<PAGE>
As filed with the Securities and Exchange Commission on May 16, 1997
SEC Registration No.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------
QUALMARK CORPORATION
--------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1232688
---------------------- ----------------------
(State or other juris- (IRS Employer
diction of incorporation) Identification Number)
1329 W. 121st Avenue
Denver, CO 80234
---------------------------------
(Address of Principal Executive
Offices, including Zip Code)
1993 STOCK OPTION PLAN
1996 STOCK OPTION PLAN
QUALMARK CORPORATION NON-QUALIFIED OPTIONS
------------------------------------------
(Full title of the plan)
W. Preston Wilson
QUALMARK CORPORATION
1329 W. 121st Avenue
Denver, CO 80234
(303) 254-8800
------------------------------------------------
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent for Service)
Copies to
---------
Peter J. Jensen, Esq.
Chrisman, Bynum & Johnson, P.C.
1900 Fifteenth Street
Boulder, CO 80302
(303) 546-1300
----------------------
CALCULATION OF REGISTRATION FEE
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Proposed
Proposed maximum
Amount maximum aggregate Amount of
Title of securities to be offering price offering registration
to be registered registered per share (1) price (1) fee
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Common Stock
(No Par Value) 750,534 $3.75 $2,814,503 $852.88
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(1) Estimated solely for the purpose of calculating the registration fee.
Computed pursuant to Rule 457(c) using the average of the high and low bid
prices for the Registrant's Common Stock as quoted on the Nasdaq SmallCap Market
System on May 14, 1997.
<PAGE>
This Registration Statement registers 750,534 shares of the no par value
common stock ("Common Stock") of QualMark Corporation (the "Company") as
follows: (i) 159,746 shares offered pursuant to the QualMark Corporation 1993
Stock Option Plan (the "1993 Plan"). The 1993 Plan was adopted by the board
of directors of the Company and approved by the shareholders in March 1993.
(ii) 415,000 shares offered pursuant to the QualMark Corporation 1996 Stock
Option Plan (the "1996 Plan"). The 1996 Plan was adopted by the Company's
board of directors on November 2, 1995 and was approved by the Company's
shareholders on March 11, 1996; on March 6, 1997 the board of directors
approved an increase in the number of shares of Common Stock available for
grant of options thereunder to 415,000, which increase was approved by the
shareholders on May 8, 1997. (iii) 175,788 shares offered pursuant to
non-qualified option agreements between the Company and its Chief Executive
Officer.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents and all other documents subsequently filed by the
Company 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 the Common Stock offered hereby has been sold or which
deregisters all such Common Stock then remaining unsold, are hereby
incorporated herein by reference to be a part of this Registration Statement
from the date of filing such documents:
(a) The Company's latest annual report filed pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since the end of the fiscal year covered by the
annual reports referred to in (a) above; and
(c) The description of the Common Stock which is contained in the
Company's Registration Statement No. 333-1454-D filed under the Securities Act
of 1933.
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 Articles of Incorporation and Bylaws of the Company provide that the
Company shall indemnify to the fullest extent permitted by Colorado law any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding, by reason of the
fact that he or she is or was a director or officer of the Company or is or was
serving at the request of the Company in any capacity and in any other
corporation, partnership, joint venture, trust or other enterprise. The
Colorado Business Corporation Act (the "Colorado Act") permits the Company to
indemnify an officer or director who was or is a party or is threatened to be
made a party to any proceeding because of his or her position, if the officer or
director acted in good faith and in a manner he or she reasonably believed to be
in the best interests of the Company or, if such officer or director was not
acting in an official capacity for the Company, he or she reasonably believed
the conduct was not opposed to the best interests of the Company.
Indemnification is mandatory if the officer or director was wholly successful,
on the merits or otherwise, in defending such proceeding. Such indemnification
(other than as ordered by a court) shall be
II-1
<PAGE>
made by the Company only upon a determination that indemnification is proper
in the circumstances because the individual met the applicable standard of
conduct. Advances for such indemnification may be made pending such
determination. Such determination shall be made by a majority vote of a
quorum consisting of disinterested directors or of a committee of at least
two disinterested directors, or by independent legal counsel or by the
shareholders.
