<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 4, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
LINDAL CEDAR HOMES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 91-0508250
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
4300 SOUTH 104TH PLACE
SEATTLE, WASHINGTON 98178
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES (ZIP CODE))
LINDAL CEDAR HOMES, INC.
1997 STOCK OPTION PLAN
(FULL TITLE OF THE PLAN)
__________________________
ROBERT W. LINDAL
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
LINDAL CEDAR HOMES, INC.
4300 SOUTH 104TH PLACE
SEATTLE, WASHINGTON 98178
(206) 725-0900
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
______________________
COPY TO:
J. SUE MORGAN
PERKINS COIE
1201 THIRD AVENUE, 40TH FLOOR
SEATTLE, WASHINGTON 98101-3099
(206) 583-8447
__________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $0.1 per share 250,000 $4.125 $1,031,250 $312.50
=====================================================================================================
</TABLE>
(1) Includes an indeterminate number of additional shares that may be issued to
adjust the number of shares issued pursuant to such employee benefit plan as
the result of any future stock split, stock dividend or similar adjustment
of the Registrant's outstanding common stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended. The
price per share is estimated to be $4.125, based on the average of the high
sales price ($4.25) and the low sales price ($4.00) for the Registrant's
common stock as reported on the Nasdaq National Market on May 29, 1997.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, filed with the Securities and Exchange
Commission (the "Commission") on March 31, 1997, which contains audited
consolidated financial statements for the most recent fiscal year for which
such statements have been filed;
(b) The Registrant's Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1996, filed with the Commission on April 30,
1997, and the Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed with the Commission on May 17, 1997; and
(c) The description of the Registrant's Common Stock
contained in the Registration Statement on Form 8-A filed with the Commission
on March 14, 1987, under Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), including any amendments or reports filed for
the purpose of updating such description.
All documents filed by the Registrant pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters the securities covered
hereby then remaining unsold, shall also be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof commencing
on the respective dates on which such documents are filed.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides that a corporation may indemnify directors and officers as well as
other employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation in a
derivative action), if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action, had no reasonable cause to believe their
conduct was unlawful. A similar standard is applicable in the case of
derivative actions, and the statute requires court approval before there can be
any indemnification where the person seeking indemnification has been found
liable to the corporation. The statute provides that it is not exclusive of
other indemnification that may be granted by a corporation's charter, bylaws,
disinterested director vote, stockholder vote, agreement or otherwise. Article
IX of the Registrant's Bylaws provide for indemnification of its directors and
officers to the full extent permitted by the DGCL.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) for payments of unlawful dividends or unlawful stock repurchases or
redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit. Article X of the Registrant's Certificate of
Incorporation provides that, to the fullest extent that the DGCL permits the
limitation or elimination of the liability of directors, a director will not be
liable to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director.
<PAGE> 3
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- --------------------------------------------------------------------------
<S> <C>
5.1 Opinion of counsel regarding legality of the Common Stock being registered
23.1 Consent of KPMG Peat Marwick LLP (see page II-5)
23.2 Consent of counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see Signature Page)
99.1 Lindal Cedar Homes, Inc. 1997 Stock Option Plan
</TABLE>
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");
(b) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) that, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement; and
(c) To include any material information with respect to
the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this Registration
Statement;
provided, however, that paragraphs (1)(a) and (1)(b) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is,
II-2
<PAGE> 4
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, 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 Seattle, State of
Washington, on May 29, 1997.
LINDAL CEDAR HOMES, INC.
