SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ROYAL FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 13-3961109
(State or other jurisdiction) (I.R.S. employer identification no.)
1000 Ballpark Way, Suite 210, Arlington, Texas 76011
(Address of principal executive offices) (Zip code)
ROYAL FINANCIAL CORPORATION 1999 STOCK OPTION PLAN
(Full title of the plan)
Michael J. Pilgrim
1000 Ballpark Way, Suite 210, Arlington, Texas 76011
(Name and address of agent for service)
With copies to:
Richard S. Heller, Esq.
Shustak Jalil & Heller
545 Madison Avenue, New York, New York 10022
Telephone number, including area code, of agent for service: 817-861-4000
This registration statement shall hereafter become effective in accordance
with Rule 462 promulgated under the Securities Act of 1933, as amended.
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
Securities Amount maximum offering maximum Amount of
to be to be price per aggregate Registration
registered registered share (1) offering price fee
Common Stock 50,000 $ 4.25 $ 212,500 $ 59.07
($.001 par 20,000 2.75 55,000 15.29
value) 1,230,000 2.25 2,767,500 769.36
150,000 2.00 300,000 83.40
198,667 1.00 198,667 55.22
300,000 .01 3,000 .84
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Total: 1,948,667 $ 2.00 $3,536,667 $983.19
(1) Estimated pursuant to Rule 457 solely for the purpose of determining the
registration fee. The price is based upon the exercise price of the outstanding
but unexercised options.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information*
Item 2. Registrant 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 DOCUMENTS BY REFERENCE
Royal Financial Corporation (the "Registrant") hereby incorporates by
reference in this registration statement the following documents:
(a) The Registrant's effective registration statement on Form 10-SB as
filed with the Securities and Exchange Commission.
(b) Inapplicable.
(c) The description of the Registrant's Shares, $.001 par value, which is
contained in the Company's registration statement on Form 10-SB as filed with
the Securities and Exchange Commission.
All documents subsequently filed by the Company 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 hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
Item 4. DESCRIPTION OF SECURITIES
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The class of securities to be offered is registered under Section 12(g) of
the Exchange Act.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Inapplicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article XII of the Registrant's Certificate of Incorporation states:
Twelfth. No director or officer of the Corporation shall be
personally liable to the Corporation or any of its stockholders for
damages for breach of fiduciary duty as a director or officer involving
any act or omission of any such director or officer; provided, however,
that the foregoing provisions shall not eliminate or limit the liability
of a director or officer (i) for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or (ii) the
payment of dividends in violation of Section 78.300 of the Nevada Revised
Statutes. Any repeal or modification of this Article by the stockholders
of the Corporation shall be prospective only, and shall not adversely
affect any limitation on the personal liability of a director or officer
of the Corporation for acts or omissions prior to such repeal or
modification.
Article V of the Registrant's By Laws states:
1. The corporation shall indemnify any and all of its Directors and
Officers, and its former Directors and Officers, or any person who may
have served at the Corporations request as a Director or Officer of
another corporation in which it owns shares of capital stock or of which
it is a creditor, against expenses actually and necessarily incurred by
them in connection with the defense of any action, suit or proceeding in
which they, or any of them are made parties, or a party, by reason of
being or having been Director(s) or Officer(s) of the corporation, or of
such other corporation, except, in relation to matters as to which any
such Director or Officer or former Director or Officer or person shall be
adjudged in such action, suit or proceeding to be liable for negligence or
misconduct in the performance of duty. Such indemnification shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled, under By-Law, agreement, vote of stockholders or otherwise.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, the
Registrant has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
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Inapplicable.
Item 8. EXHIBITS
The following is a complete list of exhibits filed as part of this
Registration Statement and which are incorporated herein:
4.1 Royal Financial Corporation's 1999 Stock Option Plan as approved by the
Board of Directors on March 15, 1999.
5 Opinion of Shustak Jalil & Heller regarding legality.
23.1 Consent of Shustak Jalil & Heller (included in Exhibit 5).
23.2 Consent of Grant Thornton LLP
23.3 Consent of William C. Spore & Company, P.C.
Item 9. UNDERTAKINGS
(a) The 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 thereto) 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.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
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(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 Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in 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 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 Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment of
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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 County of Tarrant, State of Texas on March 29, 1999.
ROYAL FINANCIAL CORPORATION
By:/s/ Michael J. Pilgrim
------------------------
MICHAEL J. PILGRIM
President, Chief Executive Officer and Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on March 29, 1999.
