SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. ____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
TECHNE CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
TECHNE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
October 22, 1998
The annual meeting of shareholders of Techne Corporation will be held
at the offices of the Company, 614 McKinley Place N.E., Minneapolis, Minnesota,
on Thursday, October 22, 1998, at 3:30 p.m. (Minneapolis Time), for the
following purposes:
1. To set the number of members of the Board of Directors at
seven (7).
2. To elect directors of the Company for the ensuing year.
3. To approve the Company's 1998 Nonqualified Stock Option Plan.
4. To take action upon any other business that may properly come
before the meeting or any adjournment thereof.
Only shareholders of record shown on the books of the Company at the
close of business on September 14, 1998, will be entitled to vote at the meeting
or any adjournment thereof. Each shareholder is entitled to one vote per share
on all matters to be voted on at the meeting.
You are cordially invited to attend the meeting. Whether or not you
plan to attend the meeting, please sign, date and return your Proxy in the
return envelope provided as soon as possible. Your cooperation in promptly
signing and returning the Proxy will help avoid further solicitation expense to
the Company.
This Notice, the Proxy Statement and the enclosed Proxy are sent to you
by order of the Board of Directors.
THOMAS E. OLAND,
President
Dated: September 22, 1998
Minneapolis, Minnesota
<PAGE>
TECHNE CORPORATION
PROXY STATEMENT
for
Annual Meeting of Shareholders
to be held October 22, 1998
INTRODUCTION
Your Proxy is solicited by the Board of Directors of Techne Corporation
(the "Company") for use at the Annual Meeting of Shareholders to be held on
October 22, 1998, and at any adjournment thereof, for the purposes set forth in
the attached Notice of Annual Meeting.
The cost of soliciting Proxies, including preparing, assembling and
mailing the Proxies and soliciting material, will be borne by the Company.
Directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit Proxies personally
or by telephone.
Any shareholder giving a Proxy may revoke it at any time prior to its
use at the meeting by giving written notice of such revocation to the Secretary
or other officer of the Company or by filing a new written Proxy with an officer
of the Company. Personal attendance at the meeting is not, by itself, sufficient
to revoke a Proxy unless written notice of the revocation or a subsequent Proxy
is delivered to an officer before the revoked or superseded Proxy is used at the
meeting.
Proxies not revoked will be voted in accordance with the choice
specified by shareholders by means of the ballot provided on the Proxy for that
purpose. Proxies which are signed but which lack any such specification will,
subject to the following, be voted in favor of the proposals set forth in the
Notice of Meeting and in favor of the number and slate of directors proposed by
the Board of Directors and listed herein. If a shareholder abstains from voting
as to any matter, then the shares held by such shareholder shall be deemed
present at the meeting for purposes of determining a quorum and for purposes of
calculating the vote with respect to such matter, but shall not be deemed to
have been voted in favor of such matter. Abstentions, therefore, as to any
proposal will have the same effect as votes against such proposal. If a broker
returns a "non-vote" proxy, indicating a lack of voting instruction by the
beneficial holder of the shares and a lack of discretionary authority on the
part of the broker to vote on a particular matter, then the shares covered by
such non-vote shall be deemed present at the meeting for purposes of determining
a quorum but shall not be deemed to be represented at the meeting for purposes
of calculating the vote required for approval of such matter.
The mailing address of the Company's principal executive office is 614
McKinley Place N.E., Minneapolis, Minnesota 55413. The Company expects that this
Proxy Statement and the related Proxy and Notice of Annual Meeting will first be
mailed to shareholders on or about September 22, 1998.
<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed September 14, 1998, as
the record date for determining shareholders entitled to vote at the Annual
Meeting. Persons who were not shareholders on such date will not be allowed to
vote at the Annual Meeting. At the close of business on September 14, 1998,
20,120,289 shares of the Company's Common Stock were issued and outstanding.
Such Common Stock is the only outstanding class of stock of the Company. Each
share of Common Stock is entitled to one vote on each matter to be voted upon at
the meeting. Holders of the Common Stock are not entitled to cumulative voting
rights in the election of directors.
PRINCIPAL SHAREHOLDERS
The following table provides information concerning the only persons
known to the Company to be the beneficial owners of more than five percent (5%)
of the Company's outstanding Common Stock as of September 14, 1998:
Amount and
Name and Address Nature of Shares Percent
of Beneficial Owner Beneficially Owned(1) of Class(2)
Kopp Investment Advisors, Inc. 3,308,428(3) 16.4%
6600 France Avenue So.
Edina, Minnesota 55435
Wasatch Advisors, Inc. 2,015,585 10.0%
68 S. Main Street
Salt Lake City, Utah 84101
D. F. Dent & Co. 1,230,072 6.1%
2 East Read St.
Baltimore, Maryland 21202
Peter R. Peterson 1,056,280(4) 5.2%
6111 Blue Circle Drive
Minnetonka, Minnesota 55343
Thomas E. Oland 704,920(5)(6) 3.5%
614 McKinley Place N.E.
Minneapolis, Minnesota 55413
<PAGE>
(1) Unless otherwise indicated, the person listed as the beneficial owner
of the shares has sole voting and sole investment power over the
shares.
(2) Shares not outstanding but deemed beneficially owned by virtue of the
right of a person to acquire them as of September 14, 1998, or within
sixty days of such date are treated as outstanding only when
determining the percent owned by such individual and when determining
the percent owned by the group.
(3) Kopp Investment Advisors, Inc. reports voting power over 486,600 of
such shares and investment power over all such shares.
(4) Does not include shares, if any, which may be held from time to time in
the trading account of Peterson Brothers Securities Company, a
corporation of which Mr. Peterson is an affiliate. Mr. Peterson
disclaims beneficial ownership of any such shares. Mr. Peterson is a
former director, and was a promoter, of the Company.
(5) Does not include 616,213 shares (3.1% of the Company's outstanding
Common Stock) held by the Company's Stock Bonus Plan ("Stock Bonus
Plan"), which are included in the group total in the Management
Shareholdings table. The Company's Board of Directors, acting by a
majority vote, currently directs the Trustee as to the voting of such
shares.
(6) Includes 34,278 shares held by Thomas Oland and Associates, 102,962
shares held by the Thomas Oland and Associates Profit Sharing Plan and
Trust and 45,554 shares subject to stock options which are exercisable
as of September 14, 1998, or will become exercisable within 60 days of
such date.
