<PAGE>
As filed with the Securities and Exchange Commission on June 2, 1997
SEC Registration No. ___________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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INFONOW CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 04-3083360
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(State or other juris- (IRS Employer
diction of incorporation) Identification Number)
1875 LAWRENCE STREET, SUITE 1100
DENVER, CO 80202
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(Address of principal executive
Offices, including zip code)
INFONOW CORPORATION 1990 STOCK OPTION PLAN
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(Full title of the plan)
Kevin D. Andrew
Chief Financial Officer
INFONOW CORPORATION
1875 Lawrence Street, Suite 1100
Denver, CO 80202
(303) 293-0212
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(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to
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Peter J. Jensen, Esq.
Chrisman, Bynum & Johnson, P.C.
1900 Fifteenth Street
Boulder, CO 80302
(303) 546-1300
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CALCULATION OF REGISTRATION FEE
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Proposed
Proposed maximum
Amount maximum aggregate Amount of
Title of securities to be offering price offering registration
to be registered registered per share (1) price (1) fee
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Common Stock
(Par Value, $.001) 1,637,092 $1.62 $2,652,089 $803.66
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(1) Estimated solely for the purpose of calculating the registration fee.
Computed pursuant to Rule 457(c) using the average of the high and low bid
prices for the Registrant's Common Stock as quoted on the NASD Electronic
Bulletin Board system on May 28, 1997.
<PAGE>
This Registration Statement registers 1,637,092 shares of the $.001 par value
common stock ("Common Stock") of InfoNow Corporation (the "Company") offered
pursuant to the InfoNow Corporation 1990 Stock Option Plan (the "Plan"). The
Plan was adopted by the board of directors of the Company on February 22, 1990
and approved by the stockholders in October 1990; on March 28, 1997 the board of
directors approved an increase in the number of shares of Common Stock available
for grant of options thereunder to 1,700,000, which increase was approved by the
stockholders on April 25, 1997. 62,908 shares of Common Stock offered pursuant
to the Plan were registered on Forms S-8, registration Nos. 33-50612 and No. 33-
68422.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents and all other documents subsequently filed by the
Company 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 the Common Stock offered hereby has been sold or which
deregisters all such Common Stock then remaining unsold, are hereby incorporated
herein by reference to be a part of this Registration Statement from the date of
filing such documents:
(a) The Company's latest annual report filed pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since the end of the fiscal year covered by the
annual reports referred to in (a) above; and
(c) The description of the Common Stock which is contained in the
Company's Registration Statement No. 33-43035 filed under the Securities Act of
1933.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
contains provisions permitting corporations organized thereunder to indemnify
directors, officers and other representatives from liabilities in connection
with any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person was or is a director, officer, employee or agent of the corporation,
against liabilities arising in any such action, suit or proceeding, expenses
incurred in connection therewith, and against certain other liabilities.
Article Seven of the Registrant's Certificate of Incorporation provides that the
personal liability of the directors of the Registrant to the Registrant or its
stockholders for monetary damages for a breach of fiduciary duty as a director
is eliminated to the maximum extent permitted by Delaware law. Article Five of
the Registrant's Bylaws provides for indemnification of the Registrant's
directors and officers in a variety of circumstances, which may include
liabilities under the Securities Act of 1933.
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ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No. Description of Exhibit
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4.1 Form of Certificate of Common Stock.(1)
4.4 Form of Class C Warrant (2)
5.1 Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of Chrisman, Bynum & Johnson, P.C. (included in
Exhibit 5.1).
23.2 Consent of Hein & Associates LLP.
23.3 Consent of Arthur Andersen LLP.
99.1 InfoNow Corporation 1990 Stock Option Plan (Amended and
Restated as of March 28, 1997).
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(1) Incorporated by reference from Registration Statement No. 33-43035 on Form
S-1 dated February 14, 1992.
(2) Incorporated by reference from Post-Effective Amendment No. 2 to
Registration Statement No. 33-43035 on Form S-1 dated July 13, 1993.
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 and
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.
(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.
