<PAGE> 1
As filed with the Securities and Exchange Commission on January 30, 1998
REGISTRATION NO. 333 -
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
----------------------
IBIS TECHNOLOGY CORPORATION
(Exact name of Registrant as specified in its charter)
MASSACHUSETTS 04-2987600
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
32 CHERRY HILL DRIVE
DANVERS, MASSACHUSETTS 01923
(978) 777-4247
(Address of Principal Executive Offices)
THE IBIS TECHNOLOGY CORPORATION 1997
EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
MARTIN J. REID
PRESIDENT AND CHIEF EXECUTIVE OFFICER
IBIS TECHNOLOGY CORPORATION
32 CHERRY HILL DRIVE
DANVERS, MASSACHUSETTS 01923
(978) 777-4247
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed Proposed
Title of Amount to be maximum maximum
securities to be registered registered(1) offering price aggregate Amount of
per share(2) offering price(2) registration fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.008 par 105,000 $9.375 $ 984,375 $ 291
value 645,000 $7.875 $5,079,375 $1,499
------- ------
750,000 $1,790
=========================================================================================================================
</TABLE>
(1) The number of shares of common stock, par value $.008 per share ("Common
Stock"), stated above consists of the aggregate number of shares which may
be sold upon the exercise of options which have been granted and/or may
hereafter be granted under The Ibis Technology Corporation 1997 Employee,
Director and Consultant Stock Option Plan, (the "Plan"). The maximum number
of shares which may be sold upon the exercise of such options granted under
the Plan is subject to adjustment in accordance with certain anti-dilution
and other provisions of the Plan. Accordingly, pursuant to Rule 416 under
the Securities Act of 1933, as amended (the "Securities Act"), this
Registration Statement covers, in addition to the number of shares stated
above, an indeterminate number of shares which may be subject to grant or
otherwise issuable after the operation of any such anti-dilution and other
provisions.
(2) This calculation is made solely for the purpose of determining the
registration fee pursuant to the provisions of Rule 457(h) under the
Securities Act as follows: (i) in the case of shares of Common Stock which
may be purchased upon exercise of outstanding options, the fee is
calculated on the basis of the price at which the options may be exercised;
and (ii) in the case of shares of Common Stock for which options have not
yet been granted and the option price of which is therefore unknown, the
fee is calculated on the basis of the average of the high and low sale
prices per share of the Common Stock on the National Market System of the
National Association of Securities Dealers Automated Quotation System
("Nasdaq") as of a date (January 26, 1998) within 5 business days prior to
filing this Registration Statement.
<PAGE> 2
EXPLANATORY NOTE
In accordance with the instructional Note to Part I of Form S-8 as
promulgated by the Securities and Exchange Commission, the information specified
by Part I of Form S-8 has been omitted from this Registration Statement on Form
S-8 for offers of Common Stock pursuant to the Plan.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by the Registrant with the Commission are
incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30, 1997, June 30, 1997 and March 31, 1997; and
(c) The description of the Common Stock contained in the Registrant's
Registration Statement on Form 8-A (File No. 0-23668) filed under the Securities
Exchange Act of 1934, including any amendment or report filed for the purpose of
updating such description.
All reports and other documents filed by the Registrant after the date
hereof pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be part hereof from the date of 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.
Incorporated by reference to the Registrant's Registration Statement on
Form S-1, File No. 333-1174.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
II-1
<PAGE> 4
ITEM 8. EXHIBITS.
(4.1) Form of Common Stock Certificate incorporated herein by
reference to Exhibit 4.2 to the Registrant's Registration
Statement filed on Form S-1, File No. 333-1174.
(4.2) Article 4 of the Restated Articles of Organization of the
Registrant incorporated herein by reference to Exhibit 3.1 to
the Registrant's Registration Statement filed on Form S-1, File
No. 333-1174.
(4.3) Restated Bylaws of the Registrant, incorporated herein by
reference to Exhibit 3.2 to the Registrant's Registration
Statement filed on Form S-1, File No. 333-1174.
(5) Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
as to the legality of shares being registered.
(23.1) Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(included in opinion of counsel filed as Exhibit 5).
