<PAGE>
As filed with the Securities and Exchange Commission
on March 1, 1996
Registration No. 33-_____________
Form S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ELECTRONIC ARTS INC.
Delaware 94-2838567
(State of Incorporation) (I.R.S. employer identification no.)
1450 Fashion Island Boulevard
San Mateo, California 94404
(Address of principal executive offices)
MANLEY & ASSOCIATES, INC.
1994 COMBINED INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN
(Full title of the Plan)
RUTH A. KENNEDY
Vice President, General Counsel and Secretary
Electronic Arts Inc.
1450 Fashion Island Boulevard
San Mateo, California 94404
(415) 571-7171
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share Price Fee
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 93 (1) $26.375 (2) $2,453 (2) $(5)
($0.01 par value)
Common Stock 2082(3) $0.72 (4) $1,499 (4) $(5)
($0.01 par value)
- ----------------------------------------------------------------------------------------------
</TABLE>
The Index to Exhibits appears on sequentially numbered page 6.
(1) Shares issued under the Manley & Associates, Inc. 1994 Combined
Incentive and Nonqualified Stock Option Plan
(2) Estimated pursuant to Rule 457(c) as of February 27, 1996, solely for
the purpose of calculating the amount of the registration fee.
(3) Shares subject to outstanding options under the Manley & Associates,
Inc. 1994 Combined Incentive and Nonqualified Stock Option Plan.
(4) Calculated pursuant to Rule 457(h)(1) on the basis of the exercise
price of the outstanding options.
(5) Fee of $100 pursuant to Section 6(b) of the Securities Act of 1933 as
amended.
<PAGE>
PROSPECTUS
93 SHARES
ELECTRONIC ARTS INC.
COMMON STOCK, $0.01 PAR VALUE
--------------------------------------
This Prospectus relates to 93 shares of Common Stock of Electronic Arts
Inc., a Delaware corporation (the "COMPANY" or "ELECTRONIC ARTS" or
"REGISTRANT") presently owned by and to be offered from time to time for the
accounts of, certain employees (the "SELLING STOCKHOLDERS") who have exercised
options to purchase the common stock of Electronic Arts pursuant to the Manley &
Associates, Inc. 1994 Combined Incentive and Nonqualified Stock Option Plan (the
"PLAN"). The Company will not receive any of the proceeds from the sale of
these shares. It is anticipated that the Selling Stockholders will sell shares
offered pursuant to this Prospectus on the Nasdaq National Market at prevailing
market prices on the date of sale or through privately negotiated transactions.
The Selling Stockholders will bear all sales commissions and related expenses.
Any other expenses incurred by the Company in connection with this registration
and offering and not borne by the Selling Stockholders will be borne by the
Company. None of the shares offered pursuant to this Prospectus have been
registered prior to the filing of the Registration Statement of which this
Prospectus is a part.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE THE DISCUSSION
ENTITLED "RISK FACTORS" ON PAGE 3 OF THIS PROSPECTUS.
Each Selling Stockholder and any broker executing selling orders on behalf
of a Selling Stockholder may be deemed to be an "underwriter" within the meaning
of the Securities Act of 1933, as amended (the "SECURITIES ACT"), in which event
commissions received by such broker may be deemed to be underwriting commissions
under the Securities Act.
Electronic Arts Common Stock is traded on the Nasdaq National Market under
the symbol "ERTS". On February 27, 1996, the closing sale price of Electronic
Arts' Common Stock, as reported in THE WALL STREET JOURNAL, was $26.625 per
share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------------------
The date of this Prospectus is March 1, 1996.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "COMMISSION"). Reports, proxy and information statements and
other information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington D.C. 20549, and at certain of its Regional Offices located
at Seven World Trade Center, 13th Floor, New York, NY 10048 and at Northwest
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661 and copies
of such materials may be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rates. The Company's Common
Stock is traded on the Nasdaq National Market under the symbol "ERTS". The
foregoing materials can also be obtained from the Nasdaq National Market at 1735
K Street N.W., Washington, D.C. 20006.
INCORPORATION BY REFERENCE
The Company hereby undertakes to provide without charge to each person to
whom this Prospectus is delivered, upon written or oral request of such person,
a copy of any and all information that has been incorporated by reference in the
Registration Statement of which this Prospectus is a part (but not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus incorporates). All such inquiries should be directed to the
Stock Administration Department, Electronic Arts Inc., 1450 Fashion Island
Blvd., San Mateo, CA 94404, telephone (415) 571-7171.
TABLE OF CONTENTS
Address and Telephone Number Page 3
Risk Factors Page 3
Use of Proceeds Page 5
Selling Security Holders Page 6
Plan of Distribution Page 6
Incorporation of Certain Information by Reference Page 7
ADDRESS AND TELEPHONE NUMBER
The address and telephone number of the Electronic Arts' principal
executive offices are: 1450 Fashion Island Blvd., San Mateo, CA 94404,
telephone (415) 571-7171.
RISK FACTORS
In addition to the other information contained in this Prospectus and in
those certain documents incorporated by reference herein, prospective investors
should carefully consider the following factors in evaluating the Company and
its business before purchasing the shares of Common Stock offered hereby.
3
<PAGE>
UNPREDICTABILITY OF EA's BUSINESS
The interactive software business has historically been a volatile and
highly dynamic industry affected by seasonality, changing technology, limited
hardware platform life cycles, hit products, competition, component supplies,
consumer spending and other economic trends. These factors all affect the
operating results of EA, often in combinations that make predicting EA's
operating results difficult.
RISKS INVOLVING PRODUCT DEVELOPMENT
Interactive entertainment software products typically have life spans of
only 3-12 months. EA must constantly develop and bring to market new products
that achieve market acceptance quickly. EA's future success will depend in
large part on its ability to develop and introduce new products on a timely
basis. New products must keep pace with competitive offerings, adapt to new
hardware platforms and emerging industry standards and provide additional
functionality. If EA were unable, due to resource constraints or technological
or other reasons, to develop and ship such products in a timely manner, this
inability would have a material adverse effect on its operating results and
financial condition.
