As filed with the Securities and Exchange Commission on May 20, 1999
Registration No. 333 - _____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
GREEN MOUNTAIN COFFEE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 03-0339228
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
33 Coffee Lane, Waterbury, Vermont 05676
----------------------------------------
(Address of Principal Executive Offices)
GREEN MOUNTAIN COFFEE, INC.
1999 STOCK OPTION PLAN
---------------------------
(Full title of the Plan)
Robert P. Stiller
Green Mountain Coffee, Inc.
33 Coffee Lane
Waterbury, Vermont 05676
---------------------------------------
(Name and address of agent for service)
(802) 244-5621
-------------------------------------------------------------
(Telephone number, including area code, of agent for service)
Copy to:
Mark V. D'Amico
Merritt & Merritt
30 Main Street
Suite 330
Burlington Vermont 05402
(802) 658-7830
Calculation of Registration Fee
<TABLE>
<S> <C> <C> <C> <C>
- ------------------ ---------------- ------------- ---------------- --------------
Proposed Proposed
Maximum Maximum
Title of Offering Aggregate Amount of
Securities to Amount to be Price Per Offering Registration
be Registered Registered (1) Share Price Fee
- ------------------ ---------------- ------------- ---------------- --------------
Common Stock 107,766 (2) $ 5.625 $ 606,184 $168.52
(par value $0.10 3,600 (2) $ 6.00 $ 21,600 $ 6.00
per share) 138,634 (3) $7.5625 (4) $1,048,419 (4) $291.46
-------
TOTAL $465.98
</TABLE>
- ----------
(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended, this
Registration Statement also covers an indeterminable number of
additional Shares that may become issuable pursuant to terms designed
to prevent dilution resulting from stock splits, stock dividends or
similar events.
(2) Represents shares of Common Stock reserved for issuance upon the
exercise of options previously granted under this Plan.
(3) Represents shares of Common Stock reserved for issuance pursuant to
options available for grant (but not yet granted) under this Plan.
(4) Estimated solely for the purposes of calculating the amount of the
registration fee. In accordance with Rule 457(h) of the Securities Act
of 1933, as amended, the price shown is the average of the high and low
selling prices of the Common Stock for May 17, 1999 as reported on the
NASDAQ National Market.
PART I
Information Required in the Section 10(a) Prospectus
The documents containing the information specified in Part I of this
Registration Statement will be supplied to all participants in the Green
Mountain Coffee, Inc. 1999 Stock Option Plan.
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference.
The following documents, or portions thereof, as filed with the
Securities and Exchange Commission by the Registrant are hereby incorporated by
reference:
(A) The Registrant's Annual Report on Form 10-K for the fiscal year
ended September 26, 1998;
(B) The Registrant's Quarterly Report on Form 10-Q for the sixteen
weeks ended January 16, 1999;
(C) The description of the Registrant's Common Stock contained in the
section entitled "Description of Capital Stock" of the Registrant's Registration
Statement on Form SB-2 filed on July 28, 1993 and declared effective on
September 21, 1993 (File No. 33-66646) (which is incorporated by reference to
Item 1 of the Registrant's Registration Statement on Form 8-A (File No.
0-22398), dated September 10, 1993, filed pursuant to Section 12 of the Exchange
Act).
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended,
after the date of this Registration Statement and prior to the filing of a
post-effective amendment to the Registration Statement which indicates that all
securities offered hereby have been sold or which de-registers all such
securities remaining unsold shall be deemed to be incorporated by reference into
this Registration Statement and to be a part hereof from the date of filing of
such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
H. Kenneth Merritt, Jr., Managing Director of Merritt & Merritt, the
Registrant's corporate counsel, serves as Assistant Secretary of the Registrant.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL")
generally provides that a corporation is authorized to indemnify any person who
is made a party to any threatened, pending or completed action, suit or
proceeding by reason of the fact that he is or was a director, officer, employee
or agent of the corporation or is or was serving, at the request of the
corporation, in any of such capacities of another corporation or other
enterprise, if such director, officer, employee or agent acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. This statute describes
in detail the right of the Registrant to indemnify any such person.
