<PAGE>
As filed with the Securities and Exchange Commission on March 1, 1999
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SYNBIOTICS CORPORATION
(Name of registrant as specified in its charter)
CALIFORNIA 95-3737816
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11011 VIA FRONTERA
SAN DIEGO, CALIFORNIA 92127
(Address of principal executive offices) (Zip Code)
SYNBIOTICS CORPORATION
1998 STOCK OPTION PLAN
(Full title of the plan)
KENNETH M. COHEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SYNBIOTICS CORPORATION
11011 VIA FRONTERA, SAN DIEGO, CALIFORNIA 92127
(Name and address of agent for service)
(619) 451-3771
(Telephone number, including area code, of agent for service)
Copies to:
Hayden J. Trubitt, Esq.
Brobeck, Phleger & Harrison
550 West C Street, Suite 1300
San Diego, California 92101
--------------
This registration statement will become effective immediately upon filing with
the Securities and Exchange Commission, and sales of the registered securities
will thereafter be effected upon option exercises effected under the 1998 Stock
Option Plan.
--------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Title of securities to be Proposed maximum Proposed maximum Amount of
registered Amount to be registered offering price per share aggregate offering registration fee
price
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (under 1998
Stock Option Plan) and
associated Preferred Stock
Purchase Rights 152,565/(1)/ $0.0016/(2)/ $244 $0.07
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This registration statement will also cover any additional shares of Common
Stock which become issuable under the 1998 Stock Option Plan by reason of any
stock dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an increase in
the number of the Company's outstanding shares of Common Stock.
(2) Calculated solely for the purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of an exercise price of
$0.0016 per share of Common Stock of Synbiotics Corporation.
================================================================================
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we have on file at
the SEC's public reference rooms in Washington, DC, New York, New York and
Chicago, Illinois. Please call the SEC at (800) SEC-0300 for further
information about the public reference rooms. Our SEC filings are also
available to the public at the SEC's web site at http://www.sec.gov.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this registration statement, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed:
(a) Our Annual Report on Form 10-KSB for the year ended December 31, 1997;
(b) Our Quarterly Reports on Form 10-QSB for the quarters ended March 31, June
30 and September 30, 1998;
(c) Our Current Reports on Form 8-K, filed with the SEC for events dated March
6 and September 25, 1998;
(d) The description of the our common stock on Form 8-A filed with the SEC on
November 14, 1983 and declared effective on January 13, 1984; and
(e) The description of the our Preferred Stock Purchase Rights on Form 8-A
filed with the SEC on October 7, 1998 relating to the rights to purchase
our Series A Junior Participating Preferred Stock, including any amendments
or reports filed to update such description.
All reports and other documents that we subsequently filed under Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), prior to the filing of a post-effective amendment which indicates
that all securities offered under this registration statement have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this registration statement 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
in any subsequently filed document which also is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this registration statement.
II-1
<PAGE>
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
Attn: Corporate Secretary
(619) 451-3771
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) California Corporations Code Section 317 provides for the indemnification
of officers and directors of the registrant against expenses, judgments,
fines and amounts paid in settlement under certain conditions and subject
to certain limitations.
(b) Article VIII, Section 4 of the registrant's bylaws provides that the
registrant shall have the power to indemnify any person who is or was a
director, officer, employee or agent of the registrant or any person who is
or was serving at the registrant's request as a director, officer, employee
or agent of another corporation, subject to certain limitations. The
rights to indemnity thereunder continue as to a person who has ceased to be
a director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of the person. In addition,
expenses incurred by a director, officer, employee or agent in defending a
civil or criminal action, suit or proceeding by reason of the fact that he
or she is or was a director, officer, employee or agent of the registrant,
or was serving at its request as a director, officer, employee or agent of
another corporation, may be paid by the registrant in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he or she is not entitled
to be indemnified by the registrant.
