<PAGE> 1
As filed with the Securities and Exchange Commission on June 14, 1996
REGISTRATION NO. 333-
================================================================================
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
---------------------------
PROCEPT, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 04-2893483
(State or Other Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
840 MEMORIAL DRIVE, CAMBRIDGE, MASSACHUSETTS 02139
(Address of Principal Executive Offices)
---------------------------
1989 STOCK PLAN
(Full Title of the Plan)
STANLEY C. ERCK
President and Chief Executive Officer
Procept, Inc.
840 Memorial Drive
Cambridge, Massachusetts 02139
(617) 491-1100
(Name, Address and Telephone Number of Agent for Service)
with copies to:
LYNNETTE C. FALLON, ESQ.
Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
(617) 573-0100
---------------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed maximum
Title of each class of securities to Amount to be maximum offering aggregate offering Amount of
be registered registered price per share(1) price(1) registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 250,000 shares $2.58 $645,000 $222.41
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of determining the registration fee
and computed pursuant to Rule 457(h) and based upon the average of the
high and low sale prices on June 13, 1996 as reported by the Nasdaq
National Market System.
</TABLE>
<PAGE> 2
STATEMENT REGARDING INCORPORATION BY REFERENCE FROM EFFECTIVE REGISTRATION
STATEMENT.
Pursuant to Instruction E to Form S-8, the contents of the Registrant's
Registration Statement on Form S-8 filed with the Securities and Exchange
Commission (the "Commission") on March 14, 1994 (File No. 33-76252) relating to
the registration of 1,083,940 shares of the Registrant's Common Stock, $0.01 par
value per share (the "Common Stock"), authorized for issuance under the
Registrant's 1989 Stock Plan (the "Plan"), are incorporated by reference in
their entirety in this Registration Statement, except as to the items set forth
below. This Registration Statement provides for the registration of an
additional 250,000 shares of the Registrant's Common Stock to be issued under
the Plan.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Commission (File No. 0-21134) are
incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995.
(b) All other reports of the Registrant filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since the end of the fiscal year covered by the annual report referred to
in (a) above.
(c) The description of the Registrant's Common Stock contained in
Amendment No. 2 to its Registration Statement on Form 8-A/A (File No. 0-21134)
filed on February 7, 1994, including any amendment or report filed for the
purpose of updating such description.
All documents filed after the date of this Registration Statement by the
Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
and prior to the filing of a post-effective amendment which indicates that all
shares of Common Stock offered hereunder have been sold or which deregisters all
shares of Common Stock 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 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the Common Stock offered hereby will be passed upon for the
Company by Palmer & Dodge LLP, Boston, Massachusetts. Peter Wirth and Lynnette
C. Fallon, the Clerk and Assistant Clerk, respectively, of the Company, are
partners of Palmer & Dodge LLP.
ITEM 8. EXHIBITS.
See Exhibit Index on page 5.
<PAGE> 4
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 Cambridge, Commonwealth of Massachusetts, on this
14th day of June, 1996.
PROCEPT, INC.
(Registrant)
By:/s/ Stanley C. Erck
------------------------------
Stanley C. Erck, President and
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Procept, Inc., hereby
severally constitute and appoint Stanley C. Erck, Michael J. Higgins, Peter
Wirth and Lynnette C. Fallon, and each of them singly, our true and lawful
attorneys-in-fact, with full power to them in any and all capacities, to sign
any amendments to this Registration Statement on Form S-8 (including any
post-effective amendments thereto), and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on this 14th day of June, 1996:
Signature Capacity
- --------- --------
/s/ Stanley C. Erck President, Chief Executive Officer
- ------------------------- (Principal Executive Officer) and Director
Stanley C. Erck
/s/ Michael J. Higgins Vice President, Finance and Chief Financial
- ------------------------- Officer (Principal Financial Officer and Principal
Michael J. Higgins Accounting Officer)
/s/ Nancy S. Amer Director
- -------------------------
Nancy S. Amer
Director
- -------------------------
James H. Cavanaugh, Ph.D.
