<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1997
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
CIMA LABS INC.
(Exact name of registrant as specified in its charter)
----------------------
DELAWARE 41-1569769
(State of Incorporation) (I.R.S. Employer
Identification No.)
----------------------
10000 Valley View Road
Eden Prairie, Minnesota 55334-9361
(612) 947-8700
(Address of principal executive offices)
----------------------
CIMA LABS INC. NON-EMPLOYEE DIRECTORS' FEE OPTION GRANT PROGRAM
(Full title of the plan)
John M. Siebert, Ph.D
President and Chief Executive Officer
CIMA LABS INC.
10000 Valley View Road
Eden Prairie, Minnesota 55334-9361
(612) 947-8700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------
Copies to:
Robert L. Jones, Esq.
Brett D. White, Esq.
Cooley Godward LLP
5 Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
(415) 843-5000
----------------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
TITLE OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER SHARE (1) PRICE (1) FEE
- -------------------------------------------------------------------------------
Stock Options
and Common Stock
(par value $.01) 60,000 $5.44 $326,400 $99.00
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h)(1). The price per share and
aggregate offering price are based upon the average of the high and low price
of Registrant's Common Stock on July 25, 1997 as reported on the Nasdaq
National Market.
<PAGE>
PART II: INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by CIMA LABS INC., a Delaware corporation
(the "Registrant"), with the Securities and Exchange Commission (the "SEC")
are incorporated by reference into this Registration Statement:
(a) The Company's annual report on Form 10-K, for the year ended
December 31, 1996.
(b) The Company's Quarterly Reports on Form 10-Q for the three months
ended March 31, 1997.
(c) The description of the Company's Common Stock which is contained in
a Registration Statement on Form 8-A filed in June 1994 filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
any amendment or report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a
part of this registration statement from the date of the filing of such
reports and documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the
Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under
the Securities Act of 1933, as amended (the "Securities Act"). The
Registrant's Bylaws provide that the Registrant will indemnify its directors,
executive officers, other officers, employees and agents to the fullest
extent permitted by Delaware law.
The Registrant's Certificate of Incorporation provides for the
elimination of liability for monetary damages for breach of the directors'
fiduciary duty of care to the Registrant and its stockholders. These
provisions do not eliminate the directors' duty of care and, in appropriate
circumstances, equitable remedies such an injunctive or other forms of
non-monetary relief will remain available under Delaware law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of
law, for any transaction from which the director derived an improper personal
benefit, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision does not
affect a director's responsibilities under any other laws, such as the
federal securities laws or state or federal environmental laws.
The Company has entered into indemnity agreements with each of its
directors and executive officers. In addition, the Company has entered into
certain agreements in connection with the Company's equity financings which
provide for the indemnification of directors and officers in certain
circumstances, including indemnification for liabilities arising under the
Securities Act. In addition, the Company maintains an insurance policy for
its directors and officers insuring against certain liabilities arising in
their capacities as such.
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
EXHIBIT
NUMBER
- -------
5 Opinion of Cooley Godward LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5 to this
Registration Statement
24 Power of Attorney is contained on the signature pages
99.1 CIMA LABS INC. Non-Employee Directors' Fee Option Grant Program
ITEM 9. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to section 13 or section 15(d) of
the Exchange Act of 1934 that are incorporated by reference herein.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
2.
<PAGE>
(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.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Exchange Act of
1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities 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
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
3.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Eden Prairie, State of Minnesota,
on July 25, 1997.
CIMA LABS INC.
By: /s/ John M. Siebert
------------------------------------
John M. Siebert
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John M. Siebert, Ph.D., his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ John M. Siebert
---------------------------------- President, Chief July 25, 1997
John M. Siebert Executive Officer,
and Director
(principal executive
officer)
/s/ Keith P. Salenger
---------------------------------- Vice President, July 25, 1997
Keith P. Salenger Finance
and Chief Financial
Officer
(principal financial
and
accounting officer)
/s/ Terrence W. Glarner
---------------------------------- Director July 25, 1997
Terrence W. Glarner
/s/ David B. Musket
---------------------------------- Director July 25, 1997
David B. Musket
/s/ Steven B. Ratoff
---------------------------------- Director July 25, 1997
Steven B. Ratoff
/s/ Joseph R. Robinson
---------------------------------- Director July 16, 1997
Joseph R. Robinson
---------------------------------- Director July , 1997
Jerry A. Weisbach
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
5 Opinion of Cooley Godward LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5 to this
Registration Statement
24 Power of Attorney is contained on the signature pages
99.1 CIMA LABS INC. Non-Employee Directors' Fee Option Grant Program
6.
