Registration No. ____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LCA-VISION INC.
(Exact name of issuer as specified in its Charter)
Delaware 11-2882328
(State of Incorporation) (I.R.S. Employer Identification No.)
7840 Montgomery Road, Cincinnati, Ohio 45236
(Address of Principal Executive Offices) (Zip Code)
LCA-VISION INC.
1998 LONG-TERM STOCK INCENTIVE PLAN
(Full Title of the Plan)
Stephen N. Joffe, CEO
LCA-Vision Inc.
7840 Montgomery Road
Cincinnati, Ohio 45236
(513) 792-9292
(Name, address, zip code, telephone number,
and area code of agent for service)
Copy To:
Charles F. Hertlein, Jr., Esq.
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
____________________________________________________________________________
CALCULATION OF REGISTRATION FEE
Title of Amount To Be Proposed Proposed Maximum Amount of
Securities Registered Maximum Offering Price* Registration
To Be Offering Fee
Registered Price Per
Share
Common Stock, 5,000,000 $2.31 $11,550,000* $3,210.90
no par value
____________________________________________________________________________
Approximate date of proposed commencement of sales hereunder:
As soon as practicable after the effective date of this Registration Statement
* Based pursuant to Rule 457(c) and 457(f)(1), on the average of the high and
low prices of the common stock of LCA-Vision Inc. on the Nasdaq SmallCap
Market March 11, 1999, a date within 5 days of the date on which this
Registration Statement is filed.<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information specified in Part I of Form S-8 is set forth in the
"Prospectus." The Prospectus is a part of the Section 10(a) Prospectus to
which this Registration Statement relates but it is not filed with this
Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
LCA-Vision Inc. (the "Registrant") states that the documents listed below are
incorporated by reference in this Registration Statement. Registrant further
states that all documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement.
- - The Registrant's Annual Report on Form 10-KSB for the year ended December
31, 1998.
- - The Registrant's Current Reports on Form 8-K filed since December 31, 1998.
- - All other reports filed pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act since December 31, 1998.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
The Registrant's amended bylaws provide, subject to the Registrant's
certificate of incorporation, that the Registrant shall indemnify each
director, officer, employee or agent of the Registrant to the full extent
permitted by the General Corporation Law of Delaware. The certificate of
incorporation of the Registrant provides that the Registrant shall, to the
fullest extent permitted by Section 145 of the Delaware General Corporation
Law, indemnify all persons whom it may indemnify pursuant thereto.
In general, under Section 145 of the General Corporation Law of Delaware, a
Delaware corporation is permitted to indemnify its present or former
officers, directors, employees and agents against liabilities and expenses
incurred by such persons in their capacities as such so long as they acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the corporation, except that no indemnification may be
made with respect of any claim, issue or matter to which a person is adjudged
liable to the corporation unless the court in which the action was brought
determines, upon application, that such person is entitled to indemnity. Any
indemnification provided for by law may be made by a corporation upon a
determination by (a) a majority vote of a quorum of directors who are not
parties to such suit or action, (b) independent legal counsel, if no quorum of
directors who are not parties to the suit or action is available or (c) the
stockholders that the person seeking indemnification has met the applicable
statutory standard of conduct. The statute also provides that a Delaware
corporation may advance attorneys' fees incurred by directors and officers,
employees, agents and others prior to the final outcome of a matter.
In addition, the Registrant has purchased insurance policies which provide
coverage for the acts and omissions of the Registrant's directors and officers
in certain situations.
Item 7. Exemption From Registration Claimed.
Not Applicable.
Item 8. Exhibits.
Exhibit No. Description
5, 23 (a) Opinion of Dinsmore & Shohl LLP as to the legality
of the securities being registered.
4 LCA-Vision Inc. 1998 Long-Term Stock Incentive
Plan*
23(b) Consent of PricewaterhouseCoopers LLP,
independent accountants
24 Power of Attorney**
______________________
* Incorporated by reference to Exhibit A to the Registrant's Proxy Statement
dated September 21, 1998 relating to a special meeting of stockholders held
October 16, 1998.
** Contained herein on the signature page
Item 9. Undertakings.
A. The undersigned registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement 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.
(ii) That, for the purpose of determining any 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.
(iii) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act 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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange 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.
C. 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
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 Act and will be governed by
the final adjudication of such issue.<PAGE>
1998 Long-Term Stock Incentive Plan
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 Cincinnati, State of Ohio on March 16, 1999.
LCA-Vision Inc.
