<PAGE> 1
As filed with the Commission on August 23, 1996 File No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-8 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------
CYTOTHERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3078125
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Two Richmond Square
Providence, Rhode Island 02906
------------------------------------------------------------
(Address of principal executive offices, including zip code)
1992 EQUITY INCENTIVE PLAN
(Full title of the plan)
Frederic A. Eustis, III, Esq.
Secretary
CytoTherapeutics, Inc.
Two Richmond Square
Providence, Rhode Island 02906
(410) 272-3310
------------------------------------------------------------
(Name, address and telephone number of agent for service)
<TABLE>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------
<CAPTION>
Title of Amount Proposed Proposed Amount of
Securities to be maximum maximum registration
to be registered offering aggregate fee
registered price per offering
share(1) price(1)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,500,000 $8.875 $13,312,500 $4591
par value $0.01 shares
- -----------------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(h) on the basis of the average of the high and low prices
of CytoTherapeutics, Inc. Common Stock, par value $0.01, reported on NASDAQ/NMS
on August 20, 1996.
</TABLE>
Exhibit Index on page 7;
Page 1 of 19 pages.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
-----------------------------------------------
The following documents filed by the Company with the Securities and
Exchange Commission (the "Commission") are incorporated herein by reference:
(i) Annual Report on Form 10-K for the fiscal year ended December
31, 1995, including portions of the Company's definitive Proxy
Statement dated April 12, 1996, filed in connection with the
Company's 1996 Annual Meeting of Stockholders.
(ii) Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996, and June 30, 1996.
(iii) Current Report on Form 8-K filed with the Commission on July
16, 1996.
(iv) The description of the Company's Common Stock contained in
its registration statement on Form 8-A, File No. 1-19871.
All reports and other documents subsequently filed by the Company
pursuant to Section 13(a) and (c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended, prior to the filing of post-effective
amendment which indicates that all securities offered hereby have been
sold or which deregisters all securities 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 reports and documents.
Item 4. Description of Securities
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
No material interests.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Section 145 of the Delaware General Corporation Law, as amended,
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal or investigative (other than an
action by or in the right of the corporation) by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any such person serving in
any such capacity who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor, against expenses actually and
reasonably incurred in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
-2-
<PAGE> 3
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
permits a corporation to include in its certificate of incorporation a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law (relating to
unlawful payment of dividends and unlawful stock purchase and redemption), or
(iv) for any transaction from which the director derived an improper personal
benefit.
The Registrant's Restated Certificate of Incorporation, as amended,
provides that the Company's Directors shall not be liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent that exculpation from liabilities is not
permitted under the Delaware General Corporation law as in effect at the time
such liability is determined. The Restated Certificate of Incorporation, as
amended, further provides that the Registrant shall indemnify its directors and
officers to the full extent permitted by the law of the State of Delaware.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not Applicable.
Item 8. Exhibits.
--------
Exhibit
4.1 Specimen Stock Certificate (incorporated by reference to Exhibit 4 of
the Registrant's Registration Statement on Form S-1, File No.
33-45739).
5.1 Opinion of Ropes & Gray.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Ropes & Gray (contained in the opinion filed as Exhibit 5
to this registration statement).
24.1 Powers of Attorney (included in Part II of this registration statement
under the caption "Signatures").
99.1 1992 Equity Incentive Plan, as amended to date
Item 9. Undertakings.
------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement; and
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<PAGE> 4
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of the
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against pubic policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
-4-
<PAGE> 5
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 on Form S-8 to be signed on its behalf by the undersigned thereunto
duly authorized, in Providence, Rhode Island, on August 23, 1996.
By /s/ Seth A. Rudnick
------------------------------------
Seth A. Rudnick
Chairman and Chief Executive Officer
and Director
Each person whose signature appears below constitutes and appoints Seth
A. Rudnick and Frederic A. Eustis, and each of them singly, 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 on Form S-8 to be filed by
CytoTherapeutics, Inc., 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 full power and
authority to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form S-8 has been signed below by the following
persons in the capacities shown.
