<PAGE> 1
As filed with the Securities and Exchange Commission on November 4, 1997
Registration No.
--------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
-----------------------
OSI PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
-----------------------
Delaware 13-3159796
---------------- ------------------
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
106 Charles Lindbergh Blvd. 11553
Uniondale, NY ---------
-------------------------------------- (Zip Code)
(Address of principal executive offices)
-----------------------
OSI PHARMACEUTICALS, INC.
1997 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
(Full title of the plan)
-----------------------
ROBERT L. VAN NOSTRAND
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
ONCOGENE SCIENCE, INC.
106 CHARLES LINDBERGH BLVD.
UNIONDALE, NEW YORK 11553
(516) 222-0023
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------------
Copy to:
SPENCER W. FRANCK, JR., ESQUIRE
SAUL, EWING, REMICK & SAUL LLP
3800 CENTRE SQUARE WEST
PHILADELPHIA, PENNSYLVANIA 19102
(215) 972-1955
-----------------------
See next page for calculation of registration fee.
-----------------------
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================================
Proposed Proposed
Title of Securities to be Amount to be Maximum Offering Maximum Amount of Registration Fee
Registered Registered Price Per Share Aggregate Offering
Price
==============================================================================================================================
<S> <C> <C> <C>
Common Stock, Par 145,000(1) $6.50 $ 942,500
Value $.01 Per Share 555,500(2) 6.88 3,819,063
1,299,500(3) 9.75 12,670,125
--------- -----------
2,000,000 $17,431,688 $5,282.33
========= =========== ==========
==============================================================================================================================
</TABLE>
(1) Represents shares issuable upon exercise of options previously granted
under the 1997 Incentive and Non-Qualified Stock Option Plan (the
"Plan").
(2) Represents shares issuable upon exercise of options previously granted
under the Plan.
(3) Represents shares issuable in connection with options available for grant
under the Plan.
(4) The registration fee has been computed in accordance with paragraphs (c)
and (h) of Rule 457, based upon, in the case of options previously
granted, the stated exercise price of such options, and, in the case of
options still available for grant, the average of the reported high and
low sale prices of shares of the Common Stock on November 3, 1997.
<PAGE> 3
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION. (1)
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.(1)
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in clauses (a), (b) and (c) below are
incorporated herein by this reference thereto, and all documents subsequently
filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by this reference in this registration statement and to be a part
hereof from the date of filing of such documents:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996.
(b) The Registrant's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1996, March 31 and June 30, 1997 and the Registrant's Current
Reports on Form 8-K dated October 1, 1997.
(c) The description of the Common Stock contained in the registration
statement filed by the Registrant to register such securities under Section 12
of the Securities Exchange Act of 1934, including any amendment or report filed
for the purpose of updating such description.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
- ------------------
(1) The information called for by Part I of Form S-8 is currently included
in the description of the Registrant's 1997 Incentive and Non-Qualified
Stock Option Plan (the "Plan") delivered to eligible persons under the
Plan. Pursuant to the Note to Part I of Form S-8, this information is
not being filed with or included in this Form S-8.
<PAGE> 4
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation or another enterprise if serving at the request of the
corporation. Depending on the character of the proceeding, a corporation may
indemnify against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding if the person indemnified acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
In the case of an action by or in the right of the corporation, no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine that despite the adjudication of liability,
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Section 145 further provides that to the extent a director or officer of
a corporation has been successful in the defense of any action, suit or
proceeding referred to above, or in defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses (including attorney's
fees) actually and reasonably incurred by him or her in connection therewith.
The Registrant's Certificate of Incorporation provides that
the Registrant shall, to the fullest extent permitted by law, indemnify all
directors, officers, employees and agents of the Company. The Certificate of
Incorporation also contains a provision eliminating the liability of directors
of the Registrant to the Registrant or its stockholders for monetary damages,
except under certain circumstances. The Certificate of Incorporation also
permits the Registrant to maintain insurance to protect itself and any director,
officer, employee or agent against any liability with respect to which the
Corporation would have the power to indemnify such persons under the Delaware
General Corporation Law. The Registrant maintains an insurance policy insuring
its directors and officers against certain liabilities.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following is a list of exhibits filed as part of the
Registration Statement:
5 Opinion of Saul, Ewing, Remick & Saul LLP.
23.1 Consent of KPMG Peat Marwick LLP, independent public
accountants.