/s/ Zola P. Horovitz Director
- -------------------------
Zola P. Horovitz, Ph.D.
/s/ Max Link Director
- -------------------------
Max Link, Ph.D.
/s/ Ellis L. Reinherz Director
- -------------------------
Ellis L. Reinherz, M.D.
<PAGE> 5
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<C> <S> <C>
4.1 Restated Certificate of Incorporation of Procept, Inc., as amended.
Filed herewith. 6
4.2 Restated By-Laws of Procept, Inc. Filed as Exhibit 3.3 to Registration
Statement on Form S-1 (File No. 33-57188) and incorporated
herein by reference.
5 Opinion of Palmer & Dodge LLP as to the legality of the securities
registered hereunder. Filed herewith. 12
23.1 Consent of Coopers & Lybrand L.L.P., independent accountants.
Filed herewith. 14
23.2 Consent of Palmer & Dodge LLP (contained in Exhibit 5).
24 Power of Attorney (included in the signature page hereto).
99 Procept, Inc. 1989 Stock Plan, as amended. Filed herewith. 16
</TABLE>
<PAGE> 1
EXHIBIT 4.1
RESTATED CERTIFICATE OF INCORPORATION
OF
PROCEPT, INC.
INCORPORATED PURSUANT TO AN ORIGINAL CERTIFICATE OF INCORPORATION
FILED WITH THE SECRETARY OF STATE ON MAY 8, 1992,
HERETOFORE AMENDED AND RESTATED BY A RESTATED CERTIFICATE OF
INCORPORATION FILED WITH THE SECRETARY OF STATE ON JANUARY 5, 1993
AND FURTHER AMENDED BY A CERTIFICATE OF
AMENDMENT FILED WITH THE SECRETARY OF STATE ON MARCH 19, 1993.
-------------------------------------------------------------
The undersigned, for the purpose of amending and restating the Restated
Certificate of Incorporation of Procept, Inc. (the "Corporation") under the laws
of the State of Delaware, hereby certifies as follows:
FIRST. The name of the Corporation is Procept, Inc.
SECOND. The address of the Corporation's registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, City of Dover, County of Kent,
State of Delaware. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD. The nature of the business or purposes to be conducted or promoted
are:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
In general, to possess and exercise all the powers and privileges granted
by the General Corporation Law of Delaware or by any other law of Delaware or by
this Restated Certificate of Incorporation, together with any powers incidental
thereto, so far as such powers and privileges are necessary or convenient to the
conduct, promotion or attainment of the business or purposes of the Corporation.
FOURTH. The total number of shares of stock which the Corporation shall
have authority to issue is Twelve Million (12,000,000) shares of Common Stock
with a par value of $0.01 per share.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. The Board of Directors is expressly authorized to exercise all
powers granted to the Directors by law except insofar as such powers are limited
or denied herein or in the by-laws of the Corporation. In furtherance of such
powers, the Board of Directors shall have the right to make, alter or repeal the
by-laws of the Corporation.
SEVENTH. Meetings of Stockholders may be held within or without the State
of Delaware, as the by-laws may provide. The books of the Corporation may be
kept outside the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the by-laws of the
Corporation. Elections of Directors need not be by written ballot unless the
by-laws of the Corporation shall so provide.
<PAGE> 2
EIGHTH. The Corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as amended from
time to time, indemnify each 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, administrative or investigative, by reason of the fact
that he is or was, or has agreed to become, a director or officer of the
Corporation, or is or was serving, or has agreed to serve, at the request of the
Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom.
Indemnification may include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of any undertaking by the person indemnified
to repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayments.
The Corporation shall not indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person
unless the initiation thereof was approved by the Board of Directors of the
Corporation.
The indemnification rights provided in this Article (i) shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any law, agreement or vote of stockholders or disinterested directors or
otherwise, and (ii) shall inure to the benefit of the heirs, executors and
administrators of such persons. The Corporation may, to the extent authorized
from time to time by its Board of Directors, grant indemnification rights to
other employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than, those
set forth in this Article.