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SIGNATURES
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 Denver, State of Colorado, on the
30th day of May, 1997.
INFONOW CORPORATION
By: /s/ Michael W. Johnson
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Michael W. Johnson, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
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/s/ Michael W. Johnson President, Chief Executive May 30, 1997
- ---------------------- Officer and Director
Michael W. Johnson (Principal Executive Officer)
/s/ Kevin D. Andrew Vice President, Chief May 30, 1997
- ---------------------- Financial Officer, Secretary
Kevin D. Andrew and Treasurer
(Principal Financial and
Accounting Officer)
/s/ Nahum Rand Chairman of the Board May 30, 1997
- ---------------------- and Director
Nahum Rand
/s/ Donald E. Cohen Vice Chairman and Director May 30, 1997
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Donald E. Cohen
/s/ Gene R. Copeland Director May 30, 1997
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Gene R. Copeland
II-3
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EXHIBIT INDEX
SEQUENTIAL
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NUMBER
- ----------- ---------------------- -----------
4.1 Form of Certificate of Common Stock.(1)
4.4 Form of Class C Warrant (2)
5.1 Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of Chrisman, Bynum & Johnson, P.C.
(included in Exhibit 5.1).
23.2 Consent of Hein & Associates LLP.
23.3 Consent of Arthur Andersen LLP.
99.1 InfoNow Corporation 1990 Stock Option Plan (Amended
and Restated as of March 28, 1997).
- ----------------------
(1) Incorporated by reference from Registration Statement No. 33-43035 on Form
S-1
(2) Incorporated by reference from Post-Effective Amendment No. 2 to
Registration Statement No. 33-43035 on Form S-1 dated July 13, 1993.
<PAGE>
May 30, 1997
InfoNow Corporation
1875 Lawrence Street, Suite 1100
Denver, CO 80202
Gentlemen:
We have acted as counsel to InfoNow Corporation (the "Company") in connection
with the preparation and filing of a Registration Statement on Form S-8
("Registration Statement") covering registration under the Securities Act of
1993 of 1,637,092 shares of the Company's Common Stock, par value $.001 per
share ("Shares"). The Shares are offered pursuant to the InfoNow Corporation
1990 Stock Option Plan.
Based on the foregoing, and assuming that the Shares will be sold according
to the Registration Statement at a time when effective and that there will be
compliance with all applicable securities laws involved in those states in
which the shares may be sold, we are of the opinion that, upon issuance of
the Shares according to the Registration Statement and receipt of the
consideration to be paid for the Shares, the Shares will be validly issued,
fully paid and nonassessable shares of Common Stock of the Company.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Chrisman, Bynum & Johnson, P.C.
CHRISMAN, BYNUM & JOHNSON, P.C.
<PAGE>
INDEPENDENT AUDITOR'S CONSENT
-----------------------------
We consent to the incorporation by reference in the Form S-8 Registration
Statement of InfoNow Corporation of our report dated February 28, 1997, which
contains an explanatory paragraph regarding the Company's ability to continue
as a going concern, accompanying the consolidated financial statements of
InfoNow Corporation, also incorporated by reference in such Registration
Statement.
/s/ Hein + Associates LLP
HEIN + ASSOCIATES LLP
Denver, Colorado
May 29, 1997
<PAGE>
[Letterhead of Arthur Andersen LLP]
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form S-8 Registration Statement of our report dated
March 29, 1996 included in the Company's Form 10-K for the year ended
December 31, 1995. It should be noted that we have not audited any
financial statements of InfoNow Corporation subsequent to December 31,
1995 or performed any audit procedures subsequent to the date of our report.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Denver, Colorado
May 30, 1997
<PAGE>
INFONOW CORPORATION EXHIBIT 99.1
1990 STOCK OPTION PLAN
(AMENDED AND RESTATED AS OF MARCH 28, 1997)
1. PURPOSE OF THE PLAN.
This stock option plan (the "Plan") is intended to encourage ownership
of the stock of INFONOW CORPORATION, a Delaware corporation (the "Company"), by
employees of the Company and its subsidiaries, to induce qualified personnel to
enter and remain in the employ of the Company or its subsidiaries and otherwise
to provide additional incentive for optionees to promote the success of its
business.
