<PAGE>
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GAMMA BIOLOGICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 74-1668436
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3700 MANGUM ROAD, HOUSTON, TEXAS 77092
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
1995 EMPLOYEE STOCK OPTION PLAN
(FULL TITLE OF THE PLAN)
DAVID E. HATCHER
3700 MANGUM ROAD
HOUSTON, TEXAS 77092
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(713) 681-8481
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================
AMOUNT TO
TITLE OF SECURITIES TO BE BE PROPOSED MAXIMUM PROPOSED
REGISTERED REGISTERED OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
(1) PER SHARE (2) OFFERING PRICE (2) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.10 250,000 $4.625 $1,156,250.00 $398.71
per share par value shares
("Common Stock")
===================================================================================================
</TABLE>
(1) Represents the maximum number of shares which could be purchased upon the
exercise of all stock options now outstanding or which may hereafter be
granted under the above plan.
(2) Estimated solely for purposes of calculating the registration fee, pursuant
to Rule 457(c) and (h), based on the average of the high and low prices on
February 16, 1996 with respect to 250,000 shares of Common Stock as to
which options have not been granted as of the date of filing this
registration statement.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed with the Securities and
Exchange Commission by Gamma Biologicals, Inc. (the "Company"), are incorporated
herein by reference and made a part hereof: (a) Annual Report on Form 10-K for
the year ended March 31, 1995; (b) Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995; (c) Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995; (d) Quarterly Report on Form 10-Q for the quarter ended
December 31, 1995; and (e) description of the Common Stock contained in the
Registration Statement on Form 8-A filed on June 5, 1981 and description of
Common Stock Purchase Rights contained in the Registration Statement on Form 8-A
filed on October 2, 1989, as amended.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, subsequent to the date hereof and
prior to the filing of a post-effective amendment which indicates that all
securities offered 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 the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
R. Bruce LaBoon, a partner of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., is
a director of the Company. Mr. LaBoon owns 2,500 shares of the Company's Common
Stock, and pursuant to the Outside Director Stock Option Plan, options to
purchase 10,000 shares of the Company's Common Stock at $2.875 per share.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1 of the Texas Business Corporation Act contains detailed
provisions for indemnification of directors and officers of Texas corporations
against any judgments, penalties, fines, settlements and reasonable expenses
which may be incurred in connection with any threatened, pending or completed
proceeding in which the director or officer is a named defendant or respondent.
The Company's Amended and Restated Bylaws require the Company to indemnify and
advance expenses to the Company's directors and officers to the maximum extent
allowed by the Texas Business Corporation Act and other applicable law, and
expressly authorize the Company to purchase directors and officers liability
insurance. The Company has purchased a directors and officers liability
insurance policy which provides for insurance of the directors and officers of
the Company against certain liabilities they may incur in their capacity as
such.
The Articles of Incorporation of the Company expressly provide that no
director of the Company shall be liable to the Company or its shareholders for
monetary damages for an act or omission in the director's capacity as a
director, except for liability for breach of the director's duty of loyalty, an
act or omission not in good faith or that involves intentional misconduct or
knowing violation of the law, a transaction from which the director receives an
improper benefit, an act or omission for which the liability of the director is
expressly provided for by statute, or an act related to an unlawful stock
repurchase or payment of a dividend.
Reference is made to the form of the 1995 Employee Stock Option Plan, filed as
Exhibit 28 which contains provisions for indemnification and limitations on the
liability of the Company and its directors for actions taken in connection with
the administration of such Plan.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
1
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ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Exhibit
----------- -------
<C> <S>
4.1 Amended and Restated Articles of Incorporation of the Company dated
July 21, 1983, as amended to date. Incorporated by reference to the
Company's Registration Statement on Form S-8 dated January 6, 1992,
Exhibit 4.1.
4.2 Amended and Restated Bylaws of the Company dated April 13, 1990.
Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended March 31, 1990 (File No. 0-9771), Exhibit 3(b).
