<PAGE> 1
As filed with the Securities and Exchange Commission on July 28, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
CONSEP, INC.
(Exact name of registrant as specified in charter)
OREGON 93-0874480
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
------------------------
213 S.W. COLUMBIA STREET, BEND, OREGON 97702
(541) 388-3688
(Address, including zip code and telephone number,
including area code, of registrant's principal executive offices)
------------------------
CONSEP, INC.
1997 STOCK INCENTIVE PLAN
------------------------
VOLKER G. OAKEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CONSEP, INC.
213 S.W. COLUMBIA STREET, BEND, OREGON 97702
(541) 388-3688
(Name, address, including zip code and telephone number,
including area code, of agent for service)
------------------------
with copies to:
MICHAEL W. SHACKELFORD, ESQ.
ATER WYNNE HEWITT DODSON & SKERRITT, LLP
222 S.W. COLUMBIA, SUITE 1800, PORTLAND, OREGON 97201
(503) 226-1191
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================
Title of Securities to Amount to be Proposed Maximum Offering Proposed Maximum Amount of
be Registered Registered Price per Share (1) Aggregate Offering Price(1) Registration Fee
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share 300,000 shares $2.4375 $731,250 $221.59
=================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are incorporated by reference into this
Registration Statement:
(a) Annual Report on Form 10-K of Consep, Inc. (the "Company")
for the year ended December 31, 1996 filed with the Securities and Exchange
Commission (the "SEC") on March 27, 1997.
(b) Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 1997, filed with the SEC on May 13, 1997.
(c) Registration Statement on Form 8-A of the Company filed
with the SEC on January 3, 1994.
(d) All documents filed by the Company with the SEC pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of
this Registration Statement and before the date of filing of a post-effective
amendment to this Registration Statement stating that all securities offered
have been sold or which deregisters all securities then remaining unsold.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As an Oregon corporation, the Company is subject to the Oregon Business
Corporation Act ("OBCA") and the exculpation from liability and indemnification
provisions contained therein. Pursuant to Section 60.047(2)(d) of the OBCA,
Article V of the Company's Third Restated Articles of Incorporation (the
"Articles") eliminates the liability of the Company's directors to the Company
or its shareholders, except for any liability related to breach of the duty of
loyalty, actions not in good faith and certain other liabilities. The Articles
require the Company to indemnify its directors and officers to the fullest
extent not prohibited by law.
Section 60.387, et seq., of the OBCA allows corporations to indemnify
their directors and officers against liability where the director or officer has
acted in good faith and with a reasonable belief
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<PAGE> 3
that actions taken were in the best interests of the corporation or at least not
adverse to the corporation's best interests and, if in a criminal proceeding,
the individual had no reasonable cause to believe the conduct in question was
unlawful. Under the OBCA, corporations may not indemnify against liability in
connection with a claim by or in the right of the corporation in which the
director or officer was adjudged liable to the corporation, but may indemnify
against the reasonable expenses associated with such claims. Corporations may
not indemnify against breaches of the duty of loyalty. The OBCA mandates
indemnification against all reasonable expenses incurred in the successful
defense of any claim made or threatened whether or not such claim was by or in
the right of the corporation. Finally, a court may order indemnification if it
determines that the director or officer is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances whether or not the
director or officer met the good faith and reasonable belief standards of
conduct set out in the statute.
The OBCA also provides that the statutory indemnification provisions are
not deemed exclusive of any other rights to which directors or officers may be
entitled under a corporation's articles of incorporation or bylaws, any
agreement, general or specific action of the board of directors, vote of
shareholders or otherwise.
The Company has entered into indemnity agreements with each executive
officer of the Company and each member of the Company's Board of Directors.
