As filed with the Securities and Exchange Page 1 of 22 pages
Commission on July 9, 1998 Reg. No. 333- _______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
EVANS & SUTHERLAND COMPUTER CORPORATION
(Exact name of registration as specified in charter)
Utah 87-0278175
(State of incorporation) (I.R.S. Employer Identification Number)
600 Komas Drive
Salt Lake City, Utah 84108
(801)588-1000
(Address of principal Executive Offices)
Evans & Sutherland Computer Corporation 1998 Stock Option Plan
(Full title of the Plan)
James R. Oyler Copy to:
Evans & Sutherland Computer Corporation, Inc. William C. Gibbs, Esq.
600 Komas Drive David K. Armstrong, Esq.
Salt Lake City, Utah 84100 Snell & Wilmer L.L.P.
(801)588-1000 111 East Broadway, Suite 900
(Name, address and telephone number, Salt Lake City, Utah 84111
including area code, of agent for service) (801) 237-1900
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, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, CHECK THE FOLLOWING BOX: [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title Of Proposed Proposed
Securities Amount Maximum Maximum Amount Of
To Be To Be Offering Price Aggregate Registration
Registered Registered (1) Per Share(2) Offering Price Fee
- ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Common Stock
$.20 par value
400,000 $28.188 $11,275,200 3,326.18
</TABLE>
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<PAGE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Evans & Sutherland
Computer Corporation 1998 Stock Plan as amended by reason of any stock
dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an
increase in the number of the Company's outstanding shares of Common
Stock.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457(h) of the Securities Act of
1933, as amended, on the basis of the average of the high and low sales
prices of the Registrant's Common Stock, as reported on the Nasdaq
National Market on July 6, 1998
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<PAGE>
Evans & Sutherland Computer Corporation
Form S-8 Registration Statement
For Evans & Sutherland Computer Corporation 1998 Stock Plan
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Evans & Sutherland Computer Corporation (the "Company" or the
"Registrant") hereby incorporates by reference in this Registration Statement
the following documents:
(a) The Company's annual report on Form 10-K, for the fiscal
year ended December 31, 1997, filed with the Securities and Exchange
Commission ("SEC") on March 31, 1998, as amended by Form 10K/A filed
with the SEC on May 13, 1998.
(b) The Company's quarterly report on Form 10-Q for the fiscal
quarter ended March 28, 1998, filed with the SEC on May 11, 1998.
(c) The description of the Company's Common Stock included in
the Company's Registration Statement on Form 8-A, filed with the SEC on
September 27, 1978.
(d) All documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, ("the Exchange Act"), prior to the filing of a post-effective
amendment to this Registration Statements which indicates that all of
the securities offered have been sold or which in this Registration
Statement deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities
The class of securities to be offered is registered under Section 12 of
the Exchange Act.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Officers and Directors
3
<PAGE>
Section 16-10a-901, et.seq., of the Utah Revised Business Corporation
Act authorizes a court to award, or a corporation's board of directors to grant,
indemnity to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933.
The E&S Bylaws require E&S to indemnify its directors and officers, including
circumstances in which indemnification is otherwise discretionary under Utah
law. E&S has entered into indemnification agreements with its directors
containing provisions which are in some respects broader than the specific
indemnification provisions contained in Utah law. The indemnification agreements
may require E&S, among other things, to indemnify its directors and officers
against certain liabilities that may arise by reason of their status or service
as directors or officers (other than liabilities arising from willful misconduct
of a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
director and officer insurance, if available on reasonable terms. E&S's Articles
of Incorporation provide for indemnification of its directors and officers to
the maximum extent permitted by Utah law, and E&S's Bylaws provide for
indemnification of its directors, officers, employees and other agents as
permitted by Utah law.
Item 7. Exemption from Registration
Not Applicable.
Item 8. Exhibits
Exhibit Index located at Page 8.
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 the Registration
Statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the
registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth
in the registration statement;
(iii) to include any material information
with respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(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
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to section 13 or section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
4
<PAGE>
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to section 13(a) or 15(d) of the
Exchange Act (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 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 Securities
Act and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Salt Lake, State of Utah, on July 8, 1998.