23.2 Consent of Saul, Ewing, Remick & Saul LLP (contained in
Exhibit No. 5).
24 Power of Attorney (included on signature page of the
registration statement).
99 1997 Incentive and Non-Qualified Stock Option Plan.
<PAGE> 5
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(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 in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liability (other than payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
<PAGE> 6
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE> 7
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, thereunder duly
authorized, in the City of Uniondale, State of New York, on October 31, 1997.
ONCOGENE SCIENCE, INC.
By: /s/ Gary E. Frashier
----------------------------------
Gary E. Frashier,
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby makes, constitutes and appoints Gary E. Frashier and Robert
L. Van Nostrand, and each of them, with full power to act without the other, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all amendments to this Registration Statement,
including post-effective amendments, 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, and each
of them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or any
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gary E. Frashier Chief Executive Officer October 31, 1997
- ----------------------------- and Director
Gary E. Frashier
/s/ Robert L. Van Nostrand Vice President and October 31, 1997
- ----------------------------- Chief Financial Officer
Robert L. Van Nostrand
/s/ G. Morgan Browne Director October 10, 1997
- -----------------------------
G. Morgan Browne
/s/ John H. French, II Director October 14, 1997
- -----------------------------
John H. French, II
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Edwin A. Gee, Ph.D. Director October 17, 1997
- ------------------------------
Edwin A. Gee, Ph.D.
/s/ Daryl K. Granner, M.D. Director October 10, 1997
- ------------------------------
Daryl K. Granner, M.D.
/s/ Walter M. Lovenberg, Ph.D. Director October 31, 1997
- ------------------------------
Walter M. Lovenberg, Ph.D.
/s/ Steve M. Peltzman Director October 23, 1997
- ------------------------------
Steve M. Peltzman
/s/ Gary Takata Director October 12, 1997
- ------------------------------
Gary Takata
/s/ John P. White Director October 10, 1997
- ------------------------------
John P. White
</TABLE>
<PAGE> 9
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
----------- -------
5 Opinion of Saul, Ewing, Remick & Saul LLP.
23.1 Consent of KPMG Peat Marwick LLP, independent
public accountants.
23.2 Consent of Saul, Ewing, Remick & Saul LLP
(Contained in Exhibit No. 5).
25 Power of Attorney authorizing Gary E. Frashier and
Robert L. Van Nostrand to sign the Registration
Statement (included in signature page of the
99 Registration Statement).
1997 Incentive and Non-Qualified Stock Option Plan
<PAGE> 1
EXHIBIT 5
LAW OFFICES OF
SAUL, EWING, REMICK & SAUL LLP
<TABLE>
<S> <C> <C>
BERWYN, PENNSYLVANIA CENTRE SQUARE WEST PRINCETON, NEW JERSEY
HARRISBURG, PENNSYLVANIA 1500 MARKET STREET, 38th FLOOR WILMINGTON, DELAWARE
NEW YORK, NEW YORK PHILADELPHIA, PA 19102-2186
</TABLE>
(215) 972-7777
Fax: (215) 972-7725
Internet Email: [email protected]
World Wide Web: http://www.saul.com
November 4, 1997
OSI Pharmaceuticals, Inc.
106 Charles Lindbergh Blvd.
Uniondale, NY 11553
Gentlemen:
We refer to the Registration Statement on Form S-8 (the "Registration
Statement") of OSI Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), to be filed with the Securities and Exchange Commission covering the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of 2,000,000 shares of common stock, par value $.01 per share, of the
Company (the "Shares"), which Shares are to be issued under the Company's 1997
Incentive and Non-Qualified Stock Option Plan.
We have examined the Registration Statement, the Certificate of
Incorporation and By-laws of the Company and such records, certificates and
other documents as we have considered necessary or appropriate for the purposes
of this Opinion.
