-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CKhaIDFVCE9Kx1UefqOlx2pbt5YLZVtEnEo0ddH3z6ADV5ApEXhVhWjXT1VbaxA8 eP2f6W4Fut88NDfIgDjkiw== 0000912057-96-027359.txt : 19961125 0000912057-96-027359.hdr.sgml : 19961125 ACCESSION NUMBER: 0000912057-96-027359 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19961122 EFFECTIVENESS DATE: 19961122 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ISCO INC CENTRAL INDEX KEY: 0000773730 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 470461807 STATE OF INCORPORATION: NE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-16637 FILM NUMBER: 96671076 BUSINESS ADDRESS: STREET 1: 4700 SUPERIOR ST CITY: LINCOLN STATE: NE ZIP: 68504 BUSINESS PHONE: 4024640231 MAIL ADDRESS: STREET 1: 4700 SUPERIOR ST CITY: LINCOLN STATE: NE ZIP: 68504 S-8 1 S-8 As filed with the Securities and Exchange Commission on November 22, 1996 Registration No. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Isco, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Nebraska 47-0461807 - ------------------------------ ------------------------------------ (State or other (I.R.S. Employer Identification No.) jurisdiction of incorporation or organization) 4700 Superior Street, Lincoln, NE. 68504 -------------------------------------------------- (Address of Principal Executive Offices) (ZIP Code) 1996 Stock Option Plan(1) 1996 Outside Directors Stock Option Plan(2) ------------------------------------------------- (Full title of the plan or written contract) Rochelle A. Mullen Cline, Williams, Wright, Johnson & Oldfather 1125 South 103rd Street, Suite 720 Omaha, NE 68124 ----------------------------------------------- (Name and address of agent for service) Telephone number, including area code, of agent for service: (402) 397-1700 ------------------------------------------------------------ (1) The Company has reserved 250,000 shares of Common Stock for issuance pursuant to the 1996 Stock Option Plan. (2) The Company has reserved 100,000 shares of Common Stock for issuance pursuant to the 1996 Outside Directors Stock Option Plan. Approximate date of proposed commencement of sales pursuant to the plan: as soon as practicable after the effective date of this registration statement. CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- Proposed Proposed maximum maximum Amount offering aggregate Amount of Title of securities to be price per offering registration to be registered registered share price fee - ------------------- ---------- --------- ---------- ------------- Common Stock, 250,000 shares $9.75(3) $2,437,500 $738.64 $0.01 par value Common Stock, 100,000 shares $9.75(3) $ 975,000 $295.45 $0.01 par value (3) Estimated pursuant to Rule 457(h)(1) and Rule 457(c) of the Securities Act of 1933, as amended (the "Securities Act") solely for the purpose of calculating the registration fee. The price is based upon the average of the high and low prices of Isco, Inc. Common Stock on November 18, 1996, as reported on the NASDAQ National Market System. - -------------------------------------------------------------------------------- PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE Isco, Inc. (the "Company") hereby incorporates by reference in this Registration Statement the following documents previously filed with the Securities and Exchange Commission (the "Commission"): (a) The Company's latest Annual Report on Form 10-K for the fiscal year ended July 26, 1996, filed pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), containing audited financial statements for the Company's latest fiscal year; (b) All other reports filed pursuant to Sections 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the document referred to in (a) above; and (c) A description of the Company's Common Stock contained in the Company's Registration Statement on Form S-1 (File No. 2-99303) filed under the Securities Act of 1933, as amended, including any amendment or report filed for the purpose of updating such description. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which reregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in the Registration Statement and to be a part thereof from the date of the filing of such documents. ITEM 4. DESCRIPTION OF SECURITIES Not applicable. -2- ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS The provision regarding indemnification of directors and officers is found in the Bylaws of the Company as amended through September 21, 1995 (incorporated by reference to Exhibit (3)(ii) to the Company's 10-K filed for the year ended July 28, 1995). ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. ITEM 8. EXHIBITS EXHIBIT NUMBER EXHIBIT - ------- --------------------------------------------------------------------- 4.1 Articles of Incorporation, as amended and restated through July 26, 1985 (incorporated by reference to Exhibit 3.1 to the Registration Statement of Form S-1 (File No. 2-99303)). 4.2 Bylaws of the Company, as amended through September 21, 1995 (incorporated by reference to Exhibit (3)(ii) to the Company's 10-K filed for the year ended July 28, 1995). 5 Opinion of Counsel. 23.1 Independent Auditors Consent. 23.2 Consent of Counsel (included in Exhibit 5). 99.1 1996 Stock Option Plan. 99.2 1996 Outside Directors Stock Option Plan. ITEM 9. UNDERTAKINGS (a) Rule 415 Offering. The undersigned registrant hereby undertakes to: (1) File, during any period in which it offers or sells securities, a post-effective amendment to this Registration Statement to: (i) Include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information set forth in the Registration Statement; and (iii) Include any additional or changed material information on the plan of distribution; PROVIDED, HOWEVER, that paragraph (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required in a post-effective amendment is incorporated by reference from periodic reports filed by the small business issuer under the Exchange Act. -3- (2) For determining liability under the Securities Act, treat each post-effective amendment as a new Registration Statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering thereof. (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. (b) Filings incorporating subsequent Exchange Act documents by reference. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act, that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Incorporated annual and quarterly reports. The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. (d) Request for acceleration of effective date or filing of registration statement on Form S-8. 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 foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the 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. -4- SIGNATURES The Registrant. 