As filed with the Securities and Exchange Commission on May 18, 2000
Registration No. __________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S - 8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
ONLINE POWER SUPPLY, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 84-1176494
- ------------------------------- --------------------------- ------------------
(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer
incorporation or organization) classification code number) Identification No.)
6909 S. Holly Circle, Suite 200, Englewood, Colorado 80112; Tel. 303.741.5641
- --------------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of small business issuer's principal executive offices)
Kris M. Budinger, 6909 S. Holly Circle, Suite 200
Englewood, CO 80112; Tel. 303.741.5641
- --------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to: Stephen E. Rounds, Esq.
The Law Office of Stephen E. Rounds
4635 East 18th Ave., Denver, CO 80220
Tel: 303.377.6997; Fax: 303.377.0231
Approximate date of commencement and end of proposed sale to the public: As soon
as practicable after the registration statement becomes effective and concluding
120 days later.
If this Form is a post-effective amendment filed pursuant to rule 429(C) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to rule 415 under the Securities Act of
1933, check the following box. [X]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Amount to Proposed Proposed Maximum Amount of
Title of Each Class of Securities be Registered Maximum Aggregate Registration
to be Registered in the Offering Offering Price(1) Fee
Price Per
Security(1)
<S> <C> <C> <C> <C>
Common Stock 4,613,000 $3.50 $16,145,500 $4,263.00
Shares
Total Fee $4,263.00
<FN>
(1) FEE. As allowed by rule 457(h), the fee is based on the weighted
average exercise price (approx. $3.50) of the qualified and
nonqualified incentive stock options outstanding at the filing date,
which cover the total of 1,538,000 shares of common stock issuable on
exercise of the now outstanding qualified (ISOP) options (425,000
shares) and nonqualified options (1,113,000 shares). BREAKDOWN OF
SHARES REGISTERED. This registration statement covers the 3,500,000
shares issuable on exercise of qualified options issuable under the
ISOP (qualified options for 425,000 shares have been granted at May 5,
2000), plus a total of 1,113,000 shares issuable on exercise of
nonqualified options. Additional nonqualified options to purchase
shares of common stock have been granted at this date, but the issuance
of shares on their exercise is not registered by this Form S-8
registration statement.
None of the qualified or unqualified options have been exercised at
this date.
</FN>
</TABLE>
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
OnLine Power Supply, Inc. (the "registrant" or "Company") hereby
incorporates by reference into this registration statement each of the following
documents previously filed with the Securities and Exchange Commission (the
"SEC"):
(1) Registrant's annual report on Form 10-K for the fiscal
year ended December 31, 1999.
(2) Registrant's current reports on Form 8-K filed in
February and March 2000 relating to the retirement of
Larry G. Arnold, the appointment of Ronald W. Mathewson
and registrant's public filings generally.
(3) Registrant's quarterly report on Form 10-Q filed in May,
2000 for the first quarter ended March 31, 2000.
(4) Registrant's registration statement on Form 8-A filed
with the SEC on February 24, 2000 (000-29669), and
including any amendments or reports filed for the
purposes of updating the description of the registrant's
common stock.
(5) If reports and definitive proxy or information
statements filed under section 13(a) or 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 after the
date of this registration statement on Form S-8, and
before the filing of a post-effective amendment which
indicate that all securities offered hereby have been
sold or which de-registers all securities then remaining
unsold, shall be deemed to be incorporated by reference
into this Form S-8 registration statement and to be a
part hereof from the filing date of such documents. Any
incorporated statement shall be deemed to modify or
supersede for purposes of this registration statement,
to the extent that a statement made herein or in any
subsequently filed document (which is also deemed to be
incorporated herein by reference) similar information in
this registration 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.
3
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation (the "Articles") provide that a director
shall not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except (I) for any breach of
the duty of loyalty; (II) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of laws; (III) for
liability under the Nevada Corporation Act (the "Nevada Act") (for actions
relating to certain unlawful dividends, stock repurchases or redemptions); or
(IV) for any transaction from which the director derived an improper personal
benefit. The Article provide that the Company shall indemnify each director and
the officers, employees and agents to the fullest extent provided by the Nevada
Act.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS PAGE NO.
4.0 Instruments defining the rights of stockholders.
Reference is made to registrant's Form 8-A registration
statement which is incorporated by reference (see Item 3
above).
5.1 Opinion of The Law Firm of Stephen E. Rounds. 7
23.1 Consent of Ehrhardt Keefe Steiner &
Hottman P.C., independent accountants. 8
23.2 Consent of The Law Firm of Stephen E. Rounds. 9
99.1 OnLine Power Supply, Inc. Incentive
Stock Option Plan. 10
99.2 Form of Stock Option Agreement. 23
99.3 Form of Nonqualified Options
(for Millspaugh, Glaza, Woodland and Riggio). 26
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");
4
<PAGE>
(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 Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the Incentive Stock Option Plan and/or the expiration of any nonqualified stock
options where the underlying common stock is registered hereby.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company 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 by the Company of expenses incurred or paid by a director, officer, or
controlling person of the Company 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 Company 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 of 1933, as amended, and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
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.