Signature Title
/s/ Michael J. Pilgrim President, Chief Executive Officer and Chairman
- --------------------------
Michael J. Pilgrim
/s/ David E. Wentsch Vice President and Director
- --------------------------
David E. Wentsch
/s/ Mark J. Teinert Secretary, Treasurer and Director
- --------------------------
Mark J. Teinert
/s/ Richard Bergner Director
- --------------------------
Richard Bergner
/s/ Susan M. Stein Vice President of Finance
- --------------------------
Susan M. Stein
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EXHIBIT INDEX
4.1 Royal Financial Corporation's 1999 Stock Option Plan as approved by the
Board of Directors on March 15, 1999.
5. Opinion of Shustak Jalil & Heller regarding legality.
23.1 Consent of Shustak Jalil & Heller (included in Exhibit 5).
23.2 Consent of Grant Thornton, LLP.
23.3 Consent of William C. Spore & Company, P.C.
EXHIBIT 4.1
ROYAL FINANCIAL CORPORATION
1999 STOCK OPTION PLAN
This Plan (the "Plan") of Royal Financial Corporation (the "Company") provides
that options for up to 2,500,000 shares (the "Shares") of the Company's Common
Stock, $.001 par value (the "Stock"), may be granted to employees of the Company
and its subsidiaries, as defined below, and to others who are in a position to
make significant contributions to the success of the Company and its
subsidiaries, as defined below. Options granted pursuant to the Plan will be
"Non-qualified Options".
1. PURPOSE. The purpose of this Plan is to attract and retain employees and
others who are in a position to contribute significantly to the success of the
Company, to reward such contributions, and to encourage option holders to
advance the long term interests of the Company through ownership of its Stock.
2. ADMINISTRATION.
(a) Board of Directors. The Plan shall be administered by the Board of Directors
of the Company (the "Board"). The Board, subject to the express provisions of
the Plan, shall determine those persons to be granted options, the times when
options shall be granted, the number of Shares subject to each option, and the
terms and conditions of each option. The Board shall establish the form of
instruments granting options and any other instruments under the Plan, and the
rules and regulations for the administration of the Plan, and may amend and
rescind such instruments, rules and regulations. The Board shall interpret the
Plan and decide any questions and settle all controversies and disputes that may
arise in connection with the Plan, and such determinations of the Board shall be
conclusive and shall bind all parties. Subject to Section 15 hereof, the Board
may, both generally and in particular instances, waive compliance by an
optionholder with any obligation to be performed under an option and waive any
condition or provision of any option.
(b) Committee. The Board may, in its discretion, delegate its powers with
respect to the Plan to a Stock Option Plan Committee (the "Committee"), in which
event all references to the Board hereunder shall be deemed to refer to the
Committee. The Committee shall be appointed by the Board and shall consist of at
least two persons, each of whom shall be a director of the Company and each of
whom shall be disinterested, as such term is defined from time to time in Rule
16b-3 promulgated under the Securities Exchange Act of 1934 and each of whom
shall be an outside Director, as defined in Section 162(m) of the Code and
related legislative history. A majority of the members of the Committee shall
constitute a quorum, and all determinations of the Committee shall be made by a
majority of its members. Any determination of the Committee under the Plan may
be made without notice or meeting of the Committee.
(c) With respect to the participation of any officer or director in the Plan,
his or her selection as an optionee, the number of option shares to be allocated
to such officer or director, the exercise price and vesting of the options and
all other terms and conditions of such options shall be determined by, or only
in accordance with, the recommendations of a Committee established pursuant to
the foregoing Section 2(b).
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3. EFFECTIVE DATE AND TERM. This Plan shall become effective upon adoption by
the Board or approval by the stockholders by at least a majority vote at a duly
held meeting (or by written consent as provided by applicable law), whichever is
earlier, but shall not become effective unless stockholder approval is obtained
within twelve (12) months before or after the adoption of the Plan by the Board.
The Board may grant options under this Plan prior to such approval, but any such
option shall become effective as of the date of grant only upon such approval
and, accordingly, no such option may be exercisable prior to such approval. This
Plan shall terminate ten years after its effective date.
4. SHARES SUBJECT TO THE PLAN. The Shares shall be reserved for issuance upon
the exercise of options granted under the Plan. Shares subject to an option
which expires or is terminated may again be subjected to an option under the
Plan. Shares delivered under the Plan may be authorized but unissued Stock or
treasury Stock. No fractional Shares shall be issued under the Plan.