By: /s/ Robert W. Lindal
-------------------------------------
Robert W. Lindal
Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Robert W. Lindal and Douglas F. Lindal, or either of them, his
attorneys-in-fact, with the power of substitution, for him in any and all
capacities, to sign any amendments to this Registration Statement, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that said attorneys-in-fact, or their substitute or substitutes, may 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 by the following persons
on May 29, 1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Robert W. Lindal Chairman and Chief Executive Officer
- -------------------------------- (Principal Executive Officer)
Robert W. Lindal (Acting Principal Financial and Accounting Officer)
/s/ Sir Walter Lindal Secretary and Director
- --------------------------------
Sir Walter Lindal
/s/ Douglas F. Lindal President, Chief Operating Officer and Director
- --------------------------------
Douglas F. Lindal
/s/ Martin J. Lindal Vice President Information Systems, Assistant
- -------------------------------- Secretary and Director
Martin J. Lindal
/s/ Everett G. Martin Vice President Midwest and Eastern Canada and Director
- --------------------------------
Everett G. Martin
/s/ Harry A. Pryde Director
- --------------------------------
Harry A. Pryde
/s/ Rick L. Stanley Director
- --------------------------------
Rick L. Stanley
/s/ William M. Weisfield Director
- --------------------------------
William M. Weisfield
/s/ Charles R. Widman Director
- --------------------------------
Charles R. Widman
</TABLE>
II-4
<PAGE> 6
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Lindal Cedar Homes, Inc.
We consent to the use of our report incorporated herein by reference.
KPMG PEAT MARWICK LLP
Seattle, Washington
June 2, 1997
II-5
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- --------------------------------------------------------------------------
<S> <C>
5.1 Opinion of counsel regarding legality of the Common Stock being registered
23.1 Consent of KPMG Peat Marwick LLP (see page II-5)
23.2 Consent of counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see Signature Page)
99.1 Lindal Cedar Homes, Inc. 1997 Stock Option Plan
</TABLE>
<PAGE> 1
EXHIBIT 5.1
PERKINS COIE
A LAW PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1201 THIRD AVENUE, 40TH FLOOR, SEATTLE, WASHINGTON 98101-3099
TELEPHONE: 206 583-8888 FACSIMILE: 206 583-8500
June 2, 1997
Lindal Cedar Homes, Inc.
4300 South 104th Place
Seattle, Washington 98178
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen and Ladies:
We have acted as counsel to Lindal Cedar Homes, Inc. (the "Company"),
in connection with the Registration Statement on Form S-8 which is being filed
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended (the "Act"), with respect to 250,000 shares of common stock, $0.01
par value, of the Company (the "Shares"), which may be issued pursuant to the
Lindal Cedar Homes, Inc. 1997 Stock Plan (the "Plan").
We have examined the Registration Statement and a copy of the
Certificate of Incorporation of the Company and any amendments thereto to date,
a copy of the Bylaws of the Company, and such resolutions of the Board of
Directors of the Company and other documentation as we have deemed necessary
for the purpose of this opinion.
Based upon and subject to the foregoing, we are of the opinion that
the Shares that may be issued by the Company pursuant to the Plan, upon the due
execution by the Company and registration by its registrar of the Shares and
the issuance thereof by the Company in accordance with the terms of the Plan,
and the receipt of consideration therefor in accordance with the terms of the
Plan, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
PERKINS COIE
<PAGE> 1
EXHIBIT 99.1
LINDAL CEDAR HOMES, INC.
1997 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Lindal Cedar Homes, Inc. 1997 Stock Option Plan
(the "Plan") is to enhance the long-term shareholder value of Lindal Cedar
Homes, Inc., a Delaware corporation (the "Company"), by offering opportunities
to employees of the Company and its Subsidiaries (as defined in Section 2) to
participate in the Company's growth and success, and to encourage them to
remain in the service of the Company and its Subsidiaries and to acquire and
maintain stock ownership in the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Cause" means dishonesty, fraud, misconduct, unauthorized use
or disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Plan Administrator, and its determination shall be
conclusive and binding.
2.3 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
2.4 "Common Stock" means the common stock, par value $0.01 per
share, of the Company.