<PAGE>
MANAGEMENT SHAREHOLDINGS
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned as of September 14, 1998, by each executive
officer of the Company named in the Summary Compensation Table, by each director
and by all directors and executive officers (including the named individuals) as
a group:
Name of Director Number of Shares Percent
or Identity Group Beneficially Owned(1) of Class(2)
Thomas E. Oland 704,920(3) 3.5%
Roger C. Lucas, Ph.D. 275,028(4)(5) 1.4%
Howard V. O'Connell 155,000(5)(6) *
G. Arthur Herbert 126,000(5)(6)(7) *
James A. Weatherbee, Ph.D. 118,648(8) *
Monica Tsang, Ph.D. 113,598(9) *
Lowell E. Sears 100,200(5)(10) *
Christopher S. Henney, D.Sc., Ph.D. 57,000(5)(11) *
Randolph C. Steer, M.D., Ph.D. 50,000(5)(6) *
Thomas C. Detwiler, Ph.D. 49,792(12) *
Marcel Veronneau 28,211(13) *
Officers and directors
as a group (11 persons) 2,394,610(14) 11.6%
* Less than 1%
(1) See Note (1) to preceding table.
(2) See Note (2) to preceding table.
(3) See Notes (5) and (6) to preceding table.
(4) Includes 63,800 shares owned by Dr. Lucas' wife and 60,000 shares
subject to stock options which are exercisable as of September 14,
1998, or will become exercisable within 60 days of such date. Dr. Lucas
disclaims beneficial ownership of the shares owned by his wife. Does
not include option to purchase 10,000 shares which will be granted on
and will become exercisable as of the date of the Annual Meeting if the
1998 Nonqualified Stock Option Plan is approved by the shareholders.
See Proposal #3 below.
(5) See Note (5) to preceding table.
(6) Includes 50,000 shares subject to options which are exercisable as of
September 14, 1998 or will become exercisable within 60 days of such
date. Does not include option to purchase 10,000 shares which will be
granted on and will become exercisable as of the date of the Annual
Meeting if the 1998 Nonqualified Stock Option Plan is approved by the
shareholders. See Proposal #3 below.
<PAGE>
(7) Includes 30,000 shares held by Mr. Herbert's wife, as to which Mr.
Herbert disclaims beneficial ownership.
(8) Includes 72,956 shares subject to stock options which are exercisable
as of September 14, 1998, or will become exercisable within 60 days of
such date. Does not include the shares beneficially owned by Monica
Tsang, Dr. Weatherbee's wife.
(9) Includes 75,070 shares subject to stock options which are exercisable
as of September 14, 1998, or will become exercisable within 60 days of
such date. Does not include the shares beneficially owned by James A.
Weatherbee, Dr. Tsang's husband.
(10) Includes 100,000 shares subject to options which are exercisable as of
September 14, 1998 or will become exercisable within 60 days of such
date.
(11) Includes 55,000 shares subject to options which are exercisable as of
September 14, 1998 or will become exercisable within 60 days of such
date. Does not include option to purchase 10,000 shares which will be
granted on and will become exercisable as of the date of the Annual
Meeting if the 1998 Nonqualified Stock Option Plan is approved by the
shareholders.
(12) Includes 35,930 shares owned by Dr. Detwiler's wife and 13,862 shares
subject to options which are exercisable as of September 14, 1998 or
will become exercisable within 60 days of such date.
(13) Includes 22,211 shares subject to options which are exercisable as of
September 14, 1998 or will become exercisable within 60 days of such
date.
(14) Includes 1,181,744 shares held directly by officers, directors and
their associates, 616,213 shares held by the Stock Bonus Plan and
594,653 shares which may be purchased pursuant to options which are
exercisable as of September 14, 1998 or will become exercisable within
60 days of such date.
ELECTION OF DIRECTORS
(Proposals #1 and #2)
General Information
The Bylaws of the Company provide that the number of directors shall be
determined by the shareholders at each annual meeting. The Board of Directors
recommends that the number of directors be set at seven. Under applicable
Minnesota law, approval of the proposal to set the number of directors at seven,
as well as the election of each nominee, requires the affirmative vote of the
holders of the greater of (1) a majority of the voting power of the shares
represented in person or by proxy at the Annual Meeting with authority to vote
on such matter or (2) a majority of the voting power of the minimum number of
shares that would constitute a quorum for the transaction of business at the
Annual Meeting.
<PAGE>
In the election of directors, each Proxy will be voted for each of the
nominees listed below unless the Proxy withholds a vote for one or more of the
nominees. Each person elected as a director shall serve for a term of one year
or until his successor is duly elected and qualified. All of the nominees are
members of the present Board of Directors. If any of the nominees should be
unable to serve as a director by reason of death, incapacity or other unexpected
occurrence, the Proxies solicited by the Board of Directors shall be voted by
the proxy representatives for such substitute nominee as is selected by the
Board, or, in the absence of such selection, for such fewer number of directors
as results from such death, incapacity or other unexpected occurrence.
The following table provides certain information with respect to the
nominees for director.
<PAGE>
<TABLE>
<CAPTION>
Current
Position(s) Principal Occupation(s) Director
Name Age with Company During Past Five Years Since
<S> <C> <C> <C> <C>
Thomas E. Oland 57 Chairman of the Chairman of the Board, President 1985
Board, President, and Treasurer of the Company since
Treasurer and December 1985 and President of
Director Research and Diagnostic Systems,
Inc. since July 1982.
Roger C. Lucas, Ph.D. 55 Vice Chairman and Vice Chairman and Senior Scientific 1985
Director Advisor to the Company's Board
since July 1995. Chairman and
Chief Executive Officer of Visual
Circuits, a digital video company,
since August 1997, and director of
ChemoCentryx, a partially-owned
subsidiary of the Company. Chief
Scientific Officer, Executive Vice
President and Secretary of the
Company from December 1985 to
March 1995.
Howard V. O'Connell 68 Director Private investor since 1990. 1985
Chairman, President and Treasurer
of John G. Kinnard and Company,
Incorporated, a securities
broker-dealer, from 1969 to 1990.
G. Arthur Herbert 72 Director Principal of CEO Advisors, a 1989
management and financial consulting
firm, since January 1989; from
January 1969 to December 1988,
President and Vice President
Manager of Electro-Science
Management Corp., a manager of
Venture Capital Partnerships.
Director of Autonomous Technologies
Corporation.
Randolph C. Steer, M.D., 48 Director Consultant to the pharmaceutical 1990
Ph.D. and biotechnology industries since
1989; Chairman/President and CEO of
Advanced Therapeutics Communications
International, a division of
Physicians World Communications, a
medical communications corporation,
from 1985 to 1989. Director of
BioCryst Pharmaceuticals, Inc.
Lowell E. Sears 47 Director Private investor since April 1994. 1994
For more than five years prior
thereto, Chief Financial Officer of
Amgen Inc., a pharmaceutical
company. Director of Neose
Technologies, Inc., CoCensys, Inc.,
Dendreon Corp. and Integrated
Biosystems, Inc.