<PAGE>
Exh 5
[Cooley Godward LLP Letterhead]
July 25, 1997
CIMA LABS INC.
10000 Valley View Road
Eden Prairie, MN 55344
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by CIMA LABS INC. (the "Company") of a Registration Statement on
Form S-8 (the "Registration Statement") with the Securities and Exchange
Commission covering the offering of up to 60,000 shares of the Company's Common
Stock, $.01 par value (the "Shares"), pursuant to the CIMA LABS INC. Non-
Employee Directors' Fee Option Grant Program (the "Program").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, the Program, your Certificate of Incorporation and Bylaws,
as amended, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a basis for this opinion. We have assumed
the genuineness and authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as copies thereof,
and the due execution and delivery of all documents where due execution and
delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Program, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Yours very truly,
COOLEY GODWARD LLP
By: /s/ Robert L. Jones
---------------------------
Robert L. Jones
<PAGE>
Exhibit 23.1
Consent of Ernst & Young LLP
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the CIMA LABS INC. Non-Employee Directors' Fee
Option Grant Program of our report dated February 5, 1997, with respect to
the financial statements and schedule of CIMA LABS INC. included in the
Annual Report for the year ended December 31, 1996, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
July 23, 1997
<PAGE>
CIMA LABS INC.
NON-EMPLOYEE DIRECTORS' FEE OPTION GRANT PROGRAM
ADOPTED ON FEBRUARY 26, 1997
APPROVED BY STOCKHOLDERS
ON MAY 14, 1997
1. PURPOSE.
(a) The purpose of the Non-Employee Directors' Fee Option Grant Program
(the "Program") is to provide a means by which each member of the Board of
Directors of CIMA LABS INC. (the "Company") who is not an employee of the
Company (a "Non-Employee Director") will be given an opportunity to defer
receipt of cash compensation attributable solely to service as a member of
the Board of Directors of the Company (a "Director"), including, but not
limited to, annual retainer fees and board and committee meeting fees
(collectively, "Directors' Fees"), in the form of stock options to acquire
common stock of the Company.
(b) The Company, by means of the Program, seeks to retain the services
of persons now serving as Non-Employee Directors of the Company, to secure
and retain the services of persons capable of serving in such capacity, and
to provide incentives for such persons to exert maximum efforts for the
success of the Company.
2. EFFECTIVE DATE.
The Program shall become effective on March 12, 1997 (the "Effective
Date").
3. ADMINISTRATION.
(a) The Program shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to
a committee, as provided in subparagraph 3(c).
1
<PAGE>
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Program:
(i) To construe and interpret the Program and options granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Program or in any option, in a
manner and to the extent it shall deem necessary or expedient to make the
Program effective.
(ii) To amend the Program or an option as provided in Section 13.
(iii) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests
of the Company which are not in conflict with the provisions of the Program.
(c) The Board may delegate administration of the Program to a committee
composed of not fewer than two (2) members of the Board (the "Committee") who
may be, in the discretion of the Board, "Non-Employee Directors" within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any applicable successor thereto. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Program, the powers theretofore
possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Program, as may be adopted from time
to time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Program.
4. SHARES SUBJECT TO THE PROGRAM.
(a) Subject to the provisions of Section 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Program shall not exceed
2
<PAGE>
in the aggregate Sixty Thousand (60,000) shares of the Company's common stock
("Common Stock"). If any option granted under the Program shall for any
reason expire or otherwise terminate without having been exercised in full,
the stock not purchased under such option shall again become available for
the Program.