Signature Capacity Date
- --------- -------- ----
/s/ Seth A. Rudnick Chairman, Chief Executive August 23, 1996
- ------------------------ Officer and Director (principal
Seth A. Rudnick executive officer)
/s/ Daniel E. Geffken Chief Financial Officer, Vice August 23, 1996
- ------------------------ President and Treasurer
Daniel E. Geffken (principal financial and
accounting officer)
/s/ Edwin C. Cadman Director August 23, 1996
- ------------------------
Edwin C. Cadman
/s/ Donald R. Conklin Director August 23, 1996
- ------------------------
Donald R. Conklin
- ------------------------ Director
Patrick Aebischer
/s/ Mark J. Levin Director August 23, 1996
- ------------------------
Mark J. Levin
-5-
<PAGE> 6
Signature Capacity Date
- --------- -------- ----
/s/ Richard J. Ramsden Director August 23, 1996
- ----------------------------
Richard J. Ramsden
/s/ Peter K. Simon Director August 23, 1996
- ----------------------------
Peter K. Simon
/s/ Sandra Nusinoff Lehrman Director August 23, 1996
- ----------------------------
Sandra Nusinoff Lehrman
-6-
<PAGE> 7
EXHIBIT INDEX
Exhibit
Number
- ------
Title of Exhibit Page
---------------- ----
5.1 Opinion of Ropes & Gray. 8
23.1 Consent of Ernst & Young, LLP. 9
23.2 Consent of Ropes & Gray (contained in the opinion
filed as Exhibit 5.1 to this registration statement).
24.1 Powers of Attorney (included in Part II of this
registration statement under the caption
"Signatures").
99.1 1992 Equity Incentive Plan, as amended to date 10
-7-
<PAGE> 1
Exhibit 5.1
August 23, 1996
CytoTherapeutics, Inc.
2 Richmond Square
Providence, RI 02906
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration
statement on Form S-8 (the "Registration Statement"), filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, for the registration of 1,500,000 shares of common stock, $.01 par
value (the "Shares"), of CytoTherapeutics, Inc. (the "Company") issuable under
the Company's 1992 Equity Incentive Plan, as amended (the "Plan").
We have acted as counsel for the Company in connection with the Plan
and are familiar with the actions taken by the Company in connection therewith.
For purposes of this opinion we have examined the Registration Statement, the
Plan, and such other documents as we deemed appropriate.
Based upon the foregoing, we are of the opinion that (i) the Shares
have been duly authorized, and the Shares, when issued and sold in accordance
with the terms of the Plan, will be validly issued, fully paid and
non-assessable.
We hereby consent to your filing this opinion as an exhibit to the
Registration Statement and to all references to our firm included in or made a
part of this Registration Statement.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference of our firm in the Registration Statement
(Form S-8 No. 333-_____) pertaining to the 1992 Equity Incentive Plan of
CytoTherapeutics, Inc. and to the incorporation by reference therein of our
report dated January 22, 1996, with respect to the financial statements of
CytoTherapeutics, Inc. incorporated by reference in its Annual Report (Form
10-K) for the year ended December 31, 1995, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
August 22, 1996
<PAGE> 1
Exhibit 99.1
As Amended Through
April, 1996
CYTOTHERAPEUTICS, INC.
1992 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of this Equity Incentive Plan (the "Plan") is to advance the
interests of CytoTherapeutics, Inc. (the "Company") by enhancing its ability to
attract and retain employees and other persons or entities who are in a position
to make significant contributions to the success of the Company and its
subsidiaries through ownership of shares of the Company's common stock
("Stock").
The Plan is intended to accomplish these goals by enabling the Company to
grant Awards in the form of Options, Stock Appreciation Rights, Restricted Stock
or Unrestricted Stock Awards, Deferred Stock Awards, Performance Awards, Loans
or Supplement Grants, or combinations thereof, all as more fully described
below.
2. ADMINISTRATION
The Plan will be administered by the Board of Directors of the Company (the
"Board"). The Board will have authority, not inconsistent with the express
provisions of the Plan and in addition to other authority granted under the
Plan, to (a) grant Awards at such time or times as it may choose; (b) determine
the size of each Award, including the number of shares of Stock subject to the
Award; (c) determine the type or types of each Award; (d) determine the terms
and conditions of each Award; (e) waive compliance by a Participant (as defined
below) with any obligations to be performed by the Participant under an Award
and waive any term or condition of an Award; (f) amend or cancel an existing
Award in whole or in part (and if an award is cancelled, grant another Award in
its place on such terms as the Board shall specify), except that the Board may
not, without the consent of the holder of an Award, take any action under this
clause with respect to such Award if such action would adversely affect the
rights of such holder; (g) prescribe the form or forms of instruments that are
required or deemed appropriate under the Plan, including any written notices and
elections required of Participants, and change such forms from time to time; (h)
adopt, amend and rescind rules and regulations for the administration of the
Plan; and (i) interpret the Plan and decide any questions and settle all
controversies and disputes that may arise in connection with the Plan. Such
determinations and actions of the Board, and all other determinations and
actions of the Board made or taken under authority granted by any provision of
the Plan, will be conclusive and will bind all parties. Nothing in this
paragraph shall be construed as limiting the power of the Board to make
adjustments under Section 7.3 or Section 8.6.