2. STOCK SUBJECT TO THE PLAN.
(a) The total number of shares of the authorized but unissued or
treasury shares of the common stock, $.001 par value, of the Company ("Common
Stock") for which options may be granted under the Plan shall not exceed
1,700,000 shares, subject to adjustment as provided in Section 12 hereof.
(b) If an option granted or assumed hereunder shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares subject thereto shall again be available for subsequent option grants
under the Plan.
(c) 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 of Directors of the Company
(the "Board").
3. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board of Directors (the
"Board") or by a committee composed solely of two or more directors
("Committee") each of whom is a Non-Employee Director. A Non-Employee Director
is a person who satisfies the definition of a "non-employee director" set forth
in Rule 16b-3 under the Exchange Act or any successor rule or regulation, as it
may be amended from time to time. The Committee or the Board, as the case may
be, shall have full authority to administer the Plan, including authority to
interpret and construe any provision of the Plan and any stock options granted
thereunder, and to adopt such rules and regulations for administering the Plan
as it may deem necessary in order to comply with the requirements of the Code or
in order that stock options that are intended to be incentive stock options will
be classified as incentive stock options under the Code, or in order to conform
to any regulation or to any change in any law or regulation applicable thereto.
The Board shall
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have the power to reprice and accelerate the vesting of stock options. The
Board may reserve to itself any of the authority granted to the Committee as
set forth herein, and it may perform and discharge all of the functions and
responsibilities of the Committee at any time that a duly constituted
Committee is not appointed and serving. All references in this Plan to the
"Committee" shall be deemed to refer to the Board whenever the Board is
discharging the powers and responsibilities of the Committee, and to any
special committee appointed by the Board to administer particular aspects of
this Plan. All actions taken and all interpretations and determinations made
by the Committee in good faith (including determinations of fair market
value) shall be final and binding upon all participants, the Company and all
other interested persons. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith
with respect to this Plan, and all members of the Committee shall, in
addition to their rights as directors, be fully protected by the Company with
respect to any such action, determination or interpretation.
(b) Rule 16b-3 under the Securities Exchange Act of 1934 (the "Act")
provides that the grant of a stock option to a director or officer of a company
will be exempt from the provisions of Section 16(b) of the Act if the conditions
set forth in said Rule are satisfied. Unless otherwise specified by the Board,
grants of options hereunder to individuals who are officers or directors of the
Company shall be made in a manner that satisfies the conditions of said Rule.
4. TYPE OF OPTIONS.
Options granted pursuant to the Plan shall be authorized by action of
the Board (or a committee designated by the Board) and may be designated as
either incentive stock options meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or non-qualified options
which are not intended to meet the requirements of such Section 422 of the Code,
the designation to be in the sole discretion of the Board. Options designated as
incentive stock options that fail to continue to meet the requirements of
Section 422 of the Code shall be redesignated as non-qualified options
automatically without further action by the Board on the date of such failure to
continue to meet the requirements of Section 422 of the Code.
5. ELIGIBILITY.
Options designated as incentive stock options may be granted only to
officers and key employees (including directors who are employees) of the
Company or of any subsidiary corporation (herein called "subsidiary" or
"subsidiaries"), as defined in Section 424(f) of the Code and the Treasury
Regulations promulgated thereunder (the "Regulations"). Options designated as
non-qualified options may be granted to directors, officers and key employees of
the Company or of any of its subsidiaries.
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In determining the eligibility of an individual to be granted an
option, as well as in determining the number of shares to be optioned to any
individual, the Board shall take into account the position and responsibilities
of the individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Board may deem relevant.