(23.2) Consent of KPMG Peat Marwick LLP.
(24) Power of Attorney to file future amendments (set forth on the
signature page of this Registration Statement).
(99.1) The Ibis Technology Corporation 1997 Employee, Director and
Consultant Stock Option Plan.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represents 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)
(Section 230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20% change
in the
II-2
<PAGE> 5
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)(1)(i) and (a)(1)(ii) do
not apply if the Registration Statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such 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 Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE> 6
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Danvers, Massachusetts on January 30, 1998.
IBIS TECHNOLOGY CORPORATION
By /s/ Martin J. Reid
-----------------------------------------
Martin J. Reid
President and Chief Executive Officer
Each person whose signature appears below constitutes and appoints
Martin J. Reid and Timothy J. Burns, and each of them, his/her true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
in each of them, for him and in his name, place and stead, and in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement on Form S-8 of Ibis Technology Corporation, or
any other registration statement for the same offering that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
or about the premises, as full to all intents and purposes as he or she 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/her substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Richard Hodgson Chairman of the Board of Directors January 30, 1998
- ---------------------------- and Director
Richard Hodgson
/s/ Martin J. Reid President, Chief Executive Officer and January 30, 1998
- ---------------------------- Director (principal executive officer)
Martin J. Reid
</TABLE>
II-4
<PAGE> 7
<TABLE>
<S> <C> <C>
/s/ Timothy J. Burns Chief Financial Officer, Operations January 30, 1998
- ---------------------------- Manager, Treasurer and Clerk
Timothy J. Burns (principal financial and accounting
officer)
/s/ Geoffrey Ryding Director January 30, 1998
- ----------------------------
Geoffrey Ryding, Ph.D.
Director January , 1998
- ----------------------------
Peter H. Rose, Ph.D.
/s/ Donald F. McGuinness Director January 30, 1998
- ----------------------------
Donald F. McGuinness
/s/ Dimitri Antoniadis Director January 30, 1998
- ----------------------------
Dimitri Antoniadis
/s/ Robert L. Gable Director January 30, 1998
- ----------------------------
Robert L. Gable
</TABLE>
II-5
<PAGE> 8
IBIS TECHNOLOGY CORPORATION
INDEX TO EXHIBITS FILED WITH
FORM S-8 REGISTRATION STATEMENT
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
(4.1) Form of Common Stock Certificate incorporated herein by
reference to Exhibit 4.2 to the Registrant's Registration
Statement filed on Form S-1, File No. 333-1174.
(4.2) Article 4 of the Restated Articles of Organization of the
Registrant incorporated herein by reference to Exhibit 3.1 to
the Registrant's Registration Statement filed on Form S-1,
File No. 333-1174.
(4.3) Restated Bylaws of the Registrant, incorporated herein by
reference to Exhibit 3.2 to the Registrant's Registration
Statement filed on Form S-1, File No. 333-1174.
(5) Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
as to the legality of shares being registered.
(23.1) Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(included in opinion of counsel filed as Exhibit 5).
(23.2) Consent of KPMG Peat Marwick LLP.
(24) Power of Attorney to file future amendments (set forth on the
signature page of this Registration Statement).
(99.1) The Ibis Technology Corporation 1997 Employee, Director and
Consultant Stock Option Plan.
</TABLE>
II-6
<PAGE> 1
EXHIBIT 5
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
701 Pennsylvania Avenue, N.W. Telephone: 617/542-6000
Washington, D.C. 20004 Fax: 617/542-2241
Telephone: 202/434-7300 www.Mintz.com
Fax: 202/434-7400
January 30, 1997
Ibis Technology Corporation
32 Cherry Hill Drive
Danvers, Massachusetts 01923
Gentlemen:
We have acted as counsel to Ibis Technology Corporation, a Massachusetts
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission of a Registration Statement on Form S-8
(the "Registration Statement"), pursuant to which the Company is registering the
issuance under the Securities Act of 1933, as amended, of a total of 750,000
shares (the "Shares") of its common stock, $.008 par value per share (the
"Common Stock"). This opinion is being rendered in connection with the filing of
the Registration Statement. All capitalized terms used herein and not otherwise
defined shall have the respective meanings given to them in the Registration
Statement.