Christopher S. Henney, 57 Director Chief Executive Officer of Dendreon 1996
D.Sc., Ph.D. Corp. (formerly Activated Cell
Therapy, Inc.), a biotechnology
company, since April 1995.
Executive Vice President of ICOS
Corporation, a biotechnology
company, from April 1990 to
April 1995.
</TABLE>
<PAGE>
Committee and Board Meetings
The Company's Board of Directors has two standing Committees, the Audit
Committee and the Compensation Committee. The Audit Committee (whose members are
Messrs. Herbert, O'Connell, Steer and Sears) is responsible for reviewing the
Company's internal audit procedures, the quarterly and annual financial
statements of the Company and, with the Company's independent accountants, the
results of the annual audit. The Audit Committee also establishes and oversees
the implementation of the Company's cash investment policy. The Audit Committee
met four times during fiscal 1998. The Compensation Committee, whose members are
Messrs. Herbert, O'Connell and Steer, recommends compensation for officers of
the Company. The Compensation Committee met four times during fiscal year 1998.
The Board does not have a nominating committee.
During fiscal 1998, the Board held four meetings. Each director except
Randolph C. Steer, M.D., Ph.D. attended 75% or more of the total number of
meetings of the Board and of Committees of which he was a member.
Directors' Fees
Directors who are not employees of the Company are compensated at the
rate of $25,000 per year for service on the Board and Committees of the Board.
In addition, under the Company's 1988 Nonqualified Stock Option Plan, outside
directors who do not hold a previously granted option which has not fully vested
were automatically granted a 20,000 share option on election and upon each
re-election as a director. The 1988 Nonqualified Stock Option Plan is
terminating. If the 1998 Nonqualified Stock Option Plan is approved by the
shareholders, outside directors will automatically receive a 10,000 share option
on election and upon each re-election. See Proposal #3 below.
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Board of Directors of the Company is composed of
directors G. Arthur Herbert, Howard V. O'Connell and Randolph C. Steer, M.D.,
Ph.D. None of the members of the Committee is or ever has been an employee or
officer of the Company and none is affiliated with any entity other than the
Company with which an executive officer of the Company is affiliated.
Overview and Philosophy. The Company's executive compensation program
is comprised of base salaries, annual performance bonuses, long-term incentive
compensation in the form of stock options, and various benefits, including the
Company's profit sharing and savings plan in which all qualified employees of
the Company participate. In addition, the Compensation Committee from time to
time may award special cash bonuses or stock options related to non-recurring,
extraordinary performance.
<PAGE>
The Compensation Committee has followed a policy of paying annual base
salaries which are on the moderate side of being competitive in its industry and
of awarding bonuses based on achievement of specific revenue, profit and
non-monetary goals. If the goals are achieved, the officer receives an option to
purchase a number of shares with a fair market value on date of grant equal to
20% of the officer's base salary and receives, at the election of the officer,
either a cash bonus equal to 20% of base salary or an additional option to
purchase a number of shares with a fair market value on date of grant equal to
170% of the cash bonus alternative. Bonuses are awarded on a prorated basis if
between 85% and 100% of the specific revenue and profit goals are achieved. The
goals are established annually by the Compensation Committee or President of the
Company.
The Company had through fiscal 1998 formal employment agreements with a
majority of its full-time executive officers. Such agreements have reached their
original expiration dates and the Company is seeking extensions. See "Employment
Contracts and Change in Control Arrangements" below. The agreements provide for
base salaries subject to annual review, bonuses as described above, benefits as
provided to all employees and severance compensation in an amount equal to one
month's base salary for each year of employment with the Company in the event
that the officer's employment is terminated without cause or in connection with
a sale or merger of the Company.
Compensation in 1998. During fiscal 1998, the Company maintained its
principal compensation policies and made adjustments in base salaries to reflect
competitive industry and individual performance factors. The Committee, at the
beginning of fiscal 1998, established performance criteria for officers based
70% on growth in revenues and earnings and, working through the Company's Chief
Executive Officer, 30% on individual goals which, if met, would permit each
officer to earn a cash bonus and additional stock options. The Company achieved
record revenues and earnings. On the basis of performance against the criteria
established, the Committee at the close of fiscal 1998 awarded to Drs. Tsang and
Detwiler and Mr. Veronneau the bonuses indicated in the table below under
"Summary Compensation Table" and, subsequent to fiscal year end, the options
indicated in footnote (2) to the table below under "Option/SAR Grants During
1998 Fiscal Year". In further recognition of the officers' achievements, the
Committee established base salaries for fiscal 1999 as disclosed below under
"Employment Contracts and Change in Control Arrangements."
During fiscal 1998 Dr. James A. Weatherbee, Vice President and Chief
Scientific Officer, became temporarily disabled and is currently on medical
leave. The Company awarded Dr. Weatherbee a cash bonus in the amount of $30,000
in recognition of his long term contribution to the Company's technical
development.
General. The Company provides medical and insurance benefits to its
executive officers which are generally available to all Company employees. The
Company has a profit sharing and savings plan in which all qualified employees,
including the executive officers, participate. In each of the past three fiscal
years the Company has contributed to the plan an amount equal to approximately
10% of gross wages. One half of the assets of the plan have been invested in
Common Stock of the Company. The amount of perquisites allowed to executive
officers, as determined in accordance with rules of the Securities and Exchange
Commission, did not exceed 10% of salary in fiscal 1998.
<PAGE>
Chief Executive Officer Compensation. Thomas E. Oland served as the
Company's Chief Executive Officer in fiscal 1998. His compensation was
determined in accordance with the policies described above as applicable to all
executive officers. His base salary was increased from $180,000 in fiscal 1997
to $190,000 in fiscal 1998 in light of the Company's increase in revenues and
earnings. For fiscal 1998 performance he earned but waived a cash bonus.
In February of 1996 the Compensation Committee, in connection with the
Board's long-term strategic planning for the Company, adopted a substantial,
long-term incentive for Mr. Oland in the form of options to purchase an
aggregate of 200,000 shares of the Common Stock of the Company at $9.0625 per
share, the fair market value on the date of grant. The options are contingent on
continued employment by the Company and have vested or will vest on the
following schedule: 1996-11,000, 1997-11,000, 1998-11,000, 1999-11,000,
2000-145,000 and 2001-11,000. The options will expire in February of 2006. In
August of 1998 the Committee offered Mr. Oland an additional option as a special
option award in recognition of his contribution to the Company's acquisition of
the research products business of Genzyme Corporation; however, Mr. Oland
declined. In further recognition of his achievements, the Committee established
Mr. Oland's base compensation for fiscal 1999 as disclosed below under
"Employment Contracts and Change in Control Arrangements."
