As filed with the Securities and Exchange Commission on June __, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EMBREX, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-1469825
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1035 Swabia Court
Durham, North Carolina 27703
(Address of Principal Executive Offices) (Zip Code)
AMENDED AND RESTATED INCENTIVE STOCK OPTION AND
NONSTATUTORY STOCK OPTION PLAN (MAY 1998)
(Full title of the plan)
Randall L. Marcuson
President and Chief Executive Officer
1035 Swabia Court
Durham, North Carolina 27703
(Name and address of agent for service)
(919) 941-5185
(Telephone number, including area code, of agent for service)
Copy to:
Gerald F. Roach, Esq.
Christopher B. Capel, Esq.
SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L.L.P.
Post Office Box 2611
Raleigh, North Carolina 27602
(919) 821-1220
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
Title of securities Amount to Proposed maximum Proposed maximum Amount of
to be registered be registered offering price per aggregate offering registration fee
share* price*
<S><C>
- ----------------------------------------------------------------------------------------------------------------
Common Stock, 700,000 shares $6.00 $4,200,000 $1,239
$.01 par value
================================================================================================================
</TABLE>
* This price is estimated solely for the purpose of calculating the
registration fee. Pursuant to Rules 457(c) and (h), shares that may be the
subject of the Plan are deemed to be offered at $6.00 per share, the
average of the high and low prices for the Company's Common Stock on
June 5, 1998 in the Nasdaq National Market System.
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
This registration statement is filed to register 700,000 additional
shares of Common Stock of Embrex, Inc. (the "Company") for issuance pursuant to
the Company's Amended and Restated Incentive Stock Option and Nonstatutory Stock
Option Plan (May 1998), which amends and restates the Company's Incentive Stock
Option and Nonstatutory Stock Option Plan (June 1993) (as amended and restated,
the "Plan"). Registration statements relating to the Plan, Registration Nos.
33-51582, 33-63318, and 333-04109, are effective, and the contents of such
registration statements are incorporated in this registration statement by
reference.
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
(b) Quarterly Report on Form 10-Q for the three months ended
March 31, 1998.
(c) Registration Statement on Form 8-A filed with the
Commission on August 29, 1991, and amended October 24,
1991 and November 5, 1991, containing a description of the
Common Stock of the Company.
All documents filed by the Company subsequent to 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 under the Plan have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date
of filing of such documents.
ITEM 8. EXHIBITS
Exhibit
No.
5 Opinion of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. as to the legality of additional
securities being registered and consent to reference to
it in the registration statement.
10 Amended and Restated Incentive Stock Option and
Nonstatutory Stock Option Plan (May 1998)
23.1 Consent of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. is contained in the opinion submitted as
Exhibit 5 hereto.
23.2 Consent of Ernst & Young LLP to the incorporation by
reference of their report on the Company's 1997 audited
financial statements contained in Form 10-K for the
fiscal year ended December 31, 1997.
24 Power of Attorney
2
<PAGE>
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 the City of Durham, State of North Carolina, on the 5th day
of June, 1998.
EMBREX, INC.
By: /s/ RANDALL L. MARCUSON
-------------------------
Randall L. Marcuson
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 5th day of June, 1998.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S><C>
/s/ RANDALL L. MARCUSON President, Chief Executive Officer and
- --------------------------------- Director
Randall L. Marcuson
* Director
- ---------------------------------
Charles E. Austin
* Director
- ---------------------------------
C. Daniel Blackshear
Director
- ---------------------------------
Lester M. Crawford, D.V.M., Ph.D.
Director
- ---------------------------------
Peter J. Holzer
* Director
- ---------------------------------
Kenneth N. May, Ph.D.
* Director
- ---------------------------------
Arthur M. Pappas
/s/ DON T. SEAQUIST Vice President, Finance and Administration
- --------------------------------- (Principal financial and accounting officer)
Don T. Seaquist
* By: /s/ RANDALL L. MARCUSON
------------------------
Randall L. Marcuson,
as Attorney-in-Fact
</TABLE>
3
<PAGE>
EMBREX, INC.