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 Lincoln, State of Nebraska on November 21, 1996. Isco, Inc. BY:/s/PHILIP M. WITTIG -------------------------------------- Philip M. Wittig, Assistant Secretary, Treasurer, Chief Financial Officer BY:/s/VICKI L. BENNE ------------------------------- Vicki L. Benne, Controller 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. SIGNATURE TITLE DATE /s/ROBERT W. ALLINGTON Chairman, Chief Executive 11/21/96 - ----------------------- Officer, Director Robert W. Allington /s/DOUGLAS M. GRANT President, Chief Operating 11/21/96 - ----------------------- Officer, Director Douglas M. Grant /s/DALE L. YOUNG Secretary, Director 11/21/96 - ----------------------- Dale L. Young /s/HARRIS WAGENSEIL Director 11/21/96 - ----------------------- Harris Wagenseil /s/ROBERT B. HARRIS Director 11/21/96 - ----------------------- Robert B. Harris /s/JAMES L. LINDERHOLM Director 11/21/96 - ----------------------- James L. Linderholm -5- EX-5 2 EXHIBIT 5 Exhibit 5 November 15, 1996 Mr. Robert Allington Chief Executive Officer Isco, Inc. 4700 Superior Street Lincoln, NE 68504 Re: Registration Statement on Form S-8 Dear Mr. Allington: We have acted as legal counsel for Isco, Inc., a Nebraska corporation, (the "Company") in connection with the Company's preparation of the above-referenced Registration Statement on Form S-8 (the "Form S-8") being filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended, (the "Act") and the Prospectus which is not filed, but is included as a part of the Form S-8 (the "Prospectus"). The Form S-8 and the Prospectus relate to the Company's two stock plans; specifically the 1996 Stock Option Plan (250,000 shares) and the 1996 Outside Directors Stock Option Plan (100,000 shares), all of the shares which are to be offered and sold by the Company pursuant to the applicable plan and in the manner set forth in the respective plan, Form S-8 and Prospectus. In connection herewith, we have examined: (i) the Form S-8 and the Prospectus; (ii) the Articles of Incorporation, as amended, and the Bylaws, as amended, of the Company; (iii) the corporate minutes and proceedings of the Company applicable to the filing of the Form S-8; and (iv) such other proceedings, documents and records as we deemed necessary or appropriate for the purposes of making this opinion. In making such examinations, we have assumed the genuineness of all signatures on all documents and conformed originals to all copies submitted to us as conformed or photocopies. In addition to such examination, we have ascertained or verified such additional facts as we deemed necessary or appropriate for purposes of this opinion. However, as to various questions of fact material to our opinion, we have relied upon representations, statements or certificates of officers, directors, or representatives of the Company or others. Based upon the foregoing, we are of the opinion that: (i) the Company has been legally incorporated and is validly existing under the laws of the state of Nebraska; and (ii) the shares issued pursuant to each of the Plans, upon issuance and payment therefor, as contemplated by the respective plan, Form S-8 and the Prospectus, will be validly issued, fully paid and non-assessable common stock of the Company. We hereby consent to the filing of this opinion as an exhibit to the Form S-8 and to any references to our firm in the Prospectus. In giving this consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Act or the Rules and Regulations of the Commission promulgated thereunder. Very truly yours, Cline, Williams, Wright, Johnson & Oldfather -6- EX-23.1 3 INDEPENDENT AUDITORS' CONSENT Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Isco, Inc. on Form S-8 of our report dated October 9, 1996 appearing in the Annual Report on Form 10-K of Isco, Inc. for the year ended July 26, 1996, and to the reference to us under the heading "Experts" in the Prospectuses, which are part of such Registration Statement. DELOITTE & TOUCHE LLP Lincoln, Nebraska November 20, 1996 -7- EX-99.1 4 STOCK OPTION PLAN EXHIBIT 99.1 ISCO, INC. 1996 STOCK OPTION PLAN 1. NAME. The name of this Plan is the Isco, Inc. 1996 Stock Option Plan. 2. DEFINITIONS. For the purposes of the Plan, the following terms shall be defined as set forth below: a. "Affiliate" means any partnership, corporation, firm, joint venture, association, trust, limited liability company, unincorporated organization or other entity (other than a Subsidiary) that, directly or indirectly through one or more intermediaries, is controlled by the Company, where the term "controlled by" means the possession, direct or indirect, of the power to cause the direction of the management and policies of such entity, whether through the ownership of voting interests or voting securities, as the case may be, by contract or otherwise. b. "Board" means the board of directors of the Company. c. "Cause" as applied to any Officer or Employee means: (i) the conviction of such individual for the commission of any felony; (ii) the commission by such individual of any crime involving moral turpitude (E.G., larceny, embezzlement) which results in harm to the business, reputation, prospects or financial condition of the Company, any Subsidiary or Affiliate; or (iii) a disciplinary discharge pursuant to the terms of the Company's management handbooks as in effect at the time. d. "Chairman" means the individual appointed by the Board to serve as the chairman of the Committee. e. "Code" means the Internal Revenue Code of 1986, as amended from time to time and the Treasury regulations promulgated thereunder. f. "Committee" means the committee appointed by the Board to administer the Plan as provided in Section 4(a). g. "Common Stock" means the Common Stock, $0.10 par value per share, of the Company or any security of the Company identified by the Committee as having been issued in substitution or exchange therefor or in lieu thereof. h. "Company" means Isco, Inc., a Nebraska corporation. i. "Employee" means an individual employed by the Company or a Subsidiary whose wages are subject to the withholding of federal income tax under Section 3401 of the Code. j. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute. k. "Fair Market Value" of a Share as of a specified date means the average of the highest and lowest market prices of a Share on the NASDAQ -8- National Market System on such date as reported in the Midwestern Edition of THE WALL STREET JOURNAL or, if no trading of Common Stock is reported for that day, the next preceding day on which trading was reported. In the event the Common Stock is not then traded on the NASDAQ National Market System, the Fair Market Value of a Share shall be determined by reference to the principal market or exchange on which the Common Stock is then traded. l. "Incentive Stock Option" (otherwise designated as an ISO) means any stock option granted pursuant to the Plan that is intended to be and is specifically designated as an "Incentive Stock Option" within the meaning of Section 422 of the Code. m. "Non-qualified Stock Option" (otherwise designated as a NQSO) means any stock option granted pursuant to the provisions of the Plan that is not an ISO. n. "Officer" means an individual elected or appointed by the Board or by the board of directors of a Subsidiary or chosen in such other manner as may be prescribed by the Bylaws of the Company or a Subsidiary, as the case may be, to serve as such. o. "Option" means an ISO or a NQSO granted under the Plan. p. "Participant" means