These indemnity agreements provide for indemnification of the indemnitee to the
fullest extent allowed by law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Number Description
------ -----------
<S> <C>
5.1 Opinion of Ater Wynne Hewitt Dodson & Skerritt, LLP as to the
legality of the securities being registered
23.1 Consent of Ater Wynne Hewitt Dodson & Skerritt, LLP (included in
legal opinion filed as Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
24.1 Powers of Attorney (included in signature page in Part II of the
Registration Statement)
99.1 Consep, Inc. 1997 Stock Incentive Plan
</TABLE>
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<PAGE> 4
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes to file, during
any period in which offers or sales are being made, a post-effective amendment
to this registration statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
subparagraphs is contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(b) The undersigned registrant hereby undertakes that, for the
purpose of determining liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes 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.
(d) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 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.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification
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<PAGE> 5
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
a director, officer or controlling person in connection with 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 Act and will be governed by the final adjudication of
such issue.
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<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bend, State of Oregon, on the 28th day of July,
1997.
CONSEP, INC.
By: /s/ Volker G. Oakey
-----------------------------
Volker G. Oakey
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Volker G. Oakey and Larry Katz and each of them
singly, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the registration statement filed herewith and any
or all amendments to said registration statement (including post-effective
amendments), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
granting unto said attorneys-in-fact and agents and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the foregoing, as fully to all intents and purposes as
he or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agent or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Witness our hands on the date set forth below.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
[SIGNATURES ON FOLLOWING PAGE]
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<PAGE> 7
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Volker G. Oakey President, Chief Executive Officer and 7/28/97
- ------------------------ Director (Principal Executive Officer)
Volker G. Oakey
/s/ Larry Katz Vice President, Finance and Chief 7/28/97
- ------------------------ Financial Officer (Principal Financial
Larry Katz and Accounting Officer)
/s/ Peter H. Gleason Director 7/28/97
- ------------------------
Peter H. Gleason
/s/ Walter C. Babcock Director 7/28/97
- ------------------------
Walter C. Babcock
/s/ Philip E. Barak Director 7/28/97
- ------------------------
Philip E. Barak
/s/ John A. Beaulieu Director 7/28/97
- ------------------------
John A. Beaulieu
/s/ Kenneth D. MacKay Director 7/28/97
- ------------------------
Kenneth D. MacKay
</TABLE>
- 7 -
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------ -------
<S> <C>
5.1 Opinion of Ater Wynne Hewitt Dodson & Skerritt, LLP as to the
legality of the securities being registered
23.1 Consent of Ater Wynne Hewitt Dodson & Skerritt, LLP (included
in legal opinion filed as Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
24.1 Powers of Attorney (included in signature page in Part II of
the Registration Statement)
99.1 Consep, Inc. 1997 Stock Incentive Plan
</TABLE>
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<PAGE> 1
EXHIBIT-5.1
ATER WYNNE HEWITT DODSON & SKERRITT, LLP
222 S.W. Columbia, Suite 1800
Portland, Oregon 97201
(503)226-1191 (phone)
(503)226-0079 (fax)
July 28, 1997
Board of Directors
Consep, Inc.
213 S.W. Columbia Street
Bend, Oregon 97702
Ladies and Gentlemen:
In connection with the registration of 300,000 shares of common stock,
par value $.01 per share (the "Common Stock"), of Consep, Inc., an Oregon
corporation (the "Company"), under the Registration Statement on Form S-8 to be
filed with the Securities and Exchange Commission on July 28, 1997, and the
proposed offer and sale of the Common Stock pursuant to the terms of the
Company's 1997 Stock Incentive Plan (the "1997 Plan"), we have examined such
corporate records, certificates of public officials and officers of the Company
and other documents as we have considered necessary or proper for the purpose of
this opinion.
Based on the foregoing and having regard to legal issues which we deem
relevant, it is our opinion that the shares of Common Stock to be offered
pursuant to the 1997 Plan, when such shares have been delivered against payment
therefor as contemplated by the 1997 Plan, will be validly issued, fully paid
and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
above-mentioned Registration Statement.
Very truly yours,
/s/ ATER WYNNE HEWITT DODSON & SKERRITT, LLP
ATER WYNNE HEWITT DODSON & SKERRITT, LLP
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders of
Consep, Inc. and Subsidiaries;
We consent to incorporation by reference in the Registration Statement
on Form S-8 for the 1997 Stock Incentive Plan dated July 28, 1997 of Consep,
Inc. and Subsidiaries of our report dated February 5, 1997, which report
appears in the December 31, 1996 Annual Report on Form 10-K of Consep, Inc.
and Subsidiaries.