(b) The stock subject to the Program may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
Options may be granted only to Non-Employee Directors.
6. PARTICIPATION.
Each Non-Employee Director may elect to defer and apply all or any
portion of the Directors' Fees otherwise payable in cash for his or her
service on the Board to the acquisition of a special option grant under the
Program, as follows:
(a) ELECTIONS BY PERSONS SERVING AS NON-EMPLOYEE DIRECTORS ON THE
EFFECTIVE DATE. Persons serving as Non-Employee Directors on the Effective
Date may elect to defer Directors' Fees otherwise payable for services after
the Effective Date and until and including the 1997 Annual Meeting of
Stockholders of the Company ("1997 Annual Meeting"). Such election shall be
submitted to the Company's Chief Financial Officer no later than the
Effective Date. The deferral amount so elected (i) shall be irrevocable
until such 1997 Annual Meeting, and (ii) shall remain in effect with respect
to Directors' Fees otherwise payable after the 1997 Annual Meeting until the
Non-Employee Director affirmatively submits a replacement election (including
an election to cease all such deferrals), which replacement election may only
affect prospectively Directors' Fees not yet earned as of the date of the
replacement election. A replacement election (or an initial election, in the
case of a Non-Employee Director who chooses
3
<PAGE>
not to submit a deferral election by the Effective Date) must be submitted at
or prior to the 1997 Annual Meeting in order to be effective for Directors'
Fees otherwise payable after the 1997 Annual Meeting. Beginning on the date
of the 1997 Annual Meeting, deferral elections in effect must remain
irrevocably in effect for Directors' Fees otherwise payable until and
including the date of the next Annual Meeting.
(b) ELECTIONS BY PERSONS NAMED TO SERVE AS NON-EMPLOYEE DIRECTORS ON OR
AFTER THE EFFECTIVE DATE. Persons named to serve as Non-Employee Directors
on or after the Effective Date may elect to defer Directors' Fees otherwise
payable for services on or after becoming a Non-Employee Director by
submitting an election to the Company's Chief Financial Officer within thirty
(30) days of becoming a Non-Employee Director. Such election shall apply
only as to amounts which the Non-Employee Director was not yet entitled to
receive at the time of submission of the election. The deferral amount so
elected (i) shall be irrevocable until and including the Annual Meeting first
following submission, and (ii) shall remain in effect with respect to
Directors' Fees otherwise payable after that first following Annual Meeting
until the Non-Employee Director affirmatively submits a replacement election
(including an election to cease all such deferrals); which replacement
election may only affect prospectively Directors' Fees not yet earned as of
the date of the replacement election. A replacement election (or an initial
election, in the case of a Non-Employee Director who chooses not to submit a
deferral election within thirty (30) days of first becoming a Non-Employee
Director) must be submitted at or prior to the date of an Annual Meeting in
order to be effective for Directors' Fees otherwise payable after such Annual
Meeting. Deferral elections in effect as of any Annual Meeting must remain
in effect for Directors' Fees otherwise payable until and including the date
of the next Annual Meeting.
4
<PAGE>
7. NON-DISCRETIONARY GRANTS.
(a) Each Non-Employee Director who timely files a deferral election as
to Directors' Fees otherwise payable for services between the Effective Date
and the 1997 Annual Meeting (as described in Section 6(a) hereof) shall
automatically be granted an option to purchase common stock of the Company on
the date of the 1997 Annual Meeting, on the terms and conditions set forth
herein.
(b) Each Non-Employee Director who timely files a deferral election
within thirty (30) days of first becoming a Non-Employee Director as to
Directors' Fees payable until and including the first Annual Meeting during
such Non-Employee Director's service on the Board (as described in Section
6(b) hereof) shall automatically be granted an option to purchase common
stock of the Company on the date on which the Non-Employee Director files the
deferral election, on the terms and conditions set forth herein.
(c) Each Non-Employee Director who has a deferral election in effect
(or is deemed to have such an election in continuing effect, in accordance
with Section 6) as of any Annual Meeting of the Stockholders of the Company
occurring after the Effective Date shall automatically be granted an option
to purchase common stock of the Company on the date of such Annual Meeting,
on the terms and conditions set forth herein.