an individual who is granted an Option under the Plan. q. "Plan" means this 1996 Stock Option Plan. r. "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor or replacement rule adopted by the Securities and Exchange Commission. s. "Share" means one share of Common Stock, adjusted in accordance with Section 10(b) of the Plan, if applicable. t. "Stock Option Agreement" means the written agreement between the Company and the Participant that contains the terms and conditions pertaining to an Option. u. "Subsidiary" means any corporation of which the Company, directly or indirectly, is the beneficial owner of fifty percent (50%) or more of the total voting power of all classes of its stock having voting power and which qualifies as a subsidiary corporation pursuant to Section 424(f) of the Code. v. "Ten Percent Stockholder" means a Participant who prior to the grant of an ISO owned, directly or indirectly within the meaning of Section 424(d) of the Code, ten percent (10%) or more of the total combined voting power of all classes of stock of the Company, any Subsidiary or any parent of the Company (as defined in Section 425(e) of the Code). 3. PURPOSE. The purpose of the Plan is to enable the Company to provide incentives, which are linked directly to increases in stockholder value, to certain key personnel in order that they will be encouraged to promote the financial success and progress of the Company. -9- 4. ADMINISTRATION. a. COMPOSITION OF THE COMMITTEE. The Plan shall be administered by a Committee appointed by the Board, consisting of not less than two "Non-Employee Directors" (as such term is defined in Rule 16b-3), to be a director who is not currently an officer or otherwise employed by the issuer, or a parent or subsidiary of the issuer; does not receive compensation directory or indirectly from the issuer, its parent or subsidiary for services rendered as a consultant or in any capacity other than as a director, (except for an amount less than $60,000); does not possess an interest in any other transaction for which disclosure would be required pursuant to Item 404(a) of Regulation S-K; and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K. In the event the Company is, at any time unable to qualify a Committee of two or more Non-Employee Directors, the Plan shall be administered by the Board. Subject to the provisions of the first sentence of this Section 4(a), the Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, shall be filled by the Board. The Board shall appoint one of the members of the Committee as Chairman. b. ACTIONS BY THE COMMITTEE. The Committee shall hold meetings at such times and places as it may determine. Acts approved by a majority of the members of the Committee present at a meeting at which a quorum is present, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee. c. POWERS OF THE COMMITTEE. Subject to the express terms and conditions hereof, the Committee shall have the authority to administer the Plan in its sole and absolute discretion. To this end, the Committee is authorized to construe and interpret the Plan and to make all other determinations necessary or advisable for the administration of the Plan, including, but not limited to, the authority to determine the eligible individuals who shall be granted Options, the number of Options to be granted, the vesting period, if any, for all Options granted hereunder, the date on which any Option becomes first exercisable, the number of Shares subject to each Option, the exercise price for the Shares subject to each Option, and, whether the Option to be granted is an ISO or a NQSO. Any determination, decision or action of the Committee in connection with the construction, interpretation, administration or application of the Plan shall be final, conclusive and binding upon all Participants and any person validly claiming under or through a Participant. d. LIABILITY OF COMMITTEE MEMBERS. No member of the Board or the Committee will be liable for any action or determination made in good faith by the Board or the Committee with respect to the Plan or any grant or exercise of an Option thereunder. e. OPTION ACCOUNTS. The Committee shall maintain a journal in which a separate account for each Participant shall be established. Whenever an Option is granted to or exercised by a Participant, the Participant's account shall be -10- appropriately credited or debited. Appropriate adjustment shall also be made in the journal with respect to each account in the event of an adjustment pursuant to Section 10(b) of the Plan. 5. EFFECTIVE DATE AND TERM OF THE PLAN. a. EFFECTIVE DATE OF THE PLAN. The Plan was adopted by the Board and became effective on September 19, 1996, subject to approval by the stockholders of the Company at a meeting duly called and held within twelve months following such date. b. TERM OF PLAN. No Option shall be granted pursuant to the Plan on or after September 19, 2006, but Options theretofore granted may extend beyond that date. 6. TYPE OF OPTIONS AND SHARES SUBJECT TO THE PLAN. Options granted under the Plan may be either ISOs or NQSOs. Each Stock Option Agreement shall specify whether the Option covered thereby is an ISO or a NQSO. The maximum aggregate number of Shares that may be issued under the Plan is 250,000 Shares. Up to and including all 250,000 Shares reserved for issuance under the Plan may be designated as ISOs. The limitation on the number of Shares which may be subject to Options under the Plan shall be subject to adjustment as provided in Section 10(b) of the Plan. If any Option granted under the Plan expires or is terminated for any reason, any Shares as to which the Option has not been exercised shall again be available for purchase under Options subsequently granted. At all times during the term of the Plan, the Company shall reserve and keep available for issuance such number of Shares as the Company is obligated to issue upon the exercise of all then outstanding Options. 7. SOURCE OF SHARES ISSUED UNDER THE PLAN. Common Stock issued under the Plan shall be authorized and unissued Shares and/or Treasury Shares. No fractional Shares shall be issued under the Plan. 8. ELIGIBILITY. The individuals eligible for the grant of Options under the Plan shall be: (i) all Officers and Employees; and (ii) such individuals determined by the Committee to be rendering substantial services as a consultant or independent contractor to the Company or any Subsidiary or Affiliate of the Company, as the Committee shall determine from time to time in its sole and absolute discretion; PROVIDED, HOWEVER, that only Employees of the Company or any Subsidiary shall be eligible to receive ISOs. Any Participant shall be eligible to be granted more than one Option hereunder. 