AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1996
REGISTRATION NO. 33-________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
ADVANCED DEPOSITION TECHNOLOGIES, INC.
--------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-2865714
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
580 MYLES STANDISH BOULEVARD, TAUNTON, MASSACHUSETTS 02780
---------------------------------------------------- -----
(Address of Principal Executive Offices) Zip Code
ADVANCED DEPOSITION TECHNOLOGIES, INC.
1988 STOCK OPTION PLAN
1993 STOCK OPTION PLAN
1994 FORMULA STOCK OPTION PLAN
------------------------------
(Full Title of the Plans)
GLENN J. WALTERS, PRESIDENT
580 MYLES STANDISH BOULEVARD
TAUNTON, MASSACHUSETTS 02780
(508) 823-0707
--------------
(Name, Address and Telephone Number of Agent for Service)
Copies to:
PAUL D. BROUDE, ESQUIRE
ANDREW D. MYERS, ESQUIRE
O'CONNOR, BROUDE & ARONSON
950 WINTER STREET, SUITE 2300
WALTHAM, MASSACHUSETTS 02154
(617) 890-6600
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
1988 STOCK OPTION PLAN
- ---------------------------------------------------------------------------------------------------------------
Title of Each Class Amount to be Proposed Proposed Amount of
of Securities to Be Registered(1) Maximum Maximum Registration
Registered Offering Price Aggregate Fee
per Share(2) Offering Price(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 4,216 $0.53 $2,234.48 $ 0.68
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 1,874 $0.27 $ 505.98 $ 0.15
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1993 STOCK OPTION PLAN
- ---------------------------------------------------------------------------------------------------------------
Title of Each Class Amount to be Proposed Proposed Amount of
of Securities to Be Registered(1) Maximum Maximum Registration
Registered Offering Price Aggregate Fee
per Share(2) Offering Price(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 191,000 $2.00 $ 382,000.00 $115.76
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 2,800 $2.75 $ 7,700.00 $ 2.33
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 10,000 $2.38 $ 23,800.00 $ 7.21
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 20,000 $2.88 $ 57,600.00 $ 17.45
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 10,000 $4.46875 $ 44,687.50 $ 13.54
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 15,000 $4.07 $ 61,050.00 $18.50
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
-1-
<TABLE>
<CAPTION>
1994 FORMULA STOCK OPTION PLAN
- ---------------------------------------------------------------------------------------------------------------
Title of Each Class Amount to be Proposed Proposed Amount of
of Securities to Be Registered(1) Maximum Maximum Registration
Registered Offering Price Aggregate Fee
per Share(2) Offering Price(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,500 $5.44 $8,160.00 $2.47
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 1,500 $2.38 $3,570.00 $1.08
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 1,000 $2.38 $2,380.00 $0.72
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 1,000 $2.38 $2,380.00 $0.72
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 1,000 $2.38 $2,380.00 $0.72
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 1,000 $5.063 $5,063.00 $1.53
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 1,500 $2.875 $4,312.50 $1.31
$.01 par value
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TOTAL
- ---------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Per Aggregate Offering Amount of
to be Registered Registered(1) Share(2) Price(2) Registration Fee(3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01
par value per share 856,090 $5.44 $2,830,448.40 $857.70
(the "Common
Stock").....................
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
(1) Pursuant to Rule 416, there are also being registered such additional
shares of Common Stock as may become issuable pursuant to stock splits
or similar transactions.
(2) The offering price for shares subject to options outstanding on the
date hereof is the actual exercise price of such options. The offering
price for options exercised as of the date hereof is the exercise price
of such options.
(3) The total Registration Fee includes $673.52 payable in respect of
551,200 and 41,500 shares under the 1993 Stock Option Plan and the 1994
Formula Stock Option Plan, respectively, that have not been made
subject to options. The offering price for shares not subject to
options on the date hereof has been estimated solely for the purpose of
determining the registration fee pursuant to Regulation C, Rule 457(h)
on the basis of the average of the high and low prices of the Company's
Common Stock, as reported in the consolidated reporting system of the
NASDAQ SmallCap Market on December 9, 1996 as $3.75.
-3-
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information specified in Part I of Form
S-8 are not required to be filed with the Securities and Exchange Commission
(the "Commission") as part of this Registration Statement on Form S-8. Such
documents and the documents incorporated by reference in this Registration
Statement on Form S-8 pursuant to Item 3 of Part II hereof, as described below,
taken together, constitute a prospectus (the "Section 10(a) Prospectus") that
meets the requirements of Section 10(a) of the Securities Act of 1933, as
amended (the "Securities Act").
-4-
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT").
PROSPECTUS
- ----------
ADVANCED DEPOSITION TECHNOLOGIES, INC.
856,090 SHARES OF COMMON STOCK
$.01 PAR VALUE PER SHARE
This Prospectus relates to 856,090 shares of common stock, $.01 par
value per share (the "Common Stock"), of Advanced Deposition Technologies, Inc.,
a Delaware corporation (the "Company"), issued or reserved for issuance pursuant
to the granting of options under the Company's 1988 Stock Option Plan (the "1988
Plan"), 1993 Stock Option Plan (the "1993 Plan") and 1994 Formula Stock Option
Plan (the "Formula Plan"), and for reoffer or resale from time to time by
selling stockholders (the "Selling Stockholders"). The 1988 Plan, 1993 Plan and
the Formula Plan are sometimes collectively referred to herein as the "Stock
Option Plans" or the "Plans."
This offering (the "Offering") is not being underwritten. The Shares
being offered hereunder may be sold by Selling Stockholders and/or their
registered representatives from time to time at prices to be determined at the
time of such sales. See "Plan of Distribution." The Company will not receive any
proceeds of any sale of the Common Stock made by Selling Stockholders. The
Company will receive the exercise price upon the exercise of any options granted
pursuant to the Stock Option Plans. See "Use of Proceeds."
The sale of Shares being offered hereby, when made, will be made
through customary brokerage channels either through broker-dealers acting as
agents or brokers for Selling Stockholders or through broker-dealers acting as
principals who may then resell the Shares on the NASDAQ SmallCap Market ("NSCM")
or otherwise, or by private sales on the NSCM or otherwise, at negotiated prices
related to prevailing market prices at the time of the sales, or by a
combination of such methods of offering. Thus, the distribution of such Shares
may occur over an extended period of time. Selling Stockholders may effect these
transactions by selling Shares to or through broker-dealers or by pledges of
Shares to broker-dealers who may, from time to time, themselves effect
distributions of Shares in their capacity as broker-dealers. See "Plan of
Distribution."
Selling Stockholders and any broker-dealer who acts in connection with
the sale of any Shares hereunder may be deemed to be "underwriters" as that term
is defined in the Securities Act and any commission received by them and profit
on any resale of the Shares as principal might be deemed to be underwriting
discounts and commissions under the Securities Act. The Selling Stockholders
will pay or assume brokerage commissions or underwriting discounts incurred in
connection with the sale of their Shares, which commissions or discounts will
not be paid or assumed by the Company. See "Plan of Distribution."
The Company's Common Stock is traded on NSCM under the symbols "ADTC".
The shares of Common Stock to be offered for sale pursuant to this Prospectus
may be offered for sale on NSCM or in privately negotiated transactions. On
December 9, 1996, the average of the high and low prices of the Company's Common
Stock on NSCM was $3.75 per share.
----------
THE SECURITIES OFFERED HEREBY INVOLVE CERTAIN RISKS TO THE PURCHASERS
OF SUCH SECURITIES. SEE "RISK FACTORS."
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------
THE DATE OF THIS PROSPECTUS IS DECEMBER 11, 1996.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copies thereof may be
obtained, at prescribed rates, at the public reference facilities maintained by
the Commission at the Public Reference Section, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located
at 7 World Trade Center, 13th Floor, New York, New York 10048, and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company has filed a Registration Statement on Form S-8 under the
Securities Act covering the Common Stock included in this Prospectus. This
Prospectus does not contain all the information set forth in or annexed as
exhibits to the Registration Statement filed by the Company with the Commission
and reference is made to such Registration Statement and the exhibits thereto
for the complete text thereof. For further information with respect to the
Company and the securities offered hereby, reference is made to the Registration
Statement, including the exhibits filed as part thereof, copies of which may be
obtained at prescribed rates upon request to the Commission in Washington, D.C.
Any statements contained herein concerning the provisions of any documents are
not necessarily complete, and, in each instance, such statements are qualified
in their entirety by reference to such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission.
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER BY THE SELLING STOCKHOLDERS TO SELL ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE SELLING
STOCKHOLDERS TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS, NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
-3-
THE COMPANY
Advanced Deposition Technologies, Inc. (the "Company") develops,
manufactures, markets and sells patented and proprietary metallized films for
energy management applications, primarily within the electronics and food
packaging industries. The Company produces metallized films by applying an
ultra-thin layer or layers of vaporized metal onto different types of polymer
films. From 1993 through 1995, the Company developed several new products based
on its proprietary method for metallizing film in high-resolutions patterns. The
Company markets and sells many of its new products to the food packaging
industry and actively pursues other applications for its patterned, metallized
films.
The primary source of the Company's revenues to date has been from
sales to the electronic capacitor market. During the years ended December 31,
1995, 1994 and 1993 the Company's sales to the food packaging market totalled
approximately $2,737,000 (28.7% revenues), $1,763,000 (27.9% of revenues) and
$92,000 (1.6% of revenues), respectively. While the Company expects that its
sales to the electronic capacitor market will continue to account for a
significant part of its business, the Company believes the market for its food
packaging products and other potential applications for its metallized films
will generate much of its anticipated future growth in revenues.
The Company began operations in 1985 as a supplier of metallized film
to the electronic capacitor industry. In 1989, the Company developed and
introduced its first metallized films for use in microwave food packaging
applications. The Company's metallized films for microwavable foods create heat
fields within the package, resulting in more uniformly cooked food than
conventional microwave food packaging. The Company generally sells metallized
film packed in rolls to converters, who incorporate the film into a final food
package.
In 1994, the Company introduced a microwave browning and crisping bag
(the "ACCU- CRISP(R) Bag"), made with a patented fuse susceptor metallized film.
The Company has sold the ACCU-CRISP(R) Bags through retail channels. The Company
has also developed, and manufactured on a limited basis for evaluation purposes,
authentication holograms, electronic article surveillance tags, electrostatic
discharge materials, microwave sterilization devices and solar protective films
using the Company's metallization process.
The Company's executive offices and manufacturing operations are
located at 580 Myles Standish Boulevard, Taunton, Massachusetts 02780. Its
telephone number is (508) 823-0707.
Except as set forth above, during the past year, there have been no
bankruptcy proceedings, receivership, or similar proceedings with respect to the
Company, nor has there been any merger or consolidation of the Company, and
there has been no disposition of any material amount of the Company's assets.
-4-
RISK FACTORS
The Common Stock offered hereby involves a high degree of risk. The
Securities should not be purchased by persons who cannot afford the loss of
their entire investment. Purchasers should carefully consider the information
presented below.
RECENT HISTORY OF LOSSES; WORKING CAPITAL DEFICIT; AUDITORS' REPORT CONTAINS
EXPLANATORY PARAGRAPH
The Company reported net income of approximately $6,000 for the year
ended December 31, 1995 and net losses of approximately $1,809,000 for the year
ended December 31, 1994. As of December 31, 1995, the Company had a working
capital deficiency of approximately $1,381,000 and an accumulated deficit of
approximately $2,088,000. The report of the Company's independent accountants
upon the Company's financial statements incorporated herein by reference
contains an explanatory paragraph, which states that the Company has working
capital deficiency, primarily due to the classification of certain obligations
to a bank as short term. In 1996, the Company raised approximately $4.8 million
in net proceeds from the exercise of Common Stock Purchase Warrants and obtained
a new bank line of credit and term loan which eliminated the Company's working
capital deficiency as of July 31, 1996. In order to operate profitably in the
future, the Company must successfully market its new products to new industries,
sell these products to existing and new customers, increase gross margins
through higher volumes and manufacturing efficiencies, and control its operating
expenses. There can be no assurance that the Company will operate on a
profitable basis in the future.
COMPETITION
The food packaging industry is highly competitive and subject to
changes in the types of food products requiring packaging and food preparation.
The Company will depend on its abilities to provide high quality, cost-effective
metallized film for the food packaging industry, to establish continuing
relationships with microwave and non-microwave food packaging companies, and to
respond to the changing needs of the marketplace in order to compete
successfully in this industry. The Company competes with numerous providers of
food packaging and food packaging supplies, many of which have a longer history
of operations and substantially greater financial, marketing, technical and
other resources than the Company, all of which may give them numerous
competitive advantages. No assurance can be given that current and future
competitors will not develop new or enhanced technologies or products perceived
to be superior to those sold or developed by the Company. No assurance can be
given that the Company can successfully compete or operate profitably in such a
competitive environment.
The electronic capacitor market in which the Company competes is also
highly competitive. The Company competes with competitors in this market which
have substantially greater financial, marketing, technical and other resources
than the Company. No assurance can be given that current and future competitors
will not develop new or enhanced technologies perceived to be superior to
-5-
those sold or developed by the Company. In recent years, there has been
increasing price competition in this market, resulting in reduced margins. No
assurance can be given that the Company will continue to compete successfully in
this market.
RISK OF EXPANSION INTO NEW MARKETS; RELIANCE ON DISTRIBUTION PARTNERS
The Company recently developed products for, and began to focus much of
its marketing efforts on, the microwave food packaging and other industries. The
Company has only recently begun to generate revenues from these markets, and no
assurances can be given that such revenues will continue or will economically
justify the Company's development and marketing efforts in these areas. In
addition, the Company's initial expansion into certain new markets may be
dependent on relationships with potential marketing and distribution partners,
and on new partners' success in these markets with products supplied by the
Company. The Company's expansion plans into new markets will subject the Company
to all of the risks incident to the expansion of a small business, particularly
the possible adverse impact associated with the integration of new lines of
products into the Company's existing operations and the potential diversion of
management time and attention from the Company's traditional line of business.
In addition, no assurance can be given that new products can be effectively
marketed and sold by the Company on a profitable basis. Companies that establish
new product lines directed toward new markets frequently encounter unforeseen
expenses, difficulties, complications and delays.
NEED FOR ADDITIONAL FINANCING
Based on the Company's operating plan, the Company anticipates that it
will require additional financing to meet its current plans for expansion. No
assurance can be given that the Company will be successful in obtaining such
additional financing on favorable terms, or at all. If the Company is unable to
obtain such additional financing, the Company's ability to maintain its current
level of operations and to expand may be materially adversely affected and the
Company may be required to reduce its overall expenditures and cancel plans for
further expansion.
DEPENDENCE ON MAJOR CUSTOMERS
Two customers accounted for approximately 34% and 11%, respectively, of
the Company's revenues in the year ended December 31, 1995. Substantially all of
the Company's sales of food packaging material, not including sales of
ACCU-CRISP(R) Bags which are ordinarily made through retail channels, were made
to Printpack Enterprises, Inc. ("Printpack") the customer that accounted for 34%
of the Company's revenues in 1995. The Company has entered into an agreement
with Printpack that, among other things, terminates a purchase agreement and
lease agreement between the parties. As a result, the Company anticipates that
it may not continue to recognize significant revenue from Printpack in the
future. If the Company were to substantially reduce doing business with any of
its major customers, the Company's business and results of operations could be
materially and adversely effected.
-6-
PATENTS AND PROPRIETARY TECHNOLOGY
The Company has been granted eight patents and has filed eight patent
applications with the U.S. Patent and Trademark Office. Most of the patent
applications pertain to products, such as the Company's ACCU-CRISP(R) Bags and
proposed security hologram products, made with vaporized metals deposited onto
substrates. In addition, the Company has pending patent applications in Europe
and Japan. The Company's patent and trade secret rights are of material
importance to the Company and its future prospects. No assurance can be given
that the patents will be held valid if subsequently challenged, that any
additional patents will be issued or that the scope of any patent protection
will exclude competitors. No assurance can be given that any patents will
provide competitive advantages for the Company's products. Even if a
competitor's products were to infringe patents owned by the Company, it would be
costly for the Company to enforce its rights in an infringement action and would
divert funds and management resources from the Company's operations.
Furthermore, no assurance can be given that the Company's products will not
infringe any patents of others. If valid patents are infringed upon by the
Company, the patent owners might be able to prevent the future use, sale and
manufacture of the Company's products. Also, the Company may be required to pay
damages for past infringement, or to pay license fees or royalties on future
sales of any infringing products, if a license could be obtained. To date, no
legal action has been initiated against the Company for infringement of any
patents.
The Company also relies on trade secrets that it seeks to protect, in
part, through confidentiality agreements with employees, consultants and other
parties. No assurance can be given that these agreements will not be breached,
that the Company will have adequate remedies for any breach, or that the
Company's trade secrets will not otherwise become known to or independently
developed by existing or potential competitors of the Company. As the Company
intends to enforce its patents, trademarks and copyrights and protect its trade
secrets, it may be involved from time to time in litigation to determine the
enforceability, scope and validity of these rights. Any such litigation could
result in substantial cost to the Company and diversion of effort by the
Company's management and technical personnel.
LIMITED PRODUCT LINES; TECHNOLOGICAL CHANGE
The Company's metallized films developed for the electronic capacitor
and food packaging markets are presently the Company's primary commercial
products. Although the Company is expanding its product line sold within these
markets and is currently developing additional applications for its products, no
assurance can be given that any proposed application or product can be
successfully developed, marketed or sold on a profitable basis.
The electronic capacitor and microwave food packaging markets in which
the Company operates are undergoing rapid technological change. No assurance can
be given that the development of new technology by others will not render the
Company's products obsolete or commercially unmarketable.
-7-
NO DIVIDENDS
The Company has not paid dividends on its Common Stock since its
inception and does not intend to pay any dividends to its stockholders in the
foreseeable future. The Company currently intends to reinvest earnings, if any,
in the development and expansion of its business. The Company's bank lender
prohibits payment of dividends without the bank's prior consent.
CONTROL BY CURRENT MANAGEMENT
The Directors and Executive Officers of the Company currently own
approximately 22% of the outstanding Common Stock. As a result, the current
management is able to exert substantial influence over the election of all of
the members of the Board of Directors and the outcome of any issues which may be
subject to a vote of the Company's stockholders.
SUBSTANTIAL NUMBER OF SHARES RESERVED FOR ISSUANCE UPON EXERCISE OF OPTIONS AND
WARRANTS
Under the 1988 Plan, the Company has issued options to purchase 6,090
shares of Common Stock to employees, officers, directors and consultants at a
weighted average exercise price of $0.47 per share. Under the 1993 Plan, the
Company may issue options to purchase 800,000 shares of Common Stock to
employees, officers, directors and consultants, of which options to purchase
248,800 shares of Common Stock were outstanding on December 9, 1996 at a
weighted average exercise price of $3.09 per share. Both the 1988 Plan and the
1993 Plan allow the Board of Directors to grant options with an exercise price
that is less than, but reasonably related to, the fair market value of the
Common Stock on the date of the grant without stockholder approval. In addition,
the Company has reserved 50,000 shares of Common Stock for issuance upon
exercise of stock options that may be granted under its Formula Plan, of which
options to purchase 8,500 shares of Common Stock at a weighted average exercise
price of $3.27 per share are outstanding as of December 9, 1996. Under the
Formula Plan, any non-employee who becomes a member of the Company's Board of
Directors receives an option to purchase 1,500 shares of Common Stock, which
vests annually in thirds beginning on the date of the grant subject to the
individual continuing to serve on the Board of Directors. In addition, each
non-employee who has served on the Board of Directors for at least one full year
receives an option to purchase 1,000 shares of Common Stock to vest one year
from the date of the grant. The exercise price of all options granted under the
Formula Plan is equal to the fair market value of the Common Stock on the date
of the grant.
