (e) of Section 3 above. Upon any attempt
to transfer, assign, pledge, hypothecate or otherwise dispose of this option or
of such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon this option or such rights, this option and
such rights shall, at the election of the Company, become null and void.
7. No Special Employment Rights. Nothing contained in the Plan or this
option shall be construed or deemed by any person under any circumstances to
bind the Company to continue the employment of the Optionee for the period
within which this option may be exercised, or for any other period.
4
<PAGE>
8. Rights as a Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares which may be purchased by exercise of
this option (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
9. Adjustment Provisions
(a) General. If, through, or as a result of, any
merger, consolidation, sale of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other similar transaction, (i) the
outstanding shares of Common Stock are increased, decreased or exchanged for a
different number or kind of shares or other securities of the Company, or (ii)
additional shares or new or different shares or other securities of the Company
or other non-cash assets are distributed with respect to such shares of Common
Stock or other securities, the Optionee shall, with respect to this option or
any unexercised portion hereof, be entitled to the rights and benefits, and be
subject to the limitations, set forth in Section 15(a) of the Plan.
(b) Board Authority to Make Adjustments. Any adjustments
under this Section 9 will be made by the Board of Directors, whose determination
as to what adjustments, if any, will be made and the extent thereof will be
final, binding and conclusive. No fractional shares will be issued pursuant to
this option on account of any such adjustments.
(c) Limits on Adjustments. No adjustment shall be made
under this Section 9 which would, within the meaning of any applicable provision
of the Code, constitute a modification, extension or renewal of this option or a
grant of additional benefits to the Optionee.
10. Mergers, Consolidation, Distributions, Liquidations Etc. In
the event of a consolidation or merger or sale of all or substantially all of
the assets of the Company in which outstanding shares of Common Stock are
exchanged for securities, cash or other property of any other corporation or
business entity, or in the event of a liquidation of the Company, prior to the
Expiration Date or termination of this option, the Optionee shall, with respect
to this option or any unexercised portion hereof, be entitled to the rights and
benefits, and be subject to the limitations, set forth in Section 16 of the
Plan.
Notwithstanding any other provision of this Agreement,
this option shall not be accelerated or exercisable, if, but only to the extent
that, such acceleration or exercise would, taking into account any other
consideration to be received by the Optionee from the Company, cause the
Optionee to be in receipt of an excess parachute payment as defined in Section
280G of the Code.
5
<PAGE>
11. Withholding Taxes. The Company's obligation to deliver shares
of Common Stock upon the exercise of this option shall be subject to the
Optionee's satisfaction of all applicable federal, state, local and foreign
taxes of any kind required by law to be withheld with respect to any shares
issued upon exercise of this option. If the Company, in its discretion,
determines that it must or should withhold or pay over tax with respect to the
exercise of this option or a Disqualifying Disposition (as defined in Section 12
below) of shares of Common Stock acquired by the Optionee on exercise of this
option, the Optionee hereby agrees that, at the option of the Company, Optionee
will pay to the Company or the Company may withhold from the Optionee's wages
the appropriate amount of federal, state, local and foreign taxes attributable
to such Disqualifying Disposition. If any portion of this option is treated as a
non-qualified option, the Optionee hereby agrees that, at the option of the
Company, Optionee will pay to the Company or the Company may withhold from the
Optionee's wages the appropriate amount of federal, state, local and foreign
taxes attributable to the Optionee's exercise of such non-qualified option. At
the Company's discretion, the amount required to be withheld may be withheld in
cash from such wages, or (with respect to compensation income attributable to
the exercise of this option) in kind from the Common Stock otherwise deliverable
to the Optionee on exercise of this Option. The Optionee further agrees that, if
the Company does not withhold an amount from the Optionee's wages sufficient to
satisfy the Company's withholding obligation, the Optionee will reimburse the
Company on demand, in cash, for the amount under withheld.