4.3 Specimen Common Stock certificate of the Company. Incorporated by
reference to the Company's Annual Report on Form 10-K for the year
ended March 31, 1990 (File No. 0-9771), Exhibit 4(a).
4.4 Shareholder Rights Plan dated as of September 5, 1989. Incorporated by
reference to the Company's Current Report on Form 8-K dated September
5, 1989, Exhibit 4.1.
5.1 Opinion and Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
15 Not applicable.
24.1 Consent of Deloitte & Touche.
24.2 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. (included in
Exhibit 5.1 to this registration statement).
25 Not applicable.
28 1995 Employee Stock Option Plan.
29 Not applicable.
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(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.
(4) If the registrant is a foreign private issuer, to file a post-effective
amendment to the registration statement to include any financial statements
required by Rule 3-19 of Regulation S-X at the start of any delayed offering or
2
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throughout a continuous offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant'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
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
3
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 21st day of
February, 1996.
GAMMA BIOLOGICALS, INC.
By: /s/ David E. Hatcher
----------------------------------
(DAVID E. HATCHER, CHAIRMAN
OF THE BOARD AND PRESIDENT)
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ David E. Hatcher Chairman of the Board of February 21, 1996
- --------------------------- Directors and President
(DAVID E. HATCHER) (Principal executive officer)
/s/ Margaret J. O'Bannion Vice President-Finance and Chief February 21, 1996
- --------------------------- Financial Officer (Principal
(MARGARET J. O'BANNION) financial and accounting officer)
/s/ Bryan J. Brieden Director February 21, 1996
- ---------------------------
(BRYAN J. BRIEDEN)
/s/ Betty Francis Hatcher Director February 21, 1996
- ---------------------------
(BETTY FRANCIS HATCHER)
/s/ R. Bruce LaBoon Director February 21, 1996
- ---------------------------
(R. BRUCE LABOON)
/s/ John J. Moulds Director February 21, 1996
- ---------------------------
(JOHN J. MOULDS)
/s/ Hayle B. Randolph Director February 21, 1996
- ---------------------------
(HAYLE B. RANDOLPH)
</TABLE>
4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Exhibit Numbered Page
- ----------- ------- -------------
<C> <S> <C>
4.1 Amended and Restated Articles of Incorporation of the
Company dated July 21, 1983, as amended to date.
Incorporated by reference to the Company's Registration
Statement on Form S-8 dated January 6, 1992, Exhibit 4.1.
4.2 Amended and Restated Bylaws of the Company dated April
13, 1990. Incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended March 31, 1990 (File
No. 0-9771), Exhibit 3(b).
4.3 Specimen Common Stock certificate of the Company.
Incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended March 31, 1990 (File No. 0-
9771), Exhibit 4(a).
4.4 Shareholder Rights Plan dated as of September 5, 1989.
Incorporated by reference to the Company's Current Report on
Form 8-K dated September 5, 1989, Exhibit 4.1.
5.1 Opinion and Consent of Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P.
15 Not applicable.
24.1 Consent of Deloitte & Touche.
24.2 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
(included in Exhibit 5.1 to this registration statement).
25 Not applicable.
28 1995 Employee Stock Option Plan.
29 Not applicable.
</TABLE>
5
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EXHIBIT 5.1
February 21, 1996
Gamma Biologicals, Inc.
3700 Mangum Road
Houston, Texas 77092
Gentlemen:
We have acted as counsel for Gamma Biologicals, Inc., a Texas corporation
(the "Company") in connection with the registration, pursuant to a Registration
Statement on Form S-8 being filed with the Securities and Exchange Commission
(the "Registration Statement") under the Securities Act of 1933, as amended, of
the offering and sale to certain officers and key employees of the Company of up
to 250,000 shares of the Company's common stock, $0.10 per share par value
("Common Stock"), which may be issued upon the exercise of incentive stock
options (as defined in the Internal Revenue Code of 1986, as amended) and/or
non-qualified stock options (all such stock options being collectively referred
to herein as the "Options").