2.5 "Corporate Transaction" means any of the following events:
(a) Consummation of any merger or consolidation of the
Company in which the Company is not the continuing or surviving corporation, or
pursuant to which shares of the Common Stock are converted into cash,
securities or other property, if following such merger or consolidation the
holders of the Company's outstanding voting securities immediately prior to
such merger or consolidation own less than 66-2/3% of the outstanding voting
securities of the surviving corporation;
(b) Consummation of any sale, lease, exchange or other
transfer in one transaction or a series of related transactions of all or
substantially all of the Company's assets other than a transfer of the
Company's assets to a majority-owned subsidiary corporation (as the term
"subsidiary corporation" is defined in Section 8.3) of the Company; or
(c) Approval by the holders of the Common Stock of any
plan or proposal for the liquidation or dissolution of the Company. Ownership
of voting securities shall take into account and shall include ownership as
determined by applying Rule 13d-3(d)(1)(i) (as in effect on the date of
adoption of the Plan) under the Exchange Act.
2.6 "Disability" means "disability" as that term is defined for
purposes of Section 22(c)(3) of the Code.
2.7 "Early Retirement" means early retirement as that term is
defined by the Plan Administrator from time to time for purposes of the Plan.
2.8 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
A-1
<PAGE> 2
2.9 The "Fair Market Value" shall be as established in good faith
by the Plan Administrator or (a) if the Common Stock is listed on the Nasdaq
National Market, the average of the high and low per share sales prices for the
Common Stock as reported by the Nasdaq National Market for a single trading day
or (b) if the Common Stock is listed on the New York Stock Exchange or the
American Stock Exchange, the average of the high and low per share sales prices
for the Common Stock as such price is officially quoted in the composite tape
of transactions on such exchange for a single trading day. If there is no such
reported price for the Common Stock for the date in question then such price on
the last preceding date for which such price exists shall be determinative of
the Fair Market Value.
2.10 "Good Reason" means the occurrence of any of the following
events or conditions and the failure of the Successor Corporation to cure such
event or condition within 30 days after receipt of written notice by the
Optionee:
(a) a change in the Optionee's status, title, position or
responsibilities (including reporting responsibilities) that, in the Optionee's
reasonable judgment, represents a substantial reduction in the status, title,
position or responsibilities as in effect immediately prior thereto; the
assignment to the Optionee of any duties or responsibilities that, in the
Optionee's reasonable judgment, are materially inconsistent with such status,
title, position or responsibilities; or any removal of the Optionee from or
failure to reappoint or reelect the Optionee to any of such positions, except
in connection with the termination of the Optionee's employment for Cause, for
Disability or as a result of his or her death, or by the Optionee other than
for Good Reason;
(b) a reduction in the Optionee's annual base salary;
(c) the Successor Corporation's requiring the Optionee
(without the Optionee's consent) to be based at any place outside a 35-mile
radius of his or her place of employment prior to a Corporate Transaction,
except for reasonably required travel on the Successor Corporation's business
that is not materially greater than such travel requirements prior to the
Corporate Transaction;
(d) the Successor Corporation's failure to (i) continue
in effect any material compensation or benefit plan (or the substantial
equivalent thereof) in which the Optionee was participating at the time of a
Corporate Transaction, including, but not limited to, the Plan, or (ii) provide
the Optionee with compensation and benefits substantially equivalent (in terms
of benefit levels and/or reward opportunities) to those provided for under each
material employee benefit plan, program and practice as in effect immediately
prior to the Corporate Transaction;
(e) any material breach by the Successor Corporation of
its obligations to the Optionee under the Plan or any substantially equivalent
plan of the Successor Corporation; or
(f) any purported termination of the Optionee's
employment or services for Cause by the Successor Corporation that does not
comply with the terms of the Plan or any substantially equivalent plan of the
Successor Corporation.
2.11 "Grant Date" means the date the Plan Administrator adopted the
granting resolution or a later date designated in a resolution of the Plan
Administrator as the date an Option is to be granted.
2.12 "Incentive Stock Option" means an Option to purchase Common
Stock granted under Section 7 with the intention that it qualify as an
"Incentive stock option" as that term is defined in Section 422 of the Code.
2.13 "Nonqualified Stock Option" means an Option to purchase Common
Stock granted under Section 7 other than an Incentive Stock Option.
2.14 "Option" means the right to purchase Common Stock granted
under Section 7.