(c) Article Seventh of the registrant's Restated Articles of Incorporation
provides that liability of its directors for monetary damages shall be
eliminated to the fullest extent permissible under California Law. Article
Eighth of the registrant's Restated Articles of Incorporation further
provides that the registrant is authorized to indemnify agents, as defined
in California Corporations Code Section 317, in excess of the
indemnification otherwise permitted by Section 317, subject to the limits
set forth in California Corporations Code Section 204.
(d) Pursuant to authorization provided under the Restated Articles of
Incorporation, the registrant has entered into indemnification agreements
with its directors and officers. Generally, the indemnification agreements
attempt to provide the maximum protection permitted by California Law as it
may be amended from time to time. Moreover, the indemnification agreements
provide for certain additional indemnification. The indemnification
agreements provide for the registrant to advance to the individual any and
all reasonable
II-2
<PAGE>
expenses, including legal fees and expenses, incurred in investigating or
defending an action, suit or proceeding. In order to receive an advance of
expenses, the individual must undertake to repay such advance upon a
determination that he or she is not entitled to indemnification. The
registrant's bylaws contain a provision of similar effect relating to
advancement of expenses to a director or officer, subject to an undertaking
to repay if it is ultimately determined that indemnification is
unavailable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
Exhibit
Number Exhibit
- ------- -------
4.1 Instruments Defining the Rights of Shareholders. Reference is made to
the Restated Articles of Incorporation (incorporated by reference to
Exhibit 3.1 of Form 10-KSB for the year ended December 31, 1996), the
Certificate of Amendment of Articles of Incorporation (incorporated by
reference to Exhibit 3.1.1 of Form 10-QSB for the quarter ended
September 30, 1998) and the Registration Statement on Form 8-A, filed
with the SEC on November 14, 1983, and the Registration Statement on
From 8-A, filed with the SEC on October 7, 1998, respectively,
together with all exhibits thereto (incorporated by reference to Items
3(d) and (e) of this Registration Statement).
5.1 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Brobeck, Phleger & Harrison LLP (contained in Exhibit 5.1
of this Registration Statement on Form S-8).
23.2 Consent of Independent Accountants.
24.1 Power of Attorney. Reference is made to page II-4 of this
Registration Statement on Form S-8.
99.1 1998 Stock Option Plan.
99.2 Form of Non-Qualified Stock Option Agreement.
ITEM 9. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement 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;
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "1933 Act") each such post-
effective amendment shall be deemed to be a new registration
II-3
<PAGE>
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; and
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold upon the
termination of the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of its annual
report pursuant to Section 13(a) or Section 15(d) of the 1934 Act 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.
3. Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to the registrant's directors, officers or controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities, other than the payment by the
registrant of expenses incurred or paid by one of its directors, officers
or controlling persons in the successful defense of any action, suit or
proceeding, is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 San Diego, State of California, on March 1, 1999.
SYNBIOTICS CORPORATION
By: /s/ Kenneth M. Cohen
--------------------------
Kenneth M. Cohen
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Kenneth M. Cohen and Michael K. Green, or either of
them, as his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement and any
registration statement related to this registration statement and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or their substitute
or substitutes may lawfully do or cause to be done by virtue hereof.
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Kenneth M. Cohen Chief Executive Officer, President and Director March 1, 1999
- -------------------------- (Principal Executive Officer)
Kenneth M. Cohen
/s/ Michael K. Green Chief Financial Officer and Vice President - Finance March 1, 1999
- --------------------------- (Principal Financial Officer)
Michael K. Green
/s/ Keith A. Butler Chief Accounting Officer and Corporate Controller March 1, 1999
- --------------------------- (Chief Accounting Officer)
Keith A. Butler
/s/ Patrick Owen Burns Director March 1, 1999
- ---------------------------
Patrick Owen Burns
/s/ James C. DeCesare Director March 1, 1999
- ---------------------------
James C. DeCesare
/s/ Brenda D. Gavin Director March 1, 1999
- ---------------------------
Brenda D. Gavin
/s/ M. Blake Ingle Director March 1, 1999
- ---------------------------
M. Blake Ingle
/s/ Skip Klein Director March 1, 1999
- ---------------------------
Skip Klein
/s/ Donald E. Phillips Director March 1, 1999
- ---------------------------
Donald E. Phillips
</TABLE>
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
SYNBIOTICS CORPORATION
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<C> <S>
4.1 Instruments Defining the Rights of Shareholders. Reference is made to the Restated Articles
of Incorporation (incorporated by reference to Exhibit 3.1 of Form 10-KSB for the year
ended December 31, 1996), the Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.1.1 of Form 10-QSB for the quarter ended
September 30, 1998) and the Registration Statement on Form 8-A, filed with the SEC on
November 14, 1983, and the Registration Statement on From 8-A, filed with the SEC on
October 7, 1998, respectively, together with all exhibits thereto (incorporated by reference to
Items 3(d) and (e) of this Registration Statement).