12. Disqualifying Disposition. Although the parties intend that
this option shall qualify as an Incentive Stock Option, if this option is
determined not to be an Incentive Stock Option, the Optionee understands that
the Company is not responsible to compensate the Optionee or otherwise make up
for the treatment of this option as a non-qualified stock option. The Optionee
should consult with the Optionee's own tax advisors regarding the tax effects of
this option and the requirements necessary to obtain favorable treatment under
the Code, including, but not limited to, holding period requirements. The
Optionee agrees to notify the Company in writing immediately after the Optionee
makes a Disqualifying Disposition of any shares of Common Stock acquired
pursuant to the exercise of this option. Generally, a Disqualifying Disposition
is any disposition (whether by sale, exchange, gift, transfer, or otherwise) of
such shares before the later of (a) two years after the date the Optionee was
granted this option or (b) one year after the date the Optionee acquired shares
by exercising this option. If the Optionee dies before such shares are sold,
these holding period requirements do not apply and no Disqualifying Disposition
would occur. The Optionee also agrees to provide the Company with any
information which it shall request concerning any such disposition. The Optionee
acknowledges that he or she will forfeit the favorable income tax treatment
otherwise available with respect to the exercise of this Incentive Stock Option
if he or she makes a Disqualifying Disposition of the shares acquired on
exercise of this option.
13. Limitations on Certain Dispositions. The Optionee agrees, by
accepting this option, that if the Company offers any of its Common Stock for
sale pursuant to a registration statement under the Securities Act, the Optionee
will not, directly or indirectly, without the prior written consent of the
Company, sell, offer or agree to sell, grant any option to purchase or
6
<PAGE>
otherwise transfer or dispose of any shares of Common Stock purchased upon
exercise of this option for a period of 180 days after the effective date of
such registration statement.
14. Interpretation of this Agreement. All decisions and
interpretations made by the Committee or the Board of Directors, with regard to
any question arising under the Plan or this Agreement shall be binding and
conclusive on the Company and the Optionee and any other person entitled to
exercise this option as provided herein. In the event there is any inconsistency
between the provisions of this Agreement and of the Plan, the provisions of the
Plan shall govern, subject to the provisions of section 2 above.
15. Miscellaneous
(a) Except as provided herein, this option may not be
amended or otherwise modified unless evidenced in writing and signed by the
Company and the Optionee.
(b) All notices under this option shall be mailed or
delivered by hand to the parties
at their respective addresses set forth beneath their names below or at such
other address as may be designated in writing by either of the parties to one
another.
(c) This option shall be governed by and construed in
accordance with the laws of The
Commonwealth of Massachusetts.
Date of Grant:
-------------------------
STARMET CORPORATION
By:
--------------------------
Robert E. Quinn, President
7
<PAGE>
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to
the terms and conditions thereof. The undersigned hereby acknowledges receipt of
a copy of the Company's 1998 Stock Plan.
OPTIONEE:
------------------------------
[NAME OF OPTIONEE]
Address:
-----------------------------
-----------------------------
8
<PAGE>
STARMET CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
1. Grant of Option. Starmet Corporation, a Massachusetts corporation,
whose principal place of business is at 2229 Main Street, Concord, Massachusetts
01742 (the "Company") hereby grants to [NAME OF OPTIONEE], an individual whose
address is set forth below the optionee signature line (the "Optionee"), an
option, pursuant to the Company's 1998 Stock Plan (the "Plan"), to purchase an
aggregate of [NUMBER OF SHARES] shares of common stock, $.10 par value per
share, of the Company ("Common Stock") at a price of $[EXERCISE PRICE] per
share, purchasable as set forth in and subject to the terms and conditions of
this option agreement (this "Agreement") and the Plan. Except where the context
otherwise requires, the term "Company" shall include the parent and all present
and future subsidiaries of the Company as defined in Sections 424(e) and 424(f)
of the Internal Revenue Code of 1986, as amended or replaced from time to time
(the "Code"). The Plan has been approved by the stockholders of the Company. No
rights and obligations of the parties pursuant to this Agreement shall conflict
with such stockholder approval.
2. Non-Qualified Stock Option. This option not is intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
3. Exercise of Option and Provisions for Termination.
(a) Vesting Schedule. Except as otherwise provided in this
Agreement, this option may be exercised as to one-third (1/3rd) of the total
number of shares from and after one year from the date of grant, as to
two-thirds (2/3rds) of the total number of shares from and after two years from
the date of grant, and as to the whole number of shares from and after three
years from the date of grant and prior to the tenth anniversary of the date of
grant (hereinafter the "Expiration Date").