Section 102(b)(7) of the DGCL enables a corporation in its original
certificate of incorporation or an amendment thereto to eliminate or limit the
personal liability of a director for violations of the director's fiduciary
duty, except (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions) or
(iv) for any transaction from which a director derived an improper personal
benefit. The Registrant's Certificate of Incorporation limits the liability of
directors to the extent permitted by Section 102(b)(7) of the DGCL.
The Registrant's Certificate of Incorporation and Bylaws state that the
Registrant shall indemnify its officers, directors, and employees, and may
indemnify its agents, to the full extent permitted by the laws of the State of
Delaware. The Registrant currently maintains an officers' and directors'
liability insurance policy which covers, subject to the exclusions and
limitations of the policy, officers and directors of the Registrant against
certain liabilities which may be incurred by them solely in such capacities.
For information regarding the Registrant's undertaking to submit to
adjudication the issue of indemnification for violation of the securities laws,
see Item 9 hereof. The Registrant believes that it is the position of the
Securities and Exchange Commission that insofar as the foregoing provisions may
be invoked to disclaim liability for damages arising under the Securities Act,
such provisions are against public policy as expressed in the Securities Act and
are therefore unenforceable.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit No. Description
----------- -----------
4 Certificate of Incorporation and Bylaws (incorporated
by reference to Exhibits 3.1 and 3.2 in the
Registrant's Registration Statement on Form SB-2
(Registration No. 33-66646) filed with the SEC on
July 28, 1993)
5 Opinion of Merritt & Merritt
23.1 Consent of Merritt & Merritt (contained in Exhibit 5)
23.2 Consent of PricewaterhouseCoopers LLP
24 Powers of Attorney (included on the signature page of
this Registration Statement)
99.1 Green Mountain Coffee, Inc. 1999 Stock Option Plan
<PAGE>
Item 9. Undertakings.
(A) The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "1933 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) above do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by
reference in the Registration Statement.
2. That, for the purpose of determining any liability under the 1933 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 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 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.
<PAGE>
(C) Insofar as indemnification for liabilities arising under the 1933 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 1933 Act and is,
therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
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 Waterbury, State of Vermont, on May 20, 1999.
GREEN MOUNTAIN COFFEE, INC.
By: /s/ Robert P. Stiller
---------------------
Robert P. Stiller
Chairman of the Board of Directors,
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Robert P. Stiller and Robert D. Britt his
true and lawful attorney-in-fact and agent, each acting alone, with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities with full power and authority to do any and all acts and
things and to execute any and all instruments which said attorneys and agents,
and any of them, determine may be necessary, advisable or required to enable the
Registrant to comply with the federal and state securities laws in connection
with the matters covered by this Registration Statement. Without limiting the
generality of the foregoing power and authority, the powers granted include the
power and authority to sign the names of the undersigned in the capacities
indicated to this Registration Statement, to any and all amendments and
supplements, and to all instruments or documents filed as a part of or in
connection with this Registration Statement or amendments or supplements
thereof, and each of the undersigned hereby ratifies and confirms all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof.