In such capacity, we have examined the corporate documents of the Company,
including its Amended and Restated Articles of Incorporation dated July 21,
1983, as amended to date, its Amended and Restated Bylaws dated April 13, 1990,
and resolutions adopted by its board of directors and committees thereof. We
have also examined the Registration Statement, together with the exhibits
thereto, and such other documents which we have deemed necessary for the
purposes of expressing the opinion contained herein. We have relied upon
representations made by and certificates of officers of the Company and public
officials with respect to certain facts material to our opinion. We have made
no independent investigation regarding such representations and certificates.
Based on the foregoing, we are of the opinion that when the Options have
been duly exercised in accordance with their respective terms, the Common Stock
issued thereupon will be validly issued, fully paid and nonassessable.
<PAGE>
Gamma Biologicals, Inc.
February 20, 1996
Page -2-
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
[SIGNATURE APPEARS HERE]
--------------------------------
/s/ LIDDELL, SAPP, ZIVLEY, HILL
& LABOON, L.L.P.
<PAGE>
EXHIBIT 24.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Gamma Biologicals, Inc. on Form S-8 of our reports dated June 9, 1995, appearing
in and incorporated by reference in the Annual Report on Form 10-K of Gamma
Biologicals, Inc. for the year ended March 31, 1995.
/s/ Deloitte & Touche LLP
Houston, Texas
February 15, 1996
<PAGE>
EXHIBIT 28
GAMMA BIOLOGICALS, INC.
1995 EMPLOYEE STOCK OPTION PLAN
ARTICLE I
---------
PURPOSE
Gamma Biologicals, Inc. (the "Company") is largely dependent for the
successful conduct of its business on the initiative, effort and judgment of its
officers and employees and the officers and employees of its subsidiaries. The
Company's 1995 Employee Stock Option Plan (the "Plan") is intended to provide
the officers and the key employees of the Company and its subsidiaries an
incentive through stock ownership in the Company and encourage them to remain in
the Company's employ. Moreover, since the stock options provided for in the
Plan are subject to various alternative provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), the Committee will have certain flexibility in
shaping options granted under the Plan to the particular circumstances of the
optionee, thus recognizing the full value of the stock option.
ARTICLE II
----------
ADMINISTRATION
The Plan shall be administered by the Stock Option Committee (the
"Committee"), which shall at all times consist of not less than two members of
the Board of Directors of the Company (the "Board"), and shall not include any
persons that are not members of the Board. All members of the Committee shall
be selected by (and serve at the pleasure of) the Board. All members of the
Committee shall be "disinterested persons" within the meaning of Rule 16b-3 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). Subject to the express provisions of the Plan and the
policies of each stock exchange or national automated quotation system on which
any of the Company's stock at any time may be listed or quoted, the Committee
shall have plenary authority, in its discretion, to recommend to the Board the
individuals within the class set forth in Article IV to whom, and the time and
price per share at which, stock options shall be granted, the number of shares
to be subject to each stock option and the other terms and provisions of their
respective Agreements, as defined herein (which need not be identical). In
making such recommendations and determinations, the Committee may take into
account the nature of the services rendered by the respective employees, their
present and potential contributions to the Company's success and such other
factors as the Committee in its discretion shall deem relevant.
Subject to the express provisions of the Plan, the Committee shall also
have plenary authority (i) to interpret the Plan, (ii) to prescribe, amend and
rescind rules and regulations
1
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regulating it, (iii) to recommend to the Board the terms and provisions of the
respective stock options (which need not be identical), (iv) to determine the
duration and purposes of leaves of absence that may be granted to participants
without constituting a termination of their employment for purposes of the Plan,
(v) to accelerate or extend the exercisability or vesting of any or all stock
options, and (vi) to make all other determinations necessary or advisable for
the administration of the Plan. The Committee shall hold meetings at such time
and places as it may determine. Acts by the 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. 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, or fill vacancies however caused, subject to the requirements that the
members of the Committee shall be "disinterested persons" as described above and
that there always be at least two members of the Committee. The Committee's
determination on the matters referred to in this Plan shall be final, conclusive
and binding upon all optionees.
