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As filed with the Securities and Exchange Commission on May 14, 1998.
Registration No. 333-_____________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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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
MEDICAL GRAPHICS CORPORATION RESTATED NON-EMPLOYEE DIRECTOR COMPENSATION PLAN
(Full title of the Plans)
------------------------------
Copy to:
Glenn D. Taylor, President Thomas G. Lovett, IV
Medical Graphics Corporation Kristin L. Johnson
350 Oak Grove Parkway Lindquist & Vennum P.L.L.P.
Saint Paul, Minnesota 55127 4200 IDS Center
(612) 484-4874 Minneapolis, MN 55402
(Name, address and telephone (612) 371-3270
number, including area code,
of agent for service)
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Securities to be Registered Amount to be Proposed Proposed Amount of
Registered Maximum Maximum Registration
Offering Aggregate Fee
Price Per Offering
Share Price
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<S> <C> <C> <C> <C>
Common Stock, $.05 par value to be issued pursuant to 250,000 $4.375(1) $1,093,750(1) $323
Medical Graphics Corporation 1987 Stock Option Plan and
Restated Non-Employee Director Compensation Plan
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 SmallCap Market on
May 8, 1998.
<PAGE>
INCORPORATION OF CONTENTS OF
REGISTRATION STATEMENT BY REFERENCE
Registration Statements on Form S-8 (File Nos. 33-15765, 33-47993,
333-14295 and 333-32469) were filed with the Securities and Exchange
Commission ("SEC") covering the registration of shares authorized for
issuance under the Company's 1987 Stock Option Plan (the "1987 Plan"). In
addition, Registration Statements on Form S-8 (File Nos. 33-80596 and
333-41725) were filed with the SEC covering the registration of shares
authorized for issuance under the Company's Restated Non-Employee Director
Compensation Plan (the "Director Plan"). The above Registration Statements
covering 900,000 and 250,000 shares, respectively, are currently in effect.
Pursuant to General Instruction E of Form S-8, this Registration Statement is
being filed to register an additional 50,000 and 200,000 shares authorized
for issuance under the 1987 Plan and Director Plan, respectively. This
Registration Statement should also be considered a post-effective amendment
to the previously 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, 1997.
(b) The Quarterly Report of the Company on Form 10-QSB for the quarter
ended March 31, 1998.
(c) The Definitive Proxy Statement dated April 13, 1998 for the Annual
Meeting of Shareholders held on May 13, 1998.
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.
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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 registered
pursuant to Section 12 of the Securities Exchange Act of 1934 (the "Exchange
Act"), Common Stock, $.05 par value. The Company is authorized to issue up
to 9,500,000 shares of Common Stock. No share of Common 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
Common Stock have no preemptive rights. The outstanding shares are, and the
Common Stock offered hereby upon payment therefore will be, fully paid and
nonassessable.
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.
CLASS A STOCK. The Class A Stock has a liquidation preference of $3.375
per share. Each Class A share is currently convertible into one share of
Common Stock and has voting rights equal to the Common Stock into which it is
convertible. The Company has a total of 444,445 shares of Class A Stock
outstanding of 500,000 shares authorized for issuance.
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.
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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
organizations, 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.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS. (Filed electronically herewith)
<TABLE>
<CAPTION>
EXHIBIT
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<S> <C>
4.1 Medical Graphics Corporation 1987 Stock Option Plan, as amended
4.2 Medical Graphics Corporation Restated Non-Employee Director
Compensation 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
24.1 Power of Attorney (included on signature page)
</TABLE>
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ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes to:
(1) File, during any period in which it 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 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
5
<PAGE>
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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<PAGE>
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
May 13, 1998.
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 in
the capacities indicated on May 13, 1998.
SIGNATURE
\s\ Glenn D. Taylor
- --------------------------------------------
Glenn D. Taylor, President,
Chief Executive Officer
(Principal Executive Officer) and Director
\s\ Dale H. Johnson
- --------------------------------------------
Dale H. Johnson, Chief Financial
Officer (Principal Financial
Officer)
7
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\s\ Mark W. Sheffert
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Mark W. Sheffert, Chairman
\s\ Anthony J. Adducci
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Anthony J. Adducci, Director
\s\ Gerald T. Knight
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Gerald T. Knight, Director
\s\ W. Edward McConaghay
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W. Edward McConaghay, Director
\s\ Donald C. Wegmiller
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Donald C. Wegmiller, Director
\s\ John C. Penn
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John C. Penn, Director
\s\ John D. Wunsch
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John D. Wunsch, Director
8
<PAGE>
EXHIBIT 4.1
MEDICAL GRAPHICS CORPORATION
1987 STOCK PLAN
<PAGE>
<TABLE>
<CAPTION>
SECTION CONTENTS PAGE
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<S> <C> <C>
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
</TABLE>
i
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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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EXHIBIT 4.2
MEDICAL GRAPHICS CORPORATION RESTATED
NON-EMPLOYEE DIRECTOR COMPENSATION PLAN
SECTION 1. PURPOSE.