The 132,084 IPO Warrants outstanding as of December 9, 1996 together
with 1,044,389 Class B Redeemable Common Stock Purchase Warrants (the "Class B
Warrants") outstanding as of December 9, 1996 will be exercisable to purchase
shares of Common Stock until March 8, 1997 and May 12, 1998, respectively, and
the Representative's Warrants grant the holders thereof the right to purchase up
to 100,000 shares of Common Stock and up to 100,000 redeemable warrants through
September 9, 1998.
The existence of the IPO Warrants, Class B Warrants and the
Representative's Warrant and the Options may prove to be a hindrance to future
financing by the Company. In addition, the
-8-
exercise of any such options or warrants may further dilute the net tangible
book value of the Common Stock. Further, the holders of such options and
warrants may exercise them at a time when the Company would otherwise be able to
obtain additional equity capital on terms more favorable to the Company.
POTENTIAL SALES PURSUANT TO RULE 144
The sale, or availability for sale, of substantial amounts of Common
Stock in the public market subsequent to this offering pursuant to Rule 144
under the Act ("Rule 144") or otherwise could adversely affect the market price
of the Common Stock and could impair the Company's ability to raise additional
capital through the sale of its equity securities or debt financing. The
availability of Rule 144 to the holder of restricted securities of the Company
would be conditioned on, among other factors, the availability of certain public
information concerning the Company. Of the Company's 4,222,694 shares of Common
Stock issued and outstanding as of December 9, 1996, 1,460,763 shares of Common
Stock are "restricted securities" as that term is defined in Rule 144
promulgated under the Act and may, under certain circumstances, be sold
immediately without registration pursuant to Rule 144. As of December 9, 1996,
1,460,763 restricted shares of Common Stock are eligible for sale pursuant to
Rule 144 subject to the volume trading limits under Rule 144. Future sales under
Rule 144 may have a depressive effect on the market price of the Common Stock.
POSSIBLE VOLATILITY IN PRICE OF SECURITIES
The level of trading in the Company's Common Stock on NASDAQ has been
volatile and no assurance can be given that a sustained, active market will
develop. Accordingly, purchasers of the Common Stock may experience difficulty
selling or otherwise disposing of such Common Stock. The stock market has from
time to time experienced significant price and volume fluctuations that may be
unrelated to the operating performance of any particular company. In addition,
the market prices of the securities of many publicly traded emerging companies,
including the Company, have in the past been, and can in the future be expected
to be, especially volatile. Various factors and events, including future
announcements of technological innovations or new products by the Company or its
competitors, developments or disputes concerning, among other things, patents or
proprietary rights, publicity regarding actual or potential results relating to
products under development by the Company or its competitors, and economic and
other external factors, as well as period-to-period fluctuations in the
Company's financial results, may have a significant impact on the market price
of the securities and the Company's business.
POSSIBLE ABEYANCE OF MARKET MAKING ACTIVITIES
In connection with any solicitation by the Representative, unless
granted an exemption by the Securities and Exchange Commission (the
"Commission") from its Rule 10b-6, promulgated under the Exchange Act, the
Representative and any other soliciting broker-dealer will be prohibited from
engaging in any market making activities with respect to the Company's
securities for the period commencing either two or nine business days (depending
on the market price of the Common Stock) prior to any solicitation of the
exercise of the Warrants until the later of (i) the termination
-9-
of such solicitation activity or (ii) the termination (by waiver or otherwise)
of any right which the Representative or any other soliciting broker-dealer may
have to receive a fee for the exercise of Warrants following such solicitation.
As a result, the Representative or any other soliciting broker-dealer may be
unable to provide a market for the Company's securities, should they desire to
do so, during certain periods while the Warrants are exercisable. Such
solicitations and reduction in the number of market makers could adversely
affect the market price of the securities.
POSSIBLE REDEMPTION OF IPO WARRANTS AND CLASS B WARRANTS
The IPO Warrants and Class B Warrants (collectively referred to herein
as the "Warrants") may be subject to redemption at $.10 per Warrant on 30 days'
prior written notice, provided that the market price of the Common Stock equals
or exceeds $7.00 per share (the "Call Price") for 10 consecutive trading days
ending within 20 days prior to the notice of redemption. The Company's Board of
Directors has the discretion to reduce the exercise price and the Call Price of
the Warrants. In the event the Company exercises the right to redeem the
Warrants, such Warrants will be exercisable until the close of business on the
date fixed for redemption in such notice. If any Warrant called for redemption
is not exercised by such time it will cease to be exercisable and the holder
will be entitled only to the redemption price.
POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue up to 1,000,000 shares of preferred stock, $.01 par value per
share. The preferred stock may be issued in one or more series, the terms of
which may be determined at the time of issuance by the Board of Directors,
without further action by stockholders, and may include voting rights (including
the right to vote as a series on particular matters), preferences as to
dividends and liquidation, conversion and redemption rights and sinking fund
provisions. No preferred stock is currently outstanding, and the Company has no
present plans for the issuance thereof. However, the issuance of any such
preferred stock could adversely affect the rights of holders of Common Stock
and, therefore, could reduce the value of the Common Stock.
The By-laws of the Company provide for a Board of Directors divided
into three classes serving for staggered three-year terms.
The ability of the Board of Directors to issue preferred stock and the
classification of the Board into three classes with staggered three-year terms
could discourage, delay or prevent a takeover of the Company.
In addition, the Company, as a Delaware corporation, is subject to the
General Corporation Law of the State of Delaware, including Section 203, an
anti-takeover law enacted in 1988. In general, the law restricts the ability of
a public Delaware corporation to engage in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder. As a result of
the application of Section 203 and certain provisions in the Company's
Certificate of Incorporation and Bylaws, as
-10-
amended, potential acquirors of the Company may find it more difficult or be
discouraged from attempting to acquire the Company, thereby possibly depriving
holders of the Company's securities of certain opportunities to sell or
otherwise dispose of such securities at above-market prices pursuant to such
transactions.
USE OF PROCEEDS
The Company will not receive any part of the proceeds of any sale of
transactions made by Selling Stockholders. The Company will receive the proceeds
from the exercise of any options exercised pursuant to the Stock Option Plans.
Any proceeds received by the Company will be used by the Company for general
working capital purposes.
SELLING STOCKHOLDERS
The following table sets forth, as of December 9, 1996, the name of
certain Selling Stockholders, the nature of his position, office, or other
material relationship with the Company within the past three years; the number
of shares subject to stock options granted to certain of the Selling
Stockholders which may be sold pursuant to this offering; and the number of
shares of Common Stock owned by them other than by means of stock options
represented by those shares. Some Selling Stockholders may be restricted in the
number and amount of shares of Common Stock they may sell and by the timing of
such sales. Certain persons not named below who are not affiliates of the
Company and who hold less than 1,000 shares of Common Stock acquired through the
exercise of stock options issued under one of the Stock Option Plans may reoffer
and resell their Common Stock under this Prospectus and the Registration
Statement of which this Prospectus is a part, and are considered to be Selling
Stockholders.
<TABLE>
<CAPTION>
Common
Stock Common Stock Percentage of
Beneficially Common Beneficially Class Beneficially
Owned Stock Owned After Owned After
Name and Relationship Prior to Being Completion of Completion of
of Selling Stockholders Offering Offered Offering Offering
- ----------------------- -------- ------- -------- --------
<S> <C> <C> <C> <C>
Gordon E. Walters(1) 311,547 60,000 251,547 61.9%
Mark R. Thomas(2) 0 40,000 40,000 9.8%
Robert M. Pozzo(3) 88,558 17,000 105,558 26.0%
John M. Buckley(4) 0 2,000 2,000 *
Charles R. Buffler(5) 0 2,500 2,500 *
John J. Moroney(6) 0 1,500 1,500 *
Salvatore F. D'Amato(7) 0 1,500 1,500 *
--------- -------- -------- --------
Total 400,105 124,500 404,605 100.0%
- --------
*Less than one percent (1%).
</TABLE>
-11-
(1) Includes 60,000 shares of Common Stock underlying unexercised stock
options held by Mr. Gordon E. Walters. Does not include 515,057 shares
of Common Stock owned by the children of Mr. Gordon Walters, including
those owned by Mr. Glenn Waters, as to which Mr. Gordon Walters
disclaims any beneficial interest. Mr. Gordon Walters is the Chairman
of the Board of Directors of the Company.
(2) Includes 40,000 shares of Common Stock underlying unexercised stock
options held by Mr. Thomas. Mr. Thomas is the Chief Financial Officer
and a Director of the Company.
(3) Includes 17,000 shares of Common Stock underlying unexercised stock
options held by Mr. Pozzo. Mr. Pozzo is a Director of the Company.
(4) Includes 2,000 shares of Common Stock underlying unexercised stock
options held by Mr. Buckley. Mr. Buckley is a Director of the Company.
(5) Includes 2,500 shares of Common Stock underlying unexercised stock
options held by Dr. Buffler. Dr. Buffler is a Director of the Company.
(6) Includes 1,500 shares of Common Stock underlying unexercised stock
options held by Mr. Moroney. Mr. Moroney is a Director of the Company.
(7) Includes 1,500 shares of Common Stock underlying unexercised stock
options held by Mr. D'Amato. Mr. D'Amato is a Director of the Company.
THE STOCK OPTION PLANS
GENERAL INFORMATION
In conjunction with this Prospectus, the Company has filed a Form S-8
Registration Statement with the Commission registering 50,000 shares of the
Common Stock issuable upon exercise of options that have been granted and that
may be granted under the Formula Plan, 800,000 shares of Common Stock issuable
upon exercise of options that have been granted and that may be granted under
the 1993 Plan, and 6,090 shares of Common Stock issuable upon exercise of
options that have been granted under the 1988 Plan.
The purpose of the Formula Plan is to advance the interests of the
Company by enhancing its ability to reward non-employee Directors of the Company
and of any future subsidiary of the Company. The Formula Plan is not subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
The purpose of the 1988 Plan and 1993 Plan is to encourage and enable
employees, consultants, Directors and others who are in a position to make
significant contributions to the success of the Company to acquire a closer
identification of their interests with those of the Company by providing them
with opportunities to purchase stock in the Company, and thereby
-12-
stimulate their efforts on behalf of the Company and strengthen their desire to
remain involved with the Company. The 1988 Plan and 1993 Plan are also not
subject to the provisions of ERISA.
To obtain additional information about the 1988 Plan, the 1993 Plan,
the Formula Plan or their administrators, or to obtain a copy of any of the
Plans or documents incorporated by reference with the Registration Statement on
Form S-8, you may write to Advanced Deposition Technologies, Inc., 580 Myles
Standish Boulevard, Taunton, Massachusetts 02780, Attention: Investor Relations,
or call the Company at (508) 823-0707. Copies will be provided without charge.
1988 STOCK OPTION PLAN
ADMINISTRATION OF THE 1988 PLAN
Members of the Board of Directors of the Company administer the 1988
Plan by (a) determining those individuals who, if any, shall be granted options;
(b) determining the time or times when options shall be granted and the number
of shares of Common Stock to be subject to each option; (c) determining the
exercise price of each option; (d) determining the time or times when each
option becomes exercisable and the duration of the exercise period; (e)
prescribing the form or forms of the instruments required under the 1988 Plan
and changing such forms from time to time; (f) adopting, amending and rescinding
rules and regulations for the administration of the 1988 Plan; and (g)
interpreting the 1988 Plan and deciding all questions and settling all
controversies and disputes which may arise in connection with the 1988 Plan. All
decisions, determinations and interpretations of the administrators are binding
on all parties concerned. The1988 Plan is not administered by disinterested
members (as defined by Rule 16b-3 promulgated under the Exchange Act) of the
Board of Directors.
SECURITIES OFFERED UNDER THE 1988 PLAN
The term options ("Options") shall include options that are intended to
qualify as incentive stock options as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code" and"Incentive Stock Options"), and
options that are not intended to qualify as incentive stock options
("Non-Qualified Options"). The Board of Directors has terminated the 1988 Plan
such that no additional options will be granted thereunder. The purchase price
for Common Stock issuable upon exercise of Options already outstanding is
determined by the Board of Directors.
PERSONS WHO MAY PARTICIPATE IN THE 1988 PLAN
The Participants in the 1988 Plan shall be such employees, directors
and consultants of the Company or of any of its subsidiaries, and others as may
be selected from time to time by the Board of Directors in its discretion, as
being in a position to contribute substantially to the success of the Company or
such subsidiaries.
-13-
TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS GRANTED UNDER THE 1988
PLAN
In no event may the Company grant an Incentive Stock Option under the
1988 Plan that is first exercisable during any one calendar year to the extent
that the aggregate fair market value of the Common Stock which is subject to
Options in the Company's Common Stock (under any plan of the Company and its
affiliates) by any one Participant exceeds $100,000.
All Incentive Stock Options are subject to the following terms and
conditions and to such other terms and conditions consistent with the applicable
provisions of the Code for Incentive Stock Options as the Board of Directors
shall determine appropriate to accomplish the purposes of the 1988 Plan:
(a) Option Price. The exercise price for each Incentive Stock Option is
determined by the Board of Directors. Incentive Stock Options will not have an
exercise price less than 100% of the fair market value per share of Common Stock
measured at the time the Option is granted; nor shall the exercise price be
less, in the case of an original issue of authorized stock, than par value.
However, if at the time of grant, the Participant owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or its subsidiaries, the exercise price will not be less than 110% of
the fair market value per share of the Common Stock subject to the Option. For
purposes of determining a Participant's ownership of stock, the ownership
attribution rules of the Code and the regulations promulgated thereunder apply.
(b) Period of Options. The term for each Incentive Stock Option is
determined by the Board of Directors, but may not in any event exceed ten years
from the date of grant. However, if at the time of grant, the Participant owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or of its subsidiaries, the Option may not be
exercisable after the expiration of five years from the date of grant of such
Option.
(c) Exercise of Options.
(1) Each Incentive Stock Option shall be made exercisable at
such time or times as the Board of Directors shall prescribe at the time the
Option is granted. In the case of an Option not immediately exercisable in full,
the Board of Directors may at any time accelerate the time at which all or any
part of the Option may be exercised. In the event that the Board of Directors
accelerates the time at which all or any part of an Option held by a Participant
may be exercised, and such accelerated vesting exceeds the annual vesting
limitations contained in Section 422(d)(1) of the Code, such option shall be
treated as a Non-Qualified Option.
(2) A Participant electing to exercise an Option must give
written notice to the Company, as specified by the Board of Directors, of his or
her election and of the number of shares of Common Stock the Participant has
elected to purchase. Such notice must be accompanied by:
(i) the instrument evidencing the Option;
-14-
(ii) payment in full for all shares of Common Stock
then being purchased thereunder in full in the form of (A) cash, (B)
check, (C) through the delivery of Common Stock (duly owned by the
Participant and for which the Participant has good title free and clear
of any liens and encumbrances), valued at Fair Market Value, as defined
in the 1988 Plan, (D) a combination of cash and Common Stock, or (E) by
any such other lawful consideration as the Board of Directors may
determine;
(iii) any other documents required by the Board of
Directors.
(3) A Participant exercising an Option must execute and
deliver to the Company any shareholder's agreement or other agreements that may
be required by the terms of the Option being exercised.
(4) A Participant receiving an Incentive Stock Option must
agree to notify the Company in writing immediately after the Participant makes a
Disqualifying Disposition, as defined below, of any stock acquired pursuant to
the exercise of an Incentive Stock Option. A "Disqualifying Disposition" is any
disposition (including any sale) of such stock before the later of (a) two years
after the date the Participant was granted the Incentive Stock Option or (b) one
year after the date the employee acquired stock by exercising the Incentive
Stock Option. If the Participant has died before such stock is sold, the above
holding requirements do not apply and no Disqualifying Disposition can occur
thereafter.
TERMS AND CONDITIONS OF NON-QUALIFIED OPTIONS GRANTED UNDER THE 1988
PLAN
All Non-Qualified Stock Options are subject to the following terms and
conditions and to such other terms and conditions as the Board of Directors
shall determine appropriate to accomplish the purposes of the 1988 Plan:
(a) Option Price. The exercise price for each Non-Qualified Option is
determined by the Board of Directors.
(b) Period of Options. The term for each Non-Qualified Option is
determined by the Board of Directors, but may not in any event exceed 10 years
from the date of grant and will be exercisable at such time or times as the
Board of Directors prescribes at the time the Option is granted. In the case of
a Non-Qualified Option not immediately exercisable in full, the Board of
Directors may at any time accelerate the time at which all or part of the Option
may be exercised.
(c) Exercise of Options.
(1) A Participant electing to exercise a Non-Qualified Option must
give written notice to the Company, as specified by the Board of Directors, of
his or her election and of the number of shares of Common Stock the Participant
has elected to purchase. Such notice must be accompanied by:
-15-
(i) the instrument evidencing such Option;
(ii) payment in full for all shares of Common Stock
then being purchased thereunder, including (if the Board of Directors
so requires) an amount equal to all applicable local, state or federal
withholding taxes, if any, in the form of (A) cash, (B) check, (C)
through the delivery of Common Stock (duly owned by the Participant and
for which the Participant has good title free and clear of any liens
and encumbrances), valued at Fair Market Value, as defined in the 1988
Plan, and having a Fair Market Value on the last business day preceding
the date of exercise equal to the purchase price and the withholding
taxes, if any, (D) a combination of cash and Common Stock, or (E) by
any such other lawful consideration as the Board of Directors may
determine; and
(iii) any other documents required by the Board of
Directors.
(2) A person exercising a Non-Qualified Option must execute
and deliver to the Company any shareholder's agreement or other agreements that
may be required by the terms of the Option being exercised.
DELIVERY OF COMMON STOCK
Common Stock to be delivered under the 1988 Plan may constitute an
original issue of authorized stock or may consist of previously issued Common
Stock acquired by the Company, as shall be determined by the Board of Directors.
The Board of Directors and the proper officers of the Company shall take any
appropriate action required for such delivery. The Company shall not be
obligated to deliver any Common Stock unless and until, in the opinion of the
Company's counsel, all applicable federal and state laws and regulations have
been complied with, or, if the Common Stock is at the time listed upon any stock
exchange, unless and until the Common Stock to be delivered has been listed or
authorized to be added to the list upon official notice of issuance upon such
exchange, or unless or until all other legal matters in connection with the
issuance and delivery of Common Stock have been approved by the Company's
counsel.
SUMMARY OF TAX TREATMENT OF 1988 PLAN
INCENTIVE STOCK OPTIONS
Under the current tax rules, an employee who has received Incentive
Stock Options under the 1988 Plan may be eligible for the following tax
treatment:
No income is realized by the employee when the Incentive Stock Option
is received or when the Option is exercised and the employee receives the shares
of Common Stock. When the employee sells the stock received upon the exercise of
the Option, the employee incurs taxable income but only to the extent the amount
received by the employee exceeds the amount the employee paid upon
-16-
exercise of the Option. Further, to the extent taxable income is incurred, it is
taxed at long-term capital gain rates. However, note that as a result of the Tax
Reform Act of 1986, and depending upon each individual's particular
circumstances, this distinction may not be meaningful.
To obtain this tax treatment, the following conditions must be
satisfied:
(a) The employee must hold any Common Stock received upon the exercise
of the Incentive Stock Option at least until (i) at least two years from the
date of the grant of the Option and (ii) at least one year from the date the
Option was exercised.
(b) The employee must not transfer any Incentive Stock Option received
under the 1988 Plan.
(c) The employee must exercise any Incentive Stock Option received
under the 1988 Plan within ten years of the date it is granted by the Company
(or such shorter period as may be specified by the grant of the Incentive Stock
Option), unless the employee holds in excess of 10% of the stock of the Company,
in which case the employee must exercise the Incentive Stock Option within five
years of the date of the grant.
(d) If the employee dies and an Incentive Stock Option granted to the
employee was never exercised, the executor of the employee's estate or legal
representative may exercise the Incentive Stock Option (to the extent
exercisable on the date of the employee's death) provided that Incentive Stock
Option is exercised within one year of the employee's death.