9. OPTIONS. a. GRANT OF OPTIONS. Subject to any applicable requirements of the Code and any regulations issued thereunder, the date of the grant of an Option shall be the date on which the Committee determines to grant the Option. -11- b. EXERCISE PRICE OF ISOs. The exercise price of each Share subject to an ISO shall not be less than the Fair Market Value of a Share on the date of grant of the ISO, except that in the case of a grant of an ISO to a Participant who at the time such ISO was granted was a Ten Percent Stockholder, the exercise price shall not be less than 110% of the Fair Market Value of a Share on the date of the grant of the ISO. c. EXERCISE PRICE OF NQSOs. The exercise price of each Share subject to a NQSO shall be determined by the Committee at the time of grant but will not be less than eighty-five percent (85%) of the Fair Market Value of a Share on the date of grant. d. EXERCISE PERIOD. Each Option granted hereunder shall vest and become first exercisable as determined by the Committee. e. TERMS AND CONDITIONS. All Options granted pursuant to the Plan shall be evidenced by a Stock Option Agreement (which need not be the same for each Participant or Option), approved by the Committee which shall be subject to the following express terms and conditions and the other terms and conditions as are set forth in this Section 9, and to such other terms and conditions as shall be determined by the Committee in its sole and absolute discretion which are not inconsistent with the terms of the Plan: i. the failure of an Option to vest for any reason whatsoever shall cause the Option to expire and be of no further force or effect; ii. unless terminated earlier pursuant to Sections 9(i) or 11, the term of any Option granted under the Plan shall be ten years from the date of grant; PROVIDED, HOWEVER, that no ISO granted to a Ten Percent Stockholder shall have a term of more than five years from the date of grant; iii. in the case of an ISO, the aggregate Fair Market Value (determined as of the time the ISO is granted) of Shares exercisable for the first time by a Participant during any calendar year (under the Plan and any other incentive stock option plans of the Company, any Subsidiary or any parent of the Company (as defined in Section 424(e) of the Code) shall not exceed $100,000; iv. Options shall not be transferable by the Participant otherwise than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the Participant only by him or by his guardian or legal representative; v. no Option or interest therein may be transferred, assigned, pledged or hypothecated by the Participant during his lifetime whether by operation of law or otherwise, or be made subject to execution, attachment or similar process; and -12- vi. payment for the Shares to be received upon exercise of an Option may be made in cash, in Shares (determined with reference to their Fair Market Value on the date of exercise) or any combination thereof. f. EXERCISE. The holder of an Option may exercise the same by filing with the Corporate Secretary of the Company and the Chairman a written election, in such form as the Committee may determine, specifying the number of Shares with respect to which such Option is being exercised, and accompanied by payment in full of the exercise price for such Shares. Notwithstanding the foregoing, the Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent the holder from exercising the Option with respect to the full number of Shares as to which the Option is then exercisable. g. WITHHOLDING TAXES. Prior to issuance of the Shares upon exercise of an Option, the Participant shall pay or make adequate provision for the payment of any Federal, state, local or foreign withholding obligations of the Company or any Subsidiary or Affiliate of the Company, if applicable. In the event a Participant shall fail to make adequate provision for the payment of such obligations, the Company shall have the right to issue a stock certificate for an amount of Shares equal to the difference obtained by subtracting: (i) the number of Shares, rounded up for any fraction to the next whole number, that have a Fair Market Value (as of the date of exercise) equal to such amount as is sufficient to satisfy applicable federal, state or local withholding obligations; from (ii) the number of Shares attributable to that portion of the Option so exercised. The Company shall promptly remit, or cause to be remitted, to the appropriate taxing authorities the amount so withheld. In such cases, although the stock certificate delivered to the Participant will be for a net number of Shares, such Participant shall be considered, for tax purposes, to have received the number of Shares equal to the full number of Shares to which the Option had been exercised. h. TERMINATION OF OPTIONS. Options granted under the Plan shall be subject to the following events of termination: i. in the event the employment of a Participant who is an Officer or Employee is terminated for Cause, all unexercised Options held by such Participant on the date of such termination of employment (whether or not vested) will expire immediately; and ii. in the event a Participant is no longer an Officer or Employee other than for the reasons set forth in Sections 9(i)(i) or 9(i)(ii), all Options which remain unvested at the time the Participant is no longer a Director, Officer or Employee, as the case may be, shall expire immediately, and all Options which have vested prior to such time shall expire twelve months thereafter unless by their terms they expire sooner. -13- 10. RECAPITALIZATION. a. CORPORATE FLEXIBILITY. The existence of the Plan and the Options granted hereunder shall not affect or restrict in any way the right or power of the Board or the stockholders of the Company, in their sole and absolute discretion, to make, authorize or consummate any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, Common Stock, preferred or prior preference stock ahead of or affecting the Company's capital stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or any other grant of rights, issuance of securities, transaction, corporate act or proceeding and notwithstanding the fact that any such activity, proceeding, action, transaction or other event may have, or be expected to have, an impact (whether positive or negative) on the value of any Option. b. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Except as otherwise provided in Section 11 and subject to any required action by the stockholders of the Company, in the event of any change in capitalization affecting the Common Stock of the Company, such as a stock dividend, stock split or recapitalization, the Committee, in its sole and absolute discretion, may make proportionate adjustments with respect to: (i) the aggregate number of Shares available for issuance under the Plan; (ii) the number of Shares available for any individual award; (iii) the number and exercise price of Shares subject to outstanding Options; PROVIDED, HOWEVER, that the number of Shares subject to any Option shall always be a whole number; and (iv) such other matters as shall be appropriate in light of the circumstances. 