<PAGE> 1
As filed with the Securities and Exchange Commission on March 3, 2000
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------
MSI HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
UTAH 87-0280886
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1121 EAST 7TH STREET
AUSTIN, TEXAS 78702
(Address of principal executive offices, including zip code)
MSI HOLDINGS, INC. 2000 STOCK OPTION PLAN
(Full Title of Plans)
-----------------
Robert J. Gibbs
President and Chief Executive Officer
1121 East 7th Street
Austin, Texas 78702
(512) 476-6925
(Name and address, including zip code, and telephone number,
including area code, of registrant's agent for service)
COPIES TO:
Kenneth W. Biermacher Jeffrey A. Chapman
Kane, Russell, Coleman & Logan, P.C. Vinson & Elkins L.L.P.
3700 Thanksgiving Tower 3700 Trammell Crow Center
1601 Elm Street 2001 Ross Avenue
Dallas, Texas 75201 Dallas, Texas 75201-2975
(214) 777-4250 (214) 220-7797
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED (1) OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
SHARE(2) PRICE (1)(2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.10 par value 5,500,000 shares $ 13.23 $ 72,751,782.50 $ 19,206.47
==================================================================================================================
</TABLE>
(1) Consists of shares of Common Stock that may be issuable under the
Registrant's 2000 Stock Option Plan described herein. Pursuant to Rule
416(c) under the Securities Act, shares issuable upon any stock split, stock
dividend or similar transaction with respect to the shares registered under
the Plans are also being registered hereunder.
(2) Estimated solely for calculating the registration fee pursuant to Rule
457(h), based on the prices at which outstanding options may be exercised
(as to 3,070,950 shares), plus the average of the high and low prices for
the Common Stock on February 28, 2000 as reported on the NASD
Over-the-Counter Bulletin Board (as to 2,429,050 shares for which the
exercise price is not known).
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information called for in Part I of Form S-8
will be provided to participants in the 2000 Stock Option Plan of MSI Holdings,
Inc. (the "Company" or the "Registrant") with respect to which this Registration
Statement on Form S-8 (this "Registration Statement") relates. Such information
is not being filed with or included in this Registration Statement in accordance
with the rules and regulations of the Securities Act of 1933 (the "Securities
Act") and the Securities and Exchange Commission (the "Commission").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
Incorporated by reference are the documents listed below and any future
filings the Registrant makes with the Commission under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold:
o The Registrant's Annual Report on Form 10-KSB/A for the year ended March
31, 1999;
o All other reports filed by the Registrant with the Commission in
compliance with Sections 13(a) or 15(d) of the Exchange Act since the
end of the fiscal year ended March 31, 1999; and
o The description the Registrant's common stock contained in the
Registrant's Registration Statement on Form 10, filed with the
Commission on October 27, 1975 (File Number M862263).
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable
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 the Company may
indemnify each director, officer, employee, or agent of the Company against all
liabilities and expenses reasonably incurred in connection with any action, suit
or proceeding to which he may be made a party by reason of his being or having
been a director, officer, employee, or agent of the Company, to the full extent
permitted by the laws of the State of Utah. With respect to indemnification of
directors, officers, employees, or agents of the Company, the Utah Revised
Business Corporation Act (the Revised Act) provides as follows:
Discretionary Indemnification
Section 902 of the Revised Act provides that a corporation may indemnify any
individual who was or is threatened to be made a party in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal (a Proceeding),
because he is or was a director of the corporation or, while a director of the
corporation, is or was serving at its request as a director, officer, partner,
trustee, employee, fiduciary or agent of another corporation or other person or
of an employee benefit plan (an Indemnifiable Director), against any obligation
incurred with respect to a Proceeding, including any judgment, settlement,
penalty, fine or reasonable expenses (including attorneys' fees), incurred in
the Proceeding if his conduct was in good faith, he
-2-
<PAGE> 3
reasonably believed that his conduct was in, or not opposed to, the best
interests of the corporation, and, in the case of any criminal Proceeding, he
had no reasonable cause to believe his conduct was unlawful.
Notwithstanding the foregoing, the corporation may not indemnify an
Indemnifiable Director under Section 902 of the Revised Act in connection with:
o a Proceeding by or in the right of the corporation in which the
Indemnifiable Director was adjudged liable to the corporation; or
o a Proceeding in which he was adjudged liable on the basis that he
derived an improper personal benefit.
In addition, a corporation may not indemnify an officer or director under
Section 902 of the Revised Act unless a determination that the requirements of
Section 902 of the Revised Act have been satisfied with respect to the
Indemnified Party has been made in that specific case by a majority of
disinterested directors; by independent legal counsel at the request of a
majority of disinterested directors (or majority of all directors if a quorum of
disinterested directors cannot be obtained); or the stockholders of the Company
at a meeting called for such purpose.
Mandatory Indemnification
Section 903 of the Revised Act provides that, unless limited by its articles
of incorporation, a corporation shall indemnify an Indemnifiable Director who
was successful, on the merits or otherwise, in the defense of any Proceeding, or
in the defense of any claim, issue or matter in the Proceeding, to which he was
a party because he is or was an Indemnifiable Director of the corporation,
against reasonable expenses (including attorneys' fees) incurred by him in
connection with the Proceeding or claim with respect to which he has been
successful.
Court Ordered Indemnification
In addition to the indemnification provided by Sections 902 and 903 of the
Revised Act, Section 905 of the Revised Act provides that, unless otherwise
limited by a corporation's articles of incorporation, an Indemnifiable Director
may apply for indemnification to the court conducting the Proceeding or to
another court of competent jurisdiction. On receipt of an application and after
giving any notice the court considers necessary, the court may order mandatory
indemnification under Section 903 of the Revised Act, in which case the court
shall also order the corporation to pay the director's reasonable expenses to
obtain court-ordered indemnification. The court may also, upon the court's
determination that the director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances and regardless of
whether the director met the applicable standard of conduct set forth in Section
902 or was adjudged liable as described in Subsection 902(4), order
indemnification as the court determines to be proper, except that
indemnification with respect to certain Proceedings resulting in a director
being found liable as described in Subsection 902(4) is limited to reasonable
expenses (including attorneys' fees) incurred by the director.
Advancement of Expenses
Section 904 of the Revised Act provides that a corporation may pay for or
reimburse the reasonable expenses (including attorneys' fees) incurred by an
Indemnifiable Director who is a party to a Proceeding in advance of the final
disposition of the Proceeding if:
o the director furnishes the corporation a written affirmation of his good
faith belief that he has met the applicable standard of conduct
described in Section 902 of the Revised Act;
o the director furnishes to the corporation a written undertaking,
executed personally or in his behalf, to repay the advance if it is
ultimately determined that he did not meet the required standard of
conduct; and
-3-
<PAGE> 4
o a determination is made that the facts then known to those making the
determination would not preclude indemnification.
