<PAGE>
As Filed with the Securities and Exchange Commission on
November 22, 1999
Registration No. 333-
- -----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
Alteon Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3304550
(State of Incorporation) (I.R.S. Employer Identification No.)
170 Williams Drive,
Ramsey, New Jersey 07446
(201) 934-5000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
ALTEON INC. AMENDED 1995 STOCK OPTION PLAN
(Full Title of the Plan)
KENNETH I. MOCH
Chief Executive Officer
Alteon Inc.
170 Williams Drive
Ramsey, New Jersey 07446
(201) 934-5000
(Name, address, and telephone number, including
area code, of agent for service)
---------------------
Copies to:
RICHARD J. PINTO, ESQ.
Smith, Stratton, Wise, Heher & Brennan
600 College Road East
Princeton, New Jersey 08540
(609) 924-6000
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum Amount of
Title of Amount to be Offering Price Aggregate Registration
Securities to be Registered Registered(1) per Share(2) Offering Price(2) Fee
- ----------------------------- ------------- ----------------- ----------------- -------------
<S> <C> <C> <C> <C>
Common Stock, $.01
par value. . . . . . . . . 2,000,000 $1.016 $2,032,000 $564.90
</TABLE>
(1) This Registration Statement also covers an indeterminate
number of shares as may be issued as a result of the anti-
dilution provisions of the Plan.
(2) Pursuant to Rule 457(h), these prices are estimated solely
for the purpose of calculating the registration fee and are
based upon the average of the high and low sales prices of
the Registrant's Common Stock as reported on the Nasdaq
SmallCap Market on November 17, 1999.
- -----------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement is being filed by Alteon Inc.
(the "Company"), pursuant to General Instruction E to Form S-8,
with respect to the registration of additional securities of the
same class as other securities for which the Company's
Registration Statements on Form S-8 (Registration Nos. 333-39429,
333-04496, 33-89134 and 33-60576) relating to the Alteon Inc.
1987 Amended and Restated Stock Option Plan (the "1987 Plan") and
the Alteon Inc. Amended 1995 Stock Option Plan (the "1995 Plan")
were filed with the Securities and Exchange Commission on May 3,
1996, February 2, 1995 and April 2, 1993, respectively, and which
are incorporated herein by reference. On June 2, 1999 the
stockholders of the Company approved an increase in the number of
shares of Common Stock of the Company reserved for issuance upon
the exercise of options granted under the 1995 Plan from
2,000,000 to 4,000,000 shares. The additional 2,000,000 shares
are being registered under this Registration Statement.
In accordance with the Note to Part I of Form S-8, the
information specified by Part I of Form S-8 has been omitted from
this Registration Statement.
<PAGE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Commission are
incorporated herein by reference:
(a) The Company's Registration Statements on Form S-8
(Registration Nos. 333-39429, 333-04496, 33-89134 and
33-60576).
(b) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998.
(c) All other reports filed pursuant to Section 13(a) or
15(d) of the Exchange Act, since December 31, 1998.
(d) The description of the Company's Common Stock, $.01 par
value, which is contained in the Company's Registration
Statements on Form 8-A filed November 1, 1991 and Form
S-1 (Registration No. 33-42574) which became effective
on November 1, 1991, including any amendments or
reports filed for the purpose of updating such
description.
(e) The description of the Company's Rights to Purchase
Series F Preferred Stock which is contained in the
Company's Registration Statement on Form 8-A and
Current Report on Form 8-K, each filed August 4, 1995,
including any amendments or reports filed for the
purpose of updating such description.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the
date of the filing of such documents.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The financial statements incorporated by reference in this
Registration Statement to the extent and for the periods
indicated have been audited by Arthur Andersen LLP, independent
public accountants, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
The legality of the Common Stock being offered hereby has
been passed upon by Smith, Stratton, Wise, Heher & Brennan,
Princeton, New Jersey. A member of Smith, Stratton, Wise, Heher &
Brennan holds an option to purchase 16,800 shares of Common
Stock.
ITEM 8. EXHIBITS.
