As filed with the Securities and Exchange Commission on November 24, 1997
SEC Registration No. 333-_____
---------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
NEWRIDERS, INC.
----------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Nevada 77-0390222
--------------------------------- ------------------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
567 San Nicolas Drive, Suite 400
Newport Beach, California 92660
-----------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
NEWRIDERS, INC. 1997 EXECUTIVE INCENTIVE COMPENSATION PLAN
(and other plans as designated in footnote 2, below)
--------------------------------------------------
(FULL TITLE OF THE PLAN)
WILLIAM R. NORDSTROM
EXECUTIVE VICE PRESIDENT - ADMINISTRATION AND FINANCE
567 SAN NICOLAS DRIVE, SUITE 400
NEWPORT BEACH, CALIFORNIA 92660
-----------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(714) 718-4630
-----------------------------------------------
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copies to:
Robert N. Wilkinson, Esq.
Suite 900 - Gateway Tower East
10 East South Temple
Salt Lake City, Utah 84133
(801) 530-7370
Fax (801) 364-9127
- ----------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED SHARE (1) PRICE (1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------
COMMON STOCK 5,140,000
$0.001 PAR VALUE SHARES (2) $ 4.50 $ 23,130,000 $ 7,009.09
(1) Estimated solely for the purpose of calculating the registration fee and computed in
accordance with Rule 457(h) of the Securities Act of 1933, as amended, on the basis of
the average of the high and low sale price of the Common Stock on November 20, 1997.
(2) Of the 5,140,000 shares being registered, 5,000,000 shares are being registered for
issuance pursuant to the Newriders, Inc. 1997 Executive Incentive Compensation Plan,
50,000 shares are being registered for issuance pursuant to a Compensation Letter
Agreement with John Martin, 50,000 shares are being registered for issuance pursuant to
a Corporate Development Consulting Agreement, and 40,000 shares are being registered
pursuant to an Agreement Concerning Legal Services.
</TABLE>
<PAGE>
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant hereby incorporates by reference into this Registration
Statement the following documents filed with the Securities and Exchange
Commission (the "Commission") by the Registrant:
(a) the Registrant's effective Registration Statement on Form 10-SB
filed on June 30, 1997;
(b) all other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), since the Registrant's Registration
Statement on Form 10-SB became effective on August 29, 1997; and
(c) the description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 10-SB filed on June
30, 1997, including any amendment or report filed for the purpose
of updating such description.
In addition, all documents subsequently filed by the Registrant pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act of 1934, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies of supersedes such
statement. Any such statements so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
The Registrant's shares of Common Stock registered hereby are included in
a class of securities registered under Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The only statutes, charter provisions, by-laws, contracts or other
arrangements under which any controlling person, director or officer of the
Company is insured or indemnified in any manner against any liability which he
may incur in his capacity as such, are as follows:
A. Sections 78.037, 78.751 and 78.752 of the Nevada Revised Statutes
offer limitation of liability protection for officers and directors and/or
indemnification protection of officers, directors, employees and agents of the
Company, and provide as follows:
78.751. Articles of incorporation: Optional provisions.
The articles of incorporation may also contain:
1. A provision eliminating or limiting the personal liability of a
director officer to the corporation or its stockholders for damages for breach
of fiduciary duty as a director or officer, but such a provision must not
eliminate or limit the liability of a director or officer for:
(a) Acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law; or
(b) The payment of distributions in violation of NRS 78.300.
2. Any provision, not contrary to the laws of this state, for the
management of the business and for the conduct of the affairs of the
corporation, and any provision creating, defining, limiting or regulating the
powers of the corporation or the rights, powers or duties of the directors,
and the stockholders, or any class of the stockholders, or the holders of
bonds or other obligations of the corporation, or governing the distribution
or division of the profits of the corporation.
78.751. Indemnification of officers, directors, employees and agents;
advancement of expenses.
1. A corporation may indemnify 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, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with the action, suit or proceeding if he acted in good faith
and in a manner which is reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which
such a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense
of any claim, issue or matter therein, he must be indemnified by the
corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a
court or advanced pursuant to subsection 5, must be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
a. By the stockholders;
b. By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or
proceeding;
c. If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
d. If a quorum consisting of directors who were not parties to
the act, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
5. The articles of incorporation, the bylaws or an agreement made by
the corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must be
paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking
by or on behalf of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by the corporation. The provisions of this
subsection do not affect any rights to advancement of expenses to which
corporate personnel other than directors or officers may be entitled under any
contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
a. Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, for either an action in his
official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant
to subsection 2 or for the advancement of expenses made pursuant to
subsection 5, may not be made to or on behalf of any director or
officer if a final adjudication establishes that his acts or omissions
involved intentional misconduct, fraud or a knowing violation of the
law and was material to the cause of action.
b. Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
78.752. Insurance and other financial arrangements against liability of
directors, officers, employees and agents.
1. A corporation may purchase and maintain insurance or make other
financial arrangements on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise for
any liability asserted against him and liability and expenses incurred by him
in his capacity as a director, officer, employee or agent, or arising out his
status as such, whether or not the corporation has the authority to indemnify
him against such liability and expenses.
2. The other financial arrangements made by the corporation pursuant
to subsection 1 may include the following:
a. The creation of a trust fund.
b. The establishment of a program of self-insurance.
c. The securing of its obligation of indemnification by granting
a security interest or other lien on any assets of the corporation.
d. The establishment of a letter of credit, guaranty or surety.
No financial arrangement made pursuant to this subsection may provide
protection for a person adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for intentional misconduct,
fraud or a knowing violation of law, except with respect to the advancement of
expenses or indemnification ordered by a court.
3. Any insurance or other financial arrangement made on behalf of a
person pursuant to this section may be provided by the corporation or any
other person approved by the board of directors, even if all or part of the
other person's stock or other securities is owned by the corporation.
4. In the absence of fraud:
a. The decision of the board of directors as to the propriety of
the terms and conditions of any insurance or other financial arrangement
made pursuant to this section and the choice of the person to provide
the insurance or other financial arrangement is conclusive; and
b. The insurance or other financial arrangement:
(1) Is not void or voidable; and
(2) Does not subject any director approving it to personal
liability for his action, even if a director approving the insurance
or other financial arrangement is a beneficiary of the insurance or
other financial arrangement.
5. A corporation or its subsidiary which provides self-insurance for
itself or for another affiliated corporation pursuant to this section is not
subject to the provisions of Title 57 of NRS.
B. The TWELFTH article of the Company's Articles of Incorporation
limits the liability exposure of officers and directors of the Company for
damages. It provides as follows:
TWELFTH. No director or officer of the Corporation shall be personally
liable to the Corporation or any of its stockholders for damages for breach of
fiduciary duty as a director or officer involving any act or omission of any
such director or officer; provided however, that the foregoing provision shall
not eliminate or limit the liability of a director or officer (i) for acts or
omissions which involve intentional misconduct, fraud or a knowing violation
of law, or (ii) the payment of dividends in violation of Section 78.300 of the
Nevada Revised Statutes. Any repeal or modification of this Article by the
stockholders of the Corporation shall be prospective only and shall not
adversely affect any limitation on the personal liability of a director of
officer of the Corporation or acts of omissions prior to such repeal or
modification.
C. Article VI of the Company's By-Laws provides for the following
indemnification protections:
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Except as hereinafter stated otherwise, the Corporation shall indemnify
all of its officers and directors, past, present and future, against any and
all expenses incurred by them, and each of them including but not limited to
legal fees, judgments and penalties which may be incurred, rendered or levied
in any legal action brought against any or all of them for or on account of
any act or omission alleged to have been committed while acting within the
scope of their duties as officers or directors of this Corporation.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
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.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See "Exhibit Index" on page II-9 below.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual 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 this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the 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 Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Newport Beach, State of California on November 20,
1997.
NEWRIDERS, INC.
