As filed with the Securities and Exchange Commission on July 2, 1996
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MEDTRONIC, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0793183
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7000 Central Avenue N.E. 55432
Minneapolis, Minnesota (Zip Code)
(Address of principal executive offices)
MEDTRONIC, INC.
Stock Options under 1993 Stock Option Plan and 1995 Stock Option
and Compensation Plan of Acquired Company
(Full title of the plan)
Ronald E. Lund
Senior Vice President,
General Counsel and Secretary
Medtronic, Inc.
7000 Central Avenue N.E.
Minneapolis, MN 55432
(Name and address of agent for service)
(612) 574-4000
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Aggregate Offering Amount of
to be Registered Registered Price Per Share (1) Price (1) Registration Fee
- --------------------- ------------------ --------------------- --------------------- ------------------
<S> <C> <C> <C> <C>
Common Stock, $.10 307,060
par value (2) Shares $54.375 $16,696,387.50 $5,757.38
=======================================================================================================
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and based
on the average of the high and low sale prices of the registrant's Common Stock
on June 26, 1996 as reported by the New York Stock Exchange.
(2) Each share of Common Stock includes a Preferred Stock Purchase Right
pursuant to the registrant's Shareholder Rights Plan.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, previously filed (File No. 1-7707) with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated in this
Registration Statement by reference, as of their respective dates, and made a
part hereof:
(1) The Annual Report on Form 10-K of Medtronic, Inc. (the "Company")
for the fiscal year ended April 30, 1995 filed pursuant to
Section 13(a) or 15(d) of the Exchange Act;
(2) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the
Annual Report referred to in (1) above; and
(3) The description of the Company's Common Stock contained in a
registration statement filed under Section 12 of the Exchange
Act, including any amendment or report filed for the purpose of
updating such description.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date
of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all of the shares of Common Stock offered have
been sold or which deregisters all shares of the Common Stock then remaining
unsold shall be deemed to be incorporated by reference in and to be a part of
this Registration Statement from the date of filing of such documents.
Any statement contained in a document incorporated, or deemed to be
incorporated, by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or incorporated herein by reference or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
II-1
<PAGE>
Item 6. Indemnification of Directors and Officers.
Section 302A.521 of the Minnesota Business Corporation Act provides
that a corporation shall indemnify any person who was or is threatened to be
made a party to any proceeding by reason of the former or present official
capacity of such person, against judgments, penalties and fines, including
without limitation, excise taxes assessed against such person with respect to an
employee benefit plan, settlements and reasonable expenses, including attorneys'
fees and disbursements, incurred by such person in connection with the
proceeding, if, with respect to the acts or omissions of such person complained
of in the proceeding, such person has not been indemnified by another
organization or employee benefit plan for the same expenses with respect to the
same acts or omissions, acted in good faith, received no improper personal
benefit and Section 302A.255 (which pertains to director conflicts of interest),
if applicable, has been satisfied; in the case of a criminal proceeding, had no
reasonable cause to believe the conduct was unlawful; and in the case of acts or
omissions by person in their official capacity for the corporation, reasonably
believed that the conduct was in the best interests of the corporation, or in
the case of acts or omissions by persons in their capacity for other
organizations, reasonably believed that the conduct was not opposed to the best
interests of the corporation. The Company's Articles of Incorporation and Bylaws
do not limit the Company's obligation to indemnify such persons.
The Company's Articles of Incorporation limit the liability of its
directors to the full extent permitted by the Minnesota Business Corporation
Act. Specifically, directors of the Company will not be personally liable for
monetary damages for breach of fiduciary duty as directors except liability for
(i) any breach of the duty of loyalty to the Company or its shareholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) dividends or other distributions of corporate
assets that are in contravention of certain statutory or contractual
restrictions, (iv) violations of certain Minnesota securities laws, or (v) any
transaction from which the director derives an improper personal benefit.
Liability under federal securities law is not limited by the Company's Articles
of Incorporation.
Subject to exclusions and limitations, the Company maintains certain
insurance coverage against liability which a director or officer may incur in
his or her capacity as such.
Item 7. Exemption from Registration Claimed.
Not applicable.
II-2
<PAGE>
Item 8. Exhibits.
Exhibit Description
4.1 Medtronic Restated Articles of Incorporation, as amended to date,
incorporated herein by reference to Exhibit 3.1 in Medtronic's
Quarterly Report on Form 10-Q for the quarter ended July 28,
1995, filed with the Commission on September 8, 1995.
4.2 Medtronic Bylaws, as amended to date, incorporated herein by
reference to Exhibit 3.2 in Medtronic's Annual Report on Form
10-K for the year ended April 30, 1991, filed with the Commission
under cover of Form SE dated July 24, 1991.
4.3 Form of Rights Agreement dated as of June 27, 1991 between
Medtronic and Norwest Bank Minnesota, National Association,
including as Exhibit A thereto the form of Preferred Stock
Purchase Right Certificate, incorporated by reference to Exhibit
(1) of Medtronic's Form 8-A Registration Statement dated June 27,
1991 and filed with the Commission on June 28, 1991.
5 Opinion of Ronald E. Lund, General Counsel of the Company.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Ronald E. Lund (included in Exhibit 5).
24 Powers of Attorney.
99.1 InStent Inc. 1993 Stock Option Plan.
99.2 Form of Option Agreement for 1993 Stock Option Plan.
99.3 InStent Inc. 1995 Stock Option and Compensation Plan.
99.4 Form of Option Agreement for 1995 Stock Option and Compensation
Plan.
Item 9. Undertakings
A. The Company 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 hereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in this Registration Statement; and (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)
do not apply if this Registration Statement is on Form S-3 or Form
S-8, and 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 Company pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
II-3
<PAGE>
(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 this offering.
B. The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company'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 herein, 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 Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company 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 Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-4
<PAGE>
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 Minneapolis, State of Minnesota, on June 28, 1996.
MEDTRONIC, INC.
Dated: June 28, 1996 By: /s/ William W. George
William W. George
President and Chief Executive Officer
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.
Dated: June 28, 1996 By: /s/ William W. George
William W. George
President and Chief Executive Officer
Dated: June 28, 1996 By: /s/ Robert L. Ryan
Robert L. Ryan
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
F. Caleb Blodgett
Arthur D. Collins, Jr.
William W. George
Antonio M. Gotto, Jr., M.D.
Bernadine P. Healy, M.D.
Vernon H. Heath
Thomas E. Holloran
Glen D. Nelson, M.D. DIRECTORS
Richard L. Schall
Jack W. Schuler
Gerald W. Simonson
Gordon M. Sprenger
Richard W. Swalin, Ph.D.
Winston R. Wallin
Ronald E. Lund, Senior Vice President, General Counsel and Secretary of
the Registrant, by signing his name hereto, does hereby sign this document on
behalf of each of the above named directors of the Registrant pursuant to powers
of attorney duly executed by such persons.
Dated: June 28, 1996 By: /s/ Ronald E. Lund
Ronald E. Lund
Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit Paper (P)
or Electronic (E)
4.1 Medtronic Restated Articles of Incorporation, as --
amended to date, incorporated herein by reference
to Exhibit 3.1 in Medtronic's Quarterly Report on
Form 10-Q for the quarter ended July 28, 1995,
filed with the Commission on September 8, 1995.
4.2 Medtronic Bylaws, as amended to date, incorporated --
herein by reference to Exhibit 3.2 in Medtronic's
Annual Report on Form 10-K for the year ended
April 30, 1991, filed with the Commission under cover
of Form SE dated July 24, 1991.
4.3 Form of Rights Agreement dated as of June 27, 1991 --
between Medtronic and Norwest Bank Minnesota, National
Association, including as Exhibit A thereto the form
of Preferred Stock Purchase Right Certificate,
incorporated by reference to Exhibit (1) of Medtronic's
Form 8-A Registration Statement dated June 27, 1991
and filed with the Commission on June 28, 1991.
5 Opinion of Ronald E. Lund, General Counsel of the Company. E
23.1 Consent of Price Waterhouse LLP. E
23.2 Consent of Ronald E. Lund (included in Exhibit 5). --
24 Powers of Attorney. E
99.1 InStent Inc. 1993 Stock Option Plan. E
99.2 Form of Stock Option Agreement for 1993 Stock Option Plan. E
99.3 InStent Inc. 1995 Stock Option and Compensation Plan. E
99.4 Form of Stock Option Agreement for 1995 Stock Option and E
Compensation Plan.
June 28, 1996
Medtronic, Inc.
7000 Central Avenue N.E.
Minneapolis, MN 55432
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-8 under the Securities
Act of 1933, as amended (the "Registration Statement"), relating to the offering
of up to 307,060 shares of Common Stock, $ .10 par value (the "Shares"), of
Medtronic, Inc., a Minnesota corporation (the "Company"), pursuant to
outstanding stock options assumed by Medtronic, Inc. in connection with its
acquisition of InStent Inc., I have examined such corporate records and other
documents, including the Registration Statement, and have reviewed such matters
of law as I have deemed relevant hereto and, based upon such examination and
review, it is my opinion that all necessary corporate action on the part of the
Company has been taken to authorize the issuance and sale of the Shares and
that, when issued and sold as contemplated in the Registration Statement, the
Shares will be legally issued, fully paid and nonassessable under the current
laws of the State of Minnesota.