2.15 "Optionee" means (i) the person to whom an Option is granted;
(ii) for an Optionee who has died, the personal representative of the
Optionee's estate, the person(s) to whom the Optionee's rights under the Option
have passed by will or by the applicable laws of descent and distribution, or
the beneficiary designated in accordance with Section 9; or (iii) person(s) to
whom an Option has been transferred in accordance with Section 9.
2.16 "Plan Administrator" means the Board or any committee of the
Board designated to administer the Plan under Section 3.1.
A-2
<PAGE> 3
2.17 "Retirement" means retirement as of the individual's normal
retirement as that term is defined by the Plan Administrator from time to time
for purposes of the Plan.
2.18 "Securities Act" means the Securities Act of 1933, as amended.
2.19 "Subsidiary," except as provided in Section 8.3 in connection
with Incentive Stock options, means any entity that is directly or indirectly
controlled by the Company or in which the Company has a significant ownership
interest, as determined by the Plan Administrator, and any entity that may
become a direct or indirect parent of the Company.
2.20 "Successor Corporation" has the meaning set forth under
Section 10.2.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board. If and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall
consider in selecting the Plan Administrator and the membership of any
committee acting as Plan Administrator, with respect to any persons subject or
likely to become subject to Section 16 of the Exchange Act, the provisions
regarding "nonemployee directors" as contemplated by Rule 16b-3 under the
Exchange Act. The Board may delegate the responsibility for administering the
Plan with respect to designated classes of eligible persons to different
committees consisting of two or more members of the Board, subject to such
limitations as the Board deems appropriate. Committee members shall serve for
such term as the Board may determine, subject to removal by the Board at any
time.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Options under the Plan, including the
selection of individuals to be granted Options, the type of Options, the number
of shares of Common Stock subject to an Option, all terms, conditions,
restrictions and limitations, if any, of an Option and the terms of any
instrument that evidences the Option. The Plan Administrator shall also have
exclusive authority to interpret the Plan and may from time to time adopt, and
change, rules and regulations of general application for the Plan's
administration. The Plan Administrator's interpretation of the Plan and its
rules and regulations, and all actions taken and determinations made by the
Plan Administrator pursuant to the Plan, shall be conclusive and binding on all
parties involved or affected. The Plan Administrator may delegate
administrative duties to such of the Company's officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 10.1, a
maximum of 250,000 shares of Common Stock shall be available for issuance under
the Plan. Shares issued under the Plan shall be drawn from authorized and
unissued shares or shares now held or subsequently acquired by the Company as
treasury shares.
4.2 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Option
that cease to be subject to the Option (other than by reason of exercise of the
Option to the extent it is exercised for shares) shall again be available for
issuance in connection with future grants of Options under the Plan.
SECTION 5. ELIGIBILITY
Options may be granted under the Plan to those employees of the
Company and its Subsidiaries as the Plan Administrator from time to time
selects. Options may also be made to consultants, agents, advisors and
independent contractors who provide services to the Company and its
Subsidiaries.
A-3
<PAGE> 4
SECTION 6. AWARDS
6.1 FORM AND GRANT OF OPTIONS
The Plan Administrator shall have the authority, in its sole
discretion, to determine the type or types of awards to be made under the Plan.
Such awards may consist of Incentive Stock Options and/or Nonqualified Stock
Options. Options may be granted singly or in combination.
6.2 ACQUIRED COMPANY OPTION AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Options under the Plan in substitution for awards
issued under other plans, or assume under the Plan awards issued under other
plans, if the other plans are or were plans of other acquired entities
("Acquired Entities") (or the parent of the Acquired Entity) and the new Option
is substituted, or the old award is assumed, by reason of a merger,
consolidation, acquisition of property or of stock, reorganization or
liquidation (the "Acquisition Transaction"). In the event that a written
agreement pursuant to which the Acquisition Transaction is completed is
approved by the Board and said agreement sets forth the terms and conditions of
the substitution for or assumption of outstanding awards of the Acquired
Entity, said terms and conditions shall be deemed to be the action of the Plan
Administrator without any further action by the Plan Administrator, except as
may be required for compliance with Rule 16b-3 under the Exchange Act, and the
persons holding such awards shall be deemed to be Optionees.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified
Stock Options, which shall be appropriately designated.
