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As filed with the Securities and Exchange Commission on July 30, 1997.
Registration No. 333-_____________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------------
MEDICAL GRAPHICS CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1316712
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
350 OAK GROVE PARKWAY
SAINT PAUL, MINNESOTA 55127
(Address of Principal Executive Offices and zip code)
----------------------------
MEDICAL GRAPHICS CORPORATION
1987 STOCK OPTION PLAN
(Full title of the Plan)
----------------------------
Copy to:
Glenn D. Taylor, President Thomas G. Lovett, IV
Medical Graphics Corporation Lindquist & Vennum P.L.L.P.
350 Oak Grove Parkway 4200 IDS Center
Saint Paul, Minnesota 55127 Minneapolis, MN 55402
(612) 484-4874 (612) 371-3270
(Name, address and telephone
number, including area code,
of agent for service)
--------------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share Price Fee
- -------------------------------------------------------------------------------
Common Stock, 400,000 shares $3.875(1) $1,550,000(1) $469.70
$.05 par value,
to be issued pursuant
to Medical Graphics Corporation
1987 Stock Option Plan
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) and (h) and based upon the average of the high and
low prices of the Company's Common Stock on the Nasdaq National Market on
July 23, 1997.
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INCORPORATION OF CONTENTS OF REGISTRATION STATEMENT BY REFERENCE
Registration Statements on Form S-8 (File Nos. 33-15765, 33-47993, and 333-
14295) were filed with the Securities and Exchange Commission covering the
registration of shares authorized for issuance under the Plan. The above
Registration Statements covering 500,000 shares are currently in effect.
Pursuant to General Instruction E of Form S-8, this Registration Statement is
being filed to register an additional 400,000 shares authorized for issuance
under the Plan. This Registration Statement should also be considered a post-
effective amendment to the preiviously filed Registration Statements. The
contents of the previously filed Registration Statements are incorporated
herein by reference.
PART I
Pursuant to Part I of Form S-8, the information required by Items 1 and 2
of Form S-8 is not filed as a part of this Registration Statement.
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
are hereby incorporated by reference:
(a) The Annual Report of the Company on Form 10-KSB for the fiscal year
ended December 31, 1996, as amended by Amendment No. 1 on Form
10-KSB/A.
(b) The Quarterly Report of the Company on Form 10-QSB for the quarter
ended March 31, 1997.
(c) The Definitive Proxy Statement dated May 2, 1997 for the Annual
Meeting of Shareholders held on May 22, 1997.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 prior to the
completion or termination of this offering of shares of Common Stock shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The current description of the Company's Common Stock is as follows:
COMMON STOCK. The Company has one class of capital stock, Common Stock,
$.05 par value, of which the Company is authorized to issue 10,000,000
shares. No share of stock is entitled to preference over any other share,
and each share is equal to any other share in all respects. Holders are
entitled to one vote for each share held of record at each meeting of
shareholders. In any distribution of capital assets, whether voluntary or
involuntary, holders are entitled to receive pro rata the assets remaining
after creditors have been paid in full. Holders of stock have no
preemptive rights. The outstanding shares are, and the stock offered
hereby upon payment therefore will be, fully paid and nonassessable.
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CUMULATIVE VOTING. There is no cumulative voting for the election of
directors. Accordingly, the owners of a majority of shares of Common Stock
outstanding may elect all of the directors, if they choose to do so, and
the owners of the balance of such shares will not be able to elect any
directors.
DIVIDEND POLICY. The Company has adopted the policy of retaining all of
its earnings to finance the growth of its business and, accordingly, does
not anticipate payment of any dividends in the foreseeable future.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation provide that a director is not
liable to the Company or its shareholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its shareholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of the law; (iii) under Sections 302A.559 or 80A.23 of the Minnesota
Statutes; (iv) for any transaction from which the director derived an improper
personal benefit; or (v) for any act or omission occurring prior to the date
such indemnification provision became effective. Provisions regarding
indemnification of officers and directors of the Company are also contained in
Section 45 of the Company's Bylaws.
