As filed with the Securities and Exchange Commission on June 23, 1998
Registration Nos. 333-______ and 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
JOINT REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MEDITRUST CORPORATION MEDITRUST OPERATING COMPANY
--------------------- ---------------------------
(Exact name of registrant as (Exact name of registrant
specified in its charter) as specified in its charter)
Delaware Delaware
-------- --------
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
95-3520818 95-3419438
---------- ----------
(I.R.S. Employer Identification No.) (I.R.S. Empoyer Identification No.)
197 First Avenue, Suite 300 197 First Avenue, Suite 100
Needham, MA 02194 Needham, MA 02194
----------------- -----------------
(Address of principal (Address of principal
executive offices) executive offices)
Stock Option Plan
For Key Employees of Cobblestone Holdings, Inc.
and
Form of Stock Option Agreement (for non-employee directors
of Cobblestone Holdings, Inc.)
-----------------------------------------------------------
(Full title of the Plans)
David F. Benson Abraham D. Gosman
President Chairman of the Board
Meditrust Corporation Meditrust Operating Company
197 First Avenue, Suite 300 197 First Avenue, Suite 100
Needham, MA 02194 Needham, MA 02194
(781) 433-6000 (781) 453-8062
-------------- --------------
(Name, address and telephone number (Name, address and telephone number
of agent for service) of agent for service)
Copy to:
Michael J. Bohnen, Esq.
NUTTER, McCLENNEN & FISH, LLP
One International Place
Boston, Massachusetts 02110-2699
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
maximum Proposed
offering maximum
Title of Amount price per aggregate Amount of
securities to be unit of Paired offering registration
to be registered registered Common Stock price fee
- ---------------- ---------- ------------ ----- ---
<S> <C> <C> <C> <C>
Paired Common Stock(1) 450,898(2) $4.095(3) $1,846,463.20(3) $544.71(3)
</TABLE>
(1) Meditrust Corporation common stock, par value $0.10 per share (the
"MC Common Stock"), paired with Meditrust Operating Company common
stock, par value $0.10 (the "MOC Common Stock", and together with the
MC Common Stock, the "Paired Common Stock"), issuable upon exercise of
outstanding options to acquire common stock of Cobblestone Holdings,
Inc., which options were assumed by Meditrust Corporation pursuant to
the Agreement and Plan of Merger, dated as of January 11, 1998, as
amended, among Cobblestone Holdings, Inc., Meditrust Corporation and
Meditrust Operating Company. Includes rights (the "Rights") issuable
pursuant to the Rights Agreement, dated as of June 15, 1989, as
amended, among Meditrust Corporation(formerly known as Santa Anita
Realty Enterprises, Inc.), Meditrust Operating Company (formerly known
as Santa Anita Operating Company), and Boston EquiServe, as Rights
Agent. One Right will be issued with respect to each share of MC Common
Stock issued under the Plan.
(2) This Joint Registration Statement covers, in addition to the number
of shares of Paired Common Stock stated above, options and other rights
to purchase or acquire the shares of Paired Common Stock covered by the
Prospectus.
(3) Pursuant to Rule 457(h), the maximum offering price, per share and
in the aggregate, and the registration fee were calculated based upon
the price at which the options to acquire the 450,896 shares of Paired
Common Stock may be exercised. In particular, of the 450,896 shares of
Paired Common Stock being registered, options to acquire 311,698 shares
are exercisable at $3.95 per share and options to acquire 139,200
shares are exercisable at $4.42 per share.
The Exhibit Index included in this Joint Registration Statement is at
page 9.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents By Reference
Meditrust Corporation (the "Corporation") and Meditrust Operating Company
(the "Operating Company," and together with the Corporation, the "Companies")
hereby incorporate by reference in this Registration Statement the following
documents and information heretofore filed with the Securities and Exchange
Commission (the "Commission"):
1. Annual Report on Form 10-K, as amended by Annual Report on Form 10-K/A, each
for the fiscal year ended December 31, 1997;
2. Joint Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
3. Joint Current Report on Form 8-K, event date January 3, 1998;
4. Joint Current Report on Form 8-K, event date January 3, 1998, as amended by
the Joint Current Report on Form 8-K/A filed May 21, 1998;
5. Joint Current Report on Form 8-K, event date January 4, 1998;
6. Joint Current Report on Form 8-K, event date January 11, 1998;
7. Joint Current Report on Form 8-K, event date January 11, 1998;
8. Joint Current Report on Form 8-K, event date February 24, 1998;
9. Joint Current Report on Form 8-K, event date February 26, 1998, as amended
by the Joint Current Report on Form 8-K/A filed April 29, 1998;
10. Joint Current Report on Form 8-K, event date March 16, 1998;
11. Joint Current Report on Form 8-K, event date March 31, 1998;
12. Joint Current Report on Form 8-K, event date May 13, 1998;
13. Joint Current Report on Form 8-K, event date May 20, 1998;
14. Joint Current Report on Form 8-K, event date May 29, 1998;
15. Joint Current Report on Form 8-K, event date June 16, 1998; and
16. The description of the Companies' Paired Common Stock and the Rights
contained in registration statements filed under the Exchange Act, including
any amendment or report filed for purposes of updating such description.
All other documents filed by the Companies with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the termination of the offering of the Securities offered
hereby shall be deemed to be incorporated by reference into this Registration
Statement and to be a part hereof from the date of filing such documents. Any
statement contained herein or 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 a subsequently filed document which also is or is deemed
to be incorporated by reference herein, as the case may be, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Michael J. Bohnen, a partner in the law firm Nutter, McClennen & Fish, LLP,
currently serves as Secretary of the Operating Company. Paul R. Eklund, also a
partner in the law firm Nutter, McClennen & Fish, LLP, serves as
2
<PAGE>
Assistant Secretary of the Corporation. Nutter, McClennen & Fish, LLP, serves as
counsel to the Companies, and has rendered a legal opinion with respect to the
validity of the shares being offered pursuant to this Registration Statement.
Item 6. Indemnification of Directors and Officers
As permitted by Section 102 of the General Corporation Law of Delaware (the
"DGCL"), both the Certificate of Incorporation of the Corporation and the
Certificate of Incorporation of the Operating Company eliminate personal
liability of its respective directors to such company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for: (i) any
breach of the duty of loyalty to such company or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or knowing
violations of law; (iii) liability under Section 174 of the DGCL relating to
certain unlawful dividends and stock repurchases; or (iv) any transaction from
which the director derived an improper personal benefit.
