As filed with the Securities and Exchange Commission on May 22, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Martek Biosciences Corporation
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
52-1399362
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(I.R.S. employer identification no.)
6480 Dobbin Road, Columbia, Maryland 21045
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(Address of principal executive offices) (Zip code)
Martek Biosciences Corporation 1997 Stock Option Plan
(Full title of the plans)
Steve Dubin
Chief Financial Officer, General Counsel, Secretary and Treasurer
Martek Biosciences Corporation
6480 Dobbin Road
Columbia Maryland 21045
(Name and address of agent for service)
(410) 740-0081
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(Telephone number, including area code, of agent for service)
Copy to:
Michael J. Silver
Hogan & Hartson L.L.P.
111 South Calvert Street
Baltimore, Maryland 21202
(410) 659-2741
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------- -------------- -------------------- -------------------- -------------------
Title of securities Amount to be Proposed Proposed maximum Amount of
to be registered registered(1) maximum offering aggregate offering registration fee(1)
price per share(1) price(1)
- ---------------------- -------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Common Stock, par (a) 22,150 (a)$25.00 (a)$ 553,750 (a)$ 167.80
value $.10 per share (b) 10,000 (b)$16.50 (b)$ 165,000 (b)$ 50.00
(c) 717,850 (c)$16.25 (c)$11,665,062 (c)$3,534.86
Total Fee:$3,752.66
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</TABLE>
(1) Pursuant to Rule 457(h)(1), the proposed maximum offering price per
share, proposed maximum aggregate offering price and the amount of the
registration fee are based on (a) the option exercise price of $25.00 per share
for 22,150 shares issuable upon exercise of currently outstanding options, (b)
the option exercise price of $16.50 per share for 10,000 shares issuable upon
exercise of currently outstanding options and (c) the average of the bid and
asked prices of $16.25 per share of Martek Biosciences Corporation Common Stock
on the NASDAQ /National Market System on May 15, 1997 with respect to the other
717,850 shares otherwise issuable under the plan listed above.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I will be sent
or given to each person eligible to participate in the Martek Biosciences
Corporation 1997 Stock Option Plan as provided by Rule 428(b)(1). In accordance
with the instructions to Part I of Form S-8, such documents will not be filed
with the Commission either as part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
Martek Biosciences Corporation (the "Registrant") hereby incorporates
by reference into this registration statement the following documents:
(a) The Registrant's Annual Report on Form 10-K for the year
ended October 31, 1996;
(b) All reports filed with the Securities and Exchange
Commission pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since October 31, 1996; and
(c) The description of the Registrant's Common Stock contained
in the Registrant's Registration Statement on Form 8-A filed
with the Securities and Exchange Commission on September 9,
1993, registering shares of Common Stock pursuant to Section
12(g) of the Exchange Act.
In addition, all documents filed by the Registrant subsequent to the date
hereof pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act,
subsequent to the filing of this Registration Statement and prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be part of
hereof from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference shall be deemed to be modified or superseded to the
extent that a statement contained in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such prior statement. The documents required to be so modified or
superseded shall not be deemed to constitute a part of this Registration
Statement, except as so modified or superseded.
To the extent that any proxy statement is incorporated by reference herein,
such incorporation shall not include any information contained in such proxy
statement which is not, pursuant to the Commission's rules, deemed to be "filed"
with the Commission or subject to the liabilities of Section 18 of the Exchange
Act.
<PAGE>
Item 4. Description of Securities.
A description of the Registrant's Common Stock is incorporated by reference
into this Registration Statement under Item 3.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Item 15 of Part II of the Registration Statement of the Registrant on Form
S-3 (Registration No. 33-96537) is hereby incorporated by reference into this
Registration Statement.
* * *
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), 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 public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of the 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 and will be governed by the final adjudication of such issue.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
Number Description
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4.1(e) Martek Biosciences Corporation 1997 Stock Option
Plan ("Stock Plan")
5 Opinion of Hogan & Hartson L.L.P. Regarding the Legality
of the Shares of Common Stock Being Registered
24.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5)
24.2 Consent of Ernst & Young LLP, Independent Auditors
25.1 Power of Attorney (contained on signature page)
Item 9. Undertakings.
<PAGE>
(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;
(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;
(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)
do not apply if the registration statement is on Form S-3 or Form
S-8, and 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 Exchange Act that are incorporated by
reference in the registration statement.
(2)That, for the purpose of determining any liability under the
Securities Act, 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, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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) The undertaking concerning indemnification is set forth under the
response to Item 6.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 County of Columbia, State of Maryland, on this 22nd day of
May, 1997.
MARTEK BIOSCIENCES CORPORATION
By: /s/ Henry Linsert Jr.
-------------------------
Henry Linsert, Jr.
Chairman and Chief Executive Officer
We, the undersigned officers and directors of Martek Biosciences
Corporation, hereby severally and individually constitute and appoint Steve
Dubin and Michael J. Silver, and each of them, the true and lawful attorneys and
agents of each of us to execute in the name, place and stead of each of us
(individually and in any capacity stated below) any and all amendments to this
Registration Statement on Form S-8, and all instruments necessary or advisable
in connection therewith and to file the same with the Securities and Exchange
Commission, each of said attorneys and agents to have power to act with or
without the other and to have full power and authority to do and perform in the
name and on behalf of each of the undersigned every act whatsoever necessary or
advisable to be done in the premises as fully and to all intents and purposes as
any of the undersigned might or could do in person, and we hereby ratify and
confirm our signatures as they may be signed by our said attorneys and agents
and each of them to any and all such amendment and amendments.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
/s/ Henry Linsert, Jr. Chairman and Chief Executive May 22, 1997
------------------------ Officer
(Principal Executive Officer)
Henry Linsert, Jr.
