UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: APRIL 12, 1996
ELECTRONIC SYSTEMS TECHNOLOGY INC.
(A Washington Corporation)
Commission File no. 2-92949-S
IRS Employer Identification no. 91-1238077
415 N. Quay St. #4
Kennewick WA 99336
(Address of principal executive offices)
Registrant's telephone number, including area code:(509) 735-9092
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ITEM 5. OTHER EVENTS
On APRIL 12, 1996, the Company's Board of Directors approved the
Company's 1996 Stock Option Plan for Directors, Officers, and Employees,
to be submitted on the annual proxy vote to the Company's shareholders
for ratification. For details of the Stock Option plan, reference is
made to the plan document as approved by the Board of Directors,
incorporated by reference and attached hereto as exhibit 99.7
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS, AND
EXHIBITS.
Exhibit 99.7 - 1996 Stock Option Plan for Directors, Officers, and
Employees, to be submitted to the Company's shareholders for
ratification, as approved by the Electronic Systems Technology, Inc.
Board of Directors, on April 12, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
ELECTRONIC SYSTEMS TECHNOLOGY, INC.
T.L. KIRCHNER
By: T.L. Kirchner
President
Date: MARCH 19, 1996
EXHIBIT 99.7 - Stock Option Plan document as approved by Board of
Directors on April 12, 1996
ELECTRONIC SYSTEMS TECHNOLOGY
1996 STOCK OPTION PLAN FOR DIRECTORS, OFFICERS, and EMPLOYEES
1. PURPOSE. The purpose of this plan is to promote the interests of
the Company and its stockholders by strengthening the Company's
ability to attract and retain the services of experienced and
knowledgeable officers and directors and by encouraging such
officers and directors to acquire an increased proprietary interest
in the Company, as well as to attract, retain, and stimulate the
performance of selected employees, and giving such directors and
employees the opportunity to acquire a proprietary interest in the
Company's business and an increased personal interest in this
continued success and progress as well as increased the productivity
of those individuals whom the Committee deem to have the potential
to contribute to the success of the company.
2. DEFINITIONS. Unless otherwise indicated, the following words when
used herein shall have the following meanings:
a. "Board of Directors" shall mean the Board of Directors of the
Company.
b. "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
c. "Common Stock" shall mean the Company's Common Stock ($0.001
par value) and any share or shares of the Company's stock
hereafter issued or issued in substitution for such shares.
d. "Director" shall mean a member of the Board of Directors.
e. "Employee" shall mean any person (including officers of the
Company), who is employed by the Company or any parent or
Subsidiary of the Company or any person who acts or represents
the Company as a consultant or advisor.
f. "Nonqualified Stock Option" shall mean any option granted to an
eligible employee under the Plan which is not an Incentive
Stock Option.
g. "Option" shall mean and refer to Nonqualified Stock Options.
h. "Optionee" shall mean any employee who is granted an Option
under the Plan. "Optionee" shall also mean the personal
representative of an Optionee and any other person who acquires
the right to exercise an Option by bequest or inheritance or
pursuant to a qualified domestic relations order. (QDRO).
i. "Subsidiary" shall mean a subsidiary corporation of the Company
as defined in Section 425(f) of the Code.
j. "Years of Service" shall mean twelve (12) consecutive Months of
Service, except that the Committee shall be empowered to
disregard such 12 month requirement. "Months of Service" shall
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mean a calendar month during any part which any employee,
consultant, or advisor completed an Hour of Service. "Hour of
Service" shall mean each hour for which a director, employee,
consultant, or advisor is directly or indirectly compensated or
entitled to compensation.
3. ADMINISTRATION.
a. This plan shall be administered by the Compensation Committee
of the Board of Directors (the "Committee"). Except for the
terms and conditions explicitly set forth in this Plan, the
Committee shall have the authority, in its discretion, to
determine all matters relating to the options to be granted
under this plan, including selection of the individuals to be
granted options, the number of shares to be subject to each
grant, the date of grant, the termination of the options, the
option term, vesting schedules, and all other terms and
conditions thereof. Grants under this plan to employees need
not be identical in any respect, even when made simultaneously.