I am admitted to the practice of law in the State of Minnesota and the foregoing
opinions are limited to the laws of that state and the federal laws of the
United States of America.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Ronald E. Lund
Ronald E. Lund
Senior Vice President,
General Counsel and Secretary
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated May 22, 1995, which appears on page 38
of the 1995 Annual Shareholder Report of Medtronic, Inc., which is incorporated
by reference in Medtronic's Annual Report on Form 10-K for the year ended April
30, 1995. We also consent to the incorporation by reference of our report on the
Financial Statement Schedule which appears on page 11 of such Annual Report on
Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
June 28, 1996
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each of the undersigned directors and
officers of Medtronic, Inc., a Minnesota corporation, hereby constitutes and
appoints WILLIAM W. GEORGE and RONALD E. LUND, or either of them, their true and
lawful attorneys-in-fact and agents, each with full power and authority to act
as such without the other, with full power of substitution and resubstitution,
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities, to do any and all acts and things and to execute any and all
instruments that any of said attorneys and agents may deem necessary or
advisable in connection with Medtronic's acquisition of InStent Inc. ("InStent")
to enable the shareholders of InStent receiving Medtronic common stock in
connection with such acquisition (including but not limited to option holders
under the InStent 1993 Stock Option Plan and the InStent 1995 Stock Option and
Compensation Plan, who will receive Medtronic common stock upon any exercise of
options under such plans) to receive registered Medtronic common stock or to
resell such Medtronic common stock in compliance with the Securities Act of
1933, as amended, with any regulations, rules or requirements of the Securities
and Exchange Commission thereunder, and with any state Blue Sky laws or
regulations in connection therewith, including specifically, but without
limiting the generality of the foregoing, power and authority to sign the names
of the undersigned to the Registration Statement on Form S-8 therefor (or other
appropriate Form), to any amendment to such Registration Statement, and to any
instrument or document filed with said Commission as a part of or in connection
with such Registration Statements or any amendment thereto; and the undersigned
hereby ratify and confirm all that said attorneys and agents, or their
substitutes or resubstitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned have subscribed their presents
effective as of the 2nd day of May, 1996.
By/s/ F. Caleb Blodgett By/s/ Glen D. Nelson, M.D.
F. Caleb Blodgett Glen D. Nelson, M.D.
By/s/ Arthur D. Collins, Jr. By/s/ Robert L. Ryan
Arthur D. Collins, Jr. Robert L. Ryan
By/s/ Gary L. Ellis By/s/ Richard L. Schall
Gary L. Ellis Richard L. Schall
By/s/ William W. George By/s/ Jack W. Schuler
William W. George Jack W. Schuler
By/s/ Antonio M. Gotto, Jr., M.D. By/s/ Gerald W. Simonson
Antonio M. Gotto, Jr., M.D. Gerald W. Simonson
By/s/ Bernadine P. Healy, M.D. By/s/ Gordon M. Sprenger
Bernadine P. Healy, M.D. Gordon M. Sprenger
By/s/ Vernon H. Heath By/s/ Richard A. Swalin, Ph.D.
Vernon H. Heath Richard A. Swalin, Ph.D.
By/s/ Thomas E. Holloran By/s/ Winston R. Wallin
Thomas E. Holloran Winston R. Wallin
12/4/92
InStent Inc.
1993 Stock Option Plan
<PAGE>
InStent Inc.
1993 Stock Option Plan
I. PURPOSES . . . . . . . . . . . . . . . . . . . . 1
II. AMOUNT OF STOCK SUBJECT TO THE PLAN . . . . . . . . 1
III. ADMINISTRATION. . . . . . . . . . . . . . . . . . . 2
IV. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . 5
V. OPTION PRICE AND PAYMENT . . . . . . . . . . . . . 5
VI. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . 7
VII. TERM OF OPTIONS AND LIMITATIONS ON THE
RIGHT OF EXERCISE . . . . . . . . . . . . . . . 7
VIII. EXERCISE OF OPTIONS . . . . . . . . . . . . . . . . 8
IX. NONTRANSFERABILITY OF OPTIONS . . . . . . . . . . . 9
X. TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . 9
XI. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN
TRANSACTIONS . . . . . . . . . . . . . . . . . 12
XII. RIGHT TO TERMINATE EMPLOYMENT . . . . . . . . . . 15
XIII. PURCHASE FOR INVESTMENT . . . . . . . . . . . . . 15
XIV. ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT
OF EXPENSES . . . . . . . . . . . . . . . . . 16
XV. WITHHOLDING TAXES . . . . . . . . . . . . . . . . 17
XVI. LISTING OF SHARES AND RELATED MATTERS . . . . . . 18
XVII. AMENDMENT OF THE PLAN . . . . . . . . . . . . . . 18
XVIII. TERMINATION OR SUSPENSION OF THE PLAN . . . . . . 19
XIX. GOVERNING LAW . . . . . . . . . . . . . . . . . . 19
XX. PARTIAL INVALIDITY . . . . . . . . . . . . . . . 19
XXI. EFFECTIVE DATE . . . . . . . . . . . . . . . . . 19
i
<PAGE>
InStent Inc.
1993 STOCK OPTION PLAN
I. PURPOSES
InStent Inc. (the "Company") desires to afford certain of its key
employees and the key employees of any subsidiary corporation or parent
corporation of the Company hereafter formed or acquired, who are responsible for
the continued growth of the Company, and certain other persons, an opportunity
to acquire a proprietary interest in the Company, and, thus, to create in such
employees and such other persons an increased interest in and a greater concern
for the welfare of the Company and its subsidiaries.
The Company, by means of this 1993 Stock Option Plan (the "Plan"),
seeks to retain the services of persons now holding key positions with it and
its subsidiaries and parent corporations and to secure the services of persons
capable of filling such positions offered in such companies.
The stock options ("Options") offered pursuant to the Plan are a
matter of separate inducement and are not in lieu of any salary or other
compensation for the services of any key employee.
The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or options that do not
meet the requirements for Incentive Options ("NonQualified Options"), but the
Company makes no warranty as to the qualification of any Option as an Incentive
Option.
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
The total number of shares of common stock of the Company which may be
purchased pursuant to the exercise of Options granted under the Plan shall not
exceed, in the aggregate, 400,000 shares of the authorized common stock, $.01
par value per share, of the Company (the "Shares").
1
<PAGE>
Shares which may be acquired under the Plan may be either authorized
but unissued Shares, Shares of issued stock held in the Company's treasury, or
both, at the discretion of the Company. If and to the extent that Options
granted under the Plan expire or terminate without having been exercised, the
Shares covered by such expired or terminated options shall again become
available for award under the Plan, provided that the grant and the terms of
such new Options shall in all respects comply with the provisions of the Plan.
Except as provided in Article XXI, the Company may, from time to time
during the period beginning March 1, 1993 (the "Effective Date") and ending
February 28, 2003 (the "Termination Date"), grant to certain salaried employees
of the Company, of any subsidiary corporation or parent corporation of the
Company hereafter formed or acquired, Incentive Options on the terms hereinafter
set forth and to such other persons as the Board of Directors (as hereinafter
defined) deems appropriate in its discretion Non-Qualified Options on the terms
hereinafter set forth.
As used in the Plan, the term "subsidiary corporation" and "parent
corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 424(f) and 424(e) of the Code.
III. ADMINISTRATION.
The board of directors of the Company (the "Board of Directors") shall
administer the Plan.
The Board of Directors may, but shall not be required to, appoint from
among its members a stock option committee consisting of at least three
directors, and, subject to applicable provisions of law and of the Certificate
of Incorporation, as amended, and the bylaws of the Company, may delegate to
such committee some or all of the powers that this Plan confers upon the Board
of Directors; provided, however, that in the event the Company shall register (a
"Registration") any class of its equity securities under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), then, prior to
such registration, the Board of Directors shall be required to designate from
among its members a stock option committee (the "Committee") consisting of three
members, each of whom shall be a "disinterested person" within the meaning of
2
<PAGE>
Rule 16b-3 (or any successor rule or regulation) promulgated under the Exchange
Act, to administer the Plan. In such event, subject to applicable provisions of
law and of the Certificate of Incorporation, as amended, and the bylaws of the
Company, all of the powers that this Plan confers upon the Board of Directors
may at any time and from time to time be exercised by the Committee. A majority
of the members of the Committee shall constitute a quorum, and the act of a
majority of the members of the Committee shall be the act of the Committee. Any
member of the Committee may be removed at any time, either with or without
cause, by resolution adopted by the Board of Directors, and any vacancy on the
Committee may be filled at any time by resolution adopted by the Board of
Directors; provided, however, that following a Registration, any person who
becomes a member of the Committee shall be a "disinterested person".
Subject to the express provisions of the Plan, the Board of Directors
shall have authority, in its discretion, to determine the employees, or other
persons, as the case may be, to whom Options shall be granted, the time when
such Options shall be granted, the number of Shares which shall be subject to
each Option, the exercise price of each Option, the period(s) during which such
Options shall be exercisable (whether in whole or in part) and the conditions,
if any, as to such exercisability, and the other terms and provisions thereof.