Product development schedules, particularly for new hardware platforms, are
difficult to predict because they involve creative processes, use of new
development tools for new platforms and the learning process associated with
development for new technologies, as well as other factors. CD-ROM products
frequently include more content and are more complex, time-consuming and costly
to develop than cartridge products and, accordingly, cause additional
development and scheduling risk. In addition, these development risks for CD-
ROM products can cause particular difficulties in predicting quarterly results
because brief manufacturing lead times allow finalization of products and
projected release dates late in a quarter. Failure to meet product development
schedules may cause a shortfall in shipments in any quarter and may cause the
operating results for such quarter to fall significantly below anticipated
levels.
In addition, EA makes substantial investments in research and development
of products for operation on new hardware platforms which EA anticipates will
become popular. Such investment occurs one to two years in advance of shipment
of products for such platforms. If EA invests in a platform that does not
achieve significant market penetration, EA's planned revenues for those products
will not be achieved and EA may not recover its development investment.
Conversely, if EA does not choose to develop for a platform that achieves
significant market success, its revenue growth may also be adversely affected.
There can be no assurance that EA will correctly make such platform choices.
COMPETITION
The interactive consumer software business is highly competitive.
Important factors in marketing both entertainment and educational software
include content quality and entertainment value, product features, manufacturing
quality and reliability, brand recognition, hardware compatibility, ease of
understanding and operation, dealer pricing, and availability and quality of
support services. A variety of companies offer products that compete directly
with one or more of EA's products. These direct competitors vary in size from
very small companies with limited resources to companies with financial,
managerial and technical resources comparable to or greater than those of EA.
Manufacturers of hardware platform systems, videogame cartridges and CD-ROM's
such as Nintendo, Sega and Sony (together with their licensees), diversified
media and
4
<PAGE>
entertainment companies such as Disney, Viacom and Time-Warner Inc. and
publishers of personal computer software such as Microsoft Corporation also
compete directly with EA in providing interactive software products to
consumers. In addition, companies in industries such as cable television and
telecommunications, many of whom have significant financial resources, have
begun to diversify or have announced plans to enter the interactive software
market. These new entrants have the potential to become significant
competitors. There can be no assurances that EA's past success will continue in
light of the increase in competition and the resources that these new entrants
can bring to the market.
RELATIONSHIPS WITH HARDWARE COMPANIES
A large portion of EA's revenues are derived from the sale of products
designed to be played on proprietary videogame platforms such as the Super
Nintendo Entertainment System, Sega Genesis, 3DO Interactive Multiplayer, Sega
Saturn and Sony PlayStation. The interdependent nature of EA's business and
that of its hardware licensers brings significant risks to EA's business. The
success of EA's products is significantly affected by market acceptance of the
videogame hardware systems and in many cases, EA will have expended a large
amount of development and marketing resources on products designed for videogame
systems (such as the new 32-bit systems) that have yet to demonstrate their
acceptance by the market. Also, EA's contracts with hardware licensers often
grant significant control over the manufacturing of EA's products to the
licenser. This fact could, in certain circumstances, leave EA unable to get its
products manufactured and shipped to customers. Finally, EA's contracts with
its hardware licensers often require EA to take significant risks in holding or
prepaying for its inventory of products. Each of the factors could materially
and adversely affect EA's operating results.
ACQUISITIONS AND JOINT VENTURES
EA continues to aggressively pursue a number of acquisition and joint
venture opportunities. Such activities have placed, and will continue to place,
a substantial strain on EA's management, operational, financial and
administrative resources, particularly in EA's international business. There
can be no assurance that EA will be able to successfully integrate its future
acquisitions and joint ventures or derive any substantial benefits or synergies
from such acquisitions or joint ventures, or that such acquisitions or joint
ventures will be profitable for EA.
OTHER RISK FACTORS
Other industry and company traits may materially and adversely affect EA's
financial and stock performance. ADDITIONAL RISK FACTORS THAT AFFECT AN
INVESTMENT IN THE COMPANY'S COMMON STOCK ARE SET FORTH IN THE DESCRIPTION OF
EA'S BUSINESS CONTAINED IN EA'S FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31,
1995 AT PAGES 3-17 AND IN EA'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER
31, 1995 AT PAGES 20-26.
USE OF PROCEEDS
This is an offering of 93 shares of the Common Stock of the Company by the
Selling Stockholders listed below. If and when any of the Selling Stockholders
sell the shares that are the subject of this Prospectus, they will do so for
their own accounts and none of the proceeds from such sales will be received by
the Company.
5
<PAGE>
SELLING SECURITY HOLDERS
The shares of Electronic Arts common stock to which this Prospectus related
are held by, and when sold will be sold for the account of, the following
persons:
NAME OF SELLING STOCKHOLDER NUMBER OF SHARES
--------------------------- ----------------
Kent Peterson 52
Jerry McManus 13
Mark Rose 28
Each of the Selling Stockholders is a regular employee of the Company, but
is not an officer, director or affiliate of the Company. The number of shares
indicated for each Selling Stockholder above represents such person's entire
holding of the Company's securities, and represents less than one percent of the
Company's outstanding common stock.
PLAN OF DISTRIBUTION
This is an offering of 93 shares of common stock of the Company by the
Selling Stockholders named above. The offering is not being underwritten, and
no proceeds from the sale of the shares will be received by the Company.
The Company has been advised that the Selling Stockholders may from time to
time offer all or part of the shares covered hereby (i) in private sales at
negotiated prices, (ii) to market makers or through broker-assisted transactions
on the Nasdaq National Market at prices and terms prevailing in the public
market at the times of such sales, or (iii) through other means and on other
terms, such as by gift or donation. The Selling Stockholders will be
responsible for any commission expenses and brokerage fees payable in connection
with their sales.
6
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for Registrant's fiscal year
ended March 31, 1995, which is the Company's latest annual report filed pursuant
to Section 13(a) or 15(d) of the Exchange Act;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual report
referred to in (a) above.
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission under
Section 12 of the Exchange Act, including any amendment or report filed for the
purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment hereto which indicates that all securities offered hereby have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents.
7
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by Registrant with the Commission are
incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for Registrant's fiscal
year ended March 31, 1995, which is Registrant's latest annual report filed
pursuant to Section 13(a) or 15(d) of the Exchange Act;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual report
referred to in (a) above.