11. CHANGE OF CONTROL. In the event of a Change of Control (as defined below), unless otherwise determined by the Committee at the time of grant or by amendment (with the holder's consent) of such grant, all Options not vested on or prior to the effective time of any such Change of Control shall immediately vest as of such effective time. The Committee in its discretion may make provisions for the assumption of outstanding Options, or the substitution for outstanding Options of new incentive awards covering the stock of a successor corporation or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices so as to prevent dilution or enlargement of rights. A "Change of Control" will be deemed to occur on the date any of the following events occur: a. any person or persons acting together which would constitute a "group" for purpose of Section 13(d) of the Exchange Act (other than the Company, any Subsidiary and any entity beneficially owned by any of the foregoing) beneficially own (as defined in Rule 13d-3 under the Exchange Act) without Board approval, directly or indirectly, at least 50% of the total voting power of the Company entitled to vote generally in the election of the Board; -14- b. the stockholders of the Company approve (i) a plan of complete liquidation of the Company, or (ii) an agreement providing for the merger or consolidation of the Company (A) in which the Company is not the continuing or surviving corporation (other than consolidation or merger with a wholly-owned subsidiary of the Company in which all Shares outstanding immediately prior to the effectiveness thereof are changed into or exchanged for the same consideration) or (B) pursuant to which the Shares are converted into cash, securities or other property, except a consolidation or merger of the Company in which the holders of the Shares immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the common stock of the continuing or surviving corporation immediately after such consolidation or merger or in which the Board immediately prior to the merger or consolidation would, immediately after the merger or consolidation, constitute a majority of the board of directors of the continuing or surviving corporation; or c. the stockholders of the Company approve an agreement (or agreements) providing for the sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company. 12. SECURITIES LAW REQUIREMENTS. No Shares shall be issued under the Plan unless and until: (i) the Company and the Participant have taken all actions required to register the Shares under the Securities Act of 1933, as amended, or perfect an exemption from the registration requirements thereof; (ii) any applicable requirement of Nasdaq or any stock exchange on which the Common Stock is listed has been satisfied; and (iii) any other applicable provision of state or Federal law has been satisfied. The Company shall be under no obligation to register the Shares under the Securities Act of 1933, as amended, or to effect compliance with the registration or qualification requirements of any state securities laws. 13. AMENDMENT AND TERMINATION. a. MODIFICATIONS TO THE PLAN. The Board may, insofar as permitted by law, from time to time, with respect to any Shares at the time not subject to Options, suspend or terminate the Plan or revise or amend the Plan in any respect whatsoever. However, unless the Board specifically otherwise provides, any revision or amendment that would cause the Plan to fail to comply with Rule 16b-3, Section 422 or 162(m) of the Code or any other requirement of applicable law or regulation if such amendment were not approved by the stockholders of the Company shall not be effective unless and until such approval is obtained. b. RIGHTS OF PARTICIPANT. No amendment, suspension or termination of the Plan that would adversely affect the right of any Participant with respect to an Option previously granted under the Plan will be effective without the written consent of the affected Participant. -15- 14. MISCELLANEOUS. a. STOCKHOLDERS' RIGHTS. No Participant and no beneficiary or other person claiming under or through such Participant shall acquire any rights as a stockholder of the Company by virtue of such Participant having been granted an Option under the Plan. No Participant and no beneficiary or other person claiming under or through such Participant will have any right, title or interest in or to any Shares, allocated or reserved under the Plan or subject to any Option except as to Shares, if any, that have been issued or transferred to such Participant. No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to the date of exercise of an Option, except as may be provided in the Stock Option Agreement. b. OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the Plan shall prevent the Board from adopting other compensation arrangements, subject to stockholder approval if such approval is required. Such other arrangements may be either generally applicable or applicable only in specific cases. c. TREATMENT OF PROCEEDS. Proceeds realized from the exercise of Options under the Plan shall constitute general funds of the Company. d. COSTS OF THE PLAN. The costs and expenses of administering the Plan shall be borne by the Company. e. NO RIGHT TO CONTINUE EMPLOYMENT OR SERVICES. Nothing contained in the Plan or in any instrument executed pursuant to the Plan will confer upon any Participant any right to continue to render services to the Company, a Subsidiary or Affiliate; to continue as an Officer or Employee; or affect the right of the Company, a Subsidiary, the Board, the board of directors of a Subsidiary, the stockholders of the Company or a Subsidiary, as applicable, to terminate the office or employment, as the case may be, of any Participant at any time with or without Cause or with or without any other cause, reason or justification. The term "Cause" as defined herein is included solely for the purposes of the Plan and is not, and shall not be deemed to be: (i) a restriction on the right of the Company or a Subsidiary, as the case may be, to terminate any Officer or Employee for any reason whatsoever; or (ii) a part of the employment relationship (whether oral or written, express or implied) of any such individual. f. SEVERABILITY. The provisions of the Plan shall be deemed severable and the validity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. -16- g. BINDING EFFECT OF PLAN. The Plan shall inure to the benefit of the Company, its successors and assigns. h. NO WAIVER OF BREACH. No waiver by any party hereto at any time of any breach by another party hereto of, or compliance with, any condition or provision of the Plan to be performed by such other party shall be deemed a waiver of the same, any similar or any dissimilar provisions of conditions at the same or at any prior or subsequent time. i. GOVERNING LAW. The Plan and all actions taken thereunder shall be enforced, governed and construed by and interpreted under the laws of the State of Nebraska applicable to contracts made and to be performed wholly within such State without giving effect to the principles of conflict of laws thereof. j. HEADINGS. The headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan. EXECUTION. To record the adoption of the Plan to read as set forth herein, the Company has caused the Plan to be signed by its President and attested by its Secretary on September 19, 1996. ISCO, INC., By:/s/Douglas M. Grant ------------------------------------- Douglas M. Grant, President