<PAGE> 1
As filed with the Securities and Exchange Commission on July 14, 1995
Registration No. 33-________________________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------
BIOMAGNETIC TECHNOLOGIES, INC.
(Exact name of issuer as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 95-2647755
----------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
9727 PACIFIC HEIGHTS BOULEVARD, SAN DIEGO, CALIFORNIA 92121
(Address of Principal Executive Office) (Zip Code)
BIOMAGNETIC TECHNOLOGIES, INC.
1987 STOCK OPTION PLAN
(Full title of the plan)
JAMES V. SCHUMACHER
President and Chief Executive Officer
BIOMAGNETIC TECHNOLOGIES, INC.
9727 PACIFIC HEIGHTS BOULEVARD, SAN DIEGO, CALIFORNIA 92121
(Name and address of agent for service)
Telephone number, including area code, of agent for service:
(619) 453-6300
Copies to:
CRAIG S. ANDREWS, ESQ.
BROBECK, PHLEGER & HARRISON
550 West C Street, Suite 1300
San Diego, California 92101
----------------------
This Registration Statement shall become effective
immediately upon filing with the Securities and
Exchange Commission, and sales of the registered
securities will begin as soon as reasonably
practicable after such effective date.
----------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
Title of Proposed maximum Proposed maximum
securities to Amount to be offering price aggregate Amount of
be registered registered per share offering price registration fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock, 1987 Plan 3,000,000 $0.91(1) $2,730,000(1) $942
no par value
</TABLE>
(1) Calculated solely for purposes of this offering under Rule 457(h)
of the Securities Act of 1933, as amended, on the basis of the last
sale reported per share of Common Stock of Biomagnetic Technologies,
Inc. on July 12, 1995 as reported on the Nasdaq National Market.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Biomagnetic Technologies, Inc. (the "Registrant") hereby files this
Registration Statement with the Securities and Exchange Commission (the
"Commission") on Form S-8 to register 3,000,000 shares of the Registrant's
Common Stock for issuance pursuant to options granted under the Registrant's
1987 Stock Option Plan, as amended.
Item 3. Incorporation of Certain Documents by Reference
The Registrant hereby incorporates by reference into this
Registration Statement the following documents previously filed with the
Commission:
(1) The Annual Report of the Registrant on Form 10-K for the
fiscal year ended September 30, 1994, as amended by Form 10K/A
filed February 20, 1995, and further amended by Form 10K-A No.
2 filed April 27, 1995;
(2) The Quarterly Report of the Registrant on Form 10-Q for the
quarter ended December 31, 1994 filed February 14, 1995;
(3) The Quarterly Report of the Registrant on Form 10-Q for the
quarter ended March 31, 1995 filed May 15, 1995, as amended
July 14, 1995;
(4) The Proxy Statement of the Registrant dated March 10, 1995 in
connection with the Annual Meeting of Shareholders held on
March 24, 1995;
(5) The Current Report of the Registrant on Form 8-K filed on
April 5, 1995;
(6) The Report by Issuer of Securities Quoted on Nasdaq
Interdealer Quotation System filed on April 12, 1995;
(7) The Current Report of the Registrant on Form 8-K filed on
April 14, 1995; and
(8) The section entitled "Description of Capital Stock" contained
in the Post-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form S-1, filed with the Commission
May 8, 1992, in which there is described the terms, rights and
provisions applicable to the Registrant's Common Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold shall
be deemed to be incorporated by reference into this Registration Statement and
to be a part hereof from the date of filing of such documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
The law firm of Brobeck, Phleger & Harrison has provided an
opinion of counsel as to the validity of the issuance of the Common Stock
offered under this Registration Statement.
Item 6. Indemnification of Directors and Officers
(a) Section 317 of the California General Corporation Law
provides for the indemnification to officers and directors of the Registrant
and its subsidiaries against expenses, judgments, fines and amounts paid in
settlement under certain conditions and subject to certain limitations.
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<PAGE> 3
(b) Article IV, Section 10 of the Bylaws of the
Registrant provides that the Registrant shall have power to indemnify any
person who is or was an agent of the Registrant as provided in Section 317 of
the California General Corporation Law. 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 or officer in
defending a civil or criminal action, suit or proceeding by reason of the fact
that he or she is or was a director or officer of the Registrant (or was
serving at the Registrant's request as a director or officer of another
corporation) shall 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 as authorized by the relevant section of the California General
Corporation Law.