In connection with this opinion, we have examined the Company's Restated
Articles of Organization, and Restated Bylaws, both as currently in effect; such
other records of the corporate proceedings of the Company and certificates of
the Company's officers as we have deemed relevant; and the Registration
Statement and the exhibits thereto.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies.
Based upon the foregoing, we are of the opinion that (i) the Shares have
been duly and validly authorized by the Company and (ii) the Shares, when sold,
will have been duly and validly issued, fully paid and non-assessable shares of
the Common Stock, free of preemptive rights.
Our opinion is limited to the laws of the Commonwealth of Massachusetts,
and we express no opinion with respect to the laws of any other jurisdiction. No
opinion is expressed herein with respect to the qualification of the Shares
under the securities or blue sky laws of any state or any foreign jurisdiction.
<PAGE> 2
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
January 30, 1997
Page 2
We understand that you wish to file this opinion as an exhibit to the
Registration Statement, and we hereby consent thereto.
Very truly yours,
/s/ Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
-------------------------------------------------------
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Ibis Technology Corporation:
We consent to the use of our report incorporated herein by reference in the
Form S-8 filing.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Boston, Massachusetts
January 30, 1998
<PAGE> 1
EXHIBIT 99.1
IBIS TECHNOLOGY CORPORATION
1997 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
1. DEFINITIONS.
Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Ibis Technology Corporation 1997
Employee, Director and Consultant Stock Option Plan, have the following
meanings:
ADMINISTRATOR means the Board of Directors, unless it has
delegated power to act on its behalf to the Committee, in which
case the Administrator means the Committee.
AFFILIATE means a corporation which, for purposes of Section 424
of the Code, is a parent or subsidiary of the Company, direct or
indirect.
BOARD OF DIRECTORS means the Board of Directors of the Company.
CODE means the United States Internal Revenue Code of 1986, as
amended.
COMMITTEE means the committee of the Board of Directors to which
the Board of Directors has delegated power to act under or
pursuant to the provisions of the Plan.
COMMON STOCK means shares of the Company's common stock, $.008
par value per share.
COMPANY means Ibis Technology Corporation, a Massachusetts
corporation.
DISABILITY or DISABLED means permanent and total disability as
defined in Section 22(e)(3) of the Code.
FAIR MARKET VALUE of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities
exchange or traded in the over-the-counter market and sales
prices are regularly reported for the Common Stock, the closing
or last price of the Common Stock on the Composite
<PAGE> 2
Tape or other comparable reporting system for the trading day
immediately preceding the applicable date;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales
prices are not regularly reported for the Common Stock for the
trading day referred to in clause (1), and if bid and asked
prices for the Common Stock are regularly reported, the mean
between the bid and the asked price for the Common Stock at the
close of trading in the over-the-counter market for the trading
day on which Common Stock was traded immediately preceding the
applicable date; and
(3) If the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market,
such value as the Administrator, in good faith, shall determine.
ISO means an option meant to qualify as an incentive stock option
under Section 422 of the Code.
KEY EMPLOYEE means an employee of the Company or of an Affiliate
(including, without limitation, an employee who is also serving
as an officer or director of the Company or of an Affiliate),
designated by the Administrator to be eligible to be granted one
or more Options under the Plan.
NON-QUALIFIED OPTION means an option which is not intended to
qualify as an ISO.
OPTION means an ISO or Non-Qualified Option granted under the
Plan.
OPTION AGREEMENT means an agreement between the Company and a
Participant delivered pursuant to the Plan, in such form as the
Administrator shall approve.
PARTICIPANT means a Key Employee, director or consultant to whom
one or more Options are granted under the Plan. As used herein,
"Participant" shall include "Participant's Survivors" where the
context requires.
PLAN means this Ibis Technology Corporation 1997 Employee,
Director and Consultant Stock Option Plan.
SHARES means shares of the Common Stock as to which Options have
been or may be granted under the Plan or any shares of capital
stock into which the Shares are changed or for which they are
exchanged within the provisions of Paragraph 3 of the Plan. The
Shares issued upon exercise of Options granted under the Plan may
be authorized and unissued shares or shares held by the Company
in its treasury, or both.