ATTEST: By:/s/Philip M. Wittig ---------------------------------------- Philip M. Wittig, Assistant Secretary -17- EX-99.2 5 OUTSIDE DIRECTORS STOCK OPTION PLAN EXHIBIT 99.2 ISCO, INC. 1996 OUTSIDE DIRECTORS STOCK OPTION PLAN 1. NAME. The name of this Plan is the Isco, Inc. 1996 Outside Directors Stock Option Plan. 2. DEFINITIONS. For the purposes of the Plan, the following terms shall be defined as set forth below: a. "Affiliate" means any partnership, corporation, firm, joint venture, association, trust, limited liability company, unincorporated organization or other entity (other than a Subsidiary) that, directly or indirectly through one or more intermediaries, is controlled by the Company, where the term "controlled by" means the possession, direct or indirect, of the power to cause the direction of the management and policies of such entity, whether through the ownership of voting interests or voting securities, as the case may be, by contract or otherwise. b. "Board" means the board of directors of the Company. c. "Chairman" means the individual appointed by the Board to serve as the chairman of the Committee. d. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury regulations promulgated thereunder. e. "Committee" means the committee appointed by the Board to administer the Plan as provided in Section 4(a). f. "Common Stock" means the common stock, $.10 par value per share, of the Company or any security of the Company identified by the Committee as having been issued in substitution or exchange therefor or in lieu thereof. g. "Company" means Isco, Inc., a Nebraska corporation. h. "Employee" means an individual whose wages are subject to the withholding of federal income tax under Section 3401 of the Code. i. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute. j. "Fair Market Value" of a Share as of a specified date means the average of the highest and lowest market prices of a Share on the NASDAQ National Market System on such date as reported in the Midwestern Edition of THE WALL STREET JOURNAL or, if no trading of Common Stock is reported for that day, the next preceding day on which trading was reported. In the event the Common Stock is not then traded on the NASDAQ National Market Service, the Fair Market Value of a Share shall be determined by reference to the principal market or exchange on which the Shares are then traded. -18- k. "Non-Employee Director" means an individual who: (i) is now, or hereafter becomes, a member of the Board; (ii) is not an Employee of the Company or of any Subsidiary or Affiliate on the date of the grant of the NQSO; and (iii) has not elected to decline to participate in the Plan pursuant to the immediately succeeding sentence. A director otherwise eligible to participate in the Plan may make an irrevocable, one-time election, by written notice to the Corporate Secretary of the Company and the Chairman within thirty days after his initial election or appointment to the Board to decline to participate in the Plan. l. "Non-qualified stock option" (otherwise designated as a NQSO) means an option that is not qualified under Section 422 of the Code. m. "Officer" means an individual elected or appointed by the Board or by the board of directors of a Subsidiary, or chosen in such other manner as may be prescribed by the by-laws of the Company or a Subsidiary, as the case may be, to serve as such. n. "Participant" means a Non-Employee Director who is granted a NQSO under the Plan. o. "Plan" means this 1996 Outside Directors Stock Option Plan. p. "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor or replacement rule adopted by the Securities and Exchange Commission. q. "Share" means one share of Common Stock, adjusted in accordance with Section 9(b), if applicable. r. "Stock Option Agreement" means the written agreement between the Company and the Participant that contains the terms and conditions pertaining to the NQSO. s. "Subsidiary" means any corporation or entity of which the Company, directly or indirectly, is the beneficial owner of fifty percent (50%) or more of the total voting power of all classes of its stock having voting power, unless the Committee shall determine that any such corporation or entity shall be excluded hereunder from the definition of the term Subsidiary. 3. PURPOSE. The purpose of the Plan is to enable the Company to provide incentives, which are linked directly to increases in stockholder value, to Non-Employee Directors in order that they will be encouraged to serve on the Board and exert their best efforts on behalf of the Company. 4. ADMINISTRATION. a. COMPOSITION OF THE COMMITTEE. The Plan shall be administered by a Committee appointed by the Board consisting of no less than two individuals. Members of the Committee need not be members of the Board, Officers or Employees of the Company. Members of the Committee shall not be entitled to participate in the Plan. The Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, shall be filled by the Board. The Board shall appoint one of the members of the Committee as Chairman. -19- b. ACTIONS BY THE COMMITTEE. The Committee shall hold meetings at such times and places as it may determine. Acts approved by a majority of the members of the Committee present at a meeting at which a quorum is present, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee. c. POWERS OF THE COMMITTEE. The Committee shall have the authority to administer the Plan in its sole and absolute discretion; PROVIDED, HOWEVER, that the Committee shall have no authority to grant NQSOs, to determine the number of Shares subject to NQSOs or the price at which each Share covered by a NQSO may be purchased pursuant to the Plan, all of which shall be automatic as described in Section 8. To this end, the Committee is authorized to construe and interpret the Plan and to make all other determinations necessary or advisable for the administration of the Plan. Subject to the foregoing, any determination, decision or action of the Committee in connection with the construction, interpretation, administration or application of the Plan shall be final, conclusive and binding upon all Participants and any person validly claiming under or through a Participant. d. LIABILITY OF COMMITTEE MEMBERS. No member of the Board or the Committee will be liable for any action or determination made in good faith by the Board or the Committee with respect to the Plan or any grant or exercise of a NQSO thereunder. e. NQSO ACCOUNTS. The Committee shall maintain a journal in which a separate account for each Participant shall be established. Whenever NQSOs are granted to or exercised by a Participant, the Participant's account shall be appropriately credited or debited. Appropriate adjustment shall also be made in the journal with respect to each account in the event of an adjustment pursuant to Section 9(b). 