LAW\\254084.01
As filed with the Securities and Exchange Commission on July 3, 1997.
Registration No. 333 -------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
1MAGE SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0866294
(State of incorporation) (I.R.S. Employer ID No.)
6486 South Quebec Street, Englewood, Colorado 80111
(Address of Principal Executive Offices) (Zip Code)
1MAGE SOFTWARE, INC, EQUITY INCENTIVE PLAN
(Full title of the plan)
David R. DeYoung
1MAGE Software, Inc.
6486 South Quebec St., Englewood, CO 80111
(Name and address of agent for service)
(303) 694-9180
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Amount of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share Price Fee
Common Stock $1,000,000 $0.625 $625,000 $189.40
$0.004 Par
Value
Per Share
(1) Computed on the basis of the last price reported to the National
Association of Securities Dealers Automated Quotation System on June
30 1997, solely for purposes of calculating the filing fee, pursuant
to Rule 457(h) of the Securities Act of 1933, as amended.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in this Part I
will be sent or given to participants in the 1MAGE Software, Inc. Equity
Incentive Plan (the Plan") as specified by Rule 428(b)(1) under the
Securities Act of 1933, as amended (the "Securities Act"). In accordance
with the rules and regulations of the Securities and Exchange Commission
(the "Commission") and the instructions to Form S-8, such documents are not
being filed with the Commission, but constitute (along with the documents
incorporated by reference into this Registration Statement pursuant to Item
3 of Part II hereof) a prospectus that meets the requirements of Section
10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Commission are
incorporated by reference in this Registration Statement:
(1) The Registrant's Form 10-K filed for the fiscal year
ended December 31, 1996.
(2) All reports filed by Registrant under Sections 13(a) or
15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") since December 31, 1996, specifically including the
Registrant's Form 10-Q for the quarter ended March 31, 1997.
(3) All other documents subsequently filed with the
Commission 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 to this Registration Statement
indicating that all securities offered have been sold or
that deregisters all securities then remaining unsold.
(4) The section entitled "Description of Securities to be
Registered" contained in the Registrant's Registration
Statement on Form 8-A, File No. 0-12535, filed on October 7,
1983, pursuant to Section 12(g) of the Exchange Act.
Any statement contained in any document incorporated, or deemed
to be incorporated, by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document which also
is, or is deemed to be, incorporated by reference herein modifies or
supersedes such statement. Except as so modified or superseded, such
statement shall not be deemed to constitute a part of this Registration
Statement.
The Registrant undertakes to provide, without charge, to each
participant, upon the written or oral request of such person, a copy of any
and all of the documents or information referred to above that has been or
may be incorporated by reference into this Registration Statement
(excluding exhibits to such document unless such exhibits are specifically
incorporated by reference). Requests should be directed to David R.
DeYoung, President 1MAGE Software, Inc., 6486 South Quebec St., Englewood,
Colorado 80111, telephone 303/694-9180.
Item 4. Description of Securities.
Not Applicable
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Officers and Directors.
The Registrant's Articles of Incorporation and Bylaws and the
laws of the State of Colorado provide for indemnification of officers and
directors of the Registrant who are indemnified generally against expenses
actually and reasonably incurred in connection with proceedings, whether
civil or criminal, provided that it is determined that they acted in good
faith, were not found guilty, and, in any criminal matter, had reasonable
cause to believe that their conduct was not unlawful.
Item 7. Exemption from Registration Claimed.
Not Applicable
Item 8. Exhibits.
The exhibits included as part of this Registration Statement are
as follows:
Exhibit
Number Exhibit
4.1 Restated Articles of Incorporation of
the Company, as amended (incorporated by
reference from Exhibit 4.1 of the
Registrant's Registration Statement on Form S-
8, Registration Statement No. 33-86760) filed
on December 29, 1994.
4.2 Bylaws of the Company, as amended
(incorporated by reference from Exhibit 3.2
of the Registrant's Registration Statement on
Form S-1, Registration Statement No. 33-
44717) filed on December 23, 1991.
