As filed with the Securities and Exchange Commission on September 10,
1996
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SEPRAGEN CORPORATION
(Exact name of registrant in its charter)
California 68-0073366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30689 Huntwood Avenue
Hayward, California 94544
(Address of principal executive offices)
SEPRAGEN CORPORATION
1996 STOCK OPTION PLAN
(Full title of the plan)
Vinit Saxena
Sepragen Corporation
30689 Huntwood Avenue
Hayward, California 94544
(Name and address of agent for service)
(510) 476-0650
(Telephone number, including area code, of agent for service)
Copy to: H. Ray Peffer, Esq.
Smith, Merrill & Peffer, A Professional Corporation
P.O. Box 10, San Ramon, California 94583
Proposed Proposed
Amount Maximum Maximum Amount
Title of Securities to be Offering Aggregate of
to be Registered Register Price per Offering Registr
ed (1) Share (2) Price ation
Fee
Class A Common Stock 250,000(3) $4.00 $1,000,000 $344.83
(no par value)
Class A Common Stock 0(4) $4.00 $0 $0.00
TOTAL $1,000,000 $344.83
(1) Pursuant to Rule 416, this Registration Statement also covers such
indeterminable number of additional shares as may become issuable
pursuant to terms designed to prevent dilution resulting from stock
splits, stock dividends or similar events.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee. In accordance with Rule 457(h), the price shown is
based upon the last sale price of the Registrant's Units which consist
of one share Class A Common Stock, one Class A Warrant and one Class B
Warrant as of September 6, 1996, as reported on the Nasdaq SmallCap
Market.
(3) Represents shares of Class A common Stock reserved for issuance
pursuant to options available for grant (but not yet granted) under
the Registrant's 1996 Stock Option Plan (the "Option Plan").
(4) Represents Shares of Common Stock reserved for issuance pursuant
to options granted under the Option Plan.
PAGE 1 OF 32. EXHIBIT INDEX APPEARS ON PAGE 8.
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Documents containing the information specified in Part I of this
Registration Statement will be given or sent to all persons who
participate in the Sepragen Corporation 1996 Stock Option Plan.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents or portions thereof, as filed with the
Securities and Exchange Commission (the "Commission") by Sepragen
Corporation, a California corporation (the "Registrant"), are
incorporated herein by reference:
(1) The Registrant's latest annual report filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or, if the financial statements therein
are more current, the Registrant's latest prospectus, other than the
prospectus of which this document is a part, filed pursuant to Rule
424(b) with the Commission under the Securities Act of 1933, as
amended (the "Securities Act").
(2) All other reports filed by the Registrant pursuant to
Sections 13(a) or 15(d) of the Exchange Act since the end of the
fiscal year covered by the annual report or the prospectus referred to
in (1) above.
(3) The description of the Class A Common Stock, no par value
("Common Stock"), of the Registrant contained in the section entitled
"Description of Securities") of the Registrant's Registration
Statement on Form SB-2 declared effective on March 23, 1995 (File No.
33-86888)(which is incorporated by reference in Item 1 of the
Registrant's Registration Statement on Form 8-A (File No. 0-025726)
dated March 20, 1995 filed pursuant to Section 12 of the Exchange
Act).
All documents subsequently filed by the Registrant pursuant to
Sections 13(a) or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment to this Registration Statement which
indicates that all securities offered have been sold or which
deregisters all of such securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement
and to be part hereof 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 other subsequently filed
document which also is or 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.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Reference is made to Section 317 of the California General
Corporation Law ("CGCL"), Article V of the Restated Articles of
Incorporation of the Registrant, and Article II of the Bylaws of the
Registrant.
The Registrant is a California corporation. Section 317 of the
CGCL generally provides that a corporation is empowered to indemnify
any person who is made a party to any threatened, pending or completed
action, suit or proceeding by reason of the fact that he is or was a
director, employee or agent of the corporation or is or was serving,
at the request of the corporation, in any of such capacities of
another corporation or other enterprise, if such director, officer,
employee or agent acted in good faith and in a manner he 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 conduct was unlawful. This
statute describes in detail the right of the Registrant to indemnify
any such person.
Pursuant to Article V of the Registrant's Restated Articles of
Incorporation and Article II, Section 8 of the Registrant's Bylaws,
the Registrant shall indemnify, to the fullest extent permitted by the
CGCL, any person, including officers and directors, with regard to any
action or proceeding.
Section 204(a)(10) of the CGCL enables a corporation in its
articles to incorporation to eliminate or limit the personal liability
of a director for monetary damages in an action brought by or in the
right of the corporation for breach of a director's duties to the
corporation or its shareholders, provided, however, that such
provision may not eliminate or limit the liability of directors: (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
corporation or its shareholders 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 corporation or its shareholders in circumstances in which the
director was, or should have been aware, in the ordinary course of
performing a director's duties, of risk of serious injury to the
corporation 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 corporation or its
shareholders, (vi) under Section 310 of the CGCL which involves
transactions between the corporation and directors or corporations
having interrelated directors, or (vii) under Section 316 which
involves directors liabilities for certain distributions, loans and
guarantees. The Registrant's Restated Articles of Incorporation
limits the liability of directors to the extent permitted by Section
204(a)(10) of the CGCL.
The Registrant has entered into Indemnification Agreements with
each officer and director of the Registrant which provide that the
Registrant will indemnify the indemnitee to the fullest extent
permitted by applicable law against expenses, including reasonable
attorneys' fees, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with
any action or proceeding arising out of his performance of his duties
as a director or officer of the Registrant. Such indemnification is
available if the indemnitee acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of
the Registrant, and, with respect to any criminal action, had no
reasonable cause to believe his conduct was unlawful.
Under such Indemnification Agreements, the entitlement of a
director or officer to indemnification shall be determined by a
majority vote of a quorum of disinterested directors, or if such
quorum either is not obtainable or so directs, by independent counsel
or by the stockholders of the Registrant, as determined by such quorum
of disinterested directors. Under certain circumstances, a party to
the Indemnification Agreement will be conclusively presumed to have
met the applicable statutory standard of conduct unless the
Registrant's Board of Directors, stockholders or independent legal
counsel determine that the relevant standard has not been met. If a
change of control of the Registrant has occurred, the entitlement of
such director or officer to indemnification shall be determined by
independent counsel selected by such director or officer, unless such
director or officer requests that either the Board of Directors or the
stockholders make such determination.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Registrant, pursuant to the foregoing provisions, the
Registrant has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
The Registrant currently maintains an officers' and directors'
liability insurance policy which covers, subject to the exclusions and
limitations of the policy, officers and directors of the Registrant
against certain liabilities which may be incurred by them solely in
such capacities.
For information regarding the Registrant's undertaking to submit
to adjudication the issue of indemnification for violation of the
securities laws, see Item 9 hereof. The Registrant has been informed
that it is the position of the Commission that insofar as the
foregoing provisions may be invoked to disclaim liability for damages
arising under the Securities Act, such provisions are against public
policy as expressed in the Securities Act and are therefore
unenforceable.
Item 7. Exemption From Registration Claimed.
Not Applicable
Item 8. Exhibits
The following is a complete list of exhibits files as a part
of this Registration Statement:
Exhibit No. Document
4.1 1996 Stock Option Plan
4.2 Specimen copy of Class A Common Stock Certificate of the
Registrant (incorporated by reference to Exhibit 4.3
contained in Amendment No.1 to the Registrant's
Registration Statement on Form SB-2 (Registration
Statement No. 33-86888) filed on January 10, 1995).
4.3 Restated Articles of Incorporation of Registrant
(Specimen copy of Redeemable Class A Warrant certificate
of the Registrant (incorporated by reference to Exhibit
3.1 contained in the Registrant's Registration Statement
on Form SB-2 (Registration Statement No. 33-86888) filed
on November 30, 1994.
4.4 Form of Incentive Stock Option Agreement under the 1994
Stock Option Plan of the Registrant.
4.5 Form of Nonqualified Stock Option Agreement under the
1994 Stock Option Plan of the Registrant.
5.1 Opinion of Smith, Merrill and Peffer, a Professional
Corporation.
23.1 Consent of Smith, Merrill and Peffer, a Professional
Corporation (included in Exhibit 5.1).
23.2 Consent of Coopers & Lybrand LLP.
24.1 Powers of Attorney (included on the signature page of
this Registration Statement).
Item 9. Undertakings.
