<PAGE>
As filed with the Securities and Exchange Commission on February 18, 1998
Registration No. ______________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
HEADLANDS MORTGAGE COMPANY
(Exact Name of registrant as specified in its charter)
California 94-2851992
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
1100 Larkspur Landing Circle, Suite 101, Larkspur, California 94939
(Address of principal executive offices) (Zip code)
HEADLANDS MORTGAGE COMPANY
1998 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plan)
---------------
Peter T. Paul
President
Headlands Mortgage Company
1100 Larkspur Landing Circle, Suite 101
Larkspur, California 94939
(415) 461-6790
(Name, address and telephone number, including area code, of agent for service)
---------------
PLEASE SEND COPIES OF COMMUNICATIONS TO:
Phillip R. Pollock, Esq.
Tobin & Tobin
500 Sansome Street, Eighth Floor
San Francisco, California 94111
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate offering Amount of
to be registered registered(1) per share(2) price(2) registration fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 300,000(1) $10.20 $3,060,000 $902.70
==============================================================================================================
</TABLE>
(1) In addition to this amount, such indeterminate amount of additional shares
as may become issuable pursuant to the anti-dilution provisions of the
Plan. The amount to be registered represents the Registrant's estimate of
the maximum number of shares which are or will become available for
issuance under the terms of the Plan from the date of filing of this
Registration Statement through December 31, 2007.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) and Rule 457(c) on the basis of 85% of the average
of the high and low prices for the Registrant's Common Stock on the Nasdaq
National Market on February 13, 1998, estimated to be the maximum offering
price under the Plan.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information*
Item 2. Registration Information and Employee Plan Annual Information*
_____________________
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance with Rule
428 under the Securities Act of 1933 and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934 (the "Exchange Act") are hereby incorporated by reference in this
Registration Statement:
(a) The Company's Prospectus, dated February 4, 1998 and filed pursuant to
Rule 424(b) under the Securities Act on February 5, 1998.
(b) The Company's Form 8-K, dated February 4, 1998 and filed on February 5,
1998.
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, filed on December 29, 1997 and
amended on January 30, 1998 and February 3, 1998.
All documents filed by the Registrant with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment to this Registration Statement 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 made a part hereof from their respective dates of
filing (such documents, and the documents enumerated above, being hereinafter
referred to as "Incorporated Documents"); provided, however, the documents
enumerated above or subsequently filed by the Registrant under such Sections of
the Exchange Act in each year during which the offering made by the Registration
Statement is in effect prior to the filing with the Commission of the
Registrant's Annual Report on Form 10-K covering such year shall not be
Incorporated Documents to be incorporated by reference in this Registration
Statement or be a part hereof from and after the filing of such Annual Report on
Form 10-K.
Any statement contained in an Incorporated Document 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
Incorporated Document 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
None.
2
<PAGE>
Item 6. Indemnification of Directors and Officers
Section 204(a)(10)(A) of the General Corporation Law of the State of
California ("GCL") allows a corporation to eliminate the personal liability of a
director for monetary damages in an action brought by or in the right of the
corporation for breach of a director's duties to the corporation and its
stockholders, except that such provision may not eliminate or limit the
liability of directors for (i) acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law, (ii) acts or omissions
that a director believes to be contrary to the best interests of the corporation
or its stockholders or that involve the absence of good faith on the part of the
director, (iii) any transaction from which a director derived an improper
personal benefit, (iv) acts or omissions that show a reckless disregard for the
director's duty to the corporation or its stockholders in circumstances in which
the director was aware, or should have been aware, in the ordinary course of
performing a director's duties, of a risk of serious injury to the corporation
or its stockholders, (v) acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
corporation or its stockholders, (vi) certain liabilities arising from contracts
with the corporation in which the director has material a financial interest,
(vii) the making of any distributions to stockholders contrary to the law,
(viii) the distribution of assets to shareholders after dissolution proceedings
without paying or adequately providing for all known liabilities of the
corporation within certain time limits, (ix) the making of any loan or guaranty
contrary to law. The Registrant's Articles of Incorporation contains a
provision which eliminates directors' personal liability as set forth above,
except, as required by Section 204(a)(10)(B) and (C) of the GCL, any liability
of a director for any act or omission occurring prior to the date of the
provision's effectiveness, or any liability for an officer's acts or omissions,
notwithstanding that the officer is also a director or that the officer's
actions, if negligent or improper, have been ratified by the directors.
