<PAGE>
As filed with the Securities and Exchange Commission on June 9, 1998
Registration No. 333-____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
WILSHIRE FINANCIAL SERVICES GROUP INC.
(Exact name of registrant as specified in its charter)
DELAWARE 93-1223879
(State or other jurisdiction of (I.R.S. employer identification No.)
incorporation or organization)
1776 SW MADISON STREET, PORTLAND, OREGON 97205, (503) 223-5600
(Address, including zip code, and telephone number, including area code, of
principal executive offices)
INCENTIVE STOCK PLAN OF WILSHIRE FINANCIAL SERVICES GROUP INC.
AND
STOCK OPTION AGREEMENTS ISSUED TO OFFICERS AND DIRECTORS
(Full title of the plan)
LAWRENCE A. MENDELSOHN
PRESIDENT
1776 SW MADISON STREET
PORTLAND, OREGON 97205
(Name and address of agent for service)
(503) 223-5600
(Telephone number, including area code, of agent for service)
With copies of all notices and communications to:
DANIEL E. TITELBAUM
HELLER EHRMAN WHITE & MCAULIFFE
333 BUSH STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 772-6000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
<S> <C> <C> <C> <C>
Proposed
Amount Proposed maximum Amount of
Title of securities to be maximum offering aggregate registration
to be registered registered price per share (1) offering price (1) fee
Common Stock issuable under the
Incentive Stock Plan,
$0.01 par value 1,825,000 $23.1875 $42,317,188 $12,484
Common Stock issuable under Stock
Option Agreements of the Company,
$0.01 par value 29,167 $23.1875 $ 676,310 $ 200
=======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933,
as amended based on the average of the high and low prices reported of the
registrant's Common Stock on the Nasdaq National Market on June 3, 1998.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed by Wilshire Financial Services
Group Inc. ("Wilshire") with the Securities and Exchange Commission (the
"Commission") and are hereby incorporated by reference in this Registration
Statement:
(a) Wilshire's Annual Report on Form 10 K for the fiscal year ended
December 31, 1997;
(b) Wilshire's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1998 and
(c) the description of Wilshire's common stock contained in Wilshire's
registration statement on Form 8-A filed with the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including any
amendment or reports filed for the purpose of updating that description.
All documents subsequently filed by Wilshire pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated by
reference into this registration statement and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this registration statement
to the extent that a statement contained herein, or in any other subsequently
filed document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such 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
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
In accordance with Sections 102 and 145 of the Delaware General
Corporation Law, Articles EIGHTH and NINTH of Wilshire's Certificate of
Incorporation provide as follows:
"EIGHTH. No director shall be personally liable to the corporation or
any of its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit. Any amendment,
modification or repeal of the foregoing sentence shall not adversely
affect any right or protection of a director of the corporation
hereunder in respect of any omission occurring prior to the time of such
amendment, modification or repeal.
NINTH. The corporation shall indemnify to the fullest extent not
prohibited by law any current or former director or officer of the
corporation and may indemnify to the fullest extent not prohibited by
law any current or former employee or agent of the corporation who is
made, or threatened to be made, a party to an action, suit or
proceeding, whether civil, criminal, administrative,
II-1
<PAGE>
investigative or other (including an action, suit or proceeding by or in
the right of the corporation), by reason of the fact that such person is
or was a director, officer, employee or agent of the corporation or a
fiduciary within the meaning of the Employee Retirement Income Security
Act of 1974 with respect to any employee benefit plan of the
corporation, or serves or served at the request of the corporation as a
director, officer, employee or agent, or as a fiduciary of an employee
benefit plan, of another corporation, partnership, joint venture, trust
or other enterprise. The corporation shall pay for or reimburse the
reasonable expenses incurred by any such current or former director or
officer and may pay for or reimburse the reasonable expenses incurred by
any such current or former employee or agent in any such proceeding in
advance of the final disposition of the proceeding if the person sets
forth in writing (i) the person's good faith belief that the person is
entitled to indemnification under this Article and (ii) the person's
agreement to repay all advances if it is ultimately determined that the
person is not entitled to indemnification under this Article. No
amendment to this Article that limits the corporation's obligation to
indemnify any person shall have any effect on such obligation for any
act or omission that occurs prior to the later of the effective date of
the amendment or the date notice of the amendment is given to the
person. This Article shall not be deemed exclusive of any other
provisions for indemnification or advancement of expenses of directors,
officers, employees, agents and fiduciaries that may be included in any
statute, bylaw, agreement, general or specific action of the Board of
Directors, vote of shareholders or other document or arrangement."
Wilshire has entered into indemnification agreements with certain of its
officers as part of their employment agreements. Each such agreement provides
that Wilshire will indemnify the officer to the fullest extent permitted by law
in connection with any claim against the officer as a result of the officer's
serving as an officer or director of Wilshire or in any capacity at the request
of Wilshire, including in or with regard to any other entity, employee benefit
plan, or enterprise. Wilshire's indemnification obligation will continue in
effect after such officers cease employment with Wilshire with respect to their
acts or omissions during the period that they were so employed.
Wilshire's By-laws provide that Wilshire will indemnify its directors,
officers, employees or agents to the full extent permitted by the Delaware
General Corporation Law. Wilshire currently maintains coverage for its
directors and officers under a directors and officers liability insurance
policy.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe (filed as part of Exhibit
5)
23.2 Consent of Arthur Andersen LLP, Independent Auditors
23.3 Consent of Deloitte & Touche LLP
24 Power of Attorney (page 5)
99.1 Incentive Stock Plan
99.2 Form of Stock Option Agreement issued to directors
99.3 Form of Stock Option Agreement issued to officers
II-2
<PAGE>
ITEM 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs A(1)(i) and A(1)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining liability under the Securities Act, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. 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 described in Item 6, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Portland, State of Oregon, on May 20, 1998.
WILSHIRE FINANCIAL SERVICES GROUP, INC.
By: /s/ Andrew A. Wiederhorn
-----------------------------------
Andrew A. Wiederhorn
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Andrew A. Wiederhorn and Lawrence A. Mendelsohn his true and lawful attorneys
fact and agents, each acting alone, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post effective amendments)
to the Registration Statement, and to sign any registration statement for the
same offering covered by this Registration Statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and all post effective amendments thereto, and to file the same, with
all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys fact and
agents, 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 to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys fact and agents, each acting alone, or his
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 below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ Andrew. A Wiederhorn
- ---------------------------
Andrew. A Wiederhorn Chairman of the Board, Chief May 20, 1998
Executive Officer, Secretary
and Treasurer (Principal
Executive Officer)
/s/ Lawrence A Mendelsohn
- ---------------------------
Lawrence A Mendelsohn President and Director May 20, 1998
/s/ Don H. Coleman
- ---------------------------
Don H. Coleman Director May 20, 1998
/s/ David Dale-Johnson
- --------------------------
David Dale-Johnson Director May 20, 1998
II-4
<PAGE>
/s/ Philip G. Forte
- --------------------------
Philip G. Forte Director May 20, 1998
/s/ Chris Tassos
- --------------------------
Chris Tassos Executive Vice President May 20, 1998
and Chief Financial Officer
(Principal Accounting and
Financial Officer)
II-5
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
-----------------
Item No. Description of Item
- -------- -----------------------------------------------------------------------
<S> <C>
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe (filed as part of Exhibit 5)
23.2 Consent of Arthur Andersen LLP, Independent Auditors
23.3 Consent of Deloitte & Touche LLP, Independent Auditors
24 Power of Attorney (see page 5)
99.1 Incentive Stock Plan
99.2 Form of Stock Option Agreement issued to directors
99.3 Form of Stock Option Agreement issued to officers
</TABLE>
<PAGE>
Exhibit 5
June 9, 1998
20181-0001
Wilshire Financial Services Group Inc.