4.3 Equity Incentive Plan.
5.1 Opinion of Gorsuch Kirgis LLC regarding
legality of shares being issued
23.1 Consent of Gorsuch Kirgis LLC (See 5.1).
23.2 Consent of Karsh & Company, P.C.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the 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
the Registration Statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the registration statement is on Form S-3 or S-
8, and the information required 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(d) or Section 15(a) of
the Securities Exchange Act of 1934, as amended, that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose for determining any liability
under the 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 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
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 Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the 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 Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the Securities Act of 1933, as amended, the Registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Englewood, State of Colorado, on
July 2, 1997.
1MAGE SOFTWARE, INC.
By:/s/David R. DeYoung
David R. DeYoung, President
Pursuant to the requirement of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Dated: July 2, 1997 By:/s/ David R. DeYoung,
David R. DeYoung, President,
Chief Executive Officer,
Director
Dated: July 2, 1997 By:/s/ Charles E. Burns,
Charles E. Burns, Director
Dated: July 2, 1997 By:/s/ Robert Wiegand II,
Robert Wiegand II, Secretary
and Director
Dated: July 2, 1997 By:/s/ Mary Anne DeYoung,
Mary Anne DeYoung, Vice
President, Finance, Principal
and Accounting Officer and
Director
Dated: July 2, 1997 By:/s/ Richard A. Knapp
Richard A. Knapp, Director
EXHIBIT INDEX
Number Exhibit Method of Filing
4.3 Equity Incentive Plan Filed herewith
electronically
5.1 Opinion of Gorsuch Kirgis LLC
regarding legality Filed herewith
of shares being issued electronically
23.2 Consent of Karsh & Company, P.C. Filed herewith
electronically
LAW\\254013.01
July 3, 1997
1mage Software, Inc.
6486 S. Quebec Street
Englewood, Colorado 80111
Re: 1mage Software, Inc.
Registration Statement on Form S-8
Gentlemen:
We are counsel to 1mage Software, Inc., a Colorado corporation (the
"Company"), in connection with the preparation of a registration statement on
Form S-8 to be filed with the Securities and Exchange Commission (the
"Registration Statement"), relating to the proposed offering by the Company of
up to 1,000,000 shares of Common Stock pursuant to the Company's Equity
Incentive Plan ( the "Plan").
In this connection, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such corporate records,
certificates and written or oral statements of officers, legal counsel and
accountants of the Company and of public officials, and other documents that we
have considered necessary and appropriate, and, based thereon, we advise you
that in our opinion:
1. The Company is a corporation duly organized and validly existing under
the laws of the State of Colorado.
2. The shares offered by the Company, when issued pursuant to and in
accordance with the Plan will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
GORSUCH KIRGIS L.L.C.
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the Registration Statement of
Image Software, Inc. of our report dated February 11, 1997, which appears on
page 28 of the 1996 Annual Report to Shareholders of Image Software, Inc.
/s/Karsh & Company, P.C.
Karsh & Company, P.C.
Denver, Colorado
June 27, 1997
LAW\50029\254002.01
1MAGE SOFTWARE, INC.
EQUITY INCENTIVE PLAN
AS ADOPTED DECEMBER 16, 1996
1. PURPOSE. 1mage Software, Inc. (the "Company") hereby establishes its
Equity Incentive Plan (the "Plan"). The purpose of the Plan is to advance the
interests of the Company and its stockholders by providing a means by which the
Company shall be able to attract and retain competent officers and directors by
providing them with an opportunity to participate in the increased value of the
Company which their effort, initiative, and skill have helped produce.
2. GENERAL PROVISIONS.
(a) The Plan will be administered by the Compensation Committee of
the Board of Directors of the Company (the "Committee"). The Committee shall be
comprised of two or more directors designated by the Board of Directors (the
"Board") and the Committee members shall qualify as "Non- Employee Directors"
within the meaning of Securities Exchange Act Rule 16b-3. (In the event Rule
16b-3 is amended, modified or repealed, the requirements for being a member of
the Committee shall reflect the then current requirements of Rule 16b-3 or
successor rule, if any.) Committee members are not required to be "outside
directors" within the meaning of Treasury Regulation Section 1.162-27(e)(3).