This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------------------------------------------------------------------------------
/s/ Robert P. Stiller Chairman of the Board of May 19, 1999
- ---------------------- Directors, President and Chief
Robert P. Stiller Executive Officer
(Principal Executive Officer)
/s/ Robert D. Britt Chief Financial Officer, May 17, 1999
- --------------------- Vice President,
Robert D. Britt Treasurer, Secretary and Director
(Principal Financial and Accounting Officer)
/s/ Stephen J. Sabol Vice President and Director May 19, 1999
- --------------------
Stephen J. Sabol
/s/ Jonathan C. Wettstein Vice President and Director May 18, 1999
- --------------------------
Jonathan C. Wettstein
/s/ William D. Davis Director May 17, 1999
- ----------------------
William D. Davis
/s/ Jules A. del Vecchio Director May 17, 1999
- ------------------------
Jules A. del Vecchio
/s/ Hinda Miller Director May 18, 1999
- ----------------
Hinda Miller
/s/ David E. Moran Director May 17, 1999
- -------------------
David E. Moran
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
4 Certificate of Incorporation and Bylaws (incorporated
by reference to Exhibits 3.1 and 3.2 in the
Registrant's Registration Statement on Form SB-2
(Registration No. 33-66646) filed with the SEC on
July 28, 1993)
5 Opinion of Merritt & Merritt
23.1 Consent of Merritt & Merritt (contained in Exhibit 5)
23.2 Consent of PricewaterhouseCoopers LLP
24 Powers of Attorney (included on the signature page of
this Registration Statement)
99.1 Green Mountain Coffee, Inc. 1999 Stock Option Plan
May 14, 1999
Board of Directors
Green Mountain Coffee, Inc.
33 Coffee Lane
Waterbury, Vermont 05676
Re: Green Mountain Coffee, Inc. - General (001)
Ladies and Gentlemen:
We have acted as counsel to Green Mountain Coffee, Inc. (the "Company")
in connection with the registration on Form S-8 under the Securities Act of
1933, as amended (the "Registration Statement") of 250,000 shares of the Common
Stock, par value $0.10 per share, of the Company authorized for issuance under
the Green Mountain Coffee, Inc. 1999 Stock Option Plan (the "Plan"). We are
furnishing you this opinion as required by the terms of the Registration
Statement.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the establishment of the
Plan. Based on this review, we are of the opinion that when such shares have
been issued and sold in accordance with the provisions of the Plan, and in
accordance with the Registration Statement, such shares will be duly authorized,
validly issued, fully-paid and nonassessable shares of the Company's Common
Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
This opinion letter is rendered to you as of the date set out above. We
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein.
This opinion is solely for your benefit and may not be relied upon,
used, published, distributed, or quoted in any manner whatsoever by or to any
other person or entity, nor filed with any governmental agency (other than as
consented to above), without the prior written consent of this firm.
Sincerely,
/s/ MERRITT & MERRITT
---------------------
Merritt & Merritt
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Green Mountain Coffee, Inc.
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated November 18, 1998 relating to the
financial statements of Green Mountain Coffee, Inc., which appear in Green
Mountain Coffee, Inc.'s Annual Report on Form 10-K for the year ended September
26, 1998.
PricewaterhouseCoopers LLP
May 20, 1999
GREEN MOUNTAIN COFFEE, INC.
1999 STOCK OPTION PLAN
1. Purpose of the Plan.
The purpose of the Green Mountain Coffee, Inc. 1999 Stock Option Plan
(the "Plan") is to advance the interests of Green Mountain Coffee, Inc., a
Delaware corporation (the "Company"), by providing an opportunity for ownership
of the stock of the Company by employees, agents and directors of, and
consultants to, the Company and its subsidiaries, as defined below. By providing
an opportunity for such stock ownership, the Company seeks to attract and retain
such qualified personnel, and otherwise to provide additional incentive for
optionees to promote the success of its business.
2. Stock Subject to the Plan.
(a) The total number of shares of the authorized but unissued or
Treasury shares of the common stock, $0.10 par value per share, of the Company
(the "Common Stock") for which options may be granted under the Plan (the
"Options") shall be 250,000, subject to adjustment as provided in Section 13
hereof.
(b) If an Option granted or assumed hereunder shall expire or terminate
for any reason without having been exercised in full, the unpurchased shares
subject thereto shall again be available for subsequent Option grants under the
Plan.
(c) Stock issuable upon exercise of an Option may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall be
determined by the Board of Directors of the Company (the "Board").