Summary. Aggregate executive compensation increased moderately in
fiscal 1998 and the Company awarded stock options to officers because the
Company achieved record revenues and earnings and individual officers achieved
performance goals. The Compensation Committee intends to continue its policy of
paying relatively moderate base salaries, basing bonuses on specific revenue and
profit goals and granting options to provide long-term incentive.
G. Arthur Herbert
Howard V. O'Connell
Randolph C. Steer, M.D., Ph.D.
Members of the
Compensation Committee
Employment Contracts and Change in Control Arrangements
The Company had formal three-year employment agreements which expired
June 30, 1998 with each of its full-time executive officers with the exception
of the President and Chief Executive Officer, with whom the Company has an oral
understanding. The Company is seeking extensions of the formal employment
agreements. The agreements provide for base salaries subject to annual review,
bonuses as described in the Compensation Committee Report contained in this
proxy statement, benefits as provided to all employees and severance
compensation in an amount equal to one month's base salary for each year of
employment by the Company in the event that the officer's employment is
terminated without cause or in connection with a sale or merger of the Company.
Base salaries for fiscal 1999 for the executive officers named in the Summary
Compensation Table are as follows: T. Oland - $199,500; M. Tsang - $165,000; T.
Detwiler - $157,000; and M. Veronneau - $101,000. Dr. Weatherbee is currently on
medical leave. Each of such officers is also subject to a confidentiality and
non-competition agreement which prohibits competition with the Company for a
period of two years following termination of employment with the Company.
<PAGE>
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's President (who serves as chief executive officer) and to the Company's
other executive officers whose salary and bonus for fiscal 1998 exceeded
$100,000.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
Securities
Restricted Underlying LTIP All Other
Name and Fiscal Stock Options Payouts Compen-
Principal Position Year Salary ($) Bonus ($) Other Awards($) /SARs (#) ($) sation ($)
- ------------------ ------ ---------- --------- ----- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas E. 1998 190,000 0 None None 0 None 17,350(1)
Oland, Chairman 1997 180,000 0 None None 0 None 17,269
of the Board 1996 175,000 0 None None 200,000 None 17,711
and President
Monica Tsang, Ph.D., 1998 150,000 30,000 None None 1,800 None 17,350(1)
Vice President 1997 136,000 27,200 None None 1,696 None 17,269
- - Research 1996 124,000 24,800 None None 30,000 None 8,855
James A. Weatherbee, 1998 92,260(2) 30,000 None None 1,260 None 13,479(3)
Ph.D., Vice President 1997 136,000 19,040 None None 1,696 None 17,269
and Chief Scientific 1996 124,000 24,800 None None 30,000 None 8,855
Officer
Thomas C. Detwiler, 1998 150,000 30,000 None None 1,784 None 17,350(1)
Ph.D., Vice President - 1997 150,000 26,975 None None 1,434 None 17,269
Scientific and 1996 150,000 21,000 None None 10,000 None 17,695
Regulatory Affairs
Marcel Veronneau, 1998 95,000 19,000 None None 1,140 None 12,933(4)
Vice President - 1997 86,000 17,200 None None 1,074 None 11,676
Hematology Operations 1996 78,500 15,700 None None 14,000 None 9,240
</TABLE>
(1) Amount reflects Company contributions to Profit Sharing and Savings Plan (as
to one-half) and Stock Bonus Plan (as to one-half), the latter consisting of 500
shares of Common Stock.
(2) Dr. Weatherbee has been on medical leave since February 1998.
(3) Amount reflects Company contributions to Profit Sharing and Savings Plan (as
to one-half) and Stock Bonus Plan (as to one-half), the latter consisting of 389
shares of Common Stock. (4) Amount reflects Company contributions to Profit
Sharing and Savings Plan (as to one-half) and Stock Bonus Plan (as to one-half),
the latter consisting of 373 shares of Common Stock.
<PAGE>
Option/SAR Grants During 1998 Fiscal Year
The following table provides information related to options granted to
the named executive officers during fiscal 1998. The Company has not granted any
stock appreciation rights.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
Number of
Securities Percent of Total
Underlying Options/SARs
Options/SARs Granted to Exercise or
Name Granted Employees Base Price Expiration
- ----- (#) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
----------- --------------- ------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. Oland 0 --- --- --- --- ---
Monica Tsang, Ph.D. 1,800(1)(2) 2.1% $14.75 8/15/04 $ 10,809 $ 25,188
James A. Weatherbee, Ph.D. 1,260(1) 1.5% $14.75 8/15/04 $ 7,566 $ 17,632
Thomas C. Detwiler, Ph.D. 1,784(1)(2) 2.1% $14.75 8/15/04 $ 10,712 $ 24,965
Marcel Veronneau 1,140(1)(2) 1.3% $14.75 8/15/04 $ 6,845 $ 15,953
</TABLE>
(1) Such option is an incentive stock option and became exercisable August
15, 1997.
(2) Subsequent to fiscal 1998 year end, options for the indicated number of
shares at a purchase price of $19.0625 expiring 6/30/05 were granted:
M. Tsang - 1,574, T. Detwiler - 1,574 and M. Veronneau - 997.
Option/SAR Exercises During 1998 Fiscal
Year and Fiscal Year End Option/SAR Values
The following table provides information related to options exercised
by the named executive officers during the 1998 fiscal year and the number and
value of options held at fiscal year end.
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
Shares at FY-End (#) FY-End ($)(1)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($)(1) Unexercisable Unexercisable
- ---- ------------ --------------- ------------------------------------
<S> <C> <C> <C> <C>
Thomas E. Oland 0 0 165,554 - 167,000 $2,366,254 - 1,670,000
Monica Tsang, Ph.D. 10,000 $118,120 73,496 - 0 $932,164 - 0
James A. Weatherbee, Ph.D. 10,000 $118,120 72,956 - 0 $929,835 - 0
Thomas C. Detwiler, Ph.D. 35,930 $373,204 12,288 - 0 $119,210 - 0
Marcel Veronneau 15,000 $138,750 21,214 - 0 $242,370 - 0
</TABLE>
(1) Based on the difference between the closing price of the Company's Common
Stock as reported by Nasdaq on the date of exercise or at fiscal year end,
as the case may be, and the option exercise price.
<PAGE>
Stock Performance Chart
The following chart compares the cumulative total shareholder return on
the Company's Common Stock with S&P Midcap 400 Index and the S&P Midcap
Biotechnology Index. The comparison assumes $100 was invested on June 30, 1993
in the Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
INDEXED RETURNS
Years Ending
Company/Index Jun94 Jun95 Jun96 Jun97 Jun98
TECHNE CORP 71.19 91.53 198.31 205.08 258.48
S&P MIDCAP BIOTECHNOLOGY INDEX 86.42 132.69 194.28 196.96 205.01
S&P MIDCAP 400 INDEX 99.94 122.27 148.66 183.34 233.13
APPROVAL OF 1998 NONQUALIFIED STOCK OPTION PLAN
(Proposal #3)
General
The Board of Directors has adopted, subject to shareholder approval,
the Techne Corporation 1998 Nonqualified Stock Option Plan (the "Plan"). A
general description of the Plan is set forth below, but such description is
qualified in its entirety by reference to the full text of the Plan, a copy of
which may be obtained without charge upon written request to the Company's
President. It is intended that no further options will be granted under the
Company's 1988 Nonqualified Stock Option Plan.