5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all the requirements of filing on this Form S-8 and authorizes this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Englewood, State of Colorado, on May 18, 2000.
OnLine Power Supply, Inc.
/s/ Kris M. Budinger
------------------------------------
Kris M. Budinger,
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement on Form S-8 has been signed by the following persons in
the capacities and on the dates stated.
Signature Capacity Date
/s/ Kris M. Budinger Chief Executive Officer, 05/18/00
- --------------------------------
Kris M. Budinger Director, Secretary
/s/ Richard L. Millspaugh Chief Financial Officer 05/18/00
- --------------------------------
Richard L. Millspaugh
/s/ Thomas Glaza Director 05/18/00
- --------------------------------
Thomas Glaza
/s/ Ronald W. Mathewson Director 05/18/00
- --------------------------------
Ronald W. Mathewson
6
EXHIBIT 5.1
May 17, 2000
OnLine Power Supply, Inc.
6909 S. Holly Circle, Suite 200
Englewood, Colorado 80112
Re: OnLine Power Supply, Inc. - Registration Statement for Offering
of 4,613,000 Shares of Common Stock
Gentlemen:
We have acted as counsel to OnLine Power Supply, Inc., a Nevada
corporation (the "Company") in connection with the registration on the
Securities and Exchange Commission's (the "SEC") Form S-8 (the "registration
statement") under the Securities Act of 1933, of the future issuance of an
aggregate of 4,613,000 shares of common stock, upon exercise of qualified
options issued and to be issued under the Company's 1999 Incentive Stock Option
Plan (the "ISOP" which covers 3,500,000 shares), and upon exercise of additional
nonqualified options (which cover 1,113,000 shares).
We provide this opinion as required by item 8 of Form S-8 and item
601(b)(5)(I) of the SEC's Regulation S-K.
We have reviewed the Company's articles of incorporation and
amendments, bylaws, and corporate proceedings taken in connection with the ISOP
and the nonqualified options. Based on that review, we are of the opinion that
if, as and when the shares are issued and sold (and the consideration therefor
received) pursuant to the terms of the qualified options authorized under the
ISOP and the employment agreements under which the nonqualified options were
issued, and in accordance with the registration statement and the requirements
of Form S-8, such shares will be duly authorized, legally issued, fully paid,
and nonassessable.
This opinion letter is provided as of the date first written above. We
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion stated herein. Our opinion is expressly
limited to the matters set forth above. We render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
ISOP or the nonqualified options, or the shares issuable on exercise of the
options addressed in this opinion and the registration statement. No opinion is
stated, and none is to be inferred or implied, regarding matters within ERISA or
comparable state laws.
Very truly yours,
/s/ Stephen E. Rounds
7
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 31, 2000 appearing in OnLine
Power Supply, Inc.'s Annual Report on Form 10-KSB for the year ended December
31, 1999.
/s/Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
May 17, 2000
Denver, Colorado
8
EXHIBIT 23.2
THE LAW OFFICE OF STEPHEN E. ROUNDS
4536 EAST EIGHTEENTH AVENUE
DENVER, COLORADO USA 80220
T. 303.377.6997 F. 303.377.0231
E-MAIL: [email protected]
May 17, 2000
OnLine Power Supply, Inc.
6909 S. Holly Circle
Suite 200
Englewood, Colorado 80112
Re: Registration Statement on Form S-8
Initial Filing
Gentlemen:
I hereby consent to the filing of my opinion to the registration
statement on Form S-8. However, I do not admit that I am in the category of
those persons whose consent is required to be so filed by Section 7(a) of the
Securities Act of 1933.
Yours Sincerely,
/s/ Stephen E. Rounds
9
EXHIBIT 99.1
INCENTIVE STOCK OPTION PLAN
FOR
ONLINE POWER SUPPLY, INC.
ARTICLE I
PURPOSE
This Incentive Stock Option Plan (hereafter the "Plan") of OnLine Power
Supply, Inc. (the "Company") for executive and other key employees, is intended
to advance the Company by providing an incentive to obtain a proprietary
interest to those persons who have management and key employment
responsibilities, and to others who serve the Company.
ARTICLE II
DEFINITIONS
For Plan purposes, except where the context clearly indicates
otherwise, the following terms shall have the meanings set forth:
a. "Board" shall mean the Company's Board of Directors.
b. "Code" shall mean the Internal Revenue Code of 1986, and the rules
and regulations thereunder.
c. "Committee" shall mean the Compensation Committee, or such other
committee of the Board designated by the Board to administer the Plan. Until
such time as the Board may designate such committee, this Plan shall be
administered by the Board. The Committee shall be composed of not less than two
persons appointed by the Board; Committee members also may be members of the
Board. Options also may be granted by the Board. No member of the Committee or
of the Board shall vote on issuance of an Incentive Stock Option to himself or
herself.
d. "Common Shares" shall mean shares of the Company's Common Stock, or,
in the event that the outstanding Common Shares are hereafter changed into or
exchanged for different shares or securities of the Company, such other shares
or securities.
e. "Company" shall mean OnLine Power Supply, Inc., a Nevada
corporation, and any parent or subsidiary corporation of such corporation, as
the terms "parent" and "subsidiary" are defined in Sections 425(e) and (f) of
the Code.