Based on the foregoing, it is our opinion that:
1. the Company is duly organized, validly existing and in good standing
under the laws of State of Delaware; and
2. the Shares to be issued in accordance with the terms described in the
Registration Statement have been duly authorized and, when issued in accordance
with the terms described in the Registration Statement, will be validly issued,
fully paid and non-assessable.
We hereby consent to use of our name in the Registration Statement as
counsel who will pass upon the legality of the Shares for the Company and as
having prepared this Opinion as an exhibit to the Registration Statement. In
giving the foregoing consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
SAUL, EWING, REMICK & SAUL LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
OSI Pharmaceuticals, Inc.:
We consent to incorporation by reference in the registration statement dated
November 4, 1997 on Form S-8 of OSI Pharmaceuticals, Inc. (formerly Oncogene
Science, Inc.) of our report dated December 3, 1996, relating to the
consolidated balance sheets of OSI Pharmaceuticals, Inc. (formerly Oncogene
Science, Inc.) and subsidiaries as of September 30, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows, for each of the years in the three year period ended September 30,
1996, which report appears in the September 30, 1996 annual report on Form
10-K of OSI Pharmaceuticals, Inc. (formerly Oncogene Science, Inc.).
KPMG PEAT MARWICK LLP
Jericho, New York
November 3, 1997
<PAGE> 1
EXHIBIT 99
OSI PHARMACEUTICALS, INC.(1)
1997 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
1. Purpose
The purpose of this 1997 Incentive and Non-Qualified Stock Option
Plan (the "Plan") is to encourage and enable selected management, other
key employees, directors (whether or not employees), and consultants of
OSI Pharmaceuticals, Inc.(2) (the "Company") or a parent or subsidiary of
the Company to acquire a proprietary interest in the Company through the
ownership of common stock, par value $.01 per share (the "Common Stock"),
of the Company. Such ownership will provide such employees, directors, and
consultants with a more direct stake in the future welfare of the Company,
and encourage them to remain with the Company or a parent or subsidiary of
the Company. It is also expected that the Plan will encourage qualified
persons to seek and accept employment with, or become associated with, the
Company or a parent or subsidiary of the Company. Pursuant to the Plan,
the Company may grant (i) "incentive stock options," within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
and (ii) stock options that do not qualify as incentive stock options
("non-qualified stock options"). No option granted under the Plan shall be
treated as an incentive stock option unless the stock option agreement
which evidences the grant refers to such option as an incentive stock
option and such option satisfies the requirements of Section 422 of the
Code.
As used herein, the term "parent" or "subsidiary" shall mean any
present or future corporation which is or would be a "parent corporation"
or "subsidiary corporation" of the Company as the term is defined in
Section 424 of the Code (determined as if the Company were the employer
corporation).
2. Administration of the Plan
The Plan shall be administered by a committee (the "Committee") as
appointed from time to time by the Board of Directors of the Company,
which may be the Compensation Committee of the Board of Directors. Except
as otherwise specifically provided herein, no person, other than members
of the Committee, shall have any discretion as to decisions regarding the
Plan. The Company may engage a third party to administer routine matters
under the Plan, such as establishing and maintaining accounts for Plan
participants and facilitating transactions by participants pursuant to the
Plan.
In administering the Plan, the Committee may adopt rules and
regulations for carrying out the Plan. The interpretations and decisions
made by the Committee with regard to any question arising under the Plan
shall be final and conclusive on all persons participating or eligible to
participate in the Plan. Subject to the provisions of the Plan, the
Committee shall determine the terms of all options granted pursuant to the
Plan, including, but not limited to, the persons to whom, and the time or
times at which, grants shall be made, the number of shares to be covered
- ------------------
(1) As of October 1, 1997, the Company's name was changed from Oncogene
Science, Inc. to OSI Pharmaceuticals, Inc.
(2) See Footnote 1.
<PAGE> 2
by each option, the duration of options, the exercisability of options,
whether options shall be treated as incentive stock options, and the
option price.