By: /s/ Stephen N. Joffe
Stephen N. Joffe, Chairman and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Larry P. Rapp, as his true and lawful
attorney-in-fact and agent, with full power of substitution, to sign and
execute on behalf of the undersigned any amendment or amendments to this
Registration Statement on Form S-8, and to perform any acts necessary to be
done in order to file such amendment with exhibits thereto and other documents
in connection therewith with the Securities and Exchange Commission, and each
of the undersigned does hereby ratify and confirm all that said attorney-in-fact
and agent, or his substitutes, shall do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
Signature Title Date
/s/ Stephen N. Joffe Chairman and Chief March 16, 1999
Stephen N. Joffe Executive Officer
(Principal Executive
Officer)
/s/ Larry P. Rapp Chief Financial Officer and March 16, 1999
Larry P. Rapp Treasurer (Principal Financial
and Accounting Officer)
Directors: Date
/s/ John C. Hassan March 16, 1999
John C. Hassan
/s/ Stephen N. Joffe March 16, 1999
Stephen N. Joffe
/s/ John H. Gutfreund March 16, 1999
John H. Gutfreund
/s/ William O. Coleman March 16, 1999
William O. Coleman<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description Page
5, 23 (a) Opinion of Dinsmore & Shohl LLP as
to the legality of the securities
being registered.
4 LCA-Vision Inc. 1998 Long-Term Stock
Incentive Plan *
23(b) Consent of PricewaterhouseCoopers LLP,
independent accountants
24 Power of Attorney **
_________________
* Incorporated by reference to Exhibit A to the Registrant's Proxy Statement
dated September 21, 1998 relating to a special meeting of stockholders held
October 16, 1998.
** Contained herein on the signature page<PAGE>
Exhibits 5 and 23(a)
Charles F. Hertlein, Jr.
(513) 977-8315
March 16, 1999
LCA-Vision, Inc.
7840 Montgomery Road
Cincinnati, Ohio 45236
Ladies and Gentlemen:
This opinion is rendered for use in connection with the Registration Statement
on Form S-8, prescribed pursuant to the Securities Act of 1933, to be filed by
LCA-Vision, Inc. (the "Company") with the Securities and Exchange Commission
on or about March 16, 1999, under which 5,000,000 shares of the Company's
Common Stock without par value ("Common Stock") are to be registered.
We hereby consent to the filing of this opinion as Exhibits 5 and 23(a) to the
Registration Statement and to the reference to our name in the Registration
Statement.
As counsel to the Company, we have examined and are familiar with originals or
copies, certified or otherwise identified to our satisfaction, of such
statutes, documents, corporate records, certificates of public officials, and
other instruments as we have deemed necessary for the purpose of this opinion,
including the Company's Amended Certificate of Incorporation and Amended
Bylaws and the record of proceedings of the stockholders and directors of the
Company.
Based upon the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing and in good
standing as a corporation under the laws of the State of Delaware.
2. When the Registration Statement shall have been declared effective by order
of the Securities and Exchange Commission and up to 5,000,000 shares of
Company Common Stock have been issued and sold upon the terms set forth in the
Registration Statement, such shares will be legally and validly issued and
outstanding, fully-paid and nonassessable.
Very truly yours,
DINSMORE & SHOHL LLP
/s/ Charles F. Hertlein, Jr.
Charles F. Hertlein, Jr.
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-8 of our report dated February 5, 1999, on our audits of the
consolidated financial statements of LCA-Vision Inc. as of December 31, 1998
and 1997, and for each of the three years in the period ended December 31,
1998, which report is included in the Company's 1998 Annual Report on Form
10KSB.
PricewaterhouseCoopers LLP
Cincinnati, Ohio
March 16, 1999
EXHIBIT 4
LCA-VISION INC.
1998 LONG-TERM STOCK INCENTIVE PLAN
1. Purposes: The purposes of this Plan are (a) to secure
for the Company the benefits of incentives inherent in ownership
of Common Stock by Eligible Employees, (b) to encourage Eligible
Employees to increase their interest in the future growth and
prosperity of the Company and to stimulate and sustain
constructive and imaginative thinking by Eligible Employees, (c)
to further the identity of interest of those who hold positions of
major responsibility in the Company and its Subsidiaries with the
interests of the Company's shareholders, (d) to induce the
employment or continued employment of Eligible Employees and (e)
to enable the Company to compete with other organizations offering
similar or other incentives in obtaining and retaining the
services of competent employees.
2. Definitions: Unless otherwise required by the
context, the following terms when used in this Plan shall have the
meanings set forth in this Section 2.
Board of Directors: The Board of Directors of the Company.