(c) Article V of the Registrant's Articles of
Incorporation provides that the liability of the directors of the Registrant
for monetary damages shall be eliminated to the fullest extent permissible
under California law. Accordingly, a director will not be liable for monetary
damages for breach of duty to the Registrant or its shareholders in any action
brought by or in the right of the Registrant. However, a director remains
liable to the extent required by law (i) for acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law, (ii) for
acts or omissions that a director believes to be contrary to the best interests
of the Registrant or its shareholders or that involve the absence of good faith
on the part of the director, (iii) for any transaction from which a director
derived an improper personal benefit, (iv) for acts or omissions that show a
reckless disregard for the director's duty to the Registrant or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of serious injury to the Registrant or its shareholders, (v) for acts or
omissions that constitute an unexcused pattern of inattention that amounts to
an abdication of the director's duty to the Registrant or its shareholders,
(vi) for any act or omission occurring prior to the date when the exculpation
provision became effective and (vii) for any act or omission as an officer,
notwithstanding that the officer is also a director or that his or her actions,
if negligent or improper, have been ratified by the directors. The effect of
the provisions in the Articles of Incorporation is to eliminate the rights of
the Registrant and its shareholders (through shareholders' derivative suits on
behalf of the Registrant) to recover monetary damages against a director for
breach of duty as a director, including breaches resulting from negligent
behavior in the context of transactions involving a change of control of the
Registrant or otherwise, except in the situations described in clauses (i)
through (vii) above. These provisions will not alter the liability of
directors under federal securities laws.
(d) Pursuant to authorization provided under the Articles
of Incorporation, the Registrant has entered into indemnification agreements
with each of its present and certain of its former directors. The Registrant
has also entered into similar agreements with certain of the Registrant's
executive officers who are not directors. 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. Under such
additional indemnification provisions, however, an individual will not receive
indemnification for judgments, settlements or expenses if he or she is found
liable to the Registrant (except to the extent the court determines he or she
is fairly and reasonably entitled to indemnity for expenses), for settlements
not approved by the Registrant or for settlements and expenses if the
settlement is not approved by the court. The indemnification agreements
provide for the Registrant to advance to the individual any and all reasonable
expenses (including legal fees and expenses) incurred in investigating or
defending any such action, suit or proceeding. In order to receive an advance
of expenses, the individual must submit to the Registrant copies of invoices
presented to him or her for such expenses. Also, the individual must repay
such advances upon a final judicial decision 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.
(e) There is directors' and officers' liability insurance
now in effect which insures directors and officers of the Registrant. The
policy expires on March 31, 1996. Under the policy, the directors and officers
II-2
<PAGE> 4
are insured against loss arising from claims made against them due to wrongful
acts while acting in their individual and collective capacities as directors
and officers, subject to certain exclusions.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
-------------- -------
<S> <C>
5. Opinion of Brobeck, Phleger & Harrison.
23.1 Consent of Price Waterhouse LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison is contained in Exhibit 5.
24. Power of Attorney. Reference is made to page II-5 of this Registration Statement.
99.1 Biomagnetic Technologies, Inc. 1987 Stock Option Plan, as amended.
</TABLE>
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933, (ii) to
reflect in the prospectus any facts or events arising after the effective date
of this Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in this Registration Statement, 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
clauses (1)(i) and (1)(ii) shall not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
into this Registration Statement; (2) that for the purpose of determining any
liability under the Securities Act of 1933 each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and (3) to remove from
registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Registrant's
1987 Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
into this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be in 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 or
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been informed that in the opinion of the
Securities and Exchange Commission 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 a director, officer
or controlling person of the Registrant in the successful defense
II-3
<PAGE> 5
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.
II-4
<PAGE> 6
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 San Diego, State of California, on this 14th
day of July, 1995.
BIOMAGNETIC TECHNOLOGIES, INC.