Accordingly, options granted under the Plan may not qualify for the "qualified
performance based compensation" exception to Internal Revenue Code Section
162(m). Notwithstanding the foregoing, if it would be consistent with all
applicable laws, including without limitation Rule 16b-3, then the Plan may be
administered by the Board of Directors, and if so administered all subsequent
references to the Committee shall be read as referring to the Board of
Directors.
(b) The Committee shall have full power to construe and interpret the
Plan and to establish and amend rules and regulations for its administration.
Any action of the Committee with respect to the Plan shall be taken by majority
vote or by the unanimous written consent of the Committee members.
(c) The Committee shall determine, in its sole discretion, which
participants under the Plan shall be granted restricted stock, stock options or
stock appreciation rights, the time or times at which stock, options and rights
are granted, as well as the number of shares and the duration of the options or
rights which are granted to participants; provided, however, that no participant
may be granted more than 500,000 options under the Plan.
(d) The Committee shall also determine any other terms and conditions
relating to restricted stock, options and rights granted under the Plan as the
Committee may prescribe, in its sole discretion.
(e) The Committee may, in its discretion, delegate its administrative
duties with respect to the Plan to an officer or employees, or to a committee
composed of officers or employees, of the Company.
(f) The Committee shall make all other determinations and take all
other actions which it deems necessary or advisable for the administration of
the Plan.
(g) All decisions, determinations and interpretations made by the
Committee shall be binding and conclusive on all participants in the Plan and on
their legal representatives, heirs and beneficiaries.
(h) The Board of Directors (with members of the Committee abstaining)
shall have the authority to make grants under this Plan to members of the
Committee or the Board may create a formula by which grants will automatically
be made to members of the Committee. The Committee shall have the authority to
make grants hereunder to members of the Board other than Committee members and
may also establish a formula by which grants will automatically be made to Board
members.
3. ELIGIBILITY. Officers and directors of the Company shall be eligible
to participate in the Plan and to receive restricted stock, options and rights
hereunder, provided, however, that Incentive Stock Options may only be granted
to officers and directors who are employees of the Company or its subsidiaries
at all times during the period beginning on the date of granting of the option
and ending on the day three months before the date of exercise.
4. NUMBER OF SHARES SUBJECT TO PLAN. The aggregate number of shares of
the Company's no par value Common Stock which may be granted to participants
shall be 1,000,000 shares, subject to adjustment only as provided in Sections
5(h) and 8 hereof. These shares may consist of shares of the Company's
authorized but unissued Common Stock or shares of the Company's authorized and
issued Common Stock reacquired by the Company and held in its treasury or any
combination thereof. If an option granted under this Plan is surrendered, or
for any other reason ceases to be exercisable in whole or in part, the shares as
to which the option ceases to be exercisable shall be available for options to
be granted to the same or other participants under the Plan, except to the
extent that an option is deemed surrendered by the exercise of a tandem stock
appreciation right and that right is paid by the Company in stock, in which
event the shares issued in satisfaction of the right shall not be available for
new options or rights under the Plan.
5. STOCK OPTIONS.
(a) TYPE OF OPTIONS. Options granted may be either Nonqualified
Stock Options or Incentive Stock Options as determined by the Committee in its
sole discretion and as reflected in the Notice of Grant issued by the Committee.
"Incentive Stock Option" means an option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986 (the "Code"). "Nonqualified Stock Option" means an option not intended to
qualify as an Incentive Stock Option or an Incentive Stock Option which is
converted to a Nonqualified Stock Option under Section 5(f) hereof.