2
<PAGE> 3
SURVIVORS means a deceased Participant's legal representatives
and/or any person or persons who acquired the Participant's
rights to an Option by will or by the laws of descent and
distribution.
2. PURPOSES OF THE PLAN.
The Plan is intended to encourage ownership of Shares by Key Employees
and directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs and
Non-Qualified Options.
3. SHARES SUBJECT TO THE PLAN.
The number of Shares which may be issued from time to time pursuant to
this Plan shall be 750,000, or the equivalent of such number of Shares after the
Administrator, in its sole discretion, has interpreted the effect of any stock
split, stock dividend, combination, recapitalization or similar transaction in
accordance with Paragraph 16 of the Plan.
If an Option ceases to be "outstanding", in whole or in part, the Shares
which were subject to such Option shall be available for the granting of other
Options under the Plan. Any Option shall be treated as "outstanding" until such
Option is exercised in full, or terminates or expires under the provisions of
the Plan, or by agreement of the parties to the pertinent Option Agreement.
4. ADMINISTRATION OF THE PLAN.
The Administrator of the Plan will be the Board of Directors, except to
the extent the Board of Directors delegates its authority to the Committee, in
which case the Committee shall be the Administrator. Subject to the provisions
of the Plan, the Administrator is authorized to:
a. Interpret the provisions of the Plan or of any Option or Option
Agreement and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
b. Determine which employees of the Company or of an Affiliate shall
be designated as Key Employees and which of the Key Employees,
directors and consultants shall be granted Options;
c. Determine the number of Shares for which an Option or Options
shall be granted, provided, however, that in no event shall
Options to purchase more than 500,000 Shares be granted to any
Participant in any fiscal year; and
3
<PAGE> 4
d. Specify the terms and conditions upon which an Option or Options
may be granted;
provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under it
shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is the Committee.
5. ELIGIBILITY FOR PARTICIPATION.
The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding the foregoing, the Administrator may authorize the
grant of an Option to a person not then an employee, director or consultant of
the Company or of an Affiliate; provided, however, that the actual grant of such
Option shall be conditioned upon such person becoming eligible to become a
Participant at or prior to the time of the delivery of the Option Agreement
evidencing such Option. ISOs may be granted only to Key Employees. Non-Qualified
Options may be granted to any Key Employee, director or consultant of the
Company or an Affiliate. The granting of any Option to any individual shall
neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Options.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions, consistent with the terms and
conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto.
A. NON-QUALIFIED OPTIONS: Each Option intended to be a Non-Qualified
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best
interest of the Company, subject to the following minimum
standards for any such Non-Qualified Option:
a. Option Price: Each Option Agreement shall state the
option price (per share) of the Shares covered by each
Option, which option price shall be determined by the
Administrator but shall not be less than one hundred
4
<PAGE> 5
percent (100%) of the Fair Market Value per share of the
Shares on the date of the grant of the Option.
b. Each Option Agreement shall state the number of Shares to
which it pertains;
c. Each Option Agreement shall state the date or dates on
which it first is exercisable and the date after which it
may no longer be exercised, and may provide that the
Option rights accrue or become exercisable in
installments over a period of months or years, or upon
the occurrence of certain conditions or the attainment of
stated goals or events; and
d. Exercise of any Option may be conditioned upon the
Participant's execution of a Share purchase agreement in
form satisfactory to the Administrator providing for
certain protections for the Company and its other
shareholders, including requirements that:
i. The Participant's or the Participant's Survivors'
right to sell or transfer the Shares may be
restricted; and
ii. The Participant or the Participant's Survivors may
be required to execute letters of investment
intent and must also acknowledge that the Shares
will bear legends noting any applicable
restrictions.