If the above conditions are not satisfied, the employee recognizes
taxable ordinary income as of the date of the exercise of the Option equal to
the fair market value of the Common Stock purchased on the date of exercise less
the exercise price of the Option. Upon the sale of the Common Stock, the
Participant recognizes further gain based upon the difference between the price
at which the Participant sells the stock and the fair market value of the Common
Stock on the day of the exercise of the Option. In the event a Participant sells
any Common Stock acquired upon exercise of an Incentive Stock Option without
complying with the above-described conditions, the Company may require, in
accordance with Section 3402(a) of the Code, that the Participant pay additional
withholding taxes in respect of the amount that is considered compensation
includable in the Participant's gross income.
Notwithstanding the above summary, holders of Incentive Stock Options
should note that the exercise of an Incentive Stock Option does produce income
for alternative minimum tax ("AMT") purposes. When calculating income for AMT
purposes, the "spread" between the exercise price of the Incentive Stock Option
and the fair market value of the Common Stock is treated as an "item of
adjustment" to income.
-17-
NON-QUALIFIED OPTIONS
When Non-Qualified Options are granted under the 1988 Plan, neither the
Company nor the employee realizes any tax impact, provided that the exercise
price is at or above fair market value of the Company's Common Stock on the date
of exercise. When the holder of a Non-Qualified Option exercises the Option, the
"spread" between the Option exercise price and the fair market value of the
Common Stock on the date the Non-Qualified Option is exercised is treated as
ordinary income to the Option holder. If this "spread" is significant, tax
liability associated with exercising a Non-Qualified Option may become very
high. At the time the Non-Qualified Option is exercised, the Company is allowed
a compensation deduction based upon the "spread" or value of the Non- Qualified
Option at the time it is granted for federal tax purposes. When the
Non-Qualified Option holder later sells the stock, he recognizes any gain over
the fair market value of the Common Stock on the day such Common Stock was
acquired.
TAX LAWS IN THIS AREA ARE COMPLEX AND SUBJECT TO CHANGE. EMPLOYEES
SHOULD CONSULT WITH THEIR PERSONAL TAX CONSULTANT RATHER THAN RELY ON THE ABOVE
SUMMARY FOR A DEFINITIVE DETERMINATION OF THE TAX TREATMENT RESULTING FROM
PARTICIPATION UNDER THE 1988 PLAN.
1993 STOCK OPTION PLAN
ADMINISTRATION OF THE 1993 PLAN
Members of the Board of Directors of the Company administer the 1993
Plan by (a) determining those individuals who, if any, shall be granted options;
(b) determining the time or times when options shall be granted and the number
of shares of Common Stock to be subject to each option; (c) determining the
exercise price of each option; (d) determining the time or times when each
option becomes exercisable and the duration of the exercise period; (e)
prescribing the form or forms of the instruments required under the 1993 Plan
and changing such forms from time to time; (f) adopting, amending and rescinding
rules and regulations for the administration of the 1993 Plan; and (g)
interpreting the 1993 Plan and deciding all questions and settling all
controversies and disputes which may arise in connection with the 1993 Plan. All
decisions, determinations and interpretations of the administrators are binding
on all parties concerned. The 1993 Plan is not administered by disinterested
members (as defined by Rule 16b-3 promulgated under the Exchange Act) of the
Board of Directors.
SECURITIES OFFERED UNDER THE 1993 PLAN
The term options ("Options") shall include options that are intended to
qualify as incentive stock options as defined in Section 422 of the Code
("Incentive Stock Options"), and options that are not intended to qualify as
incentive stock options ("Non-Qualified Options"). The Company may grant Options
to purchase up to 800,000 shares of Common Stock under the 1993 Plan. The
-18-
purchase price for Common Stock issuable upon exercise of Options is determined
by the Board of Directors.
PERSONS WHO MAY PARTICIPATE IN THE 1993 PLAN
The Participants in the 1993 Plan shall be such employees, directors
and consultants of the Company or of any of its subsidiaries, and others as may
be selected from time to time by the Board of Directors in its discretion, as
being in a position to contribute substantially to the success of the Company or
such subsidiaries.
TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS GRANTED UNDER THE 1993
PLAN
In no event may the Company grant an Incentive Stock Option under the
1993 Plan that is first exercisable during any one calendar year to the extent
that the aggregate fair market value of the Common Stock which is subject to
Options in the Company's Common Stock (under any plan of the Company and its
affiliates) by any one Participant exceeds $100,000.
All Incentive Stock Options are subject to the following terms and
conditions and to such other terms and conditions consistent with the applicable
provisions of the Code for Incentive Stock Options as the Board of Directors
shall determine appropriate to accomplish the purposes of the 1993 Plan:
(a) Option Price. The exercise price for each Incentive Stock Option is
determined by the Board of Directors. Incentive Stock Options will not have an
exercise price less than 100% of the fair market value per share of Common Stock
measured at the time the Option is granted; nor shall the exercise price be
less, in the case of an original issue of authorized stock, than par value.
However, if at the time of grant, the Participant owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or its subsidiaries, the exercise price will not be less than 110% of
the fair market value per share of the Common Stock subject to the Option. For
purposes of determining a Participant's ownership of stock, the ownership
attribution rules of the Code and the regulations promulgated thereunder apply.
(b) Period of Options. The term for each Incentive Stock Option is
determined by the Board of Directors, but may not in any event exceed ten years
from the date of grant. However, if at the time of grant, the Participant owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or of its subsidiaries, the Option may not be
exercisable after the expiration of five years from the date of grant of such
Option.
(c) Exercise of Options.
(1) Each Incentive Stock Option shall be made exercisable at
such time or times as the Board of Directors shall prescribe at the time the
Option is granted. In the case of an Option not immediately exercisable in full,
the Board of Directors may at any time accelerate the time at
-19-
which all or any part of the Option may be exercised. In the event that the
Board of Directors accelerates the time at which all or any part of an Option
held by a Participant may be exercised, and such accelerated vesting exceeds the
annual vesting limitations contained in Section 422(d)(1) of the Code, such
option shall be treated as a Non-Qualified Option.
(2) A Participant electing to exercise an Option must give
written notice to the Company, as specified by the Board of Directors, of his or
her election and of the number of shares of Common Stock the Participant has
elected to purchase. Such notice must be accompanied by:
(i) the instrument evidencing the Option;
(ii) payment in full for all shares of Common Stock
then being purchased thereunder in full in the form of (A) cash, (B)
check, (C) through the delivery of Common Stock (duly owned by the
Participant and for which the Participant has good title free and clear
of any liens and encumbrances), valued at Fair Market Value, as defined
in the 1993 Plan, (D) a combination of cash and Common Stock, or (E) by
any such other lawful consideration as the Board of Directors may
determine;
(iii) any other documents required by the Board of
Directors.
(3) A Participant exercising an Option must execute and
deliver to the Company any shareholder's agreement or other agreements that may
be required by the terms of the Option being exercised.
(4) A Participant receiving an Incentive Stock Option must
agree to notify the Company in writing immediately after the Participant makes a
Disqualifying Disposition, as defined below, of any stock acquired pursuant to
the exercise of an Incentive Stock Option. A "Disqualifying Disposition" is any
disposition (including any sale) of such stock before the later of (a) two years
after the date the Participant was granted the Incentive Stock Option or (b) one
year after the date the employee acquired stock by exercising the Incentive
Stock Option. If the Participant has died before such stock is sold, the above
holding requirements do not apply and no Disqualifying Disposition can occur
thereafter.
TERMS AND CONDITIONS OF NON-QUALIFIED OPTIONS GRANTED UNDER THE 1993
PLAN
All Non-Qualified Stock Options are subject to the following terms and
conditions and to such other terms and conditions as the Board of Directors
shall determine appropriate to accomplish the purposes of the 1993 Plan:
(a) Option Price. The exercise price for each Non-Qualified Option is
determined by the Board of Directors.
-20-
(b) Period of Options. The term for each Non-Qualified Option is
determined by the Board of Directors, but may not in any event exceed 10 years
from the date of grant and will be exercisable at such time or times as the
Board of Directors prescribes at the time the Option is granted. In the case of
a Non-Qualified Option not immediately exercisable in full, the Board of
Directors may at any time accelerate the time at which all or part of the Option
may be exercised.
(c) Exercise of Options.
(1) A Participant electing to exercise a Non-Qualified Option
must give written notice to the Company, as specified by the Board of Directors,
of his or her election and of the number of shares of Common Stock the
Participant has elected to purchase. Such notice must be accompanied by:
(i) the instrument evidencing such Option;
(ii) payment in full for all shares of Common Stock
then being purchased thereunder, including (if the Board of Directors
so requires) an amount equal to all applicable local, state or federal
withholding taxes, if any, in the form of (A) cash, (B) check, (C)
through the delivery of Common Stock (duly owned by the Participant and
for which the Participant has good title free and clear of any liens
and encumbrances), valued at Fair Market Value, as defined in the 1993
Plan, and having a Fair Market Value on the last business day preceding
the date of exercise equal to the purchase price and the withholding
taxes, if any, (D) a combination of cash and Common Stock, or (E) by
any such other lawful consideration as the Board of Directors may
determine; and
(iii) any other documents required by the Board of
Directors.
(2) A person exercising a Non-Qualified Option must execute
and deliver to the Company any shareholder's agreement or other agreements that
may be required by the terms of the Option being exercised.
DELIVERY OF COMMON STOCK
Common Stock to be delivered under the 1993 Plan may constitute an
original issue of authorized stock or may consist of previously issued Common
Stock acquired by the Company, as shall be determined by the Board of Directors.
The Board of Directors and the proper officers of the Company shall take any
appropriate action required for such delivery. The Company shall not be
obligated to deliver any Common Stock unless and until, in the opinion of the
Company's counsel, all applicable federal and state laws and regulations have
been complied with, or, if the Common Stock is at the time listed upon any stock
exchange, unless and until the Common Stock to be delivered has been listed or
authorized to be added to the list upon official notice of issuance upon such
exchange, or unless or until all other legal matters in connection with the
issuance and delivery of Common Stock have been approved by the Company's
counsel.
-21-
SUMMARY OF TAX TREATMENT OF 1993 PLAN
INCENTIVE STOCK OPTIONS
Under the current tax rules, an employee who receives Incentive Stock
Options under the 1993 Plan may be eligible for the following tax treatment:
No income is realized by the employee when the Incentive Stock Option
is received or when the Option is exercised and the employee receives the shares
of Common Stock. When the employee sells the stock received upon the exercise of
the Option, the employee incurs taxable income but only to the extent the amount
received by the employee exceeds the amount the employee paid upon exercise of
the Option. Further, to the extent taxable income is incurred, it is taxed at
long-term capital gain rates. However, note that as a result of the Tax Reform
Act of 1986, and depending upon each individual's particular circumstances, this
distinction may not be meaningful.
To obtain this tax treatment, the following conditions must be
satisfied:
(a) The employee must hold any Common Stock received upon the exercise
of the Incentive Stock Option at least until (i) at least two years from the
date of the grant of the Option and (ii) at least one year from the date the
Option was exercised.
(b) The employee must not transfer any Incentive Stock Option received
under the 1993 Plan.
(c) The employee must exercise any Incentive Stock Option received
under the 1993 Plan within ten years of the date it is granted by the Company
(or such shorter period as may be specified by the grant of the Incentive Stock
Option), unless the employee holds in excess of 10% of the stock of the Company,
in which case the employee must exercise the Incentive Stock Option within five
years of the date of the grant.
(d) If the employee dies and an Incentive Stock Option granted to the
employee was never exercised, the executor of the employee's estate or legal
representative may exercise the Incentive Stock Option (to the extent
exercisable on the date of the employee's death) provided that Incentive Stock
Option is exercised within one year of the employee's death.
If the above conditions are not satisfied, the employee recognizes
taxable ordinary income as of the date of the exercise of the Option equal to
the fair market value of the Common Stock purchased on the date of exercise less
the exercise price of the Option. Upon the sale of the Common Stock, the
Participant recognizes further gain based upon the difference between the price
at which the Participant sells the stock and the fair market value of the Common
Stock on the day of the exercise of the Option. In the event a Participant sells
any Common Stock acquired upon exercise of an Incentive Stock Option without
complying with the above-described conditions, the Company may require, in
accordance with Section 3402(a) of the Code, that the Participant pay
-22-
additional withholding taxes in respect of the amount that is considered
compensation includable in the Participant's gross income.
Notwithstanding the above summary, holders of Incentive Stock Options
should note that the exercise of an Incentive Stock Option does produce income
for alternative minimum tax ("AMT") purposes. When calculating income for AMT
purposes, the "spread" between the exercise price of the Incentive Stock Option
and the fair market value of the Common Stock is treated as an "item of
adjustment" to income.
NON-QUALIFIED OPTIONS
When Non-Qualified Options are granted under the 1993 Plan, neither the
Company nor the employee realizes any tax impact, provided that the exercise
price is at or above fair market value of the Company's Common Stock on the date
of exercise. When the holder of a Non-Qualified Option exercises the Option, the
"spread" between the Option exercise price and the fair market value of the
Common Stock on the date the Non-Qualified Option is exercised is treated as
ordinary income to the Option holder. If this "spread" is significant, tax
liability associated with exercising a Non-Qualified Option may become very
high. At the time the Non-Qualified Option is exercised, the Company is allowed
a compensation deduction based upon the "spread" or value of the Non- Qualified
Option at the time it is granted for federal tax purposes. When the
Non-Qualified Option holder later sells the stock, he recognizes any gain over
the fair market value of the Common Stock on the day such Common Stock was
acquired.
TAX LAWS IN THIS AREA ARE COMPLEX AND SUBJECT TO CHANGE. EMPLOYEES
SHOULD CONSULT WITH THEIR PERSONAL TAX CONSULTANT RATHER THAN RELY ON THE ABOVE
SUMMARY FOR A DEFINITIVE DETERMINATION OF THE TAX TREATMENT RESULTING FROM
PARTICIPATION UNDER THE 1993 PLAN.
AMENDMENTS TO THE 1993 PLAN
The 1993 Plan provides that the provisions of the 1993 Plan may be
amended at any time or the 1993 Plan may be terminated in its entirety. However,
no amendments to the 1993 Plan affecting the following subjects shall be made by
the Board of Directors without the approval of the stockholders of the Company:
(a) the number of shares of Common Stock to which Options may be granted
thereunder other than pursuant to a change in the Company's capital structure,
(b) the requirements as to eligibility for participation in the 1993 Plan, (c)
the minimum price at which Options may be granted, (d) the maximum term of
Options granted, or (e) the term of the 1993 Plan.
Options granted prior to suspension or termination of the 1993 Plan may
not be cancelled solely because of the suspension or termination of the 1993
Plan, except with the consent of the grantee of the Options.
-23-
1994 FORMULA PLAN
ADMINISTRATION OF THE FORMULA PLAN/PERSONS WHO MAY PARTICIPATE
The Formula Plan is administered by the Board of Directors of the
Company. The Board of Directors may also designate a committee thereof to
administer the Formula Plan. All non-employee Directors of the Company are
eligible to be granted Non-Qualified Option Awards under the Formula Plan,
unless they choose not to participate in the Formula Plan.
Under the Formula Plan, options will be granted pursuant to a formula
that determines the timing, pricing and amount of the option awards using only
objective criteria, without discretion on the part of the administrators of the
Formula Plan.
Options granted under the Formula Plan will not exceed fifty thousand
(50,000) shares of Common Stock. Options shall be granted under the Formula Plan
to eligible non-employee Directors (the "Participants") as follows:
(a) Effective August 9, 1994, on the first business day
immediately following the Company's annual meeting of shareholders, the
Company shall grant, to each of its non-employee Directors who has
served as a Director of the Company for at least one full year, options
to purchase a total of 1,000 shares of Common Stock. The options shall
be granted to a non-employee Director only if the Director is a
Director on the date of the grant and has attended, during the
Company's fiscal year immediately preceding the grant, at least 75% of
meetings of the Board of Directors and the Committees on which the
Director has served. Said options shall vest completely and be
exercisable one year from the date of the grant, subject to the
Director's continued service as a Director on such date.
(b) Each non-employee Director who becomes a Director after
November 1, 1993 will receive, on the later of (i) the date he or she
becomes a Director or (ii) the effective date of the Formula Plan,
options to purchase a total of 1,500 shares of Common Stock. One- third
of said options shall vest and be exercisable immediately and one-third
will vest on each of the first and second anniversaries of the grant,
subject to the Director's continued service as a Director on such
dates.
TERMS AND CONDITIONS OF OPTIONS GRANTED UNDER THE FORMULA PLAN
All Options are subject to the following terms and conditions:
(a) Option Price and Exercise of Options. The exercise price
of options to be granted under the Formula Plan will be the fair market
value, as defined in the Formula Plan, of the shares of Common Stock on
the date of the grant and said options shall vest and be exercisable as
determined pursuant to the provisions of the instrument evidencing such
option.
-24-
(b) A person electing to exercise an Option granted under the
Formula Plan must give written notice to the Company of his election
and of the number of shares of Common Stock he or she has elected to
purchase. Such notice must be accompanied by:
(i) the instrument evidencing the Option;
(ii) payment in full for all shares of Common Stock
then being purchased thereunder in the form of cash, check,
through the delivery of Common Stock (duly owned by the
Director and for which the Director has good title free and
clear of any liens and encumbrances) having a fair market
value on the last business day preceding the date of exercise
equal to the purchase price, or, at the election of the
Company, issuance of a promissory note, or a combination of
cash and Common Stock or in such other form as the Board may
designate at the time an Option is granted;
(iii) payment in (a) cash, (b) check or, (c) if the
Board determines at the time an Option is exercised, through
the delivery of Common Stock, of an amount equal to all
applicable local, state or federal withholding taxes, if any,
or such other assurance of the payment to the Company of such
amount as shall be satisfactory to the Board in their sole
discretion; and
(iv) any other documents required by the Board.
(c) A person exercising an Option must execute and deliver to
the Company any stockholder's agreement or other agreements that may be
required by the terms of the Option being exercised.
Options may be granted to participants in the Formula Plan who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Formula Plan as the Board or
designated committee considers necessary or advisable to achieve the purposes of
the Formula Plan or comply with applicable laws.
DELIVERY OF COMMON STOCK
Common Stock to be delivered under the Formula Plan may constitute an
original issue of authorized stock or may consist of previously issued Common
Stock acquired by the Company, as shall be determined by the Board. The Board
and the proper officers of the Company shall take any appropriate action
required for such delivery. The Company shall not be obligated to deliver any
Common Stock unless and until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, or,
if the Common Stock is at the time listed upon any stock exchange, unless and
until the Common Stock to be delivered has been listed or authorized to be added
to the list upon official notice of issuance upon such exchange, or unless or
-25-
until all other legal matters in connection with the issuance and delivery of
Common Stock have been approved by the Company's counsel.
SUMMARY OF TAX TREATMENT OF THE FORMULA PLAN
A participant recognizes taxable ordinary income as of the date he or
she exercise a Non- Qualified Option equal to the fair market value of the
Common Stock purchased less the exercise price of the Option. When the
participant sells the Common Stock, he or she recognizes further gain based upon
the difference between the price at which he or she sells his stock and the fair
market value of the Common Stock on the day he or she exercised the Option.
TAX LAWS IN THIS AREA ARE COMPLEX AND SUBJECT TO CHANGE. PARTICIPANTS
SHOULD CONSULT WITH THEIR PERSONAL TAX CONSULTANT RATHER THAN RELY ON THE ABOVE
SUMMARY FOR A DEFINITIVE DETERMINATION ON THE TAX TREATMENT RESULTING FROM
PARTICIPATION UNDER THE FORMULA PLAN.