Section 317 of the GCL ("Section 317") empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of the corporation to
procure a judgment in its favor) by reason of the fact that the or she is or was
a director, officer, employee or agent of the corporation, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with the proceeding if that person acted in good faith and in a
manner the person reasonably believed to be in the best interests of the
corporation and, in the case of a criminal proceeding, had no reasonable cause
to believe the conduct of the person was unlawful. The termination of any
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent does not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person reasonably
believed to be in the best interests of the corporation or that the person had
reasonable cause to believe that the person's conduct was unlawful. Section 317
empowers the corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action by
or in the right of the corporation to procure a judgment in its favor by reason
of the fact that the person is or was a director, officer, employee or agent of
the corporation, against expenses actually and reasonably incurred by that
person in connection with the defense or settlement of the action if the person
acted in good faith, in a manner the person believed to be in the best interests
of the corporation and its stockholders, provided that (i) the person is
successful on the merits or (ii) such amounts are paid with court approval.
Section 317 also provides that, unless a person is successful
on the merits in defense of any proceeding referred to above, indemnification
may be made unless a person is successful on the merits in defense of any
proceeding referred to above, indemnification may be made only if authorized in
the specific case, upon a determination that indemnification is proper in the
circumstances because the indemnified person met the applicable standard of
conduct described above by one of the following: (1) a majority vote of a
quorum consisting of directors who are not parties to such proceedings; (2) if
such quorum is not obtainable, by independent legal counsel in a written
opinion; (3) by approval of stockholders with such indemnified person's shares
not being entitled to vote thereon; or (4) by the court in which the proceeding
is or was pending upon application by or on behalf of the person. Such
indemnification may be advanced to the indemnified person upon the receipt of
the corporation of an undertaking by or
3
<PAGE>
on behalf of the indemnified person to repay such amount in the event it shall
be ultimately determined that such indemnified person is not entitled to
indemnification. Section 317 also allows the corporation, by express provision
in its articles, to authorize additional rights for indemnification pursuant to
Section 204(a)(11).
The Bylaws of the Registrant provide that the Registrant shall indemnify
its directors and officers against expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with any proceeding
arising by reason of such person being or having been a director or officer of
the corporation and shall advance to such director or officer expenses incurred
in defending any such proceeding to the fullest extent permissible under
California law. The Bylaws also provide that the Registrant may indemnify its
employees and agents for such expenses by resolution of the Board of Directors.
Item 7. Exemption from Registration Claimed
Not applicable
Item 8. Exhibits
Exhibit # Description
- --------- -----------
5 Opinion of Tobin & Tobin as to the legality of securities
offered under the 1998 Employee Stock Option Plan.
10 Headlands Mortgage Company 1998 Employee Stock Purchase Plan.
23(a) Independent Auditors' Consent, KPMG Peat Marwick LLP
23(b) Consent of Tobin & Tobin (contained in the opinion of the Tobin
& Tobin, Exhibit 5 hereto)
24 Power of Attorney
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;
(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.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(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 (1)(a)(i) and (1)(a)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
4
<PAGE>
contained in periodic reports filed by, or furnished to the Commission by, the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification of liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
5
<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 Larkspur, State of California, on February 17, 1998.
HEADLANDS MORTGAGE COMPANY
By /s/ PETER T. PAUL
----------------------------------------
Peter T. Paul
(President, Chief Executive Officer and Director )
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated:
<TABLE>
<CAPTION>
Signature Position Date
--------- -------- ----
<S> <C> <C>
/s/ PETER T. PAUL President, Chief Executive Officer February 17, 1998
- ------------------------------ and Director
Peter T. Paul (Principal Executive Officer)
/s/ BECKY S. POISSON Executive Vice President February 17, 1998
- ------------------------------ Operations and Director
Becky S. Poisson
/s/ GILBERT J. MACQUARRIE Executive Vice President, Chief February 17, 1998
- ------------------------------ Financial Officer, Secretary and
Gilbert J. MacQuarrie Director
(Principal Financial Officer)
/s/ STEVEN M. ABREU Executive Vice President, February 17, 1998
- ------------------------------ Production and Secondary Marketing
Steven M. Abreu
Director February , 1998
- ------------------------------
Mark L. Korell
Director February , 1998
- ------------------------------
Leonard Auerbach
Director February , 1998
- ------------------------------
Mark E. Lachtman
/s/ KRISTEN DECKER Senior Vice President and February 17, 1998
- ------------------------------ Controller
Kristen Decker (Principal Accounting Officer)
</TABLE>
6
<PAGE>
Item 10. Exhibits
Exhibit # Description
- --------- -----------
5 Opinion of Tobin & Tobin as to the legality of securities
offered under the 1998 Employee Stock Option Plan.