No option designated as an incentive stock option shall be granted to
any employee of the Company or any subsidiary if such employee owns, immediately
prior to the grant of an option, stock representing more than 10% of the voting
power or more than 10~ of the value of all classes of stock of the Company or a
parent or a subsidiary (a "Ten-Percent Shareholder"), unless the purchase price
for the stock under such option shall be at least 110% of its fair market value
at the time such option is granted and the option, by its terms, shall not be
exercisable more than five (5) years from the date it is granted. In determining
the stock ownership under this paragraph, the provisions of Section 424(d) of
the Code shall be controlling. In determining the fair market value under this
paragraph, the provisions of Section 7 hereof shall apply.
6. OPTION AGREEMENT.
Each option shall be evidenced by an option agreement (the
"Agreement") duly executed on behalf of the Company and by the optionee to whom
such option is granted, which Agreement shall comply with and be subject to the
terms and conditions of the Plan. The Agreement may contain such other terms,
provisions and conditions which are not inconsistent with the Plan as may be
determined by the Board, including provisions for longer post-termination
exercise periods, provided that options designated as incentive stock options
shall meet all of the conditions for incentive stock options as defined in
Section 422 of the Code. No option shall be granted within the meaning of the
Plan and no purported grant of any option shall be effective until the Agreement
shall have been duly executed on behalf of the Company and the optionee. More
than one option may be granted to an individual.
7. OPTION PRICE.
The option price or prices of shares of Common Stock for options
designated as non-qualified stock options shall be the fair market value of
Common Stock as determined by the Board. The option price or prices of shares of
Common Stock for incentive stock options shall be the fair market value of such
Common Stock at the time the option is granted as determined by the Board in
accordance with the Regulations promulgated under Section 422 of the Code. If
such shares are then listed on any national securities exchange, the fair market
value shall be the mean between the high and low sales prices, if any, on the
largest such exchange on the date of the grant of the option or, if none, shall
be determined by taking a weighted average of the means between the highest and
lowest sales on the nearest date before and the nearest date after the date
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<PAGE>
of grant in accordance with Treasury Regulations Section 25.2512-2. If such
shares are not then listed on any such exchange, the fair market value of
such shares shall be the mean between the closing "Bid" and the closing
"Asked" prices, if any, as reported in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") for the date of the grant of
the option, or, if none, shall be determined by taking a weighted average of
the means between the highest and lowest sales on the nearest date before and
the nearest date after the date of grant in accordance with Treasury
Regulations Section 25.2512-2. If such shares are not then either listed on
any such exchange or quoted on NASDAQ, the fair market value shall be the
mean between the average of the "Bid" and the average of the "Asked" prices,
if any, as reported in the National Daily Quotation Service for the date of
the grant of the option, or, if none, shall be determined by taking a
weighted average of the means between the highest and lowest sales on the
nearest date before and the nearest date after the date of grant in
accordance with Treasury Regulations Section 25.2512-2. If the fair market
value cannot be determined under the preceding three sentences, it shall be
determined in good faith by the Board.
8. MANNER OF PAYMENT: MANNER OF EXERCISE.
(a) Options granted under the Plan may provide for the payment of the
exercise price in the manner set forth in the Option Agreement or as otherwise
authorized by the Board, which shall be (i) delivery of cash or a check payable
to the order of the Company in an amount equal to the exercise price of such
options, (ii) delivery of shares of Common Stock of the Company owned by the
optionee having a fair market value equal in amount to the exercise price of the
options being exercised, (iii) having the Company withhold whole shares of
Common Stock issuable upon exercise of the stock option, as part or full payment
for the exercise of a stock option, or (iv) any combination of (i), (ii) and
(iii), provided, however, that payment of the exercise price by delivery of
shares of Common Stock owned by such optionee may be made only if such payment
does not result in a charge to earnings for financial accounting purposes as
determined by the Board. The fair market value of any shares of Common Stock
which may be delivered upon exercise of an option shall be determined by the
Board in accordance with Section 7 hereof. Pyramiding of options is permitted
in the sole discretion of the Board.
(b) To the extent that the right to purchase shares under an option
has accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, not more than thirty days (30)
from the date of receipt of the notice by the Company, as shall be designated in
such notice, or at such time, place and manner as may be agreed upon by the
Company and the person or persons exercising the option.