Exhibit
Number Description
- ------- -----------
4.1 - Restated Certificate of Incorporation, as amended.
(Incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q filed on
November 10, 1999).
4.2 - Certificate of the Voting Powers, Designations,
Preference and Relative Participating, Optional and
Other Special Rights and Qualifications, Limitations or
Restrictions of Series F Preferred Stock of the
Company. (Incorporated by reference to Exhibit 4.2 to
the Company's Current Report on Form 8-K filed on
August 4, 1995).
4.3 - Certificate of Designations of Series G Preferred Stock
of Alteon Inc. (Incorporated by reference to Exhibit
3.4 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
4.4 - Certificate of Amendment of Certificate of Designations
of Series G Preferred Stock of Alteon Inc.
(Incorporated by reference to Exhibit 3.4 to the
Company's Report on Form 10-Q filed on August 14,
1998).
4.5 - Certificate of Designations of Series H Preferred Stock
of Alteon Inc. (Incorporated by reference to Exhibit
3.5 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
4.6 - Amended Certificate of Designations of Series H
Preferred Stock of Alteon Inc. (Incorporated by
reference to Exhibit 3.6 to the Company's Report on
Form 10-Q filed on August 14, 1998).
4.7 - By-laws, as amended. (Incorporated by reference to
Exhibit 3.7 to the Company's Report on Form 10-Q filed
on May 12, 1999).
4.8 - Stockholders' Rights Agreement dated as of July 27,
1995 between Alteon Inc. and Registrar and Transfer
Company, as Rights Agent. (Incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K
filed on August 4, 1995).
4.9 - Amendment to Stockholders' Rights Agreement dated as of
April 24, 1997 between Alteon Inc. and Registrar and
Transfer Company, as Rights Agent. (Incorporated by
reference to Exhibit 4.4 to the Company's Current
Report on Form 8-K filed on May 9, 1997).
4.10 - Amendment to Stockholders' Rights Agreement dated as of
December 1, 1997 between Alteon Inc. and Registrar and
Transfer Company, as Rights Agent. (Incorporated by
reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K filed on December 10, 1997).
5.1 - Opinion of Smith, Stratton, Wise, Heher & Brennan.
23.1 - Consent of Arthur Andersen LLP, independent public
accountants.
23.2 - Consent of Smith, Stratton, Wise, Heher & Brennan
(contained in Exhibit 5.1).
24.1 - Power of Attorney (see "Power of Attorney" above).
99.1 - Amended 1995 Stock Option Plan.
<PAGE>
<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 Ramsey,
State of New Jersey, on this 22nd day of November, 1999.
ALTEON INC.
By: /s/ Kenneth I. Moch
-------------------------
Kenneth I. Moch,
President and
Chief Executive Officer
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Kenneth I. Moch
and Elizabeth A. O'Dell, and each or either one of them, his or
her true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person,
hereby ratifying and conforming all that said attorneys-in-fact
and agents, or any of them, or their or his or her substitutes or
substitute, 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 below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Mark Novitch Chairman of the Board November 22, 1999
- -----------------------
Mark Novitch
/s/ Kenneth I. Moch President, Chief November 22, 1999
- ----------------------- Executive Officer and
Kenneth I. Moch Director (principal
executive officer)
/s/ Elizabeth A. O'Dell Treasurer, Secretary November 22, 1999
- ----------------------- Vice President, Finance
Elizabeth A. O'Dell and Administration
(principal finance and
accounting officer)
/s/ Edwin D. Bransome, Jr. Director November 18, 1999
- -----------------------
Edwin D. Bransome, Jr.
/s/ Marilyn G. Breslow Director November 22, 1999
- -----------------------
Marilyn G. Breslow
/s/ Alan J. Dalby Director November 22, 1999
- -----------------------
Alan J. Dalby
/s/ David McCurdy Director November 19, 1999
- -----------------------
David McCurdy
/s/ George M. Naimark Director November 19, 1999
- -----------------------
George M. Naimark
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
4.1 - Restated Certificate of Incorporation, as
amended.(Incorporated by reference to Exhibit 3.1 to
the Company's Quarterly Report on Form 10-Q filed on
November 10, 1999).