Section 302A.521 of the Minnesota Business Corporation Act provides that a
corporation shall indemnify any person made or threatened to be made a party to
a proceeding by reason of acts or omissions performed in their official capacity
as an officer, director, employee or agent of the corporation against judgments,
penalties, fines, including without limitation, excise taxes assessed against
such person with respect to an employee benefit plan, settlements, and
reasonable expenses, including attorneys' fees and disbursements, incurred by
such person in connection with the proceeding if, with respect to the acts or
omissions of such person complained of in the proceeding, such person (i) has
not been indemnified by another organization or employee benefit plan for the
same expenses with respect to the same acts or omissions; (ii) acted in good
faith; (iii) received no improper personal benefit and Minnesota Statutes,
Section 302A.255 (regarding conflicts of interest), if applicable, has been
satisfied; (iv) in the case of a criminal proceeding, has no reasonable cause to
believe the conduct was unlawful; and (v) in the case of acts or omissions by
persons in their official capacity for the corporation, reasonably believed that
the conduct was in the best interests of the corporation, or in the case of acts
or omissions by persons in their capacity for other organization, reasonably
believed that the conduct was not opposed to the best interests of the
corporation. In addition, Section 302A.521, subd. 3, of the Minnesota Statutes
requires payment or reimbursement by the corporation, upon written request, of
reasonable expenses (including attorneys' fees) incurred by a person in advance
of the final disposition of a proceeding in certain instances if a decision as
to required indemnification is made by a disinterested majority of the Board of
Directors present at a meeting at which a disinterested quorum is present, or by
a designated committee of the Board, by special legal counsel, by the
shareholders or by a court.
In addition, the Company has entered into indemnification agreements with
each of its directors and officers, which agreements provide for indemnification
to the full extent permitted by Minnesota law.
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ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS. (Filed electronically herewith)
EXHIBIT
4.1 Medical Graphics Corporation 1987 Stock Option Plan, as amended
5.1 Opinion of Lindquist & Vennum P.L.L.P
23.1 Consent of Lindquist & Vennum P.L.L.P. (included in Exhibit 5.1)
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Ernst & Young LLP
24.1 Power of Attorney (included on signature page)
ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes to:
(1) File, during any period in which offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information
in the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act of 1933 if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered
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therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer 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 small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer 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 small
business issuer 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Saint Paul, State of Minnesota, on July 22, 1997.
MEDICAL GRAPHICS CORPORATION
By \s\ Glenn D. Taylor
------------------------------------
Glenn D. Taylor, President and
Chief Executive Officer
POWER OF ATTORNEY
The undersigned officers and directors of Medical Graphics Corporation
hereby constitute and appoint Glenn D. Taylor and Mark W. Sheffert, or either of
them, with power to act one without the other, our true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for us and
in our stead, in any and all capacities to sign any and all amendments
(including post-effective amendments) to this Registration Statement and all
documents relating thereto, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing necessary or advisable
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 attorney-in-fact and agent, or his or her substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons on
the date and in the capacities indicated.