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(c) With respect to any non-qualified option granted under the Plan,
the Company's obligation to deliver shares upon the exercise of such option
shall be subject to the option holder's satisfaction of all applicable federal,
state and local income and employment tax withholding requirements. The Company
and an employee optionee may agree to withhold shares of Common Stock purchased
upon exercise of an option to satisfy any such withholding requirements.
9. EXERCISE OF OPTIONS.
Each option granted under the Plan shall, subject to Section 10(b) and
Section 12 hereof, be exercisable at such time or times and during such period
as shall be set forth in the Agreement; provided, however, that no option
granted under the Plan shall have a term in excess of ten (10) years from the
date of grant.
To the extent that an option to purchase shares is not exercised by an
optionee when it becomes initially exercisable, it shall not expire but shall be
carried forward and shall be exercisable, on a cumulative basis, until the
expiration of the exercise period. No partial exercise may be made for less than
1,000 full shares of Common Stock.
10. TERMS OF OPTIONS: EXERCISABILITY.
(a) TERM.
(1) Options granted under the Plan shall be for a term fixed by
the Board at the time of grant; provided, however, that each incentive stock
option granted to an employee other than a Ten-Percent Shareholder shall expire
not more than ten (10) years from the date of the granting thereof, and shall be
subject to earlier termination as herein provided.
(2) Each incentive stock option granted to a Ten Percent
Shareholder shall expire not more than five (5) years from the date of the
granting thereof, and shall be subject to earlier termination as herein
provided.
(3) Except as otherwise provided in this Section 10, an option
granted to any employee optionee who ceases to be an employee of the Company or
one of its subsidiaries shall terminate on the last day of the month next
following the month in which such optionee ceases to be an employee of the
Company or one of its subsidiaries, or on the date on which the option expires
by its terms, whichever occurs first.
(4) If such termination of employment is because of dismissal
for cause or because the employee is in breach of any employment agreement, such
option will terminate on the date the optionee ceases to be an employee of the
Company or one of its subsidiaries.
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(5) If such termination of employment is because the optionee
has become permanently disabled (within the meaning of Section 22 of the Code),
such option shall terminate on the last day of the twelfth month from the date
such optionee ceases to be an employee, or on the date on which the option
expires by its terms, whichever occurs first.
(6) In the event of the death of any optionee, any option
granted to such optionee shall terminate on the last day of the twelfth month
from the date of death, or on the date on which the option expires by its terms,
whichever occurs first.
(b) EXERCISABILITY.
(1) Except as provided below, an option granted to an employee
optionee who ceases to be an employee of the Company or one of its subsidiaries
shall be exercisable only to the extent that the right to purchase shares under
such option has accrued and is in effect on the date such optionee ceases to be
an employee of the Company or one of its subsidiaries.
(2) An option granted to an employee optionee who ceases to be
an employee of the Company or one of its subsidiaries because he or she has
become permanently disabled, as defined above, shall be exercisable for the full
number of shares covered by such option.
(3) In the event of the death of any optionee, the option
granted to such optionee may be exercised for the full number of shares covered
thereby, whether or not under provisions of Section 9 hereof the optionee was
entitled to do so at the date of his or her death, by the estate of such
optionee, or by any person or persons who acquired the right to exercise such
option by bequest or inheritance or by reason of the death of such optionee.
11. ASSIGNABILITY.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution, and any such option shall be
exercisable during the lifetime of such optionee only by him. Notwithstanding
the preceding sentence, the Committee, in its sole discretion, may permit the
assignment or transfer of a nonstatutory stock option and the exercise thereof
by a person other than the optionee, on such terms and conditions as the
Committee in its sole discretion may determine. Any such terms shall be set
forth in the Option Agreement. Any option granted under the Plan shall be null
and void and without effect upon the bankruptcy of the optionee to whom the
option is granted, or upon any attempted assignment or transfer, except as
herein provided, including without limitation any purported assignment, whether
voluntary or by operation of law, pledge, hypothecation or other disposition,
attachment, trustee process or similar process, whether legal or equitable, upon
such option. The terms of any rights under this
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Plan in the hands of a transferee or assignee shall be determined as if held
by the optionee and shall be of no greater extent or term than if the
transfer or assignment had not taken place.