Indemnification of Officers
Section 903 of the Revised Act provides that, unless a corporation's
articles of incorporation provide otherwise:
o an officer of the corporation is entitled to mandatory indemnification
under Section 903 of the Revised Act and is entitled to apply for court
ordered indemnification under Section 905 of the Revised Act, in each
case to the same extent as an Indemnifiable Director;
o the corporation may indemnify and advance expenses to an officer,
employee, fiduciary or agent of the corporation to the same extent as an
Indemnifiable Director; and
o a corporation may also indemnify and advance expenses to an officer,
employee, fiduciary or agent who is not an Indemnifiable Director to a
greater extent than the right of indemnification granted to
Indemnifiable Directors, if not inconsistent with public policy, and if
provided for by its articles of incorporation, bylaws, general or
specific action of its board of directors or contract.
Waiver of Personal Liability to the Company
The Company's articles of incorporation, as amended, provide that the
personal liability of any director of the Company to the Company or its
stockholders, for monetary damages for any action taken or any failure to take
any action as a director is eliminated to the fullest extent permitted by the
Revised Act. The extent to which the Revised Act permits director liability to
be eliminated is governed by Section 841 of the Revised Act, which provides that
the liability of a director may not be eliminated or limited for:
o the amount of financial benefit received by a director to which he is
not entitled;
o an intentional infliction of harm on the corporation or its
stockholders;
o a violation of Section 842 of the Revised Act which prohibits unlawful
distributions by a corporation to its stockholders; or
o an intentional violation of criminal law.
We currently maintain directors' and officers' insurance in the amount of
$5,000,000. This insurance will insure directors against any liability arising
out of the director's status as our director, regardless of whether we have the
power to indemnify the director against the liability under applicable law.
We have been advised that it is the position of the Commission that insofar
as the indemnification provisions referenced above may be invoked to disclaim
liability for damages arising under the Securities Act, these provisions are
against public policy as expressed in the Securities Act and are, therefore,
unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable
-4-
<PAGE> 5
ITEM 8. EXHIBITS.
4.1 MSI Holdings, Inc. 2000 Stock Option Plan*
5.1 Opinion of Parr, Waddoups, Brown, Gee & Loveless, P.C.*
23.1 Consent of Brown, Graham & Co., P.C.*
23.2 Consent of Ernst & Young LLP*
23.3 Consent of Parr, Waddoups, Brown, Gee & Loveless, P.C. (included as
part of Exhibit 5.1)
24 Power of Attorney (set forth on the signature pages of the
registration statement)
- ---------------
* Filed herewith.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement;
(iii) 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 the undertakings set forth in paragraphs (a)(1)(i)
and (a)(1)(ii) 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 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 which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
-5-
<PAGE> 6
(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, 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.
-6-
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Austin, State of Texas, on the 3rd day of March, 2000.
MSI HOLDINGS, INC.
(Registrant)
By: /s/ ROBERT J. GIBBS
-----------------------------------------------
Robert J. Gibbs, President and
Chief Executive Officer
Each person whose signature appears below hereby constitutes and appoints
Robert J. Gibbs and Douglas W. Banister, and each of them (with full power in
each of them to act alone), his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign and to
file with the Commission, any and all amendments, exhibits, certificates, and
other documents in connection therewith, in connection with the registration
under the Securities Act, of shares of Common Stock issuable pursuant to the
Plans, granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
and on the date indicated below in the City of Austin, State of Texas.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ ROBERT J. GIBBS President, Chief Executive March 3, 2000
- -----------------------------
Robert J. Gibbs Officer and Director
/s/ DOUGLAS W. BANISTER Chief Financial Officer and March 3, 2000
- -----------------------------
Douglas W. Banister Vice President of Finance
/s/ DANIEL S. DORNIER Director March 3, 2000
- -----------------------------
Daniel S. Dornier
/s/ STEPHEN J. METZGER Director March 3, 2000
- -----------------------------
Stephen J. Metzger
/s/ HUMBERT B. POWELL, III. Director March 3, 2000
- -----------------------------
Humbert B. Powell, III
/s/ DAVINDER SETHI Director March 3, 2000
- -----------------------------
Davinder Sethi
</TABLE>
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------- ------- ------------
<S> <C> <C>
4.1 MSI Holdings, Inc. 2000 Stock Option Plan*
5.1 Opinion of Parr, Waddoups, Brown, Gee & Loveless, P.C.*
23.1 Consent of Brown, Graham & Co., P.C.*
23.2 Consent of Ernst & Young LLP*
23.3 Consent of Parr, Waddoups, Brown, Gee & Loveless, P.C. (included as part of
Exhibit 5.1)
24 Power of Attorney (set forth on the signature page of the registration
statement)
</TABLE>
- ------------------------
* Filed herewith.
<PAGE> 1
EXHIBIT 4.1
MSI HOLDINGS, INC.
2000 STOCK OPTION PLAN
On February 22, 2000, the Board of Directors of MSI Holdings, Inc. adopted
the following 2000 Stock Option Plan:
1. Purpose.
MSI Holdings, Inc., a Utah corporation (herein, together with its
successors, referred to as the "Company"), by means of this 2000 Stock Option
Plan (the "Plan"), desires to afford certain individuals and key employees of
the Company and any parent corporation or subsidiary corporation thereof now
existing or hereafter formed or acquired (such parent and subsidiary
corporations sometimes referred to herein as "Related Entities") who are
responsible for the continued growth of the Company an opportunity to acquire a
proprietary interest in the Company, and thus to create in such persons an
increased interest in and a greater concern for the welfare of the Company and
any Related Entities. As used in the Plan, the terms "parent corporation" and
"subsidiary corporation" shall mean, respectively, a corporation within the
definition of such terms contained in Sections 424(e) and 424(f), respectively,
of the Internal Revenue Code of 1986, as amended (the "Code"). All defined terms
not otherwise defined in Sections 1 through 17 of this Plan shall have the
meanings set forth in Section 18 of this Plan.
The stock options described in Sections 6 and 7 (the "Options") and the
shares of Common Stock (as hereinafter defined) acquired pursuant to the
exercise of such Options are a matter of separate inducement and are not in lieu
of any salary or other compensation for services.
