<PAGE> 1
------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
INSTEEL INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0674867
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1373 BOGGS DRIVE, MOUNT AIRY, NORTH CAROLINA 27030
------------------------------------------------------------
(Address of principal executive offices, including zip code)
1994 EMPLOYEE STOCK OPTION PLAN OF INSTEEL INDUSTRIES, INC.
(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 1, 2000)
-----------------------------------------------------------
(Full title of the plan)
HOWARD O. WOLTZ, JR.
CHAIRMAN OF THE BOARD
INSTEEL INDUSTRIES, INC.
1373 BOGGS DRIVE
MOUNT AIRY, NORTH CAROLINA 27030
(336) 786-2141
---------------------------------------------------------
(Name, address and telephone number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE(1)
- ---------- ---------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Common
Stock, no par value 750,000 shares $7.84375 $5,882,812.00 $1,553.0625
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 457(c) and (h)(1), based on the average ($7.84375) of
the high ($7.9375) and low ($7.75) prices of the Registrant's common
stock on February 16, 2000, as reported on the New York Stock Exchange.
_______________
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Insteel Industries, Inc. (the
"Company") with the Securities and Exchange Commission (the "Commission") are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended October 2, 1999, filed with the Commission on December 17,
1999.
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended January 1, 2000, filed with the Commission on February
15, 2000.
(c) The description of the Company's Common Stock (no par
value), which is incorporated by reference to the Company's
Registration Statement on Form S-1 (SEC File No. 33-4929).
(d) The description of the Company's Rights Agreement dated
April 27, 1999, between the Company and First Union National Bank,
which is incorporated by reference to Exhibit 99.1 to the Company's
Registration Statement on Form 8-A, filed with the Commission on May 7,
1999.
(e) All other reports that have been filed pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since the end of the fiscal year covered by the Annual
Report on Form 10-K referred to in (a), above.
All reports and other documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
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 reports and documents.
Pursuant to General Instruction E to Form S-8, the contents of
Registration Statement No. 33-61887 on Form S-8 are incorporated by reference in
this Registration Statement on Form S-8.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 55-8-50 through 55-8-58 of the General Statutes of
North Carolina prescribe the conditions under which indemnification may be
obtained by a present or former director or officer who incurs expenses or
liability as a consequence of a legal proceeding arising out of his activities
as a director of officer.
Mandatory Statutory Indemnification. Under the statutes, a
North Carolina corporation must indemnify a director or officer who is wholly
successful on the merits or otherwise in defending a proceeding in which he was
involved by virtue of his being a director or officer of the corporation. This
mandatory indemnification covers reasonable expenses and attorneys' fees.
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<PAGE> 3
Permissive Statutory Indemnification. A North Carolina
corporation may, but is not required by statute to, indemnify its directors and
officers who conduct themselves in good faith and meet a reasonable belief test
regarding the challenged conduct. If he was acting in his official capacity, the
director or officer must have believed the challenged conduct was in the
corporation's best interest; if he was acting otherwise, he must meet the test
that he reasonably believed his conduct was not opposed to the corporation's
best interest. Notwithstanding those tests, however, statutory indemnification
is prohibited where the individual is held liable to the corporation or where he
is held liable on the basis of an improperly received personal benefit.
Court-Ordered Indemnification. A director or officer may
enforce his or her right to mandatory indemnification and, if the court
determines the individual to be entitled to the mandatory indemnification, the
court must also order the corporation to pay the reasonable expenses incurred to
enforce the right, including counsel fees. The statutes authorize the court to
provide indemnification in any case regardless of whether the individual has met
the tests applicable to permissive indemnification upon a finding that the
individual "is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances." [G.S. 55-8-54(2)] This relief is limited to
reasonable expenses when there is liability to the corporation by the
individual.
Voluntary Indemnification. Notwithstanding the limits on
statutory indemnification, a North Carolina corporation may voluntarily agree to
indemnify its directors and officers by provisions in the articles of
incorporation, the bylaws, a contract or a resolution of the Board of Directors
against any liability, subject to the limitation that an individual cannot be
indemnified on account of his activities which were at the time taken known or
believed by him to be clearly in conflict with the best interests of the
corporation. A North Carolina corporation may, also, obtain insurance to protect
its directors and officers from personal liability.
Exculpation of Directors from Liability. The articles of
incorporation of a North Carolina corporation may exonerate directors (but not
officers) from monetary liability for acts performed by them in their official
capacity as directors. This exculpation may not include conduct that the
director knew or believed was clearly in conflict with the best interests of the
corporation, liability for unlawful distributions, transactions from which he
derived an improper personal benefit or acts undertaken prior to the effective
date of the adoption of the exculpation provision.