10
<PAGE>
f. "Fair Market Value" shall mean, with respect to the date a given
stock option is granted or exercised, the average of the highest and lowest
reported sales prices of the Common Shares as reported in any trading market
where the Company then is listed, or if there were no transactions in the Common
Shares on such day, then the last preceding day on which transactions took
place. If the Common Shares of the Company are not traded in any public market,
then fair value may be established by reference to sales of Common Shares by the
Company, or to sales by shareholders of outstanding Common Shares held by them,
or to sales by third parties of outstanding Common Shares which had been owned
by shareholders of record (for example, sales by a trustee in bankruptcy or a
secured creditor or by order of court in domestic relations or probate
proceedings). The above notwithstanding, the Committee may determine the Fair
Market Value in such other manner as it may deem more equitable for Plan
purposes or as is required by applicable laws or regulations. The Committee
always shall take into account and duly consider developments in the Company
since the date of the sale or sales being used to determine Fair Market Value,
including without limitation material changes in earnings per Common Share,
contracts for new business, and other factors.
g. "Incentive Stock Option" or "ISO" or "Option" shall mean a stock
option issued under the Plan which is intended to meet the terms of Code Section
422A for qualified options (i.e., a "Qualified Incentive Stock Option").
h. "Optionee" shall mean the person to whom has been granted an
Incentive Stock Option.
i. Stock Option Agreement" shall mean the agreement between the Company
and the Optionee under which the Optionee may purchase Common Shares.
j. "Ten Percent Shareholder" shall mean an employee who owns ten
percent or more of the Common Shares as such amount is calculated under Code
Section 422A(b)(6). Attribution rules under Code Section 425(d) are applicable
to determine whether the ten percent ownership rule is satisfied.
k. "Vesting" and "vested" shall mean the time(s) when options are
exercisable as determined by the Committee (or the Board if no Committee has
been established), subject to the provisions of this Plan.
ARTICLE III
ADMINISTRATION
3.1 The Committee (or the Board, until a Committee is designated) shall
administer the Plan with full power to grant Incentive Stock Options, and
construe and interpret the Plan, establish rules and regulations and perform all
other acts it believes reasonable and proper.
11
<PAGE>
3.2 The determination of those eligible to receive Incentive Stock
Options, and the amount and terms and conditions of such Options shall rest in
the sole discretion of the Committee (or the Board, if no Committee is
designated), subject to the provisions of this Plan. Eligibility and vesting
shall be determined under Article V.
3.3 The Committee may cancel any Incentive Stock Options if an Optionee
conducts herself or himself in a manner which the Committee in good faith
determines to be not in the best interests of the Company, as set forth in
Section 11.7.
3.4 The Board, or the Committee, may correct any defect, supply any
omission, or reconcile any inconsistency in the Plan, or in any granted
Incentive Stock Option, in the manner and to the extent it shall deem necessary
to carry it into effect.
3.5 Any decision made, or action taken, by the Committee or the Board
arising out of or in connection with the interpretation and administration of
the Plan shall be final and conclusive.
3.6 Meetings of the Committee shall be held at such times and places as
shall be determined by the Committee. Notice of meetings shall be made in the
same manner as required for Board meetings under the Bylaws. A majority of the
members of the Committee shall constitute a quorum for the transaction of
business, and the vote of a majority of those members present shall decide any
question brought before that meeting. In addition, the Committee may take any
action otherwise proper under the Plan by the signed affirmative vote, taken
without an actual meeting, of all members. All proceedings of the Committee
shall be evidenced by complete and detailed minutes, signed by the Committee
members.
3.7 No member of the Committee shall be liable for any act or omission
of any other member of the Committee or for any act or omission on her or his
own part, including, but not limited to, the exercise of any power or discretion
given to her or him under the Plan, except those resulting from her or his own
bad faith, gross negligence, or willful misconduct.
3.8 The Plan shall always be administered in such a manner as to permit
the Options to qualify as "incentive stock options" under Section 422A of the
Code.
3.9 Management of the Company shall supply full and timely information
to the Committee on all matters relating to eligible employees, their duties and
performance, and current information on death, retirement, and disability or
other termination of employment of Optionees, and such other pertinent
information as the Committee may require. The Company shall furnish the
Committee with clerical and other assistance as necessary in performance of its
duties hereunder.
12
<PAGE>
ARTICLE IV
NUMBER OF RESERVED SHARES
4.1 RESERVED SHARES. The total number of Common Shares of the Company
available for issuance under the Plan shall be 3,500,000, subject to adjustment
under Article VII. The reserved shares may be either authorized but unissued, or
previously issued and subsequently reacquired.