/s/ Steve Dubin Chief Financial Officer May 22, 1997
------------------------ General Counsel, Secretary and
Treasurer (Principal Financial
Officer and Principal Accounting
Officer)
Steve Dubin
Board of Directors:
By: /s/ Henry Linsert, Jr. Director May 22, 1997
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Henry Linsert, Jr.
By: Director May 22, 1997
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Jules Blake
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By: Director May 22, 1997
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Bruce E. Elmblad
By: /s/ Ann L. Johnson Director May 22, 1997
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Ann L. Johnson
By: /s/ Douglas J. MacMaster, Jr. Director May 22, 1997
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Douglas J. MacMaster, Jr.
By: /s/ John H. Mahar Director May 22, 1997
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John H. Mahar
By: /s/ Sandra Panem Director May 22, 1997
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Sandra Panem
By: /s/ Richard J. Radmer Director May 22, 1997
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Richard J. Radmer
By: /s/ Eugene H. Rotberg Director May 22, 1997
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Eugene H. Rotberg
By: /s/ William D. Smart Director May 22, 1997
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William D. Smart
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EXHIBIT INDEX
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Exhibit Sequential
Number Description Page Number
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4.1(e) Martek Biosciences Corporation 1997
Employee Stock Option Plan ("Stock Plan")
5 Opinion of Counsel Regarding
the Legality of the Shares of Common
Stock Being Registered
24.1 Consent of Counsel *
24.2 Consent of Ernst & Young LLP, Independent Auditors
25 Powers of Attorney **
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* Included in Exhibit 5.
** Contained on signature page.
MARTEK BIOSCIENCES CORPORATION
1997 STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
Page
1. PURPOSE...................................................................1
2. DEFINITIONS...............................................................1
3. ADMINISTRATION............................................................3
3.1. Committee.........................................................3
3.2. No Liability......................................................3
4. STOCK.....................................................................4
5. ELIGIBILITY...............................................................4
6. EFFECTIVE DATE AND TERM...................................................4
6.1. Effective Date....................................................4
6.2. Term..............................................................5
7. GRANT OF OPTIONS..........................................................5
8. LIMITATION ON INCENTIVE STOCK OPTIONS.....................................5
9. OPTION AGREEMENTS.........................................................5
10. OPTION PRICE..............................................................6
11. TERM AND EXERCISE OF OPTIONS..............................................6
11.1. Term.............................................................6
11.2. Exercise by Optionee.............................................6
11.3. Option Period and Limitations on Exercise........................6
11.4. Method of Exercise...............................................7
11.5. Parachute Limitations............................................8
12. TRANSFERABILITY OF OPTIONS................................................9
12.1. Transferability of Options.......................................9
12.2. Family Transfers.................................................9
13. TERMINATION OF EMPLOYMENT.................................................9
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY...............................10
14.1. Death...........................................................10
14.2. Disability......................................................11
15. USE OF PROCEEDS..........................................................11
16. SECURITIES LAWS..........................................................11
17. EXCHANGE ACT: RULE 16b-3.................................................12
17.1.General..........................................................12
17.2. Compensation Committee..........................................12
17.3. Restriction on Transfer of Stock................................13
18. AMENDMENT AND TERMINATION................................................13
19. EFFECT OF CHANGES IN CAPITALIZATION......................................13
19.1. Changes in Stock................................................13
19.2. Reorganization With Corporation Surviving.......................14
19.3. Other Reorganizations; Sale of Assets or Stock..................14
19.4. Adjustments.....................................................15
19.5. No Limitations on Corporation...................................15
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20. WITHHOLDING..............................................................15
21. DISCLAIMER OF RIGHTS.....................................................15
22. NONEXCLUSIVITY...........................................................16
23. GOVERNING LAW............................................................16
2
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MARTEK BIOSCIENCES CORPORATION
1997 EMPLOYEE STOCK OPTION PLAN
MARTEK BIOSCIENCES CORPORATION, a Delaware corporation (the
"Corporation"), sets forth herein the terms of the Martek Biosciences
Corporation 1997 Stock Option Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the
Corporation by providing eligible individuals (as designated pursuant to Section
5 hereof) an opportunity to acquire or increase a proprietary interest in the
Corporation, which thereby will create a stronger incentive to expend maximum
effort for the growth and success of the Corporation and its subsidiaries and
will encourage such eligible individuals to continue to service the Corporation.
Each stock option granted under the Plan is intended to be an Incentive Stock
Option within the meaning of Section 422 of the Code, except (a) to the extent
that any such Option would exceed the limitations set forth in Section 8 hereof
and (b) for Options specifically designated at the time of grant as not being
Incentive Stock Options.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents
(including Option Agreements), the following definitions shall apply:
2.1 "Affiliate" means Martek Biosciences Corporation and any company or
other trade or business that is controlled by or under common control with the
Corporation, (determined in accordance with the principles of Section 414(b) and
414(c) of the Code and the regulations thereunder) or is an affiliate of the
Corporation within the meaning of Rule 405 of Regulation C under the 1933 Act.