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed with the Commission under
Section 12 of the Exchange Act, including any amendment or report filed for the
purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment hereto which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be a part hereof from
the date of filing of such documents.
ITEM 5. EXPERTS.
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Registrant by Ruth A. Kennedy, Vice President,
General Counsel and Secretary of the Registrant.
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The provisions of Section 145 of the Delaware General Corporation Law and
Section 6 of the Registrant's Bylaws provide for indemnification for expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding brought against any person is or was a
director, officer or employee of the Registrant arising in connection with
actions
8
<PAGE>
taken or omissions made by such person within the scope of his or her duties to
the Registrant. This indemnification may be sufficiently broad to permit
indemnification of the Registrant's officers and directors for liabilities
arising under the Securities Act of 1933, as amended. In addition, Article 7 of
the Registrant's Certificate of Incorporation provides that the Registrant's
directors shall not be personally liable to the Registrant 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 Registrant
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law or (iv) for any transactions
for which the director derived an improper personal benefit. Article 7 of the
Registrant's Certificate of Incorporation further provides that if any amendment
to the Delaware General Corporation Law further eliminates or limits the
liability of a director of a corporation incorporated in Delaware, the liability
of the Registrant's directors shall be eliminated to the fullest extent then-
permissible under Delaware law. The Registrant has entered into indemnity
agreements with each of its current directors to give such directors additional
contractual assurances regarding the scope of indemnification and limitation of
liability set forth in the Delaware General Corporation Law and the Registrant's
Certificate of Incorporation and Bylaws. The Registrant maintains an insurance
policy against claims regarding errors or omissions of any of Registrant's
directors or executive officers while acting within the scope of their duties to
the Registrant.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The issuances of the Registrant's common stock to the individuals named as
Selling Stockholders in the Prospectus included within this Registration
Statement were issued pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act. The Selling Stockholders are part of a
limited class of individuals who are optionees under the Plan and the issuances
of stock to the Selling Stockholders were the result of the exercise of options
granted pursuant to the Plan prior to the filing of this Registration Statement.
The Selling Stockholders have been provided with an information statement
regarding Registrant and its business which information statement included
copies of Registrant's most recent annual report to its stockholders,
Registrant's most recent annual report on Form 10-K, Registrant's report on Form
10-Q for its Quarterly Period ended September 30, 1995 and Registrant's proxy
statement for its 1995 annual meeting.
ITEM 8. EXHIBITS
4.01 Registrant's Manley & Associates, Inc. 1994 Combined Incentive and
Nonqualified Stock Option Plan (the "PLAN").
4.02 Registrant's Certificate of Incorporation (incorporated by reference
to Exhibit 3.01 of Registrant's Current Report on Form 8-K filed with
the Commission on October 16, 1991 (the "FORM 8-K")).
4.03 Registrant's Certificate of Amendment to Certificate of Incorporation
(incorporated by reference to Exhibit 4.01 to Registrant's
Registration Statement on Form S-8 filed with the Commission on
December 1, 1992 (File No. 33-55212).
4.04 Registrant's By-laws (incorporated by reference to Exhibit 3.02 of the
Form 8-K).
5.01 Opinion of Corporate Counsel regarding legality of the securities
being issued.
23.01 Consent of Corporate Counsel (included in Exhibit 5.01).
23.02 Consent of KPMG Peat Marwick LLP, Independent Accountants.
24.01 Power of Attorney (see page 11).
9
<PAGE>
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(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 set forth in this Registration
Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) 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 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof; and
(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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions of Item 6 of this Registration Statement,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than by 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 herein, 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
10
<PAGE>
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual and corporation whose
signature appears below constitutes and appoints E. Stanton McKee and David L.
Carbone and each of them, his or its true and lawful attorneys-in-fact and
agents with full power of substitution, for him or it and in his or its name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement of Form S-
8, and to file the same with all exhibits thereto and all documents in
connection therewith, with the Securities and Exchange Commission, 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
in and about the premises, as fully to all intents and purposes as he or it
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the 1933 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 San
Mateo, State of California, on this 29th day of February, 1996.
ELECTRONIC ARTS INC.
By: /s/ RUTH A. KENNEDY, ESQ.
-------------------------------------
Ruth A. Kennedy, Esq.
Vice President, General Counsel and Secretary
Pursuant to the requirements of the 1933 Act, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
CHIEF EXECUTIVE OFFICER:
/s/ LAWRENCE F. PROBST III February 29, 1996
- ---------------------------
Lawrence F. Probst III President, Chairman
of the Board of Directors
and Chief Executive Officer
PRINCIPAL FINANCIAL OFFICER:
/s/ E. STANTON MCKEE, JR. February 29, 1996
- ----------------------------
E. Stanton McKee, Jr. Sr. Vice President,
Chief Financial and
Administrative Officer
PRINCIPAL ACCOUNTING OFFICER:
/s/ DAVID L. CARBONE February 29, 1996
- ---------------------------
David L. Carbone Vice President,
Assistant Secretary
DIRECTORS:
/s/ M. RICHARD ASHER February 29, 1996
- ---------------------------
M. Richard Asher
/s/ WILLIAM J. BYRON February 29, 1996
- ---------------------------
William J. Byron
/s/ DANIEL H. CASE III February 29, 1996
- ---------------------------
Daniel H. Case III
/s/ GARY M. KUSIN February 29, 1996
- ---------------------------
Gary M. Kusin
/s/ TIMOTHY MOTT February 29, 1996
- ---------------------------
Timothy Mott
</TABLE>
12
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
4.01 Registrant's Manley & Associates, Inc. 1994 Combined Incentive and
Nonqualified Stock Option Stock Plan (including form of
Nonqualified Stock Option Grant)
4.02 Registrant's Certificate of Incorporation (incorporated by reference
to Exhibit 3.01 of Registrant's Current Report on Form 8-K filed with
the Commission on October 16, 1991 (the "FORM 8-K")
4.03 Registrant's Certificate of Amendment to Certificate of Incorporation
(incorporated by reference to Exhibit 4.01 to Registrant's
Registration Statement on Form S-8 filed with the Commission on
December 1, 1992 (File No. 33-55212)
4.04 Registrant's By-laws (incorporated by reference to Exhibit 3.02 of the
Form 8-K)
5.01 Opinion of General Counsel regarding legality of the securities being
issued
23.01 Consent of General Counsel (included in Exhibit 5.01)
23.02 Consent of KPMG Peat Marwick LLP as Independent Auditors
24.01 Power of Attorney (see page 11)
13
<PAGE>
EXHIBIT 4.01
MANLEY & ASSOCIATES, INC.