(b) OPTION PRICE. The price at which options may be granted under
the Plan shall be determined by the Committee at the time of grant as follows:
(i) For Incentive Stock Options the option price shall be equal
to 100% of the Fair Market Value of the stock on the date the option is granted;
provided, however, that for Incentive Stock Options granted to any person who,
at the time such option is granted, owns (as defined in Section 422 of the Code)
shares possessing more than 10% of the total combined voting power of all
classes of shares of the Company or its parent or subsidiary corporation, the
Option Price shall be 110% of the Fair Market Value.
(ii) For Nonqualified Stock Options the option price may be less
than the Fair Market Value of the stock on the date of grant, but in no event
shall the option price be less than fifty percent (50%) of the Fair Market Value
of the stock on the date of the grant.
(iii) For purposes of this Plan, and except as otherwise set
forth herein, "Fair Market Value" shall mean: (a) if there is an established
market for the Company's Common Stock on a stock exchange, in an over-the-
counter market or otherwise, the mean of the highest and lowest quoted selling
prices on the valuation date, or (b) if there were no such sales on the
valuation date, then in accordance with Treas. Reg. Section 20.2031-2 or
successor regulations. Unless otherwise specified by the Committee at the time
or grant (or in the formula proposed for such grant, if applicable), the
valuation date for purposes of determining Fair Market Value shall be the date
of grant. The Committee (or the Board of Directors with respect to grants to
Committee members pursuant to Section 5(g) hereof) may specify in any grant of
an Option or Stock Appreciation Right that, instead of the date of grant, the
valuation date shall be a valuation period of up to ninety (90) days prior to
the date of grant, and Fair Market Value for purposes of such grant shall be the
average over the valuation period of the mean of the highest and lowest quoted
selling prices on each date on which sales were made in the valuation period,
provided, however, that if the Committee (or the Board of Directors) fails to
specify a valuation period and there were no sales on the date of grant then
Fair Market Value shall be determined as if the Committee had specified a thirty
(30) day valuation period for such determination, unless there is no established
market for the Company's Common Stock in which case the determination of Fair
Market Value shall be in accordance with clause (b) above.
(c) EXERCISE OF OPTION. The right to purchase shares covered by any
option or options under this Plan shall be exercisable only in accordance with
the terms and conditions of the grant to the participant. Such terms and
conditions may include a time period or schedule whereby some of the options
granted may become exercisable, or "vested", over time and certain conditions,
such as continuous service or specified performance criteria or goals, must be
satisfied for such vesting. The determination as to whether to impose any such
vesting schedule or performance criteria, and the terms of such schedule or
criteria, shall be within the sole discretion of the Committee. These terms and
conditions may be different for different participants so long as all options
satisfy the requirements of the Plan.
The exercise of options shall be paid for in cash or in shares of
the Company's Common Stock, or any combination thereof. Shares tendered as
payment for option exercises shall be valued at the Fair Market Value of the
shares on the date of exercise. The Committee may, in its discretion, agree to
a loan by the Company to one or more participants of a portion of the exercise
price (not to exceed the exercise price minus the par value of the shares to be
acquired, if any) for up to three (3) years with interest payable at the prime
rate quoted in the Wall Street Journal on the date of exercise. Members of the
Committee may receive such loans from the Company for the exercise of their
options, if any, without Committee or Board approval or ratification.
The Committee may also permit a participant to effect a net
exercise of an option without tendering any shares of the Company's stock as
payment for the option. In such an event, the participant will be deemed to
have paid for the exercise of the option with shares of the Company's stock and
shall receive from the Company a number of shares equal to the difference
between the shares that would have been tendered and the number of options
exercised.
The Committee may also cause the Company to enter into
arrangements with one or more licensed stock brokerage firms whereby
participants may exercise options without payment therefor but with irrevocable
orders to such brokerage firm to immediately sell the number of shares necessary
to pay the exercise price for the option and the withholding taxes, if any, and
then to transmit the proceeds from such sales directly to the Company in
satisfaction of such obligations.
(d) DURATION OF OPTIONS. Unless otherwise prescribed by the
Committee or this Plan, options granted hereunder shall expire ten (10) years
from the date of grant, subject to early termination as provided in Section 5(f)
hereof.