2.2 "Board" means the Board of Directors of the Corporation.
2.3 "Cause" means, unless otherwise defined in an Option Agreement, (i)
gross negligence or willful misconduct in connection with the performance of
duties; (ii) conviction of a criminal offense (other than minor traffic
offenses); or (iii) material breach of any term of any employment, consulting or
other services, confidentiality, intellectual property or non-competition
agreements, if any, between Optionee and the Corporation or any of its
Subsidiaries or Affiliates.
2.4 "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.
<PAGE>
2.5 "Committee" means the Compensation Committee of the Board which must
consist of no fewer than two members of the Board and shall be appointed by the
Board.
2.6 "Corporation" means Martek Biosciences Corporation.
2.7 "Effective Date" means the date of adoption of the Plan by the Board.
2.8 "Employer" means Martek Biosciences Corporation or other Affiliate
which employs the designated recipient of an Option.
2.9 "Exchange Act" means the Securities Exchange Act of 1934, as now in
effect or as hereafter amended.
2.10 "Fair Market Value" means the value of each share of Stock subject to
the Plan determined as follows: if on the Grant Date or other determination date
the shares of Stock are listed on an established national or regional stock
exchange, are admitted to quotation on the National Association of Securities
Dealers Automated Quotation System, or are publicly traded on an established
securities market, the Fair Market Value of the shares of Stock shall be the
closing price of the shares of Stock on such exchange or in such market (the
highest such closing price if there is more than one such exchange or market) on
the trading day immediately preceding the Grant Date or such other determination
date (or if there is no such reported closing price, the Fair Market Value shall
be the mean between the highest bid and lowest asked prices or between the high
and low sale prices on such trading day) or, if no sale of the shares of Stock
is reported for such trading day, on the next preceding day on which any sale
shall have been reported. If the shares of Stock are not listed on such an
exchange, quoted on such System or traded on such a market, Fair Market Value
shall be determined by the Board in good faith.
2.11 "Grant Date" means the later of (i) the date as of which the Committee
approves the grant and (ii) the date as of which the Optionee and the
Corporation or Affiliate enter the relationship resulting in the Optionee being
eligible for grants.
2.12 "Immediate Family Members" means the spouse, children and
grandchildren of the Optionee.
2.13 "Incentive Stock Option" means an "incentive stock option" within the
meaning of section 422 of the Code.
2.14 "Option" means an option to purchase one or more shares of Stock
pursuant to the Plan.
2
<PAGE>
2.15 "Option Agreement" means the written agreement evidencing the grant of
an Option hereunder.
2.16 "Optionee" means a person who holds an Option under the Plan.
2.17 "Option Period" means the period during which Options may be exercised
as defined in Section 11.
2.18 "Option Price" means the purchase price for each share of Stock
subject to an Option.
2.19 "Plan" means the Martek Biosciences Corporation 1997 Stock Option
Plan.
2.20 "1933 Act" means the Securities Act of 1933, as now in effect or as
hereafter amended.
2.21 "Stock" means the shares of common stock, par value $.01 per share, of
the Corporation.
2.22 "Subsidiary" means any "subsidiary corporation" of the Corporation
within the meaning of Section 425(f) of the Code.
3. ADMINISTRATION
3.1. Committee
The Plan shall be administered by the Committee appointed by
the Board, which shall have the full power and authority to take all actions and
to make all determinations required or provided for under the Plan or any Option
granted or Option Agreement entered into hereunder and all such other actions
and determinations not inconsistent with the specific terms and provisions of
the Plan deemed by the Committee to be necessary or appropriate to the
administration of the Plan or any Option granted or Option Agreement entered
into hereunder. The interpretation and construction by the Committee of any
provision of the Plan or of any Option granted or Option Agreement entered into
hereunder shall be final and conclusive.
3.2. No Liability
No member of the Board or of the Committee shall be liable for
any action or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Option granted or
Option Agreement entered into hereunder.
3
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4. STOCK
The stock that may be issued pursuant to Options granted under
the Plan shall be Stock, which shares may be treasury shares or authorized but
unissued shares. The number of shares of Stock that may be issued pursuant to
Options granted under the Plan shall not exceed in the aggregate 750,000 shares
of Stock, which number of shares is subject to adjustment as provided in Section
19 hereof. If any Option expires, terminates or is terminated for any reason
prior to exercise in full, the shares of Stock that were subject to the
unexercised portion of such Option shall be available for future Options granted
under the Plan.
5. ELIGIBILITY
Options may be granted under the Plan to (i) any officer or
key employee of the Corporation, any Subsidiary or any Affiliate (including any
such officer or key employee who is also a director of the Corporation, any
Subsidiary or any Affiliate) or (ii) any other individual whose participation in
the Plan is determined to be in the best interests of the Corporation by the
Committee. An individual may hold more than one Option, subject to such
restrictions as are provided herein.