<PAGE>
Description of the Plan
Purpose. The purpose of the Plan is to promote the success of the
Company by facilitating the employment and retention of competent personnel and
by furnishing incentive to officers, directors, employees, consultants, advisors
and others upon whose efforts the success of the Company will depend to a large
degree. A total of 300,000 shares of Common Stock have been reserved for options
under the Plan.
Term. Options may be granted pursuant to the Plan until the Plan is
discontinued or terminated by the Board.
Administration. The Plan may be administered by the Board of Directors
or a Committee of the Board (the "Administrator"). The Plan gives broad powers
to the Administrator to administer and interpret the Plan, including the
authority to select the individuals to be granted options and to prescribe the
particular form and conditions of each option granted.
Eligibility. All officers, directors and employees of the Company or of
any subsidiary, as well as consultants or advisors to the Company, are eligible
to receive options pursuant to the Plan. The Company had approximately 420
employees, directors, consultants and advisors as of September 14, 1998.
Options. When an option is granted under the Plan the Administrator at
its discretion specifies the option price and the number of shares of Common
Stock which may be purchased upon exercise of the option. Unless otherwise
determined by the Board, the option price may not be less than 100% of the fair
market value of the Company's Common Stock on the date of grant. The market
value of the Company's Common Stock on September 14, 1998 was $13.6875.
The term during which the option may be exercised and whether the
option will be exercisable immediately, in stages or otherwise are set by the
Administrator. Unless otherwise permitted by the Administrator, options granted
under the Plan are not transferable during the lifetime of the optionee.
Generally, each outstanding option under the Plan will terminate earlier than
its stated expiration date in the event of the optionee's termination of
employment or directorship.
The Administrator may impose additional or alternative restrictions on
the options granted under the Plan.
Amendment. The Board of Directors may from time to time suspend or
discontinue the Plan or revise or amend it in any respect; provided, that no
such revision or amendment may impair the terms and conditions of any
outstanding option to the material detriment of the optionee without the consent
of the optionee except as authorized in the event of a merger, consolidation or
liquidation of the Company.
<PAGE>
Federal Income Tax Consequences of the Plan. Generally, no tax will
result upon the grant of a stock option under the Plan. However, in the year
that an option is exercised, the optionee must recognize compensation taxable as
ordinary income equal to the difference between the option price and the fair
market value of the shares on the date of exercise. The Company normally will
receive a deduction equal to thew amount of compensation the optionee is
required to recognize as ordinary income if the Company complies with any
applicable federal income tax withholding requirements.
Automatic Grants to Directors. The Plan provides that each nonemployee
director who is elected or re-elected a director of the Company will
automatically be granted an option to purchase 10,000 shares of Common Stock at
an exercise price equal to the fair market value of the Company's Common Stock
on the date of grant. Each such option will be exercisable in full on the date
of grant and will be for a term of ten years; provided, that such options will
terminate earlier in the event of termination of the director's relationship
with the Company. On the date of the 1998 Annual Meeting, Christopher Henney,
D.Sc., Ph.D., G. Arthur Herbert, Roger Lucas, Ph.D., Howard O'Connell, Lowell
Sears and Randolph Steer, M.D., Ph.D. will each receive an option to purchase
10,000 shares pursuant to such provision.
Plan Benefits. No stock options have been granted under the Plan to
date. Because future grants of options are subject to the discretion of the
Administrator, the future benefits that may be received by any individuals or
groups under the Plan cannot be determined at this time.
Vote Required
The Board of Directors recommends that the shareholders approve the
1998 Nonqualified Stock Option Plan. Approval of the Plan requires the
affirmative vote of the greater of (i) a majority of the shares represented in
person or by proxy at the meeting with authority to vote on such matter and (ii)
a majority of the voting power of the minimum number of shares that would
constitute a quorum for the transaction of business at the meeting.
INDEPENDENT AUDITORS
Deloitte & Touche LLP acted as the Company's independent auditors for
the 1998 fiscal year and has been selected by the Board of Directors to continue
for the current fiscal year.
A representative of Deloitte & Touche LLP is expected to be present at
the shareholders' meeting, will have the opportunity to make any desired
comments, and will be available to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors,
and greater than 10 percent shareholders ("Insiders") are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
<PAGE>
To the Company's knowledge, based on a review of the copies of such
reports furnished to the Company, during the fiscal year ended June 30, 1998,
all Section 16(a) filing requirements applicable to Insiders were complied with
except that Dr. Roger Lucas was late filing a form to report one transaction and
Marcel Veronneau was late filing forms to report four transactions.
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 1999 Annual Meeting must be received by the
Company at its offices by May 24, 1999, to be eligible for inclusion in the
Company's proxy statement and related proxy for the 1999 Annual Meeting.
Shareholder proposals intended to be presented at the 1999 Annual Meeting but
not included in the Company's proxy statement and proxy will be considered
untimely if received by the Company after August 7, 1999.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
meeting. If any other matter does properly come before the meeting, the
appointees named in the Proxies will vote the Proxies in accordance with their
best judgment.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended June 30, 1998, including financial statements, accompanies this
Notice of Annual Meeting and Proxy Statement. No portion of the Annual Report is
incorporated herein or is to be considered proxy soliciting material.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1998, TO ANY SHAREHOLDER OF THE
COMPANY UPON WRITTEN REQUEST. REQUESTS SHOULD BE SENT TO PRESIDENT, TECHNE
CORPORATION, 614 MCKINLEY PLACE N.E., MINNEAPOLIS, MINNESOTA 55413.
Dated: September 22, 1998
Minneapolis, Minnesota
<PAGE>
TECHNE CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints THOMAS E. OLAND and KATHLEEN BACKES, or either
of them acting alone, with full power of substitution, as proxies to represent
and vote, as designated below, all shares of Common Stock of Techne Corporation
registered in the name of the undersigned, at the Annual Meeting of the
Shareholders to be held on Thursday, October 22, 1998, at 3:30 p.m., Minneapolis
Time, at the offices of the Company, 614 McKinley Place N.E., Minneapolis,
Minnesota, and at all adjournments of such meeting. The undersigned hereby
revokes all proxies previously granted with respect to such meeting.