AMENDMENTS TO THE FORMULA PLAN
The Formula Plan provides that its provisions may not be amended more
than once every six months, other than to comply with changes in the Code,
ERISA, or the rules thereunder. The Board may at any time discontinue granting
Options under the Formula Plan and may at any time amend any outstanding Options
for the purpose of satisfying the requirements of any changes in applicable laws
or regulations or for any other purpose that may at the time be permitted by
law. However, no amendments to the Formula Plan affecting the following subjects
shall be made by the Board without the approval of the stockholders of the
Company (a) the number of shares of Common Stock as to which Options may be
granted thereunder other than pursuant to a change in the Company's capital
structure, (b) the requirements as to eligibility for participation in the
Formula Plan, (c) the minimum price at which Options may thereafter be granted,
(d) the maximum term of Options granted, or (e) the term of the Formula Plan.
APPLICABLE TO ALL PLANS
POSSIBLE RESTRICTIONS ON RESALE OF COMMON STOCK ISSUED PURSUANT TO THE
PLANS
The Company may require from the person exercising an Option an
investment representation or other agreement as counsel for the Company may
consider necessary to comply with the Securities Act and any applicable Blue Sky
or state securities laws and may require that the person agree that any sale of
the shares of Common Stock will be made only on a stock exchange or in such
other manner as is permitted by the Board and that he or she will notify the
Company upon any disposition of the shares whether by sale, gift or otherwise.
-26-
To the extent required to qualify for the exemption provided by Rule
16b-3 under the Exchange Act, and any successor provision, at least six months
must elapse from the date of an acquisition of an Option by a person who is
subject to Section 16 of the Exchange Act (including directors of the Company)
to the date of disposition of such Option (other than by exercise) or its
underlying Common Stock.
Stock issuable upon the exercise of an option granted under the Plans
may be subject to such restrictions on transfer or repurchase rights as shall be
determined by the Board of Directors.
NONTRANSFERABILITY OF OPTIONS
Each Option, by its terms, shall not be transferable by the participant
otherwise than by will or by the laws of descent and distribution. During the
participant's lifetime, the Option shall be exercisable only by him or her.
PLAN OF DISTRIBUTION
The Shares are being registered to permit public secondary trading of
the Shares from time to time by any Selling Stockholders. The Shares being
offered hereby were issued, or will be issued, by the Company as a result of
participation by Selling Stockholders in the Company's Stock Option Plans. Such
securities are being registered at the expense of the Company, exclusive of fees
and expenses of Selling Stockholders' attorneys or other representatives and
selling or brokerage commissions, if any, as the result of any sale of the
Shares.
Selling Stockholders are not restricted as to the price or prices at
which they may sell the Shares and sales of the Shares at less than the market
price may depress the market price of the Common Stock. It is anticipated that
any sales of the Shares, when and if made, will be made through customary
channels either through broker-dealers acting as agents or brokers for the
seller, or through broker-dealers acting as principals, who may then resell the
Shares in the over-the-counter market, or at private sales in the
over-the-counter market or otherwise, at negotiated prices related to prevailing
market prices at the time of the sales, or by a combination of such methods.
Thus, the sale of such Shares by Selling Stockholders may occur over an extended
period of time. Selling Stockholders will act independently of the Company in
making decisions with respect to the timing, market, or otherwise of prices
related to the then current market price or in negotiated transactions.
Shares may be sold from time to time by Selling Stockholders, or by
pledgees, donees, transferees or other successors in interest. Shares may be
sold by Selling Stockholders in one or more transactions on the NSCM, or
otherwise at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The Shares may be sold
by one or more of the following: (a) a block trade in which the broker or dealer
so engaged will attempt to sell the Shares as agent but may position and resell
a portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer
-27-
for its account pursuant to this Prospectus; and (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers. In
effecting sales, broker-dealers engaged by Selling Stockholders may arrange for
other broker-dealers to participate. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by Selling Stockholders in
connection with such sales. The Company will not receive any proceeds from any
sales of the Common Stock by Selling Stockholders.
In offering the Shares, Selling Stockholders and any broker-dealers and
any other participating broker-dealers who execute sales for Selling
Stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales, and any profits realized by
Selling Stockholders and the compensation of such broker-dealers may be deemed
to be underwriting discounts and commissions. In addition, any Shares covered by
this Prospectus which qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this Prospectus.
The Company has advised Selling Stockholders that during such time as
they may be engaged in a distribution of Shares they are required to comply with
Rules 10b-6 and 10b-7 under the Exchange Act (as those Rules are described in
more detail below) and, in connection therewith, that they may not engage in any
stabilization activity, except as permitted under the Exchange Act, are required
to furnish each broker-dealer through which Common Stock included herein may be
offered copies of this Prospectus, and may not bid for or purchase any
securities of the Company or attempt to induce any person to purchase any
securities except as permitted under the Exchange Act.
Rule 10b-6 under the Exchange Act prohibits, with certain exceptions,
participants in a distribution from bidding for or purchasing, for an account in
which the participant has a beneficial interest, any of the securities that are
the subject of the distribution. Rule 10b-7 governs bids and purchases made in
order to stabilize the price of a security in connection with a distribution of
the security.
RECENT DEVELOPMENTS
No material changes in the Company's affairs have occurred since the
end of Fiscal 1995, which have not been described in a report on an Annual
Report on Form 10-KSB, a Quarterly Report on Form 10-QSB or a Current Report on
Form 8-K filed by the Company under the Exchange Act.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such
-28-
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
Delaware General Corporation Law, Section 102(b)(7), enables a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders to eliminate or limit personal liability of
members of its Board of Directors for violations of a director's fiduciary duty
of care. However, the elimination or limitation shall not apply where there has
been a breach of the duty of loyalty, failure to act in good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase which is deemed illegal or obtaining an improper
personal benefit. The Company's Certificate of Incorporation includes the
following language:
To the maximum extent permitted by Section 102(b)(7) of the
General Corporation Law of Delaware, a director of this Corporation
shall not be personally liable to the Corporation or its stockholders,
for monetary damages for breach of fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit.
Delaware General Corporation Law, Section 145, permits a corporation
organized under Delaware law to indemnify directors and officers with respect to
any matter in which the director or officer acted in good faith and in a manner
he reasonably believed to be not opposed to the best interests of the Company,
and, with respect to any criminal action, had reasonable cause to believe his
conduct was lawful. The By-laws of the Company include the following provision:
Reference is made to Section 145 and any other relevant
provisions of the General Corporation Law of the State of Delaware.
Particular reference is made to the class of persons, hereinafter
called "Indemnitees", who may be indemnified by a Delaware corporation
pursuant to the provisions of such Section 145, namely, any person, or
the heirs, executors, or administrators of such person, who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that such
person is or was a director, officer, employee, or agent of such
corporation or is or was serving at the request of such corporation as
a director, officer, employee or agent of such corporation or is or was
serving at the request of such corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise. The Corporation shall, and is hereby
obligated to, indemnify the Indemnitees, and each of them, in each and
every situation where the Corporation is obligated to make such
indemnification pursuant to the aforesaid statutory provisions. The
Corporation shall indemnify the Indemnitees, and each of them, in each
and every situation where,
-29-
under the aforesaid statutory provisions, the Corporation is not
obligated, but is nevertheless permitted or empowered, to make such
indemnification, it being understood that, before making such
indemnification, with respect to any situation covered under this
sentence, (i) the Corporation shall promptly make or cause to be made,
by any of the methods referred to in Subsection (d) of such Section
145, a determination as to whether each Indemnitee 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, in the case of any criminal
action or proceeding, had no reasonable cause to believe that his
conduct was unlawful, and (ii) that no such indemnification shall be
made unless it is determined that such Indemnitee 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, in the case of any criminal
action or proceeding, had no reasonable cause to believe that his
conduct was unlawful.
-30-
================================================================================
No dealer, salesman or any other person has been authorized in connection with
this Offering to give any information or to make any representations other than
those contained in this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby in any jurisdiction in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to any person to whom it
is unlawful to make such an offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the circumstances of the Company or
the facts herein set forth since the date hereof.
---------------------
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION....................... 3
THE COMPANY................................. 4
RISK FACTORS................................ 5
USE OF PROCEEDS............................. 11
SELLING STOCKHOLDERS........................ 11
THE STOCK OPTION PLANS...................... 12
PLAN OF DISTRIBUTION........................ 27
RECENT DEVELOPMENTS......................... 28
INDEMNIFICATION............................. 28
================================================================================
================================================================================
856,090 SHARES
OF COMMON STOCK
$.01 PAR VALUE PER SHARE
ADVANCED DEPOSITION
TECHNOLOGIES, INC.
---------------
PROSPECTUS
---------------
December 11, 1996
================================================================================
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed by the Company with the
Commission under the Securities Act and the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995 ("Fiscal 1995");
(2) The Company's Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 1996, as amended; the Company's
Quarterly Report on Form 10- QSB for the fiscal quarter ended
June 30, 1996; and the Company's Quarterly Report on Form
10-QSB for the fiscal quarter ended September 30, 1996.
(3) The Company's Proxy Statement for its 1995 Annual Meeting of
Stockholders filed with the Commission on May 3, 1996;
(4) Description of the Company's Common Stock in the Company's
Form S-3 Registration Statement, filed with the Commission on
May 13, 1996; and
(5) The Company's current reports pursuant to Section 13 or 15(d)
of the Exchange Act on Form 8-K dated June 4, 1996; June 13,
1996; June 18, 1996; June 25, 1996; July 17, 1996; and August
12, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act subsequent to the date of this
Registration Statement on Form S-8 and prior to such time as the Company files a
post-effective amendment to this Registration Statement on Form S-8 which
indicates that all securities offered hereby have been sold or which deregisters
all such securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement on Form S-8 and to be a part hereof
from the date of filing such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
II-1
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to the following provisions, or otherwise, the Company 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.
Delaware General Corporation Law, Section 102(b)(7), enables a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders to eliminate or limit personal liability of
members of its Board of Directors for violations of a director's fiduciary duty
of care. However, the elimination or limitation shall not apply where there has
been a breach of the duty of loyalty, failure to act in good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase which is deemed illegal or obtaining an improper
personal benefit. The Company's Certificate of Incorporation includes the
following language:
To the maximum extent permitted by Section 102(b)(7) of the
General Corporation Law of Delaware, a director of this Corporation
shall not be personally liable to the Corporation or its stockholders,
for monetary damages for breach of fiduciary duty as a director, 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) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an improper
personal benefit.
Delaware General Corporation Law, Section 145, permits a corporation
organized under Delaware law to indemnify directors and officers with respect to
any matter in which the director or officer acted in good faith and in a manner
he reasonably believed to be not opposed to the best interests of the Company,
and, with respect to any criminal action, had reasonable cause to believe his
conduct was lawful. The Bylaws of the Company include the following provision:
Reference is made to Section 145 and any other relevant
provisions of the General Corporation Law of the State of Delaware.
Particular reference is made to the class of persons, hereinafter
called "Indemnitees", who may be indemnified by a Delaware corporation
pursuant to the provisions of such Section 145, namely, any person, or
the heirs, executors, or administrators of such person, who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that such
person is or was a director, officer, employee, or agent of such
corporation or is or was serving at the request of such corporation as
a director, officer, employee or agent of such corporation or is or was
serving at the request of such corporation as a director, officer,
employee, or agent of another
II-2
corporation, partnership, joint venture, trust, or other enterprise.
The Corporation shall, and is hereby obligated to, indemnify the
Indemnitees, and each of them, in each and every situation where the
Corporation is obligated to make such indemnification pursuant to the
aforesaid statutory provisions. The Corporation shall indemnify the
Indemnitees, and each of them, in each and every situation where, under
the aforesaid statutory provisions, the Corporation is not obligated,
but is nevertheless permitted or empowered, to make such
indemnification, it being understood that, before making such
indemnification, with respect to any situation covered under this
sentence, (i) the Corporation shall promptly make or cause to be made,
by any of the methods referred to in Subsection (d) of such Section
145, a determination as to whether each Indemnitee 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, in the case of any criminal
action or proceeding, had no reasonable cause to believe that his
conduct was unlawful, and (ii) that no such indemnification shall be
made unless it is determined that such Indemnitee 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, in the case of any criminal
action or proceeding, had no reasonable cause to believe that his
conduct was unlawful.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
With respect to restricted securities (the "Reoffer Securities") to be
reoffered or resold pursuant to the Registration Statement and the accompanying
Prospectus, the Company states that all Reoffer Securities were acquired under
an exemption from registration pursuant to Section 4(2) of the Securities Act,
and that no general solicitation, advertising, or offer to the general public
was made with respect to the Reoffer Securities.
ITEM 8. EXHIBITS.
(a) The following exhibits have been filed (except where otherwise
indicated) as part of this Registration Statement:
Exhibit
No. Description
--- -----------
4a 1988 Stock Option Plan.
4b 1993 Stock Option Plan.
4c 1994 Formula Stock Option Plan.
4d Certificate of Incorporation.
II-3
4e By-laws.
5 Opinion Letter of O'Connor, Broude & Aronson as to
legality of shares being registered.
23a Consent of O'Connor, Broude & Aronson (contained in
Opinion filed as Exhibit 5).
23b Consent of Arthur Andersen LLP
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;
(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. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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 in 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, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission 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
II-4
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 reports pursuant to Section 13(a) or 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) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described under Item 6 above, or
otherwise, the registrant has been advised that in the opinion of the 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 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.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Taunton, Commonwealth of Massachusetts on this
11th day of December, 1996.
ADVANCED DEPOSITION TECHNOLOGIES, INC.
By:/s/ Glenn J. Walters
----------------------------------
Glenn J. Walters
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Name Capacity Date
- ---- -------- ----
<S> <C> <C>
/s/ Glenn J. Walters Chief Executive Officer, December 11, 1996
- ------------------------------- President and Director
Glenn J. Walters (principal executive officer)
/s/ Gordon E. Walters Chairman of the Board December 11, 1996
- ------------------------------- of Directors
Gordon E. Walters
/s/ Mark R. Thomas Chief Financial Officer December 11, 1996
- ------------------------------- (principal financial and
Mark R. Thomas accounting officer)
/s/ John M. Buckley Director December 11, 1996
- -------------------------------
John M. Buckley
/s/ Dr. Charles R. Buffler Director December 11, 1996
- -------------------------------
Dr. Charles R. Buffler
/s/ Salvatore F. D'Amato Director December 11, 1996
- -------------------------------
Salvatore F. D'Amato
/s/ John J. Moroney Director December 11, 1996
- -------------------------------
John J. Moroney
/s/ Robert M. Pozzo Director December 11, 1996
- -------------------------------
Robert M. Pozzo
</TABLE>
II-6
EXHIBIT 4a
ADVANCED DIELECTRIC TECHNOLOGIES, INC.
1988 STOCK OPTION PLAN
ARTICLE I
Purpose of the Plan
The purpose of this Plan is to encourage and enable employees,
consultants, directors and others who are in a position to make significant
contributions to the success of ADVANCED DIELECTRIC TECHNOLOGIES, INC. and of
its affiliated corporations upon whose judgment, initiative and efforts the
Corporation depends for the successful conduct of its business, to acquire a
closer identification of their interests with those of the Corporation by
providing them with opportunities to purchase stock in the Corporation pursuant
to options granted hereunder, thereby stimulating their efforts on behalf of the
Corporation and strengthening their desire to remain involved with the
Corporation.
ARTICLE II
Definitions
2.1 "Affiliated Corporation" means any stock corporation of which a
majority of the voting common or capital stock is owned directly or indirectly
by the Corporation.
2.2 "Award" means an Option granted under Article V.
2.3 "Board" means the Board of Directors of the Corporation.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.5 "Corporation" means ADVANCED DIELECTRIC TECHNOLOGIES, INC., a
Delaware corporation, or its successor.
2.6 "Employee" means any person who is a regular full-time or part-time
employee of the Corporation or an Affiliated Corporation on or after September
15, 1988.
2.7 "Option" means an Incentive Stock Option or Non-Qualified Option
granted by the Board under Article V of this Plan in the form of a right to
purchase Stock evidenced by an instrument containing such provisions as the
Board may establish.
2.8 "Plan" means this 1988 Stock Option Plan.
2.9 "Incentive Stock Option" ("ISO") means an option which qualifies as
an incentive stock option as defined in Section 422 of the Code, as amended.
2.10 "Non-Qualified Option" means any option not intended to qualify as
an Incentive Stock Option.
2.11 "Stock" means the Common Stock, $.01 par value, of the Corporation
or any successor, including any adjustments in the event of changes in capital
structure of the type described in Article IX.
ARTICLE III
Administration of the Plan
3.1 Administration by Board. This Plan shall be administered by the
Board of Directors of the Corporation. The Board may, from time to time,
delegate any of its functions under this Plan to one or more committees. No
member of a committee, while a member, shall be eligible to participate in this
Plan, to the extent said member may receive Incentive Stock Options under this
Plan. All references in this Plan to the Board shall also include the Committee
or committees, if one or more have been appointed by the Board. From time to
time the Board may increase the size of the Committee or committees and appoint
additional members thereto, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee or committees and thereafter directly administer
the Plan.
2
No member of the Board or a committee shall be liable for any action or
determination made in good faith with respect to the Plan or any options granted
under it.
3.2 Powers. The Board of Directors and/or any committee appointed by
the Board shall have full and final authority to operate, manage and administer
the Plan on behalf of the Corporation.
This authority includes, but is not limited to:
(a) The power to grant Awards conditionally or unconditionally;
(b) The power to prescribe the form or forms of the instruments
evidencing Awards granted under this Plan;
(c) The power to interpret the Plan;
(d) The power to provide regulations for the operation of the
incentive features of the Plan, and otherwise to prescribe and
rescind regulations for interpretation, management and
administration of the Plan;
(e) The power to delegate responsibility for Plan operation,
management and administration on such terms, consistent with the
Plan, as the Board may establish,
(f) The power to delegate to other persons the responsibility of
performing ministerial acts in furtherance of the Plan's purpose;
and
(g) The power to engage the services of persons, companies, or
organizations in furtherance of the Plan's purpose, including but
not limited to, banks, insurance companies, brokerage firms and
consultants.
3.3 Additional Powers. In addition, as to each Option to buy Stock of
the Corporation, the Board shall have full and final authority in its
discretion: (a) to determine the number of shares of Stock subject to each
Option, (b) to determine the time or times at which Options will be granted,
3
(c) to determine the option price of the shares of Stock subject to each Option,
which price shall be not less than the minimum price specified in Article V of
this Plan; (d) to determine the time or times when each Option shall become
exercisable and the duration of the exercise period (including the acceleration
of any exercise period), which shall not exceed the maximum period specified in
Article V, and (e) to determine whether each Option granted shall be an
Incentive Stock Option or a Non-Qualified Option.
In no event may the Corporation grant an Employee any Incentive Stock
Option that is first exercisable during any one calendar year to the extent the
aggregate fair market value of the Stock (determined at the time the Options are
granted) exceeds $100,000 (under all stock option plans of the Corporation and
any Affiliated Corporation); provided, however, that this paragraph shall have
no force and effect if its inclusion in the Plan is not necessary for Incentive
Stock Options issued under the Plan to qualify as such pursuant to Section
422(b) of the Code.
ARTICLE IV
Eligibility
4.1 Eligible Employees. All Employees (including Directors who are
Employees) are eligible to be granted Incentive Stock Option and Non-Qualified
Option Awards under this Plan.
4.2 Consultants, Directors and other Non-Employees. Any consultant,
Director (whether or not an employee) and any other non-Employee is eligible to
be granted Non-Qualified Option Awards under the Plan.
4.3 Relevant Factors. In selecting individual Employees, Consultants,
Directors and other non-Employees to whom Awards shall be granted, the Board
shall weigh such factors as are relevant to accomplish the purpose of the Plan
as stated in Article I. An Employee who has been
4
granted an Award may be granted one or more additional Awards, if the Board so
determines. The granting of an Award to any individual shall neither entitle
that individual to, nor disqualify him from, participation in any other grant of
Awards.