6. EFFECTIVE DATE AND TERM
6.1. Effective Date
The Plan shall become effective as of the date of adoption by
the Board, subject to stockholders' approval of the Plan within one year of such
effective date by a majority of the votes cast at a duly held meeting of the
stockholders of the Corporation at which a quorum representing a majority of all
outstanding stock is present, either in person or by proxy, and voting on the
matter, or by written consent in accordance with applicable state law and the
Certificate of Incorporation and By-Laws of the Corporation; provided, however,
that upon approval of the Plan by the stockholders of the Corporation, all
Options granted under the Plan on or after the effective date shall be fully
effective as if the stockholders of the Corporation had approved the Plan on the
effective date; and provided, further, that Options to purchase up to 35,000
shares granted during January, 1997 shall not be subject to stockholder
approval. If the stockholders fail to approve the Plan within one year of such
effective date, any Options granted hereunder, other than the Options to
purchase up to 35,000 shares described in the previous sentence, shall be null,
void and of no effect.
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6.2. Term
The Plan shall terminate on the date 10 years after the
effective date.
7. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee
may, at any time and from time to time prior to the date of termination of the
Plan, grant to such eligible individuals as the Committee may determine Options
to purchase such number of shares of Stock on such terms and conditions as the
Committee may determine, including any terms or conditions which may be
necessary to qualify such Options as Incentive Stock Options. Without limiting
the foregoing, the Committee may at any time, with the consent of the Optionee,
amend the terms of outstanding Options or issue new Options in exchange for the
surrender and cancellation of outstanding Options. The date on which the
Committee approves the grant of an Option (or such later date as is specified by
the Committee) shall be considered the date on which such Option is granted. The
maximum number of shares of Stock subject to Options that can be awarded under
the Plan to any person is 250,000 shares.
8. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than an Option described in Section 1 hereof)
shall constitute an Incentive Stock Option only to the extent that the aggregate
fair market value (determined at the time the Option is granted) of the Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionee during any calendar year (under the Plan and all other plans of
the Optionee's employer corporation and its parent and subsidiary corporations
within the meaning of Section 422(d) of the Code) does not exceed $100,000. This
limitation shall be applied by taking Options into account in the order in which
such Options were granted.
9. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by
written agreements to be executed by the Corporation and the Optionee, in such
form or forms as the Committee shall from time to time determine. Option
Agreements covering Options granted from time to time or at the same time need
not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.
5
<PAGE>
10. OPTION PRICE
The purchase price of each share of Stock subject to an Option
shall be fixed by the Committee and stated in each Option Agreement. In the case
of an Option that is intended to constitute an Incentive Stock Option, the
Option Price shall be not less than the greater of par value or 100 percent of
the fair market value of a share of the Stock covered by the Option on the date
the Option is granted (as determined in good faith by the Committee); provided,
however, that in the event the Optionee would otherwise be ineligible to receive
an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and
424(d) of the Code (relating to stock ownership of more than 10 percent), the
Option Price of an Option which is intended to be an Incentive Stock Option
shall be not less than the greater of par value or 110 percent of the fair
market value of a share of the Stock covered by the Option at the time such
Option is granted. In the case of an Option not intended to constitute an
Incentive Stock Option, the Option Price shall be not less than the par value of
a share of the Stock covered by the Option on the date the Option is granted (as
determined in good faith by the Committee).
11. TERM AND EXERCISE OF OPTIONS
11.1. Term
Each Option granted under the Plan shall terminate and all
rights to purchase shares thereunder shall cease upon the expiration of 10 years
from the date such Option is granted, or on such date prior thereto as may be
fixed by the Committee and stated in the Option Agreement relating to such
Option; provided, however, that in the event the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more
than 10 percent), an Option granted to such Optionee which is intended to be an
Incentive Stock Option shall in no event be exercisable after the expiration of
five years from the date it is granted.
11.2. Exercise by Optionee
Only the Optionee receiving an Option or a transferee of an
Option pursuant to Section 12 (or, in the event of the Optionee's legal
incapacity or incompetency, the Optionee's guardian or legal representative, and
in the case of the Optionee's death, the Optionee's estate) may exercise the
Option.
11.3. Option Period and Limitations on Exercise
Each Option granted under the Plan shall be exercisable in
whole or in part at any time and from time to time over a period commencing on
or after the date of grant of the Option and ending upon the expiration or
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termination of the Option, as the Committee shall determine and set forth in the
Option Agreement relating to such Option. Without limitation of the foregoing,
the Committee, subject to the terms and conditions of the Plan, may in its sole
discretion provide that an Option may not be exercised in whole or in part for
any period or periods of time during which such Option is outstanding as the
Committee shall determine and set forth in the Option Agreement relating to such
Option. Any such limitation on the exercise of an Option contained in any Option
Agreement may be rescinded, modified or waived by the Committee, in its sole
discretion, at any time and from time to time after the date of grant of such
Option. Notwithstanding any other provisions of the Plan except Section 6.1, no
Option, except an Option granted in January 1997, shall be exercisable in whole
or in part prior to the date the Plan is approved by the stockholders of the
Corporation as provided in Section 6.1 hereof.