e. DIRECTORS' OPTIONS: Upon the adjournment of each Annual
Meeting or Special Meeting in Lieu of an Annual Meeting
of the shareholders of the Company (collectively, the
"Annual Meeting"), commencing upon the adjournment of the
Annual Meeting to be held in 1998, each person who is not
an employee of the Company or of an Affiliate who is
serving as a Director of the Company upon the adjournment
of such Annual Meeting shall be granted a Non-Qualified
Option to purchase 1,250 Shares, provided, however, a
person who is not an employee of the Company or of an
Affiliate who is first elected to serve as a Director of
the Company at any meeting of stockholders other than the
Annual Meeting or at any meeting of the Board of
Directors (or by the unanimous written consent of the
Directors) pursuant to the Company's Restated Articles of
Organization and its Restated By-Laws shall be granted a
Non-Qualified Option to purchase 1,250 Shares upon such
election. Each such Option shall (i) have an exercise
price equal to the Fair Market Value (per share) of the
Shares on the date of grant of the Option, (ii) have a
term of ten (10) years, and (iii) become exercisable
immediately prior to the occurrence of the Annual Meeting
following the date the Option is granted. Notwithstanding
the provisions of Paragraph 23 concerning amendment of
the Plan, the provisions of this subparagraph shall not
be amended more than once every six months, other than to
comport with changes in the
5
<PAGE> 6
Code, the Employee Retirement Income Security Act, or the
rules thereunder.
B. ISOS: Each Option intended to be an ISO shall be issued only to a
Key Employee and be subject to the following terms and
conditions, with such additional restrictions or changes as the
Administrator determines are appropriate but not in conflict with
Section 422 of the Code and relevant regulations and rulings of
the Internal Revenue Service:
a. Minimum standards: The ISO shall meet the minimum
standards required of Non-Qualified Options, as described
in Paragraph 6(A) above, except clauses (a) and (e)
thereunder.
b. Option Price: Immediately before the Option is granted,
if the Participant owns, directly or by reason of the
applicable attribution rules in Section 424(d) of the
Code:
i. Ten percent (10%) OR LESS of the total combined
voting power of all classes of share capital of
the Company or an Affiliate, the Option price per
share of the Shares covered by each Option shall
not be less than one hundred percent (100%) of the
Fair Market Value per share of the Shares on the
date of the grant of the Option.
ii. More than ten percent (10%) of the total combined
voting power of all classes of stock of the
Company or an Affiliate, the Option price per
share of the Shares covered by each Option shall
not be less than one hundred ten percent (110%) of
the said Fair Market Value on the date of grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) OR LESS of the total combined
voting power of all classes of share capital of
the Company or an Affiliate, each Option shall
terminate not more than ten (10) years from the
date of the grant or at such earlier time as the
Option Agreement may provide.
ii. More than ten percent (10%) of the total combined
voting power of all classes of stock of the
Company or an Affiliate, each Option shall
terminate not more than five (5) years from the
date of the grant or at such earlier time as the
Option Agreement may provide.
d. Limitation on Yearly Exercise: The Option Agreements
shall restrict the amount of Options which may be
exercisable in any calendar year (under this or any other
ISO plan of the Company or an Affiliate) so that the
6
<PAGE> 7
aggregate Fair Market Value (determined at the time each
ISO is granted) of the stock with respect to which ISOs
are exercisable for the first time by the Participant in
any calendar year does not exceed one hundred thousand
dollars ($100,000), provided that this subparagraph (d)
shall have no force or effect if its inclusion in the
Plan is not necessary for Options issued as ISOs to
qualify as ISOs pursuant to Section 422(d) of the Code.
7. EXERCISE OF OPTIONS AND ISSUE OF SHARES.
An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal executive office address,
together with provision for payment of the full purchase price in accordance
with this Paragraph for the Shares as to which the Option is being exercised,
and upon compliance with any other condition(s) set forth in the Option
Agreement. Such written notice shall be signed by the person exercising the
Option, shall state the number of Shares with respect to which the Option is
being exercised and shall contain any representation required by the Plan or the
Option Agreement. Payment of the purchase price for the Shares as to which such
Option is being exercised shall be made (a) in United States dollars in cash or
by check, or (b) at the discretion of the Administrator, through delivery of
shares of Common Stock having a Fair Market Value equal as of the date of the
exercise to the cash exercise price of the Option, or (c) at the discretion of
the Administrator, by delivery of the grantee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the applicable
Federal rate, as defined in Section 1274(d) of the Code, or (d) at the
discretion of the Administrator, in accordance with a cashless exercise program
established with a securities brokerage firm, and approved by the Administrator,
or (e) at the discretion of the Administrator, by any combination of (a), (b),
(c) and (d) above. Notwithstanding the foregoing, the Administrator shall accept
only such payment on exercise of an ISO as is permitted by Section 422 of the
Code.