4.2 - Certificate of the Voting Powers, Designations,
Preference and Relative Participating, Optional and
Other Special Rights and Qualifications, Limitations or
Restrictions of Series F Preferred Stock of the
Company. (Incorporated by reference to Exhibit 4.2 to
the Company's Current Report on Form 8-K filed on
August 4, 1995).
4.3 - Certificate of Designations of Series G Preferred Stock
of Alteon Inc. (Incorporated by reference to Exhibit
3.4 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
4.4 - Certificate of Amendment of Certificate of Designations
of Series G Preferred Stock of Alteon Inc.
(Incorporated by reference to Exhibit 3.4 to the
Company's Report on Form 10-Q filed on August 14,
1998).
4.5 - Certificate of Designations of Series H Preferred Stock
of Alteon Inc. (Incorporated by reference to Exhibit
3.5 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
4.6 - Amended Certificate of Designations of Series H
Preferred Stock of Alteon Inc. (Incorporated by
reference to Exhibit 3.6 to the Company's Report on
Form 10-Q filed on August 14, 1998).
4.7 - By-laws, as amended. (Incorporated by reference to
Exhibit 3.7 to the Company's Report on Form 10-Q filed
on May 12, 1999).
4.8 - Stockholders' Rights Agreement dated as of July 27,
1995 between Alteon Inc. and Registrar and Transfer
Company, as Rights Agent. (Incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K
filed on August 4, 1995).
4.9 - Amendment to Stockholders' Rights Agreement dated as of
April 24, 1997 between Alteon Inc. and Registrar and
Transfer Company, as Rights Agent. (Incorporated by
reference to Exhibit 4.4 to the Company's Current
Report on Form 8-K filed on May 9, 1997).
4.10 - Amendment to Stockholders' Rights Agreement dated as of
December 1, 1997 between Alteon Inc. and Registrar and
Transfer Company, as Rights Agent. (Incorporated by
reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K filed on December 10, 1997).
5.1 - Opinion of Smith, Stratton, Wise, Heher & Brennan.
23.1 - Consent of Arthur Andersen LLP, independent public
accountants.
23.2 - Consent of Smith, Stratton, Wise, Heher & Brennan
(contained in Exhibit 5.1).
24.1 - Power of Attorney (see "Power of Attorney" above).
99.1 - Amended 1995 Stock Option Plan.
[Letterhead of Smith, Stratton,
Wise, Heher & Brennan]
November 22, 1999
Alteon Inc.
170 Williams Drive
Ramsey, New Jersey 07446
Gentlemen:
We have acted as counsel to Alteon Inc., a Delaware
corporation (the "Company"), in connection with the filing by the
Company of a registration statement on Form S-8 (the
"Registration Statement"), under the Securities Act of 1933, as
amended. The Registration Statement relates to the registration
of 2,000,000 shares (the "Shares") of the Company's common stock,
$.01 par value, which are to be offered by the Company under its
Amended 1995 Stock Option Plan (the "Plan").
We have examined such corporate records and documents, other
documents, and such questions of law as we have deemed necessary
or appropriate for purposes of this opinion. On the basis of
such examination, it is our opinion that:
1. The issuance of the Shares has been duly and validly
authorized; and
2. The Shares, when issued, delivered and sold in
accordance with the terms of the Plan and the stock
options granted thereunder, will be validly issued,
fully paid and non-assessable.
We consent to the filing of this opinion as Exhibit 5.1 to
the Registration Statement and to the reference to this firm
under the heading "Interests of Named Experts and Counsel" in the
Registration Statement.
Sincerely,
/s/ Smith, Stratton, Wise,
Heher & Brennan
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Alteon Inc.:
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated March 16, 1999 included in Alteon Inc.'s Form 10-K
for the year ended December 31, 1998 and to all references to our
firm included in this registration statement.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Roseland, New Jersey
November 22, 1999
ALTEON INC.