10 Headlands Mortgage Company 1998 Employee Stock Purchase Plan.
23(a) Independent Auditors' Consent, KPMG Peat Marwick LLP
23(b) Consent of Tobin & Tobin (contained in the opinion of the Tobin
& Tobin, Exhibit 5 hereto)
24 Power of Attorney
7
<PAGE>
[LETTERHEAD OF TOBIN & TOBIN]
Exhibit 5
February 17, 1998
The Board of Directors
Headlands Mortgage Company
1100 Larkspur Landing Circle, Suite 101
Larkspur, CA 94939
Re: Registration Statement on Form S-8 relative to the 1998
Employee Stock Purchase Plan
-------------------------------------------------------
Ladies and Gentlemen:
We have acted as your counsel in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of an aggregate of up
to 300,000 shares (the "Shares") of common stock (the "Common Stock") of
Headlands Mortgage Company, a California corporation (the "Company"), issuable
pursuant to the Company's the 1998 Employee Stock Purchase Plan (the "Plan").
This opinion is delivered in accordance with the requirements of Items
601(b)(5) and (23) of Regulation S-K under the Securities Act.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Registration Statement on Form S-8, relating to the Shares, filed with
the Securities and Exchange Commission (the "Commission") under the Securities
Act on or about the date hereof (together with all exhibits thereto, the
"Registration Statement"), (ii) the Prospectus of the Plan to be given to
participants pursuant to the requirements of Part I of the Registration
Statement, (iii) the Articles of Incorporation of the Company, as amended and
presently in effect, (iv) the Bylaws of the Company in effect as of the date
hereof, (v) resolutions of the Board of Directors of the Company relating to the
issuance of the Shares and the filing and effectiveness of the Registration
Statement, and (vi) a specimen of the certificates representing the Shares. We
have also examined such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinion set forth below.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to this
opinion which we did not independently establish or verify, we have relied upon
oral or written statements and representations of officers and other
representatives of the Company and others.
<PAGE>
Board of Directors
Headlands Mortgage Company
February 17, 1998
Page 2
Members of our firm are admitted to the practice of law in the State of
California and we do not express any opinion as to the laws of any other
jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that the
300,000 Shares to be issued by the Company pursuant to the Plan have been duly
and validly authorized for issuance, and, upon issuance and delivery of the
Shares in accordance with the terms of the Plan, the Shares will be validly
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5 to Form S-8 and its incorporation by reference as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act or under the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
/s/ Tobin & Tobin
<PAGE>
Exhibit 10
HEADLANDS MORTGAGE COMPANY
1998 EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT OF PLAN.
Headlands Mortgage Company, a California corporation (the "Company"),
proposes to grant options ("Options") for purchase of the Company's common
stock, no par value ("Common Stock"), to eligible employees of the Company and
its Designated Subsidiaries (as hereinafter defined) pursuant to this Employee
Stock Purchase Plan (this "Plan"). For purposes of this Plan, "parent
corporation" and "subsidiary" (collectively, "Subsidiaries") shall have the same
meanings as "parent corporation" and "subsidiary corporation" set forth in
Sections 424 (e) and 424 (f), respectively, of the Internal Revenue Code of
1986, as amended (the "Code").The Company intends this Plan to qualify as an
"employee stock purchase plan" under Section 423 of the Code (including any
amendments or successor provisions to such Section), and this Plan shall be so
construed. Any term not expressly defined in this Plan but defined for purposes
of Section 423 of the Code shall have the same definition therein.
2. STOCK SUBJECT TO PLAN.
A total of 300,000 shares of the Common Stock is reserved for issuance
under this Plan. Such number shall be subject to adjustments affected in
accordance with Section 16 of this Plan. Any shares of Common Stock that have
been made subject to an Option that cease to be subject to the Option (other
than by means of exercise of the Option), including, without limitation, in
connection with the cancellation or termination of an Option, shall again be
available for issuance in connection with future grants of Options under this
Plan.
3. PURPOSE.
The purpose of this Plan is to provide employees of the Company and its
designated subsidiaries, as that term is defined in Section 5 of this Plan
("Designated Subsidiaries"), with a convenient means of acquiring an equity
interest in the Company through payroll deductions, to enhance such employees'
sense of participation in the affairs of the Company and Subsidiaries, and to
provide an incentive for continued employment.