ARTICLE III
-----------
SHARES SUBJECT TO PLAN AND DURATION OF PLAN
Under the Plan the Board may, but only upon recommendation of the
Committee, grant to eligible persons incentive stock options (as defined in the
Code) and/or non-qualified stock options to purchase up to but not exceeding an
aggregate amount of 250,000 shares of the Company's $0.10 par value Common Stock
("Common Stock") (subject to adjustment as provided in Article VIII). Shares
subject to stock options under the Plan may be either authorized and unissued
shares or issued shares that have been acquired by the Company and are being
held in its treasury, in the sole discretion of the Board. When stock options
have been granted under the Plan and have lapsed unexercised or partially
unexercised or have been surrendered for cancellation by the optionee thereof,
the shares which were subject thereto may be reoptioned under the Plan. The
maximum number of shares of Common Stock that may be delivered pursuant to stock
options to any employee under this Plan shall not exceed 100,000 (subject to
adjustment as provided in Article VIII). No stock options shall be granted more
than 10 years after the effective date of the Plan.
ARTICLE IV
----------
ELIGIBILITY AND PARTICIPATION
To the fullest extent permitted by applicable securities laws, all officers
and employees of the Company, any Parent Corporation, any Subsidiary Corporation
(including, without limitation, Parent Corporations or Subsidiary Corporations
which become such after adoption of the Plan) and their respective divisions
shall be eligible to receive stock options under the Plan, and employment by any
of such Parent Corporations and Subsidiary Corporations shall constitute
employment by the Company for purposes of this Plan; provided, however, that no
member of the Committee shall be entitled to receive a stock option under this
Plan while
2
<PAGE>
serving as a member of the Committee. Directors of the Company who are not
regular employees of the Company are not eligible to participate in the Plan.
For purposes of the Plan, the term "Parent Corporation" shall have the meaning
set forth in Section 424(e) of the Code, and the term "Subsidiary Corporation"
shall have the meaning set forth in Section 424(f) of the Code.
ARTICLE V
---------
TERMS AND CONDITIONS OF STOCK OPTIONS
Each stock option granted under the Plan shall be evidenced by a stock
option agreement (the "Agreement"), the form of which shall have been approved
by the Committee. The Agreement shall be executed by the Company and the
optionee and shall set forth the terms and conditions of the stock option, which
terms and conditions shall include, but not be limited to, the following:
(a) Option Price. The option price shall be determined by the
Committee, but shall not in any event be less than the par value of the
Common Stock.
(b) Term of Stock Option. The term of the stock option shall be
selected by the Committee, but in no event shall such term exceed ten (10)
years from the date such option is granted. Each such stock option shall
be subject to earlier termination as hereinafter provided.
(c) Transferability. Stock options granted hereunder shall not be
transferable other than by will or operation of the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined
in the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder. During the lifetime of the
optionee, stock options granted hereunder shall be exercisable only by the
optionee, or the optionee's guardian or legal representative.
(d) Vesting. The Committee shall have complete discretion in
determining when stock options granted hereunder are to vest; provided,
however, that the sale of the shares of Common Stock issued upon the
exercise of the stock option by any person subject to Section 16 of the
1934 Act shall not be allowed until at least six months after the grant of
the stock option. Such vesting determination for each stock option is to
be made prior to or at the time that stock option is granted.
(e) Termination of Employment. In the event of an optionee's
termination of employment with the Company for any reason other than death,
all stock options granted hereunder shall thereupon terminate. Upon the
termination of an optionee's employment by reason of his death, his stock
option shall terminate to the extent it was not exercisable at the date of
optionee's death, but to the extent it was then exercisable by the
optionee, the optionee's estate or the beneficiaries thereof shall be
entitled to exercise such options for a period of one (1) year from the
date of the optionee's death but not
3
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thereafter. Notwithstanding any other provisions of this subparagraph (e),
no stock option shall be exercised after the expiration of ten (10) years
from the date such option is granted.