(b) Exercise Procedure. Subject to the conditions set forth in
this Agreement, this option shall be exercised by the Optionee's delivery of
written notice of exercise to the Company, specifying the number of shares to be
purchased and the purchase price to be paid therefor and accompanied by payment
in full in accordance with Section 4. Such exercise shall be effective upon
receipt by the Company of such written notice together with the required
payment. The Optionee may purchase less than the number of shares covered
hereby, provided that no partial exercise of this option may be for any
fractional share or for less than one whole share.
(c) Continuous Relationship with Company Required. Except as
otherwise provided in this Section 3, this option may not be exercised unless
the Optionee, at the time he or she exercises this option, is, and has been at
all times since the date of grant of this option, an employee, officer or
director of, or consultant or advisor to, the Company (an "Eligible Optionee").
For all purposes of this option, (i) "employment" shall be defined in accordance
with the provisions of Section 1.421-7(h) of the Income Tax Regulations or any
successor regulations, and (ii) if this option shall be assumed or a new option
substituted
<PAGE>
therefor in a transaction to which Section 424(a) of the Code applies,
employment by such assuming or substituting corporation (hereinafter called the
"Successor Corporation") shall be considered for all purposes of this option to
be employment by the Company.
(d) Exercise Period Upon Termination of Relationship with the
Company. If the Optionee ceases to be an Eligible Employee for any reason, then,
except as provided in paragraphs (e) and (f) below, the right to exercise this
option shall terminate three months after such cessation (but in no event after
the Expiration Date), provided that this option shall be exercisable only to the
extent that the Optionee was entitled to exercise this option on the date of
such cessation. Notwithstanding the foregoing, if the Optionee, prior to the
Expiration Date, materially violates any non-competition or confidentiality
provisions of any agreement between the Optionee and the Company, the right to
exercise this option shall terminate immediately upon such violation.
(e) Exercise Period Upon Death or Disability. If the Optionee
dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Expiration Date while he or she is an employee of the Company, or
if the Optionee dies within three months after the Optionee ceases to be an
employee of the Company (other than as the result of a discharge for "cause" as
specified in paragraph (f) below), this option shall be exercisable, within the
period of one year following the date of death or disability of the Optionee
(but in no event after the Expiration Date), by the Optionee or by the person to
whom this option is transferred by will or the laws of descent and distribution;
provided that this option shall be exercisable only to the extent that this
option was exercisable by the Optionee on the date of his or her death or
disability. Except as otherwise indicated by the context, the term "Optionee",
as used in this option, shall be deemed to include the estate of the Optionee or
any person who acquires the right to exercise this option by bequest or
inheritance or otherwise by reason of the death of the Optionee.
(f) Discharge for Cause. If the Optionee, prior to the
Expiration Date, ceases his or her employment with the Company because he or she
voluntarily resigns or is discharged for "Cause" (as defined below), the right
to exercise this option shall terminate immediately upon such cessation of
employment. "Cause" is conduct, as determined by the Board of Directors,
involving one or more of the following: (i) gross misconduct by the optionee
which is materially injurious to the Company; or (ii) the commission of an act
of embezzlement, fraud or deliberate disregard of the rules or policies of the
Company which results in material economic loss, damage or injury to the
Company; or (iii) the unauthorized disclosure of any trade secret or
confidential information of the Company or any third party who has a business
relationship with the Company or the violation of any noncompetition covenant or
assignment of inventions obligation with the Company; or (iv) the commission of
any act which induces any customer or prospective customer of the Company to
break a contract with the Company or to decline to do business with the Company;
or (v) the conviction of the optionee of a felony involving any financial
impropriety or which would materially interfere with the optionee's ability to
perform his or her services for the Company or otherwise be injurious to the
Company; or (vi) the failure of the optionee to perform in a
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<PAGE>
material respect his or her employment obligations without proper cause. In
making such determination, the Board of Directors shall act fairly and in utmost
good faith. For the purposes of this subsection (f), termination of employment
shall be deemed to occur when the optionee receives notice that his or her
employment is terminated.