Subject to the express provisions of the Plan, the Board of Directors
shall also have authority to construe the Plan and the Options granted
thereunder, to amend the Plan and the Options granted thereunder, to prescribe,
amend and rescind rules and regulations relating to the Plan, to determine the
terms and provisions of the respective Options (which need not be identical) and
to make all other determinations necessary or advisable for administering the
Plan. The Board of Directors also shall have the authority to require, in its
discretion, as a condition of the granting of any such Option, that the
employee, or such other person, as the case may be, agree (i) not to sell or
otherwise dispose of Shares acquired pursuant to the award of Options for a
period of six months following the date of acquisition of such Shares, and (ii)
that in the event of termination of employment of such employee, other than as a
result of dismissal without cause, such employee, or such other person, as the
case may be, will not, for a period to be fixed at the time of the grant of the
Option, enter into any other employment or participate directly or indirectly in
any other business or enterprise which is competitive with the business of the
Company or any subsidiary corporation or parent corporation of the Company, or
3
<PAGE>
enter into any employment in which such employee will be called upon to utilize
special knowledge obtained through employment with the Company or any subsidiary
corporation or parent corporation thereof.
Without limiting the foregoing, upon granting an Option, the Board of
Directors shall notify the person to whom the Option shall have been granted and
shall deliver to such person an Option Agreement evidencing such Option. An
award of an Option shall immediately expire if the person to whom the Board of
Directors has decided to grant an Option shall not have (and no Option shall be
exercisable unless and until such person has) signed the Option Agreement and
returned it to the Company within thirty days after delivery to such individual
of the Option Agreement. Subject to the express provisions of this Plan, and
except to the extent inconsistent with Section 422 of the Code, the Board of
Directors may prescribe in the Option Agreement such provisions as it shall
determine, in its discretion, including but not limited to provisions governing
(a) vesting of the Options (which may vary from one Option Agreement to
another), (b) the times at which, the manner in which, the number and size of
installments (which need not be equal) for which, and the contingencies upon
which, an Option may be exercised during its term, (c) termination, vesting or
redemption of, or adjustment in, Options, (d) the effect, if any, of the
termina-tion of employment of an employee Option holder, (e) the number of
Shares for which an Option may be exercised during its term and (f) conditions
precedent to the exercise of the Option.
The determination of the Board of Directors on matters referred to in
this Article III shall be conclusive.
The Board of Directors may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred by the
Board of Directors in the engagement of such counsel, consultant or agent shall
be paid by the Company. No member of the Board of Directors shall be liable for
any action or determination made in good faith with respect to the Plan or any
award of Options granted hereunder.
4
<PAGE>
IV. ELIGIBILITY
Incentive Options may be granted only to salaried employees of the
Company, or of any subsidiary corporation or parent corporation of the Company,
and shall not be granted to any officer or director who is not also a salaried
key employee. Any person who shall have retired from the Company and all
subsidiary corporations and parent corporations of the Company, although such
person shall have entered into a consulting contract with the Company or with
any subsidiary corporation or parent corporation of the Company, shall not be
eligible to receive an Incentive Option. Non-Qualified Options may be granted to
such persons as the Board of Directors deems appropriate in its discretion.
The Plan does not create a right in any employee to participate in the
Plan nor does it create a right in any employee to have any Options granted to
him or her.
An Option holder shall have none of the rights of a shareholder with
respect to Shares underlying such Option until such Shares shall have been
issued upon exercise of the Option.
V. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Non-Qualified Option
granted hereunder shall be such amount as the Board of Directors shall deem
appropriate in compliance with all applicable laws.
The price for each Share purchasable under any Incentive Option
granted hereunder shall be such amount as the Board of Directors shall, in its
best judgment, determine to be not less than one hundred percent (100%) of the
fair market value per Share at the date the Option is granted; provided,
however, that in the case of an Incentive Option granted to a person who, at the
time such Incentive Option is granted, owns shares of the Company or any
subsidiary corporation or parent corporation of the Company possessing more than
ten percent (10%) of the total combined voting power of all classes of shares of
the Company or of any such subsidiary corporation or parent corporation of the
Company, the purchase price for each share shall be such amount as the Board of
Directors, in its best judgment, shall determine to be not less than one hundred
ten percent (110%) of the fair market value per share at the date the Option is
granted. In determining stock ownership of an employee for any purposes under
the Plan, the rules of Section 424(d) of the Code shall be applied, and the
Board of Directors may rely on representations of fact made to it by the
employee and believed by it to be true.
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If the Shares are listed on a national securities exchange in the
United States on any date on which the fair market value per Share is to be
determined, the fair market value per Share shall be deemed to be the average of
the high and low quotations at which such Shares are sold on such national
securities exchange on the date such Option is granted. If the Shares are listed
on a national securities exchange in the United States on such date but the
Shares are not traded on such date, or such national securities exchange is not
open for business on such date, the fair market value per Share shall be
determined as of the closest preceding date on which such exchange shall have
been open for business and the Shares were traded. If the Shares are listed on
more than one national securities exchange in the United States on the date on
which the fair market value per Share is to be determined, the Board of
Directors shall determine which national securities exchange shall be used for
the purpose of determining the fair market value per Share.
For purposes of this Plan, the determination by the Board of Directors
of the fair market value of a Share shall be conclusive.
Upon the exercise of an Option granted hereunder, the Company shall
cause the purchased Shares to be issued only when it shall have received the
full purchase price for the Shares in cash or by certified check; provided,
however, that in lieu of cash, the holder of an Option may, if and to the extent
the terms of such Option so provide and to the extent permitted by applicable
law, exercise an Option (a) in whole or in part, by delivering to the Company
shares of common stock of the Company (in proper form for transfer and
accompanied by all requisite stock transfer tax stamps or cash in lieu thereof)
owned by such holder having a fair market value equal to the exercise price
applicable to that portion of the Option being exercised by the delivery of such
Shares or (b) in part, by delivering to the Company an executed promissory note,
on such terms and conditions as the Board of Directors shall determine, at the
time of grant, in its sole discretion; provided, however, that the principal
amount of such note shall not exceed ninety percent (90%) (or such lesser
percentage as would be permitted by applicable margin regulations) of the
aggregate purchase price of the Shares then being purchased pursuant to the
exercise of such Option. The fair market value of the stock so delivered shall
be determined as of the date immediately preceding the date on which the Option
is exercised, or as otherwise may be required in order to comply with or to
conform to the requirements of any applicable laws or regulations.
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VI. USE OF PROCEEDS
The proceeds of the sale of Shares pursuant to the Plan are to be
added to the general funds of the Company and used for its general corporate
purposes as the Board of Directors in its discretion shall determine.
VII. TERM OF OPTIONS AND LIMITATIONS ON THE
RIGHT OF EXERCISE
Any Option shall be exercisable at such times, in such amounts and
during such period or periods as the Board of Directors shall determine at the
date of the grant of such Option; provided, however, that an Incentive Option
shall not be exercisable after the expiration of ten years from the date such
Option is granted; and provided further that, in the case of an Incentive Option
granted to a person who, at the time such Option is granted, owns stock of the
Company or any subsidiary corporation or parent corporation of the Company
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of any such subsidiary corporation or parent
corporation of the Com- pany, such Option shall not be exercisable after the
expiration of five years from the date such Option is granted.
Except to the extent otherwise provided under the Code, to the extent
that the aggregate fair market value of stock with respect to which Incentive
Options are exercisable for the first time by an employee during any calendar
year (under all stock option plans of the Company and of any parent corporation
or subsidiary corporation of the Company) exceeds one hundred thousand dollars
($100,000), such Options shall be treated as Non-Qualified Options. For purposes
of this limitation, (i) the fair market value of stock shall be determined as of
the time such Option is granted, (ii) the limitation will be applied by taking
into account options (under all stock option plans of the Company and of any
parent corporation or subsidiary corporation of the Company) in the order in
which they were granted, and (iii) Incentive Options granted before 1991 shall
not be taken into account.
Subject to the provisions of Article XVII, the Board of Directors
shall have the right to accelerate, in whole or in part, from time to time,
conditionally or unconditionally, the right to exercise any Option granted
hereunder.
Any Option not exercised in full within the period of exercisability
specified therein shall, at the end of such period, expire as to the unexercised
part.
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In no event shall an Option granted hereunder be exercisable for a
fraction of a Share.
VIII. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the optionee as to all or
part of the Shares covered thereby by the giving of written notice of the
exercise thereof to the Secretary of the Company or such other officer of the
Company designated in the Option Agreement at the principal business office of
the Company specifying the number of Shares to be purchased and specifying a
business day not more than (15) days from the date such notice is given, for the
payment of the purchase price against delivery of the Shares being purchased.
Subject to the terms of Articles XIII, XV and XVI, the Company shall cause
certificates for the Shares so purchased to be delivered to the optionee at the
principal business office of the Company against payment of the full purchase
price, on the date specified in the notice of exercise.
IX. NONTRANSFERABILITY OF OPTIONS
An Option granted hereunder shall not be transferable, whether by
operation of law or otherwise, other than by will or the laws of descent and
distribution, and any Option granted hereunder shall be exercisable, during the
lifetime of the holder, only by such holder.