The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant's
Survivors, as the case may be). In determining what constitutes "reasonably
promptly," it is expressly understood that the delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.
The Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the Administrator shall
not accelerate the exercise date of any installment of any Option granted to any
Key Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 19) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.
7
<PAGE> 8
8. RIGHTS AS A SHAREHOLDER.
No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.
9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
By its terms, an Option granted to a Participant shall not be
transferable by the Participant other than (i) by will or by the laws of descent
and distribution, or (ii) as otherwise determined by the Administrator and set
forth in the applicable Option Agreement. The designation of a beneficiary of an
Option by a Participant shall not be deemed a transfer prohibited by this
Paragraph. Except as provided above, an Option shall be exercisable, during the
Participant's lifetime, only by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon an Option, shall be null and void.
10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR DEATH OR
DISABILITY.
Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised all Options, the following rules apply:
a. A Participant who ceases to be an employee, director or
consultant of the Company or of an Affiliate (for any reason
other than termination "for cause", Disability, or death for
which events there are special rules in Paragraphs 11, 12, and
13, respectively), may exercise any Option granted to him or her
to the extent that the Option is exercisable on the date of such
termination of service, but only within such term as the
Administrator has designated in the pertinent Option Agreement.
b. Except as provided in Subparagraph (c) below, or Paragraph 12 or
13, in no event may an Option Agreement provide, if the Option is
intended to be an ISO, that the time for exercise be later than
three (3) months after the Participant's termination of
employment.
c. The provisions of this Paragraph, and not the provisions of
Paragraph 12 or 13, shall apply to a Participant who subsequently
becomes Disabled or dies after the
8
<PAGE> 9
termination of employment, director status or consultancy,
provided, however, in the case of a Participant's Disability or
death within three (3) months after the termination of
employment, director status or consultancy, the Participant or
the Participant's Survivors may exercise the Option within one
(1) year after the date of the Participant's termination of
employment, but in no event after the date of expiration of the
term of the Option.
d. Notwithstanding anything herein to the contrary, if subsequent to
a Participant's termination of employment, termination of
director status or termination of consultancy, but prior to the
exercise of an Option, the Board of Directors determines that,
either prior or subsequent to the Participant's termination, the
Participant engaged in conduct which would constitute "cause",
then such Participant shall forthwith cease to have any right to
exercise any Option.
e. A Participant to whom an Option has been granted under the Plan
who is absent from work with the Company or with an Affiliate
because of temporary disability (any disability other than a
permanent and total Disability as defined in Paragraph 1 hereof),
or who is on leave of absence for any purpose, shall not, during
the period of any such absence, be deemed, by virtue of such
absence alone, to have terminated such Participant's employment,
director status or consultancy with the Company or with an
Affiliate, except as the Administrator may otherwise expressly
provide.
f. Except as required by law or as set forth in the pertinent Option
Agreement, Options granted under the Plan shall not be affected
by any change of a Participant's status within or among the
Company and any Affiliates, so long as the Participant continues
to be an employee, director or consultant of the Company or any
Affiliate.
11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE."
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the time the
Participant is notified his or her service is terminated "for
cause" will immediately be forfeited.
b. For purposes of this Plan, "cause" shall include (and is not
limited to) dishonesty with respect to the Company or any
Affiliate, insubordination, substantial malfeasance or
non-feasance of duty, unauthorized disclosure of confidential
information, and conduct substantially prejudicial to the
business of the Company or any Affiliate. The determination of
the Administrator as to the existence of "cause" will be
conclusive on the Participant and the Company.
9
<PAGE> 10
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that
the Administrator's finding of "cause" occur prior to
termination. If the Administrator determines, subsequent to a
Participant's termination of service but prior to the exercise of
an Option, that either prior or subsequent to the Participant's
termination the Participant engaged in conduct which would
constitute "cause," then the right to exercise any Option is
forfeited.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition
of "cause" for termination and which is in effect at the time of
such termination, shall supersede the definition in this Plan
with respect to such Participant.