/s/ John E. Martin
---------------------------
John E. Martin
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints John E. Martin and William R. Nordstrom
his true and lawful attorneys-in-fact, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments, including any
post-effective amendments, to this Registration Statement, and to file the
same, with exhibits thereto, and other documents to be filed in connection
therewith, with the Commission, hereby ratifying and confirming all that said
attorneys-in-fact or their substitutes, each acting alone, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
- --------- -------------------- --------------
/s/ John E. Martin Chairman, Chief Executive November 20, 1997
- ----------------------------- Officer and Director
John E. Martin (principal executive officer)
/s/ William R. Nordstrom Executive Vice President - November 20, 1997
- ----------------------------- Administration and Finance and
William R. Nordstrom Director (principal executive
officer and principal accounting
officer)
/s/ William E. Prather Director November 20, 1997
- -----------------------------
William E. Prather
/s/ Michael T. Purcell Vice President, Chief November 20, 1997
- ----------------------------- Marketing Officer and
Michael T. Purcell Director
/s/ Leon Hatcher Vice President, Chief November 20, 1997
- ----------------------------- Operating Officer and
Leon Hatcher Director
/s/ C.W. Doyle Director November 20, 1997
- -----------------------------
C.W. Doyle
- ----------------------------- Director November --, 1997
Wayne L. Knyal
/s/ Daniel Gallery Director November 20, 1997
- -----------------------------
Daniel Gallery
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
4.1 Articles of Incorporation(1) Incorporated by Reference
4.2 Amendment to Articles of Incorporation(2) Incorporated by Reference
4.3 Bylaws(3) Incorporated by Reference
5.1 Opinion of Robert N. Wilkinson, Esq. __________
10.1 Newriders, Inc. 1997 Executive Incentive __________
Compensation Plan
10.2 Compensation Letter Agreement with __________
John Martin dated March 11, 1997
10.3 Corporate Development Consulting __________
Agreement, dated February 14, 1997
10.4 Agreement Concerning Legal Services __________
between Newriders, Inc. and Bolen,
Fransen & Boostrom, LLP
23.1 Consent of Jones, Jensen & Company __________
24.1 Power of Attorney is included in the Signatures Section
"Signatures" section of this
Registration Statement
- -----------------------------
(1) Incorporated by reference from Exhibit 2.1 of the Registrant's
Registration Statement on Form 10-SB filed on June 30, 1997.
(2) Incorporated by reference from Exhibit 2.2 of the Registrant's
Registration Statement on Form 10-SB filed on June 30, 1997.
(3) Incorporated by reference from Exhibit 2.3 of the Registrant's
Registration Statement on Form 10-SB filed on June 30, 1997.
<PAGE>
EXHIBIT 5.1
Robert N. Wilkinson, Esq.
ATTORNEY AT LAW
GATEWAY TOWER EAST SUITE 900
10 EAST SOUTH TEMPLE
SALT LAKE CITY, UTAH 84133
TEL.(801) 530-7370
FAX (801) 364-9127
November 20, 1997
Newriders, Inc.
567 San Nicolas Drive, Suite 400
Newport Beach, California 92660
Re: REGISTRATION STATEMENT ON FORM S-8 FOR NEWRIDERS, INC.'S 1997
EXECUTIVE INCENTIVE COMPENSATION PLAN
On the date hereof, Newriders, Inc., a Nevada corporation (the
"Company"), transmitted for filing with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-8 (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Act"). The
Registration Statement relates to the issuance, offering and/or sale by the
Company of up to 5,140,000 shares (the "Shares") of the Company's Common
Stock, par value $.001 per share (the "Common Stock"), 5,000,000 shares of
which may be issued pursuant to stock options, restricted stock, deferred
stock, and/or other stock-related awards (collectively, "Awards") granted or
to be granted under the Company's 1997 Executive Incentive Compensation Plan
(the "Plan"), and 140,000 shares which may be issued pursuant to a
Compensation Letter Agreement with John Martin (50,000 shares), a Corporate
Development Consulting Agreement (50,000 shares) and an Agreement Concerning
Legal Services (40,000 shares). I have acted as counsel to the Company in
connection with the preparation and filing of the Registration Statement.
In connection therewith, I have examined and relied upon the original or
a copy, certified to my satisfaction, of (i) the Articles of Incorporation and
Amendment thereto, and Bylaws of the Company; (ii) records of corporate
proceedings of the Company authorizing the Plan and related matters; (iii) the
Registration Statement and exhibits thereto; and (iv) such other documents and
instruments as I have deemed necessary for the expression of the opinions
herein contained. In making the foregoing examinations, I have assumed the
genuineness of all signatures and the authenticity of all documents submitted
to me as originals, and the conformity to original documents of all documents
submitted to me as certified or photostatic copies. As to various questions of
fact material to this opinion, I have relied, to the extent I deem reasonably
appropriate, upon representations or certificates of officers or directors of
the Company and upon documents, records and instruments furnished to me by the
Company, without independently checking or verifying the accuracy of such
documents, records and instruments.
Based upon the foregoing examination, I am of the opinion that the
Company presently has available at least 5,140,000 shares of authorized and
unissued Common Stock from which the 5,000,000 shares of Common Stock may be
issued pursuant to Awards granted under the Plan, and the remaining 140,000
shares of Common Stock may be issued pursuant to the other agreements
identified in paragraph 1, above. In addition, assuming that the Company
maintains an adequate number of authorized but unissued shares of Common Stock
available for issuance pursuant to Awards and other agreements identified
above, and assuming that the Company's consideration for shares issued
pursuant to Awards is actually received by the Company in accordance with the
Plan and Section 78.211 of the Nevada Revised Statutes, I am of the opinion
that the shares of Common Stock issued pursuant to the Awards granted under
and in accordance with the terms of the Plan will be duly and validly issued,
fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, I do not admit that I come
within the category of persons whose consent is required by Section 7 of the
Act or the rules and regulations of the Commission thereunder.
Sincerely,
/s/ Robert N. Wilkinson
Robert N. Wilkinson
EXHIBIT 10.1
NEWRIDERS, INC.
1997 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. PURPOSE. The purpose of this 1997 Executive Incentive Compensation
Plan (the "Plan") is to assist Newriders, Inc. (the "Company") and its
subsidiaries in attracting, motivating, retaining and rewarding high-quality
executives and other employees, officers, Directors and independent
contractors enabling such persons to acquire or increase a proprietary
interest in the Company in order to strengthen the mutuality of interests
between such persons and the Company's stockholders, and providing such
persons with annual and long term performance incentives to expend their
maximum efforts in the creation of shareholder value. The Plan is also
intended to qualify certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Code (as hereafter defined) to the
extent deemed appropriate by the Committee (or any successor committee) of the
Board of Directors of the Company.
2. DEFINITIONS. For purposes of the Plan, the following terms
shall be defined as set forth below, in addition to such terms defined in
Section 1 hereof.
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock or
other Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR),
Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of
another award, Dividend Equivalent, Other Stock-Based Award, Performance
Award or Annual Incentive Award, together with any other right or interest
granted to a Participant under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section
10(b) hereof. If, upon a Participant's death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term Beneficiary
means person, persons, trust or trusts entitled by will or the laws of descent
and distribution to receive such benefits.
(d) "Beneficial Owner," "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Change in Control" means Change in Control as defined with
related terms in Section 9 of the Plan.
(g) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.
(h) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
(i) "Committee" means a committee designated by the Board to
administer the Plan; provided, however, that the Committee shall consist
solely of at least two directors, each of whom shall be (i) a "disinterested
person" within the meaning of Rule 16b-3 under the Exchange Act, unless
administration of the Plan by "disinterested persons" is not then required in
order for exemptions under Rule 16b-3 to apply to transactions under the Plan,
and (ii) an "outside director" as defined under Section 162(m) of the Code,
unless administration of the Plan by "outside directors" is not then required
in order to qualify for tax deductibility under Section 162(m) of the Code.
(j) "Corporate Transaction" means a transaction as defined in
Section 9(b) of the Plan.
(k) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 8(e) of the Plan.
(l) "Deferred Stock" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the
end of a specified deferral period.
(m) "Director" means a member of the Board.
(n) "Disability" means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.
(o) "Dividend Equivalent" means a right, granted to a Participant
under Section 6(g) hereof, to receive cash, Stock, other Awards or other
property equal in value to dividends paid with respect to a specified number
of shares of Stock, or other periodic payments.
(p) "Effective Date" means the effective date of the Plan, which
shall be November 12, 1997, the date on which the Plan was adopted by the
Company's Board of Directors.
(q) "Eligible Person" means each executive officer of the Company(as
defined under the Exchange Act) and other officers, Directors and employees of
the Company or of any subsidiary, and independent contractors with the Company
or any subsidiary. The foregoing notwithstanding, no Non-Employee Director
shall be an Eligible Person for purposes of receiving any Awards under this
Plan other than Formula Grants of Options granted under Section 6(b)(iv) of
the Plan and Formula Grants of Restricted Stock granted under Section 6(d)(v)
of the Plan, and no independent contractor shall be an Eligible Person for
purposes of receiving any Awards other than Options under Section 6(b) of the
Plan. An employee on leave of absence may be considered as still in the employ
of the Company or a subsidiary for purposes of eligibility for participation
in the Plan.
(r) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
(s) "Executive Officer" means an executive officer of the Company as
defined under the Exchange Act.
(t) "Fair Market Value" means the fair market value of Stock, Awards
or other property as determined by the Committee or under procedures
established by the Committee. Unless otherwise determined by the Committee,
the Fair Market Value of Stock as of any given date shall be the closing sale
price per share reported on a consolidated basis for stock listed on the
principal stock exchange or market on which Stock is traded on the date as of
which such value is being determined or, if there is no sale on that date,
then on the last previous day on which a sale was reported.