Portland, Oregon
July 28, 1997
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
<PAGE> 1
EXHIBIT 99.1
CONSEP, INC.
1997 STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either "incentive stock options," as
defined in Section 422 of the Internal Revenue Code of 1986, as amended, or
"nonqualified stock options," at the discretion of the Board and as reflected in
the terms of the written option agreement. In addition, shares of the Company's
Common Stock may be Sold hereunder independent of any Option grant.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" shall mean the Board or any of its Committees
as shall be administering the Plan, in accordance with Section 4.(a) of the
Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Committee" shall mean a committee appointed by the Board in
accordance with Section of the Plan.
(e) "Common Stock" shall mean the Common Stock of the Company.
(f) "Company" shall mean Consep, Inc., an Oregon corporation.
(g) "Consultant" shall mean any person who is engaged by the
Company or any Parent or Subsidiary to render consulting services and is
compensated for such consulting services and any Director of the Company whether
compensated for such services or not.
(h) "Continuous Status as an Employee or Consultant" shall mean
the absence of any interruption or termination of service as an Employee or
Consultant. Continuous
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1 - 1997 STOCK INCENTIVE PLAN
<PAGE> 2
Status as an Employee or Consultant shall not be considered interrupted in the
case of: (i) any sick leave, military leave, or any other leave of absence
approved by the Company; provided, however, that for purposes of Incentive Stock
Options, any such leave is for a period of not more than ninety days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute, provided, further, that on the ninety-first day of such leave (where
re-employment is not guaranteed by contract or statute) the Optionee's Incentive
Stock Option shall automatically convert to a Nonqualified Stock Option; or (ii)
transfers between locations of the Company or between the Company, its Parent,
its Subsidiaries or its successor.
(i) "Director" shall mean a member of the Board.
(j) "Disability" shall mean total and permanent disability as
defined in Section 22(e)(3) of the Code.
(k) "Employee" shall mean any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary. Neither the
payment of a director's fee by the Company nor service as a Director shall be
sufficient to constitute "employment" by the Company.
(l) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(m) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or the Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
- --------------------------------------------------------------------------------
2 - 1997 STOCK INCENTIVE PLAN
<PAGE> 3
(o) "Nonqualified Stock Option" shall mean an Option not intended
to qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(p) "Notice of Grant" shall mean a written notice evidencing
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.
(q) "Officer" shall mean a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) "Option" shall mean a stock option granted pursuant to the
Plan.
(s) "Option Agreement" shall mean a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of
the Plan.
(t) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(u) "Optionee" shall mean an Employee or Consultant who receives
an Option.
(v) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(w) "Plan" shall mean this 1997 Stock Incentive Plan.
(x) "Rule 16b-3" shall mean Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(y) "Sale" or "Sold" shall include, with respect to the sale of
Shares under the Plan, the sale of Shares for consideration in the form of cash
or notes, as well as a grant of Shares for consideration in the form of past or
future services.
(z) "Share" shall mean a share of the Common Stock, as adjusted
in accordance with Section of the Plan.
(aa) "Subsidiary" shall mean a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section
of the Plan, the maximum aggregate number of Shares which may be optioned and/or
Sold under the Plan is 300,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.
- --------------------------------------------------------------------------------
3 - 1997 STOCK INCENTIVE PLAN
<PAGE> 4
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future Option grants and/or Sales under the Plan; provided, however, that Shares
that have actually been issued under the Plan shall not be returned to the Plan
and shall not become available for future distribution under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. If permitted by Rule
16b-3, the Plan may be administered by different bodies with respect to
Directors, Officers who are not Directors, and Employees who are neither
Directors nor Officers.