ARTICLE V
Stock Option Awards
5.1 Number of Shares. Subject to the provisions of Article IX of this
Plan, the aggregate number of shares of Stock for which Options may be granted
under this Plan shall not exceed 193,091 shares. The shares to be delivered upon
exercise of Options under this Plan shall be made available, at the discretion
of the Board, either from authorized but unissued shares or from previously
issued and reacquired shares of Stock held by the Corporation as treasury
shares, including shares purchased in the open market.
Stock issuable upon exercise of an option granted under the Plan may be
subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
5.2 Effect of Expiration, Termination or Surrender. If an Option under
this Plan shall expire or terminate unexercised as to any shares covered
thereby, or shall cease for any reason to be exercisable in whole or in part, or
if the Corporation shall reacquire any invested shares issued pursuant to
Options under the Plan, such shares shall thereafter be available for the
granting of other Options under this Plan.
5.3 Term of Options. The full term of each Option granted hereunder
shall be for such period as the Board shall determine. In the case of Incentive
Stock Options granted hereunder, the term shall not exceed ten (10) years from
the date of granting thereof. Each Option shall be subject
5
to earlier termination as provided in Sections 6.3 and 6.4. Notwithstanding the
foregoing, Options intended to qualify as "Incentive Stock Options" may not be
granted to any Employee who at the time such option is granted owns more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Corporation unless such Option is not exercisable after the expiration of
five (5) years from the date such Option is granted.
5.4 Option Price. The Option price shall be determined by the Board at
the time any Option is granted. In the case of Incentive Stock Options, the
exercise price shall not be less than 100% of the fair market value of the
shares covered thereby at the time the Incentive Stock Option is granted (but in
no event less than par value), provided that no Incentive Stock Option shall be
granted hereunder to any Employee if at the time of grant the Employee, directly
or indirectly, owns Stock possessing more than 10% of the combined voting power
of all classes of stock of the Corporation and its Affiliated Corporations
unless the Incentive Stock Option price equals not less than 110% of the fair
market value of the shares covered thereby at the time the Incentive Stock
Option is granted.
In the case of Non-qualified Options, the exercise price shall in no
event be less than the lesser of (i) the book value of the shares covered
thereby as of the end of the fiscal year of the Corporation immediately
preceding the date of such grant, or (ii) 50% of the fair market value of the
shares covered thereby on the date of such grant.
5.5 Fair Market Value. If, at the time an Option is granted under the
Plan, the Corporation's Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Stock
6
on the principal national securities exchange on which the Stock is traded, if
the Stock is then traded on a national securities exchange; or (ii) the last
reported sale price (on that date) of the Stock on the NASDAQ National Market
List, if the Stock is not then traded on a national securities exchange; or
(iii) the closing bid price (or average of bid prices) last quoted (on that
date) by an established quotation service for over-the-counter securities, if
the Stock is not reported on the NASDAQ National Market List. However, if the
Stock is not publicly traded at the time an Option is granted under the Plan,
"fair market value" shall be deemed to be the fair value of the Stock as
determined by the Board after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Stock in private transactions negotiated at arm's length.
5.6 Non-Transferability of Options. No Option granted under this Plan
shall be transferable by the grantee otherwise than by will or the laws of
descent and distribution, and such Option may be exercised during the grantee's
lifetime only by the grantee.
ARTICLE VI
Exercise of Option
6.1 Exercise. Each Option granted under this Plan shall be exercisable
on such date or dates and during such period and for such number of shares as
shall be determined pursuant to the provisions of the instrument evidencing such
Option. The Board shall have the right to accelerate the date of exercise of any
Option, provided that, the Board shall not accelerate the exercise date of any
Incentive Stock Option granted if such acceleration would violate the annual
vesting limitation contained in Section 422(b) of the Code.
6.2 Notice of Exercise. A person electing to exercise an Option shall
give written notice
7
to the Corporation of such election and of the number of shares he or she has
elected to purchase and shall at the time of exercise tender the full purchase
price of the shares he or she has elected to purchase. The purchase price can be
paid partly or completely in shares of the Corporation's Stock. Until such
person has been issued a certificate or certificates for the shares so
purchased, he or she shall possess no rights of a record holder with respect to
any of such shares.
6.3 Option Unaffected by Change in Duties. No Incentive Stock Option
(and, unless otherwise determined by the Board of Directors, no Non-Qualified
Option granted to a person who is, on the date of the grant, an Employee of the
Corporation or an Affiliated Corporation) shall be affected by any change of
duties or position of the optionee (including transfer to or from an Affiliated
Corporation), so long as he or she continues to be an Employee. Employment shall
be considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval of
the Board shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Corporation or
any Affiliated Corporation to continue the employment of the optionee after the
approved period of absence.
If the optionee shall cease to be an Employee for any reason other than
death, such Option shall thereafter be exercisable only to the extent of the
purchase rights, if any, which have accrued as of the date of such cessation;
provided that (i) the Board may provide in the instrument evidencing any Option
that the Board may in its absolute discretion, upon any such cessation of
employment, determine (but be under no obligation to determine) that such
accrued purchase rights shall be
8
deemed to include additional shares covered by such Option and, (ii) unless the
Board shall otherwise provide in the instrument evidencing any Option, upon any
such cessation of employment, such remaining rights to purchase shall in any
event terminate upon the earlier of (A) the expiration of the original term of
the Option or (B) where such cessation of employment is on account of
disability, the expiration of one year from the date of such cessation of
employment and, otherwise, the expiration of three months from such date. For
purposes of the Plan, the term "disability" shall mean "permanent and total
disability" as defined in Section 22(e)(3) of the Code.
6.4 Death of Optionee. Should an optionee die while in possession of
the legal right to exercise an Option or Options under this Plan, such persons
as shall have acquired, by will or by the laws of descent and distribution, the
right to exercise any Options theretofore granted, may, unless otherwise
provided by the Board in any instrument evidencing any Option, exercise such
Options at any time prior to one year from the date of death; provided, that
such Option or Options shall expire in all events no later than the last day of
the original term of such Option; provided, further, that any such exercise
shall be limited to the purchase rights which have accrued as of the date when
the optionee ceased to be an Employee, whether by death or otherwise, unless the
Board provides in the instrument evidencing such Option that, in the discretion
of the Board, additional shares covered by such Option may become subject to
purchase immediately upon the death of the optionee.
ARTICLE VII
Terms and Conditions of Options
Options shall be evidenced by instruments (which need not be identical)
in such forms as the Board may from time to time approve. Such instruments shall
conform to the terms and conditions
9
set forth in Articles V and VI hereof and may contain such other provisions as
the Board deems advisable which are not inconsistent with the Plan, including
restrictions applicable to shares of Stock issuable upon exercise of Options. In
granting any Non-Qualified Option, the Board may specify that such Non-Qualified
Option shall be subject to the restrictions set forth herein with respect to
Incentive Stock Options, or to such other termination and cancellation
provisions as the Board may determine. The Board may from time to time confer
authority and responsibility on one or more of its own members and/or one or
more officers of the Corporation to execute and deliver such instruments. The
proper officers of the Corporation are authorized and directed to take any and
all action necessary or advisable from time to time to carry out the terms of
such instruments.
ARTICLE VIII
Benefit Plans
Awards under the Plan are discretionary and are not a part of regular
salary. Awards may not be used in determining the amount of compensation for any
purpose under the benefit plans of the Corporation, or an Affiliated
Corporation, except as the Board may from time to time expressly provide.
Neither the Plan, an Option or any instrument evidencing an Option confers upon
any Employee the right to continued employment with the Corporation or an
Affiliated Corporation.
ARTICLE IX
Amendment, Suspension or Termination of the Plan
The Board may suspend the Plan or any part thereof at any time or may
terminate the Plan in its entirety. Awards shall not be granted after Plan
termination.
The Board may also amend the Plan from time to time, except that
amendments which affect the following subjects must be approved by stockholders
of the Corporation:
10
(a) Except as provided in Article X relative to capital changes, the
number of shares as to which Options may be granted pursuant to Article V;
(b) The maximum term of Options granted;
(c) The minimum price at which Options may be granted;
(d) The term of the Plan; and
(e) The requirements as to eligibility for participation in Awards
granted prior to suspension or termination of the Plan may not be cancelled
solely because of such suspension or termination, except with the consent of the
grantee of the Award.
ARTICLE X
Changes in Capital Structure
The instruments evidencing Options granted hereunder shall be subject
to adjustment in the event of changes in the outstanding Stock of the
Corporation by reason of Stock dividends, Stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other
relevant changes in capitalization occurring after the date of an Award to the
same extent as would affect an actual share of Stock issued and outstanding on
the effective date of such change. Such adjustment to outstanding Options shall
be made without change in the total price applicable to the unexercised portion
of such Options, and a corresponding adjustment in the applicable option price
per share shall be made. In the event of any such change, the aggregate number
and classes of shares for which Options may thereafter be granted under Section
5.1 of this Plan may be appropriately adjusted as determined by the Board so as
to reflect such change.
Notwithstanding the foregoing, any adjustments made pursuant to this
Article X with respect to Incentive Stock Options shall be made only after the
Board, after consulting with counsel for the
11
Corporation, determines whether such adjustments would constitute a
"modification" of such Incentive Stock Options (as that term is defined in
Section 425 of the Code) or would cause any adverse tax consequences for the
holders of such Incentive Stock Options. If the Board determines that such
adjustments made with respect to Incentive Stock Options would constitute a
modification of such Incentive Stock Options, it may refrain from making such
adjustments.
In the event of the proposed dissolution or liquidation of the
Corporation, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as shall be determined by the Board.
Except as expressly provided herein, no issuance by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities of
the Corporation.
No fractional shares shall be issued under the Plan and the optionee
shall receive from the Corporation cash in lieu of such fractional shares.
ARTICLE XI
Effective Date and Term of the Plan
The Plan shall become effective on September 15, 1988. The Plan shall
continue until such time as it may be terminated by action of the Board;
provided, however, that no Options may be granted under this Plan on or after
the tenth anniversary of the effective date hereof.
12
ARTICLE XII
Conversion of ISOs into Non-Qualified Options; Termination of ISOs
The Board, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's
Incentive Stock Options, that have not been exercised on the date of conversion,
into Non-Qualified Options at any time prior to the expiration of such Incentive
Stock Options, regardless of whether the optionee is an employee of the
Corporation or an Affiliated Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of such Options. At the time of such conversion, the
Board (with the consent of the optionee) may impose such conditions on the
exercise of the resulting Non-Qualified Options as the Board in its discretion
may determine, provided that such conditions shall not be inconsistent with the
Plan. Nothing in the Plan shall be deemed to give any optionee the right to have
such optionee's Incentive Stock Options converted into Non-Qualified Options,
and no such conversion shall occur until and unless the Board takes appropriate
action. The Board, with the consent of the optionee, may also terminate any
portion of any Incentive Stock Option that has not been exercised at the time of
such termination.
ARTICLE XIII
Application of Funds
The proceeds received by the Corporation from the sale of shares
pursuant to Options granted under the Plan shall be used for general corporate
purposes.
13
ARTICLE XIV
Governmental Regulation
The Corporation's obligation to sell and deliver shares of Stock under
this Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.
ARTICLE XV
Withholding of Additional Income Taxes
Upon the exercise of a Non-Qualified Option or the making of a
Disqualifying Disposition (as defined in Article XVI) the Corporation, in
accordance with Section 3402(a) of the Code, may require the optionee to pay
additional withholding taxes in respect of the amount that is considered
compensation includible in such person's gross income. The Board in its
discretion may condition the exercise of an Option on the payment of such
additional withholding taxes.
ARTICLE XVI
Notice to Corporation of Disqualifying Disposition
Each Employee who receives an Incentive Stock Option must agree to
notify the Corporation in writing immediately after the Employee makes a
Disqualifying Disposition of any Stock acquired pursuant to the exercise of an
Incentive Stock Option. A Disqualifying Disposition is any disposition
(including any sale) of such Stock before the later of (a) two years after the
date the Employee was granted the Incentive Stock Option or (b) one year after
the date the Employee acquired Stock by exercising the Incentive Stock Option.
If the Employee has died before such Stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.
14
ARTICLE XVII
Governing Laws; Construction
The validity and construction of the Plan and the instruments
evidencing Options shall be governed by the laws of the Commonwealth of
Massachusetts. In construing this Plan, the singular shall include the plural
and the masculine gender shall include the feminine and neuter, unless the
context otherwise requires.
15
EXHIBIT 4.b
ADVANCED DEPOSITION TECHNOLOGIES, INC.
1993 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF THE PLAN
The purpose of this Plan is to encourage and enable employees,
consultants, directors and others who are in a position to make significant
contributions to the success of ADVANCED DEPOSITION TECHNOLOGIES, INC. and of
its affiliated corporations upon whose judgment, initiative and efforts the
Corporation depends for the successful conduct of its business, to acquire a
closer identification of their interests with those of the Corporation by
providing them with opportunities to purchase stock in the Corporation pursuant
to options granted hereunder, thereby stimulating their efforts on behalf of the
Corporation and strengthening their desire to remain involved with the
Corporation. Any employee, consultant or advisor designated to participate in
the Plan is referred to as a "Participant."
ARTICLE II
DEFINITIONS
2.1 "Affiliated Corporation" means any stock corporation of which a
majority of the voting common or capital stock is owned directly or indirectly
by the Corporation.
2.2 "Award" means an Option granted under Article V.
2.3 "Board" means the Board of Directors of the Corporation or, if one
or more has been appointed, a Committee of the Board of Directors of the
Corporation.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
-1-
2.5 "Committee" means a Committee of not less than two members of the
Board appointed by the Board to administer the Plan.
2.6 "Corporation" means ADVANCED DEPOSITION TECHNOLOGIES, INC., a
Delaware corporation, or its successor.
2.7 "Employee" means any person who is a regular full-time or part-time
employee of the Corporation or an Affiliated Corporation on or after July 13,
1993.
2.8 "Incentive Stock Option" ("ISO") means an option which qualifies as
an incentive stock option as defined in Section 422 of the Code, as amended.
2.9 "Non-Qualified Option" means any option not intended to qualify as
an Incentive Stock Option.
2.10 "Option" means an Incentive Stock Option or Non-Qualified Option
granted by the Board under Article V of this Plan in the form of a right to
purchase Stock evidenced by an instrument containing such provisions as the
Board may establish. Except as otherwise expressly provided with respect to an
Option grant, no Option granted pursuant to the Plan shall be an Incentive Stock
Option.
2.11 "Participant" means a person selected by the Committee to receive
an award under the Plan.
2.12 "Plan" means this 1993 Stock Option Plan.
2.13 "Reporting Person" means a person subject to Section 16 of the
Securities Exchange Act of 1934 or any successor provision.
2.14 "Restricted Period" means the period of time selected by the
Committee during which an award may be forfeited by the person.
-2-
2.15 "Stock" means the Common Stock, $.01 par value, of the Corporation
or any successor, including any adjustments in the event of changes in capital
structure of the type described in Article IX.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 Administration by Board. This Plan shall be administered by the
Board of Directors of the Corporation. The Board may, from time to time,
delegate any of its functions under this plan to one or more Committees. All
references in this Plan to the Board shall also include the Committee or
Committees, if one or more have been appointed by the Board. From time to time
the Board may increase the size of the Committee or Committees and appoint
additional members thereto, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee or Committees and thereafter directly administer
the Plan. No member of the Board or a Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any options
granted hereunder.
If a Committee is appointed by the Board, a majority of the members of
the Committee shall constitute a quorum, and all determinations of the Committee
under the Plan may be made without notice or meeting of the Committee by a
writing signed by a majority of Committee members. On or after registration of
the Stock under the Securities Exchange Act of 1934, the Board shall delegate
the power to select directors and officers to receive Awards under the Plan, and
the timing, pricing and amount of such Awards to a Committee, all members of
which shall be "disinterested persons" within the meaning of Rule 16b-3 under
that Act.
-3-
3.2 Powers. The Board of Directors and/or any Committee appointed by
the Board shall have full and final authority to operate, manage and administer
the Plan on behalf of the Corporation.
This authority includes, but is not limited to:
(a) The power to grant Awards conditionally or unconditionally,
(b) The power to prescribe the form or forms of any instruments
evidencing Awards granted under this Plan,
(c) The power to interpret the Plan,
(d) The power to provide regulations for the operation of the
incentive features of the Plan, and otherwise to prescribe and
rescind regulations for interpretation, management and
administration of the Plan,
(e) The power to delegate responsibility for Plan operation,
management and administration on such terms, consistent with
the Plan, as the Board may establish,
(f) The power to delegate to other persons the responsibility of
performing ministerial acts in furtherance of the Plan's
purpose, and
(g) The power to engage the services of persons, companies, or
organizations in furtherance of the Plan's purpose, including
but not limited to, banks, insurance companies, brokerage
firms and consultants.
3.3 Additional Powers. In addition, as to each Option to buy Stock of
the Corporation, the Board shall have full and final authority in its
discretion: (a) to determine the number of shares of Stock subject to each
Option; (b) to determine the time or times at which Options will be granted; (c)
to determine the option price of the shares of Stock subject to each Option,
which price shall be not less than the minimum price specified in Article V of
this Plan; (d) to determine the time or times
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when each Option shall become exercisable and the duration of the exercise
period (including the acceleration of any exercise period), which shall not
exceed the maximum period specified in Article V; (e) to determine whether each
Option granted shall be an Incentive Stock Option or a Non- qualified Option;
and (f) to waive compliance by a Participant with any obligation to be performed
by him under an Option, to waive any condition or provision of an Option, and to
amend or cancel any Option (and if an Option is cancelled, to grant a new Option
on such terms as the Board may specify), except that the Board may not take any
action with respect to an outstanding option that would adversely affect the
rights of the Participant under such Option without such Participant's consent.
Nothing in the preceding sentence shall be construed as limiting the power of
the Board to make adjustments required by Article XI.
In no event may the Company grant an Employee any Incentive Stock
Option that is first exercisable during any one calendar year to the extent the
aggregate fair market value of the Stock (determined at the time the options are
granted) exceeds $100,000 (under all stock option plans of the Corporation and
any Affiliated Corporation); provided, however, that this paragraph shall have
no force and effect if its inclusion in the Plan is not necessary for Incentive
Stock Options issued under the Plan to qualify as such pursuant to Section
422(d)(1) of the Code.
ARTICLE IV
ELIGIBILITY
4.1 Eligible Employees. All Employees (including Directors who are
Employees) are eligible to be granted Incentive Stock Option and Non-Qualified
Option Awards under this Plan.
4.2 Consultants, Directors and other Non-Employees. Any Consultant,
Director (whether or not an Employee) and any other Non-Employee is eligible to
be granted Non-Qualified Option
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Awards under the Plan, provided the person has not irrevocably elected to be
ineligible to participate in the Plan.
4.3 Relevant Factors. In selecting individual Employees, Consultants,
Directors and other Non-Employees to whom Awards shall be granted, the Board
shall weigh such factors as are relevant to accomplish the purpose of the Plan
as stated in Article I. An individual who has been granted an Award may be
granted one or more additional Awards, if the Board so determines. The granting
of an Award to any individual shall neither entitle that individual to, nor
disqualify him from, participation in any other grant of Awards.
ARTICLE V
STOCK OPTION AWARDS
5.1 Number of Shares. Subject to the provisions of Article IX of this
Plan, the aggregate number of shares of Stock for which Options may be granted
under this Plan shall not exceed 800,000 shares. The shares to be delivered upon
exercise of Options under this Plan shall be made available, at the discretion
of the Board, either from authorized but unissued shares or from previously
issued and reacquired shares of Stock held by the Corporation as treasury
shares, including shares purchased in the open market.
Stock issuable upon exercise of an option granted under the Plan may be
subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
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5.2 Effect of Expiration, Termination or Surrender. If an Option under
this Plan shall expire or terminate unexercised as to any shares covered
thereby, or shall cease for any reason to be exercisable in whole or in part, or
if the Company shall reacquire any unvested shares issued pursuant to Options
under the Plan, such shares shall thereafter be available for the granting of
other Options under this Plan.