(f) Other Conditions. At its sole discretion, the Committee may
impose other conditions upon the stock options granted hereunder, so long
as those conditions do not conflict with any other provisions of the Plan.
Such conditions may include, by way of illustration, but not by way of
limitation, percentage limitations upon the exercisability of stock options
granted hereunder.
ARTICLE VI
----------
INCENTIVE STOCK OPTIONS
The Committee and the Board, in recommending and granting stock options
hereunder, shall have the discretion to determine that certain options shall be
Incentive Stock Options, as defined in Section 422 of the Code, while other
options shall be Non-Qualified Stock Options. Neither the members of the
Committee, the members of the Board nor the Company shall be under any
obligation or incur any liability to any person by reason of the determination
by the Committee or the Board whether an option granted under the Plan shall be
an Incentive Stock Option or a Non-Qualified Stock Option. The provisions of
this Article VI shall be applicable to all Incentive Stock Options at any time
granted or outstanding under the Plan.
All Incentive Stock Options granted or outstanding under the Plan shall be
granted and held subject to and in compliance with the terms and conditions
specifically set forth in Articles II, III, IV, and V hereof and, in addition,
subject to and in compliance with the following further terms and conditions:
(a) the per share option price of all Incentive Stock Options shall
not be less than one hundred percent (100%) of the Fair Market Value (as
defined below) of one share of the Company's Common Stock at the time the
option is granted (notwithstanding any provision of Article V hereof to the
contrary);
(b) no Incentive Stock Option shall be granted to any person who, at
the time of the grant, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or
any Parent Corporation or Subsidiary Corporation of the Company; provided,
however, that this ownership limitation will be waived if at the time the
option is granted the per share option price is at least one hundred ten
percent (110%) of the Fair Market Value of one share of the Company's
Common Stock and such option by its terms is not exercisable after the
expiration of five (5) years from the date such option is granted;
(c) an Incentive Stock Option shall not be transferable other than by
will or the laws of descent and distribution, and shall be exercisable
during the lifetime of the optionee only by the optionee; and
4
<PAGE>
(d) the aggregate Fair Market Value of all shares of Common Stock
(determined at the time of the grant of the option) with respect to which
Incentive Stock Options are exercisable for the first time by any optionee
during any one calendar year shall not exceed $100,000.
For purposes of the Plan, the term "Fair Market Value" on any date shall
mean (i) if the Common Stock is listed or admitted to trade on a national
securities exchange or national market system, the closing price of the Common
Stock, as published in the Wall Street Journal, so listed or admitted to trade
on such date or, if there is no trading of the Common Stock on such date, then
the closing price of the Common Stock on the next preceding date on which there
was trading in such shares; (ii) if the Common Stock is not listed or admitted
to trade on a national securities exchange or national market system, the mean
between the bid and asked price for the Common Stock on such date, as furnished
by the National Association of Securities Dealers, Inc. through NASDAQ or a
similar organization if NASDAQ is no longer reporting such information; or (iii)
if the Common Stock is not listed or admitted to trade on a national securities
exchange and if bid and asked prices for the Common Stock are not so furnished
through NASDAQ or a similar organization, the value established by the Committee
for purposes of granting stock options under the Plan. In addition to the above
rules, Fair Market Value shall be determined without regard to any restriction
other than a restriction which, by its terms, will never lapse.
ARTICLE VII
-----------
EXERCISE OF STOCK OPTIONS
Stock options granted hereunder may be exercised in whole or in part at any
time or from time to time during their respective terms, but only to the extent
that they have vested and only by tendering to the Company written notice of
exercise accompanied by the aggregate purchase price for the shares with respect
to which the stock option is being exercised. The purchase price of shares of
Common Stock of the Company acquired upon the exercise of any stock option
granted under the Plan may be paid by an optionee by the payment of cash or
check, or, upon receipt of all required regulatory approvals, if any, by the
assignment to the Company of shares of the Company's Common Stock theretofore
owned by the optionee having a Fair Market Value equal to such option price, or
by any combination thereof.
