<PAGE>
As Filed with the Securities and Exchange Commission on February 17, 1999
Registration No.
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
OLYMPIC CASCADE FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-4128138
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
875 NORTH MICHIGAN AVENUE, SUITE 1560 60611
CHICAGO, IL (ZIP CODE)
(Address of Principal Executive Offices)
OLYMPIC CASCADE FINANCIAL CORPORATION
1996 STOCK OPTION PLAN
1997 STOCK OPTION PLAN
1999 STOCK OPTION PLAN
(FULL TITLE OF THE PLAN)
STEVEN A. ROTHSTEIN
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ROBERT H. DASKAL
CHIEF FINANCIAL OFFICER
OLYMPIC CASCADE FINANCIAL CORPORATION
875 North Michigan Avenue, Suite 1560, Chicago, Illinois 60611
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(312) 751-8833
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
ALAN I. ANNEX, ESQ.
ERIC M. ROTH, ESQ.
CAMHY KARLINSKY & STEIN LLP
1740 Broadway, New York, New York 10019-4315
(212) 977-6600
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Title of Securities Amount to be Proposed Maximum Offering Proposed Maximum Amount of
to be Registered Registered Price Aggregate Offering Registration Fee
Per Share (1)(2) Price (1)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, 1,106,537 shares $5.91 $6,539,634 $1,818.02
$.02 par value
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933 (the
"Securities Act"), this registration statement also covers an indeterminate
amount of interests to be offered or sold pursuant to the employee benefit
plan described herein.
(2) The proposed maximum offering price per share has been estimated solely for
the purpose of calculating the registration fee, in accordance with Rule
457(h), on the basis of the average of the high and low prices of the
shares of the Common Stock as reported by The Nasdaq SmallCap Market on
February 16, 1999.
1
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing information specified in Part I are being separately
provided to the participants in the 1996 and 1997 Stock Option Plan as
specified by Rule 428(b)(1).
2
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents, heretofore filed by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to the
Securities and Exchange Act of 1934 (the "Exchange Act"), are hereby
incorporated by reference:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended September 25, 1998;
(b) the Company's Form 10-Q for the fiscal year ended December 31,
1998.
(c) all other reports filed by the Company pursuant to 13(a) or
15(d) of the Exchange Act, since the end of the fiscal year
covered by the Annual Report referred to in (a) above.
(d) the Company's Form 8-A, as filed with the Commission on
July 31, 1998.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing
of a post-effective amendment which indicates that all securities offered
have been sold or which 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 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 in any other subsequently filed document that also is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement 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 Company's Common Stock was registered under Section 12 of the
Exchange Act, pursuant to the Company's Registration Statement on Form S-4
filed on September 27, 1996 and any amendment or report filed for the purpose
of updating such description.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable
Item 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Company's bylaws provide that the Company shall indemnify and
advance the expenses of individual directors, officers, employees and agents
against costs, judgments and other financial liability resulting from any
action alleged to have been taken or omitted by such individual. The bylaws
permit such indemnification if, among other things, the proposed indemnity
acted in good faith with reasonable belief that the conduct was in, or at
least not opposed to, the best interests of the Company, and in the case of a
criminal proceeding, with a reasonable belief that the conduct was not
unlawful. The Company has obtained insurance on behalf of any person who is
or was a director, officer or employee or agent of the Company or is or was
serving at the request of the Company as an officer, employee, or agent of
another corporation, partnership, joint venture, trust other enterprise or
employee benefit plan, against any liability arising out of that person's
status as such, whether or not the Company would have the power to indemnify
that person against such liability.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
3
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Item 8. EXHIBITS. The following is a complete list of exhibits filed as a
part of this Registration Statement:
EXHIBIT NO. DOCUMENT
---------- --------
4.1 National Securities Corporation 1996 Stock Option Plan
(Predecessor to Olympic Cascade Financial Corporation).
4.2 Olympic Cascade Financial Corporation 1997 Stock Option
Plan
4.3 Olympic Cascade Financial Corporation 1999 Stock Option
Plan
5.1 Opinion of Camhy Karlinsky & Stein LLP regarding the
legality of shares of Common Stock being registered.
23.1 Consent of Feldman Sherb Ehrlich & Co., P.C.
23.2 Consent of Moss Adams LLP.
23.3 Consent of Camhy Karlinsky & Stein LLP (included in
Exhibit 5.1).
Item 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes, except as otherwise
specifically provided in the rules of the Commission promulgated under the
Securities Act, that:
(a)(1) The Registrant will file during any period in which it offers or
sells securities, a post-effective amendment to this registration
statement to:
(a)(1)(iii) Include any additional or changed material information in the
Plan;
(a)(1)(iii)(2) Treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time shall be deemed to be the initial bona
fide offering, for determining liability under the Securities
Act; and
(a)(1)(iii)(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(b) 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
that is incorporated by reference in this Registration Statement
relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(h) 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 provisions
referenced in Item 6 of this Registration Statement, or
otherwise, the Registration has been advised that in the opinion
of the Commission, such 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 the public policy expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
4
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago, State of Illinois, on
February 11, 1999.
OLYMPIC CASCADE FINANCIAL CORPORATION
By: /s/Steven A. Rothstein
--------------------------------
Steven A. Rothstein, Chairman, President
and Chief Executive Officer
By: /s/Robert H. Daskal
---------------------------------
Robert H. Daskal, Senior Vice President, Treasurer,
Secretary and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below under the heading "Signature" constitutes and appoints Steven A.
Rothstein and Robert H. Daskal, each as his true and lawful attorney-in-fact
and agent for him and in his name, place and stead, in any and all capacities
to sign any or all amendments to this Registration Statement on Form S-8, and
to file the same with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully for all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- -----
/s/Steven A. Rothstein Chairman, President and February 11, 1999
---------------------------- Chief Executive Officer
Steven A. Rothstein
/s/ Robert I. Kollack Vice Chairman and Director February 11, 1999
Robert I. Kollack
----------------------------
/s/Gary A. Rosenberg Director February 11, 1999
----------------------------
Gary A. Rosenberg
/s/James C. Holcomb, Jr. Director February 11, 1999
----------------------------
James C. Holcomb, Jr.
/s/D.S Patel Director February 11, 1999
----------------------------
D.S. Patel
5
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EXHIBIT 4.1
NATIONAL SECURITIES CORPORATION
1996 STOCK OPTION PLAN
This 1996 Stock Option Plan (the "Plan") of NATIONAL SECURITIES
CORPORATION, a Washington corporation (the "Company"), provides for the grant
of options to acquire shares of the Company's common stock (the "Common
Stock"). Stock options granted under this Plan that qualify under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), are referred
to in the Plan as "Incentive Stock Options." Incentive Stock Options and
stock options that do not qualify under Section 422 of the Code
("Non-Qualified Stock Options") granted under this Plan are referred to as
"Options."
1. PURPOSES.
The purposes of the Plan are to retain the services of valued key
employees and consultants of the Company and such other persons as the Plan
Administrator shall select in accordance with Section 3 below, to encourage
such persons to acquire a greater proprietary interest in the Company,
thereby strengthening their incentive to achieve the objectives of the
shareholders of the Company, and to serve as an aid and inducement in the
hiring of new employees, consultants and other persons selected by the Plan
Administrator.
2. ADMINISTRATOR.
This Plan shall be administered by the Board of Directors of the Company
(the "Board"). If the board so desires, the Plan shall be administered by a
committee designated by the Board and composed of two (2) or more members of
the Board, which committee (the "Committee") may be an executive,
compensation or other committee, including a separate committee especially
created for this purpose. If the Company is or becomes subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Board shall attempt to provide for administration
of the Plan, insofar as it relates to the participation of officers,
directors or stockholders of the Company who are subject to the reporting and
liability provisions of Section 16 of the Exchange Act (the "Insiders"), in a
manner which shall qualify the grant, exercise, expiration or surrender of
Options under this Plan for the treatment afforded by Securities and Exchange
Commission Rule 16b-3, as amended from time to time, or any successor rule or
regulatory requirements (the "Rule"). The Committee shall have the powers
and authority vested in the Board hereunder (including the power and
authority to interpret any provision of this Plan or of any Option). The
members of any such Committee shall serve at the pleasure of the board. A
majority of the members of the Committee shall constitute a quorum, and all
actions of the Committee shall be taken by a majority of the members present.
Any action may be taken by a written instrument signed by all of the members
of the Committee and any action so taken shall be fully effective as if it
had been taken at a meeting. The Board, or any committee thereof appointed
to administer the Plan, is referred to herein as the "Plan Administrator."
Subject to the provisions of the Plan, and with a view to effecting its
purpose, the Plan Administrator shall have sole authority, in its absolute
discretion, to (a) construe and interpret this Plan; (b) define the terms
used in this Plan; (c) prescribe, amend and rescind rules and regulations
relating to this Plan; (d) correct any defect, supply any omission or
reconcile any inconsistency in this Plan; (e) determine the individuals to
whom Options shall be granted under this Plan and whether the Option is an
Incentive Stock Option or a Non-Qualified Stock Option; (f) determine the
time or times at which Options shall be granted under this Plan; (g) subject
to Sections 5(a) of this Plan, determine the number of shares of Common Stock
subject to each Option, the exercise price of each Option, the du ration of
each Option and the times at which each Option shall become exercisable; (h)
determine all other terms and conditions of Options; and (I) make all other
determinations necessary or advisable for the administration of this Plan.
All decisions, determinations and interpretations made by the Plan
Administrator shall be binding and conclusive on all participants in this
Plan and on their legal representatives, heirs and beneficiaries.
1
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3. ELIGIBILITY.
Incentive Stock Options may be granted to any individual who, at the
time the Option is granted, is an employee of the Company or any Related
Corporation (as defined below), including employees who are directors of the
Company ("Employees"). Non-Qualified Stock Options may be granted to
Employees and to such other persons other than directors who are not
Employees as the Plan Administrator shall select. Options may be granted in
substitution for outstanding Options of another corporation in connection
with the merger, consolidation, acquisition of property or stock or other
reorganization between such other corporation and the Company or any
subsidiary of the Company. Options also may be granted in exchange for
outstanding Options. Any person to whom an Option is granted under this Plan
is referred to as an "Optionee."
As used in this Plan, the term "Related Corporation", when referring to
a subsidiary corporation, shall mean any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent (50%)
or more of the total combined voting power of all classes of stock of one of
the other corporations in such chain. When referring to a parent
corporation, the term "Related Corporation" shall mean any corporation (other
than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of granting of the Option, each of the corporations
other than the Company owns stock possessing 50 percent (50%) or more of the
total combined voting power of all classes of stock of one of the other
corporations in such chain.