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
5 Opinion of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan,
L.L.P. as to the legality of additional securities being
registered and consent to reference to it in the registration
statement.
10 Amended and Restated Incentive Stock Option and Nonstatutory
Stock Option Plan (May 1998).
23.1 Consent of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan,
L.L.P. is contained in the opinion submitted as Exhibit 5 hereto.
23.2 Consent of Ernst & Young LLP to the incorporation by reference of
their report on the Company's 1997 audited financial statements
contained in Form 10-K for the fiscal year ended December 31,
1997.
24 Power of Attorney
4
SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L.L.P.
2500 FIRST UNION CAPITOL CENTER
RALEIGH, NORTH CAROLINA 27601
PHONE: (919) 821-1220
FAX: (919) 821-6800
June 8th, 1998
Embrex, Inc.
1035 Swabia Court
Durham, North Carolina 27703
Ladies and Gentlemen:
As counsel for Embrex, Inc. (the "Company"), we furnish the following
opinion in connection with the proposed issuance by the Company of up to 700,000
additional shares of its common stock, $0.01 par value (the "Common Stock"),
pursuant to the Company's Amended and Restated Incentive Stock Option and
Nonstatutory Stock Option Plan (May 1998) (the "Plan"). These securities are the
subject of a Registration Statement to be filed by the Company with the
Securities and Exchange Commission on Form S-8 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Act"), to which this opinion
is to be attached as an exhibit. This opinion is furnished pursuant to the
requirement of Item 601(b)(5) of Regulation S-K under the Act.
We have examined the Articles of Incorporation and Bylaws of the
Company, the minutes of meetings of its Board of Directors, and such other
documents and considered such matters of law and fact as we, in our professional
judgment, have deemed appropriate to render the opinion contained herein. Based
on such examination, it is our opinion that the 700,000 shares of Common Stock
of the Company, which are being registered pursuant to the Registration
Statement, may be legally issued in accordance with the Company's Articles of
Incorporation and Bylaws, and when so issued and duly delivered against payment
therefor pursuant to the Plan as described in the Registration Statement, such
shares will be legally issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. Such consent shall not be deemed to be an admission that
this firm is within the category of persons whose consent is required under
Section 7 of the Act or the regulations promulgated pursuant to the Act.
This opinion is limited to the laws of the State of North Carolina and
no opinion is expressed as to the laws of any other jurisdiction.
<PAGE>
Embrex, Inc.
June 5, 1998
Page 2
Our opinion is as of the date hereof, and we do not undertake to advise
you of matters which might come to our attention subsequent to the date hereof
which may affect our legal opinion expressed herein.
Very truly yours,
SMITH, ANDERSON, BLOUNT, DORSETT,
MITCHELL & JERNIGAN, L.L.P.
By: /s/ CHRISTOPHER B. CAPEL
------------------------------
Christopher B. Capel
EMBREX, INC.
AMENDED AND RESTATED INCENTIVE STOCK OPTION
AND NONSTATUTORY STOCK OPTION PLAN
MAY 1998
1. PURPOSE
The purpose of this Incentive Stock Option and Nonstatutory Stock
Option Plan (hereinafter referred to as the "Plan") is to provide a special
incentive to selected individuals ("Participants") who have made significant
contributions to the business of Embrex, Inc. (hereinafter referred to as the
"Company"). The Plan is designed to accomplish this purpose by offering such
individuals an opportunity to purchase shares of the Common Stock of the Company
so that they will share in the Company's future growth and success.