1776 SW Madison Street
Portland, Oregon 97205
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel to Wilshire Financial Services Group Inc., a
Delaware corporation (the "Company"), in connection with the Registration
Statement on Form S-8 (the "Registration Statement") that the Company proposes
to file with the Securities and Exchange Commission on or about June 9, 1998 for
the purpose of registering under the Securities Act of 1933, as amended,
1,854,167 shares of its Common Stock, par value $.01 (the "Shares"), of which
1,825,000 Shares are issuable under the Company's Incentive Stock Plan (the
"Plan") and 29,167 Shares are issuable under Stock Option Agreements (the
"Agreements") issued to certain officers and directors of the Company.
We have assumed the authenticity of all records, documents and instruments
submitted to us as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all records,
documents and instruments submitted to us as copies.
In rendering our opinion, we have examined the following records, documents
and instruments:
(a) the Certificate of Incorporation of the Company, certified by the
Delaware Secretary of State as of May 15, 1998, and certified to
us by an officer of the Company as being complete and in full
force as of the date of this opinion;
(b) the Bylaws of the Company certified to us by an officer of the
Company as being complete and in full force and effect as of the
date of this opinion;
(c) a certificate of an officer of the Company attaching certain
records and certifying as to certain factual matters;
(d) the Registration Statement;
(e) the Plan;
<PAGE>
(f) the Agreements; and
(g) a letter from The Bank of New York, the Company's transfer agent,
dated June 4, 1998, as to the number of shares of the Company's
Common Stock that were outstanding on June 3, 1998.
This opinion is limited to the federal law of the United States of America
and the General Corporation Law of the State of Delaware. We disclaim any
opinion as to the laws of any other jurisdiction. We further disclaim any
opinion as to any other statute, rule, regulation, ordinance, order or other
promulgation of any other jurisdiction or any regional or local governmental
body as to any related judicial or administrative opinion.
Based upon the foregoing and our examination of such questions of law as
we have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered and issued, (ii) the full
consideration stated in the Plan or the Agreements, as applicable, is paid for
each Share and such consideration in respect of each Share includes payment of
cash or other lawful consideration at least equal to the par value thereof and
(iii) all applicable securities laws are complied with, it is our opinion that
when issued and sold by the Company the Shares will be legally issued, fully
paid and nonassessable.
This opinion is rendered to you in connection with the Registration
Statement and is solely for your benefit. This opinion may not be relied upon
by you for any other purpose, or relied upon by any other person, firm,
corporation or other entity for any purpose, without our prior written consent.
We disclaim any obligation to advise you of any change of law that occurs, or
any facts of which we may become aware, after the date of this opinion.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ HELLER EHRMAN WHITE & McAULIFFE
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
dated March 12, 1998 (and to all references to our Firm) included in or made a
part of this registration statement filed on Form S-8 by Wilshire Financial
Services Group, Inc. with the Securities and Exchange Commission.
/s/ Arthur Andersen LLP
Los Angeles, California
June 5, 1998
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Wilshire Financial Services Group Inc. (the "Company") on Form S-8 of our report
dated March 14, 1997 (which expresses an unqualified opinion and includes an
explanatory paragraph referring to certain subsidiaries of the Company operating
under regulatory agreements) on the consolidated statement of financial
condition as of December 31, 1996 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years ended December 31,
1996 and 1995, appearing in the Annual Report on Form 10-K of Wilshire Financial
Services Group Inc. for the year ended December 31, 1997.
/s/ Deloitte & Touche LLP
Los Angeles, California
June 8, 1998
<PAGE>
EXHIBIT 99.1
INCENTIVE STOCK PLAN
OF
WILSHIRE FINANCIAL SERVICES GROUP INC.
--------------------------------------
1. PURPOSE OF THE PLAN AND DEFINITIONS
-----------------------------------
1.1 PURPOSE. The purposes of this Incentive Stock Plan (the "Plan")
-------
of Wilshire Financial Services Group Inc. (the "Company") are to provide
additional incentives to eligible persons chosen to receive stock-based awards,
to encourage selected employees to accept or continue employment and to increase
the interest of directors in the Company's welfare through, in each such case,
participation in the appreciation of the Company's common stock.
1.2 DEFINITIONS. For purposes of this Plan, these terms have these
-----------
meanings:
"ADMINISTRATOR" has the meaning given it in Section 4.1.
-------------
-1-
<PAGE>
"AFFILIATE" means a parent or subsidiary corporation, as defined in
---------
the applicable provisions (currently Section 424) of the Code when this
definition is being applied.
"AWARD" means any award under this Plan (i.e., any Option, Restricted
----- - -
Stock, Stock Appreciation Right or Formula Director Option).
"AWARD AGREEMENT" means, with respect to each Award, the signed
---------------
written agreement between the Company and the Participant or other written
document approved by the Administrator setting forth the terms and conditions of
the Award.
"BOARD" means the Company's Board of Directors.
-----
"CODE" means the Internal Revenue Code of 1986, as amended from
----
time to time, and any successor statute.
"COMMISSION" means the Securities and Exchange Commission and any
----------
successor agency.
"COMMITTEE" has the meaning given it in Section 4.1.
---------
"COMPANY" has the meaning given it in Section 1.1.
-------
-2-
<PAGE>
"EFFECTIVE DATE" has the meaning given it in Section 16.
--------------
"EMPLOYEE" has the meaning given to it for purposes of Section 3401(c)
--------
of the Code and the Treasury Regulations adopted under that Section. The term
"employee" includes a director who is also an employee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
------------
amended from time to time, and any successor statute.
"EXECUTIVE OFFICER" means a Participant who, as of the earliest of the
-----------------
date an Award is vested, the date restrictions with respect to the Award lapse
or the date a payment is made pursuant to the Award, is a "covered employee" as
defined in Treasury Regulations adopted under Section 162(m).
"FORMULA DIRECTOR OPTION" has the meaning given it in Section
-----------------------
5.3.
"GRANT DATE" means the date on which an Award becomes effective.
----------
"ISO" means any Option intended to be and designated as an "incentive
---
stock option" within the meaning of Section 422 of the Code.
-3-
<PAGE>
"NON-EMPLOYEE DIRECTOR" has the meaning given it in Rule 16b-3.
---------------------
"NSO" means any Option that is not an ISO, it being understood
---
that Formula Director Options are also NSOs.
"OPTION" means an option granted under Section 6, but not an
------
option granted under Section 5.3.