By: /s/ James V. Schumacher
-------------------------------------
James V. Schumacher,
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of BIOMAGNETIC
TECHNOLOGIES, INC., a California corporation, do hereby constitute and appoint
James V. Schumacher and Herman Bergman, or either of them, the lawful attorneys
and agents, with full power and authority to do any and all acts and things and
to execute any and all instruments which said attorneys and agents, and any one
of them, determine may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules or regulations or requirements of the Securities and Exchange Commission
in connection with this Registration Statement. Without limiting the
generality of the foregoing power and authority, the powers granted include the
power and authority to sign the names of the undersigned officers and directors
in the capacities indicated below to this Registration Statement, to any and
all amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ James V. Schumacher President, Chief Executive Officer and Director July 14, 1995
---------------------------------- (Principal Executive Officer)
(James V. Schumacher)
/s/ Herman Bergman Acting Chief Financial Officer (Principal Financial July 14, 1995
---------------------------------- and Accounting Officer)
(Herman Bergman)
Director July 14, 1995
----------------------------------
(R. Scott Asen)
/s/ Jerry C. Benjamin Director July 14, 1995
----------------------------------
(Jerry C. Benjamin)
/s/ William C. Black, Jr. Director July 14, 1995
----------------------------------
(William C. Black, Jr.)
/s/ Martin P. Egli Director July 14, 1995
----------------------------------
(Martin P. Egli)
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Michael E. Faherty Director July 14, 1995
----------------------------------
(Michael E. Faherty)
/s/ Gerald D. Knudson Director July 14, 1995
----------------------------------
(Gerald D. Knudson)
/s/ Alfred S. LeBlang Director July 14, 1995
----------------------------------
(Alfred S. LeBlang)
Director July 14, 1995
----------------------------------
(Enrique Maso)
</TABLE>
II-6
<PAGE> 8
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
BIOMAGNETIC TECHNOLOGIES, INC.
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<S> <C>
5 Opinion of Brobeck, Phleger & Harrison.
23.1 Consent of Price Waterhouse LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison is contained in Exhibit 5.
24 Power of Attorney.
99.1 1987 Stock Option Plan, as amended.
</TABLE>
<PAGE> 1
EXHIBIT 5
Opinion of Brobeck, Phleger & Harrison
July 14, 1995
Biomagnetic Technologies, Inc.
9727 Pacific Heights Boulevard
San Diego, California 92121
Re: Biomagnetic Technologies, Inc.
Registration Statement for Offering of
3,000,000 Shares of Common Stock
Ladies and Gentlemen:
In connection with the registration of 3,000,000 shares of the Common
Stock of Biomagnetic Technologies, Inc. (the "Registrant") on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, we
advise you that, in our opinion, when, as and if such shares have been issued
and sold pursuant to the provisions of the Registrant's 1987 Stock Option Plan
(and the provisions of the respective stock options thereunder) and in
accordance with the Registration Statement, such shares will be
duly-authorized, validly-issued, fully-paid and non-assessable shares of the
Registrant's Common Stock.
We hereby consent to the reference to our firm under Item 5,
"Interests of Named Experts and Counsel," in Part II of the Registration
Statement and to the filing of this opinion as an exhibit to the Registration
Statement.
Yours very truly,
BROBECK, PHLEGER & HARRISON
<PAGE> 1
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 January 9, 1995,
appearing on page F-1 of the Biomagnetic Technologies, Inc. Annual Report on
Form 10-K/A No. 2 for the year ended September 30, 1994. We also consent to
the incorporation by reference of our report on the Financial Statement
Schedule, which appears on page 36 of such Annual Report on Form 10-K.
PRICE WATERHOUSE
San Diego, California
July 14, 1995
<PAGE> 1
EXHIBIT 99.1
1987 Stock Option Plan, as amended
<PAGE> 2
BIOMAGNETIC TECHNOLOGIES, INC.
1987 STOCK OPTION PLAN
AS AMENDED MARCH 24, 1995
1. PURPOSE.
The Plan is intended to provide incentive to the directors,
advisers and employees of the Corporation and its Subsidiaries, to encourage
such individuals' proprietary interest in the Corporation, to encourage such
individuals to remain in the service of the Corporation or its Subsidiaries and
to attract new directors, advisers and employees with outstanding
qualifications.