2. Administration.
(a) Committee. The Board of Directors of the Company (the "Board of
Directors") shall administer the Plan with respect to all Key Employees (as
hereinafter defined) or Eligible Non-Employees (as hereinafter defined) or may
delegate all or part of its duties under this Plan to any committee or
sub-committee appointed by the Board of Directors (the "Committee") or to any
officer or committee of officers of the Company, subject in each case to such
conditions and limitations as the Board of Directors may establish and subject
to the following sentence. Unless a majority of the members of the Board of
Directors determines otherwise: (a) the Committee shall be constituted in a
manner that satisfies the requirements of Rule 16b-3, which Committee shall
administer the Plan with respect to all Key Employees or Eligible Non-Employees
who are subject to Section 16 of the Exchange Act in a manner that satisfies the
requirements of Rule 16b-3; and (b) the Committee shall be constituted in a
manner that satisfies the requirements of Section 162(m), which Committee shall
administer the Plan with respect to "performance-based compensation" for all Key
Employees or Eligible Non-Employees who are reasonably expected to be "covered
employees" as those terms are defined in Section 162(m). The number of persons
that shall constitute the Committee shall be determined from time to time by a
majority of all the members of the Board of Directors. Except for references in
Sections 2(a), 2(b), and 2(c) and unless the context otherwise requires,
references herein to the Committee shall also refer to the Board of Directors as
administrator of the Plan for Key Employees or Eligible Non-Employees or to the
appropriate delegate of the Committee or the Board of Directors.
(b) Duration, Removal, Etc. The members of the Committee shall serve at the
pleasure of the Board of Directors, which shall have the power, at any time and
from time to time, to remove members from or add members to the Committee.
Removal from the Committee may be with or without cause. Any individual serving
as a member of the Committee shall have the right to resign from membership in
the Committee by written notice to the Board of Directors. The Board of
Directors, and not the remaining members of the Committee, shall have the power
and authority to fill vacancies on the Committee, however caused.
(c) Meetings and Actions of Committee. The Board of Directors shall
designate which of the Committee members shall be the chairman of the Committee.
If the Board of Directors fails to designate a Committee chairman,
-1-
<PAGE> 2
the members of the Committee shall elect one of the Committee members as
chairman, who shall act as chairman until he ceases to be a member of the
Committee or until the Board of Directors elects a new chairman. The Committee
shall hold its meetings at those times and places as the chairman of the
Committee may determine. At all meetings of the Committee, a quorum for the
transaction of business shall be required, and a quorum shall be deemed present
if at least a majority of the members of the Committee are present. At any
meeting of the Committee, each member shall have one vote. All decisions and
determinations of the Committee shall be made by the majority vote or majority
decision of all of its members present at a meeting at which a quorum is
present; provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting that was duly called and held. The
Committee may make any rules and regulations as it may deem advisable for the
conduct of its business that are not inconsistent with the provisions of the
Plan, the certificate of incorporation of the Company, the by-laws of the
Company, Rule 16b-3 so long as it is applicable, and Section 162(m) so long as
it is applicable.
3. Shares Available.
Subject to the adjustments provided in Section 10, the maximum aggregate
number of shares of Common Stock, $0.10 par value, of the Company ("Common
Stock") in respect of which Options may be granted for all purposes under the
Plan shall be 5,500,000 shares. If, for any reason, any shares as to which
Options have been granted cease to be subject to purchase thereunder, including
the expiration of such Option, the termination of such Option prior to exercise,
or the forfeiture of such Option, such shares shall thereafter be available for
grants under the Plan. Options granted under the Plan may be fulfilled in
accordance with the terms of the Plan with (i) authorized and unissued shares of
the Common Stock, (ii) issued shares of such Common Stock held in the Company's
treasury, or (iii) issued shares of Common Stock reacquired by the Company in
each situation as the Board of Directors or the Committee may determine from
time to time.
4. Eligibility and Bases of Participation.
Grants of Incentive Options (as hereinafter defined) and Non-Qualified
Options (as hereinafter defined) may be made under the Plan, subject to and in
accordance with Section 6, to Key Employees. As used herein, the term "Key
Employee" shall mean any employee of the Company or any Related Entity,
including officers and directors of the Company or any Related Entity who are
also employees of the Company or any Related Entity, who is regularly employed
on a salaried basis and who is so employed on the date of such grant, whom the
Committee identifies as having a direct and significant effect on the
performance of the Company or any Related Entity.
Grants of Non-Qualified Options may be made, subject to and in accordance
with Section 7, to any Eligible Non-Employee. As used herein, the term "Eligible
Non-Employee" shall mean any director of the Company who is not regularly
employed on a salaried basis with the Company and any other person or entity of
any nature whatsoever, specifically including an individual, a firm, a company,
a corporation, a partnership, a trust, or other entity (collectively, a
"Person"), that the Committee designates as eligible for a grant of Options
pursuant to this Plan because such Person performs bona fide consulting,
advisory, or other services for the Company or any Related Entity (other than
services in connection with the offer or sale of securities in a capital-raising
transaction) and the Board of Directors or the Committee determines that the
Person has a direct and significant effect on the financial development of the
Company or any Related Entity.
The adoption of this Plan shall not be deemed to give any Person a right to
be granted any Options.
Notwithstanding any other provision of this Plan to the contrary, with
respect to the grant of any Options to any Key Employee or Eligible
Non-Employee, the Committee shall first determine the number of shares in
respect of which Options are to be granted to such Key Employee or Eligible
Non-Employee and shall then cause to be granted to such Key Employee or Eligible
Non-Employee an Option exercisable for such shares. The exercise price per share
of Common Stock under each Option shall be fixed by the Committee at the time of
grant of the Option and shall equal at least 100% of the Fair Market Value of a
share of Common Stock on the date of grant.