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Brobeck, Phleger & Harrison LLP (contained in Exhibit 5.1).
23.2 Consent of Independent Accountants.
24.1 Power of Attorney. Reference is made to the signature page of this Registration Statement.
99.1 1998 Stock Option Plan.
99.2 Form of Non-Qualified Stock Option Agreement.
</TABLE>
<PAGE>
Instruments Defining the Rights of Shareholders Exhibit 4.1
----------------------------------------------- -----------
Reference is made to the Restated Articles of Incorporation (incorporated by
reference to Exhibit 3.1 of Form 10-KSB for the year ended December 31, 1996),
the Certificate of Amendment of Articles of Incorporation (incorporated by
reference to Exhibit 3.1.1 of Form 10-QSB for the quarter ended September 30,
1998) and the Registration Statement on Form 8-A, filed with the SEC on November
14, 1983, and the Registration Statement on From 8-A, filed with the SEC on
October 7, 1998, respectively, together with all exhibits thereto (incorporated
by reference to Items 3(d) and (e) of this Registration Statement).
<PAGE>
Opinion and Consent of Brobeck, Phleger & Harrison LLP Exhibit 5.1
------------------------------------------------------ -----------
February 26, 1999
Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
Re: Synbiotics Corporation Registration Statement on Form S-8 for
152,565 shares of Common Stock and associated Preferred Stock
Purchase Rights, and Related Stock Options
------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Synbiotics Corporation, a California
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended, of
152,565 shares of Common Stock and associated Preferred Stock Purchase Rights
(collectively, the "Shares") and related stock options for issuance under the
Company's 1998 Stock Option Plan (the "Plan").
This opinion is being furnished in accordance with the requirements of
Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-B.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the establishment of the
Plan. Based on such review, we are of the opinion that, if, as and when the
Shares have been issued and sold (and the consideration therefor received)
pursuant to the provisions of option agreements duly authorized under the Plan
and in accordance with the Registration Statement, such Shares will be duly
authorized, legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5.1 to the
Registration Statement. In giving this consent, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, or Item 509 of
Regulation S-B.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Plan or the Shares.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our reports dated March 25, 1998 and March 18, 1998
appearing on pages 16 and 17, respectively, of Synbiotics Corporation's Annual
Report on Form 10-KSB for the year ended December 31, 1997.
PRICEWATERHOUSECOOPERS LLP
San Diego, California
February 26, 1999
<PAGE>
Exhibit 99.1
SYNBIOTICS CORPORATION ------------
1998 STOCK OPTION PLAN
----------------------
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1998 Stock Option Plan (the "Plan") is intended to promote the
interests of Synbiotics Corporation, a California corporation, by providing
eligible persons with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation.
Capitalized terms not otherwise defined shall have the meanings
assigned to such terms in the attached Appendix.
II. STRUCTURE OF THE PLAN
Under this Plan eligible persons may, at the discretion of the Plan
Administrator, be granted non-qualified options to purchase shares of Common
Stock of the Corporation.
III. ADMINISTRATION OF THE PLAN
A. Plan Administrator. This Plan shall be administered by the Board
------------------
or may, at the Board's discretion, be administered by a committee as set forth
in Section III.B below (the "Plan Administrator").