12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
a. To the extent exercisable but not exercised on the date of
Disability; and
b. In the event rights to exercise the Option accrue periodically,
to the extent of a pro rata portion of any additional rights as
would have accrued had the Participant not become Disabled prior
to the end of the accrual period which next ends following the
date of Disability. The proration shall be based upon the number
of days of such accrual period prior to the date of Disability.
A Disabled Participant may exercise such rights only within the period
ending one (1) year after the date of the Participant's termination of
employment, directorship or consultancy, as the case may be, notwithstanding
that the Participant might have been able to exercise the Option as to some or
all of the Shares on a later date if the Participant had not become disabled and
had continued to be an employee, director or consultant or, if earlier, within
the originally prescribed term of the Option.
The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
10
<PAGE> 11
13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant's Survivors:
a. To the extent exercisable but not exercised on the date of death;
and
b. In the event rights to exercise the Option accrue periodically,
to the extent of a pro rata portion of any additional rights
which would have accrued had the Participant not died prior to
the end of the accrual period which next ends following the date
of death. The proration shall be based upon the number of days of
such accrual period prior to the Participant's death.
If the Participant's Survivors wish to exercise the Option, they must
take all necessary steps to exercise the Option within one (1) year after the
date of death of such Participant, notwithstanding that the decedent might have
been able to exercise the Option as to some or all of the Shares on a later date
if he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
14. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued upon the
particular exercise of an Option shall have been effectively registered under
the Securities Act of 1933, as now in force or hereafter amended (the "1933
Act"), the Company shall be under no obligation to issue the Shares covered by
such exercise unless and until the following conditions have been fulfilled:
a. The person(s) who exercise(s) such Option shall warrant to the
Company, prior to the receipt of such Shares, that such person(s)
are acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection
with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the provisions
of the following legend which shall be endorsed upon the
certificate(s) evidencing their Shares issued pursuant to such
exercise or such grant:
"The shares represented by this certificate have been
taken for investment and they may not be sold or
otherwise transferred by any person, including a pledgee,
unless (1) either (a) a Registration Statement with
respect to such shares shall be effective under the
Securities Act of 1933, as amended, or (b) the Company
shall have received an opinion of counsel satisfactory to
it that an exemption from registration under such Act is
then available, and (2) there shall have been compliance
with all applicable state securities laws."
11
<PAGE> 12
b. At the discretion of the Administrator, the Company shall have
received an opinion of its counsel that the Shares may be issued
upon such particular exercise in compliance with the 1933 Act
without registration thereunder.
15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not otherwise terminated and
expired, the Participant or the Participant's Survivors will have the right
immediately prior to such dissolution or liquidation to exercise any Option to
the extent that the Option is exercisable as of the date immediately prior to
such dissolution or liquidation.
16. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant's
rights with respect to any Option granted to him or her hereunder which has not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the pertinent Option Agreement:
A. STOCK DIVIDENDS AND STOCK SPLITS. If (i) the shares of Common
Stock shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock dividend on
its outstanding Common Stock, or (ii) additional shares or new or different
shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock, the number of shares of
Common Stock deliverable upon the exercise of such Option may be appropriately
increased or decreased proportionately, and appropriate adjustments may be made
in the purchase price per share to reflect such events. The number of Shares
subject to options to be granted to directors pursuant to Paragraph 6(A)(e)
shall also be proportionately adjusted upon the occurrence of such events.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or substantially all
of the Company's assets or otherwise (an "Acquisition"), the Administrator or
the board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph), within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment
12
<PAGE> 13
equal to the excess of the Fair Market Value of the shares subject to such
Options (either to the extent then exercisable or, at the discretion of the
Administrator, all Options being made fully exercisable for purposes of this
Subparagraph) over the exercise price thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in Subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising an Option shall be entitled to
receive for the purchase price paid upon such exercise the securities which
would have been received if such Option had been exercised prior to such
recapitalization or reorganization.