(u) "Formula Grants" means the Formula Grant Options and Formula
Grant Restricted Stock granted to Non-Employee Directors pursuant to Sections
6(b)(iv) and 6(d)(v) of the Plan.
(v) "Incentive Stock Option" or "ISO" means any Option intended to
be designated as an incentive stock option within the meaning of Section 422
of the Code or any successor provision thereto.
(w) "Incumbent Board" means the Board as defined in Section 9(b) of
the Plan.
(x) "Limited SAR" means a right granted to a Participant under
Section 6(c) hereof.
(y) "Non-Employee Director" shall mean a member of the Board who is
not an employee of the Company or any subsidiary, and who meets the definition
of a Non-Employee Director described in Rule 16b-3.
(z) "Option" means a right granted to a Participant under Section
(b) hereof, to purchase Stock or other Awards at a specified price during
specified time periods.
(aa) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(h) hereof.
(ab) "Participant" means a person who has been granted an Award under
the Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(ac) "Performance Award" means a right, granted to a Eligible Person
under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee.
(ad) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and
shall include a "group" as defined in Section 13(d) thereof.
(ae) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(af) "Retire" or "Retirement" means termination of service as a
Director after having attained at least age 62 and having served as a Director
for at least 5 years, other than by reason of death, Disability or the
Director's willful misconduct or negligence.
(ag) "Rule 16b-3" and "Rule 16a-l(c)(3)" means Rule 16b-3 and Rule
16a-l(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
(ah) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.
(ai) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by
the Committee. The Committee shall have full and final authority, in each case
subject to and consistent with the provisions of the Plan, to select Eligible
Persons to become Participants, grant Awards, determine the type, number and
other terms and conditions of, and all other matters relating to, Awards,
prescribe Award agreements (which need not be identical for each Participant)
and rules and regulations for the administration of the Plan, construe and
interpret the Plan and Award agreements and correct defects, supply omissions
or reconcile inconsistencies therein, and to make all other decisions and
determinations as the Committee may deem necessary or advisable for the
administration of the Plan.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee shall
exercise sole and exclusive discretion on any matter relating to a Participant
then subject to Section 16 of the Exchange Act with respect to the Company to
the extent necessary in order that transactions by such Participant shall be
exempt under Rule 16b-3 under the Exchange Act. Any action of the Committee
shall be final, conclusive and binding on all persons, including the Company,
its subsidiaries, Participants, Beneficiaries, transferees under Section 10(b)
hereof or other persons claiming rights from or through a Participant, and
stockholders. The express grant of any specific power to the Committee, and
the taking of any action by the Committee, shall not be construed as limiting
any power or authority of the Committee. The Committee may delegate to
officers or managers of the Company or any subsidiary, or committees thereof,
the authority, subject to such terms as the Committee shall determine, (i) to
perform administrative functions, (ii) with respect to Participants not
subject to Section 16 of the Exchange Act, to perform such other functions as
the Committee may determine, and (iii) with respect to Participants subject to
Section 16, to perform such other functions of the Committee as the Committee
may determine to the extent performance of such functions will not result in
the loss of an exemption under Rule 16b-3 otherwise available for transactions
by such persons, in each case to the extent permitted under applicable law and
subject to the requirements set forth in Section 8(d). The Committee may
appoint agents to assist it in administering the Plan.
(c) LIMITATION OF LIABILITY. The Committee and each member thereof
shall be entitled to, in good faith, rely or act upon any report or other
information furnished to him or her by any executive officer other officer or
employee of the Company or a subsidiary, the Company's independent auditors,
consultants or any other agents assisting in the administration of the Plan.
Members of the Committee and any officer or employee of the Company or a
subsidiary acting at the direction or on behalf of the Committee shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action or
determination.
4. STOCK SUBJECT TO PLAN.
(a) OVERALL NUMBER OF SHARES SUBJECT TO AWARDS. Subject to
adjustment as provided in Section 10(c) hereof, the total number of shares of
Stock that may be subject to the granting of Awards under the Plan at any
point in time during the term of the Plan shall be equal to 5,000,000 shares.
Any shares of Stock delivered under the Plan may consist, in whole or in part,
of authorized and unissued shares or treasury shares. In no event shall the
aggregate number of shares of stock which may be issued pursuant to ISOs
exceed 2,000,000 shares.
(b) APPLICATION OF LIMITATIONS. The limitation contained in Section
4(a) shall apply not only to Awards that are settleable by the delivery of
shares of stock but also to Awards relating to shares of stock but settleable
only in cash (such as cash-only SARs). The Committee may adopt reasonable
counting procedures to ensure appropriate counting, avoid double counting (as,
for example, in the case of tandem or substitute awards) and make adjustments
if the number of shares of Stock actually delivered differs from the number of
shares previously counted in connection with an Award.
5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any part
of which the Plan is in effect, an Eligible Person may not be granted Awards
relating to more than 250,000 shares of Stock, subject to adjustment as
provided in Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e),
6(f), 6(g), 6(h), 8(b) and 8(c). In addition, the maximum amount that may be
earned as a final Annual Incentive Award or other cash Award in any fiscal
year by any one Participant shall be $1,000,000, and the maximum amount that
may be earned as a final Performance Award or other cash Award in respect of a
performance period by any one Participant shall be $5,000,000.
6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to Section
10(e)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment by
the Participant and terms permitting a Participant to make elections relating
to his or her Award. The Committee shall retain full power and discretion to
accelerate, waive or modify, at any time, any term or condition of an Award
that is not mandatory under the Plan. Except in cases in which the Committee
is authorized to require other forms of consideration under the Plan, or to
the extent other forms of consideration must be paid to satisfy the
requirements of Nevada law, no consideration other than services may be
required for the grant (but not the exercise) of any Award.
(b) OPTIONS. The Committee is authorized to grant Options to
participants on the following terms and conditions:
(i) EXERCISE PRICE. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee. The
exercise price may be less than the Fair Market Value of a share of Stock on
the date of grant of such Option, unless the option being granted is an
Incentive Stock Option which must comply with Section 422 of the Code.
(ii) TIME AND METHOD OF EXERCISE. The Committee shall
determine the time or times at which or the circumstances under which an
Option may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the time or times at
which Options shall cease to be or become exercisable following termination of
employment or upon other conditions, the methods by which such exercise price
may be paid or deemed to be paid, the form of such payment, including, without
limitation, cash, Stock, other Awards or awards granted under other plans of
the Company or any subsidiary, or other property (including notes or other
contractual obligations of Participants to make payment on a deferred basis),
and the methods by or forms in which Stock will be delivered or deemed to be
delivered to Participants.
(iii) ISOS. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the Code.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to ISOs (including any SAR in tandem therewith) shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the
Plan be exercised, so as to disqualify either the Plan or any ISO under
Section 422 of the Code, unless the Participant has first requested the change
that will result in such disqualification.
(iv) FORMULA GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS.
Subject to adjustment as provided in the first sentence of Section 10(c)
hereof, each Non-Employee Director shall receive (A) on the date of his or her
appointment as a Director of the Company, an Option to purchase 50,000 shares
of Stock, and (B) each year, on the day the Company issues its earnings
release for the prior fiscal year, an Option to purchase 50,000 shares of
Stock. Options granted to Non-Employee Directors pursuant to this Section
shall be for a term of 10 years and shall become exercisable at the rate of 33
1/3% per year commencing on the first anniversary of the date on which the
Option is granted; provided, however, that the Options shall be fully
exercisable in the event that, while serving as a Director, the Non-Employee
Director dies, suffers a Disability, or Retires. The per share exercise price
of all Options granted to Non-Employee Directors pursuant to this paragraph
(iv) shall be equal to the Fair Market Value of a share of Stock on the date
such Option is granted. Unless otherwise extended in the sole discretion of
the Committee, the unexercised portion of any Option granted pursuant to this
paragraph (iv) shall become null and void (C) three months after the date on
which such Non-Employee Director ceases to be a Director of the Company for
any reason other than the Non-Employee Director's willful misconduct or
negligence, Disability, death or Retirement, (D) immediately in the event of
the Non-Employee Director's willful misconduct or negligence, (E) one year
after the Non-Employee Director ceases to be a Director by reason of his
Disability, (F) at the expiration of its original term, if the Non-Employee
Director ceases to be a Director by reason of his Retirement, and (G) twelve
months after the date of the Non-Employee Director's death in the event that
such death occurs prior to the time the Option otherwise would become null and
void pursuant to this sentence.