NINTH. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for 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) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is hereafter
amended to authorize a further limitation or elimination of the liability of
directors or officers, then the liability of a director or officer of the
Corporation shall, in addition to the limitation on personal liability provided
herein, be limited or eliminated to the fullest extent permitted by the Delaware
General Corporation Law, as from time to time amended. No amendment to or repeal
of this Article Ninth shall apply to or have any effect on the liability or
alleged liability of any director or officer of the Corporation for or with
respect to any acts or omissions of such director or officer occurring prior to
such amendment or repeal.
<PAGE> 3
TENTH. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
This Restated Certificate of Incorporation was duly adopted in accordance
with the provisions of Sections 242 and 245 of the Delaware General Corporation
Law by written consent in accordance with Section 228 of the Delaware General
Corporation Law. Prompt notice of such written consent has been given as
provided in Section 228 of the Delaware General Corporation Law.
Signed this 17th day of February, 1994.
/s/ Stanley C. Erck
--------------------------
Stanley C. Erck, President
Attest:
/s/ Peter Wirth
- ----------------------
Peter Wirth, Secretary
<PAGE> 4
CERTIFICATE OF CHANGE OF REGISTERED AGENT
AND REGISTERED OFFICE
Procept, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
The present registered agent of the corporation is The Prentice-Hall
Corporation System, Inc. and the present registered office of the corporation is
in the county of Kent.
The Board of Directors of Procept, Inc. adopted the following resolution on
the 16th day of April, 1996.
RESOLVED: That, pursuant to Section 133 of the Delaware General Corporation
Law, the registered office of the Company in the State of
Delaware be and it hereby is changed from the present address in
the County of Kent, to Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, County of New Castle, and the
authorization of the present registered agent of the Company be
and the same hereby is withdrawn, and the Corporation Trust
Company shall be and hereby is constituted and appointed the
registered agent of the Company at the address of its registered
office.
IN WITNESS WHEREOF, Procept, Inc. has caused this statement to be signed by
Michael J. Higgins, its Vice President, Finance and Chief Financial Officer,
this 7th day of May, 1996.
/s/ Michael J. Higgins
---------------------------------
Michael J. Higgins
Vice President, Finance and Chief
Financial Officer
<PAGE> 5
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
PROCEPT, INC.
It is hereby certified that:
1. The name of the corporation is Procept, Inc. (the "Corporation").
2. The Corporation's Certificate of Incorporation, as heretofore amended
and restated is hereby amended by deleting Article FOURTH thereof in
its entirety and substituting the following:
"FOURTH: The total number of shares of stock which the Corporation has
authority to issue is 30,000,000 shares of Common Stock with a par value of
$0.01 per share."
3. The amendments set forth herein were adopted by the stockholders of
the Corporation holding a majority of the outstanding shares of Common
Stock at the annual meeting of stockholders in accordance with Section
242 of the General Corporation Law of the State of Delaware.
Signed and attested to on May 16, 1996.
/s/ Stanley C. Erck
------------------------------
Stanley C. Erck, President and
Chief Executive Officer
ATTEST:
/s/ Lynnette C. Fallon
- ----------------------
Lynnette C. Fallon,
Assistant Secretary
<PAGE> 1
EXHIBIT 5
PALMER & DODGE LLP
One Beacon Street
Boston, Massachusetts 02108
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
June 14, 1996
Procept, Inc.
840 Memorial Drive
Cambridge, Massachusetts 02139
We are rendering this opinion in connection with the Registration Statement
on Form S-8 (the "Registration Statement") filed by Procept, Inc. (the
"Company") with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Act"), on or about the date hereof. The Registration
Statement relates to 250,000 shares of the Company's Common Stock, $0.01 par
value (the "Shares"), offered pursuant to the provisions of the Company's 1989
Stock Plan (the "Plan").
We have acted as your counsel in connection with the preparation of the
Registration Statement and are familiar with the proceedings taken by the
Company in connection with authorization, issuance and sale of the Shares. We
have examined all such documents as we consider necessary to enable us to render
this opinion.