Evans & Sutherland Computer Corporation
By /S/ Mark C. McBride
Mark C. McBride
Vice President, Corporate Controller and Corporate
Secretary
KNOW BY ALL MEN THESE PRESENTS, that the persons whose
signatures appear below constitute and appoint John T. Lemley and Mark C.
McBride, and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities to sign the Form S-8
Registration Statement pertaining to the Evans & Sutherland Computer Corporation
1998 Stock Option Plan and any or all amendments (including post-effective
amendments) to said Form S-8 Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the SEC,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
their substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement and any amendments to Registration Statement have been
signed below by the following persons in the capacities and on the dates
indicated. Moreover, the undersigned hereby also certify that to the best of
their knowledge and belief the Registrant meets all of the requirements for
filing on Form S-8.
Signature Title Date
Stewart Carrell Chairman of the Board of Directors July 8, 1998
/S/ James R. Oyler
James R. Oyler Director and President July 8, 1998
(Chief Executive Officer)
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<PAGE>
/S/ John T. Lemley
John T. Lemley Vice President and Chief Financial Officer July 8, 1998
(Principal Financial Officer)
/S/ Mark C. McBride
Mark C. McBride Vice President, Corporate Controller and July 8, 1998
Corporate Secretary
(Principal Accounting Officer)
/S/ Gerald S. Casilli
Gerald S. Casilli Director July 8, 1998
/S/ Peter O. Crisp
Peter O. Crisp Director July 8, 1998
/S/ Ivan E. Sutherland
Ivan E. Sutherland Director July 8, 1998
John E. Warnock Director July 8, 1998
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<PAGE>
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
5.1 Opinion of Snell & Wilmer
L.L.P.
23.1 Consent of Snell & Wilmer
L.L.P. (included in the opinion
filed as Exhibit 5.1)
23.2 Consent of KPMG Peat
Marwick L.L.P. Certified
Public Accountants
24.1 Power of Attorney (included
on signature page)
99.1 Evans & Sutherland
Computer Corporation 1998
Stock Option Plan
8
EXHIBIT 5.1
Opinion dated July 8, 1998, of
Snell & Wilmer L.L.P.
July 8, 1998
Evans & Sutherland Computer Corporation
600 Komas Drive
Salt Lake City, Utah 84108
Ladies and Gentlemen:
We have acted as counsel to Evans & Sutherland Computer
Corporation, a Utah corporation (the "Company"), in connection with its
Registration Statement on Form S-8 (the "Registration Statement") filed under
the Securities Act of 1933 relating to the sale and issuance from time to time
of not in excess of 400,000 shares of common stock, $.20 par value, of the
Company (the "Stock"). The Stock is issuable pursuant to the terms of the Evans
& Sutherland Computer Corporation 1998 Stock Plan (the "Plan").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records, agreements, and other
instruments, certificates, orders, opinions, correspondence with public
officials, certificates provided by the Company and representatives, and other
documents, as we have deemed necessary or advisable for the purposes of
rendering the opinions set forth herein.
Based on the foregoing, it is our opinion that the Stock, when
issued and sold in accordance with the terms of the Plan, will be validly
issued, fully paid and non-assessable.
Consent is hereby given to the use of this opinion as an exhibit to
the Registration Statement.
Sincerely yours,
/S/ Snell & Wilmer L.L.P
SNELL & WILMER L.L.P.
EXHIBIT 23.2
Consent of KPMG Peat Marwick L.L.P.
Independent Certified Public Accountants
Accountants' Consent
The Board of Directors and Stockholders
Evans & Sutherland Computer Corporation:
We consent to incorporation by reference in the Registration Statements on Form
S-8 of Evans & Sutherland Computer Corporation of our report dated February 11,
1998, relating to the consolidated balance sheets of Evans & Sutherland Computer
Corporation and subsidiaries as of December 31, 1997 and December 27, 1996, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1997, and related schedule, which report appears in the December 31, 1997 Annual
Report on Form 10-K of Evans & Sutherland Computer Corporation.