This plan shall be known as the "Medical Graphics Corporation Restated
Non-Employee Director Compensation Plan" and is hereinafter referred to as
the "Plan." The purpose of the Plan is to promote the interests of Medical
Graphics Corporation, a Minnesota corporation (the "Company"), by enhancing
its ability to attract and retain the services of experienced and
knowledgeable independent directors and by providing additional incentive for
these directors to increase their interest in the Company's long-term success
and progress.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Committee") of three or more persons appointed by the Board
of Directors of the Company. Grants of restricted stock and stock options under
the Plan and the amount and nature of the awards to be granted shall be
described in Section 6. However, all questions of interpretation of the Plan or
of any options issued under it shall be determined by the Committee and such
determination shall be final and binding upon all persons having an interest in
the Plan.
SECTION 3. PARTICIPATION IN THE PLAN.
Each director of the Company shall be eligible to participate in the Plan
unless such director is an employee of the Company or any subsidiary of the
Company.
SECTION 4. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 12 hereof, the stock to be subject to
options and restricted stock grants under the Plan shall be authorized but
unissued shares of the Company's common stock, par value $.05 per share (the
"Common Stock"). Subject to adjustment as provided in Section 12 hereof, the
maximum number of shares with respect to which restricted stock grants and
options may be exercised under this Plan shall be 250,000 shares. If an option
or restricted stock grant under the Plan expires, or for any reason is canceled
or terminated, any shares, that have not been purchased upon exercise of the
option prior to the expiration or termination date or in the case of restricted
stock grants are canceled, shall again be available for restricted stock and
options thereafter granted during the term of the Plan.
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SECTION 5. NON-QUALIFIED STOCK OPTIONS.
All options granted under the Plan shall be non-qualified options that do
not quality as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS AND RESTRICTED STOCK GRANTS.
Each option granted under this Plan shall be evidenced by a written
agreement in such form as the Committee shall from time to time approve, which
agreements shall comply with and be subject to the following terms and
conditions:
(a) ONE-TIME OPTION GRANT. Beginning May 23, 1997, an option to
purchase 10,000 shares of Common Stock shall be granted automatically on
the first business day immediately following the date an eligible director
is first elected to the Board of Directors of the Company.
(b) ANNUAL RESTRICTED STOCK GRANTS. Subject to the provisions of
Section 9 hereof, 1,000 shares of restricted Common Stock shall be granted
automatically to each eligible director on the first business day
immediately following each annual meeting of the Company's shareholders
(the "Annual Restricted Stock Grant Date") held during the term of the Plan
beginning with the 1998 annual meeting of shareholders and, in addition,
each Committee Chairman shall receive an additional 1,000 shares of
restricted stock. Beginning on the Annual Restricted Stock Grant Date in
1998, the Chairman of the Board shall receive a 5,000 share restricted
stock grant. The Restriction Period (as defined in Section 9(c)) with
respect to such stock grants in this Section 6(b) shall be one year.
(c) MEETING OPTION GRANTS. Beginning with the first Board
and/or Committee meetings following the 1997 Annual Meeting of
shareholders, directors shall receive an option to purchase 1,500
shares per Board meeting attended in person up to a maximum of 9,000
shares per director per year and the Chairman of the Board shall
receive 3,000 per meeting attended in person up to a maximum of 18,000
shares per year. In addition, a director shall receive an option to
purchase 500 shares of Common Stock for each Committee meeting
attended in person up to a maximum of 1,500 shares per director per
year.
(d) DISCRETIONARY GRANTS. The Board of Directors may authorize
the cancellation of previously granted options if the holder thereof
consents to such cancellation and may issue additional options to
purchase shares of Common Stock under this Plan in such numbers as the
Board of Directors approves at a meeting or by a writing in lieu of
meeting.
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(e) PERIOD OF OPTIONS. Options shall terminate upon the expiration
of 10 years from the date on which they were granted.
(f) EXERCISE OF OPTIONS.
(I) Subject to Section 12 hereof, options granted under the
Plan shall not be exercisable for a period of one year after the date
on which they were granted, but thereafter will be exercisable in full
at any time or from time to time during the term of the option.