(c) STOCK APPRECIATION RIGHTS. The Committee is authorized to grant
SARs to Participants on the following terms and conditions:
(i) RIGHT TO PAYMENT. A SAR shall confer on the Participant
to whom it is granted a right to receive, upon exercise thereof, the excess of
(A) the Fair Market Value of one share of stock on the date of exercise (or,
in the case of a "Limited SAR," the Fair Market Value determined by reference
to the Change in Control Price, as defined under Section 9(c) hereof), over
(B) the grant price of the SAR as determined by the Committee. The grant price
of an SAR shall not be less than the Fair Market Value of a share of Stock on
the date of grant except as provided under Section 7(a) hereof.
(ii) OTHER TERMS. The Committee shall determine at the date of
grant or thereafter, the time or times at which and the circumstances under
which a SAR may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time
or times at which SARs shall cease to be or become exercisable following
termination of employment or upon other conditions, the method of exercise,
method of settlement, form of consideration payable in settlement, method by
or forms in which Stock will be delivered or deemed to be delivered to
Participants, whether or not a SAR shall be in tandem or in combination with
any other Award, and any other terms and conditions of any SAR. Limited SARs
that may only be exercised in connection with a Change in Control or other
event as specified by the Committee may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee may determine. SARs and
Limited SARs may be either freestanding or in tandem with other Awards.
(d) RESTRICTED STOCK. The Committee is authorized to grant
Restricted Stock to Participants on the following terms and conditions:
(i) GRANT AND RESTRICTIONS. Restricted Stock shall be subject
to such restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee may impose, which restrictions may
lapse separately or in combination at such times, under such circumstances
(including based on achievement of performance goals and/or future service
requirements), in such installments or otherwise, as the Committee may
determine at the date of grant or thereafter. In no event shall the restricted
period be less than three years unless the Restricted Stock is subject to
performance conditions in accordance with Section 8 of this Plan, in which
case the restricted period shall not be less than one year. Except to the
extent restricted under the terms of the Plan and any Award agreement relating
to the Restricted Stock, a Participant granted Restricted Stock shall have all
of the rights of a stockholder, including the right to vote the Restricted
Stock and the right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Committee). During the
restricted period applicable to the Restricted Stock, subject to Section 10(b)
below, the Restricted Stock may not be sold, transferred, pledged,
hypothecated, margined or otherwise encumbered by the Participant.
(ii) FORFEITURE. Except as otherwise determined by the
Committee at the time of the Award, upon termination of a Participant's
employment during the applicable restriction period, the Participant's
Restricted Stock that is at that time subject to restrictions shall be
forfeited and required by the Company; provided that the Committee may
provide, by rule or regulation or in any Award agreement, or may determine in
any individual case, that restrictions or forfeiture conditions relating to
Restricted Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes.
(iii) CERTIFICATES FOR STOCK. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of the
Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical
possession of the certificates, and that the Participant deliver a stock power
to the Company, endorsed in blank, relating to the Restricted Stock.
(iv) DIVIDENDS AND SPLITS. As a condition to the grant of an
Award of Restricted Stock, the Committee may require that any cash dividends
paid on a share of Restricted Stock be automatically reinvested in additional
shares of Restricted Stock or applied to the purchase of additional Awards
under the Plan. Unless otherwise determined by the Committee, Stock
distributed in connection with a Stock split or Stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a
risk of forfeiture to the same extent as the Restricted Stock with respect to
which such Stock or other property has been distributed.
(v) FORMULA GRANTS OF RESTRICTED STOCK TO NON-EMPLOYEE
DIRECTORS. Subject to adjustment as provided in the first sentence of Section
10(c) hereof, commencing at the end of the Company's fiscal year that begins
January 1, 1997, each Non-Employee Director shall receive each year, on the
day the Company issues its earnings release for the prior fiscal year, an
Award of shares of Restricted Stock, in an amount to be determined annually by
the Board of Directors. Each Award of Restricted Stock shall become
non-forfeitable on the third anniversary of the date on which the Restricted
Stock is granted; provided, however, that all Restricted Stock granted to a
Non-Employee Director shall become nonforfeitable in the event that, while
serving as a Director, the Non-Employee Director dies, suffers a Disability,
or Retires. In the event that a Non-Employee Director ceases to serve as a
Director for any reason other than the death, Disability or Retirement of the
Non-Employee Director, the Restricted Stock that is at that time subject to
restrictions shall be forfeited and required by the Company.
(e) DEFERRED STOCK. The Committee is authorized to grant Deferred
Stock to Participants, which are rights to receive Stock, cash, or a
combination thereof at the end of a specified deferral period, subject to the
following terms and conditions:
(i) AWARD AND RESTRICTIONS. Satisfaction of an Award of
Deferred Stock shall occur upon expiration of the deferral period specified
for such Deferred Stock by the Committee (or, if permitted by the Committee,
as elected by the Participant). In addition, Deferred Stock shall be subject
to such restrictions (which may include a risk of forfeiture) as the Committee
may impose, if any, which restrictions may lapse at the expiration of the
deferral period or at earlier specified times (including based on achievement
of performance goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee may determine. In
no event shall an Award of Deferred Stock payable in Stock have a deferral
period of less than three years unless the Award is subject to performance
conditions in accordance with Section 8 of the Plan, in which case the
deferral period shall be for not less than one year. Deferred Stock may be
satisfied by delivery of Stock, cash equal to the Fair Market Value of the
specified number of shares of Stock covered by the Deferred Stock, or a
combination thereof, as determined by the Committee at the date of grant or
thereafter. Prior to satisfaction of an Award of Deferred Stock, an Award of
Deferred Stock carries no voting or dividend or other rights associated with
share ownership.
(ii) FORFEITURE. Except as otherwise determined by the
Committee, upon termination of a Participant's employment during the
applicable deferral period thereof to which forfeiture conditions apply (as
provided in the Award agreement evidencing the Deferred Stock), the
Participant's Deferred Stock that is at that time subject to deferral (other
than a deferral at the election of the Participant) shall be forfeited;
provided that the Committee may provide, by rule or regulation or in any Award
agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Deferred Stock shall be waived in whole or
in part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of
Deferred Stock.
(iii) DIVIDEND EQUIVALENTS. Unless otherwise determined by
the Committee at date of grant, Dividend Equivalents on the specified number
of shares of Stock covered by an Award of Deferred Stock shall be either (A)
paid with respect to such Deferred Stock at the dividend payment date in cash
or in shares of unrestricted Stock having a Fair Market Value equal to the
amount of such dividends, or (B) deferred with respect to such Deferred Stock
and the amount or value thereof automatically deemed reinvested in additional
Deferred Stock, other Awards or other investment vehicles, as the Committee
shall determine or permit the Participant to elect.
(f) BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS. The Committee
is authorized to grant Stock as a bonus, or to grant Stock or other Awards in
lieu of Company obligations to pay cash or deliver other property under the
Plan or under other plans or compensatory arrangements, provided that, in the
case of Participants subject to Section 16 of the Exchange Act, the amount of
such grants remains within the discretion of the Committee to the extent
necessary to ensure that acquisitions of Stock or other Awards are exempt from
liability under Section 16(b) of the Exchange Act. Stock or Awards granted
hereunder shall be subject to such other terms as shall be determined by the
Committee.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to a Participant entitling the Participant to receive
cash, Stock, other Awards, or other property equal in value to dividends paid
with respect to a specified number of shares of Stock, or other periodic
payments. Dividend Equivalents may be awarded on a free-standing basis or in
connection with another Award. The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to
have been reinvested in additional Stock, Awards, or other investment
vehicles, and subject to such restrictions on transferability and risks of
forfeiture, as the Committee may specify.
(h) OTHER STOCK-BASED AWARDS. The Committee is authorized, subject
to limitations under applicable law, to grant to Participants such other
Awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Stock, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for Stock, Awards with
value and payment contingent upon performance of the Company or any other
factors designated by the Committee, and Awards valued by reference to the
book value of Stock or the value of securities of or the performance of
specified subsidiaries or business units. The Committee shall determine the
terms and conditions of such Awards. Stock delivered pursuant to an Award in
the nature of a purchase right granted under this Section 6(h) shall be
purchased for such consideration, paid for at such times, by such methods, and
in such forms, including, without limitation, cash, Stock, other Awards or
other property, as the Committee shall determine. Cash awards, as an element
of or supplement to any other Award under the Plan, may also be granted
pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company,
any subsidiary, or any business entity to be acquired by the Company or a
subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee shall require the surrender
of such other Award or award in consideration for the grant of the new Award.
In addition, Awards may be granted in lieu of cash compensation, including in
lieu of cash amounts payable under other plans of the Company or any
subsidiary, in which the value of Stock subject to the Award is equivalent in
value to the cash compensation (for example, Deferred Stock or Restricted
Stock), or in which the exercise price, grant price or purchase price of the
Award in the nature of a right that may be exercised is equal to the Fair
Market Value of the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an exercise price "discounted"
by the amount of the cash compensation surrendered).