2. DEFINITIONS.
(a) "Board" shall mean the Board of Directors of the
Corporation, as constituted from time to time.
(b) "Cause" shall mean fraud, dishonesty, willful and
habitual neglect of or repeated failure to perform properly the duties assigned
to an Optionee or conduct that is contrary to the best interests of the
Corporation. Cause shall be determined by the Committee in good faith.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(d) "Committee" shall mean the Compensation Committee of
the Board in accordance with Section 4 hereof.
(e) "Corporation" shall mean Biomagnetic Technologies,
Inc., a California corporation.
(f) "Employee" shall mean (i) an individual who is an
employee (within the meaning of section 3401(c) of the Code and the regulations
thereunder) of the Corporation or of a Parent or Subsidiary and (ii) a director
or adviser of the Corporation or of a Parent or Subsidiary. Service as such a
director or adviser shall be deemed to be employment for all purposes of the
Plan except Section 5(b) hereof.
(g) "Exercise Price" shall mean the amount for which one
Share may be purchased upon exercise of an Option, as specified by the
Committee in the applicable stock option agreement.
(h) "Fair Market Value" shall mean the fair market value
of Stock, as determined by the Committee in good faith. Such determination
shall be conclusive and binding on all persons.
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<PAGE> 3
(i) "Incentive Stock Option" shall mean an option
described in section 422(b) of the Code.
(j) "Nonqualified Stock Option" shall mean an option not
described in sections 422(b) or 423(b) of the Code.
(k) "Option" shall mean either an Incentive Stock Option
or Nonqualified Stock Option granted pursuant to the Plan and entitling the
holder to purchase Shares.
(l) "Optionee" shall mean an individual who holds an
Option.
(m) "Parent" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the Corporation,
if each of the corporations other than the Corporation owns stock possessing at
least fifty percent (50%) of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(n) "Plan" shall mean this Biomagnetic Technologies, Inc.
1987 Stock Option Plan, as it may be amended from time to time.
(o) "Purchase Price" shall mean the Exercise Price
multiplied by the number of Shares with respect to which an Option is
exercised.
(p) "Share" shall mean one (1) share of Stock, as
adjusted in accordance with Section 10 hereof (if applicable).
(q) "Shareholders" shall mean collectively the holders of
the Corporation's outstanding shares of Common Stock.
(r) "Stock" shall mean the Common Stock of the
Corporation.
(s) "Subsidiary" shall mean any corporation, if the
Corporation and/or one or more other Subsidiaries own at least fifty percent
(50%) of the total combined voting power of all classes of outstanding stock or
other evidence of ownership in such corporation. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
(t) "Total and Permanent Disability" shall mean that the
Optionee is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted, or can be expected to last, for a
continuous period of not less than twelve (12) months.
3. EFFECTIVE DATE.
The Plan was adopted by the Board on December 16, 1986,
subject to the approval of the Shareholders pursuant to Section 14 hereof. No
Option may be granted under the Plan prior to January 1, 1987. The Board
approved amendments to the Plan in
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<PAGE> 4
December 1987, February 1989, January 1990, November 1990, October 1991,
December 1993, March 1994 and March 1995, and all amendments were ratified and
approved by the Shareholders.
4. ADMINISTRATION.
(a) Committee Membership.
The Plan shall be administered by the Compensation
Committee of the Board. The Committee shall be appointed by the Board and
shall consist of not less than two (2) directors. The Board may from time to
time remove members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board. The Committee shall
hold meetings at such times and places as it may determine. Acts of a majority
of the Committee at which a quorum is present, or acts reduced to or approved
in writing by a majority of the members of the Committee, shall be the valid
acts of the Committee. In its absolute discretion, the Board may at any time
and from time to time exercise any and all rights and duties of the Committee
under the Plan.
(b) Committee Responsibilities and Powers.
The Committee shall from time to time at its
discretion select the Employees to whom Options are to be granted, determine
the number of Shares to be optioned to each Optionee, determine the Exercise
Price thereof, designate such Options as Incentive Stock Options or
Nonqualified Stock Options, and determine the other terms and conditions of
such Options. However, a Committee member shall in no event participate in any
determination relating to Options held by or to be granted to such Committee
member. The interpretation and construction by the Committee of any provision
of the Plan or of any Option granted thereunder shall be final. No member of
the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Option granted thereunder.