The Company's bylaws contain broad indemnification provisions
covering both directors and officers of the Company. The Company's articles of
incorporation contain the provision eliminating monetary liability of directors
to the extent permitted by law. The Company has purchased insurance providing
for indemnification of its directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
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<PAGE> 4
ITEM 8. EXHIBITS.
The following exhibits are filed as a part of this
Registration Statement:
NUMBER DESCRIPTION
------ -----------
4.1 Restated Articles of Incorporation of the Company, as
amended, which are incorporated by reference to
Exhibit 3.1 of the Company's Current Report on Form
8-K, dated May 3, 1988
4.2 Articles of Amendment to the Restated Articles of
Incorporation of the Company, which are incorporated
by reference to Exhibit 3.1 of the Company's
Quarterly Report on Form 10-Q for the quarter ended
April 3, 1999
4.3 Bylaws of the Company, as last amended April 26,
1999, which are incorporated by reference to Exhibit
3.2 to the Company's Quarterly Report on Form 10-Q
for the quarter ended April 3, 1999
4.4 Rights Agreement dated April 27, 1999, between the
Company and First Union National Bank, which is
incorporated by reference to Exhibit 99.1 to the
Company's Registration Statement on Form 8-A filed
with the Commission on May 7, 1999
5 Opinion of Womble Carlyle Sandridge & Rice, PLLC, as
to the legality of the Common Stock being registered
23.1 Consent of Womble Carlyle Sandridge & Rice, PLLC,
which is contained in its opinion filed as Exhibit 5
23.2 Consent of Arthur Andersen LLP
24 Power of Attorney
99 1994 Employee Stock Option Plan of Insteel
Industries, Inc. (as amended and restated effective
February 1, 2000)
ITEM 9. UNDERTAKINGS.
(a) The Company 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;
II-3
<PAGE> 5
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Company pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or
controlling person of the Company 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 Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
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<PAGE> 6
SIGNATURES
THE REGISTRANT
Pursuant to the requirements of the Securities Act of 1933,
Insteel Industries, Inc. 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 Mount Airy, State of North Carolina,
on this 14th day of February, 2000.
INSTEEL INDUSTRIES, INC.
By: H. O. Woltz III *
--------------------------------
H. O. Woltz III
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 14, 2000.
<TABLE>
<S> <C>
H. O. Woltz III * Howard O. Woltz, Jr. *
- -------------------------------------------- --------------------------------------------
Name: H. O. Woltz III Name: Howard O. Woltz, Jr.
Title: Director, President and Title: Chairman of the Board
Chief Executive Officer
(principal executive officer)
Michael C. Gazmarian * Louis E. Hannen *
- -------------------------------------------- --------------------------------------------
Name: Michael C. Gazmarian Name: Louis E. Hannen
Title: Chief Financial Officer Title: Director
(principal financial and accounting officer)
Frances H. Johnson * Charles B. Newsome *
- -------------------------------------------- --------------------------------------------
Name: Frances H. Johnson Name: Charles B. Newsome
Title: Director Title: Director
Gary L. Pechota * W. Allen Rogers, II *
- -------------------------------------------- --------------------------------------------
Name: Gary L. Pechota Name: W. Allen Rogers, II
Title: Director Title: Director
William J. Shields * C. Richard Vaughn *
- -------------------------------------------- --------------------------------------------
Name: William J. Shields Name: C. Richard Vaughn
Title: Director Title: Director
*By: /s/ H. O. Woltz, Jr.
---------------------------------
Name: H. O. Woltz, Jr.
---------------------------------
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM S-8 OF
INSTEEL INDUSTRIES, INC.
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.1 Restated Articles of Incorporation of the Company, as
amended, which are incorporated by reference to
Exhibit 3.1 of the Company's Current Report on Form
8-K, dated May 3, 1988 *
4.2 Articles of Amendment to the Restated Articles of
Incorporation of the Company, which are incorporated
by reference to Exhibit 3.1 of the Company's
Quarterly Report on Form 10-Q for the quarter ended
April 3, 1999 *
4.3 Bylaws of the Company, as last amended April 26,
1999, which are incorporated by reference to Exhibit
3.2 to the Company's Quarterly Report on Form 10-Q
for the quarter ended April 3, 1999 *
4.4 Rights Agreement dated April 27, 1999, between the
Company and First Union National Bank, which is
incorporated by reference to Exhibit 99.1 to the
Company's Registration Statement on Form 8-A filed
with the Commission on May 7, 1999*
5 Opinion of Womble Carlyle Sandridge & Rice, PLLC, as
to the legality of the Common Stock being registered
23.1 Consent of Womble Carlyle Sandridge & Rice, PLLC,
which is contained in its opinion filed as Exhibit 5
23.2 Consent of Arthur Andersen LLP
24 Power of Attorney
99 1994 Employee Stock Option Plan of Insteel
Industries, Inc. (as amended and restated effective
February 1, 2000)
- ------
* Incorporated by reference.
