As filed with the Securities and Exchange Commission on June 28, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------
ARIZONA INSTRUMENT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 86-0410138
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4114 East Wood Street, Phoenix, Arizona 85040
(Address of Principal Executive Offices) (Zip Code)
--------
1991 STOCK OPTION PLAN
(Full title of the plan)
--------
Scott M. Carter Copy to:
Vice President and Chief Financial Officer Paul M. Gales
ARIZONA INSTRUMENT CORPORATION QUARLES & BRADY
4114 East Wood Street One East Camelback Road
Phoenix, Arizona 85040 Suite 400
Phoenix, Arizona 85012-1659
(Name and address of agent for service)
----------
(602) 470-1414
(Telephone number, including area code, of agent for service)
--------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Proposed maximum
Amount to be maximum offering aggregate offering Amount of
Title of securities to be registered registered price per share price registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per Share 698,356 shares(1) (2)(3) $964,144.25(2) $332.46
====================================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
(1) The Plan provides for the possible adjustment of the number, price and kind
of shares covered by options granted or to be granted in the event of certain
capital or other changes affecting the Registrant's Common Stock. This
Registration Statement therefore covers, in addition to the above-stated 698,356
shares, an indeterminate number of shares that may become subject to the Plan by
means of any such adjustment.
(2) Pursuant to Rule 457(h), estimated solely for the purpose of computing the
registration fee, based upon (i) the aggregate exercise price of $535,362 for
the 566,423 shares underlying outstanding options, and (ii) as to the remaining
131,933 shares available, $3.25 per share, which is the last sale price of the
Registrant's Common Stock as reported in the Nasdaq Small Cap Market on June 25,
1996.
(3) The actual offering price will be determined in accordance with the terms of
the Plan. However, with respect to an incentive stock option, in no event shall
such price be less than 100% of the fair market value of the Registrant's Common
Stock on the date on which the option is granted.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Information specified in Part I of Form S-8 (Items 1 and 2) will be
sent or given to Plan participants as specified by Rule 428(b)(1) under the
Securities Act of 1933.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Arizona Instrument Corporation (the
"Registrant") (Commission File No. 0-12575) with the Securities and Exchange
Commission (the "Commission") pursuant to Section 13 of the Securities Exchange
Act of 1934 (the "1934 Act") are incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-KSB, and Amendment
No. 1 thereto on Form 10-KSB/A, for the fiscal year ended
December 31, 1995;
(b) The Registrant's Quarterly Report on Form 10-QSB for the fiscal
period ended March 31, 1996;
(c) The description of the Registrant's Common Stock contained in
the Registrant's Registration Statement on Form 8-A, dated June
26, 1996, 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 1934 Act, prior to the filing of a
post-effective amendment 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 the filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part hereof.
Item 4. Description of Securities.
Not applicable. See Item 3(c) above.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145(a) of the General Corporation Law of the State of Delaware
(the "General Corporation Law") provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed
-1-
<PAGE>
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no cause to believe his or her
conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted under similar standards as
set forth above, except that no indemnification may be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the court in which
such action or suit was brought shall determine that despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to be indemnified for such expenses which the
court shall deem proper.
Section 145 further provides that to the extent a director or officer
of a corporation has been successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to in subsections (a) and (b) or in
the defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses actually and reasonably incurred by him or her in
connection therewith; that indemnification provided for by Section 145 shall not
be deemed exclusive of any other rights to which the indemnified party may be
entitled; and that the corporation may purchase and maintain insurance on behalf
of such person against any liability asserted against him or her or incurred by
him or her in any such capacity or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liabilities under such Section 145.
Section 102(b)(7) of the General Corporation Law provides that a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders may eliminate or limit personal liability of
members of its board of directors or governing body for monetary damages for
breach of a director's fiduciary duty. However, no such provision may eliminate
or limit the liability of a director for breaching his or her duty of loyalty,
failing to act in good faith, engaging in intentional misconduct or knowingly
violating a law, paying a dividend or approving a stock repurchase or redemption
which was illegal, or obtaining an improper personal benefit. A provision of
this type has no effect on the availability of equitable remedies, such as
injunction or rescission, for breach of fiduciary duty. The Company's
Certificate of Incorporation contains such a provision.
The Company's Certificate of Incorporation provides that the Company
shall indemnify officers and directors to the full extent permitted by and in
the manner permissible under the law. The Company's Bylaws provide that the
Company may, to the extent authorized by the Board of Directors, indemnify
employees and agents of the Company made a party to a legal proceeding by reason
of that person being the Company's employee or agent.