"OPTION AGREEMENT" means an Award Agreement evidencing an Option.
----------------
"OUTSIDE DIRECTOR" means a person who is an "outside director" as
----------------
defined in Section 162(m).
"PARTICIPANT" means an eligible person granted an Award.
-----------
"PLAN" means this plan.
----
"RESTRICTED STOCK" means an Award of Stock subject to
----------------
restrictions, as more fully described in Section 7.
"RULE 16B-3" means Rule 16b-3 adopted under Section 16(b) of the
-----------
Exchange Act, as that rule may be amended from time to time, or any successor
rule.
-4-
<PAGE>
"SECTION 162(m)" means Section 162(m) of the Code and the
--------------
Treasury Regulations adopted from time to time under that Section, as they may
be amended from time to time, or any successor law or regulations.
"SECURITIES ACT" means the Securities Act of 1933, as amended
--------------
from time to time, and any successor statute.
"STOCK" means the common stock, $0.01 par value per share, of the
-----
Company.
"STOCK APPRECIATION RIGHT" means an Award granted under Section 8.
------------------------
"STOCKHOLDER APPROVED STANDARD" means any pre-established, objective
-----------------------------
performance goal qualifying under Section 162(m) and approved by the
stockholders of the Company in accordance with Section 162(m).
"SUBSIDIARY" means a subsidiary corporation of the Company, as
----------
defined in the applicable provisions (currently Section 424(f)) of the Code
when this definition is being applied.
-5-
<PAGE>
"TEN PERCENT STOCKHOLDER" means any person who, when this definition
-----------------------
is being applied, owns, directly or indirectly (or is treated as owning by
reason of attribution rules currently set forth in Section 424(d) of the Code),
stock of the Company constituting more than ten percent of the total combined
voting power of all classes of outstanding stock of the Company or of any
Affiliate of the Company.
"TERMINATION" means that a Participant has ceased, for any reason and
-----------
with or without cause, to be an employee or director of, or a consultant to, the
Company or any Subsidiary. However, "Termination" shall not be deemed to have
occurred if a Participant changes from one "eligible status" to another eligible
status (for example, ceases to be an employee but becomes a consultant) or
transfers from one "eligible entity" to another eligible entity (for example,
ceases being an employee of the Company but begins employment with a
Subsidiary). In addition, "Termination" shall not be deemed to have occurred as
a result of a leave of absence duly authorized by the Company in writing, unless
the Administrator has provided otherwise.
2. ELIGIBLE PERSONS
----------------
Every person who, as of the Grant Date, is (a) an employee of the
Company or a Subsidiary, (b) a director of the Company or (c) someone whom the
Administrator designates as
-6-
<PAGE>
eligible for an Award because that person (i) performs bona fide consulting or
advisory services for the Company or a Subsidiary (other than services in
connection with the offer or sale of securities in a capital-raising
transaction) and (ii) has a direct and significant effect on the financial
development of the Company or a Subsidiary shall be eligible to receive Awards.
However, only persons who are employees of the Company or a Subsidiary shall be
eligible to receive ISOs. The Administrator may grant Awards to persons who are
expected to become such employees, directors or consultants, in which case the
grant shall be deemed to have been made upon the date the grantee becomes such
an employee, director or consultant without the necessity for further action or
approval by the Administrator.
3. STOCK SUBJECT TO THIS PLAN
--------------------------
The total number of shares of Stock that may be issued under Awards is
1,825,000. Such shares may consist, in whole or in part, of unissued shares,
treasury shares or shares reacquired in private transactions or open market
purchases. However, all shares issued under the Plan, regardless of their
source, shall be counted against this 1,825,000-share limitation, including
shares represented by Stock Appreciation Rights. Any shares that are retained
by the Company upon exercise or settlement of an Award in order to satisfy the
exercise price in whole or in part, or to pay withholding taxes due with respect
to such exercise or
-7-
<PAGE>
settlement, shall be treated as issued to the Participant and thereafter will
not be available under the Plan. The number of shares reserved for issuance
under this Plan is subject to adjustment in accordance with the provisions for
adjustment in this Plan. The maximum number of shares of Stock with respect to
which Awards may be granted to any one Participant during the term of this Plan
is 900,000.
4. ADMINISTRATION
--------------
4.1 ADMINISTRATOR. This Plan shall be administered by the Board or
-------------
by a committee appointed by the Board (the "Committee"). If the Board appoints
a Committee, it may authorize the Committee to administer the entire Plan or may
authorize the Committee to administer the Plan with respect only to certain
Participants (for example, persons subject to Section 16 of the Exchange Act,
Executive Officers or both) or with respect only to certain types of Awards. If
the Board appoints a Committee, it may (but need not) choose to cause the
members of the Committee to be Non-Employee Directors, Outside Directors or both
Non-Employee Directors and Outside Directors. Unless the context requires
otherwise, references in this Plan to the "Administrator" refer to the Committee
or the Board, whichever is applicable.
-8-
<PAGE>
4.2 ADMINISTRATOR'S POWERS. Subject to the express provisions of the
----------------------
Plan, the Administrator shall have the authority, in its sole discretion: (a)
to adopt, amend and rescind administrative and interpretive rules and
regulations relating to the Plan; (b) to determine the eligible persons to whom,
and the time or times at which, Awards shall be granted; (c) to determine the
number of shares of Stock that shall be subject to each Award; (d) to determine
the provisions of each Award Agreement (which need not be identical) and any
amendments thereof, including provisions defining or otherwise relating to (i)
the period or periods and extent of exercisability of any Options or Stock
Appreciation Rights, (ii) the extent to which the transferability of shares of
Stock issued or transferred pursuant to any Award is restricted, (iii) the
effect of Termination (including death or disability) on the Award and (iv) the
effect of approved leaves of absence (consistent with any applicable Department
of Treasury Regulation under Section 421 of the Code); (e) to accelerate the
time of exercisability of any Option or Stock Appreciation Right; (f) to
construe Award Agreements and the Plan; (g) to make determinations of the fair
market value of Stock; (h) to waive any provision set forth in an Award
Agreement; (i) to certify whether the performance goals and any other material
terms of an Award have been satisfied and (j) to make all other determinations,
perform all other acts and exercise all other powers and authority necessary or
advisable for administering the Plan, including the delegation of those
-9-
<PAGE>
ministerial acts and responsibilities as the Administrator deems appropriate.
The determinations of the Administrator on the matters referred to in this
Section 4.2 shall be final and binding. The Administrator may not vary or waive
any of the terms specified or referred to in Section 5.3 of this Plan with
respect to Formula Director Options. However, nothing in Section 5.3 or
elsewhere in this Plan shall prevent the Company from granting Awards to Non-
Employee Directors in addition to Formula Director Options.
4.3 TERM OF PLAN. No Awards shall be granted under this Plan after
------------
ten years from the Effective Date.
5. GRANT OF OPTIONS
----------------
5.1 WRITTEN AGREEMENT. Each Option shall be evidenced by an Option
-----------------
Agreement. The Option Agreement shall specify whether the Options it evidences
are NSOs or ISOs.