<PAGE> 1
EXHIBIT 5
<PAGE> 2
February 23, 2000
Insteel Industries, Inc.
1373 Boggs Drive
Mount Airy, North Carolina 27030
Re: Registration Statement on Form S-8 with respect to the 1994
Employee Stock Option Plan of Insteel Industries, Inc. (As
Amended and Restated Effective February 1, 2000)
Ladies and Gentlemen:
We have served as counsel for Insteel Industries, Inc. (the
"Company") in connection with its registration under the Securities Act of 1933,
as amended, of an aggregate of 750,000 shares of its common stock, no par value
(the "Shares"), which are proposed to be offered and sold pursuant to the 1994
Employee Stock Option Plan of Insteel Industries, Inc., as amended and restated
effective February 1, 2000 (the "Plan"), and pursuant to the Company's
Registration Statement on Form S-8 (the "Registration Statement") to be filed
with the Securities and Exchange Commission (the "Commission") with respect to
the Shares.
We have reviewed the Company's articles of incorporation and
bylaws, each as amended to date, and have examined the originals, or copies
certified or otherwise identified to our satisfaction, of corporate records of
the Company, including minute books of the Company as furnished to us by the
Company, certificates of public officials and of representatives of the Company,
statutes and other instruments and documents, as a basis for the opinions
hereinafter expressed. In rendering this opinion, we have relied upon
certificates of public officials and officers of the Company with respect to the
accuracy of the factual matters contained in such certificates. We also have
reviewed the Plan and the Registration Statement.
In connection with such review, we have assumed with your
permission (1) the genuineness of all signatures; (2) the authenticity of all
documents submitted to us as originals and the conformity to original documents
of all documents submitted to us as certified or photostatic copies; and (3) the
proper issuance and accuracy of certificates of public officials and officers
and agents of the Company. In rendering opinions as to future events, we have
assumed the facts and law existing on the date hereof.
Based upon the foregoing, and having regard for such legal
considerations as we have deemed relevant, we are of the opinion that the Shares
have been duly authorized and, when issued and paid for in accordance with the
terms of the Plan, will be validly issued, fully paid and nonassessable.
This opinion is limited to the laws of the State of North Carolina.
This opinion is rendered as of the date hereof, and we undertake no obligation
to advise you of any changes in applicable law or any other matters that may
come to our attention after the date hereof.
We hereby consent to the filing of this opinion with the Commission
as Exhibit 5 to the Registration Statement. In giving this consent, we do not
admit that we are within the category of persons whose consent is required by
Section 7 of the Securities Act, or other rules and regulations of the
Commission thereunder.
WOMBLE CARLYLE SANDRIDGE & RICE
A Professional Limited Liability Company
By: /s/ Jane Jeffries Jones
-----------------------------------
Jane Jeffries Jones
<PAGE> 1
EXHIBIT 23.2
<PAGE> 2
Consent of Independent Public Accountants
To the Board of Directors and Shareholders of
Insteel Industries, Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated October 15, 1999,
included in Insteel Industries, Inc.'s Form 10-K for the year ended October 2,
1999, and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Charlotte, North Carolina,
February 23, 2000.
<PAGE> 1
EXHIBIT 24
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
We, the undersigned directors and officers of Insteel
Industries, Inc., and each of us, do hereby make, constitute and appoint Howard
O. Woltz, Jr. and H. O. Woltz III, and each of them (either of whom may act
without the consent or joinder of the other), our attorneys-in-fact and agents
with full power of substitution for us and in our name, place and stead, in any
and all capacities, to execute for us and in our behalf the Registration
Statement on Form S-8 under the Securities Act of 1933, and any post-effective
amendments thereto, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in the premises, as fully to all intents and purposes as we
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them, or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, we the undersigned have executed this
Power of Attorney this 14th day of February, 2000.
/s/ H. O. Woltz III /s/ Howard O. Woltz, Jr.