Change of Control: The event which shall be deemed to have
occurred if either (i) after the date this Plan is adopted by the
Company's shareholders, without prior approval of the Board, any
"person" becomes a beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities; or (ii)
without prior approval of the Board, as a result of, or in
connection with, or within two years following, a tender or
exchange offer for the voting stock of the Company, a merger or
other business combination to which the Company is a party, the
sale or other disposition of all or substantially all of the
assets of the Company, a reorganization of the Company, or a proxy
contest in connection with the election of members of the Board of
Directors, the persons who were directors of the Company
immediately prior to any of such transactions cease to constitute
a majority of the Board of Directors or of the board of directors
of any successor to the Company (except for resignations due to
death, disability or normal retirement). For purposes of this
definition, a person shall be deemed the "beneficial owner" of any
securities (i) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; or (ii)
which such person or any of its Affiliates or Associates, has
directly or indirectly, (1) the right to acquire (whether such
right is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants
or options, or otherwise, or (2) the right to vote pursuant to any
agreement, arrangement or understanding; or (iii) which are
beneficially owned, directly or indirectly, by any other person
with which such person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any securities. For
purposes of this definition, a "person" shall mean any individual,
firm, company, partnership, other entity or group, and the terms
"Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as in effect on the
date the Plan is approved by the shareholders of the Company and
becomes effective.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The Committee of the Board of Directors
designated to administer this Plan pursuant to the provisions of
section 11.
Common Stock: The Common Stock of the Company, without par
value.
Company: LCA-Vision Inc., a Delaware corporation.
Eligible Employee: An employee (as such term is defined for
purposes of the Form S-8 registration statement promulgated by the
Securities and Exchange Commission) of the Company or of a
Subsidiary who in the opinion of the Committee can contribute
significantly to the growth and successful operations of the
Company or a Subsidiary. The recommendation of the grant of a
Stock Incentive to an employee by the Committee shall be deemed a
determination by the Committee that such employee is an Eligible
Employee.
Fair Market Value: As applied to any date, the mean of the
highest and lowest quoted selling prices of a share of Common
Stock on the composite tape of the Nasdaq National Market (or any
stock exchange on which the Company's Common Stock may be listed
in the future) on the date specified, or if the Common Stock was
not traded on such system on such date, on the next preceding date
on which the Common Stock was traded; provided, however, that, if
the Common Stock is not so quoted, Fair Market Value shall be
determined in accordance with the method approved by the Board of
Directors, and, provided further, if any of the foregoing methods
of determining Fair Market Value shall not be consistent with the
regulations of the Secretary of the Treasury or his delegate at
the time applicable to a Stock Incentive of the type involved,
Fair Market Value in the case of such Stock Incentive shall be
determined in accordance with such regulations and shall mean the
value as so determined.
Incentive Compensation: Bonuses, extra and other
compensation payable in addition to a salary or other base amount,
whether contingent or discretionary or required to be paid
pursuant to an agreement, resolution or arrangement, and whether
payable currently, or on a deferred basis, in cash, Common Stock
or other property, awarded by the Company or a Subsidiary prior or
subsequent to the date of the approval and adoption of this Plan
by the shareholders of the Company.
Incentive Option: An option granted under this Plan which is
designated to be an incentive stock option under the provisions of
Section 422 of the Code; and any provisions elsewhere in this Plan
or in any such Incentive Option which would prevent such option
from being an incentive stock option may be deleted and/or voided
retroactively to the date of the granting of such option, by
action of the Committee.
Nonqualified Option: An option granted under this Plan which
is not an incentive stock option under the provisions of Section
422 of the Code; and which is exercisable even though there is
outstanding an Incentive Option which was granted before the
granting of the Nonqualified Option to the same participant. Such
Nonqualified Option shall not be affected by any actions taken
retroactively as provided above with respect to Incentive Options.
Option: An option to purchase shares of Common Stock.
Outside Director: A duly elected or appointed member of the
Board of Directors who is not employed by the Company in any other
capacity.
Performance Objectives: Stated criteria which may, but need
not be set forth in a Stock Incentive at the discretion of the
Committee, the successful attainment of which is specified in the
Stock Incentive as a condition precedent to the issuance, transfer
or retention of some or all of the shares of Common Stock covered
by the Stock Incentive. Performance Objectives may be personal
and/or corporate in nature and shall include, but shall not be
limited to, objectives determined by reference to or changes in
(a) the Fair Market Value, book value or earnings per share of
Common Stock, or (b) sales and revenues, income, profits and
losses, return on capital employed, or net worth of the Company
(on a consolidated or unconsolidated basis) or of any or more of
its groups, divisions, Subsidiaries or departments, or (c) a
combination of two or more of the foregoing or other factors.
Plan: The 1998 Long-Term Stock Incentive Plan herein set
forth as the same may from time to time be amended.