3. Administration of the Plan.
(a) The Plan shall be administered by the Board. No member of the Board
shall act upon any matter exclusively affecting any Option granted or to be
granted to himself or herself under the Plan. A majority of the members of the
Board shall constitute a quorum, and any action may be taken by a majority of
those present and voting at any meeting. The decision of the Board as to all
questions of interpretation and application of the Plan shall be final, binding
and conclusive on all persons. The Board, in its sole discretion, may grant
Options to purchase shares of the Common Stock, and the Board shall issue shares
upon exercise of such Options as provided in the Plan. The Board shall have
authority, subject to the express provisions of the Plan, to construe the
respective Option agreements and the Plan, to prescribe, amend and rescind rules
and regulations relating to the Plan, to determine the terms and provisions of
the respective Option agreements, which may but need not be identical, and to
make all other determinations in the judgment of the Board necessary or
desirable for the administration of the Plan. The Board may correct any defect
or supply any omission or reconcile any inconsistency in the Plan or in any
Option agreement in the manner and to the extent it shall deem expedient to
implement the Plan and shall be the sole and final judge of such expediency. No
director shall be liable for any action or determination made in good faith. The
Board, in its discretion, may delegate its power, duties and responsibilities to
a committee, consisting of two or more members of the Board, all of whom are
"disinterested persons" (as hereinafter defined). If a committee is so
appointed, all references to the Board herein shall mean and relate to such
committee, unless the context otherwise requires.
4. Type of Options.
Options granted pursuant to the Plan shall be authorized by action of
the Board and may be designated as either incentive stock options meeting the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or non-qualified options which are not intended to meet the
requirements of such Section 422 of the Code, the designation to be in the sole
discretion of the Board. Options designated as incentive stock options that fail
to continue to meet the requirements of Section 422 of the Code shall be
redesignated as non-qualified options automatically without further action by
the Board on the date of such failure to continue to meet the requirements of
Section 422 of the Code.
5. Eligibility.
Options designated as incentive stock options may be granted to any
full-time employees of the Company or any subsidiary corporation (herein called
"subsidiary" or "subsidiaries"), as defined in Section 424(f) of the Code and
the Treasury regulations promulgated thereunder (the "Regulations"). Directors
who are not otherwise employees of the Company or a subsidiary shall not be
eligible to be granted incentive stock options pursuant to the Plan. Options
designated as non-qualified options may be granted to (i) officers and key
employees of the Company or of any of its subsidiaries, or (ii) agents,
directors of and consultants to the Company, whether or not otherwise employees
of the Company.
In determining the eligibility of an individual to be granted an
Option, as well as in determining the number of shares to be optioned to any
individual, the Board shall take into account the position and responsibilities
of the individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Board may deem relevant.
6. Restrictions on Incentive Stock Options.
Incentive stock options (but not non-qualified options) granted under
this Plan shall be subject to the following restrictions:
(a) Limitation on Number of Shares.
Ordinarily, the aggregate fair market value of the shares of Common
Stock with respect to which incentive stock options are granted
(determined as of the date the incentive stock options are granted),
exercisable for the first time by an individual during any calendar
year shall not exceed $100,000. If an incentive stock option is granted
pursuant to which the aggregate fair market value of shares with
respect to which it first becomes exercisable in any calendar year by
an individual exceeds such $100,000 limitation, the portion of such
option which is in excess of the $100,000 limitation shall be treated
as a non-qualified option pursuant to Section 422(d)(1) of the Code. In
the event that an individual is eligible to participate in any other
stock option plan of the Company or any subsidiary of the Company which
is also intended to comply with the provisions of Section 422 of the
Code, such $100,000 limitation shall apply to the aggregate number of
shares for which incentive stock options may be granted under this Plan
and all such other plans.
(b) Ten Percent (10%) Shareholder.