- ----------------------------- ------------------------------
H. O. Woltz III Howard O. Woltz, Jr.
/s/ Michael C. Gazmarian /s/ Louis E. Hannen
- ----------------------------- ------------------------------
Michael C. Gazmarian Louis E. Hannen
/s/ Frances H. Johnson /s/ Charles B. Newsome
- ----------------------------- ------------------------------
Frances H. Johnson Charles B. Newsome
/s/ Gary L. Pechota /s/ W. Allen Rogers, II
- ----------------------------- ------------------------------
Gary L. Pechota W. Allen Rogers, II
/s/ William J. Shields /s/ C. Richard Vaughn
- ----------------------------- ------------------------------
William J. Shields C. Richard Vaughn
<PAGE> 1
EXHIBIT 99
<PAGE> 2
1994 EMPLOYEE STOCK OPTION PLAN
OF
INSTEEL INDUSTRIES, INC.
(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 1, 2000)
<PAGE> 3
1994 EMPLOYEE STOCK OPTION PLAN OF
INSTEEL INDUSTRIES, INC.
(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 1, 2000)
1. Purpose.
The purpose of the 1994 Employee Stock Option Plan of Insteel
Industries, Inc., as amended and restated (the "Plan"), is to encourage and
enable selected key employees of Insteel Industries, Inc. (the "Corporation") to
acquire or to increase their holdings of common stock of the Corporation (the
"Common Stock") in order to promote a closer identification of their interests
with those of the Corporation and its shareholders, thereby further stimulating
their efforts to enhance the efficiency, soundness, profitability, growth and
shareholder value of the Corporation. This purpose will be carried out through
the granting of incentive stock options ("Incentive Options") and nonqualified
stock options ("Nonqualified Options"). Incentive Options and Nonqualified
Options shall be referred to herein collectively as "Options."
2. Administration of the Plan.
(a) The Plan shall be administered by the Board of Directors of the
Corporation (the "Board" or the "Board of Directors") or, upon its delegation,
by the Executive Compensation Committee of the Board (the "Committee"). Unless
the Board determines otherwise, the Committee shall be comprised solely of
"non-employee directors," as such term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or as may
otherwise be permitted under Rule 16b-3. For the purposes herein, the term
"Administrator" shall refer to the Board, and, upon its delegation to the
Committee of all or part of its authority to administer the Plan, to the
Committee.
(b) Any action of the Administrator may be taken by a written
instrument signed by all of the members of the Administrator and any action so
taken by written consent shall be as fully effective as if it had been taken by
a majority of the members at a meeting duly held and called. Subject to the
provisions of the Plan, the Committee shall have full and final authority, in
its discretion, to take any action with respect to the Plan including, without
limitation, the following: (i) to determine the individuals to receive Options,
the nature of each Option as an Incentive Option or a Nonqualified Option, the
times when Options shall be granted, the number of shares to be subject to each
Option, the Option Price (determined in accordance with Section 6), the Option
Period (determined in accordance with Section 7), the time or times when each
Option shall be exercisable, and all related terms conditions, restrictions and
limitations; (ii) to prescribe the form or forms of the agreements evidencing
any Options granted under the Plan; (iii) to establish, amend and rescind rules
and regulations for the administration of the Plan; and (iv) to construe and
interpret the Plan, the rules and regulations, and the agreements evidencing
Options granted under the Plan, and to make all other determinations deemed
necessary or advisable for administering the Plan. The Administrator also shall
have authority, in its discretion, to accelerate the date that any Option which
was not otherwise exercisable or vested shall become exercisable or vested in
whole or in part
<PAGE> 4
without any obligation to accelerate such date with respect to any other Option
granted to any recipient.
3. Effective Date; Term of the Plan.
The effective date of the Plan shall be September 23, 1994. The Plan
was amended and restated effective February 1, 2000. Options may be granted
under the Plan on or after the effective date, but not after September 22, 2004.
4. Shares of Common Stock Subject to the Plan.
The number of shares of Common Stock that may be issued pursuant to
Options shall not exceed in the aggregate 1,500,000 shares of authorized but
unissued Common Stock. The Corporation hereby reserves sufficient authorized
shares to provide for the exercise of such Options. Any shares subject to an
Option which, for any reason, expires or is terminated unexercised as to such
shares may again be subjected to an Option granted under the Plan. If the option
price of an Option is satisfied by tendering shares of Common Stock, only the
number of shares issued net of the shares of Common Stock tendered shall be
deemed issued for purposes of determining the maximum number of shares of Common
Stock available for issuance under the Plan. If there is any change in the
shares of Common Stock because of a merger, consolidation or reorganization
involving the Corporation or a related corporation, or if the Corporation
declares a stock dividend or stock split distributable in shares of Common
Stock, or if there is a change in the capital structure of the Corporation or a
related corporation affecting the Common Stock, the number of shares of Common
Stock reserved for issuance under the Plan shall be correspondingly adjusted,
and the Administrator shall make such adjustments to Options or to any
provisions of this Plan as the Administrator deems equitable to prevent dilution
or enlargement of Options.