2. ADMINISTRATION AND TYPES OF OPTION
(A) ADMINISTRATION. The Plan shall be administered by a Compensation
Committee (the "Committee") to be established by the Board of Directors of the
Company (the "Board"). To the extent that the Board determines it to be
desirable to qualify options granted hereunder as "performance-based
compensation" within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), or to qualify transactions hereunder as exempt
under Rule 16b-3 under Section 16(b) of the Securities Exchange Act of 1934, as
amended, the Compensation Committee shall consist, as applicable, of two or more
"outside directors" within the meaning of Section 162(m) or two or more
"non-employee directors" within the meaning of Rule 16b-3. The Committee shall
have authority, consistent with the Plan,
(1) to grant options pursuant to this Plan;
(2) to determine which individuals shall be granted options;
(3) to determine the time or times when options shall be
granted and the number of shares of Common Stock to be subject to each option;
(4) to determine which options shall constitute incentive
stock options and which options shall constitute nonstatutory stock options;
(5) to determine the option price of the shares subject to
each option and the method of payment of such price;
(6) to determine the time or times when each option becomes
exercisable and the duration of the exercise period, subject to the limitations
contained in Paragraph 6(b);
<PAGE>
(7) to prescribe the form or forms of the instruments
evidencing any options granted under the Plan and of any other instruments
required under the Plan and to change such forms from time to time;
(8) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and proceedings;
and
(9) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan. All decisions,
determinations and interpretations of the Committee shall be binding on all
parties concerned.
(B) TYPES OF OPTIONS. Pursuant to this Plan, the Company is authorized
to grant two types of options: incentive stock options within the meaning of
Section 422 of the Code and nonstatutory stock options.
3. PARTICIPANTS
(A) INCENTIVE STOCK OPTIONS. Incentive stock options shall be granted
only to Participants who are, at the time of grant, employees of the Company or
of any Parent Corporation or Subsidiary. No Participant shall be granted any
incentive stock option under the Plan who, at the time such option is granted,
owns, directly or indirectly, Common Stock of the Company possessing more than
10% of the total combined voting power of all classes of stock of the Company or
of any Parent Corporation or Subsidiary, unless the requirements of paragraph
(4)(ii) of Section 7(a) are satisfied. A Participant who has been granted an
incentive stock option may, if he or she is otherwise eligible, be granted an
additional option or options if the Board shall so determine.
(B) NONSTATUTORY STOCK OPTIONS. Nonstatutory stock options shall be
granted only to Participants who are, at the time of grant, employees of the
Company, officers, directors, consultants or any other parties who have made a
significant contribution to the business and success of the Company, as may be
selected from time to time by the Board or Committee in its discretion. A
Participant who has been granted a nonstatutory stock option may, if he or she
is otherwise eligible, be granted an additional option or options if the Board
shall so determine.
4. STOCK SUBJECT TO THE PLAN
No option shall be granted under the Plan after December 31, 2002, but
options theretofore granted may extend beyond that date. Subject to adjustment
as provided in Section 14 of the Plan, the maximum number of shares of Common
Stock of the Company which may be issued and sold under the Plan is one million,
nine hundred thousand (1,900,000) shares. Such shares may be authorized and
unissued shares or may be shares issued and thereafter acquired by the Company.
If an option granted under the Plan shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares subject to such
option shall
-2-
<PAGE>
again be available for subsequent option grants under the Plan. Stock issuable
upon exercise of an option granted under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall be
determined by the Board or the Committee.
5. FORMS OF OPTION AGREEMENTS
As a condition to the grant of an option under the Plan, each recipient
of an option shall execute an option agreement substantially in the form of
Exhibit A, or in such other form not inconsistent with the Plan as shall be
specified by the Board or the Committee at the time such option is authorized to
be granted.
6. ANNUAL LIMITATIONS.
The following limitations shall apply to grants of options:
(A) No Participant shall be granted, in any fiscal year of the Company,
options to purchase more than 300,000 shares of Common Stock.
(B) In connection with his or her initial service, a Participant may be
granted options to purchase more than 300,000 shares of Common Stock which shall
not count against the limit set forth in Section 6(a) above.
(C) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 14 hereof.
(D) If an option is canceled in the same fiscal year of the Company in
which it was granted (other than in connection with a transaction described in
Section 15), the canceled option will be counted against the limits set forth in
Section 6(a) and Section 6(b) above. For this purpose, if the exercise price of
an option is reduced, the transaction will be treated as a cancellation of the
option and the grant of a new option.