4. STOCK.
The Plan Administrator is authorized to grant Options to acquire up to a
total of 174,615 shares of the Company's authorized but unissued, or
reacquired, Common Stock. The number of shares with respect to which Options
may be granted hereunder is subject to adjustment as set forth in Section
5(m) of this Plan. If any outstanding Option expires or is terminated for any
reason, the shares of Common Stock allocable to the unexercised portion of
such Option may again be subject to an Option to the same Optionee or to a
different person eligible under Section 3 of this Plan, PROVIDED, HOWEVER,
that any canceled Options will be counted against the maximum number of
shares with respect to which Options may be granted to any particular person
as set forth in section 3 of this Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted under this Plan shall be evidenced by a written
agreement approved by the Plan Administrator (the "Agreement"). Agreements
may contain such additional provisions, not inconsistent with this Plan, as
the Plan Administrator in its discretion may deem advisable. All Options
also shall comply with the following requirements:
(a) NUMBER OF SHARES AND TYPE OF OPTION.
Each Agreement shall state the number of shares of Common Stock to which
it pertains and whether the Option is intended to be an Incentive Stock
Option or a Non-Qualified Stock Option. In the absence of action to the
contrary by the Plan Administrator in connection with the grant of an Option,
all Options shall be Non-Qualified Stock Options. The aggregate fair market
value (determined at the Date of Grant, as defined below) of the stock with
respect to which Incentive Stock Options are exercisable for the first time
by the Optionee during any calendar year (granted under this Plan and all
other Incentive Stock Option plans of the Company, a Related Corporation or a
predecessor corporation) shall not exceed $100,000, or such other limit as
may be prescribed by the Code as it may be amended from time to time. Any
Option which exceeds the annual limit shall not be void but rather shall be a
Non-Qualified Stock Option.
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(b) DATE OF GRANT.
Each Agreement shall state the date of the Plan Administrator has deemed
to the effective date of the Option for purposes of this Plan (the "Date of
Grant").
(c) EXERCISE PRICE.
Each Agreement shall state the price per share of Common Stock at which
it is exercisable. The exercise price shall be fixed by the Plan
Administrator at whatever price the Plan Administrator may determine in the
exercise of its sole discretion in good faith; PROVIDED, HOWEVER, that the
per share exercise price for an Incentive Stock Option shall not be less than
the fair market value per share of the Common Stock at the Date of Grant as
determined by the Plan Administrator in good faith; PROVIDED FURTHER, that
with respect to Incentive Stock Options granted to greater-than-10 percent
(>10%) shareholders of the Company (as determined with reference to Section
424(d) of the Code), the exercise price per share shall not be less than 100
percent (110%) of the fair market value per share of the Common Stock at the
Date of Grant; and PROVIDED FURTHER, that Options granted in substitution for
outstanding options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization
involving such other corporation and the Company or any subsidiary of the
Company may be granted with an exercise price equal to the exercise price for
the substituted option of the other corporation, subject to any adjustment
(i) consistent with the terms of the transaction pursuant to which the
substitution is to occur, or (ii) consistent with Section 162(m) of the Code
and the regulations thereunder (as amended from time to time), if applicable.
(d) DURATION OF OPTIONS.
At the time of the grant of the Options, the Plan Administrator shall
designate, subject to paragraph 5(g) below, the expiration date of the
Option, which date shall not be later than 10 years from the Date of Grant in
the case of Incentive Stock Options; PROVIDED, that the expiration date of
any Incentive Stock Option granted to a greater-than-10 percent shareholder
of the Company (as determined with reference to Section 424(d) of the Code)
shall not be later than five years from the Date of Grant. In the absence of
action to the contrary by the Plan Administrator in connection with the grant
of a particular Option, and except in the case of Incentive Stock Options as
described above, all Options granted under this Plan shall expire five (5)
years from the Date of Grant.
(e) VESTING SCHEDULE.
No Option shall be exercisable until it has vested. The vesting
schedule for each Option shall be specified by the Plan Administrator at the
time of grant of the Option; PROVIDED, that if no vesting schedule is
specified at the time of grant, the Option shall vest with respect to 25% of
the shares subject to such option on the Date of Grant, and shall vest with
respect to the remaining shares according to the following schedule:
NUMBER OF YEARS PERCENTAGE OF TOTAL
FOLLOWING DATE OF GRANT OPTION VESTED
----------------------- -------------------
1 50%
2 75%
3 100%
(f) ACCELERATION OF VESTING.
The vesting of one or more outstanding Options may be accelerated by the
Plan Administrator at such times and in such amounts as it shall determine in
its sole discretion. The vesting of Options also shall be accelerated under the
circumstances described in Sections 5(m) and 5(n) below.
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(g) TERM OF OPTION.
Vested Options shall terminate, to the extent not previously exercised,
upon the first to occur of: (i) the expiration of the Option, as designated
by the Plan Administrator in accordance with Section 5(d) above; (ii) the
date of an Optionee's termination of employment or contractual relationship
with the Company or any Related Corporation for cause (as determined in the
sole discretion of the plan Administrator unless otherwise defined in a
written agreement between the Company and the Optionee); (iii) the expiration
of 30 days from the date of an Optionee's termination of employment or
contractual relationship with the Company or any Related Corporation for any
reason whatsoever other than cause, death or Disability (as defined below)
unless, in the case of a Non-Qualified Stock Option, the exercise period is
extended by the Plan Administrator until a date not later than the expiration
date of the Option; or (iv) the expiration of 60 days from the date of death
of the Optionee; or (v) the expiration of 90 days from the date of the
cessation of an Optionee's employment or contractual relationship by reason
of Disability (as defined below) unless, in the case of a Non-Qualified Stock
Option, the exercise period is extended by the Plan Administrator until a
date not later than the expiration date of the Option. If an Optionee's
employment or contractual relationship is terminated by death, any Option
held by the Optionee shall be exercisable only by the person or persons to
whom such Optionee's rights under such Option shall pass by the Optionee's
will or by the laws of descent and distribution of the state or county of the
Optionee's domicile at the time of death.
For purposes of the Plan, unless otherwise defined in the Agreement,
"Disability" shall mean any physical, mental or other health condition which
substantially impairs the Optionee's ability to perform her or his assigned
duties for one hundred twenty (120) days or more in any two hundred forty
(240) day period or that can be expected to result in death. The Plan
Administrator shall determine whether an Optionee has incurred a Disability
on the basis of medical evidence acceptable to the Plan Administrator. Upon
making a determination of Disability, the Plan Administrator shall, for
purposes of the Plan, determine the date of an Optionee's termination of
employment or contractual relationship.
Unless accelerated in accordance with Section 5(f) above, unvested
Options shall terminate immediately upon termination of employment of the
Optionee by the Company for any reason whatsoever, including death or
Disability. If, in the case of an Incentive Stock Option, an Optionee's
relationship with the Company changes (E.G., from an Employee to a
non-Employee, such as a consultant), such change shall not constitute a
termination of an Optionee's employment with the Company but rather the
Optionee's Incentive Stock Option shall automatically be converted into a
Non-Qualified Stock Option if the Plan Administrator so determines.
For purposes of this Plan, transfer of employment between or among the
Company and/or any Related Corporation shall not be deemed to constitute a
termination of employment with the Company or any Related Corporations. For
purposes of this subsection with respect to Incentive Stock Options,
employment shall be deemed to continue while the Optionee is on military
leave, sick leave or other bona fide leave of absence (as determined by the
Plan Administrator). The foregoing notwithstanding, employment shall not be
deemed to continue beyond the first ninety (90) days of such leave, unless
the Optionee's re-employment rights are guaranteed by statute or by contract.
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(h) EXERCISE OF OPTIONS.
Options shall be exercisable, either all or in part, at any time after
vesting, until termination; PROVIDED, HOWEVER, that after registration of any
of the Company's securities under Section 12 of the Exchange Act and
regardless of when the Option is exercised, any Optionee who is subject to
the reporting and liability provisions of Section 16 of the Exchange Act with
respect to the Company's securities shall be precluded from selling or
transferring any Common Stock or other security underlying an Option during
the six (6) months immediately following the grant of that Option. If less
than all of the shares included in the vested portion of any Option are
purchased, the remainder may be purchased at any subsequent time prior to the
expiration of the Option term. No portion of any Option for less than one
hundred (100) shares (as adjusted pursuant to Section 5(m) below) may by
exercised; PROVIDED, that if the vested portion of any Option is less than
one hundred (100) shares, it may be exercised with respect to all shares for
which it is vested. Only whole shares may be issued pursuant to an Option,
and to the extent that an Option covers less than one (1) share, it is
unexercisable. Options or portions thereof may be exercised by giving
written notice to the Company, which notice shall specify the number of
shares to be purchased, and be accompanied by payment in the amount of the
aggregate exercise price for the Common Stock so purchased, which payment
shall be in the form specified in Section 5(i) below. The Company shall not
be obligated to issue, transfer or deliver a certificate of Common Stock to
any Optionee, or to his personal representative, until the aggregate exercise
price has been paid for all shares for which the Option shall have been
exercised and adequate provision has been made by the Optionee for
satisfaction of any tax withholding obligations associated with such
exercise. During the lifetime of an Optionee, Options are exercisable only
by the Optionee.
(i) PAYMENT UPON EXERCISE OF OPTION.
Upon the exercise of any Option, the aggregate exercise price shall be
paid to the Company in cash or by certified or cashier's check. In addition,
upon approval of the Plan Administrator, an Optionee may pay for all or any
portion of the aggregate exercise price by delivering to the Company shares
of Common Stock previously held by such Optionee, by having the Company
withhold shares issuable upon exercise of the Option or by complying with any
other payment mechanism approved by the Plan Administrator from time to time,
PROVIDED, HOWEVER, that the Plan Administrator shall not approve any payment
mechanism for the exercise of Incentive Stock Options not contemplated by the
Optionee's Incentive Stock Option Agreement. The shares of Common Stock
received or withheld by the Company as payment for shares of Common Stock
purchased upon the exercise of Options shall have a fair market value at the
date of exercise (as determined by the Plan Administrator) equal to the
aggregate exercise price (or portion thereof) to be paid by the Optionee upon
such exercise.
(j) RIGHTS AS A SHAREHOLDER.
An Optionee shall have no rights as a shareholder with respect to any
shares covered by an Option until such Optionee becomes a record holder of
such shares, whether or not such Optionee has given notice of exercise.
Subject to the provisions of Sections 5(m) and 5(n) of this Plan, no rights
shall accrue to an Optionee and no adjustments shall be made on account of
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights declared on, or created in, the
Common Stock for which the record date is prior to the date the Optionee
becomes a record holder of the shares of Common Stock covered by the Option,
whether or not such Optionee has given notice of exercise.