As permitted by Section 145 of the DGCL, both the Corporation's by-laws and
the Operating Company's by-laws provide for indemnification of directors and
officers (and permit the respective Boards of Directors to provide for
indemnification of employees and agents) of such Registrants against all costs,
charges, expenses, liabilities and losses (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and other amounts paid in settlement)
actually and reasonably incurred by them in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, in which any such person was or is a party or
is threatened to be made a party, if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interest of such Registrant and, with respect to any criminal action or
proceeding, if such person had no reasonable cause to believe his conduct was
unlawful. In the case of an action or suit by or in the right of the respective
Registrant, such a person may be indemnified only for expenses (including
attorneys fees) and may not be indemnified in respect of any claim, issue or
matter as to which he has been adjudged liable for negligence or misconduct in
the performance of his duty to the respective Registrant, unless and only to the
extent the court in which such action or suit was brought determines that such
person is fairly and reasonably entitled to indemnity for such expenses as such
court may deem proper. In each case, indemnification of an officer or director
shall be made only upon specific authorization of a majority of disinterested
directors, by written opinion of independent legal counsel or by the
stockholders, unless the officer, or director has been successful on the merits
or otherwise in defense of any such action or suit, in which case he shall be
indemnified without such authorization. Both the Corporation's by-laws and the
Operating Company's by-laws require such Registrant to pay the expenses incurred
by a director or officer in defending or investigating a threatened or pending
action, suit or proceeding in advance of the final disposition of such action,
suit or proceeding upon receipt by such Registrant of an undertaking by or on
behalf of such director or officer to repay such amount if it is ultimately
determined that he is not entitled to indemnification and permit such Registrant
to advance such expenses to other employees and agents of such Registrant upon
such terms and conditions as are specified by the respective Registrant's Board
of Directors. The advancement of expenses, as well as indemnification, pursuant
to each Registrant's by-laws is not exclusive of any other rights which those
seeking indemnification or advancement of expenses from such Registrant may
have.
Individual indemnification agreements (the "Indemnification Agreements")
have been entered into by each of the Corporation and the Operating Company with
certain of its respective directors and officers. The Indemnification Agreements
provide for indemnification to the fullest extent permitted by law and provide
contractual assurance to directors and officers that indemnity and advancement
of expenses will be available to them regardless of any amendment or revocation
of such Registrant's by-laws.
Both the Corporation's by-laws and the Operating Company's by-laws permit
such Registrant to purchase and maintain insurance on behalf of any director,
officer, employee or agent of such Registrant against liability asserted against
him or her in any such capacity, whether or not such Registrant would have the
power to indemnify him against such liability under the provisions of the
by-laws. Both the Corporation and the Operating Company maintain liability
insurance providing officers and directors with coverage with respect to certain
liabilities.
3
<PAGE>
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
See the attached Exhibit Index.
Item 9. Undertakings
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrants' annual report pursuant to Section 13(a)
or Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the provisions of the Delaware General Corporation
Law and the respective registrant's Certificate of Incorporation and by-laws, or
otherwise, the registrants have 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 registrants of expenses incurred or paid by a director, officer
or a controlling person of such 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 respective
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy, as
expressed in the Act, and will be governed by the final adjudication of such
issue.
4
<PAGE>
MEDITRUST CORPORATION SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Meditrust
Corporation 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 Joint
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Needham, Commonwealth of Massachusetts, as of
June 23, 1998.
MEDITRUST CORPORATION
By: /s/ David F. Benson
------------------------------------
Name: David F. Benson
Title: Director, President and Treasurer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints David F.
Benson and Michael S. Benjamin his or her true and lawful attorneys-in-fact and
agents, each acting alone, with full powers of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Joint Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each acting
alone, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Joint
Registration Statement has been signed below by the following persons in the
capacities indicated as of June 23, 1998.
Signature Title
- --------- -----
/s/ Abraham D. Gosman
- ------------------------
Abraham D. Gosman Chairman of the Board
5
<PAGE>
/s/ David F. Benson Director, President and Treasurer
- ------------------------ (Principal Executive Officer)
David F. Benson
/s/ Laurie T. Gerber Chief Financial Officer (Principal
- ------------------------ Financial and Accounting Officer)
Laurie T. Gerber
- ------------------------ Director
Donald J. Amaral
/s/ Edward W. Brooke Director
- ------------------------
Edward W. Brooke
/s/ Nancy G. Brinker Director
- ------------------------
Nancy G. Brinker
/s/ James P. Conn Director
- ------------------------
James P. Conn
/s/ C. Gerald Goldsmith Director
- ------------------------
C. Gerald Goldsmith
/s/ Stephen E. Merrill Director
- ------------------------
Stephen E. Merrill
/s/ Thomas J. Magovern Director
- ------------------------
Thomas J. Magovern
- ------------------------ Director
Gerald Tsai, Jr.
/s/ John C. Cushman, III Director
- ------------------------
John C. Cushman, III
6
<PAGE>
MEDITRUST OPERATING COMPANY SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Meditrust Operating
Company 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 Joint
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Needham, Commonwealth of Massachusetts, as of
June 23, 1998.
MEDITRUST OPERATING COMPANY
By:/s/ Abraham D. Gosman
--------------------------------------
Name: Abraham D. Gosman
Title: Chairman of the Board, Chief
Executive Officer and Treasurer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Michael J.
Bohnen and Paul R. Eklund his or her true and lawful attorneys-in-fact and
agents, each acting alone, with full powers of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Joint Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each acting
alone, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Joint
Registration Statement has been signed below by the following persons in the
capacities indicated as of June 23, 1998.
Signature Title
- --------- -----
/s/ Abraham D. Gosman Chairman of the Board, Chief
- --------------------- Executive Officer and Treasurer (Principal
Abraham D. Gosman Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
7
<PAGE>
- ------------------------ Director
Donald J. Amaral
/s/ William C. Baker Director
- ------------------------
William C. Baker
/s/ David F. Benson Director
- ------------------------
David F. Benson
/s/ Edward W. Brooke Director
- ------------------------
Edward W. Brooke
/s/ Nancy G. Brinker Director
- ------------------------
Nancy G. Brinker
/s/ William G. Byrnes Director
- ------------------------
William G. Byrnes
/s/ C. Gerald Goldsmith Director
- ------------------------
C. Gerald Goldsmith
/s/ Stephen E. Merrill Director
- ------------------------
Stephen E. Merrill
/s/ Thomas J. Magovern Director
- ------------------------
Thomas J. Magovern
- ------------------------ Director
Gerald Tsai, Jr.
8
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Document
- ------- -----------------------
4.1 Stock Option Plan For Key Employees of Cobblestone Holdings, Inc.
4.2 Form of Stock Option Agreement (for non-employee directors of
Cobblestone Holdings, Inc.)
4.3 Pairing Agreement by and between Meditrust Corporation (formerly known
as Santa Anita Realty Enterprises, Inc.) and Meditrust Operating
Company (formerly known as Santa Anita Operating Company), dated as of
December 20, 1979 (incorporated by reference to Exhibit 5 to
Registration Statement on Form 8-A of Santa Anita Operating Company
filed February 5, 1980).