Based upon the foregoing, we are of the opinion that when issued in
accordance with the terms of the Plan and the options or other rights granted
thereunder, the Shares will be duly authorized, validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as a part of the
Registration Statement.
Very truly yours,
/s/ Palmer & Dodge LLP
----------------------
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Procept, Inc. on Form S-8 of our report, which includes an explanatory paragraph
regarding substantial doubt about the entity's ability to continue as a going
concern, dated February 22, 1996, except as to the information presented in Note
M, for which the date is March 27, 1996, on our audits of the financial
statements of Procept, Inc. as of December 31, 1995 and 1994, and for each of
the three years in the period ended December 31, 1995, which report is included
in Procept, Inc.'s Annual Report on Form 10-K as previously filed.
/s/ COOPERS & LYBRAND L.L.P.
----------------------------
Boston, Massachusetts
June 14, 1996
<PAGE> 1
EXHIBIT 99
PROCEPT, INC.
1989 Stock Plan
---------------
(as amended through May 16, 1996)
1. PURPOSE. This 1989 Stock Plan (the "Plan") is intended to provide
incentives: (a) to the officers and other employees of Procept, Inc. (the
"Company"), its parent (if any) and any present or future subsidiaries of the
Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code") ("ISO" or "ISOs"); (b) to
officers, employees and consultants of the Company and Related Corporations by
providing them with opportunities to purchase stock in the Company pursuant to
options granted hereunder which do not qualify as ISOs ("Non-Qualified Option"
or "Non-Qualified Options"); (c) to officers, employees and consultants of the
Company and Related Corporations by providing them with awards of stock in the
Company ("Awards"); and (d) to officers, employees and consultants of the
Company and Related Corporations by providing them with opportunities to make
direct purchases of Stock in the Company ("Purchases"). Both ISOs and
Non-Qualified Options are referred to hereafter individually as an "Option" and
collectively as "Options". Options, Awards and authorizations to make Purchases
are referred to hereafter collectively as "Stock Rights". As used herein, the
terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation", respectively, as those terms are defined in Section 424 of the
Code.
2. Administration of the Plan.
--------------------------
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered
by the Board of Directors of the Company (the "Board"). The Board may appoint a
Stock Plan Committee (the "Committee") of three or more of its members to
administer this Plan. The members of such Committee shall be "disinterested"
within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended. Hereinafter, all references in this Plan to the "Committee"
shall mean the Board if no Committee has been appointed. Subject to ratification
of the grant or authorization of each Stock Right by the Board (if so required
by applicable state law), and subject to the terms of the Plan, the Committee
shall have the authority to (i) determine the employees of the Company and
Related Corporations (from among the class of employees eligible under paragraph
3 to receive ISOs) to whom ISOs may be granted, and to determine (from among the
class of individuals and entities eligible under paragraph 3 to receive
Non-Qualified Options and Awards and to make Purchases) to whom Non-Qualified
Options, Awards and authorizations to make Purchases may be granted; (ii)
determine the time or times at which Options or Awards may be granted or
Purchases made; (iii) determine the option price of shares subject to each
Option, which price shall not be less than the minimum price specified in
paragraph 6, and the purchase price of shares subject to each Purchase; (iv)
determine whether each Option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options, Awards and Purchases and the nature of such restrictions, if
any, and (vii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the Committee determines to issue a Non-
Qualified Option, it shall take whatever actions it deems necessary, under
Section 422 of the Code and the regulations promulgated thereunder, to ensure
that such Option is not treated as an ISO. The interpretation and construction
by the Committee of any provisions of the Plan or of any Stock Right granted
under it shall be final unless otherwise determined by the Board. The Committee
may from time to time adopt such rules and regulations for carrying out the Plan
as it may deem best. No member of
<PAGE> 2
the Board or the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any Stock Right granted under it.