12. RECAPITALIZATIONS. REORGANIZATIONS AND THE LIKE.
In the event that the outstanding shares of Common Stock are changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization, reclassification, stock split-up,
combination of shares, or dividends payable in capital stock, appropriate
adjustment shall be made in the number and kind of shares as to which options
may be granted under the Plan and as to which outstanding options or portions
thereof then unexercised shall be exercisable, to the end that the proportionate
interest of the optionee shall be maintained as before the occurrence of such
event; such adjustment in outstanding options shall be made without change in
the total price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share.
In addition, unless otherwise determined by the Board in its sole
discretion, in the case of any (i) sale or conveyance to another entity of all
or substantially all of the property and assets of the Company or (ii) Change in
Control (as hereinafter defined) of the Company, the purchaser(s) of the
Company's assets or stock may, in his, her or its discretion, deliver to the
optionee the same kind of consideration that is delivered to the shareholders of
the Company as a result of such sale, conveyance or Change in Control, or the
Board may cancel all outstanding options in exchange for consideration in cash
or in kind which consideration in both cases shall be equal in value to the
value of those shares of stock or other securities the optionee would have
received had the option been exercised (to the extent then exercisable) and no
disposition of the shares acquired upon such exercise been made prior to such
sale, conveyance or Change in Control, less the option price therefor. Upon
receipt of such consideration by the optionee, his or her option shall
immediately terminate and be of no further force and effect. The value of the
stock or other securities the optionee would have received if the option had
been exercised shall be determined in good faith by the Board, and in the case
of shares of Common Stock, in accordance with the provisions of Section 7
hereof. The Board shall also have the power and right to accelerate the
exercisability of any options, notwithstanding any limitations in this Plan or
in the Agreement upon such a sale, conveyance or Change in Control. Upon such
acceleration, any options or portion thereof originally designated as incentive
stock options that no longer qualify as incentive stock options under Section
422 of the Code as a result of such acceleration shall be redesignated as
non-qualified stock options. A "Change in Control" shall be deemed to have
occurred if any person, or any two or more persons acting as a group, and all
affiliates of such person or persons, who prior to such time owned less than
twenty-five percent (25%) of the then outstanding Common Stock, shall acquire
such additional shares of Common Stock in one or more transactions, or series of
transactions, such that following such transaction or transactions, such person
or group and affiliates beneficially own fifty percent (50%) or more of Common
Stock outstanding.
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Upon dissolution or liquidation of the Company, all options granted
under this Plan shall terminate, but each optionee (if at such time in the
employ of or otherwise associated with the Company or any of its
subsidiaries) shall have the right, immediately prior to such dissolution or
liquidation, to exercise his or her option to the extent then exercisable. If
by reason of a corporate merger, consolidation, acquisition of property or
stock, separation, reorganization, or liquidation, the Board shall authorize
the issuance or assumption of a stock option or stock options in a
transaction to which Section 424(a) of the Code applies, then,
notwithstanding any other provision of the Plan, the Board may grant an
option or options upon such terms and conditions as it may deem appropriate
for the purpose of assumption of the old option, or substitution of a new
option for the old option, in conformity with the provisions of such Section
425(a) of the Code and the Regulations thereunder, and any such option shall
not reduce the number of shares otherwise available for issuance under the
Plan.
No fraction of a share shall be purchasable or deliverable upon the
exercise of any option, but in the event any adjustment hereunder of the number
of shares covered by the option shall cause such number to include a fraction of
a share, such fraction shall be adjusted to the nearest smaller whole number of
shares.
13. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the 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 by the Company (or any subsidiary) or interfere in any
way with the right of the Company (or any subsidiary), subject to the terms of
any separate employment agreement to the contrary, at any time to terminate such
employment 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 of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Board at the
time.