(ii) The exercise of any option granted here under shall only
be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock pursuant to
such exercise will not violate any federal or state securities or
other laws. An optionee desiring to exercise an option may be
required by the Company, as a condition of the effectiveness of any
exercise of an option granted hereunder, to agree in writing that all
Common Stock to be acquired pursuant to such exercise shall be held
for his or her own account without a view to any distribution thereof,
that the certificates for such shares shall bear an appropriate legend
to that effect and that such shares will not be transferred or
disposed of except in compliance with applicable federal and state
securities laws.
(iii) An optionee electing to exercise an option shall give
written notice to the Company of such election and of the number of
shares subject to such exercise. The full purchase price of such
shares shall be tendered with such notice of exercise. Payment shall
be made to the Company in cash (including check, bank draft, money
order or by delivery of previously owned shares).
(g) EFFECT OF DEATH. If the optionee shall die prior to the time the
option is fully exercised, such option may be exercised at any time within
one year after his or her death by the personal representatives or
administrators of the optionee or by any person or persons to whom the
option is transferred by will or the applicable laws of descent and
distribution, to the extent of the full number of shares the optionee was
entitled to purchase under the option on the date of death and subject to
the condition that no option shall be exercisable after the expiration of
the term of the option.
SECTION 7. OPTION EXERCISE PRICE.
The option exercise price per share for the shares covered by each option
shall be at such price established by the Board but in no event less than the
greater of the "fair market value" of a share of Common Stock as of the date on
which the option is granted, as determined pursuant to Section 10 hereof or
$3.375 per share.
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SECTION 8. TIME FOR GRANTING OPTIONS.
Unless the Plan shall have been discontinued as provided in Section 14
hereof, the Plan shall terminate on May 22, 2007. No option may be granted
after such termination, but termination of the Plan shall not, without the
consent of the optionee, alter or impair any rights or obligations under any
option theretofore granted.
SECTION 9. RESTRICTED STOCK.
(a) ADMINISTRATION. Shares of restricted stock may be issued either alone
or in addition to other awards granted under the Plan. The Committee shall
designate members of the Board of Directors and consultants to the Company to
whom, and the time or times at which, grants of restricted stock will be made,
the number of shares to be awarded, the time or times within which such awards
may be subject to forfeiture, and all other conditions of the awards. The
provisions of restricted stock awards need not be the same with respect to each
recipient.
(b) AWARDS AND CERTIFICATES. The prospective recipient of an award of
shares of restricted stock shall not have any rights with respect to such award,
except as specified in Section 6(b) hereof, but subject to Section 11 hereof,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the then applicable terms and conditions.
(I) Each participant shall be issued a stock certificate in respect
of shares of restricted stock awarded under the Plan. Such certificate
shall be registered in the name of the participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such award, substantially in the following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the Medical Graphics
Corporation Restated Non-Employee Director Compensation Plan
and Award Agreement entered into between the registered
owner and the Company. Copies of such Plan and any award
agreement are on file in the offices of Medical Graphics
Corporation, 350 Oak Grove Parkway, St. Paul, Minnesota
55127."
(ii) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
restricted stock award, the participant shall have delivered a stock power,
endorsed in blank, relating to the Common Stock covered by such award.
(c) RESTRICTIONS AND CONDITIONS. The shares of restricted stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:
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(I) Subject to the provisions of this Plan and the award agreement,
if any, during a period set by the Committee commencing with the date of
such award (the "Restriction Period"), the participant shall not be
permitted to sell, transfer, pledge or assign shares of restricted stock
awarded under the Plan except as provided in Section 12 hereof, in no event
shall the Restriction Period be less than one (1) year. Within these
limits, the Committee may provide for the lapse of such restrictions in
installments where deemed appropriate.
(ii) Except as provided in paragraph (c)(i) of this Section 9, the
participant shall have, with respect to the shares of Restricted Stock, all
of the rights of a shareholder of the Company, including the right to vote
the shares and the right to receive any cash dividends. The Committee, in
its sole discretion, may permit or require the payment of cash dividends to
be deferred and, if the Committee so determines, reinvested in additional
shares of Restricted Stock (to the extent shares are available under
Section 4). Certificates for shares of unrestricted common stock shall be
delivered to the grantee promptly after, and only after, the period of
forfeiture shall have expired without forfeiture in respect of such shares
of Restricted Stock.
(iii) Subject to the provisions of the award agreement, if any,
and paragraph (c)(iv) of this Section 9, upon termination of the
directorship for any reason during the Restriction Period, all shares still
subject to restriction shall be forfeited by the participant.