-2-
<PAGE> 3
5. Authority of Committee.
Subject to the express provisions of the Plan and any applicable law with
which the Company intends the Plan to comply, the Committee shall have the
authority, in its sole and absolute discretion, (a) to adopt, amend, and rescind
administrative and interpretive rules and regulations relating to the Plan,
including without limitation to adopt and observe such procedures concerning the
counting of Options against the Plan and individual maximums as it may deem
appropriate from time to time; (b) to determine the Key Employees or Eligible
Non-Employees to whom, and the time or times at which, Options shall be granted;
(c) to determine the number of shares of Common Stock, that shall be the subject
of each Option; (d) to determine the terms and provisions of each award
evidencing Options granted hereunder (which need not be identical), including
provisions defining or otherwise relating to (i) the term and the period or
periods and extent of exercisability of the Options, (ii) the extent to which
the transferability of shares of Common Stock issued or transferred pursuant to
any Option is restricted, (iii) the effect of termination of employment on the
Option, (iv) the effect of approved leaves of absence (consistent with any
applicable regulations of the Internal Revenue Service) and (v) the
establishment of procedures for an optionee (A) to have withheld from the total
number of shares of Common Stock to be acquired upon the exercise of an Option
that number of shares having a Fair Market Value which, together with such cash
as shall be paid in respect of fractional shares, shall equal the aggregate
exercise price under such Option for the number of shares then being acquired
(including the shares to be so withheld), and (B) to exercise a portion of an
Option by delivering that number of shares of Common Stock already owned by such
optionee having an aggregate Fair Market Value which shall equal the partial
Option exercise price and to deliver the shares thus acquired by such optionee
in payment of shares to be received pursuant to the exercise of additional
portions of such Option, the effect of which shall be that such optionee can in
sequence utilize such newly acquired shares in payment of the exercise price of
the entire Option, together with such cash as shall be paid in respect of
fractional shares; provided, however, that (A) in the case of Incentive Options,
no shares shall be used to pay the exercise price under this paragraph unless
(1) such shares were not acquired through the exercise of Incentive Options or
(2) if so acquired, (x) such shares have been held for more than two years since
the grant of such Incentive Options and for more than one year since the
exercise of such Incentive Options (the "Holding Period"), or (y) if such shares
have not been held for the Holding Period, the optionee elects in writing to use
such shares to pay the exercise price under this paragraph, and (B) no such
procedure shall be available if there is an opinion of the Company's independent
accounting firm that the use of such a procedure could negatively affect the
financial statements of the Company or a Related Entity; (e) to accelerate,
pursuant to Section 8 or otherwise, the time of exercisability of any Option
that has been granted; (f) to construe the respective awards evidencing Options
pursuant to the Plan; (g) to make determinations of the Fair Market Value of the
Common Stock pursuant to the Plan; (h) to delegate its duties under the Plan to
such agents as it may appoint from time to time, subject to the second sentence
of Section 2(a); and (i) to make all other determinations, perform all other
acts, and exercise all other powers and authority necessary or advisable for
administering the Plan, including the delegation of those ministerial acts and
responsibilities as the Committee deems appropriate. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Plan, in
any Option, or in any awards evidencing Options granted hereunder in the manner
and to the extent it deems necessary or desirable to carry the Plan into effect,
and the Committee shall be the sole and final judge of that necessity or
desirability. The determinations of the Committee on the matters referred to in
this Section 5 shall be final and conclusive. The Committee shall not have the
power to appoint members of the Committee or to terminate, modify, or amend the
Plan. Those powers are vested in the Board of Directors.
From time to time, the Board of Directors and appropriate officers of the
Company shall be and are authorized to take whatever actions are necessary to
file required documents with governmental authorities, stock exchanges, and
other appropriate Persons to make shares of Common Stock available for issuance
pursuant to awards evidencing Options granted hereunder.
-3-
<PAGE> 4
6. Stock Options for Key Employees.
Subject to the express provisions of this Plan, the Committee shall have the
authority to grant incentive stock options pursuant to Section 422 of the Code
("Incentive Options") to grant non-qualified stock options (options which do not
qualify under Section 422 of the Code) ("Non-Qualified Options"), and to grant
both types of Options to Key Employees. No Incentive Option shall be granted
pursuant to this Plan after the earlier of ten years from the date of adoption
of the Plan or ten years from the date of approval of the Plan by the
stockholders of the Company. Notwithstanding anything in this Plan to the
contrary, Incentive Options may be granted only to Key Employees. The terms and
conditions of the Options granted under this Section 6 shall be determined from
time to time by the Committee; provided, however, that the Options granted under
this Section 6 shall be subject to all terms and provisions of the Plan (other
than Section 7), including the following:
(a) Option Exercise Price. Subject to Section 4, the Committee shall
establish the Option exercise price at the time any Option is granted at such
amount as the Committee shall determine; provided, that such price shall not be
less than the Fair Market Value per share of Common Stock at the date the Option
is granted; and provided, further, that in the case of an Incentive Option
granted to a person who, at the time such Incentive Option is granted, owns
shares of the Company or any Related Entity which possess more than 10% of the
total combined voting power of all classes of shares of the Company or of any
Related Entity, the option exercise price shall not be less than 110% of the
Fair Market Value per share of Common Stock at the date the Option is granted.
The Option exercise price shall be subject to adjustment in accordance with the
provisions of Section 10 of the Plan.
(b) Payment. The price per share of Common Stock with respect to each Option
exercise shall be payable at the time of such exercise. Such price shall be
payable in cash or by any other means acceptable to the Committee, including
delivery to the Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure created pursuant
to Section 5(d) of the Plan. Shares delivered to or withheld by the Company in
payment of the Option exercise price shall be valued at the Fair Market Value of
the Common Stock on the day preceding the date of the exercise of the Option.
(c) Continuation of Employment. Each Incentive Option shall require the
optionee to remain in the continuous employ of the Company or any Related Entity
from the date of grant of the Incentive Option until no more than three months
prior to the date of exercise of the Incentive Option.
(d) Exercisability of Stock Option. Subject to Section 8, each Option shall
be exercisable in one or more installments as the Committee may determine at the
time of the grant. No Incentive Option by its terms shall be exercisable after
the expiration of ten years from the date of grant of such Option; provided,
however, that no Incentive Option granted to a person who, at the time such
Option is granted, owns stock of the Company, or any Related Entity, possessing
more than 10% of the total combined voting power of all classes of stock of the
Company, or any Related Entity, shall be exercisable after the expiration of
five years from the date such Option is granted.
(e) Death. If any optionee's employment with the Company or a Related Entity
terminates due to the death of such optionee, the estate of such optionee, or a
Person who acquired the right to exercise such Option by bequest or inheritance
or by reason of the death of the optionee, shall have the right to exercise such
Option in accordance with its terms at any time and from time to time within 180
days after the date of death unless a shorter or longer period is expressly
provided in such Option (but in no event prior to the 90th day after the death
of such optionee) or established by the Committee pursuant to Section 8 (but in
no event after the expiration date of such Option).
(f) Disability. If the employment of any optionee terminates because of his
Disability (as defined in Section 18), such optionee or his legal representative
shall have the right to exercise the Option in accordance with its terms at any
time and from time to time within 180 days after the date of such termination
unless a shorter or longer period is expressly provided in such Option (but in
no event prior to the 90th day after the date of such termination of employment)
or established by the Committee pursuant to Section 8 (but not after the
expiration date of the Option);
-4-
<PAGE> 5
provided, however, that in the case of an Incentive Option, the optionee or his
legal representative shall in any event be required to exercise the Incentive
Option within one year after termination of the optionee's employment due to his
Disability.