5.2 ANNUAL $100,000 LIMITATION ON ISOS. To the extent that the total
----------------------------------
"fair market value" of Stock with respect to which ISOs first become exercisable
by a Participant in any calendar year exceeds $100,000, taking into account ISOs
granted under this Plan and any other plan of the Company or any Affiliate of
the Company, all or part of the Options covering such additional shares becoming
exercisable in that year shall cease to be ISOs
-10-
<PAGE>
and thereafter be NSOs. For this purpose, the "fair market value" of Stock
subject to Options shall be determined as of the date the Options were granted.
In determining the Options that will be treated as ISOs to meet this $100,000
limit, the most recently-granted Options shall be treated as NSOs until the
$100,000 limit has been met.
5.3 ANNUAL GRANTS TO DIRECTORS. On the last trading day of each
--------------------------
calendar quarter beginning March 31, 1997, each person who is then a Non-
Employee Director shall automatically be granted an NSO to purchase that number
of shares of Stock that equals $6,250 divided by the fair market value per share
of the Stock on that trading day. (Each option referred to in the previous
sentence is referred to as a "Formula Director Option".) The exercise price of
each Formula Director Option shall be the fair market value of the Stock subject
to that option on the date the option is granted. Each Formula Director Option
shall be fully exercisable beginning six months after the date of grant and
continuing, unless sooner terminated as provided in this Plan, for ten years
after the date of grant. If, for any reason other than death or permanent and
total disability, a Non-Employee Director ceases to be a member of the Board,
each Formula Director Option then held by that Non-Employee Director may be
exercised in whole or in part at any time within one year thereafter or until
the expiration of the Formula Director Option, whichever is earlier. If a Non-
Employee Director dies or
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<PAGE>
becomes permanently and totally disabled (within the meaning of Section 22(e)(3)
of the Code) while a member of the Board (or within the period that a Formula
Director Option held by the member remains exercisable after the member ceased
to be a member of the Board), that Formula Director Option may be exercised, in
whole or in part, by the Non-Employee Director, by the Non-Employee Director's
personal representative or by the person to whom the Non-Employee Director
transferred the Formula Director Option by will or the laws of descent and
distribution, at any time within two years after the date of death or permanent
and total disability of the Non-Employee Director or until the expiration date
of the Formula Director Option, whichever is earlier. However, nothing in this
Section 5.3 shall have the effect of accelerating the exercisability of any
Formula Director Option. Each Formula Director Option shall be evidenced by a
signed Option Agreement in the form of Exhibit A to this Plan.
------- -
6. CERTAIN TERMS AND CONDITIONS OF OPTIONS AND OTHER AWARDS
--------------------------------------------------------
Each Option shall be designated an ISO or a NSO and shall be subject
to the terms and conditions set forth in Section 6.1. NSOs shall also be
subject to the terms and conditions set forth in Section 6.2, but not those set
forth in Section 6.3. ISOs shall also be subject to the terms and conditions
set forth in Section 6.3, but not those set forth in Section 6.2.
-12-
<PAGE>
6.1 ALL AWARDS. Except to the extent specifically stated otherwise
----------
in this Section 6.1, all Options and other Awards shall be subject to the
following terms and conditions:
(a) CHANGES IN CAPITAL STRUCTURE. If the number of outstanding
----------------------------
shares of Stock is increased by means of a stock dividend payable in shares of
Stock, a stock split or other subdivision or by a reclassification of shares
of Stock, then, from and after the record date for such dividend, subdivision
or reclassification, the number and class of shares of stock subject to this
Plan (including its Section 3) and each outstanding Award shall be increased
in proportion to such increase in outstanding shares of Stock and the then-
applicable exercise price of each outstanding Award shall be correspondingly
decreased. If the number of outstanding shares of Stock is decreased by means
of a stock split or other subdivision or by a reclassification of shares of
Stock, then, from and after the record date for such split, subdivision or
reclassification, the number and class of shares of stock subject to this Plan
(including its Section 3) and each outstanding Award shall be decreased in
proportion to such decrease in outstanding shares of Stock and the then-
applicable exercise price of each outstanding Award shall be correspondingly
increased. In any such case, each outstanding ISO shall be adjusted so as to
retain its status as an ISO under the principles set forth in Section 424(a)
of the Code.
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<PAGE>
(b) CERTAIN CORPORATE TRANSACTIONS. This Section 6.1(b) addresses the
------------------------------
impact of certain corporate transactions. In case of any consolidation or
merger of the Company with or into another entity (other than a merger in which
the Company is a continuing corporation and which does not result in any
reclassification or change in the then-outstanding shares of Stock) or in the
case of any sale or conveyance to another entity of all or substantially all of
the Company's and its Subsidiaries' assets taken as a whole (including by means,
in whole or in part, of sales by the Company of shares of Subsidiaries), then,
as a condition of such consolidation, merger, sale or conveyance, the Company or
such successor or purchasing entity, as the case may be, shall make lawful and
adequate provision whereby the holder of each outstanding Award shall thereafter
have the right, on exercise of such Award, to receive the kind and amount of
securities, property and/or cash receivable upon such consolidation, merger,
sale or conveyance by a holder of the number of securities issuable upon
exercise of such Award immediately before such consolidation, merger, sale or
conveyance. Such provision shall include adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section
6.1(a). Notwithstanding the foregoing, if such a transaction occurs, in lieu of
causing such rights to be substituted for outstanding Awards, the Administrator
may, upon 15 days' prior written notice to Participants in its sole discretion:
(i) shorten the period during which Awards are
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<PAGE>
exercisable, provided they remain exercisable, to the extent otherwise
exercisable, for at least 15 days after the date the notice is given or (ii)
cancel an Award upon payment to the Participant in cash, with respect to each
Award to the extent then exercisable, of an amount which, in the sole discretion
of the Administrator, is determined to be equivalent to the amount, if any, by
which the fair market value (at the effective time of the transaction) of the
consideration that the Participant would have received if the Award had been
exercised before the effective time of the transaction exceeds the exercise
price of the Award. The actions described in this Section 6.1(b) may be taken
without regard to any resulting tax consequences to the Participant.
(c) GRANT DATE. Each Award Agreement shall specify the date as
----------
of which it shall be effective (the "Grant Date").
(d) FAIR MARKET VALUE. For purposes of this Plan, the fair
-----------------
market value of Stock shall be determined as follows:
(i) If the Stock is listed on any established stock exchange or a
national market system, including, without limitation, the National Market
System of the National Association of Securities Dealers Automated Quotation
-15-
<PAGE>
System, its fair market value shall be the mean between the highest and lowest
quoted selling prices for the Stock, or the mean between the high bid and low
asked prices if no sales were reported, as quoted on such system or exchange
(or, if the Stock is listed on more than one exchange, then on the largest such
exchange) for the date the value is to be determined (or if there are no sales
or bids for such date, then for the last preceding business day on which there
were sales or bids), as reported in The Wall Street Journal or similar
--- ---- ------ -------
publication.
(ii) If the Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, its fair market value shall be the
mean between the high bid and low asked prices for the Stock on the date the
value is to be determined (or if there are no quoted prices for the date of
grant, then for the last preceding business day on which there were quoted
prices).