If any employee to whom an incentive stock option is granted pursuant
to the provisions of this Plan is on the date of grant the owner of
stock (as determined under Section 424(d) of the Code) possessing more
than 10% of the total combined voting power of all classes of stock of
the Company or any subsidiary of the Company, then the following
special provisions shall be applicable to the incentive stock options
granted to such individual:
(i) The Option price per share subject to
such incentive stock options shall be not less than
110% of the fair market value of the stock determined
at the time such Option was granted. In determining
the fair market value under this clause (i), the
provisions of Section 8 hereof shall apply.
(ii) The incentive stock option by its terms
shall not be exercisable after the expiration of five
(5) years from the date such option is granted.
7. Option Agreement.
Each Option shall be evidenced by an Option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such Option
is granted, which Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Agreement may contain such other terms, provisions
and conditions which are not inconsistent with the Plan as may be determined by
the Board; provided that Options designated as incentive stock options shall
meet all of the conditions for incentive stock options as defined in Section 422
of the Code. No Option shall be granted within the meaning of the Plan and no
purported grant of any Option shall be effective until the Agreement shall have
been duly executed on behalf of the Company and the optionee. More than one
Option may be granted to an individual.
8. Option Price.
(a) The Option price or prices of shares of the Common Stock for
Options designated as non-qualified stock options shall be as determined by the
Board; provided, however, such Option price shall be not less than 85% of the
fair market value of the stock subject to such Option, determined as of the date
of grant of such Option.
(b) Subject to the conditions set forth in Section 6(b) hereof, the
Option price or prices of shares of the Company's Common Stock for incentive
stock options shall be at least the fair market value of such Common Stock at
the time the Option is granted as determined by the Board in accordance with the
Regulations promulgated under Section 422 of the Code.
(c) If such shares are then listed on any national securities exchange,
the fair market value shall be the mean between the high and low sales prices,
if any, on the largest such exchange on the date of the grant of the Option or,
if none, shall be determined by taking a weighted average of the means between
the highest and lowest sales prices on the nearest date before and the nearest
date after the date of grant in accordance with Section 25.2512-2 of the
Regulations. If the shares are not then listed on any such exchange, the fair
market value of such shares shall be the mean between the closing "Bid" and the
closing "Ask" prices, if any, as reported in the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") for the date of the
grant of the Option, or, if none, shall be determined by taking a weighted
average of the means between the highest and lowest sales prices on the nearest
date before and the nearest date after the date of grant in accordance with
Section 25.2512-2 of the Regulations. If the shares are not then either listed
on any such exchange or quoted in NASDAQ, the fair market value shall be the
mean between the average of the "Bid" and "Ask" price quotations on the National
Daily Quotation Service for the date of the grant of the Option, or, if none,
shall be determined by taking a weighted average of the means between the
highest and lowest sales prices on the nearest date before and the nearest date
after the date of grant in accordance with Section 25.2512-2 of the Regulations.
If the fair market value cannot be determined under the preceding three
sentences, it shall be determined in good faith by the Board.
9. Manner of Payment: Manner of Exercise.
(a) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such Options, (ii) shares of
Common Stock owned by the optionee having a fair market value equal in amount to
the exercise price of the Options being exercised, or (iii) any combination of
(i) and (ii); provided, however, that payment of the exercise price by delivery
of shares of Common Stock owned by such optionee may be made only upon the
condition that such payment does not result in a charge to earnings for
financial accounting purposes as determined by the Board, unless such condition
is waived by the Board. The fair market value of any shares of Common Stock
which may be delivered upon exercise of an Option shall be determined by the
Board in accordance with Section 8 hereof.
(b) To the extent that the right to purchase shares under an Option has
accrued and is in effect, Options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the Option, to the Company, stating the number of shares with
respect to which the Option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the Option
at such time, during ordinary business hours, after thirty (30) days but not
more than ninety (90) days from the date of receipt of the notice by the
Company, as shall be designated in such notice, or at such time, place and
manner as may be agreed upon by the Company and the person or persons exercising
the Option.