(k) TRANSFER OF OPTION.
Unless otherwise specified in the Agreement or by the Plan
Administrator, Options granted under this Plan and the rights and privileges
conferred by this Plan may not be transferred, assigned, pledged or
hypothecated in any manner (whether by operation of law or otherwise) other
than by will or by applicable laws of descent and distribution, and shall not
be subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any Option or
of any right or privilege conferred by this Plan contrary to the provisions
of this Plan, such Option shall thereupon terminate and become null and void.
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(l) SECURITIES REGULATION AND TAX WITHHOLDING.
(1) Shares shall not be issued with respect to an Option
unless the exercise of such Option and the issuance and delivery of such
shares shall comply with all relevant provisions of law, including, without
limitation, any applicable state securities laws, the Securities Exchange Act
of 1933, as amended, the Exchange Act, the rules and regulations thereunder
and the requirements of any stock exchange upon which such shares may then be
listed, and such issuance shall be further subject to the approval of counsel
for the Company with respect to such compliance, including the availability
of an exemption from registration for the issuance and sale of such shares.
The inability of the Company to obtain from any regulatory body the authority
deemed by the Company to be necessary for the lawful issuance and sale of any
shares under this Plan, or the unavailability of an exemption from
registration for the issuance and sale of any shares under this Plan, shall
relieve the Company of any liability with respect to the non-issuance or sale
of such shares.
As a condition to the exercise of an Option, the Plan Administrator may
require the Optionee to represent and warrant in writing at the time of such
exercise that the shares are being purchased only for investment and without
any then-present intention to sell or distribute such shares. At the option
of the Plan Administrator, a stop-transfer order against such shares may be
placed on the stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel is provided stating that such transfer is not in violation
of any applicable law or regulation, may be stamped on the certificates
representing such shares in order to assure an exemption from registration.
The Plan Administrator also may require such other documentation as may from
time to time be necessary to comply with federal and state securities laws.
THE COMPANY HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE
SHARES OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.
(2) As a condition to the exercise of any Option granted under
this Plan, the Optionee shall make such arrangements as the Plan
Administrator may require for the satisfaction of any federal, state or local
withholding tax obligations that may arise in connection with such exercise,
including, without limitation, arrangements to having the Company withhold
shares issuable upon exercise of the Option.
(3) The issuance, transfer or delivery of certificates of
Common Stock pursuant to the exercise of Options may be delayed, at the
discretion of the Plan Administrator, until the Plan Administrator is
satisfied that the applicable requirements of the federal and state
securities laws and the withholding provisions of the Code have been met.
(m) STOCK DIVIDEND, REORGANIZATION OR LIQUIDATION.
(1) If (i) the Company shall at any time be involved in a
transaction described in Section 424(a) of the Code (or any successor
provision) or any "corporate transaction" described in the regulations
thereunder; (ii) the Company shall declare a dividend payable in, or shall
subdivide or combine, its Common Stock or (iii) any other event with
substantially the same effect shall occur, the Plan Administrator shall, with
respect to each outstanding Option, proportionately adjust the number of
shares of Common Stock and/or the exercise price per share so as to preserve
the rights of the Optionee substantially proportionate to the rights of the
Optionee prior to such event, and to the extent that such action shall
include an increase or decrease in the number of shares of Common Stock
subject to outstanding Options, the number of shares available under Section
4 of this Plan shall automatically be increased or decreased, as the case may
be, proportionately, without further action on the part of the Plan
Administrator, the Company or the Company's shareholders.
(2) If the Company is liquidated or dissolved, the Plan
Administrator may allow the holders of any outstanding Options to exercise
all or any part of the unvested portion of the Options held by them;
PROVIDED, however, that such Options must be exercised prior to the effective
date of such liquidation or dissolution. If the Option holders do not
exercise their Options prior to such effective date, each outstanding Option
shall terminate as of the effective date of the liquidation or dissolution.
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(3) The foregoing adjustments in the shares subject to Options
shall be made by the Plan Administrator, or by any successor administrator of
this Plan, or by the applicable terms of any assumption or substitution
document.
(4) The grant of an Option shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge,
consolidate or dissolve, to liquidate or to sell or transfer all or any part
of its business or assets.
(n) CHANGE IN CONTROL
Unless otherwise determined by the Plan Administrator, any and
all Options that have been outstanding under the Plan for at least six (6)
months at the time of occurrence of any of the events (a "Change in Control")
described in Paragraphs (1), (2) and (3) below (an "Eligible Option") shall
become immediately vested and fully exercisable for the periods indicated
(each such exercise period referred to as an "Acceleration Window"):
1. For a period of 45 days beginning on the day on which any "Person", as such
term is used in sections 13(d) and 14() of the Exchange Act (other
than a shareholder of the company on the date of this Plan, the
Company, a subsidiary or an employee benefit plan of the company,
including any trustee of such plan acting as trustee) together with
all affiliates and associates of such Person, becomes, after the date
of this Plan, the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), of 50% or more of the shares of Common Stock then
outstanding;
2. Beginning on the date that a tender or exchange offer for Common Stock by
any Person (other than the Company, any subsidiary of the Company, any
employee benefit plan of the Company or of any subsidiary of the
Company, or any Person organized, appointed or established by the
Company for or pursuant to the terms of any such employee benefit
plan) is first published or sent or given within the meaning of Rule
14d-2 under the Exchange Act, and continuing so long as such offer
remains open (including any extensions or renewals of such offer),
unless by the terms of such offer the offeror, upon consummation
thereof, would be the Beneficial Owner of less than 50% of the shares
of Common Stock then outstanding; or
3. For a period of 20 days beginning on the day on which the shareholders of
the Company duly approve any merger, consolidation, reorganization or
other transaction providing for the conversion or exchange of more
than 50% of the outstanding shares of Common Stock into securities of
any entity, or cash, or property, or a combination of any of the
foregoing, provided that the holder has agreed in writing to waive his
or her rights, if any, arising under the second paragraph of Section
5(m) above in connection with completion of any of the transactions
described in this clause;
PROVIDED, HOWEVER, that with respect to the event specified in Paragraph (1)
above, such accelerated vesting shall not occur if the event that would
otherwise trigger the accelerated vesting of Eligible Options has received
the prior approval by the affirmative vote of a majority of all of the
directors of the Company, excluding for such purposes the votes of directors
who are directors or officers of, or have a material financial interest in
any entity (other than the Company) who is a party of the event specified in
Paragraph (1) above.
The exercisability of any Eligible Option which remains unexercised
following expiration of an Acceleration Window shall be governed by the
vesting schedule and other terms of the Agreement representing such Option.
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6. EFFECTIVE DATE; TERM.
This Plan shall be effective as of the date this Plan is approved by the
Board (the "Effective Date"). Incentive Stock Options may be granted by the
Plan Administrator from time to time thereafter until the tenth anniversary
of the effective Date. Non-Qualified Stock Options may be granted until this
Plan is terminated by the Board in its sole discretion. Termination of this
Plan shall not terminate any Option granted prior to such termination. The
Plan Administrator may require that any Options granted prior to the approval
of this Plan by the shareholders of the Company shall be granted subject to
ratification of this Plan by the shareholders of the Company within twelve
(12) months after this Plan is adopted by the Board, in such manner as the
Plan Administrator may consider appropriate for the Company and/or the
Optionees to comply with or qualify for the benefits of any securities, tax,
market listing or other administrative or regulatory provisions. If
shareholder ratification is sought but not obtained within twelve (12) months
after this Plan is adopted by the Board, the Plan Administrator may declare
any Option or all Options granted under this Plan to be null and void.
7. NO OBLIGATIONS TO EXERCISE OPTION.
The grant of an Option shall impose no obligation upon the Optionee to
exercise such Option.
8. NO RIGHT TO OPTIONS OR TO EMPLOYMENT.
Whether or not any Options are to be granted under this Plan shall be
exclusively within the discretion of the Plan Administrator, and nothing
contained in this Plan shall be construed as giving any person any right to
participate under this Plan. The grant of an Option shall in no way
constitute any form of agreement or understanding binding on the Company or
any Related Company, express or implied, that the Company or any Related
Company will employ or contract with an Optionee for any length of time, nor
shall it interfere in any way with the Company's or, where applicable, a
Related Company's right to terminate Optionee's employment at any time, which
right is hereby reserved.
9. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock
issued upon the exercise of Options shall be used for general corporate
purposes, unless otherwise directed by the Board.
10. INDEMNIFICATION OF PLAN ADMINISTRATOR.
In addition to all other rights of indemnification they may have as
members of the Board, members of the Plan Administrator shall be indemnified
by the Company for all reasonable expenses and liabilities of any type or
nature, including attorneys' fees, incurred in connection with any action,
suit or proceeding to which they or any of them are a party by reason of, or
in connection with, this Plan or any Option granted under this Plan, and
against all amounts paid by them in settlement thereof (provided that such
settlement is approved by independent legal counsel selected by the Company),
except to the extent that such expenses relate to matters for which it is
adjudged that such Plan Administrator member is liable for willful
misconduct; PROVIDED, that within fifteen (15) days after the institution of
any such action, suit or proceeding, the Plan Administrator member involved
herein shall, in writing, notify the Company of such action, suit or
proceeding, so that the Company may have the opportunity to make appropriate
arrangements to prosecute or defend the same.
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11. AMENDMENT OF PLAN.
The Plan Administrator may, at any time, modify, amend or terminate this
Plan and Options granted under this Plan, including, without limitation, such
modifications or amendments as are necessary to maintain compliance with
applicable statutes, rules or regulations; PROVIDED HOWEVER, that the Plan
Administrator may condition the effectiveness of any such amendment on the
receipt of shareholder approval at such time and in such manner as the Plan
Administrator may consider appropriate for the Company and/or the Optionees
to comply with or to qualify for the benefits of any securities, tax, market
listing or other administrative or regulatory provision. Without limiting
the generality of the foregoing, the Plan Administrator may modify grants to
persons who are eligible to receive Options under this Plan who are foreign
nationals or employed outside the United States to recognize differences in
local law, tax policy or custom.
Date Approved by Board of Directors:
/s/ Mark Roth
Corporate Secretary
Date Approved by Shareholders: ______________________________________
________________________________________
Corporate Secretary
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EXHIBIT 4.2
OLYMPIC CASCADE FINANCIAL CORPORATION
1997 STOCK OPTION PLAN
This 1997 Stock Option Plan (the "Plan") of OLYMPIC CASCADE FINANCIAL
CORPORATION, a Delaware corporation (the "Company"), provides for the grant
of options to acquire shares of the Company's common stock (the "Common
Stock"). Stock options granted under this Plan that qualify under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), are referred
to in the Plan as "Incentive Stock Options." Incentive Stock Options and
stock options that do not qualify under Section 422 of the Code
("Non-Qualified Stock Options") granted under this Plan are referred to as
"Options."