4.4 First Amendment to Pairing Agreement, by and between Meditrust
Corporation and Meditrust Operating Company, dated November 6, 1997
(incorporated by reference to Exhibit 4.4 to the Joint Registration
Statement on Form S-8 of Meditrust Corporation and Meditrust Operating
Company (File Nos. 333-39771 and 333-39771-01).
4.5 Second Amendment to Pairing Agreement by and between Meditrust
Corporation and Meditrust Operating Company (incorporated by reference
to the Joint Registration Statement on Form S-4 of Meditrust
Corporation and Meditrust Operating Company (File Nos. 333-47737 and
47737-01)).
4.6 Rights Agreement, dated June 15, 1989, among Meditrust Corporation
(formerly known as Santa Anita Realty Enterprises, Inc.), Meditrust
Operating Company (formerly known as Santa Anita Operating Company) and
Harris Trust Company, as Rights Agent, (incorporated by reference to
Exhibit 5 to Registration Statement on Form 8-A of Santa Anita
Operating Company filed February 5, 1980).
4.7 Appointment of Boston EquiServe as Rights Agent, dated October 24, 1997
(incorporated by reference to Exhibit 4.6 to the Joint Registration
Statement on Form S-8 of Meditrust Corporation and Meditrust Operating
Company (File Nos. 333-39771 and 333-39771-01)).
5.1 Opinion of Nutter, McClennen & Fish, LLP (opinion re: legality).
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of KPMG Peat Marwick LLP.
23.4 Consent of Nutter, McClennen & Fish, LLP (included in Exhibit 5.1).
24.1 Meditrust Corporation Power of Attorney (included in this Joint
Registration Statement under "Meditrust Corporation Signatures").
24.2 Meditrust Operating Company Power of Attorney (included in this Joint
Registration Statement under "Meditrust Operating Company Signatures").
9
EXHIBIT 4.1
STOCK OPTION PLAN
FOR KEY EMPLOYEES
OF
COBBLESTONE HOLDINGS, INC.
Cobblestone Holdings, Inc., a corporation organized under the laws of
the State of Delaware, hereby adopts this Stock Option Plan for Key Employees of
Cobblestone Holdings, Inc. The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its key Employees who
have been or will be given responsibility for the management or administration
of the Company's business affairs, by assisting them to become owners of the
Company's Common Stock and thus to benefit directly from its growth, development
and financial success.
(2) To enable the Company to obtain and retain the services of the
type of professional, technical and managerial employees considered essential to
the long-range success of the Company by providing and offering them an
opportunity to become owners of the Company's Common Stock under options,
including options that are intended to qualify as "incentive stock options"
under Section 422 of the Code.
ARTICLE I
DEFINITIONS
-----------
Whenever the following terms are used in this Plan, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.
Section 1.1 - Board
- -------------------
"Board" shall mean the Board of Directors of the Company.
Section 1.2 - Code
- ------------------
"Code" shall mean the Internal Revenue Code of 1986, as amended.
1
<PAGE>
Section 1.3 - Company
- ---------------------
"Company" shall mean Cobblestone Holdings, Inc. In addition, "Company"
shall mean any corporation assuming, or issuing new employee stock options in
substitution for, Incentive Stock Options, outstanding under the Plan, in a
transaction to which Section 424(a) of the Code applies.
Section 1.4 - Director
- ----------------------
"Director" shall mean a member of the Board.
Section 1.5 - Employee
- ----------------------
"Employee" shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company, or of any corporation which is then a Parent Corporation
or a Subsidiary, whether such employee is so employed at the time this Plan is
adopted or becomes so employed subsequent to the adoption of this Plan.
Section 1.6 - Exchange Act
- --------------------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
Section 1.7 - Incentive Stock Option
- ------------------------------------
"Incentive Stock Option" shall mean an Option which qualifies under
Section 422 of the Code and which is designated as an Incentive Stock Option
by the Board.
Section 1.8 - Non-Qualified Option
- ----------------------------------
"Non-Qualified Option" shall mean an Option which is not an
Incentive Stock Option and which is designated as a Non-Qualified Option by
the Board.
Section 1.9 - Officer
- ---------------------
"Officer" shall mean an officer of the Company, as defined in
Rule 16a-1(f) under the Exchange Act, as such Rule may be amended in the future.
Section 1.10 - Option
- ---------------------
"Option" shall mean an option to purchase Common Stock of the Company,
granted under the Plan. "Options" includes both Incentive Stock Options and
Non-Qualified Options.
2
<PAGE>
Section 1.11 - Optionee
- -----------------------
"Optionee" shall mean an Employee to whom an Option is granted under
the Plan.
Section 1.12 - Parent Corporation
- ---------------------------------
"Parent Corporation" shall mean any corporation in an unbroken
chain of corporations ending with the Company if each of the corporations
other than the Company then owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
Section 1.13 - Plan
- -------------------
"Plan" shall mean this Stock Option Plan for Key Employees of
Cobblestone Holdings, Inc.
Section 1.14 - Secretary
- ------------------------
"Secretary" shall mean the Secretary of the Company.
Section 1.15 - Securities Act
- -----------------------------
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.16 - Subsidiary
- -------------------------
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
Section 1.17 - Termination of Employment
- ----------------------------------------
"Termination of Employment" shall mean the time when the
employee-employer relationship between the Optionee and the Company, a Parent
Corporation or a Subsidiary is terminated for any reason, with or without
cause, including, but not by way of limitation, a termination by resignation,
discharge, death or retirement, but excluding terminations where there is a
simultaneous reemployment by the Company, a Parent Corporation or a Subsidiary.
The Board, in its absolute discretion, shall determine the effect of all other
matters and questions relating to Termination of Employment, including, but not
by way of limitation, the question of whether a Termination of Employment
resulted from a discharge for good cause, and all questions of whether
3
<PAGE>
particular leaves of absence constitute Terminations of Employment; provided,
however, that, with respect to Incentive Stock Options, a leave of absence shall
constitute a Termination of Employment if, and to the extent that, such leave
of absence interrupts employment for the purposes of Section 422(a)(2) of the
Code and the then applicable regulations and revenue rulings under said Section.
ARTICLE II
SHARES SUBJECT TO PLAN
----------------------
Section 2.1 - Shares Subject to Plan
- ------------------------------------
The shares of stock subject to Options shall be shares of the
Company's $.01 par value Common Stock. The aggregate number of such shares
which may be issued upon exercise of Options shall not exceed 250,000.
Section 2.2 - Unexercised Options
- ---------------------------------
If any Option expires or is cancelled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation may again be
optioned hereunder, subject to the limitations of Section 2.1.