The Board may, in its discretion, delegate some or all of its powers with
respect to the Plan to a committee (the "Committee"), in which event all
references (as appropriate) to the Board hereunder shall be deemed to refer to
the Committee. The Committee, if one is appointed, shall consist of at least two
directors. A majority of the members of the Committee shall constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made without
notice or meeting of the Committee by a writing signed by a majority of the
Committee members. On and after registration of the Stock under the Securities
Exchange Act of 1934 (the "1934 Act"), the Board shall delegate the power to
select directors and officers to receive Awards under the Plan and the timing,
pricing and amount of such Awards to a committee, all members of which shall be
disinterested persons within the meaning of Rule 16b-3 under the 1934 Act and
"outside directors" within the meaning of section 162(m)(4)(C)(i) of the
Internal Revenue Code of 1986, as amended (the "Code").
3. EFFECTIVE DATE AND TERM OF PLAN
-1-
<PAGE> 2
The Plan will become effective on the date on which it is approved by the
stockholders of the Company. Grants of Awards under the Plan may be made prior
to that date (but after Board adoption of the Plan), subject to such approval of
the Plan.
No Award may be granted under the Plan after February 12, 2002, but Awards
previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
Subject to the adjustment as provided in Section 8.6 below, the aggregate
number of shares of Stock that may be delivered under the Plan will be
3,000,000. If any Award requiring exercise by the Participant for delivery of
Stock terminates without having been exercised in full, or if any Award payable
in Stock or cash is satisfied in cash rather than Stock, the number of shares of
Stock as to which such Award was not exercised or for which cash was substituted
will be available for future grants.
Stock delivered under the Plan may be either authorized but unissued Stock
or previously issued Stock acquired by the Company and held in treasury. No
fractional shares of Stock will be delivered under the Plan.
Subject to Section 8.6(a), the maximum number of shares of Stock as to
which Options may be granted to any Participant during the period beginning on
May 24, 1994 and ending on February 12, 2002 is 350,000 and the maximum number
of shares of Stock as to which Stock Appreciation Rights may be granted to any
Participant during the period beginning on May 24, 1994 and ending on February
12, 2002 is 350,000. For purposes of this paragraph, except as otherwise
provided in regulations or other guidance issued under Section 162(m) of the
Code, any repricing of an Option or Stock Appreciation Right shall be treated as
an additional grant.
5. ELIGIBILITY AND PARTICIPATION
Those eligible to receive Awards under the Plan ("Participants") will be
employees of the Company or any of its subsidiaries ("Employees") and other
persons or entities (including without limitation non-Employee directors of the
Company or a subsidiary of the Company) who, in the opinion of the Board, are in
a position to make a significant contribution to the success of the Company or
its subsidiaries. A "subsidiary" for purposes of the Plan will be a corporation
in which the Company owns, directly or indirectly, stock possessing 50% or more
of the total combined voting power of all classes of stock.
6. TYPES OF AWARDS
6.1. Options.
(a) Nature of Options. An Option is an Award entitling the recipient
on exercise thereof to purchase Stock at a specified exercise price.
Both "incentive stock options," as defined in section 422 of the Code (any
Option intended to qualify as an incentive stock option being hereinafter
referred to as an "ISO"), and Options that are not incentive stock options, may
be granted under the Plan. ISOs shall be awarded only to Employees.
(b) Exercise Price. The exercise price of an Option will be determined
by the Board subject to the following:
(1) The exercise price of an ISO shall not be less than 100%
(110% in the case of an ISO granted to a ten-percent shareholder) of
the fair market value of the Stock subject to the Option, determined
as of the time the Option is granted. A "ten-percent shareholder" is
any person who at the time of grant owns, directly or indirectly, or
is deemed to own by reason of the attribution rules of section 424(d)
of the Code, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any of its
subsidiaries.
-2-
<PAGE> 3
(2) In no case may the exercise price paid for Stock which is
part of an original issue of authorized Stock be less than the par
value per share of the Stock.
(3) The Board may reduce the exercise price of an Option at any
time after the time of grant, but in the case of an Option originally
awarded as an ISO, only with the consent of the Participant.
(c) Duration of Options. The latest date on which an Option may be
exercised will be the tenth anniversary (fifth anniversary, in the case of
an ISO granted to a ten-percent shareholder) of the day immediately
preceding the date the Option was granted, or such earlier date as may have
been specified by the Board at the time the Option was granted.