B. Committees. Administration of the Plan with respect to persons
----------
eligible to participate in this program may, at the Board's discretion, be
vested in the Board or a committee of two (2) or more Board members appointed by
the Board to administer the Plan with respect to eligible persons (the
"Committee").
C. Members of the Committee. If a Committee is appointed, members
------------------------
of such Committee shall serve for such period of time as the Board may determine
and may be removed by the Board at any time. The Board may also at any time
terminate the functions of such Committee and assume all powers and authority
previously delegated to such Committee.
D. Service as Committee Members. Service on an appointed Committee
----------------------------
shall constitute service as a Board member, and members of such Committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such Committee. No member of the Committee shall
be liable for any act or omission made in good faith with respect to the Plan or
any option grants or stock issuances under the Plan.
E. Authority. The Plan Administrator shall, within the scope of its
---------
administrative functions under the Plan, have full power and authority (subject
to the express provisions of the Plan) to (i) establish such rules and
regulations as it may deem appropriate for the proper administration of the Plan
and to make such determinations under, and issue such interpretations of, such
program and any outstanding option grants as it may deem necessary or advisable
and (ii) determine, with respect to the option grants under the Plan, which
eligible persons are to receive option grants, the time or times when such
option grants are to be made, the number of shares to be covered by each such
grant, the time or times at which each option is to become exercisable, the
vesting schedule (if any) applicable to the option shares and the maximum term
for which the
-1-
<PAGE>
option is to remain outstanding. The Plan Administrator shall have the absolute
discretion to grant options in accordance with the Plan. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest
under the Plan or any outstanding option thereunder.
IV. OPTION GRANTS
Subject to Section V.B below, the persons eligible to receive non-
qualified option grants pursuant to the Plan ("Optionee") are as follows:
(i) employees of the Corporation (or its Parent or Subsidiary
corporations), other than directors or officers of the Corporation, who
render services which contribute to the management, growth and financial
success of the Corporation (or its Parent or Subsidiary); and
(ii) those consultants or other independent contractors who
provide valuable services to the Corporation (or its Parent or Subsidiary).
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized
but unissued Common Stock of the Corporation ("Common Stock"). The maximum
number of shares of Common Stock which may be issued over the term of the Plan
shall not exceed 152,565 shares.
B. No one person participating in the Plan may receive options for
more than 150,000 shares of Common Stock in the aggregate over the term of the
Plan.
C. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Section
III of Article Two. All shares issued under the Plan, whether or not those
shares are subsequently repurchased by the Corporation pursuant to its
repurchase rights under the Plan, shall reduce on a share-for-share basis the
number of shares of Common Stock available for subsequent grant under the Plan.
In addition, should the exercise price of an option under the Plan be paid with
shares of Common Stock or should shares of Common Stock otherwise issuable under
the Plan be withheld by the Corporation in satisfaction of the withholding taxes
incurred in connection with the exercise of an option under the Plan, then the
number of shares of Common Stock available for grant under the Plan shall be
reduced by the gross number of shares for which the option is exercised, and not
by the net number of shares of Common Stock issued to the holder of such option.
D. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan, (ii) the number and/or class of securities for which any one
person may be granted options over the term of the Plan and (iii) the number
and/or class of securities and the exercise price per share in effect under each
outstanding option to prevent the dilution or enlargement of benefits
thereunder. The adjustments determined by the Plan Administrator shall be
final, binding and conclusive.
-2-
<PAGE>
ARTICLE TWO
OPTION GRANT PROGRAM
--------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below.
A. Exercise Price.
--------------
1. The exercise price per share shall be fixed by the Plan
Administrator.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section II of
Article Three and the documents evidencing the option (including any limiting
provisions in such documents as to form of payments), be payable in one or more
of the forms specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the exercise date, or
(iii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable written instructions to
(a) a Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable
federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (b) the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm to complete the sale transaction.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
exercise date.
B. Exercise and Term of Options. Each option shall be exercisable
----------------------------
at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.
C. Effect of Termination of Service.
--------------------------------
1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason (including without limitation,
termination without cause, death or permanent and total disability) shall
remain exercisable for such period of time thereafter as shall be
determined by the Plan Administrator and set forth in the documents
evidencing the option, but no such option shall be exercisable after the
expiration of the option term.