1994 COMBINED INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN
SECTION 1. PURPOSE. The purpose of the Manley & Associates, Inc. 1994
Combined Incentive and Nonqualified Stock Option Plan (the "Plan") is to enable
Manley & Associates, Inc. (the "Company") to attract and retain the services of
people with training, experience and ability and to provide additional incentive
to such persons by granting them an opportunity to participate in the ownership
of the Company.
SECTION 2. STOCK SUBJECT TO PLAN. The stock subject to this Plan shall
be the Company's common stock, no par value per share (the "Common Stock"),
presently authorized but unissued or subsequently acquired by the Company.
Subject to adjustment as provided in Section 10, the aggregate amount of Common
Stock reserved for issuance or delivery upon exercise of all options granted
under this Plan shall not exceed 2,500 shares of Common Stock, as constituted on
date of adoption of this Plan by the Board of Directors. If any option granted
under this Plan shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject thereto shall thereupon again
be available for purposes of this Plan, including for replacement options which
may be granted in exchange for such expired, surrendered, exchanged, canceled or
terminated options.
SECTION 3. ADMINISTRATION. The Plan shall be administered by the Board
of Directors of the Company, in accordance with the following terms and
conditions:
3.1 GENERAL AUTHORITY. Subject to the express provisions of the Plan,
the Board of Directors shall have the authority, in its discretion, to determine
all matters relating to options to be granted under the Plan, including the
selection of individuals to be granted options, the number of shares to be
subject to each option, the exercise price, the term, whether such options shall
be immediately exercisable or shall become exercisable in increments over time,
and all other terms and conditions thereof. Grants under this Plan to persons
eligible need not be identical in any respect, even when made simultaneously.
The Board of Directors may from time to time adopt rules and regulations
relating to the administration of the Plan. The interpretation and construction
by the Board of Directors of any terms or provisions of this Plan or any option
issued hereunder, or of any rule or regulation promulgated in connection
herewith, shall be conclusive and binding on all interested parties. The Board
of Directors in its sole discretion, may grant incentive stock options
("Incentive Stock Options") as such term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended, (the "Code") and/or nonqualified
stock options ("Nonqualified Stock Options"). A Nonqualified Stock Option is a
stock option which is not an Incentive Stock Option. The type of option granted,
whether an Incentive Stock Option or a Nonqualified Stock Option shall be
clearly identified by the Board of Directors when granted. The term option when
used in this Plan should refer to Incentive Stock Options and Nonqualified Stock
Options, collectively.
<PAGE>
3.2 DIRECTORS. A member of the Board of Directors may be eligible to
participate in or receive or hold options under this Plan; provided, however,
that no member of the Board of Directors shall vote with respect to the granting
of an option hereunder to himself or herself, as the case may be.
3.3 DELEGATION TO A COMMITTEE. Notwithstanding the foregoing, the
Board of Directors, if it so determines, may delegate to a committee of the
Board of Directors any or all authority for the administration of the Plan, and
thereafter references to the Board of Directors in this Plan shall be deemed to
be references to the committee to the extent provided in the resolution
establishing the committee. With respect to grants made under this Plan to
individuals who are subject to Section 16 of the Securities Exchange Act of
1934, as amended (the "1934 Act"), the administrator of this Plan shall be
constituted at all times so as to meet the requirements of Rule 16b-3
promulgated under Section 16(b) of the 1934 Act if any of the Company's equity
securities are registered pursuant to Section 12(b) or 12(g) of the 1934 Act.
3.4 PERSONS SUBJECT TO SECTION 16(B). It is the intention of the
Company that, if any of the Company's equity securities are registered pursuant
to Section 12(b) or 12(g) of the 1934 Act, this Plan shall comply in all
respects with Rule 16b-3 under the 1934 Act. If any Plan provision is later
found not to be in compliance with such Section, the provision shall be deemed
null and void, and in all events this Plan shall be construed in favor of it
meeting the requirements of Rule 16b-3. Notwithstanding anything in the Plan to
the contrary, the Board of Directors, in its absolute discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan to participants who are officers and directors subject to Section 16(b) of
the 1934 Act without so restricting, limiting or conditioning the Plan with
respect to other participants.
3.5 REPLACEMENT OF OPTIONS. The Board of Directors, in its absolute
discretion, may grant options subject to the condition that options previously
granted at a higher or lower exercise price under the Plan be canceled or
exchanged in connection with such grant. The number of shares covered by the new
options, the exercise price, the term and the other terms and conditions of the
new option, shall be determined in accordance with the Plan and may be different
from the provisions of the canceled or exchanged options. Alternatively, the
Board of Directors may, with the agreement of the Optionee, amend previously
granted options to establish the exercise price at the then current fair market
value of the Company's Common Stock.
3.6 LOANS TO OPTIONEES. The Board of Directors, in its absolute
discretion, may provide that the Company loan to Optionees sufficient funds to
exercise any option granted under the Plan and/or to pay withholding tax due
upon exercise of such option. The Board of Directors shall have the authority
to make such determinations at the time of grant or exercise and shall establish
repayment terms thereof, including installments, maturity and interest rate.