The undersigned registrant hereby undertakes that it will:
a. To file, during any period in which offers or sales are
being made, a post-effective amended to this Registration
Statement to:
i. Include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
ii. Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement; and
iii. 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;
provided, however, that paragraphs (a)(i) and (a)(ii) above do
not apply if the Registration Statement is no Form S-3 or Form S-
8 and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in the
Registration Statement;
b. To treat, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of the securities at
that time to be the initial bona fide offering thereof;
c. 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;
d. That for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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 the securities at
that time to be the initial bona fide offering thereof;
e. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to Item 6, or
otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of competent 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.
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 of 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 Leandro, State of California, on the 9th day of September, 1996.
Sepragen Corporation
By: /s/ Vinit Saxena
Vinit Saxena
President, Chief Executive
Officer, Chief Financial
Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby severally constitutes and appoints Dr. Q. R.
Miranda and Vinit Saxena, and each of them, his true and lawful
attorneys-in-fact and agents, 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 (including post-
effective amendments) to this Registration Statement and all documents
relating thereto, 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 necessary or advisable to be done in and about the premises, 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 his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
In accordance with 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 stated.
Signature Title Date
/s/ Vinit Saxena Director & September 9, 1996
Vinit Saxena President
/s/ Armin Ramel Director & September 9, 1996
Armin Ramel Secretary
/s/Werner Kofod Nielsen Director September 9, 1996
Werner Kofod Nielsen
/s/ Robert Leach Director September 9, 1996
Robert Leach
<PAGE>
INDEX TO EXHIBITS
Sequential
Page No.
4.1 1996 Stock Option Plan .............. 9
4.4 Form of Incentive Stock Option Agreement under the
1996 Stock Option Plan of the Registrant. ..... 17
4.5 Form of Nonqualified Stock Option Agreement under the
1996 Stock Option Plan of the Registrant. ..... 24
5.1 Opinion of Smith, Merrill and Peffer, a Professional
Corporation. ................... 31
23.2 Consent of Coopers & Lybrand LLP. ......... 32
EXHIBIT 4.1
SEPRAGEN CORPORATION
1996 STOCK OPTION PLAN
1. Purpose.
The purpose of this plan (the "Plan") is to secure for Sepragen
Corporation (the "Company") and its shareholders the benefits arising
from capital stock ownership by employees, officers and directors of,
and consultants or advisors to, the Company and its subsidiary
corporations who are expected to contribute to the Company's future
growth and success. Except where the context otherwise requires, the
term "Company" shall include all present and future subsidiaries of
the Company as defined in Sections 424(e) and 424(f) of the Internal
Revenue Code of 1986, as amended or replaced from time to time (the
"Code"). Those provisions of the Plan which make express reference to
Section 422 shall apply only to Incentive Stock Options (as that term
is defined in the Plan).
2. Type of Options and Administration.
(a) Types of Options. Options granted pursuant to the Plan
shall be authorized by action of the Board of Directors of the Company
(or a Committee designated by the Board of Directors) and may be
either incentive stock options ("Incentive Stock Options") meeting the
requirements of Section 422 of the Code or non-statutory options which
are not intended to meet the requirements of Section 422 of the Code.
(b) Administration. The Plan will be administered by a
committee (the "Committee") appointed by the Board of Directors of the
Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The delegation
of powers to the Committee shall be consistent with applicable laws or
regulations (including, without limitation, applicable state law and
Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), or any successor rule ("Rule 16b-3")). The Committee
may in its sole discretion grant options to purchase shares of the
Company's Class A Common Stock ("Common Stock") and issue shares upon
exercise of such options as provided in the Plan. The Committee shall
have authority, subject to the express provisions of the Plan, to
construe the respective option agreements and the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective option
agreements, which need not be identical, and to make all other
determinations in the judgment of the Committee necessary or desirable
for the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the
Plan or in any option agreement in the manner and to the extent it
shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. No director or person acting
pursuant to authority delegated by the Board of Directors shall be
liable for any action or determination under the Plan made in good
faith.
(c) Applicability of Rule 16b-3. Those provisions of the
Plan which make express reference to Rule 16b-3 shall apply to the
Company only at such time as the Company's Common Stock is registered
under the Exchange Act, subject to the last sentence of Section 3(b),
and then only to such persons as are required to file reports under
Section 16(a) of the Exchange Act (a "Reporting Person").
3. Eligibility.
(a) General. Options may be granted to persons who are, at
the time of grant, employees, officers or directors of, or consultants
or advisors to, the Company provided, that Incentive Stock Options may
only be granted to individuals who are employees of the Company
(within the meaning of Section 3401(c) of the Code). A person who has
been granted an option may, if he or she is otherwise eligible, be
granted additional options if the Board of Directors shall so
determine.
(b) Grant of Options to Reporting Persons. From and after
the registration of the Common Stock of the Company under the Exchange
Act, the selection of a director or an officer who is a Reporting
Person (as the terms "director" and "officer" are defined for purposes
of Rule 16b-3) as a recipient of an option, the timing of the option
grant, the exercise price of the option and the number of shares
subject to the option shall be determined either (i) by the Board of
Directors, of which all members shall be "disinterested persons" (as
hereinafter defined), (ii) by a committee consisting of two or more
directors having full authority to act in the matter, each of whom
shall be a "disinterested persons or (iii) pursuant to provisions for
automatic grants set forth in Section 3(c) below. For the purposes of
the Plan, a director shall be deemed to be a "disinterested person"
only if such person qualifies as a "disinterested person" within the
meaning of Rule 16b-3, as such term is interpreted from time to time.
If at least two of the members of the Board of Directors do not
qualify as a "disinterested person" within the meaning of Rule 16b-3,
as such term is interpreted from time to time, then the granting of
options to officers and directors who are Reporting Persons under the
Plan shall not be determined in accordance with this Section 3(b) but
shall be determined in accordance with the other provisions of the
Plan.
(c) Officer's and Director's Options. A maximum of 100,000
option shares may be granted to directors or executive officers under
this plan.
4. Stock Subject to Plan.
The stock subject to options granted under the Plan shall be
shares of authorized but unissued Class A Common Stock. Subject to
adjustment as provided in Section 15 below, the maximum number of
shares of Class A Common Stock of the Company which may be issued and
sold under the Plan is 250,000 shares. If an option granted under the
Plan shall expire, terminate or is cancelled for any reason without
having been exercised in full, the unpurchased shares subject to such
option shall again be available for subsequent option grants under the
Plan.
5. Forms of Option Agreements.
As a condition to the grant of an option under the Plan, each
recipient of an option shall execute an option agreement in such form
not inconsistent with the Plan as may be approved by the Board of
Directors. Such option agreements may differ among recipients.
6. Purchase Price.
(a) General. The purchase price per share of stock
deliverable upon the exercise of an option shall be determined by the
Board of Directors at the time of grant of such option; provided,
however, that in the case of an Incentive Stock Option, the exercise
price shall not be less than 100% of the Fair Market Value (as
hereinafter defined) of such stock, at the time of grant of such
option, or less than 110% of such Fair Market Value in the case of
options described in Section 11(b). "Fair Market Value" of a share of
Common Stock of the Company as of a specified date for the purposes of
the Plan shall mean the closing price of a share of the Common Stock
on the principal securities exchange on which such shares are traded
on the day immediately preceding the date as of which Fair Market
Value is being determined, or on the next preceding date on which such
shares are traded if no shares were traded on such immediately
preceding day, or if the shares are not traded on a securities
exchange, Fair Market Value shall be deemed to be the average of the
high bid and low asked prices of the shares in the over-the-counter
market on the day immediately preceding the date as of which Fair
Market Value is being determined or on the next preceding date on
which such high bid and low asked prices were recorded. If the shares
are not publicly traded, Fair Market Value of a share of Common Stock
(including, in the case of any repurchase of shares, any distributions
with respect thereto which would be repurchased with the shares) shall
be determined in good faith by the Board of Directors. In no case
shall Fair Market Value be determined with regard to restrictions
other than restrictions which, by their terms, will never lapse.
(b) Payment of Purchase Price. Options granted under the
Plan may provide for the payment of the exercise price by delivery of
cash or a check to the order of the Company in an amount equal to the
exercise price of such options, or, to the extent provided in the
applicable option agreement, (i) by delivery to the Company of shares
of Common Stock of the Company having a Fair Market Value on the date
of exercise equal in amount to the exercise price of the options being
exercised, (ii) by any other means which the Board of Directors
determines are consistent with the purpose of the Plan and with
applicable laws and regulations (including, without limitation, the
provisions of Rule 16b-3 and Regulation T promulgated by the Federal
Reserve Board) or (iii) by any combination of such methods of payment.