(ii) Administration With Respect to Directors and Officers
Subject to Section 16(b). With respect to Option grants made to Employees who
are also Officers or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may administer the
Plan in compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3, or (B) a Committee designated by the Board
to administer the Plan, which Committee shall be constituted to comply with the
rules, if any, governing a plan intended to qualify as a discretionary plan
under Rule 16b-3. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint additional members,
remove members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
rules, if any, governing a plan intended to qualify as a discretionary plan
under Rule 16b-3. With respect to persons subject to Section 16 of the Exchange
Act, transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3. To the extent any provision of the Plan or action by
the Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Administrator.
(iii) Administration With Respect to Other Persons. With
respect to Option grants made to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board, which Committee shall be
constituted to satisfy the legal requirements relating to the administration of
stock option plans under applicable corporate and securities laws and the Code.
Once appointed, such Committee shall serve in its designated capacity until
otherwise directed by the Board. The Board may increase the size of the
Committee and appoint additional members, remove members (with or without cause)
and substitute new members, fill vacancies (however caused), and remove all
members of the Committee and thereafter directly administer the Plan, all to the
extent permitted by the legal requirements relating to the administration of
stock option plans under state corporate and securities laws and the Code.
- --------------------------------------------------------------------------------
4 - 1997 STOCK INCENTIVE PLAN
<PAGE> 5
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to grant Incentive Stock Options in accordance with
Section 422 of the Code, or Nonqualified Stock Options;
(ii) to authorize Sales of Shares of Common Stock
hereunder;
(iii) to determine, upon review of relevant information,
the Fair Market Value of the Common Stock;
(iv) to determine the exercise/purchase price per Share of
Options to be granted or Shares to be Sold, which exercise/purchase price shall
be determined in accordance with Section of the Plan;
(v) to determine the Employees or Consultants to whom,
and the time or times at which, Options shall be granted and the number of
Shares to be represented by each Option;
(vi) to determine the Employees or Consultants to whom,
and the time or times at which, Shares shall be Sold and the number of Shares to
be Sold;
(vii) to interpret the Plan;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(ix) to determine the terms and provisions of each Option
granted (which need not be identical) and, with the consent of the holder
thereof, modify or amend each Option;
(x) to determine the terms and provisions of each Sale of
Shares (which need not be identical) and, with the consent of the purchaser
thereof, modify or amend each Sale;
(xi) to accelerate or defer (with the consent of the
Optionee) the exercise date of any Option;
(xii) to accelerate or defer (with the consent of the
Optionee or purchaser of Shares) the vesting restrictions applicable to Shares
Sold under the Plan or pursuant to Options granted under the Plan;
- --------------------------------------------------------------------------------
5 - 1997 STOCK INCENTIVE PLAN
<PAGE> 6
(xiii) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option or Sale of
Shares previously granted or authorized by the Board;
(xiv) to determine the restrictions on transfer, vesting
restrictions, repurchase rights, or other restrictions applicable to Shares
issued under the Plan;
(xv) to effect, at any time and from time to time, with
the consent of the affected Optionees, the cancellation of any or all
outstanding Options under the Plan and to grant in substitution therefor new
Options under the Plan covering the same or different numbers of Shares, but
having an Option price per Share consistent with the provisions of Section of
this Plan as of the date of the new Option grant;
(xvi) to establish, on a case-by-case basis, different
terms and conditions pertaining to exercise or vesting rights upon termination
of employment, whether at the time of an Option grant or Sale of Shares, or
thereafter;
(xvii) to approve forms of agreement for use under the Plan;
(xviii)to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted;
(xix) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock; and
(xx) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options granted under the
Plan or Shares Sold under the Plan.
5. Eligibility.
(a) Persons Eligible. Options may be granted and/or Shares Sold
only to Employees and Consultants. Incentive Stock Options may be granted only
to Employees. An Employee or Consultant who has been granted an Option or Sold
Shares may, if he or she is otherwise eligible, be granted an additional Option
or Options or Sold additional Shares.