SECTION 4. ELIGIBILITY. Options may be granted only to persons who, at
the time of the option is granted, are employees, directors, consultants or
independent contractors of the Company or any of its present or future parent or
subsidiary corporations (as those terms are used
<PAGE>
in Section 422A(a) (2) and (d) (1) and Section 425(e) and (f) of the Code,
hereafter a "Parent" or "Subsidiary"). Any individual to whom an option is
granted under this Plan shall be referred to hereinafter as "Optionee". Any
Optionee may receive one or more grants of options as the Board of Directors as
shall from time to time determine, and such determinations may be different as
to different Optionees and may vary as to different grants. Optionees who are
not employees will only be eligible to receive Nonqualified Stock Options.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS. Options granted under this
Plan shall be evidenced by written agreements which shall contain such terms,
conditions, limitations and restrictions as the Board of Directors shall deem
advisable and which are not inconsistent with this Plan. Each option granted
hereunder shall clearly indicate whether it is an Incentive Stock Option or a
Nonqualified Stock Option. Notwithstanding the foregoing, all such options
shall include or incorporate by reference the following terms and conditions:
5.1 NUMBER OF SHARES. The maximum number of shares that may be
purchased pursuant to the exercise of each option and the price per share at
which such option is exercisable (the "exercise price") shall be as established
by the Board of Directors, provided, however, that the maximum number of shares
with respect to which an option or options may be granted to any Optionee in any
one fiscal year of the Company shall not exceed 700 shares, (the "Maximum Annual
Optionee Grant"); and provided that the exercise price of Incentive Stock
Options shall not be less than the fair market value per share of the Common
Stock at the time the option is granted, as determined in good faith by the
Board of Directors. The exercise price of Nonqualified Stock Options may be
greater or less than the fair market value per share of the Common Stock at the
time the option is granted.
5.2 DURATION OF OPTIONS. Subject to the restrictions contained in
Section 9, the term of each option shall be established by the Board of
Directors and, if not so established, shall be ten years fromthe date it is
granted, but in no event shall the term of any Incentive Stock Option exceed ten
years.
5.3 EXERCISABILITY. Each option shall prescribe the installments, if
any, in which an option granted under the Plan shall become exercisable. The
Board of Directors, in its absolute discretion, may waive or accelerate any
installment requirement contained in outstanding options. In no case may an
option be exercised as to less than 100 shares at any one time (or the remaining
shares covered by the option if less than 100) during the term of the option.
Only whole shares shall be issued pursuant to the exercise of any option.
5.4 INCENTIVE STOCK OPTION. Any option which is issued as an
Incentive Stock Option under this Plan, shall, notwithstanding any other
provisions of this Plan or the option terms to the contrary, contain all of the
terms, conditions, restrictions, rights and limitations required to be an
Incentive Stock Option, and any provision to the contrary shall be disregarded.
The Board of Directors may require an Optionee to give the Company prompt notice
of any disposition of shares of Common Stock acquired by the exercise of an
Incentive Stock Option prior to the expiration of two years after the date of
grant of the option and one year from the date of exercise.
<PAGE>
SECTION 6. NONTRANSFERABILITY OF OPTIONS. Options granted under this
Plan and the rights and privileges conferred hereby may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or the applicable laws of descent and
distribution, and shall not be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of any option under this Plan or any right or privilege conferred
hereby, contrary to the provisions hereof, or upon the sale or levy or any
attachment or similar process, such option thereupon shall terminate and become
null and void. During an Optionee's lifetime, any options granted under this
Plan are personal to him or her and are exercisable solely by such Optionee.
Notwithstanding the foregoing, to the extent permitted by Rule 16b-3 under the
1934 Act and other applicable law and regulation, the Company may permit an
Optionee to, during the Optionee's lifetime, designate a person who may exercise
the option after the Optionee's death by giving written notice of such
designation to the Company (such designation may be changed from time to time by
the Optionee by giving written notice to the Company revoking any earlier
designation and making a new designation).
SECTION 7. CERTAIN LIMITATIONS REGARDING INCENTIVE STOCK OPTIONS. The
grant of Incentive Stock Options shall be subject to the following special
limitations:
7.1 LIMITATION ON AMOUNT OF GRANTS. As to all Incentive Stock Options
granted under the terms of this Plan, to the extent that the aggregate fair
market value of the stock (determined at the time the Incentive Stock Option is
granted) with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under this Plan and all
other incentive stock option plans of the Company, a related corporation or a
predecessor corporation) exceeds $100,000, such options shall be treated as
Nonqualified Stock Options. The previous sentence shall not apply if the
Internal Revenue Service issues a public rule, issues a private ruling to the
Company, any Optionee or any legatee, personal representative or distributee of
an Optionee or issues regulations changing or eliminating such annual limit. No
such limitation shall apply to Nonqualified Stock Options.
7.2 GRANTS TO 10% SHAREHOLDERS. Incentive Stock Options may be
granted a person owning more than 10% of the total combined voting power of all
classes of stock of the Company and any Parent or Subsidiary only if (i) the
exercise price is at least 110% of the fair market value of the stock at the
time of grant, and (ii) the option is not exercisable after the expiration of
five years from the date of grant.
SECTION 8. EXERCISE OF OPTIONS. Options shall be exercised in
accordance with the following terms and conditions:
8.1 PROCEDURE. Options shall be exercised by delivery to the Company
of written notice of the number of shares with respect to which the option is
exercised.
8.2 PAYMENT. Payment of the option price shall be made in full within
5 business days of the notice of exercise of the option and shall be in cash or
bank-certified or
<PAGE>
cashier's checks, or personal check if permitted by the Board of Directors. To
the extent permitted by applicable laws and regulations (including, but not
limited to, federal tax and securities laws and regulations), an option may be
exercised by delivery of shares of Common Stock of the Company held by the
Optionee having a fair market value equal to the exercise price, such fair
market value to be determined in good faith by the Board of Directors. Such
payment in stock may occur in the context of a single exercise of an option or
successive and simultaneous exercises, sometimes referred to as "pyramiding",
which provides that, rather than physically exchanging certificates for a series
of exercises, bookkeeping entries will be made pursuant to which the Optionee is
permitted to retain his existing stock certificate and a new stock certificate
is issued for the net shares.
If the Company's Common Stock is registered under the 1934 Act, and if
permitted by the Board of Directors, and to the extent permitted by applicable
laws and regulations, (including, but not limited to, federal tax and securities
laws and regulations) an option also may be exercised by delivery of a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds to pay the
exercise price.