3. Shares of Stock Subject to the Plan
Except as provided in paragraphs 6(h), 6(i) and 7 hereof, the number
of shares that may be issued or transferred pursuant to the exercise of
options granted under the Plan shall not exceed 2,000,000 shares of Common
Stock. Such shares may be authorized and unissued shares or previously
issued shares acquired or to be acquired by the Company and held in
treasury. Any shares subject to an option which for any reason expires or
is terminated unexercised as to such shares may again be subject to an
option right under the Plan. The aggregate Fair Market Value, as defined
in paragraph 6(k) below (determined at the time the option is granted), of
the shares with respect to which incentive stock options are exercisable
for the first time by an optionee during any calendar year (under the Plan
and all plans of the Company and any parent or subsidiary of the Company)
shall not exceed $100,000.
4. Eligibility
Incentive stock options may be granted only to management and other
key employees who are employed by the Company or a parent or subsidiary of
the Company. Incentive stock options may be granted to a director of the
Company or a parent or subsidiary of the Company, provided that the
director is also an officer or key employee. Non-qualified stock options
may be granted to directors, officers, employees and consultants of the
Company.
5. Granting of options
No options pursuant to this Plan may be granted after the close of
business on March 18, 2007. The date of the grant of any option shall be
the date on which the Committee authorizes the grant of such option.
6. Options
Options shall be evidenced by stock option agreements in such form,
consistent with the Plan, as the Committee shall approve from time to
time, which agreements need not be identical and shall be subject to the
following terms and conditions:
(a) Option Price. The purchase price under each incentive
stock option shall be not less than 100% of the Fair Market Value of
the Common Stock at the time the option is granted and not less than
the par value of the Common Stock. In the case of an incentive stock
option granted to an employee owning, actually or constructively
under Section 424(d) of the Code, more than 10% of the total
combined voting power of all classes of stock of the Company or of
any parent or subsidiary of the Company (a "10% Stockholder") the
option price shall not be less than 110% of the Fair Market Value of
the Common Stock at the time of the grant. The purchase price under
each non-qualified stock option shall be specified by the Committee,
but shall in no case be less than the greater of 50% of the Fair
Market Value of the Common Stock at the time the option is granted
and the par value of such Common Stock.
<PAGE> 3
(b) Medium and Time of Payment. Stock purchased pursuant to
the exercise of an option shall at the time of purchase be paid for
in full in cash, or, upon conditions established by the Committee,
by delivery of shares of Common Stock owned by the recipient. If
payment is made by the delivery of shares, the value of the shares
delivered shall be the Fair Market Value of such shares on the date
of exercise of the option. In addition, unless otherwise provided by
the Committee an "in the money" non-qualified stock option may be
exercised on a "cashless" basis in exchange for the issuance to the
optionee (or other person entitled to exercise the option) of the
largest whole number of shares having an aggregate value equal to
the value of such option on the date of exercise. For this purpose,
the value of the shares delivered by the Company and the value of
the option being exercised shall be determined based on the Fair
Market Value of the Common Stock on the date of exercise of the
option. Upon receipt of payment and such documentation as the
Company may deem necessary to establish compliance with the
Securities Act of 1933, as amended (the "Securities Act"), the
Company shall, without stock transfer tax to the optionee or other
person entitled to exercise the option, deliver to the person
exercising the option a certificate or certificates for such shares.
It shall be a condition to the performance of the Company's
obligation to issue or transfer Common Stock upon exercise of an
option or options that the optionee pay, or make provision
satisfactory to the Company for the payment of, any taxes (other
than stock transfer taxes) the Company is obligated to collect with
respect to the issue or transfer of Common Stock upon such exercise,
including any federal, state, or local withholding taxes.
(c) Waiting Period. The waiting period and time for exercising
an option shall be prescribed by the Committee in each particular
case; provided, however, that no option may be exercised after 10
years from the date it is granted. In the case of an incentive stock
option granted to a 10% Stockholder, such option, by its terms,
shall be exercisable only within five years from the date of grant.
(d) Rights as a Stockholder. A recipient of options shall have
no rights as a stockholder with respect to any shares issuable or
transferable upon exercise thereof until the date a stock
certificate is issued to him for such shares. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the
date such stock certificate is issued.