4. ADMINISTRATION.
This Plan shall be administered by a committee (the "Committee") appointed
by the Company's Board of Directors (the "Board") consisting of at least two
members of the Board, each of whom is a Disinterested Person as defined in Rule
16b-3(d) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (unless the General Counsel of the Company shall have rendered a written
opinion to the Board that such composition of the Committee is not required for
the exemption under Rule 16b-3 to be available with respect to purchases of
Common Stock under the Plan), which shall be the Compensation Committee of the
Board if it satisfies such requirements. Subject to the provisions of this Plan
and the limitations of Section 423 of the Code or any successor provision in the
Code, the Committee shall have exclusive authority, in its discretion, to
determine all matters relating to Options granted under this Plan, including all
terms, conditions, restrictions, and limitations of Options; provided, however,
that all participants granted Options under an offering pursuant to this Plan
shall have the same rights and privileges within the meaning of Code Section 423
(b) (5) except as required by applicable law. The Committee shall also have
exclusive authority to interpret this Plan and may from time to time adopt rules
and regulations of general application for this Plan's administration. The
Committee's exercise of discretion and interpretation of this Plan, its rules
and regulations, and all actions taken and determinations made by the Committee
pursuant to this Plan shall be conclusive and binding on all parties involved or
affected. The Committee may delegate administrative duties to such of the
Company's officers or employees as it so determines (provided that no such
delegation may be made that would cause the purchase of Common Stock by
participants under this Plan to cease to be exempt from Section 16 (b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")). All expenses
incurred in connection with the administration of this Plan shall be paid by the
Company and the Designated Subsidiaries; provided, however, that the Committee
may require a participant to pay any costs or fees in connection with the sale
by the participant of shares of Common Stock acquired under this
1
<PAGE>
Plan or in connection with the participant's request for the issuance of a
certificate for shares of Common Stock held in the participant's account under
the Plan.
5. ELIGIBILITY.
Any employee of the Company or the Designated Subsidiaries is eligible to
participate in the Plan for any Offering Period (as hereinafter defined) under
this Plan except the following:
(a) employees who have not been continuously employed by the Company or
Subsidiaries from the date of hire or rehire or of return from an unapproved
leave of absence for a period of at least three months before the beginning of
such Offering Period;
(b) employees who are customarily employed for less than 20 hours per week;
(c) employees who are customarily employed for not more than five months in
a calendar year; and
(d) employees who, together with any other person whose stock would be
attributed to such employee pursuant to Section 424 (d) of the Code, own stock
or hold options to purchase stock possessing five percent or more of the total
combined voting power or value of all classes of stock of the Company or any of
its Subsidiaries or who, as a result of being granted Options under this Plan
would own stock or hold options to purchase stock possessing five percent or
more of the total combined voting power or value of all classes of stock of the
Company or any of its Subsidiaries.
For all purposes of this Plan, the term Designated Subsidiaries shall mean
those Subsidiaries listed on Annex A to this Plan or Subsidiaries which may
hereafter be determined by the Committee or the Board to be Designated
Subsidiaries. A Designated Subsidiary will cease to be a Designated Subsidiary
on the earlier of (i) the date the Committee or the Board determines that such
Subsidiary is no longer a Designated Subsidiary or (ii) such Designated
Subsidiary ceases for any reason to be a "parent corporation" or "subsidiary
corporation" as defined in Sections 424 (e) and 424 (f), respectively, of the
Code.
6. EFFECTIVE DATE; OFFERING AND PURCHASE PERIODS.
The effective date of this Plan shall be the effective date of the initial
public offering of the Company's Common Stock (the "Effective Date"). The
offering periods of this Plan (individually, an "Offering Period") shall consist
of periods not to exceed the maximum period permitted by Section 423 of the
Code. Until determined otherwise by the Committee or the Board, (a) Offering
Periods shall commence on each January 1 and July 1 and continue for six months,
provided, however, that the first Offering Period shall begin on the Effective
Date and continue through June 30, 1998, and (b) each Offering Period shall
consist of one or more purchase periods (individually, a "Purchase Period")
during which payroll deductions of the participants are accumulated under this
Plan. Until otherwise determined by the Committee or the Board, each Purchase
Period shall be a six-month period coinciding with an Offering Period, provided,
however, that the first Purchase Period shall coincide with the first Offering
Period ending on June 30, 1998. The first day of each Offering Period is
referred to as the "Offering Date". The last day of each Purchase Period is
referred to as the "Purchase Date". Subject to the requirements of Section 423
of the Code, the Committee or the Board shall have the power to change the
duration of Offering Periods or Purchase Periods with respect to future
offerings if such change is announced at least 30 days prior to the first day of
the first Offering Period or Purchase Period to be affected by such change.
7. PARTICIPATION IN THIS PLAN.
Eligible employees may become participants in an Offering Period under this
Plan for the first Purchase Period after satisfying the eligibility requirements
by delivering an enrollment form provided by the Company to the administrator
for this Plan at the division of the Company or the Designated Subsidiary by
which the participant is employed ("Division Plan Administrator") not later than
the 15th day of the month (or if such day is not a business day for the Company
or the applicable Subsidiary, on the immediately preceding business day) before
commencement of such Purchase Period unless a later time for filing the
enrollment form authorizing payroll deductions is set by the Committee for all
eligible employees with respect to a given Purchase Period. Notwithstanding the
foregoing, for the initial Offering Period, the time for filing an enrollment
form and commencing participation for employees who satisfy the
2
<PAGE>
eligibility requirements on the Offering Date for such Offering Period shall be
determined by the Committee and communicated to such employees. Once an employee
becomes a participant in the Plan with respect to an Offering Period, such
employee will automatically participate in the Offering Period commencing
immediately following the last day of the prior Offering Period unless the
employee withdraws from this Plan or terminates further participation in the
Offering Period as set forth in Sections 13 and 14 below. Such participant is
not required to file any additional enrollment forms in order to continue
participation in this Plan, except that the Committee may require the filing of
new enrollment cards by participants who transfer to another division of the
Company or a Designated Subsidiary.