Stock Award: An issuance or transfer of shares of Common
Stock at the time the Stock Incentive is granted or as soon
thereafter as practicable, or an undertaking to issue or transfer
such shares in the future.
Stock Incentive: A stock incentive granted under this Plan
in one of the forms provided for in section 3.
Subsidiary: A company or other entity designated by the
Committee in which the Company has a significant equity interest,
except that, with respect to grants of Incentive Options, the term
"Subsidiary" shall be deemed to mean a company or other form of
business association of which shares (or other ownership
interests) having 50% or more of the voting power are owned or
controlled, directly or indirectly, by the Company.
3. Grants of Stock Incentives:
(a) Subject to the provisions of this Plan, the Committee
may at any time, or from time to time, grant Stock Incentives
under this Plan to, and only to, Eligible Employees.
(b) Stock Incentives may be granted in the following
forms:
(i) an Option, or
(ii) a Stock Award, or
(iii) a combination of an Option and a Stock
Award.
(c) Stock Incentives contingently granted prior to the
approval of this Plan by the Company's stockholders but subject to
such approval shall be deemed to be granted hereunder as of the
date of such stockholder approval.
4. Stock Subject to this Plan:
(a) A total of 5,000,000 shares of Common Stock are
available for Stock Incentives granted under the Plan; provided,
that if another company is acquired by the Company or combines
with the Company, any of the Company's shares covered by or issued
as a result of the assumption or substitution of outstanding
grants of the acquired company would not be deemed issued under
the Plan and would not be subtracted from the shares of Common
Stock available for grant under the Plan; and provided further,
that if any shares of Common Stock that are subject to Stock
Incentives are forfeited, such shares shall again become available
under the Plan. For purposes of the preceding sentence:
(i) "Forfeited shares" means any shares issued
pursuant to grants of Stock Incentives which expire or terminate
for any reason in a calendar year without ever having been
exercised or as to which the recipient did not receive any
benefits of ownership (other than voting rights).
(ii) Shares of Common Stock subject to Stock
Incentives granted under this Plan may be either authorized but
unissued shares or shares held in the Company's treasury, or any
combination thereof, in the discretion of the Committee.
(b) The maximum amount of Common Stock with respect to
which Stock Incentives may be granted to any person during any
calendar year shall be 1,000,000 shares.
5. Options: Stock Incentives in the form of Options
shall be subject to the following provisions:
(a) Upon the exercise of an Option, the purchase price
shall be paid in cash by means reasonably acceptable to the
Company or, unless otherwise provided by the Committee (and
subject to such terms and conditions as are specified in the
Option or by the Committee), in shares of Common Stock delivered
to the Company by the optionee or by the withholding of shares
issuable upon exercise of the Option or in a combination of such
payment methods. Shares of Common Stock thus delivered or
withheld shall be valued at their Fair Market Value on the date of
the exercise. The purchase price per share shall be not less than
100% of the Fair Market Value of a share of Common Stock on the
date the Option is granted.
(b) Each Option shall be exercisable in full or in part
immediately, if so determined by the Committee at the time of
grant to an Eligible Employee who is not subject to Section 16 of
the Securities Exchange Act of 1934, or in the case of Eligible
Employees who are subject to such Section 16, not less than six
months after the date the Option is granted, or may become
exercisable in one or more installments at such later time or
times as the Committee shall determine. Unless otherwise provided
in the Option, an Option, to the extent it is or becomes
exercisable, may be exercised at any time in whole or in part
until the expiration or termination of the Option. Any term or
provision in any outstanding Option specifying that the Option not
be immediately exercisable or that it be exercisable in
installments may be modified at any time during the life of the
Option by the Committee, provided, however, no such modifications
of an outstanding Option shall, without the consent of the
optionee, adversely affect any Option theretofore granted to the
optionee.
(c) Each Option shall be exercisable during the life of
the optionee only by the optionee and, after the optionee's death,
only by the optionee's estate or by a person who acquired the
right to exercise the Option by will or the laws of descent and
distribution. An Option, to the extent that it shall not have
been exercised, shall terminate at the close of business on the
60th day following the date the optionee ceases to be an employee
or director of the Company or a Subsidiary, unless the optionee
ceases to be an employee or director because of resignation with
the consent of the Committee (which consent may be given before or
after resignation), or by reason of death or incapacity, in which
case any unexercised Option or portion thereof held by such person
shall terminate 18 months after such resignation, death or
incapacity, or at the Option's stated expiration date, whichever
is earlier. Any Option that is exercisable hereunder after the
date an optionee ceases to be an employee or director of the
Company for any reason may be exercised only to the extent it
could have been exercised as of the date the optionee ceases to be
an employee or director. A leave of absence for military or
governmental service or for other purposes shall not, if approved
by the Committee, be deemed a termination of employment within the
meaning of this paragraph (c). Notwithstanding the foregoing
provisions of this paragraph (c) or any other provisions of this
Plan, no Option shall be exercisable after expiration of the term
for which the Option was granted, which shall in no event exceed
ten years.