5.3 Term of Options. The full term of each Option granted hereunder
shall be for such period as the Board shall determine. In the case of Incentive
Stock Options granted hereunder, the term shall not exceed ten (10) years from
the date of granting thereof. Each Option shall be subject to earlier
termination as provided in Sections 6.3 and 6.4. Notwithstanding the foregoing,
the term of options intended to qualify as "Incentive Stock Options" shall not
exceed five (5) years from the date of granting hereof if such option is granted
to any employee who at the time such option is granted owns more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company.
5.4 Option Price. The Option price shall be determined by the Board at
the time any Option is granted. In the case of Incentive Stock Options, the
exercise price shall not be less than 100% of the fair market value of the
shares covered thereby at the time the Incentive Stock Option is granted (but in
no event less than par value), provided that no Incentive Stock Option shall be
granted hereunder to any Employee if at the time of grant the Employee, directly
or indirectly, owns Stock possessing more than 10% of the combined voting power
of all classes of stock of the Corporation and its Affiliated Corporations
unless the Incentive Stock Option price equals not less than 110% of the fair
market value of the shares covered thereby at the time the Incentive Stock
Option is granted. In the case of Non-Qualified Options, the exercise price
shall be reasonably
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related to the fair market value of the shares covered thereby at the time the
Non-Qualified Option is granted.
5.5 Fair Market Value. If, at the time an Option is granted under the
Plan, the Corporation's Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Stock on the principal national securities exchange on which the Stock is
traded, if the Stock is then traded on a national securities exchange; or (ii)
the last reported sale price (on that date) of the Stock on the NASDAQ National
Market List, if the Stock is not then traded on a national securities exchange;
or (iii) the closing bid price (or average of bid prices) last quoted (on that
date) by an established quotation service for over-the-counter securities, if
the Stock is not reported on the NASDAQ National Market List. However, if the
Stock is not publicly traded at the time an Option is granted under the Plan,
"fair market value" shall be deemed to be the fair value of the Stock as
determined by the Board after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Stock in private transactions negotiated at arm's length.
5.6 Non-Transferability of Options. No Option granted under this Plan
shall be transferable by the grantee otherwise than by will or the laws of
descent and distribution, and such Option may be exercised during the grantee's
lifetime only by the grantee.
5.7 Foreign Nationals. Awards may be granted to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified
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in the Plan as the Committee considers necessary or advisable to achieve the
purposes of the Plan or comply with applicable laws.
ARTICLE VI
EXERCISE OF OPTION
6.1 Exercise. Each Option granted under this Plan shall be exercisable
on such date or dates and during such period and for such number of shares as
shall be determined pursuant to the provisions of the instrument evidencing such
Option. The Board shall have the right to accelerate the date of exercise of any
option, provided that, the Board shall not accelerate the exercise date of any
Incentive Stock Option granted if such acceleration would violate the annual
vesting limitation contained in Section 422(d)(1) of the Code.
6.2 Notice of Exercise. A person electing to exercise an Option shall
give written notice to the Corporation of such election and of the number of
shares he or she has elected to purchase and shall at the time of exercise
tender the full purchase price of the shares he or she has elected to purchase.
The purchase price can be paid partly or completely in shares of the
Corporation's stock valued at Fair Market Value as defined in Section 5.5
hereof, or by any such other lawful consideration as the Board may determine.
Until such person has been issued a certificate or certificates for the shares
so purchased and has fully paid the purchase price for such shares, he or she
shall possess no rights of a record holder with respect to any of such shares.
In the event that the Corporation elects to receive payment for such shares by
means of a promissory note, such note, if issued to an officer, director or
holder of 5% or more of the Company's outstanding Common Stock, shall provide
for payment of interest at a rate no less than the interest rate then payable by
the Company to its principal commercial lender, or if the Company has no loan
outstanding to a
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commercial lender, then the interest rate payable shall equal the prevailing
prime rate of interest then charged by commercial banks headquartered in
Massachusetts (as determined by the Board of Directors in its reasonable
discretion) plus two percent.
6.3 Option Unaffected by Change in Duties. No Incentive Stock Option
(and, unless otherwise determined by the Board of Directors, no Non-Qualified
Option granted to a person who is, on the date of the grant, an Employee of the
Corporation or an Affiliated Corporation) shall be affected by any change of
duties or position of the optionee (including transfer to or from an Affiliated
Corporation), so long as he or she continues to be an Employee. Employment shall
be considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval of
the Board shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Corporation or
any Affiliated Corporation to continue the employment of the optionee after the
approved period of absence.
If the optionee shall cease to be an Employee for any reason other than
death, such Option shall thereafter be exercisable only to the extent of the
purchase rights, if any, which have accrued as of the date of such cessation;
provided that (i) the Board may provide in the instrument evidencing any Option
that the Board may in its absolute discretion, upon any such cessation of
employment, determine (but be under no obligation to determine) that such
accrued purchase rights shall be
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deemed to include additional shares covered by such Option; and (ii) unless the
Board shall otherwise provide in the instrument evidencing any Option, upon any
such cessation of employment, such remaining rights to purchase shall in any
event terminate upon the earlier of (A) the expiration of the original term of
the Option; or (B) where such cessation of employment is on account of
disability, the expiration of one year from the date of such cessation of
employment and, otherwise, the expiration of three months from such date. For
purposes of the Plan, the term "disability" shall mean "permanent and total
disability" as defined in Section 22(e)(3) of the Code.
In the case of a Participant who is not an employee, provisions
relating to the exercisability of an Option following termination of service
shall be specified in the award. If not so specified, all Options held by such
Participant shall terminate on termination of service to the Corporation.
6.4 Death of Optionee. Should an optionee die while in possession of
the legal right to exercise an Option or Options under this Plan, such persons
as shall have acquired, by will or by the laws of descent and distribution, the
right to exercise any Options theretofore granted, may, unless otherwise
provided by the Board in any instrument evidencing any Option, exercise such
Options at any time prior to one year from the date of death; provided, that
such Option or Options shall expire in all events no later than the last day of
the original term of such Option; provided, further, that any such exercise
shall be limited to the purchase rights which have accrued as of the date when
the optionee ceased to be an Employee, whether by death or otherwise, unless the
Board provides in the instrument evidencing such Option that, in the discretion
of the Board, additional shares covered by such Option may become subject to
purchase immediately upon the death of the optionee.
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ARTICLE VII
REPORTING PERSON LIMITATIONS
To the extent required to qualify for the exemption provided by Rule
16b-3 under the Securities Exchange Act of 1934, and any successor provision, at
least six months must elapse from the date of acquisition of an Option by a
Reporting Person to the date of disposition of such Option (other than upon
exercise) or its underlying Common Stock. ARTICLE VIII TERMS AND CONDITIONS OF
OPTIONS Options shall be evidenced by instruments (which need not be identical)
in such forms as the Board may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in Articles V and VI hereof and
may contain such other provisions as the Board deems advisable which are not
inconsistent with the Plan, including restrictions applicable to shares of Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Board may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to Incentive Stock Options, or to
such other termination and cancellation provisions as the Board may determine.
The Board may from time to time confer authority and responsibility on one or
more of its own members and/or one or more officers of the Corporation to
execute and deliver such instruments. The proper officers of the Corporation are
authorized and directed to take any and all action necessary or advisable from
time to time to carry out the terms of such instruments.
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ARTICLE VIII
TERMS AND CONDITIONS OF OPTIONS
Options shall be evidenced by instruments (which need not be identical)
in such forms as the Board may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in Articles V and VI hereof and
may contain such other provisions as the Board deems advisable which are not
inconsistent with the Plan, including restrictions applicable to shares of Stock
issuable upon excercise of Options. In granting any Non-Qualified Option the
board may specify that such Non-Qualified option shall be subject to the
restrictions set forth herein with respect to Incentive Stock Options, or to
such other termination and cancellation provisions as the Board may determine.
The Board may from time to time confer authority and responsibility on one or
more of its members and/or one or more officers of the Corporation to execute
and deliver such instruments. The proper officers of the Corporation are
authorized and directed to take any and all necessary action or advisable from
time to time to carry out the terms of such instruments.
ARTICLE IX
BENEFIT PLANS
Awards under the Plan are discretionary and are not a part of regular
salary. Awards may not be used in determining the amount of compensation for any
purpose under the benefit plans of the Corporation, or an Affiliated
Corporation, except as the Board may from time to time expressly provide.
Neither the Plan, an Option or any instrument evidencing an Option confers upon
any Participant any right to continue as an employee of, or consultant or
advisor to, the Company or an Affiliated Corporation or affect the right of the
Corporation or any Affiliated Corporation to terminate them at any time. Except
as specifically provided by the Board in any particular case, the loss of
existing or potential profits granted under this Plan shall not constitute an
element of damages in the event of termination of the relationship of a
Participant even if the termination is in violation of an obligation of the
Corporation to the Participant by contract or otherwise.
ARTICLE X
AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board may suspend the Plan or any part thereof at any time or may
terminate the Plan in its entirety. Awards shall not be granted after Plan
termination. The Board may also amend the Plan from time to time, except that
amendments which affect the following subjects must be approved by stockholders
of the Corporation:
(a) Except as provided in Article XI relative to capital changes,
the number of shares as to which Options may be granted pursuant
to Article V;
(b) The maximum term of Options granted;
(c) The minimum price at which Options may be granted;
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(d) The term of the Plan; and
(e) The requirements as to eligibility for participation in the
Plan.
Awards granted prior to suspension or termination of the Plan may not
be cancelled solely because of such suspension or termination, except with the
consent of the grantee of the Award.
ARTICLE XI
CHANGES IN CAPITAL STRUCTURE
The instruments evidencing Options granted hereunder shall be subject
to adjustment in the event of changes in the outstanding Stock of the
Corporation by reason of Stock dividends, Stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other
relevant changes in capitalization occurring after the date of an Award to the
same extent as would affect an actual share of Stock issued and outstanding on
the effective date of such change. Such adjustment to outstanding Options shall
be made without change in the total price applicable to the unexercised portion
of such options, and a corresponding adjustment in the applicable option price
per share shall be made. In the event of any such change, the aggregate number
and classes of shares for which Options may thereafter be granted under Section
5.1 of this Plan may be appropriately adjusted as determined by the Board so as
to reflect such change.
Notwithstanding the foregoing, any adjustments made pursuant to this
Article XI with respect to Incentive Stock Options shall be made only after the
Board, after consulting with counsel for the Corporation, determines whether
such adjustments would constitute a "modification" of such Incentive Stock
Options (as that term is defined in Section 424 of the Code) or would cause any
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adverse tax consequences for the holders of such Incentive Stock Options. If the
Board determines that such adjustments made with respect to Incentive Stock
Options would constitute a modification of such Incentive Stock Options, it may
refrain from making such adjustments.
In the event of the proposed dissolution or liquidation of the
Corporation, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as the Board shall determine.
Except as expressly provided herein, no issuance by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities of
the Corporation.
No fractional shares shall be issued under the Plan and the optionee
shall receive from the Corporation cash in lieu of such fractional shares.
ARTICLE XII
EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective on July 13, 1993. The Plan shall
continue until such time as it may be terminated by action of the Board or the
Committee; provided, however, that no Options may be granted under this Plan on
or after the tenth anniversary of the effective date hereof.
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ARTICLE XIII
CONVERSION OF ISOS INTO NON-QUALIFIED
OPTIONS; TERMINATION OF ISOS
The Board, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's
Incentive Stock Options, that have not been exercised on the date of conversion,
into Non-Qualified Options at any time prior to the expiration of such Incentive
Stock Options, regardless of whether the optionee is an employee of the
Corporation or an Affiliated Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of such Options. At the time of such conversion, the
Board or the Committee (with the consent of the optionee) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the Board
or the Committee in its discretion may determine, provided that such conditions
shall not be inconsistent with the Plan. Nothing in the Plan shall be deemed to
give any optionee the right to have such optionee's Incentive Stock Options
converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Board or the Committee takes appropriate action. The Board, with
the optionee's consent, may also terminate any portion of any Incentive Stock
Option that has not been exercised at the time of such termination.
ARTICLE XIV
APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of shares
pursuant to Options granted under the Plan shall be used for general corporate
purposes.
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ARTICLE XV
GOVERNMENTAL REGULATION
The Corporation's obligation to sell and deliver shares of Stock under
this Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.
ARTICLE XVI
WITHHOLDING OF ADDITIONAL INCOME TAXES
Upon the exercise of a Non-Qualified Option or the making of a
Disqualifying Disposition (as defined in Article XVI) the Corporation, in
accordance with Section 3402(a) of the Code, may require the optionee to pay
additional withholding taxes in respect of the amount that is considered
compensation includible in such person's gross income. The Board in its
discretion may condition the exercise of an Option on the payment of such
additional withholding taxes.
ARTICLE XVII
NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION
Each employee who receives an Incentive Stock Option must agree to
notify the Corporation in writing immediately after the employee makes a
Disqualifying Disposition of any Stock acquired pursuant to the exercise of an
Incentive Stock Option. A Disqualifying Disposition is any disposition
(including any sale) of such Stock before the later of (a) two years after the
date the employee was granted the Incentive Stock Option or (b) one year after
the date the employee acquired Stock by exercising the Incentive Stock Option.
If the employee has died before such stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.
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ARTICLE XVIII
GOVERNING LAW; CONSTRUCTION
The validity and construction of the Plan and the instruments
evidencing Options shall be governed by the laws of the Commonwealth of
Massachusetts (without regard to the conflict of law principles thereof). In
construing this Plan, the singular shall include the plural and the masculine
gender shall include the feminine and neuter, unless the context otherwise
requires.
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EXHIBIT 4.c
ADVANCED DEPOSITION TECHNOLOGIES, INC.
1994 FORMULA STOCK OPTION PLAN
ARTICLE I
PURPOSE OF THE PLAN
The purpose of this Plan is to encourage and enable non-employee
Directors who are in a position to make significant contributions to the success
of ADVANCED DEPOSITION TECHNOLOGIES, INC. and of its affiliated corporations
upon whose judgment, initiative and efforts the Corporation depends for the
successful conduct of its business, to acquire a closer identification of their
interests with those of the Corporation by providing them with opportunities to
purchase stock in the Corporation pursuant to options granted hereunder, thereby
stimulating their efforts on behalf of the Corporation and strengthening their
desire to remain involved with the Corporation. Any non-employee Director
designated to participate in the Plan is referred to as a "Participant."
ARTICLE II
DEFINITIONS
2.1 "Affiliated Corporation" means any stock corporation of which a
majority of the voting common or capital stock is owned directly or indirectly
by the Corporation.
2.2 "Award" means an Option granted under Article V.
2.3 "Board" means the Board of Directors of the Corporation or, if one
or more has been appointed, a Committee of the Board of Directors of the
Corporation.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
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2.5 "Committee" means a Committee of not less than two members of the
Board appointed by the Board to administer the Plan.
2.6 "Corporation" means ADVANCED DEPOSITION TECHNOLOGIES, INC. a
Delaware corporation.
2.7 "Non-Employee" means any person who is not a regular full-time or
part-time employee of the Corporation or an Affiliated Corporation on or after
November 1, 1993.
2.8 "Non-Qualified Option" means any option not intended to qualify as
an Incentive Stock Option.
2.9 "Option" means a Non-Qualified Option granted by the Board under
Article V of this Plan in the form of a right to purchase Stock evidenced by an
instrument containing such provisions as the Board may establish.
2.10 "Participant" means a person who is to receive an award under the
Plan.
2.11 "Plan" means this 1994 Formula Stock Option Plan.
2.12 "Reporting Person" means a person subject to Section 16 of the
Securities Exchange Act of 1934 or any successor provision.
2.13 "Restricted Period" means the period of time selected by the
Committee during which an award may be forfeited by the person.
2.14 "Stock" means the Common Stock, $.01 par value, of the Corporation
or any successor, including any adjustments in the event of changes in capital
structure of the type described in Article IX.
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ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 Administration by Board. This Plan may be administered by the Board
of Directors or by a committee of the Board of Directors of the Corporation. If
a committee administers this Plan, the Board may, from time to time, increase
the size of the Committee or committees and appoint additional members thereto,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies however caused, or remove all members of the Committee
or committees and thereafter directly administer the Plan. No member of the
Board or a committee shall be liable for any action or determination made in
good faith with respect to the Plan or any options granted hereunder.
3.2 Powers. The Board of Directors and/or any committee appointed by
the Board shall have full and final authority to operate, manage and administer
the Plan on behalf of the Corporation.
This authority includes, but is not limited to:
(a) The power to grant Awards conditionally or unconditionally,
(b) The power to prescribe the form or forms of any instruments
evidencing Awards granted under this Plan,
(c) The power to interpret the Plan,
(d) The power to delegate responsibility for Plan operation,
management and administration on such terms, consistent with the
Plan, as the Board may establish,
(e) The power to delegate to other persons the responsibility of
performing ministerial acts in furtherance of the Plan's
purpose, and
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(f) The power to engage the services of persons, companies, or
organizations in furtherance of the Plan's purpose, including
but not limited to, banks, insurance companies, brokerage firms
and consultants.
ARTICLE IV
ELIGIBILITY
4.1 Eligible Persons. All non-employee Directors are eligible to be
granted Non-Qualified Option Awards under this Plan provided the person has not
irrevocably elected to be ineligible to participate in the Plan.
ARTICLE V
STOCK OPTION AWARDS
5.1 Number of Shares. Subject to the provisions of Article IX of this
Plan, the aggregate number of shares of Stock for which Options may be granted
under this Plan shall not exceed Fifty Thousand (50,000) shares. Options shall
be granted under this Plan, without approval or discretion on the part of the
Board, to non-employee Directors as follows: Effective August 9, 1994, on the
first business day immediately following the Corporation's annual meeting of
shareholders, the Corporation shall grant, to each of its non-employee
Directors, who has served as a Director of the Corporation for at least one full
year, options to purchase a total of 1,000 shares of Stock. The options shall be
granted to a non-employee Director only if the Director is a Director on the
date of the grant and has attended, during the Corporation's fiscal year
immediately preceding the grant, at least 75% of meetings of the Board of
Directors and the Committees on which the Director has served. The exercise
price of options granted to non-employee Directors shall be the fair market
value of the shares of Stock on the date of the grant and said options shall
vest completely and be
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exercisable one year from the date of the grant, subject to the Director's
continued service as a Director on such date.
Each non-employee Director who becomes a Director after November 1,
1993 will receive, on the later of (i) the date he or she becomes a Director or
(ii) the effective date of this Plan, options to purchase a total of 1,500
shares of Stock. The exercise price of such options will be the fair market
value of the shares of Stock on the date of the grant. One-third of said options
shall vest and be exercisable immediately and one-third will vest on each of the
first and second anniversaries of the grant, subject to the Director's continued
service as a Director on such dates.
The shares to be delivered upon exercise of Options under this Plan
shall be made available, at the discretion of the Board, either from authorized
but unissued shares or from previously issued and reacquired shares of Stock
held by the Corporation as treasury shares, including shares purchased in the
open market.
Stock issuable upon exercise of an option granted under the Plan may be
subject to such restrictions on transfer or repurchase rights as shall be
determined by the Board of Directors.
5.2 Effect of Expiration, Termination or Surrender. If an Option under
this Plan shall expire or terminate unexercised as to any shares covered
thereby, or shall cease for any reason to be exercisable in whole or in part, or
if the Corporation shall reacquire any unvested shares issued pursuant to
Options under the Plan, such shares shall thereafter be available for the
granting of other Options under this Plan.
5.3 Term of Options. Each Option granted hereunder shall be for a term
of ten (10) years from the date of granting thereof. Each Option shall be
subject to earlier termination as provided in Sections 6.3 and 6.4.