(e) INCENTIVE STOCK OPTIONS LIMITATIONS. In no event shall an
Incentive Stock Option be granted to any person who, at the time such option is
granted, owns (as defined in Section 422 of the Code) shares possessing more
than 10% of the total combined voting power of all classes of shares of the
Company or of its parent or subsidiary corporation, unless the option price is
at least 110% of the Fair Market Value of the stock subject to the Option, and
such Option is by its terms not exercisable after the expiration of five (5)
years from the date such Option is granted. Moreover, the aggregate Fair Market
Value (determined as of the time that option is granted) of the shares with
respect to which Incentive Stock Options are exercisable for the first time by
any individual employee during any single calendar year under the Plan shall not
exceed $100,000. In addition, in order to receive the full tax benefits of an
Incentive Stock Option, the employee must not resell or otherwise dispose of the
stock acquired upon exercise of the Incentive Stock Option until two (2) years
after the date the option was granted and one (1) year after it was exercised.
(f) EARLY TERMINATION OF OPTIONS. In the event a participant's
employment with or service to the Company shall terminate as the result of total
disability, as defined below, or the result of retirement at 65 years of age or
later, then any options granted to such participant shall expire and may no
longer be exercised three (3) months after such termination. If the participant
dies while employed or engaged by the Company, to the extent that the option was
exercisable at the time of the participant's death, such option may, within one
year after the participant's death, be exercised by the person or persons to
whom the participant's rights under the option shall pass by will or by the
applicable laws of descent and distribution; provided, however, that an option
may not be exercised to any extent after the expiration of the option as
originally granted. In the event a participant's employment or engagement by
the Company shall terminate as the result of any circumstances other than those
referred to above, whether terminated by the participant or the Company, with or
without cause, then all options granted to such participant under this Plan
shall terminate and no longer be exercisable as of the date of such termination,
provided, however, that if an employee with an Incentive Stock Option terminates
employment prior to its exercise, but notwithstanding such termination becomes
or remains a non-employee officer or director eligible for Nonqualified Stock
Options hereunder, then the Incentive Stock Option shall be converted to a
Nonqualified Stock Option on the date the Incentive Stock Option would otherwise
have terminated.
An employee who is absent from work with the Company because of
total disability, as defined below, shall not by virtue of such absence alone be
deemed to have terminated such participant's employment with the Company. All
rights which such participant would have had to exercise options granted
hereunder will be suspended during the period of such absence and may be
exercised cumulatively by such participant upon his return to the Company so
long as such rights are exercised prior to the expiration of the option as
originally granted. For purposes of this Plan, "total disability" shall mean
disability, as a result of sickness or injury, to the extent that the
participant is prevented from engaging in any substantial gainful activity and
is eligible for and receives a disability benefit under Title II of the Federal
Social Security Act.
(g) GRANTS TO COMMITTEE MEMBERS. In accordance with Section 2(g)
hereof, the Committee shall have no authority to make grants to its members
hereunder, rather the Board of Directors (with members of the Committee
abstaining) shall have the authority to make grants under this Plan to members
of the Committee. Any designation of such grants may be by means of a formula
specified by the Board of Directors to award grants automatically at a stated
time. The option price of any such option shall be calculated in accordance
with the grant or formula designation based on the Fair Market Value (determined
in accordance with Section 3(b) above) on the valuation date or valuation period
specified by the Board of Directors in the grant or designation. Nothing in
this Section 5(g) shall be interpreted to prohibit the Board of Directors from
granting restricted stock, options or rights to its members if the Board of
Directors is administering the Plan in accordance with Section 2(a) above.
(h) RELOAD BY PAYMENT IN SHARES. To the extent that a participant
pays for the exercise of an option with shares of the Company's stock rather
than cash, the tendered shares shall be deemed to be added back to the Plan,
increasing the total number of shares subject to and reserved for the Plan by
that amount.
6. STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock appreciation rights may be granted by the Committee
under this Plan upon such terms and conditions as it may prescribe. A stock
appreciation right may be granted in connection with an option previously
granted to or to be granted under this Plan or may be granted by itself. Each
stock appreciation right related to an option (a "Tandem Right") shall become
nonexercisable and be forfeited if the option to which it relates (the "Related
Option") is exercised. "Stock appreciation right" as used in this Plan means a
right to receive the excess of Fair Market Value, on the date of exercise, of a
share of the Company's Common Stock on which an appreciation right is exercised
over the option price provided for in the related option and is issued in
consideration of services performed for the Company or for its benefit by the
participant. Such excess is hereafter called "the differential."
(b) EXERCISE OF STOCK APPRECIATION RIGHTS. Stock appreciation rights
shall be exercisable and be payable in the following manner:
(i) A stock appreciation right not issued with a Related Option
(a "Separate Right") shall be exercisable at the time or times prescribed by the
Committee. A Tandem Right shall be exercisable by the participant at the same
time or times that the Related Option could be exercised. A participant wishing
to exercise a stock appreciation right shall give written notice of such
exercise to the Company. Upon receipt of such notice, the Company shall
determine, in its sole discretion, whether the participant's stock appreciation
rights shall be paid in cash or in shares of the Company's Common Stock or any
combination of cash and shares and thereupon shall, without deducting any
transfer or issue tax, deliver to the person exercising such right an amount of
cash or shares of the Company's Common Stock or a combination thereof with a
value equal to the differential. The date the Company receives the written
notice of exercise hereunder is the exercise date. The shares issued upon the
exercise of a stock appreciation right may consist of shares of the Company's
authorized but unissued Common Stock or of its authorized and issued Common
Stock reacquired by the Company and held in its treasury or any combination
thereof. No fractional share of Common Stock shall be issued; rather, the
Committee shall determine whether cash shall be given in lieu of such fractional
share or whether such fractional share shall be eliminated.
(ii) The exercise of a Tandem Right shall automatically result in
the surrender of the Related Option by the participant on a share for share
basis. Likewise, the exercise of a stock option shall automatically result in
the surrender of the related Tandem Right. Shares covered by surrendered
options shall be available for granting further options under this Plan except
to the extent and in the amount that such rights are paid by the Company with
shares of stock, as more fully discussed in Section 4 hereof.
(iii) The Committee may impose any other terms and conditions it
prescribes upon the exercise of a stock appreciation right, which conditions may
include a condition that the stock appreciation right may only be exercised in
accordance with rules and regulations adopted by the Committee from time to
time.
(c) LIMITATION ON PAYMENTS. Notwithstanding any other provision of
this Plan, the Committee may from time to time determine, including at the time
of exercise, the maximum amount of cash or stock which may be given upon
exercise of any stock appreciation right in any year; provided, however, that
all such amounts shall be paid in full no later than the end of the year
immediately following the year in which the participant exercised such stock
appreciation rights. Any determination under this paragraph may be changed by
the Committee from time to time provided that no such change shall require the
participant to return to the Company any amount theretofore received or to
extend the period within which the Company is required to make full payment of
the amount due as the result of the exercise of the participant's stock
appreciation rights.
(d) EXPIRATION OR TERMINATION OF STOCK APPRECIATION RIGHTS.
(i) Each Tandem Right and all rights and obligations thereunder
shall expire on the date on which the Related Option expires or terminates.
Each Separate Right shall expire on the date prescribed by the Committee.
7. RESTRICTED STOCK.
(a) The Committee may grant shares of the Company's Common Stock to
persons eligible for grants under this Plan, subject to such restrictions, if
any, as may be determined by the Committee, including but not limited to that
person's continuous employment by or service to the Company for a specified
period of time or the attainment of specified performance goals or objectives by
that person, a group of persons or the Company as a whole. The determination as
to whether to impose any such vesting schedule or performance criteria, and the
terms of such schedule or criteria, shall be within the sole discretion of the
Committee. These terms and conditions may be different for different
participants so long as all options satisfy the requirements of the Plan.