D. MODIFICATION OF ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to Subparagraph A, B or C with respect to ISOs shall
be made only after the Administrator, after consulting with counsel for the
Company, determines whether such adjustments would constitute a "modification"
of such ISOs (as that term is defined in Section 424(h) of the Code) or would
cause any adverse tax consequences for the holders of such ISOs. If the
Administrator determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from making such
adjustments, unless the holder of an ISO specifically requests in writing that
such adjustment be made and such writing indicates that the holder has full
knowledge of the consequences of such "modification" on his or her income tax
treatment with respect to the ISO.
17. ISSUANCES OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company.
18. FRACTIONAL SHARES.
No fractional shares shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional shares equal to the Fair Market Value thereof.
19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.
The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior
13
<PAGE> 14
to the expiration of such ISOs, regardless of whether the Participant is an
employee of the Company or an Affiliate at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options. At
the time of such conversion, the Administrator (with the consent of the
Participant) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Administrator in its discretion may determine,
provided that such conditions shall not be inconsistent with this Plan. Nothing
in the Plan shall be deemed to give any Participant the right to have such
Participant's ISOs converted into Non-Qualified Options, and no such conversion
shall occur until and unless the Administrator takes appropriate action. The
Administrator, with the consent of the Participant, may also terminate any
portion of any ISO that has not been exercised at the time of such conversion.
20. WITHHOLDING.
In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise of an Option or a Disqualifying Disposition (as defined in
Paragraph 21), the Company may withhold from the Participant's compensation, if
any, or may require that the Participant advance in cash to the Company, or to
any Affiliate of the Company which employs or employed the Participant, the
amount of such withholdings unless a different withholding arrangement,
including the use of shares of the Company's Common Stock or a promissory note,
is authorized by the Administrator (and permitted by law). For purposes hereof,
the fair market value of the shares withheld for purposes of payroll withholding
shall be determined in the manner provided in Paragraph 1 above, as of the most
recent practicable date prior to the date of exercise. If the fair market value
of the shares withheld is less than the amount of payroll withholdings required,
the Participant may be required to advance the difference in cash to the Company
or the Affiliate employer. The Administrator in its discretion may condition the
exercise of an Option for less than the then Fair Market Value on the
Participant's payment of such additional withholding.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
Each Key Employee who receives an ISO must agree to notify the Company
in writing immediately after the Key Employee makes a Disqualifying Disposition
of any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired Shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
14
<PAGE> 15
22. TERMINATION OF THE PLAN.
The Plan will terminate on the date which is ten (10) years from the
EARLIER of the date of its adoption and the date of its approval by the
shareholders of the Company. The Plan may be terminated at an earlier date by
vote of the shareholders of the Company; provided, however, that any such
earlier termination shall not affect any Option Agreements executed prior to the
effective date of such termination.
23. AMENDMENT OF THE PLAN AND AGREEMENTS.
The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, and to the extent
necessary to qualify the shares issuable upon exercise of any outstanding
Options granted, or Options to be granted, under the Plan for listing on any
national securities exchange or quotation in any national automated quotation
system of securities dealers. Any amendment approved by the Administrator which
the Administrator determines is of a scope that requires shareholder approval
shall be subject to obtaining such shareholder approval. Any modification or
amendment of the Plan shall not, without the consent of a Participant, adversely
affect his or her rights under an Option previously granted to him or her. With
the consent of the Participant affected, the Administrator may amend outstanding
Option Agreements in a manner which may be adverse to the Participant but which
is not inconsistent with the Plan. In the discretion of the Administrator,
outstanding Option Agreements may be amended by the Administrator in a manner
which is not adverse to the Participant.
24. EMPLOYMENT OR OTHER RELATIONSHIP.
Nothing in this Plan or any Option Agreement shall be deemed to prevent
the Company or an Affiliate from terminating the employment, consultancy or
director status of a Participant, nor to prevent a Participant from terminating
his or her own employment, consultancy or director status or to give any
Participant a right to be retained in employment or other service by the Company
or any Affiliate for any period of time.
25. GOVERNING LAW.
This Plan shall be construed and enforced in accordance with the law of
The Commonwealth of Massachusetts.
15