(iii) In the absence of an established market for the Stock,
the fair market value shall be determined in good faith by the Administrator,
with reference to the Company's net worth, prospective earning power, dividend-
paying capacity and other relevant factors, including the goodwill of the
Company, the economic outlook in the Company's industry or industries, the
Company's position in its industry or industries and its
-16-
<PAGE>
management, and the values of stock of other corporations in the same or similar
lines of business.
(e) TIME OF EXERCISE AND VESTING. Awards may, in the sole discretion
----------------------------
of the Administrator, be exercisable or may vest, and restrictions may lapse, as
the case may be, at such times and in such amounts as may be specified by the
Administrator in the grant of the Award.
(f) NONASSIGNABILITY OF RIGHTS. No Award shall be transferable other
--------------------------
than by will or the laws of descent and distribution. However, Awards that are
not ISOs may be transferred pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or any rules adopted thereunder. During a Participant's
lifetime, Awards shall be exercisable only by the Participant or, in the case of
Awards that are not ISOs, transferees pursuant to such a qualified domestic
relations order. After a Participant's death, Awards shall be exercisable only
by the executors, administrators or beneficiaries of the Participant or, in the
case of Awards that are not ISOs, the executors, administrators or beneficiaries
of transferees pursuant to such a qualified domestic relations order.
-17-
<PAGE>
(g) NOTICE AND PAYMENT. To the extent it is exercisable, an Award
------------------
shall be exercisable only by written or recorded electronic notice of exercise,
in the manner specified by the Administrator from time to time, delivered to the
Company or its designated agent during the term of the Award. The notice shall
(a) state the number of shares of Stock with respect to which the Award is being
exercised, (b) be signed or otherwise given by the person authorized to exercise
the Award under Section 6.1(f) and (c) include such other information,
instruments and documents as may be required to satisfy any other condition to
exercise specified by the Administrator. Except as provided in the balance of
this Section 6.1(g), payment in full, in cash, shall be made for all Stock
purchased at the time notice of exercise of an Award is given to the Company.
At the time an Award is granted or before it is exercised, the Administrator, in
the exercise of its sole discretion, may authorize any one or more of the
following additional methods of payment:
(i) acceptance of the Participant's full recourse promissory note for
some or all of the exercise price of the shares being acquired, payable on such
terms and bearing such interest rate as determined by the Administrator (but in
no event at a rate below the minimum rate required to avoid imputed interest or
original issue discount under the Code), and secured in such manner, if at all,
as the Administrator shall approve,
-18-
<PAGE>
including, without limitation, by a security interest in the Stock or other
securities;
(ii) delivery by the Participant of Stock of the Company
already owned by the Participant for all or part of the exercise price of the
shares being acquired, provided that the fair market value of such Stock is
equal on the date of exercise to the exercise price of the shares being
acquired, or such portion thereof as the Participant is authorized to pay and
elects to pay by delivery of such Stock;
(iii) surrender by the Participant, or withholding by the
Company from the shares issuable upon exercise of the Award, of a number of
shares subject to the Award being exercised with a fair market value equal to
some or all of the exercise price of the shares being acquired, together with
such documentation as the Administrator shall require or
(iv) to the extent permitted by applicable law, pursuant
to arrangements with a brokerage firm under which that brokerage firm, on
behalf of the Participant, shall pay to the Company the exercise price of the
Award being exercised (either as a loan to the Participant or from the
proceeds of the sale of Stock issued under that Award), in which case the
Company shall promptly cause the shares being purchased under the Award to be
delivered to the brokerage firm.
-19-
<PAGE>
(h) TERMINATION. Any Award or portion thereof which is not
-----------
exercisable on or before the date of a Participant's Termination shall expire on
the date of Termination. As to an Award or portion thereof that has vested by
the time of Termination, the Administrator shall establish, in respect of each
Award when granted, the effect, if any, of a Termination on the rights and
benefits thereunder and in so doing may, but need not, make distinctions based
upon the cause of termination (such as retirement, death, disability or other
factors) or which party effected the termination (the employer or the employee).
Notwithstanding any other provision in this Plan or the Award Agreement, the
Administrator may decide in its discretion at the time of any Termination (or
within a reasonable time thereafter) to extend the exercise period of an Award
(but not beyond the period specified in Section 6.2(b) or 6.3(b), as applicable)
and not decrease the number of shares covered by the Award with respect to which
the Award is exercisable or vested.
(i) OTHER PROVISIONS. Each Award Agreement may contain such other
----------------
provisions not inconsistent with this Plan, as may be determined by the
Administrator, and each ISO granted under this Plan shall include such
provisions as are necessary to qualify such Option as an "incentive stock
option" within the meaning of Section 422 of the Code unless the Administrator
determines otherwise.
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<PAGE>
(j) WITHHOLDING AND EMPLOYMENT TAXES. At the time of exercise of an
--------------------------------
Award, the expiration of an unexercised Stock Appreciation Right, the lapse of
restrictions on an Award or a "disqualifying disposition" of Stock issued under
an ISO (see Section 6.3(c)), the Participant shall remit to the Company in cash
all applicable federal and state withholding and employment taxes. The
Administrator may, in the exercise of the Administrator's sole discretion,
permit a Participant to pay some or all of such taxes by means of a recourse
promissory note on such terms as the Administrator deems appropriate. If and to
the extent authorized and approved by the Administrator in its sole discretion,
a Participant may elect, by a means prescribed by the Administrator, to have
shares which are acquired upon exercise of an Award withheld by the Company or
tender other shares of Stock owned by the Participant to the Company at the time
the amount of such taxes is determined, in order to pay the amount of such tax
obligations.
6.2 TERMS AND CONDITIONS TO WHICH ONLY NSOS ARE SUBJECT. Options
---------------------------------------------------
granted under this Plan that are designated NSOs shall be subject to the
following additional terms and conditions:
(a) EXERCISE PRICE. The exercise price of an NSO shall not be less
--------------
than 100 percent of the fair market value of the Stock subject to the Option on
the Grant Date or, if required
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<PAGE>
by applicable state securities laws in the case of an NSO granted to any Ten
Percent Stockholder, not less than 110 percent of such fair market value.
(b) OPTION TERM. Unless an earlier expiration date is specified by
-----------
the Administrator at the Grant Date, each NSO shall expire ten years after the
Grant Date or, if required by applicable state securities laws in the case of an
NSO granted to a Ten Percent Stockholder, five years after the Grant Date.
6.3 TERMS AND CONDITIONS TO WHICH ONLY ISOS ARE SUBJECT. Options
---------------------------------------------------
granted under this Plan that are designated ISOs shall be subject to the
following additional terms and conditions:
(a) EXERCISE PRICE. The exercise price of an ISO shall be
--------------
determined in accordance with the applicable provisions of the Code and in no
event shall be less than 100 percent of the fair market value of the stock
covered by the ISO at the Grant Date, provided that the exercise price of an
ISO granted to a Ten Percent Stockholder shall not be less than 110 percent of
such fair market value.