(e) Non-Assignability of Options. No incentive stock option
and, except as may otherwise be specifically provided by the
Committee, no non-qualified stock options, shall be assignable or
transferable by the recipient except by will or by the laws of
descent and distribution. During the lifetime of a recipient,
incentive stock options and, except as may otherwise be specifically
provided by the Committee, non-qualified stock options, shall be
exercisable only by such recipient. If the Committee approves
provisions in any particular case allowing for assignment or
transfer of a non-qualified stock option, then such option will
nonetheless be subject to a six-month holding period commencing on
the date of grant during which period the recipient will not be
permitted to assign or transfer such option, unless the Committee
further specifically provides for the assignability or
transferability of such option during this period. See paragraph 8
hereof for restrictions on sale of shares.
(f) Effect of Termination of Employment. If a recipient's
employment (or service as an officer, director or consultant) shall
terminate for any reason, other than
<PAGE> 4
death or Retirement (as defined below), the right of the recipient
to exercise any option otherwise exercisable on the date of such
termination shall expire unless such right is exercised within a
period of 90 days after the date of such termination. The term
"Retirement" shall mean the voluntary termination of employment (or
service as an officer, director or consultant) by a recipient who
has attained the age of 55 and who has completed at least five years
of service with the Company. If a recipient's employment (or service
as an officer, director or consultant) shall terminate because of
death or Retirement, the right of the recipient to exercise any
option otherwise exercisable on the date of such termination shall
be unaffected by such termination and shall continue until the
normal expiration of such option. Notwithstanding the foregoing, the
tax treatment available pursuant to Section 421 of the Code upon the
exercise of an incentive stock option will not be available in
connection with the exercise of any incentive stock option more than
three months after the date of termination of such option
recipient's employment due to Retirement. Option rights shall not be
affected by any change of employment as long as the recipient
continues to be employed by either the Company or a parent or
subsidiary of the Company. In no event, however, shall an option be
exercisable after the expiration of its original term as determined
by the Committee pursuant to subparagraph 6(c) above. The Committee
may, if it determines that to do so would be in the Company's best
interests, provide in a specific case or cases for the exercise of
options which would otherwise terminate upon termination of
employment with the Company for any reason, upon such terms and
conditions as the Committee determines to be appropriate. Nothing in
the Plan or in any option agreement shall confer any right to
continue in the employ of the Company or any parent or subsidiary of
the Company or interfere in any way with the right of the Company or
any parent or subsidiary of the Company to terminate the employment
of a recipient at any time.
(g) Leave of Absence. In the case of a recipient on an
approved leave of absence, the Committee may, if it determines that
to do so would be in the best interests of the Company, provide in a
specific case for continuation of options during such leave of
absence, such continuation to be on such terms and conditions as the
Committee determines to be appropriate, except that in no event
shall an option be exercisable after 10 years from the date it is
granted.
(h) Recapitalization. In the event that dividends payable in
Common Stock during any fiscal year of the Company exceed in the
aggregate five percent of the Common Stock issued and outstanding at
the beginning of the year, or in the event there is during any
fiscal year of the Company one or more splits, subdivisions, or
combinations of shares of Common Stock resulting in an increase or
decrease by more than five percent of the shares outstanding at the
beginning of the year, the number of shares available under the Plan
shall be increased or decreased proportionately, as the case may be,
and the number of shares deliverable upon the exercise thereafter of
any options theretofore granted shall be increased or decreased
proportionately, as the case may be, without change in the aggregate
purchase price. Common Stock dividends, splits, subdivisions, or
combinations during any fiscal year that do not exceed in the
aggregate five percent of the Common Stock issued and outstanding at
the beginning of such year shall be ignored for purposes of the
Plan. All adjustments shall be made as of the day such action
necessitating such adjustment becomes effective.
<PAGE> 5
(i) Sale or Reorganization. In case the Company is merged or
consolidated with another corporation, or in case the property or
stock of the Company is acquired by another corporation, or in case
of a separation, reorganization, or liquidation of the Company, the
Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company hereunder, shall
either (i) make appropriate provisions for the protection of any
outstanding options by the substitution on an equitable basis of
appropriate stock of the Company, or appropriate stock of the
merged, consolidated, or otherwise reorganized corporation, provided
only that such substitution of options shall, with respect to
incentive stock options, comply with the requirements of Section
424(a) of the Code, or (ii) give written notice to optionees that
their options, which will become immediately exercisable
notwithstanding any waiting period otherwise prescribed by the
Committee, must be exercised within 30 days of the date of such
notice or they will be terminated.