1. PURPOSES.
The purposes of the Plan are to retain the services of valued key
employees and consultants of the Company and such other persons as the Plan
Administrator shall select in accordance with Section 3 below, to encourage
such persons to acquire a greater proprietary interest in the Company,
thereby strengthening their incentive to achieve the objectives of the
shareholders of the Company, and to serve as an aid and inducement in the
hiring of new employees, consultants and other persons selected by the Plan
Administrator.
2. ADMINISTRATOR.
This Plan shall be administered by the Board of Directors of the Company
(the "Board"). If the board so desires, the Plan shall be administered by a
committee designated by the Board and composed of two (2) or more members of
the Board, which committee (the "Committee") may be an executive,
compensation or other committee, including a separate committee especially
created for this purpose. If the Company is or becomes subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Board shall attempt to provide for administration
of the Plan, insofar as it relates to the participation of officers,
directors or stockholders of the Company who are subject to the reporting and
liability provisions of Section 16 of the Exchange Act (the "Insiders"), in a
manner which shall qualify the grant, exercise, expiration or surrender of
Options under this Plan for the treatment afforded by Securities and Exchange
Commission Rule 16b-3, as amended from time to time, or any successor rule or
regulatory requirements (the "Rule"). The Committee shall have the powers
and authority vested in the Board hereunder (including the power and
authority to interpret any provision of this Plan or of any Option). The
members of any such Committee shall serve at the pleasure of the board. A
majority of the members of the Committee shall constitute a quorum, and all
actions of the Committee shall be taken by a majority of the members present.
Any action may be taken by a written instrument signed by all of the members
of the Committee and any action so taken shall be fully effective as if it
had been taken at a meeting. The Board, or any committee thereof appointed
to administer the Plan, is referred to herein as the "Plan Administrator."
Subject to the provisions of the Plan, and with a view to effecting its
purpose, the Plan Administrator shall have sole authority, in its absolute
discretion, to (a) construe and interpret this Plan; (b) define the terms
used in this Plan; (c) prescribe, amend and rescind rules and regulations
relating to this Plan; (d) correct any defect, supply any omission or
reconcile any inconsistency in this Plan; (e) determine the individuals to
whom Options shall be granted under this Plan and whether the Option is an
Incentive Stock Option or a Non-Qualified Stock Option; (f) determine the
time or times at which Options shall be granted under this Plan; (g) subject
to Sections 5(a) of this Plan, determine the number of shares of Common Stock
subject to each Option, the exercise price of each Option, the duration of
each Option and the times at which each Option shall become exercisable; (h)
determine all other terms and conditions of Options; and (i) make all other
determinations necessary or advisable for the administration of this Plan.
All decisions, determinations and interpretations made by the Plan
Administrator shall be binding and conclusive on all participants in this
Plan and on their legal representatives, heirs and beneficiaries.
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3. ELIGIBILITY.
Incentive Stock Options may be granted to any individual who, at the
time the Option is granted, is an employee of the Company or any Related
Corporation (as defined below), including employees who are directors of the
Company ("Employees"). Non-Qualified Stock Options may be granted to
Employees and to such other persons other than directors who are not
Employees as the Plan Administrator shall select. Options may be granted in
substitution for outstanding Options of another corporation in connection
with the merger, consolidation, acquisition of property or stock or other
reorganization between such other corporation and the Company or any
subsidiary of the Company. Options also may be granted in exchange for
outstanding Options. Any person to whom an Option is granted under this Plan
is referred to as an "Optionee."
As used in this Plan, the term "Related Corporation", when referring to
a subsidiary corporation, shall mean any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent (50%)
or more of the total combined voting power of all classes of stock of one of
the other corporations in such chain. When referring to a parent
corporation, the term "Related Corporation" shall mean any corporation (other
than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of granting of the Option, each of the corporations
other than the Company owns stock possessing 50 percent (50%) or more of the
total combined voting power of all classes of stock of one of the other
corporations in such chain.
4. STOCK.
The Plan Administrator is authorized to grant Options to acquire up to a
total of 431,922 shares of the Company's authorized but unissued, or
reacquired, Common Stock. The number of shares with respect to which Options
may be granted hereunder is subject to adjustment as set forth in Section
5(m) of this Plan. If any outstanding Option expires or is terminated for any
reason, the shares of Common Stock allocable to the unexercised portion of
such Option may again be subject to an Option to the same Optionee or to a
different person eligible under Section 3 of this Plan, PROVIDED, HOWEVER,
that any canceled Options will be counted against the maximum number of
shares with respect to which Options may be granted to any particular person
as set forth in section 3 of this Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted under this Plan shall be evidenced by a written
agreement approved by the Plan Administrator (the "Agreement"). Agreements
may contain such additional provisions, not inconsistent with this Plan, as
the Plan Administrator in its discretion may deem advisable. All Options
also shall comply with the following requirements:
(a) NUMBER OF SHARES AND TYPE OF OPTION.
Each Agreement shall state the number of shares of Common Stock to which
it pertains and whether the Option is intended to be an Incentive Stock
Option or a Non-Qualified Stock Option. In the absence of action to the
contrary by the Plan Administrator in connection with the grant of an Option,
all Options shall be Non-Qualified Stock Options. The aggregate fair market
value (determined at the Date of Grant, as defined below) of the stock with
respect to which Incentive Stock Options are exercisable for the first time
by the Optionee during any calendar year (granted under this Plan and all
other Incentive Stock Option plans of the Company, a Related Corporation or a
predecessor corporation) shall not exceed $100,000, or such other limit as
may be prescribed by the Code as it may be amended from time to time. Any
Option which exceeds the annual limit shall not be void but rather shall be a
Non-Qualified Stock Option.
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(b) DATE OF GRANT.
Each Agreement shall state the date of the Plan Administrator has deemed
to the effective date of the Option for purposes of this Plan (the "Date of
Grant").
(c) EXERCISE PRICE.
Each Agreement shall state the price per share of Common Stock at which
it is exercisable. The exercise price shall be fixed by the Plan
Administrator at whatever price the Plan Administrator may determine in the
exercise of its sole discretion in good faith; PROVIDED, HOWEVER, that the
per share exercise price for an Incentive Stock Option shall not be less than
the fair market value per share of the Common Stock at the Date of Grant as
determined by the Plan Administrator in good faith; PROVIDED FURTHER, that
with respect to Incentive Stock Options granted to greater-than-10 percent
(>10%) shareholders of the Company (as determined with reference to Section
424(d) of the Code), the exercise price per share shall not be less than 110
percent (110%) of the fair market value per share of the Common Stock at the
Date of Grant; and PROVIDED FURTHER, that Options granted in substitution for
outstanding options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization
involving such other corporation and the Company or any subsidiary of the
Company may be granted with an exercise price equal to the exercise price for
the substituted option of the other corporation, subject to any adjustment
(i) consistent with the terms of the transaction pursuant to which the
substitution is to occur, or (ii) consistent with Section 162(m) of the Code
and the regulations thereunder (as amended from time to time), if applicable.
(d) DURATION OF OPTIONS.
At the time of the grant of the Options, the Plan Administrator shall
designate, subject to paragraph 5(g) below, the expiration date of the
Option, which date shall not be later than 10 years from the Date of Grant in
the case of Incentive Stock Options; PROVIDED, that the expiration date of
any Incentive Stock Option granted to a greater-than-10 percent shareholder
of the Company (as determined with reference to Section 424(d) of the Code)
shall not be later than five years from the Date of Grant. In the absence of
action to the contrary by the Plan Administrator in connection with the grant
of a particular Option, and except in the case of Incentive Stock Options as
described above, all Options granted under this Plan shall expire five (5)
years from the Date of Grant.
(e) VESTING SCHEDULE.
No Option shall be exercisable until it has vested. The vesting
schedule for each Option shall be specified by the Plan Administrator at the
time of grant of the Option; PROVIDED, that if no vesting schedule is
specified at the time of grant, the Option shall vest with respect to 25% of
the shares subject to such option on the Date of Grant, and shall vest with
respect to the remaining shares according to the following schedule:
Number of Years Percentage of Total
Following Date of Grant Option Vested
----------------------- -------------------
1 50%
2 75%
3 100%
(f) ACCELERATION OF VESTING.
The vesting of one or more outstanding Options may be accelerated by the
Plan Administrator at such times and in such amounts as it shall determine in
its sole discretion. The vesting of Options also shall be accelerated under
the circumstances described in Sections 5(m) and 5(n) below.
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(g) TERM OF OPTION.
Vested Options shall terminate, to the extent not previously exercised,
upon the first to occur of: (i) the expiration of the Option, as designated
by the Plan Administrator in accordance with Section 5(d) above; (ii) the
date of an Optionee's termination of employment or contractual relationship
with the Company or any Related Corporation for cause (as determined in the
sole discretion of the plan Administrator unless otherwise defined in a
written agreement between the Company and the Optionee); (iii) the expiration
of 30 days from the date of an Optionee's termination of employment or
contractual relationship with the Company or any Related Corporation for any
reason whatsoever other than cause, death or Disability (as defined below)
unless, in the case of a Non-Qualified Stock Option, the exercise period is
extended by the Plan Administrator until a date not later than the expiration
date of the Option; or (iv) the expiration of 60 days from the date of death
of the Optionee; or (v) the expiration of 90 days from the date of the
cessation of an Optionee's employment or contractual relationship by reason
of Disability (as defined below) unless, in the case of a Non-Qualified Stock
Option, the exercise period is extended by the Plan Administrator until a
date not later than the expiration date of the Option. If an Optionee's
employment or contractual relationship is terminated by death, any Option
held by the Optionee shall be exercisable only by the person or persons to
whom such Optionee's rights under such Option shall pass by the Optionee's
will or by the laws of descent and distribution of the state or county of the
Optionee's domicile at the time of death.
For purposes of the Plan, unless otherwise defined in the Agreement,
"Disability" shall mean any physical, mental or other health condition which
substantially impairs the Optionee's ability to perform her or his assigned
duties for one hundred twenty (120) days or more in any two hundred forty
(240) day period or that can be expected to result in death. The Plan
Administrator shall determine whether an Optionee has incurred a Disability
on the basis of medical evidence acceptable to the Plan Administrator. Upon
making a determination of Disability, the Plan Administrator shall, for
purposes of the Plan, determine the date of an Optionee's termination of
employment or contractual relationship.