7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant Date with respect to
Incentive Stock Options.
7.3 TERM OF OPTIONS
The term of each Option shall be as established by the Plan
Administrator or, if not so established, shall be 10 years from the Grant Date.
7.4 EXERCISE OF OPTIONS
The Plan Administrator shall establish and set forth in each
instrument that evidences an Option the time at which or the installments in
which the Option shall vest and become exercisable, which provisions may be
waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option will vest and
become exercisable according to the following schedule, which may be waived or
modified by the Plan Administrator at any time:
<TABLE>
<CAPTION>
PERIOD OF OPTIONEE'S CONTINUOUS
EMPLOYMENT WITH THE COMPANY OR ITS PERCENT OF TOTAL OPTIONS
SUBSIDIARIES FROM THE GRANT DATE THAT IS VESTED AND EXERCISABLE
- ---------------------------------- ------------------------------
<S> <C>
After 1 year 20%
After 2 years 40%
After 3 years 60%
After 4 years 80%
After 5 years 100%
</TABLE>
A-4
<PAGE> 5
To the extent that the right to purchase shares has accrued
thereunder, an Option may be exercised from time to time by written notice to
the Company, in accordance with procedures established by the Plan
Administrator, setting forth the number of shares with respect to which the
Option is being exercised and accompanied by payment in full as described in
Section 7.5. The Plan Administrator may determine at any time that an Option
may not be exercised as to less than 100 shares at any one time (or the lesser
number of remaining shares covered by the Option).
7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid
in full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or by check or, unless the Plan Administrator in its sole
discretion determines otherwise, either at the time the Option is granted or at
any time before it is exercised, a combination of cash and/or check (if any)
and one or both of the following alternative forms: (a) tendering (either
actually or, if and so long as the Common Stock is registered under Section
12(b) or 12(g) of the Exchange Act, by attestation) Common Stock already owned
by the Optionee having a Fair Market Value on the day prior to the exercise
date equal to the aggregate Option exercise price or (b) if and so long as the
Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
delivery of a properly executed exercise notice, together with irrevocable
instructions, to (i) a brokerage firm designated by the Company to deliver
promptly to the Company the aggregate amount of sale or loan proceeds to pay
the Option exercise price and any withholding tax obligations that may arise in
connection with the exercise and (ii) the Company to deliver the certificates
for such purchased shares directly to such brokerage firm, all in accordance
with the regulations of the Federal Reserve Board. In addition, the exercise
price for shares purchased under an Option may be paid, either singly or in
combination with one or more of the alternative forms of payment authorized by
this Section 7.5, by such other consideration as the Plan Administrator may
permit.
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each
instrument that evidences an Option whether the Option will continue to be
exercisable, and the terms and conditions of such exercise, if an Optionee
ceases to be employed by, or to provide services to, the Company or its
Subsidiaries, which provisions may be waived or modified by the Plan
Administrator at any time. If not so established in the instrument evidencing
the Option, the Option will be exercisable according to the following terms and
conditions, which may be waived or modified by the Plan Administrator at any
time.
In case of termination of the Optionee's employment or services other
than by reason of death or Cause, the Option shall be exercisable, to the
extent of the number of shares purchasable by the Optionee at the date of such
termination, only (a) within one year if the termination of the Optionee's
employment or services is coincident with Retirement, Early Retirement at the
Company's request or Disability or (b) within three months after the date the
Optionee ceases to be an employee of the Company or a Subsidiary if termination
of the Optionee's employment or services is for any reason other than
Retirement, Early Retirement at the Company's request or Disability, but in no
event later than the remaining term of the Option. Any Option exercisable at
the time of the Optionee's death may be exercised, to the extent of the number
of shares purchasable by the Optionee at the date of the Optionee's death, by
the personal representative of the Optionee's estate, the person(s) to whom the
Optionee's rights under the Option have passed by will or the applicable laws
of descent and distribution or the beneficiary designated pursuant to Section 9
at any time or from time to time within one year after the date of death, but
in no event later than the remaining term of the Option. Any portion of an
Option that is not exercisable on the date of termination of the Optionee's
employment or services shall terminate on such date, unless the Plan
Administrator determines otherwise. In case of termination of the Optionee's
employment or services for Cause, the Option shall automatically terminate upon
first notification to the Optionee of such termination, unless the Plan
Administrator determines otherwise. If an Optionee's employment or services
with the Company are suspended pending an investigation of whether the Optionee
shall be terminated for Cause, all the Optionee's rights under any Option
likewise shall be suspended during the period of investigation.