(d) Options shall be granted for such lawful
consideration as the Committee shall determine.
(e) No Option nor any right thereunder may be assigned or
transferred by the optionee except by will or the laws of descent
and distribution. If so provided in the Option or if so
authorized by the Committee and subject to such terms and
conditions as are specified in the Option or by the Committee, the
Company shall have the right, upon or without the request of the
holder of the Option and at any time or from time to time, to
cancel all or a portion of the Option then subject to exercise and
either (i) pay the holder an amount of money equal to the excess,
if any, of the Fair Market Value, at such time or times, of the
shares subject to the portion of the Option so canceled over the
aggregate purchase price of such shares, or (ii) issue or transfer
shares of Common Stock to the holder with a Fair Market Value, at
such time or times, equal to such excess.
(f) Each Option shall be evidenced by a written
instrument, which shall contain such terms and conditions
(including, without limitation, Performance Objectives), and shall
be in such form, as the Committee may determine, provided the
Option is consistent with this Plan and incorporates it by
reference. Notwithstanding the preceding sentence, an Option if
so recommended by the Committee, may include restrictions and
limitations in addition to those provided for in this Plan.
(g) Any federal, state or local withholding taxes payable
by an optionee upon the exercise of an Option shall be paid in
cash or, unless otherwise provided by the Committee, by the
surrender of shares of Common Stock or the withholding of shares
of Common Stock to be issued to the optionee, or in any
combination thereof, or in such other form as the Committee may
authorize from time to time. All such shares so surrendered or
withheld shall be valued at Fair Market Value on the date they are
surrendered to the Company or authorized to be withheld.
(h) Options may be either Incentive Options or
Nonqualified Options at the discretion of the Committee. Options
not otherwise designated shall be Nonqualified Options.
Notwithstanding any other provisions herein, the following
provisions shall apply to Incentive Options: (i) the exercise
price of any Incentive Option granted to any person who on the
date of grant owns (within the meaning of Section 425(d) of the
Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Subsidiary
shall not be less than 110% of the Fair Market Value of the stock
on the date of grant; (ii) the maximum term of any Incentive
Option granted hereunder shall be ten years, except that the
maximum term of any Incentive Option granted to a person described
in section 5(h)(i) above shall be five years; (iii) no Incentive
Option may be granted subsequent to the tenth anniversary of the
date of shareholder approval of this Plan; (iv) Incentive Options
may only be granted to persons who are employees of the Company or
any Subsidiary within the meaning of the Code; (v) the aggregate
Fair Market Value, determined as of the time of the grant, of the
shares of Common Stock with respect to which Incentive Stock
Options held by any Eligible Employee which are exercisable for
the first time by such Eligible Employee during any calendar year
under the Plan and under any other benefit plans of the Company
shall not exceed $100,000, or if different, the maximum limitation
in effect at the time of grant under Section 422 of the Code, or
any successor provision, and any regulations promulgated
thereunder; and (vi) Incentive Options may not be granted with
respect to more than an aggregate of 3,500,000 shares of Common
Stock under this Plan.
6. Stock Awards: Stock Incentives in the form of Stock
Awards shall be subject to the following provisions:
(a) A Stock Award shall be granted only in payment of
Incentive Compensation that has been earned or as Incentive
Compensation to be earned, including, without limitation,
Incentive Compensation awarded concurrently with or prior to the
grant of the Stock Award.
(b) For the purposes of this Plan, in determining the
value of a Stock Award, all shares of Common Stock subject to such
Stock Award shall be valued at not less than 100% of the Fair
Market Value of such shares on the date such Stock Award is
granted, regardless of whether or when such shares are issued or
transferred to the Eligible Employee and whether or not such
shares are subject to restrictions which affect their value.
(c) The number of shares of Common Stock which may be
granted under the Plan as Stock Awards shall not exceed 500,000
shares of Common Stock (i.e.,10% of the maximum aggregate number
of shares of Common Stock that may be granted to participants in
the Plan).
(d) Shares of Common Stock subject to a Stock Award may
be issued or transferred to the Eligible Employee at the time the
Stock Award is granted, or at any time subsequent thereto, or in
installments from time to time, as the Committee shall determine.