B. COMMITTEE ACTIONS. The Committee may select one of its members as
its chairman, and shall hold meetings at such time and places as it may
determine. Acts by a majority of the Committee, or acts reduced to or approved
in writing by a majority of the members of the Committee, shall be the valid
acts of the Committee. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted to any employee of
the Company or any Related Corporation. Those officers of the Company who are
not employees may not be granted ISOs under the Plan. Non-Qualified Options,
Awards and authorizations to make Purchases may be granted to any employee or
officer (whether or not also an employee) or consultant of the Company or any
Related Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant an ISO, a Non-Qualified
Option, an Award or an authorization to make a Purchase. Granting of any Stock
Right to any individual or entity shall neither entitle that individual or
entity to, nor disqualify such individual or entity from, participating in any
other grant of Stock Rights.
4. STOCK. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common Stock of the Company, par value $.01
per share (the "Common Stock"), or shares of Common Stock reacquired by the
Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 1,387,118. The aggregate number of shares which may be
issued pursuant to the Plan is subject to further adjustment as provided in
paragraph 13. Any such shares may be issued as ISOs, Non-Qualified Options or
Awards, or to persons or entities making Purchases, so long as the number of
shares so issued does not exceed such number, as adjusted. If any Option granted
under the Plan shall expire or terminate for any reason without having been
exercised in full or shall cease for any reason to be exercisable in whole or in
part, or if the Company shall reacquire any unvested shares issued pursuant to
Options, Awards or Purchases, the unpurchased shares subject to such Options and
any unvested shares so reacquired by the Company shall again be available for
grants of Stock Rights under the Plan.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan at
any time on or after April 18, 1989 and prior to April 18, 1999. The date of
grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Rights; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant. The Committee shall have the right, with the consent of the optionee, to
convert an ISO granted under the Plan to a Non-Qualified Option pursuant to
paragraph 16.
6. Minimum Option Price; ISO Limitations.
-------------------------------------
A. PRICE FOR NON-QUALIFIED OPTIONS. The exercise price per share
specified in the agreement relating to each Non-Qualified Option granted under
the Plan shall in no event be less than the lesser of (i) the book value per
share of Common Stock as of the end of the fiscal year of the Company
immediately preceding the date of such grant, or (ii) fifty percent (50%) of the
fair market value per share of Common Stock on the date of such grant.
2
<PAGE> 3
B. PRICE OF ISOs. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less than the
fair market value per share of Common Stock on the date of such grant. In the
case of an ISO to be granted to an employee owning stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than one hundred ten percent
(110%) of the fair market value per share of Common Stock on the date of grant.
C. $100,000 ANNUAL LIMITATION ON ISOs. Each eligible employee may be
granted ISOs only to the extent that, in the aggregate under this Plan and all
incentive stock option plans of the Company and any Related Corporation, such
ISOs do not become exercisable for the first time by such employee during any
calendar year in a manner which would entitle the employee to purchase more than
$100,000 in fair market value (determined at the time the ISOs were granted) of
Common Stock in that year. Any options granted to an employee in excess of such
amount will be granted as Non-Qualified Options.
D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded, "fair
market value" shall be determined as of the last business day for which the
prices or quotes discussed in this sentence are available prior to the date such
Option is granted and shall mean (i) the average (on that date) of the high and
low prices of the Common Stock on the principal national securities exchange on
which the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the NASDAQ National Market System, if the Common
Stock is not then traded on a national securities exchange; or (iii) the closing
bid price (or average of bid prices) last quoted (on that date) by an
established quotation service for over-the-counter securities, if the Common
Stock is not reported on the NASDAQ National Market System. However, if the
Common Stock is not publicly traded at the time an Option is granted under the
Plan, "fair market value" shall be deemed to be the fair value of the Common
Stock as determined by the Committee after taking into consideration all factors
which it deems appropriate, including, without limitation, recent sale and offer
prices of the Common Stock in private transactions negotiated at arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten years and one day from the date of grant in
the case of Non-Qualified Options, (ii) ten years from the date of grant in the
case of ISOs generally, and (iii) five years from the date of grant in the case
of ISOs granted to an employee owning stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Related Corporation. Subject to earlier termination as provided in
paragraphs 9 and 10, the term of each ISO shall be the term set forth in the
original instrument granting such ISO, except with respect to any part of such
ISO that is converted into a Non-Qualified Option pursuant to paragraph 16.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 and
through 12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. The option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify.