AMENDED 1995 STOCK OPTION PLAN
1. Purposes of Plan. The purposes of this Stock Option Plan
are to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional
incentive to Employees and Consultants of the Company and its
Subsidiaries and to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Non-Qualified Stock Options, as determined by the Administrator at
the time of grant of an Option.
2. Certain Definitions. As used herein, the following
definitions shall apply:
2.1. "Administrator" means the Board or a Committee.
2.2. "Board" means the Board of Directors of the
Company.
2.3. "Code" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
2.4. "Committee" means a Committee appointed by the
Board in accordance with Section 4.1 of the Plan.
2.5. "Common Stock" means the Common Stock of the
Company.
2.6. "Company" means Alteon Inc., a Delaware
corporation.
2.7. "Consultant" means any person, including an
advisor, who is engaged by the Company or any Subsidiary to render
services and is compensated for such services. The payment of a
director's fee by the Company shall not render a director a
Consultant within the meaning of this section.
2.8. "Date of Grant" means the date on which an Option
is granted under the Plan pursuant to Section 12 of the Plan.
2.9. "Employee" means any person, including officers and
directors, employed by the Company or any Subsidiary of the
Company. The payment of a director's fee by the Company shall not
be sufficient to constitute employment by the Company.
2.10. "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
2.11. "Fair Market Value" means, as of any date, the
value of the Common Stock determined as follows:
(a) If the Common Stock is listed on any
established stock exchange or a national market system including
without limitation the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") System, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange for the last market
trading day prior to such date as reported in the Wall Street
Journal or such other source as the Administrator deems reliable;
(b) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly
quoted by a recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean between the high
and low asked prices for the Common Stock as quoted on such System
or by such dealer for the last market trading day prior to such
date; or
(c) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Administrator.
2.12. "Incentive Stock Option" means an Option which
qualifies as an incentive stock option within the meaning of
Section 422 of the Code.
2.13. "Non-Compensated Directors" means directors of the
Company who are not Consultants who render services more than one
(1) day per week or full-time Employees.
2.14. "Non-Qualified Stock Option" means an Option which
does not qualify as an Incentive Stock Option.
2.15. "Option" means a stock option granted pursuant to
the Plan.
2.16. "Option Agreement" means the agreement which must
be entered into between the Optionee and the Company upon the grant
of an Option by the Company to the Optionee as approved by the
Administrator pursuant to Section 15 of the Plan.
2.17. "Optionee" means a person who receives an Option.
2.18. "Parent" means a "parent corporation", whether now
-2-
or hereafter existing, as defined in Section 424(e) of the Code.
2.19. "Plan" means this 1995 Stock Option Plan.
2.20. "Share" means a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.
2.21. "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of
the Code.
3. Stock Subject to the Plan. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of Shares
which may be optioned and sold under the Plan is 4,000,000 Shares
and the maximum number of Shares which may be covered by Options
granted to any employee in any calendar year may not exceed 500,000
Shares. The Shares may be authorized, but unissued, or reacquired
Common Stock. If an Option should expire or become unexercisable
for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the
Plan shall have been terminated, become available for future grant
under the Plan.
4. Administration of the Plan.
4.1. Procedure.
(a) Administration With Respect to Directors and
Officers. With respect to grants of Options to Employees and
Consultants who are also officers or directors of the Company, the
Plan shall be administered, and grants of Options shall be
approved, by (i) the Board or (ii) a Committee designated by the
Board to administer the Plan, which Committee shall be constituted
in such a manner as (A) to permit transactions under the Plan to
qualify for exemption from the provisions of Section 16(b) of the
Exchange Act pursuant to Rule 16b-3 promulgated thereunder ("Rule
16b-3") and (B) to satisfy all legal requirements relating to
administration of stock option plans and the Code (the "Applicable
Laws"). Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board.
From time to time the Board may increase the size of the Committee
and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor,
fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan.
(b) Administration With Respect to Consultants and
Employees Who Are Not Directors or Officers. With respect to
grants of Options to Employees or Consultants who are neither
directors nor officers of the Company, the Plan shall be
administered by (i) the Board or (ii) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to
-3-
satisfy the Applicable Laws. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws.