(g) Termination for Good Cause. Unless an optionee's Option expressly
provides otherwise or the Committee determines otherwise, such optionee shall
immediately forfeit all rights under his Option, except as to the shares of
stock already purchased thereunder, if the employment of such optionee with the
Company or a Related Entity is terminated by the Company or any Related Entity
for Good Cause (as defined in Section 18 below). The determination that there
exists Good Cause for termination shall be made by the Committee (unless
otherwise agreed to in writing by the Company and the optionee) and any decision
in respect thereof by the Committee shall be final and binding on all parties in
interest.
(h) Other Termination of Employment. If the employment of an optionee with
the Company or a Related Entity terminates for any reason other than those
specified in subsections 6(e), (f) or (g) above, such optionee shall have the
right to exercise his Option in accordance with its terms, within 90 days after
the date of such termination, unless a shorter or longer period is expressly
provided in such Option or established by the Committee pursuant to Section 8
(but not after the expiration date of the Option); provided, that no Incentive
Option shall be exercisable more than three months after such termination.
(i) Maximum Exercise. The aggregate Fair Market Value of stock (determined
at the time of the grant of the Option) with respect to which Incentive Options
are exercisable for the first time by an optionee during any calendar year under
all plans of the Company and any Related Entity shall not exceed $100,000.
7. Stock Option Grants to Eligible Non-Employees.
(a) Subject to the express provisions of this Plan, the Committee shall have
the authority to grant Non-Qualified Options to Eligible Non-Employees. The
terms and conditions of the Options granted under this Section 7 shall be
determined from time to time by the Committee; provided, however, that the
Options granted under this Section 7 shall be subject to all terms and
provisions of the Plan (other than Section 6), including the following:
(i) Option Exercise Price. Subject to Section 4, the Committee shall
establish the Option exercise price at the time any Non-Qualified
Option is granted at such amount as the Committee shall determine.
The Option exercise price shall be subject to adjustment in
accordance with the provisions of Section 10 of the Plan.
(ii) Payment. The price per share of Common Stock with respect to each
Option exercise shall be payable at the time of such exercise.
Such price shall be payable in cash or by any other means
acceptable to the Committee, including delivery to the Company of
shares of Common Stock owned by the optionee or by the delivery or
withholding of shares pursuant to a procedure created pursuant to
Section 5(d) of the Plan. Shares delivered to or withheld by the
Company in payment of the Option exercise price shall be valued at
the Fair Market Value of the Common Stock on the day preceding the
date of the exercise of the Option.
(iii) Exercisability of Stock Option. Subject to Section 8, each Option
shall be exercisable in one or more installments as the Committee
may determine at the time of the grant. No Option shall be
exercisable after the expiration of ten years from the date of
grant of the Option, unless otherwise expressly provided in such
Option.
(iv) Death. If the retention by the Company or any Related Entity of
the services of any Eligible Non-Employee terminates because of
his death, the estate of such optionee, or a Person who acquired
the right to exercise such Option by bequest or inheritance or by
reason of
-5-
<PAGE> 6
the death of the optionee, shall have the right to exercise such
Option in accordance with its terms, at any time and from time to
time within 180 days after the date of death unless a shorter or
longer period is expressly provided in such Option (but in no event
prior to the 90th day after the death of such optionee) or
established by the Committee pursuant to Section 8 (but in no event
after the expiration date of such Option).
(v) Disability. If the retention by the Company or any Related Entity of
the services of any Eligible Non-Employee terminates because of his
Disability, such optionee or his legal representative shall have the
right to exercise the Option in accordance with its terms at any
time and from time to time within 180 days after the date of the
optionee's termination unless a shorter or longer period is
expressly provided in such Option (but in no event prior to the 90th
day after the date of such termination of employment) or established
by the Committee pursuant to Section 8 (but not after the expiration
of the Option).
(vi) Termination for Good Cause. If the retention by the Company or any
Related Entity of the services of any Eligible Non-Employee is
terminated (i) for Good Cause or (ii) as a result of removal of the
optionee from office as a director of the Company or of any Related
Entity for cause by action of the stockholders of the Company or
such Related Entity in accordance with the by-laws of the Company or
such Related Entity, as applicable, and the corporate law of the
jurisdiction of incorporation of the Company or such Related Entity,
then such optionee shall immediately forfeit his rights under his
Option except as to the shares of stock already purchased. The
determination that there exists Good Cause for termination shall be
made by the Committee (unless otherwise agreed to in writing by the
Company and the optionee) and any decision in respect thereof by the
Committee shall be final and binding on all parties in interest.
(vii) Other Termination of Relationship. If the retention by the Company
or any Related Entity of the services of any Eligible Non-Employee
terminates for any reason other than those specified in subsections
7(a)(iv), (a)(v) or (a)(vi) above, such optionee shall have the
right to exercise his or its Option in accordance with its terms
within 30 days after the date of such termination, unless a shorter
or longer period is expressly provided in such Option or established
by the Committee pursuant to Section 8 (but not after the expiration
date of the Option).
(b) An Eligible Non-Employee that is a non-employee director of the Company
may elect to receive Options in lieu of all or a portion of such director's
annual cash retainer fee for services as a director of the Company.
Notwithstanding subsection 7(a)(ii), the following shall apply if a non-employee
director elects to receive all or a portion of his/her annual cash retainer in
Options:
(i) Method of Election. Except as otherwise specified by the Committee,
a non-employee director's election shall be made in accordance with
the following provisions. Unless the Committee provides otherwise,
the election may be made only by written notice delivered to the
Committee prior to the first day of the calendar year in which the
cash payment would otherwise be made. The election shall specify the
amount of the annual cash retainer that is to be paid in the form of
Options and shall be irrevocable except for payments otherwise
payable in the next calendar year after the date of a written notice
of revocation.
(ii) Terms of Options. The date of grant of an Option granted pursuant
to this Section 7(b) shall be the date on which the portion of the
annual cash retainer fee that the non-employee director has elected
not to receive would otherwise have been paid. The number of shares
subject to that Option shall be determined by dividing the foregone
amount of the annual cash retainer fee otherwise due and payable on
the date of grant by the value of an Option
-6-
<PAGE> 7
for one share of Common Stock on the date of grant having the terms
set forth herein, which value shall be calculated pursuant to the
Black-Scholes Model. The exercise price with respect to a share of
Common Stock subject to that Option shall be the Fair Market Value
of a share of Common Stock on the Option's date of grant.
8. Change of Control.
Except as otherwise expressly provided in a particular Option, if (i) a
Change of Control shall occur or (ii) the Company shall enter into an agreement
providing for a Change of Control, then the Committee may declare any or all
Options outstanding under the Plan to be exercisable in full at such time or
times as the Committee shall determine and the Company may purchase any or all
of such Options for an amount of cash equal to the amount that could have been
attained upon the exercise of such Options or the realization of the optionee's
rights had such Option been currently exercisable. Each Option accelerated by
the Committee pursuant to the preceding sentence shall terminate,
notwithstanding any express provision thereof or any other provision of the
Plan, on such date (not later than the stated exercise date) as the Committee
shall determine.