8. OPTION PROVISIONS.
Each option shall be a nonstatutory stock option (not intended to meet
the requirements of Section 422 of the Internal Revenue Code (the "Code")),
subject to the following terms and conditions:
(a) TERM. The term of each option commences on the date it is granted
and, unless sooner terminated as set forth herein, expires on the date
("Expiration Date") ten (10) years from
5
<PAGE>
the date of grant. If the Non-Employee Director's service as a Director
terminates for any reason or for no reason, the option shall terminate on the
earlier of the Expiration Date or the date three (3) years following the date
of termination of such service. Except as provided in Section 8(b) hereof,
an option may be exercised following termination of service as a Director
only as to that number of shares as to which it was exercisable as of the
date of termination of such service under the provisions of Section 8(e).
Each option held by a Director under the Program at the time of his or
her cessation of service as a Director shall immediately terminate and cease
to remain outstanding with respect to any and all shares of Common Stock for
which the option is not otherwise at that time exercisable.
(b) DEATH OR PERMANENT DISABILITY. Should the Non-Employee Director's
service as a Director cease by reason of death or permanent disability, then
each option held by that Non-Employee Director under the Program shall
immediately become exercisable for all the shares of Common Stock at the time
subject to that option, and the option may be exercised for any or all of
those shares as fully vested shares. For purposes of this plan, "permanent
disability" shall mean an inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than twelve (12)
months.
Should the Non-Employee Director die while holding one or more options
under the Program, then each such option may be exercised, for any or all of
the shares for which the option is exercisable at the time of the
Non-Employee Director's cessation of service as a Director (less any shares
subsequently purchased by the Non-Employee Director prior to death),
6
<PAGE>
by the personal representative of the Non-Employee Director's estate or by
the person or persons to whom the option is transferred pursuant to the
Non-Employee Director's will or in accordance with the laws of descent and
distribution. Such right of exercise under this Section 8(b) shall lapse,
and the option shall terminate, upon the earlier of (i) the expiration of the
ten (10)-year option term described in Section 8(a), or (ii) the three
(3)-year period measured from the date of the Non-Employee Director's
cessation of service as a Director.
(c) EXERCISE PRICE.
(i) The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the fair market value (as defined in Section
11(e) hereof) of a share of Common Stock on the last day of the month prior
to the option grant date.
(ii) The exercise price must be paid in full upon exercise of the
option using one of the following alternatives:
(1) in cash (including by check); or
(2) by delivery of shares of Common Stock already owned by
the Non-Employee Director, held for the period required to avoid a charge to
the Company's reported earnings, and owned free and clear of any liens,
claims, encumbrances or security interest, which Common Stock shall be valued
at its fair market value (as defined in Section 11(e) hereof) on the date of
exercise; or
(3) by a combination of the methods of payment specified in
Section 8(c)(ii)(1) or 8(c)(ii)(2) hereof.
Notwithstanding the foregoing, this option may be exercised pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or check) by the Company either
prior to the issuance of shares of the
7
<PAGE>
Company's common stock or pursuant to the terms of irrevocable instructions
issued by the Non-Employee Director prior to the issuance of shares of the
Company's common stock.
(d) NUMBER OF OPTION SHARES. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the maximum amount of the Director's Fees subject to the
Non-Employee Director's deferral election and applied to the grant of
such option under the Program, and
B is the fair market value per share of Common Stock on the last day
of the month prior to the option grant date.
(e) VESTING. Each option shall vest (become exercisable) as follows:
(i) Options granted pursuant to Section 7(a) shall be fully vested
and exercisable on the date of grant.
(ii) Options granted pursuant to Sections 7(b) and 7(c) shall
become exercisable in installments on each date that Directors' Fees would
have been payable in cash had no deferral election been in effect under the
Program with respect to the number of shares equal to (1) the aggregate
shares subject to the option multiplied by (2) the fraction obtained where
the numerator is the cash Directors' Fees that the Non-Employee Director
otherwise would have received on such date and the denominator is the
aggregate Directors' Fees that the Non-Employee Director would have received
in cash absent a deferral election under this Program
8
<PAGE>
following the date of the option's grant through and including that Board
meeting held at the time of the next Annual Meeting of Stockholders of the
Company.