11.4. Method of Exercise
An Option that is exercisable hereunder may be exercised by
delivery to the Corporation on any business day, at its principal office
addressed to the attention of the Committee, of written notice of exercise,
which notice shall specify the number of shares for which the Option is being
exercised, and shall be accompanied by payment in full of the Option Price of
the shares for which the Option is being exercised. Payment of the Option Price
for the shares of Stock purchased pursuant to the exercise of an Option shall be
made, as determined by the Committee and set forth in the Option Agreement
pertaining to an Option, (a) in cash or by certified check payable to the order
of the Corporation; (b) through the tender to the Corporation of shares of
Stock, which shares shall be valued, for purposes of determining the extent to
which the Option Price has been paid thereby, at their Fair Market Value on the
date of exercise; or (c) by a combination of the methods described in Sections
11.4(a) and 11.4(b) hereof; provided, however, that the Committee may in its
discretion impose and set forth in the Option Agreement pertaining to an Option
such limitations or prohibitions on the use of shares of Stock to exercise
Options as it deems appropriate. Payment in full of the Option Price need not
accompany the written notice of exercise provided the notice directs that the
Stock certificate or certificates for the shares for which the Option is
exercised be delivered to a licensed broker acceptable to the Corporation as the
agent for the individual exercising the Option and, at the time such Stock
certificate or certificates are delivered, the broker tenders to the Corporation
cash (or cash equivalents acceptable to the Corporation) equal to the Option
Price plus the amount (if any) of federal and/or other taxes which the
Corporation may, in its judgment, be required to withhold with respect to the
exercise of the Option. An attempt to exercise any Option granted hereunder
other than as set forth above shall be invalid and of no force and effect.
Promptly after the exercise of an Option and the payment in full of the Option
Price of the shares of Stock covered thereby, the individual exercising the
Option shall be entitled to the issuance of a Stock certificate or certificates
evidencing such individual's ownership of such shares. A separate Stock
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certificate or certificates shall be issued for any shares purchased pursuant to
the exercise of an Option which is an Incentive Stock Option, which certificate
or certificates shall not include any shares which were purchased pursuant to
the exercise of an Option which is not an Incentive Stock Option. An individual
holding or exercising an Option shall have none of the rights of a stockholder
until the shares of Stock covered thereby are fully paid and issued to such
individual and, except as provided in Section 19 hereof, no adjustment shall be
made for dividends or other rights for which the record date is prior to the
date of such issuance.
11.5. Parachute Limitations
Notwithstanding any other provision of this Plan or of any
other agreement, contract, or understanding heretofore or hereafter entered into
by the Optionee with the Corporation or any Subsidiary, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or
excludes application of this paragraph (an "Other Agreement"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by the Corporation (or any such Subsidiary) for the direct or
indirect provision of compensation to the Optionee (including groups or classes
of participants or beneficiaries of which the Optionee is a member), whether or
not such compensation is deferred, is in cash, or is in the form of a benefit to
or for the Optionee (a "Benefit Arrangement"), if the Optionee is a
"disqualified individual," as defined in Section 280G(c) of the Code, any Option
held by that Optionee and any right to receive any payment or other benefit
under this Plan shall not become exercisable or vested (i) to the extent that
such right to exercise, vesting, payment, or benefit, taking into account all
other rights, payments, or benefits to or for the Optionee under this Plan, all
Other Agreements, and all Benefit Arrangements, would cause any payment or
benefit to the Optionee under this Plan to be considered a "parachute payment"
within the meaning of Section 280G(b)(2) of the Code as then in effect (a
"Parachute Payment") and (ii) if, as a result of receiving a Parachute Payment,
the aggregate after-tax amounts received by the Optionee from the Corporation
under this Plan, all Other Agreements, and all Benefit Arrangements would be
less than the maximum after-tax amount that could be received by Optionee
without causing any such payment or benefit to be considered a Parachute
Payment. In the event that the receipt of any such right to exercise, vesting,
payment, or benefit under this Plan, in conjunction with all other rights,
payments, or benefits to or for the Optionee under any Other Agreement or any
Benefit Arrangement would cause the Optionee to be considered to have received a
Parachute Payment under this Plan that would have the effect of decreasing the
after-tax amount received by the Optionee as described in clause (ii) of the
preceding sentence, then the Optionee shall have the right, in the Optionee's
sole discretion, to designate those rights, payments, or benefits under this
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Plan, any Other Agreements, and any Benefit Arrangements that should be reduced
or eliminated so as to avoid having the payment or benefit to the Optionee under
this Plan be deemed to be a Parachute Payment.
12. TRANSFERABILITY OF OPTIONS
12.1. Transferability of Options
Except as provided in Section 12.2, during the lifetime of an
Optionee, only the Optionee (or, in the event of legal incapacity or
incompetency, the Optionee's guardian or legal representative) may exercise an
Option. Except as provided in Section 12.2, no Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by will or the
laws of descent and distribution.
12.2. Family Transfers.
Subject to the terms of the applicable Option Agreement, an
Optionee may transfer all or part of an Option which is not an Incentive Stock
Option to (i) any Immediate Family Member, (ii) a trust or trusts for the
exclusive benefit of any Immediate Family Member, or (iii) a partnership in
which Immediate Family Members are the only partners, provided that (x) there
may be no consideration for any such transfer, and (y) subsequent transfers of
transferred Options are prohibited except those in accordance with this Section
12.2 or by will or the laws of descent and distribution. Following transfer, any
such Option shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that for purposes of
Section 12.2 hereof the term "Optionee" shall be deemed to refer the transferee.
The events of termination of employment of Sections 13 and 14 hereof shall
continue to be applied with respect to the original Optionee, following which
the Option shall be exercisable by the transferee only to the extent, and for
the periods specified in Section 11.3.