7. TERMS AND CONDITIONS OF OPTIONS
All options granted under the Plan shall be subject to the following
terms and conditions (except as provided in Section 11) and to such other terms
and conditions as the Board or Committee shall determine to be appropriate to
accomplish the purposes of the Plan:
(A) INCENTIVE STOCK OPTIONS
(1) PURCHASE PRICE. The purchase price per share of stock
deliverable upon exercise of an option shall be determined by the Board or
Committee on the date such option is granted; provided, however, that the
exercise price shall not be less than 100% of the fair market value of such
stock, as determined by the Board, at the grant of such option, or less than
110% of such fair market value in the case of options described in paragraph
(4)(ii) of Section 7(a).
-3-
<PAGE>
(2) OPTION PERIOD. Each option and all rights hereunder shall
expire on such date as the Board or the Committee shall determine on the date
such option is granted, but in no event after the expiration of ten years from
the day on which the option is granted (or five years in the case of options
described in paragraph (4)(ii) of Section 7(a)), and shall be subject to earlier
termination as provided in the Plan.
(3) TERMINATION OF EMPLOYMENT. No option may be exercised
unless, at the time of such exercise, the Participant is, and has been, since
the date of grant of his or her option, continuously employed by one or more of
the Company, a Parent Corporation or a Subsidiary, except that if and to the
extent the option agreement or instrument so provides:
(i) the option may be exercised within such period of
time as is specified in the option agreement to the extent that the option is
vested on the date of termination (but in no event later than the expiration of
the term of such option as set forth in the option agreement). In the absence of
a specified time in the option agreement, the option shall remain exercisable
for three (3) months following the Participant's termination;
(ii) if the Participant dies while in the employ of
the Company, a Parent Corporation or a Subsidiary or within three months after
the Participant ceases to be such an employee, the option may be exercised
within such period of time as is specified in the option agreement to the extent
that the option is vested on the date of death (but in no event later than the
expiration of the term of such option as set forth in the option agreement) by
the Participant's estate or by a person who acquires the right to exercise the
option by bequest or inheritance. In the absence of a specified time in the
option agreement, the option shall remain exercisable for twelve (12) months
following the Participant's death; and
(iii) if the Participant becomes disabled (within the
meaning of Section 22(e)(3) of the Code) while in the employ of the Company, a
Parent Corporation or Subsidiary, and ceases to be an employee as a result of
such disability, the Participant may exercise his or her option within such
period of time as is specified in the option agreement to the extent the option
is vested on the date of termination, but in no event later than the expiration
date of the term of such option as set forth in the option agreement. In the
absence of a specified time in the option agreement, the option shall remain
exercisable for twelve (12) months following the Participant's termination;
(iv) if the Participant ceases his or her employment
with the Company, a Parent Corporation or Subsidiary because he or she is
discharged for cause, the right to exercise the option shall terminate
immediately upon such cessation of employment;
provided, however, that in no event may any option be exercised after the
expiration date of the option nor may any option be exercised to an extent
greater than that exercisable on the last day of the Participant's employment.
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations).
-4-
<PAGE>
(4) LIMITATIONS.
(i) Dollar Limitation. The aggregate fair market
value (determined as of the respective date or dates of grant) of the Common
Stock with respect to which options granted to any employee under the Plan (and
under any other incentive stock option plans of the Company, and any Parent
Corporation and Subsidiary) are exercisable for the first time shall not exceed
$100,000 in any one calendar year. In the event that Section 422 of the Code is
amended to alter the limitation set forth therein so that following such
amendment such limitation shall differ from the limitation set forth in this
paragraph, the limitation of this paragraph shall be automatically adjusted
accordingly.
(ii) Ten Percent Shareholder. If any employee to whom
an option is to be granted under the Plan is at the time of the grant of such
option the owner of stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any Parent Corporation or any
Subsidiary, then the following special provisions shall be applicable to the
option granted to such individual: the purchase price per share of the Common
Stock subject to such option shall not be less than 110% of the fair market
value of one share of Common Stock at the time of grant and the option exercise
period shall not exceed five years from the date of grant.
(B) NONSTATUTORY STOCK OPTIONS
(1) PURCHASE PRICE. The purchase price per share of stock
deliverable upon exercise of an option shall be determined by the Board or
Committee on the date such option is granted; provided, however, that the
exercise price shall not be less than one hundred percent (100%) of the fair
market value of such stock, as determined by the Board or Committee, at the
grant of such option.