7. Option Period.
Subject to earlier termination as provided in the Plan, each
option and all rights thereunder shall expire on such date as
determined by the Board of Directors and set forth in the applicable
option agreement, provided, that such date shall not be later than
(10) ten years after the date on which the option is granted.
8. Exercise of Options.
Each option granted under the Plan shall be exercisable either in
full or in installments at such time or times and during such period
as shall be set forth in the option agreement evidencing such option,
subject to the provisions of the Plan. No option granted to a
Reporting Person for purposes of the Exchange Act, however, shall be
exercisable during the first six months after the date of grant.
Subject to the requirements in the immediately preceding sentence, if
an option is not at the time of grant immediately exercisable, the
Board of Directors may (i) in the agreement evidencing such option,
provide for the acceleration of the exercise date or dates of the
subject option upon the occurrence of specified events, and/or (ii) at
any time prior to the complete termination of an option, accelerate
the exercise date or dates of such option.
9. Non-transferability of Option.
No option granted under this Plan shall be assignable or
otherwise transferable by the optionee except by will or by the laws
of descent and distribution or pursuant to a qualified domestic
relations order as defined in the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder. An option
may be exercised during the lifetime of the optionee only by the
optionee. In the event an optionee dies during his employment by the
Company or any of its subsidiaries, or during the three-month period
following the date of termination of such employment, his option shall
thereafter be exercisable, during the period specified in the option
agreement, by his executors or administrators to the full extent to
which such option was exercisable by the optionee at the time of his
death during the periods set forth in Section 10 or 11(d).
10. Effect of Termination of Employment or Other Relationship
Except as provided in Section 11(d) with respect to Incentive
Stock Options, and subject to the provisions of the Plan, an optionee
may exercise an option at any time within three (3) months following
the termination of the optionee's employment or other relationship
with the Company or within one (1) year if such termination was due to
the death or disability of the optionee, but, except in the case of
the optionee's death, in no event later than the expiration date of
the Option. If the termination of the optionee's employment is for
cause or is otherwise attributable to a breach by the optionee of an
employment or confidentiality or non-disclosure agreement, the option
shall expire immediately upon such termination. The Board of
Directors shall have the power to determine what constitutes a
termination for cause or a breach of an employment or confidentiality
or non-disclosure agreement, whether an optionee has been terminated
for cause or has breached such an agreement, and the date upon which
such termination for cause or breach occurs. Any such determinations
shall be final and conclusive and binding upon the optionee.
11. Incentive Stock Option.
Options granted under the Plan which are intended to be Incentive
Stock Options shall be subject to the following additional terms and
conditions:
(a) Express Designation. All Incentive Stock Options
granted under the Plan shall, at the time of grant, be specifically
designated as such in the option agreement covering such Incentive
Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive
Stock Option is to be granted under the Plan is, at the time of the
grant of such option, the owner of stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company
(after taking into account the attribution of stock ownership rules of
Section 424(d) of the Code), then the following special provisions
shall be applicable to the Incentive Stock Option granted to such
individual:
i. The purchase price per share of the Common Stock
subject to such Incentive Stock Option shall not be less than
110% of the Fair Market Value of one share of Common Stock at the
time of grant; and
ii. the option exercise period shall not exceed five
years from the date of grant.
(c) Dollar Limitation. For so long as the Code shall so
provide, options granted to any employee under the Plan (and any other
incentive stock option plans of the Company) which are intended to
constitute Incentive Stock Options shall not constitute Incentive
Stock Options to the extent that such options, in the aggregate,
become exercisable for the first time in any one calendar year for
shares of Common Stock with an aggregate Fair Market Value, as of the
respective date or dates of grant, of more than $100,000.
(d) Termination of Employment. Death or Disability. No
Incentive Stock Option may be exercised unless, at the time of such
exercise, the optionee is, and has been continuously since the date of
grant of his or her option, employed by the Company, except that:
i. an Incentive Stock Option may be exercised within
the period of three months after the date the optionee ceases to
be an employee of the Company (or within such lesser period as
may be specified in the applicable option agreement), provided,
that the agreement with respect to such option may designate a
longer exercise period and that the exercise after such
three-month period shall be treated as the exercise of a
non-statutory option under the Plan;
ii. if the optionee dies while in the employ of the
Company, or within three months after the optionee ceases to be
such an employee, the Incentive Stock Option may be exercised by
the person to whom it is transferred by will or the laws of
descent and distribution within the period of one year after the
date of death (or within such lesser period as may be specified
in the applicable option agreement); and
iii. if the optionee becomes disabled (within the
meaning of Section 22(e)(3) of the Code or any successor
provisions thereto) while in the employ of the Company, the
Incentive Stock Option may be exercised within the period of one
year after the date the optionee ceases to be such an employee
because of such disability (or within such lesser period as may
be specified in the applicable option agreement).
For all purposes of the Plan and any option granted hereunder,
"Unemployment" shall be defined in accordance with the provisions of
Section 1.421-7(h) of the Income Tax Regulations (or any successor
regulations). Notwithstanding the foregoing provisions, no Incentive
Stock Option may be exercised after its expiration date.
12. Additional Provisions.
(a) Additional Option Provisions. The Board of Directors
may, in its sole discretion, include additional provisions in option
agreements covering options granted under the Plan, including without
limitation restrictions on transfer, repurchase rights, rights of
first refusal, commitments to pay cash bonuses, to make, arrange for
or guarantee loans or to transfer other property to options upon
exercise of options, or such other provisions as shall be determined
by the Board of Directors; provided, that such additional provisions
shall not be inconsistent with any other term or condition of the Plan
and such additional provisions shall not cause any Incentive Stock
Option granted under the Plan to fail to qualify as an Incentive Stock
Option within the meaning of Section 422 of the Code.
(b) Acceleration, Extension, Etc. The Board of Directors
may, in its sole discretion, (i) accelerate the date or dates on which
all or any particular option or options granted under the Plan may be
exercised or (ii) extend the dates during which all, or any
particular, option or options granted under the Plan may be exercised;
provided, however, that no such extension shall be permitted if it
would cause the Plan to fail to comply with Section 422 of the Code or
with Rule 16b-3 (if applicable).
13. General Restrictions.
(a) Investment Representations. The Company may require
any person to whom an option is granted, as a condition of exercising
such option, to give written assurances in substance and form
satisfactory to the Company to the effect that such person is
acquiring the Common Stock subject to the option for his or her own
account for investment and not with any present intention of selling
or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with federal
and applicable state securities laws, or with covenants or
representations made by the Company in connection with any public
offering of its Common Stock.
(b) Compliance With Securities Laws. Each option shall be
subject to the requirement that if, at any time, counsel to the
Company shall determine that the listing, registration or
qualification of the shares subject to such option upon any securities
exchange or under any state or federal law, or the consent or approval
of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is
necessary as a condition of, or in connection with the issuance or
purchase of shares thereunder, such option may not be exercised, in
whole or in part, unless such listing, registration, qualification,
consent or approval, or satisfaction of such condition shall have been
effected or obtained on conditions acceptable to the Board of
Directors. Nothing herein shall be deemed to require the Company to
apply for or to obtain such listing, registration or qualification, or
to satisfy such condition.
14. Rights as a Shareholder.
The holder of an option shall have no rights as a shareholder
with respect to any shares covered by the option (including, without
limitation, any rights to receive dividends or non-cash distributions
with respect to such shares) until the date of issue of a stock
certificate to him or her for such shares. 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.
15. Adjustment Provisions for Recapitalization, Reorganizations
and Related Transactions.
(a) Recapitalization and Related Transactions. If, through
or as a result of any recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar
transaction, (i) the outstanding shares of Common Stock are increased,
decreased or exchanged for a different number or kind of shares or
other securities of the Company, or (ii) additional shares or new or
different shares or other non-cash assets are distributed with respect
to such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and
kind of shares reserved for issuance under the Plan, (y) the number
and kind of shares or other securities subject to any then outstanding
options under the Plan, and (z) the price for each share subject to
any then outstanding options under the Plan, without changing the
aggregate purchase price as to which such options remain exercisable.
Notwithstanding the foregoing, no adjustment shall be made pursuant to
this Section 15 if such adjustment (i) would cause the Plan to fail to
comply with Section 422 of the Code or with Rule 16b-3 or (ii) would
be considered as the adoption of a new plan requiring stockholder
approval.