Section 2.3 - Changes in Company's Shares
- -----------------------------------------
In the event that the outstanding shares of Common Stock of the
Company are hereafter changed into or exchanged for a different number of kind
of shares or other securities of the Company, or of another corporation, by
reason or reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares,
appropriate adjustments shall be made by the Board in the number and kind of
shares for the purchase of which Options may be granted, including adjustments
of the limitations in Section 2.1 on the maximum number and kind of shares
which may be issued on exercise of Options.
ARTICLE III
GRANTING OF OPTIONS
-------------------
Section 3.1 - Eligibility
- -------------------------
Any key Employee of the Company or of any corporation which is then
a Parent Corporation or a Subsidiary shall be eligible to be granted Options,
except as provided in Section 3.2.
4
<PAGE>
Section 3.2 - Qualification of Incentive Stock Options
- ------------------------------------------------------
No Incentive Stock Option shall be granted unless such Option, when
granted, qualifies as an "incentive stock option" under Section 422 of the Code.
Section 3.3 - Granting of Options
- ---------------------------------
(a) The Board shall from time to time, in its absolute discretion:
(i) Determine which Employees are key Employees and select from
among the key Employees (including those to whom Options have been
previously granted under the Plan) such of them as in its opinion should
be granted Options; and
(ii) Determine the number of shares to be subject to such
Options granted to such selected key Employees, and determine whether such
Options are to be Incentive Stock Options or Non-Qualified Options; and
(iii) Determine the terms and conditions of such Options,
consistent with the Plan.
(b) Upon the selection of a key Employee to be granted an Option, the
Board shall instruct the Secretary to issue such Option and may impose such
conditions on the grant of such Option as it deems appropriate. Without limiting
the generality of the preceding sentence, the Board may, in its discretion and
on such terms as it deems appropriate, require as a condition on the grant of an
Option to an Employee that the Employee surrender for cancellation some or all
of the unexercised Options which have been previously granted to him. An Option
the grant of which is conditioned upon such surrender may have an option price
lower (or higher) than the option price of the surrendered Option, may cover the
same (or a lesser or greater) number of shares as the surrendered Option, may
contain such other terms as the Board deems appropriate and shall be exercisable
in accordance with its terms, without regard to the number of shares, price,
option period or any other term or condition of the surrendered Option.
ARTICLE IV
TERMS OF OPTIONS
----------------
Section 4.1 - Option Agreement
- ------------------------------
Each Option shall be evidenced by a written Stock Option Agreement,
which shall be executed by the Optionee and an authorized Officer of the Company
and which shall contain such terms and conditions as the Board shall determine,
consistent with the Plan. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and
5
<PAGE>
conditions as may be necessary to qualify such Options as "incentive stock
options" under Section 422 of the Code.
Section 4.2 - Option Price
- --------------------------
(a) The price of the shares subject to each Option shall be set by
the Board; provided, however, that the price per share shall be not less than
100% of the fair market value of such shares on the date such Option is granted;
provided, further, that, in the case of an Incentive Stock Option, the price
per share shall not be less than 110% of the fair market value of such shares
on the date such Option is granted in the case of an individual then owning
(within the meaning of Section 424(d)of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company, any Subsidiary
or any Parent Corporation.
(b) For purposes of the Plan, the fair market value of a share of the
Company's Common Stock as of a given date shall be: (i) the closing price of a
share of the Company's Common Stock on the principal exchange on which shares
of the Company's Common Stock are then trading, if any, on the day previous
to such date, or, if shares were not traded on the day previous to such date,
then on the next preceding trading day during which a sale occurred; or (ii) if
such Common Stock is not traded on an exchange but is quoted on NASDAQ or a
successor quotation system, (1) the last sales price (if the Company's Common
Stock is then listed a National Market Issue under the NASD National Market
System) or (2) the mean between the closing representative bid and asked prices
(in all other cases) for the Company's Common Stock on the day previous to such
date as reported by NASDAQ or such successor quotation system; or (iii) if such
Common Stock is not publicly traded on an exchange and not quoted on NASDAQ or a
successor quotation system, the mean between the closing bid and asked prices
for the Company's Common Stock, on the day previous to such date, as determined
in good faith by the Board; or (iv) if the Company's Common Stock is not
publicly traded, the fair market value established by the Board acting in good
faith.
Section 4.3 - Commencement of Exercisability
- --------------------------------------------
(a) Except as the Board may otherwise provide with respect to Options
granted to Employees who are not Officers, no Option may be exercised in whole
or in part during the first year after such Option is granted.
(b) Subject to the provisions of Sections 4.3(a), 4.3(c), 4.3(d) and
7.3, Options shall become exercisable at such times and in such installments
(which may be cumulative) as the Board shall provide in the terms of each
individual Option; provided, however, that by a resolution adopted after an
Option is granted the Board may, on such terms and conditions as it may
determine to be appropriate and subject to Sections 4.3(a),
6
<PAGE>
4.3(c), 4.3(d) and 7.3, accelerate the time at which such Option or any
portion thereof may be exercised.
(c) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
(d) Notwithstanding any other provision of this Plan, in the case
of an Incentive Stock Option, the aggregate fair market value (determined at
the time the Incentive Stock Option is granted) of the shares of the Company's
stock with respect to which "incentive stock options" (within the meaning
of Section 422 of the Code) are exercisable for the first time by the Optionee
during any calendar year (under the Plan and all other incentive stock option
plans of the Company, any Subsidiary and any Parent Corporation) shall not
exceed $100,000.
Section 4.4 - Expiration of Options
- -----------------------------------
(a) No Option may be exercised to any extent by anyone after the
first to occur of the following events:
(i) The expiration of ten years from the date the Option was
granted; or
(ii) With respect to an Incentive Stock Option in the case of
an Optionee owning (within the meaning of Section 424(d) of the Code), at
the time the Incentive Stock Option was granted, more than 10% of the
total combined voting power of all classes of stock of the Company, any
Subsidiary or any Parent Corporation, the expiration of five years from
the date the Incentive Stock Option as granted; or
(iii) Except in the case of any Optionee who is disabled (within
the meaning of Section 22(e)(3) of the Code), the expiration of three
months from the date of the Optionee's Termination of Employment for any
reason other than such Optionee's death unless the Optionee dies within
said three-month period; or
(iv) In the case of an Optionee who is disabled (within the
meaning of Section 22(e)(3) of the Code), the expiration of one year from
the date of the Optionee's Termination of Employment for any reason other
than such Optionee's death unless the Optionee dies within said one-year
period; or
(v) The expiration of one year from the date of the
Optionee's death.