(2) PERIOD OF OPTIONS. The period of an option shall not
exceed ten years from the date of grant.
(3) TERMINATION OF EMPLOYMENT. No option may be exercised
unless, at the time of such exercise, the Participant is, and has been
continuously since the date of grant of his or her option, employed by one or
more of the Company, a Parent Corporation or a Subsidiary, except that if and to
the extent the option agreement or instrument so provides:
(i) the option may be exercised within such period of
time as is specified in the option agreement to the extent that the option is
vested on the date of termination (but in no event later than the expiration of
the term of such option as set forth in the option agreement). In the absence of
a specified time in the option agreement, the option shall remain exercisable
for three (3) months following the Participant's termination;
(ii) if the Participant dies while in the employ of
the Company, a Parent Corporation or a Subsidiary or within three months after
the Participant ceases to be such an employee, the option may be exercised
within such period of time as is specified in the option
-5-
<PAGE>
agreement to the extent that the option is vested on the date of death (but in
no event later than the expiration of the term of such option as set forth in
the option agreement) by the Participant's estate or by a person who acquires
the right to exercise the option by bequest or inheritance. In the absence of a
specified time in the option agreement, the option shall remain exercisable for
twelve (12) months following the Participant's death; and
(iii) if the Participant becomes disabled (within the
meaning of Section 22(e)(3) of the Code) while in the employ of the Company, a
Parent Corporation or Subsidiary, and ceases to be an employee as a result of
such disability, the Participant may exercise his or her option within such
period of time as is specified in the option agreement to the extent the option
is vested on the date of termination, but in no event later than the expiration
date of the term of such option as set forth in the option agreement. In the
absence of a specified time in the option agreement, the option shall remain
exercisable for twelve (12) months following the Participant's termination;
(iv) if the Participant ceases his or her employment
with the Company, a Parent Corporation or Subsidiary because he or she is
discharged for cause, the right to exercise the option shall terminate
immediately upon such cessation of employment;
provided, however, that in no event may any option be exercised after the
expiration date of the option nor may any option be exercised to an extent
greater than that exercisable on the last day of the Participant's employment.
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations).
(6) DIRECTOR OPTIONS. Notwithstanding the Committee's
authority to administer the Plan as set forth in Section 2(a) hereinabove,
options shall be granted to all nonofficer members of the Board upon their
initial election to the Board and on an annual basis without further action by
the Committee or the Board. Each qualifying director shall receive an option to
purchase 2,500 shares at the fair market value of such shares on the date of
grant upon his or her initial election or appointment to the Board (commencing
with appointments or elections of nonofficer directors in and after 1995) and
shall receive annually an option to purchase additional shares at the fair
market value of such shares on the date of grant in accordance with the
following schedule:
Year Number of Shares
1993 2,000
1994 3,000
1995 4,000
1996 and each 5,000
year thereafter
Director options shall be exercisable for a full ten-year period,
whether or not a director remains with the Company for the entire period, and
the vesting schedule for director options
-6-
<PAGE>
shall be at the discretion of the Committee. If a director has not qualified for
an annual award under the schedule above because he or she was not still a
director at the time of the annual grant, whether by reason of resignation,
removal or death, the Committee shall, in its sole discretion, determine whether
or not an option shall be awarded and the number of shares purchasable under any
such option.
8. EXERCISE OF OPTIONS
(A) Each option granted under the Plan shall be exercisable either in
full or in installments at such time or times, and during such period, as shall
be set forth in the agreement evidencing such option; provided, however, that no
option granted under the Plan shall have a term in excess of ten years from the
date of grant.