(b) TERM OF AWARDS. The term of each Award shall be for such period
as may be determined by the Committee; provided that in no event shall the
term of any Option or SAR exceed a period of ten years (or such shorter term
as may be required in respect of an ISO under Section 422 of the Code).
(c) FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS. Subject to
the terms of the Plan and any applicable Award agreement, payments to be made
by the Company or a subsidiary upon the exercise of an Option or other Award
or settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. The settlement of any Award may be accelerated, and cash
paid in lieu of Stock in connection with such settlement, in the discretion of
the Committee or upon occurrence of one or more specified events (in addition
to a Change in Control). Installment or deferred payments may be required by
the Committee (subject to Section 10(e) of the Plan) or permitted at the
election of the Participant on terms and conditions established by the
Committee. Payments may include, without limitation, provisions for the
payment or crediting of a reasonable interest rate on installment or deferred
payments or the grant or crediting of Dividend Equivalents or other amounts in
respect of installment or deferred payments denominated in Stock.
(d) EXEMPTIONS FROM SECTION 16(B) LIABILITY. It is the intent of
the Company that this Plan comply in all respects with applicable provisions
of Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that
neither the grant of any Awards to nor other transaction by a Participant who
is subject to Section 16 of the Exchange Act is subject to liability under
Section 16(b) thereof (except for transactions acknowledged in writing to be
non-exempt by such Participant). Accordingly, if any provision of this Plan or
any Award agreement does not comply with the requirements of Rule 16b-3 or
Rule 16a-1(c)(3) as then applicable to any such transaction, such provision
will be construed or deemed amended to the extent necessary to conform to the
applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such
Participant shall avoid liability under Section 16(b). In addition, the
purchase price of any Award conferring a right to purchase Stock shall be not
less than any specified percentage of the Fair Market Value of Stock at the
date of grant of the Award then required in order to comply with Rule 16b-3.
8. PERFORMANCE AND ANNUAL INCENTIVE AWARDS.
(a) PERFORMANCE CONDITIONS. The right of a Participant to exercise
or receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee.
The Committee may use such business criteria and other measures of performance
as it may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce the amounts payable under any Award subject
to performance conditions, except as limited under Sections 8(b) and 8(c)
hereof in the case of a Performance Award or Annual Incentive Award intended
to qualify under Code Section 162(m).
(b) PERFORMANCE AWARDS GRANTED TO DESIGNATED COVERED EMPLOYEES. If
and to the extent that the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as likely to
be a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(b).
(i) PERFORMANCE GOALS GENERALLY. The performance goals for
such Performance Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to each of such criteria,
as specified by the Committee consistent with this Section 8(b). Performance
goals shall be objective and shall otherwise meet the requirements of Code
Section 162(m) and regulations thereunder including the requirement that the
level or levels of performance targeted by the Committee result in the
achievement of performance goals being "substantially uncertain." The
Committee may determine that such Performance Awards shall be granted,
exercised and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition to grant,
exercise and/or settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Participant or to different
Participants.
(ii) BUSINESS CRITERIA. One or more of the following business
criteria for the Company, on a consolidated basis, and/or specified
subsidiaries or business units of the Company (except with respect to the
total stockholder return and earnings per share criteria), shall be used
exclusively by the Committee in establishing performance goals for such
Performance Awards: (1) total stockholder return; (2) such total stockholder
return as compared to total return (on a comparable basis) of a publicly
available index such as, but not limited to, the Standard & Poor's 500 Stock
Index or the S&P Specialty Retailer Index; (3) net income; (4) pretax
earnings; (5) earnings before interest expense, taxes, depreciation and
amortization; (6) pretax operating earnings after interest expense and before
bonuses, service fees, and extraordinary or special items; (7) operating
margin; (8) earnings per share; (9) growth in earnings per share; (10) return
on equity; (11) return on capital; (12) return on investment; (13) operating
earnings; (14) working capital or inventory; and (15) ratio of debt to
stockholders' equity. One or more of the foregoing business criteria shall
also be exclusively used in establishing performance goals for Annual
Incentive Awards granted to a Covered Employee under Section 8(c) hereof.
(iii) PERFORMANCE PERIOD; TIMING FOR ESTABLISHING PERFORMANCE
GOALS. Achievement of performance goals in respect of such Performance Awards
shall be measured over a performance period of up to ten years, as specified
by the Committee. Performance goals shall be established not later than 90
days after the beginning of any performance period applicable to such
Performance Awards, or at such other date as may be required or permitted for
"performance-based compensation" under Code Section 162(m).
(iv) PERFORMANCE AWARD POOL. The Committee may establish a
Performance Award pool, which shall be an unfunded pool, for purposes of
measuring Company performance in connection with Performance Awards. The
amount of such Performance Award pool shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria set
forth in Section 8(b)(ii) hereof during the given performance period, as
specified by the Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Performance Award Pool as a percentage
of any of such business criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
(v) SETTLEMENT OF PERFORMANCE AWARDS; OTHER TERMS. Settlement
of such Performance Awards shall be in cash, Stock, other Awards or other
property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance Awards. The Committee shall specify the
circumstances in which such Performance Awards shall be paid or forfeited in
the event of termination of employment by the Participant prior to the end of
a performance period or settlement of Performance Awards.
(c) ANNUAL INCENTIVE AWARDS GRANTED TO DESIGNATED COVERED EMPLOYEES.
If and to the extent that the Committee determines that an Annual Incentive
Award to be granted to an Eligible Person who is designated by the Committee
as likely to be a Covered Employee should qualify as "performance-based
compensation" for purposes of Code Section 162(m), the grant, exercise and/or
settlement of such Annual Incentive Award shall be contingent upon achievement
of preestablished performance goals and other terms set forth in this Section
8(c).
(i) ANNUAL INCENTIVE AWARD POOL. The Committee may establish
an Annual Incentive Award pool, which shall be an unfunded pool, for purposes
of measuring Company performance in connection with Annual Incentive Awards.
The amount of such Annual Incentive Award pool shall be based upon the
achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof during the given
performance period, as specified by the Committee in accordance with Section
8(b)(iii) hereof. The Committee may specify the amount of the Annual Incentive
Award pool as a percentage of any such business criteria, a percentage thereof
in excess of a threshold amount, or as another amount which need not bear a
strictly mathematical relationship to such business criteria.
(ii) POTENTIAL ANNUAL INCENTIVE AWARDS. Not later than the end
of the 90th day of each fiscal year, or at such other date as may be required
or permitted in the case of Awards intended to be "performance-based
compensation" under Code Section 162(m), the Committee shall determine the
Eligible Persons who will potentially receive Annual Incentive Awards, and the
amounts potentially payable thereunder, for that fiscal year, either out of an
Annual Incentive Award pool established by such date under Section 8(c)(i)
hereof or as individual Annual Incentive Awards. In the case of individual
Annual Incentive Awards intended to qualify under Code Section 162(m), the
amount potentially payable shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria set
forth in Section 8(b)(ii) hereof in the given performance year, as specified
by the Committee; in other cases, such amount shall be based on such criteria
as shall be established by the Committee. In all cases, the maximum Annual
Incentive Award of any Participant shall be subject to the limitation set
forth in Section 5 hereof.
(iii) PAYOUT OF ANNUAL INCENTIVE AWARDS. After the end of each
fiscal year, the Committee shall determine the amount, if any, of (A) the
Annual Incentive Award pool, and the maximum amount of potential Annual
Incentive Award payable to each Participant in the Annual Incentive Award
pool, or (B) the amount of potential Annual Incentive Award otherwise payable
to each Participant. The Committee may, in its discretion, determine that the
amount payable to any Participant as a final Annual Incentive Award shall be
reduced from the amount of his or her potential Annual Incentive Award,
including a determination to make no final Award whatsoever. The Committee
shall specify the circumstances in which an Annual Incentive Award shall be
paid or forfeited in the event of termination of employment by the Participant
prior to the end of a fiscal year or settlement of such Annual Incentive
Award.
(d) WRITTEN DETERMINATIONS. All determinations by the Committee as
to the establishment of performance goals, the amount of any Performance Award
pool or potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Section 8(b), and the
amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards and the amount of final Annual Incentive Awards under Section
8(c), shall be made in writing in the case of any Award intended to qualify
under Code Section 162(m). The Committee may not delegate any responsibility
relating to such Performance Awards or Annual Incentive Awards.
(e) STATUS OF SECTION 8(B) AND SECTION 8(C) AWARDS UNDER CODE
SECTION 162(M). It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 8(b) and 8(c) hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within
the meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and (e),
including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the
term Covered Employee as used herein shall mean only a person designated by
the Committee, at the time of grant of Performance Awards or an Annual
Incentive Award, as likely to be a Covered Employee with respect to that
fiscal year. If any provision of the Plan or any agreement relating to such
Performance Awards or Annual Incentive Awards does not comply or is
inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.