8. GRANT OF OPTION ON ENROLLMENT.
Enrollment by an eligible employee in this Plan with respect to an Offering
Period will constitute the grant by the Company to such employee as of the
related Offering Date of an Option to purchase on each Purchase Date up to that
number of whole shares of Common Stock of the Company, determined by dividing
(a) the amount accumulated in such employee's payroll deduction account during
the Purchase Period ending on such Purchase Date by (b) the Purchase Price as
that term is defined in Section 9; provided, however, that the number of shares
which may be purchased pursuant to an Option may in no event exceed (i) the
number determined by dividing the amount of $12,500 by the fair market value (as
defined in Section 9) of a share of Common Stock on the Offering Date, or (ii)
such other maximum number of shares as may be specified in the future by the
Board or Committee in lieu of the limitation contained in clause (i).
9. PURCHASE PRICE.
The purchase price per share (the "Purchase Price") at which a share of
Common Stock will be sold in any Purchase Period shall initially be the LOWER of
(a) 85 percent of the fair market value of such share on the first day of the
Offering Period in which such Purchase Price occurs or (b) 85 percent of the
fair market value of such share on the Purchase Date.
For purposes this Plan, the term "fair market value" of the Common Stock on
the initial Offering Date shall be the price per share at which shares of Common
Stock are first sold to the public in the Company's initial public offering as
specified in the final prospectus with respect to that offering, and in all
other instances, the term "fair market value" on any date shall be the closing
price on such date of the Common Stock reported on the Nasdaq National Market or
any national securities exchange on which the Common Stock is listed. If there
is no reported closing price of the Common Stock on such date, then the "fair
market value" shall be measured on the next preceding trading day for which such
reported closing price is available. If there is no regular trading market for
the Common Stock, the fair market value of the Common Stock shall be as
determined by the Committee in its sole discretion, exercised in good faith.
The Committee may change the manner in which the Purchase Price is determined
with respect to future Offering Periods or Purchase Periods (provided such
determination does not have the effect of lowering the Purchase Price to an
amount less than that which would be computed utilizing the method for
determining the Purchase Price set forth in the first paragraph of this Section
9) if such changed manner of computation is announced at least 30 days prior to
the first day of the first Offering Period or Purchase Period to be affected by
such change.
10. PURCHASE OF SHARES; CHANGES IN PAYROLL DEDUCTIONS;
ISSUANCE OF SHARES.
(a) Funds contributed by each participant for the purchase of shares under
this Plan shall be accumulated by regular payroll deductions made during each
Offering Period. The deductions shall be made as a percentage of the
participant's Compensation in 1 percent increments comprising not less than 1
percent and not more than 15 percent of Compensation. As used herein,
"Compensation" shall mean all base salary, wages, cash bonuses, commissions, and
overtime; provided, however, that, for purposes of determining a participant's
Compensation, any election by such participant to reduce his or her regular cash
remuneration under Sections 125 or 401 (k) of the Code shall be treated as if
the participant did not make such election. "Compensation" does not include
severance pay, hiring and relocation allowances, pay in lieu of vacation,
automobile allowances, imputed income arising under any Company group insurance
or benefit program, income received in connection with stock options, or any
other special items of remuneration. Payroll deductions shall commence on the
first payday following the Offering Date (except with respect to the first
Offering Period, as noted above) and shall continue through the last payday of
the Offering Period unless sooner altered or terminated as provided in this
Plan.
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(b) A participant may lower (but not increase) the rate of payroll
deductions during an Offering Period by filing with the Division Plan
Administrator a new authorization for payroll deductions, in which case the new
rate shall become effective for the next payroll period commencing more than 15
days after the Division Plan Administrator's receipt of the authorization and
shall continue for the remainder of the Offering Period unless changed as
described below. Such change in the rate of payroll deductions may be made at
any time during an Offering Period, but not more than one change may be made
effective during any Offering Period. Notwithstanding the foregoing, a
participant may lower the rate of payroll deductions to zero for the remainder
of the Offering Period. A participant may increase or decrease the rate of
payroll deductions for any subsequent Offering Period by filing with the
Division Plan Administrator a new authorization for payroll deductions not later
than the 15th day of the month (or if such date is not a business day , the
immediately preceding business day) before the beginning of such Offering
Period. A participant who has decreased the rate of withholding to zero will be
deemed to continue as a participant in the Plan until the participant withdraws
from the Plan in accordance with the provisions of Section 14. A participant
shall have the right to withdraw from this Plan in the manner set forth in
Section 13 regardless of whether the participant has exercised his or her right
to lower the rate at which payroll deductions are made during the applicable
Offering Period.