/S/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Salt Lake City, Utah
July 8, 1998
EXHIBIT 99.1
Evans & Sutherland Computer Corporation 1998 Stock Plan
EVANS & SUTHERLAND COMPUTER CORPORATION
1998 STOCK OPTION PLAN
ARTICLE 1 - PURPOSE
1.1 GENERAL. The purpose of the Evans & Sutherland Computer
Corporation 1998 Stock Option Plan (the "Plan") is to promote the success, and
enhance the value, of Evans & Sutherland Computer Corporation (the "Company") by
linking the personal interests of its officers, employees, and consultants or
independent contractors to those of Company stockholders and by providing its
officers, employees, and consultants or independent contractors with an
incentive for outstanding performance. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of officers, employees, and consultants or independent contractors upon
whose judgment, interest, and special effort the successful conduct of the
Company's operation is largely dependent. Accordingly, the Plan permits the
grant of stock options from time to time to officers, employees, and consultants
or independent contractors.
ARTICLE 2 - EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan is effective as of April 13,
1998 (the "Effective Date").
ARTICLE 3 - DEFINITIONS AND CONSTRUCTION
3.1 DEFINITIONS. When a word or phrase appears in this Plan with
the initial letter capitalized, and the word or phrase does not commence a
sentence, the word or phrase shall generally be given the meaning ascribed to it
in this Section or in Sections 1.1 or 2.1 unless a clearly different meaning is
required by the context. The following words and phrases shall have the
following meanings:
(a) "Board" means the Board of Directors of the Company.
(b) "Change of Control" means any of the following: (i)
the Company executes a definitive agreement to merge or consolidate
with or into another corporation in which the Company is not the
surviving corporation and the Company's common stock is converted
into or exchanged for stock or securities of any other corporation,
cash, or any other thing of value; (ii) the Company executes a
definitive agreement to sell or otherwise dispose of substantially
all its assets; (iii) the Company undergoes a change of control of
the nature required to be reported in response to item 6(e) of
Schedule 14A promulgated under the Securities Exchange Act of 1934,
as amended; (iv) a public announcement that more than thirty
percent (30%) of the Company's then outstanding voting stock has
been acquired by any person or group; or (v) a change is made in
the membership of the Board resulting in a membership of which less
than a majority were also members of the Board on the date two
years prior to such change, unless the election, or the nomination
for election by the stockholders of the Company, of each new
director was approved by the vote of at last two-thirds of the
directors then still in office who were directors on the date two
years prior to such change.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the committee of the Board
described in Article 4.
<PAGE>
(e) "Disability" shall mean any illness or other physical
or mental condition of a Participant which renders the Participant
incapable of performing his customary and usual duties for the
Company, or any medically determinable illness or other physical or
mental condition resulting from a bodily injury, disease or mental
disorder which in the judgment of the Committee is permanent and
continuous in nature. The Committee may require such medical or
other evidence as it deems necessary to judge the nature and
permanency of the Participant's condition.
(f) "Fair Market Value" means, as of any given date, the
fair market value of stock or other property on a particular date
determined by such methods or procedures as may be established from
time to time by the Committee. Unless otherwise determined by the
Committee, the Fair Market Value of stock as of any date shall be
the closing price for the stock as reported on the NASDAQ National
Market System (or on any national securities exchange on which the
stock is then listed) for that date or, if no closing price is so
reported for that date, the closing price on the next preceding
date for which a closing price was reported.
(g) "Incentive Stock Option" means an option that is
intended to meet the requirements of Section 422 of the Code or any
successor provision thereto.
(h) "Non-Employee Director" means a member of the Board
who qualifies as a "Non-Employee Director" as defined in Rule
16b-3(b)(3) of the Exchange Act, or any successor definition
adopted by the Board.
(i) "Non-Qualified Stock Option" means an option that is
not intended to be an Incentive Stock Option.
(j) "Option" means a right granted to a Participant under
Article 7 of the Plan to purchase stock at a specified price during
specified time periods. An option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
(k) "Option Agreement" means any written agreement,
contract, or other instrument or document evidencing an option.