9. CHANGE IN CONTROL.
(a) EFFECT OF "CHANGE IN CONTROL." In the event of a "Change in
Control," as defined in Section 9(b), the following provisions shall apply:
(i) Any Award carrying a right to exercise that was not
previously exercisable and vested shall become fully exercisable and vested as
of the time of the Change in Control and shall remain exercisable and vested
for the balance of the stated term of such Award without regard to any
termination of employment by the Participant, subject only to applicable
restrictions set forth in Section 10(a) hereof;
(ii) Any optionee who holds an Option shall be entitled to
elect, during the 60-day period immediately following a Change in Control, in
lieu of acquiring the shares of Stock covered by such Option, to receive, and
the Company shall be obligated to pay, in cash the excess of the Change in
Control Price over the exercise price of such Option, multiplied by the number
of shares of Stock covered by such Option; provided, however, that no optionee
who is subject to Section 16 with respect to the Company at the time of the
Change in Control shall be entitled to make such an election if the
acquisition of the right to make such election would represent a non-exempt
purchase under Section 16(b) by such optionee;
(iii) Limited SARs (and other SARs if so provided by their
terms) shall become exercisable for amounts, in cash, determined by reference
to the Change in Control Price;
(iv) The restrictions, deferral of settlement, and forfeiture
conditions applicable to any other Award granted under the Plan shall lapse
and such Awards shall be deemed fully vested as of the time of the Change in
Control, except to the extent of any waiver by the Participant and subject to
applicable restrictions set forth in Section 10(a) hereof; and
(v) With respect to any such outstanding Award subject to
achievement of performance goals and conditions under the Plan, such
performance goals and other conditions will be deemed to be met if and to the
extent so provided by the Committee in the Award agreement relating to such
Award.
(b) DEFINITION OF "CHANGE IN CONTROL." A "Change in Control" shall
be deemed to have occurred upon:
(i) An acquisition by any Person of Beneficial Ownership of the
shares of Common Stock of the Company then outstanding (the "Company Common
Stock Outstanding") or the voting securities of the Company then outstanding
entitled to vote generally in the election of directors (the "Company Voting
Securities Outstanding") if such acquisition of Beneficial Ownership results
in the Person's Beneficially Owning 25% or more of the Company Common Stock
outstanding or 25% or more of the combined voting power of the Company Voting
Securities Outstanding; or
(ii) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, complete liquidation or dissolution of
the Company, sale or disposition of all or substantially all of the assets of
the Company, or similar corporate transaction (in each case referred to in
this Section 9(b) as a "Corporate Transaction") or, if consummation of such
Corporate Transaction is subject, at the time of such approval by
stockholders, to the consent of any government or governmental agency, the
obtaining of such consent (either explicitly or implicitly); provided,
however, that any merger, consolidation, sale, disposition or other similar
transaction to or with one or more Participants or entities controlled by one
or more Participants shall not constitute a Corporate Transaction in respect
of such Participant(s); or
(iii) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board (such Board
shall be hereinafter referred to as the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided, however, for
purposes of this Section 9(b), that any individual who becomes a member of the
Board subsequent to the Effective Date whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this
provision) shall be considered as though such individual were a member of the
Incumbent Board; and, provided, further, that any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest subject to Rule 14a-11 of Regulation 14A under the
Exchange Act, including any successor to such Rule, or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board shall in no event be considered as a member of the
Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i) and (ii) of
this Section 9(b), the following shall not constitute a Change in Control for
purposes of the Plan: (1) any acquisition by or consummation of a Corporate
Transaction with any entity that was a subsidiary of the Company immediately
prior to the transaction or an employee benefit plan (or related trust)
sponsored or maintained by the Company or an entity that was a subsidiary of
the Company immediately prior to the transaction if, immediately after such
transaction (including consummation of all related transactions), the
surviving entity is controlled by no Person other than such subsidiary,
employee benefit plan (or related trust) and/or other Persons who controlled
the Company immediately prior to such transaction; or (2) any acquisition or
consummation of a Corporate Transaction following which more than 50% of,
respectively, the shares then outstanding of common stock of the corporation
resulting from such acquisition or Corporate Transaction and the combined
voting power of the voting securities then outstanding of such corporation
entitled to vote generally in the election of directors is then Beneficially
Owned, directly or indirectly, by all or substantially all of the individuals
and entities who were Beneficial Owners, respectively, of the Company Common
Stock Outstanding and Company Voting Securities Outstanding immediately prior
to such acquisition or Corporate Transaction in substantially the same
proportions as their ownership, immediately prior to such acquisition or
Corporate Transaction, of the Company Common Stock Outstanding and Company
Voting Securities Outstanding, as the case may be.
(c) DEFINITION OF "CHANGE IN CONTROL PRICE." The "Change in Control
Price" means an amount in cash equal to the higher of (i) the amount of cash
and fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering
the Change in Control under Section 9(b)(ii) hereof or any liquidation of
shares following a sale of substantially all assets of the Company, or (ii)
the highest Fair Market Value per share at any time during the 60-day period
preceding and 60-day period following the Change in Control.
10. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS. The Company may,
to the extent deemed necessary or advisable by the Committee, postpone the
issuance or delivery of Stock or payment of other benefits under any Award
until completion of such registration or qualification of such Stock or other
required action under any federal or state law, rule or regulation, listing or
other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other Company securities are listed
or quoted, or compliance with any other obligation of the Company, as the
Committee may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject
to such other conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in compliance with
applicable laws, rules, and regulations, listing requirements, or other
obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action and shall
undertake or permit to arise no legal or contractual obligation, that results
or would result in any postponement of the issuance or delivery of Stock or
payment of benefits under any Award or the imposition of any other conditions
on such issuance, delivery or payment, to the extent that such postponement or
other condition would represent a greater burden on a Participant than existed
on the 90th day preceding the Change in Control.
(b) LIMITS ON TRANSFERABILITY; BENEFICIARIES. No Award or other
right or interest of a Participant under the Plan, including any Award or
right which constitutes a derivative security as generally defined in Rule
16a-l(c) under the Exchange Act, shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such Participant
to any party (other than the Company or a subsidiary), or assigned or
transferred by such Participant otherwise than by will or the laws of descent
and distribution or to a Beneficiary upon the death of a Participant, and such
Awards or rights that may be exercisable shall be exercised during the
lifetime of the Participant only by the Participant or his or her guardian or
legal representative, except that Awards and other rights (other than ISOs and
SARs in tandem therewith) may be transferred to one or more Beneficiaries or
other transferees during the lifetime of the Participant, and may be exercised
by such transferees in accordance with the terms of such Award, but only if
and to the extent such transfers and exercises are permitted by the Committee
pursuant to the express terms of an Award agreement (subject to any terms and
conditions which the Committee may impose thereon, and further subject to any
prohibitions or restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee, or other person claiming any rights under the Plan
from or through any Participant shall be subject to all terms and conditions
of the Plan and any Award agreement applicable to such Participant, except as
otherwise determined by the Committee, and to any additional terms and
conditions deemed necessary or appropriate by the Committee.
(c) ADJUSTMENTS. In the event that any dividend or other
distribution (whether in the form of cash, stock or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Stock
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the rights of Participants under
the Plan, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and kind of shares of Stock which may be
delivered in connection with Awards granted thereafter, (ii) the number and
kind of shares of Stock by which annual per-person Award limitations are
measured under Section 5 hereof, (iii) the number and kind of shares of Stock
subject to or deliverable in respect of outstanding Awards and (iv) the
exercise price, grant price or purchase price relating to any Award and/or
make provision for payment of cash or other property in respect of any
outstanding Award. In addition, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals, and Annual
Incentive Awards and any Annual Incentive Award pool or performance goals
relating thereto) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence, as well as
acquisitions and dispositions of businesses and assets) affecting the Company,
any subsidiary or any business unit, or the financial statements of the
Company or any subsidiary, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee's assessment of the business strategy
of the Company, any subsidiary or business unit thereof, performance of
comparable organizations, economic and business conditions, personal
performance of a Participant, and any other circumstances deemed relevant;
provided that no such adjustment shall be authorized or made if and to the
extent that such authority or the making of such adjustment would cause
Options, SARs, Performance Awards granted under Section 8(b) hereof or Annual
Incentive Awards granted under Section 8(c) hereof to Participants designated
by the Committee as Covered Employees and intended to qualify as
"performance-based compensation" under Code Section 162(m) and the regulations
thereunder to otherwise fail to qualify as "performance-based compensation"
under Code Section 162(m)and regulations thereunder.
(d) TAXES. The Company and any subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax
obligations, either on a mandatory or elective basis in the discretion of the
Committee.