(b) Subject to the provisions of Section 4.4(a), the Board shall
provide, in the terms of each individual Option, when such Option expires and
becomes unexercisable; and (without limiting the generality of the foregoing)
the Board may provide in the terms of
7
<PAGE>
individual Options that said Options expire immediately upon a Termination
of Employment for any reason.
Section 4.5 - Consideration
- ---------------------------
In consideration of the granting of an Option, the Optionee shall
agree, in the written Stock Option Agreement, to remain in the employ of the
Company, a Parent Corporation or a Subsidiary for a period of at least one year
after the Option is granted. Nothing in this Plan or in any Stock Option
Agreement hereunder shall confer upon any Optionee any right to continue in
the employ of the Company, any Parent Corporation or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company, its Parent
Corporations and its Subsidiaries, which are hereby expressly reserved, to
discharge any Optionee at any time for any reason whatsoever, with or without
cause.
Section 4.6 - Adjustments in Outstanding Options
- ------------------------------------------------
In the event that the outstanding shares of the stock subject to
Options are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend or combination of shares, the Board shall make an appropriate and
equitable adjustment in the number and kind of shares as to which all
outstanding Options, or portions thereof then unexercised, shall be exercisable,
to the end that after such event the Optionee's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in an
outstanding Option shall be made without change in the total price applicable
to the Option or the unexercised portion of the Option (except for any change
in the aggregate price resulting from rounding-off of share quantities or
prices) and with any necessary corresponding adjustment in Option price per
share; provided, however, that, in the case of Incentive Stock Options, each
such adjustment shall be made in such manner as not to constitute a
"modification" within the meaning of Section 424(h)(3) of the Code. Any such
adjustment made by the Board shall be final and binding upon all Optionees, the
Company and all other interested persons.
Section 4.7 - Merger, Consolidation, Acquisition, Liquidation or Dissolution
- ----------------------------------------------------------------------------
Notwithstanding the provisions of Section 4.6, in its absolute
discretion, and on such terms and conditions as it deems appropriate, the
Board may provide by the terms of any Option that such Option cannot be
exercised after the merger or consolidation of the Company with or into
another corporation, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock or the liquidation or dissolution of the Company; and
if the Board so provides, it may, in its absolute discretion and on such terms
and conditions as it deems appropriate, also provide, either by the terms of
such Option or by a resolution adopted prior to the occurrence of such merger,
consolidation, acquisition, liquidation or dissolution, that,
8
<PAGE>
for some period of time prior to such event, such Option shall be exercisable
as to all shares covered hereby, notwithstanding anything to the contrary in
Section 4.3(a), Section 4.3(b) and/or any installment provisions of such Option,
but subject to Section 4.3(d).
ARTICLE V
EXERCISE OF OPTIONS
-------------------
Section 5.1 - Person Eligible to Exercise
- -----------------------------------------
During the lifetime of the Optionee, only he may exercise an Option
(or any portion thereof) granted to him. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option Agreement,
be exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's will or under the then applicable laws of descent
and distribution.
Section 5.2 - Partial Exercise
- ------------------------------
At any time and from time to time prior to the time when any
exercisable Option or exercisable portion thereof becomes unexercisable under
the Plan or the applicable Stock Option Agreement, such Option or portion
thereof may be exercised in whole or in part; provided, however, that the
company shall not be required to issue fractional shares and the Board may,
by the terms of the Option, require any partial exercise to be with respect to
a specified minimum number of shares.
Section 5.3 - Manner of Exercise
- --------------------------------
An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement:
(a) Notice in writing signed by the Optionee or other person
then entitled to exercise such Option or portion, stating that such Option or
portion is exercised, such notice complying with all applicable rules
established by the Board;
(b) Full payment (in cash or by check) for the shares with respect
to which such Option or portion is thereby exercised;
(c) The payment to the Company (or other employer corporation) of all
amounts which it is required to withhold under federal, state or local law in
connection with the exercise of the Option;
9
<PAGE>
(d) Such representations and documents as the Board, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Board may, in its absolute discretion, also
take whatever additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and
issuing stop-transfer orders to transfer agents and registrars; and
(e) In the event that the Option or portion thereof shall be
exercised pursuant to Section 5.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to exercise
the Option or portion thereof.
Section 5.4 - Conditions to Issuance of Stock Certificates
- ----------------------------------------------------------
The shares of stock issuable and deliverable upon the exercise of an
Option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the
Company. The Company shall not be required to issue or deliver any certificate
or certificates for shares of stock purchased upon the exercise of any Option
or portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed; and
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body, which the Board shall, in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Board shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of
all amounts which it is required to withhold under federal, state or local law
in connection with the exercise of the Option; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Board may establish from time to time for
reasons of administrative convenience.
Section 5.5 - Rights as Shareholders
- ------------------------------------
The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect of any shares
purchasable upon the exercise of
10
<PAGE>
any part of an Option unless and until certificates representing such shares
have been issued by the Company to such holders.
Section 5.6 - Transfer Restrictions
- -----------------------------------
Unless otherwise approved in writing by the Board, no shares acquired
upon exercise of any Option by any Officer may be sold, assigned, pledged,
encumbered or otherwise transferred until at least six months have elapsed from
(but excluding) the date that such Option was granted. The Board, in its
absolute discretion, may impose such other restrictions on the transferability
of the shares purchasable upon the exercise of an Option as it deems
appropriate. Any such other restriction shall be set forth in the respective
Stock Option Agreement and may be referred to on the certificates evidencing
such shares. The Board may require the Employee to give the Company prompt
notice of any disposition of shares of stock, acquired by exercise of an
Incentive Stock Option, within two years from the date of granting such Option
or one year after the transfer of such shares to such Employee. The Board may
direct that the certificates evidencing shares acquired by exercise of an
Incentive Stock Option refer to such requirement to give prompt notice of
disposition.
ARTICLE VI
ADMINISTRATION
--------------
Section 6.1 - Duties and Powers of Board
- ----------------------------------------
It shall be the duty of the Board to conduct the general
administration of the Plan in accordance with its provisions. The Board shall
have the power to interpret the Plan and the Options and to adopt such rules for
the administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Any such
interpretations and rules in regard to Incentive Stock Options shall be
consistent with the basic purpose of the Plan to grant "incentive stock options"
within the meaning of Section 422 of the Code.
Section 6.2 - Professional Assistance; Good Faith Actions
- ---------------------------------------------------------
All expenses and liabilities incurred by members of the Board in
connection with the administration of the Plan shall be borne by the Company.
The Board may employ attorneys, consultants, accountants, appraisers, brokers or
other persons. The Board, the Company and its Officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the Board
in good faith shall be final and binding upon all Optionees, the Company and all
other interested persons. No member of the Board shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the
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<PAGE>
Options, and all members of the Board shall be fully protected by the Company
in respect to any such action, determination or interpretation.