5. ELIGIBILITY.
(a) Eligible Classes.
The Optionees shall be such Employees (who may be
officers or directors) as the Committee may select, subject to the terms and
conditions set forth below.
(b) Non-Employee Directors and Advisers.
Only individuals who are employed as common-law
Employees by the Corporation or a Parent or Subsidiary shall be eligible to
receive an Incentive Stock Option; non-employee directors or advisers shall
only be eligible to receive a Nonqualified Stock Option.
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<PAGE> 5
(c) Ten-Percent Shareholders.
An Employee who owns more than ten percent (10%) of
the total combined voting power of all classes of outstanding stock of the
Corporation or any of its Parents or Subsidiaries shall not be eligible to
receive an Option, unless (i) the Exercise Price of the Shares subject to such
Option is at least one hundred ten percent (110%) of the Fair Market Value of
such Shares on the date of grant and (ii) if the Option is an Incentive Stock
Option, the term of such Option does not exceed five (5) years from the date of
grant.
(d) Attribution Rules.
For purposes of (c) above, in determining stock
ownership, an Employee shall be deemed to own the stock owned, directly or
indirectly, by or for his or her brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries. Stock
with respect to which such Employee holds an Option shall not be counted.
(e) Outstanding Stock.
For purposes of (c) above, "outstanding stock" shall
include all stock actually issued and outstanding immediately after the grant
of the Option to the Optionee. "Outstanding stock" shall not include
reacquired Shares or Shares authorized for issuance under outstanding Options
held by the Optionee or by any other person.
6. STOCK.
The aggregate number of Shares which may be issued upon
exercise of Options under the Plan shall not exceed five million (5,000,000).
The number of Shares subject to Options outstanding at any time shall not
exceed the number of Shares then remaining available for issuance under the
Plan. In the event that any outstanding Option for any reason expires or is
terminated, the Shares allocable to the unexercised portion of such Option may
again be made subject to Options. The limitation established by this Section 6
shall be subject to adjustment in the manner provided in Section 10 hereof upon
the occurrence of an event specified therein.
7. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreements.
Options shall be evidenced by written stock option
agreements in such form as the Committee shall from time to time determine.
Such agreements shall comply with and be subject to the terms and conditions
set forth below. However, the provisions of all stock option agreements
executed under the Plan need not be identical.
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<PAGE> 6
(b) Number of Shares.
Each Option shall specify the number of Shares to
which it pertains and shall provide for the adjustment of such number in
accordance with Section 10 hereof. The Option shall also specify whether it is
an Incentive Stock Option or a Nonqualified Stock Option.
(c) Exercise Price.
Each Option shall specify the Exercise Price. The
Exercise Price under a Nonqualified Stock Option shall not be less than one
hundred percent (100%) of the Fair Market Value on the date of grant. The
Exercise Price under any Incentive Stock Option shall not be less than one
hundred percent (100%) of the Fair Market Vale on the date of grant and, in the
case of an Incentive Stock Option granted to an Optionee described in Section
5(c) hereof, shall not be less than one hundred ten percent (110%) of the Fair
Market Value on the date of the grant.
(d) Medium and Time of Payment.
The Purchase Price shall be payable in full in United
States dollars upon the exercise of the Option, except that the applicable
stock option agreement may provide that all or part of the Purchase Price can
be paid by any legal consideration acceptable to the Committee at the time of
exercise in its sole and absolute discretion including and subject to any
conditions the Committee may impose.
(e) Withholding Taxes.
As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that
may arise in connection with such exercise.
(f) Term and Nontransferability of Options.
Each Option shall specify the date when all or any
installment thereof is to become exercisable. The Option shall also specify
its term, which shall not exceed ten (10) years from the date of grant and, in
the case of an Incentive Stock Option granted to an Optionee described in
Section 5(c) hereof, shall not exceed five (5) years from the date of grant.
During the lifetime of the Optionee, the Option shall
be exercisable only by the Optionee and shall not be assignable or
transferable. In the event of the Optionee's death, the Option shall not be
transferable other than by will or by the laws of descent and distribution.