(b) VOTING RIGHTS. A participant will have all voting, dividend,
liquidation and other rights with respect to the shares of restricted stock in
accordance with its terms upon becoming the holder of record of such stock;
provided, however, that the participant shall have the right to sell, encumber
or otherwise transfer such stock only to the extent that vesting and performance
criteria have been satisfied. Such limitations may be enforced, in the sole
discretion of the Committee, by placing of a restrictive legend on the stock
certificates, or making certain custodial arrangements for the stock
certificates.
(c) EARLY TERMINATION. In the event of the death or total disability
of a participant, or the retirement of a participant at age 65 or later, all
employment period and other restrictions applicable to restricted stock then
held by him will lapse, and such stock will become fully nonforfeitable.
Subject to provisions in the Plan concerning reorganization, liquidation or
change in control of the Company, in the event of a participant's termination of
employment for any other reason, any restricted stock as to which the employment
period or other restrictions have not been satisfied will be forfeited.
8. CAPITAL ADJUSTMENTS. The aggregate number of shares of the Company's
Common Stock subject to this Plan, the maximum number of shares as to which
options may be granted to any one participant hereunder, and the number of
shares and the price per share subject to outstanding options, shall be
appropriately adjusted by the Committee for any increase or decrease in the
number of shares of Common Stock which the Company has issued resulting from any
stock split, reverse stock split, stock dividend, combination of shares or any
other change, or any exchange for other securities or any reclassification,
merger, reorganization, consolidation, redesignation, recapitalization, or
otherwise. Similar adjustments shall be made to the terms of stock appreciation
rights.
9. NONTRANSFERABILITY. During a participant's lifetime, a right or an
option may be exercisable only by the participant. Options and rights granted
under the Plan and the rights and privileges conferred thereby shall not be
subject to execution, attachment or similar process and may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by
applicable law and, if the Company has a class of securities registered under
the Exchange Act, by Exchange Act Rule 16b-3, the Committee may, in its sole
discretion, (i) permit a recipient of a Nonqualified Stock Option to designate
in writing during the participant's lifetime a beneficiary to receive and
exercise the participant's Nonqualified Stock Options in the event of such
participant's death (as provided in Section 5(f)), (ii) grant Nonqualified Stock
Options that are transferable to the immediate family or a family trust of the
participant, and (iii) modify existing Nonqualified Stock Options to be
transferable to the immediate family or a family trust of the participant. Any
other attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
any option or right under the Plan, or of any right or privilege conferred
thereby, contrary to the provisions of the Plan shall be null and void.
10. AMENDMENT, SUSPENSION, OR TERMINATION OF PLAN. The Committee may at
any time suspend or terminate the Plan and may amend it from time to time in
such respects as the Committee may deem advisable in order that options and
rights granted hereunder shall conform to any change in the law, or in any other
respect which the Committee may deem to be in the best interests of the Company;
provided, however, that no such amendment shall, without the participant's
consent, alter or impair any of the rights or obligations under any option or
stock appreciation rights theretofore granted to him under the Plan; and
provided further that no such amendment shall, without shareholder approval: (a)
increase the total number of shares available for grants of options or rights
under the Plan (except as provided by Section 8 hereof); or (b) effect any
change to the Plan which is required by law, including without limitation the
regulations promulgated under Section 422 of the Code, to be approved by
shareholders.
11. EFFECTIVE DATE. The effective date of the Plan shall be December 16,
1996.
12. TERMINATION DATE. Unless this Plan shall have been previously
terminated by the Committee, this Plan shall terminate on December 15, 2016,
except as to stock, options and rights theretofore granted and outstanding under
the Plan at that date, and no stock, option or right shall be granted after that
date.