10. Exercise of Options.
Each Option granted under the Plan shall, subject to Section 11 (b) and
Section 13 hereof, be exercisable at such time or times and during such period
as shall be set forth in the Agreement; provided, however, that no Option
granted under the Plan shall have a term in excess of ten (10) years from the
date of grant. To the extent that an Option to purchase shares is not exercised
by an optionee when it becomes initially exercisable, it shall not expire but
shall be carried forward and shall be exercisable, on a cumulative basis, until
the expiration of the exercise period. No partial exercise may be made for less
than one hundred (100) full shares of Common Stock.
11. Term of Options: Exercisability.
(a) Term.
(i) Each Option shall expire on a date
determined by the Board which is not more than ten
(10) years from the date of the granting thereof,
except (a) as otherwise provided pursuant to the
provisions of Section 6(b) hereof, and (b) for
earlier termination as herein provided.
(ii) Except as otherwise provided in this
Section 11, an Option granted to any optionee whose
employment, for the Company or any of its
subsidiaries, is terminated, shall terminate on the
earlier of ninety days after the date such optionee's
employment, for the Company or any such subsidiary,
is terminated, or (ii) the date on which the Option
expires by its terms.
(iii) If the employment of an optionee is
terminated by the Company or any of its subsidiaries
for cause or because the optionee is in breach of any
employment agreement, such Option will terminate on
the date the optionee's employment is terminated by
the Company or any such subsidiary.
(iv) If the employment of an optionee is
terminated by the Company or any of its subsidiaries
because the optionee has become permanently disabled
(within the meaning of Section 22(e)(3) of the Code),
such Option shall terminate on the earlier of (i) one
year after the date such optionee's employment, for
the Company or any such subsidiary, is terminated, or
(ii) the date on which the Option expires by its
terms.
(v) In the event of the death of any
optionee, any Option granted to such optionee shall
terminate one year after the date of death, or on the
date on which the Option expires by its terms,
whichever occurs first.
(b) Exercisability.
(i) Except as provided below, an Option
granted to an optionee whose employment, for the
Company or any of its subsidiaries, is terminated,
shall be exercisable only to the extent that the
right to purchase shares under such Option has
accrued and is in effect on the date such optionee's
employment, for the Company or any such subsidiary,
is terminated.
(ii) An Option granted to an optionee whose
employment is terminated by the Company or any of its
subsidiaries because he or she has become permanently
disabled, as defined above, shall be immediately
exercisable as to the full number of shares covered
by such Option, whether or not under the provisions
of Section 10 hereof such Option was otherwise
exercisable as of the date of disability.
(iii) In the event of the death of an
optionee, the Option granted to such optionee may be
exercised as to the full number of shares covered
thereby, whether or not under the provisions of
Section 10 hereof the optionee was entitled to do so
at the date of his or her death, by the executor,
administrator or personal representative of such
optionee, or by any person or persons who acquired
the right to exercise such Option by bequest or
inheritance or by reason of the death of such
optionee.
12. Options Not Transferable.
The right of any optionee to exercise any Option granted to him or her
shall not be assignable or transferable by such optionee other than by will or
the laws of descent and distribution, and any such Option shall be exercisable
during the lifetime of such optionee only by him or her. Any Option granted
under the Plan shall be null and void and without effect upon the bankruptcy of
the optionee to whom the Option is granted, or upon any attempted assignment or
transfer, except as herein provided, including without limitation, any purported
assignment, whether voluntary or by operation of law, pledge, hypothecation or
other disposition, attachment, trustee process or similar process, whether legal
or equitable, upon such Option.
13. Recapitalization, Reorganizations and the Like.
In the event that the outstanding shares of the Common Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination of shares, or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which Options may be granted under the Plan and as to which outstanding Options
or portions thereof then unexercised shall be exercisable, to the end that the
proportionate interest of the optionee shall be maintained as before the
occurrence of such event; such adjustment in outstanding Options shall be made
without change in the total price applicable to the unexercised portion of such
Options and with a corresponding adjustment in the Option price per share.