ARTICLE VII
OTHER PROVISIONS
----------------
Section 7.1 - Options Not Transferable
- --------------------------------------
No Option or interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Optionee or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that nothing in this Section 7.1 shall
prevent transfers by will or by the applicable laws of descent and distribution.
Section 7.2 - Amendment, Suspension or Termination of the Plan
- --------------------------------------------------------------
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board. However,
without approval of the Company's shareholders given within 12 months before or
after the action by the Board, no action of the Board may, except as provided in
Section 2.3, increase any limit imposed in Section 2.1 on the maximum number of
shares which may be issued on exercise of Options, materially modify the
eligibility requirements of Section 3.1, reduce the minimum Option price
requirements of Section 4.2(a) or extend the limit imposed on this Section 7.2
on the period during which Options may be granted. Neither the amendment,
suspension nor termination of the Plan shall, without the consent of the holder
of the Option, impair any rights or obligations under any Option theretofore
granted. No Option may be granted during any period of suspension nor after
termination of the Plan, and in no event may any Option be granted under this
Plan after the first to occur of the following events:
(a) The expiration of ten years from the date the Plan is adopted by
the Board; or
(b) The expiration of ten years from the date the Plan is approved by
the Company's shareholders under Section 7.3.
Section 7.3 - Approval of Plan by Shareholders
- ----------------------------------------------
This Plan will be submitted for the approval of the Company's
shareholders within 12 months after the date of the Board's initial adoption of
the Plan. Options may be
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<PAGE>
granted prior to such shareholder approval; provided, however, that such Options
shall not be exercisable prior to the time when the Plan is approved by the
shareholders; provided, further, that is such approval has not been obtained at
the end of said 12-month period, all Options previously granted under the Plan
shall thereupon be cancelled and become null and void.
Section 7.4 - Effect of Plan Upon Other Option and Compensation Plans
- ---------------------------------------------------------------------
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company, any Parent Corporation or any Subsidiary (a) to establish any other
forms of incentives or compensation for employees of the Company, any Parent
Corporation or any Subsidiary or (b) to grant or assume options otherwise than
under this Plan in connection with any proper corporate purpose, including, but
not by way of limitation, the grant or assumption of options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, firm or association.
Section 7.5 - Titles
- --------------------
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of the Plan.
* * * *
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of Cobblestone Holdings, Inc. on January 24, 1995.
Executed on this 11th day of December, 1997.
/s/ Stefan C. Karnavas
----------------------
Secretary
13
<PAGE>
* * * *
I hereby certify that the foregoing Plan was duly approved by the
shareholders of Cobblestone Holdings, Inc. on January 24, 1995.
Executed on this 23rd day of June, 1998.
/s/ Stefan C. Karnavas
-----------------------
Secretary
14
Exhibit 4.2
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (this "Agreement") is entered into as of
_________, 199_, by and between Cobblestone Holdings, Inc., a Delaware
corporation (the "Company") and __________________________ ("Purchaser").
RECITALS
A. Purchaser is a member of the Company's Board of Directors.
B. The Company desires to issue to Purchaser, and Purchaser desires to
accept from the Company, an option (the "Option") to purchase, subject to
adjustment as set forth herein, _______________ shares (such shares issuable
upon exercise of the Option being called the "Common Shares") of the Company's
authorized but unissued Common Stock, par value $.01 per share (the "Common
Stock") upon the terms and conditions specified herein.
C. The Company desires to have, and Purchaser is willing to grant to the
Company, the right and option to repurchase the Common Shares issuable upon
exercise of the Option upon the terms and conditions contained herein, including
the vesting provisions contained herein.
D. It is a condition precedent to the obligations of the Company under this
Agreement that the Purchaser enter into that certain Stockholders' Agreement
dated January 31, 1994, as amended (the "Stockholders' Agreement").
THEREFORE, in consideration of the premises and of the covenants and
conditions contained herein, the parties hereto agree as follows:
<PAGE>
1. Purchase and Sale; Closing. (a) The Company hereby issues and grants to
Purchaser, and Purchaser hereby agrees to accept from the Company, the Option.
The Option is exercisable only when and to the extent it become vested (as
described below) and shall remain exercisable for ten (10) years, subject to
earlier expiration as set forth herein. The initial exercise price of the Option
is $____ per share, for an initial aggregate exercise price of $_____.
(b) Upon proper exercise of the Option and payment in cash of the
applicable exercise price and all applicable withholding, the Company shall
deliver to Purchaser certificates evidencing the Common Shares registered in the
name of Purchaser, and concurrently therewith Purchaser shall make payment in
cash of the aggregate purchase price of the Common Shares.
2. Vesting. (a) The Option shall become, vested and exercisable with
respect to ___% of the Common Shares covered thereby on each January 1st of the
years ____, ____, ____, ____ and ____.
The foregoing notwithstanding, no portion of the Option shall become vested
unless Purchaser has been a member of the Company's Board of Directors
continuously from the date of this Stock Option Agreement until each respective
date on which the Common Shares are scheduled to vest; provided, however, that
if such membership is terminated by the Company, with or without cause, the
portion of the Option scheduled to vest in the period in which such termination
occurs shall vest upon such termination.
(b) Anything in this Agreement to the contrary notwithstanding, if the
Company is acquired by a third party through an asset purchase, merger or sale
of 80% (in value) or
-2-
<PAGE>
more of the outstanding equity securities of the Company (an "Acquisition"), all
installments of the portion of the Option scheduled or eligible to vest in the
calendar year in which the Acquisition is closed (and not previously repurchased
by the Company pursuant to Section 3) plus the portion of the Option scheduled
to vest in the next succeeding period shall vest immediately prior to the
Acquisition closing date, and all further vesting shall thereupon cease. The
Company will give the Purchaser at least five (5) days prior written notice (the
"Acquisition Notice") of the closing of any Acquisition. Upon an Acquisition,
the Company's board of directors may, in its absolute discretion and upon such
terms and conditions as it deems appropriate, provide by resolution, adopted
prior to such event and incorporated in the Acquisition Notice, that at some
time prior to the effective date of such event this Option shall be exercisable
as to all the shares covered hereby, notwithstanding that this Option may not
yet have become fully exercisable. Otherwise, upon an Acquisition, the Option,
whether vested or unvested in whole or in part, shall expire and cease to be
exercisable.
(c) As used herein, "Termination of Membership" shall mean the time when
Purchaser no longer serves on the Company's Board of Directors for whatever
reason whatsoever, with or without cause.