-3-
<PAGE>
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by the personal
representative of the Optionee's estate or by the person or persons to whom
the option is transferred pursuant to the Optionee's will or in accordance
with the laws of descent and distribution.
(iii) During the applicable post-Service exercise period,
the option may not be exercised in the aggregate for more than the number
of vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares
for which the option has not been exercised. However, the option shall,
immediately upon the Optionee's cessation of Service, terminate and cease
to be outstanding to the extent it is not exercisable for vested shares on
the date of such cessation of Service.
(iv) In the event of a Corporate Transaction, the
provisions of Section II of this Article Two shall govern the period for
which the outstanding options are to remain exercisable following the
Optionee's cessation of Service and shall supersede any provisions to the
contrary in this section.
2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service from the
period otherwise in effect for that option to such greater period of time
as the Plan Administrator shall deem appropriate, but in no event beyond
the expiration of the option term, and/or
(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of vested shares of Common Stock for which such option is
exercisable at the time of the Optionee's cessation of Service but also
with respect to one or more additional installments in which the Optionee
would have vested under the option had the Optionee continued in Service.
D. Shareholder Rights. The holder of an option shall have no
------------------
shareholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
-----------------
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares,
the Corporation shall have the right to repurchase, at the exercise price paid
per share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the document evidencing
such repurchase right.
F. Limited Transferability of Options. Unless the Plan
----------------------------------
Administrator otherwise expressly approves in writing, the option shall be
exercisable only by the Optionee during the lifetime of the Optionee, and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. The terms applicable to any
assigned option (or portion thereof) shall be the same as those in effect for
the option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.
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<PAGE>
II. CORPORATE TRANSACTION
A. In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall NOT so accelerate
if and to the extent: (i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation (or Parent
thereof) or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or Parent thereof), (ii) such option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested option shares at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or Parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
Parent thereof). To the extent that the documents evidencing the option so
states, the successor corporation may also be required to issue an equivalent
option.
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan on both an aggregate and per
Optionee basis following the consummation of such Corporate Transaction and (ii)
the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same.
E. The grant of options under the Discretionary Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
III. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Discretionary Option
Grant Program and to grant in substitution new options covering the same or a
different number of shares of Common Stock but with a different exercise price
per share.
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<PAGE>
ARTICLE THREE
MISCELLANEOUS
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I. ACCELERATION
The Plan Administrator shall have the discretion, exercisable either
at the time an option is granted under the Discretionary Stock Option Program or
at any time while the option remains outstanding, to provide for the
acceleration of one or more outstanding options and the termination of
repurchase rights on one or more outstanding shares upon the occurrence of such
events as the Plan Administrator may determine, including upon termination
without cause and upon a Corporate Transaction regardless of whether or not such
options are to be assumed or replaced or the repurchase rights are to be
assigned in the Corporate Transaction.
II. FINANCING
The Plan Administrator may permit any Optionee to pay the option
exercise price under the Discretionary Option Grant Program by delivering a
promissory note payable in one or more installments. The terms of any such
promissory note (including the interest rate and the terms of repayment) shall
be established by the Plan Administrator in its sole discretion. Promissory
notes may be authorized with or without security or collateral. In all events,
the maximum credit available to the Optionee may not exceed the sum of (i) the
aggregate option exercise price plus (ii) any federal, state and local income
and employment tax liability incurred by the Optionee in connection with the
option exercise.
The Plan Administrator may, in its discretion, determine that one or
more such promissory notes shall be subject to forgiveness by the Corporation in
whole or in part upon such terms as the Plan Administrator may deem appropriate.
III. TAX WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options under the Plan shall be subject to the satisfaction of
all applicable federal, state and local income and employment tax withholding
requirements.