(d) Exercise of Options. An Option will become exercisable at such
time or times, and on such conditions, as the Board may specify. The Board
may at any time accelerate the time at which all or any part of the Option
may be exercised.
Any exercise of an Option must be in writing, signed by the proper person
and delivered or mailed to the Company, accompanied by (1) any documents
required by the Board and (2) payment in full in accordance with paragraph (e)
below for the number of shares for which the Option is exercised.
(e) Payment for Stock. Stock purchased on exercise of an Option must
be paid for as follows: (1) in cash or by check (acceptable to the Company
in accordance with guidelines established for this purpose), bank draft or
money order payable to the order of the Company or (2) if so permitted by
the instrument evidencing the Option (or in the case of an Option which is
not an ISO, by the Board at or after grant of the Option), (i) through the
delivery of shares of Stock which have been outstanding for at least six
months (unless the Board expressly approves a shorter period) and which
have a fair market value on the last business day preceding the date of
exercise equal to the exercise price, or (ii) by delivery of a promissory
note of the Option holder to the Company, payable on such terms as are
specified by the Board, or (iii) by delivery of an unconditional and
irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or (iv) by the withholding of
shares of Stock otherwise deliverable upon exercise which have a fair
market value on the date of exercise at least equal to the exercise price,
or (v) by any combination of the permissible forms of payment; provided,
that if the Stock delivered upon exercise of the Option is an original
issue of authorized Stock, at least so much of the exercise price as
represents the par value of such Stock must be paid other than by the
Option holder's personal check or promissory note.
(f) Discretionary Payments. If the market price of shares of Stock
subject to an Option (other than an Option which is in tandem with a Stock
Appreciation Right as described in Section 6.2 below) exceeds the exercise
price of the Option at the time of its exercise, the Board may cancel the
Option and cause the Company to pay in cash or in shares of Common Stock
(at a price per share equal to the fair market value per share) to the
person exercising the Option an amount equal to the difference between the
fair market value of the Stock which would have been purchased pursuant to
the exercise (determined on the date the Option is cancelled) and the
aggregate exercise price which would have been paid. The Board may exercise
its discretion to take such action only if it has received a written
request from the person exercising the Option, but such a request will not
be binding on the Board.
6.2. Stock Appreciation Rights.
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right is
an Award entitling the recipient on exercise of the Right to receive an
amount, in cash or Stock or a combination thereof (such form to be
determined by the Board), determined in whole or in part by reference to
appreciation in Stock value.
In general, a Stock Appreciation Right entitles the Participant to receive,
with respect to each share of Stock as to which the Right is exercised, the
excess of the share's fair market value on the date of exercise over its fair
market value on the date the Right was granted. However, the Board may provide
at the time of grant that
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<PAGE> 4
the amount the recipient is entitled to receive will be adjusted upward or
downward under rules established by the Board to take into account the
performance of the Stock in comparison with the performance of other stocks or
an index or indices of other stocks. The Board may also grant Stock Appreciation
Rights that provide, in such limited circumstances following a change in control
(as determined by the Board) of the Company as the Board may specify, that the
holder of such Right will be entitled to receive, with respect to each share of
Stock subject to the Right, an amount equal to the excess of a specified value
(which may include an average of values) for a share of Stock during a period
preceding the change in control over the fair market value of a share of Stock
on the date the Right was granted.
(b) Grant of Stock Appreciation Rights. Stock Appreciation Rights may
be granted in tandem with, or independently of, Options granted under the
Plan. A Stock Appreciation Right granted in tandem with an Option which is
not an ISO may be granted either at or after the time the Option is
granted. A Stock Appreciation Right granted in tandem with an ISO may be
granted only at the time the Option is granted.
(c) Rules Applicable to Tandem Awards. When Stock Appreciation Rights
are granted in tandem with Options, the following will apply:
(1) The Stock Appreciation Right will be exercisable only at such
time or times, and to the extent, that the related Option is
exercisable and will be exercisable in accordance with the procedure
required for exercise of the related Option.
(2) The Stock Appreciation Right will terminate and no longer be
exercisable upon the termination or exercise of the related Option,
except that a Stock Appreciation Right granted with respect to less
than the full number of shares covered by an Option will not be
reduced until the number of shares as to which the related Option has
been exercised or has terminated exceeds the number of shares not
covered by the Stock Appreciation Right.
(3) The Option will terminate and no longer be exercisable upon
the exercise of the related Stock Appreciation Right.
(4) The Stock Appreciation Right will be transferable only with
the related Option.
(5) A Stock Appreciation Right granted in tandem with an ISO may
be exercised only when the market price of the Stock subject to the
Option exceeds the exercise price of such option.