8.3 FEDERAL WITHHOLDING TAX REQUIREMENTS. Upon exercise of an option,
the Optionee shall, upon notification of the amount due and prior to or
concurrently with the delivery of the certificates representing the shares, pay
to the Company amounts necessary to satisfy applicable federal, state and local
withholding tax requirements or shall otherwise make arrangements satisfactory
to the Company for such requirements. In order to implement this provision, the
Company or any related corporation shall have the right to retain and withhold
from any payment of cash or Common Stock under this Plan the amount of taxes
required by any government to be withheld or otherwise deducted and paid with
respect to such payment. At its discretion, the Company may require an Optionee
receiving shares of Common Stock to reimburse the Company for any such taxes
required to be withheld by the Company and withhold any distribution in whole or
in part until the Company is so reimbursed. In lieu thereof, the Company shall
have the right to withhold from any other cash amounts due or to become due from
the Company to the Optionee an amount equal to such taxes. The Company may also
retain and withhold or the Optionee may elect, subject to approval by the
Company at its sole discretion, to have the Company retain and withhold a number
of shares having a market value not less than the amount of such taxes required
to be withheld by the Company to reimburse the Company for any such taxes and
cancel (in whole or in part) any such shares so withheld.
SECTION 9. TERMINATION OF EMPLOYMENT, DISABILITY AND DEATH.
9.1 GENERAL. If the employment of the Optionee by the Company, a
Parent or a Subsidiary shall terminate by retirement or for any reason other
than death, disability or cause as hereinafter provided, the option may be
exercised by the Optionee at any time prior to the expiration of three months
after the date of such termination of employment (unless by its terms the option
sooner terminates or expires), but only if, and to the extent the Optionee was
entitled to exercise the option at the date of such termination.
<PAGE>
9.2 DISABILITY. If the employment of the Optionee by the Company, a
Parent or a Subsidiary is terminated because of the Optionee's disability (as
herein defined), the option may be exercised by the Optionee at any time prior
to the expiration of one year after the date of such termination (unless by its
terms the option sooner terminates or expires), but only if, and to the extent
the Optionee was entitled to exercise the option at the date of such
termination. For purposes of this section, an Optionee will be considered to be
disabled if the Optionee is unable to engage in any substantial gainful activity
by reason of any medically determinable mental or physical impairment which can
be expected to result in death or which has lasted or can be expected to last a
continuous period of not less than 12 months.
9.3 DEATH. In the event of the death of an Optionee while in the
employ of the Company, a Parent or a Subsidiary, the option shall be exercisable
on or prior to the expiration of one year after the date of such death (unless
by its terms the option sooner terminates and expires), but only if and to the
extent the Optionee was entitled to exercise the option at date of such death
and only by the Optionee's personal representative if then subject to
administration as part of the Optionee's estate, or by the person or persons to
whom such Optionee's rights under the option shall have passed by the Optionee's
will or by the applicable laws of descent and distribution.
9.4 TERMINATION FOR CAUSE. If the Optionee's employment with the
Company, a Parent or a Subsidiary is terminated for cause, any option granted
hereunder shall automatically terminate as of the first advice or discussion
thereof, and such Optionee shall thereupon have no right to purchase any shares
pursuant to such option. "Termination for Cause" shall mean dismissal for
dishonesty, conviction or confession of a crime punishable by law (except minor
violations), intoxication while at work, fraud, misconduct or disclosure of
confidential information.
9.5 WAIVER OR EXTENSION OF TIME PERIODS. The Board of Directors shall
have the authority, prior to or within the times specified in this Section 9 for
the exercise of any such option, to extend such time period or waive in its
entirety any such time period to the extent that such time period expires prior
to the expiration of the term of such option. In addition, the Board of
Directors may grant, pursuant to a specific resolution adopted at the time of
grant, modify or eliminate the time periods specified in this Section 9.
However, no Incentive Stock Option may be exercised after the expiration of ten
(10) years from the date such option is granted. If an Optionee holding an
Incentive Stock Option exercises such option, by permission, after the
expiration of the various time periods specified in this Section 9, and by
virtue of such exercise the option is no longer treated as an Incentive Stock
Option under the Code, such Option shall automatically be converted into a
Nonqualified Stock Option.
9.6 TERMINATION OF OPTIONS. To the extent that the option of any
deceased Optionee or of any Optionee whose employment is terminated shall not
have been exercised within the limited periods prescribed in this Section 9, all
further rights to purchase shares pursuant to such option shall cease and
terminate at the expiration of such period. No Incentive Stock Option may be
exercised after the expiration of ten (10) years from the date such option is
granted, notwithstanding any provision to the contrary.
<PAGE>
9.7 NON-EMPLOYEE OPTIONEES. Options granted to Optionees who are not
employees of the Company, a Parent or a Subsidiary at the time of grant shall
not be subject to the provisions of this Section 9, except as specifically
provided in the option.
SECTION 10. OPTION ADJUSTMENTS.
10.1 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate
number and class of shares on which options may be granted under this Plan, the
Maximum Annual Optionee Grant set forth in Section 5.1, the number and class of
shares covered by each outstanding option and the exercise price per share
thereof (but not the total price), and all such options, shall each be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a split-up, spin-off or
consolidation of shares or any like capital adjustment, or the payment of any
stock dividend.
10.2 EFFECT OF CERTAIN TRANSACTIONS. Except as provided in
subsection 10.3, upon a merger, consolidation, acquisition of property or stock,
separation, reorganization (other than a merger or reorganization of the Company
in which the holders of Common Stock immediately prior to the merger or
reorganization have the same proportionate ownership of Common Stock in the
surviving corporation immediately after the merger or reorganization) or
liquidation of the Company, as a result of which the shareholders of the Company
receive cash, stock or other property in exchange for their shares of Common
Stock, any option granted hereunder shall terminate, but, provided that the
Optionee shall have the right immediately prior to any such merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to exercise his or her option in whole or in part whether or not the
vesting requirements set forth in the option agreement have been satisfied.