(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend, alter,
suspend, discontinue or terminate the Plan or the Committee's authority to
grant Awards under the Plan without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's stockholders not later than the
annual meeting next following such Board action if such amendment represents a
material change to the Plan or such stockholder approval is required by any
federal or state law or regulation (including, without limitation, Rule 16b-3
or Code Section 162(m) ) or the rules of any stock exchange or automated
quotation system on which the Stock may then be listed or quoted, and the
Board may otherwise, in its discretion, determine to submit other such changes
to the Plan to stockholders for approval; provided that, without the consent
of an affected Participant, no such Board action may materially and adversely
affect the rights of such Participant under any previously granted and
outstanding Award. The Committee may waive any conditions or rights under, or
amend, alter, suspend, discontinue or terminate any Award theretofore granted
and any Award agreement relating thereto, except as otherwise provided in the
Plan; provided that, without the consent of an affected Participant, no such
Committee action may materially and adversely affect the rights of such
Participant under such Award. Notwithstanding anything in the Plan to the
contrary, if any right under this Plan would cause a transaction to be
ineligible for pooling of interest accounting that would, but for the right
hereunder, be eligible for such accounting treatment, the Committee may modify
or adjust the right so that pooling of interest accounting shall be available,
including the substitution of Stock having a Fair Market Value equal to the
cash otherwise payable hereunder for the right which caused the transaction to
be ineligible for pooling of interest accounting. Notwithstanding anything
herein to the contrary, the provisions of Section 6(b)(iv) and Section 6(d)(v)
of this Plan which govern formula grants of Options and Restricted Stock to
Non-Employee Directors, shall not be amended more than once every six months
other than to comport with changes to the Code or the rules promulgated
thereunder or the Employee Retirement Income Security Act of 1974, as amended,
or the rules promulgated thereunder, or with rules promulgated by the
Securities and Exchange Commission, unless such limit on amendments is not
required under Rule 16b-3 or other applicable law.
(f) LIMITATION ON RIGHTS CONFERRED UNDER PLAN. Neither the Plan nor
any action taken hereunder shall be construed as (i) giving any Eligible
Person or Participant the right to continue as an Eligible Person or
Participant or in the employ of the Company or a subsidiary; (ii) interfering
in any way with the right of the Company or a subsidiary to terminate any
Eligible Person's or Participant's employment at any time, (iii) giving an
Eligible Person or Participant any claim to be granted any Award under the
Plan or to be treated uniformly with other Participants and employees, or (iv)
conferring on a Participant any of the rights of a stockholder of the Company
unless and until the Participant is duly issued or transferred shares of Stock
in accordance with the terms of an Award.
(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the
Plan or any Award shall give any such Participant any rights that are greater
than those of a general creditor of the Company, provided that the Committee
may authorize the creation of trusts and deposit therein cash, Stock, other
Awards or other property, or make other arrangements to meet the Company's
obligations under the Plan. Such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant. The
trustee of such trusts may be authorized to dispose of trust assets and
reinvest the proceeds in alternative investments, subject to such terms and
conditions as the Committee may specify and in accordance with applicable law.
(h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan
by the Board nor its submission to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board or a committee thereof to adopt such other incentive arrangements as it
may deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).
(i) PAYMENTS IN THE EVENT OF FORFEITURES; FRACTIONAL SHARES. Unless
otherwise determined by the Committee, in the event of a forfeiture of an
Award with respect to which a Participant paid cash or other consideration,
the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,
other Awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) GOVERNING LAW. The validity, construction and effect of the
Plan, any rules and regulations under the Plan, and any Award agreement shall
be determined in accordance with the laws of the State of California without
giving effect to principles of conflicts of laws, and applicable federal law.
(k) PLAN EFFECTIVE DATE AND STOCKHOLDER APPROVAL; TERMINATION OF
PLAN. The Plan shall become effective on the Effective Date, subject to
subsequent approval at the Company's 1998 Annual Meeting of Stockholders, by
stockholders of the Company eligible to vote in the election of directors, by
a vote sufficient to meet the requirements of Code Sections 162(m) and 422,
Rule 16b-3 under the Exchange Act, applicable NASDAQ requirements (if the
Company's Common Stock is then listed on NASDAQ), and other laws, regulations,
and obligations of the Company applicable to the Plan. Awards may be granted
subject to stockholder approval, but may not be exercised or otherwise settled
in the event stockholder approval is not obtained. The Plan shall terminate at
such time as no shares of Common Stock remain available for issuance under the
Plan and the Company has no further rights or obligations with respect to
outstanding Awards under the Plan.
EXHIBIT 10.2
NEWRIDERS, INC.
1040 East Herndon Avenue, Suite 102
Fresno, California 93720
March 11, 1997
Mr. John Martin
567 San Nicolas Drive, Suite 400
Newport Beach, California 92660
Dear John:
Newriders, Inc. (the "Company") is pleased to offer you a position as a
member of its Board of Directors, effective immediately. Obviously, the
Company will stand to benefit tremendously from your reputation, experience
and leadership in the restaurant industry. Your passion for motorcycles only
adds to the excitement which all of the Board members feel about the prospect
of your joining us.
The purpose of this letter is to set forth the compensation you will
receive upon your becoming a director. By way of information the Company is
planning to register its securities with the Securities and Exchange
Commission on Form 10-SB within the next two weeks. This registration
statement shall become effective no later than 60 days following its filing.
During said 60 day period the Company intends to adopt a plan (the "Company's
Stock Plan") covering 2,000,000 of its shares of common stock which will allow
for the direct issuance of said shares and/or the granting of options with
respect to said shares. Immediately following the effectiveness of the
Company's registration statement on Form 10-SB, the Company intends to file a
registration statement on Form S-8 (which will immediately be effective) for
the purpose of registering (i) the stock and options which have been or may
subsequently be granted pursuant to the Company's Stock Plan, (ii) the stock
and options granted to you pursuant to this letter in the event they are
granted outside of the Company's Stock Plan, and (iii) the resale by you (and
others) of the stock granted to you and hereunder and the stock received by
you upon exercise of the options granted to you hereunder. Although you will
be able to sell shares immediately upon the effectiveness of the S-8
registration statement, as a Board member you will be limited to the number of
shares you can sell by the volume limitations contained in Rule 144 which have
been explained to you.
The specifics of the compensation to be paid to you upon your becoming a
director are as follows:
Mr. John Martin
March 11, 1997
Page 2
1. There will be issued to you 50,000 shares of the Company's common
stock.
2. You will be granted options to acquire an additional 500,000
shares of the Company's common stock, which options will be subject to the
following:
a. Your right to exercise the options as to 250,000 shares
shall be fully vested immediately; your right to exercise the options as to
125,000 shares shall vest upon your having completed one (1) year of service
as a director of the Company; your right to exercise the options as to the
remaining 125,000 shares shall vest upon your having completed two (2) years
of service as a director of the Company.
b. The term of the options shall be for ten years from the
date of grant.
c. The option price shall be $2.50 per share.
d. As to options in which you are vested, you will be
entitled to exercise the options at any time in whole or in part during their
term, whether or not you remain a director or otherwise affiliated with the
Company.
e. In addition to any other methods of exercise which may
be provided for generally in the Company's Stock Plan, after a period of two
years from your commencing to be a director (or sooner if sooner provided for
other participants in the Company's Stock Plan), you will be entitled to
exercise your options in whole or in part by either (i) using existing shares
of the Company's common stock, meaning that you may deliver common shares of
the Company already owned by you with an aggregate fair market value on the
date of exercise equal to the purchase price and/or (ii) effecting a "cashless
exercise," meaning that you may surrender your option and receive a number of
shares of common stock equal to the full number of shares of common stock
subject to the option less that number of shares having an aggregate fair
market value on the date of exercise equal to the purchase price.
f. The options shall be subject to the same anti-dilution
provisions as may be contained in the Company's stock plan.
g. Notwithstanding the provisions of subjection a above,
your right to exercise any unvested options shall automatically become fully
vested immediately upon your termination of service with the Board of
Directors of the Company for "good reason". For purposes of this Agreement,
"good reason" shall mean any of the following:
Mr. John Martin
March 11, 1997
Page 3
(1) Your failure to be re-elected to the Board of
Directors or removal from the Board of Directors by action of the shareholders
of the Company.
(2) Failure of the Company to implement and
follow agreed upon policies of corporate governance.
(3) Failure of the Company to make substantial
progress in implementing its business plan as set forth in the Form 10 filed
with the Securities and Exchange Commission or as otherwise modified by the
Board of Directors of the Company.
(4) There is internal discord among the members
of the Board of Director and policies material to the conduct of business of
the Company are adopted by the Board which are opposed by you.
(5) There is a material adverse change in the
business or financial condition of the Company or its business prospects.
(6) The Company is sued or otherwise engages in
business activity which in your judgment exposes members of the Board of
Directors to personal liability not covered by insurance.
(7) The Company shall engage in activities in
violation of law.