13. TERMINATION OF EMPLOYMENT
Upon the termination of employment of an Optionee with the
Corporation, a Subsidiary or an Affiliate, other than by reason of the death or
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Optionee or for Cause, any Option granted to an Optionee pursuant
to the Plan shall continue to be exercisable only to the extent that it was
exercisable immediately before such termination; provided, however, such Option
shall terminate 30 days after the date of such termination of employment, unless
earlier terminated pursuant to Section 11.1 hereof, and such Optionee shall have
no further right to purchase shares of Stock pursuant to such Option; and
provided further, that the Committee may provide, by inclusion of appropriate
language in any Option Agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 11.3 hereof), in the event of
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termination of the employment of the Optionee with the Corporation, a Subsidiary
or an Affiliate, exercise an Option, in whole or in part, at any time subsequent
to such termination of employment and prior to termination of the Option
pursuant to Section 11.1 hereof, either subject to or without regard to any
installment limitation on exercise imposed pursuant to Section 11.3 hereof, as
the Committee, in its sole and absolute discretion, shall determine and set
forth in the Option Agreement. Upon the termination of employment of an Optionee
with the Corporation, a Subsidiary or an Affiliate for Cause, any Option granted
to an Optionee pursuant to the Plan shall terminate and such Optionee shall have
no further right to purchase shares of Stock pursuant to such Option; and
provided however, that the Committee may provide, by inclusion of appropriate
language in any Option Agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 11.3 hereof), in the event of
termination of employment of the Optionee with the Corporation, a Subsidiary or
an Affiliate for Cause, exercise an Option, in whole or in part, at any time
subsequent to such termination of employment and prior to termination of the
Option pursuant to Section 11.1 hereof, either subject to or without regard to
any installment limitation on exercise imposed pursuant to Section 11.3 hereof,
as the Committee, in its sole and absolute discretion, shall determine and set
forth in the Option Agreement. Whether a leave of absence or leave on military
or government service shall constitute a termination of employment for purposes
of the Plan shall be determined by the Committee, which determination shall be
final and conclusive. For purposes of the Plan, including without limitation
this Section 13 and Section 14, unless otherwise provided in an Option
Agreement, a termination of employment with the Corporation, a Subsidiary or an
Affiliate shall not be deemed to occur if the Optionee immediately thereafter is
employed with the Corporation, any other Subsidiary or any other Affiliate.
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
14.1. Death
If an Optionee dies within the period during which the Option
is exercisable, the executors, administrators, legatees or distributees of such
Optionee's estate shall have the right (subject to the general limitations on
exercise set forth in Section 11.3 hereof), at any time within one year after
the date of such Optionee's death and prior to termination of the Option
pursuant to Section 11.1 hereof, to exercise, in whole or in part, any Option
held by such Optionee at the date of such Optionee's death, to the extent such
Option was exercisable immediately prior to such Optionee's death; provided,
however, that the Committee may provide by inclusion of appropriate language in
any Option Agreement that, in the event of the death of an Optionee, the
executors, administrators, legatees or distributees of such Optionee's estate
may exercise an Option (subject to the general limitations on exercise set forth
in Section 11.3 hereof), in whole or in part, at any time subsequent to such
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Optionee's death and prior to termination of the Option pursuant to Section 11.1
hereof, either subject to or without regard to any installment limitation on
exercise imposed pursuant to Section 11.3 hereof, as the Committee, in its sole
and absolute discretion, shall determine and set forth in the Option Agreement.
14.2. Disability
If an Optionee terminates employment with the Corporation, a
Subsidiary or an Affiliate by reason of the "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such Optionee, then such
Optionee shall have the right (subject to the general limitations on exercise
set forth in Section 11.3 hereof), at any time within one year after such
termination of employment and prior to termination of the Option pursuant to
Section 11.1 hereof, to exercise, in whole or in part, any Option held by such
Optionee at the date of such termination of employment, to the extent such
Option was exercisable immediately prior to such termination of employment;
provided, however, that the Committee may provide, by inclusion of appropriate
language in any Option Agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 11.3 hereof), in the event of the
termination of employment of the Optionee with the Corporation or a Subsidiary
by reason of the "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code) of such Optionee, exercise an Option, in whole or in part,
at any time subsequent to such termination of employment and prior to
termination of the Option pursuant to Section 11.1 hereof, either subject to or
without regard to any installment limitation on exercise imposed pursuant to
Section 11.3 hereof, as the Committee, in its sole and absolute discretion,
shall determine and set forth in the Option Agreement. Whether a termination of
employment is to be considered by reason of "permanent and total disability" for
purposes of the Plan shall be determined by the Committee, which determination
shall be final and conclusive.
15. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of
Stock pursuant to Options granted under the Plan shall constitute general funds
of the Corporation.
16. SECURITIES LAWS
The Corporation shall not be required to sell or issue any
shares of Stock under any Option if the sale or issuance of such shares would
constitute a violation by the individual exercising the Option or by the
Corporation of any provisions of any law or regulation of any governmental
authority, including, without limitation, any federal or state securities laws
or regulations. If at any time the Corporation shall determine, in its
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discretion, that the listing, registration or qualification of any shares
subject to the Option upon any securities exchange or under any state or federal
law, or the consent of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the issuance or purchase of shares,
the Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Corporation, and any delay
caused thereby shall in no way affect the date of termination of the Option.