(d) Exercise of Independent Stock Appreciation Rights. A Stock
Appreciation Right not granted in tandem with an Option will become
exercisable at such time or times, and on such conditions, as the Board may
specify. The Board may at any time accelerate the time at which all or any
part of the Right may be exercised.
Any exercise of an independent Stock Appreciation Right must be in writing,
signed by the proper person and delivered or mailed to the Company, accompanied
by any other documents required by the Board.
6.3. Restricted and Unrestricted Stock.
(a) Nature of Restricted Stock Award. A Restricted Stock Award
entitles the recipient to acquire, for a purchase price equal to par value,
shares of Stock subject to the restrictions described in paragraph (d)
below ("Restricted Stock").
(b) Acceptance of Award. A Participant who is granted a Restricted
Stock Award will have no rights with respect to such Award unless the
Participant accepts the Award by written instrument delivered or mailed to
the Company accompanied by payment in full of the specified purchase price,
if any, of the shares covered by the Award. Payment may be by certified or
bank check or other instrument acceptable to the Board.
-4-
<PAGE> 5
(c) Rights as a Stockholder. A Participant who receives Restricted
Stock will have all the rights of a stockholder with respect to the Stock,
including voting and dividend rights, subject to the restrictions described
in paragraph (d) below and any other conditions imposed by the Board at the
time of grant. Unless the Board otherwise determines, certificates
evidencing shares of Restricted Stock will remain in the possession of the
Company until such shares are free of all restrictions under the Plan.
(d) Restrictions. Except as otherwise specifically provided by the
Plan, Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of, and if the Participant ceases to be an
Employee or otherwise suffers a Status Change (as defined at Section 7.2(a)
below) for any reason, must be offered to the Company for purchase for the
amount of cash paid for the Stock, or forfeited to the Company if no cash
was paid. These restrictions will lapse at such time or times, and on such
conditions, as the Board may specify. The Board may at any time accelerate
the time at which the restrictions on all or any part of the shares will
lapse.
(e) Notice of Election. Any Participant making an election under
Section 83(b) of the Code with respect to Restricted Stock must provide a
copy thereof to the Company within 10 days of the filing of such election
with the Internal Revenue Service.
(f) Other Awards Settled with Restricted Stock. The Board may, at the
time any Award described in this Section 6 is granted, provide that any or
all the Stock delivered pursuant to the Award will be Restricted Stock.
(g) Unrestricted Stock. The Board may, in its sole discretion, sell to
any Participant shares of Stock free of restrictions under the Plan for a
price which is not less than the par value of the Stock.
6.4. Deferred Stock.
A Deferred Stock Award entitles the recipient to receive shares of Stock to
be delivered in the future. Delivery of the Stock will take place at such time
or times, and on such conditions, as the Board may specify. The Board may at any
time accelerate the time at which delivery of all or any part of the Stock will
take place. At the time any Award described in this Section 6 is granted, the
Board may provide that, at the time Stock would otherwise be delivered pursuant
to the Award, the Participant will instead receive an instrument evidencing the
Participant's right to future delivery of Deferred Stock.
6.5. Performance Awards; Performance Goals.
(a) Nature of Performance Awards. A Performance Award entitles the
recipient to receive, without payment, an amount in cash or Stock or a
combination thereof (such form to be determined by the Board) following the
attainment of Performance Goals. Performance Goals may be related to
personal performance, corporate performance, departmental performance or
any other category of performance deemed by the Board to be important to
the success of the Company. The Board will determine the Performance Goals,
the period or periods during which performance is to be measured and all
other terms and conditions applicable to the Award.
(b) Other Awards Subject to Performance Condition. The Board may, at
the time any Award described in this Section 6 is granted, impose the
condition (in addition to any conditions specified or authorized in this
Section 6 or any other provision of the Plan) that Performance Goals be met
prior to the Participant's realization of any payment or benefit under the
Award.
6.6. Loans and Supplemental Grants.
(a) Loans. The Company may make a loan to a Participant ("Loan"),
either on the date of or after the grant of any Award to the Participant. A
Loan may be made either in connection with the purchase of Stock under the
Award or with the payment of any Federal, state and local income tax with
respect to income recognized as a result of the Award. The Board will have
full authority to decide
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whether to make a Loan and to determine the amount, terms and conditions of
the Loan, including the interest rate (which may be zero), whether the Loan
is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the Loan is to be repaid and the conditions,
if any, under which it may be forgiven. However, no Loan may have a term
(including extensions) exceeding ten years in duration.