The Company has directors and officers' liability insurance coverage
with a policy limit of $1,000,000. The policy includes coverage for liability
for certain violations of federal and state securities laws.
The Company has entered into indemnity agreements with its directors
and officers for indemnification of and advance of expenses to such persons to
the full extent permitted by law. The Company intends to execute such indemnity
agreements with its future officers and directors.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
See Exhibit Index following Signatures page in this Registration
Statement, which Exhibit Index is incorporated herein by reference.
-2-
<PAGE>
Item 9. Undertakings.
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;
(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 (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 by
the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
the 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.
(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 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.
Reference is made to the indemnification provisions referred to in Item
6 of this Registration Statement.
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 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.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix, State of Arizona, on June 26, 1996.
ARIZONA INSTRUMENT CORPORATION
(Registrant)
By: /s/ John P. Hudnall
------------------------------
John P. Hudnall, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Walfred R. Raisanan and John P. Hudnall,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any other regulatory authority, 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
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Person Title Date
------ ----- ----
<S> <C> <C>
/s/ Walfred R. Raisanan Chairman of the Board of Directors June 26, 1996
- ------------------------------------------- ---------------
Walfred R. Raisanan
President and Director
/s/ John P. Hudnall (Principal Executive Officer) June 26, 1996
- -------------------------------------------- ---------------
John P. Hudnall
Chief Financial Officer (Principal
/s/ Scott M. Carter Financial and Accounting Officer) June 26, 1996
- -------------------------------------------- ---------------
Scott M. Carter
/s/ S. Thomas Emerson Director June 26, 1996
- -------------------------------------------- ---------------
S. Thomas Emerson
/s/ Quinn Johnson Director June 26, 1996
- -------------------------------------------- ---------------
Quinn Johnson
/s/ Richard Long Director June 26, 1996
- -------------------------------------------- ---------------
Richard Long
/s/ Patricia Onderdonk Director June 26, 1996
- -------------------------------------------- ---------------
Patricia Onderdonk
/s/ Stanley H. Weiss Director June 26, 1996
- -------------------------------------------- ---------------
Stanley H. Weiss
</TABLE>
S-1
<PAGE>
ARIZONA INSTRUMENT CORPORATION
(the "Registrant")
(Commission File No. 0-12575)
EXHIBIT INDEX
TO
FORM S-8 REGISTRATION STATEMENT
<TABLE>
<CAPTION>
Exhibit Incorporated by
Number Description Filed Herewith Reference to
<S> <C> <C> <C> <C>
4.1 Certificate of Incorporation Exhibit 1 to the
of the Registrant, as amended Registrant's
Registration
Statement on Form
8-A, filed
June 26, 1996
4.2 Bylaws of the Registrant Exhibit 2 to the
Registrant's
Registration
Statement on Form
8-A, filed
June 26, 1996
5 Opinion of Counsel X
23.1 Consent of Independent Auditors X
23.3 Consent of Counsel Contained in Opinion filed
as Exhibit 5
24 Powers of Attorney Signatures Page to this
Registration Statement
99.1 Arizona Instrument Corporation X
1991 Stock Option Plan
</TABLE>
EX-1
EXHIBIT 5
(AZI Form S-8)
June 26, 1996
Arizona Instrument Corporation
4114 East Wood Street
Phoenix, Arizona 85040
Gentlemen:
We are providing this opinion in connection with the Registration
Statement of Arizona Instrument Corporation (the "Company") on Form S-8 (the
"Registration Statement") filed under the Securities Act of 1933, as amended
(the "Act"), with respect to the proposed sale of up to 698,356 shares of Common
Stock, par value .01 per share, of the Company (the "Shares") pursuant to the
Arizona Instrument Corporation 1991 Stock Option Plan, as amended (the "Plan").
We have examined (i) the Registration Statement; (ii) the Company's Certificate
of Incorporation and Bylaws, as amended to date; (iii) the Plan; (iv) corporate
proceedings relating to the adoption of the Plan and the issuance of the Shares;
and (v) such other documents and records as we have deemed necessary in order to
render this opinion. In rendering this opinion, we have relied as to certain
factual matters on certificates of officers of the Company and of state
officials.