In the event that any such issuance or transfer shall not be made
to the Eligible Employee at the time the Stock Award is granted,
the Committee may provide for payment to such Eligible Employee,
either in cash or in shares of Common Stock from time to time or
at the time or times such shares shall be issued or transferred to
such Eligible Employee, of amounts not exceeding the dividends
which would have been payable to such Eligible Employee in respect
of such shares (as adjusted under section 8) if they had been
issued or transferred to such Eligible Employee at the time such
Stock Award was granted. Any amount payable in shares of Common
Stock under the terms of a Stock Award may, at the discretion of
the Company, be paid in cash, on each date on which delivery of
shares would otherwise have been made, in an amount equal to the
Fair Market Value on such date, of the shares which would
otherwise have been delivered.
(e) A Stock Award shall be subject to such terms and
conditions, including, without limitation, restrictions on sale or
other disposition of the Stock Award or of the shares issued or
transferred pursuant to such Stock Award, as the Committee shall
determine; provided, however, that upon the issuance or transfer
of shares pursuant to a Stock Award, the recipient shall, with
respect to such shares, be and become a shareholder of the Company
fully entitled to receive dividends, to vote and to exercise all
other rights of a shareholder except to the extent otherwise
provided in the Stock Award. The Committee may, in its sole
discretion, but shall not be required to, specify in any Stock
Award that the issuance, transfer and/or retention of some or all
of the shares of Common Stock covered by the Stock Award shall be
subject to the attainment of Performance Objectives. Each Stock
Award shall be evidenced by a written instrument in such form as
the Committee shall determine, provided such written instrument is
consistent with this Plan and incorporates it by reference.
(f) In the event the holder of shares of Common Stock
subject to a Stock Award dies prior to the time such shares are no
longer subject to forfeiture pursuant to the terms of the Stock
Award, the estate of such holder may retain such shares subject to
the restrictions set forth in the Stock Award.
7. Combinations of Options and Stock Awards: Stock
Incentives authorized by paragraph (b)(iii) of Section 3 in the
form of combinations of Options and Stock Awards, shall be subject
to the following provisions:
(a) A Stock Incentive may be a combination of any form of
Option with any form of Stock Award; provided, however, that the
terms and conditions of such Stock Incentive pertaining to an
Option are consistent with Section 5 and the terms and conditions
of such Stock Incentive pertaining to a Stock Award are consistent
with Section 6.
(b) Such combination Stock Incentive shall be subject to
such other terms and conditions as the Committee may determine,
including, without limitation, a provision terminating in whole or
in part a portion thereof upon the exercise in whole or in part of
another portion thereof. Such combination Stock Incentive shall
be evidenced by a written instrument in such form as the Committee
shall determine, provided it is consistent with this Plan and
incorporates it by reference.
8. Nondiscretionary Grants to Outside Directors: Upon
election or appointment to the Board of Directors, an Outside
Director shall automatically be granted a Nonqualified Option to
purchase 75,000 shares of the Company's Common Stock. In
addition, at every annual organizational meeting of the Board of
Directors following the Company's regular annual meeting of
stockholders, each Outside Director who is then serving on the
Board of Directors shall receive an automatic grant of a
Nonqualified Option to purchase 12,500 shares of Common Stock;
provided, however, that the number of shares subject to such
annual options granted to Outside Directors who have not yet
served a full year on the Board of Directors shall be prorated
such that those Outside Directors shall receive an Option to
purchase a percentage of 12,500 shares commensurate with the
actual portion of the year that such director served on the Board
of Directors. The following additional provisions shall apply to
Nonqualified Options granted under this Section 8:
(a) Each such Option shall terminate not later than five
years from the date of grant thereof; and
(b) Each such Option shall not be exercisable for the
first year after grant. On and after the first anniversary of the
grant date, such an option shall be exercisable as to 50% of the
shares covered thereby, and on and after the second anniversary of
the grant date, such Option shall be exercisable as to 100% of the
shares covered thereby to the extent not previously exercised.
9. Adjustment Provisions: In the event that any
recapitalization, reclassification, forward or reverse split
(except as provided below) of shares of Common Stock, or any
similar transaction shall be effected, or the outstanding shares
of Common Stock are, in connection with a merger or consolidation
of the Company or a sale by the Company of all or a part of its
assets, exchanged for a different number of class of shares of
stock or other securities of the Company or for shares of the
stock or other securities of any other company, or a record date
for determination of holders of Common Stock entitled to receive a
dividend payable in Common Stock shall occur, (a) the number and
class of shares or other securities that may be issued or
transferred pursuant to Stock Incentives or with respect to which
a cash payment pursuant to the Stock Incentive is determinable,
(b) the number and class of shares or other securities which have
not been issued or transferred under outstanding Stock Incentives,
(c) the purchase price to be paid per share or other security
under outstanding Options, and (d) the price to be paid by the
Company or a Subsidiary for shares or other securities issued or
transferred pursuant to Stock Incentives which are subject to a
right of the Company or a Subsidiary to reacquire such shares or
other securities, shall in each case be equitably adjusted.