(b) Supplemental Grants. In connection with any Award, the Board may
at the time such Award is made or at a later date, provide for and grant a
cash award to the Participant ("Supplemental Grant") not to exceed an
amount equal to (1) the amount of any federal, state and local income tax
on ordinary income for which the Participant may be liable with respect to
the Award, determined by assuming taxation at the highest marginal rate,
plus (2) an additional amount on a grossed-up basis intended to make the
Participant whole on an after-tax basis after discharging all the
Participant's income tax liabilities arising from all payments under this
Section 6. Any payments under this subsection (b) will be made at the time
the Participant incurs Federal income tax liability with respect to the
Award.
7. EVENTS AFFECTING OUTSTANDING AWARDS
7.1. Death.
If a Participant dies, the following will apply:
(a) All Options and Stock Appreciation Rights held by the Participant
immediately prior to death, to the extent then exercisable, may be
exercised by the Participant's executor or administrator or the person or
persons to whom the Option or Right is transferred by will or the
applicable laws of descent and distribution, at any time within the
one-year period ending with the first anniversary of the Participant's
death (or such shorter or longer period as the Board may determine), and
shall thereupon terminate. In no event, however, shall an Option or Stock
Appreciation Right remain exercisable beyond the latest date on which it
could have been exercised without regard to this Section 7. Except as
otherwise determined by the Board, all Options and Stock Appreciation
Rights held by a Participant immediately prior to death that are not then
exercisable shall terminate at death.
(b) Except as otherwise determined by the Board, all Restricted Stock
held by the Participant must be transferred to the Company (and, in the
event the certificates representing such Restricted Stock are held by the
Company, such Restricted Stock will be so transferred without any further
action by the Participant) in accordance with Section 6.3 above.
(c) Any payment or benefit under a Deferred Stock Award, Performance
Award, or Supplemental Grant to which the Participant was not irrevocably
entitled prior to death will be forfeited and the Award canceled as of the
time of death, unless otherwise determined by the Board.
7.2. Termination of Service (Other Than By Death).
If a Participant who is an Employee ceases to be an Employee for any reason
other than death, or if there is a termination (other than by reason of death)
of the consulting, service or similar relationship in respect of which a
non-Employee Participant was granted an Award hereunder (such termination of the
employment or other relationship being hereinafter referred to as a "Status
Change"), the following will apply:
(a) Except as otherwise determined by the Board, all Options and Stock
Appreciation Rights held by the Participant that were not exercisable
immediately prior to the Status Change shall terminate at the time of the
Status Change. Any Options or Rights that were exercisable immediately
prior to the Status Change will continue to be exercisable for a period of
three months (or such longer period as the Board may determine), and shall
thereupon terminate, unless the Award provides by its terms for immediate
termination in the event of a Status Change or unless the Status Change
results from a discharge for cause which in the opinion of the Board casts
such discredit on the Participant as to justify immediate termination of
the Award. In no event, however, shall an Option or Stock Appreciation
Right remain exercisable beyond the latest date on which it could have been
exercised without regard to this
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<PAGE> 7
Section 7. For purposes of this paragraph, in the case of a Participant who
is an Employee, a Status Change shall not be deemed to have resulted by
reason of (i) a sick leave or other bona fide leave of absence approved for
purposes of the Plan by the Board, so long as the Employee's right to
reemployment is guaranteed either by statute or by contract, or (ii) a
transfer of employment between the Company and a subsidiary or between
subsidiary, or to the employment of a corporation (or a parent or
subsidiary corporation of such corporation) issuing or assuming an option
in a transaction to which section 424(a) of the Code applies.
(b) Except as otherwise determined by the Board, all Restricted Stock
held by the Participant at the time of the Status Change must be
transferred to the Company (and, in the event the certificates representing
such Restricted Stock are held by the Company, such Restricted Stock will
be so transferred without any further action by the Participant) in
accordance with Section 6.3 above.
(c) Any payment or benefit under a Deferred Stock Award, Performance
Award, or Supplemental Grant to which the Participant was not irrevocably
entitled prior to the Status Change will be forfeited and the Award
cancelled as of the date of such Status Change unless otherwise determined
by the Board.
7.3. Certain Corporate Transactions.
Except as provided below in this Section 7.3, on the effective date of a
Corporate Transaction (as defined below) (i) each outstanding Option and Stock
Appreciation Right shall automatically become exercisable with respect to fifty
percent (50%) of any portion of such Option or Stock Appreciation Right which is
not then exercisable, (ii) all restrictions with respect to fifty percent (50%)
of the shares of Common Stock then subject to the restrictions of Restricted
Stock awards shall lapse, (iii) fifty percent (50%) of all payments or other
benefits under each outstanding Deferred Stock Award, Performance Award and
Supplemental Grant which have not then been paid or provided shall be paid or
provided, and (iv) fifty percent (50%) of the unpaid principal balance and
accrued interest on each outstanding Loan shall be forgiven.