5. CHANGES IN CAPITAL STOCK. In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the Company's capital
stock, the number and kind of shares of stock or securities of the Company
subject to options then outstanding or subsequently granted under the Plan, the
maximum number of shares or securities that may be delivered under the Plan, the
exercise price, and other relevant provisions shall be adjusted appropriately in
a manner determined by the Board to be equitable, whose determination shall be
binding. The Board may also adjust the number of Shares subject to outstanding
options, the exercise price of outstanding options and the terms of outstanding
options to take into consideration material changes in accounting practices or
principles, consolidations or mergers, acquisitions or dispositions of stock or
property or any other event if it is determined by the Board that such
adjustment is appropriate to avoid distortion in the operation of the Plan.
6. ELIGIBILITY. All employees of the Company and its subsidiaries, as well as
those other persons or entities who, in the opinion of the Board, are in a
position to contribute significantly to the success of the Company or its
subsidiaries, shall be eligible to receive options under the Plan. A
"subsidiary" for purposes of the Plan shall be a subsidiary corporation as
defined in Section 424(f) of the Code. Receipt of options under the Plan or of
awards under any other employee benefit plan of the Company or any of its
subsidiaries shall not preclude an employee from receiving options or additional
options under the Plan. In granting options the Board may include or exclude
previous participants in the Plan as the Board may determine.
7. TERMS AND CONDITIONS OF OPTIONS.
(a) Exercise Price. The exercise price of each option shall be determined by the
Board but shall not be less than 100% of the fair market value of the stock
subject to the option on the date of grant; nor shall the exercise price of any
option be less, in the case of an original issue of authorized stock, than par
value. For this purpose, "fair market value" shall be determined by the Board in
good faith on a basis consistent with the provisions of Section 422 of the Code
and the regulations promulgated thereunder.
(b) Duration, Vesting and Conditions of Exercise. Each option shall be
exercisable during such period or periods as the Board may determine, but in no
case after the expiration of ten years from the date of grant. In the discretion
of the Board, options may be exercisable (i) in full upon grant or (ii) over or
<PAGE>
after a period of time conditioned on satisfaction of certain Company, division,
group, office, individual or other performance criteria, including the continued
performance of services to the Company or its subsidiaries. In the case of an
option not immediately exercisable in full, the Board may at any time accelerate
the time at which all or any part of the option may be exercised.
8. EXERCISE OF OPTIONS. Any exercise of an option shall be in writing pursuant
to a written instrument in the form prescribed by the Board, signed by the
proper person and delivered to the Company, accompanied by (a) such documents as
may be required by this Plan, by such written instrument, or by the Board, and
(b) payment as required by such written instrument for the number of Shares for
which the option is exercised. In addition, each exercise of an option shall be
subject to such additional conditions as may be required by the Board, including
without limitation those described in Section 9 of this Plan. No exercise of an
option shall be effective, and the Company shall not be obligated to deliver any
Shares, until all requirements and conditions for exercise have been met to the
satisfaction of the Board.
9. CONDITIONS TO EXERCISE OF OPTIONS. Except as waived by the Board in a
particular case, all the following conditions shall be complied with as a
condition to the exercise of each option granted under the Plan:
(a) Legal Matters. In the opinion of the Company's counsel all applicable
federal and state laws and regulations, including securities laws and
regulations, shall have been complied with, and legal matters in connection with
the issuance and delivery of such Shares shall have been approved by the
Company's counsel.
(b) Listing and Registration of Shares. If at any time the Board shall determine
that the listing, registration or qualification of the Shares covered by any
option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of or in connection with the granting of such option or
the issuance or purchase of Shares thereunder, such option may not be exercised
in whole or in part unless and until such listing, registration, qualification,
consent or approval shall have been effective or obtained free of any conditions
not acceptable to the Board.
(c) Tax Undertakings. The Board may require the optionholder to remit to the
Company an amount sufficient to satisfy any federal, state or local withholding
tax requirements (or make other arrangements satisfactory to the Company with
regard to such taxes, including withholding from regular cash compensation or
giving of security to the Company adequate to meet the potential liability of
the Company for withholding of tax) prior to the delivery of any Shares pursuant
to the exercise of the option.
(d) Evidence of Authority. If an option is exercised by the legal representative
of a deceased optionholder or by a person to whom the option has been
transferred by the optionholder's will or by applicable laws of descent and
distribution, the Company shall not be obligated to deliver Shares until
satisfied as to the authority of the person exercising the option.