In addition, the Articles of Incorporation provide for the elimination, to
the extent permitted by Colorado law, of personal liability of directors to
the Company and its shareholders for monetary damages for breach of fiduciary
duty as directors. The Colorado Act provides for the elimination of personal
liability of directors for damages occasioned by breach of fiduciary duty,
except for liability based on the director's duty of loyalty to the Company,
liability for acts or omissions not made in good faith, liability for acts or
omissions involving intentional misconduct, liability based on payments of
improper dividends, liability based on violations of state securities laws,
and liability for acts occurring prior to the date such provision was added.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No. Description of Exhibit
- ----------- ----------------------
4.1 Form of Certificate of Common Stock.(1)
4.6 Form of Warrant issued to holders of 10% secured promissory
notes.(1)
5.1 Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of Chrisman, Bynum & Johnson, P.C. (included in
Exhibit 5.1).
23.2 Consent of Price Waterhouse LLP.
99.1 QualMark Corporation 1996 Stock Option Plan.
- ---------------------------
(1) Incorporated by reference from Registration Statement No. 333-1454-D on
Form SB-2 dated April 8, 1996.
ITEM 9 UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement and 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.
(2) 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE>
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 Denver, State of Colorado, on the
12th day of May, 1997.
QUALMARK CORPORATION
By: /s/ W. Preston Wilson
-------------------------------------
W. Preston Wilson, Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ W. Preston Wilson
- ----------------------- President, Chief Executive May 12, 1997
W. Preston Wilson Officer and Director
(Principal Executive Officer)
/s/ Vernon W. Settle
- ----------------------- Vice President of May 12, 1997
Vernon W. Settle Administration (Principal
Financial and Accounting Officer)
/s/ H. Robert Gill
- ----------------------- Chairman of the Board May 15, 1997
H. Robert Gill and Director
/s/ Charles A. French
- ----------------------- Director May 14, 1997
Charles A. French
/s/ Philip A. Gordon
- ----------------------- Director May 12, 1997
Philip A. Gordon
/s/ William B. Phillips
- ----------------------- Director May 13, 1997
William B. Phillips
II-3
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit No. Description of Exhibit Page Number
- ----------- ---------------------- -----------
4.1 Form of Certificate of Common Stock.(1)
4.6 Form of Warrant issued to holders of 10% secured
promissory notes.(1)
5.1 Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of Chrisman, Bynum & Johnson, P.C.
(included in Exhibit 5.1).
23.2 Consent of Price Waterhouse LLP.
99.1 QualMark Corporation 1996 Stock Option Plan.
- -------------------------
(1) Incorporated by reference from Registration Statement No. 333-1454-D on
Form SB-2 dated April 8, 1996.
<PAGE>
May 16, 1997
Qualmark Corporation
1329 S. 121st Avenue
Denver, CO 80234
Gentlemen:
We have acted as counsel to Qualmark Corporation ("Company") in connection
with the preparation and filing of a Registration Statement on Form S-8
("Registration Statement") covering registration under the Securities Act of
1933 of 750,534 shares of the Company's Common Stock, no par value per share
("Shares"). The Shares are offered as follows: (i) 159,746 shares pursuant
to the QualMark Corporation 1993 Stock Option Plan; (ii) 415,000 shares
pursuant to the QualMark Corporation 1996 Stock Option Plan; and (iii)
175,788 shares pursuant to non-qualified options. As such, we have examined
the Registration Statement, the Company's Articles of Incorporation, as
amended, its Bylaws and minutes of meetings of its Board of Directors.
Based on the foregoing, and assuming that the Shares will be sold according
to the Registration Statement at a time when effective and that there will be
compliance with all applicable securities laws involved in those states in
which the shares may be sold, we are of the opinion that, upon issuance of
the Shares according to the Registration Statement and receipt of the
consideration to be paid for the Shares, the Shares will be validly issued,
fully paid and nonassessable shares of Common Stock of the Company.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Sincerely,
CHRISMAN, BYNUM & JOHNSON, P.C.
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 21, 1997, which appears on
page 14 of the 1996 Annual Report to Shareholders of QualMark Corporation,
which is incorporated in the QualMark Corporation's Annual Report on Form
10-K for the year ended December 31, 1996.