5. Eligibility.
An Option may be granted only to an individual who satisfies the
following eligibility requirements on the date the Option is granted:
(a) The individual is a key employee of the Corporation or a related
corporation. For this purpose, an individual shall be considered to be an
"employee" only if there exists between the individual and the Corporation or a
related corporation the legal and bona fide relationship of employer and
employee. In determining whether such a relationship exists, the regulations of
the United States Treasury Department relating to the determination of the
employment relationship for the purpose of collection of income tax on wages at
the source shall be applied. Also for this purpose, a "key employee" shall mean
an employee of the Corporation or a related corporation whom the Administrator
determines qualifies as a key employee based on the nature and extent of such
employee's duties, responsibilities, personal capabilities, performance,
potential or any combination of such factors.
(b) With respect to the grant of an Incentive Option, the individual
does not own, immediately before the time that the Incentive Option is granted,
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation or a
-2-
<PAGE> 5
related corporation; provided, that an individual owning more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Corporation or a related corporation may be granted an Incentive Option if the
price at which such Option may be exercised is greater than or equal to 110
percent of the fair market value of the shares on the date the Option is granted
and the period of the Option does not exceed five years. For this purpose, an
individual will be deemed to own stock which is attributed to him under Section
424(d) of the Internal Revenue Code of 1986, as amended (the "Code").
(c) The individual, being otherwise eligible under this Section 5, is
selected by the Administrator as an individual to whom an Option shall be
granted (an "Optionee").
6. Grant of Options; Option Price.
Subject to the limitations of the Plan, the Administrator may in its
sole and absolute discretion grant Options to such eligible individuals, in such
numbers, upon such terms and conditions and at such times as the Administrator
shall determine. Both Incentive Options and Nonqualified Options may be granted
under the Plan. To the extent that an Option is designated as an Incentive
Option but does not qualify as such under Section 422 of the Code, the Option
(or portion thereof) shall be treated as a Nonqualified Option. In addition, the
following provisions shall apply with respect to Options:
(a) Option Price. The price per share of Common Stock at which an
Option may be exercised (the "Option Price") shall be no less than the fair
market value per share of the Common Stock on the date the Option is granted, as
established by the Administrator and set forth in the terms of the agreement
granting the agreement (as provided in Section 10).
(i) For the purposes of the Plan, the fair market value per
share of the Common Stock shall be established in good faith by the
Administrator and, except as may otherwise be determined by the
Administrator, the fair market value shall be determined in accordance
with the following provisions: (A) if the shares of Common Stock are
listed for trading on the New York Stock Exchange or the American Stock
Exchange, the fair market value shall be the closing sales price per
share of the shares on the New York Stock Exchange or the American
Stock Exchange (as applicable) on the date immediately preceding the
date the Option is granted, or, if there is no transaction on such
date, then on the trading date nearest preceding the date the Option is
granted for which closing price information is available, and, provided
further, if the shares are quoted on the Nasdaq National Market or the
Nasdaq SmallCap Market of the Nasdaq Stock Market but are not listed
for trading on the New York Stock Exchange or the American Stock
Exchange, the fair market value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on
such system on the date immediately preceding the date the Option is
granted for which such information is available; or (B) if the shares
of Common Stock are not listed or reported in any of the foregoing,
then the fair market value shall be determined by the Administrator in
accordance with the applicable provisions of Section 20.2031-2 of the
Federal Estate Tax Regulations, or in any other manner consistent with
the Code and accompanying regulations.
(ii) In no event shall there first become exercisable by the
Optionee in any one
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<PAGE> 6
calendar year incentive stock options granted by the Corporation or any
related corporation with respect to shares of Common Stock having an
aggregate fair market value (determined at the time an option is
granted) greater than $100,000.
(b) Date of Grant. An Incentive Option shall be considered to be
granted on the date that the Administrator acts to grant the Option, or on any
later date specified by the Administrator as the effective date of the Option. A
Nonqualified Option shall be considered to be granted on the date the
Administrator acts to grant the Option or any other date specified by the
Administrator as the date of grant of the Option.