No stock option shall be exercisable unless the Plan and all shares
issuable on the exercise thereof have been registered under the Act and all
other applicable securities laws, and there is available for delivery a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended (the "1933 Act"), or the Company shall have first received the
opinion of its counsel that registration under the 1933 Act and all other
applicable securities laws is not required in connection with such issuance.
At the time of exercise, if the shares with respect to which the stock option is
being exercised have not been registered under the 1933 Act and all other
applicable securities laws, the Company may require the optionee to give the
Company whatever written assurance counsel for the Company may require that the
shares are being acquired for investment and not with a view to the distribution
thereof, and that the shares
5
<PAGE>
will not be disposed of without the written opinion of such counsel that
registration under the 1933 Act and all other applicable securities laws is not
required. Share certificates issued to the optionee upon exercise of the stock
option shall bear a legend to the foregoing effect to the extent counsel for the
Company deems it advisable.
In the event that the Company is required to withhold payroll or other
federal or state taxes upon the grant or exercise of any non-qualified stock
option granted pursuant to this Plan, then upon the exercise of any such stock
option, the Company shall be entitled to withhold that number of shares
otherwise deliverable upon the exercise of the stock option as it may be
required to so withhold in order to satisfy its obligations under applicable tax
laws. The Company shall also have the right to withhold from the cash
compensation otherwise payable by the Company or any subsidiary to the optionee
any amount necessary to satisfy its payroll or other tax withholding
obligations. The Company may also require, as a condition to exercise of any
non-qualified stock option granted under this Plan, the payment by the optionee
to the Company by cash or check of the amount of any taxes which are required to
be withheld by the Company upon the exercise of the option.
ARTICLE VIII
------------
ADJUSTMENTS
(a) Adjustments Upon Changes in Capitalization. Subject to any
required action by the Company's directors and shareholders, the number of
shares provided for in each outstanding stock option and the price per
share thereof, and the number of shares provided for in the Plan, shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of the Company's Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Common Stock), a stock split, a reverse stock split, or any other increase
or decrease in the number of such shares effected without receipt of
consideration by the Company, and shall also be proportionately adjusted in
the event of a spin-off, spin-out, or other distribution of assets to
shareholders of the Company, to the extent necessary to prevent dilution of
the interests of grantees pursuant to the Plan or of the other shareholders
of the Company, as applicable. If the Company shall engage in a merger,
consolidation, reorganization or recapitalization, each outstanding stock
option (or if such transaction involves less than all of the shares of the
Company's Common Stock, then a number of stock options proportionate to the
number of such involved shares), shall become exercisable for the
securities and other consideration to which a holder of the number of
shares of the Company's Common Stock subject to each such stock option
would have been entitled to receive in any such merger, consolidation,
reorganization or recapitalization.
(b) Acceleration. In the event of a potential merger or consolidation
involving the Company (regardless of whether the Company is the surviving
entity of such merger or consolidation), a potential liquidation or
dissolution of the Company, a potential sale or other disposition by the
Company of all or substantially all of its assets, or a potential
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sale or other disposition by the shareholders of the Company of all or
substantially all of the outstanding Common Stock to one purchaser (any
such merger, consolidation, liquidation, dissolution, or sale being
referred to herein as a "Significant Event"), then the Company shall have
the option of terminating all outstanding stock options upon the actual
occurrence of the Significant Event, by notice to all optionees at least 15
days before the occurrence of the Significant Event. In consideration for
this option of the Company to terminate outstanding stock options, the
Company, if it exercises its option, shall waive any and all restrictions
on the vesting of optionees' rights under stock options granted pursuant to
this Plan, and optionees' rights under their respective stock options shall
vest in full, subject to the actual occurrence of the Significant Event.