Specifically in connection with the Securities Act, upon exercise of any Option,
unless a registration statement under the Securities Act is in effect with
respect to the shares of Stock covered by such Option, the Corporation shall not
be required to sell or issue such shares unless the Corporation has received
evidence satisfactory to the Corporation that the Optionee may acquire such
shares pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Corporation shall be final and
conclusive. The Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act. The Corporation
shall not be obligated to take any affirmative action in order to cause the
exercise of an Option or the issuance of shares pursuant thereto to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable unless
and until the shares of Stock covered by such Option are registered or are
subject to an available exemption from registration, the exercise of such Option
(under circumstances in which the laws of such jurisdiction apply) shall be
deemed conditioned upon the effectiveness of such registration or the
availability of such an exemption.
17. EXCHANGE ACT: RULE 16b-3
17.1. General
The Plan is intended to comply with Rule 16b-3 ("Rule 16b-3")
(and any successor thereto) under the Exchange Act. Any provision inconsistent
with Rule 16b-3 shall, to the extent permitted by law and determined to be
advisable by the Committee (constituted in accordance with Section 17.2 hereof),
be inoperative and void.
17.2. Compensation Committee
The Committee appointed in accordance with Section 3.1 hereof
shall consist of not fewer than two members of the Board each of whom shall
qualify (at the time of appointment to the Committee and during all periods of
service on the Committee) in all respects as a "non-employee director" as
defined in Rule 16b-3.
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17.3. Restriction on Transfer of Stock
No director, officer or other "insider" of the Corporation
subject to Section 16 of the Exchange Act shall be permitted to sell Stock
(which such "insider" had received upon exercise of an Option) during the six
months immediately following the grant of such Option.
18. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend,
suspend or terminate the Plan as to any shares of Stock as to which Options have
not been granted. The Corporation also may retain the right in an Option
Agreement to cause a forfeiture of the shares or gain realized by an Optionee on
account of the Optionee taking actions in "competition with the Corporation," as
defined in the applicable Option Agreement. Furthermore, the Corporation may, in
the Option Agreement, retain the right to annul the grant of an Option if the
holder of such grant was employed by the Corporation, a Subsidiary, or an
Affiliate and is terminated "for cause," as defined in the applicable Option
Agreement. Except as permitted under Section 19 hereof, no amendment, suspension
or termination of the Plan shall, without the consent of the Optionee, alter or
impair rights or obligations under any Option theretofore granted under the
Plan.
19. EFFECT OF CHANGES IN CAPITALIZATION
19.1. Changes in Stock
If the number of outstanding shares of Stock is increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other increase
or decrease in such shares effected without receipt of consideration by the
Corporation, occurring after the effective date of the Plan, a proportionate and
appropriate adjustment shall be made by the Corporation in the number and kind
of shares for which Options are outstanding, so that the proportionate interest
of the Optionee immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event. Any such adjustment
in outstanding Options shall not change the aggregate Option Price payable with
respect to shares subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price
per share.
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19.2. Reorganization With Corporation Surviving
Subject to Section 19.3 hereof, if the Corporation shall be
the surviving entity in any reorganization, merger or consolidation of the
Corporation with one or more other entities, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger or consolidation.
19.3. Other Reorganizations; Sale of Assets or Stock
Upon the dissolution or liquidation of the Corporation, or
upon a merger, consolidation or reorganization of the Corporation with one or
more other entities in which the Corporation is not the surviving entity, or
upon a sale of substantially all of the assets of the Corporation to another
person or entity, or upon any transaction (including, without limitation, a
merger or reorganization in which the Corporation is the surviving entity)
approved by the Board that results in any person or entity (other than persons
who are holders of stock of the Corporation at the time the Plan is approved by
the Stockholders and other than an Affiliate) owning 80 percent or more of the
combined voting power of all classes of stock of the Corporation, the Plan and
all Options outstanding hereunder shall terminate, except to the extent
provision is made in connection with such transaction for the continuation of
the Plan and/or the assumption of the Options theretofore granted, or for the
substitution for such Options of new options covering the stock of a successor
entity, or a parent or subsidiary thereof, with appropriate adjustments as to
the number and kinds of shares and exercise prices, in which event the Plan and
Options theretofore granted shall continue in the manner and under the terms so
provided. In the event of any such termination of the Plan, each Optionee shall
have the right (subject to the general limitations on exercise set forth in
Section 11.3 hereof and except as otherwise specifically provided in the Option
Agreement relating to such Option), immediately prior to the occurrence of such
termination and during such period occurring prior to such termination as the
Committee in its sole discretion shall designate, to exercise such Option in
whole or in part, whether or not such Option was otherwise exercisable at the
time such termination occurs, but subject to any additional provisions that the
Committee may, in its sole discretion, include in any Option Agreement. The
Committee shall send written notice of an event that will result in such a
termination to all Optionees not later than the time at which the Corporation
gives notice thereof to its stockholders.
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19.4. Adjustments
Adjustments under this Section 19 relating to stock or
securities of the Corporation shall be made by the Committee, whose
determination in that respect shall be final and conclusive. No fractional
shares of Stock or units of other securities shall be issued pursuant to any
such adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share or unit.
19.5. No Limitations on Corporation
The grant of an Option pursuant to the Plan shall not affect
or limit in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
20. WITHHOLDING
The Corporation or a Subsidiary may be obligated to withhold
federal and local income taxes and Social Security taxes to the extent that an
Optionee realizes ordinary income in connection with the exercise of an Option.