(b) Reorganization, Merger and Related Transactions. If
the Company shall be the surviving corporation in any reorganization,
merger or consolidation of the Company with one or more other
corporations, any then outstanding option granted pursuant to the Plan
shall pertain to and apply to the securities to which a holder of the
number of shares of Common Stock subject to such options would have
been entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of the
purchase price as to which such options may be exercised so that the
aggregate purchase price as to which such options may be exercised
shall be the same as the aggregate purchase price as to which such
options may be exercised for the shares remaining subject to the
options immediately prior to such reorganization, merger, or
consolidation.
(c) Board Authority to Make Adjustments. Any adjustments
under this Section 15 will be made by the Board of Directors, whose
determination as to what adjustments, if any, will be made and the
extent thereof will be final, binding and conclusive. No fractional
shares will be issued under the Plan on account of any such
adjustments.
16. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of a consolidation or merger in
which the Company is not the surviving corporation, or sale of all or
substantially all of the assets of the Company in which outstanding
shares of Common Stock are exchanged for securities, cash or other
property of any other corporation or business entity or in the event
of a liquidation of the Company (collectively, a "Corporate
Transaction"), the Board of Directors of the Company, or the board of
directors of any corporation assuming the obligations of the Company,
may, in its discretion, take any one or more of the following actions,
as to outstanding options: (i) provide that such options shall be
assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof), provided that any
such options substituted for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, (ii) upon written notice
to the options, provide that all unexercised options will terminate
immediately prior to the consummation of such transaction unless
exercised by the optionee within a specified period following the date
of such notice, (iii) in the event of a Corporate Transaction under
the terms of which holders of the Common Stock of the Company will
receive upon consummation thereof a cash payment for each share
surrendered in the Corporate Transaction (the "Transaction Price),
make or provide for a cash payment to the options equal to the
difference between (A) the Transaction Price times the number of
shares of Common Stock subject to such outstanding options (to the
extent then exercisable at prices not in excess of the Transaction
Price) and (B) the aggregate exercise price of all such outstanding
options in exchange for the termination of such options, and (iv)
provide that all or any outstanding options shall become exercisable
in full immediately prior to such event.
(b) Substitute Options. The Company may grant options
under the Plan in substitution for options held by employees of
another corporation who become employees of the Company, or a
subsidiary of the Company, as the result of a merger or consolidation
of the employing corporation with the Company or a subsidiary of the
Company, or as a result of the acquisition by the Company, or one of
its subsidiaries, of property or stock of the employing corporation.
The Company may direct that substitute options be granted on such
terms and conditions as the Board of Directors considers appropriate
in the circumstances.
17. No Special Employment Rights.
Nothing contained in the Plan or in any option shall confer upon
any optionee any right with respect to the continuation of his or her
employment by the Company or interfere in any way with the right of
the Company at any time to terminate such employment or to increase or
decrease the compensation of the optionee.
18. Other Employee Benefits.
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by
an employee as a result of the exercise of an option or the sale of
shares received upon such exercise will not constitute compensation
with respect to which any other employee benefits of such employee are
determined, including, without limitation, benefits under any bonus,
pension, profit-sharing, life insurance or salary continuation plan,
except as otherwise specifically determined by the Board of Directors.
19. Amendment of the Plan.
(a) The Board of Directors may at any time, and from time
to time, modify or amend the Plan in any respect, except that if at
any time the approval of the shareholders of the Company is required
under Section 422 of the Code or any successor provision with respect
to Incentive Stock Options, or under Rule 16b-3, the Board of
Directors may not effect such modification or amendment without such
approval.
(b) The modification or amendment of the Plan shall not,
without the consent of an optionee, affect his or her rights under an
option previously granted to him or her. With the consent of the
optionee affected, the Board of Directors may amend outstanding option
agreements in a manner not inconsistent with the Plan. The Board of
Directors shall have the right to amend or modify (i) the terms and
provisions of the Plan and of any outstanding Incentive Stock Options
granted under the Plan to the extent necessary to qualify any or all
such options for such favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code and (ii) the
terms and provisions of the Plan and of any outstanding option to the
extent necessary to ensure the qualification of the Plan under Rule
16b-3.
20. Withholding.
(a) The Company shall have the right to deduct from
payments of any kind otherwise due to the optionee any federal, state
or local taxes of any kind required by law to be withheld with respect
to any shares issued upon exercise of options under the Plan. Subject
to the prior approval of the Company, which may be withheld by the
Company in its sole discretion, the optionee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the
exercise of an option or (ii) by delivering to the Company shares of
Common Stock already owned by the optionee. The shares so delivered
or withheld shall have a Fair Market Value equal to such withholding
obligation as of the date that the amount of tax to be withheld is to
be determined. An optionee who has made an election pursuant to this
Section 20(a) may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.
(b) The acceptance of shares of Common Stock upon exercise
of an Incentive Stock Option shall constitute an agreement by the
optionee (i) to notify the Company if any or all of such shares are
disposed of by the optionee within two years from the date the option
was granted or within one year from the date the shares were issued to
the optionee pursuant to the exercise of the option, and (ii) if
required by law, to remit to the Company, at the time of and in the
case of any such disposition, an amount sufficient to satisfy the
Company's federal, state and local withholding tax obligations with
respect to such disposition, whether or not, as to both (i) and (ii),
the optionee is in the employ of the Company at the time of such
disposition.
(c) Notwithstanding the foregoing, in the case of a
Reporting Person whose options have been granted in accordance with
the provisions of Section 3(b) herein, no election to use shares for
the payment of withholding taxes shall be effective unless made in
compliance with any applicable requirements of Rule 16b-3.
21. Cancellation and New Grant of Options, Etc.
The Board of Directors shall have the authority to effect, at any
time and from time to time, with the consent of the affected options,
(i) the cancellation of any or all outstanding options under the Plan
and the grant in substitution there for of new options under the Plan
covering the same or different numbers of shares of Common Stock and
having an option exercise price per share which may be lower or higher
than the exercise price per share of the cancelled options or (ii) the
amendment of the terms of any and all outstanding options under the
Plan to provide an option exercise price per share which is higher or
lower than the then-current exercise price per share of such
outstanding options.
22. Effective Date and Duration of the Plan.
(a) Effective Date. The Plan shall become effective when
adopted by the Board of Directors, but no Incentive Stock Option
granted under the Plan shall become exercisable unless and until the
Plan shall have been approved by the Company's shareholders. If such
shareholder approval is not obtained within twelve months after the
date of the Board's adoption of the Plan, no options previously
granted under the Plan shall be deemed to be Incentive Stock Options
and no Incentive Stock Options shall be granted thereafter.
Amendments to the Plan not requiring shareholder approval shall become
effective when adopted by the Board of Directors; amendments requiring
shareholder approval (as provided in Section 19) shall become
effective when adopted by the Board of Directors, but no Incentive
Stock Option granted after the date of such amendment shall become
exercisable (to the extent that such amendment to the Plan was
required to enable the Company to grant such Incentive Stock Option to
a particular optionee) unless and until such amendment shall have been
approved by the Company's shareholders. If such shareholder approval
is not obtained within twelve months of the Board's adoption of such
amendment, any Incentive Stock Options granted on or after the date of
such amendment shall terminate to the extent that such amendment to
the Plan was required to enable the Company to grant such option to a
particular optionee. Subject to this limitation, options may be
granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance
with Section 16, the Plan shall terminate upon the earlier of (i) the
close of business on the day next preceding the tenth anniversary of
the date of its adoption by the Board of Directors, or (ii) the date
on which all shares available for issuance under the Plan shall have
been issued pursuant to the exercise or cancellation of options
granted under the Plan. If the date of termination is determined
under (i) above, then options outstanding on such date shall continue
to have force and effect in accordance with the provisions of the
instruments evidencing such options.
23. Provision for Foreign Participants.
The Board of Directors may, without amending the Plan, modify
awards or options granted to participants who are foreign nationals or
employed outside the United States to recognize differences in laws,
rules, regulations or customs of such foreign jurisdictions with
respect to tax, securities, currency, employee benefit or other
matters.
24. Governing Law.
The provisions of this Plan shall be governed and construed in
accordance with the laws of the State of California.
Adopted by the Board of Directors on May 15, 1996 and the
Shareholders as of June 28, 1996.
<PAGE>
ISO
EXHIBIT 4.2
FORM OF ISO AGREEMENT
STOCK OPTION AGREEMENT
AGREEMENT made as of this day of
by and between SEPRAGEN CORPORATION, a California
Corporation, having its principal place of business at 30689 Huntwood
Avenue, Hayward, California 94544 ("Company") and *** ("Optionee").