4.2 SHARES UNDER EXPIRED OR TERMINATED OPTIONS. If an Incentive Stock
Option or portion thereof shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares shall be available for
future grants of Incentive Stock Options.
ARTICLE V
ELIGIBILITY, VESTING AND ALLOCATION
5.1 ELIGIBILITY. Qualified Incentive Stock Options may be granted to
officers and employees of the Company, as determined by the Committee.
The Compensation Committee shall determine the length of service
required for each Optionee to be eligible to participate in this Plan.
5.2 VESTING. Subject to Section 6.8, Incentive Stock Options generally
shall be exercisable at the rates established by the Committee.
5.3 ALLOCATION. The number of Incentive Stock Options to be issued in
any calendar year shall be in the discretion of the Committee (or the Board if
no Committee has been established).
ARTICLE VI
TERMS AND CONDITIONS
6.1 FORM OF OPTION AGREEMENT. All Incentive Stock Options shall be
evidenced by agreements in the form of Attachment A hereto, or in such other
form as may be duly approved pursuant to this Plan. Any such other form shall be
subject to applicable provisions of the Plan, and such other provisions as the
Committee may adopt, but always shall include the provisions set forth in
Sections 6.2 through 6.10 below.
6.2 PRICE. The option price per share for Qualified Incentive Stock
Options shall be equal to or more than 100% of the Fair Market Value of a Common
Share on the grant date. The price at which shares may be purchased on exercise
of an Incentive Stock Option by a Ten Percent Shareholder shall be not less than
110 percent of the Fair Market Value on the grant date.
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<PAGE>
6.3 TIME OF GRANT. All Incentive Stock Options must be granted within
10 years from the date this Plan is adopted by shareholders. No Incentive Stock
Option may remain exercisable after termination of this Plan (the tenth
anniversary of adoption by the shareholders).
6.4 TIME OF EXERCISE. No Incentive Stock Option granted to any Ten
Percent Shareholder shall be exercisable after the expiration of five years from
the date such is granted. No ISO granted to any other person shall be
exercisable after the expiration of ten years from the date such is granted, and
in any event no ISO (whether qualified or nonqualified) shall be exercisable
after termination of the Plan.
Subject to Article V, the Committee may establish installment exercise
terms for an Incentive Stock Option, such that the Option becomes fully
exercisable over a series of cumulating portions. If an Optionee shall not, in
any given installment period, purchase all the Common Shares available within
such period, such Optionee's right to purchase any Common Shares not purchased
in such installment period shall continue until the expiration or sooner
termination of such ISO.
6.5 EXERCISE. An Incentive Stock Option shall be exercised by delivery
of (a) a written notice of exercise (in the form of Attachment B hereto) to the
Company specifying the number of Common Shares to be purchased, and (b) payment
of the full price of such Common Shares, as set forth in Section 6.6.
Not less than 100 Common Shares may be purchased at one time unless the
number purchased is the total number at the time available for purchase. Until
the Common Shares represented by an exercised option are issued to an Optionee,
she or he shall have none of the rights of a shareholder.
6.6 METHOD OF PAYMENT. The purchase price for an Incentive Stock Option
or portion thereof may be paid:
a. In United States dollars by cashier's check, certified check, bank
draft, or money order payable to order of the Company in an amount equal to the
option price; or
b. At the discretion of the Committee, through the delivery of fully
paid and non-assessable Common Shares, with an aggregate Fair Market Value on
the date of the exercise equal to the option price, provided such tendered
shares have been owned by the Optionee for at least one year prior to such
exercise; or
c. By a combination of a. and b.; or
d. In an "immaculate" or "cashless" manner which would allow the
Optionee to keep the number of Common Shares "in the money," i.e., if the Fair
Market Value of the Common Shares exceeds the purchase price under the Option,
as follows: The Optionee may use some of the Common Shares as to which the
Option is then being exercised, in which case the notice of exercise
14
<PAGE>
need not be accompanied by any stock certificates, but shall include a statement
(i) specifying the number of Common Shares to be purchased; (ii) directing the
Company to keep that number of Common Shares underlying the Option which equals
(x) the aggregate purchase price of the Common Shares to be purchased, divided
by (y) Fair Market Value on the date the notice of exercise is received by the
Company; and (iii) directing the Company to issue a certificate for the number
of Common Shares which equals (i) minus (ii).
If the Company is required to withhold from the Option holder for any
tax imposed because of this "immaculate" or "cashless" exercise method, then the
stock surrendered or retained shall include an additional number of shares whose
Fair Market Value equals the amount required to be withheld.
e. In any other lawful consideration approved by the Committee,
including without limitation promissory notes, salary set-offs, and exchange of
options with higher exercise prices.
The Committee shall determine acceptable methods for tendering Common
Shares as payment upon exercise, and may impose limitations on such use of
Common Shares.