(B) A person electing to exercise an option shall give written notice
to the Company, as specified by the Board or Committee, of his election and of
the number of shares he/she has elected to purchase, such notice to be
accompanied by such instruments or documents as may be required by the Board or
Committee, and unless otherwise directed by the Board or Committee shall at the
time of such exercise tender the purchase price in cash of the shares he/she has
elected to purchase. For all nonstatutory stock options granted prior to April
30, 1998 and for all nonstatutory and all incentive stock options issued after
April 30, 1998, payment of the purchase price of the shares may be made, at the
discretion of the Participant, and to the extent permitted by the Board or
Committee, (i) in cash, (ii) in Common Stock of the Company (valued at the fair
market value thereof on the date of exercise) through the surrender of
previously held shares of Common Stock of the Company (by delivery of stock
certificates in negotiable form), (iii) by a combination of cash and Common
Stock of the Company or (iv) with any other consideration (including payment in
accordance with a cashless exercise program under which, if so instructed by the
participant, shares of Common Stock of the Company may be issued directly to the
participant's broker or dealer upon receipt of the purchase price in cash from
the broker or dealer).
9. PAYMENT FOR ISSUANCE OF SHARES
The Board or Committee may in its sole discretion permit the issuance
of stock upon a partial payment under any plan it deems reasonable, provided
that the then unpaid portion of the purchase price shall be evidenced by a
promissory note at such rate of interest and upon such other terms and
conditions as the Board or Committee shall deem appropriate. In all cases where
stock is issued for less than present full payment of the purchase price, there
shall be placed upon the certificate a legend setting forth the amount paid at
issuance, and the amount remaining unpaid thereon, and that the shares are
subject to call for the remainder and may not be transferred by the holder until
the balance due thereon shall be fully paid.
The Company shall not be obligated to issue any shares unless and
until, in the opinion of the Company's counsel, all applicable laws and
regulations have been complied with, nor, in the event the outstanding Common
Stock is at the time listed upon any stock exchange, unless and until the shares
to be issued have been listed or authorized to be added to the list upon
official
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<PAGE>
notice of issuance upon such exchange, nor unless or until all other legal
matters in connection with the issuance and delivery of shares have been
approved by the Company's counsel. Without limiting the generality of the
foregoing, the Company may require from the Participant such investment
representation or such agreement, if any, as counsel for the Company may
consider necessary in order to comply with the Securities Act of 1933 as then in
effect, and may require that the Participant agree that any sale of the shares
will be made only in such manner as is permitted by the Board or Committee and
that the Participant will notify the Company when he/she intends to make any
disposition of the shares whether by sale, gift or otherwise. The Participant
shall take any action reasonably requested by the Company in such connection. A
Participant shall have the rights of a shareholder only as to shares actually
acquired by him/her under the Plan.
10. NONTRANSFERABILITY OF OPTIONS
Unless determined otherwise by the Committee, an option may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Participant, only by the Participant. If
the Committee makes an option transferable, such option shall contain such
additional terms and conditions as the Committee deems appropriate.
11. REPLACEMENT OPTIONS
The Company may grant options under the Plan on terms differing from
those provided for in Section 7 where such options are granted in substitution
for options held by employees of other corporations who concurrently become
employees of the Company or a subsidiary as the result of a merger,
consolidation or other reorganization of the employing corporation with the
Company or subsidiary, or the acquisition by the Company or a subsidiary of the
business, property or stock of the employing corporation. The Committee may
direct that the substitute options be granted on such terms and conditions as
the Board or Committee considers appropriate in the circumstances.
12. GENERAL RESTRICTIONS
(A) INVESTMENT REPRESENTATION. The Company may require any person to
whom an option is granted, as a condition of exercising such option, to give
written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the option for
his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with Federal and
applicable state securities laws.
(B) COMPLIANCE WITH SECURITIES LAWS. Each option shall be subject to
the requirement that, if at any time counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
upon any securities exchange or under any state or Federal law, or the consent
or approval of any governmental or regulatory
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<PAGE>
body, is necessary as a condition of, or in connection with, the issuance or
purchase of shares thereunder, such option may not be accepted or exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained on conditions acceptable to the
Board. Nothing herein shall be deemed to require the Company to apply for or to
obtain such a listing, registration or qualification.
13. RIGHTS AS A SHAREHOLDER
The holder of an option shall have no rights as a shareholder with
respect to any shares covered by the option until the date of issue of a stock
certificate to him or her for such shares. Except as otherwise expressly
provided in the Plan, no adjustments shall be made for dividends or other rights
for which the record date is prior to the date such stock certificate is issued.