Price Waterhouse LLP
Denver, Colorado
May 15, 1997
<PAGE>
QUALMARK CORPORATION
1996 STOCK OPTION PLAN
(AMENDED AS OF MARCH 6, 1997)
I. PURPOSE
The QUALMARK CORPORATION 1996 STOCK OPTION PLAN ("Plan") provides for the
grant of Stock Options to employees, directors and consultants of QUALMARK
Corporation (the "Company"), and such of its subsidiaries (as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code")
as the Board of Directors of the Company (the "Board") shall from time to
time designate ("Participating Subsidiaries") in order to advance the
interests of the Company and its Participating Subsidiaries through the
motivation, attraction and retention of key personnel.
II. INCENTIVE STOCK OPTIONS AND NON-INCENTIVE STOCK OPTIONS
The Stock Options granted under the Plan may be either:
a) Incentive Stock Options ("ISOs") which are intended to be
"Incentive Stock Options" as that term is defined in Section 422 of the
Code; or
b) Nonstatutory Stock Options ("NSOs") which are intended to be
options that do not qualify as "Incentive Stock Options" under Section 422
of the Code.
All Stock Options shall be ISOs unless the Option Agreement clearly
designates the Stock Options granted thereunder, or a specified portion
thereof, as NSOs. Subject to the other provisions of the Plan, a Participant
may receive ISOs and NSOs at the same time, provided that the ISOs and NSOs
are clearly designated as such, and the exercise of one does not affect the
exercise of the other.
Except as otherwise expressly provided herein, all of the provisions and
requirements of the Plan relating to Stock Options shall apply to ISOs and
NSOs.
III. ADMINISTRATION
This Plan shall be administered by the Board or by a committee composed
solely of two or more directors ("Committee") each of whom is a Non-Employee
Director. The Committee or the Board of Directors, as the case may be, shall
have full authority to administer this Plan, including authority to interpret
and construe any provision of this Plan and any Stock Options granted
hereunder, and to adopt such rules and regulations for administering this
Plan as it may deem necessary in order to comply with the requirements of the
Code or in order that Stock Options that are intended to be ISOs will be
classified as
<PAGE>
incentive stock options under the Code, or in order to conform to any
regulation or to any change in any law or regulation applicable thereto. The
Board of Directors may reserve to itself any of the authority granted to the
Committee as set forth herein, and it may perform and discharge all of the
functions and responsibilities of the Committee at any time that a duly
constituted Committee is not appointed and serving. All references in this
Plan to the "Committee" shall be deemed to refer to the Board of Directors
whenever the Board is discharging the powers and responsibilities of the
Committee, and to any special committee appointed by the Board to administer
particular aspects of this Plan.
All actions taken and all interpretations and determinations made by the
Board or Committee in good faith (including determinations of Fair Market
Value) shall be final and binding upon all Participants, the Company and all
other interested persons. No member of the Board or Committee shall be
personally liable for any action, determination or interpretation made in
good faith with respect to the Plan, and all members of the Board and
Committee shall, in addition to their rights as directors, be fully protected
by the Company with respect to any such action, determination or
interpretation. Rule 16b-3 under the Securities Exchange Act of 1934 (the
"Exchange Act") provides that the grant of a stock option to a director or
officer of a company will be exempt from the provisions of Section 16(b) of
the Act if the conditions set forth in said Rule are satisfied. Unless
otherwise specified by the Board or Committee, grants of Stock Options
hereunder to individuals who are officers or directors of the Company shall
be made in a manner that satisfies the conditions of said Rule.
IV. DEFINITIONS
4.1. "STOCK OPTION." A Stock Option is the right granted under the Plan
to an Employee, director, or consultant to purchase, at such time or times
and at such price or prices ("Option Price") as are determined by the Board
or Committee, the number of shares of Common Stock determined by the Board or
Committee.
4.2. "COMMON STOCK." A share of Common Stock means a share of authorized
but unissued or reacquired common stock of the Company.