(c) Formula Awards to Non-Compensated Directors.
(i) On the date of a Non-Compensated
Director's election or reelection to the Board at an annual meeting
of shareholders of the Company and on each of the dates of the
Company's two annual meetings of shareholders following the date of
such election, (provided that on such date the Non-Compensated
Director is serving as a director of the Company), such Non-
Compensated Director shall be granted a Non-Qualified Stock Option
to purchase 20,000 Shares. Each such Option shall vest and become
exercisable on the date of the Company's first annual meeting of
shareholders following the date of its grant, provided that on such
date the Non-Compensated Director is serving as a director of the
Company.
(ii) If a Non-Compensated Director is elected
or appointed to the Board other than at an annual meeting of
shareholders, on the date of his election he shall be granted a
Non-Qualified Stock Option to purchase the number of Shares
determined by multiplying 1,667 by the number of whole or partial
months from the date of his election or appointment to the
Company's next annual meeting of shareholders. For purposes of the
preceding sentence, a month shall mean a period of 30 consecutive
days. In addition, on the dates of each of the Company's annual
meetings of shareholders which occur during the term to which he
was so elected or appointed (provided that on such date he is
serving as a director of the Company), such Non-Compensated
Director shall be granted a Non-Qualified Stock Option to purchase
20,000 Shares. Each Option granted pursuant to this subsection
4.1(c)(ii) shall vest and become exercisable on the date of the
Company's first annual meeting of shareholders following the date
of its grant, provided that on such date the Non-Compensated
Director is serving as a director of the Company.
(iii) Each Non-Compensated Director who held
such office on January 1, 1999 shall be granted a Non-Qualified
Stock Option to purchase 3,667 Shares. Each Non-Compensated
Director who held such office on January 1, 1999 and whose term
continues beyond the date of the Company's first annual meeting of
shareholders following January 1, 1999 shall be granted a Non-
Qualified Stock Option to purchase 8,800 Shares on the date of the
Company's first annual meeting of shareholders following January 1,
1999 (provided that on such date the Non-Compensated Director is
-4-
serving as a director of the Company). Each Non-Compensated
Director who held such office on January 1, 1999 and whose term
continues beyond the date of the Company's second annual meeting of
shareholders following January 1, 1999 shall be granted a Non-
Qualified Stock Option to purchase 8,800 Shares on the date of the
Company's second annual meeting of shareholders following January
1, 1999 (provided that on such date the Non-Compensated Director is
serving as a director of the Company). Each Option granted
pursuant to this subsection 4.1(c)(iii) shall vest and become
exercisable on the date of the Company's first annual meeting of
shareholders following the date of its grant, provided that on such
date the Non-Compensated Director is serving as a director of the
Company.
(iv) Options granted pursuant to this Section
4.1(c) shall have a per share exercise price equal to the Fair
Market Value per share on the Date of Grant and shall expire ten
years from the Date of Grant. Once an Option granted pursuant to
this Section, or any portion thereof, has become exercisable, it
shall remain exercisable regardless of whether or not the Non-
Compensated Director holding the Option later ceases to be a
director of the Company.
(v) If the granting of any option on the dates
provided in this Section 4.1(c) would cause the number of Shares as
to which options have been granted pursuant to the Plan to exceed
the number set forth in Section 3 of the Plan, the grant of such
option shall be deferred to the first date on which an option may
be granted without exceeding the limitation set forth in Section 3
and such date shall be the Date of Grant of the option.
(d) Multiple Administrative Bodies. The Plan may
be administered by different bodies with respect to directors,
non-director officers, and Employees and Consultants who are
neither directors nor officers.