9. [RESERVED]
10. Adjustment of Shares.
Except as otherwise contemplated in Section 8, and unless otherwise
expressly provided in a particular Option, in the event that, by reason of any
merger, consolidation, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change in capital
structure of the Company (collectively, a "Reorganization"), the Common Stock is
substituted, combined, or changed into any cash, property, or other securities,
or the shares of Common Stock are changed into a greater or lesser number of
shares of Common Stock, the number and/or kind of shares and/or interests
subject to an Option and the per share price or value thereof shall be
appropriately adjusted by the Committee to give appropriate effect to such
Reorganization. Any fractional shares or interests resulting from such
adjustment shall be eliminated. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Option shall comply with the rules of
Section 424(a) of the Code, and (ii) in no event shall any adjustment be made
which would render any Incentive Option granted hereunder other than an
"incentive stock option" for purposes of Section 422 of the Code. The maximum
aggregate number of shares of Common Stock in respect of which Options may be
granted under this Plan as provided for in Section 3 shall be subject to
adjustment as contemplated above.
Except as otherwise contemplated in Section 8, and unless otherwise
expressly provided in a particular Option, in the event that the Company is not
the surviving entity of a Reorganization and, following such Reorganization and,
in connection with such Reorganization, any optionee will hold Options issued
pursuant to this Plan which have not been exercised, canceled, or terminated in
connection therewith, the Company shall cause such Options to be assumed (or
canceled and replacement Options issued) by the surviving entity or a Related
Entity with such changes in the number and/or kind of shares and/or interests
subject to an Option and the per share price or the value thereof as the
Committee determines is necessary to give appropriate effect to such
Reorganization. In the event of any perceived conflict between the provisions of
Section 8 and this Section 10, the Committee's determination under Section 8
shall control.
11. Assignment or Transfer.
(a) Transfer of Incentive Options. Incentive Options are not transferrable
by an optionee other than by will or the laws of descent and
distribution.
(b) Transfer of Non-Qualified Options.
-7-
<PAGE> 8
(i) Permitted Transferees. The Committee may, in its discretion, permit
an optionee to transfer all or any portion of a Non-Qualified
Option, or authorize all or a portion of any Non-Qualified Option to
be granted to an optionee to be on terms which permit transfer by
such optionee, to (A) the spouse, former spouse, children,
stepchildren, grandchildren, parents, stepparents, grandparents,
siblings, nieces, nephews, mother-in-law, father-in-law,
sons-in-law, daughters-in-law, brothers-in-law, or sisters-in-law of
the optionee, including adoptive relationships, or any other person
sharing the optionee's household (other than a tenant or employee)
(collectively, "Immediate Family Members"), (B) a trust or trusts in
which such Immediate Family Members have more than fifty percent of
the beneficial interest, (C) a foundation in which such Immediate
Family Members (or the optionee) control the management of assets,
or (D) any other entity in which such Immediate Family Members (or
the optionee) own more than fifty percent of the voting interests
(collectively, "Permitted Transferees"), provided that (x) there may
be no consideration for any such transfer, (y) subsequent transfers
of Non-Qualified Options transferred as provided above shall be
prohibited except subsequent transfers back to the option grantee
and transfers to other Permitted Transferees of the option grantee.
(ii) Domestic Relations Orders. In the Committee's sole discretion
Non-Qualified Options may be transferred pursuant to domestic
relations orders entered or approved by a court of competent
jurisdiction upon delivery to the Company of written notice of such
transfer and a certified copy of such order.
(iii) Other Transfers and Exercise Rights. Except as expressly permitted
by Sections 11(b)(i) and 11(b)(ii), Non-Qualified Options requiring
exercise shall not be transferable other than by will or the laws of
descent and distribution. In the event that a legal representative
has been appointed in connection with the Disability of an optionee,
the optionee's options may be exercised by the legal representative.
(iv) Effect of Transfer. Following the transfer of any Non-Qualified
Option as contemplated by Sections 11(b)(i), 11(b)(ii) and
11(b)(iii), (A) such Non-Qualified Option shall continue to be
subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that the term "optionee"
shall be deemed to refer to the Permitted Transferee, the recipient
under a domestic relations order, or the estate or heirs of a
deceased optionee, as applicable, to the extent appropriate to
enable the optionee to exercise the transferred Non-Qualified Option
in accordance with the terms of this Plan and applicable law, (B)
the provisions of Sections 7(e) through (h) hereof shall continue to
be applied with respect to the original optionee and, following the
occurrence of any such events described therein the Non-Qualified
Options shall be exercisable by the Permitted Transferee, the
recipient under a domestic relations order, or the estate or heirs
of a deceased Holder, as applicable, only to the extent and for the
periods specified in Sections 7(e) through (h), and (C) in the
discretion of the Committee, all voting control in the Common Stock
transferred pursuant to the exercise of Non-Qualified Options shall
be retained in the option grantee.
(c) Procedures and Restrictions. Any optionee desiring to transfer an Option
as permitted under Section 11(a) or 11(b) shall make application
therefor in the manner and time specified by the Committee and shall
comply with such other requirements as the Committee may require to
assure compliance with all applicable securities laws. The Committee
shall not give permission for such a transfer if (i) it would give rise
to short-swing liability under Section 16(b) of the Exchange Act, or
(ii) it may not be made in compliance with all applicable federal, state
and foreign securities laws.
-8-
<PAGE> 9
12. Compliance with Securities Laws.
The Company shall not in any event be obligated to file any registration
statement under the Securities Act or any applicable state securities law to
permit exercise of any option or to issue any Common Stock in violation of the
Securities Act or any applicable state securities law. Each optionee (or, in the
event of his death or, in the event a legal representative has been appointed in
connection with his Disability, the Person exercising the Option) shall, as a
condition to his right to exercise any Option, deliver to the Company an
agreement or certificate containing such representations, warranties and
covenants as the Company may deem necessary or appropriate to ensure that the
issuance of shares of Common Stock pursuant to such exercise is not required to
be registered under the Securities Act or any applicable state securities law.