Signature
\s\ Glenn D. Taylor Dated: July 22, 1997
- ------------------------------------------
Glenn D. Taylor, President,
Chief Executive Officer
(Principal Executive Officer) and Director
\s\ Dale H. Johnson Dated: July 22, 1997
- ------------------------------------------
Dale H. Johnson, Chief Financial
Officer (Principal Financial
Officer)
\s\ Mark W. Sheffert Dated: July 22, 1997
- ------------------------------------------
Mark W. Sheffert, Chairman
\s\ Anthony J. Adducci Dated: July 22, 1997
- ------------------------------------------
Anthony J. Adducci, Director
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\s\ Gerald T. Knight Dated: July 22, 1997
- ------------------------------------------
Gerald T. Knight, Director
\s\ W. Edward McConaghay Dated: July 22, 1997
- ------------------------------------------
W. Edward McConaghay, Director
\s\ Donald C. Wegmiller Dated: July 22, 1997
- ------------------------------------------
Donald C. Wegmiller, Director
\s\ John C. Penn Dated: July 22, 1997
- ------------------------------------------
John C. Penn, Director
\s\ John D. Wunsch Dated: July 22, 1997
- ------------------------------------------
John D. Wunsch, Director
7
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EXHIBIT 4.1
MEDICAL GRAPHICS CORPORATION
1987 STOCK PLAN
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SECTION CONTENTS PAGE
------- -------- ----
1. General Purpose of Plan; Definitions 1
2. Administration 3
3. Stock Subject to Plan 4
4. Eligibility 4
5. Stock Options 4
6. Transfer, Leave of Absence, etc. 7
7. Amendments and Termination 7
8. Unfunded Status of Plan 8
9. General Provisions 8
10. Effective Date of Plan 9
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MEDICAL GRAPHICS CORPORATION
1987 STOCK PLAN
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
The name of this plan is the Medical Graphics Corporation 1987 Stock Plan
(the "Plan"). The purpose of the Plan is to enable Medical Graphics Corporation
(the "Company") and its Subsidiaries to retain and attract executives, other key
employees, consultants and directors who contribute to the Company's success by
their ability, ingenuity and industry, and to enable such individuals to
participate in the long-term success and growth of the Company by giving them a
proprietary interest in the Company.
For purposes of the Plan, the following terms shall be defined as set forth
below:
a. "BOARD" means the Board of Directors of the Company.
b. "CAUSE" means a felony conviction of a participant or the failure of a
participant to contest prosecution for a felony, or a participant's
misconduct or dishonesty, any of which is harmful to the business or
reputation of the Company.
c. "CODE" means the Internal Revenue Code of 1986, as amended.
d. "COMMITTEE" means the Committee referred to in Section 2 of the Plan.
If at any time no Committee shall be in office, then the functions of
the Committee specified in the Plan shall be exercised by the Board.
e. "COMPANY" means Medical Graphics Corporation, a corporation organized
under the laws of the State of Minnesota (or any successor
corporation).
f. "DISABILITY" means permanent and total disability as determined by the
Committee.
g. "EARLY RETIREMENT" means retirement, with consent of the Committee at
the time of retirement, from active employment with the Company and
any Subsidiary or Parent Corporation of the Company.
h. "FAIR MARKET VALUE" means the value of the Stock on a given date as
determined by the Committee in accordance with Section 422 of the Code
and any applicable Treasury Department regulations with respect to
"incentive stock options."
i. "INCENTIVE STOCK OPTION" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of
Section 422 of the Code.
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j. "NON-EMPLOYEE DIRECTOR" means a "Non-Employee Director" within the
meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934,
as amended, or any successor rule.
k. "NON-QUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option, and is intended to be and is designated as a
"Non-Qualified Stock Option."
l. "NORMAL RETIREMENT" means retirement from active employment with the
Company and any Subsidiary or Parent Corporation of the Company on or
after age 65.
m. "OUTSIDE DIRECTOR" means a director who (a) is not a current employee
of the Company or any member of an affiliated group which includes the
Company; (b) is not a former employee of the Company who receives
compensation for prior services (other than benefits under a tax-
qualified retirement plan) during the taxable year; (c) has not been
an officer of the Company; (d) does not receive remuneration from the
Company, either directly or indirectly, in any capacity other than as
a director, except as otherwise permitted under Code Section 162(m)
and regulations thereunder. For this purpose, remuneration includes
any payment in exchange for goods or services. This definition shall
be further governed by the provisions of Code Section 162(m) and
regulations promulgated thereunder.
n. "PARENT CORPORATION" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if each of
the corporations (other than the Company) owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one
of the other corporations in the chain.
o. "RETIREMENT" means Normal Retirement or Early Retirement.
p. "STOCK" means the Common Stock, $.05 par value per share, of the
Company.
q. "STOCK OPTION" means any option to purchase shares of Stock granted
pursuant to Section 5 below.
r. "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of
the corporations (other than the last corporation in the unbroken
chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the
chain.
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SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Board or by a Committee appointed by
the Board consisting of at least two directors, all of whom shall be Outside
Directors and Non-Employee Directors, and who shall serve at the pleasure of the
Board. The Committee may be a subcommittee of the Compensation Committee of the
Board.