Based upon the foregoing, it is our opinion that the Shares, when
issued and paid for as contemplated by the Registration Statement and the Plan,
will be validly issued, fully paid and non-assessable by the Company.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement. In giving our consent, we do not admit that we are
"experts" within the meaning of Section 11 of the Act, or that we come within
the category of persons whose consent is required by Section 7 of the Act.
Very truly yours,
QUARLES & BRADY
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Arizona Instrument Corporation on Form S-8 of our report dated March 13, 1996,
except for Note C, as to which the date is March 26, 1996, appearing in the
Annual Report on Form 10-KSB of Arizona Instrument Corporation for the year
ended December 31, 1995.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
June 21, 1996
EXHIBIT 99.1
(AZI Form S-8)
1991 STOCK OPTION PLAN
1. Purpose
The purposes of the Arizona Instrument Corporation 1991 Stock Option
Plan ("Plan") are to attract and retain the best available employees and
directors of Arizona Instrument Corporation or any parent or subsidiary or
affiliate of Arizona Instrument Corporation which now exists or hereafter is
organized or acquired by or acquires Arizona Instrument Corporation
(collectively or individually as the context requires the "Company") as well as
appropriate third parties who can provide valuable services to the Company, to
provide additional incentive to such persons and to promote the success of the
business of the Company. This Plan is intended to comply with Rule 16b-3 under
Section 16 of the Securities Exchange Act of 1934, as amended or any successor
rule ("Rule 16b-3"), and the Plan shall be construed, interpreted and
administered to so comply.
2. Incentive and Nonqualified Stock Options
Two types of options (referred to herein as "options," without
distinction between such two types) may be granted under the Plan: options
intended to qualify as incentive stock options ("incentive stock options") under
Section 422 of the United States Internal Revenue Code of 1986, as amended, or
any successor provision ("Code"); and other options intended not to qualify for
favorable income tax treatment under Sections 421 through 424 of the Code
("nonqualified stock options").
3. Eligibility and Administration
(a) Eligibility. The following individuals shall be eligible to receive
grants pursuant to the Plan as follows:
i) Any employee (including any officer or director who is an
employee) of the Company or any ISO Group member shall be eligible to
receive either incentive stock options or nonqualified stock options
under the Plan. An employee may receive more than one option under the
Plan.
ii) Any director who is not an employee of the Company or any
Affiliated Group member shall be eligible to receive options only as
set forth in Section 8.
iii) Any other individual whose participation the committee
determines is in the best interests of the Company shall be eligible to
receive nonqualified stock options.
(b) Administration. The Plan shall be administered by a committee or
committees appointed by the Board of Directors of the Company (the "Board") so
constituted as to permit the Plan to comply under Rule 16b-3. All administrative
powers may be delegated by a committee, except where required for selection and
determination of grants for persons subject to Section 16 of the Securities
Exchange Act of 1934, as amended ("Section 16"). The Company shall indemnify and
hold harmless each director and committee member for any action
Exhibit 99.1-1
<PAGE>
or determination made in good faith with respect to the Plan or any option.
Determinations by the committee shall be final and conclusive upon all persons.
4. Shares Subject to Options
The stock available for grant of options under the Plan shall be shares
of the Company's authorized but unissued or reacquired voting common stock. The
aggregate number of shares that may be issued pursuant to exercise of options
granted under the Plan shall be 450,000 shares. Additionally, each year the
aggregate number of shares of stock that may be issued pursuant to exercise of
nonqualified stock options (but not incentive stock options) under the Plan
shall automatically increase annually on January 1 by the number of shares equal
to 1% of the outstanding common shares on such date and shall not thereafter
decrease except by specific action of the Board; provided, however, that the
aggregate number of shares available for issuance pursuant to the Plan, minus
the number of shares that are subject to outstanding options and the number of
shares that have been purchased upon exercise of options, shall not exceed on
any January 1 over 10% of the outstanding common shares. If any outstanding
option grant under the Plan for any reason expires or is terminated, the shares
of common stock allocable to the unexercised portion of the option grant shall
again be available for options under the Plan as if no options had been granted
with respect to such shares.
5. Terms and Condition of Options
Option grants under the Plan shall be evidenced by agreements in such
form and containing such provisions which are consistent with the Plan as the
committee shall from time to time approve. Each agreement shall specify whether
the option(s) granted thereby are incentive stock options or nonqualified stock
options. Such agreements may incorporate all or any of the terms hereof by
reference and shall comply with and be subject to the following terms and
conditions:
(a) Shares Granted. Each option grant agreement shall specify the
number of incentive stock options and/or nonqualified stock options being
granted; one option shall be deemed granted for each share of stock. In
addition, each option grant agreement shall specify the exercisability and/or
vesting schedule of such options, if any.