(c) All payroll deductions made for a participant will be credited to his
or her account under this Plan and deposited with the general funds of the
Company. No interest will accrue on payroll deductions. All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such payroll
deductions.
(d) On each Purchase Date, provided that the participant has not terminated
employment in accordance with Section 14 or has not submitted to the Division
Plan Administrator a signed and completed withdrawal form, in either case on or
before the 15th day (or if such date is not a business day, on the immediately
preceding business day) of the last month of the Purchase Period in accordance
with Section 10(b) or Section 13 of this Plan, or the Plan has not been
terminated prior to the date referred to in the foregoing clause, the Company
shall apply the funds then in the participant's account to the purchase at the
Purchase Price of whole share(s) of Common Stock issuable under the Option
granted to such participant with respect to the Offering Period to the extent
that such Option is exercisable on the Purchase Date. Subject to Section 11,
any funds remaining in the participant's account will be applied to the
following Purchase Period. No fractional shares will be purchased.
(e) During a participant's lifetime, such participant's Option to purchase
shares hereunder is exercisable only by him or her. The participant will have
no interest or voting right in shares covered by his or her Option until such
Option has been exercised.
11. LIMITATIONS ON RIGHT TO PURCHASE.
(a) No employee shall be granted an Option to purchase Common Stock under
this Plan at a rate which, when aggregated with his or her rights to purchase
stock under all other employee stock purchase plans of the Company or any
Subsidiary which is intended to meet the requirements of Code Section 423,
exceeds $25,000 in fair market value, determined as of the applicable date of
the grant of the Option, for each calendar year in which the employee
participates in this Plan (or any other employee stock purchase plan described
in this Section 11 (a)).
(b) The number of shares which may be purchased by any employee on a
Purchase Date may not exceed the number of shares determined by dividing the sum
of $12,500 by the fair market value (as defined in Section 9) of a share of
Common Stock on the first day of the Offering Period in which such Purchase Date
occurs or, in the event the Committee or Board may specify a different
limitation to be applied in lieu of the foregoing limitation, then the number of
shares which may be purchased by any employee on a Purchase Date may not exceed
such other limitation.
(c) If the number of shares to be purchased on a Purchase Date by all
employees participating in this Plan exceeds the number of shares then available
for issuance under this Plan, then the Company will make a pro rata allocation
of the remaining shares in as uniform a manner as shall be reasonably
practicable and as the Committee shall determine to be equitable. In such
event, the Company shall give written notice of such reduction of the number of
shares to be purchased under a participant's Option to each participant affected
thereby.
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(d) Any payroll deductions accumulated in a participant's account which are
not used to purchase stock due to the limitations in this Section 11 shall be
returned to the participant as soon as practicable after the end of the
applicable Purchase Period without interest.
12. EVIDENCE OF STOCK OWNERSHIP.
(a) Promptly following each Purchase Date, the number of full shares of
Common Stock purchased by each participant shall be deposited into an account
established in the participant's name at a stock brokerage or other financial
services firm designated or approved by the Committee (the "Plan Financial
Agent"). A participant shall be free to undertake a disposition (whether by way
of sale, gift, or other transfer) of the shares in his or her account at any
time, but, in the absence of such a disposition, the shares must remain in the
participant's account at the Plan Financial Agent until the holding period set
forth in Code Section 423 (a) has been satisfied. With respect to full shares
for which the Code Section 423(a) holding period has been satisfied, the
participant may move those shares to another brokerage account of the
participant's choosing or request that a stock certificate for full shares be
issued and delivered to him or her.
(b) Following termination of a participant's employment for any reason, the
participant shall have a period of 60 days to notify the Plan Financial Agent
whether such participant desires (i) to receive a certificate representing all
full shares then in the participant's account with the Plan Financial Agent and
any cash being held for future purchases or (ii) to sell the shares in the
participant's account through the Plan Financial Agent. If the terminated
participant fails to file such notice with the Plan Financial Agent within 60
days after termination, he or she shall be deemed to have elected the
alternative set forth in clause (i) above, provided that the Plan Financial
Agent will continue to hold the terminated participant's certificates, on his or
her behalf, in an account no longer subject to this Plan, until otherwise
directed by such participant or determined by the Plan Financial Agent.