Any exercise by an optionee in these circumstances may be conditioned upon
the occurrence of the Significant Event. If the Company exercises its
option under this paragraph (b), upon the actual occurrence of the
Significant Event each outstanding stock option shall terminate. If the
potential Significant Event does not in fact occur for any reason, then the
Company's exercise of its option under this paragraph (b) shall have no
effect and the optionee's rights will be vested only to the extent that
they would be vested if the Company had never exercised its option under
this paragraph (b). Notwithstanding any other provision of this Plan to
the contrary, with regard to any and all optionees subject to Section 16 of
the 1934 Act, if the Company exercises its option herein, the stock options
held by such optionees shall terminate as set forth above, provided,
however, that vesting of any such optionee's rights under such stock
options shall not be accelerated without the prior consent of such
optionee.
(c) Change of Par Value. In the event of a change in the Company's
Common Stock which is limited to a change of all of its authorized shares
with par value into the same number of shares with a different par value or
without par value, the shares resulting from any such change shall be
deemed to be Common Stock within the meaning of the Plan.
(d) Miscellaneous. The adjustments provided for in this Article shall
be made by the Committee, whose determination in that respect shall be
final, binding and conclusive. Except as hereinbefore expressly provided
in this Article, the holder of a stock option shall not be entitled to the
privilege of stock ownership as to any shares of Common Stock or other
stock not actually issued and delivered to the holder. Any issue by the
Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect and no adjustment by reason
thereof shall be made with respect to the number or price of shares of the
Company's Common Stock subject to any stock option. The grant of a stock
option pursuant to the Plan shall not affect in any way the right or power
of the Company to, among other things, make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge
or to consolidate or to dissolve or liquidate or sell or transfer all or
any part of its business or assets.
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ARTICLE IX
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ISSUANCE OF STOCK CERTIFICATES
Upon exercise of a stock option, the person exercising the stock
option shall be entitled to one (1) stock certificate evidencing the shares
acquired upon such exercise; provided, however, that any person who tenders
Common Stock of the Company in payment of a portion or all of the purchase price
of Common Stock purchased upon exercise of the stock option shall be entitled to
receive a separate certificate representing the number of shares purchased in
consideration of the tender of such Common Stock.
ARTICLE X
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CONTINUATION OF EMPLOYMENT
Nothing contained in the Plan (or in any stock option granted pursuant
to the Plan) shall confer upon any employee any right to continue in the employ
of the Company or any Parent Corporation or Subsidiary Corporation or constitute
any contract or agreement of employment or interfere in any way with the right
of the Company, the Parent Corporation or any Subsidiary Corporation to reduce
any person's compensation from the rate in existence at the time of the granting
of a stock option or to terminate such person's employment. Nothing contained
herein or in any Agreement shall affect any other contractual rights of an
employee.
ARTICLE XI
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AMENDMENT OR DISCONTINUANCE
The Board of the Company may at any time and from time to time amend,
rescind, suspend or terminate the Plan, as it shall deem advisable, provided
that the Plan may not be amended in any manner which would cause the Plan to no
longer comply with Rule 16b-3 of the General Rules and Regulations under the
1934 Act, or any successor rule, or the provisions of the Code applicable to
Incentive Stock Options, as such rule or provisions shall read as of the time of
amendment. In addition to Board approval of any amendment to the Plan, if Rule
16b-3 of the General Rules and Regulations under the 1934 Act, or any successor
rule, or the provisions of the Code applicable to Incentive Stock Options, as
such rule or provisions shall read as of the time of amendment, requires
shareholder approval of such amendment, then such amendment shall be approved by
the holders of a majority of the voting stock of the Company (voting as a single
class) present, or represented, and entitled to vote at a meeting of such
shareholders duly held in accordance with the applicable laws of the state or
other jurisdiction in which the Company is incorporated.
In addition, no change may be made in, and no amendment, rescission,
suspension or termination of the Plan shall have an effect on, stock options
previously granted under the Plan
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which may impair or alter the rights or obligations of the holders thereof,
except that any change may be made in stock options previously granted with the
consent of the optionees.
ARTICLE XII
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MISCELLANEOUS
(a) Governing Law. The Plan and the stock options issued hereunder
shall be governed by, and construed and enforced in accordance with, the
laws of the State of Texas applicable to contracts made and performed
within that State.