The Board of Directors recommends that you vote "FOR" the following proposals:
(1) SET NUMBER OF DIRECTORS AT SEVEN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) ELECT DIRECTORS: Nominees: Thomas E. Oland, Roger C. Lucas, Ph.D.,
Howard V. O'Connell, G. Arthur Herbert, Randolph C. Steer, M.D., Ph.D.,
Lowell E. Sears and Christopher S. Henney, D.Sc., Ph.D.
[ ] FOR all Nominees listed above [ ] WITHOUT AUTHORITY
(except those whose names have to vote for all nominees
been written on the line below) listed above
(To withhold authority to vote for any nominee, write that nominee's
name on the line below.)
(3) APPROVE 1998 NONQUALIFIED STOCK OPTION PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) OTHER MATTERS. In their discretion, the appointed proxies are
authorized to vote upon such others business as may properly come
before the Meeting or any adjournment.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.
Date __________________, 1998.
____________________________________________
____________________________________________
PLEASE DATE AND SIGN ABOVE exactly as name
appears at the left, indicating, where
appropriate, official position or
representative capacity. If stock is held in
joint tenancy, each joint owner should sign.
<PAGE>
APPENDIX
TECHNE CORPORATION
1998 NONQUALIFIED STOCK OPTION PLAN
SECTION 1.
DEFINITIONS
As used herein, the following terms shall have the meanings indicated below:
(a) "Committee" shall mean a Committee of two or more directors who shall be
appointed by and serve at the pleasure of the Board. As long as the Company's
securities are registered pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended, then, to the extent necessary for compliance with Rule
16b-3, or any successor provision, each of the members of the Committee shall be
a "Non-Employee Director." For purposes of this Section 1(b) "Non-Employee
Director" shall have the same meaning as set forth in Rule 16b-3, or any
successor provision, as then in effect, of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.
(b) The "Company" shall mean Techne Corporation, a Minnesota corporation.
(c) "Fair Market Value" shall mean (i) if such stock is reported by the Nasdaq
National Market or Nasdaq SmallCap Market or is listed upon an established stock
exchange or exchanges, the reported closing price of such stock by the Nasdaq
National Market or Nasdaq SmallCap Market or on such stock exchange or exchanges
on the date the option is granted or, if no sale of such stock shall have
occurred on that date, on the next preceding day on which there was a sale of
stock; (ii) if such stock is not so reported by the Nasdaq National Market or
Nasdaq SmallCap Market or listed upon an established stock exchange, the average
of the closing "bid" and "asked" prices quoted by the National Quotation Bureau,
Inc. (or any comparable reporting service) on the date the option is granted, or
if there are no quoted "bid" and "asked" prices on such date, on the next
preceding date for which there are such quotes; or (iii) if such stock is not
publicly traded as of the date the option is granted, the per share value as
determined by the Board, or the Committee, in its sole discretion by applying
principles of valuation with respect to all such options.
(d) The "Internal Revenue Code" is the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Non-Employee Director" shall mean members of the Board who are not
employees of the Company or any subsidiary.
(f) "Option Stock" shall mean Common Stock of the Company (subject to adjustment
as described in Section 13) reserved for options pursuant to this Plan.
<PAGE>
(g) The "Optionee" means an employee, officer, director, consultant, advisor or
such other individual of the Company or any Subsidiary to whom an option is
granted pursuant to this Plan.
(h) "Parent" shall mean any corporation which owns, directly or indirectly in an
unbroken chain, fifty percent (50%) or more of the total voting power of the
Company's outstanding stock.
(i) The "Plan" means the Techne Corporation 1998 Nonqualified Stock Option Plan,
as amended hereafter from time to time, including the form of Option Agreements
as they may be modified by the Board from time to time.
(j) A "Subsidiary" shall mean any corporation of which fifty percent (50%) or
more of the total voting power of outstanding stock is owned, directly or
indirectly in an unbroken chain, by the Company.
SECTION 2.
PURPOSE
The purpose of the Plan is to promote the success of the Company and
its Subsidiaries by facilitating the retention of competent personnel and by
furnishing incentive to officers, directors, employees, consultants, and
advisors upon whose efforts the success of the Company and its Subsidiaries will
depend to a large degree.
SECTION 3.
EFFECTIVE DATE OF PLAN
The Plan shall be effective as of the date of approval by the
shareholders of the Company.
SECTION 4.
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(hereinafter referred to as the "Board") or by a Committee which may be
appointed by the Board from time to time (whether the Board or such a Committee,
referred to herein as the "Administrator"). The Administrator shall have all of
the powers vested in it under the provisions of the Plan, including but not
limited to exclusive authority (where applicable and within the limitations
described herein) to determine, in its sole discretion, whether an option shall
be granted, the individuals to whom, and the time or times at which, options
shall be granted, the number of shares subject to each option and the option
price and terms and conditions of each option. The Administrator shall have full
<PAGE>
power and authority to administer and interpret the Plan, to make and amend
rules, regulations and guidelines for administering the Plan, to prescribe the
form and conditions of the respective stock option agreements (which may vary
from Optionee to Optionee) evidencing each option and to make all other
determinations necessary or advisable for the administration of the Plan. The
Administrator's interpretation of the Plan, and all actions taken and
determinations made by the Administrator pursuant to the power vested in it
hereunder, shall be conclusive and binding on all parties concerned.
Notwithstanding anything in the Plan to the contrary, an Optionee shall not, in
any calendar year, be granted options which, in total, provide for the purchase
of more than 200,000 shares of Option Stock.
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith in connection with the administration
of the Plan. In the event the Board appoints a Committee as provided hereunder,
any action of the Committee with respect to the administration of the Plan shall
be taken pursuant to a majority vote of the Committee members or pursuant to the
written resolution of all Committee members.
SECTION 5.
PARTICIPANTS
The Administrator shall from time to time, at its discretion and
without approval of the shareholders, designate those employees, officers,
directors, consultants, and advisors of the Company or of any Subsidiary to whom
options shall be granted under this Plan; provided, however, that consultants or
advisors shall not be eligible to receive stock options hereunder unless such
consultant or advisor renders bona fide services to the Company or Subsidiary
and such services are not in connection with the offer or sale of securities in
a capital raising transaction. The Administrator may grant additional options
under this Plan to some or all participants then holding options or may grant
options solely or partially to new participants. In designating participants,
the Administrator shall also determine the number of shares to be optioned to
each such participant. The Board may from time to time designate individuals as
being ineligible to participate in the Plan.
SECTION 6.
STOCK
The Stock to be optioned under this Plan shall consist of authorized
but unissued shares of Option Stock. Three hundred thousand (300,000) shares of
Option Stock shall be reserved and available for options under the Plan;
provided, however, that the total number of shares of Option Stock reserved for
options under this Plan shall be subject to adjustment as provided in Section 12
of the Plan. In the event that any outstanding option under the Plan for any
reason expires or is terminated prior to the exercise thereof, the shares of
Option Stock allocable to the unexercised portion of such option shall continue
to be reserved for options under the Plan and may be optioned hereunder.