4. Payment of Purchase Price
(a) Method of Payment. Payment of the purchase price for
shares purchased upon exercise of this option shall be made (i) by delivery to
the Company of cash or a certified or bank check to the order of the Company in
an amount equal to the purchase price of such shares, (ii) subject to the
consent of the Company, by delivery to the Company of shares of Common Stock of
the Company then owned by the Optionee having a fair market value equal in
amount to the purchase price of such shares, (iii) subject to the consent of the
Company, by the delivery of an assignment to the Company of a sufficient amount
of the proceeds from the sale of the Common Stock acquired upon exercise of this
option and an authorization to the broker or selling agent to pay that amount to
the Company, which sale shall be at the Optionee's direction at the time of
exercise, (iv) by any other means (including, without limitation, by delivery of
a promissory note of the Optionee payable on such terms as are specified by the
Board of Directors) which the Board of Directors determines are consistent with
the purpose of the Plan and with applicable laws and regulations (including,
without limitation, the provisions of Rule 16b-3 under the Securities Exchange
Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (v)
by any combination of such methods of payment.
(b) Valuation of Shares or Other Non-Cash Consideration
Tendered in Payment of Purchase Price. For the purposes hereof, unless a
recognized market value is available, the fair market value of any share of the
Company's Common Stock or other non-cash consideration which may be delivered to
the Company in exercise of this option shall be determined in good faith by the
Board of Directors of the Company.
(c) Delivery of Shares Tendered in Payment of Purchase Price.
If the Optionee exercises this option by delivery of shares of Common Stock of
the Company, the certificate or certificates representing the shares of Common
Stock of the Company to be delivered shall be duly executed in blank by the
Optionee or shall be accompanied by a stock power duly executed in blank
suitable for purposes of transferring such shares to the Company. Fractional
shares of Common Stock of the Company will not be accepted in payment of the
purchase price of shares acquired upon exercise of this option.
(d) Restrictions on Use of Option Stock. Notwithstanding the
foregoing, no shares of Common Stock of the Company may be tendered in payment
of the purchase price of shares purchased upon exercise of this option if the
shares to be so tendered were acquired within twelve (12) months before the date
of such tender through the exercise of an option granted under the Plan or any
other stock option or restricted stock plan of the Company.
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5. Delivery of Shares; Compliance With Securities Laws, Etc.
(a) General. The Company shall, upon payment of the option
price for the number of shares purchased and paid for, make prompt delivery of
such shares to the Optionee; provided that if any law or regulation requires the
Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action.
(b) Listing, Qualification, Etc. This option shall be subject
to the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject hereto
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board of Directors. Nothing herein shall be deemed to
require the Company to apply for, effect or obtain such listing, registration,
qualification, or disclosure, or to satisfy such other condition.
6. Nontransferability of Option. This option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process except that this option may
be transferred (i) as provided in paragraph (e) of Section 3 above or (ii)
pursuant to a qualified domestic relations order as defined in Section 414(p) of
the Code. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this option or of such rights contrary to the provisions hereof, or
upon the levy of any attachment or similar process upon this option or such
rights, this option and such rights shall, at the election of the Company,
become null and void.
7. No Special Employment Rights. Nothing contained in the Plan or this
option shall be construed or deemed by any person under any circumstances to
bind the Company to continue the employment of the Optionee for the period
within which this option may be exercised, or for any other period.
8. Rights as a Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares which may be purchased by exercise of
this option (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
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9. Adjustment Provisions
(a) General. If, through, or as a result of, any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased, decreased or exchanged for a different number or
kind of shares or other securities of the Company, or (ii) additional shares or
new or different shares or other securities of the Company or other non-cash
assets are distributed with respect to such shares of Common Stock or other
securities, the Optionee shall, with respect to this option or any unexercised
portion hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Section 15(a) of the Plan.
(b) Board Authority to Make Adjustments. Any adjustments under
this Section 9 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued pursuant to this
option on account of any such adjustments.