(l) "Participant" means a person, who as an officer,
employee, consultant or independent contractor of the Company or a
Subsidiary, including an individual who is also a member of the
Board, has been granted an option under the Plan.
(m) "Plan" means the Evans & Sutherland Computer
Corporation 1998 Stock Option Plan, as amended from time to time.
(n) "Retirement" means a Participant's termination of
employment with the Company after attaining any normal or early
retirement age specified in any pension, profit sharing or other
retirement program sponsored by the Company or such other event
designated as a Retirement by the Committee in an Option Agreement.
(o) "Stock" means the common stock of the Company and
such other securities of the Company that may be substituted for
stock pursuant to Article 9.
(p) "Subsidiary" means any corporation of which a
majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company.
<PAGE>
ARTICLE 4 - ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by the Board or a
Committee appointed by, and which serves at the discretion of, the Board. If the
Board appoints a Committee, the Committee shall consist of at least two
individuals, each of whom qualifies as (i) a Non-Employee Director, and (ii) an
"outside director" under Code Section 162(m) and the regulations issued
thereunder; provided, however, that the Chief Executive Officer of the Company
shall have the authority to grant options to individuals who are not subject to
Section 16 of the Securities Exchange Act of 1934. When the Chief Executive
Officer is acting to grant options under this Plan, solely for purposes of this
Plan, the Chief Executive Officer shall be deemed to be acting as the Board or
the Committee, as the case may be. Additionally, reference to the Committee
shall also refer to the Board if the Board does not appoint a Committee.
4.2 ACTION BY THE COMMITTEE. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present and acts approved in writing by a majority
of the Committee in lieu of a meeting shall be deemed the acts of the Committee.
Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other
employee of the Company or any Subsidiary, the Company's independent certified
public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive
power, authority and discretion to:
(a) Designate Participants to receive options;
(b) Determine the type or types of options to be granted
to each Participant;
(c) Determine the number of options to be granted and the
number of shares of stock to which an option will relate;
(d) Determine the terms and conditions of any option
granted under the Plan including but not limited to, the exercise
price, grant price, or purchase price, any restrictions or
limitations on the option, any schedule for lapse of forfeiture
restrictions or restrictions on the exercisability of an option,
and accelerations or waivers thereof, based in each case on such
considerations as the Committee in its sole discretion determines;
(e) Determine whether, to what extent, and under what
circumstances an option may be settled in, or the exercise price of
an option may be paid in, cash, stock, other options, or other
property, or an option may be canceled, forfeited, or surrendered;
(f) Prescribe the form of each Option Agreement, which
need not be identical for each Participant;
(g) Decide all other matters that must be determined in
connection with an option;
(h) Establish, adopt or revise any rules and regulations
as it may deem necessary or advisable to administer the Plan; and
<PAGE>
(i) Make all other decisions and determinations that may
be required under the Plan or as the Committee deems necessary or
advisable to administer the Plan.
4.4 DECISIONS BINDING. The Committee's interpretation of the Plan,
any options granted under the Plan, any Option Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5 - SHARES SUBJECT TO THE PLAN
5.1 NUMBER OF SHARES. Subject to adjustment as provided in Article
9.1 below, the maximum aggregate number of shares of stock that may be subject
to options under the Plan is 400,000. The shares may be authorized but unissued
or reacquired shares of stock.
5.2 LAPSED OPTIONS. To the extent that an option terminates,
expires or lapses for any reason, any shares of stock subject to the option will
again be available for the grant under the Plan.
5.3 STOCK DISTRIBUTED. Any stock distributed pursuant to an option
may consist, in whole or in part, of authorized and unissued stock, treasury
stock or stock purchased on the open market.
5.4 LIMITATION ON NUMBER OF SHARES SUBJECT TO OPTIONS.
Notwithstanding any provision in the Plan to the contrary, and subject to the
adjustment in Article 9.1, the maximum number of shares of stock with respect to
one or more options that may be granted to any one Participant during the
Company's fiscal year shall be 250,000.