However, the participant shall not in any event receive a certificate
representing shares with respect to which the Code Section 423 (a) holding
period has not been satisfied until such holding period has been satisfied.
13. WITHDRAWAL.
(a) Each participant may withdraw from an Offering Period under this Plan
by signing and delivering to the Division Plan Administrator a written notice to
that effect on a form provided for such purpose. Such withdrawal may be elected
at any time on or prior to the 15th day of the last month (or if such date is
not a business day, the immediately preceding business day) of a Purchase
Period.
(b) Upon withdrawal from this Plan, the accumulated payroll deductions of
the participant not theretofore utilized for the purchase of shares of Common
Stock on a Purchase Date shall be returned to the withdrawn participant, without
interest, and his or her participation in this Plan shall terminate. In the
event a participant voluntarily elects to withdraw from this Plan, he or she may
not resume his or her participation in this Plan during the same Offering Period
unless otherwise determined by the Committee, but he or she may participate in
any subsequent Offering Period by filing a new authorization for payroll
deductions in the same manner as set forth above for initial participation in
this Plan.
14. TERMINATION OF EMPLOYMENT; LEAVE OF ABSENCE.
Termination of a participant's employment for any reason, including
retirement, death, or the failure of a participant to remain an eligible
employee, immediately terminates his or her participation in this Plan. In such
event, except as provided in Section 15, the payroll deductions credited to the
participant's account will be returned to him or her or, in the case of his or
her death, to his or her beneficiary or heirs, without interest. For purposes
of this Section 14, an employee will not be deemed to have terminated employment
or failed to remain in the continuous employ of the Company in the case of any
leave of absence permitted by applicable law or otherwise approved by the
Committee.
15. RETURN OF PAYROLL DEDUCTIONS.
In the event a participant's interest in this Plan is terminated by
withdrawal, termination of employment, or otherwise, or in the event this Plan
is terminated by the Board, the Company shall promptly deliver to the
participant all contributions of the participant to the Plan which have not yet
been applied to the purchase of stock unless such termination of participation
occurs later than the 15th day of the final month of any Purchase Period (or if
such date is
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not a business day, on the preceding business day), in which event such
contributions will be utilized to purchase Common Stock for the participant. No
interest shall accrue on the payroll deductions of a participant in this Plan.
16. CAPITAL CHANGES.
In the event that at any time or from time to time a stock dividend, stock
split, spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to stockholders other than a normal cash dividend,
or other change in the Company's corporate or capital structure results in (a)
the outstanding shares of Common Stock or any securities exchanged therefor or
received in their place being exchanged for a different number or class of
securities of the Company or of any other corporation or (b) new, different, or
additional securities of the Company or of any other corporation being received
by the holders of shares of Common Stock, then the Committee, in its sole
discretion, shall make such equitable adjustments as it shall deem appropriate
in the circumstances in the maximum number and kind of shares of stock subject
to this Plan as set forth in Sections 1 and 2, the number and kind of shares
subject to outstanding Options, and the Purchase Price. The determination by
the Committee as to the terms of any of the foregoing adjustments shall be
conclusive and binding.
17. NONASSIGNABILITY.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive shares under this
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
(other than by will, the laws of descent and distribution, or as provided in
Section 24 hereof) by the participant. Any such attempt at assignment,
transfer, pledge, or other disposition shall be void and without effect.
18. REPORTS AND STATUS OF ACCOUNTS.
Individual accounts will be maintained by the Plan Financial Agent for each
participant in this Plan. The participant shall have all ownership rights with
respect to shares of Common Stock held in his or her account by the Plan
Financial Agent, including the right to vote such shares and to receive any
dividends or distributions which may be declared thereon by the Board. The Plan
Financial Agent shall send to each participant promptly after the end of each
Purchase Period a report of his or her account setting forth the total of shares
purchased, the total number of shares then held in his or her account, and the
market value per share. Neither the Company nor any Designated Subsidiary shall
have any liability for any error or discrepancy in any such report.
19. NO RIGHTS TO CONTINUED EMPLOYMENT; NO IMPLIED RIGHTS.
Neither this Plan nor the grant of any Option hereunder shall confer any
right on any employee to remain in the employ of the Company or any Subsidiary
or restrict the right of the Company or any Subsidiary to terminate such
employee's employment. The grant of any Option hereunder during any Offering
Period shall not give a participant any right to similar grants thereafter.
20. EQUAL RIGHTS AND PRIVILEGES.
All eligible employees shall have equal rights and privileges with respect
to this Plan except as required by applicable law so that this Plan qualifies as
an "employee stock purchase plan" within the meaning of Section 423 or any
successor provision of the Code and the related regulations. Any provision of
this Plan which is inconsistent with Section 423 or any successor provision of
the Code shall, without further act or amendment by the Company, the Board, or
the Committee, be reformed to comply with the requirements of Section 423. This
Section 20 shall take precedence over all other provisions in this Plan.