5. EFFECTIVE DATE AND TERM OF THE PLAN. a. EFFECTIVE DATE OF THE PLAN. The Plan was adopted by the Board and became effective on September 19, 1996, subject to approval by the stockholders of the Company at a meeting duly called and held within twelve months following such date. b. TERM OF PLAN. No NQSO shall be granted pursuant to the Plan on or after September 19, 2006, but NQSOs theretofore granted may extend beyond that date. 6. SHARES SUBJECT TO THE PLAN. The maximum aggregate number of Shares which may be subject to NQSOs granted to Non-Employee Directors under the Plan shall be 100,000. The limitation on the number of Shares which may be subject to NQSOs under the Plan shall be subject to adjustment as provided in Section 9(b). If any NQSO granted under the Plan expires or is terminated for any reason without having been exercised in full, the Shares allocable to the -20- unexercised portion of such NQSO shall again become available for grant pursuant to the Plan. At all times during the term of the Plan, the Company shall reserve and keep available for issuance such number of Shares as the Company is obligated to issue upon the exercise of all then outstanding NQSOs. 7. SOURCE OF SHARES ISSUED UNDER THE PLAN. Common Stock issued under the Plan shall be authorized and unissued Shares and/or Treasury Shares. No fractional Shares shall be issued under the Plan. 8. NON-QUALIFIED STOCK OPTIONS. a. GRANT OF NQSOs. On the next succeeding business day following election of the Board at the 1996 Annual Meeting of Stockholders and each Annual Meeting of Stockholders thereafter, all Non-Employee Directors who will serve as a Director in the succeeding year shall automatically be granted NQSOs to purchase 1,000 Shares. With respect to any Non-Employee Director who is elected other than at the Annual Meeting of Stockholders, said Non-Employee Director shall automatically be granted a NQSO to purchase a pro-rata portion of the 1,000 Shares for his/her partial year of service on the Board. NQSOs shall be granted in the aforesaid manner until the date on which the Shares available for grant shall no longer be sufficient to permit grants of NQSOs covering 1,000 Shares to be made to each Non-Employee Director entitled to a grant as of such date, in which event the Shares then available for grant shall be allocated on a PRO RATA basis among the Non-Employee Directors entitled to a grant of NQSOs as of such date. The provisions of this Section shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules thereunder. b. EXERCISE PRICE. Each Share covered by a NQSO granted may be purchased at a purchase price equal to the Fair Market Value of a Share on the date of the NQSO grant. The provisions of this Section shall not be amended more than once every six months, other than to comport with changes in the Code, ERISA, or the rules thereunder. c. TERMS AND CONDITIONS. All NQSOs granted pursuant to the Plan shall be evidenced by a Stock Option Agreement (which need not be the same for each Participant or NQSO), approved by the Committee which shall be subject to the following express terms and conditions and to the other terms and conditions specified in this Section 8, and to such other terms and conditions as shall be determined by the Committee in its sole and absolute discretion which are not inconsistent with the terms of the Plan: (i) all NQSOs granted to a Participant shall vest and become first exercisable immediately upon grant. (ii) the failure of a NQSO to vest for any reason whatsoever shall cause the NQSO to expire and be of no further force or effect; -21- (iii) unless terminated earlier pursuant to Section 8(e), the term of each NQSO shall be ten years from the date of grant; (iv) NQSOs shall not be transferable by the Participant otherwise than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the Participant only by him or by his guardian or legal representative; (v) no NQSO or interest therein may be transferred, assigned, pledged or hypothecated by the Participant during his lifetime whether by operation of law or otherwise, or be made subject to execution, attachment or similar process; and (vi) payment for the Shares to be received upon exercise of a NQSO may be made in cash, in Shares (determined with reference to their Fair Market Value on the date of exercise) or any combination thereof. d. EXERCISE. The holder of a NQSO may exercise the same by filing with the Corporate Secretary of the Company and the Chairman a written election, in such form as the Committee may determine, specifying the number of Shares with respect to which such NQSO is being exercised. Such notice shall be accompanied by payment in full of the exercise price for such Shares. Notwithstanding the foregoing, the Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent the holder from exercising the Option with respect to the full number of Shares as to which the Option is then exercisable. e. TERMINATION OF NQSOs. NQSOs granted under the Plan shall be subject to the following events of termination: (i) in the event a Participant is removed from the Board for cause (as contemplated by the Company's by-laws), all unexercised NQSOs held by such Participant on the date of such removal (whether or not vested) will expire immediately; (ii) in the event a Participant is no longer a member of the Board, other than by reason of removal for cause, all NQSOs which have vested prior to such time shall expire twelve months thereafter unless by their terms they expire sooner; and (iii) in the event a Participant becomes an Officer or Employee of the Company or a Subsidiary (whether or not such Participant remains a member of the Board) all NQSOs which have vested prior to such time shall expire twelve months thereafter unless by their terms they expire sooner. 9. RECAPITALIZATION. a. CORPORATE FLEXIBILITY. The existence of the Plan and the NQSOs granted hereunder shall not affect or restrict in any way the right or power of the Board or the stockholders of the Company, in their sole and absolute discretion, to make, authorize or consummate any adjustment, recapitalization, -22- reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, common stock, preferred or prior preference stocks ahead of or affecting the Company's capital stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or any other grant of rights, issuance of securities, transaction, corporate act or proceeding and notwithstanding the fact that any such activity, proceeding, action, transaction or other event may have, or be expected to have, an impact (whether positive or negative) on the value of any NQSO. b. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Except as otherwise provided in Section 10 below and subject to any required action by the stockholders of the Company, in the event of any change in capitalization affecting the Common Stock of the Company, such as a stock dividend, stock split or recapitalization, the Committee shall make proportionate adjustments with respect to: (i) the aggregate number of Shares available for issuance under the Plan; (ii) the number of Shares subject to each grant under the Plan; (iii) the number and exercise price of Shares subject to outstanding NQSOs; and (iv) such other matters as shall be appropriate in light of the circumstances; PROVIDED, HOWEVER, that the number of Shares subject to any NQSO shall always be a whole number and that no such adjustment shall be made if the adjustment would cause the Plan to fail to comply with the "formula award" exception, as set forth in Rule 16b-3(c)(2)(ii) of the Exchange Act, for grants of NQSOs to non-employee directors. 