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<PAGE> 7
(g) Termination of Service (Except by Death).
If an Optionee ceases to be an Employee by reason of
his or her termination or removal for Cause, then the Optionee shall have the
right to exercise an Option (to the extent not previously exercised and not
expired and to the extent that, on the date of termination, the Optionee's
right to exercise the Option has accrued (vested) pursuant to the terms of the
applicable stock option agreement) at any time within thirty days following the
date of termination or removal; provided, however, that such thirty-day period
shall be shortened to ten days if the Corporation sends a notice of its
intention to purchase Shares upon exercise of an Option to the Optionee, in
which event Optionee shall have ten days from the date of such notice to
exercise an Option (to the extent not previously exercised and not expired and
to the extent that, on date of termination, the Optionee's right to exercise
the Option has accrued (vested) pursuant to the terms of the applicable stock
option agreement). In the event that Optionee exercises an Option within the
ten-day period described in the preceding sentence, all Shares so acquired
shall be deemed to be immediately offered to the Corporation for cash purchase
by the Corporation or its designee at Fair Market Value, and any purchase by
the Corporation or its designee must be consummated within ten days after
Optionee's exercise. If an Optionee ceases to be an Employee for any reason
other than for Cause or his or her death or Total and Permanent Disability,
then the Optionee shall have the right to exercise an Option (to the extent not
previously exercised and not expired) at any time within three (3) months after
the date when he or she ceases to be an Employee, but only to the extent that,
on such date, the Optionee's right to exercise such Option has accrued pursuant
to the terms of the applicable stock option agreement. If an Optionee ceases
to be an Employee by reason of Total and Permanent Disability, then the period
of three (3) months described in the preceding sentence shall be extended to
twelve (12) months.
For purposes of this Subsection (g), the Employee
relationship shall be deemed to continue while the Optionee is on military
leave, sick leave or other bona fide leave of absence (to be determined in the
sole discretion of the Committee). The foregoing notwithstanding, in the case
of an Incentive Stock Option, the Employee relationship shall not be deemed to
continue beyond the ninetieth (90th) day after the Optionee ceased active
employment as a common-law employee, unless the Optionee's reemployment rights
are guaranteed by statute or by contract.
(h) Death of Optionee.
If an Optionee dies while an Employee and has not
fully exercised an Option, such Option may be exercised in full at any time
within twelve (12) months after the Optionee's death by the executors or
administrators of his or her estate or by any person or persons who have
acquired such Option directly from the Optionee by bequest or inheritance, but
only to the extent that such Option has not previously been exercised and has
not expired.
If an Optionee dies after the Employee relationship
terminated, but within the period during which an Option could have been
exercised under (g) above, and
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has not fully exercised such Option, then such Option (to the extent not
previously exercised and not expired) may be exercised at any time within
twelve (12) months after the Optionee's death by the executors or
administrators of his or her estate or by any person or persons who have
acquired such Option directly from the Optionee by bequest or inheritance, but
only to the extent that, at the date of termination of the Employee
relationship, the Optionee's right to exercise such Option has accrued pursuant
to the terms of the applicable stock option agreement.
(i) Rights as a Shareholder.
An Optionee, or a transferee of an Optionee, shall
have no rights as a shareholder with respect to any Shares covered by his or
her Option until the date of the issuance of a stock certificate for such
Shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other rights
for which the record date is prior to the date when such stock certificate is
issued, except as provided in Section 10 hereof.
(j) Modification, Extension and Renewal of Options.
Within the limitations of the Plan, the Committee may
modify, extend or renew outstanding Options or accept the cancellation of
outstanding Options (to the extent not previously exercised) for the granting
of new Options in substitution therefor. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair any rights or obligations under such Option.
(k) Other Provisions.
The stock option agreements authorized under the Plan
may contain such other provisions not inconsistent with the terms of the Plan
(including, without limitation, rights of repurchase, rights of first refusal
or restrictions upon the exercise of the Option or the transferability of
Shares) as the Committee may deem advisable.