The Corporation or a Subsidiary may withhold amounts needed to cover such taxes
from payments otherwise due and owing to an Optionee, and upon demand the
Optionee will promptly pay to the Corporation or a Subsidiary having such
obligation any additional amounts as may be necessary to satisfy such
withholding tax obligation. Such payment shall be made in cash or cash
equivalents.
21. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option
Agreement entered into pursuant to the Plan shall be construed to confer upon
any individual the right to remain in the employ of the Corporation, any
Subsidiary or any Affiliate, or to interfere in any way with the right and
authority of the Corporation, any Subsidiary or any Affiliate either to increase
or decrease the compensation of any individual at any time, or to terminate any
employment or other relationship between any individual and the Corporation, any
Subsidiary or any Affiliate. The obligation of the Corporation to pay any
benefits pursuant to the Plan shall be interpreted as a contractual obligation
to pay only those amounts described herein, in the manner and under the
conditions prescribed herein. The Plan shall in no way be interpreted to require
the Corporation to transfer any amounts to a third party trustee or otherwise
hold any amounts in trust or escrow for payment to any participant or
beneficiary under the terms of the Plan.
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22. NONEXCLUSIVITY
Neither the adoption of the Plan nor the submission of the
Plan to the stockholders of the Corporation for approval shall be construed as
creating any limitations upon the right and authority of the Board to adopt such
other incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan.
23. GOVERNING LAW.
This Plan and all Options to be granted hereunder shall be
governed by the laws of the State of Delaware (but not including the choice of
law rules thereof).
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HOGAN & HARTSON L.L.P.
May 22, 1997
Martek Biosciences Corporation
6480 Dobbin Road
Columbia, MD 21045
Ladies and Gentlemen:
This firm has acted as counsel to Martek Biosciences
Corporation, a Delaware corporation (the "Company"), in connection with its
registration, pursuant to a registration statement on Form S-8 filed on the date
hereof (the "Registration Statement"), of 750,000 shares (the "Shares") of
common stock, par value $.10 per share of the Company (the "Common Stock"),
issuable upon the exercise of options granted or to be granted or as restricted
Shares pursuant to the Martek Biosciences Corporation 1997 Stock Option Plan
(the "Plan"). This letter is furnished to you pursuant to the requirements of
Item 601(b)(5) of Regulation S-K, 17 C.F.R. ss. 229.601(b)(5) in connection with
such registration.
For purposes of this opinion letter, we have examined copies
of the following documents:
1. The Registration Statement.
2. The Articles of Incorporation of the Company, as
certified by the Secretary of State of the State of
Delaware on May 2, 1997 and by the Secretary of the
Company on the date hereof as being complete, accurate
and in effect.
3. The Bylaws of the Company, as certified by the
Secretary of the Company on the date hereof as being
complete, accurate and in effect.
4. The Plan as adopted by the Board of Directors and
stockholders of the Company and as certified by the
Secretary of the Company on the date hereof as being
complete, accurate and in effect.
5. Resolutions of the Board of Directors of the Company
adopted on March 14, 1997, as certified by the
Secretary of the Company on the date hereof as being
complete, accurate and in effect, relating to, among
other things, the approval of the Plan and the filing
of the Registration Statement.
6. A certificate of certain officers of the Company, dated
the date hereof, as to certain facts relating to the
Company.
In our examination of the aforesaid documents, we have assumed
the genuineness of all signatures, the legal capacity of natural persons, the
authenticity, accuracy and completeness of all documents submitted to us, and
the conformity with the original documents of all documents submitted to us as
certified, telecopied, photostatic, or reproduced copies. This opinion letter is
given, and all statements herein are made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on
the General Corporation Law of the State of Delaware, and we express no opinion
as to any other laws, statutes, ordinances, rules or regulations (such as state
securities or "blue sky" laws).
Based upon, subject to and limited by the foregoing, we are of
the opinion that the Shares, when issued and delivered in the manner and on the
terms contemplated in the Registration Statement and the Plan (with the Company
having received the consideration therefor, the form of which is in accordance
with applicable law), will be validly issued, fully paid and non-assessable.
We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion letter. This opinion letter
has been prepared solely for your use in connection with filing of the
Registration Statement on the date hereof, and should not be quoted in whole or
in part or otherwise be referred to, nor be filed with or furnished to any
governmental agency or other person or entity, without the prior written consent
of this firm.
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We hereby consent to the filing of this opinion letter as an
exhibit to the Registration Statement. In giving this consent, we do not thereby
admit that we are an "expert" within the meaning of the Securities Act of 1933,
as amended.
Sincerely yours,
/s/Hogan & Hartson L.L.P.
HOGAN & HARTSON L.L.P.
Consent of Independent Auditors
We consent to the reference to our firm in the registration Statement(S-3 to be
filed on or about May 22, 1997) pertaining to the Martek Biosciences Corporation
1997 Stock Option Plan and to the incorporation by reference therein of our
report dated December 13,1996 with respect to the financial statements of Martek
Biosciences Corporation included in its Annual Report(Form 10K) for the year
ended October 31, 1996, filed with the Securities and Exchange Commision.
/s/Ernst & Young LLP
Vienna, Virginia
May 22,1997