7. Option Period and Limitations on the Right to Exercise Options.
(a) The period during which an Option may be exercised (the "Option
Period") shall be determined by the Administrator when the Option is granted and
shall extend from the date on which the Option is granted to a date not more
than ten years from the date on which the Option is granted. Subject to the
restriction contained in the preceding sentence and as otherwise provided in
this Plan, an Option shall be exercisable on such date or dates, during such
period, for such number of shares, and subject to such conditions as shall be
determined by the Administrator and set forth in the agreement evidencing such
Option, subject to the discretion of the Administrator to accelerate the time or
times when Options may be exercised. Any Option or portion thereof not exercised
before the expiration of the Option Period shall terminate.
(b) An Option may be exercised by giving written notice to the
Administrator or its designee at such time and place as the Administrator shall
direct. Such notice shall specify the number of shares to be purchased pursuant
to an Option and the aggregate purchase price to be paid therefor, and shall be
accompanied by the payment of such purchase price. Such payment shall be in the
form of (i) cash; (ii) shares of Common Stock owned by the Optionee at the time
of exercise and acceptable to the Administrator; or (iii) in any combination
thereof; provided, that the Administrator may, in its sole and absolute
discretion and subject to such terms and conditions as it deems appropriate,
also permit all or a portion of the purchase price to be paid (A) with funds
borrowed from the Corporation pursuant to Section 7(f); (B) with respect to
Options granted on or after February 1, 2000, shares of Common Stock withheld
upon exercise; (C) by delivery of written notice of exercise to the Corporation
and delivery to a broker of written notice of exercise and irrevocable
instructions to promptly deliver to the Corporation the amount of sale or loan
proceeds to pay the Option Price; or (D) by a combination of such methods.
Shares tendered or withheld in payment on the exercise of an Option shall be
valued at their fair market value on the date of exercise, which shall be
determined in good faith by the Administrator in accordance with Section 6(a)(i)
herein.
(c) No Option shall be exercised unless the Optionee, at the time of
exercise, shall have been an employee continuously since the date the Option was
granted, subject to the following:
(i) An Option shall not be affected by any change in the
terms, conditions or status of the Optionee's employment, provided that
the Optionee continues to be an employee of the Corporation or a
related corporation.
(ii) The employment relationship of an Optionee may, in the
discretion of the
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<PAGE> 7
Administrator, be treated as continuing intact for any period that the
Optionee is on military or sick leave or other bona fide leave of
absence, provided that the period of such leave does not exceed 90
days, and in any event shall be treated as continuing during such
period as the Optionee's right to reemployment is guaranteed either by
statute or by contract. The employment relationship of an Optionee may,
in the discretion of the Administrator, also be treated as continuing
intact while the Optionee is not in active service because of
disability; provided, that shares acquired by the Optionee pursuant to
exercise of an Incentive Option shall be subject to Sections 421 and
422 of the Code only if and to the extent that such exercise occurs
within twelve months less one day following the date the Optionee's
employment is considered to be terminated because of such disability
under Section 422. For purposes of this subparagraph (c)(ii),
"disability" shall mean the inability of the Optionee to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death,
or which has lasted or can be expected to last for a continuous period
of not less than twelve months. The Administrator shall determine
whether an Optionee is disabled within the meaning of the Plan, and, if
applicable, the date of a participant's termination of employment for
any reason (the "termination date").
(iii) Unless an individual agreement provides otherwise, if
the employment of an Optionee is terminated because of death or
disability, the Option may be exercised following such termination only
to the extent determined by the Administrator in its discretion;
provided that such discretion may include a decision to accelerate the
date for exercising all or any part of the Option which was not
otherwise exercisable on the termination date. In any event, the Option
must be exercised, if at all, prior to the earlier of: (A) the first
anniversary of the Optionee's termination date, or (B) the close of the
Option Period. In the event of the Optionee's death, such Option shall
be exercisable by such person or persons as shall have acquired the
right to exercise the Option by will or by the laws of intestate
succession.
(iv) Unless an individual agreement provides otherwise, if the
employment of an Optionee is terminated for any reason other than
death, disability or, with respect to Options granted on or after
February 1, 2000, for "cause" (as such term is defined in Section
7(c)(v)), his Option may be exercised only to the extent determined by
the Administrator in its discretion; provided, that such discretion may
include a decision to accelerate the date of exercising all or any part
of the Option which was not otherwise exercisable on the Optionee's
termination date. In any event, the Option must be exercised, if at
all, prior to the earlier of: (A) 90 days following the Optionee's
termination date, or (B) the close of the Option Period.