(b) OPTION TERM. Unless an earlier expiration date is specified by
-----------
the Administrator at the Grant Date, each ISO shall expire ten years after the
Grant Date, provided that an
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<PAGE>
ISO granted to a Ten Percent Stockholder shall expire no later than five years
after the Grant Date.
(c) DISQUALIFYING DISPOSITIONS. If Stock acquired by exercise of an
--------------------------
ISO is disposed of within two years after the Grant Date or within one year
after the transfer of the Stock to the optionee, the holder of the Stock
immediately before the disposition shall promptly notify the Company in writing
of the date and terms of the disposition, shall provide such other information
regarding the disposition as the Company may reasonably require and shall pay
the Company any withholding and employment taxes which the Company in its sole
discretion deems applicable to the disposition.
6.4 SURRENDER OF OPTIONS. The Administrator, acting in its sole
--------------------
discretion, may include a provision in an Option Agreement allowing the optionee
to surrender the Option covered by the agreement, in whole or in part in lieu of
exercise in whole or in part, on any date that the fair market value of the
Stock subject to the Option exceeds the exercise price and the Option is
exercisable (to the extent being surrendered). The surrender shall be effected
by the delivery of the Option Agreement, together with a signed statement that
specifies the number of shares as to which the optionee is surrendering the
Option, together with a request for such type of payment. Upon such surrender,
the optionee shall receive Stock equal to (or
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<PAGE>
equal in fair market value to) the excess of the fair market value of the shares
covered by the portion of the Option being surrendered on the date of surrender
over the exercise price for such shares.
7. RESTRICTED STOCK
----------------
Shares of Restricted Stock shall be subject to the following terms and
conditions:
7.1 GRANT. The Administrator may grant one or more Awards of
-----
Restricted Stock to any Participant. Each Restricted Stock Award shall specify
the number of shares of Stock to be issued to the Participant, the date of
issuance, the consideration for such shares (but not less than the minimum
consideration required under applicable state law) and the restrictions imposed
on the shares including the conditions of release or lapse of such restrictions.
Pending the lapse of restrictions, stock certificates evidencing shares of
Restricted Stock shall bear a legend referring to the restrictions and shall be
held by the Company. Upon issuance of Restricted Stock Awards, the Participant
may be required to furnish such additional documentation or other assurances as
the Administrator may require to enforce the restrictions.
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<PAGE>
7.2 RESTRICTIONS. Except as specifically provided elsewhere in this
------------
Plan or the Restricted Stock Award, Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise disposed of or encumbered, either voluntarily
or involuntarily, until the restrictions have lapsed and the rights to the
shares have vested. With respect to any particular Award, the Administrator
may, in its sole discretion, provide in the Award Agreement for the lapse of
such restrictions in installments and may accelerate or waive such restrictions,
in whole or in part, based on service, performance or such other factors or
criteria as the Administrator may determine.
7.3 DIVIDENDS. Unless otherwise determined by the Administrator, any
---------
cash dividends payable by the Company with respect to shares of Restricted Stock
shall be paid to the recipient of the Restricted Stock Award on the normal
dividend payment dates, and dividends payable in Stock shall be paid in the form
of Restricted Stock having the same terms as the Restricted Stock upon which
such dividend is paid. The Award Agreement shall specify whether and, if so,
the extent to which the Participant shall be obligated to return to the Company
any dividends paid with respect to any shares of Restricted Stock that are
subsequently forfeited.
7.4 FORFEITURE OF RESTRICTED SHARES. Except to the extent otherwise
-------------------------------
provided in the Award Agreement, when a
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<PAGE>
Participant's Termination occurs, the Participant shall forfeit all shares still
subject to restriction.
8. STOCK APPRECIATION RIGHTS
-------------------------
The Administrator may grant Stock Appreciation Rights to any
Participant. A Stock Appreciation Right shall entitle its holder to receive
from the Company, at the time of exercise of the right, an amount in cash equal
to (or, at the Administrator's discretion, shares of Stock equal in fair market
value to) the excess of the fair market value (at the date of exercise) of a
share of Stock over a specified price fixed by the Administrator in the
governing Award Agreement multiplied by the number of shares as to which the
holder is exercising the Stock Appreciation Right. The specified price fixed by
the Administrator shall not be less than the fair market value of the Stock at
the date of grant of the Stock Appreciation Right. Stock Appreciation Rights
may be granted in tandem with any contemporaneously granted Option or
independently of any Option. The specified price of a tandem Stock Appreciation
Right shall be the exercise price of the related Option. Any Stock Appreciation
Rights granted in connection with an ISO shall contain such terms as may be
required to comply with Section 422 of the Code.
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<PAGE>
9. SECURITIES LAWS
---------------
Nothing in this Plan or in any Award or Award Agreement shall require
the Company to issue any shares with respect to any Award if, in the opinion of
the Company or its counsel, that issuance could constitute a violation of the
Securities Act, any other law or the requirements of any applicable securities
exchange or securities association. As a condition to the grant or exercise of
any Award, the Company may require the Participant (or, in the event of the
Participant's death, the Participant's legal representatives, heirs, legatees or
distributees) to provide written representations concerning the Participant's
(or such other person's) intentions with regard to the retention or disposition
of the Stock covered by the Award and written covenants as to the manner of
disposal of such Stock as may be necessary or useful to ensure that the grant,
exercise or disposition will not violate the Securities Act, any other law or
any requirement of any applicable securities exchange or securities association.
The Company shall not be required to register any Stock under the Securities
Act, register or qualify any Stock or Awards under any state or other securities
laws, or cause any Stock or Awards to meet the requirements of any securities
exchange or securities association.
-27-
<PAGE>
10. EMPLOYMENT OR OTHER RELATIONSHIP
--------------------------------
Nothing in this Plan or any Award shall in any way interfere with or
limit the right of the Company or of any of its Affiliates to terminate any
Participant's employment or status as a consultant or director at any time, nor
confer upon any Participant any right to continue in the employ of, or as a
director or consultant of, the Company or any of its Affiliates.
11. LIABILITY AND INDEMNIFICATION OF ADMINISTRATOR
----------------------------------------------
No member of the group constituting the Administrator shall be liable
for any act or omission on such person's part, including but not limited to the
exercise of any power or discretion given to such member under this Plan, except
for those acts or omissions resulting from such member's willful misconduct.
The Company shall indemnify each present and future member of the group
constituting the Administrator against, and each such member shall be entitled
without further act on his or her part to indemnity from the Company for, all
expenses (including the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation)
reasonably incurred by such person in connection with or arising out of any
action, suit or proceeding to the fullest extent permitted by law and the
Company's Certificate of Incorporation and Bylaws.
-28-
<PAGE>
12. CERTAIN DIRECTORS AND OFFICERS
------------------------------
With respect to any Award granted to any person who is subject to
Section 16 of the Exchange Act, unless the Administrator determines that the
Award should not comply with the requirements of Rule 16b-3, the Award shall be
deemed to include such additional provisions as Rule 16b-3 then requires.