10.3 CONVERSION OF OPTIONS ON STOCK FOR STOCK EXCHANGE. If the
shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger, consolidation, acquisition of property or stock,
separation or reorganization (other than a merger or reorganization of the
Company in which the holders of Common Stock immediately prior to the merger or
reorganization have the same proportionate ownership of Common Stock in the
surviving corporation immediately after the merger or reorganization), all
options granted hereunder shall terminate in accordance with the provision of
subsection 10.2 unless the Board of Directors and the corporation issuing the
Exchange Stock, in their sole and arbitrary discretion and subject to any
required action by the shareholders of the Company and such corporation, agree
that all such options granted hereunder are converted into options to purchase
shares of Exchange Stock. The amount and price of the such options shall be
determined by adjusting the amount and price of the options granted hereunder in
the same proportion as used for determining the number of shares of Exchange
Stock the holders of the Common Stock receive in such merger, consolidation,
acquisition of property or stock, separation or reorganization. The vesting
schedule set forth in the option agreement shall continue to apply to the
options granted for the Exchange Stock.
<PAGE>
10.4 FRACTIONAL SHARES. In the event of any adjustment in the
number of shares covered by any option, any fractional shares resulting from
such adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.
10.5 DETERMINATION OF BOARD OF DIRECTORS TO BE FINAL. All such
adjustments shall be made by the Board of Directors and its determination as to
what adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive. In addition, the Board of Directors may, at any time prior to
the exercise of an option, waive or modify any provisions of this Section 10 as
it relates to any specific option grant.
SECTION 11. SECURITIES REGULATIONS.
11.1 COMPLIANCE. Shares shall not be issued with respect to an
option granted under this Plan unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the 1934 Act, the rules
and regulations promulgated thereunder, and the requirements of NASDAQ or any
stock exchange upon which the shares may then be listed, and shall further be
subject to the approval of counsel for the Company with respect to such
compliance. 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, 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.
11.2 REPRESENTATIONS BY OPTIONEE. As a condition to the exercise
of an option, the Company may require the Optionee to represent and warrant at
the time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 11.1. At the option
of the Company, a stop transfer order against any shares of stock may be placed
on the official stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel was provided (concurred in by counsel for the Company)
stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on the stock certificate in order to assure exemption
from registration. The Board of Directors may also require such other action or
agreement by the Optionees as may from time to time be necessary to comply with
the federal and state securities laws. This provision shall not obligate the
Company to undertake registration of options or stock hereunder.
SECTION 12. EMPLOYMENT RIGHTS. Nothing in this Plan or any option or
right granted pursuant hereto shall confer upon any Optionee any right to be
continued in the employment or service of the Company, a Parent or any
Subsidiary of the Company or to remain a director, or to interfere in any way
with the right of the Company, a Parent or any Subsidiary, in its sole
discretion, to terminate such Optionee's employment or service at any time or to
remove the Optionee as a director at any time.
<PAGE>
SECTION 13. AMENDMENT AND TERMINATION.
13.1 ACTION BY SHAREHOLDERS. The Plan may be terminated, modified
or amended by the shareholders of the Company.
13.2 ACTION BY BOARD OF DIRECTORS. The Board of Directors may at
any time suspend, amend or terminate this Plan, provided that, to the extent
required for compliance with Rule 16b-3 promulgated under Section 16(b) of the
1934 Act, Section 422 of the Code or by any applicable law or regulation, the
Company's shareholders must approve any amendment which will:
(i) Increase the number of shares in the aggregate which may be
sold pursuant to options granted under the Plan;
(ii) Materially increase the benefits accruing to
participants under the Plan; or
(iii) Change the terms of the Plan which causes the Plan to
lose its qualification as an incentive stock option plan under Section 422 of
the Code.
No termination, suspension or amendment of the Plan may, without the
consent of each Optionee to whom any option shall theretofore have been granted,
adversely affect the rights of such Optionees under such options.
13.3 AUTOMATIC TERMINATION. Unless the Plan shall theretofore
have been terminated as herein provided, this Plan shall terminate ten (10)
years from the earlier of: (i) the date on which the Plan is adopted; or (ii)
the date on which this Plan is approved by the shareholders of the Company. No
option may be granted after such termination, or during any suspension of this
Plan. The amendment or termination of this Plan shall not, without the consent
of the Optionee, alter or impair any rights or obligations under any option
theretofore granted under this Plan.
SECTION 14. EFFECTIVE DATE OF THE PLAN. This Plan shall become effective on
the date of its adoption by the Board of Directors of the Company and options
may be granted immediately thereafter but no Incentive Stock Option may be
exercised under the Plan unless and until the Plan shall have been approved by
the shareholders within 12 months after the date of adoption of the Plan by the
Board of Directors. If such approval is not obtained within such period the Plan
and any Incentive Stock Options granted thereunder shall be null and void.
<PAGE>
March 6, 1995
((FirstName)) ((LastName,) Manley & Associates, Inc. 1065-12th Avenue NW, Suite
E-4 Issaquah, Washington 98027
Dear ((FirstName)):
We are pleased to inform you that you have been selected by the Board of
Directors of Manley & Associates, Inc. to receive a non-qualified stock option
for the purchase of ((Shares)~ shares of the Company's Common Stock at an
exercise price of $1.35 per share. The grant of the options being made pursuant
to the Company's 1994 Combined Incentive and Non-Qualified Stock Option Plan, a
copy of which is attached and incorporated into this agreement by reference.
The terms of the option are as set forth in the Plan and Agreement. The most
important of the terms set forth in the Plan are summarized as follows:
1. TERM. The term of the option is 10 years from the date of the grant, unless
sooner terminated.
2. EXERCISE. During your lifetime only you can exercise the option. The Plan
also provides for exercise of the option by the personal representative of your
estate or the beneficiary thereof following your death. You may use the Notice
of Exercise of Non-Qualified Stock Option in the form attached to this Stock
Option Letter Agreement when you exercise the option.
3. TERMINATION. The option will terminate three (3) months after cessation of
employment with the Company unless cessation is due to total disability, in
which case the option shall generally terminate twelve (12) months after
cessation of employment.
4. TRANSFER OF OPTION. The option is not transferable except by will or the
applicable laws of descent and distribution.
<PAGE>
5. VESTING. The date of the grant of this option is January 1, 1995. 2.77% of
the shares subject to the option may be purchased each month beginning one year
from January 1, 1994, or your hire date, which ever is the more recent. 100% of
the shares subject to the options may be purchased four years from January 1,
1994, or your hire date, which ever is the more recent.