14. RECAPITALIZATION
In the event that the outstanding shares of Common Stock of the Company
are changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of any recapitalization, reclassification,
stock split, stock dividend, combination or subdivision, appropriate adjustment
shall be made in the number and kind of shares available under the Plan and
under any options granted under the Plan. Such adjustment to outstanding options
shall be made without change in the total price applicable to the unexercised
portion of such options, and a corresponding adjustment in the applicable option
price per share shall be made. No such adjustment shall be made which would,
within the meaning of any applicable provisions of the Code, constitute a
modification, extension or renewal of any option or a grant of additional
benefits to the holder of an option or which would cause any incentive stock
option to fail to continue to qualify as an incentive stock option within the
meaning of Section 422 of the Code.
15. REORGANIZATION
In case the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or in case all or
substantially all of the assets or more than 50% of the outstanding voting stock
of the Company is acquired by any other corporation, or in case of a
reorganization or liquidation of the Company, the Board or the board of
directors of any corporation assuming the obligations of the Company, shall, as
to outstanding options, either (i) make appropriate provisions for the
protection of any such outstanding options by the substitution on an equitable
basis of appropriate stock of the Company, or of the merged, consolidated or
otherwise reorganized corporation which will be issuable in respect of the
shares of Common Stock of the Company, provided that no additional benefits
shall be conferred upon Participants as a result of such substitution, and the
excess of the aggregate fair market value of the shares subject to the options
immediately after such substitution over the purchase price thereof is not more
than the excess of the aggregate fair market value of the shares subject to such
options immediately before such substitution over the purchase price thereof, or
(ii) provide written notice to the Participants that all unexercised options
must be exercised within a specified number of days of the date of such notice
or they will be terminated. In any such case, the
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<PAGE>
exercise dates of outstanding options shall automatically accelerate and the
options shall become fully vested and exercisable as of the date of such notice
and shall remain exercisable for such specified period of days thereafter.
16. NO SPECIAL RIGHTS
In the event an option holder is also an employee of, or has any other
relationship with, the Company, nothing contained in this Plan or in any option
granted under the Plan shall confer upon any option holder any right with
respect to the continuation of his or her employment or other relationship with
the Company (or any Parent Corporation or Subsidiary), nor shall it interfere in
any way with the right of the Company (or any Parent Corporation or Subsidiary)
at any time to terminate such employment or other relationship or to increase or
decrease the compensation of the option holder from the rate in existence at the
time of the grant of an option. Whether an authorized leave or absence, or
absence in military or governmental service, shall constitute termination or
cessation of employment for purposes of this Plan shall be determined by the
Board, except as regulated by law.
17. DEFINITIONS
(A) SUBSIDIARY. The term "Subsidiary" as used in the Plan shall mean
any corporation in an unbroken chain of corporations beginning with the Company
if each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
(B) PARENT CORPORATION. The term "Parent Corporation" as used in the
Plan shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of the corporations other than the
Company owns stock possessing 50% or more of the combined voting power of all
classes of stock in one of the other corporations in such chain.
18. AMENDMENT
The Board or the Committee may at any time discontinue granting options
under the Plan. In addition, the Board may at any time and from time to time
modify or amend the Plan in any respect, except that without the approval of the
shareholders of the Company, the Board may not (a) materially increase the
benefits accruing to individuals who participate in the Plan, (b) materially
increase the maximum number of shares which may be issued under the Plan (except
for permissible adjustments provided in the Plan), or (c) materially modify the
requirements as to eligibility for participation in the Plan. The modification
or amendment of the Plan shall not, without the consent of a Participant, affect
his or her rights under an option previously granted to him or her; provided,
however, that with the consent of the Participant affected, the Board may amend
outstanding option agreements in a manner not inconsistent with the Plan and,
with respect to incentive stock options, the Board shall have the right to amend
or modify the terms and provisions of the Plan and of any such options
outstanding granted under the Plan to the extent necessary to qualify any or all
such options for favorable income tax treatment (including deferral
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<PAGE>
of taxation upon exercise) as may be afforded incentive stock options under
Section 422 of the Code.