ARTICLE 6 - ELIGIBILITY AND PARTICIPATION
6.1 ELIGIBILITY. Persons eligible to participate in this Plan
include all officers, employees, and consultants or independent contractors of
the Company or a Subsidiary, as determined by the Committee, including officers,
employees, and consultants or independent contractors who are also members of
the Board. In order to assure the viability of options granted to Participants
employed in foreign countries, the Committee may provide for such special terms
as it may consider necessary or appropriate to accommodate differences in local
law, tax policy, or custom. Moreover, the Committee may approve such supplements
to, or amendments, restatements, or alternative versions of the Plan as it may
consider necessary or appropriate for such purposes without thereby affecting
the terms of the Plan as in effect for any other purpose; provided, however,
that no such supplements, amendments, restatements, or alternative versions
shall increase the share limitations contained in Section 5 of the Plan. For
purposes of this Plan, a change in status from (i) an Employee to a consultant
or advisor, or (ii) a consultant or advisor to an Employee will not constitute a
termination of employment.
6.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan,
the Committee may, from time to time, select from among all eligible
individuals, those to whom options shall be granted and shall determine the
nature and amount of each option. No individual shall have any right to be
granted an option under this Plan.
ARTICLE 7 - STOCK OPTIONS
7.1 GENERAL. The Committee is authorized to grant options to
Participants on the following terms and conditions:
<PAGE>
(a) EXERCISE PRICE. The exercise price per share of stock
under an option shall be determined by the Committee and set forth
in the Option Agreement. It is the intention under the Plan that
the exercise price for any option shall not be less than the Fair
Market Value as of the date of grant; provided, however that the
Committee may, in its discretion, grant options (other than options
that are intended to be Incentive Stock Options) with an exercise
price of less than Fair Market Value on the date of grant.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall
determine the time or times at which an option may be exercised in
whole or in part. The Committee also shall determine the
performance or other conditions, if any, that must be satisfied
before all or part of an option may be exercised. Notwithstanding
anything in the Plan to the contrary, a Participant's Option shall
become fully vested and exercisable and any restrictions shall
lapse once the Participant terminates employment on account of
Retirement and such options shall remain exercisable after such
termination of employment until the expiration of the option.
(c) PAYMENT. The Committee shall determine the methods by
which the exercise price of an option may be paid, the form of
payment, including, without limitation, cash, shares of stock
(through actual tender or by attestation), or other property
(including broker-assisted "cashless exercise" arrangements), and
the methods by which shares of stock shall be delivered or deemed
to be delivered to Participants.
(d) EVIDENCE OF GRANT. All options shall be evidenced by
a written Option Agreement between the Company and the Participant.
The Option Agreement shall include such provisions as may be
specified by the Committee.
7.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be
granted only to employees and the terms of any Incentive Stock Options granted
under the Plan must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of stock
shall be set by the Committee, provided that the exercise price for
any Incentive Stock Option may not be less than the Fair Market
Value as of the date of the grant.
(b) EXERCISE. In no event, may any Incentive Stock Option
be exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall
lapse under the following circumstances:
(1) The Incentive Stock Option shall lapse ten years from
the date it is granted, unless an earlier time is set in
the Option Agreement.
(2) Subject to Section 6.1, if the Participant separates
from employment for any reason other than Disability or
death, the Incentive Stock Option shall lapse three
months following the Participant's termination of
employment, or such other time as specified in the
Participant's Option Agreement. Notwithstanding anything
in the Plan to the contrary, a Participant's ISO shall
become fully vested and exercisable and any restrictions
shall lapse once the Participant terminates employment on
account of Retirement and such ISO shall remain
exercisable after such termination of employment
<PAGE>
until the expiration of the ISO; provided, however, that
to the extent such option is not exercised within three
months after such termination, such option shall
thereafter be considered a Non-Qualified Stock Option. To
the extent that this provision causes Incentive Stock
Options to become first exercisable by a Participant in
excess of the limitation in Section 7.2(d), the excess
shall be considered Non-Qualified Stock Options.