(v) With respect to Options granted on or after February 1,
2000, unless an individual agreement provides otherwise, if the
employment of an Optionee is terminated for "cause," his Option shall
terminate and no longer exercisable as of the Optionee's termination
date. For purposes of this Section 7(c), an Optionee's termination
shall be for "cause" if such termination results from the Optionee's
(W) termination for "cause" under the terms of the Optionee's
employment or other agreement with the Corporation, if any; (X)
dishonesty or conviction of a crime; (Y) failure to perform his duties
to the satisfaction of the
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<PAGE> 8
Corporation; or (Z) engaging in conduct that could be materially
damaging to the Corporation without a reasonable good faith belief that
such conduct was in the best interest of the Corporation. The
determination of "cause" shall be made by the Administrator and its
determination shall be final and conclusive.
(d) An Optionee or his legal representative, legatees or distributees
shall not be deemed to be the holder of any shares subject to an Option and
shall not have any rights as a shareholder unless and until certificates for
such shares are issued to him or them under the Plan. A certificate or
certificates for shares of Common Stock acquired upon exercise of an Option
shall be issued in the name of the Optionee (or his beneficiary) and distributed
to the Optionee (or his beneficiary) as soon as practicable following receipt of
proper notice of exercise and payment of the Option Price.
(e) Nothing in the Plan shall confer upon the Optionee any right to
continue in the employment or service of the Corporation or a related
corporation, or to interfere in any way with the right of the Corporation or a
related corporation to terminate the Optionee's employment or service at any
time.
(f) If an Optionee shall exercise an Option with funds borrowed from
the Corporation, the Optionee shall execute a promissory note in favor of the
Corporation for the amount of the Option Price borrowed. The promissory note
shall provide for such repayment terms as the Administrator in its discretion
shall establish; provided, that the rate of interest in effect under the
promissory note shall equal or exceed the rate necessary to prevent application
of the unstated interest rules under Section 483 of the Code. In addition, the
Optionee shall execute an agreement assigning to the Corporation as security for
the promissory note the shares acquired pursuant to the Option. The security
agreement shall provide for the shares to be held by the Administrator until the
promissory note is repaid in full; provided, that if Optionee shall not have
repaid the promissory note in full at the time of his termination of employment
with the Corporation, or if he shall otherwise be in default under the terms of
such promissory note, the Administrator shall retain the number of shares needed
to repay the outstanding balance on such note, and shall deliver a certificate
for the remaining shares held by the Administrator to the Optionee.
8. Nontransferability of Options.
(a) Incentive Options shall not be transferable other than by will or
the laws of intestate succession. Nonqualified Options shall not be transferable
other than by will or the laws of intestate succession, except as may be
permitted by the Administrator in its sole discretion in a manner consistent
with the registration provisions of the Securities Act of 1933, as amended (the
"Securities Act"). Except as may be permitted by the preceding sentence, an
Option shall be exercisable during the Optionee's lifetime only by him or by his
guardian or legal representative.
(b) If an Optionee is subject to Section 16 of the Act, shares of
Common Stock acquired upon exercise of an Option may not, without the consent of
the Administrator, be disposed of by the Optionee until the expiration of six
months after the date the Option was granted.
9. Certain Definitions.
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<PAGE> 9
For purposes of the Plan, the following terms shall have the meaning
indicated:
(a) "Related corporation" means any parent, subsidiary or predecessor
of the Corporation.
(b) "Parent" or "parent corporation" shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations ending with the
Corporation if, at the time as of which a determination is being made, each
corporation other than the Corporation owns stock possessing fifty percent or
more of the total combined voting power of all classes of stock in another
corporation in the chain.
(c) "Subsidiary" or "subsidiary corporation" means any corporation
(other than the Corporation) in an unbroken chain of corporations beginning with
the Corporation if, at the time as of which a determination is being made, each
corporation other than the last corporation in the unbroken chain owns stock
possessing fifty percent or more of the total combined voting power of all
classes of stock in another corporation in the chain.
(d) "Predecessor" or "predecessor corporation" means a corporation
which was a party to a transaction described in Section 424(a) of the Code (or
which would be so described if a substitution or assumption under that section
had occurred) with the Corporation, or a corporation which is a parent or
subsidiary of the Corporation, or a predecessor of any such corporation.
(e) In general, terms used in the Plan shall, where appropriate, be
given the meaning ascribed to them under the provisions of the Code applicable
to incentive stock options.