Certificates for shares of Common Stock, when issued, may have substantially
the following legend, or statements of other applicable restrictions, endorsed
thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES
LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED
OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE
SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY
INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH
OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT VIOLATE
APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Common Stock issued pursuant
to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
13. Withholding Taxes.
By acceptance of the Option, the optionee will be deemed to (i) agree to
reimburse the Company or Related Entity by which the optionee is employed for
any federal, state, or local taxes required by any government to be withheld or
otherwise deducted by such corporation in respect of the optionee's exercise of
all or a portion of the Option; (ii) authorize the Company or any Related Entity
by which the optionee is employed to withhold from any cash compensation paid to
the optionee or in the optionee's behalf, an amount sufficient to discharge any
federal, state, and local taxes imposed on the Company, or the Related Entity by
which the optionee is employed, and which otherwise has not been reimbursed by
the optionee, in respect of the optionee's exercise of all or a portion of the
Option; and (iii) agree that the Company may, in its discretion, hold the stock
certificate to which the optionee is entitled upon exercise of the Option as
security for the payment of the aforementioned withholding tax liability, until
cash sufficient to pay that liability has been accumulated, and may, in its
discretion, effect such withholding by retaining shares issuable upon the
exercise of the Option having a Fair Market Value on the date of exercise which
is equal to the amount to be withheld.
14. Costs and Expenses.
The costs and expenses of administering the Plan shall be borne by the
Company and shall not be charged against any Option nor to any employee
receiving an Option.
-9-
<PAGE> 10
15. Funding of Plan.
The Plan shall be unfunded. The Company shall not be required to make any
segregation of assets to assure the payment of any Option under the Plan.
16. Other Incentive Plans.
The adoption of the Plan does not preclude the adoption by appropriate means
of any other incentive plan for employees.
17. Effect on Employment.
Nothing contained in the Plan or any agreement related hereto or referred to
herein shall affect, or be construed as affecting, the terms of employment of
any Key Employee except to the extent specifically provided herein or therein.
Nothing contained in the Plan or any agreement related hereto or referred to
herein shall impose, or be construed as imposing, an obligation on (i) the
Company or any Related Entity to continue the employment of any Key Employee,
and (ii) any Key Employee to remain in the employ of the Company or any Related
Entity.
18. Definitions.
In addition to the terms specifically defined elsewhere in the Plan, as used
in the Plan, the following terms shall have the respective meanings indicated
unless another definition is agreed to in writing by the Company and the
optionee in an option grant agreement with respect to such term or a similar
term:
(a) "Affiliate" shall mean, as to any Person, a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person.
(b) "Authorization Date" shall have the meaning set forth in Section 11(b)
hereof.
(c) "Board of Directors" shall have the meaning set forth in Section 2
hereof.
(d) "Change of Control" shall mean the first to occur of the following
events: (i) any sale, lease, exchange, or other transfer (in one transaction or
series of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act, (ii) a majority of the Board of Directors of the Company
shall consist of Persons who are not Continuing Directors; (iii) the acquisition
after the date of acceptance of this Plan by any Person or Group of the power,
directly or indirectly, to vote or direct the voting of securities having more
than 50% of the ordinary voting power for the election of directors of the
Company, or (iv) the approval by the stockholders of the Company of a merger or
consolidation of the Company with any other entity, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or such surviving entity's parent) at least fifty percent (50%)
of the total voting power represented by the voting securities of the Company or
such surviving entity or such surviving entity's parent outstanding immediately
after such merger or consolidation.
(e) "Code" shall have the meaning set forth in Section 1 hereof.
(f) "Committee" shall have the meaning set forth in Section 2 hereof.
(g) "Common Stock" shall have the meaning set forth in Section 3 hereof.
-10-
<PAGE> 11
(h) "Company" shall have the meaning set forth in Section 1 hereof.
(i) "Continuing Director" shall mean, as of the date of determination, any
Person who (i) was a member of the Board of Directors of the Company on the date
of adoption of this Plan or (ii) was nominated for election or elected to the
Board of Directors of the Company with the affirmative vote of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election.
(j) "Disability" shall mean permanent disability as defined under Section
22(e)(3) of the Code.
(k) "Election Notice" shall have the meaning set forth in Section 11(b)
hereof.
(l) "Eligible Non-Employee" shall have the meaning set forth in Section 4
hereof.
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" shall, as it relates to the Common Stock, mean, at
the option of the Committee, the average of the high and low prices or the
closing price of such Common Stock as reported on the principal national
securities exchange on which the shares of Common Stock are then listed or the
NASDAQ National Market, as applicable, on the date specified herein for such a
determination, or if there were no sales on such date, on the next succeeding
day or immediately preceding day on which there were sales, or if such Common
Stock is not listed on a national securities exchange or the NASDAQ National
Market, the last reported bid price in the over-the-counter market, or if such
shares are not traded in the over-the-counter market, the per share cash price
for which all of the outstanding Common Stock could be sold to a willing
purchaser in an arms length transaction (without regard to minority discount,
absence of liquidity, or transfer restrictions imposed by any applicable law or
agreement) at the date of the event giving rise to a need for a determination.
Except as may be otherwise expressly provided in a particular Option, Fair
Market Value shall be determined in good faith by the Committee.
(o) "Good Cause" with respect to any Key Employee, shall mean (unless
another definition is agreed to in writing by the Company and the optionee)
termination by action of the Board of Directors because of: (A) the optionee's
conviction of, or plea of nolo contendere to, a felony or a crime involving
moral turpitude; (B) the optionee's personal dishonesty, incompetence, willful
misconduct, willful violation of any law, rule, or regulation (other than minor
traffic violations or similar offenses) or breach of fiduciary duty which
involves personal profit; (C) the optionee's commission of material
mismanagement in the conduct of his duties as assigned to him by the Board of
Directors or the optionee's supervising officer or officers of the Company or
any Related Entity; (D) the optionee's willful failure to execute or comply with
the policies of the Company or any Related Entity or his stated duties as
established by the Board of Directors or the optionee's supervising officer or
officers of the Company or any Related Entity, or the optionee's intentional
failure to perform the optionee's stated duties; or (E) substance abuse or
addiction on the part of the optionee. "Good Cause" with respect to any Eligible
Non-Employee, shall mean (unless another definition is agreed to in writing by
the Company and the optionee) termination by action of the Board of Directors
because of: (A) the optionee's conviction of, or plea of nolo contendere to, a
felony or a crime involving moral turpitude; (B) the optionee's personal
dishonesty, incompetence, willful misconduct, willful violation of any law,
rule, or regulation (other than minor traffic violations or similar offenses) or
breach of fiduciary duty which involves personal profit; (C) the optionee's
commission of material mismanagement in providing services to the Company or any
Related Entity; (D) the optionee's willful failure to comply with the policies
of the Company in providing services to the Company or any Related Entity, or
the optionee's intentional failure to perform the services for which the
optionee has been engaged; (E) substance abuse or addiction on the part of the
optionee; or (F) the optionee's willfully making any material misrepresentation
or willfully omitting to disclose any material fact to the board of directors of
the Company or any Related Entity with respect to the business of the Company or
any Related Entity.