Provisions (i) through (iv) above shall not apply to the extent an
outstanding Award held by a participant who, following the covered transaction,
will be employed by or otherwise providing services to a corporation which is a
surviving or acquiring corporation in such transaction or an affiliate of such a
corporation, is replaced by such surviving or acquiring corporation or affiliate
with a replacement award which, in the judgment of the Board, is substantially
equivalent to the Award and which replacement award provides that if the
recipient of such replacement award suffers an Involuntary Termination (as
defined below) within twenty-four (24) months after the effective date of the
Corporate Transaction in which such replacement award was granted then (i) each
replacement option and stock appreciation right will automatically become
exercisable with respect to fifty percent (50%) of any portion of such
replacement option or stock appreciation right which is unexercisable at the
time of the Involuntary Termination, (ii) all restrictions with respect to fifty
percent (50%) of the shares of stock subject to replacement restricted stock
awards at the time of the Involuntary Termination shall lapse, (iii) fifty
percent (50%) of all payments or other benefits under each outstanding
replacement deferred stock award, performance award and supplemental grant which
have not been paid or provided as of the time of the Involuntary Termination
shall be paid or provided, and (iv) fifty percent (50%) of the unpaid principal
balance and accrued interest at the time of the Involuntary Termination on each
outstanding replacement loan shall be forgiven.
The term "Corporate Transaction" shall mean the occurrence of any of the
following: (i) a merger or consolidation involving the Company which results in
less than 50% of the combined voting power of the surviving or resulting
entity's outstanding securities being held by the stockholders of the Company
who were stockholders immediately prior to such transaction, or (ii) the sale,
transfer or other disposition of more than 51% of the Company's assets in a
single or related series of transactions or (iii) within any twenty-four (24)
consecutive month period, persons who were members of the Board immediately
prior to such twenty-four (24) month period, together with any persons who were
first elected as directors (other than as a result of any settlement of a proxy
or consent solicitation contest or any action taken to avoid such a contest)
during such twenty-four (24) month period by or upon the recommendation of
persons who were members of the Board immediately prior to such twenty-four (24)
month period and who constituted a majority of the Board at the time of such
election, cease to constitute a majority of the Board.
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The term "Involuntary Termination" shall mean (i) the termination of the
services of any Participant which occurs by reason of such individual's
involuntary dismissal or discharge for reasons other than as a result of (a) the
commission of any act or fraud, embezzlement or dishonesty by the Participant,
(b) material unauthorized use or disclosure by such individual of confidential
information or trade secrets of the Company or its successor, or (c) any other
intentional misconduct by such individual adversely affecting the business or
affairs of the Company or its successor in a material manner, or (ii) (d) a
material diminution of the responsibilities of a Participant, (e) a reduction of
more than 10% in a Participant's level of compensation (including base salary,
benefits or any non-discretionary and objective-standard incentive payment or
bonus award) or (c) a relocation of a Participant's principal place of
employment by more than 50 miles, only if such change, reduction or relocation
is effected by the Company or the successor thereto without the Participant's
consent.
8. GENERAL PROVISIONS
8.1. Documentation of Awards.
Awards will be evidenced by such written instruments, if any, as may be
prescribed by the Board from time to time. Such instruments may be in the form
of agreements to be executed by both the Participant and the Company, or
certificates, letters or similar instruments, which need not be executed by the
Participant but acceptance of which will evidence agreement to the terms
thereof.
8.2. Rights as a Stockholder, Dividend Equivalents.
Except as specifically provided by the Plan, the receipt of an Award will
not give a Participant rights as a stockholder; the participant will obtain such
rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, upon actual receipt of Stock. However, the Board may, on
such conditions as it deems appropriate, provide that a Participant will receive
a benefit in lieu of cash dividends that would have been payable on any or all
Stock subject to the Participant's Award had such Stock been outstanding.
Without limitation, the Board may provide for payment to the Participant of
amounts representing such dividends, either currently or in the future, or for
the investment of such amounts on behalf of the Participant.