(e) Restrictions on Transfer of Stock. If the sale of Shares has not been
registered under the Securities Act of 1933, as amended, or under applicable
state securities laws, the Company may require, as a
<PAGE>
condition to exercise of an option, such representations or agreements from the
optionholder as counsel for the Company may consider appropriate to avoid
violation of such Act or such state securities laws and may require that the
certificates evidencing such Shares bear an appropriate legend restricting
transfer. In addition, the Board may require as conditions to the grant or
exercise of any option that the optionholder agree in writing to (i)
restrictions on the transfer of Shares, (ii) a right of first refusal of the
Company to repurchase Shares in the event the holder desires to sell such
Shares, and (iii) a right of the Company to repurchase Shares in the event of
termination of employment or death or disability. Such restrictions and rights
on the part of the Company shall be identified in the instrument granting the
option.
10. PAYMENT FOR SHARES.
(a) Exercise Price. The exercise price for Shares purchased under an option
shall be paid as follows: (i) in cash or by certified check, bank draft or money
order payable to the order of the Company; (ii) if permitted by the terms of the
option (or if permitted by the Board), by the delivery of share of Stock having
a fair market value (as determined by the Board in good faith in its reasonable
discretion) on the date of exercise equal to the exercise price, or (iii) by a
combination of cash and Stock.
(b) Promissory Note. To the extent permitted by an applicable margin regulations
of the Board of Governors of the Federal Reserve System and other provisions of
applicable law, the instrument granting an option may, in the discretion of the
Board, permit the exercise price for Shares to be paid by payment of at least
the par value by a combination of cash and Stock as provided above, and delivery
to the Company of the optionholder's promissory note for the balance of the
exercise price. Unless otherwise specified by the Board in the instrument
granting the option, such note (i) shall bear interest at least equal to the
Applicable Federal Rate, as determined under Section 1274(d) of the Code and
published by the Service on a monthly basis, in effect for the month of
exercise, (ii) shall be a fully recourse note, (iii) shall be secured by a
pledge of the Shares acquired by exercising the option, and (iv) shall be
payable in equal annual installments of principal and interest over a period of
not more than five years after the exercise date (except that any such note
shall be payable on demand in the event of termination of employment). Any such
promissory note shall be in a form satisfactory to the Company.
11. NO RIGHTS AS STOCKHOLDER. Optionholders shall not have the rights of
stockholders with regard to options granted under the Plan, except as to Shares
actually purchased pursuant to such options.
12. TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY.
(a) Termination In General. Upon termination of the employment of an
optionholder, any unexercised options shall terminate immediately, except as
provided in Subsections (b), (c) and (d) below. For purposes of this Section 13,
employment shall not be considered terminated (i) in the case of sick leave or
other bona fide leave of absence approved for purposes of the Plan by the Board,
so long as the employee's right to reemployment is guaranteed either by statute
or by contract, or (ii) in the case of a transfer of employment among the
Company and its subsidiaries, or to the employment of a corporation (or a parent
or subsidiary corporation of such corporation) issuing or assuming an option,
which in the case of an Incentive Option is a transaction to which Section
424(a) of the Code applies.
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For all purposes of this Section 13, the term "employment" shall include the
relationships of optionholders to the Company as directors, consultants and
professional advisors.
(b) Termination Not For Cause. If such termination was not for cause, the
optionholder may exercise any option which was otherwise exercisable on the date
of termination for a period ending on the earlier of (i) the last day of the
third month after such termination and (ii) the expiration date of such option
pursuant to the first sentence of Section 7(c).
(c) Death. If termination of employment results from the optionholder's death,
any option which was otherwise exercisable by such optionholder as of the time
immediately before his or her death shall be exercisable by the optionholder's
estate or by any person who acquired the options by bequest or inheritance for a
period ending on the earlier of (i) one year after the death of the optionholder
and (ii) the expiration date of such option pursuant to the first sentence of
Section 7(c). The Board may permit any option to be exercised for up to the
total number of Shares subject to the option, or grant an option which by its
terms is exercisable for up to the total number of Shares subject to the option,
at any time within one year after the death of the optionholder, consistent with
the above provisions.