(f) The Company may require any Non-Employee Director, or any person to
whom an option is transferred under Section 8(b) or 8(h), as a condition of
exercising any such option: (i) to give written assurances satisfactory to
the Company as to the optionee's knowledge and experience in financial and
business matters; and (ii) to give written assurances satisfactory to the
Company stating that such person is acquiring the Common Stock subject to the
option for such person's own account and not with any present intention of
selling or otherwise distributing the Common Stock. These requirements, and
any assurances given pursuant to such requirements, shall be inoperative if
(i) the issuance of shares of Common Stock upon the exercise of the option
has been registered under a then-currently-effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), or (ii),
as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may require any optionee to
provide such other representations, written assurances or information which
the Company shall determine is necessary, desirable or appropriate to comply
with applicable securities laws as a condition of granting an option to the
optionee or permitting the optionee to exercise the option. The Company may,
upon advice of counsel to the Company, place legends on stock certificates
issued under the Program as such counsel deems necessary or appropriate in
order to comply with applicable securities laws, including, but not limited
to, legends restricting the transfer of the Common Stock.
(g) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares of Common Stock issuable upon
exercise of such option are then
9
<PAGE>
registered under the Securities Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would
be exempt from the registration requirements of the Securities Act.
(h) Options granted under the Program shall not be transferable, except
(i) by will or by the laws of descent and distribution, (ii) by written
designation which takes effect upon the Non-Employee Director's death, (iii)
by written instruction, in a form accepted by the Company, to the
Non-Employee Director's spouse, children, stepchildren, or grandchildren
(whether adopted or natural), to a trust created solely for the benefit of
the Non-Employee Director and the foregoing persons, or (iv) to the
Non-Employee Director's former spouse (if transfer is pursuant to a judicial
decree dissolving the Non-Employee Director's marriage). During a
Non-Employee Director's life the Non-Employee Director's option is
exercisable only by the Non-Employee Director or a transferee satisfying the
above conditions. The right of a transferee to exercise the transferred
portion of an option after the Non-Employee Director's termination of service
as a Director shall terminate in accordance with the Non-Employee Director's
right of exercise under Sections 8(a) or 8(b) hereof (after the Non-Employee
Director's death, treating the transferee as a person who acquired the right
to exercise the Non-Employee Director's option by bequest or inheritance).
The terms of the Non-Employee Director's option shall be binding upon the
transferees, executors, administrators, heirs, successors, and assigns of the
Non-Employee Director.
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9. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Program, the
Company shall keep available at all times the number of shares of Common
Stock required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Program such authority as may be required
to issue and sell shares of Common Stock upon exercise of the options granted
under the Program; PROVIDED, HOWEVER, that this undertaking shall not require
the Company to register under the Securities Act either the Program, any
option granted under the Program, or any Common Stock issued or issuable
pursuant to any such option. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and
sale of Common Stock under the Program, the Company shall be relieved from
any liability for failure to issue and sell Common Stock upon exercise of
such options.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to the exercise of
options granted under the Program shall constitute general funds of the
Company.
11. MISCELLANEOUS.
(a) Neither a Non-Employee Director nor any person to whom an option is
transferred under Section 8(b) or 8(h) shall be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any shares subject
to such option unless and until such person has satisfied all requirements
for exercise of the option pursuant to its terms.
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(b) Nothing in the Program or in any instrument executed pursuant
thereto shall confer upon any Director any right to continue in the service
of the Company in any capacity or shall affect any right of the Company, its
Board or stockholders to remove any Director pursuant to the Company's
By-Laws and the provisions of the Delaware General Corporation Law (or the
applicable laws of the Company's state of incorporation if the Company's
state of incorporation should change in the future).