X. TERMINATION OF EMPLOYMENT
Upon termination of employment of any employee with the Company and
all subsidiary corporations and parent corporations of the Company, an Option
previously granted to such employee, unless (with respect to Non-Qualified
Options) otherwise specified by the Board of Directors in such Non-Qualified
Option, shall, to the extent not theretofore exercised, terminate and become
null and void; provided, however, that:
(a) if the employee shall die while in the employ of such corporation or
during either the three month or one year period, whichever is applicable,
specified in clause (b) below and at such time such employee was entitled to
exercise an Option as herein provided, the legal representative of such
employee, or such person who acquired such Option by bequest or inheritance or
by reason of the death of the employee, may, not later
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than one year from the date of death, exercise such Option, to the extent not
theretofore exercised, in respect of any or all of such number of Shares as
specified by the Board of Directors in such Option; and
(b) if the employment of any employee to whom such Option shall have been
granted shall terminate by reason of the employee's retirement (at such age or
upon such conditions as shall be specified by the Board of Directors),
disability (as described in Section 22(e)(3) of the Code) or dismissal by the
employer other than for cause (as defined below), and at such time such employee
is entitled to exercise such Option as herein provided, such employee shall have
the right to exercise such Option, to the extent not theretofore exercised, in
respect of any or all of such number of Shares as specified by the Board of
Directors in such Option, at any time up to and including (i) three months after
the date of such termination of employment in the case of termination by reason
of retirement or dismissal other than for cause and (ii) one year after the date
of termination of employment in the case of termination by reason of disability.
In no event, however, shall any person be entitled to exercise any
Option after the expiration of the period of exercisability of such Option as
specified therein.
If an employee voluntarily terminates his or her employment, or is
discharged for cause, any Option granted hereunder shall, unless otherwise
specified by the Board of Directors in the Option, forthwith terminate with
respect to any unexercised portion thereof.
If an Option granted hereunder shall be exercised by the legal
representative of a deceased employee or former employee, or by a person who
acquired an Option granted hereunder by bequest or inheritance or by reason of
the death of any employee or former employee, written notice of such exercise
shall be accompanied by a certified copy of a letter testamentary or equivalent
proof of the right of such legal representative or other person to exercise such
Option.
For the purposes of the Plan, the term termination "for cause" shall
mean (i) with respect to an employee, who is a party to a written agreement
with, or, alternatively, participates in a
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compensation or benefit plan of the Company or a subsidiary corporation or
parent corporation of the Company, which agreement or plan contains a definition
of "for cause" or "cause" (or words of like import) for purposes of termination
of employment thereunder by the Company or such subsidiary corporation or parent
corporation of the Company, "for cause" or "cause" as defined in the most recent
of such agreements or plans, or (ii) in all other cases, as deter-mined by the
Board of Directors, in its sole discretion, including, without limitation, (a)
the willful commission by an employee of a criminal or other act that causes or
may cause substantial economic damage to the Company or a subsidiary corporation
or parent corportion of the Company or substantial injury to the business
reputation of the Company or a subsidiary corporation or parent corporation of
the Company; (b) the commission by an employee of an act of fraud in the
performance of such employee's duties on behalf of the Company, or a subsidiary
corporation or parent corporation of the Company; or (c) the continuing willful
failure of an employee to perform the duties of such employee to the Company or
a subsidiary corporation or parent corporation of the Company (other than such
failure resulting from the employee's incapacity due to physical or mental
illness), after written notice thereof (specifying the par-ticulars thereof in
reasonable detail) and a reasonable opportunity to be heard and cure such
failure are given to the employee by the Board of Directors. For purposes of the
Plan, no act, or failure to act on the employee's part shall be considered
"willful" unless done or omitted to be done by the employee not in good faith
and without reasonable belief that the employee's action or omission was in the
best interest of the Company or a subsidiary corporation or parent corporation
of the Company.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an "employee" of such corporation for purposes
of Section 422(a) of the Code. If an individual is on military, sick leave or
other bona fide leave of absence, such individual shall be considered an
"employee" for purposes of the exercise of an Option and shall be entitled to
exercise such Option during such leave if the period of such leave does not
exceed ninety (90) days, or, if longer, so long as the individual's right to
reemployment with the Company or any subsidiary or parent corporation of the
Company, as the case may be, is guaranteed either by statute or by contract. If
the period of leave exceeds ninety (90) days, the employment relationship shall
be deemed to have terminated on the ninety-first (91st) day of such leave,
unless the individual's right to reemployment is guaranteed by statute or
contract.
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A termination of employment shall not be deemed to occur by reason of
(i) the transfer of an employee from employment by the Company to employment by
a subsidiary corporation or a parent corporation of the Company, or (ii) the
transfer of an employee from employment by a subsidiary corporation or a parent
corporation of the Company to employment by the Company or by another subsidiary
corporation or parent corporation of the Company.
In the event of the complete liquidation or dissolution of a
subsidiary corporation of the Company, or in the event that such corporation
ceases to be a subsidiary corporation of the Company, any unexercised Options
theretofore granted to any person employed by such subsidiary corporation will
be deemed canceled unless such person is employed by the Company or by any
parent corporation or another subsidiary corporation of the Company after the
occurrence of such event. In the event an Option is to be can-celled pursuant to
the provisions of the previous sentence, notice of such cancellation will be
given to each employee holding unexer-cised Options, and such holder will have
the right to exercise such Options in full (without regard to any limitation set
forth or imposed pursuant to Article VII) during the thirty (30) day period
following the giving of such notice of cancellation.
XI. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN
TRANSACTIONS
In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
split-up, split-off, spin-off, combination of shares, exchange of shares, or
other like change in capital structure of the Company, an adjustment shall be
made to each outstanding Option so that each such Option shall thereafter be
exercisable for such securities, cash and/or other property as would have been
received in respect of the Shares subject to such Option had such Option been
exercised in full immediately prior to such change, and such an adjustment shall
be made successively each time any such change shall occur. The term "Shares"
after any such change shall refer to the securities, cash and/or property then
receivable upon exercise of an Option. In addition, in the event of any such
change, the Board of Directors shall make any further adjustment as may be
appropriate to the maximum number of Shares subject to the Plan, the maximum
number of Shares which may be granted to any one employee, and the number of
Shares and price per Share subject to outstanding Options as shall be equitable
to pre-vent dilution or enlargement of rights under such Options, and the
determination of the Board of Directors as to these matters shall be conclusive.
Notwithstanding the foregoing, (i) each such adjustment with respect to an
Incentive Option shall comply with the rules of Section 424(a) of the Code, and
(ii) in no event shall any adjustment be made which
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would render any Incentive Option granted hereunder other than an incentive
stock option for purposes of Section 422 of the Code.
In the event of a "change in control" of the Company, then all the
Options then outstanding shall immediately become exercisable. For purposes of
the Plan, a "change in control" of the Company occurs if:
(a) A change in control of the direction and administration of the
Company's business of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A (or any successor rule or
regulation) promulgated under the Exchange Act, whether or not the Company is
then subject to such reporting requirement; or
(b) Any "person" (as such terms is used in Sections 13(d) and 14(d)(2) of
the Exchange Act but excluding any employee benefit plan of the Company) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's outstanding
securities then entitled ordinarily (and apart from rights accruing under
special circumstances) to vote for the election of directors; or
(c) During any period of two consecutive years, the individuals who at the
beginning of such period constitute the Board of Directors or any individuals
who would be "Continuing Directors" (as hereinafter defined), cease for any
reason to constitute at least a majority thereof; or
(d) The Board of Directors shall approve a sale of
all or substantially all of the assets of the Company; or
(e) The Board of Directors shall approve any merger, consolidation, or
like business combination or reorganization of the Company, the consummation of
which would result in the occurrence of any event described in clause (b) or (c)
above;
provided, however, that none of the foregoing events shall constitute a change
in control if such event occurs as a result of an agreement or transaction
approved by the "Continuing Directors,"
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either before or after the occurrence of such event, and the Continuing
Directors in approving such agreement or transaction determine that it is not in
the best interest of the Company for such agreement or transaction to constitute
a change in control for purposes of the Plan.
For purposes of the Plan, "Continuing Directors" shall mean the
directors of the Company in office on the Effective Date and any successor to
any such director and any additional director who after the Effective Date (i)
was nominated or selected by a majority of the Continuing Directors in office at
the time of his nomination or selection and (ii) is not, at the time of his
monination or selection, an "affiliate" or "associate" (as defined in Regulation
12B under the Exchange Act) of any person who is the beneficial owner, directly
or indirectly, of securities representing ten percent (10%) or more of the
combined voting power of the Company's outstanding securities then entitled
ordinarily to vote for the election of directors.
The Board of Directors, in its discretion, may determine that, upon
the occurrence of a transaction described in the second preceding paragraph,
each Option outstanding hereunder shall terminate within a specified number of
days after the giving of notice to the holder, and such holder shall receive,
with respect to each Share subject to such Option, cash in an amount equal to
the excess of the fair market value of such Share immediately prior to the
occurrence of such transaction over the exercise price per Share of such Option.
The provisions contained in the preceding sentence shall be inapplicable to an
Option granted within six months before the occurrence of such transaction if
the holder of such Option is a Director or officer of the Company or a
beneficial owner of the Company who is described is Section 16(a) of the
Exchange Act, unless such holder dies or becomes disabled (within the meaning of
Section 22(e)(3) of the Code) prior to the expiration of such six-month period.
XII. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on any
subsidiary corporation or parent corporation thereof to continue the employment
of any holder of Options; and it shall not impose any obligation on the part of
any holder of Options to remain in the employ of the Company or of any
subsidiary corporation or parent corporation thereof.