Notwithstanding the foregoing or any other provision in this Plan,
there shall be no adjustment to the number of shares available
under this Plan for Stock Incentives, or in any of the Plan
limitations upon numbers of shares underlying Stock Incentives
granted to individuals, or available for Stock Awards, as the
result of a reverse stock split approved by the Company's
stockholders at the same stockholders' meeting this Plan is
approved by the stockholders.
10. Acceleration: In the event of a Change of Control,
any Stock Incentives which have then been outstanding hereunder
for at least six months shall be immediately exercisable (without
regard to any limitation imposed by the Plan or the Committee at
the time the Stock Incentive was granted, which permits all or any
part of the Stock Incentive to be exercised only after the lapse
of time or the attainment of Performance Objectives or other
conditions to exercise), and will remain exercisable until the
expiration of the Stock Incentive.
11. Term: This Plan shall be deemed adopted and shall
become effective on the date it is approved and adopted by the
shareholders of the Company. This Plan shall remain in effect
until such time as it is terminated by the Board of Directors;
provided, however, that no Incentive Options may be granted
hereunder after August 31, 2008.
12. Administration:
(a) The Plan shall be administered by the Committee,
which shall consist of not less than two directors of the Company
designated by the Board of Directors in accordance with the Bylaws
of the Company; provided, however, that no director shall be
designated as or continue to be a member of the Committee unless
such director shall at the time of designation and service be both
(i) a "disinterested person" within the meaning of Rule 16b-3 of
the Securities and Exchange Commission (or any successor provision
at the time in effect) and (ii) an "outside director" within the
meaning of Section 162(m) of the Code and any regulations
promulgated thereunder by the Department of the Treasury. Grants
of Stock Incentives may be recommended by the Committee either
with or without consultation with employees, but, anything in this
Plan to the contrary notwithstanding, the Committee shall have
full authority to act in the matter of selection of all Eligible
Employees and in recommending Stock Incentives to be granted to
them.
(b) The Committee may establish such rules and
regulations, not inconsistent with the provisions of this Plan, as
it deems necessary to determine eligibility to participate in this
Plan and for the proper administration of this Plan, and may amend
or revoke any rule or regulation so established. The Committee
may make such determinations and interpretations under or in
connection with this Plan as it deems necessary or advisable. All
such rules, regulations, determinations and interpretations shall
be binding and conclusive upon the Company, its Subsidiaries, its
shareholders and all employees, and upon their respective legal
representatives, beneficiaries, successors and assigns and upon
all other persons claiming under or through any of them.
(c) Members of the Board of Directors and members of the
Committee acting under this Plan shall be fully protected in
relying in good faith upon the advice of counsel and shall incur
no liability except for gross negligence or willful misconduct in
the performance of their duties.
13. Acquisitions: Notwithstanding Section 4(a), if the
Company or any Subsidiary should merge or consolidate with, or
purchase stock or assets or otherwise acquire the whole or part of
the business of, another company, the Company in connection
therewith, upon the recommendation of the Committee and the
approval of the Board of Directors, (a) may assume, in whole or in
part and with or without modifications or conditions, any stock
options granted by the acquired company to its employees, in their
capacity as such, or (b) may grant new Options in substitution
therefore; provided that the granting of an Option with the terms
and conditions of the assumed or substitute options is
permissible under either this Plan or a plan approved by the
shareholders of the acquired company. For the purposes of the
preceding sentence, the permissibility of the granting of an
option under a plan shall be determined as of the date of grant of
the original option by the acquired company and not as of the date
of assumption or substitution by the Company.
14. General Provisions:
(a) Nothing in this Plan nor in any instrument executed
pursuant hereto shall confer upon any employee any right to
continue in the employ of the Company or a Subsidiary, or shall
affect the right of the Company or of a Subsidiary to terminate
the employment of any employee with or without cause.