Unless the Administrator determines that an Award to a Participant is not
intended to qualify for the exemption for performance-based compensation under
Section 162(m) or unless (and then only to the extent) the requirements of
Section 162(m) change: (a) the period over which the performance objectives of
the Award must be satisfied shall not be shorter than six months, (b) the
performance objectives applicable to the Award shall be based on one or more of
the Stockholder Approved Standards and (c) the Award shall be subject to any
additional requirements of Section 162(m).
13. SECURITIES LAW LEGENDS
----------------------
If the Company or its counsel deems it necessary or advisable,
certificates for shares of Stock issued under Awards may bear the following
legend and also statements of other applicable restrictions endorsed thereon:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS
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<PAGE>
AMENDED, OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR
SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER
HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE SOLE
DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION
WILL NOT VIOLATE ANY APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
14. SEVERABILITY
------------
If any provision of this Plan is held to be illegal or invalid for any
reason, that illegality or invalidity shall not affect the remaining provisions
of this Plan, but such provision shall be fully severable and the Plan shall be
construed and enforced as if the illegal or invalid provision had never been
included in this Plan. If any provision of this Plan or any Award Agreement
conflicts with the requirements of Rule 16b-3 (as that provision is applied to
eligible persons who are subject to Section 16 of the Exchange Act), Section 422
of the Code (with respect to ISOs) or Section 162(m) (with respect to the
exception for performance-based compensation), that conflicting provision shall
be deemed inoperative to the extent it conflicts with those requirements. With
respect to ISOs, if this Plan does not contain any provision required to be
included in a plan under Section 422 of the Code, that provision shall be deemed
to be incorporated into this Plan with the same force and effect as if it had
been expressly set out in this Plan. However, to the extent any Option that is
intended to qualify as an ISO cannot so
-30-
<PAGE>
qualify, the Option shall be deemed to be an NSO for all purposes of this Plan.
15. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN
---------------------------------------------
The Board may at any time amend, suspend or terminate this Plan
without stockholder approval, except as required by applicable law. However, no
amendment, suspension or termination shall be made which would impair the rights
of any Participant under any Award previously granted, without the Participant's
consent, except to conform this Plan and Awards granted to the requirements of
federal or other tax laws including Section 162(m) and ERISA, or to the
requirements of Rule 16b-3. The Board may choose to require that the Company's
stockholders approve any amendment to this Plan in order to satisfy the
requirements of Section 422 of the Code, Rule 16b-3, Section 162(m) or for any
other reason.
16. EFFECTIVE DATE AND PROCEDURAL HISTORY
-------------------------------------
This Plan was approved by the Company's Board on October 28, 1996. It
was approved by the holders of the Company's voting stock on October 28, 1996
(the "Effective Date").
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<PAGE>
EXHIBIT 99.2
Stock Option Agreement
WILSHIRE FINANCIAL SERVICES GROUP INC.
THIS OPTION AGREEMENT is made between Wilshire Financial Services
Group Inc., a Delaware corporation (the "Company") and ________________ (the
"Optionee"). The Company and the Optionee agree as follows:
1. Option Grant. The Company hereby grants to the Optionee on
------------
the terms and conditions of this Agreement the right and the option (the
"Option") to purchase all or any part of ________ shares of the Company's common
stock at a purchase price of $ per share. The Option is not intended to be
an Incentive Stock Option, as defined in Section 422 of the Internal REvenue
Code of 1986, as amended (the "Code") and therefore is a non-qualified stock
option.
2. Exercisability. The Option is not exercisable in whole or in
--------------
part until the sixtieth (60th) day following the date of the closing of the
Company's initial public offering of its common stock (the "Vesting Date"). On
the Vesting Date, the Option shall be exercisable in full.
3. Term of Option. The Grant Date for the Option is _________ __,
--------------
199_. The Option Shall continue in effect until 5:00 p.m. (Portland Oregon
time) on June 23, 1999, (the "Expiration Date") unless earlier terminated or
extended.
4. Termination of Employment or Service.
------------------------------------
4.1 Unless a longer period is established by the Board of
Directors of the Company, upon termination of the Optionee's service as a
director of the Company for any reason other than because of physical
disability or death, the Option may be exercised at any time prior to the
Expiration Date or 30 days following the termination date, whichever, is the
shorter period.
4.2 Unless a longer period is established by the Board of
Directors, if termination of the Optionee's service as a director occurs
because of death or physical disability, the Optionee's service as a director
occurs because of death or physical disability, the Option may be exercised at
any time prior to the Expiration Date or the expiration of 12 months after the
termination date, whichever is the shorter period. If the Optionee's service
as a director is terminated by death, the Option shall be exercisable only by
the person or persons to whom the Optionee's rights under the Option pass by
the Optionee's will or by the laws of descent and distribution of the state or
country of the Optionee's domicile at the time of death.
<PAGE>
5. Method of Exercise of Option.
----------------------------
5.1 Unless the Board of directors determines otherwise, to
exercise the option, the Optionee must give written notice to the Company
stating the Optionee's intention to exercise, specifying the number of shares
as to which the Optionee's intention to exercise, specifying the number of
shares as to which the Optionee desires to exercise the Option and the date on
which the optionee desires to complete the transaction. Unless the board of
directors determines otherwise, on or before the date specified for completion
of the purchase of shares pursuant to the Option, the full purchase price of
such shares in cash must be paid to the Company. No shares shall be issued
until full payment for the shares has been made.
5.2 After exercise of all or a part of the Option, after
notification of the amount due, if any, and prior to or concurrently with
delivery of the certificates representing the shares for which the option was
exercised, the Optionee shall pay to the Company amounts necessary to satisfy
any applicable federal, state, and local withholding tax requirements. If
additional withholding becomes required beyond any amount deposited before
delivery of the certificates, the Optionee shall pay such amount to the
Company on demand. If the Optionee fails to pay the amount demanded, the
Company shall have the right to withhold that amount from other amounts
payable by the Company to the Optionee, including fees for services rendered,
subject to applicable law.
6. Restriction on Transfer of Option. The Option granted hereby is not
---------------------------------
transferable otherwise than by will or under the applicable laws of descent
and distribution and during the lifetime of the Optionee may be exercised only
by the Optionee or the Optionee's guardian or legal representative. In
addition, the Option shall not be assigned, negotiated, pledged or
hypothecated in any way (whether by operation of law or otherwise), and the
Option shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, negotiate, pledge or hypothecate the Option,
or in the event of any levy upon the Option by reason of any execution,
attachment or similar process contrary to the provisions hereof, the Option
shall immediately become null and void.
7. Rights as a Stockholder. The Optionee shall not have any rights as
-----------------------
a stockholder with respect to any shares covered by the Option until the
Optionee has become the holder of record of the shares, and no adjustments
shall be made for dividends in cash or other property, distributions or other
rights in respect of any such shares.
8. No Right to Employment or Service. Nothing in this Agreement shall
---------------------------------
(i) confer upon the Optionee any right to be employed by or to continue
providing service to the Company as a director or otherwise; (ii) interfere in
any way with the right of the Company to terminate the Optionee's service at
any time for any reason, with or without cause, or to decrease any fees
payable to the Optionee; or (iii) confer upon the Optionee any right to
continuation, extension, renewal, or modification of any compensation,
contract or arrangement with or by the Company.