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XIII. PURCHASE FOR INVESTMENT
Except as hereinafter provided, the Board of Directors may require any
holder of an Option granted hereunder, upon exercise of any Option granted
hereunder, to execute and deliver to the Company (a) stock powers with respect
to Shares underlying a particular Option and required to be held by a custodian,
and (b) a written statement, in form satisfactory to the Board of Directors, in
which such holder represents and warrants that Shares are being acquired for
such holder's own account, for investment only and not with a view to the resale
or distribution thereof. The holder shall, at the request of the Board of
Directors, be required to represent and warrant in writing that, to the extent
permitted by the terms of the Option, any subsequent resale or distribution of
Shares by the holder shall be made only pursuant to either (i) a Registration
Statement on an appropriate form under the Securities Act of 1933, as amended
(the "Securities Act"), which has become effective and is current with regard to
the Shares being sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption the holder
shall, prior to any offer of sale or sale of such Shares, obtain a prior
favorable written opinion of counsel, in form and substance satisfactory to
counsel for the Company, as to the applicability of such exemption.
XIV. ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT
OF EXPENSES
Upon any exercise of an Option which may be granted hereunder and
payment of the purchase price, a certificate or certificates for the Shares
shall be issued by the Company in the name of the person exercising the Option
and shall be delivered to or upon the order of such person or persons.
The Company may endorse such legend or legends upon the certificates
for Shares issued pursuant to the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such Shares as the Board of
Directors, in its discretion, determines to be necessary or appropriate to (i)
prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act, (ii) implement the provisions of the Plan
and any agreement between the Company and the optionee with respect to such
Shares, or (iii) permit the Company to determine the occurrence of disqualifying
disposition, as described in Section 421(b) of the Code, of Shares transferred
upon exercise of an Incentive Option granted under the Plan.
The Company shall pay all issue or transfer taxes, if any, with
respect to the issuance or transfer of Shares upon exercise of an Option, other
than taxes with respect to the transfer of Shares
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to any person other than the holder of such Option, as well as all fees and
expenses necessarily incurred by the Company in connection with such issuance or
transfer, except fees and expenses which may be required for the filing or
amending of a Registration Statement under the Securities Act, which fees and
expenses shall be borne by the recipient of the Shares unless such Registration
Statement has been filed by the Company for its own corporate purposes (and the
Company so states) in which event the recipient of the Shares shall bear only
such fees and expenses as are attributable solely to the inclusion of the Shares
he or she receives in the Registration Statement.
All Shares issued as provided herein shall be fully paid and
nonassessable to the extent permitted by law.
XV. WITHHOLDING TAXES
The Company may require an employee exercising a NonQualified Option
granted hereunder, or disposing of Shares acquired pursuant to the exercise of
an Incentive Option in a disqualifying disposition (within the meaning of
Section 421(b) of the Code), to reimburse the corporation that employs such
employee for any taxes required by any government to be withheld or otherwise
deducted and paid by such corporation in respect of the issuance, transfer or
disposition of such Shares. In lieu thereof, the corporation that employs such
employee shall have the right to withhold the amount of such taxes from any
other sums due or to become due from such corporation to the employee upon such
terms and conditions as the Board of Directors shall prescribe. The corporation
that employs such employee may, in its discretion, hold the stock certificate to
which such employee is entitled upon exercise of an Option as security for the
payment of such withholding tax liability, until cash sufficient to pay that
liability has been accumulated. In addition, at any time at which the Company
becomes subject to a withholding obligation under any applicable law with
respect to the exercise of a Non-Qualified Option (the "Tax Date"), except as
set forth below, a holder of a NonQualified Option may elect to satisfy, in
whole or in part, such holder's related personal tax liabilities (an "Election")
by (i) directing the Company to withhold from Shares issuable in the related
exercise either a specified number of Shares or Shares having a specified value
(in each case) not in excess of the related personal tax liabilities), (ii)
tendering Shares previously issued pursuant to the exercise of an Option or
other shares of the Company's common stock owned by the holder or (iii)
combining any or all of the foregoing options in any fashion. An Election shall
be irrevocable. The withheld Shares and other shares tendered in payment should
be valued at their fair market value (determined
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<PAGE>
in accordance with the principles set forth in Article V of the Plan) on the Tax
Date. The Board of Directors may disapprove of any Election, suspend or
terminate the right to make Elections or provide that the right to make
Elections shall not apply to particular grants, Shares or exercises. If a holder
is a person subject to Section 16 of the Exchange Act then (l) any Election by
such holder must be made (i) at least six months prior to the relevant Tax Date
or (ii) on or prior to the relevant Tax Date and during a period that begins on
the third business day following the date of release of publication of the
Company's quarterly or annual summary statements of sales and earnings and that
ends on the twelfth business day following such date and (2) the Election may
not be made with respect to an exercise, or the withholding obligation arising
thereon, if the relevant NonQualified Option was granted six months or less
prior to the date of Election. The Board of Directors may impose any other
conditions or restrictions on the right to make an Election as it shall deem
appropriate.
XVI. LISTING OF SHARES AND RELATED MATTERS
The Board of Directors may delay any issuance or delivery of Shares
upon the exercise of any Option if it determines that listing, registration or
qualification of Shares or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the sale or purchase of Shares under the Plan, until such listing,
registration, qualification, consent or approval shall have been effected or
obtained, or otherwise provided for, free of any conditions not acceptable to
the Board of Directors.
XVII. AMENDMENT OF THE PLAN
The Board of Directors may, from time to time, amend the Plan, provided that,
without the approval of the shareholders of the Company, there shall not be made
any amendment which will (i) increase the total number of Shares reserved for
Options under the Plan (other than an increase resulting from an adjustment
provided for in Article XI), (ii) reduce the exercise price of any Incentive
Option granted hereunder below the price required by Article V, (iii) modify the
provisions of the Plan relating to eligibility, or (iv) materially increase the
benefits accruing to participants under the Plan. The Board of Directors shall
be authorized to amend the Plan and the Options granted thereunder to permit the
Incentive Options granted thereunder to qualify as incentive stock options
within the meaning of Section 422 of the Code. The rights and obligations under
any Option granted before amendment of the Plan shall not be adversely affected
by any amendment of the Plan or Option without the
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<PAGE>
consent of the holder of the Option.
XVIII. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan.
The Plan, unless sooner terminated under Article XXI or by action of the Board
of Directors, shall terminate at the close of business on the Termination Date.
Options may not be granted while the Plan is suspended or after it is
terminated. Rights and obligations under any Option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except upon the consent of the person to whom such Options were granted.
The power of the Board of Direc-tors to construe and administer any Options
granted prior to the termination or suspension of the Plan under Article III
shall continue after such termination or during such suspension.
XIX. GOVERNING LAW
The Plan and the Options and all related matters shall be governed by,
and construed and enforced in accordance with, the laws of the State of
Delaware.
XX. PARTIAL INVALIDITY
The invalidity or illegality of any provision hereof shall not be
deemed to affect the validity of any of other provision.
XXI. EFFECTIVE DATE
The Plan shall become effective at 5:00 p.m., New York City time, on
the Effective Date, the date as of which the Plan was adopted by the Board of
Directors; provided, however, that if the Plan is not approved within twelve
(12) months before or after the Effective Date by (l) a vote of the shareholders
of the Company at an annual meeting or any special meeting or (2) written
consent of shareholders having not less than the minimum number of votes that
would be necessary to authorize such approval at a duly held shareholders'
meeting at which all shareholders entitled to vote thereon were present and
voted (but in any event not less than a majority of the votes necessary at such
a meeting), the Plan and any Options granted thereunder shall terminate.
17
INSTENT INC.
1993 PLAN EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement (the "Agreement") is executed by and
between _______________ (the "Optionee") and InStent Inc., a Minnesota
corporation, (the "Company") pursuant to the terms of the Company's 1993 Stock
Option Plan (as the same may be amended, modified or supplemented from time to
time, the "Plan). This Option Agreement is pursuant to, and replaces and
supersedes in its entirety that certain stock option letter agreement from the
Company to Optionee dated ______, and any other writing from the Company prior
to the date hereof relating to stock options, which are of no further force and
effect.
1. The Optionee is hereby granted the right and option to purchase ______
shares of the Company's common stock (the "Common Stock") at an option
price per share of $_____ (the "Option") in accordance with the Plan.
2. The terms and condition of the Plan, a copy of which has been delivered to
the Optionee, are hereby incorporated herein and made a part here by
reference as if set forth in full. In the event of any conflict or
inconsistency between the provisions of this Agreement and those of the
Plan, the provisions of the Plans shall govern and control.
3. The Option shall expire on ___________, which is ___ years from the date of
the grant of the Option (the "Grant Date"), unless otherwise terminated
pursuant to the provisions of the Plan. Except as provided in the Plan, in
the vent that the Optionee's employment by the Company is terminated, the
Option will terminate, will become null and void and will no longer be
exercisable commencing _____ months after the date of termination.
4. Except as provided in the Plan and in that certain Lock-Up Agreement dated
as of __________, by and between the Optionee and the Company, the Option
is immediately exercisable in full.
5. Except for any transfer pursuant to the Plan, the Option may not be
transferred, pledged or assigned. The Option may be exercised during the
lifetime of the Optionee only by the Optionee or the Optionee's guardian or
legal representative.