The Committee shall have the power and authority to grant Stock Options to
eligible employees, consultants and directors pursuant to the terms of the Plan.
In particular, the Committee shall have the authority:
(i) to select the officers, other key employees, directors and
consultants of the Company and its Subsidiaries to whom Stock Options
may from time to time be granted hereunder;
(ii) to determine whether and to what extent Incentive Stock Options or
Non-Qualified Stock Options, or a combination of the foregoing, are
to be granted hereunder;
(iii) to determine the number of shares to be covered by each such award
granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not
limited to, any restriction on any Stock Option or the shares of
Stock relating thereto); and
(v) to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an award under this
Plan shall be deferred either automatically or at the election of the
participant.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
delegate its authority to officers of the Company for the purpose of selecting
employees who are not officers of the Company for purposes of (i) above.
All decisions made by the Committee pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Company and Plan
participants.
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SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 900,000. Such shares may consist, in whole or in part,
of authorized and unissued shares.
If any shares that have been optioned cease to be subject to Stock Options,
such shares shall again be available for distribution in connection with future
awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, other change in corporate structure affecting
the Stock, or spin-off or other distribution of assets to shareholders, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Stock Options granted under the Plan, as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any Stock Option shall always be a whole
number.
SECTION 4. ELIGIBILITY.
Officers, other key employees, consultants and members of the Board of the
Company and Subsidiaries who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company and its
Subsidiaries are eligible to be granted Stock Options under the Plan. The
optionees and participants under the Plan shall be selected from time to time by
the Committee, in its sole discretion, from among those eligible, and the
Committee shall determine, in its sole discretion, the number of shares covered
by each award.
Notwithstanding the foregoing, no person shall receive grants of Stock
Options under this Plan which exceed 50,000 shares during any fiscal year of the
Company.
SECTION 5. STOCK OPTIONS.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock Options
shall be granted under the Plan after May 23, 2001.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of options. To the
extent that any option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted
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under the Plan be so exercised, so as to disqualify either the Plan or any
Incentive Stock Option under Section 422 of the Code. The preceding sentence
shall not preclude any modification or amendment to an outstanding Incentive
Stock Option, whether or not such modification or amendment results in
disqualification of such Stock Option as an Incentive Stock Option, provided the
optionee consents in writing to the modification or amendment.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) OPTION PRICE. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant. In no
event shall the option price per share of Stock purchasable under an Incentive
Stock Option be less than 100% of the Fair Market Value of the Stock on the date
of the grant of the Stock Option. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is
granted to such employee, the option price shall be no less than 110% of the
Fair Market Value of the Stock on the date the option is granted.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.
(c) EXERCISABILITY. Stock Options shall be exercisable at such time or
times as determined by the Committee at or after grant. If the Committee
provides, in its discretion, that any option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time, provided, however, that unless the Stock Option has been approved by
the Board, the Committee or the shareholders of the Company, a Stock Option to a
director, officer or a 10% shareholder of the Company or its Subsidiaries shall
not be exercisable for a period of six (6) months after the date of grant.
Notwithstanding the foregoing, unless the Stock Option Agreement provides
otherwise, any Stock Option granted under this Plan shall be exercisable in
full, without regard to any installment exercise or vesting provisions, for a
period specified by the Board, but not to exceed sixty (60) days nor be less
than seven (7) days, prior to the occurrence of any of the following events:
(i) dissolution or liquidation of the Company other than in conjunction with a
bankruptcy of the Company or any similar occurrence, (ii) any merger,
consolidation, acquisition, separation, reorganization, or similar occurrence,
where the Company will not be the surviving entity or (iii) the transfer of
substantially all of the assets of the Company or 75% or more of the outstanding
Stock of the Company.