The Plan Administrator may, in its discretion, provide any or all
Optionees with the right to use shares of Common Stock in satisfaction of all or
part of the federal, state and local income or employment taxes incurred by such
holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:
(i) Stock Withholding: The election to have the Corporation
-----------------
withhold, from the shares of Common Stock otherwise issuable upon the
exercise of such Option, a portion of those shares with an aggregate Fair
Market Value equal to the percentage of such taxes (not to exceed one
hundred percent (100%)) designated by the holder.
(ii) Stock Delivery: The election to deliver to the Corporation,
--------------
at the time the Option is exercised, one or more shares of Common Stock
previously acquired by such holder (other than in connection with the
option exercise or share vesting triggering the taxes) with an aggregate
Fair Market Value equal to the percentage of such taxes (not to exceed one
hundred percent (100%)) designated by the holder.
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<PAGE>
IV. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective on the date the Plan is adopted
by the Board, and options may be granted under the Discretionary Option Grant
Program from and after the effective date.
B. The Plan shall terminate upon the earliest of (i) April 27, 2005,
(ii) the date on which all shares available for issuance under the Plan shall
have been issued pursuant to the exercise of the options under the Plan or (iii)
the termination of all outstanding options in connection with a Corporate
Transaction. Upon such Plan termination, all options outstanding on such date
shall thereafter continue to have force and effect in accordance with the
provisions of the documents evidencing such options.
V. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee consents to such amendment or modification.
VI. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
VII. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option under
the Plan and the issuance of any shares of Common Stock upon the exercise of any
option shall be subject to the Corporation's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the options granted under it and the shares of Common Stock issued pursuant to
it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VIII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.
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<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
BOARD shall mean the Corporation's Board of Directors.
-----
CORPORATE TRANSACTION shall mean either of the following transactions to
---------------------
which the Corporation is a party:
(i) a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Corporation's
incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in liquidation or
dissolution of the Corporation,
(iii) any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to holders different from those
who held such securities immediately prior to such merger, or
(iv) a transfer of more than fifty percent (50%) of the
issued and outstanding Capital Stock of the Corporation to a third
party (other than the Corporation), if so stated in the documents
evidencing the option.
CORPORATION shall mean Synbiotics Corporation, a California corporation.
-----------
FAIR MARKET VALUE per share of Common Stock on any relevant date shall be
-----------------
determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor
system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.
(ii) If the Common Stock is at the time listed on any stock
exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(iii) If the Common Stock is at the time not traded on the
Nasdaq National Market or listed on any stock exchange, then the Fair
Market Value shall be determined according to whatever method is from
time to time approved in good faith by the Board.
PARENT shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns,
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<PAGE>
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
SERVICE shall mean the provision of services to the Corporation (or any
-------
Parent or Subsidiary) by a person in the capacity of an employee, a consultant
or an independent advisor, except to the extent otherwise specifically provided
in the documents evidencing the option grant.
SUBSIDIARY shall mean any corporation (other than the Corporation) in an
----------
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
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<PAGE>
Exhibit 99.2
------------
Form of Non-Qualified Stock Option Agreement
--------------------------------------------
SYNBIOTICS CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, entered into as of the 7th day of March, 1998, is by and
between ________________________ (the "Participant") and SYNBIOTICS CORPORATION,
a California corporation (the "Company").
WITNESSETH THAT:
WHEREAS, the Participant was previously granted a non-qualified stock
option (the "Prisma Option") by Prisma Acquisition Corp. ("Prisma");
WHEREAS, pursuant to the terms of a certain Agreement and Plan of
Reorganization, dated February 27, 1998, Prisma was merged with and into the
Company (the "Merger");
WHEREAS, pursuant to the terms of the Merger the Company is obligated to
issue an option in exchange for the Prisma Option;
WHEREAS, the Board of Directors of the Company has authorized the issuance
of certain options to acquire shares of the Company's Common Stock pursuant to
the terms and conditions set forth herein; and
WHEREAS, the grant of this option is intended to be an assumption of the
Prisma Option;
NOW, THEREFORE, in consideration of the mutual premises and covenants and
agreements set forth herein, as well as other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Participant hereby agree as follows:
1. Terms of Award. The following terms used in this Agreement shall have
--------------
the meanings set forth in this Section 1:
(a) The "Participant" is ________________, an individual residing at
__________________________________________________________.
(b) The "Grant Date" is March 7, 1998.