<PAGE>
SECTION 7.
DURATION OF PLAN
The Plan shall have no fixed termination date. Options may be granted
pursuant to the Plan from time to time after the effective date of the Plan and
until the Plan is discontinued or terminated by the Board. Any option granted
prior to the termination of the Plan by the Board shall remain in full force and
effect until the expiration of the option as specified in the written stock
option agreement and shall remain subject to the terms and conditions of this
Plan.
SECTION 8.
PAYMENT
Optionees may pay for shares upon exercise of options granted pursuant
to this Plan with cash, personal check, certified check or, if approved by the
Administrator in its sole discretion, Common Stock of the Company valued at such
Stock's then Fair Market Value, or such other form of payment as may be
authorized by the Administrator. The Administrator may, in its sole discretion,
limit the forms of payment available to the Optionee and may exercise such
discretion any time prior to the termination of the option granted to the
Optionee or upon any exercise of the option by the Optionee.
With respect to payment in the form of Common Stock of the Company, the
Administrator may require advance approval or adopt such rules as it deems
necessary to assure compliance with Rule 16b-3, or any successor provision of
the General Rules and Regulations under the Securities Exchange Act of 1934 and
to achieve accounting treatment for the financial statements of the Company most
advantageous to it.
SECTION 9.
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
Each nonqualified stock option granted pursuant to this Plan shall be
evidenced by a written Option Agreement. The Option Agreement shall be in such
form as may be approved from time to time by the Administrator and may vary from
Optionee to Optionee; provided, however, that each Optionee and each Option
Agreement shall comply with and be subject to the following terms and
conditions:
<PAGE>
(a) Number of Shares and Option Price. The Option Agreement shall state
the total number of shares covered by the nonqualified stock option.
Unless otherwise determined by the Administrator, the option price per
share shall be one hundred percent (100%) of the Fair Market Value of
the Common Stock per share on the date the Administrator grants the
option.
(b) Term and Exercisability of Nonqualified Stock Option. Except as
provided in Section 10, the term during which any nonqualified stock
option granted under the Plan may be exercised shall be established in
each case by the Administrator. The Option Agreement shall state when
the nonqualified stock option becomes exercisable and shall also state
the maximum term during which the option may be exercised. In the event
a nonqualified stock option is exercisable immediately, the manner of
exercise of the option in the event it is not exercised in full
immediately shall be specified in the stock option agreement. The
Administrator may accelerate the exercisability of any nonqualified
stock option granted hereunder which is not immediately exercisable as
of the date of grant.
(c) Withholding. The Company or its Subsidiary shall be entitled to
withhold and deduct from future wages of the Optionee all legally
required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Optionee's exercise of a
nonqualified stock option. In the event the Optionee is required under
the Option Agreement to pay the Company, or make arrangements
satisfactory to the Company respecting payment of, such withholding and
employment-related taxes, the Administrator may, in its discretion and
pursuant to such rules as it may adopt, permit the Optionee to satisfy
such obligation, in whole or in part, by electing to have the Company
withhold shares of Common Stock otherwise issuable to the Optionee as a
result of the option's exercise equal to the amount required to be
withheld for tax purposes. Any stock elected to be withheld shall be
valued at its Fair Market Value, as of the date the amount of tax to be
withheld is determined under applicable tax law. The Optionee's
election to have shares withheld for this purpose shall be made on or
before the date the option is exercised or, if later, the date that the
amount of tax to be withheld is determined under applicable tax law.
Such election shall be approved by the Administrator and otherwise
comply with such rules as the Administrator may adopt to assure
compliance with Rule 16b-3, or any successor provision, as then in
effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934, if applicable.
(d) Other Provisions. The Option Agreement authorized under this
Section 10 shall contain such other provisions as the Administrator
shall deem advisable.
<PAGE>
SECTION 10.
GRANTING OF AUTOMATIC OPTIONS TO NON-EMPLOYEE DIRECTORS
(a) Upon Election or Re-election to or Continuation on the Board. Each
Non-Employee Director who, on and after the date this Plan is approved by the
Company's shareholders, is elected or re-elected as a director of the Company
or, in the event the Company adopts staggered terms for its directors, whose
term of office continues after a meeting of shareholders at which directors are
elected shall, as of the date of such re-election or shareholder meeting,
automatically be granted an option to purchase 10,000 shares of the Common Stock
at an option price per share equal to 100% of the Fair Market Value of the
Common Stock on the date of such election, re-election or shareholder meeting;
provided however, that if such Non-Employee Director is elected other than by
shareholders at an annual meeting, the number of shares subject to the option
shall be determined by multiplying 10,000 by a fraction, the numerator of which
is the number of months until the next regular annual meeting of shareholders
and the denominator of which is 12. Options granted pursuant to this subsection
(a) shall be immediately exercisable in full.
(b) General. Options granted pursuant to this Section 10 shall be immediately
exercisable in full and shall terminate, subject to the earlier termination
provisions of this Section, 10 years from date of grant. If a Non-Employee
Director's membership on the Board and service to the Company as an employee,
advisor or consultant terminates for any reason other than death or disability,
the options shall terminate on the earlier of (i) the close of business on the
date twelve months following the date of termination or (ii) the 10 year
anniversary of the date of grant. If a Non-Employee Director dies (i) while a
member of the Board or serving as an employee, advisor or consultant, or (ii)
within twelve months following the date of termination of membership on the
Board, the options shall terminate on the earlier of (i) the close of business
on the twelve-month anniversary of the date of death or (ii) the 10 year
anniversary of the date of grant. If a Non-Employee Director terminates his or
her membership on the Board and service to the Company as an employee, advisor
or consultant by reason of disability, the options shall expire on the earlier
of (i) the close of business on the twelve-month anniversary of the date of
termination, or (ii) the 10 year anniversary of the date of grant. In the event
of a change in the accounting treatment of options to be granted automatically
pursuant to this Section 10, the Board in its discretion may modify or amend the
terms of such options provided that no such modification or amendment shall
change the terms of outstanding options or materially increase the benefits
accruing to recipients of future automatic grants.
<PAGE>
SECTION 11.
TRANSFER OF OPTION
The Administrator may, in its sole discretion, permit the Optionee to
transfer any or all nonqualified stock options to any member of the Optionee's
"immediate family" as such term is defined in Rule 16a-1(e) promulgated under
the Securities Exchange Act of 1934, or any successor provision, or to one or
more trusts whose beneficiaries are members of such Optionee's "immediate
family" or partnerships in which such family members are the only partners;
provided, however, that the Optionee receives no consideration for the transfer
and such transferred nonqualified stock option shall continue to be subject to
the same terms and conditions as were applicable to such nonqualified stock
option immediately prior to its transfer.