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(d) METHOD OF EXERCISE. Stock Options may be exercised in whole or in
part at any time during the option period by giving written notice of exercise
to the Company specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by
certified or bank check, or by any other form of legal consideration deemed
sufficient by the Committee and consistent with the Plan's purpose and
applicable law, including promissory notes or a properly executed exercise
notice together with irrevocable instructions to a broker acceptable to the
Company to promptly deliver to the Company the amount of sale or loan proceeds
to pay the exercise price. As determined by the Committee, in its sole
discretion, payment in full or in part may also be made in the form of
unrestricted Stock already owned by the optionee (based on the Fair Market Value
of the Stock on the date the option is exercised, as determined by the
Committee). If the terms of an option so permit, or the Committee, in its sole
discretion, so permits, an optionee may elect to pay all or part of the option
exercise price by having the Company withhold from the shares of Stock that
would otherwise be issued upon exercise that number of shares of Stock having a
Fair Market Value equal to the aggregate option exercise price for the shares
with respect to which such election is made. No shares of Stock shall be issued
until full payment therefor has been made. An optionee generally shall have the
rights to dividends and other rights of a shareholder with respect to shares
subject to the option when the optionee has given written notice of exercise,
has paid in full for such shares, and, if requested, has given the
representation described in paragraph (a) of Section 9.
(e) TERMINATION BY DEATH. If an optionee's employment by the Company and
any Subsidiary or Parent Corporation terminates by reason of death, the Stock
Option may thereafter be immediately exercised, to the extent then exercisable
(or on such accelerated basis as the Committee shall determine at or after
grant), by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of twelve months (or such
shorter period as the Committee shall specify at grant) from the date of such
death or until the expiration of the stated term of the option, whichever period
is shorter.
(f) TERMINATION BY REASON OF DISABILITY. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be exercised,
to the extent it was exercisable at the time of termination due to Disability
(or on such accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after twelve months (or such shorter period as
the Committee shall specify at grant) from the date of such termination of
employment or the expiration of the stated term of the option, whichever period
is shorter.
(g) TERMINATION BY REASON OF RETIREMENT. Unless otherwise determined by
the Committee, if an optionee's employment by the Company and any Subsidiary or
Parent Corporation terminates by reason of Retirement, any Stock Option held by
such optionee may thereafter be exercised to the extent it was exercisable at
the time of such Retirement, but may not be exercised after three months (or
such shorter period as Committee shall specify at grant) from the date of such
termination of employment or the expiration of the stated term of the option,
whichever period is shorter. In the event of termination of employment by
reason of Retirement, if an Incentive Stock
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Option is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.
(h) OTHER TERMINATION. Unless otherwise determined by the Committee, if
an optionee's employment by the Company and any Subsidiary or Parent Corporation
terminates for any reason other than Cause, death, Disability or Retirement, the
Stock Option may be exercised to the extent it was exercisable at such
termination for the lesser of one month or the balance of the option's term. If
the Optionee's employment by the Company and any Subsidiary or Parent
Corporation terminates for Cause, the Stock Option may be exercisable to the
extent it was then exercisable no later than the date of such termination.
(i) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. The aggregate Fair Market
Value (determined as of the time the Option is granted) of the Common Stock with
respect to which an Incentive Stock Option under this Plan or any other plan of
the Company and any Subsidiary or Parent Corporation is exercisable for the
first time by an optionee during any calendar year shall not exceed $100,000.
SECTION 6. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer of an employee from the Company to a Parent Corporation or
Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or from
one Subsidiary to another;
(b) a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days (or such longer
period as the Committee may approve, in its sole discretion); and
(c) a leave of absence in excess of ninety (90) days, approved in
writing by the Committee, but only if the employee's right to reemployment is
guaranteed either by a statute or by contract, and provided that, in the case of
any leave of absence, the employee returns to work within 30 days after the end
of such leave.
SECTION 7. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option or theretofore granted,
without the optionee's or participant's consent, or (ii) which without the
approval of the stockholders of the Company would cause the Plan to no longer
comply with Rule 16b-3 under the Securities Exchange Act of 1934, Section 422 of
the Code or any other regulatory requirements.
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The Committee may amend the terms of any option theretofore granted,
prospectively or retroactively, but, subject to Section 3 above, no such
amendment shall impair the rights of any holder without his consent. The
Committee may also substitute new Stock Options for previously granted options,
including previously granted options having higher option prices.