(j) General Restrictions. Each option granted under the Plan
shall be subject to the requirement that, if at any time the Board
of Directors shall determine, in its discretion, that the listing,
registration, or qualification of the shares issuable or
transferable upon exercise thereof upon any securities exchange or
under any state or federal law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the granting of such option or
the issue, transfer, or purchase of shares thereunder, such option
may not be exercised in whole or in part unless such listing,
registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the
Board of Directors.
The Company shall not be obligated to sell or issue any shares
of Common Stock in any manner in contravention of the Securities
Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the rules and regulations of the Securities and Exchange
Commission, any state securities law, the rules and regulations
promulgated thereunder or the rules and regulations of any
securities exchange or over the counter market on which the Common
Stock is listed or in which it is included for quotation. The Board
of Directors may, in connection with the granting of each option,
require the individual to whom the option is to be granted to enter
into an agreement with the Company stating that as a condition
precedent to each exercise of the option, in whole or in part, he
shall, if then required by the Company, represent to the Company in
writing that such exercise is for investment only and not with a
view to distribution, and also setting forth such other terms and
conditions as the Committee may prescribe. Such agreements may also,
in the discretion of the Committee, contain provisions requiring the
forfeiture of any options granted and/or Common Stock held, in the
event of the termination of employment or association, as the case
may be, of the optionee with the Company. Upon any forfeiture of
Common Stock pursuant to an agreement authorized by the preceding
sentence, the Company shall pay consideration for such Common Stock
to the optionee, pursuant to any such agreement, without interest
thereon.
(k) "Fair Market Value." Fair Market Value for all purposes
under the Plan shall mean the closing price of shares of Common
Stock, as reported in The Wall Street Journal, in the NASDAQ
National Market Issues or similar successor consolidated
transactions reports (or a similar consolidated transactions report
for the exchange on which the shares of Common Stock are then
trading) for the relevant date, or if no sales
<PAGE> 6
of shares of Common Stock were made on such date, the average of the
high and low sale prices of shares as reported in such composite
transaction report for the preceding day on which sales of shares
were made. If the shares are not listed on a national securities
exchange or included for quotation in the NASDAQ National Market
System at the time Fair Market Value is to be determined, then Fair
Market Value shall be determined by the Committee in good faith
pursuant to such method as to the Committee deems appropriate and
equitable. Under no circumstances shall the Fair Market Value of a
share of Common Stock be less than its par value.
7. Termination and Amendment of the Plan
The Board of Directors or the Committee shall have the right to
amend, suspend, or terminate the Plan at any time; provided, however, that
no such action shall affect or in any way impair the rights of a recipient
under any option right theretofore granted under the Plan; and, provided,
further, that unless first duly approved by the stockholders of the
Company entitled to vote thereon at a meeting (which may be the annual
meeting) duly called and held for such purpose, except as provided in
subparagraphs 6(h) and 6(i), no amendment or change shall be made in the
Plan increasing the total number of shares which may be issued or
transferred under the Plan, materially increasing the benefits to Plan
participants or modifying the requirements as to eligibility for
participation in the Plan.
8. Restriction on Sale of Shares
Without the written consent of the Company, no stock acquired by an
optionee upon exercise of an incentive stock option granted hereunder may
be disposed of by the optionee within two years from the date such
incentive stock option was granted, nor within one year after the transfer
of such stock to the optionee; provided, however, that a transfer to a
trustee, receiver, or other fiduciary in any insolvency proceeding, as
described in Section 422(c)(3) of the Code, shall not be deemed to be such
a disposition. The optionee shall make appropriate arrangements with the
Company for any taxes which the Company is obligated to collect in
connection with any such disposition, including any federal, state, or
local withholding taxes.