14. RESTRICTIONS ON ISSUE OF SHARES.
(a) Notwithstanding the provisions of Section 8, the Company may
delay the issuance of shares covered by the exercise of any option and the
delivery of a certificate for such shares until one of the following conditions
shall be satisfied:
(1) The shares with respect to which such option has been
exercised are at the time of the issue of such shares effectively registered or
qualified under applicable federal and state securities acts now in force or as
hereafter amended; or
(2) Counsel for the Company shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such shares are
exempt from registration and qualification under applicable federal and state
securities acts now in force or hereafter amended.
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(b) It is intended that all exercises of options shall be effective,
and the Company shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to qualify shares or to cause a registration statement or a
post effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any option may be
exercised, except as otherwise agreed to by the Company in writing.
15. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT REGISTRATION.
Unless the shares to be issued upon exercise of an option granted
under the Plan 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 any shares covered by any option unless the
person who exercises such option, in whole or in part, shall give a written
representation and undertaking to the Company which is satisfactory in form and
scope to counsel for the Company and upon which, in the opinion of such counsel,
the Company may reasonably rely, that he or she is acquiring the shares issued
pursuant to such exercise of the option for his or her own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares, and that he or she will make no transfer of the
same except in compliance with any rules and regulations in force at the time of
such transfer under the 1933 Act, or any other applicable law, and that if
shares are issued without such registration, a legend to this effect may be
endorsed upon the securities so issued. In the event that the Company shall,
nevertheless, deem it necessary or desirable to register under the 1933 Act or
other applicable statutes any shares with respect to which an option shall have
been exercised, or to qualify any such shares for exemption from the 1933 Act or
other applicable statutes, then the Company may take such action and may require
from each optionee such information in writing for use in any registration
statement, supplementary registration statement, prospectus, preliminary
prospectus or offering circular as is reasonably necessary for such purpose and
may require reasonable indemnity to the Company and its officers and directors
from such holder against all losses, claims, damages and liabilities arising
from such use of the information so furnished and caused by any untrue statement
of any material fact therein or caused by the omission to state a material fact
requires to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made.
16. LOANS.
The Company may make loans to optionees to permit them to exercise
options. If loans are made, the requirements of all applicable federal and state
laws and regulations regarding such loans must be met.
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17. MODIFICATION OF OUTSTANDING OPTIONS.
The Board may authorize the amendment of any outstanding option with
the consent of the optionee when and subject to such conditions as are deemed to
be in the best interests of the Company and in accordance with the purposes of
the Plan.
18. APPROVAL OF STOCKHOLDERS.
The Plan shall be subject to approval by the vote of stockholders
holding at least a majority of the voting stock of the Company voting in person
or by proxy at a duly held stockholders meeting, or by written consent of all of
the stockholders, within twelve (12) months after the adoption of the Plan by
the Board and shall take effect as of the date of adoption by the Board upon
such approval. The Board may grant options under the Plan prior to such
approval, but any such option shall become effective as of the date of grant
only upon such approval and, accordingly, no such option may be exercisable
prior to such approval.
19. TERMINATION AND AMENDMENT OF PLAN.
Unless sooner terminated as herein provided, the Plan shall terminate
on February 22, 2000, ten (10) years from the date upon which the Plan was duly
adopted by the Board. The Board may at any time terminate the Plan or make such
modification or amendment thereof as it deems advisable; provided, however, that
except as provided in this Section 19, the Board may not, without the approval
of the stockholders of the Company obtained in the manner stated in Section 18,
increase the maximum number of shares for which options may be granted or change
the designation of the class of persons eligible to receive options under the
Plan. Termination or any modification or amendment of the Plan shall not,
without the consent of an optionee, affect his or her rights under an option
theretofore granted to him or her.
20. RESERVATION OF STOCK.
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
21. LIMITATION OF RIGHTS IN THE OPTION SHARES.
An optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
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22. NOTICES.
Any communication or notice required or permitted to be given under
the Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on the
records of the Company.
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