(c) No Director, individually or as a member of a group, and no
beneficiary, transferee or other person claiming under or through him or her,
shall have any right, title or interest in or to any option reserved for the
purposes of the Program except as to such shares of Common Stock, if any, as
shall have been reserved for such person pursuant to an option granted (or
transferred) to such person.
(d) In connection with each option made pursuant to the Program, it
shall be a condition precedent to the Company's obligation to issue or
transfer shares to any person, or to evidence the removal of any restrictions
on transfer, that such person make arrangements satisfactory to the Company
to insure that the amount of any federal or other withholding tax required to
be withheld with respect to such sale or transfer, or such removal or lapse,
is made available to the Company for timely payment of such tax.
(e) As used in this Program, "fair market value" means, as of any date,
the value of the Common Stock of the Company determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the fair market value of a share of Common Stock shall be the closing
sales price for such Common Stock (or the closing bid,
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if no sales were reported) as quoted on such exchange or market (or the
exchange or market with the greatest volume of trading in the Company's
Common Stock in the event that the Company's Common Stock is traded on more
than one such exchange or market) on the last market trading day prior to the
day of determination, as reported in THE WALL STREET JOURNAL or such other
source as the Board deems reliable; or
(ii) In the absence of such markets for the Common Stock, the fair
market value shall be determined in good faith by the Board.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Program, or
subject to any option granted under the Program (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company), the
Program and outstanding options will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Program and the
class(es) and number of shares and price per share of stock subject to
outstanding options. Such adjustments shall be made by the Board, the
determination of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be treated
as a "transaction not involving the receipt of consideration by the Company.")
(b) In the event of: (1) a dissolution, liquidation, or sale of all or
substantially all of the assets of the Company; (2) a merger or consolidation
in which the Company is not the surviving corporation; (3) a reverse merger
in which the Company is the surviving corporation
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but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise; or (4) the
acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Exchange Act or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or any Affiliate of the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act, or comparable successor rule) of securities of the Company representing
at least fifty percent (50%) of the combined voting power entitled to vote in
the election of directors, then to the extent not prohibited by applicable
law, the time during which options outstanding under the Program vest and may
be exercised shall be accelerated prior to the occurrence of such event and
the options terminated if not exercised after such acceleration and at or
prior to the occurrence of such event.
13. AMENDMENT OF THE PROGRAM.
(a) The Board at any time, and from time to time, may amend the Program
and/or some or all of the outstanding options granted under the Program.
Except as provided in Section 12 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares which may be issued under
the Program;
(ii) Modify the requirements as to eligibility for
participation in the Program (to the extent such modification requires
stockholder approval in order for the Program to comply with the requirements
of Rule 16b-3 promulgated under the Exchange Act); or
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(iii) Modify the Program in any other way if such modification
requires stockholder approval in order for the Program to comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act.
(b) Rights and obligations under any option granted before any
amendment of the Program shall not be impaired by such amendment unless (i)
the Company requests the consent of the person to whom the option was granted
and (ii) such person consents in writing.
14. TERMINATION OR SUSPENSION OF THE PROGRAM.
(a) The Board may suspend or terminate the Program at any time. Unless
sooner terminated, the Program upon the issuance of all of the shares of
Common Stock reserved for issuance hereunder. No options may be granted
under the Program while the Program is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Program
is in effect shall not be impaired by suspension or termination of the
Program, except with the consent of the person to whom the option was granted.
(c) The Program shall terminate upon the occurrence of any of the
events described in Section 12(b) above.
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15. EFFECTIVE DATE OF PROGRAM; CONDITIONS OF EXERCISE.
(a) The Program shall become effective on the date specified in Section
2, subject to the condition subsequent that the Program is approved by the
stockholders of the Company. In the event that the stockholders of the
Company do not approve the Program at the 1997 Annual Meeting, then any
Non-Employee Director's election to defer Directors' Fees hereunder shall be
void, and such deferred Directors' Fees shall be paid in cash to such
Non-Employee Director as soon as reasonably practicable following the 1997
Annual Meeting.
(b) No option granted under the Program shall be exercised or
exercisable unless and until the conditions of Section 9(b) or Section 15(a)
hereof has been met.
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