In addition, unless otherwise determined by the Board in its sole
discretion, in the case of any (i) sale or conveyance to another entity of all
or substantially all of the property and assets of the Company or (ii) Change in
Control (as hereinafter defined) of the Company, the purchaser(s) of the
Company's assets or stock, in his, her or its sole discretion, may deliver to
the optionee the same kind of consideration that is delivered to the
shareholders of the Company as a result of such sale, conveyance or Change in
Control, or the Board may cancel all outstanding Options in exchange for
consideration in cash or in kind, which consideration in both cases shall be
equal in value to the value of those shares of stock or other securities the
optionee would have received had the Option been exercised (but only to the
extent then exercisable) and had no disposition of the shares acquired upon such
exercise been made prior to such sale, conveyance or Change in Control, less the
Option price therefor. Upon receipt of such consideration, all Options (whether
or not then exercisable) shall immediately terminate and be of no further force
or effect. The value of the stock or other securities the optionee would have
received if the Option had been exercised shall be determined in good faith by
the Board, and in the case of shares of Common Stock, in accordance with the
provisions of Section 8 hereof.
The Board shall also have the power and right to accelerate the
exercisability of any Options, notwithstanding any limitations in this Plan or
in the Agreement upon such a sale, conveyance or Change in Control. Upon such
acceleration, any Options or portion thereof originally designated as incentive
stock options that no longer qualify as incentive stock options under Section
422 of the Code as a result of such acceleration shall be redesignated as
non-qualified stock options.
A "Change in Control" shall be deemed to have occurred if any person,
or any two or more persons acting as a group, and all affiliates of such person
or persons, who prior to such time owned less than fifty percent (50%) of the
then outstanding Common Stock, shall acquire such additional shares of Common
Stock in one or more transactions, or series of transactions, such that
following such transaction or transactions, such person or group and affiliates
beneficially own fifty percent (50%) or more of the Common Stock outstanding.
Upon dissolution or liquidation of the Company, all Options granted
under this Plan shall terminate, but each optionee (if at such time in the
employ of or otherwise associated with the Company or any of its subsidiaries as
a director, agent or consultant) shall have the right, immediately prior to such
dissolution or liquidation, to exercise his or her Option to the extent then
exercisable.
If by reason of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization, or liquidation, the Board shall
authorize the issuance or assumption of a stock option or stock options in a
transaction to which Section 424(a) of the Code applies, then, notwithstanding
any other provision of the Plan, the Board may grant an option or options upon
such terms and conditions as it may deem appropriate for the purpose of
assumption of the old Option, or substitution of a new option for the old
Option, in conformity with the provisions of such Section 424(a) of the Code and
the Regulations thereunder, and any such option shall not reduce the number of
shares otherwise available for issuance under the Plan.
No fraction of a share shall be purchasable or deliverable upon the
exercise of any Option, but in the event any adjustment hereunder in the number
of shares covered by the Option shall cause such number to include a fraction of
a share, such fraction shall be adjusted to the nearest smaller whole number of
shares.
14. No Special Employment Rights.
Nothing contained in the Plan or in any Option granted under the Plan
shall confer upon any Option holder any right with respect to the continuation
of his or her employment by the Company or any subsidiary or interfere in any
way with the right of the Company or any subsidiary, subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the Option holder from
the rate in existence at the time of the grant of an Option. Whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Board at the
time of such occurrence.
15. Withholding.
The Company's obligation to deliver shares upon the exercise of any
non-qualified Option granted under the Plan shall be subject to the Option
holder's satisfaction of all applicable Federal, state and local income and
employment tax withholding requirements. The Company and optionee may agree to
withhold shares of Common Stock purchased upon exercise of an Option to satisfy
the above-mentioned withholding requirements.