(b) Purchase Price. The purchase price for a share subject to (i) a
nonqualified option may be any amount above the par value of such share
determined in good faith by the committee, and (ii) unless otherwise permitted
at a lower price by the Code, an incentive option shall not be less than 100% of
the fair market value of the share on the date the option is granted, provided,
however, the option price on an incentive stock option shall not be less than
110% of the fair market value of such share on the date the option is granted to
an individual then owning (after the application of the family and other
attribution rules of Section 424(d) or any successor rule of the Code) more than
10% of the total combined voting power of all classes of stock of the Company or
any ISO Group member. For purposes of the Plan, "fair market value" at any date
shall be (i) the reported closing price of such stock on the New York Stock
Exchange or other established stock exchange or National Market System on such
date, or if no sale of such stock shall have been made on such exchange on that
date, on the preceding date on which there was such a sale, (ii) if such stock
is not then listed on an exchange or the National Market System, the average of
the closing bid and asked prices per share for such stock in the
over-the-counter market as quoted on NASDAQ or the pink sheets or successor
Exhibit 99.1-2
<PAGE>
publication of the National Quotation Bureau on such date, or (iii) if the stock
is not then listed or quoted as referenced above, an amount determined in good
faith by the committee.
(c) Termination. Unless otherwise provided herein or in a specific
option grant agreement which may provide for longer or shorter periods of
exercisability, no option shall be exercisable after the expiration of the
earliest of
i) in the case of an incentive stock option:
(1) ten years from the date the option is granted, or
five years from the date the option is granted to an
individual owning (after the application of the family and
other attribution rules of Section 424(d) of the Code) at the
time such option was granted, more than 10% of the total
combined voting power of all classes of stock of the Company
or any ISO Group member,
(2) three months after the date the optionee ceases
to perform services for the Company or any ISO Group member,
if such cessation is for any reason other than death,
disability (within the meaning of Code Section 22(e)(3)), or
cause,
(3) one year after the date the optionee ceases to
perform services for the Company or any ISO Group member, if
such cessation is by reason of disability (within the meaning
of Code Section 22(e)(3)),
(4) three years after the date the optionee ceases to
perform services for the Company or any ISO Group member, if
such cessation is by reason of death, or
(5) the date the optionee ceases to perform services
for the Company or any ISO Group member, if such cessation is
for cause, as determined by the committee in its sole
discretion;
ii) in the case of a nonqualified stock option:
(1) twenty years from the date the option is granted,
(2) two years after the date the optionee ceases to
perform services for the Company or any Affiliated Group
member, if such cessation is for any reason other than death,
permanent disability, retirement or cause,
(3) three years after the date the optionee ceases to
perform services for the Company or any Affiliated Group
member, if such cessation is by reason of death, permanent
disability or retirement, or
(4) the date the optionee ceases to perform services
for the Company or any Affiliated Group member, if such
cessation is for cause, as determined by the committee in its
sole discretion;
Exhibit 99.1-3
<PAGE>
provided, that an option shall only be exercisable for the periods described
above following the date an optionee ceases to perform services to the extent
the option was exercisable on the date of such cessation.
(d) Method of Payment. The purchase price for any share purchased
pursuant to the exercise of an option granted under the Plan shall be paid in
full upon exercise of the option by any of the following methods, (i) by cash,
(ii) by check, or (iii) to the extent permitted under the particular grant
agreement, by transferring to the Company shares of stock of the Company at
their fair market value as of the date of exercise of the option as determined
in accordance with paragraph 5(b). Notwithstanding the foregoing, the Company
may arrange for or cooperate in permitting cashless exercise procedures and may
extend and maintain, or arrange for the extension and maintenance of, credit to
an optionee to finance the optionee's purchase of shares pursuant to the
exercise of options, on such terms as may be approved by the committee, subject
to applicable regulations of the Federal Reserve Board and any other applicable
laws or regulations in effect at the time such credit is extended.