(b) No Liability for Good Faith Determinations. Neither the members
of the Board nor any member of the Committee shall be liable for any act,
omission or determination taken or made in good faith with respect to the
Plan or any stock option granted under it. All Board and Committee members
shall also be entitled, with respect to all matters relating to the Plan,
to all of the protections and rights, including without limitation
indemnification and limitation of liability rights, provided to Board
members generally pursuant to applicable law, the Articles of Incorporation
of the Company, the Bylaws of the Company or otherwise.
(c) Information Confidential. As partial consideration for the
granting of each stock option hereunder and subject to the provisions of
applicable law, the optionee shall keep confidential the manner and amount
of his participation in the Plan; provided, however, that such information
may be given in confidence to a financial institution to the extent that
such information is necessary in order to secure a loan for the exercise of
any stock options granted to such optionee. In the event any breach of
this promise comes to the attention of the Committee, and in addition to
any other rights and remedies of the Company or the Board against such
optionee, in determining whether to recommend the grant of any future stock
option to such optionee, the Committee shall take into consideration such
breach as a factor militating against the advisability of granting any
future stock option to such employee.
(d) Other Benefits. Participation in the Plan shall not preclude the
optionee from eligibility in any other stock option plan of the Company,
its Parent Corporation or any Subsidiary Corporation or any benefit,
insurance, pension, profit sharing, retirement, bonus or other extra
compensation plans that the Company, its Parent Corporation or any
Subsidiary Corporation has adopted, or may, at any time, adopt for the
benefit of its employees.
(e) Execution of Receipts and Releases. Any issuance or transfer of
shares of Common Stock to the optionee, or to his legal representative,
heir, legatee or distributee, in accordance with the provisions hereof,
shall, to the extent thereof, be in full satisfaction of all claims of such
persons hereunder. The Board may require any optionee, legal
representative, heir, legatee or distributee, as a condition precedent to
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such issuance or transfer, to execute a release and receipt therefor in
such form as it shall determine.
(f) Company Records. Records of the Company, the Parent Corporation
or any Subsidiary Corporation regarding the optionee's period of
employment, termination of employment and the reason therefor, leaves of
absence, re-employment and other matters shall be conclusive for all
purposes hereunder, unless determined by the Committee in its sole
discretion to be incorrect.
(g) Information. The Company, the Parent Corporation and any
Subsidiary Corporation shall, upon request or as may be specifically
required hereunder, furnish or cause to be furnished to the Committee all
of the information or documentation that is necessary or required by the
Committee or the Board to perform their respective duties and functions
under the Plan.
(h) No Liability of Company. The Company assumes no obligation or
responsibility to the optionee or his legal representatives, heirs,
legatees or distributees for any act of, or failure to act by, the
Committee or the Board.
(i) Severability. In the event any provision of the Plan shall be
held to be illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining provisions hereof, but shall be fully
severable and the Plan shall be construed and enforced as if the illegal or
invalid provision had never been included herein.
(j) Notice. Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered or sent by mail.
Any notice required or permitted to be delivered hereunder shall be deemed
to be delivered on the date that it is personally delivered or, whether
actually received or not, on the third business day after it is deposited
in the United States mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address which such
person has theretofore specified by written notice delivered in accordance
herewith. The Company or an optionee may change, at any time and from time
to time, by written notice to the other, the address which it or he had
theretofore specified for receiving notices. Until it is changed in
accordance herewith, the Company and each optionee shall specify as its and
his address for receiving notices the address set forth in the Agreement
pertaining to the shares to which such notice relates.
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ARTICLE XIII
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SHAREHOLDER APPROVAL
The Plan shall be effective as of the date when it is approved by the
holders of a majority of the outstanding voting stock of the Company (voting as
a single class) present, or represented, and entitled to vote at a meeting of
such shareholders duly held in accordance with the applicable laws of the state
or other jurisdiction in which the Company is incorporated.
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