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the
Option, unless otherwise specified by the Committee.
3
<PAGE> 4
C. PARTIAL EXERCISE. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total number
of shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date of exercise or vesting of any installment of any Option;
provided that the Committee shall not, without the consent of an optionee,
accelerate the exercise date of any installment of any Option granted to any
employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to paragraph 16) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
6(C).
9. TERMINATION OF EMPLOYMENT. If an ISO optionee ceases to be employed by
the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of such
optionee's ISOs shall become exercisable or vested, and such optionee's ISOs
shall terminate after the passage of ninety (90) days from the date of
termination of such optionee's employment, but in no event later than on their
specified expiration dates, except to the extent that such ISOs (or unexercised
installments thereof) have been converted into Non-Qualified Options pursuant to
paragraph 16. Employment shall be considered as continuing uninterrupted during
any bona fide leave of absence (such as those attributable to illness, military
obligations or governmental service) provided that the period of such leave does
not exceed 90 days or, if reemployment is guaranteed by statute. A bona fide
leave of absence with the written approval of the Committee shall not be
considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Company or any Related Corporation
to continue the employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change of employment
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation. Nothing
in the Plan shall be deemed to give any grantee of any Stock Right the right to
be retained in employment or other service by the Company or any Related
Corporation for any period of time.
10. Death; Disability.
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A. DEATH. If an ISO optionee ceases to be employed by the Company and
all Related Corporations by reason of such optionee's death, any ISO of such
optionee may be exercised, to the extent of the number of shares with respect to
which such optionee could have exercised it on the date of such optionee's
death, by such optionee's estate, personal representative or beneficiary who has
acquired the ISO by will or by the laws of descent and distribution, at any time
prior to the earlier of the specified expiration date of the ISO or 180 days
from the date of such optionee's death.
B. DISABILITY. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of such optionee's disability, such
optionee shall have the right to exercise any ISO held by such optionee on the
date of termination of employment, to the extent of the number of shares with
respect to which such optionee could have exercised it on that date, at any time
prior to the earlier of the specified expiration date of the ISO or 180 days
from the date of the termination of such optionee's employment. For the purposes
of the Plan, the term "disability" shall mean "permanent and total disability"
as defined in Section 22(e)(3) of the Code or successor statute.
11. ASSIGNABILITY. No Option shall be assignable or transferable by the
optionee except by will or by the laws of descent and distribution, and during
the lifetime of the optionee each Option shall be exercisable only by such
optionee.
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12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of Options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
B. CONSOLIDATION OR MERGERS. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Committee or the board
of directors of any entity assuming the obligations of the Company hereunder
(the "Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the shares then subject to such Options the consideration
payable with respect to the outstanding shares of Common Stock in connection
with the Acquisition; or (ii) upon written notice to the optionees, provide that
all Options must be exercised, to the extent then exercisable, within a
specified number of days of the date of such notice, at the end of which period
the Options shall terminate; or (iii) terminate all Options in exchange for a
cash payment equal to the excess of the fair market value of the shares subject
to such Options (to the extent then exercisable) over the exercise price
thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an Option shall be entitled to receive
for the purchase price paid upon such exercise the securities such optionee
would have received if such optionee had exercised such optionee's Option prior
to such recapitalization or reorganization.
D. MODIFICATION OF ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs shall
be made only after the Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424 of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments.
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E. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such other
time and subject to such other conditions as shall be determined by the
Committee.
F. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to Options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
G. FRACTIONAL SHARES. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
H. ADJUSTMENTS. Upon the happening of any of the foregoing events
described in subparagraphs A, B or C above, the class and aggregate number of
shares set forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments to
be made under this paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.