(e) Exercise. No option shall be exercisable during the lifetime of an
optionee by any person other than the optionee, his or her guardian or legal
representative. The committee shall have the power to set the time or times
within which each option shall be exercisable and to accelerate the time or
times of exercise. To the extent that an optionee has the right to exercise one
or more options and purchase shares pursuant thereto, the option(s) may be
exercised from time to time by written notice to the Company stating the number
of shares being purchased and accompanied by payment in full of the purchase
price for such shares. Any certificate for shares of outstanding stock used to
pay the purchase price shall be accompanied by a stock power duly endorsed in
blank by the registered owner of the certificate (with the signature thereon
guaranteed). In the event the certificate tendered by the optionee in such
payment covers more shares than are required for such payment, the certificate
shall also be accompanied by instructions from the optionee to the Company's
transfer agent with respect to the disposition of the balance of the shares
covered thereby.
(f) Nontransferability. No option shall be transferable by an optionee
otherwise than by will or the laws of descent and distribution.
(g) ISO $100,000 Limit. If required by applicable tax rules regarding a
particular grant, to the extent that the aggregate fair market value (determined
as of the date an incentive stock option is granted) of the shares with respect
to which an incentive stock option under this Plan (when aggregated, if
appropriate), with shares subject to other incentive stock option grants made
before said grant under this Plan or any other plan maintained by the Company or
any ISO Group member) is exercisable for the first time by an optionee during
any calendar year exceeds $100,000 (or such other limit as is prescribed by the
Code), such option grant shall be treated as a grant on nonqualified stock
options pursuant to Code Section 422(d).
(h) Investment Representation. Unless the shares of stock covered by
the Plan have been registered with the Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933, as amended, each optionee
by accepting an option grant represents and agrees, for himself or herself and
his or her transferees by will or the laws of descent and distribution, that all
shares of stock purchased upon the exercise of the option grant will be acquired
for investment and not for resale or distribution. Upon such exercise of any
portion of an option grant, the person entitled to exercise the same shall upon
request of the Company
Exhibit 99.1-4
<PAGE>
furnish evidence satisfactory to the Company (including a written and signed
representation) to the effect that the shares of stock are being acquired in
good faith for investment and not for resale or distribution. Furthermore, the
Company may if it deems appropriate affix a legend to certificates representing
shares of stock purchased upon exercise of options indicating that such shares
have not been registered with the Securities and Exchange Commission and may so
notify its transfer agent.
(i) Rights of Optionee. An optionee or transferee holding an option
grant shall have no rights as a shareholder of the Company with respect to any
shares covered by any option grant until the date one or more of the options
granted thereunder have been properly exercised and the purchase price for such
shares has been paid in full. No adjustment shall be made for dividends
(ordinary or extraordinary, whether cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such share certificate is issued, except as provided for in paragraph 5(k).
Nothing in the Plan or in any option grant agreement shall confer upon any
optionee any right to continue performing services for the Company or any
Affiliated Group member, or interfere in any way with any right of the Company
or any Affiliated Group member to terminate the optionee's services at any time.
(j) Fractional Shares. The Company shall not be required to issue
fractional shares upon the exercise of an option. The value of any fractional
share subject to an option grant shall be paid in cash in connection with the
exercise that results in all full shares subject to the grant having been
exercised.
(k) Reorganizations, Etc. If the outstanding shares of stock of the
class then subject to this Plan are increased or decreased, or are changed into
or exchanged for a different number or kind of shares or securities, as a result
of one or more reorganizations, recapitalizations, stock splits, reverse stock
splits, stock dividends, spin-off, spin-out or other distribution of assets to
shareholders, or assumption and conversion of outstanding grants due to an
acquisition and the like, appropriate adjustments shall be made in the number
and/or type of shares or securities for which options may thereafter be granted
under this Plan and for which options then outstanding under this Plan may
thereafter be exercised. Any such adjustments in outstanding options shall be
made without changing the aggregate exercise price applicable to the unexercised
portions of such options. Notwithstanding the foregoing but subject to Section
9, a merger or similar reorganization that the Company does not survive, a sale
of all or substantially all of the assets of the Company, or the dissolution or
liquidation of the Company shall cause every option outstanding hereunder to
terminate, to the extent not then exercised, except to the extent that any
surviving entity agrees to assume the Plan and/or the obligations under any such
option.
(l) Option Modification. Subject to the terms and conditions and within
the limitations of the Plan, the committee may modify, extend or renew
outstanding options granted under the Plan, accept the surrender of outstanding
options (to the extent not theretofore exercised), reduce the exercise price of
outstanding options, and authorize the granting of new options in substitution
therefor (to the extent not theretofore exercised). Notwithstanding the
foregoing, no modification of an option (either directly or through modification
of the Plan) shall, without the consent of the optionee, alter or impair any
rights of the optionee under the option.