2
<PAGE>
9. Successors of Company. This Agreement shall be binding upon and
---------------------
shall inure to the benefit of any successor of the Company but, except as
provided herein, the Option may not be assigned or otherwise transferred by
the Optionee.
10. Notices. Any notices under this Agreement must be in writing and
-------
will be effective when actually delivered or, if mailed, three days after
deposit into the United States mails by registered or certified mail, postage
prepaid.
11. Bank Options. In exchange for and in consideration of the Option,
------------
the Optionee acknowledges and expressly agrees that (a) any and all options
granted to the Optionee to purchase the capital stock of First Bank of Beverly
Hills, FSB, an affiliate of the Company, are terminated and of no further
force or effect and (b) the grant of the Option is conditioned on the
execution and delivery by the Optionee of a certain Bank Option Cancellation
Agreement to that effect.
IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate as of the date written above.
WILSHIRE FINANCIAL SERVICES GROUP INC.
By:__________________________________
Name:
Title:
OPTIONEE
______________________________________
Name:
Address:
______________________________________
______________________________________
<PAGE>
EXHIBIT 99.3
Stock Option Agreement
Employee or Consultant
WILSHIRE FINANCIAL SERVICES GROUP INC.
THIS OPTION AGREEMENT is made between Wilshire Financial Services
Group Inc., a Delaware corporation, (the "Company") and ______________, (the
"Optionee"). The Company and the Optionee agree as follows:
1. Option Grant. The Company hereby grants to the Optionee on the
------------
terms and conditions of this Agreement the right and the option (the "Option")
to purchase all or any part of ___ shares of the Company's common stock at a
purchase price of $_____ per share. The Option is not intended to be an
Incentive Stock Option, as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") and therefore is a non-qualified stock option.
2. Exercisability. The Option is not exercisable in whole or in part
--------------
until the sixtieth (60th) day following the date of the closing of the
Company's initial pubic offering of its common stock (the "Vesting Date"). On
the Vesting Date, the Option shall be exercisable in full.
3. Term of Option. The Grant Date for the Option is _____________. The
--------------
Option shall continue in effect until 5:00 pm (Portland, Oregon time) on June
28, 2000 (the "Expiration Date") unless earlier terminated or extended.
4. Termination of Employment or Service.
------------------------------------
4.1 Unless a longer period is established by the Board of
Directors of the Company, upon the later to occur (the "Termination Date") of:
(i) termination of the Optionee's employment by or service to the Company or
(ii) failure of Optionee to be employed by or be rendering services to an
affiliate or subsidiary of the Company, in either case for any reason other
than because of physical disability, death or involuntary termination without
cause, the Option may be exercised at any time prior to the Expiration Date or
30 days following the Termination Date, whichever is the shorter period. For
purposes of this Section 4, "affiliate" shall mean any entity that controls,
is controlled by or is under common control with either the Company or
Wilshire Acquisitions Corporation.
4.2 Unless a longer period is established by the Board of
Directors, if the Termination Date is defined in Section 4.1 occurs because of
death, physical disability or involuntary termination without cause, the
Option may be exercised at any time prior to the Expiration Date or the
expiration of 12 months after the Termination Date, whichever
<PAGE>
is the shorter period. If the Optionee's service is terminated by death, the
Option shall be exercisable only by the person or persons to whom the
Optionee's rights under the Option pass by the Optionee's will or by the laws
of descent and distribution of the state or country of the Optionee's domicile
at the time of death.
5. Method of Exercise of Option.
----------------------------
5.1 Unless the Board of Directors determines otherwise, to exercise
the Option, the Optionee must give written notice to the Company stating the
Optionee's intention to exercise, specifying the number of shares as to which
the Optionee desires to exercise the Option and the date on which the Optionee
desires to complete the transaction. Unless the Board of Directors determines
otherwise, on or before the date specified for completion of the purchase of
shares pursuant to the Option, the full purchase price of such shares in cash
must be paid to the Company. No shares shall be issued until full payment for
the shares has been made.
5.2 After exercise of all or a part of the Option, after
notification of the amount due, if any, and prior to or concurrently with
delivery of the certificates representing the shares for which the Option was
exercised, the Optionee shall pay to the Company amounts necessary to satisfy
any applicable federal, state, and local withholding tax requirements. If
additional withholding becomes required beyond any amount deposited before
delivery of the certificates, the Optionee shall pay such amount to the
Company on demand. If the Optionee fails to pay the amount demanded, the
Company shall have the right to withhold that amount from other amounts
payable by the Company to the Optionee, including compensation for services
rendered, subject to applicable law.
6. Restriction on Transfer of Option. The Option granted hereby is not
---------------------------------
transferable otherwise than by will or under the applicable laws of descent
and distribution and during the lifetime of the Optionee may be exercised only
by the Optionee or the Optionee's guardian or legal representative. In
addition, the Option shall not be assigned, negotiated, pledged or
hypothecated in any way (whether by operation of law or otherwise), and the
Option shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, negotiate, pledge or hypothecate the Option,
or in the event of any levy upon the Option by reason of any execution,
attachment or similar process contrary to the provisions hereof, the Option
shall immediately become null and void.
7. Rights as a Stockholder. The Optionee shall not have any rights as
-----------------------
a stockholder with respect to any shares covered by the Option until the
Optionee has become the holder of record of the shares, and no adjustments
shall be made for dividends in cash or other property, distributions or other
rights in respect of any such shares.
8. No Right to Employment or Service. Nothing in this Agreement shall
---------------------------------
(i) confer upon the Optionee any right to be employed by or to continue
providing service to
<PAGE>
the Company or any affiliate or subsidiary of the Company; (ii) interfere in
any way with the right of the Company or any affiliate or subsidiary of the
Company to terminate the Optionee's employment or service at any time for any
reason, with or without cause, or to decrease the Optionee's compensation or
benefits, or (iii) confer upon the Optionee any right to continuation,
extension, renewal, or modification of any compensation, contract or
arrangement with or by the Company or any affiliate or subsidiary of the
Company.
9. Successors of Company. This Agreement shall be binding upon and
---------------------
shall inure to the benefit of any successor of the Company but, except as
provided herein, the Option may not be assigned or otherwise transferred by
the Optionee.
10. Notices. Any notices under this Agreement must be in writing and
-------
will be effective when actually delivered or, if mailed, three days after
deposit into the United States mails by registered or certified mail, postage
prepaid.
11. Bank Options. In exchange for and in consideration of the Option,
the Optionee agrees that (a) any and all options granted to the Optionee to
purchase the capital stock of Girard Savings Bank, FSB, an affiliate of the
Company, are terminated and of no further force or effect and (b) the grant of
the Option is conditioned on the execution and delivery by the Optionee of a
certain Bank Option Cancellation Agreement to that effect.
IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate as of the date written above.
WILSHIRE FINANCIAL SERVICES GROUP INC.
By:___________________________________
Name:
Title:
OPTIONEE
______________________________________
Name:
Address:
______________________________________
______________________________________