6.7 NON-TRANSFERABILITY. Except by will or the laws of descent and
distribution, no right or interest in any Incentive Stock Option shall be
assignable or transferable. Incentive Stock Options shall be exercisable during
the Optionee's lifetime only by the Optionee, except as provided by Section
6.8(c) below.
6.8 TERMINATION OF EMPLOYMENT, DISABILITY, OR DEATH OF OPTIONEE. If an
Optionee shall cease to be employed by the Company, die, or become permanently
or totally disabled (within the meaning of Section 22(e)(3) of the Code) while
he or she is holding Options, each Option shall expire as follows:
a. If the Optionee's termination of employment occurs for any reason,
during the first year 12 months after grant of the Option, the Optionee's right
to exercise shall terminate; provided, however, that if during the same period
the Optionee (i) retires pursuant to a Company approved retirement policy then
in effect, or (ii) becomes permanently and totally disabled (within the meaning
of Section 105(b)(4) of the Code), the Option shall become exercisable in full
on the date of such retirement or disability and remain exercisable for three
months.
b. If the Optionee's termination of employment occurs for any reason,
except death, more than 12 months after grant of the Option, the Optionee shall
have the right to exercise the Option for three months after termination to the
extent that it was exercisable on the date of termination.
c. If the Optionee shall die while employed by the Company or within
three months after termination of employment, the personal representative or
administrator of the Optionee's estate or the person(s) to whom the Option was
validly transferred by personal representative or
15
<PAGE>
administrator, shall have the right to exercise the Option for three months
after the death of the Optionee, to the extent the Option (i) was exercisable on
the date of death and (ii) was not exercised.
No transfer of an Incentive Stock Option by the will of an Optionee, or
by the laws of descent and distribution shall be effective to bind the Company
unless the Company shall have been furnished with written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee may
deem necessary to establish validity of the transfer.
6.9 LEAVES OF ABSENCE. For purposes of the Plan, it shall not be
considered a termination of employment when an Optionee is placed by the Company
on military or sick leave or other type of leave of absence considered as
continuing intact the employment relationship. In case of such leave of absence,
the employment relationship shall be continued until the later of the date when
such leave equals 90 days or the date when the Optionee's right to reemployment
with the Company shall no longer be guaranteed by statute or contract.
6.10 ANNUAL $100,000 LIMIT ON EACH ISO OPTIONEE. Notwithstanding any
other provision of the Plan, the aggregate Fair Market Value of the Common
Shares, determined as of the time such Option is granted, for which any Optionee
may be granted Incentive Stock Options under the Plan shall not exceed $100,000
in any such same calendar year. For example, if Options to buy 50,000 Common
Shares are granted, and if the Fair Market Value of the Common Shares is $2.00
or less on grant date, then all of the Options will be considered Incentive
Stock Options when the Options are exercised, provided the Fair Market Value on
exercise date is $2.00 or less. But if under the example, Fair Market Value is
$3.00 at the time of exercise, Incentive Stock Option treatment under the Code
would be limited to 33,333 Common Shares, and the remainder would not qualify
for such treatment.
ARTICLE VII
ADJUSTMENTS ON CHANGES IN CAPITALIZATION
7.1 In the event that the outstanding Common Shares of the Company are
hereafter changed into or exchanged for a different number or kind of shares or
other securities of the Company:
a. Prompt, proportionate, equitable, lawful, and adequate adjustment
shall be made of the aggregate number and kind of shares subject to Options
which may have been granted, such that the Optionee shall have the right to
purchase such Common Shares as may be issued in exchange for those purchasable
on exercise of the Options had such merger, consolidation, other reorganization,
recapitalization, reclassification, combination of shares, stock split-up, or
stock dividend not taken place.
b. Rights under granted but unexercised Options or portions thereof, as
to the exercise price per share, shall be adjusted appropriately; such
adjustment shall be made without change in the total exercise price applicable
to the unexercised Options.
16
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7.2 The foregoing adjustments and their manner of application shall be
determined solely by the Committee (or by the Board, if there be no committee).
No fractional shares shall be issued under the Plan on account of any such
adjustments.
ARTICLE VIII
MERGER OR CONSOLIDATION
8.0 If the Company shall be a party to a binding agreement to any
merger, consolidation, or reorganization of which the Company shall not be the
survivor, each outstanding Option shall pertain and apply to the securities
which a shareholder of the Company would be entitled to receive pursuant to such
merger, consolidation, or reorganization. Every Optionee shall have the right
immediately prior to taking effect of such a transaction, to exercise the Option
to the extent not exercised by such date, and unexercised Options shall be
deemed exchanged for new options, with identical terms, to purchase common
shares in the successor company.
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1 The Board, without further approval of the shareholders, and at any
time and from time to time, may suspend or terminate the Plan in whole or in
part or amend it in such respects as the Board deems appropriate and in the best
interest of the Company; provided, however, that no such amendment shall be made
which would, without approval of the shareholders:
a. Materially modify the eligibility requirements for receiving
Options;
b. Increase the total number of Common Shares which may be issued
pursuant to Options, except in accordance with Article VII;
c. Reduce the minimum exercise price per Common Share, except in
accordance with Article VII;
d. Extend the period of granting Options; or
e. Materially increase in any other way the benefits to Optionees.