RECITALS
WHEREAS, Optionee is presently an employee of the Company and is
office manager at the Company; and
WHEREAS, Company is desirous of increasing the incentive of
Optionee to exert Optionee's utmost efforts to improve the business
and increase the assets of the Company and desires to grant the
Optionee a statutory incentive stock option under the Company's 1996
Stock Option Plan (the "Plan") to acquire shares of the Company's
Class A Common Stock.
NOW, THEREFORE, the Company hereby grants to the Optionee an
option to purchase Class A common stock of the Company on the terms
and conditions set forth below.
1. Option.
(a) The option granted herein is intended to be treated as
an incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). Subject to the vesting rights
specified in Section 3(a) below, the Company hereby grants to the
Optionee the option to purchase all or any part of an aggregate number
of shares of Class A Common Stock of the Company ("Shares") shown at
the end of this Agreement on the terms and conditions hereinafter set
forth. The option granted herein shall expire and terminate at 5:00
p.m. on the date shown at the end of this Agreement (the "Expiration
Date"), as determined by the Board of Directors of the Company, which
shall not be more than ten (10) years from the date of the granting
thereof, subject to earlier termination as herein provided.
(b) For purposes herein, the date of commencement ("Date of
Commencement") of the option is as specified at the end of this
Agreement.
2. Purchase Price. The purchase price shall be the dollar
amount shown at the end of this Agreement (the "Purchase Price") for
the Shares that vest and become exercisable under this option. The
Company shall pay all fees and expenses necessarily incurred by the
Company in connection with the exercise of the option.
3. Vesting; Exercise of Option.
(a) This option shall vest and shall become exercisable to
the extent of XXX of the Shares subject to this Option and specified
at the end of this Agreement (rounded to the nearest whole share), if
Optionee is still an officer, director or employee of the Company on
the first anniversary of the Date of Commencement. Thereafter, this
option shall vest and shall become exercisable to the extent of the an
additional XXXX of the Shares subject to this Option (rounded to the
nearest whole share) if the Optionee is still an officer, director or
employee of the Company on each subsequent anniversary after the first
anniversary of the Date of Commencement, up to a maximum of shares
specified in Section 1. Any portion of the vested option rights which
the Optionee does not exercise shall accumulate and may be exercised
during the term of this option as specified in Section 1.
(b) The Optionee shall notify the Company by certified
mail, return receipt requested, addressed to its principal office as
to the number of Shares which Optionee desires to purchase under the
options herein granted, which notice shall be accompanied by payment
(by cash or certified check) of the option price therefor as specified
in Section 2 above. As soon as practicable thereafter, the Company
shall at its principal office tender to Optionee certificates issued
in the Optionee's name evidencing the Shares purchased by the
Optionee.
(c) In the event of Optionee's death or other termination
of employment, the exercise of the option shall be governed by Section
4, below.
4. Exercise in the Event of Termination of Optionee's
Employment.
(a) In the event the position of the Optionee, as an
officer, director, employee or consultant of the Company, ceases
either voluntarily or involuntarily, the option granted to the
Optionee hereunder shall terminate the earlier of: (i) three months
after termination of such directorship, employment, or other
relationship with the Company, or (ii) one year following termination
if such termination was due to death or disability of the Optionee;
but in no event later than the Expiration Date of the Option.
(b) If the Optionee dies (i) while acting in a position
with the Company as either an officer, director or employee, or (ii)
after the termination of Optionee's position as officer, director or
employee to the Company, subject to the provisions of subsections (a)
and (c) of this Section 4, this option may be exercised by a legatee
or legatees of such optionee under such individual's last will or by
the duly authorized administrator or special administrator of
Optionee's estate or by Optionee's personal representatives or dis-
tributees to the extent Optionee had the right to exercise this option
on the date of Optionee's death or disability.
(c) Notwithstanding any other provision herein to the
contrary, if the termination of the Optionee's employment is for cause
or is otherwise attributable to a breach by Optionee of an employment
or confidentiality or non-disclosure agreement, the Option shall
expire immediately upon such termination. The Board of Directors
shall have the power to determine what constitutes a termination for
cause or a breach of an employment or confidentiality or
non-disclosure agreement, whether Optionee has been terminated for
cause or has breached such an agreement, and the date upon which such
termination for cause or breach occurs. Any such determinations shall
be final and conclusive and binding upon Optionee.
5. Divisibility and Non-Assignability of the Options.
(a) The Optionee may exercise the options herein granted
from time to time during the periods of their respective effectiveness
with respect to any whole number of Shares included therein, but in no
event may an option be exercised as to a fractional share.
(b) The Optionee may not give, grant, sell, exchange,
transfer legal title, pledge, assign or otherwise encumber or dispose
of the options herein granted or any interest therein, otherwise than
by will or the laws of descent and distribution, and these options, or
any of them, shall be exercisable during Optionee's lifetime only by
the Optionee. Any purported transfer or assignment of this option
shall be void and of no effect, and shall give the Company the right
to terminate this option as of the date of such purported transfer or
assignment.
6. Stock as Investment. By accepting this option, the
Optionee agrees for Optionee, Optionee's heirs and legatees that this
option and any all Shares purchased upon exercise of the options
granted hereunder shall be acquired for investment and not for
distribution and, upon acceptance of the option and the exercise of
the options granted hereunder, shall deliver to the Company an
Investor Certificate, in the form attached hereto as Exhibit "A" and
incorporated by reference, representing that such Shares are being
acquired in good faith for investment and not for distribution. The
Company may place all restrictive legends deemed by it to be
appropriate on the certificate(s) representing Shares to be issued
pursuant to this Agreement.
7. Restriction on Issuance of Shares.
(a) This option and the obligation of the Company to
transfer shares hereunder shall be subject to all applicable federal
and state laws, rules, and regulations, including those related to
disclosure of financial and other information to the Optionee, and to
such approvals by any governmental or regulatory agency as may be
required. The Company shall not be required to issue or deliver any
certificate for Shares of its common stock purchased upon the exercise
of any option prior to (a) the completion of all registrations or
qualifications of such shares under any federal or state law, or any
rule or regulation of any governmental body which the Company shall,
in its sole discretion, determine may be necessary or advisable; and
(b) permission for the listing of such shares shall have been given by
any national securities exchange on which the common stock of the
Company is at the time of issuance listed, or (c) counsel to the
Company has determined, in Optionee's professional judgment, that such
registration, qualification, or listing is not necessary.
(b) This option shall be subject to the requirement that
if, at any time, counsel to the Company shall determine that the
listing, registration or qualification of the shares subject to such
option upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental or regulatory body, or
that the disclosure of non-public information or the satisfaction of
any other condition is necessary as a condition of, or in connection
with the issuance or purchase of shares thereunder, such option may
not be exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions
acceptable to the Board of Directors. Nothing herein shall be deemed
to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
8. Adjustments Upon Changes in Capitalization.
(a) Recapitalization and Related Transactions. If, through
or as a result of any recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar
transaction, (i) the outstanding shares of Common Stock are increased,
decreased or exchanged for a different number or kind of shares or
other securities of the Company, or (ii) additional shares or new or
different shares or other non-cash assets are distributed with respect
to such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and
kind of shares reserved for issuance under the Plan, (y) the number
and kind of shares or other securities subject to any then outstanding
options under the Plan, and (z) the price for each share subject to
any then outstanding options under the Plan, without changing the
aggregate purchase price as to which such options remain exercisable.
Notwithstanding the foregoing, no adjustment shall be made pursuant to
this Section 8 if such adjustment (i) would cause the Plan to fail to
comply with Section 422 of the Code or with Rule 16b-3 or (ii) would
be considered as the adoption of a new plan requiring stockholder
approval.
(b) Reorganization, Merger and Related Transactions. If
the Company shall be the surviving corporation in any reorganization,
merger or consolidation of the Company with one or more other
corporations, any then outstanding option granted pursuant to the Plan
shall pertain to and apply to the securities to which a holder of the
number of shares of Common Stock subject to such options would have
been entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of the
purchase price as to which such options may be exercised so that the
aggregate purchase price as to which such options may be exercised
shall be the same as the aggregate purchase price as to which such
options may be exercised for the shares remaining subject to the
options immediately prior to such reorganization, merger, or
consolidation.
(c) Board Authority to Make Adjustments. Any adjustments
under this Section 8 will be made by the Board of Directors, whose
determination as to what adjustments, if any, will be made and the
extent thereof will be final, binding and conclusive. No fractional
shares will be issued under the Plan on account of any such
adjustments.
9. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of a consolidation or merger in
which the Company is not the surviving corporation, or sale of all or
substantially all of the assets of the Company in which outstanding
shares of Common Stock are exchanged for securities, cash or other
property of any other corporation or business entity or in the event
of a liquidation of the Company (collectively, a "Corporate
Transaction"), the Board of Directors of the Company, or the board of
directors of any corporation assuming the obligations of the Company,
may, in its discretion, take any one or more of the following actions,
as to outstanding options: (i) provide that such options shall be
assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof), provided that any
such options substituted for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, (ii) upon written notice
to the Optionee, provide that all unexercised options will terminate
immediately prior to the consummation of such transaction unless
exercised by the Optionee within a specified period following the date
of such notice, (iii) in the event of a Corporate Transaction under
the terms of which holders of the Common Stock of the Company will
receive upon consummation thereof a cash payment for each share
surrendered in the Corporate Transaction (the "Transaction Price),
make or provide for a cash payment to the options equal to the
difference between (A) the Transaction Price times the number of
shares of Common Stock subject to such outstanding options (to the
extent then exercisable at prices not in excess of the Transaction
Price) and (B) the aggregate exercise price of all such outstanding
options in exchange for the termination of such options, and (iv)
provide that all or any outstanding options shall become exercisable
in full immediately prior to such event.
(b) Substitute Options. The Company may grant options
under the Plan in substitution for options held by employees of
another corporation who become employees of the Company, or a
subsidiary of the Company, as the result of a merger or consolidation
of the employing corporation with the Company or a subsidiary of the
Company, or as a result of the acquisition by the Company, or one of
its subsidiaries, of property or stock of the employing corporation.
The Company may direct that substitute options be granted on such
terms and conditions as the Board of Directors considers appropriate
in the circumstances.
10. No Rights in Option Stock. Optionee shall have no rights
as a shareholder in respect of Shares as to which the option granted
hereunder shall not have been exercised and payment made as herein
provided.
11. Certain Corporate Transactions. Nothing in this Agreement
shall in any way prohibit or affect the right and power of the Company
to make adjustments, reclassifications, reorganizations or changes of
its capital or business structures, or from merging with or
consolidating into another corporation, or from selling or
transferring all or substantially all of its assets, or from
distributing all or substantially all of its assets to its
stockholders in liquidation, or from dissolving and terminating its
corporate existence.
12. No Effect Upon Employment. This Agreement does not give
the Optionee any right to continued employment by the Company, whether
as officer, director, employee or consultant.
13. Binding Effect. Except as herein otherwise expressly
provided, this Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors, legal representatives
and assigns.
14. Taxes. OPTIONEE UNDERSTANDS AND ACKNOWLEDGES THAT IT IS
OPTIONEE'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE ANY
ELECTIONS UNDER THE INTERNAL REVENUE CODE AND TO REPORT ANY TAXABLE
INCOME. Optionee acknowledges that Optionee has been advised to
consult Optionee's tax advisor.
15. Withholding.
i. The Company shall have the right to deduct from
payments of any kind otherwise due to the Optionee any federal, state
or local taxes of any kind required by law to be withheld with respect
to any shares issued upon exercise of options under the Plan. Subject
to the prior approval of the Company, which may be withheld by the
Company in its sole discretion, the Optionee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the
exercise of an option or (ii) by delivering to the Company shares of
Common Stock already owned by the Optionee. The shares so delivered
or withheld shall have a Fair Market Value equal to such withholding
obligation as of the date that the amount of tax to be withheld is to
be determined. An Optionee who has made an election pursuant to this
Section 15(a) may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.
(a) The acceptance of shares of Common Stock upon exercise
of an Incentive Stock Option shall constitute an agreement by the
Optionee (i) to notify the Company if any or all of such shares are
disposed of by the Optionee within two years from the date the option
was granted or within one year from the date the shares were issued to
the Optionee pursuant to the exercise of the option, and (ii) if
required by law, to remit to the Company, at the time of and in the
case of any such disposition, an amount sufficient to satisfy the
Company's federal, state and local withholding tax obligations with
respect to such disposition, whether or not, as to both (i) and (ii),
the Optionee is in the employ of the Company at the time of such
disposition.
(b) Notwithstanding the foregoing, in the case of a
Reporting Person (as defined by the Plan), no election to use shares
for the payment of withholding taxes shall be effective unless made in
compliance with any applicable requirements of Rule 16b-3.
16. Miscellaneous. This Agreement shall be construed under the
laws of the State of California. Headings have been included herein
for convenience of reference only, and shall not be deemed a part of
the agreement. The terms of the Plan shall be binding upon this
Option and shall supercede any terms of this Option to the extent of
any inconsistencies.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
Number of Shares: Sepragen Corporation
shares of
Class A Common Stock By:
Purchase Price Per Share: Vinit Saxena, President
$ per Share
Expiration Date:
Date of Commencement:
<PAGE>
ISO
ACCEPTANCE
Optionee acknowledges receipt of the Investor's Certificate.
Optionee represents that Optionee has read and understands the terms
and provisions thereof, and hereby accepts this option subject to all
of the terms and conditions thereof. Optionee hereby agrees to accept
as binding, conclusive, and final all decisions or interpretations
required of the Board of Directors of the Company by and as to this
option.
By:
***
Address:
Social Security Number:
<PAGE>
ISO
INVESTOR CERTIFICATE
The undersigned, as a condition to purchase shares of the Class A
Common, no par stock (the "Securities") of Sepragen Corporation, a
California corporation (the "Company"), certifies to the Company as
follows:
1. My full name, residence address and business address are as
follows:
Name Address
***
2. I am purchasing the Securities in my own name and for my own
account (or for a trust account if I am a trustee), and no other
person has any interest in or right with respect to the Securities,
nor have I agreed to give any person any such interest or right in the
future.
3. I am acquiring the Securities for investment and not with a
view to or for sale in connection with any distribution of the
Securities. I recognize that the Securities have not been qualified
under the California Corporate Securities Law of 1968, that any
disposition of the Securities is subject to restrictions imposed by
state law and that the certificates representing the Securities may
bear a restrictive legend. I also recognize that I cannot dispose of
the Securities absent qualification, or an available exemption from
registration and qualification, and that no undertaking has been made
with regard to qualifying the Securities in the future. I understand
that the availability of an exemption in the future will depend in
part on circumstances outside my control and that I may be required to
hold the Securities for a substantial period. I understand that the
California Commissioner of Corporations has made no finding or
determination relating to the fairness for investment of the
Securities offered by the Company and that the Commissioner has not
and will not recommend or endorse the Securities.
4. I have not seen or received any advertisement or general
solicitation with respect to the sale of the Securities.
5. I believe, by reason of my business or financial experience
that I am capable of evaluating the merits and risks of this
investment and of protecting my own interests in connection with this
investment.
6. I acknowledge that during the course of this transaction and
prior to purchasing the Securities I have been provided with financial
and other written information about the Company, I have been given the
opportunity by the Company to obtain such information and ask such
questions concerning the Company, the Securities, and my investment as
I felt necessary, and to the extent I availed myself of such
opportunity, I received satisfactory information and answers. If I
requested any additional information which the Company possessed or
could acquire without unreasonable effort or expense and which was
necessary to verify the accuracy of the financial and other written
information furnished to me by the Company, that additional
information was provided to me. In reaching the decision to invest in
the Securities, I have carefully evaluated my financial resources and
investment position and the risks associated with this investment, and
I acknowledge that I am able to bear the economic risks of this
investment. I further acknowledge that my financial condition is such
that I am not under any present necessity or constraint to dispose of
the Securities to satisfy any existent or contemplated debt or
undertaking.
Dated:
***
<PAGE>
NQSO
EXHIBIT 4.3
FORM OF NQSO AGREEMENT
STOCK OPTION AGREEMENT
AGREEMENT made as of this day of ,
by and between SEPRAGEN CORPORATION, a California Corporation,
having its principal place of business at 30689 Huntwood Avenue,
Hayward, California 94544 ("Company") and
("Optionee").
RECITALS
WHEREAS, Optionee is presently
at the Company; and
WHEREAS, Company is desirous of increasing the incentive of
Optionee to exert Optionee's utmost efforts to improve the business
and increase the assets of the Company and desires to grant the
Optionee a nonstatutory stock option under the Company's 1996 Stock
Option Plan (the "Plan") to acquire shares of the Company's Class A
Common Stock.
NOW, THEREFORE, the Company hereby grants to the Optionee an
option to purchase Class A common stock of the Company on the terms
and conditions set forth below.