If any person or entity owning restricted Common Stock obtained by exercise of a
Stock Right made hereunder receives shares or securities or cash in connection
with a corporate transaction described in subparagraphs A, B or C above as a
result of owning such restricted Common Stock, such shares or securities or cash
shall be subject to all of the conditions and restrictions applicable to the
restricted Common Stock with respect to which such shares or securities or cash
were issued, unless otherwise determined by the Committee or the Successor
Board.
14. MEANS OF EXERCISING STOCK RIGHTS. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the purchase price therefor
either (a) in United States dollars in cash or by check, or (b) at the
discretion of the Committee, through delivery of shares of Common Stock having a
fair market value equal as of the date of the exercise to the cash exercise
price of the Stock Right, or (c) at the discretion of the Committee, by delivery
of the grantee's personal recourse note being interest payable not less than
annually at no less than 100% of the lowest applicable Federal rate, as defined
in Section 1274(d) of the Code, or (d) at the discretion of the Committee, by
any combination of (a), (b) and (c) above. If the Committee exercises its
discretion to permit payment of the exercise price of an ISO by means of the
methods set forth in clauses (b), (c), or (d) of the preceding sentence, such
discretion shall be exercised in writing at the time of the grant of the ISO in
question. The holder of a Stock Right shall not have the rights of a shareholder
with respect to the shares covered by such holder's Stock Right until the date
of issuance of a stock certificate to such holder for such shares. Except as
expressly provided above in paragraph 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on April
18, 1989, subject (with respect to the validation of ISOs granted under the
Plan) to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent. If the approval
of stockholders is not obtained by April 18, 1990, any grants of ISOs under the
Plan made prior to that date will be rescinded. The Plan shall expire on April
18, 1999 (except as to Options
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outstanding on that date). Subject to the provisions of paragraph 5 above, Stock
Rights may be granted under the Plan prior to the date of stockholder approval
of the Plan. The Board may terminate or amend the Plan in any respect at any
time, except that, without the approval of the stockholders obtained within 12
months before or after the Board adopts a resolution authorizing any of the
following actions: (a) the total number of shares that may be issued under the
Plan may not be increased (except by adjustment pursuant to paragraph 13); (b)
the provisions of paragraph 3 regarding eligibility for grants of ISOs may not
be modified; (c) the provisions of paragraph 6(B) regarding the exercise price
at which shares may be offered pursuant to ISOs may not be modified (except by
adjustment pursuant to paragraph 13); and (d) the expiration date of the Plan
may not be extended. Except as otherwise provided in this paragraph 15, in no
event may action of the Board or stockholders alter or impair the rights of a
grantee, without such grantee's consent, under any Stock Right previously
granted to such grantee.
16. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs. The
Committee, at the written request of any optionee, may in its discretion take
such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options. At
the time of such conversion, the Committee (with the consent of the optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.
17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock, for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 20) or the vesting of restricted Common
Stock acquired on the exercise of a Stock Right hereunder, the Company, in
accordance with Section 3402(a) of the Code, may require the optionee, Award
recipient or purchaser to pay additional withholding taxes in respect of the
amount that is considered compensation includable in such person's gross income.
The Committee in its discretion may condition (i) the exercise of an Option,
(ii) the grant of an Award, (iii) the making of a Purchase of Common Stock for
less than its fair market value, or (iv) the vesting of restricted Common Stock
acquired by exercising a Stock Right, on the grantee's payment of such
additional withholding taxes.
20. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each employee who
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition of any Common Stock acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such Common Stock before the later of (a)
two years
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after the date the employee was granted the ISO, or (b) one year after the date
the employee acquired Common Stock by exercising the ISO. If the employee has
died before such stock is sold, these holding period requirements do not apply
and no Disqualifying Disposition can occur thereafter.
21. GOVERNING LAW; CONSTRUCTION. The validity and construction of the Plan
and instruments evidencing Stock Rights shall be governed by the laws of the
State of Delaware, or the laws of any jurisdiction in which the Company or its
successors in interest may be organized. In construing this Plan, the singular
shall include the plural.
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