13. RESALE OF SHARES PURCHASED. Except as provided in Section 7 with
respect to restricted stock, all shares of stock acquired under this Plan may be
freely resold, subject to applicable state and federal securities laws
restricting their transfer. As a condition to exercise of an option, however,
the Company may impose various conditions, including a requirement that the
person exercising such option represent and warrant that, at the time of such
exercise, the shares of Common Stock being purchased are being purchased for
investment and not with a view to resale or distribution thereof. In addition,
the resale of shares purchased upon the exercise of Incentive Stock Options may
cause the employee to lose certain tax benefits if the employee fails to comply
with the holding period requirements described in Section 5(e) hereof.
14. ACCELERATION OF RIGHTS AND OPTIONS. If the Company or its
shareholders enter into an agreement to dispose of all or substantially all of
the assets or stock of the Company by means of a sale, merger or other
reorganization, liquidation, or otherwise, any right or option granted pursuant
to the Plan shall become immediately and fully exercisable during the period
commencing as of the date of the agreement to dispose of all or substantially
all of the assets or stock of the Company and ending when the disposition of
assets or stock contemplated by that agreement is consummated or the option is
otherwise terminated in accordance with its provisions or the provisions of the
Plan, whichever occurs first; provided that no option or right shall be
immediately exercisable under this Section on account of any agreement of merger
or other reorganization where the shareholders of the Company immediately before
the consummation of the transaction will own 50% or more of the total combined
voting power of all classes of stock entitled to vote of the surviving entity
(whether the Company or some other entity) immediately after the consummation of
the transaction. In the event the transaction contemplated by the agreement
referred to in this section is not consummated, but rather is terminated,
canceled or expires, the options and rights granted pursuant to the Plan shall
thereafter be treated as if that agreement had never been entered into.
15. WRITTEN NOTICE REQUIRED; TAX WITHHOLDING. Any option or right granted
pursuant to the Plan shall be exercised when written notice of that exercise by
the participant has been received by the Company at its principal office and,
with respect to options, when full payment for the shares with respect to which
the option is exercised has been received by the Company. Participant agrees
that, if and to the extent required by law, the Company shall withhold or
require the payment by participant of any state, federal or local taxes
resulting from the exercise of an option or right; provided, however, that to
the extent permitted by law, the Committee may in its discretion, permit some or
all of such withholding obligation to be satisfied by the delivery by the
participant of, or the retention by the Company of, shares of its Common Stock.
16. COMPLIANCE WITH SECURITIES LAWS. Shares shall not be issued with
respect to any option or right granted under the Plan unless the exercise of
that option and the issuance and delivery of the shares pursuant thereto shall
comply with all relevant provisions of state and federal law, including without
limitation the Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder and the requirements of any stock exchange or automated
quotation system upon which shares of the Company's stock may then be listed or
traded, and shall be further subject to the approval of counsel for the Company
with respect to such compliance. Further, each participant must consent to the
imposition of a legend on the certificate representing the shares of Common
Stock issued upon the exercise of the option or right restricting their
transferability as may be required by law, the option or right, or the Plan.
17. WAIVER OF VESTING RESTRICTIONS BY COMMITTEE. Notwithstanding any
provision of the Plan, in the event a participant dies, becomes totally or
partially disabled, retires (before or after the age of 65) as an employee,
officer or director of the Company, the Committee shall have the discretion to
waive any vesting restrictions on the retiree's restricted stock, options or
rights, or the early termination thereof.
18. REPORTS TO PARTICIPANTS. The Company shall furnish to each
participant a copy of the annual report, if any, sent to the Company's
shareholders. Upon written request, the Company shall furnish to each
participant a copy of its most recent annual report and each quarterly report to
shareholders issued since the end of the Company's most recent fiscal year.
19. NO EMPLOYEE CONTRACT. The grant of restricted stock or an option or
right under the Plan shall not confer upon any participant any right with
respect to continuation of employment by, or the rendition of advisory or
consulting services to, the Company, nor shall it interfere in any way with the
Company's right to terminate the participant's employment or services at any
time.
Adopted by the Board of Directors of the Company on December 16, 1996 and
proposed to be adopted by the Stockholders of the Company on May 12, 1997.