21. NOTICES.
All notices or other communications by a participant to the Company under
or in connection with this Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.
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22. AMENDMENT OF PLAN.
This Plan may be amended by the stockholders of the Company. The Board may
also amend this Plan in such respects as it shall deem advisable; however,
stockholder approval will be required for any amendment that will increase the
total number of shares as to which Options may be granted under this Plan, or,
but for such shareholder approval, cause this Plan to fail to continue to
qualify as an "employee stock purchase plan" under Section 423 of the Code or
cause the purchase of shares thereunder to fail to be exempt from the provisions
of Section 16 (b) of the Exchange Act.
23. TERMINATION OF THE PLAN.
The Company's stockholders or the Board may suspend or terminate this Plan
at any time. Unless this Plan shall theretofore have been terminated by the
Company's stockholders or the Board, this Plan shall terminate on December 31,
2007.
24. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under this
Plan in the event of such participant's death prior to delivery to him or her
(or to the Plan Financial Agent on his or her behalf) of such shares and cash.
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under this Plan who is living at
the time of such participant's death, the Company shall deliver such shares or
cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such shares or cash to the
spouse or to any one or more dependents or relatives of the participant or, if
no spouse, dependent, or relative is known to the Company, to such other person
as the Company may in good faith determine to be the appropriate designee.
25. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON
SALE OF SHARES.
Shares shall not be issued with respect to an Option unless the exercise of
such Option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of the
Nasdaq National Market or any stock exchange upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.
26. WITHHOLDING.
The Committee shall have the right to make such provisions as it deems
appropriate to satisfy any obligation of the Company to withhold federal, state
or local income or other taxes incurred by reason of the operation of the Plan.
27. GOVERNING LAW.
Except to the extent that provisions of this Plan are governed by
applicable provisions of the Code or any other substantive provision of federal
law, this Plan shall be construed in accordance with, and shall be governed by,
the substantive laws of the State of California without regard to any provisions
of California law relating to the conflict of laws.
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ANNEX A
List of Subsidiaries
Headlands Mortgage Securities Inc.
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Exhibit 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Headlands Mortgage Company on Form S-8 of our report dated December 19, 1997
appearing in the Prospectus of Headlands Mortgage Company dated February 4, 1998
and filed pursuant to Rule 424(b) on February 5, 1998. Our report refers to a
change in the Company's method of accounting for originated mortgage servicing
rights in 1995 and its method of accounting for transfers and servicing of
financial assets in 1997.
KPMG Peat Marwick LLP
San Francisco, California
February 18, 1998
<PAGE>
Exhibit 24
POWER OF ATTORNEY
HEADLANDS MORTGAGE COMPANY
1998 EMPLOYEE STOCK PURCHASE PLAN
The undersigned, Directors and/or Officers of Headlands Mortgage Company, a
California corporation (the "Company") hereby constitute and appoint Peter T.
Paul, Becky S. Poisson, Gilbert J. MacQuarrie, Steven M. Abreu and Paul
Casellini, or any one of them, their true and lawful attorneys-in-fact, with
full power of substitution and resubstitution, for each of the undersigned and
in his or her name, place, and stead, in any and all capacities, to do any and
all acts and execute any and all instruments which the said attorneys may deem
necessary or advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules and regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
registration under the Securities Act of 1933 of an aggregate of 300,000 shares
of Common Stock of the Company which may be issued and sold pursuant to the
terms of the Headlands Mortgage Company 1998 Employee Stock Purchase Plan
(together with such indeterminate number of additional shares as may become
issuable pursuant to the anti-dilution provisions of the Plan), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign the name of each of the undersigned in his or her capacity
as Director and/or Officer of the Company to one or more Registration Statements
to be filed with the Securities and Exchange Commission with respect thereto, to
any and all amendments, including post-effective amendments, to the said
Registration Statements, and to any and all instruments and documents filed as a
part of or in connection with the said Registration Statements or amendments
thereto; hereby ratifying and confirming all that the said attorneys-in-fact, or
any of them, has done, shall do, or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this power of attorney
this 17th day of February, 1998.
/s/ PETER T.PAUL /s/ STEVEN M. ABREU
- ------------------------------ ------------------------------
Peter T. Paul Steven M. Abreu
/s/ BECKY S. POISSON
- ------------------------------ ------------------------------
Becky S. Poisson Mark L. Korell
/s/ GILBERT J. MACQUARRIE
- ------------------------------ ------------------------------
Gilbert J. MacQuarrie Leonard Auerbach
/s/ KRISTEN DECKER
- ------------------------------ ------------------------------
Kristen Decker Mark E. Lachtman