(m) Grants to Foreign Optionees. The committee in order to fulfill the
Plan purposes and without amending the Plan may modify grants to participants
who are foreign nationals or
Exhibit 99.1-5
<PAGE>
performing services for the Company or an Affiliated Group member outside the
United States to recognize differences in local law, tax policy or custom.
(n) Other Terms. Each option grant agreement may contain such other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the committee, such as without limitation discretionary
performance standards, tax withholding provisions, or other forfeiture
provisions regarding competition and confidential information.
6. Termination or Amendment of the Plan
The Board may at any time terminate or amend the Plan; provided, that
shareholder approval shall be obtained of any action for which shareholder
approval is required in order to comply with Rule 16b-3, the Code or other
applicable laws or regulatory requirements within such time periods prescribed.
7. Shareholder Approval and Term of the Plan
The Plan shall be effective as of April 26, 1991, the date it was
adopted by the Board, subject to ratification by the shareholders of the Company
within (each of) the time period(s) prescribed under Rule 16b-3, the Code, and
any other applicable laws or regulatory requirements, and shall continue
thereafter until terminated by the Board. Unless sooner terminated by the Board,
in its sole discretion, the Plan will expire on April 26, 2001 solely with
respect to the granting of incentive stock options or such later date as may be
permitted by the Code for incentive stock options.
8. Automatic Grants to Certain Directors
At the time this Plan is approved by a vote of shareholders, each
director who is not an employee of the Company or any Affiliated Group member
shall automatically be awarded 2,500 nonqualified stock options. Thereafter, at
the time each person who is not an employee of the Company or any Affiliated
Group member becomes a director and on each subsequent January 1 thereafter each
nonemployee director shall be automatically granted 2,500 nonqualified stock
options. The exercise price shall equal the fair market value on each such date
and such options shall be exercisable in full for the period beginning six
months after the date of grant and ending two years after the optionee ceases to
be a director; provided, however, such options shall terminate immediately on
the date that a director ceases to be a director for cause. This Section 8 shall
not be amended more than once every six months other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or the rules
thereunder.
9. Acceleration of Exercisability and Vesting Under Certain Circumstances
Notwithstanding any provision in the Plan to the contrary, with regard
to any option granted to any executive officer or director of the Company unless
the particular letter of grant provides otherwise, the option will become
immediately exercisable and vested in full upon the occurrence, before the
expiration or termination of such option, of any of the events listed below:
(a) delivery of written notice of a stockholders' meeting to
the stockholders of the Company announcing a stockholders' meeting at which the
stockholders will consider a
Exhibit 99.1-6
<PAGE>
proposed merger, proposed sale of substantially all the assets, or similar
proposed reorganization of the Company; or
(b) the acquisition of beneficial ownership (as such term is
defined in Rule 13d-3 as promulgated under the Securities Exchange Act of 1934)
by any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934), other than the Company, directly or
indirectly, of securities representing 25% or more of the total number of votes
that may be cast for the election of directors of the Company; or
(c) commencement (within the meaning of Rule 14d-2 as
promulgated under the Securities Exchange Act of 1934) of a "tender offer" for
stock of the Company subject to Section 14(d)(2) of the Securities Exchange Act
of 1934; or
(d) failure, at any annual or special meeting of the Company's
shareholders following an "election contest" subject to Rule 14a-11 (as
promulgated under the Securities Exchange Act of 1934), of any of the persons
nominated by the Company in the proxy material mailed to shareholders by the
management of the Company to win election to seats on the Board, excluding only
those who die, retire voluntarily, are disabled or are otherwise disqualified in
the interim between their nomination and the date of the meeting.
10. Definitions
(a) "Affiliate" means any corporation, partnership, joint
venture or other entity, domestic or foreign, in which the Company, either
directly or through another affiliate or affiliates, has a 50% or more ownership
interest.
(b) "Affiliated Group" means the group consisting of the
Company and any entity that is an "affiliate," a "parent" or a "subsidiary" of
the Company.
(c) "ISO Group" means the group consisting of the Company and
any corporation that is a "parent" or a "subsidiary" of the Company.
(d) "Parent" means a corporation that is a "parent" of the
Company within the meaning of Code Section 424(e).
(e) "Subsidiary" means a corporation that is a "subsidiary" of
the Company within the meaning of Code Section 424(f).
Exhibit 99.1-7