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5.4 Fair Market Value. If, at the time an Option is granted under the
Plan, the Corporation's Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Stock on the principal national securities exchange on which the Stock is
traded, if the Stock is then traded on a national securities exchange; or (ii)
the last reported sale price (on that date) of the Stock on the NASDAQ or NASDAQ
National Market List, if the Stock is not then traded on a national securities
exchange; or (iii) the closing bid price (or average of bid prices) last quoted
(on that date) by an established quotation service for over-the-counter
securities, if the Stock is not reported on the NASDAQ or NASDAQ National Market
List. However, if the Stock is not publicly traded at the time an Option is
granted under the Plan, "fair market value" shall be deemed to be the fair value
of the Stock as determined by the Board after taking into consideration all
factors which it deems appropriate, including, without limitation, recent sale
and offer prices of the Stock in private transactions negotiated at arm's
length.
5.5 Non-Transferability of Options. No Option granted under this Plan
shall be transferable by the grantee otherwise than by will or the laws of
descent and distribution, and such Option may be exercised during the grantee's
lifetime only by the grantee.
5.6 Foreign Nationals. Awards may be granted to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or comply with
applicable laws.
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ARTICLE VI
EXERCISE OF OPTION
6.1 Exercise. Each Option granted under this Plan shall be exercisable
on such date or dates and during such period and for such number of shares as
shall be determined pursuant to the provisions of the instrument evidencing such
Option. The Board shall have the right to accelerate the date of exercise of any
option.
6.2 Notice of Exercise. A person electing to exercise an Option shall
give written notice to the Corporation of such election and of the number of
shares he or she has elected to purchase and shall at the time of exercise
tender the full purchase price of the shares he or she has elected to purchase.
The purchase price can be paid partly or completely in shares of the
Corporation's stock valued at Fair Market Value as defined in Section 5.4
hereof, or by any such other lawful consideration as the Board may determine.
Until such person has been issued a certificate or certificates for the shares
so purchased and has fully paid the purchase price for such shares, he or she
shall possess no rights of a record holder with respect to any of such shares.
If the Corporation elects to receive payment for such shares by means of a
promissory note, such note, if issued to an officer, director or holder of 5% or
more of the Corporation's outstanding Common Stock, shall provide for payment of
interest at a rate no less than the interest rate then payable by the
Corporation to its principal commercial lender, or if the Corporation has no
loan outstanding to a commercial lender, then the interest rate payable shall
equal the prevailing prime rate of interest then charged by commercial banks
headquartered in Massachusetts (as determined by the Board of Directors in its
reasonable discretion) plus two percent.
-7-
6.3 Option Unaffected by Certain Changes. A Director's term shall be
considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval of
the Board shall not be considered an interruption of service under the Plan.
If the optionee shall cease to be a Director for any reason other than
death, such Option shall thereafter be exercisable only to the extent of the
purchase rights, if any, which have accrued as of the date of such cessation;
provided that upon any such cessation of service, such remaining rights to
purchase shall in any event terminate upon the expiration of the original term
of the Option.
6.4 Death of Optionee. Should an optionee die while in possession of
the legal right to exercise an Option or Options under this Plan, such persons
as shall have acquired, by will or by the laws of descent and distribution, the
right to exercise any Options theretofore granted, may, unless otherwise
provided by the Board in any instrument evidencing any Option, exercise such
Options until the expiration of the original term of the Options, provided,
further, that any such exercise shall be limited to the purchase rights that
have accrued as of the date when the optionee ceased to be a Director whether by
death or otherwise.
ARTICLE VII
REPORTING PERSON LIMITATIONS
To the extent required to qualify for the exemption provided by Rule
16b-3 under the Securities Exchange Act of 1934, and any successor provision, at
least six months must elapse from
-8-
the date of acquisition of an Option by a Reporting Person to the date of
disposition of such Option (other than upon exercise) or its underlying Common
Stock.
ARTICLE VIII
TERMS AND CONDITIONS OF OPTIONS
Options shall be evidenced by instruments (which need not be identical)
in such forms as the Board may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in Articles V and VI hereof and
may contain such other provisions as the Board deems advisable that are not
inconsistent with the Plan, including restrictions applicable to shares of Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Board may specify that such Non-Qualified Option shall be subject to such other
termination and cancellation provisions as the Board may determine. The Board
may from time to time confer authority and responsibility on one or more of its
own members and/or one or more officers of the Corporation to execute and
deliver such instruments. The proper officers of the Corporation are authorized
and directed to take any and all action necessary or advisable from time to time
to carry out the terms of such instruments.
ARTICLE IX
BENEFIT PLANS
Awards under the Plan are not discretionary. Awards may not be used in
determining the amount of compensation for any purpose under the benefit plans
of the Corporation, or an Affiliated Corporation, except as the Board may from
time to time expressly provide. Neither the Plan, an Option or any instrument
evidencing an Option confers upon any Participant any right to continue as a
Director of, or consultant or advisor to, the Corporation or an Affiliated
Corporation. Except
-9-
as specifically provided by the Board in any particular case, the loss of
existing or potential profits granted under this Plan shall not constitute an
element of damages in the event of termination of the relationship of a
Participant even if the termination is in violation of an obligation of the
Corporation to the Participant by contract or otherwise.
ARTICLE X
AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board may suspend the Plan or any part thereof at any time or may
terminate the Plan in its entirety. Awards shall not be granted after Plan
termination. The Plan may not be amended more than once every six months, unless
such changes are necessary to comport with changes in the Code, the Employee
Retirement Income Security Act, or the Rules thereunder. Subject to the
foregoing, the Board may also amend the Plan from time to time, except that
amendments that affect the following subjects must be approved by stockholders
of the Corporation:
(a) Except as provided in Article XI relative to capital changes,
the number of shares as to which Options may be granted pursuant
to Article V;
(b) The maximum term of Options granted;
(c) The minimum price at which Options may be granted;
(d) The term of the Plan; and
(e) The requirements as to eligibility for participation in the
Plan.
Awards granted prior to suspension or termination of the Plan may not
be cancelled solely because of such suspension or termination, except with the
consent of the grantee of the Award.
-10-
ARTICLE XI
CHANGES IN CAPITAL STRUCTURE
The instruments evidencing Options granted hereunder shall be subject
to adjustment in the event of changes in the outstanding Stock of the
Corporation by reason of stock dividends, Stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other
relevant changes in capitalization occurring after the date of an Award to the
same extent as would affect an actual share of Stock issued and outstanding on
the effective date of such change. Such adjustment to outstanding Options shall
be made without change in the total price applicable to the unexercised portion
of such options, and a corresponding adjustment in the applicable option price
per share shall be made. In the event of any such change, the aggregate number
and classes of shares for which Options may thereafter be granted under Section
5.1 of this Plan may be appropriately adjusted as determined by the Board so as
to reflect such change.
In the event of the proposed dissolution or liquidation of the
Corporation, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as the Board shall determine.
Except as expressly provided herein, no issuance by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities of
the Corporation.
No fractional shares shall be issued under the Plan and the optionee
shall receive from the Corporation cash in lieu of such fractional shares.
-11-
ARTICLE XII
EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective on August 9, 1994. The Plan shall
continue until such time as it may be terminated by action of the Board or the
Committee; provided, however, that no Options may be granted under this Plan on
or after the tenth anniversary of the effective date hereof.
ARTICLE XIII
APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of shares
pursuant to Options granted under the Plan shall be used for general corporate
purposes.
ARTICLE XIV
GOVERNMENTAL REGULATION
The Corporation's obligation to sell and deliver shares of Stock under
this Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.
ARTICLE XV
WITHHOLDING OF ADDITIONAL INCOME TAXES
Upon the exercise of a Non-Qualified Option the Corporation, in
accordance with Section 3402(a) of the Code, may require the optionee to pay
additional withholding taxes in respect of the amount that is considered
compensation includible in such person's gross income. The Board in its
discretion may condition the exercise of an Option on the payment of such
additional withholding taxes.
-12-
ARTICLE XVI
GOVERNING LAW; CONSTRUCTION
The validity and construction of the Plan and the instruments
evidencing Options shall be governed by the internal laws of the State of
Delaware (without regard to the conflict of law principles thereof). In
construing this Plan, the singular shall include the plural and the masculine
gender shall include the feminine and neuter, unless the context otherwise
requires.
-13-
EXHIBIT 4.d
CERTIFICATE OF INCORPORATION
OF
ADVANCED DEPOSITION TECHNOLOGIES, INC.
*****
1. The name of the corporation is ADVANCED DEPOSITION TECHNOLOGIES,
INC.
2. The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted
is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is Five Million Five Hundred Thousand (5,500,000) shares of
Common Stock, of the par value of One Cent ($.01) per share and One Million
(1,000,000) shares of Preferred Stock, of the par value of One Cent ($.01) per
share, amounting in the aggregate to Sixty-Five Thousand and 00/100 Dollars
($65,000.00).
Additional designations and powers, preferences and rights and
qualifications, limitations or restrictions thereof of the shares of each class
shall be determined by the Board of Directors of the corporation from time to
time.
5. The name and mailing address of the corporation's incorporator is
Glenn J. Walters, 76 Bayview Road, Duxbury, Massachusetts 02331.
6. The name and address of the person who is to serve as the sole
director of the Corporation until the first annual meeting of the stockholders
or until his successor(s) are elected and qualified is:
Glenn J. Walters
76 Bayview Road
Duxbury, MA 02331
7. The corporation is to have perpetual existence.
8. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
1
To make, alter or repeal the bylaws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The bylaws may provide that in the absence or disqualification of
a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such agent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
or in the bylaws of the corporation, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease, or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
bylaws of the corporation; and, unless the resolution or bylaws expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute,
to sell, lease or exchange all or substantially all of the property and assets
of the corporation, including its goodwill and its corporate franchises, upon
such terms and conditions and for such consideration, which may consist in whole
or in part of money or property, including shares of stock in, and/or other
securities of, any other corporation or corporation, as its board of directors
shall deem expedient and for the best interests of the corporation.
9. To the maximum extent permitted by Section 102(b)(7) of the General
Corporation Law of Delaware, a director of this Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
-2-
10. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court or equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directors. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement to any
reorganization of this corporation as consequences of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this corporation, as the case may be,
and also on this corporation.
11. Meetings of the stockholders may be held within or without the
State of Delaware, as the bylaws may provide. The books of the corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the bylaws of the corporation. Elections of
directors need not be by written ballot unless the bylaws of the corporation
shall so provide.
12. The corporation reserves the right to amend, alter, change, or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation; except that any
such amendment shall be made by the holders of at least two-thirds of the
outstanding shares of Common Stock of the Corporation.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
-3-
THE UNDERSIGNED, being the incorporator named hereinbefore, for the
purposes of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this certificate, hereby declaring and certifying
that this is his act and deed and the facts herein stated are true, and
accordingly, has hereunto set his hand this 7th day of July, 1993.
---
/s/ Glenn J. Walters
-----------------------
Glenn J. Walters
COMMONWEALTH OF MASSACHUSETTS)
ss.: COUNTY OF MIDDLESEX )
BE IT REMEMBERED that on this 7th day of July, 1993, personally came
---
before me, a Notary Public for the Commonwealth of Massachusetts, Glenn J.
Walters, the party to the foregoing Certificate of Incorporation, known to me
personally to be such, and acknowledged the said certificate to be his act and
deed and that the facts stated therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
/s/ Janet M. Davenport
----------------------
Notary Public
-4-
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ADVANCED DEPOSITION TECHNOLOGIES, INC.
*****
ADVANCED DEPOSITION TECHNOLOGIES, INC. (the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That at a Meeting of the Board of Directors of the Corporation
held on March 22, 1996 and at a Meeting of the Stockholders of
the Corporation held on May 31, 1996, a resolution was adopted
which sets forth a proposed amendment of the Certificate of
Incorporation of said corporation and declaring said amendment
to be advisable. The resolution setting forth the proposed
amendment is as follows:
RESOLVED: That the Certificate of Incorporation of
the Corporation be amended by change of the
article thereof numbered "4" so that, as
amended, said Article 4 shall be, and read,
in its entirety as follows:
"4. The total number of shares of stock
which the corporation shall have authority
to issue is Ten Million (10,000,000) shares
of Common Stock, of the par value of One
Cent ($.01) per share and One Million
(1,000,000) shares of Preferred Stock, of
the par value of One Cent ($.01) per share,
amounting in the aggregate to One Hundred
Ten Thousand and 00/100 Dollars
($110,000.00).
Additional designations and powers,
preferences and rights and qualifications,
limitations or restrictions thereof of the
shares of each class shall be determined by
the Board of Directors of the Corporation
from time to time."
SECOND: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said ADVANCED DEPOSITION TECHNOLOGIES,
INC. has caused this Certificate of Amendment to be signed by Glenn J. Walters,
its President and Andrew D. Myers, its Assistant Secretary , this 31st day of
May, 1996.
/s/ Glenn J. Walters
------------------------------
Glenn J. Walters, President
/s/ Andrew D. Myers
- ---------------------
Andrew D. Myers
Assistant Secretary
EXHIBIT 4.e
BYLAWS
OF
ADVANCED DEPOSITION TECHNOLOGIES, INC.
Article I. Offices.
Section 1. Registered Office. The registered office of the Corporation
shall be at The Corporation Trust Company, 1209 Orange Street, in the City of
Wilmington, County of New Castle, State of Delaware 19801.
Section 2. Additional Offices. The Corporation may also have offices at
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
Article II. Meetings of Stockholders.
Section 1. Time and Place. A meeting of stockholders for any purpose
may be held at such time and place within or without the State of Delaware as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual Meeting. Annual meetings of stockholders, commencing
with the year 1994, shall be held on the second Wednesday in May if not a legal
holiday, or, if a legal holiday, then on the next secular day following, at
10:00 a.m., or at such other date and time as shall, from time to time, be
designated by the Board of Directors and stated in the notice of the meeting. At
such annual meetings, the stockholders shall elect a Board of Directors and
transact such other business as may properly be brought before the meetings.
Section 3. Notice of Annual Meeting. Written notice of the annual
meeting, stating the place, date, and time thereof, shall be given to each
stockholder entitled to vote at such meeting not less than ten (unless a longer
period is required by law) nor more than sixty days prior to the meeting.
Section 4. Special Meetings. Special meetings of the stockholders may
be called for any purpose or purposes, unless otherwise prescribed by statute or
by the Certificate of Incorporation, by the Chairman of the Board, if any, or
the President, and shall be called by the President or Secretary at the request,
in writing, of a majority of the Board of Directors or of the stockholders
owning at least ten percent (10%) of the outstanding shares of capital stock of
the Corporation issued and outstanding and entitled to vote. Such request shall
state the purpose of the proposed meeting.
Section 5. Notice of Special Meeting. Written notice of a special
meeting, stating the place, date, and time thereof and the purpose or purposes
for which the meeting is called, shall be given
-1-
to each stockholder entitled to vote at such meeting not less than ten (unless a
longer period is required by law) nor more than sixty days prior to the meeting.
Section 6. List of Stockholders. The transfer agent or the officer in
charge of the stock ledger of the Corporation shall prepare and make, at least
ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, at a
place within the city where the meeting is to be held, which place, if other
than the place of the meeting, shall be specified in the notice of the meeting.
The list shall also be produced and kept at the place of the meeting during the
whole time thereof and may be inspected by any stockholder who is present in
person thereat.
Section 7. Presiding Officer and Order of Business.
(a) Meetings of stockholders shall be presided over by the Chairman of
the Board or the President, at their option, or, if the Chairman of the Board
and the President are not present or there are none, by a Vice President, or, if
he is not present or there is none, by a person chosen by the Board of
Directors, or, if no such person is present or has been chosen, by a chairman to
be chosen by the stockholders owning a majority of the shares of capital stock
of the Corporation issued and outstanding and entitled to vote at the meeting
and who are present in person or represented by proxy. The Secretary of the
Corporation, or, if he is not present, an Assistant Secretary, or, if he is not
present, a person chosen by the Board of Directors, shall act as Secretary at
meetings of stockholders; if no such person is present or has been chosen, the
stockholders owning a majority of the shares of capital stock of the Corporation
issued and outstanding and entitled to vote at the meeting who are present in
person or represented by proxy shall choose any person present to act as
secretary of the meeting.
(b) The following order of business, unless otherwise determined at the
meeting, shall be observed as far as practicable and consistent with the
purposes of the meeting:
(1) Call of the meeting to order.
(2) Presentation of proof of mailing of the notice of the
meeting and, if the meeting is a special meeting, the
call thereof.
(3) Presentation of proxies.
(4) Announcement that a quorum is present.
(5) Reading and approval of the minutes of the previous
meeting.
(6) Reports, if any, of officers.
(7) Election of directors, if the meeting is an annual
meeting or a meeting called for that purpose.
-2-
(8) Consideration of the specific purpose or purposes,
other than the election of directors, for which the
meeting has been called, if the meeting is a special
meeting.
(9) Transaction of such other business as may properly
come before the meeting.
(10) Adjournment.
Section 8. Quorum and Adjournments. The presence in person or
representation by proxy of the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote
shall be necessary to, and shall constitute a quorum for, the transaction of
business at all meetings of the stockholders, except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, a quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat who are present in person or represented by proxy shall
have the power to adjourn the meeting from time to time until a quorum shall be
present or represented. If the time and place of the adjourned meeting are
announced at the meeting at which the adjournment is taken, no further notice of
the adjourned meeting need be given. Even if a quorum shall be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat who are present in person or represented by proxy shall have the
power to adjourn the meeting from time to time for good cause to a date that is
not more than thirty days after the date of the original meeting. Further notice
of the adjourned meeting need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken. At any adjourned
meeting at which a quorum is present in person or represented by proxy, any
business may be transacted that might have been transacted at the meeting as
originally called. If the adjournment is for more than thirty days, or if, after
the adjournment, a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote thereat.
Section 9. Voting.
(a) At any meeting of the stockholders, every stockholder having the
right to vote shall be entitled to vote in person or by proxy. Except as
otherwise provided by law or the Certificate of Incorporation, each stockholder
of record shall be entitled to one vote for each share of capital stock
registered in his name on the books of the Corporation.
(b) All elections shall be determined by a plurality vote, and, except
as otherwise provided by law or the Certificate of Incorporation, all other
matters shall be determined by a vote of a majority of the shares present in
person or represented by proxy and voting on such other matters.
Section 10. Action by Consent. Any action required or permitted by law
or the Certificate of Incorporation to be taken at any meeting of stockholders
may be taken without a meeting, without prior notice if a written consent,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to
-3-
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present or represented by proxy and voted. Such written consent
shall be filed with the minutes of the meetings of stockholders. Prompt notice
of the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing thereto.
Article III. Directors.
Section 1. General Powers, Number, and Tenure. The business of the
Corporation shall be managed by its Board of Directors, which may exercise all
powers of the Corporation and perform all lawful acts that are not by law, the
Certificate of Incorporation, or these Bylaws directed or required to be
exercised or performed by the stockholders. The number of directors shall be
determined by the Board of Directors; if no such determination is made, the
number of directors shall be one. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 2 of this Article.
The directors shall be divided into three classes, as nearly equal in number as
possible, with the term of office of the first class to expire at the 1994
Annual Meeting of Stockholders, the term of office of the second class to expire
at the 1995 Annual Meeting of Stockholders and the term of office of the third
class to expire at the 1996 Annual Meeting of Stockholders. At each Annual
Meeting of Stockholders following such initial classification and election,
directors elected to succeed those directors whose terms expire shall be elected
for a term of office to expire at the third succeeding Annual Meeting of
Stockholders after their election. Directors need not be stockholders. Without
the approval of a majority of disinterested directors, directors cannot
otherwise be engaged as officers, directors, employees, consultants, advisors,
agents (whether as salespeople or otherwise), brokers, partners, coventurers,
stockholders or other proprietors owning directly or indirectly any interest in
any firm, corporation, partnership, trust, association, or other organization
which is engaged in the business of developing, manufacturing, marketing and/or
selling metallized films for the electronics and food packaging industries or
any other markets in which the Corporation sells its present products or
products which it may develop in the future.