No stock acquired by an optionee upon exercise of a non-qualified
stock option granted hereunder may be disposed of by the optionee (or
other person eligible to exercise the option) within six months from the
date such non-qualified stock option was granted, unless otherwise
provided by the Committee.
9. Effective Date of the Plan
This Plan shall become effective upon approval by the stockholders
of the Company. The Plan shall terminate on March 18, 2007, or on such
earlier date as the Board of Directors or the Committee may determine. Any
option outstanding at the termination date shall remain outstanding until
it has either expired or has been exercised.
10. Compliance with Rule 16b-3
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors. To the extent any provision of
the Plan or action by the Committee (or any other person on behalf of the
<PAGE> 7
Committee or the Company) fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the
Committee.
11. Automatic Grant of Options to Non-Employee Directors
The purpose of this Section 11 is to continue the program of
automatic grants of options to non-employee directors of the Company
established pursuant to Section 11 of the Company's 1993 Incentive and
Non-Qualified Stock Option Plan (the "1993 Plan"). The following options,
to the extent not heretofore granted pursuant to the 1993 Plan, shall be
automatically awarded:
(a) Each director, who is not also an employee of the Company
or any of its affiliates, or the designee of any stockholder of the
Company pursuant to a right to designate one or more directors (an
"Eligible Director") shall automatically be awarded a grant of
50,000 non-qualified stock options upon his or her initial election
to the Board of Directors. Such options shall vest and be
exercisable solely in accordance with the following schedule:
(i) The options may be exercised with respect to a maximum
of one-half of the option shares during the twelve-month
period beginning after the date of grant.
(ii) The options may be exercised with respect to all of the
option shares upon the Eligible Director's reelection to
the Board of Directors for a second
consecutive term.
(iii) The options will expire and will no longer be
exercisable as of the tenth anniversary of the date of
grant, subject to sooner expiration upon the occurrence
of certain events as provided elsewhere
in this Plan.
(b) In addition to the grant provided in subsection (a), each
Eligible Director shall automatically be awarded a grant of
non-qualified stock options upon the reelection of such Eligible
Director to a third or subsequent, successive term, in the amount
and at the times hereinafter set forth. Such automatic grants of
non-qualified stock options commenced on June 21, 1995, pursuant to
the 1993 Plan, and have occurred and shall continue to occur
annually thereafter on the date of the annual meeting of
stockholders for such year until the termination of the Plan. The
number of options to which each Eligible Director shall be entitled
pursuant to this subsection (b) shall be as follows:
(i) 20,000 on the date of the Eligible
Director's reelection to a third one-year
term;
(ii) 20,000 on the date of the Eligible
Director's reelection to a fourth
one-year term;
(iii) 15,000 on the later of the date of the annual meeting of
stockholders in 1997, or the date of the Eligible
Director's reelection to a fifth one-year term;
<PAGE> 8
(iv) 15,000 on the later of the date of the annual meeting of
stockholders in 1998, or the date of the Eligible
Director's reelection to a sixth one-year term;
(v) 10,000 on the later of the date of the annual meeting of
stockholders in 1999, or the date of the Eligible
Director's reelection to a seventh one-year term;
(vi) 10,000 on the later of the date of the annual meeting of
stockholders in 2000, or the date of the Eligible
Director's reelection to an eighth one-year term; and
(vii) 10,000 on the later of the date of the annual meeting of
stockholders in 2001, or the date of the Eligible
Director's reelection to a ninth one-year term.
Such options shall vest and be exercisable solely in accordance with
the following schedule:
(i) The options shall not be exercisable during the
twelve-month period beginning after the date of grant.
(ii) The options may be exercised with respect to one-third
of the option shares after the expiration of twelve
months from the
date of grant.
(iii) The remaining two-thirds of the options shall vest and
become exercisable ratably on a monthly basis over the
two-year period commencing one year from the date of
grant and ending three years from the
date of grant.
(iv) The options will expire and will no longer be
exercisable as of the tenth anniversary of the date of
grant, subject to sooner expiration upon the occurrence
of certain events as provided elsewhere
in this Plan.
(c) The option price for all options awarded under this
Section 11 shall be equal to 100% of the Fair Market Value on the
date of grant.