<PAGE>
6. Subject to the terms and conditions of this Agreement and the Plan, the
Option may be exercised by giving written notice of exercise signed by the
Optionee to the Secretary of the Company at its principal office specifying
the number of shares to be purchased and by paying in full the purchase
price for the number of shares of stock with respect to which the Option is
exercised. Such purchase price shall be paid in cash and/or in shares of
Common Stock of the Company. In addition, the Optionee shall, upon
notification of the amount due and prior to or concurrently with the
delivery to the Optionee of a certificate representing shares issued
pursuant to the Option exercised, pay promptly an amount sufficient to
satisfy applicable federal, state and local tax requirements. In the event
the Option shall be accompanied by appropriate proof of the right of such
person to exercise the Option. The Company has no obligation to delivery
shares upon exercise of the Option until such shares are qualified for
delivery under such laws and regulations as may be deemed by the Company to
be applicable thereto.
7. Nothing contained herein is intended or shall be construed as conferring
upon or giving to any person, firm or corporation other than the parties
hereto any rights or benefits under or by reason of this Agreement.
8. The Plan, the Lock-Up Agreement, and this Agreement embodies the entire
agreement made between the parties hereto with respect to the matters
covered herein and shall not be modified except by a writing signed by the
party to be charged.
9. This Agreement, in its interpretation and effect, shall be governed by the
laws of the State of Minnesota applicable to contracts executed and to be
performed therein.
10. This Agreement shall not be effective until executed by the Optionee and
returned to the Company. By executing this Agreement, the Optionee hereby
acknowledges that the Optionee has read and agreed to all the terms and
conditions of this Agreement.
The parties have executed this Agreement as of _____________.
OPTIONEE INSTENT INC.
- ------------------- -------------------
By:
InStent Inc.
1995 Stock Option and Compensation Plan
1. Purpose. The purpose of the 1995 Stock Option and Compensation Plan
(the "Plan") of InStent Inc. (the "Company") is to increase stockholder value
and to advance the interests of the Company by furnishing a variety of economic
incentives ("Incentives") designed to attract, retain and motivate employees.
Incentives may consist of opportunities to purchase or receive shares of Common
Stock, $0.01 par value, of the Company ("Common Stock"), monetary payments or
both on terms determined under this Plan.
2. Administration. The Plan shall be administered by the stock option
committee (the "Committee") of the board of directors of the Company. The
Committee shall consist of not less than two directors of the Company and shall
be appointed from time to time by the board of directors of the Company. Each
member of the Committee shall be a "disinterested person" within the meaning of
Rule 16b-3 of the Securities Exchange Act of 1934, and the regulations
promulgated thereunder (the "1934 Act"). The board of directors of the Company
may from time to time appoint members of the Committee in substitution for, or
in addition to, members previously appointed, and may fill vacancies, however
caused, in the Committee. The Committee shall select one of its members as its
chairman and shall hold its meetings at such times and places as it shall deem
advisable. A majority of the Committee's members shall constitute a quorum. All
action of the Committee shall be taken by the majority of its members. Any
action may be taken by a written instrument signed by majority of the members
and actions so taken shall be fully effective as if it had been made by a
majority vote at a meeting duly called and held. The Committee may appoint a
secretary, shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable. The
Committee shall have complete authority to award Incentives under the Plan, to
interpret the Plan, and to make any other determination which it believes
necessary and advisable for the proper administration of the Plan. The
Committee's decisions and matters relating to the Plan shall be final and
conclusive on the Company and its participants.
3. Eligible Recipients. Employees, consultants, officers and directors of
the Company or its subsidiaries or affiliates shall become eligible to receive
Incentives under the Plan when designated by the Committee. Employees may be
designated individually or by groups or categories (for example, by pay grade)
as the Committee deems appropriate. Participation by officers of the Company or
its subsidiaries or affiliates and any performance objectives relating to such
officers must be approved by the Committee. Participation by others and any
performance objectives relating to others may be approved by groups or
categories (for example, by pay grade) and authority to designate participants
who are not officers and to set or modify such targets may be delegated.
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4. Types of Incentives. Incentives under the Plan may be granted in any
one or a combination of the following forms: (a) incentive stock options and
non-statutory stock options (section 6); (b) stock appreciation rights ("SARs")
(section 7); (c) stock awards (section 8); (d) restricted stock (section 8); (e)
performance shares (section 9); and (f) cash awards (section 10).
5. Shares Subject to the Plan.
5.1. Number of Shares. Subject to adjustment as provided in Section
11.6, the number of shares of Common Stock which may be issued under the
Plan shall not exceed 700,000 shares of Common Stock.
5.2. Cancellation. To the extent that cash in lieu of shares of Common
Stock is delivered upon the exercise of an SAR pursuant to Section 7.4, the
Company shall be deemed, for purposes of applying the limitation on the
number of shares, to have issued the greater of the number of shares of
Common Stock which it was entitled to issue upon such exercise or on the
exercise of any related option. In the event that a stock option or SAR
granted hereunder expires or is terminated or cancelled unexercised as to
any shares of Common Stock, such shares may again be issued under the Plan
either pursuant to stock options, SARs or otherwise. In the event that
shares of Common Stock are issued as restricted stock or pursuant to a
stock award and thereafter are forfeited or reacquired by the Company
pursuant to rights reserved upon issuance thereof, such forfeited and
reacquired shares may again be issued under the Plan, either as restricted
stock, pursuant to stock awards or otherwise. The Committee may also
determine to cancel, and agree to the cancellation of, stock options in
order to make a participant eligible for the grant of a stock option at a
lower price than the option to be cancelled.
5.3. Type of Common Stock. Common Stock issued under the Plan in
connection with stock options, SARs, performance shares, restricted stock
or stock awards, may be authorized and unissued shares.
6. Stock Options. A stock option is a right to purchase shares of
Common Stock from the Company. Each stock option granted by the Committee
under this Plan shall be subject to the following terms and conditions:
6.1. Price. The option price per share shall be determined by the
Committee, subject to adjustment under Section 11.6.
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6.2. Number. The number of shares of Common Stock subject to the
option shall be determined by the Committee, subject to adjustment as
provided in Section 11.6. The number of shares of Common Stock subject to a
stock option shall be reduced in the same proportion that the holder
thereof exercises an SAR if any SAR is granted in conjunction with or
related to the stock option.
6.3. Duration and Time for Exercise. Subject to earlier termination as
provided in Section 11.4, the term of each stock option shall be determined
by the Committee but shall not exceed ten years and one day from the date
of grant. Each stock option shall become exercisable at such time or times
during its term as shall be determined by the Committee at the time of
grant. The Committee may accelerate the exercisability of any stock option.
Subject to the foregoing and with the approval of the Committee, all or any
part of the shares of Common Stock with respect to which the right to
purchase has accrued may be purchased by the Company at the time of such
accrual or at any time or times thereafter during the term of the option.
6.4. Manner of Exercise. A stock option may be exercised, in whole or
in part, by giving written notice to the Company, specifying the number of
shares of Common Stock to be purchased and accompanied by the full purchase
price for such shares. The option price shall be payable in United States
dollars upon exercise of the option and may be paid by cash; uncertified or
certified check; bank draft; by delivery of shares of Common Stock in
payment of all or any part of the option price, which shares shall be
valued for this purpose at the Fair Market Value on the date such option is
exercised; by instructing the Company to withhold from the shares of Common
Stock issuable upon exercise of the stock option shares of Common Stock in
payment of all or any part of the option price, which shares shall be
valued for this purpose at the Fair Market Value or in such other manner as
may be authorized from time to time by the Committee. Prior to the issuance
of shares of Common Stock upon the exercise of a stock option, a
participant shall have no rights as a stockholder.
6.5. Incentive Stock Options. Notwithstanding anything in the Plan to
the contrary, the following additional provisions shall apply to the grant
of stock options which are intended to qualify as Incentive Stock Options
(as such term is defined in Section 422A of the Internal Revenue Code of
1986, as amended):
(a) The aggregate Fair Market Value (determined as of the time
the option is granted) of the shares of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by
any participant during any calendar year (under all of the Company's
plans) shall not exceed $100,000.
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(b) Any Incentive Stock Option certificate authorized under the
Plan shall contain such other provisions as the Committee shall deem
advisable, but shall in all events be consistent with and contain all
provisions required in order to qualify the options as Incentive Stock
Options.
(c) All Incentive Stock Options must be granted within ten years
from the earlier of the date on which this Plan was adopted by board
of directors or the date this Plan was approved by the stockholders.
(d) Unless sooner exercised, all Incentive Stock Options shall
expire no later than 10 years after the date of grant.
(e) The option price for Incentive Stock Options shall be not
less than the Fair Market Value of the Common Stock subject to the
option on the date of grant.
(f) No Incentive Stock Options shall be granted to any
participant who, at the time such option is granted, would own (within
the meaning of Section 422 of the Code) stock possessing more than 10%
of the total combined voting power of all classes of stock of the
employer corporation or of its parent or subsidiary corporation.