Unless accelerated in accordance with Section 5(f) above, unvested
Options shall terminate immediately upon termination of employment of the
Optionee by the Company for any reason whatsoever, including death or
Disability. If, in the case of an Incentive Stock Option, an Optionee's
relationship with the Company changes (E.G., from an Employee to a
non-Employee, such as a consultant), such change shall not constitute a
termination of an Optionee's employment with the Company but rather the
Optionee's Incentive Stock Option shall automatically be converted into a
Non-Qualified Stock Option if the Plan Administrator so determines.
For purposes of this Plan, transfer of employment between or among the
Company and/or any Related Corporation shall not be deemed to constitute a
termination of employment with the Company or any Related Corporations. For
purposes of this subsection with respect to Incentive Stock Options,
employment shall be deemed to continue while the Optionee is on military
leave, sick leave or other bona fide leave of absence (as determined by the
Plan Administrator). The foregoing notwithstanding, employment shall not be
deemed to continue beyond the first ninety (90) days of such leave, unless
the Optionee's re-employment rights are guaranteed by statute or by contract.
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(h) EXERCISE OF OPTIONS.
Options shall be exercisable, either all or in part, at any time after
vesting, until termination; PROVIDED, HOWEVER, that after registration of any
of the Company's securities under Section 12 of the Exchange Act and
regardless of when the Option is exercised, any Optionee who is subject to
the reporting and liability provisions of Section 16 of the Exchange Act with
respect to the Company's securities shall be precluded from selling or
transferring any Common Stock or other security underlying an Option during
the six (6) months immediately following the grant of that Option. If less
than all of the shares included in the vested portion of any Option are
purchased, the remainder may be purchased at any subsequent time prior to the
expiration of the Option term. No portion of any Option for less than one
hundred (100) shares (as adjusted pursuant to Section 5(m) below) may by
exercised; PROVIDED, that if the vested portion of any Option is less than
one hundred (100) shares, it may be exercised with respect to all shares for
which it is vested. Only whole shares may be issued pursuant to an Option,
and to the extent that an Option covers less than one (1) share, it is
unexercisable. Options or portions thereof may be exercised by giving
written notice to the Company, which notice shall specify the number of
shares to be purchased, and be accompanied by payment in the amount of the
aggregate exercise price for the Common Stock so purchased, which payment
shall be in the form specified in Section 5(i) below. The Company shall not
be obligated to issue, transfer or deliver a certificate of Common Stock to
any Optionee, or to his personal representative, until the aggregate exercise
price has been paid for all shares for which the Option shall have been
exercised and adequate provision has been made by the Optionee for
satisfaction of any tax withholding obligations associated with such
exercise. During the lifetime of an Optionee, Options are exercisable only
by the Optionee.
(i) PAYMENT UPON EXERCISE OF OPTION.
Upon the exercise of any Option, the aggregate exercise price shall be
paid to the Company in cash or by certified or cashier's check. In addition,
upon approval of the Plan Administrator, an Optionee may pay for all or any
portion of the aggregate exercise price by delivering to the Company shares
of Common Stock previously held by such Optionee, by having the Company
withhold shares issuable upon exercise of the Option or by complying with any
other payment mechanism approved by the Plan Administrator from time to time,
PROVIDED, HOWEVER, that the Plan Administrator shall not approve any payment
mechanism for the exercise of Incentive Stock Options not contemplated by the
Optionee's Incentive Stock Option Agreement. The shares of Common Stock
received or withheld by the Company as payment for shares of Common Stock
purchased upon the exercise of Options shall have a fair market value at the
date of exercise (as determined by the Plan Administrator) equal to the
aggregate exercise price (or portion thereof) to be paid by the Optionee upon
such exercise.
(j) RIGHTS AS A SHAREHOLDER.
An Optionee shall have no rights as a shareholder with respect to any
shares covered by an Option until such Optionee becomes a record holder of
such shares, whether or not such Optionee has given notice of exercise.
Subject to the provisions of Sections 5(m) and 5(n) of this Plan, no rights
shall accrue to an Optionee and no adjustments shall be made on account of
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights declared on, or created in, the
Common Stock for which the record date is prior to the date the Optionee
becomes a record holder of the shares of Common Stock covered by the Option,
whether or not such Optionee has given notice of exercise.
(k) TRANSFER OF OPTION.
Unless otherwise specified in the Agreement or by the Plan
Administrator, Options granted under this Plan and the rights and privileges
conferred by this Plan may not be transferred, assigned, pledged or
hypothecated in any manner (whether by operation of law or otherwise) other
than by will or by applicable laws of descent and distribution, and shall not
be subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any Option or
of any right or privilege conferred by this Plan contrary to the provisions
of this Plan, such Option shall thereupon terminate and become null and void.
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(l) SECURITIES REGULATION AND TAX WITHHOLDING.
(1) Shares shall not be issued with respect to an Option
unless the exercise of such Option and the issuance and delivery of such
shares shall comply with all relevant provisions of law, including, without
limitation, any applicable state securities laws, the Securities Exchange Act
of 1933, as amended, the Exchange Act, the rules and regulations thereunder
and the requirements of any stock exchange upon which such shares may then be
listed, and such issuance shall be further subject to the approval of counsel
for the Company with respect to such compliance, including the availability
of an exemption from registration for the issuance and sale of such shares.
The inability of the Company to obtain from any regulatory body the authority
deemed by the Company to be necessary for the lawful issuance and sale of any
shares under this Plan, or the unavailability of an exemption from
registration for the issuance and sale of any shares under this Plan, shall
relieve the Company of any liability with respect to the non-issuance or sale
of such shares.
As a condition to the exercise of an Option, the Plan Administrator may
require the Optionee to represent and warrant in writing at the time of such
exercise that the shares are being purchased only for investment and without
any then-present intention to sell or distribute such shares. At the option
of the Plan Administrator, a stop-transfer order against such shares may be
placed on the stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel is provided stating that such transfer is not in violation
of any applicable law or regulation, may be stamped on the certificates
representing such shares in order to assure an exemption from registration.
The Plan Administrator also may require such other documentation as may from
time to time be necessary to comply with federal and state securities laws.
THE COMPANY HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE
SHARES OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.
(2) As a condition to the exercise of any Option granted under
this Plan, the Optionee shall make such arrangements as the Plan
Administrator may require for the satisfaction of any federal, state or local
withholding tax obligations that may arise in connection with such exercise,
including, without limitation, arrangements to having the Company withhold
shares issuable upon exercise of the Option.
(3) The issuance, transfer or delivery of certificates of
Common Stock pursuant to the exercise of Options may be delayed, at the
discretion of the Plan Administrator, until the Plan Administrator is
satisfied that the applicable requirements of the federal and state
securities laws and the withholding provisions of the Code have been met.
(m) STOCK DIVIDEND, REORGANIZATION OR LIQUIDATION.
(1) If (i) the Company shall at any time be involved in a
transaction described in Section 424(a) of the Code (or any successor
provision) or any "corporate transaction" described in the regulations
thereunder; (ii) the Company shall declare a dividend payable in, or shall
subdivide or combine, its Common Stock or (iii) any other event with
substantially the same effect shall occur, the Plan Administrator shall, with
respect to each outstanding Option, proportionately adjust the number of
shares of Common Stock and/or the exercise price per share so as to preserve
the rights of the Optionee substantially proportionate to the rights of the
Optionee prior to such event, and to the extent that such action shall
include an increase or decrease in the number of shares of Common Stock
subject to outstanding Options, the number of shares available under Section
4 of this Plan shall automatically be increased or decreased, as the case may
be, proportionately, without further action on the part of the Plan
Administrator, the Company or the Company's shareholders.
(2) If the Company is liquidated or dissolved, the Plan
Administrator may allow the holders of any outstanding Options to exercise
all or any part of the unvested portion of the Options held by them;
PROVIDED, however, that such Options must be exercised prior to the effective
date of such liquidation or dissolution. If the Option holders do not
exercise their Options prior to such effective date, each outstanding Option
shall terminate as of the effective date of the liquidation or dissolution.
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(3) The foregoing adjustments in the shares subject to Options
shall be made by the Plan Administrator, or by any successor administrator of
this Plan, or by the applicable terms of any assumption or substitution
document.
(4) The grant of an Option shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge,
consolidate or dissolve, to liquidate or to sell or transfer all or any part
of its business or assets.
(n) CHANGE IN CONTROL
CHANGE IN CONTROL. Unless otherwise determined by the Plan
Administrator, any and all Options that have been outstanding under the Plan
for at least six (6) months at the time of occurrence of any of the events (a
"Change in Control") described in Paragraphs (1), (2) and (3) below (an
"Eligible Option") shall become immediately vested and fully exercisable for
the periods indicated (each such exercise period referred to as an
"Acceleration Window"):
1. For a period of 45 days beginning on the day on which any "Person", as such
term is used in sections 13(d) and 14 of the Exchange Act (other than
a shareholder of the Company on the date of this Plan, the Company, a
subsidiary or an employee benefit plan of the Company, including any
trustee of such plan acting as trustee) together with all affiliates
and associates of such Person, becomes, after the date of this Plan,
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), of 50% or more of the shares of Common Stock then outstanding;
2. Beginning on the date that a tender or exchange offer for Common Stock by
any Person (other than the Company, any subsidiary of the Company, any
employee benefit plan of the Company or of any subsidiary of the
Company, or any Person organized, appointed or established by the
Company for or pursuant to the terms of any such employee benefit
plan) is first published or sent or given within the meaning of Rule
14d-2 under the Exchange Act, and continuing so long as such offer
remains open (including any extensions or renewals of such offer),
unless by the terms of such offer the offeror, upon consummation
thereof, would be the Beneficial Owner of less than 50% of the shares
of Common Stock then outstanding; or
3. For a period of 20 days beginning on the day on which the shareholders of
the Company duly approve any merger, consolidation, reorganization or
other transaction providing for the conversion or exchange of more
than 50% of the outstanding shares of Common Stock into securities of
any entity, or cash, or property, or a combination of any of the
foregoing, provided that the holder has agreed in writing to waive his
or her rights, if any, arising under the second paragraph of Section
5(m) above in connection with completion of any of the transactions
described in this clause;
PROVIDED, HOWEVER, that with respect to the event specified in Paragraph (1)
above, such accelerated vesting shall not occur if the event that would
otherwise trigger the accelerated vesting of Eligible Options has received
the prior approval by the affirmative vote of a majority of all of the
directors of the Company, excluding for such purposes the votes of directors
who are directors or officers of, or have a material financial interest in
any entity (other than the Company) who is a party of the event specified in
Paragraph (1) above.
The exercisability of any Eligible Option which remains unexercised
following expiration of an Acceleration Window shall be governed by the
vesting schedule and other terms of the Agreement representing such Option.
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6. EFFECTIVE DATE; TERM.