4.3. "FAIR MARKET VALUE." If the Common Stock is traded publicly, the
Fair Market Value of a share of Common Stock on any date shall be the average
of the representative closing bid and asked prices, as quoted by the National
Association of Securities Dealers through NASDAQ (its automated system for
reporting quotes), for the date in question, or, if the Common Stock is
listed on the NASDAQ National Market System or is listed on a national stock
exchange, the officially quoted closing price on NASDAQ or such exchange, as
the case may be, on the date in question. If the Common Stock is not traded
publicly, the Fair Market Value of a share of Common Stock on any date shall
be determined in good faith by the Board of Directors or the Board or
Committee after such consultations with outside legal, accounting and other
experts as the Board of Directors or the Committee may deem advisable, and
the
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Board of Directors or the Committee shall maintain a written record of its
method of determining such value.
4.4. "EMPLOYEE." An Employee is an employee of the Company or any
Participating Subsidiary.
4.5. "PARTICIPANT." A Participant is an Employee, director or consultant
to whom a Stock Option is granted.
4.6. "NON-EMPLOYEE DIRECTOR." A Non-Employee Director is a person who
satisfies the definition of a "non-employee director" set forth in Rule 16b-3
under the Exchange Act or any successor rule or regulation, as it may be amended
from time to time.
4.7 "CORPORATE TRANSACTION." "Corporate Transaction" shall mean one or
more of the following transactions: (i) a merger or acquisition in which the
Company is not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Company's incorporation and
except for merger of the Company into any of its wholly owned subsidiaries;
(ii) the sale, transfer or other disposition of all or substantially all of
the Company's assets; or (iii) the transfer of shares of the Company
representing more than 50% of the total combined voting power of all Company
shares in one or more related transactions to a person or persons acting as a
group for voting purposes.
V. ELIGIBILITY AND PARTICIPATION
Grants of ISOs and NSOs may be made to Employees of the Company or any
Participating Subsidiary. Grants of NSOs may be made to directors of or
consultants to the Company or any Participating Subsidiary. Any director of
the Company or of a Participating Subsidiary who is also an Employee shall
also be eligible to receive ISOs. The Committee shall from time to time
determine the Participants to whom Stock Options shall be granted, the number
of shares of Common Stock subject to each Stock Option to be granted to each
such Participant, the Option Price of such Stock Options, all as provided in
this Plan. The Option Price of an NSO shall be determined by the Committee,
but shall be at least 85% of the Fair Market Value on the date the NSO is
granted. The Option Price of any ISO shall be not less than the Fair Market
Value of a share of Common Stock on the date on which the Stock Option is
granted. If an ISO is granted to an Employee who then owns stock possessing
more than 10% of the total combined voting power of all classes of stock of
the Company or any parent or subsidiary corporation of the Company, the
Option Price of such ISO shall be at least 110% of the Fair Market Value of
the Common Stock subject to the ISO at the time such ISOs are granted, and
such ISO shall not be exercisable after five years after the date on which it
was granted. Each Stock Option shall be evidenced by a written agreement
("Option Agreement") containing such terms and provisions as the Committee
may determine, subject to the provisions of this Plan.
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<PAGE>
VI. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
6.1. MAXIMUM NUMBER. The maximum aggregate number of shares of Common
Stock that may be made subject to Stock Options shall be 415,000 authorized
but unissued shares (post 3 for 2 stock split). The aggregate Fair Market
Value (determined as of the time the ISO is granted) of the stock as to all
ISOs granted to an individual which may first become exercisable in a
particular calendar year may not exceed $100,000. If any shares of Common
Stock subject to Stock Options are not purchased or otherwise paid for before
such Stock Options expire, such shares may again be made subject to Stock
Options.
6.2. CAPITAL CHANGES. In the event any changes are made to the shares of
Common Stock (whether by reason of reorganization, recapitalization, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or otherwise), appropriate adjustments shall be made in:
(i) the number of shares of Common Stock theretofore made subject to Stock
Options, and in the Option Price of said shares; and (ii) the aggregate
number of shares which may be made subject to Stock Options in the future.
If any of the foregoing adjustments shall result in a fractional share, the
fraction shall be disregarded, and the Company shall have no obligation to
make any cash or other payment with respect to such a fractional share.