(iv) In the event of special hardship circumstances of a participant
whose directorship is terminated (other than for cause), including death,
disability, or in the event of an unforeseeable emergency of a participant
still in service, the Committee may, in its sole discretion, when it finds
that a waiver would be in the best interest of the Company, waive in whole
or in part any or all remaining restrictions with respect to such
participant's shares of restricted stock.
SECTION 10. FAIR MARKET VALUE OF COMMON STOCK.
For the purposes of the Plan, the fair market value of the Common Stock on
a given date shall be the average of the closing bid and asking price of the
Common Stock as reported on the Nasdaq National Market or Nasdaq SmallCap
Market, if the Common Stock is then being quoted on the Nasdaq National Market
or Nasdaq SmallCap Market. If on the date as of which the fair market value is
being determined the Common Stock is not publicly traded, the Committee shall
make a good faith attempt to determine such fair market value and, in connection
therewith, shall take such actions and consider such factors as it deems
necessary or advisable.
SECTION 11. LIMITATION OF RIGHTS.
(a) NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the
granting of an option or restricted stock nor any other action taken
pursuant to the Plan, shall constitute, or
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be evidence of, any agreement or understanding, express or implied, that
the Company will retain a director for any period of time, or at any
particular rate of compensation.
(b) NO SHAREHOLDER RIGHTS FOR OPTIONS. An optionee shall have no
rights as a shareholder with respect to the shares covered by options and
restricted stock until the date of the issuance to such optionee of a stock
certificate therefor, and no adjustment will be made for cash dividends or
other rights for which the record date is prior to the date such
certificate is issued.
SECTION 12. ADJUSTMENTS TO COMMON STOCK; SALE, MERGER, LIQUIDATION.
If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Plan and outstanding options shall be made. In the event of
any such changes, adjustments shall include, where appropriate, changes in the
aggregate number of shares subject to the Plan, the number of shares subject to
outstanding options and the option exercise prices thereof in order to prevent
dilution or enlargement of option rights.
In the event of the sale by the Company of substantially all of its assets
and the consequent discontinuance of its business, or in the event of a merger,
exchange, consolidation or liquidation of the Company, the Board shall, in its
sole discretion, in connection with the Board's adoption of the plan for sale,
merger, exchange, consolidation or liquidation, provide for one or more of the
following with respect to restricted stock awards and options that are, on such
date, still subject to a restriction period: (i) the removal of the restrictions
on any or all outstanding options or restricted stock awards; (ii) the complete
termination of this Plan and forfeiture of outstanding options or restricted
stock awards prior to a date specified by the Board; and (iii) the continuance
of the Plan with respect to the restricted stock awards which were outstanding
as of the date of adoption by the Board of such plan for sale, merger, exchange,
consolidation or liquidation and provide to participants holding options and/or
restricted stock awards the right to an equivalent number of restricted shares
of stock of the corporation succeeding the Company by reason of such sale,
merger, exchange, consolidation or liquidation. The grant of an option or a
restricted stock award pursuant to the Plan shall not limit in any way the right
or power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure or to merge, exchange ro
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 13. EFFECTIVE DATE OF THE PLAN; EFFECTIVE DATE OF THE RESTATED PLAN.
The Restated Plan shall be effective as of May 22, 1997, the date
shareholders of the Company approved an increase in the number of shares of
Common Stock authorized under the Plan from 150,000 to 250,000.
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SECTION 14. AMENDMENT OF THE PLAN.
The Board may suspend or discontinue the Plan or revise or amend it in any
respect whatsoever, provided, however, that without approval of the shareholders
of the Company, no revision or amendment shall be made that (a) absent such
shareholder approval, would cause Rule 16b-3, as promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
or any successor rule or regulation thereto, to become unavailable with respect
to the Plan, or (b) requires the approval of the Company's shareholders under
any rules or regulations of the National Association of Securities Dealers, Inc.
that are applicable to the Company. The Board shall not alter or impair any
option theretofore granted under the Plan without the consent of the holder of
the option.
SECTION 15. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws or the State of Minnesota and construed
accordingly.
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EXHIBIT 5.1
May 13, 1998
Medical Graphics Corporation
350 Oak Grove Parkway
St. Paul, MN 55127
RE: OPINION OF COUNSEL AS TO LEGALITY OF 250,000 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 250,000 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 and Restated Non-Employee Director Compensation Plan (the
"Plans").
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 250,000 shares of Common Stock to
be offered to employees, directors and consultants by the Company under the
Plans 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.
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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
and Restated Non-Employee Director Compensation Plan of our report dated
February 13, 1998, appearing in the Annual Report on Form 10-KSB of Medical
Graphics Corporation for the year ended December 31, 1997.
DELOITTE & TOUCHE LLP
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
May 12, 1998