The Committee will also determine and approve the granting of
options to selected eligible individuals.
b. Options shall be evidenced by written agreements which shall
contain such terms and conditions as may be determined by the
Committee. Each agreement shall be signed on behalf of the
Company by an officer or officers delegated such authority by
the Committee using either manual or facsimile signature.
c. All decisions made by the Committee pursuant to the provisions
of this Plan and all determinations and selections made by the
Committee pursuant to such provisions and related orders or
resolutions of the Board of Directors shall be final and
conclusive.
4. ELIGIBILITY AND PARTICIPATION. The group of employees, consultants,
and advisors eligible to receive options shall consist of those
employees, directors, officers and other key employees with no less
than three years continuous tenure with the Company. At the
discretion of the Committee, eligible individuals from this group
may be selected to receive options.
5. SHARES SUBJECT TO THIS PLAN.
a. The stock to be offered under the Plan shall be shares of the
Company's authorized Common Stock and may be unissued shares or
shares now held subsequently acquired by the Company as
treasury shares, as the Board of Directors may from time to
time determine. Subject to adjustment as provided in Section
12 hereof, the aggregate number of shares to be delivered under
this Plan shall not exceed one million (1,000,000) shares.
If an option expires, is surrendered in exchange for another
option, or terminates for any reason during the term of this
Plan prior to its exercise in full, the shares subject to but
not delivered under such option shall be available for options
thereafter granted and for replacement options which may be
granted in exchange for such surrendered or terminated options.
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6. TERMS OF OPTIONS PERIOD. The term during which options may be
granted under this Plan shall expire as set in the discretion of the
Committee, and the option period during which each option may be
exercised shall, subject to the provisions of Section 13 hereof, be
such period as determined by the Committee, up to a maximum of no
later than 3 years (1095 days) following the grant date of the
option.
7. OPTION PRICE. The price at which shares may be purchased upon
exercise of a particular option shall be such price per share equal
to market price at the time of grant. Market price will be the mean
of bid and ask prices on the National Daily Quotation Service "pink
sheet" for the effective date of the option granted by the
Committee. If no activity is reported for that date the "pink
sheet" with the closest preceding date with recorded activity will
establish market price.
8. MEANS OF EXERCISE. Payment of the option exercise price by the
Optionee may be in cash or check payable to the Company.
9. VESTING; EXERCISE OF OPTIONS AND RIGHTS.
a. Vesting: Exercisability. Subject to the provisions of
paragraph g. herein, an option shall vest and become
nonforfeitable and exercisable, immediately upon issuance by
the Committee and receipt of written agreement by the Optionee.
Notwithstanding the above, all eligible employees, directors,
and officers of ELECTRONIC SYSTEMS TECHNOLOGY as of the date of
adoption of this plan shall receive credit for prior years of
service as an employee, director, or officer of the Company in
respect to determining eligibility for granting of options by
the Committee may determine, provided that the election to
exercise an option shall be made in accordance with applicable
Federal laws and regulations.
c. Options will be exercisable in minimum blocks of 5,000 shares
at any one time. No option may at any time be exercised with
respect to a fractional share and no fractional shares shall be
issued.
d. As a condition to the exercise of a Non-Qualified Stock Option,
optionees shall make such arrangements as the Committee may
require for the satisfaction of any federal, state, or local
withholding tax obligations that may arise in connection with
such exercise.
e. No shares shall be delivered pursuant to the exercise of any
option, in whole or in part, until qualified for delivery under
such securities laws and regulations as may be deemed by the
Committee to be applicable thereto and until, in the case of
the exercise of an option, payment in full of the option price
thereof is received by the Company in cash or check. No holder
of an option, or his/her legal representative, legatee, or
distributee, shall be or be deemed to be a holder of any shares
subject to such option unless and until he/she has received a
certificate or certificates therefor.
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f. Notwithstanding any vesting requirements contained in any
Option, all outstanding Options shall become immediately
exerciseable (1) following the first purchase of Common Stock
pursuant to a tender offer or exchange offer (other than an
offer made by the Company) for all or part of the Common Stock,
(2) at such time as a third person, including a "group" as
defined in Section 13(d) of the Securities Exchange Act of
1934, becomes the beneficial owner of shares of the Company
having 25% or more of the total number of votes that may be
cast for the election of Directors of the Company, (3) on the
date on which the shareholders of the company approve (i) any
agreement for a merger or consolidation on which the Company
will not survive as an independent, publicly owned corporation
or (ii) any sale, exchange or other disposition of all or
substantially all of the Company's assets. The Committee's
reasonable determination as to whether such an event has
occurred shall be final and conclusive.
g. Notwithstanding any provisions of the agreement to the
contrary, the right of any Employee to receive any benefits
hereunder shall terminate and shall be forever forfeited if
such employee's employment with the Electronic Systems
Technology or status as a director or officer is terminated
because of his/her fraud, embezzlement, dishonesty, or breach
of fiduciary duty. In such an event, all unexercised options
shall be deemed null and void. This Section shall be
inapplicable to any such termination of employment or status as
a director or officer occuring after the Plan has been
terminated.
10. TRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS. The right
of any optionee to exercise an option granted under the Plan shall,
during the lifetime of such optionee, be exerciseable only by such
optionee or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code of 1986, as amended, or Title I
of the Employee Retirement Income Security Act, or the rules
thereunder and shall not be assignable or transferable by such
optionee other than by will or the laws of descent and distribution
or a qualified domestic relations order (QDRO).
11. TERMINATION OF RELATIONSHIP. The terms and conditions under which
an option may be exercised after the termination of relationship
with the Company and Optionee shall be as follows:
a. Immediately following the termination of relationship with the
Company, the Optionee shall have a period of ninety (90) days
in which to exercise any options which the Optionee has been
granted, except under the conditions set forth in paragraphs b
and c below, which shall supersede the provisions of paragraph a.
b. If recapitalization and/or similar events result in the change
of share unit values, the Optionee will receive options for
equivalent shares. If the Company is not the surviving entity
by virtue of merger, acquisition, etc., the Optionee will have
a window of ten days in which to exercise any options held at
the time. The last day of the window will be five days prior
to the legal conclusion of any such event.
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c. In the event of Company acquisition, merger, reorganization and
other transactions altering the Company structure, any
outstanding options then in force must be immediately
exercised.
12. CHANGES IN COMMON STOCK. The aggregate number and class of shares
on which options may be granted under this Plan, the number and
class of shares covered by each outstanding option, and the exercise
price per share thereof (but not the total price), of each such
option, shall all 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 or consolidation of shares, or any
spin-off, spin-out, split-up, or other distribution of assets to
shareholders, or any like capital adjustment or the payment of any
such stock dividend, or any other increase or decrease in the number
of shares of common stock of the Company without the receipt of
consideration by the Company, or assumption and conversion of
outstanding grants due to an acquisition.
13. AMENDMENT AND DISCONTINUANCE. The Board of Directors may amend,
suspend, or discontinue this Plan, but may not, without the approval
of the holders of the Company's common stock, make any amendment
thereof which operates: a) to increase the total number or shares
which may be granted under this Plan, b) to extend the terms of
this Plan or the maximum option period provided in Section 6 hereof,
c) to decrease the minimum option price provided in Section 7
hereof, d) to materially modify the requirements as to eligibility
for participation in this Plan, or e) to materially increase the
benefits accruing to participants under this Plan. No amendment to
this Plan shall, except with the consent of the Optionee, adversely
affect rights under an option previously granted,
14. TERMS OF PLAN. This Plan shall become effective April 12, 1996,
subject to the approval by the holders of the Company's common stock
at a meeting to be held within one year of the date of adoption of
this Plan.
15. INVESTMENT REPRESENTATION. Upon demand by the Company, the Optionee
shall deliver to the Company a representation in writing that the
purchase of all shares with respect to which notice of exercise of
the Option has been given by Optionee is being made for investment
only and not for resale or with a view to distribution and
containing such other representations and provisions with respect
thereto as the Company may require. Upon such demand, delivery of
such representation promptly and prior to the transfer or delivery
of any such shares and prior to the expiration of the option period,
shall be a condition precedent to the right to purchase such shares.
16. RIGHTS AS SHAREHOLDER AND EMPLOYEE. An Optionee shall have no
rights as a shareholder of the Company with respect to any shares of
Common Stock covered by an Option until the date of the issuance of
the stock certificate for such shares. Neither the Plan, nor the
granting of an option or other rights herein, nor any other action
taken pursuant to the Plan shall constitute or be evidence of, any
agreement or understanding, express or implied, that an Employee has
a right to continue as an Employee for any period of time or at any
particular rate of compensation.
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17. GOVERNING LAW. Options granted under this Plan shall be construed
and shall take effect in accordance with the laws of the State of
Washington.