8. LIMITATION ON ISO EXERCISABILITY.
The aggregate Fair Market Value (determined as of the date an
Option is granted) of the Stock with respect to which Incentive Stock Options
are exercisable for the first time by Optionee during any calendar year under
this Plan and any other plans maintained by the Corporation, its Parent or its
Subsidiaries shall not exceed $100,000.
9. TERM OF PLAN.
Options may be granted pursuant to the Plan until the
expiration of the Plan on December 31, 1996.
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10. RECAPITALIZATIONS.
Subject to any required action by Shareholders, (i) the number
of Shares covered by the Plan as provided in Section 6 hereof, (ii) the number
of Shares covered by each outstanding Option and (iii) the Exercise Price
thereof, shall be adjusted proportionately for any increase or decrease in the
number of issued Shares resulting from a subdivision or consolidation of Shares
or the payment of a stock dividend or any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Corporation.
In the event of any of the following transactions (a
"Corporate Transaction"):
o a merger or acquisition in which the Company is not
the surviving entity, except for a transaction the
principal purpose of which is to change the state of
the Company's incorporation,
o the sale, transfer or other disposition of all or
substantially all of the assets of the Company,
o the acquisition and ownership by a single shareholder
or group of affiliated shareholders of more than
fifty percent (50%) of the Company's outstanding
voting stock, or
o any reverse merger in which the Company is the
surviving entity but in which fifty percent (50%) or
more of the Company's outstanding voting stock is
transferred to holders different from those who held
the stock immediately prior to such merger,
then, the exercisability of each option outstanding under the Option Plan shall
be automatically accelerated so that each such option shall, immediately prior
to the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock
purchasable under such option and may be exercised for all or any portion of
such shares. However, an outstanding option under the Option Plan shall not be
so accelerated if and to the extent the acceleration of such option is subject
to other applicable limitations imposed by the Committee at the time of grant.
Upon the consummation of the Corporation Transaction, all
outstanding options under the Option Plan shall, to the extent not previously
exercised or assumed by the successor corporation or its parent company,
terminate and cease to be outstanding.
The grant of options under the Option Plan shall in no way
affect the right of the Company 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.
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To the extent that the foregoing adjustments relate to
securities of the Corporation, such adjustments shall be made by the Committee,
whose determination shall be conclusive and binding on all parties.
Except as expressly provided in this Section 10, the Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or
stock of another corporation, and any issue by the Corporation of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall not affect, and no adjustments by reason thereof shall be made
with respect to, the number of Shares subject to an Option.
11. SECURITIES LAW REQUIREMENTS.
(a) Legality of Issuance.
No Shares shall be issued upon the exercise of any
Option in a transaction not registered under the Securities Act of 1933 unless
and until the Corporation has received a written exercise letter containing
investment representations in a form substantially equivalent to those
contained in the form of exercise letter attached to the form of Stock Option
Agreement attached hereto.
(b) Registration or Qualification of Securities.
The Corporation may, but shall not be obligated to,
register or qualify the sale of Shares under the Act or any other applicable
law. The Corporation shall not be obligated to take any affirmative action in
order to cause the sale of Shares under the Plan to comply with any law.
12. AMENDMENT OF THE PLAN.
The Board may from time to time, with respect to any Shares at
the time not subject to Options, suspend or discontinue the Plan or revise or
amend it in any respect whatsoever except that, without the approval of the
Shareholders, no such revision or amendment shall:
(a) Increase the number of Shares subject to the Plan,
except as provided in Section 10 hereof.
(b) Materially change the designation in Section 5 hereof
with respect to the class of Employees eligible to receive Incentive Stock
Options; or
(c) Amend this Section 12 to defeat its purpose.
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<PAGE> 11
13. APPLICATION OF FUNDS.
The proceeds received by the Corporation from the sale of
Stock pursuant to the exercise of an Option will be used for general corporate
purposes.
14. APPROVAL OF SHAREHOLDERS.
The Plan and any amendment described in Section 12 hereof
shall be subject to approval by Shareholders, by means of either the
affirmative vote or written consent of the holders of a majority of the
outstanding Shares of the Corporation entitled to vote. In the event that the
Plan is not so approved by Shareholders within 12 months after its adoption by
the Board, any Option theretofore granted shall be null and void.
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