10. CHANGE OF CONTROL. In the event of a Change of Control (as defined below), the Committee in its discretion may make provisions for the assumption of outstanding Options, or the substitution for outstanding Options of new incentive awards covering the stock of a successor corporation or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices so as to prevent dilution or enlargement of rights; provided, however, that no such adjustment shall be made if the adjustment would cause the Plan to fail to comply with the "formula award" exception, as set forth in Rule 16b-3(c)(2)(ii) of the Exchange Act, for grants of NQSOs to non-employee directors. A "Change of Control" will be deemed to occur on the date any of the following events occur: a. any person or persons acting together which would constitute a "group" for purpose of Section 13(d) of the Exchange Act (other than the Company, any Subsidiary and any entity beneficially owned by any of the foregoing), beneficially own (as defined in Rule 13d-3 under the Exchange Act) without Board approval, directly or indirectly, at least 50% of the total voting power of the Company entitled to vote generally in the election of the Board; b. the stockholders of the Company approve (i) a plan of complete liquidation of the Company, or (ii) an agreement providing for the merger or consolidation of the Company (A) in which the Company is not the continuing or surviving corporation (other than consolidation or merger with a wholly owned subsidiary of the Company in which all -23- Shares outstanding immediately prior to the effectiveness thereof are changed into or exchanged for the same consideration) or (B) pursuant to which the Shares are converted into cash, securities or other property, except a consolidation or merger of the Company in which the holders of the Shares immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the common stock of the continuing or surviving corporation immediately after such consolidation or merger or in which the Board immediately prior to the merger or consolidation would, immediately after the merger or consolidation, constitute a majority of the board of directors of the continuing or surviving corporation; or c. the stockholders of the Company approve an agreement (or agreements) providing for the sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company. 11. SECURITIES LAW REQUIREMENTS. No Shares shall be issued under the Plan unless and until: (i) the Company and the Participant have taken all actions required to register the Shares under the Securities Act of 1933, as amended, or perfect an exemption from the registration requirements thereof; (ii) any applicable requirement of Nasdaq or any stock exchange on which the Common Stock is listed has been satisfied; and (iii) any other applicable provision of state or federal law has been satisfied. The Company shall be under no obligation to register the Shares under the Securities Act of 1933, as amended, or to effect compliance with the registration or qualification requirements of any state securities laws. 12. AMENDMENT AND TERMINATION. a. MODIFICATIONS TO THE PLAN. The Board may, insofar as permitted by law, from time to time, with respect to any Shares at the time not subject to NQSOs, suspend or terminate the Plan or, subject to Sections 8(a) and 8(b), revise or amend the Plan in any respect whatsoever. However, unless the Board specifically otherwise provides, any revision or amendment that would cause the Plan to fail to comply with Rule 16b-3 or any other requirement of applicable law or regulation if such amendment were not approved by the stockholders of the Company shall not be effective unless and until such approval is obtained. b. RIGHTS OF PARTICIPANT. No amendment, suspension or termination of the Plan that would adversely affect the right of any Participant with respect to a NQSO previously granted under the Plan will be effective without the written consent of the affected Participant. 13. MISCELLANEOUS. a. STOCKHOLDERS' RIGHTS. No Participant and no beneficiary or other person claiming under or through such Participant shall acquire any rights as a stockholder of the Company by virtue of such Participant having been granted a NQSO under the Plan. No Participant and no beneficiary or other person claiming under or through such Participant will have any right, title -24- or interest in or to any Shares, allocated or reserved under the Plan or subject to any NQSO except as to Shares, if any, that have been issued or transferred to such Participant. No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to the date of exercise. b. OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the Plan shall prevent the Board from adopting other compensation arrangements, subject to stockholder approval if such approval is required. Such other arrangements may be either generally applicable or applicable only in specific cases. c. TREATMENT OF PROCEEDS. Proceeds realized from the exercise of NQSOs under the Plan shall constitute general funds of the Company. d. COSTS OF THE PLAN. The costs and expenses of administering the Plan shall be borne by the Company. e. NO RIGHT TO CONTINUE AS DIRECTOR. Nothing contained in the Plan or in any instrument executed pursuant to the Plan will confer upon any Participant any right to continue as a member of the Board or affect the right of the Company, the Board or the stockholders of the Company to terminate the directorship of any Participant at any time with or without cause. f. SEVERABILITY. The provisions of the Plan shall be deemed severable and the validity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. g. BINDING EFFECT OF PLAN. The Plan shall inure to the benefit of the Company, its successors and assigns. h. NO WAIVER OF BREACH. No waiver by any party hereto at any time of any breach by another party hereto of, or compliance with, any condition or provision of the Plan to be performed by such other party shall be deemed a waiver of the same, any similar or any dissimilar provisions of conditions at the same or at any prior or subsequent time. i. GOVERNING LAW. The Plan and all actions taken thereunder shall be enforced, governed and construed by and interpreted under the laws of the State of Nebraska applicable to contracts made and to be performed wholly within such State without giving effect to the principles of conflict of laws thereof. -25- j. HEADINGS. The headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan. 14. EXECUTION. To record the adoption of the Plan to read as set forth herein, the Company has caused the Plan to be signed by its President and attested by its Secretary on September 19, 1996. ISCO, INC. By: /s/ Douglas M. Grant ------------------------------------- Douglas M. Grant, President ATTEST: By: /s/ Philip M. Wittig ----------------------------------------- Philip M. Wittig, Assistant Secretary -26- -----END PRIVACY-ENHANCED MESSAGE-----