A transfer of employment or services between or among the Company and
its Subsidiaries shall not be considered a termination of employment or
services. The effect of a Company-approved leave of absence on the terms and
conditions of an Option shall be determined by the Plan Administrator, in its
sole discretion.
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SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock
Options shall be subject to the following additional terms and conditions:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds $100,000, such portion in
excess of $100,000 shall be treated as a Nonqualified Stock Option. In the
event the Optionee holds two or more such Options that become exercisable for
the first time in the same calendar year, such limitation shall be applied on
the basis of the order in which such Options are granted.
8.2 10% SHAREHOLDERS
If an individual owns more than 10% of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the Grant Date and the Option term shall not exceed five
years. The determination of 10% ownership shall be made in accordance with
Section 422 of the Code.
8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, "parent corporation" and
"subsidiary corporation" shall have the meanings attributed to those terms for
purposes of Section 422 of the Code.
8.4 TERM
The term of an Incentive Stock Option shall not exceed 10 years.
8.5 EXERCISABILITY
To qualify for Incentive Stock Option tax treatment, an Option
designated as an Incentive Stock Option must be exercised within three months
after termination of employment for reasons other than death, except that, in
the case of termination of employment due to total disability, such Option must
be exercised within one year after such termination. Employment shall not be
deemed to continue beyond the first 90 days of a leave of absence unless the
Optionee's reemployment rights are guaranteed by statute or contract. For
purposes of this Section 8.5, "total disability" shall mean a mental or
physical impairment of the Optionee that is expected to result in death or that
has lasted or is expected to last for a continuous period of 12 months or more
and that causes the Optionee to be unable, in the opinion of the Company and
two independent physicians, to perform his or her duties for the Company and to
be engaged in any substantial gainful activity. Total disability shall be
deemed to have occurred on the first day after the Company and the two
independent physicians have furnished their opinion of total disability to the
Plan Administrator.
8.6 TAXATION OF INCENTIVE STOCK OPTIONS
In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Optionee must hold the shares issued
upon the exercise of an Incentive Stock Option for two years after the Grant
Date of the Incentive Stock Option and one year from the date of exercise. An
Optionee may be subject to the alternative minimum tax at the time of exercise
of an Incentive Stock Option. The Plan Administrator may require an Optionee
to give the Company prompt notice of any disposition of shares acquired by the
exercise of an incentive Stock Option prior to the expiration of such holding
periods.
SECTION 9. ASSIGNABILITY
No Option granted under the Plan may be assigned, pledged or
transferred by the Optionee other than by will or by the applicable laws of
descent and distribution, and, during the Optionee's lifetime, such Option may
be exercised only by the Optionee or a permitted assignee or transferee of the
Optionee (as provided below). Notwithstanding the foregoing, and
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to the extent permitted by Section 422 of the Code, the Plan Administrator, in
its sole discretion, may permit such assignment, transfer and exercisability
and may permit an Optionee to designate a beneficiary who may exercise the
Option after the Optionee's death; provided, however, that any Option so
assigned or transferred shall be subject to all the same terms and conditions
contained in the instrument evidencing the Option.
SECTION 10. ADJUSTMENTS
10.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (a) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Common Stock of the Company, then the Plan
Administrator shall make proportional adjustments in (i) the maximum number and
kind of securities subject to the Plan as set forth in Section 4.1 and (ii) the
number and kind of securities that are subject to any outstanding Option and
the per share price of such securities, without any change in the aggregate
price to be paid therefor. The determination by the Plan Administrator as to
the terms of any of the foregoing adjustments shall be conclusive and binding.