Your particular attention is directed to Section 11 of the Plan which describes
certain important conditions relating to Federal and State securities laws that
must be satisfied prior to the issuance of any shares pursuant to this option.
Please execute the Acceptance and Acknowledgment set forth below on both copies
of this Agreement and return one signed copy to the undersigned. Retain one copy
for your records.
Yours very truly,
Manley & Associates, Inc.
By:
Ivan M. Manley
President & CEO
ACCEPTANCE AND ACKNOWLEDGMENT
I accept the stock option described above and in Manley & Associates,
Inc.Combined Incentive and Non-Qualified Stock Option Plan, and acknowledge
receipt of a copy of this letter, including a copy of the Plan. I have read and
understandthe Plan, including the provisions of Section 11.
Dated:
Signature:
Printed Name:
<PAGE>
EXHIBIT A
STOCK OPTION EXERCISE NOTICE AND AGREEMENT
Electronic Arts Inc.
1450 Fashion Island Blvd.
San Mateo, CA 94404
Attention: Stock Administrator
1. EXERCISE OF OPTION. The undersigned ("OPTIONEE") hereby elects to
exercise Optionee's option to purchase _________ shares of the Common Stock (the
"OPTION SHARES") of Electronic Arts Inc. (the "COMPANY") under and pursuant to
the MANLEY & ASSOCIATES, INC. 1994 COMBINED INCENTIVE AND NONQUALIFIED STOCK
OPTION PLAN AND THE EXCHANGE AGREEMENT DATED JANUARY 9, 1996 (the "PLAN"), and
the stock option grant dated _________ (the "GRANT"). The terms and conditions
of the Plan and the Grant are hereby incorporated into and made a part of this
Agreement by this reference.
2. REPRESENTATIONS OF OPTIONEE. Optionee hereby acknowledges, represents
and warrants that Optionee has received, read and understood the Plan and the
Grant and will abide by and be bound by their terms and conditions.
3. COMPLIANCE WITH SECURITIES LAWS. Optionee understands and
acknowledges that the exercise of any rights to purchase any Option Shares is
expressly conditioned upon compliance with the Securities Act of 1933, the
Exchange Act of 1934, the requirements of any stock exchange or national market
system on which the Company's stock may be listed, and all applicable state
securities laws. Optionee agrees to cooperate with the Company to ensure
compliance with such laws.
4. STOP TRANSFER NOTICES. Optionee understands and agrees that the
Company may issue appropriate "stop transfer" instructions to its transfer agent
to ensure compliance with the restrictions on transfer.
5. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF
THE OPTION SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE OPTION SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY
FOR ANY TAX ADVICE. IN PARTICULAR, IF OPTIONEE IS AN INSIDER SUBJECT TO SECTION
16(B) OF THE EXCHANGE ACT, OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH
OPTIONEE'S TAX ADVISERS CONCERNING THE ADVISABILITY OF FILING AN 83(B) ELECTION
WITH THE INTERNAL REVENUE SERVICE.
6. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company the
aggregate purchase price of the Option Shares that Optionee has elected to
purchase and has made provision for the payment of any federal or state
withholding taxes required to be paid or withheld by the Company.
7. ENTIRE AGREEMENT. This Exercise Agreement, the Plan and the Grant
constitute the entire agreement of the parties and supersede in their entirety
all prior undertakings and agreements of the Company and Optionee with respect
to the subject matter hereof, and is governed by California law except for that
body of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: ELECTRONIC ARTS INC.
--------------------------
(Print Name)
By:
- ------------------------------------- -----------------------------
(Signature) Ruth A. Kennedy
Its: Vice President, General Counsel
Dated: Dated:
----------------------- -------------------------
<PAGE>
Exhibit 5.01
(Includes Exhibit 23.01)
February 29, 1996
Securities and Exchange Commission
Division of Corporation Finance
450 5th Street, N.W.
Washington, D.C. 20549
Re: Electronic Arts Inc. ("EA")
Registration Statement on Form S-8
----------------------------------
Ladies/Gentlemen:
I am an attorney licensed to practice law in the states of California and New
York and I am Vice President, General Counsel and Secretary of EA. I have
examined EA's Registration Statement on Form S-8 (the "REGISTRATION STATEMENT")
to be filed by EA on or about March 1, 1996 in connection with the registration
under the Securities Act of 1933, as amended, of a total 2,175 shares of Common
Stock of Electronic Arts Inc., $0.01 par value per share ("Common Stock"), 2,082
shares of which (the "OPTION SHARES") may be sold by EA upon the exercise of
outstanding options held by certain employees pursuant to the Manley &
Associates, Inc. 1994 Combined Incentive and Nonqualified Stock Option Plan (the
"PLAN"), and 93 shares of which are the subject of a resale prospectus on Form
S-3 (the "RE-SALE SHARES").
As General Counsel for EA, I have examined the proceedings taken by EA in
connection with the Plan and the shares being registered hereby.
It is my opinion that the Option Shares that may be issued and sold by EA
pursuant to the Plan, and the Re-Sale Shares that may be re-sold by the
individual holders thereof, when issued, sold and re-sold in the manner
referred to in the Prospectus, Registration Statement and the Plan, as
applicable, will be legally issued, fully paid and nonassessable.
I consent to the use of this opinion as an exhibit to the Registration Statement
and further consent to all references to this opinion, if any, in the
Registration Statement and amendments thereto.
Very truly yours,
ELECTRONIC ARTS INC.
Ruth A. Kennedy
Vice President, General Counsel and Secretary
<PAGE>
EXHIBIT 23.02
Consent of Independent Auditors
The Board of Directors
Electronic Arts Inc.
We consent to incorporation by reference in the registration statement on
Form S-8 of Electronic Arts Inc. of our reports dated April 21, 1995, relating
to the consolidated balance sheets of Electronic Arts Inc. and subsidiaries
as of March 31, 1995 and 1994, and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the years in the
three-year period ended March 31, 1995, and the related schedule, which
reports are incorporated by reference or appear in the March 31, 1995, annual
report on Form 10-K of Electronic Arts Inc.
KPMG Peat Marwick, LLP
San Jose, California
February 29, 1996