(b) No shares of Common Stock shall be issued or
transferred pursuant to a Stock Incentive unless and until all
legal requirements applicable to the issuance or transfer of such
shares, in the opinion of counsel to the Company, have been
complied with. In connection with any such issuance or transfer
the person acquiring the shares shall, if requested by the
Company, give assurances, satisfactory to counsel to the Company,
that the shares are being acquired for investment and not with a
view to resale or distribution thereof and assurances in respect
of such other matters as the Company or a Subsidiary may deem
desirable to assure compliance with all applicable legal
requirements. No employee (individually or as a member of a
group), and no beneficiary or other person claiming under or
through him, shall have any right, title or interest in or to any
shares of Common Stock allocated or reserved for the purposes of
this Plan or subject to any Stock Incentive except as to shares of
Common Stock, if any, as shall have been issued or transferred to
him.
(c) The Company or a Subsidiary may, with the approval of
the Committee, enter into an agreement or other commitment to
grant a Stock Incentive in the future to a person who is or will
be an Eligible Employee at the time of grant, and, notwithstanding
any other provision of this Plan, any such agreement or commitment
shall not be deemed the grant of a Stock Incentive until the date
on which the Company takes action to implement such agreement or
commitment.
(d) In the case of a grant of a Stock Incentive to an
employee of a Subsidiary, such grant may, if the Committee so
directs, be implemented by the Company issuing or transferring the
shares, if any, covered by the Stock Incentive to the Subsidiary,
for such lawful consideration as the Committee may specify, upon
the condition or understanding that the Subsidiary will transfer
the shares to the employee in accordance with the terms of the
Stock Incentive specified by the Committee pursuant to the
provisions of this Plan. Notwithstanding any other provision
hereof, such Stock Incentive may be issued by and in the name of
the Subsidiary and shall be deemed granted on the date it is
approved by the Committee, on the date it is delivered by the
Subsidiary, or on such other date between said two dates, as the
Committee shall specify.
(e) The Committee shall have full power and authority to
determine whether, to what extent and under what circumstances any
Stock Incentive shall be canceled or suspended by the Company. In
particular, but without limitation, all outstanding Stock
Incentives to any Eligible Employee may be canceled if the
Eligible Employee, without the consent of the Committee, while
employed by the Company or after termination of such employment,
engages in any activity which is in competition with the Company,
including but not limited to an activity whereby the Company's or
its Subsidiary's trade secrets or confidential information may
conceivably be divulged, or is otherwise detrimental to the
Company's best interest, as determined by the Committee.
(f) The Company or a Subsidiary may make such provisions
as it may deem appropriate for the withholding of any taxes which
the Company or a Subsidiary determines it is required to withhold
in connection with any Stock Incentive.
(g) Nothing in this Plan is intended to be a substitute
for, or shall preclude or limit the establishment or continuation
of, any other plan, practice or arrangement for the payment of
compensation or fringe benefits to employees generally, or to any
class or group of employees, which the Company or any Subsidiary
or other affiliate now has or may hereafter lawfully put into
effect, including, without limitation, any retirement, pension,
group insurance, stock purchase, stock bonus or stock option plan.
(h) The Plan and any rules and regulations relating to
the Plan shall be determined in accordance with the laws of the
State of Delaware and applicable federal law.
(i) If any provision of the Plan is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction, or
would disqualify the Plan or any stock option or Stock Award under
any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws or if
it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of
the Plan, it shall be stricken and the remainder of the Plan shall
remain in full force and effect.
(j) Stock options or Stock Awards may be granted to
Eligible Employees who are foreign nationals or employed outside
the United States, or both, on such terms and conditions different
from those specified in the Plan as may, in the judgment of the
Committee, be necessary or desirable in order to recognize
differences in local law or tax policy. The Committee also may
impose conditions on the exercise or vesting of stock options or
Stock Awards in order to minimize the Company's obligation with
respect to tax equalization for Eligible Employees on assignments
outside their home country.
15. Amendments and Discontinuance:
(a) This Plan may be amended by the Board of Directors
upon the recommendation of the Committee, provided that, without
the approval of the stockholders of the Company, no amendment
shall be made which (i) increases the maximum aggregate number of
shares of Common Stock that may be issued or transferred pursuant
to Stock Incentives as provided in Section 4, (ii) withdraws the
administration of this Plan from the Committee or amends the
provisions of paragraph (a) of section 11 with respect to
eligibility and disinterest of members of the Committee, (iii)
permits any person who is not at the time an Eligible Employee of
the Company or of a Subsidiary to be granted a Stock Incentive,
(iv) permits any Option to be exercised more than ten years after
the date it is granted, (v) amends Section 10 to extend the date
set forth therein, or (vi) amends this Section 15.
(b) The Board of Directors may by resolution adopted by a
majority of the entire Board of Directors discontinue this Plan.
(c) No amendment or discontinuance of this Plan by the
Board of Directors or the stockholders of the Company shall,
without the consent of the employee, adversely affect any Stock
Incentive theretofore granted to him.