9.2 No amendment, suspension, or termination of this Plan shall,
without the Optionee's consent, alter or impair any of the rights or obligations
under issued Options.
9.3 The Board may amend the Plan, subject to the limitations cited
above, as may be necessary to permit the granting of Incentive Stock Options
meeting the requirements of the Code.
17
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9.4 No Option may be granted during any suspension of the Plan or after
termination of the Plan.
ARTICLE X
REGULATIONS
10.0 The obligation of the Company to issue Common Shares for exercised
Incentive Stock Options shall be subject to all applicable laws and regulations,
including without limitation (I) for citizens of the United States, the
Securities Act of 1933 and state securities laws, (ii) for citizens of Canada
and other jurisdictions, the securities laws of Canada and other jurisdictions,
and (iii) if the Company is listed, on the NASDAQ market system, or the
requirements of other exchanges or quotation markets.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to
be granted an Option under the Plan, and the grant thereof under the Plan shall
not be construed as giving any person the right to be employed by or retained as
a consultant for the Company, or to continue any such employment or consulting
status.
11.2 PLAN EXPENSES. The Company will pay all expenses of administering
this Plan.
11.3 USE OF EXERCISE PROCEEDS. Money received from Optionees on the
exercise of Options shall be used for the general corporate purposes of the
Company.
11.4 FOREIGN NATIONALS. Without amending the Plan, grants may be made
to employees of the Company who are foreign nationals or employed outside the
United States, or both, on terms and conditions consistent with the Plan's
purpose but different from those specified in the Plan as may be necessary or
desirable to create equitable opportunities, given differences in tax laws.
11.5 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or the Committee, the
members of the Committee shall be indemnified by the Company against all costs
and expenses reasonably incurred by them in connection with any action, suit, or
proceeding to which they or any of them may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit, or proceeding, except a judgment based upon a finding of bad faith;
provided that upon the institution of any such action, suit, or proceeding, a
Committee member shall, in writing, give the Company notice thereof and an
opportunity, at its own expense, to handle
18
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and defend the same before such member undertakes to handle and defend it on her
or his own behalf.
11.6 SUBSTITUTE OPTIONS. Options may be granted under this Plan from
time to time in substitution for options held by employees of other corporations
who become employees of the Company as the result of a merger or the
consolidation of the employing corporation with the Company or the acquisition
by the Company of the assets of the employing corporation or the acquisition by
the Company of stock of the employing corporation as a result of which it
becomes a subsidiary of the Company.
11.7 FORFEITURE FOR DISHONESTY. Notwithstanding anything to the
contrary in the Plan, if the Committee in good faith finds by a majority vote,
after full consideration of the facts presented on behalf of both the Company
and the Optionee, that the Optionee has been engaged in fraud, embezzlement,
theft, commission of a felony or dishonesty in the course of her or his
employment by the Company or any subsidiary corporation, which damaged the
Company or any subsidiary corporation, or for disclosing trade secrets of the
Company or any subsidiary corporation, the Optionee shall forfeit all
unexercised Options. The decision of the Committee as to the cause of an
Optionee's discharge and the damage done to the Company shall be final. No
decision of the Committee, however, shall affect the finality of the discharge
of such Optionee by the Company or any subsidiary corporation in any manner.
ARTICLE XII
INFORMATION DELIVERY REQUIREMENTS
12.0 In order that the Company complies with its obligations under the
securities laws, an Optionee desiring to exercise his or her options will notify
the Chief Executive Officer or Chief Financial Officer of the Company of his or
her intention, in writing. Such Officer shall direct other officer(s) of the
Company to meet with the individual to deliver and discuss the following
information: If the Company is registered with the SEC, copies of its last
annual report, quarterly report, proxy statement and any Form 8-K reports; If
the Company is not so registered, then copies of the audited financial
statements for the last fiscal year and unaudited interim financial statements;
a summary of current and expected contracts and overall business strategy;
copies of the articles of incorporation and significant business contracts in
place; and copies of debt/credit line documents, and any other document material
to the evaluation of an investment in the Company. Prior to the exercise of the
Option, the Optionee shall acknowledge receipt of the delivered information in
writing.
19
<PAGE>
ARTICLE XIII
DISPOSITION OF STOCK ACQUIRED ON EXERCISE OF AN INCENTIVE STOCK OPTION
13.1 QUALIFYING DISPOSITION. A disposition of Common Shares acquired by
exercise of an ISO, where the disposition occurs after two years from the grant
of the ISO will qualify the receipt of proceeds from disposition as capital
gains income, provided that at least one year has elapsed between exercise of
the ISO and disposition of the Common Shares.