8.3. Conditions on Delivery of Stock.
The Company will not be obligated to deliver any shares of Stock pursuant
to the Plan or to remove restriction from shares previously delivered under the
Plan (a) until all conditions of the Award have been satisfied or removed, (b)
until, in the opinion of the Company's counsel, all applicable federal and state
laws and regulation have been complied with, (c) if the outstanding Stock is at
the time listed on any stock exchange, until the shares to be delivered have
been listed or authorized to be listed on such exchange upon official notice of
notice of issuance, and (d) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to exercise of the
Award, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
If an Award is exercised by the Participant's legal representative, the
Company will be under no obligation to deliver Stock pursuant to such exercise
until the Company is satisfied as to the authority of such representative.
8.4. Tax Withholding.
The Company will withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all federal, state and local withholding tax
requirements (the "withholding requirements").
In the case of an Award pursuant to which Stock may be delivered, the Board
will have the right to require that the Participant or other appropriate person
remit to the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the Board with regard
to such requirements, prior to the delivery of any Stock. If and to the extent
that such withholding is required, the Board may permit
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<PAGE> 9
the Participant or such other person to elect at such time and in such manner as
the Board provides to have the Company hold back from the shares to be
delivered, or to deliver to the Company, Stock having a value calculated to
satisfy the withholding requirement.
If at the time an ISO is exercised the Board determines that the Company
could be liable for withholding requirements with respect to a disposition of
the Stock received upon exercise, the Board may require as a condition of
exercise that the person exercising the ISO agree (a) to inform the Company
promptly of any disposition (within the meaning of section 424(c) of the Code)
of Stock received upon exercise, and (b) to give such security as the Board
deems adequate to meet the potential liability of the Company for the
withholding requirements and to augment such security from time to time in any
amount reasonably deemed necessary by the Board to preserve the adequacy of such
security.
8.5. Transferability of Awards.
Except as the Board may otherwise determine in connection with gifts and
except as provided below, no Award (other than an Award in the form of an
outright transfer of cash or Unrestricted Stock) may be transferred other than
by will or by the laws of descent and distribution, and during an employee's
lifetime an Award requiring exercise may be exercised only by the Participant
(or in the event of the Participant's incapacity, the person or persons legally
appointed to act on the Participant's behalf). The Board may grant Options that
are transferable, (i) without payment of consideration, to immediate family
members of the optionee or to trusts or partnerships for such family members;
the Committee may also amend outstanding Options to provide for such
transferability or (ii) as is otherwise hereafter permitted in accordance with
Rule 16b-3 of the 1934 Act (or any rule promulgated in replacement thereof or in
substitution therefor).
8.6. Adjustments in the Event of Certain Transactions.
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or other change in the Company's capitalization,
or other distribution to common stockholders other than normal cash
dividends, after the effective date of the Plan, the Board will make any
appropriate adjustments to the maximum number of shares that may be
delivered under the Plan under Section 4 above.
(b) In any event referred to in paragraph (a), the Board will also
make any appropriate adjustments to the number and kind of shares of stock
or securities subject to Awards then outstanding or subsequently granted,
any exercise prices relating to Awards and any other provision of Awards
affected by such change. The Board may also make such adjustments to take
into account material changes in law or in accounting practices or
principles, mergers, consolidations, acquisitions, dispositions or similar
corporate transactions, or any other event, if it is determined by the
Board that adjustments are appropriate to avoid distortion in the operation
of the Plan.
8.7. Employment Rights, Etc.
Neither the adoption of the Plan nor the grant of Awards will confer upon
any person any right to continue retention by the Company or any subsidiary as
an Employee or otherwise, or affect in any way the right of the Company or
subsidiary to terminate an employment, service or similar relationship at any
time. Except as specifically provided by the Board in any particular case, the
loss of existing or potential profit in Awards granted under the Plan will not
constitute an element of damages in the event of termination of an employment,
service or similar relationship even if the termination is in violation of an
obligation of the Company to the Participant.
8.8. Deferral of Payments.
The Board may agree at any time, upon request of the Participant, to defer
the date on which any payment under an Award will be made.
8.9. Past Services as Consideration.
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Where a Participant purchases Stock under an Award for a price equal to the
par value of the Stock the Board may determine that such price has been
satisfied by past services rendered by the Participant.
9. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of Awards to a Participant will
affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock will be issued to
Employees.
The Board may at any time or times amend the Plan or any outstanding Award
for any purpose which may at the time be permitted by law, or may at any time
terminate the Plan as to any further grants of Awards, provided that (except to
the extent expressly required or permitted by the Plan) no such amendment will,
without the approval of the stockholders of the Company, effectuate a change for
which stockholder approval is required in order for the Plan to continue to
qualify for the award of ISOs under section 422 of the Code, or for the award of
performance-based compensation under section 162(m) of the Code, or to continue
to qualify under Rule 16b-3 promulgated under Section 16 of the 1934 Act.
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