This Plan shall be effective as of the date this Plan is approved by the
Board (the "Effective Date"). Incentive Stock Options may be granted by the
Plan Administrator from time to time thereafter until the tenth anniversary
of the effective Date. Non-Qualified Stock Options may be granted until this
Plan is terminated by the Board in its sole discretion. Termination of this
Plan shall not terminate any Option granted prior to such termination. The
Plan Administrator may require that any Options granted prior to the approval
of this Plan by the shareholders of the Company shall be granted subject to
ratification of this Plan by the shareholders of the Company within twelve
(12) months after this Plan is adopted by the Board, in such manner as the
Plan Administrator may consider appropriate for the Company and/or the
Optionees to comply with or qualify for the benefits of any securities, tax,
market listing or other administrative or regulatory provisions. If
shareholder ratification is sought but not obtained within twelve (12) months
after this Plan is adopted by the Board, the Plan Administrator may declare
any Option or all Options granted under this Plan to be null and void.
7. NO OBLIGATIONS TO EXERCISE OPTION.
The grant of an Option shall impose no obligation upon the Optionee to
exercise such Option.
8. NO RIGHT TO OPTIONS OR TO EMPLOYMENT.
Whether or not any Options are to be granted under this Plan shall be
exclusively within the discretion of the Plan Administrator, and nothing
contained in this Plan shall be construed as giving any person any right to
participate under this Plan. The grant of an Option shall in no way
constitute any form of agreement or understanding binding on the Company or
any Related Company, express or implied, that the Company or any Related
Company will employ or contract with an Optionee for any length of time, nor
shall it interfere in any way with the Company's or, where applicable, a
Related Company's right to terminate Optionee's employment at any time, which
right is hereby reserved.
9. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock
issued upon the exercise of Options shall be used for general corporate
purposes, unless otherwise directed by the Board.
10. INDEMNIFICATION OF PLAN ADMINISTRATOR.
In addition to all other rights of indemnification they may have as
members of the Board, members of the Plan Administrator shall be indemnified
by the Company for all reasonable expenses and liabilities of any type or
nature, including attorneys' fees, incurred in connection with any action,
suit or proceeding to which they or any of them are a party by reason of, or
in connection with, this Plan or any Option granted under this Plan, and
against all amounts paid by them in settlement thereof (provided that such
settlement is approved by independent legal counsel selected by the Company),
except to the extent that such expenses relate to matters for which it is
adjudged that such Plan Administrator member is liable for willful
misconduct; PROVIDED, that within fifteen (15) days after the institution of
any such action, suit or proceeding, the Plan Administrator member involved
herein shall, in writing, notify the Company of such action, suit or
proceeding, so that the Company may have the opportunity to make appropriate
arrangements to prosecute or defend the same.
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11. AMENDMENT OF PLAN.
The Plan Administrator may, at any time, modify, amend or terminate this
Plan and Options granted under this Plan, including, without limitation, such
modifications or amendments as are necessary to maintain compliance with
applicable statutes, rules or regulations; PROVIDED HOWEVER, that the Plan
Administrator may condition the effectiveness of any such amendment on the
receipt of shareholder approval at such time and in such manner as the Plan
Administrator may consider appropriate for the Company and/or the Optionees
to comply with or to qualify for the benefits of any securities, tax, market
listing or other administrative or regulatory provision. Without limiting
the generality of the foregoing, the Plan Administrator may modify grants to
persons who are eligible to receive Options under this Plan who are foreign
nationals or employed outside the United States to recognize differences in
local law, tax policy or custom.
Date Approved by Board of Directors: February
/s/ Mark Roth
Corporate Secretary
Date Approved by Shareholders: _______________________________________
__________________________________________
Corporate Secretary
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EXHIBIT 4.3
OLYMPIC CASCADE FINANCIAL CORPORATION
1999 STOCK OPTION PLAN
This 1999 Stock Option Plan (the "Plan") of OLYMPIC CASCADE FINANCIAL
CORPORATION, a Delaware corporation (the "Company"), provides for the grant
of options to acquire shares of the Company's common stock (the "Common
Stock"). Stock options granted under this Plan that qualify under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), are referred
to in the Plan as "Incentive Stock Options." Incentive Stock Options and
stock options that do not qualify under Section 422 of the Code
("Non-Qualified Stock Options") granted under this Plan are referred to as
"Options."
1. PURPOSES.
The purposes of the Plan are to retain the services of valued key
employees and consultants of the Company and such other persons as the Plan
Administrator shall select in accordance with Section 3 below, to encourage
such persons to acquire a greater proprietary interest in the Company,
thereby strengthening their incentive to achieve the objectives of the
shareholders of the Company, and to serve as an aid and inducement in the
hiring of new employees, consultants and other persons selected by the Plan
Administrator.
2. ADMINISTRATOR.
This Plan shall be administered by the Board of Directors of the Company
(the "Board"). If the board so desires, the Plan shall be administered by a
committee designated by the Board and composed of two (2) or more members of
the Board, which committee (the "Committee") may be an executive,
compensation or other committee, including a separate committee especially
created for this purpose. If the Company is or becomes subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Board shall attempt to provide for administration
of the Plan, insofar as it relates to the participation of officers,
directors or stockholders of the Company who are subject to the reporting and
liability provisions of Section 16 of the Exchange Act (the "Insiders"), in a
manner which shall qualify the grant, exercise, expiration or surrender of
Options under this Plan for the treatment afforded by Securities and Exchange
Commission Rule 16b-3, as amended from time to time, or any successor rule or
regulatory requirements (the "Rule"). The Committee shall have the powers
and authority vested in the Board hereunder (including the power and
authority to interpret any provision of this Plan or of any Option). The
members of any such Committee shall serve at the pleasure of the board. A
majority of the members of the Committee shall constitute a quorum, and all
actions of the Committee shall be taken by a majority of the members present.
Any action may be taken by a written instrument signed by all of the members
of the Committee and any action so taken shall be fully effective as if it
had been taken at a meeting. The Board, or any committee thereof appointed
to administer the Plan, is referred to herein as the "Plan Administrator."
Subject to the provisions of the Plan, and with a view to effecting its
purpose, the Plan Administrator shall have sole authority, in its absolute
discretion, to (a) construe and interpret this Plan; (b) define the terms
used in this Plan; (c) prescribe, amend and rescind rules and regulations
relating to this Plan; (d) correct any defect, supply any omission or
reconcile any inconsistency in this Plan; (e) determine the individuals to
whom Options shall be granted under this Plan and whether the Option is an
Incentive Stock Option or a Non-Qualified Stock Option; (f) determine the
time or times at which Options shall be granted under this Plan; (g) subject
to Sections 5(a) of this Plan, determine the number of shares of Common Stock
subject to each Option, the exercise price of each Option, the duration of
each Option and the times at which each Option shall become exercisable; (h)
determine all other terms and conditions of Options; and (i) make all other
determinations necessary or advisable for the administration of this Plan.
All decisions, determinations and interpretations made by the Plan
Administrator shall be binding and conclusive on all participants in this
Plan and on their legal representatives, heirs and beneficiaries.
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3. ELIGIBILITY.
Incentive Stock Options may be granted to any individual who, at the
time the Option is granted, is an employee of the Company or any Related
Corporation (as defined below), including employees who are directors of the
Company ("Employees"). Non-Qualified Stock Options may be granted to
Employees and to such other persons other than directors who are not
Employees as the Plan Administrator shall select. Options may be granted in
substitution for outstanding Options of another corporation in connection
with the merger, consolidation, acquisition of property or stock or other
reorganization between such other corporation and the Company or any
subsidiary of the Company. Options also may be granted in exchange for
outstanding Options. Any person to whom an Option is granted under this Plan
is referred to as an "Optionee."
As used in this Plan, the term "Related Corporation", when referring to
a subsidiary corporation, shall mean any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent (50%)
or more of the total combined voting power of all classes of stock of one of
the other corporations in such chain. When referring to a parent
corporation, the term "Related Corporation" shall mean any corporation (other
than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of granting of the Option, each of the corporations
other than the Company owns stock possessing 50 percent (50%) or more of the
total combined voting power of all classes of stock of one of the other
corporations in such chain.
4. STOCK.
The Plan Administrator is authorized to grant Options to acquire up to a
total of 500,000 shares of the Company's authorized but unissued, or
reacquired, Common Stock. The number of shares with respect to which Options
may be granted hereunder is subject to adjustment as set forth in Section
5(m) of this Plan. If any outstanding Option expires or is terminated for any
reason, the shares of Common Stock allocable to the unexercised portion of
such Option may again be subject to an Option to the same Optionee or to a
different person eligible under Section 3 of this Plan, PROVIDED, HOWEVER,
that any canceled Options will be counted against the maximum number of
shares with respect to which Options may be granted to any particular person
as set forth in section 3 of this Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted under this Plan shall be evidenced by a written
agreement approved by the Plan Administrator (the "Agreement"). Agreements
may contain such additional provisions, not inconsistent with this Plan, as
the Plan Administrator in its discretion may deem advisable. All Options
also shall comply with the following requirements:
(a) NUMBER OF SHARES AND TYPE OF OPTION.
Each Agreement shall state the number of shares of Common Stock to which
it pertains and whether the Option is intended to be an Incentive Stock
Option or a Non-Qualified Stock Option. In the absence of action to the
contrary by the Plan Administrator in connection with the grant of an Option,
all Options shall be Non-Qualified Stock Options. The aggregate fair market
value (determined at the Date of Grant, as defined below) of the stock with
respect to which Incentive Stock Options are exercisable for the first time
by the Optionee during any calendar year (granted under this Plan and all
other Incentive Stock Option plans of the Company, a Related Corporation or a
predecessor corporation) shall not exceed $100,000, or such other limit as
may be prescribed by the Code as it may be amended from time to time. Any
Option which exceeds the annual limit shall not be void but rather shall be a
Non-Qualified Stock Option.
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(b) DATE OF GRANT.
Each Agreement shall state the date of the Plan Administrator has deemed
to the effective date of the Option for purposes of this Plan (the "Date of
Grant").
(c) EXERCISE PRICE.
Each Agreement shall state the price per share of Common Stock at which
it is exercisable. The exercise price shall be fixed by the Plan
Administrator at whatever price the Plan Administrator may determine in the
exercise of its sole discretion in good faith; PROVIDED, HOWEVER, that the
per share exercise price for an Incentive Stock Option shall not be less than
the fair market value per share of the Common Stock at the Date of Grant as
determined by the Plan Administrator in good faith; PROVIDED FURTHER, that
with respect to Incentive Stock Options granted to greater-than-10 percent
(>10%) shareholders of the Company (as determined with reference to Section
424(d) of the Code), the exercise price per share shall not be less than 110
percent (110%) of the fair market value per share of the Common Stock at the
Date of Grant; and PROVIDED FURTHER, that Options granted in substitution for
outstanding options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization
involving such other corporation and the Company or any subsidiary of the
Company may be granted with an exercise price equal to the exercise price for
the substituted option of the other corporation, subject to any adjustment
(i) consistent with the terms of the transaction pursuant to which the
substitution is to occur, or (ii) consistent with Section 162(m) of the Code
and the regulations thereunder (as amended from time to time), if applicable.