SECTION 12.
RECAPITALIZATION, SALE, MERGER, EXCHANGE
OR LIQUIDATION
In the event of an increase or decrease in the number of shares of
Common Stock resulting from a subdivision or consolidation of shares or the
payment of a stock dividend or any other increase or decrease in the number of
shares of Common Stock effected without receipt of consideration by the Company,
the number of shares of Option Stock reserved under Section 6 hereof, the number
of shares of Option Stock covered by each outstanding option and the price per
share thereof, and the number of shares subject to automatic grant to
Non-Employee Directors pursuant to Section 10 above shall automatically be
adjusted to reflect such change, provided that the Board in its discretion may
in such event decrease but not increase the number of shares subject to the
automatic grants of Section 10 above made subsequent to the date of such event.
Additional shares which may be credited pursuant to such adjustment shall be
subject to the same restrictions as are applicable to the shares with respect to
which the adjustment relates.
Unless otherwise provided in the stock option agreement, in the event
of an acquisition of the Company through the sale of substantially all of the
Company's assets and the consequent discontinuance of its business or through a
merger, consolidation, exchange, reorganization, reclassification, extraordinary
dividend, divestiture or liquidation of the Company (collectively referred to as
a "transaction"), all outstanding options shall become immediately exercisable,
whether or not such options had become exercisable prior to the transaction;
provided, however, that if the acquiring party seeks to have the transaction
accounted for on a "pooling of interests" basis and, in the opinion of the
Company's independent certified public accountants, accelerating the
exercisability of such options would preclude a pooling of interests under
generally accepted accounting principles, the exercisability of such options
shall not accelerate. In addition to the foregoing, in the event of such a
transaction, the Board may provide for one or more of the following:
<PAGE>
(a) the complete termination of this Plan and cancellation of
outstanding options not exercised prior to a date specified by the
Board (which date shall give Optionees a reasonable period of time in
which to exercise the options prior to the effectiveness of such
transaction);
(b) that Optionees holding outstanding incentive or nonqualified
options shall receive, with respect to each share of Option Stock
subject to such options, as of the effective date of any such
transaction, cash in an amount equal to the excess of the Fair Market
Value of such Option Stock on the date immediately preceding the
effective date of such transaction over the option price per share of
such options; provided that the Board may, in lieu of such cash
payment, distribute to such Optionees shares of stock of the Company or
shares of stock of any corporation succeeding the Company by reason of
such transaction, such shares having a value equal to the cash payment
herein; or
(c) the continuance of the Plan with respect to the exercise of options
which were outstanding as of the date of adoption by the Board of such
plan for such transaction and provide to Optionees holding such options
the right to exercise their respective options as to an equivalent
number of shares of stock of the corporation succeeding the Company by
reason of such transaction.
The Board may restrict the rights of or the applicability of this Section 12 to
the extent necessary to comply with Section 16(b) of the Securities Exchange Act
of 1934, the Internal Revenue Code or any other applicable law or regulation.
The grant of an option pursuant to the Plan shall not limit in any way the right
or power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure or to merge, exchange or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 13.
SECURITIES LAW COMPLIANCE
No shares of Common Stock shall be issued pursuant to the Plan unless
and until there has been compliance, in the opinion of Company's counsel, with
all applicable legal requirements, including without limitation, those relating
to securities laws and stock exchange listing requirements. As a condition to
the issuance of Option Stock to Optionee, the Administrator may require Optionee
to (i) represent that the shares of Option Stock are being acquired for
investment and not resale and to make such other representations as the
Administrator shall deem necessary or appropriate to qualify the issuance of the
shares as exempt from the Securities Act of 1933 and any other applicable
securities laws, and (ii) represent that Optionee shall not dispose of the
shares of Option Stock in violation of the Securities Act of 1933 or any other
applicable securities laws.
<PAGE>
As a further condition to the grant of any incentive or nonqualified
stock option or the issuance of Option Stock to Optionee, Optionee agrees to the
following:
(a) In the event the Company advises Optionee that it plans an
underwritten public offering of its Common Stock in compliance with the
Securities Act of 1933, as amended, and the underwriter(s) seek to
impose restrictions under which certain shareholders may not sell or
contract to sell or grant any option to buy or otherwise dispose of
part or all of their stock purchase rights of the underlying Common
Stock, Optionee will not, for a period not to exceed 180 days from the
prospectus, sell or contract to sell or grant an option to buy or
otherwise dispose of any incentive or nonqualified stock option granted
to Optionee pursuant to the Plan or any of the underlying shares of
Common Stock without the prior written consent of the underwriter(s) or
its representative(s).
(b) In the event of a transaction (as defined in Section 13 of the
Plan) which is treated as a "pooling of interests" under generally
accepted accounting principles, Optionee will comply with Rule 145 of
the Securities Act of 1933 and any other restrictions imposed under
other applicable legal or accounting principles if Optionee is an
"affiliate" (as defined in such applicable legal and accounting
principles) at the time of the transaction, and Optionee will execute
any documents necessary to ensure compliance with such rules.
The Company reserves the right to place a legend on any stock
certificate issued upon exercise of an option granted pursuant to the Plan to
assure compliance with this Section 13.
SECTION 14.
RIGHTS AS A SHAREHOLDER
An Optionee (or the Optionee's successor or successors) shall have no
rights as a shareholder with respect to any shares covered by an option until
the date of the issuance of a stock certificate evidencing such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property), distributions or other rights for which the
record date is prior to the date such stock certificate is actually issued
(except as otherwise provided in Section 12 of the Plan).
SECTION 15.
AMENDMENT OF THE PLAN
The Board may from time to time, insofar as permitted by law, suspend
or discontinue the Plan or revise or amend it in any respect; provided, however,
that no such revision or amendment, except as is authorized in Section 12, shall
impair the terms and conditions of any option which is outstanding on the date
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of such revision or amendment to the material detriment of the Optionee without
the consent of the Optionee. Notwithstanding the foregoing, no such revision or
amendment shall (i) materially increase the number of shares subject to the Plan
except as provided in Section 12 hereof, (ii) change the designation of the
class of employees eligible to receive options, (iii) decrease the price at
which options may be granted, or (iv) materially increase the benefits accruing
to Optionees under the Plan without the approval of the shareholders of the
Company if such approval is required for compliance with the requirements of any
applicable law or regulation.
SECTION 16.
NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon the Optionee
to exercise such option. Further, the granting of an option hereunder shall not
impose upon the Company or any Subsidiary any obligation to retain the Optionee
as an employee, officer, director, consultant or advisor for any period.