1. Option.
(a) The option granted herein is intended as a "non-
statutory" or "nonqualified" stock option. The option granted herein
is NOT intended to be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Subject to the vesting rights specified in Section 3(a)
below, the Company hereby grants to the Optionee the option to
purchase all or any part of an aggregate number of shares of Class A
Common Stock of the Company ("Shares") shown at the end of this
Agreement on the terms and conditions hereinafter set forth. The
option granted herein shall expire and terminate at 5:00 p.m. on the
date shown at the end of this Agreement (the "Expiration Date"), as
determined by the Board of Directors of the Company, which shall not
be more than ten (10) years from the date of the granting thereof,
subject to earlier termination as herein provided.
(b) For purposes herein, the date of commencement ("Date of
Commencement") of the option is as specified at the end of this
Agreement.
2. Purchase Price. The purchase price shall be the dollar
amount shown at the end of this Agreement (the "Purchase Price") for
the Shares that vest and become exercisable under this option. The
Company shall pay all fees and expenses necessarily incurred by the
Company in connection with the exercise of the option.
3. Vesting; Exercise of Option.
(a) This option shall vest and shall become exercisable to
the extent of of the Shares subject to this Option
and specified at the end of this Agreement (rounded to the nearest
whole share), if Optionee is still an officer, director or employee of
the Company on the first anniversary of the Date of Commencement.
Thereafter, this option shall vest and shall become exercisable to the
extent of the an additional of the Shares subject
to this Option (rounded to the nearest whole share) if the Optionee is
still an officer, director or employee of the Company on each
subsequent anniversary after the first anniversary of the Date of
Commencement, up to a maximum of shares specified in Section 1. Any
portion of the vested option rights which the Optionee does not
exercise shall accumulate and may be exercised during the term of this
option as specified in Section 1.
(b) The Optionee shall notify the Company by certified
mail, return receipt requested, addressed to its principal office as
to the number of Shares which Optionee desires to purchase under the
options herein granted, which notice shall be accompanied by payment
(by cash or certified check) of the option price therefor as specified
in Section 2 above. As soon as practicable thereafter, the Company
shall at its principal office tender to Optionee certificates issued
in the Optionee's name evidencing the Shares purchased by the
Optionee.
(c) In the event of Optionee's death or other termination
of employment, the exercise of the option shall be governed by Section
4, below.
4. Exercise in the Event of Termination of Optionee's
Employment.
(a) In the event the position of the Optionee, as an
officer, director, employee or consultant of the Company, ceases
either voluntarily or involuntarily, the option granted to the
Optionee hereunder shall terminate the earlier of: (i) three months
after termination of such directorship, employment, or other
relationship with the Company, or (ii) one year following termination
if such termination was due to death or disability of the Optionee;
but in no event later than the Expiration Date of the Option.
(b) If the Optionee dies (i) while acting in a position
with the Company as either an officer, director or employee, or (ii)
after the termination of Optionee's position as officer, director or
employee to the Company, subject to the provisions of subsections (a)
and (c) of this Section 4, this option may be exercised by a legatee
or legatees of such optionee under such individual's last will or by
the duly authorized administrator or special administrator of
Optionee's estate or by Optionee's personal representatives or dis-
tributees to the extent Optionee had the right to exercise this option
on the date of Optionee's death or disability.
(c) Notwithstanding any other provision herein to the
contrary, if the termination of the Optionee's employment is for cause
or is otherwise attributable to a breach by Optionee of an employment
or confidentiality or non-disclosure agreement, the Option shall
expire immediately upon such termination. The Board of Directors
shall have the power to determine what constitutes a termination for
cause or a breach of an employment or confidentiality or
non-disclosure agreement, whether Optionee has been terminated for
cause or has breached such an agreement, and the date upon which such
termination for cause or breach occurs. Any such determinations shall
be final and conclusive and binding upon Optionee.
5. Divisibility and Non-Assignability of the Options.
(a) The Optionee may exercise the options herein granted
from time to time during the periods of their respective effectiveness
with respect to any whole number of Shares included therein, but in no
event may an option be exercised as to a fractional share.
(b) The Optionee may not give, grant, sell, exchange,
transfer legal title, pledge, assign or otherwise encumber or dispose
of the options herein granted or any interest therein, otherwise than
by will or the laws of descent and distribution, and these options, or
any of them, shall be exercisable during Optionee's lifetime only by
the Optionee. Any purported transfer or assignment of this option
shall be void and of no effect, and shall give the Company the right
to terminate this option as of the date of such purported transfer or
assignment.
6. Stock as Investment. By accepting this option, the
Optionee agrees for Optionee, Optionee's heirs and legatees that this
option and any all Shares purchased upon exercise of the options
granted hereunder shall be acquired for investment and not for
distribution and, upon acceptance of the option and the exercise of
the options granted hereunder, shall deliver to the Company an
Investor Certificate, in the form attached hereto as Exhibit "A" and
incorporated by reference, representing that such Shares are being
acquired in good faith for investment and not for distribution. The
Company may place all restrictive legends deemed by it to be
appropriate on the certificate(s) representing Shares to be issued
pursuant to this Agreement.
7. Restriction on Issuance of Shares.
(a) This option and the obligation of the Company to
transfer shares hereunder shall be subject to all applicable federal
and state laws, rules, and regulations, including those related to
disclosure of financial and other information to the Optionee, and to
such approvals by any governmental or regulatory agency as may be
required. The Company shall not be required to issue or deliver any
certificate for Shares of its common stock purchased upon the exercise
of any option prior to (a) the completion of all registrations or
qualifications of such shares under any federal or state law, or any
rule or regulation of any governmental body which the Company shall,
in its sole discretion, determine may be necessary or advisable; and
(b) permission for the listing of such shares shall have been given by
any national securities exchange on which the common stock of the
Company is at the time of issuance listed, or (c) counsel to the
Company has determined, in Optionee's professional judgment, that such
registration, qualification, or listing is not necessary.
(b) This option shall be subject to the requirement that
if, at any time, counsel to the Company shall determine that the
listing, registration or qualification of the shares subject to such
option upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental or regulatory body, or
that the disclosure of non-public information or the satisfaction of
any other condition is necessary as a condition of, or in connection
with the issuance or purchase of shares thereunder, such option may
not be exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions
acceptable to the Board of Directors. Nothing herein shall be deemed
to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
8. Adjustments Upon Changes in Capitalization.
(a) Recapitalization and Related Transactions. If, through
or as a result of any recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar
transaction, (i) the outstanding shares of Common Stock are increased,
decreased or exchanged for a different number or kind of shares or
other securities of the Company, or (ii) additional shares or new or
different shares or other non-cash assets are distributed with respect
to such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and
kind of shares reserved for issuance under the Plan, (y) the number
and kind of shares or other securities subject to any then outstanding
options under the Plan, and (z) the price for each share subject to
any then outstanding options under the Plan, without changing the
aggregate purchase price as to which such options remain exercisable.
Notwithstanding the foregoing, no adjustment shall be made pursuant to
this Section 8 if such adjustment (i) would cause the Plan to fail to
comply with Section 422 of the Code or with Rule 16b-3 or (ii) would
be considered as the adoption of a new plan requiring stockholder
approval.
(b) Reorganization, Merger and Related Transactions. If
the Company shall be the surviving corporation in any reorganization,
merger or consolidation of the Company with one or more other
corporations, any then outstanding option granted pursuant to the Plan
shall pertain to and apply to the securities to which a holder of the
number of shares of Common Stock subject to such options would have
been entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of the
purchase price as to which such options may be exercised so that the
aggregate purchase price as to which such options may be exercised
shall be the same as the aggregate purchase price as to which such
options may be exercised for the shares remaining subject to the
options immediately prior to such reorganization, merger, or
consolidation.
(c) Board Authority to Make Adjustments. Any adjustments
under this Section 8 will be made by the Board of Directors, whose
determination as to what adjustments, if any, will be made and the
extent thereof will be final, binding and conclusive. No fractional
shares will be issued under the Plan on account of any such
adjustments.
9. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of a consolidation or merger in
which the Company is not the surviving corporation, or sale of all or
substantially all of the assets of the Company in which outstanding
shares of Common Stock are exchanged for securities, cash or other
property of any other corporation or business entity or in the event
of a liquidation of the Company (collectively, a "Corporate
Transaction"), the Board of Directors of the Company, or the board of
directors of any corporation assuming the obligations of the Company,
may, in its discretion, take any one or more of the following actions,
as to outstanding options: (i) provide that such options shall be
assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof), provided that any
such options substituted for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, (ii) upon written notice
to the Optionee, provide that all unexercised options will terminate
immediately prior to the consummation of such transaction unless
exercised by the Optionee within a specified period following the date
of such notice, (iii) in the event of a Corporate Transaction under
the terms of which holders of the Common Stock of the Company will
receive upon consummation thereof a cash payment for each share
surrendered in the Corporate Transaction (the "Transaction Price),
make or provide for a cash payment to the options equal to the
difference between (A) the Transaction Price times the number of
shares of Common Stock subject to such outstanding options (to the
extent then exercisable at prices not in excess of the Transaction
Price) and (B) the aggregate exercise price of all such outstanding
options in exchange for the termination of such options, and (iv)
provide that all or any outstanding options shall become exercisable
in full immediately prior to such event.
(b) Substitute Options. The Company may grant options
under the Plan in substitution for options held by employees of
another corporation who become employees of the Company, or a
subsidiary of the Company, as the result of a merger or consolidation
of the employing corporation with the Company or a subsidiary of the
Company, or as a result of the acquisition by the Company, or one of
its subsidiaries, of property or stock of the employing corporation.
The Company may direct that substitute options be granted on such
terms and conditions as the Board of Directors considers appropriate
in the circumstances.
10. No Rights in Option Stock. Optionee shall have no rights
as a shareholder in respect of Shares as to which the option granted
hereunder shall not have been exercised and payment made as herein
provided.
11. Certain Corporate Transactions. Nothing in this Agreement
shall in any way prohibit or affect the right and power of the Company
to make adjustments, reclassifications, reorganizations or changes of
its capital or business structures, or from merging with or
consolidating into another corporation, or from selling or
transferring all or substantially all of its assets, or from
distributing all or substantially all of its assets to its
stockholders in liquidation, or from dissolving and terminating its
corporate existence.
12. No Effect Upon Employment. This Agreement does not give
the Optionee any right to continued employment by the Company, whether
as officer, director, employee or consultant.
13. Binding Effect. Except as herein otherwise expressly
provided, this Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors, legal representatives
and assigns.
14. Taxes. Optionee understands that Section 83 of the
Internal Revenue Code of 1986, as amended, taxes as ordinary income
the difference between the amount paid for the Shares and the fair
market value of the Shares as of the date the option is exercised.
OPTIONEE UNDERSTANDS AND ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE ANY ELECTIONS UNDER THE
INTERNAL REVENUE CODE AND TO REPORT ANY TAXABLE INCOME. Optionee
acknowledges that Optionee has been advised to consult Optionee's tax
advisor. Whenever Shares are to be issued upon exercise of this
Option, the Company shall have the right to require the Optionee to
remit to the Company any amount sufficient to satisfy all Federal,
state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such Shares.
15. Withholding.
i. The Company shall have the right to deduct from
payments of any kind otherwise due to the Optionee any federal, state
or local taxes of any kind required by law to be withheld with respect
to any shares issued upon exercise of options under the Plan. Subject
to the prior approval of the Company, which may be withheld by the
Company in its sole discretion, the Optionee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the
exercise of an option or (ii) by delivering to the Company shares of
Common Stock already owned by the Optionee. The shares so delivered
or withheld shall have a Fair Market Value equal to such withholding
obligation as of the date that the amount of tax to be withheld is to
be determined. An Optionee who has made an election pursuant to this
Section 15(a) may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.
(a) Notwithstanding the foregoing, in the case of a
Reporting Person (as defined by the Plan), no election to use shares
for the payment of withholding taxes shall be effective unless made in
compliance with any applicable requirements of Rule 16b-3.
16. Miscellaneous. This Agreement shall be construed under the
laws of the State of California. Headings have been included herein
for convenience of reference only, and shall not be deemed a part of
the agreement. The terms of the Plan shall be binding upon this
Option and shall supercede any terms of this Option to the extent of
any inconsistencies.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
Number of Shares: Sepragen Corporation
shares of Class A Common
Stock By:
Purchase Price Per Share:
$ per Share Title:
Expiration Date:
/ /
Date of Commencement:
/ /
<PAGE>
NQSO
ACCEPTANCE
Optionee acknowledges receipt of the Investor's Certificate.
Optionee represents that Optionee has read and understands the terms
and provisions thereof, and hereby accepts this option subject to all
of the terms and conditions thereof. Optionee hereby agrees to accept
as binding, conclusive, and final all decisions or interpretations
required of the Board of Directors of the Company by and as to this
option.
By:
Print Name:
Address:
Social Security Number:
<PAGE>
NQSO
INVESTOR CERTIFICATE
The undersigned, as a condition to purchase shares of the Class A
Common, no par stock (the "Securities") of Sepragen Corporation, a
California corporation (the "Company"), certifies to the Company as
follows:
1. My full name, residence address and business address are as
follows:
Name Address
2. I am purchasing the Securities in my own name and for my own
account (or for a trust account if I am a trustee), and no other
person has any interest in or right with respect to the Securities,
nor have I agreed to give any person any such interest or right in the
future.
3. I am acquiring the Securities for investment and not with a
view to or for sale in connection with any distribution of the
Securities. I recognize that the Securities have not been registered
under the Federal Securities Act of 1933, nor qualified under the
California Corporate Securities Law of 1968, that any disposition of
the Securities is subject to restrictions imposed by federal and state
law and that the certificates representing the Securities may bear a
restrictive legend. I also recognize that I cannot dispose of the
Securities absent registration and qualification, or an available
exemption from registration and qualification, and that no undertaking
has been made with regard to registering or qualifying the Securities
in the future. I understand that the availability of an exemption in
the future will depend in part on circumstances outside my control and
that I may be required to hold the Securities for a substantial
period. I understand that the California Commissioner of Corporations
has made no finding or determination relating to the fairness for
investment of the Securities offered by the Company and that the
Commissioner has not and will not recommend or endorse the Securities.
4. I have not seen or received any advertisement or general
solicitation with respect to the sale of the Securities.
5. I believe, by reason of my business or financial experience
that I am capable of evaluating the merits and risks of this
investment and of protecting my own interests in connection with this
investment.
6. I acknowledge that during the course of this transaction and
prior to purchasing the Securities I have been provided with financial
and other written information about the Company, I have been given the
opportunity by the Company to obtain such information and ask such
questions concerning the Company, the Securities, and my investment as
I felt necessary, and to the extent I availed myself of such
opportunity, I received satisfactory information and answers. If I
requested any additional information which the Company possessed or
could acquire without unreasonable effort or expense and which was
necessary to verify the accuracy of the financial and other written
information furnished to me by the Company, that additional
information was provided to me. In reaching the decision to invest in
the Securities, I have carefully evaluated my financial resources and
investment position and the risks associated with this investment, and
I acknowledge that I am able to bear the economic risks of this
investment. I further acknowledge that my financial condition is such
that I am not under any present necessity or constraint to dispose of
the Securities to satisfy any existent or contemplated debt or
undertaking.
Dated:
Print Name:
September 9, 1996
Sepragen Corporation
30689 Huntwood Avenue
Hayward, California 94544
Dear Board of Directors:
We have acted as special counsel for Sepragen Corporation, a
California corporation (the "Company"), in connection with the Regis-
tration Statement on Form S-8, to which this letter is to be filed as
an exhibit by the Company under the Securities Act of 1933, as amend-
ed, relating to the registration of up to 250,000 Shares of Class A
Common Stock, no par value (the "Shares"), pursuant to the Company's
1996 Stock Option Plan (the "Option Plan").
We have examined such corporate records, documents, agree-
ments and such matters of law as we have considered necessary or
appropriate for purposes of this opinion. Based upon the foregoing,
we are of the opinion that the Shares when issued upon exercise of and
in accordance with the terms of stock options duly and validly granted
pursuant to the terms and conditions of the Option Plan against
payment therefor in accordance with the terms of the governing agree-
ments, will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement. In giving our 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 of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commis-
sion thereunder.
Very truly yours,
SMITH, MERRILL & PEFFER
A Professional Corporation
/s/Smith, Merrill & Peffer
Enclosures
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Sepragen Corporation on Form S-8 (File No. 7311-11) of
our report dated March 13, 1996, on our audits of the financial
statements of Sepragen Corporation as of December 31, 1995 and 1994,
and for the years then ended, which report is included in the Annual
Report on Form 10-K.
/s/Coopers & Lybrand LLP
San Francisco, California
August 22, 1996<PAGE>