7. Stock Appreciation Rights. An SAR is a right to receive, without
payment to the Company, a number of shares of Common Stock, cash or any
combination thereof, the amount of which is determined pursuant to the formula
set forth in Section 7.4. An SAR may be granted (a) with respect to any stock
option granted under this Plan, either concurrently with the grant of such stock
option or at such later time as determined by the Committee (as to all or any
portion of the shares of Common Stock subject to the stock option), or (b)
alone, without reference to any related stock option. Each SAR granted by the
Committee under this Plan shall be subject to the following terms and
conditions:
7.1. Number. Each SAR granted to any participant shall relate to such
number of shares of Common Stock as shall be determined by the Committee,
subject to adjustment as provided in Section 11.6. In the case of an SAR
granted with respect to a stock option, the number of shares of Common
Stock to which the SAR pertains shall be reduced in the same proportion
that the holder of the option exercises the related stock option.
7.2. Duration. Subject to earlier termination as provided in Section
11.4, the term of each SAR shall be determined by the Committee but shall
not exceed ten years and one day from the date of grant. Unless otherwise
provided by the Committee, each SAR shall become exercisable at such time
or times, to such extent and upon such conditions as the stock option, if
any, to which it relates is exercisable. The Committee may in its
discretion accelerate the exercisability of any SAR.
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7.3. Exercise. An SAR may be exercised, in whole or in part, by giving
written notice to the Company, specifying the number of SARs which the
holder wishes to exercise. Upon receipt of such written notice, the Company
shall, within 90 days thereafter, deliver to the exercising holder
certificates for the shares of Common Stock or cash or both, as determined
by the Committee, to which the holder is entitled pursuant to Section 7.4.
7.4. Payment. Subject to the right of the Committee to deliver cash in
lieu of shares of Common Stock (which, as it pertains to officers and
directors of the Company, shall comply with all requirements of the 1934
Act), the number of shares of Common Stock which shall be issuable upon the
exercise of an SAR shall be determined by dividing:
(a) the number of shares of Common Stock as to which the SAR is
exercised multiplied by the amount of the appreciation in such shares
(for this purpose, the "appreciation" shall be the amount by which the
Fair Market Value of the shares of Common Stock subject to the SAR on
the exercise date exceeds (1) in the case of an SAR related to a stock
option, the purchase price of the shares of Common Stock under the
stock option or (2) in the case of an SAR granted alone, without
reference to a related stock option, an amount which shall be
determined by the Committee at the time of grant, subject to
adjustment under Section 11.6); by
(b) the Fair Market Value of a share of Common Stock on the
exercise date.
In lieu of issuing shares of Common Stock upon the exercise of an SAR,
the Committee may elect to pay the holder of the SAR cash equal to the Fair
Market Value on the exercise date of any or all of the shares which would
otherwise be issuable. No fractional shares of Common Stock shall be issued
upon the exercise of an SAR; instead, the holder of the SAR shall be
entitled to receive a cash adjustment equal to the same fraction of the
Fair Market Value of a share of Common Stock on the exercise date or to
purchase the portion necessary to make a whole share at its Fair Market
Value on the date of exercise.
8. Stock Awards and Restricted Stock. A stock award consists of the
transfer by the Company to a participant of shares of Common Stock, without
other payment therefor, as additional compensation for services to the Company.
A share of restricted stock consists of shares of Common Stock which are sold or
transferred by the Company to a participant at a price determined by the
Committee (which price shall be at least equal to the minimum price required by
applicable law for the issuance of a share of Common Stock) and subject to
restrictions on their sale or other transfer by the participant. The transfer of
Common Stock pursuant to stock awards and the transfer and sale of restricted
stock shall be subject to the following terms and conditions:
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8.1. Number of Shares. The number of shares to be transferred or sold
by the Company to a participant pursuant to a stock award or as restricted
stock shall be determined by the Committee.
8.2. Sale Price. The Committee shall determine the price, if any, at
which shares of restricted stock shall be sold to a participant, which may
vary from time to time and among participants and which may be below the
Fair Market Value of such shares of Common Stock at the date of sale.
8.3. Restrictions. All shares of restricted stock transferred or sold
hereunder shall be subject to such restrictions as the Committee may
determine, including, without limitation any or all of the following:
(a) a prohibition against the sale, transfer, pledge or other
encumbrance of the shares of restricted stock, such prohibition to
lapse at such time or times as the Committee shall determine (whether
in annual or more frequent installments, at the time of the death,
disability or retirement of the holder of such shares, or otherwise);
(b) a requirement that the holder of shares of restricted stock
forfeit, or (in the case of shares sold to a participant) resell back
to the Company at his or her cost, all or a part of such shares in the
event of termination of his or her employment during any period in
which such shares are subject to restrictions;
(c) such other conditions or restrictions as the Committee may
deem advisable.
8.4. Escrow. In order to enforce the restrictions imposed by the
Committee pursuant to Section 8.3, the participant receiving restricted
stock shall enter into an agreement with the Company setting forth the
conditions of the grant. Shares of restricted stock shall be registered in
the name of the participant and deposited, together with a stock power
endorsed in blank, with the Company. Each such certificate shall bear a
legend in substantially the following form:
The transferability of this certificate and the shares of Common
Stock represented by it are subject to the terms and conditions
(including conditions of forfeiture) contained in the 1991 Stock
Option and Compensation Plan of InStent Inc. (the "Company"), and
an agreement entered into between the registered owner and the
Company. A copy of the Plan and the agreement is on file in the
office of the secretary of the Company.
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8.5. End of Restrictions. Subject to Section 11.5, at the end of any
time period during which the shares of restricted stock are subject to
forfeiture and restrictions on transfer, such shares will be delivered free
of all restrictions to the participant or to the participant's legal
representative, beneficiary or heir.
8.6. Stockholder. Subject to the terms and conditions of the Plan,
each participant receiving restricted stock shall have all the rights of a
stockholder with respect to shares of stock during any period in which such
shares are subject to forfeiture and restrictions on transfer, including
without limitation, the right to vote such shares. Dividends paid in cash
or property other than Common Stock with respect to shares of restricted
stock shall be paid to the participant currently.
9. Performance Shares. A performance share consists of an award which shall
be paid in shares of Common Stock, as described below. The grant of performance
share shall be subject to such terms and conditions as the Committee deems
appropriate, including the following:
9.1. Performance Objectives. Each performance share will be subject to
performance objectives for the Company or one of its operating units to be
achieved by the end of a specified period. The number of performance shares
granted shall be determined by the Committee and may be subject to such
terms and conditions, as the Committee shall determine. If the performance
objectives are achieved, each participant will be paid in shares of Common
Stock or cash. If such objectives are not met, each grant of performance
shares may provide for lesser payments in accordance with formulas
established in the award.
9.2. Not Stockholder. The grant of performance shares to a participant
shall not create any rights in such participant as a stockholder of the
Company, until the payment of shares of Common Stock with respect to an
award.
9.3. No Adjustments. No adjustment shall be made in performance shares
granted on account of cash dividends which may be paid or other rights
which may be issued to the holders of Common Stock prior to the end of any
period for which performance objectives were established.
9.4. Expiration of Performance Share. If any participant's employment
with the Company is terminated for any reason other than normal retirement,
death or disability prior to the achievement of the participant's stated
performance objectives, all the participants rights on the performance
shares shall expire and terminate unless otherwise determined by the
Committee. In the event of termination of employment by reason of death,
disability, or normal retirement, the Committee, in its own discretion may
determine what portions, if any, of the performance shares should be paid
to the participant.
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10. Cash Awards. A cash award consists of a monetary payment made by
the Company to a participant as additional compensation for his or her services
to the Company. Payment of a cash award will normally depend on achievement of
performance objectives by the Company or by individuals. The amount of any
monetary payment constituting a cash award shall be determined by the Committee
in its sole discretion. Cash awards may be subject to other terms and
conditions, which may vary from time to time and among participants, as the
Committee determines to be appropriate.
11. General.
11.1. Effective Date. The Plan shall take effect on the date
of adoption of the Plan by the Board of Directors, subject to the
condition that the Plan is approved by the affirmative vote of the
holders of a majority of the voting stock of the Company at the first
annual meeting of stockholders held after the date hereof. If such
stockholder approval is not obtained, all options granted under the
Plan shall be void. Options may be granted under the Plan at any time
after adoption of the Plan by the Board of Directors.
11.2. Duration. The Plan shall remain in effect until all
Incentives granted under the Plan have either been satisfied by the
issuance of shares of Common Stock or the payment of cash or have been
terminated under the terms of the Plan and all restrictions imposed on
shares of Common Stock in connection with their issuance under the Plan
have lapsed. No Incentives may be granted under the Plan after the
tenth anniversary of the date on which this Plan was adopted by board
of directors, or the date of approval by the stockholders, whichever is
earlier.
11.3. Non-transferability of Incentives. No stock option, SAR,
restricted stock or performance award may be transferred, pledged or
assigned by the holder thereof except, in the event of the holder's
death, by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue
Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act, or the rules thereunder, and the Company shall not be
required to recognize any attempted assignment of such rights by any
participant. During a participant's lifetime, an Incentive may be
exercised only by him or her, or by his or her guardian or legal
representative.
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11.4. Effect of Termination of Employment or Death. In the event
that a participant ceases to be an employee of the Company for any
reason, including death, any Incentives may be exercised or shall
expire at such times as may be determined by the Committee.