(c) The number of "Covered Shares" shall be [_____] shares of Common
Stock of the Company (the "Stock").
(d) The "Initial Exercise Date" is the Grant Date.
(e) The "Exercise Price" is $.0016 per share.
2. Award and Exercise Price. The Participant is hereby granted an option
------------------------
(the "Option") to purchase the number of Covered Shares of Stock at the Exercise
Price per share as set forth in Section 1. The Option is not intended to
qualify as an Incentive Stock Option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
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<PAGE>
3. Date of Exercise. The Option shall become exercisable according to the
----------------
following schedule.
Dates: The Option shall become exercisable
with respect to the following
percentage of the Covered Shares:
Immediately upon execution of this Agreement 100%
For purposes of this schedule, a year shall mean the 12-month period
commencing on the Grant Date and each anniversary date thereafter.
In the event that the Participant's relationship with the Company is
terminated, whether voluntarily or involuntarily, prior to the date on which the
Participant is fully vested, the Participant shall only have the right to
exercise that portion of the Options that had vested prior to said date of
termination. Exercisability under the schedule is cumulative, and after the
Option becomes exercisable under the schedule with respect to any portion of the
Covered Shares, it shall continue to be exercisable with respect to that portion
of the Covered Shares until the "Expiration Date," as defined below.
Notwithstanding any provision to the contrary set forth herein, the Option shall
become immediately and fully exercisable with respect to all of the Covered
Shares (e.g., 100% vested) in the event that (i) the Company shall dispose of,
or agree to dispose of, all or substantially all of its assets as an entity and
thereafter dissolve, (ii) consolidate with or merge into another corporation or
permit one or more corporations to consolidate with or merge into it and
pursuant to any such merger or consolidation the Company shall not be the
resulting or surviving corporation, (iii) a "Change in Control," as defined
below, of the Company occurs, or (iv) the Participant's employment relationship
with the Company is terminated by the Company without cause. In any such event
described in (i) or (ii) above, this Option shall terminate upon the
consummation of such event, but the Company shall require the resulting company
to issue an equivalent Option (with the same vesting and exercise rights as set
forth herein) to the Participant. In the event of any merger or consolidation
involving the Company and pursuant to which the Company shall be the resulting
or surviving corporation, then the Options granted hereunder shall not be
subject to full and immediate vesting nor to termination and replacement. For
purposes of this Agreement, a "Change in Control" of the Company shall be deemed
to have occurred if more than fifty percent (50%) of the issued and outstanding
shares of capital stock of the Company are transferred to a third party (other
than the Company).
4. Expiration.
----------
(a) The Option, to the extent not theretofore exercised, shall not be
exercisable on or after the close of business on the "Expiration Date." Subject
to the provisions set forth in Sections 4(b), 4(c) and 4(d) below, the term
"Expiration Date" shall mean January 15, 2008.
(b) In the event that the Participant's employment with the Company
terminates by reason of the Participant's death and prior to the complete
exercise of the vested portion of the Option granted to the Participant under
this Agreement, any such unexercised options or portions thereof may not be
exercised in whole or in part after ninety (90) days after the date of the
Participant's death; provided, however, that in the event that on such 90th day
the Covered Shares are not registered pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission (the
"SEC"), then the unexercised options may be exercised in whole or in part within
thirty (30) days after the date on which said registration statement is declared
effective by the SEC. Notwithstanding the foregoing, the Option may not be
exercised after the ten-year anniversary of the Grant Date. The Option may be
exercised by the Participant's estate or by or on behalf of such person or
persons to whom the Participant's rights pass under the Participant's will or
the laws of decent and distribution.