VII. EXERCISE OF STOCK OPTIONS
7.1 TIME OF EXERCISE. Subject to the provisions of the Plan, the
Committee, in its discretion, shall determine the time when a Stock Option,
or a portion of a Stock Option, shall become exercisable, and the time when a
Stock Option, or a portion of a Stock Option, shall expire. Such time or
times shall be set forth in the Option Agreement evidencing such Stock
Options. A Stock Option shall expire, to the extent not exercised, no later
than the tenth anniversary of the date on which it was granted. The
Committee may accelerate the vesting of any Participant's Stock Option by
giving written notice to the Participant. Upon receipt of such notice, the
Participant and the Company shall amend the Option Agreement to reflect the
new vesting schedule. The acceleration of the exercise period of a Stock
Option shall not affect the expiration date of that Stock Option.
7.2 EXCHANGE OF OUTSTANDING STOCK. The Committee, in its sole
discretion, may permit a Participant to surrender to the Company shares of
the Common Stock previously acquired by the Participant as part of full
payment for the exercise of a Stock Option. Such surrendered shares shall be
valued at their Fair Market Value on the date of exercise.
7.3. USE OF PROMISSORY NOTE; EXERCISE LOANS. The Committee may, in its
sole discretion, impose terms and conditions, including conditions relating
to the manner and timing of payments, on the exercise of Stock Options. Such
terms and conditions may include, but are not limited to, permitting a
Participant to deliver to the Company his promissory note as full or partial
payment for the exercise of a Stock Option. The Committee, in its sole
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discretion, may authorize the Company to make a loan to a Participant in
connection with the exercise of Stock Options, or authorize the Company to
arrange or guarantee loans to a Participant by a third party.
7.4. TERMINATION OF EMPLOYMENT BEFORE EXERCISE. If the employment of a
Participant who was an employee of the Company or a Participating Subsidiary
when the Stock Option was granted shall terminate for any reason other than
the Participant's death or disability, any Stock Options granted to the
Participant, to the extent then exercisable under the applicable Option
Agreement(s), shall remain exercisable after the termination of his
employment for a period of three months (but not later than the specified
expiration date). If the Participant's employment is terminated because the
Participant is disabled within the meaning of Section 22(e)(3) of the Code,
any Stock Option granted to the Participant, to the extent then exercisable
under the applicable Option Agreement(s), shall remain exercisable after the
termination of his employment for a period of twelve months (but not later
than the specified expiration date). If the Participant dies while employed
by the Company or a Participating Subsidiary, or during the three-month or
twelve-month periods referred to above, his Stock Options may be exercised to
the extent that they were exercisable on the date of cessation of his
employment by his estate, or duly appointed representative, or beneficiary
who acquires the Stock Options by will or by the laws of descent and
distribution, but no further installments of his Stock Options will become
exercisable and each of his Stock Options shall terminate on the first
anniversary of the date of his death (but not later than the specified
expiration dates). If a Stock Option is not exercised during the applicable
period, it shall be deemed to have been forfeited and of no further force or
effect.
7.5. DISPOSITION OF FORFEITED STOCK OPTIONS. Any shares of Common Stock
subject to Stock Options forfeited by a Participant shall not thereafter be
eligible for purchase by the Participant, but may be made subject to Stock
Options granted to other Participants.
VIII. NO CONTRACT OF EMPLOYMENT
Nothing in this Plan shall confer upon the Participant the right to
continue in the employ of the Company, or any Participating Subsidiary, nor
shall it interfere in any way with the right of the Company, or any such
Participating Subsidiary, to discharge the Participant at any time for any
reason whatsoever, with or without cause. Nothing in this Article VIII shall
affect any rights or obligations of the Company or any Participant under any
written contract of employment.
IX. NO RIGHTS AS A STOCKHOLDER
A Participant shall have no rights as a stockholder with respect to any
shares of Common Stock subject to a Stock Option. Except as provided in
Section 6.2, no adjustment shall be made in the number of shares of Common
Stock issued to a Participant, or in any other rights of the Participant upon
exercise of a Stock Option by reason of any dividend,
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<PAGE>
distribution or other right granted to stockholders for which the record date
is prior to the date of exercise of the Participant's Stock Option.