13.2 DISQUALIFYING DISPOSITION. A disposition of Common Shares acquired
by exercise of an ISO, where the disposition occurs less than two years from the
grant of the ISO, will disqualify the receipt of proceeds from disposition as
capital gains income, such that (a) the receipt of such proceeds will be
recognized as compensation income in the calendar year of disposition, equal to
the difference between the exercise price and the fair market value of the
Common Shares at the time of exercise; and (b) for purposes of calculating
capital gains tax on disposition proceeds, the basis shall equal the exercise
price plus the amount of compensation income recognized.
ARTICLE XIV
SHAREHOLDER APPROVAL AND EFFECTIVE DATE
14.0 This Plan is effective as of the date of approval by the Board of
Directors, provided the shareholders approve the plan within 12 months after
that date.
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ATTACHMENT A TO PLAN
Number of Shares: ________
Date of Grant: ____________, 19____
STOCK OPTION AGREEMENT
Agreement made this ___ day of _________________, 199___, between
_________________ ("Optionee") and OnLine Power Supply, Inc. (formerly known as
Online Inc.), a Nevada corporation (the "Company").
1. GRANT OF OPTION. The Company, pursuant to the provisions of the
Company's Incentive Stock Option Plan ("Plan"), attached hereto, hereby grants
to the Optionee, subject to the terms and conditions set forth or incorporated
herein, an Option to purchase from the Company all or any part of an aggregate
of __________ Common Shares, at the purchase price of $________ per Share. The
provisions of the Plan governing the terms and conditions of the Option granted
hereby are incorporated herein by reference.
In the event of any conflict between this Agreement and the Plan,
the Plan shall control.
2. EXERCISE. This Option shall be exercisable in whole or in part
(in multiples of 100 Shares, unless for the balance of this Option) on or before
______________, 200__.
This Option shall be exercisable by delivery to the Company of a
notice of election to exercise, in the form attached hereto, specifying the
number of Shares to be purchased and accompanied by payment of the full purchase
price. A copy of this Stock Option Agreement shall also be delivered to the
Company along with the notice of election of exercise, for the Company's
endorsement of exercise on Schedule I and return to the Optionee for his or her
records.
ONLINE POWER SUPPLY, INC.
------------------------------------------
(Name of officer) (Date)
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ATTACHMENT B TO PLAN
(Suggested form of letter to be used for notification of election to exercise.
Please do not use this page, but follow this form in a separately typed letter.)
Date _____________, 200___
OnLine Power Supply, Inc.
[address]
In accordance with Paragraph 2 of the Stock Option Agreement
evidencing the Option granted to me on ________ __, ____, I hereby elect to
exercise this Option to the extent of__________ Common Shares, by (circle method
used):
1. A cashier's check, certified check, bank draft, or money order
payable to order of the Company in an amount equal to the option price; or
2. My notice to the Company that I intend to exercise in an
"immaculate" or "cashless" manner. Please consider my Option exercised to the
extent of _________ Common Shares which I am purchasing. Please keep that number
of Common Shares underlying the Option which equals (x) the aggregate purchase
price of the Common Shares I am purchasing, divided by (y) the Fair Market Value
per share on the date you receive this notice of exercise, and issue me a
certificate for the number of Common Shares equal to the difference between what
I am purchasing and the number of shares you are to keep.
When the certificate for Common Shares which I have elected to purchase
has been issued, please deliver it to me, along with my endorsed Stock Option
Agreement, in the event there remains an unexercised balance of Shares under the
Option, at the following address:
----------------------------
----------------------------
----------------------------
Very truly yours,
------------------------------
Optionee Signature
Print Name:___________________
22
<PAGE>
SCHEDULE I
Unexercised Issuing
Shares Payment Shares Officer
Date Purchased Received Remaining Initials
23
EXHIBIT 99.2
QUALIFIED OPTION
Number of Shares: ______
Date of Grant: __________, 19_____
STOCK OPTION AGREEMENT
Agreement made this __ day of _________________, 199__, between
_________________ ("Optionee") and OnLine Power Supply, Inc. (formerly known as
Online Entertainment, Inc.), a Nevada corporation (the "Company").
1. GRANT OF OPTION. The Company, pursuant to the provisions of the
Company's Incentive Stock Option Plan ("Plan"), attached hereto, hereby grants
to the Optionee, subject to the terms and conditions set forth or incorporated
herein, an Option to purchase from the Company all or any part of an aggregate
of __________ Common Shares, at the purchase price of $________ per Share. The
provisions of the Plan governing the terms and conditions of the Option granted
hereby are incorporated herein by reference.
In the event of any conflict between this Agreement and the Plan,
the Plan shall control.
2. EXERCISE. This Option shall be exercisable in whole or in part
(in multiples of 100 Shares, unless for the balance of this Option) on or before
______________, 200___
This Option shall be exercisable by delivery to the Company of a
notice of election to exercise, in the form attached hereto, specifying the
number of Shares to be purchased and accompanied by payment of the full purchase
price. A copy of this Stock Option Agreement shall also be delivered to the
Company along with the notice of election of exercise, for the Company's
endorsement of exercise on Schedule I and return to the Optionee for his or her
records.