10.2 CORPORATE TRANSACTION
Except as otherwise provided in the instrument that evidences the
Option in the event of any Corporate Transaction, each Option that is at the
time outstanding shall automatically accelerate so that each such Option shall,
immediately prior to the specified effective date for the Corporate
Transaction, become 100% vested and exercisable, except that such acceleration
will not occur if, in the opinion of the Company's outside accountants, it
would render unavailable "pooling of interest" accounting for a Corporate
Transaction that would otherwise qualify for such accounting treatment. Such
Option shall not so accelerate, however, if and to the extent that such Option
is, in connection with the Corporate Transaction, either to be assumed by the
successor corporation or parent thereof (the "Successor Corporation") or to be
replaced with a comparable award for the purchase of shares of the capital
stock of the Successor Corporation. The determination of Option comparability
shall be made by the Plan Administrator, and its determination shall be
conclusive and binding. All such Options shall terminate and cease to remain
outstanding immediately following the consummation of the Corporate
Transaction, except to the extent assumed by the Successor Corporation. Any
such Options that are assumed or replaced in the Corporate Transaction and do
not otherwise accelerate at that time shall be accelerated in the event that
the Optionee's employment or services should subsequently terminate within two
years following such Corporate Transaction, unless such employment or services
are terminated by the Successor Corporation for Cause or by the Optionee
voluntarily without Good Reason.
10.3 FURTHER ADJUSTMENT OF OPTIONS
Subject to Section 10.2, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to Optionees, with respect to
Options. Such authorized action may include (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or duration of,
or restrictions on, Options so as to provide for earlier, later, extended or
additional time for exercise and other modifications, and the Plan
Administrator may take such actions with respect to all Optionees, to certain
categories of Optionees or only to individual Optionees. The Plan
Administrator may take such action before or after granting Options to which
the action relates and before or after any public announcement with respect to
such sale, merger, consolidation, reorganization, liquidation or change in
control that is the reason for such action.
10.4 LIMITATIONS
The grant of Options will in no way affect the Company's right to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
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SECTION 11. WITHHOLDING
The Company may require the Optionee to pay to the Company the amount
of any withholding taxes that the Company is required to withhold with respect
to the grant or exercise of any Option. Subject to the Plan and applicable
law, the Plan Administrator may, in its sole discretion, permit the Optionee to
satisfy withholding obligations, in whole or in part, by paying cash, by
electing to have the Company withhold shares of Common Stock or by transferring
shares of Common Stock to the Company, in such amounts as are equivalent to the
Fair Market Value of the withholding obligation. The Company shall have the
right to withhold from any shares of Common Stock issuable pursuant to an
Option or from any cash amounts otherwise due or to become due from the Company
to the Optionee an amount equal to such taxes. The Company may also deduct
from any Option any other amounts due from the Optionee to the Company or a
Subsidiary.
SECTION 12. MARKET STANDOFF
In connection with any underwritten public offering by the Company of
its equity securities pursuant to an effective registration statement filed
under the Securities Act, including the Company's initial public offering, a
person shall not sell, or make any short sale of, loan, hypothecate, pledge,
grant any option for the purchase of, or otherwise dispose or transfer for
value or otherwise agree to engage in any of the foregoing transactions with
respect to, any shares issued pursuant to an Option granted under the Plan
without the prior written consent of the Company or its underwriters. Such
limitations shall be in effect for such period of time as may be requested by
the Company or such underwriters and agreed to by the Company's offices and
directors with respect to their shares; provided, however, that in no event
shall such period exceed 180 days. The limitations of this paragraph shall in
all events terminate two years after the effective date of the Company's
initial public offering. Holders of shares issued pursuant to an Option
granted under the Plan shall be subject to the market standoff provisions of
this paragraph only if the officers and directors of the Company are also
subject to similar arrangements.
In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock is effected as a class without the Company's
receipt of consideration, then any new, substituted or additional securities
distributed with respect to the purchased shares shall be immediately subject
to the provisions of this Section 12, to the same extent the purchased shares
are at such time covered by such provisions.