(d) DURATION OF OPTIONS.
At the time of the grant of the Options, the Plan Administrator shall
designate, subject to paragraph 5(g) below, the expiration date of the
Option, which date shall not be later than 10 years from the Date of Grant in
the case of Incentive Stock Options; PROVIDED, that the expiration date of
any Incentive Stock Option granted to a greater-than-10 percent shareholder
of the Company (as determined with reference to Section 424(d) of the Code)
shall not be later than five years from the Date of Grant. In the absence of
action to the contrary by the Plan Administrator in connection with the grant
of a particular Option, and except in the case of Incentive Stock Options as
described above, all Options granted under this Plan shall expire five (5)
years from the Date of Grant.
(e) VESTING SCHEDULE.
No Option shall be exercisable until it has vested. The vesting
schedule for each Option shall be specified by the Plan Administrator at the
time of grant of the Option; PROVIDED, that if no vesting schedule is
specified at the time of grant, the Option shall vest with respect to 25% of
the shares subject to such option on the Date of Grant, and shall vest with
respect to the remaining shares according to the following schedule:
Number of Years Percentage of Total
Following Date of Grant Option Vested
----------------------- -------------------
1 50%
2 75%
3 100%
(f) ACCELERATION OF VESTING.
The vesting of one or more outstanding Options may be accelerated by the
Plan Administrator at such times and in such amounts as it shall determine in
its sole discretion. The vesting of Options also shall be accelerated under
the circumstances described in Sections 5(m) and 5(n) below.
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(g) TERM OF OPTION.
Vested Options shall terminate, to the extent not previously exercised,
upon the first to occur of: (i) the expiration of the Option, as designated
by the Plan Administrator in accordance with Section 5(d) above; (ii) the
date of an Optionee's termination of employment or contractual relationship
with the Company or any Related Corporation for cause (as determined in the
sole discretion of the plan Administrator unless otherwise defined in a
written agreement between the Company and the Optionee); (iii) the expiration
of 30 days from the date of an Optionee's termination of employment or
contractual relationship with the Company or any Related Corporation for any
reason whatsoever other than cause, death or Disability (as defined below)
unless, in the case of a Non-Qualified Stock Option, the exercise period is
extended by the Plan Administrator until a date not later than the expiration
date of the Option; or (iv) the expiration of 60 days from the date of death
of the Optionee; or (v) the expiration of 90 days from the date of the
cessation of an Optionee's employment or contractual relationship by reason
of Disability (as defined below) unless, in the case of a Non-Qualified Stock
Option, the exercise period is extended by the Plan Administrator until a
date not later than the expiration date of the Option. If an Optionee's
employment or contractual relationship is terminated by death, any Option
held by the Optionee shall be exercisable only by the person or persons to
whom such Optionee's rights under such Option shall pass by the Optionee's
will or by the laws of descent and distribution of the state or county of the
Optionee's domicile at the time of death.
For purposes of the Plan, unless otherwise defined in the Agreement,
"Disability" shall mean any physical, mental or other health condition which
substantially impairs the Optionee's ability to perform her or his assigned
duties for one hundred twenty (120) days or more in any two hundred forty
(240) day period or that can be expected to result in death. The Plan
Administrator shall determine whether an Optionee has incurred a Disability
on the basis of medical evidence acceptable to the Plan Administrator. Upon
making a determination of Disability, the Plan Administrator shall, for
purposes of the Plan, determine the date of an Optionee's termination of
employment or contractual relationship.
Unless accelerated in accordance with Section 5(f) above, unvested
Options shall terminate immediately upon termination of employment of the
Optionee by the Company for any reason whatsoever, including death or
Disability. If, in the case of an Incentive Stock Option, an Optionee's
relationship with the Company changes (E.G., from an Employee to a
non-Employee, such as a consultant), such change shall not constitute a
termination of an Optionee's employment with the Company but rather the
Optionee's Incentive Stock Option shall automatically be converted into a
Non-Qualified Stock Option if the Plan Administrator so determines.
For purposes of this Plan, transfer of employment between or among the
Company and/or any Related Corporation shall not be deemed to constitute a
termination of employment with the Company or any Related Corporations. For
purposes of this subsection with respect to Incentive Stock Options, employment
shall be deemed to continue while the Optionee is on military leave, sick leave
or other bona fide leave of absence (as determined by the Plan Administrator).
The foregoing notwithstanding, employment shall not be deemed to continue beyond
the first ninety (90) days of such leave, unless the Optionee's re-employment
rights are guaranteed by statute or by contract.
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(h) EXERCISE OF OPTIONS.
Options shall be exercisable, either all or in part, at any time after
vesting, until termination; PROVIDED, HOWEVER, that after registration of any
of the Company's securities under Section 12 of the Exchange Act and
regardless of when the Option is exercised, any Optionee who is subject to
the reporting and liability provisions of Section 16 of the Exchange Act with
respect to the Company's securities shall be precluded from selling or
transferring any Common Stock or other security underlying an Option during
the six (6) months immediately following the grant of that Option. If less
than all of the shares included in the vested portion of any Option are
purchased, the remainder may be purchased at any subsequent time prior to the
expiration of the Option term. No portion of any Option for less than one
hundred (100) shares (as adjusted pursuant to Section 5(m) below) may by
exercised; PROVIDED, that if the vested portion of any Option is less than
one hundred (100) shares, it may be exercised with respect to all shares for
which it is vested. Only whole shares may be issued pursuant to an Option,
and to the extent that an Option covers less than one (1) share, it is
unexercisable. Options or portions thereof may be exercised by giving
written notice to the Company, which notice shall specify the number of
shares to be purchased, and be accompanied by payment in the amount of the
aggregate exercise price for the Common Stock so purchased, which payment
shall be in the form specified in Section 5(i) below. The Company shall not
be obligated to issue, transfer or deliver a certificate of Common Stock to
any Optionee, or to his personal representative, until the aggregate exercise
price has been paid for all shares for which the Option shall have been
exercised and adequate provision has been made by the Optionee for
satisfaction of any tax withholding obligations associated with such
exercise. During the lifetime of an Optionee, Options are exercisable only
by the Optionee.
(i) PAYMENT UPON EXERCISE OF OPTION.
Upon the exercise of any Option, the aggregate exercise price shall be
paid to the Company in cash or by certified or cashier's check. In addition,
upon approval of the Plan Administrator, an Optionee may pay for all or any
portion of the aggregate exercise price by delivering to the Company shares
of Common Stock previously held by such Optionee, by having the Company
withhold shares issuable upon exercise of the Option or by complying with any
other payment mechanism approved by the Plan Administrator from time to time,
PROVIDED, HOWEVER, that the Plan Administrator shall not approve any payment
mechanism for the exercise of Incentive Stock Options not contemplated by the
Optionee's Incentive Stock Option Agreement. The shares of Common Stock
received or withheld by the Company as payment for shares of Common Stock
purchased upon the exercise of Options shall have a fair market value at the
date of exercise (as determined by the Plan Administrator) equal to the
aggregate exercise price (or portion thereof) to be paid by the Optionee upon
such exercise.
(j) RIGHTS AS A SHAREHOLDER.
An Optionee shall have no rights as a shareholder with respect to any
shares covered by an Option until such Optionee becomes a record holder of
such shares, whether or not such Optionee has given notice of exercise.
Subject to the provisions of Sections 5(m) and 5(n) of this Plan, no rights
shall accrue to an Optionee and no adjustments shall be made on account of
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights declared on, or created in, the
Common Stock for which the record date is prior to the date the Optionee
becomes a record holder of the shares of Common Stock covered by the Option,
whether or not such Optionee has given notice of exercise.
(k) TRANSFER OF OPTION.
Unless otherwise specified in the Agreement or by the Plan
Administrator, Options granted under this Plan and the rights and privileges
conferred by this Plan may not be transferred, assigned, pledged or
hypothecated in any manner (whether by operation of law or otherwise) other
than by will or by applicable laws of descent and distribution, and shall not
be subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any Option or
of any right or privilege conferred by this Plan contrary to the provisions
of this Plan, such Option shall thereupon terminate and become null and void.
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(l) SECURITIES REGULATION AND TAX WITHHOLDING.
(1) Shares shall not be issued with respect to an Option
unless the exercise of such Option and the issuance and delivery of such
shares shall comply with all relevant provisions of law, including, without
limitation, any applicable state securities laws, the Securities Exchange Act
of 1933, as amended, the Exchange Act, the rules and regulations thereunder
and the requirements of any stock exchange upon which such shares may then be
listed, and such issuance shall be further subject to the approval of counsel
for the Company with respect to such compliance, including the availability
of an exemption from registration for the issuance and sale of such shares.
The inability of the Company to obtain from any regulatory body the authority
deemed by the Company to be necessary for the lawful issuance and sale of any
shares under this Plan, or the unavailability of an exemption from
registration for the issuance and sale of any shares under this Plan, shall
relieve the Company of any liability with respect to the non-issuance or sale
of such shares.
As a condition to the exercise of an Option, the Plan Administrator may
require the Optionee to represent and warrant in writing at the time of such
exercise that the shares are being purchased only for investment and without
any then-present intention to sell or distribute such shares. At the option
of the Plan Administrator, a stop-transfer order against such shares may be
placed on the stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel is provided stating that such transfer is not in violation
of any applicable law or regulation, may be stamped on the certificates
representing such shares in order to assure an exemption from registration.
The Plan Administrator also may require such other documentation as may from
time to time be necessary to comply with federal and state securities laws.
THE COMPANY HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE
SHARES OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.
(2) As a condition to the exercise of any Option granted under
this Plan, the Optionee shall make such arrangements as the Plan
Administrator may require for the satisfaction of any federal, state or local
withholding tax obligations that may arise in connection with such exercise,
including, without limitation, arrangements to having the Company withhold
shares issuable upon exercise of the Option.
(3) The issuance, transfer or delivery of certificates of Common
Stock pursuant to the exercise of Options may be delayed, at the discretion of
the Plan Administrator, until the Plan Administrator is satisfied that the
applicable requirements of the federal and state securities laws and the
withholding provisions of the Code have been met.
(m) STOCK DIVIDEND, REORGANIZATION OR LIQUIDATION.