11.5. Additional Condition. Notwithstanding anything in this
Plan to the contrary: (a) the Company may, if it shall determine it
necessary or desirable for any reason, at the time of award of any
Incentive or the issuance of any shares of Common Stock pursuant to any
Incentive, require the recipient of the Incentive, as a condition to
the receipt thereof or to the receipt of shares of Common Stock issued
pursuant thereto, to deliver to the Company a written representation of
present intention to acquire the Incentive or the shares of Common
Stock issued pursuant thereto for his or her own account for investment
and not for distribution; and (b) if at any time the Company further
determines, in its sole discretion, that the listing, registration or
qualification (or any updating of any such document) of any Incentive
or the shares of Common Stock issuable pursuant thereto is necessary on
any securities exchange or under any federal or state securities or
blue sky law, or that the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with the award of any Incentive, the issuance of shares of
Common Stock pursuant thereto, or the removal of any restrictions
imposed on such shares, such Incentive shall not be awarded or such
shares of Common Stock shall not be issued or such restrictions shall
not be removed, as the case may be, in whole or in part, unless such
listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the
Company.
11.6. Adjustment. In the event of any merger, consolidation or
reorganization of the Company with any other corporation or
corporations, there shall be substituted for each of the shares of
Common Stock then subject to the Plan, including shares subject to
restrictions, options, or achievement of performance share objectives,
the number and kind of shares of stock or other securities to which the
holders of the shares of Common Stock will be entitled pursuant to the
transaction. In the event of any recapitalization, stock dividend,
stock split, combination of shares or other change in the Common Stock,
the number of shares of Common Stock then subject to the Plan,
including shares subject to restrictions, options or achievements of
performance shares, shall be adjusted in proportion to the change in
outstanding shares of Common Stock. In the event of any such
adjustments, the purchase price of any option, the performance
objectives of any Incentive, and the shares of Common Stock issuable
pursuant to any Incentive shall be adjusted as and to the extent
appropriate, in the discretion of the Committee, to provide
participants with the same relative rights before and after such
adjustment.
11.7. Incentive Plans and Agreements. Except in the case of stock
awards or cash awards, the terms of each Incentive shall be stated in
a plan or agreement approved by the Committee. The Committee may also
determine to enter into agreements with holders of options to
reclassify or convert certain outstanding options, within the terms of
the Plan, as Incentive Stock Options or as non-statutory stock options
and in order to eliminate SARs with respect to all or part of such
options and any other previously issued options.
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11.8. Withholding.
(a) The Company shall have the right to withhold from
any payments made under the Plan or to collect as a condition
of payment, any taxes required by law to be withheld. At any
time when a participant is required to pay to the Company an
amount required to be withheld under applicable income tax
laws in connection with a distribution of Common Stock or upon
exercise of an option or SAR, the participant may satisfy this
obligation in whole or in part by electing (the "Election") to
have the Company withhold from the distribution shares of
Common Stock having a value up to the amount required to be
withheld. The value of the shares to be withheld shall be
based on the Fair Market Value of the Common Stock on the date
that the amount of tax to be withheld shall be determined
("Tax Date").
(b) Each Election must be made prior to the Tax Date.
The Committee may disapprove of any Election, may suspend or
terminate the right to make Elections, or may provide with
respect to any Incentive that the right to make Elections
shall not apply to such Incentive. An Election is irrevocable.
(c) If a participant is an officer or director of the
Company within the meaning of Section 16 of the 1934 Act, then
an Election must comply with all of the requirements of the
1934 Act.
11.9. No Continued Employment or Right to Corporate Assets. No
participant under the Plan shall have any right, because of his or her
participation, to continue in the employ of the Company for any period
of time or to any right to continue his or her present or any other
rate of compensation. Nothing contained in the Plan shall be construed
as giving an employee, the employee's beneficiaries or any other
person any equity or interests of any kind in the assets of the
Company or creating a trust of any kind or a fiduciary relationship of
any kind between the Company and any such person.
11.10. Deferral Permitted. Payment of cash or distribution of any
shares of Common Stock to which a participant is entitled under any
Incentive shall be made as provided in the Incentive. Payment may be
deferred at the option of the participant if provided in the
Incentive.
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11.11. Amendment of the Plan. The Board may amend or
discontinue the Plan at any time. However, no such amendment or
discontinuance shall, subject to adjustment under Section 11.6, (a)
change or impair, without the consent of the recipient, an Incentive
previously granted, (b) materially increase the maximum number of
shares of Common Stock which may be issued to all participants under
the Plan, (c) materially increase the benefits that may be granted
under the Plan, (d) materially modify the requirements as to
eligibility for participation in the Plan, or (e) materially increase
the benefits accruing to participants under the Plan.
11.12. Immediate Acceleration of Incentives. Notwithstanding
any provision in this Plan or in any Incentive to the contrary, (a) the
restrictions on all shares of restricted stock award shall lapse
immediately, (b) all outstanding options and SARs will become
exercisable immediately, and (c) all performance shares shall be deemed
to be met and payment made immediately, if subsequent to the date that
the Plan is approved by the Board of Directors of the Company, any of
the following events occur unless otherwise determined by the board of
directors and a majority of the Continuing Directors (as defined
below):
(1) any person or group of persons becomes the beneficial
owner of 30% or more of any equity security of the Company
entitled to vote for the election of directors;
(2) a majority of the members of the board of directors of
the Company is replaced within the period of less than two years
by directors not nominated and approved by the board of
directors; or
(3) the stockholders of the Company approve an agreement to
merge or consolidate with or into another corporation or an
agreement to sell or otherwise dispose of all or substantially
all of the Company's assets (including a plan of liquidation).
For purposes of this Section 11.12, beneficial ownership by a person or
group of persons shall be determined in accordance with Regulation 13D (or any
similar successor regulation) promulgated by the Securities and Exchange
Commission pursuant to the 1934 Act. Beneficial ownership of more than 30% of an
equity security may be established by any reasonable method, but shall be
presumed conclusively as to any person who files a Schedule 13D report with the
Securities and Exchange Commission reporting such ownership. If the restrictions
and forfeitability periods are eliminated by reason of provision (1), the
limitations of this Plan shall not become applicable again should the person
cease to own 30% or more of any equity security of the Company.
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For purposes of this Section 11.12, "Continuing Directors" are directors
(a) who were in office prior to the time any of provisions (1), (2) or (3)
occurred or any person publicly announced an intention to acquire 20% or more of
any equity security of the Company, (b) directors in office for a period of more
than two years, and (c) directors nominated and approved by the Continuing
Directors.
11.13. Definition of Fair Market Value. Whenever "Fair Market Value" of
Common Stock shall be determined for purposes of this Plan, it shall be
determined by reference to the last sale price of a share of Common Stock on the
principal United States Securities Exchange registered under the 1934 Act on
which the Common Stock is listed (the "Exchange"), or, on the National
Association of Securities Dealers, Inc. Automatic Quotation System (including
the National Market System) ("NASDAQ") on the applicable date. If the Exchange
or NASDAQ is closed for trading on such date, or if the Common Stock does not
trade on such date, then the last sale price used shall be the one on the date
the Common Stock last traded on the Exchange or NASDAQ.
12
INSTENT INC.
1995 PLAN STOCK OPTION AGREEMENT
OPTION AGREEMENT made effective as of the ____ day of __________, 1996, between
InStent Inc., a Minnesota corporation (the "Company"), and _______________,
("Employee").
The parties hereto agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to Employee the
right and option, hereinafter call the Option, to purchase all of any part
of any aggregate of _______ shares of the common stock, $__ par value, of
the Company (the "Shares") subject to the terms and conditions herein set
forth herein and in the Company's 1995 Stock Option and Compensation Plan,
as such plan may be amended from time to time (the "Plan").
2. Purchase Price. The purchase price of the Shares covered by the Option
shall be $_____ per share.
3. Exercise and Vesting of Option. The Option shall be exercisable only to the
extent that all, or any portion thereof, has vested in the Employee. The
Option shall vest in the Employee until the Option is fully vested, as set
forth in the following schedule:
4. Total Options Vesting Date
5. In the event that the Employee ceases to be employed by the Company, for
any reason or no reason, with or without cause, prior to any Vesting Date,
that part of the Option scheduled to vest on such Vesting Date, and all
part of the Option scheduled to vest in the future, shall not vest and all
of Employee's rights to and under such non-vested part of the Option shall
terminate.
<PAGE>
6. Term of Option. To the extent vested, and except as otherwise provided in
this Agreement, the Option shall be exercisable until ____; provided,
however, that in the event that Employee ceases to be employed by the
Company, for any reason or for no reason, with or without cause, Employee
or his/her legal representative shall have ____ days from the date of such
termination of his/her position as an employee to exercise any part of the
Option vested pursuant to Sections 3 or 4 of this Agreement. Upon the
expiration of such _____ day period, or, if earlier, upon the expiration
date of the Option as set forth above, the Option shall terminate and
become null and void.
7. Rights of Option Holder. Employee, as holder of the Option, shall not have
any of the rights of a shareholder with respect to the Shares covered by
the option except to the extent that one or more certificates for such
Shares shall be delivered to him upon the due exercise of all or any part
of the Option.
8. General. The Option is granted pursuant to the Plan and is governed by the
terms thereof. Any inconsistency between the terms of this Option Agreement
and the terms of the Plan shall be governed by the terms of the Plan. The
Company shall at all times during the term of the Option reserve and keep
available such number of Shares as will be sufficient to satisfy the
requirements of this Option agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
INSTENT INC.: EMPLOYEE:
By