(3) If the Participant terminates employment on account
of Disability or death before the option lapses pursuant
to paragraph (1) or (2) above, the Incentive Stock Option
shall lapse, unless it is previously exercised, on the
earlier of (i) the date on which the option would have
lapsed had the Participant not become Disabled or lived
and had his employment status (i.e., whether the
Participant was employed by the Company on the date of
his Disability or death or had previously terminated
employment) remained unchanged; or (ii) 12 months after
the date of the Participant's termination of employment
on account of Disability or death. Upon the Participant's
Disability or death, any Incentive Stock Options
exercisable at the Participant's Disability or death may
be exercised by the Participant's legal representative or
representatives, by the person or persons entitled to do
so under the Participant's last will and testament, or,
if the Participant shall fail to make testamentary
disposition of such Incentive Stock Option or shall die
intestate, by the person or persons entitled to receive
said Incentive Stock Option under the applicable laws of
descent and distribution.
(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair
Market Value (determined as of the time an option is made) of all
shares of stock with respect to which Incentive Stock Options are
first exercisable by a Participant in any calendar year may not
exceed $100,000.00 or such other limitation as imposed by Section
422(d) of the Code, or any successor provision. To the extent that
Incentive Stock Options are first exercisable by a Participant in
excess of such limitation, the excess shall be considered
Non-Qualified Stock Options.
(e) TEN PERCENT OWNERS. An Incentive Stock Option shall
be granted to any individual who, at the date of grant, owns stock
possessing more than ten percent of the total combined voting power
of all classes of stock of the Company only if such option is
granted at a price that is not less than 110% of Fair Market Value
on the date of grant and the option is exercisable for no more than
five years from the date of grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No option of
an Incentive Stock Option may be made pursuant to this Plan after
the tenth anniversary of the Effective Date.
(g) RIGHT TO EXERCISE. During a Participant's lifetime,
an Incentive Stock Option may be exercised only by the Participant.
ARTICLE 8 - PROVISIONS APPLICABLE TO OPTIONS
8.1 EXCHANGE PROVISIONS. The Committee may at any time offer to
exchange or buy out any previously granted option for a payment in cash, stock,
or another option (subject to Section 8.1), based on the terms and conditions
the Committee determines and communicates to the Participant at the time the
offer is made.
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8.2 TERM OF OPTION. The term of each option shall be for the period
as determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option exceed a period of ten years from the date of its grant.
8.3 FORM OF PAYMENT FOR OPTIONS. Subject to the terms of the Plan
and any applicable law or Option Agreement, payments or transfers to be made by
the Company or a Subsidiary on the grant or exercise of an option may be made in
such forms as the Committee determines at or after the time of grant, including
without limitation, cash, stock, other options, or other property, or any
combination, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case determined in accordance with rules adopted
by, and at the discretion of, the Committee.
8.4 LIMITS ON TRANSFER. No right or interest of a Participant in
any option may be pledged, encumbered, or hypothecated to or in favor of any
party other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no
option shall be assignable or transferable by a Participant other than by will
or the laws of descent and distribution.
8.5 BENEFICIARIES. Notwithstanding Section 8.4, a Participant may,
in the manner determined by the Committee, designate a beneficiary to exercise
the rights of the Participant and to receive any distribution with respect to
any option upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Option Agreement applicable to the
Participant, except to the extent the Plan and Option Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If the Participant is married, a designation of a person other
than the Participant's spouse as his beneficiary with respect to more than 50
percent of the Participant's interest in the option shall not be effective
without the written consent of the Participant's spouse. If no beneficiary has
been designated or survives the Participant, payment shall be made to the person
entitled thereto under the Participant's will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is
filed with the Committee.
8.6 STOCK CERTIFICATES. All stock certificates delivered under the
Plan are subject to any stop-transfer orders and other restrictions as the
Committee deems necessary or advisable to comply with Federal or state
securities laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on with the stock is listed, quoted, or
traded. The Committee may place legends on any stock certificate to reference
restrictions applicable to the stock.