4.2. Powers of the Administrator. Subject to the
provisions of the Plan and in the case of a Committee, the specific
duties delegated by the Board to such Committee, the Administrator,
acting in its sole discretion, shall have the power and authority
to supervise the administration of the Plan and to take all action
necessary or desirable in order to carry out the provisions of the
Plan including, without limitation, the power and authority:
(a) to select the Consultants and Employees to whom
Options may from time to time be granted hereunder;
(b) to determine whether and to what extent Options
are granted hereunder;
(c) to determine the number of shares of Common
Stock to be covered by each such Option granted hereunder;
-5-
(d) to approve forms of agreement for use under the
Plan;
(e) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option granted
hereunder (including, but not limited to, the exercise price, the
vesting schedule, and any restrictions or limitations regarding any
Option and/or the Shares relating thereto) based in each case on
such factors as the Administrator shall determine, in its sole
discretion;
(f) to make changes to any outstanding Option,
including, without limitation, to reduce the exercise price, to
accelerate the vesting schedule, or to extend the expiration date,
provided that no such change shall impair the rights of any
Optionee under any grant previously made without such Optionee's
consent;
(g) to determine whether and when an Optionee has
ceased to have an employment or consulting relationship with the
Company;
(h) to buy out for a payment in cash or Shares, an
Option previously granted, based on such terms and conditions as
the Administrator shall establish and the Optionee shall accept.
4.3. Effect of Committee's Decision. The Administrator
shall have the power and authority to establish, amend, and revoke
rules and regulations for administration of the Plan. All
decisions, determinations and interpretations of the Administrator
shall be final and binding on all holders of Options.
5. Eligibility. Non-Qualified Stock Options may be granted
to Non-Compensated Directors (but only pursuant to Section 4.1(c)),
Employees, and Consultants. Incentive Stock Options may be granted
only to Employees. An individual who has been granted an Option
may, if otherwise eligible, be granted an additional Option or
Options.
6. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its
approval by the shareholders of the Company as described in Section
18 of the Plan. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 13 of the Plan.
7. Exercise Period of Option.
7.1. Term. Each Option shall vest and become exercisable
as provided in the Option Agreement. The term of each Option shall
be the term stated in the Option Agreement; provided, however, that
in no case shall the term shall be more than ten (10) years from
the Date of Grant. However, in the case of an Incentive Stock
-6-
Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Option shall be no more than five
(5) years from the Date of Grant.
7.2. Termination of Employment. If an Optionee ceases to
be an Employee of the Company for any reason, except death or
disability within the meaning of Section 422(c) of the Code, an
Incentive Stock Option, to the extent unexercised and exercisable
by the Optionee on the date on which the Optionee ceased to be an
Employee, may be exercised by the Optionee within three (3) months
after the date on which the Optionee's employment terminated, but
in any event no later than the date of expiration of the Option
term. If the Optionee's employment is terminated because of the
death or disability of the Optionee within the meaning of Section
422(c) of the Code, an Incentive Stock Option, to the extent
unexercised and exercisable by the Optionee on the date on which
the Optionee ceased to be an Employee, may be exercised by the
Optionee (or the Optionee's legal representative) at any time prior
to the expiration of twelve (12) months from the date the
Optionee's employment terminated, but in any event no later than
the date of expiration of the Option term. An Optionee's
employment shall be deemed to have terminated on account of death
if the Optionee dies within three (3) months after the Optionee's
termination of employment.
8. Option Exercise Price and Consideration.
8.1. Exercise Price. The per Share exercise price for
the Shares to be issued pursuant to exercise of an Option (other
than Options granted pursuant to Section 4.1(c)) shall be such
price as is determined by the Administrator, provided that in the
case of an Incentive Stock Option (a) granted to an Employee who,
at the time of the grant of such Incentive Stock Option, owns stock
representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the Date of Grant and (b) granted to any
other Employee, the per Share exercise price shall be no less than
100% of the Fair Market Value per Share on the Date of Grant.
8.2. Consideration. The consideration to be paid for
the Shares to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Administrator and may
consist entirely of (i) cash, (ii) check, (iii) promissory note,
(iv) other Shares which have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (v) authorization from the
Company to retain from the total number of Shares as to which the
Option is exercised that number of Shares having a Fair Market
Value on the date of exercise equal to the exercise price for the
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total number of Shares as to which the Option is exercised, (vi)
delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the
Company the amount of sale or loan proceeds required to pay the
exercise price, (vii) any combination of the foregoing methods of
payment, or (viii) such other consideration and method of payment
for the issuance of Shares to the extent permitted under the
Applicable Laws.