Section 2. Vacancies. If any vacancies occur in the Board of Directors,
or if any new directorships are created, they may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. Each director chosen to fill a vacancy will serve for the remainder of
the term of the class of directors from which the vacancy was created and until
his successor is duly elected and qualified. Each director elected to fill a
newly created directorship will hold office for a one, two or three year term as
determined by the Board of Directors in accordance with Section 1 of this
Article and until his successor is duly elected and qualified. If there are no
directors in office, any officer or stockholder may call a special meeting of
stockholders in accordance with the provisions of the Certificate of
Incorporation or these Bylaws, at which meeting such vacancies shall be filled.
-4-
Section 3. Removal or Resignation.
(a) except as otherwise provided by law or the Certificate of
Incorporation, any director or the entire Board of Directors may be removed,
with or without cause, by the holders of a majority of the shares then entitled
to vote at an election of directors.
(b) Any director may resign at any time by giving written notice to the
Board of Directors, the Chairman of the Board, if any, or the President or
Secretary of the Corporation. Unless otherwise specified in such written notice,
a resignation shall take effect on delivery thereof to the Board of Directors or
the designated officer. It shall not be necessary for a resignation to be
accepted before it becomes effective.
Section 4. Place of Meetings. The Board of Directors may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. Annual Meeting. The annual meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting shall be necessary to the newly
elected directors in order to constitute the meeting legally, provided a quorum
shall be present.
Section 6. Regular Meetings. Additional regular meetings of the Board
of Directors may be held at such time and place as may be determined from time
to time by the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the President, or by a majority of
the whole Board on at least two days' notice to each director, if such notice is
delivered personally or sent by telegram, or on at least three days' notice if
sent by mail. Any such notice need not state the purpose or purposes of such
meeting, except as provided in Article XI.
Section 8. Quorum and Adjournments. At all meetings of the Board of
Directors, a majority of the directors then in office shall constitute a quorum
for the transaction of business, and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by law or the
Certificate of Incorporation. If a quorum is not present at any meeting of the
Board of Directors, the directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting at which the
adjournment is taken, until a quorum shall be present.
Section 9. Compensation. Directors shall be entitled to such
compensation for their services as directors and to such reimbursement for any
reasonable expenses incurred in attending directors' meetings as may from time
to time be fixed by the Board of Directors. The compensation of directors may be
on such basis as is determined by the Board of Directors. Any director may waive
compensation for any meeting. Any director receiving compensation under these
provisions shall
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not be barred from serving the Corporation in any other capacity and receiving
compensation and reimbursement for reasonable expenses for such other services.
Section 10. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting,
and without prior notice, if a written consent to such action is signed by all
members of the Board of Directors and such written consent is filed with the
minutes of its proceedings.
Section 11. Meetings by Telephone or Similar Communications Equipment.
The Board of Directors may participate in a meeting by conference telephone or
similar communications equipment by means of which all directors participating
in the meeting can hear each other, and participation in such a meeting shall
constitute presence in person by any such director at such meeting.
Article IV. Committees.
Section 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may appoint an Executive Committee
consisting of one or more directors, one of whom shall be designated as Chairman
of the Executive Committee. Each member of the Executive Committee shall
continue as a member thereof until the expiration of his term as a director or
his earlier resignation, unless sooner removed as a member or as a director by a
vote of a majority of the whole Board.
Section 2. Powers. The Executive Committee shall have and may exercise
those rights, powers, and authority of the Board of Directors as may from time
to time be granted to it by the Board of Directors to the extent permitted by
law, and may authorize the seal of the Corporation to be affixed to all papers
that may require it.
Section 3. Procedure and Meetings. The Executive Committee shall fix
its own rules of procedure and shall meet at such times and at such place or
places as may be provided by such rules or as the members of the Executive
Committee shall fix. The Executive Committee shall keep regular minutes of its
meetings, which it shall deliver to the Board of Directors from time to time.
The Chairman of the Executive Committee or, in his absence, a member of the
Executive Committee chosen by a majority of the members present, shall preside
at meetings of the Executive Committee; and another member chosen by the
Executive Committee shall act as Secretary of the Executive Committee.
Section 4. Quorum. A majority of the Executive Committee shall
constitute a quorum for the transaction of business, and the affirmative vote of
a majority of the members present at any meeting at which there is a quorum
shall be required for any action of the Executive Committee; provided, however,
that when an Executive Committee of one member is authorized under the
provisions of Section 1 of this Article, that one member shall constitute a
quorum.
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Section 5. Other Committees. The Board of Directors, by resolutions
adopted by a majority of the whole Board, may appoint such other committee or
committees as it shall deem advisable and with such rights, power, and authority
as it shall prescribe. Each such committee shall consist of one or more
directors.
Section 6. Committee Changes. The Board of Directors, by a vote of a
majority of the whole Board, shall have the power at any time to fill vacancies
in, to change the membership of, and to discharge any committee.
Section 7. Compensation. Members of any committee shall be entitled to
such compensation for their services as members of the committee and to such
reimbursement for any reasonable expenses incurred in attending committee
meetings as may from time to time be fixed by the Board of Directors. Any member
may waive compensation for any meeting. Any committee member receiving
compensation under these provisions shall not be barred from serving the
Corporation in any other capacity and from receiving compensation and
reimbursement of reasonable expenses for such other services.
Section 8. Action by Consent. Any action required or permitted to be
taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if a written consent to such action is signed by all members
of the committee and such written consent is filed with the minutes of its
proceedings.
Section 9. Meetings by Telephone or Similar Communications Equipment.
The members of any committee designated by the Board of Directors may
participate in a meeting of such committee by conference telephone or similar
communications equipment by means of which all persons participating in such
meeting can hear each other, and participation in such a meeting shall
constitute presence in person by any such committee member at such meeting.
Article V. Notices.
Section 1. Form and Delivery. Whenever a provision of any law, the
Certificate of Incorporation, or these Bylaws requires that notice be given to
any director or stockholder, it shall not be construed to require personal
notice unless so specifically provided, but such notice may be given in writing,
by mail addressed to the address of the director or stockholder as it appears on
the records of the Corporation, with postage prepaid. These notices shall be
deemed to be given when they are deposited in the United States mail. Notice to
a director may also be given personally or by telephone or by telegram sent to
his address as it appears on the records of the Corporation.
Section 2. Waiver. Whenever any notice is required to be given under
the provisions of any law, the Certificate of Incorporation, or these Bylaws, a
written waiver thereof signed by the person entitled to said notice, whether
before or after the time stated therein, shall be deemed to be
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equivalent to such notice. In addition, any stockholder who attends a meeting of
stockholders in person or is represented at such meeting by proxy, without
protesting at the commencement of the meeting the lack of notice thereof to him,
or any director who attends a meeting of the Board of Directors without
protesting at the commencement of the meeting of the lack of notice, shall be
conclusively deemed to have waived notice of such meeting.
Article VI. Officers.
Section 1. Designations. The officers of the Corporation shall be
chosen by the Board of Directors. The Board of Directors may choose a Chairman
of the Board, a President, a Vice President or Vice Presidents, a Secretary, a
Treasurer, one or more Assistant Secretaries and/or Assistant Treasurers, and
other officers and agents that it shall deem necessary or appropriate. All
officers of the Corporation shall exercise the powers and perform the duties
that shall from time to time be determined by the Board of Directors. Any number
of offices may be held by the same person, unless the Certificate of
Incorporation or these Bylaws provide otherwise.
Section 2. Term of, and Removal From, Office. At its first regular
meeting after each annual meeting of stockholders, the Board of Directors shall
choose a President, a Secretary, and a Treasurer. It may also choose a Chairman
of the Board, a Vice President or Vice Presidents, one or more Assistant
Secretaries and/or Assistant Treasurers, and such other officers and agents as
it shall deem necessary or appropriate. Each officer of the Corporation shall
hold office until his successor is chosen and shall qualify. Any officer elected
or appointed by the Board of Directors may be removed, with or without cause, at
any time by the affirmative vote of a majority of the directors then in office.
Removal from office, however, shall not prejudice the contract rights, if any,
of the person removed. Any vacancy occurring in any office of the Corporation
may be filled for the unexpired portion of the term by the Board of Directors.
Section 3. Compensation. The salaries of all officers of the
Corporation shall be fixed from time to time by the Board of Directors, and no
officer shall be prevented from receiving a salary because he is also a director
of the Corporation.
Section 4. The Chairman of the Board. The Chairman of the Board, if
any, shall be an officer of the Corporation and, subject to the direction of the
Board of Directors, shall perform such executive, supervisory, and management
functions and duties as may be assigned to him from time to time by the Board of
Directors. He shall, if present, preside at all meetings of stockholders and of
the Board of Directors.
Section 5. The President.
(a) The President shall have primary responsibility for executing the
management and affairs of the Corporation and, subject to the direction of the
Board of Directors, shall have general charge of the business, affairs, and
property of the Corporation and general supervision over its other
-8-
officers and agents. In general, he shall perform all duties incident to the
office of President and shall see that all orders and resolutions of the Board
of Directors are carried into effect.
(b) Unless otherwise prescribed by the Board of Directors, the
President shall have full power and authority to attend, act, and vote on behalf
of the Corporation at any meeting of the security holders of other corporations
in which the Corporation may hold securities. At any such meeting, the President
shall possess and may exercise any and all rights and powers incident to the
ownership of such securities that the Corporation might have possessed and
exercised if it had been present. The Board of Directors may from time to time
confer like powers upon any other person or persons.
Section 6. The Vice President. The Vice President, if any, or in the
event there be more than one, the Vice Presidents in the order designated, or in
the absence of any designation, in the order of their election, shall, in the
absence of the President or in the event of his disability, perform the duties
and exercise the powers of the President and shall generally assist the
President and perform such other duties and have such other powers as may from
time to time be prescribed by the Board of Directors.
Section 7. The Secretary. The Secretary shall attend all meetings of
the Board of Directors and the stockholders and record all votes and the
proceedings of the meetings in a book to be kept for that purpose. He shall
perform like duties for the Executive Committee or other committees, if
required. He shall give, or cause to be given, notice of all meetings of
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may from time to time be prescribed by the Board of
Directors, the Chairman of the Board, or the President, under whose supervision
he shall act. He shall have custody of the seal of the Corporation, and he, or
an Assistant Secretary, shall have authority to affix it to any instrument
requiring it, and, when so affixed, the seal may be attested by his signature or
by the signature of the Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing thereof by his signature.
Section 8. The Assistant Secretary. The Assistant Secretary, if any, or
in the event there be more than one, the Assistant Secretaries in the order
designated, or in the absence of any designation, in the order of their
election, shall, in the absence of the Secretary or in the event of his
disability, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
Section 9. The Treasurer. The Treasurer shall have custody of the
corporate funds and other valuable effects, including securities, and shall keep
full and accurate accounts of receipts and disbursements in books belonging to
the Corporation and shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such depositories as may from time
to time be designated by the Board of Directors. He shall disburse the funds of
the Corporation in accord with the orders of the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the Chairman of the
Board, if any, the President, and the Board of Directors, whenever they
-9-
may require it or at regular meetings of the Board, an account of all his
transactions as Treasurer and of the financial condition of the Corporation.
Section 10. The Assistant Treasurer. The Assistant Treasurer, if any,
or in the event there shall be more than one, the Assistant Treasurers in the
order designated, or in the absence of any designation, in the order of their
election, shall, in the absence of the Treasurer or in the event of his
disability, perform such other duties and have such other powers as may from
time to time be prescribed by the Board of Directors.
Article VII. Indemnification.
Reference is made to Section 145 and any other relevant provisions of
the General Corporation Law of the State of Delaware. Particular reference is
made to the class of persons, hereinafter called "Indemnitees", who may be
indemnified by a Delaware corporation pursuant to the provisions of such Section
145, namely, any person, or the heirs, executors, or administrators of such
person, who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact that such
person is or was a director, officer, employee, or agent of such corporation or
is or was serving at the request of such corporation as a director, officer,
employee, or agent of such corporation or is or was serving at the request of
such corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise. The
Corporation shall, and is hereby obligated to, indemnify the Indemnitees, and
each of them, in each and every situation where the Corporation is obligated to
make such indemnification pursuant to the aforesaid statutory provisions. The
Corporation shall indemnify the Indemnitees, and each of them, in each and every
situation where, under the aforesaid statutory provisions, the Corporation is
not obligated, but is nevertheless permitted or empowered, to make such
indemnification, it being understood that, before making such indemnification
with respect to any situation covered under this sentence, (i) the Corporation
shall promptly make or cause to be made, by any of the methods referred to in
Subsection (d) of such Section 145, a determination as to whether each
Indemnitee 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, in the case of
any criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful, and (ii) that no such indemnification shall be made unless
it is determined that such Indemnitee 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, in the case of any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful.
Article VIII. Affiliated Transactions and Interested Directors.
Section 1. Affiliated Transactions. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are
-10-
directors or officers or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is present at
or participates in the meeting of the Board of Directors or committee thereof
that authorizes the contract or transaction or solely because his or their votes
are counted for such purpose if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by the vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved, or ratified by the Board of Directors, a
committee thereof, or the stockholders.
Section 2. Determining Quorum. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorizes the contract or
transaction.
Article IX. Stock Certificates.
Section 1. Form and Signatures.
(a) Every holder of stock of the Corporation shall be entitled to a
certificate stating the number and class, and series, if any, of shares owned by
him, signed by the Chairman of the Board, if any, or the President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the Corporation, and bearing the seal of the Corporation. The signatures and
the seal may be facsimiles. A certificate may be signed, manually or by
facsimile, by a transfer agent or registrar other than the Corporation or its
employee. In case any officer who has signed, or whose facsimile signature was
placed on, a certificate shall have ceased to be such officer before the
certificate is issued, it may nevertheless be issued by the Corporation with the
same effect as if he were such officer at the date of its issue.
(b) All stock certificates representing shares of capital stock that
are subject to restrictions on transfer or to other restrictions may have
imprinted thereon any notation to that effect determined by the Board of
Directors.
Section 2. Registration of Transfer. Upon surrender to the Corporation
or any transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment, or
authority to transfer, the Corporation or its transfer agent shall issue a
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new certificate to the person entitled thereto, cancel the old certificate, and
record the transaction upon the books of the Corporation.
Section 3. Registered Stockholders.
(a) Except as otherwise provided by law, the Corporation shall be
entitled to recognize the exclusive right of a person who is registered on its
books as the owner of shares of its capital stock to receive dividends or other
distributions and to vote or consent as such owner, and to hold liable for calls
and assessments any person who is registered on its books as the owner of shares
of its capital stock. The Corporation shall not be bound to recognize any
equitable or legal claim to, or interest in, such shares on the part of any
other person.
(b) If a stockholder desires that notices and/or dividends shall be
sent to a name or address other than the name or address appearing on the stock
ledger maintained by the Corporation, or its transfer agent or registrar, if
any, the stockholder shall have the duty to notify the Corporation, or its
transfer agent or registrar, if any, in writing of his desire and specify the
alternate name or address to be used.
Section 4. Record Date. In order that the Corporation may determine the
stockholders of record who are entitled to receive notice of, or to vote at, any
meeting of stockholders or any adjournment thereof or to express consent to
corporate action in writing without a meeting, to receive payment of any
dividend or other distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion, or exchange of stock or for the
purpose of any lawful action, the Board of Directors may, in advance, fix a date
as the record date for any such determina tion. Such date shall not be more than
sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to the date of any other action. A determination of
stockholders of record entitled to notice of, or to vote at, a meeting of
stockholders shall apply to any adjournment of the meeting taken pursuant to
Section 8 of Article II; provided, however, that the Board of Directors may fix
a new record date for the adjourned meeting.
Section 5. Lost, Stolen, or Destroyed Certificates. The Board of
Directors may direct that a new certificate be issued to replace any certificate
theretofore issued by the Corporation that, it is claimed, has been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate to be lost, stolen, or destroyed. When authorizing the
issue of a new certificate, the Board of Directors may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of the lost,
stolen, or destroyed certificate, or his legal representative, to advertise the
same in such manner as it shall require, and/or to give the Corporation a bond
in such sum, or other security in such form, as it may direct as indemnity
against any claims that may be made against the Corporation with respect to the
certificate claimed to have been lost, stolen, or destroyed.
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Article X. General Provisions.
Section 1. Dividends. Subject to the provisions of law and the
Certificate of Incorporation, dividends upon the outstanding capital stock of
the Corporation may be declared by the Board of Directors at any regular or
special meeting, and may be paid in cash, in property, or in shares of the
Corporation`s capital stock.
Section 2. Reserves. The Board of Directors shall have full power,
subject to the provisions of law and the Certificate of Incorporation, to
determine whether any, and, if so, what part, of the funds legally available for
the payment of dividends shall be declared as dividends and paid to the
stockholders of the Corporation. The Board of Directors, in its sole discretion,
may fix a sum that may be set aside or reserved over and above the paid-in
capital of the Corporation as a reserve for any proper purpose, and may, from
time to time, increase, diminish, or vary such amount.
Section 3. Fiscal Year. Except as from time to time otherwise provided
by the Board of Directors, the fiscal year of the Corporation shall end on
December 31 of each year.
Section 4. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation, and the words "Corporate
Seal" and "Delaware".
Article XI. Amendments.
These Bylaws may be altered, amended or repealed or new Bylaws may be
adopted (a) at any regular or special meeting of stockholders at which a quorum
is present or represented, by the affirmative vote of a majority of the stock
entitled to vote, or (b) by the affirmative vote of a majority of the whole
Board at any regular or special meeting of the Board, in both cases provided
notice of the proposed alteration, amendment or repeal be contained in the
notice of such meeting.
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December 11, 1996
Board of Directors
Advanced Deposition Technologies, Inc.
580 Myles Standish Boulevard
Taunton, Massachusetts 02780
Ladies and Gentlemen:
This firm has represented Advanced Deposition Technologies, Inc., a
Delaware corporation (hereinafter called the "Corporation"), in connection with
the filing of the Registration Statement described below.
In our capacity as counsel to the Corporation, we are familiar with the
Certificate of Incorporation, as amended, and the By-Laws of the Corporation. We
are also familiar with the corporate proceedings taken by the Corporation in
connection with the preparation and filing of a Registration Statement on Form
S-8 (the "Registration Statement") covering the registration of 856,090 shares
of Common Stock, $.01 par value per share (the "Common Stock"), issuable upon
exercise of options (the "Options") issued or issuable in connection with the
Corporation's 1988 Stock Option Plan, 1993 Stock Option Plan and 1994 Formula
Stock Option Plan (collectively, the "Plans").
Based upon the foregoing, we are of the opinion that:
1. The Corporation is duly organized and validly existing under the
laws of the State of Delaware.
2. The 856,090 shares of Common Stock to be registered have been
duly authorized and reserved for issuance upon exercise of the
Options, and such shares, when paid for and issued upon exercise
in accordance with the terms of the Options, will be legally
issued, fully paid and non-assessable.
Board of Directors
Advanced Deposition Technologies, Inc.
December 11, 1996
Page 2
This opinion is provided solely for the benefit of the addressee hereof
and is not to be relied upon by any other person or party. Nevertheless, we
hereby consent to the use of this opinion and to all references to our firm in
or made part of the Registration Statement.
Very truly yours,
O'CONNOR, BROUDE & ARONSON
By: /s/ Paul D. Broude
-----------------------
Paul D. Broude
c: Glenn J. Walters, Chief Executive Officer
EXHIBIT 23B
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 26, 1996
(except with respect to the matters discussed in Note 3, as to which the date is
April 12, 1996) included in Advanced Deposition Technologies, Inc.'s Form
10-KSB-A for the year ended December 31, 1995 and to all references to our Firm
included in this registration statement.
/S/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
December 9, 1996