SECTION 8. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize
the creation of trusts or other arrangements to meet the obligations created
under the Plan to deliver Stock or payments in lieu of or; provided, however,
that the existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.
SECTION 9. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares pursuant to a
Stock Option under the Plan to represent to and agree with the Company in
writing that the optionee is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
(b) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company or any subsidiary
any right to continued employment with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any time.
(c) Each participant shall, no later than the date as of which any part
of the value of an award first becomes includable as compensation in the gross
income of the participant for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company and Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant. With respect to
any award under the Plan, if the terms of such award so permit, a participant
may elect by written notice to the Company to satisfy part or all of the
withholding tax requirements associated with the award by (i) authorizing the
Company to retain from the number of shares of Stock that would otherwise be
deliverable to the participant, or (ii) delivering to the Company from shares of
Stock already owned by the participant, that number of shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the
participant under this
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Section 9(c). Any such election shall be in accordance with, and subject to,
applicable tax and securities laws, regulations and rulings.
(d) At the time of grant, the Committee may provide in connection with
any grant or award made under this Plan that the shares of Stock received as a
result of such grant shall be subject to a repurchase right in favor of the
Company, pursuant to which the participant shall be required to offer to the
Company upon termination of employment for any reason any shares that the
participant acquired under the Plan, with the price being the then Fair Market
Value of the Stock or, in the case of a termination for Cause, an amount equal
to the cash consideration paid for the Stock, subject to such other terms and
conditions as the Committee may specify at the time of grant. The Committee
may, at the time of the grant of an award under the Plan, provide the Company
with the right to repurchase, or require the forfeiture of, shares of Stock
acquired pursuant to the Plan by any participant who, at any time within two
years after termination of employment with the Company, directly or indirectly
competes with, or is employed by a competitor of, the Company.
SECTION 10. EFFECTIVE DATE OF PLAN.
The Plan was approved by the Board and became effective on March 12, 1987.
The Plan was amended further by the Board with approval by the shareholders of
the Company.
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[Letterhead]
EXHIBIT 5.1
July 25, 1997
Medical Graphics Corporation
350 Oak Grove Parkway
St. Paul, MN 55127
RE: OPINION OF COUNSEL AS TO LEGALITY OF 400,000 SHARES OF COMMON STOCK TO
BE REGISTERED UNDER THE SECURITIES ACT OF 1933
Ladies and Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933 on Form S-8 of 400,000 shares of Common Stock, $.05 par
value per share, of Medical Graphics Corporation (the "Company") offered to key
employees, directors and consultants pursuant to Medical Graphics Corporation
1987 Stock Option Plan (the "Plan").
As general counsel for the Company, we advise you that it is our opinion,
based on our familiarity with the affairs of the Company and upon our
examination of pertinent documents, that the 400,000 shares of Common Stock to
be offered to employees, directors and consultants by the Company under the Plan
will, when paid for and issued, be validly issued and lawfully outstanding,
fully paid and nonassessable shares of Common Stock of the Company.
The undersigned hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an Exhibit to the Registration Statement
with respect to said shares of Common Stock under the Securities Act of 1933.
Very truly yours,
LINDQUIST & VENNUM P.L.L.P.
\s\ Lindquist & Vennum P.L.L.P.
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Medical Graphics Corporation on Form S-8 relating to the 1987 Stock Option Plan
of our report dated April 4, 1997 (April 15, 1997 as to the third paragraph of
Note 11) on the 1996 financial statements, appearing in the Annual Report on
Form 10-KSB of Medical Graphics Corporation for the year ended
December 31, 1996.
DELOITTE & TOUCHE LLP
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
July 28, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement of
Medical Graphics Corporation on Form S-8 pertaining to the 1987 Stock Option
Plan of our report dated February 16, 1996 with respect to the consolidated
financial statements of Medical Graphics Corporation included in its Annual
Report (Form 10-KSB) for the year ended December 31, 1996 filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
July 25, 1997