(c) In the event that the Participant is terminated without cause or
becomes permanently and totally disabled (within the meaning of Section
22(e)(3) of the Code) while an employee of the Company and prior to the complete
exercise of the vested portion of the Option granted to the Participant under
this Agreement, any such unexercised options or any portion thereof may not be
exercised in whole or in part after ninety (90) days following such termination
without cause or the determination date of such permanent and total disability;
provided, however, that in the event that on such 90th day the Covered Shares
are not registered pursuant to a registration statement filed with and declared
effective by the SEC, then the unexercised options may be
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<PAGE>
exercised in whole or in part within thirty (30) days after the date on which
said registration statement is declared effective by the SEC. Notwithstanding
the foregoing, the Option may not be exercised after the ten-year anniversary of
the Grant Date.
(d) In the event that the Participant voluntarily resigns his employment
with the Company, or in the event that the Participant's employment with the
Company is terminated for cause, the Option shall immediately cease to be
exercisable.
5. Method of Option Exercise. The Option may be exercised in whole or in
-------------------------
part by filing a written notice with the Secretary of the Company at its
corporate headquarters prior to the Expiration Date. Such notice shall (a)
specify the number of shares of Stock which the Participant elects to purchase,
and (b) be accompanied by payment of the Exercise Price for such shares of
Stock. Payment shall be by the delivery of cash or by check made payable to the
Company.
6. Withholding. All distributions under this Agreement are subject to
-----------
withholding of all applicable taxes. At the discretion of, and subject to such
rules as may be established by the Board of Directors from time to time, such
withholding obligations may be satisfied through the surrender of shares of
Stock which the Participant already owns, or to which the Participant is
otherwise entitled under this Agreement or otherwise.
7. Transferability. The Option is not transferable other than as
---------------
designated by the Participant by will or by the laws of descent and
distribution, and during the Participant's life, may be exercised only by the
Participant or by the Participant's guardian or legal representative.
8. Rights as a Shareholder. The Participant shall have no rights as a
-----------------------
shareholder of the Company with respect to the Covered Shares until the date of
the issuance to him or her of a certificate of stock representing the Covered
Shares.
9. Consideration. As consideration for the grant of the Option set forth
-------------
herein, the Participant hereby releases and forever discharges the Company, its
officers, directors and shareholders, from and against any and all claims,
liabilities, and obligations whatsoever, whether in law or at equity, and
arising from any statement of facts from the beginning of time until the Grant
Date; including, without limitation, any claim to be paid by the Company or
Prisma for accrued but unused vacation, if any.
10. Survivability and Assignability. This Agreement shall be binding
-------------------------------
upon, and inure to the benefit of, the Company and its successors and assigns,
and upon any person acquiring, whether by merger, consolidation, purchase of
assets or otherwise, all or substantially all of the Company's assets and
business. In the event of the Participant's death prior to exercise of this
Option, the Option may be exercised by the estate of the Participant to the
extent such exercise is otherwise permitted by this Agreement.
11. General Provisions.
------------------
(a) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous negotiations, agreements and understandings.
(b) All payments, notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given at the
earlier of (i) the time of actual delivery, (ii) on the third business day
following the date deposited with the United States Postal Service, postage
prepaid, certified with return receipt requested, (iii) the date of delivery via
telefax communication, provided that a confirmation statement validates said
delivery, or (iv) the next business day if sent by overnight mail, to the
parties at the addresses set forth at the beginning of this Agreement, or at
such other address as shall be given in writing by a party to the other parties.
(c) If any term, covenant or condition of this Agreement is held to
be invalid, void or otherwise unenforceable by any court of competent
jurisdiction, the remainder of this Agreement shall not be affected thereby and
each term, covenant and condition of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
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<PAGE>
(d) Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Participant and the Company. Any amendment or waiver effected in
accordance with this Section 11(d) shall be binding upon all parties to this
Agreement.
(e) If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
an award of its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which such party may be entitled.
(f) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(g) This Agreement is deemed to be entered into in, and shall be
governed, construed and enforced in accordance with the internal laws of, the
State of California, without giving effect to its conflicts of laws principles.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement.
_____________________, Participant
SYNBIOTICS CORPORATION
By:
----------------------------------
Kenneth M. Cohen, President
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