X. ASSIGNABILITY
No Stock Option granted under this Plan, nor any other rights acquired by
Participant under this Plan, shall be assignable or transferable by a
Participant, other than by will or the laws of descent and distribution, and
Stock Options issued to a Participant are exercisable during his lifetime
only by him. Notwithstanding the preceding sentence, the Committee may, in
its sole discretion, permit the assignment or transfer of an NSO and the
exercise thereof by a person other than a Participant, on such terms and
conditions as the Committee in its sole discretion may determine. Any such
terms shall be set forth in the Option Agreement. In the event of a
Participant's death, the Stock Option may be exercised by the Personal
Representative of the Participant's estate or by the successor or successors
in interest determined under the Participant's will or under the applicable
laws of descent and distribution. The terms of any rights under this Plan in
the hands of a transferee or assignee shall be determined as if held by the
Participant and shall be of no greater extent or term than if the transfer or
assignment had not taken place.
XI. SPECIFIC CORPORATE TRANSACTIONS
11.1. At least twenty (20) days prior to the consummation of a
Corporate Transaction, the Company shall give Participants written notice of
the proposed Corporate Transaction. All Stock Options, to the extent not
previously exercised, shall terminate upon the consummation of such Corporate
Transaction and cease to be exercisable unless expressly assumed by the
successor corporation or parent thereof.
11.2. If the Company or its stockholders enter into an agreement
providing for a Corporate Transaction the vesting schedule of some or all Stock
Options may, at the sole discretion of the Committee, be accelerated so that all
or any portion of Stock Options outstanding under the Plan as of the day before
the consummation of such Corporate Transaction to the extent not exercised,
shall for all purposes under this Plan become exercisable as of such date.
XII. AMENDMENT
The Board of Directors may from time to time alter, amend, suspend or
discontinue the Plan, including, where applicable, any modifications or
amendments as it shall deem advisable in order that ISOs will be classified
as incentive stock options under the Code, or in order to conform to any
regulation or to any change in any law or regulation applicable thereto;
provided, however, that no such action shall adversely affect the rights and
obligations with respect to Stock Options at any time outstanding under the
Plan; and provided further that no such action shall, without the approval of
the stockholders of the Company, (i) increase the
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<PAGE>
maximum number of shares of Common Stock that may be made subject to Stock
Options (unless necessary to effect the adjustments required by Section 6.2),
(ii) materially modify the requirements as to eligibility for participation
in the Plan.
XIII. REGISTRATION OF OPTIONED SHARES
The Stock Options shall not be exercisable unless the purchase of such
optioned shares is pursuant to an applicable effective registration statement
under the Securities Act of 1933, as amended, or unless, in the opinion of
counsel to the Company, the proposed purchase of such optioned shares would
be exempt from the registration requirements of the Securities Act of 1933,
as amended, and from the registration or qualification requirements of
applicable state securities laws.
XIV. WITHHOLDING TAXES
The Company or Participating Subsidiary may take such steps as it may
deem necessary or appropriate for the withholding of any taxes (including the
withholding of shares of Common Stock otherwise issuable which have
appropriate Fair Market Value) which the Company or the Participating
Subsidiary is required by any law or regulation of any governmental
authority, whether federal, state or local, domestic or foreign to withhold
in connection with any Stock Options.
XV. BROKERAGE ARRANGEMENTS
The Committee, in its discretion, may enter into arrangements with one or
more banks, brokers, or other financial institutions to facilitate the
disposition of shares acquired upon exercise of Stock Options including,
without limitation, arrangements for the simultaneous exercise of Stock
Options and the sale of shares acquired upon exercise.
XVI. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor the
submission of this Plan to stockholders of the Company for approval shall be
construed as creating any limitations on the power or authority of the Board
of Directors to adopt such other or additional incentive or other
compensation arrangements of whatever nature as the Board of Directors may
deem necessary or desirable or preclude or limit the 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 Participating Subsidiary now has lawfully put into effect,
including, without limitation, any retirement, pension, savings and stock
purchase plan, insurance, death and disability benefits and executive
short-term incentive plans.
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XVII. EFFECTIVE DATE
This Plan was adopted by the Board of Directors and shareholders of the
Company on January 22, 1996 and became effective on January 22, 1996. No
Stock Options shall be granted subsequent to ten years after the effective
date of this Plan. Stock Options outstanding subsequent to ten years after
the effective date of this Plan shall continue to be governed by the
provisions of this Plan.
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