(p) "Grantor" shall have the meaning set forth in Section 9 hereof.
-11-
<PAGE> 12
(q) "Holding Period" shall have the meaning set forth in Section 5 hereof.
(r) "Incentive Options" shall have the meaning set forth in Section 6
hereof.
(s) The terms "include," "included" or "including" when used herein shall
mean "including, but not limited to."
(t) "Key Employee" shall have the meaning set forth in Section 4 hereof.
(u) "Non-Qualified Options" shall have the meaning set forth in Section 6
hereof.
(v) "Options" shall have the meaning set forth in Section 1 hereof.
(w) "Person" shall have the meaning set forth in Section 4 hereof.
(x) "Plan" shall have the meaning set forth in Section 1 hereof.
(y) "Purchasable Shares" shall have the meaning set forth in Section 9
hereof.
(z) "Purchase Option" shall have the meaning set forth in Section 9 hereof.
(aa) "Related Entities" shall have the meaning set forth in Section 1
hereof.
(bb) "Reorganization" shall have the meaning set forth in Section 10 hereof.
(cc) "Right-of-First-Refusal" shall have the meaning set forth in Section
11(b) hereof.
(dd) "Rule 16b-3" shall mean Rule 16b-3, as amended, or other applicable
rules under Section 16(b) of the Exchange Act.
(ee) "Sale Notice" shall have the meaning set forth in Section 11(b) hereof.
(ff) "Section 162(m)" means Section 162(m) of the Code and the rules and
regulations adopted from time to time thereunder, or any successor law or rule
as it may be amended from time to time.
(gg) "Securities Act" shall mean the Securities Act of 1933.
(hh) "Subsidiary" shall mean, with respect to any Person, any other Person
of which such first Person owns or has the power to vote, directly or
indirectly, securities representing a majority of the votes ordinarily entitled
to be cast for the election of directors or other governing Persons.
(ii) "Transfer" shall have the meaning set forth in Section 11(b) hereof.
-12-
<PAGE> 13
19. Amendment of Plan.
The Board of Directors shall have the right to amend, modify, suspend or
terminate the Plan at any time; provided, that no amendment shall be made which
shall increase the total number of shares of the Common Stock which may be
issued and sold pursuant to Options granted under the Plan unless such amendment
is made by or with the approval of the stockholders. The Board of Directors
shall have the right to amend the Plan and the Options outstanding thereunder,
without the consent or joinder of any optionee or other Person, in such manner
as may be determined necessary or appropriate by the Board of Directors in order
to cause the Plan and the Options outstanding thereunder (i) to qualify as
"incentive stock options" within the meaning of Section 422 of the Code, (ii) to
comply with Rule 16b-3 (or any successor rule) under the Exchange Act (or any
successor law) and the regulations (including any temporary regulations)
promulgated thereunder, or (iii) to comply with Section 162(m) of the Code (or
any successor section) and the regulations (including any temporary regulations)
promulgated thereunder. Except as provided above, no amendment, modification,
suspension or termination of the Plan shall alter or impair any Options
previously granted under the Plan, without the consent of the holder thereof.
20. Effective Date.
The Plan shall become effective on the date on which it is approved by the
Board of Directors, provided the Plan is approved by the stockholders of the
Company within twelve months thereafter. Notwithstanding any provision in the
Plan, in any Option Agreement, or in any Restricted Stock Agreement, no
Incentive Option shall be exercisable or vest prior to such stockholder
approval.
21. Individual Limitations on Awards.
No person may be granted during any one year period, Options with respect to
more than 2,000,000 shares of Common Stock. If an Option is canceled, the
canceled Option shall continue to be counted against the maximum number of
shares of Common Stock for which Options may be granted to such Person under the
Plan. If, after the grant, the exercise price of an Option is reduced, the
transaction shall be treated as a cancellation of the Option and the grant of a
new Option. In such case, both the Option that is deemed to be canceled and the
Option that is deemed to be granted reduce the maximum number of shares for
which Options may be granted to such Person under the Plan.
-13-
<PAGE> 1
EXHIBIT 5.1
OPINION OF PARR, WADDOUPS, BROWN, GEE & LOVELESS, P.C.
March 3, 2000
MSI Holdings, Inc.
1121 East 7th Street
Austin, Texas 78702
Gentlemen:
We have acted as special counsel for MSI Holdings, Inc., a Utah
corporation (the "Company"), with respect to matters of Utah corporate law. In
particular, we have been asked to render the opinions set forth below and to
consent to the Company's filing of such opinions with the United States
Securities and Exchange Commission in connection with the Registration Statement
on Form S-8 (the "Registration Statement"), with respect to 5,500,000 shares of
the Common Stock, $0.10 par value, of the Company (the "Common Stock") that may
be issued and sold by the Company pursuant to the MSI Holdings, Inc. 2000 Stock
Option Plan (the "Plan").
With respect to the foregoing, we have examined originals or copies
certified by the Company of the Registration Statement, the Plan and
resolutions of its board of directors and such other documents, and such legal
matters, as we have deemed necessary to render the opinions expressed herein. In
all such examinations, we have assumed the genuineness of all signatures and
the conformity to the original of all copies submitted to us. We have also
assumed that the Plan has been approved by the shareholders of the Company or
will be approved by the shareholders of the Company prior to February 22, 2001.
As to various questions of fact relevant to the opinion expressed herein, we
have relied upon certificates and statements of officers and other
representatives of the Company.
Based on the foregoing, we are of the opinion that the 5,500,000 shares
of Common Stock reserved for issuance pursuant to the Plan, when issued and sold
in accordance with the terms of the Plan and option agreements issued by the
Company in accordance with the Plan for consideration equal to at least the par
value per share of Common Stock, will be duly authorized, validly issued, and
fully paid and nonassessable.
We consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
PARR, WADDOUPS, BROWN, GEE & LOVELESS, P.C.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated June 9, 1998, as restated on September 24,
1999, accompanying the consolidated financial statement of MSI Holdings, Inc.
and subsidiary appearing in the Annual Report on Form 10-KSB for the fiscal year
ended March 31, 1999, which is incorporated by reference in this Registration
Statement on Form S-8 and the related Prospectus. We consent to the
incorporation by reference in the Registration Statement and Prospectus of the
aforementioned report.
/s/ BROWN, GRAHAM & CO., P.C.
Georgetown, Texas
March 1, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the MSI Holdings, Inc. 2000 Stock Option Plan of our
report dated September 28, 1999, except for Notes 1, 13, and 15, as to which the
date is February 29, 2000, with respect to the consolidated financial statements
of MSI Holdings, Inc. included in its Annual Report (Form 10-KSB/A) for the year
ended March 31, 1999, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Austin, Texas
February 29, 2000