8.7 TENDER OFFERS. In the event of a public tender for all or any
portion of the stock, or in the event that a proposal to merge, consolidate, or
otherwise combine with another company is submitted for stockholder approval,
the Committee may in its sole discretion declare previously granted options to
be immediately exercisable. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in Section 7.2(d), the
excess options shall be deemed to be Non-Qualified Stock Options.
8.8 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of
Control occurs, all outstanding options shall become fully exercisable. To
the extent that this provision causes Incentive Stock Options to exceed
the dollar limitation set forth in Section 7.2(d), the excess options shall be
deemed to be Non-Qualified Stock Options. Upon, or in anticipation of, such
an event, the Committee may cause every option outstanding hereunder to
terminate at a specific time in the future and shall give each Participant the
right to
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exercise options during a period of time as the Committee, in its sole and
absolute discretion, shall determine, except in the event that the surviving or
resulting entity agrees to assume the options on terms and conditions that
substantially preserve the Participant's rights and benefits of the option then
outstanding.
ARTICLE 9 - CHANGES IN CAPITAL STRUCTURE
9.1 GENERAL. In the event a stock dividend is declared upon the
stock, the shares of stock then subject to each option (and the number of shares
subject thereto) shall be increased proportionately without any change in the
aggregate purchase price therefor. In the event the stock shall be changed into
or exchanged for a different number or class of shares of stock or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation, there shall be substituted for
each such share of stock then subject to each option the number and class of
shares of stock into which each outstanding share of stock shall be so
exchanged, all without any change in the aggregate purchase price for the shares
then subject to each option.
ARTICLE 10 - AMENDMENT, MODIFICATION AND TERMINATION
10.1 AMENDMENT, MODIFICATION AND TERMINATION. With the approval of
the Board, at any time and from time to time, the Committee may terminate, amend
or modify the Plan; provided, however, that to the extent necessary and
desirable to comply with any applicable law, regulation, or stock exchange rule,
the Company shall obtain shareholder approval of any Plan amendment in such a
manner and to such a degree as required.
10.2 OPTIONS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any option
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 11 - GENERAL PROVISIONS
11.1 NO RIGHTS TO OPTIONS. No Participant , employee, or other
person shall have any claim to be granted any option under the Plan, and neither
the Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.
11.2 NO STOCKHOLDERS RIGHTS. No option gives the Participant any of
the rights of a stockholder of the Company unless and until shares of stock are
in fact issued to such person in connection with such option.
11.3 WITHHOLDING. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy Federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of this Plan.
11.4 NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any Option
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary.
11.5 UNFUNDED STATUS OF OPTIONS. The Plan is intended to be
an "unfunded" plan for incentive compensation. With respect to any payments not
yet made to a Participant pursuant to an option,
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nothing contained in the Plan or any Option Agreement shall give the Participant
any rights that are greater than those of a general creditor of the Company or
any Subsidiary.
11.6 INDEMNIFICATION. To the extent allowable under applicable law,
each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act under the Plan and against and from any and all amounts paid by him or
her in satisfaction of judgment in such action, suit, or proceeding against him
or her provided he or she gives the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-Laws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
11.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary.
11.8 EXPENSES. The expenses of administering the Plan shall be
borne by the Company and its Subsidiaries.
11.9 TITLES AND HEADINGS. The titles and headings of the Sections
in the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
11.10 FRACTIONAL SHARES. No fractional shares of stock shall be
issued and the Committee shall determine, in its discretion, whether cash shall
be given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
11.11 SECURITIES LAW COMPLIANCE. With respect to any person who is,
on the relevant date, obligated to file reports under Section 16 of the 1934
Act, transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall be
void to the extent permitted by law and voidable as deemed advisable by the
Committee.
11.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the
Company to make payment of options in stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register under the Securities Act of 1933, as amended (the "1933 Act"), any of
the shares of stock paid under the Plan. If the shares paid under the Plan may
in certain circumstances be exempt from registration under the 1933 Act, the
Company may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.
11.13 GOVERNING LAW. The Plan and all Option Agreements
shall be construed in accordance with and governed by the laws of the State of
Utah.