(d) Disability. If the termination of employment results from the optionholder's
disability, any option which was otherwise exercisable by such optionholder
immediately prior to the termination of his employment shall be exercisable by
him or her (or his or her legal representative) for a period ending on the
earlier of (i) one year after such termination and (ii) the expiration date of
such option pursuant to the first sentence of Section 7(c). The Board may permit
any option to be exercised for up to the total number of Shares subject to the
option, or grant an option which by its terms is exercisable for up to the total
number of Shares subject to the option, at any time within one year after
termination of employment, consistent with the above provisions. The term
"disability" shall for this purpose be defined as such term is defined in
Section 22(e)(3) of the Code.
13. REORGANIZATIONS.
(a) Substitute Options. If by reason of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization, or liquidation the
Board shall authorize the issuance or assumption of a stock option in a
transaction to which Section 424(a) of the code applies, then, notwithstanding
any other provision of the Plan, the Board may grant an option upon such terms
and conditions as it may deem appropriate for the purpose of assumption of the
old option, or substitution of a new option for the old option, in conformity
with the provisions of said Section 424(a) of the Code and the Regulations
thereunder, and any such option shall not reduce the number of shares otherwise
available for issuance under the Plan.
(b) Termination of Options. In the event of a consolidation or merger in which
the Company is not the surviving corporation, the acquisition of all or
substantially all the Company's outstanding Stock by a single person or entity
or by a group of persons and/or entities acting in concert, or the sale or
transfer of substantially all the Company's assets, all outstanding options
shall thereupon terminate, provided that at least 20 days prior to the effective
date of any such merger, consolidation, acquisition of stock or sale of assets,
the Board may either (i) accelerate the exercisability, prior to the effective
date of such merger, consolidation, acquisition of stock or sale of assets, of
all outstanding options granted under this Plan, (ii) arrange, if there is a
surviving or acquiring corporation, subject to consummation
<PAGE>
of the merger, consolidation or sale of assets, to have that corporation or an
affiliate of that corporation grant to employees and other optionholders
replacement options (with substantially similar or, if not adverse to the
optionees, different provisions with respect to exercisability), (iii) cancel
all outstanding options in exchange for consideration in cash in an amount equal
to the value of the shares, as determined by the Board in good faith, the
optionee would have received had the option been exercised (to the extent then
exercisable or to a greater extent, including in full, as the Board may
determine) less the option price therefor, (iv) permit the purchaser of the
Company's stock to deliver to the optionee the same kind of consideration that
is delivered to the stockholders of the Company in cancellation of such options
in an amount equal to the value of the shares, as determined by the Board in
good faith, the optionee would have received had the option been exercised (to
the extent then exercisable or to a greater extent, including in full, as the
Board may determine), less the option price therefor, or (v) any combination of
the above.
(c) Royal Mortgage Corporation/Davenport Ventures, Inc. In August 1998, the
Company was formed as a result of a merger between Royal Mortgage Corporation
and Davenport Ventures, Inc. in which Davenport Ventures, Inc. was the surviving
company. As part of this merger, Davenport Ventures, Inc. changed its name to
Royal Financial Corporation. The Company hereby assumes full responsibility for
and hereby ratifies all outstanding options issued by Royal Mortgage Corporation
and Davenport Ventures, Inc. Option holders of Royal Mortgage Corporation and
Davenport Ventures, Inc. shall be entitled to all of the rights, preferences and
privileges as outlined in their option agreements and, upon exercise, shall be
entitled to common shares of the Company on a one for one basis. The holders of
options in Royal Mortgage Corporation and Davenport Ventures, Inc. may exercise
their options by forwarding their options to the Company with an executed
exercise form and payment; once received, the Company will cause the appropriate
number of common shares of the Company to be issued to the appropriate party.
14. EMPLOYMENT RIGHTS AND OTHER BENEFITS. Neither the adoption of the Plan nor
the grant of options shall confer upon any employee any right to continued
employment with the Company or any parent or subsidiary or affect in any way the
right of the Company or such parent or subsidiary to terminate the employment of
an employee at any time. Except as specifically provided by the Board in any
particular case, the loss of existing or potential profit in options granted
under this Plan shall not constitute an element of damages in the event of
termination of the employment of an employee even if the termination is in
violation of an obligation of the Company to the employee by contract or
otherwise. Nothing in this Plan shall restrict the authority of the Board to
grant stock options or to award bonuses or other benefits to employees or others
otherwise than pursuant to the Plan.
15. DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION. The Board may at
any time abandon the Plan or discontinue granting options under the Plan. With
the consent of the optionholder, the Board may at any time cancel an existing
option in whole or in part and grant another option for such number of shares as
the Board specifies. The Board may at any time amend the Plan for the purpose of
satisfying the requirements of Section 422 of the Code or of any changes in
applicable laws or regulations or for any other purpose which may at the time be
permitted by law, or may at any time terminate the Plan as to any further grants
of options, provided that (except to the extent expressly required or permitted
herein above) no such amendment shall, without the approval of the stockholders
of the Company by at least a majority vote at a duly held meeting (or by written
<PAGE>
consent as provided by applicable law), (a) increase the maximum number of
shares for which options may be granted under the Plan, (b) change the group of
employees eligible to receive options under the Plan, (c) extend the time within
which Options may be granted, (d) amend the provisions of this Section 16, or
(e) make any other change in the Plan which requires stockholder approval under
applicable law or regulations, including any approval requirement which is a
prerequisite for exemptive relief under Section of the Securities Exchange Act
of 1934, as amended. The termination or any modification or amendment of the
Plan shall not adversely affect the rights of any optionholder under any option
previously granted without his or her consent.
16. COMPLIANCE WITH RULE 16b-3. It is intended that the provisions of this Plan
and any option granted thereunder to a person subject to the reporting
requirements of Section 16(a) of the Securities and Exchange Act of 1934, as
amended, shall comply in all respects with the terms and conditions of Rule
16b-3 promulgated under such Act or any successor provisions thereto. Any
agreement granting options shall contain such provisions as are necessary or
appropriate to assure such compliance. To the extent that any provision hereof
is found not to be in compliance with such Rule, such provision shall be deemed
to be modified so as to be in compliance with such Rule or, if such modification
is not possible, shall be deemed to be null and void, as it relates to a
recipient subject to Section 16(a) of the Securities Exchange Act of 1934, as
amended.
ADOPTED by the Board of Directors of Royal Financial Corporation as of the 15th
day of March 1999.
/s/Mark J. Teinert Secretary
-------------------
APPROVED by the stockholders of Royal Financial Corporation as of the _________
day of ____________, 1999.
PENDING
------------------- Secretary
Shustak Jalil & Heller
545 Madison Avenue
New York, New York 10022
Tel (212) 688-5900
Fax (212) 688-6151
March 30, 1999
Royal Financial Corporation
1000 Ballpark Way, Suite 210
Arlington, Texas 76011
Dear Sirs:
We have examined the corporate records and proceedings of Royal Financial
Corporation, a Nevada corporation, with respect to the legal sufficiency of all
corporate proceedings of such corporation taken in connection with the creation,
form and validity and full payment and non-assessability when issued of the
1,948,667 shares of common stock, par value $0.001 per share, covered by the
Registration Statement on Form S-8, dated April 6, 1998, in connection with
which Registration Statement this opinion is rendered.
Based upon such examination, we are of the opinion that when the
Registration Statement shall have been declared effective by order of the
Securities and Exchange Commission, and the shares shall have been issued and
sold upon the terms and conditions set forth in the Registration Statement, such
shares will be validly authorized and legally issued, fully paid, and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/s/ Shustak Jalil & Heller
----------------------------
SHUSTAK JALIL & HELLER
We have issued our report dated September 17, 1998, accompanying the
consolidated financial statements of Royal Financial Corporation for the eight
months ended August 31, 1998, included in the registration statement of Royal
Financial Corporation on Form 10SB, as amended on March 16, 1999. We hereby
consent to the incorporation by reference of said report in this registration
statement of Royal Financial Corporation on Form S-8, to be filed with the
Securities and Exchange Commission on or about April 6, 1999.
/s/ Grant Thorton LLP
GRANT THORTON LLP
Dallas, Texas
April 6, 1999
[LETTERHEAD OF WILLIAM C. SPORE & COMPANY, PC.]
INDEPENDENT ACCOUNTANTS' CONSENT
We consent to inclusion by reference in the Registration Statement on Form S-8
of Royal Financial Corporation dated April 6, 1999, pertaining to Royal
Financial Corporation Stock Option Plan, of our reports dated January 14, 1998
and January 11, 1997 relating to the balance sheets of Royal Mortgage
Corporation as of December 31, 1997 and 1998 and the related statements of loss,
stockholders' equity and cash flows for each of the two year period December 31,
1997.
/s/ William C. Spore & Company, P.C.
William C. Spore & Company, P.C.
Certified Public Accountants
Bedford, Texas
March 27, 1999