16. Restrictions on Issuance of Shares.
(a) Notwithstanding the provisions of Section 9, the Company may delay
the issuance of shares covered by the exercise of an Option and the
delivery of a certificate for such shares until one of the following
conditions shall be satisfied:
(i) The shares with respect to which such
Option has been exercised are at the time of the
issue of such shares effectively registered or
qualified under applicable Federal and state
securities acts now in force or as hereafter amended;
or
(ii) Counsel for the Company shall have
given an opinion, which opinion shall not be
unreasonably conditioned or withheld, that such
shares are exempt from registration and qualification
under applicable Federal and state securities acts
now in force or as hereafter amended.
(b) It is intended that all exercises of Options shall be effective,
and the Company shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to qualify shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any Option may be
exercised, except as otherwise agreed to by the Company in writing in its sole
discretion.
17. Purchase for Investment: Rights of Holder on Subsequent
Registration.
Unless and until the shares to be issued upon exercise of an Option
granted under the Plan have been effectively registered under the 1933 Act, as
now in force or hereafter amended, the Company shall be under no obligation to
issue any shares covered by any Option unless the person who exercises such
Option, in whole or in part, shall give a written representation and undertaking
to the Company which is satisfactory in form and scope to counsel for the
Company and upon which, in the opinion of such counsel, the Company may
reasonably rely, that he or she is acquiring the shares issued pursuant to such
exercise of the Option for his or her own account as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the 1933
Act, or any other applicable law, and that if shares are issued without such
registration, a legend to this effect may be endorsed upon the securities so
issued.
In the event that the Company shall, nevertheless, deem it necessary or
desirable to register under the 1933 Act or other applicable statutes any shares
with respect to which an Option shall have been exercised, or to qualify any
such shares for exemption from the 1933 Act or other applicable statutes, then
the Company may take such action and may require from each optionee such
information in writing for use in any registration statement, supplementary
registration statement, prospectus, preliminary prospectus or offering circular
as is reasonably necessary for such purpose and may require reasonable indemnity
to the Company and its officers and directors from such holder against all
losses, claims, damages and liabilities arising from such use of the information
so furnished and caused by any untrue statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
18. Loans.
At the discretion of the Board, the Company may loan to the optionee
some or all of the purchase price of the shares acquired upon exercise of an
Option.
19. Modification of Outstanding Options.
Subject to any applicable limitations contained herein, the Board may
authorize the amendment of any outstanding Option with the consent of the
optionee when and subject to such conditions as are deemed to be in the best
interests of the Company and in accordance with the purposes of the Plan.
20. Approval of Stockholders.
The Plan shall become effective upon adoption by the Board; provided,
however, that the Plan shall be submitted for approval by the stockholders of
the Company no later than twelve (12) months after the date of adoption of the
Plan by the Board. Should the stockholders of the Company fail to approve the
Plan within such twelve-month period, all Options granted thereunder shall be
and become null and void. Notwithstanding anything else to the contrary in this
Plan, no option may be exercised until the stockholders have approved this Plan.
21. Termination and Amendment of Plan.
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the Board
of the Company. The Board may at any time terminate the Plan or make such
modification or amendment thereof as it deems advisable; provided, however, (i)
the Board may not, without the approval of the stockholders of the Company
obtained in the manner stated in Section 20, increase the maximum number of
shares for which Options may be granted or change the designation of the class
of persons eligible to receive Options under the Plan, and (ii) any such
modification or amendment of the Plan shall be approved by a majority of the
stockholders of the Company to the extent that such stockholder approval is
necessary to comply with applicable provisions of the Code, rules promulgated
pursuant to Section 16 of the Exchange Act, applicable state law, or applicable
NASD or exchange listing requirements. Termination or any modification or
amendment of the Plan shall not, without the consent of an optionee, affect his
or her rights under an Option theretofore granted to him or her.
22. Limitation of Rights in the Option Shares.
An optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the Options except to the extent that the
Option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
23. Notices.
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to the attention of the President at the
Company's principal place of business; and, if to an optionee, to his or her
address as it appears on the records of the Company.