ONLINE POWER SUPPLY, INC.
-----------------------------
(Name of officer) (Date)
24
<PAGE>
ATTACHMENT TO QUALIFIED OPTION
(Suggested form of letter to be used for notification of election to exercise.
Please do not use this page, but follow this form in a separately typed letter.)
Date _____________, 200__
OnLine Power Supply, Inc.
[address]
In accordance with Paragraph 2 of the Stock Option Agreement
evidencing the Option granted to me on ________ __, ____, I hereby elect to
exercise this Option to the extent of__________ Common Shares, by (circle method
used):
1. A cashier's check, certified check, bank draft, or money order
payable to order of the Company in an amount equal to the option price; or
2. My notice to the Company that I intend to exercise in an
"immaculate" or "cashless" manner. Please consider my Option exercised to the
extent of ______ Common Shares which I am purchasing. Please keep that number of
Common Shares underlying the Option which equals (x) the aggregate purchase
price of the Common Shares I am purchasing, divided by (y) the Fair Market Value
per share on the date you receive this notice of exercise, and issue me a
certificate for the number of Common Shares equal to the difference between what
I am purchasing and the number of shares you are to keep.
When the certificate for Common Shares which I have elected to purchase
has been issued, please deliver it to me, along with my endorsed Stock Option
Agreement, in the event there remains an unexercised balance of Shares under the
Option, at the following address:
----------------------------
----------------------------
----------------------------
Very truly yours,
------------------------------
Optionee Signature
Print Name: _____________________________
25
<PAGE>
SCHEDULE I
Unexercised Issuing
Shares Payment Shares Officer
Date Purchased Received Remaining Initials
26
EXHIBIT 99.3
NONQUALIFIED OPTION
Number of Shares: __________
Date of Grant: ________, 19___
STOCK OPTION AGREEMENT
Agreement made this __ day of _________________, 199__, between
_________________ ("Optionee") and OnLine Power Supply, Inc. (formerly known as
Online Entertainment, Inc.), a Nevada corporation (the "Company").
1. GRANT OF OPTION. The Company, pursuant to the provisions of the
Company's Employment Agreement ("Agreement") attached hereto, hereby grants to
the Optionee, subject to the terms and conditions set forth or incorporated
herein, an Option to purchase from the Company all or any part of an aggregate
of __________ Common Shares, at the purchase price of $________ per Share. The
provisions of the Agreement governing the terms and conditions of the Option
granted hereby are incorporated herein by reference. Except for treatment of
options on termination of employment, which shall be governed by the Employment
Agreement, and except for provisions in the ISOP specifically related to
qualified options, which do not apply to these nonqualified options, the terms
and provisions of the Company's 1999 Incentive Stock Option Plan ("ISOP") hereby
are incorporated herein by reference and such terms and provisions of the ISOP
shall govern this option.
2. EXERCISE. This Option shall be exercisable in whole or in part
(in multiples of 100 Shares, unless for the balance of this Option) on or before
______________, 200__.
This Option shall be exercisable by delivery to the Company of a
notice of election to exercise, in the form attached hereto, specifying the
number of Shares to be purchased and accompanied by payment of the full purchase
price. A copy of this Stock Option Agreement shall also be delivered to the
Company along with the notice of election of exercise, for the Company's
endorsement of exercise on Schedule I and return to the Optionee for his or her
records.
ONLINE POWER SUPPLY, INC.
-----------------------------
(Name of officer) (Date)
27
<PAGE>
ATTACHMENT TO NONQUALIFIED OPTION
(Suggested form of letter to be used for notification of election to exercise.
Please do not use this page, but follow this form in a separately typed letter.)
Date _____________, 200__
OnLine Power Supply, Inc.
[address]
In accordance with Paragraph 2 of the Stock Option Agreement
evidencing the Option granted to me on ________ __, ____, I hereby elect to
exercise this Option to the extent of__________ Common Shares, by (circle method
used):
1. A cashier's check, certified check, bank draft, or money order
payable to order of the Company in an amount equal to the option price; or
2. My notice to the Company that I intend to exercise in an
"immaculate" or "cashless" manner. Please consider my Option exercised to the
extent of ______ Common Shares which I am purchasing. Please keep that number of
Common Shares underlying the Option which equals (x) the aggregate purchase
price of the Common Shares I am purchasing, divided by (y) the Fair Market Value
per share on the date you receive this notice of exercise, and issue me a
certificate for the number of Common Shares equal to the difference between what
I am purchasing and the number of shares you are to keep.
When the certificate for Common Shares which I have elected to purchase
has been issued, please deliver it to me, along with my endorsed Stock Option
Agreement, in the event there remains an unexercised balance of Shares under the
Option, at the following address:
----------------------------
----------------------------
----------------------------
Very truly yours,
------------------------------
Optionee Signature
Print Name: _____________________________
28
<PAGE>
SCHEDULE I
Unexercised Issuing
Shares Payment Shares Officer
Date Purchased Received Remaining Initials
29