In order to enforce the limitations of this Section 12, the Company
may impose stop-transfer instructions with respect to the purchased shares
until the end of the applicable standoff period.
SECTION 13. AMENDMENT AND TERMINATION OF PLAN
13.1 AMENDMENT OF PLAN
The Plan may be amended only by the Board in such respects as it shall
deem advisable; however, to the extent required for compliance with Section 422
of the Code or any applicable law or regulation, shareholder approval will be
required for any amendment that will (a) increase the total number of shares as
to which Options may be granted under the Plan, (b) modify the class of persons
eligible to receive Options, or (c) otherwise require shareholder approval
under any applicable law or regulation.
13.2 TERMINATION OF PLAN
The Board may suspend or terminate the Plan at any time. The Plan
will have no fixed expiration date; provided, however, that no Incentive Stock
Options may be granted more than 10 years after the earlier of the Plan's
adoption by the Board and approval by the shareholders.
13.3 CONSENT OF OPTIONEE
The amendment or termination of the Plan shall not, without the
consent of the Optionee, impair or diminish any rights or obligations under any
Option theretofore granted under the Plan.
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Any change or adjustment to an outstanding Incentive Stock Option
shall not, without the consent of the Optionee, be made in a manner so as to
constitute a "modification" that would cause such Incentive Stock Option to
fail to continue to qualify as an Incentive Stock Option.
SECTION 14. GENERAL
14.1 OPTION AGREEMENTS
Options granted under the Plan shall be evidenced by a written
agreement that shall contain such terms, conditions, limitations and
restrictions as the Plan Administrator shall deem advisable and that are not
inconsistent with the Plan.
14.2 CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN OPTIONS
None of the Plan, participation in the Plan or any action of the Plan
Administrator taken under the Plan shall be construed as giving any person any
right to be retained in the employ of the Company or limit the Company's right
to terminate the employment or services of any person.
14.3 REGISTRATION
The Company shall be under no obligation to any Optionee to register
for offering or resale or to qualify for exemption under the Securities Act, or
to register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if
made. The Company may issue certificates for shares with such legends and
subject to such restrictions on transfer and stop-transfer instructions as
counsel for the Company deems necessary or desirable for compliance by the
Company with federal and state securities laws.
Inability of the Company to obtain, from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of
an exemption from registration for the issuance and sale of any shares
hereunder shall relieve the Company of any liability in respect of the
nonissuance or sale of such shares as to which such requisite authority shall
not have been obtained.
14.4 NO RIGHTS AS A SHAREHOLDER
No Option shall entitle the Optionee to any dividend, voting or other
right of a shareholder unless and until the date of issuance under the Plan of
the shares that are the subject of such Option, free of all applicable
restrictions.
14.5 COMPLIANCE WITH LAWS AND REGULATIONS
Notwithstanding anything in the Plan to the contrary, the Board, in
its sole discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to Optionees who are officers or
directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Optionees.
Additionally, in interpreting and applying the provisions of the Plan, any
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
14.6 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing
contained herein shall require the Company to segregate any monies or other
property, or shares of Common Stock, or to create any trusts, or to make any
special deposits for any immediate or deferred amounts payable to any Optionee,
and no Optionee shall have any rights that are greater than those of a general
unsecured creditor of the Company.
14.7 SEVERABILITY
If any provision of the Plan or any Option is determined to be
invalid, illegal or unenforceable in any jurisdiction, or as to any person, or
would disqualify the Plan or any Option under any law deemed applicable by the
Plan Administrator,
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such provision shall be construed or deemed amended to conform to applicable
laws, or, if it cannot be so construed or deemed amended without, in the Plan
Administrator's determination, materially altering the intent of the Plan or
the Option, such provision shall be stricken as to such jurisdiction, person or
Option and the remainder of the Plan and any such Option shall remain in full
force and effect.
SECTION 15. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the
Board, so long as it is approved by the Company's shareholders at any time
within 12 months of such adoption.
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