19. WITHHOLDING
The Company's obligation to deliver shares upon the exercise of any
option granted under the Plan shall be subject to the option holder's
satisfaction of all applicable Federal, state and local tax withholding
requirements.
20. SECTION 16 COMPLIANCE
With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934 (the "1934 Act"), transactions under this Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successor rules
under the 1934 Act. To the extent that any provision of this Plan or action by
the Committee or Board fails to so comply, such provision or action shall be
deemed null and void to the extent permitted by law and deemed advisable by the
Committee or Board.
21. EFFECTIVE DATE AND DURATION OF THE PLAN
(A) EFFECTIVE DATE. The Plan shall become effective when adopted by the
Board, but no option granted under the Plan shall become exercisable unless and
until the Plan shall have been approved by the Company's shareholders. If such
shareholder approval is not obtained within twelve months after the date of the
Board's adoption of the Plan, any options previously granted under the Plan
shall terminate and no further options shall be granted. Subject to this
limitation, options may be granted under the Plan at any time after the
effective date and before the date fixed for termination of the Plan.
(B) TERMINATION. The Plan shall terminate upon the earlier of (i) the
close of business on the day preceding the tenth anniversary of the date of its
adoption by the Board, or (ii) the date on which all shares available for
issuance under the Plan shall have been issued pursuant to the exercise or
cancellation of options granted under the Plan. If the date of termination is
determined under (i) above, options outstanding on such date shall continue to
have force and effect in accordance with the provisions of the instruments
evidencing such options.
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CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-8 pertaining to the Amended and Restated Incentive Stock
Option and Nonstatutory Stock Option Plan (May 1998) of Embrex, Inc. of our
report dated February 20, 1998, with respect to the financial statements of
Embrex, Inc. incorporated by reference in its Annual Report on Form 10-K for the
year ended December 31, 1997, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Raleigh, North Carolina
June 5, 1998
POWER OF ATTORNEY
We, the undersigned directors and officers of EMBREX, INC., a North
Carolina corporation (the "Company"), do hereby constitute and appoint Randall
L. Marcuson and Don T. Seaquist or either of them, our true and lawful
attorneys-in-fact and agents, with full power of substitution, to sign a
Registration Statement on Form S-8 under the Securities Exchange Act of 1934, as
amended (the "Act"), concerning the Company's Amended and Restated Incentive
Stock Option and Nonstatutory Stock Option Plan (May 1998), to be filed with the
Securities and Exchange Commission, and to do any and all acts and things and to
execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys-in-fact and agents, or either of them, may
deem necessary or advisable to enable the Company to comply with the Act and any
rules, regulations, and requirements of the Securities and Exchange Commission
in connection with such Registration Statement, including without limitation the
power and authority to execute and deliver for us or any of us in our names and
in the capacities indicated below any and all amendments to such Registration
Statement; and we do hereby ratify and confirm all that the said
attorneys-in-fact and agents, or either of them, shall do or cause to be done by
virtue of this power of attorney.
IN WITNESS THEREOF, the undersigned have signed this instrument in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S><C>
/s/ RANDALL L. MARCUSON President, Chief Executive May 21, 1998
- -------------------------------- Officer, and Director
Randall L. Marcuson
/s/ CHARLES E. AUSTIN Director May 21, 1998
- --------------------------------
Charles E. Austin
/s/ C. DANIEL BLACKSHEAR Director May 21, 1998
- --------------------------------
C. Daniel Blackshear
- -------------------------------- Director May 21, 1998
Lester M. Crawford
/s/ KENNETH N. MAY Director May 21, 1998
- --------------------------------
Kenneth N. May
/s/ ARTHUR M. PAPPAS Director May 21, 1998
- --------------------------------
Arthur M. Pappas
/s/ DON T. SEAQUIST Vice President, Finance May 21, 1998
- -------------------------------- and Administration, and
Don T. Seaquist Chief Financial Officer
</TABLE>