(d) The Option will expire and may not be exercised after the first to
occur of the following:
(i) The expiration of ten (10) years from the date the Option was
granted; or
-3-
<PAGE>
(ii) The time of the Purchaser's Termination of Membership unless such
Termination of Membership results from his death; or
(iii) The expiration of one (1) year from the date of the Purchaser's
death; or
(iv) An Acquisition.
3. Adjustments. The number of shares issuable upon exercise of the Option,
and the exercise price payable, are subject to adjustment as follows: if the
outstanding shares of the class or series then subject to the Option are
increased or decreased, or are changed into or exchanged for a different number
or kind of shares or securities, as a result of one or more reorganizations,
recapitalizations, stock splits, reverse stock splits, stock dividends or the
like, appropriate adjustments shall be made in the number and/or kind of shares
or securities for which the unexercised portions of the Option may thereafter be
exercised, all without any change in the aggregate exercise price applicable to
such unexercised portions, but with corresponding adjustment in the exercise
price per share or other unit. No fractional share of stock shall be issued
under the Option or in connection with any such adjustment. Such adjustment
shall be made by or under the authority of the Company's board of directors
whose determinations as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. Notwithstanding the foregoing,
the provisions of Section 2(b) shall control and supersede this Section 3 with
respect to a transaction referred to in Section 2(b).
4. Purchaser Representations and Agreements. Purchaser hereby represents
and warrants, and agrees with, the Company as set forth below.
-4-
<PAGE>
(a) Purchaser has full power and authority to execute, deliver and perform
his obligations under this Agreement and this Agreement is a valid and binding
obligation of Purchaser, enforceable in accordance with its terms.
(b) Purchaser has received and reviewed this Agreement and all annexes and
schedules hereto (including the Stockholders' Agreement) and has received all
such business, financial and other information as he deems necessary or
appropriate to enable him to evaluate the financial risk inherent in making an
investment in the Common Shares.
(c) Purchaser is acquiring the Option and any Common Shares for investment,
for his own account, and not as a nominee or agent for any other person,
corporation or entity, and not with a view to the sale or distribution of all or
any part thereof, and Purchaser has no present intention of selling, granting
participation in, or otherwise distributing the Option (or any part thereof) or
any Common Shares.
(d) Purchaser understands and agrees that (i) neither the Option nor any of
the Common Shares will be registered under the Securities Act of 1933, as
amended (the "Act"), in part based upon an exemption from the registration
predicated on the accuracy and completeness of his representations and
warranties appearing herein and (ii) he will not be permitted to sell, transfer
or assign all or any portion of the Option or any of the Common Shares issuable
upon exercise thereof until they are registered under the Act or an exemption
from the registration and prospectus delivery requirements of the Act is
available, and (iii) there is no assurance that such an exemption from
registration will ever be available or that the Option or the Common Shares
will ever be able to be sold.
-5-
<PAGE>
(e) Purchaser agrees that in no event will he make a disposition of the
Option or any Common Shares or any interest therein, unless such Option and/or
Common Shares are registered under the Act or unless and until (i) he shall have
notified the Company of the proposed disposition and shall have furnished the
Company with a statement of the circumstances surrounding the proposed
disposition, and (ii) he shall have furnished the Company with an opinion of
counsel reasonably satisfactory in form and content to the Company to the effect
that (A) such disposition will not require registration under the Act or
compliance with applicable state securities laws, or (B) that appropriate action
necessary for compliance with the Act and applicable state securities laws has
been taken, or (iii) the Company shall have waived, expressly and in writing,
its rights under clauses (i) and (ii) of this subsection.
(f) Purchaser does not require the assistance of an investment advisor or
other Purchaser representative to participate in the transactions contemplated
by this Agreement, has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of his investment in
the Company, has the ability to bear the economic risks of its investment for an
indefinite period of time and has been furnished with and has had access to such
information as would be made available in the form of a registration statement
under the Act together with such additional information as is necessary to
verify the accuracy of the information supplied and to have all questions
answered by the Company. Purchaser is an "accredited investor" (as such term is
deemed in Regulation D promulgated under the Securities Act of 1933, as
amended).
-6-
<PAGE>
5. Conditions to Exercise.
The obligations of the Company to issue shares upon exercise of the Option
are subject to the fulfillment of the conditions set forth below.
(a) All permits, consents, approvals, orders and authorizations, if any,
which the Company is required to obtain from, and all registrations,
qualifications, designations, declarations and filings which the Company is
required to make with, any state or Federal governmental authority of the United
States and any stock exchange on which the Common Stock is traded in connection
with the execution, delivery or performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly
obtained or made.
(b) Purchaser shall have become a party to and agreed to be bound by the
Stockholders' Agreement, which Stockholders' Agreement is hereby incorporated
herein as if set forth in full in this Agreement.
6. Legends.
(a) All certificates evidencing the Common Shares shall bear substantially
the following legends:
(i) "The securities represented by this certificate have not been
registered under the Securities Act. These securities have been acquired
for investment and not with a view to distribution or resale, and may not
be sold, offered for sale, pledged or hypothecated in the absence of an
effective registration statement for such shares under the Act or an
opinion of counsel satisfactory in form and content to the issuer that such
registration is not required under such Act."
-7-
<PAGE>
(ii) "The shares represented by this certificate or to be issued upon
exercise hereof are subject to a right of first refusal option in favor of
the Company and drag- along rights in favor of certain stockholders, each
as set forth in an agreement between the Company, its stockholders and the
registered holder, or its predecessor in interest, a copy of which is on
file at the principal office of the Company and will be furnished upon
request to the holder of record of the shares represented by this
certificate."
(b) As and when the facts legally justify, upon the written request of
Purchaser, the Company will deliver to Purchaser a certificate or certificates
representing the Common Shares without those legends which have become
inapplicable.
7. Enforcement.
The parties acknowledge that the remedy at law for any breach or violation
of the provisions of relating to restrictions on transfer contained or
incorporated herein shall be inadequate and that, in the event of any such
breach or violation, the Company shall be entitled to injunctive relief in
addition to any other remedy, at law or in equity, to which he or it may be
entitled.
8. Violation of Transfer Provisions. The Company shall not be required (a)
to transfer on its books any Common Shares which shall have been sold,
transferred, assigned or pledged in violation of any of the provisions of this
Agreement or (b) to treat as owner of such Common Shares or to accord the right
to vote or to pay dividends to any purported transferee of Common Shares in
violation of any of the provisions of this Agreement.
-8-
<PAGE>
9. General Provisions.
(a) No Assignments. Except as specifically provided to the contrary in this
Agreement, Purchaser shall not transfer, assign or encumber the Option or any of
his rights, privileges, duties or obligations under this Agreement without the
prior written consent of the Company, and any attempt to so transfer, assign or
encumber shall be void.