The shares and options to be issued to you may be part of the Company's
Stock Plan if issuances under the Company's Stock Plan are consistent with the
above provisions for your benefit.
The Company is also in agreement that upon your becoming a Board member,
it will enter into an indemnity agreement with you in the form attached as
Exhibit "A" to this letter.
Any dispute which may arise with respect to this Agreement shall be
resolved by arbitration to be conducted in Orange County, California pursuant
to the provisions of California Civil Code of Procedure 1280 et seq. The
prevailing party in any such proceeding shall be entitled to recover its
attorneys fees, in addition to its costs of the proceeding.
Mr. John Martin
March 11, 1997
Page 4
I look forward to your reply.
Very truly yours,
/s/ Michael Purcell
MICHAEL PURCELL,
President and Chief
Executive Officer of
NEWRIDERS, INC.
EXHIBIT 10.3
CORPORATE DEVELOPMENT CONSULTING AGREEMENT
THIS AGREEMENT, made and entered into this 14th day of February, 1997 by
and between Newriders, Inc. (hereinafter "Client"), a corporation organized
and existing under the laws of the State of Nevada, having its principal
office at 1040 East Herndon Ave., Suite 102, Fresno, California 93720, and
National Investors Council (hereinafter "NIC"), a sole proprietorship having
its principal place of business at 1501 Westcliff Drive, Suite 305, Newport
Beach, California 92660.
WITNESSETH
WHEREAS, NIC and its affiliates have the professional ability to assist
corporations in strategic planning, organizational development, broker and
shareholder relations, media relations and other corporate activities,
hereinafter "Corporate Development", and
WHEREAS, Client desires to receive consulting services and assistance on
Corporate Development,
NOW, THEREFORE, the parties agree to the following:
1. Client hereby agrees to contract with NIC for Corporate Development
consulting services and NIC hereby agrees to provide said services to Client
in a professional and timely manner. These services shall include but are not
limited to all of NIC's publishing and reporting services, i.e., Corporate
Digests, "Bill Nordstrom's Growth Stock Newsletter" and "Portfolio Picks."
2. The term of this Agreement shall be one year from the date of
execution.
3. Compensation shall be as follows:
A. Client shall issue 30,000 shares of Client's common stock to
William R. Nordstrom, the sole proprietor of NIC, such shares to be issued
under Client's S-8 stock and option plan immediately upon the effective date
of said plan;
B. As soon as permitted by applicable securities laws, Client shall
issue to William R. Nordstrom, the sole proprietor of NIC, options under
Client's S-8 plan to purchase 250,000 shares of Client's common stock at $2.50
per share, such option to have an expiration date of five years from the date
of issuance;
C. Client shall issue to Mr. M. Richard Keating, an individual and an
affiliate of NIC, 20,000 shares of Client's common stock under Client's S-8
stock and option plan, immediately upon the effective date of said plan, and;
D. As soon as permitted by applicable securities laws, Client shall
issue to Mr. M. Richard Keating options under Client's S-8 plan to purchase
100,000 shares at $2.50 per share, such option to have an expiration date of
five years from the date of issue.
4. Client agrees to pay any pre-approved expenses incurred by NIC and/or
its affiliates while performing Corporate Development services under this
Agreement, such as travel and lodging, printing, bulk mailing costs, etc. In
the event NIC performs services for anyone other than Client while traveling
at Client's expense, the travel expenses for that trip shall be pro-rated
among the parties as appropriate.
5. This Agreement shall be governed for all purposes by the laws of the
State of California.
6. This Agreement can only be terminated for cause, which shall be defined
as unprofessional, untimely or fraudulent providing of Corporate Development
consulting services. If Client is dissatisfied with NIC's performance, Client
shall give notice in writing specifying such dissatisfaction, and NIC shall
have 10 business days in which to rectify or resolve the complaint. NIC's
failure to resolve or rectify the complaint shall constitute cause for
termination.
7. Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, will be finally settled by Arbitration in Newport
Beach, California, in accordance with the then current rules of the American
Arbitration Association. Any award shall be final, binding and conclusive
upon the parties and a judgment upon the award rendered thereon may be entered
in any court of competent jurisdiction. Unless otherwise ordered by the
arbitrators, each party to such arbitration shall bear its own costs and
expenses of such arbitration, including its experts, evidence and legal fees
and expenses.
8. This Agreement contains the entire Agreement of the two parties and
supersedes all other agreements, either oral or written, and no
representations or warranties that are not contained herein shall be valid or
binding on the parties hereto.
9. This Agreement may not be changed, modified, amended or supplemented
except by written instrument signed by both parties.
10. This Agreement may not be assigned or otherwise transferred in whole
or in part by either party without the prior written consent of the other
party, which consent shall not be unreasonably withheld.
11. The terms of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assignees of
the parties hereto.
12. If any part, term or provision of this Agreement shall be held
unenforceable, such provision shall be deemed to have been severed from this
Agreement, and the remainder of this Agreement shall nevertheless remain in
full force and effect.
13. Each party hereto agrees to execute, acknowledge and deliver such
other instruments and to do all other such acts as may be necessary or
appropriate in order to carry out the purpose and intend of this Agreement.
14. Neither party shall be liable for any failure to delay in performance
under this Agreement which is due in whole or in part, directly or indirectly
to any cause of any nature beyond the reasonable control of such parties,
including fire, explosion, earthquake, storm, flood, strike, lockout
activities of a combination of workmen or other labor difficulties, war,
insurrection, riot, act of God, or the public enemy, law, regulation,
ordinance or instrument of government or other public authorities, or judgment
or decree of a court of competent jurisdiction (not arising out of breach by
such party of this Agreement). In the event of the happening of such a cause,
the party so affected shall give prompt, written notice to the other party
stating the period of time the same is expected to continue, and shall take
all reasonable measures to ensure that the effects of such case of Force
Majeure is kept as minimal as possible.
15. All notices required by this Agreement shall be in writing. All
notices and reports shall be considered to be delivered when faxed, hand
delivered, or sent by overnight courier. Notices shall be deemed to be given
when received by the other party.
16. Waiver by either party of breach or any provision herein shall be in
writing, and shall in no way be construed as a waiver of any succeeding breach
or provision or the waiver of the provision itself.
17. In performing the Corporate Development consulting services under this
Agreement, NIC and its affiliates shall operate as, and have the status of,
independent contractor. As an independent contractor, NIC will be solely
responsible for determining the means and methods of performing and/or
providing the Corporate Development consulting services described in this
Agreement.
18. NIC will rely upon the accuracy and completeness of information
supplied to it by the Client in the performance of its Corporate Development
activities. Client agrees to hold harmless and bear the cost of defense of
NIC for any claim which arises from Client's negligence in providing accurate
and complete information to NIC.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
NEWRIDERS, INC. NATIONAL INVESTORS COUNCIL
By: /s/ Michael Purcell By: /s/ W R Nordstrom
------------------------ -------------------------
Date: 3/28/97 Date: 2/14/97
----------------------- ------------------------
EXHIBIT 10.4
[BOLEN, FRANSEN & BOOSTROM LLP LETTERHEAD]
November 21, 1997
FACSIMILE AND U.S. MAIL
-----------------------
Mr. William R. Nordstrom
Chief Operating Officer
Newriders,Inc.
567 San Nicolas Drive, Suite 400
Newport Beach, CA 92660
Re: Newriders, Inc./Legal Fees Arrangement
Our File No. 12128.001
------------------------
Dear Mr. Nordstrom:
This letter will confirm the agreement between Newriders, Inc. and this
law firm made by the Board of Directors of Newriders, Inc. in July, 1996,
pursuant to which this law firm agreed to provide legal services in connection
with general business matters other than securities law, to the Company, in
exchange for an issuance of the Company's S-8 stock when it became available.
In particular, we agreed to provide $60,000 worth of legal services billed at
normal rates, in exchange for 40,000 shares of such S-8 stock.
If the foregoing reflects your understanding of the agreement I would
appreciate it if you would so indicate by executing and returning the enclosed
counterpart of this letter.
Thank you for the opportunity to continue to be of services to Newriders,
Inc.
Very truly yours,
/s/ Hal H. Bolen II
Hal H. Bolen II
The foregoing is agreed and acknowledged this 21st day of November, 1997.
/s/ William R. Nordstrom
- ------------------------
WILLIAM R. NORDSTROM
1267
EXHIBIT 23.1
[JONES, JENSEN & COMPANY LETTERHEAD]
November 21, 1997
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTS
As independent certified public accountants, we hereby consent to the use of
our audit report dated June 3, 1997 (and to all references to our Firm)
included in or made a part of the Form S-8 registration statement of
Newriders, Inc. and Subsidiary.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
50 South Main Street, Suite 1450, Salt Lake City, Utah 84144
Telephone (801) 328-408, Facsimile (801) 328-4461