9. Exercise of Option.
9.1. Procedure for Exercise. An Option shall be deemed
to be exercised when written notice of such exercise has been given
to the Company in accordance with the terms of the Option Agreement
by the person entitled to exercise the Option and full
consideration for the Shares with respect to which the Option is
exercised has been received by the Company. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock
certificate promptly upon exercise of the Option. No adjustment
will be made for a dividend or other right for which the record
date is prior to the date the stock certificate is issued. An
Option may not be exercised for a fraction of a Share.
9.2. Limitations on Exercise.
(a) Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply
with all relevant provisions of law, including, without limitation,
the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of the
National Association of Securities Dealers or any stock exchange
upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to
such compliance. As a condition to the exercise of an Option, the
Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any
of the aforementioned relevant provisions of law.
(b) The Administrator may specify a reasonable
minimum number of shares that may be purchased on any exercise of
an Option, provided that such minimum number will not prevent the
Optionee from exercising that full number of Shares as to which the
Option is then exercisable.
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9.3. Withholding Obligations. Prior to issuance of the
Shares upon exercise of an Option, the Optionee shall pay or make
adequate provision for any federal or state withholding obligations
of the Company, if applicable, in a form and manner satisfactory to
the Administrator.
10. Transferability of Options. Except as otherwise provided
in this Section 10, Options may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than
by will or by the laws of descent and distribution and during the
lifetime of the Optionee shall be exercisable only by the Optionee.
If the Administrator so determines, Non-Qualified Stock Options may
be transferable to (a) the Optionee's spouse, parents, siblings,
children or grandchildren (including stepparents, stepsiblings,
stepchildren, and stepgrandchildren), (b) trusts for the benefit of
the Optionee and/or such family members, and (c) partnerships whose
only partners are the Optionee and/or such family members, provided
that (i) no consideration is paid for such transfer, (ii) the terms
and conditions of the Option which are applicable to the Optionee
prior to the transfer of the Option shall continue to apply to the
transferee; and (iii) the Option Agreement pertaining to each
transferable option shall set forth the applicable transfer
restrictions.
11. Adjustments. Unless the terms of an Option Agreement
provide otherwise:
11.1. Change in Capitalization. Subject to any
required action by the shareholders of the Company, the number of
shares of Common Stock covered by each outstanding Option, and the
number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation
or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final,
binding and conclusive. 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 of Common Stock subject
to an Option.
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11.2. Merger without Change of Control. After a
merger of one or more corporations or other entities with or into
the Company or after a consolidation of the Company and one or more
corporations or other entities in which the shareholders of the
Company immediately prior to such merger or consolidation own after
such merger or consolidation shares representing at least fifty
percent (50%) of the voting power of the Company or the surviving
or resulting corporation or other entity, as the case may be, each
holder of an outstanding Option shall, at no additional cost, be
entitled upon exercise of such Option to receive in lieu of the
shares of Common Stock as to which such Option was exercisable
immediately prior to such event, the number and class of shares of
stock or other securities, cash or property (including, without
limitation, shares of stock or other securities of another
corporation or Common Stock) to which such holder would have been
entitled pursuant to the terms of the agreement of merger or
consolidation if, immediately prior to such merger or
consolidation, such holder had been the holder of record of a
number of shares of Common Stock equal to the number of shares for
which such Option shall be so exercised.