10. Mergers, Consolidation, Distributions, Liquidations Etc. In the
event of a consolidation or merger or sale of all or substantially all of the
assets of the Company in which outstanding shares of Common Stock are exchanged
for securities, cash or other property of any other corporation or business
entity, or in the event of a liquidation of the Company, prior to the Expiration
Date or termination of this option, the Optionee shall, with respect to this
option or any unexercised portion hereof, be entitled to the rights and
benefits, and be subject to the limitations, set forth in Section 16 of the
Plan.
Notwithstanding any other provision of this Agreement, this
option shall not be accelerated or exercisable, if, but only to the extent that,
such acceleration or exercise would, taking into account any other consideration
to be received by the Optionee from the Company, cause the Optionee to be in
receipt of an excess parachute payment as defined in Section 280G of the Code.
11. Withholding Taxes. The Company's obligation to deliver shares of
Common Stock upon the exercise of this option shall be subject to the Optionee's
satisfaction of all applicable federal, state, local and foreign taxes of any
kind required by law to be withheld with respect to any shares issued upon
exercise of this option.
12. Limitations on Certain Dispositions. The Optionee agrees, by
accepting this option, that if the Company offers any of its Common Stock for
sale pursuant to a registration statement under the Securities Act, the Optionee
will not, directly or indirectly, without the prior written consent of the
Company, sell, offer or agree to sell, grant any option to purchase or otherwise
transfer or dispose of any shares of Common Stock purchased upon exercise of
this option for a period of 180 days after the effective date of such
registration statement.
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13. Interpretation of this Agreement. All decisions and interpretations
made by the Committee, as defined in Section 2 of the Plan, with regard to any
question arising under the Plan or this Agreement shall be binding and
conclusive on the Company and the Optionee and any other person entitled to
exercise this option as provided herein. In the event there is any inconsistency
between the provisions of this Agreement and of the Plan, the provisions of the
Plan shall govern.
14. Miscellaneous
(a) Except as provided herein, this option may not be amended
or otherwise modified unless evidenced in writing and signed by the Company and
the Optionee.
(b) All notices under this option shall be mailed or delivered
by hand to the parties at their respective addresses set forth beneath their
names below or at such other address as may be designated in writing by either
of the parties to one another.
(c) This option shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts.
Date of Grant:
--------------
STARMET CORPORATION
By:
--------------------------------------
Robert E. Quinn, President
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OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's 1998 Stock Plan.
OPTIONEE:
--------------------------------
[NAME OF OPTIONEE]
Address:
--------------------------------
--------------------------------
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May 5, 1998
Starmet Corporation
2229 Main Street
Concord, MA 01742
Re: Registration Statement on Form S-8 Relating to the 1995 Directors' Stock
Option Plan and 1998 Stock Plan (the "Plans") of Starmet Corporation (the
"Company")
Dear Sir or Madam:
Reference is made to the above-captioned Registration Statement on Form S-8
(the "Registration Statement") filed by the Company on or about May 5, 1998
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to an aggregate of 370,000 shares of Common Stock, $.10 par
value per share, of the Company issuable pursuant to the Plans (the "Shares").
We have examined, are familiar with, and have relied as to factual matters
solely upon, copies of the Plans, the Articles of Organization and the By-Laws
of the Company, the minute books and stock records of the Company and originals
of such other documents, certificates and proceedings as we have deemed
necessary for the purpose of rendering this opinion.
Based on the foregoing, we are of the opinion that the Shares have been duly
authorized and, when issued and paid for in accordance with the terms of the
Plans, the terms of any option or purchase right granted thereunder and duly
authorized by the Company's Board of Directors or Stock Option Committee and/or
any related agreements with the Company, will be validly issued, fully paid and
nonassessable.
<PAGE>
Starmet Corporation
May 5, 1998
Page 2
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any amendments thereto.
Very truly yours,
/s/ PEABODY & ARNOLD LLP
------------------------
Peabody & Arnold LLP
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Starmet Corporation:
As independent public accountants, we hereby consent to the use of our reports
dated November 14, 1997 (except with respect to the matter discussed in Notes 6
and 11 as to which the date is December 29, 1997) and to all references to our
firm included in or made a part of this registration statement on Form S-8.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Boston, Massachusetts
May 4, 1998