- --------------------------------------------------------------------------------
6 - 1997 STOCK INCENTIVE PLAN
<PAGE> 7
(b) ISO Limitation. To the extent that the aggregate Fair Market
Value: (i) of Shares subject to an Optionee's Incentive Stock Options granted by
the Company, any Parent or Subsidiary, which (ii) become exercisable for the
first time during any calendar year (under all plans of the Company or any
Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonqualified Stock Options. For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares shall be determined as of the time of grant.
(c) Section Limitations. Section of the Plan shall apply only to
an Incentive Stock Option evidenced by an Option Agreement which sets forth the
intention of the Company and the Optionee that such Option shall qualify as an
Incentive Stock Option. Section of the Plan shall not apply to any Option
evidenced by a Option Agreement which sets forth the intention of the Company
and the Optionee that such Option shall be a Nonqualified Stock Option.
(d) No Right to Continued Employment. The Plan shall not confer
upon any Optionee any right with respect to continuation of employment or
consulting relationship with the Company, nor shall it interfere in any way with
his or her right or the Company's right to terminate his employment or
consulting relationship at any time, with or without cause.
(e) Other Limitations. The following limitations shall apply to
grants of Options to Employees:
(i) No Employee shall be granted, in any fiscal year of
the Company, Options to purchase more than 75,000 Shares.
(ii) In connection with his or her initial employment, an
Employee may be granted Options to purchase up to an additional 75,000 Shares
which shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 11.
(iv) If an Option is canceled in the same fiscal year of
the Company in which it was granted (other than in connection with a transaction
described in Section 11), the canceled Option shall be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
- --------------------------------------------------------------------------------
7 - 1997 STOCK INCENTIVE PLAN
<PAGE> 8
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section of the Plan. It shall continue in effect for a
term of ten (10) years, unless sooner terminated under Section of the Plan.
7. Term of Option. The term of each Option shall be stated in the Notice
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. However, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Incentive Stock Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Notice of Grant.
8. Exercise/Purchase Price and Consideration.
(a) Exercise/Purchase Price. The per-Share exercise/purchase
price for the Shares to be issued pursuant to exercise of an Option or a Sale
shall be such price as is determined by the Administrator, but shall be subject
to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of
the grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of the
grant.
(B) granted to any other Employee, the per Share
exercise price shall be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.
(ii) In the case of a Nonqualified Stock Option or Sale,
the per Share exercise/purchase price shall be determined by the Administrator.
(iii) Any determination to establish an Option exercise
price or effect a Sale of Common Stock at less than Fair Market Value on the
date of the Option grant or authorization of Sale shall be accompanied by an
express finding by the Administrator specifying that the sale is in the best
interest of the Company, and specifying both the Fair Market Value and the
Option exercise price or Sale price of the Common Stock.
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(b) Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option or pursuant to a Sale, including the method
of payment, shall be determined by the Administrator. In the case of an
Incentive Stock Option, the Administrator shall determine the acceptable form of
consideration at the time of grant. Such consideration may consist of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) transfer to the Company of Shares which
(A) in the case of Shares acquired upon exercise
of an Option, have been owned by the Optionee for more than six months on the
date of surrender, and
(B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares to be acquired;
(v) delivery of a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price;
(vi) such other consideration and method of payment for the
issuance of Shares to the extent permitted by legal requirements relating to the
administration of stock option plans and issuances of capital stock under
applicable corporate and securities laws and the Code; or
(vii) any combination of the foregoing methods of payment.
If the Fair Market Value of the number of whole Shares transferred or
the number of whole Shares surrendered is less than the total exercise price of
the Option, the shortfall must be made up in cash or by check. Notwithstanding
the foregoing provisions of this Section 8.(b), the consideration for Shares to
be issued pursuant to a Sale may not include, in whole or in part, the
consideration set forth in subsections (iv) and (v) above.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the
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9 - 1997 STOCK INCENTIVE PLAN
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Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under the Option Agreement and
Section 8.(b) of the Plan. Each Optionee who exercises an Option shall, upon
notification of the amount due (if any) and prior to or concurrent with delivery
of the certificate representing the Shares, pay to the Company amounts necessary
to satisfy applicable federal, state and local tax withholding requirements. An
Optionee must also provide a duly executed copy of any stock transfer agreement
then in effect and determined to be applicable by the Administrator. Until the
issuance (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock
represented by such stock certificate, notwithstanding the exercise of the
Option. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment or Consulting Relationship. In the
event that an Optionee's Continuous Status as an Employee or Consultant
terminates (other than upon the Optionee's death or Disability), the Optionee
may exercise his or her Option, but only within such period of time as is
determined by the Administrator, and only to the extent that the Optionee was
entitled to exercise it at the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Notice of Grant).