11.3. Sale or Merger with Change of Control. If the
Company is merged with or into or consolidated with another
corporation or other entity under circumstances where the
shareholders of the Company immediately prior to such merger or
consolidation do not own after such merger or consolidation shares
representing at least fifty percent of the voting power of the
Company or the surviving or resulting corporation or other entity,
as the case may be, or if one hundred percent of the then
outstanding voting shares of the Company are sold or otherwise
transferred, or if the Company is liquidated, or sells or otherwise
disposes of substantially all of its assets to another corporation
or other entity while unexercised Options remain outstanding under
the Plan, (a) subject to the provisions of clause (c) below, after
the effective date of such merger, consolidation, liquidation, sale
or disposition, as the case may be, each holder of an outstanding
Option shall be entitled, upon exercise of such Option, to receive,
in lieu of the shares of Common Stock as to which Option was
exercisable immediately prior to such event, the number and class
of shares of stock or other securities, cash or property
(including, without limitation, shares of stock or other securities
of another corporation or common stock) to which such holder would
have been entitled pursuant to the terms of the merger,
consolidation, liquidation, sale or disposition if, immediately
prior to such event, such holder had been the holder of a number of
shares of Common Stock equal to the number of shares as to which
such Option shall be so exercised; (b) the Administrator may
accelerate the time for exercise of some or all unexercised and
unexpired options so that from and after a date prior to the
effective date of such merger, consolidation, liquidation, sale or
disposition, as the case may be, specified by the Administrator
such accelerated options shall be exercisable in full; or (c) all
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outstanding Options may be canceled by the Administrator as of the
effective date of any such merger, consolidation, liquidation, sale
or disposition provided that (i) notice of such cancellation shall
be given to each holder of an Option and (ii) each holder of an
Option shall have the right to exercise such Option to the extent
that the same is then exercisable or, if the Administrator shall
have accelerated the time for exercise of all unexercised and
unexpired Options, in full during the 10-day period preceding the
effective date of such merger, consolidation, liquidation, sale or
disposition.
11.4. Miscellaneous. Adjustments under this Section
11 shall be determined by the Administrator, and such
determinations shall be conclusive. No fractional shares of Common
Stock shall be issued under the Plan on account of any adjustment
specified above.
12. Time of Granting Options. The Date of Grant of an Option
shall, for all purposes, be the date on which the Administrator
makes the determination granting such Option, or such other date as
is determined by the Administrator. Notice of the determination
shall be given to each Employee or Consultant to whom an Option is
granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
13.1. Amendment and Termination. The Board may at
any time amend, alter, suspend or discontinue the Plan, but no
amendment, alteration, suspension or discontinuation shall be made
which would impair the rights of any Optionee under any grant
theretofore made without the Optionee's consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422 of the Code (or any other
applicable law or regulation, including the requirements of the
National Association of Securities Dealers or an established stock
exchange), the Company shall obtain shareholder approval of any
Plan amendment in such a manner and to such a degree as required.
13.2. Effect of Amendment or Termination. Any such
amendment or termination of the Plan shall not affect Options
already granted and such Options shall remain in full force and
effect as if the Plan had not been amended or terminated unless
mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and signed by the Optionee and the
Company.
14. Reservation of Shares. The Company, during the term of
the Plan, will at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of the
Plan. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by
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the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as
to which such requisite authority shall not have been obtained.
15. Agreements. Options shall be evidenced by written
agreements in such form as the Administrator shall approve from
time to time. Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Non-Qualified
Stock Option as the Administrator shall determine. However,
notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first
time by any Optionee during any calendar year (under all plans of
the Company or any Parent or Subsidiary) exceeds $100,000, such
excess Options shall be treated as Non-Qualified Stock Options.
For purposes of the preceding sentence, Incentive Stock Options
shall be taken into account in the order in which they were
granted, and the Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is
granted.
16. No Additional Rights. The Plan shall not confer upon
any Optionee any right with respect to continuation of an
employment or consulting relationship with the Company, nor shall
it interfere in any way with his right or the Company's right to
terminate his employment or consulting relationship at any time,
with or without cause.
17. Rule 16b-3. Grants of Options to persons subject to
Section 16(b) of the Exchange Act must qualify for exemption from
Section 16(b) of the Exchange Act pursuant to Rule 16b-3. Options
granted to such persons shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect
to Plan transactions.
18. Shareholder Approval. Continuance of the Plan shall be
subject to approval by the shareholders of the Company within
twelve (12) months after the date the Plan is adopted. Such
shareholder approval shall be obtained in the degree and manner
required under applicable state and federal law.
* * * * *
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