(b) Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given and made and served either by personal delivery to the person
for whom it is intended (including by reputable overnight delivery services
which shall be deemed to have effected personal delivery) or by telecopy,
receipt of which is acknowledged by the telecopy number set forth below for the
applicable addressee, or if deposited, postage prepaid, registered or certified
mail, return receipt requested, in the United States mail:
(i) if to Purchaser, addressed to Purchaser at his address shown on
the stock register maintained by the Company, or at such other address as
Purchaser may specify by written notice to the Company, or
(ii) if to the Company, at 3702 Via de la Valle, Suite 202, Del Mar,
California 92014, Attention: President; or at such other address as the
Company may specify in writing, with a copy to David H. Wong, Brentwood
Associates, 11150 Santa Monica Boulevard, Suite 1200 Los Angeles,
California 90025.
Each such notice, request, consent and other communication shall be deemed to
have been given upon receipt thereof as set forth above or, if sooner, three
days after deposit as described above. The addresses for the purposes of this
Section 18(c) may be changed by
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<PAGE>
giving written notice of such change in the manner provided herein for giving
notice. Unless and until such written notice is received, the addresses provided
herein shall be deemed to continue in effect for all purposes hereunder.
(c) Choice of Law. This Agreement shall be governed by and construed in
accordance with the internal laws, and not the laws of conflicts of laws, of the
State of Delaware.
(d) Severability. The parties hereto agree that the terms and provisions in
this Agreement are reasonable and shall be binding and enforceable in accordance
with the terms hereof and, in any event, that the terms and provisions of this
Agreement shall be enforced to the fullest extent permissible under law. In the
event that any term or provision of this Agreement shall for any reason be
adjudged to be unenforceable or invalid, then such unenforceable or invalid term
or provision shall not affect the enforceability or validity of the remaining
terms and provisions of this Agreement, and the parties hereto hereby agree to
replace such unenforceable or invalid term or provision with an enforceable and
valid arrangement which in its economic effect shall be as close as possible to
the unenforceable or invalid term or provision.
(e) Parties in Interest. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective permitted successors and assigns of the parties hereto.
(f) Modification, Amendment and Waiver. No modification, amendment or
waiver of any provision of this Agreement shall be effective against the Company
or Purchaser unless approved in writing, and, in the case of the Company,
authorized by its
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<PAGE>
Board of Directors. The failure at any time to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of any of the parties thereafter to enforce, each and
every provision hereof in accordance with its terms.
(g) Integration. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof.
(h) Headings. The headings of the sections and paragraphs of this Agreement
have been inserted for convenience of reference only and do not constitute a
part of this Agreement.
(i) Counterparts. This Agreement may be executed in counterpart with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
COMPANY:
COBBLESTONE HOLDINGS, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
PURCHASER:
----------------------------------
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EXHIBIT 5.1
June 23, 1998
12742-450
Meditrust Corporation
197 First Avenue, Suite 300
Needham, MA 02194
Meditrust Operating Company
197 First Avenue, Suite 100
Needham, MA 02194
Re: Registration Statement on Form S-8
----------------------------------
Dear Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933, as
amended (the "Act") of 450,898 shares of Common Stock of Meditrust Corporation
(the "Corporation"), par value $0.10 per share ("MC Common Stock") and 450,898
shares of Common Stock of Meditrust Operating Company (the "Operating Company"),
par value $0.10 per share ("MOC Common Stock"), to be issued in connection with
the exercise of currently outstanding options (the "Cobblestone Options") to
acquire Common Stock of Cobblestone Holdings, Inc. ("Cobblestone") which have
been assumed by the Corporation pursuant to the Agreement and Plan of Merger,
dated as of January 11, 1998, as amended (the "Merger Agreement") among the
Corporation, the Operating Company and Cobblestone, which Merger Agreement
provides that the terms and conditions of the Cobblestone Options, except as
otherwise provided in the Merger Agreement, will continue to be governed by the
Stock Option Plan For Key Employees of Cobblestone Holdings, Inc. (the "Plan")
and the stock option agreements (for non-employee directors of Cobblestone
Holdings, Inc.) (the "Stock Option Agreements"), as appropriate, all pursuant to
the Registration Statement on Form S-8 (the "Registration Statement") filed with
the Securities and Exchange Commission on June 23, 1998, you have requested our
opinion set forth below. Such shares of MC Common Stock and MOC Common Stock,
which will be paired for transfer and trading purposes, are referred to herein
as "Shares."
We have considered such facts and examined such questions of law as we have
considered appropriate for purposes of rendering the opinion expressed below.
<PAGE>
Meditrust Corporation
Meditrust Operating Company
June 23, 1998
Page 2
We are opining only as to the General Corporation Law of the State of
Delaware and we express no opinion with respect to the applicability or the
effect of any other laws or as to any matters of municipal law or of any other
local agencies within any state.
Subject to the foregoing and in reliance thereon, in our opinion, upon
payment for and delivery of the Shares in accordance with the terms and
conditions set forth in the Merger Agreement and the Cobblestone Plan or the
Stock Option Agreements, as appropriate, and the countersigning of the
certificate or certificates representing the Shares, the Shares will be duly
authorized, validly issued, fully paid and non-assessable.
We consent to your filing this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Nutter, McClennen & Fish, LLP
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
of Meditrust Corporation and/or Meditrust Operating Company on Form S-8 of our
report dated December 1, 1997, with respect to the consolidated financial
statements and schedules of Cobblestone Holdings, Inc. included in Meditrust
Corporation and Meditrust Operating Company's Current Report on Form 8-K dated
May 13, 1998, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Diego, California
June 22, 1998
EXHIBIT 23.2
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 30, 1998, except for Note 16
for which the date is February 26, 1998, on our audits of the financial
statements of the Meditrust Companies and Meditrust Corporation as of December
31, 1997 and 1996, and for the years ended December 31, 1997, 1996 and 1995, and
of Meditrust Operating Company as of December 31, 1997 and for the initial
period ended December 31, 1997 and of our report dated January 30, 1998 on the
financial statements schedules of Meditrust Corporation as of December 31, 1997.
COOPERS & LYBRAND, L.L.P.
Boston, Massachusetts
June 23, 1998
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
La Quinta Inns, Inc.
San Antonio, TX
We consent to the incorporation by reference in this Joint Registration
Statement on Form S-8 of Meditrust Corporation and Meditrust Operating Company
of our report dated January 23, 1998, except for Note 17, which is as of
February 12, 1998, relating to the combined balance sheets of La Quinta Inns,
Inc. as of December 31, 1997 and 1996, and the related combined statements of
operations, shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997, which report appears in the Meditrust
Corporation and Meditrust Operating Company Joint Current Report on Form 8-K,
dated March 31, 1998.
KPMG Peat Marwick LLP
San Antonio, Texas
June 19, 1998