(1) If (i) the Company shall at any time be involved in a
transaction described in Section 424(a) of the Code (or any successor
provision) or any "corporate transaction" described in the regulations
thereunder; (ii) the Company shall declare a dividend payable in, or shall
subdivide or combine, its Common Stock or (iii) any other event with
substantially the same effect shall occur, the Plan Administrator shall, with
respect to each outstanding Option, proportionately adjust the number of
shares of Common Stock and/or the exercise price per share so as to preserve
the rights of the Optionee substantially proportionate to the rights of the
Optionee prior to such event, and to the extent that such action shall
include an increase or decrease in the number of shares of Common Stock
subject to outstanding Options, the number of shares available under Section
4 of this Plan shall automatically be increased or decreased, as the case may
be, proportionately, without further action on the part of the Plan
Administrator, the Company or the Company's shareholders.
(2) If the Company is liquidated or dissolved, the Plan
Administrator may allow the holders of any outstanding Options to exercise
all or any part of the unvested portion of the Options held by them;
PROVIDED, however, that such Options must be exercised prior to the effective
date of such liquidation or dissolution. If the Option holders do not
exercise their Options prior to such effective date, each outstanding Option
shall terminate as of the effective date of the liquidation or dissolution.
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(3) The foregoing adjustments in the shares subject to Options
shall be made by the Plan Administrator, or by any successor administrator of
this Plan, or by the applicable terms of any assumption or substitution
document.
(4) The grant of an Option shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge,
consolidate or dissolve, to liquidate or to sell or transfer all or any part
of its business or assets.
(n) CHANGE IN CONTROL
CHANGE IN CONTROL. Unless otherwise determined by the Plan
Administrator, any and all Options that have been outstanding under the Plan
for at least six (6) months at the time of occurrence of any of the events (a
"Change in Control") described in Paragraphs (1), (2) and (3) below (an
"Eligible Option") shall become immediately vested and fully exercisable for
the periods indicated (each such exercise period referred to as an
"Acceleration Window"):
1. For a period of 45 days beginning on the day on which any "Person", as such
term is used in sections 13(d) and 14 of the Exchange Act (other than
a shareholder of the Company on the date of this Plan, the Company, a
subsidiary or an employee benefit plan of the Company, including any
trustee of such plan acting as trustee) together with all affiliates
and associates of such Person, becomes, after the date of this Plan,
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), of 50% or more of the shares of Common Stock then outstanding;
2. Beginning on the date that a tender or exchange offer for Common Stock by
any Person (other than the Company, any subsidiary of the Company, any
employee benefit plan of the Company or of any subsidiary of the
Company, or any Person organized, appointed or established by the
Company for or pursuant to the terms of any such employee benefit
plan) is first published or sent or given within the meaning of Rule
14d-2 under the Exchange Act, and continuing so long as such offer
remains open (including any extensions or renewals of such offer),
unless by the terms of such offer the offeror, upon consummation
thereof, would be the Beneficial Owner of less than 50% of the shares
of Common Stock then outstanding; or
3. For a period of 20 days beginning on the day on which the shareholders of
the Company duly approve any merger, consolidation, reorganization or
other transaction providing for the conversion or exchange of more
than 50% of the outstanding shares of Common Stock into securities of
any entity, or cash, or property, or a combination of any of the
foregoing, provided that the holder has agreed in writing to waive his
or her rights, if any, arising under the second paragraph of Section
5(m) above in connection with completion of any of the transactions
described in this clause;
PROVIDED, HOWEVER, that with respect to the event specified in Paragraph (1)
above, such accelerated vesting shall not occur if the event that would
otherwise trigger the accelerated vesting of Eligible Options has received
the prior approval by the affirmative vote of a majority of all of the
directors of the Company, excluding for such purposes the votes of directors
who are directors or officers of, or have a material financial interest in
any entity (other than the Company) who is a party of the event specified in
Paragraph (1) above.
The exercisability of any Eligible Option which remains unexercised
following expiration of an Acceleration Window shall be governed by the
vesting schedule and other terms of the Agreement representing such Option.
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6. EFFECTIVE DATE; TERM.
This Plan shall be effective as of the date this Plan is approved by the
Board (the "Effective Date"). Incentive Stock Options may be granted by the
Plan Administrator from time to time thereafter until the tenth anniversary
of the effective Date. Non-Qualified Stock Options may be granted until this
Plan is terminated by the Board in its sole discretion. Termination of this
Plan shall not terminate any Option granted prior to such termination. The
Plan Administrator may require that any Options granted prior to the approval
of this Plan by the shareholders of the Company shall be granted subject to
ratification of this Plan by the shareholders of the Company within twelve
(12) months after this Plan is adopted by the Board, in such manner as the
Plan Administrator may consider appropriate for the Company and/or the
Optionees to comply with or qualify for the benefits of any securities, tax,
market listing or other administrative or regulatory provisions. If
shareholder ratification is sought but not obtained within twelve (12) months
after this Plan is adopted by the Board, the Plan Administrator may declare
any Option or all Options granted under this Plan to be null and void.
7. NO OBLIGATIONS TO EXERCISE OPTION.
The grant of an Option shall impose no obligation upon the Optionee to
exercise such Option.
8. NO RIGHT TO OPTIONS OR TO EMPLOYMENT.
Whether or not any Options are to be granted under this Plan shall be
exclusively within the discretion of the Plan Administrator, and nothing
contained in this Plan shall be construed as giving any person any right to
participate under this Plan. The grant of an Option shall in no way
constitute any form of agreement or understanding binding on the Company or
any Related Company, express or implied, that the Company or any Related
Company will employ or contract with an Optionee for any length of time, nor
shall it interfere in any way with the Company's or, where applicable, a
Related Company's right to terminate Optionee's employment at any time, which
right is hereby reserved.
9. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock
issued upon the exercise of Options shall be used for general corporate
purposes, unless otherwise directed by the Board.
10. INDEMNIFICATION OF PLAN ADMINISTRATOR.
In addition to all other rights of indemnification they may have as
members of the Board, members of the Plan Administrator shall be indemnified
by the Company for all reasonable expenses and liabilities of any type or
nature, including attorneys' fees, incurred in connection with any action,
suit or proceeding to which they or any of them are a party by reason of, or
in connection with, this Plan or any Option granted under this Plan, and
against all amounts paid by them in settlement thereof (provided that such
settlement is approved by independent legal counsel selected by the Company),
except to the extent that such expenses relate to matters for which it is
adjudged that such Plan Administrator member is liable for willful
misconduct; PROVIDED, that within fifteen (15) days after the institution of
any such action, suit or proceeding, the Plan Administrator member involved
herein shall, in writing, notify the Company of such action, suit or
proceeding, so that the Company may have the opportunity to make appropriate
arrangements to prosecute or defend the same.
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11. AMENDMENT OF PLAN.
The Plan Administrator may, at any time, modify, amend or terminate this
Plan and Options granted under this Plan, including, without limitation, such
modifications or amendments as are necessary to maintain compliance with
applicable statutes, rules or regulations; PROVIDED HOWEVER, that the Plan
Administrator may condition the effectiveness of any such amendment on the
receipt of shareholder approval at such time and in such manner as the Plan
Administrator may consider appropriate for the Company and/or the Optionees
to comply with or to qualify for the benefits of any securities, tax, market
listing or other administrative or regulatory provision. Without limiting
the generality of the foregoing, the Plan Administrator may modify grants to
persons who are eligible to receive Options under this Plan who are foreign
nationals or employed outside the United States to recognize differences in
local law, tax policy or custom.
Date Approved by Board of Directors: February 11, 1999
/s/_Robert H. Daskal
Corporate Secretary
Date Approved by Shareholders: _______________________________________
__________________________________________
Corporate Secretary
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EXHIBIT 5.1
February 16, 1999
Olympic Cascade Financial Corporation
875 North Michigan Avenue
Chicago, Illinois 60611
Re: REGISTRATION STATEMENT ON FORM S-8
Dear Sir/Madam:
We have reviewed the Registration Statement on Form S-8 (the
"Registration Statement") filed under the Securities Act of 1933 as amended
(the "Act"), by Olympic Cascade Financial Corporation, a Delaware corporation
(the "Company"), on February 16, 1999. The Registration Statement has been
filed for the purpose of registering for offer and sale under the Act, up to
870,320 shares (the "Shares") of the Company's Common Stock, $.02 par value
(the "Common Stock") issuable under the Company's 1996 Stock Option Plan, its
1997 Stock Option Plan and its 1999 Stock Option Plan (collectively, the
"Plans").
We have examined your Certificate of Incorporation as amended, your
Bylaws and such documents, corporate records and questions of law as we have
deemed necessary solely for the purpose of enabling us to render this
opinion. In conducting our examination, we have assumed, without
investigation, the genuineness of all signatures, the correctness of all
certificates, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of such
copies, and the accuracy and completeness of all records made available to us
by the Company, and public officials. In addition, we have assumed, without
investigation, the accuracy of representations and statements as to factual
matters made by officers and employees of the Company.
In addition, the opinions hereinafter expressed are subject to the
following qualifications:
(a) Our opinion in Paragraph 1 below as to the good standing of the
Company and its subsidiaries is based solely upon certificates from public
officials and verbal confirmation from the State of Delaware.
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(b) Our opinions below are limited to the matters expressly set forth
in this opinion letter, and no opinion is to be implied or may be inferred
beyond the matters expressly so stated.
(c) We disclaim any obligation to update this letter for events
occurring after the date of this opinion letter.
(d) We are members of the Bar of the State of New York. Our opinions
below are limited solely to the effect of the laws of the State of New York,
the General Corporation Law of the State of Delaware and of the federal laws
of the United States.
On the basis of such examination, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing
and in good standing under the laws of the State of Delaware.
2. The Company has an authorized capitalization of 6,100,000 shares of
capital stock consisting of 6,000,000 shares of Common Stock, $.02 par value,
and 100,000 shares of Preferred Stock, $.01 par value.
3. The options, when issued pursuant to the terms and conditions of
the Plans, as described in the Registration Statement, will constitute legal
and binding obligations of the Company in accordance with their terms.
4. The Shares, upon payment therefore and issuance thereof upon
exercise of the options in accordance with the terms thereof and as described
in the Registration Statement, will be validly issued, fully paid and
non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
CAMHY KARLINSKY & STEIN LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this Registration Statement on Form S-8 of our
report dated December 9, 1998 relating to the financial statements of Olympic
Cascade Financial Corporation as of September 25, 1998 and for the year then
ended.
Feldman Sherb Ehrlich & Co., P.C.
Certified Public Accountants
February 12, 1999
New York, New York
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of Olympic Cascade Financial Corporation of our report dated November
14, 1997 incorporated by reference in the Annual Report on Form 10-K of Olympic
Cascade Financial Corporation for the year ended September 25, 1998.
Seattle, Washington /s/ Moss Adams LLP
February 12, 1999