In the case of an Incentive Stock Option, the Administrator shall determine such
period of time (in no event to exceed three (3) months from the date of
termination) when the Option is granted. If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan. If,
after termination, the Optionee does not exercise his or her Option with the
time specified by the Administrator, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(c) Disability of Optionee. In the event that an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee
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10 - 1997 STOCK INCENTIVE PLAN
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may exercise his or her Option at any time within twelve (12) months from the
date of such termination, but only to the extent that the Optionee was entitled
to exercise it at the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant). If,
at the date of termination, the Optionee is not entitled to exercise his or her
entire Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an Optionee,
the Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent that the Optionee was entitled to exercise the Option at
the date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
(e) Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
(f) Buyout Provisions. The Administrator may at any time offer
to buy out, in whole or in part, for a payment in cash or Shares, an Option
previously granted, based on such terms and conditions as the Administrator
shall establish and communicate to the Optionee at the time that such offer is
made.
10. Nontransferability of Options. Except as otherwise specifically
provided in the Option Agreement, an Option may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will, or by
the laws of descent and distribution, and may be exercised during the lifetime
of the Optionee only by the Optionee or, if incapacitated, by his or her legal
guardian or legal representative.
11. Adjustments Upon Changes in Capitalization or Merger.
(a) Changes in Capitalization: Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and the number of shares of Common Stock which have been
authorized for issuance under the Plan
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11 - 1997 STOCK INCENTIVE PLAN
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but as to which no Options have yet been granted or Sales made or which have
been returned to the Plan upon cancellation or expiration of an Option, as well
as the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Administrator, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no issuance
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each outstanding Option will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Administrator. The Administrator may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his or her Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable.
(c) Merger or Asset Sale. In the event of a proposed sale of all
or substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding Option shall be assumed or an
equivalent option shall be substituted by such successor corporation or a Parent
or Subsidiary of such successor corporation, unless the Administrator
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the Optionee shall have the right to exercise
the Option as to all of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. If the Administrator makes an Option
fully exercisable in lieu of assumption or substitution in the event of a merger
or sale of assets, the Administrator shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice or such shorter period as the Administrator may specify in the
notice, and the Option will terminate upon the expiration of such period. For
the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the Option confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date
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12 - 1997 STOCK INCENTIVE PLAN
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of the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
sale of assets was not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation and
the Optionee, provide for the consideration to be received upon the exercise of
the Option, for each Share of Optioned Stock subject to the Option, to be solely
common stock of the successor corporation or its Parent equal in Fair Market
Value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
12. Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the determination
granting such Option. Notice of the determination shall be given to each
Optionee within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such shareholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
(c) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the Optionee
and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or a Sale unless the exercise of such
Option or consummation of the Sale and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, applicable state
securities laws, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange (including NASDAQ) upon
which the
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13 - 1997 STOCK INCENTIVE PLAN
<PAGE> 14
Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
15. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
16. Liability of Company.
(a) Inability to Obtain Authority. Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
As a condition to the exercise of an Option or a Sale, the
Company may require the person exercising such Option or to whom Shares are
being Sold to represent and warrant at the time of any such exercise or Sale
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock
covered by an Option exceeds, as of the date of grant, the number of Shares
which may be issued under the Plan without additional shareholder approval, such
Option shall be void with respect to such excess Optioned Stock, unless
shareholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section 13 of
the Plan.
17. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
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14 - 1997 STOCK INCENTIVE PLAN