10. Stock Option Agreement.
The grant of any Option under the Plan shall be evidenced by the
execution of an agreement (an "Agreement") between the Corporation and the
Optionee. Such Agreement shall set forth the date of grant of the Option, the
Option Price, and the time or times when and the conditions upon the happening
of which the Option shall become exercisable. Such Agreement shall also set
forth the restrictions, if any, with respect to which the shares to be purchased
thereunder shall be subject, and such other terms and conditions as the
Administrator shall determine which are consistent with the provisions of the
Plan and applicable law and regulations.
11. Restrictions on Shares.
The Administrator may impose such restrictions on any shares issued
pursuant to the exercise of Options granted hereunder as it may deem advisable,
including without limitation restrictions under the Securities Act, under the
requirements of the New York Stock Exchange and under any Blue Sky or securities
laws applicable to such shares. Notwithstanding any other Plan provision to the
contrary, the Corporation shall not be obligated to issue, deliver or transfer
shares of Common Stock under the Plan, or take any other action, unless such
issuance, delivery, transfer or other action is in compliance with all
applicable laws, rules and regulations (including but not limited to the
requirements of the Securities Act). The Administrator may cause a restrictive
legend to be placed on any certificate issued pursuant to the exercise of an
Option granted hereunder in such
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<PAGE> 10
form as may be prescribed from time to time by applicable laws and regulations
or as may be advised by legal counsel.
12. Amendment and Termination.
The Plan and any Option granted under the Plan may be amended or
terminated at any time by the Board of Directors of the Corporation; provided,
that (i) approval of an amendment to the Plan by the shareholders of the
Corporation shall be required to the extent, if any, that shareholder approval
of such amendment is required by applicable law, rule or regulation; and (ii)
such amendment or termination of an Option shall not, without the consent of a
recipient of an Option, adversely affect the rights of the recipient with
respect to an outstanding Option.
13. Withholding.
The Corporation shall withhold all required local, state and federal
taxes from any amount payable in cash with respect to an Option. The Corporation
shall require any recipient of an Option payable in shares of the Common Stock
to pay to the Corporation in cash the amount of any tax or other amount required
by any governmental authority to be withheld and paid over by the Corporation to
such authority for the account of such recipient. Notwithstanding the foregoing,
with respect to Options granted on or after February 1, 2000, the Corporation
may establish procedures to permit a recipient to satisfy such obligation in
whole or in part, and any other local, state or federal income tax obligations
relating to such an Option, by electing (the "election") to have the Corporation
withhold shares of Common Stock from the shares to which the recipient is
entitled. The number of shares to be withheld shall have a fair market value as
of the date that the amount of tax to be withheld is determined as nearly equal
as possible to (but not exceeding) the amount of such obligations being
satisfied. Each election must be made in writing to the Administrator in
accordance with election procedures established by the Administrator.
14. Predecessor Plan.
As of the effective date of the Plan, no further options shall be
granted under the 1985 Insteel Industries, Inc. Employee Incentive Stock Option
Plan, as amended (the "Predecessor Plan"). The Predecessor Plan shall continue
in effect and shall be applicable with respect to all options granted prior to
the effective date under the Predecessor Plan.
15. Section 16(b) Compliance.
It is the intention of the Corporation that the Plan shall comply in
all respects with Rule 16b-3 under the Act, and, if any Plan provision is later
found not to be in compliance with Section 16 of the Act, the provision shall be
deemed null and void, and in all events the Plan shall be construed in favor of
it meeting the requirements of Rule 16b-3 (or successor rules applicable to the
Plan). Notwithstanding anything in the Plan to the contrary, the Administrator,
in its sole and absolute discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to participants who are
officers or Directors subject to Section 16 of the Act without so restricting,
limiting or conditioning the Plan with respect to other participants.
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<PAGE> 11
16. Applicable Law.
Except as otherwise provided herein, the Plan shall be construed and
enforced according to the laws of the State of North Carolina.
17. Change of Control.
(a) Notwithstanding any other provision of the Plan to the contrary, in
the event of a change of control (as defined in Section 17(c) herein), all
options outstanding as of the date of such change of control shall become fully
exercisable, whether or not then otherwise exercisable.
(b) Notwithstanding the foregoing, in the event of a merger, share
exchange, reorganization or other business combination affecting the Corporation
or a related corporation, the Administrator may, in its sole and absolute
discretion, determine that any or all options granted pursuant to the Plan shall
not vest or become exercisable on an accelerated basis, if the Corporation or
the board of directors of the surviving or acquiring corporation, as the case
may be, shall have taken such action, including but not limited to the
assumption of options granted under the Plan or the grant of substitute awards
(in either case, with substantially similar terms as options granted under the
Plan), as in the opinion of the Administrator is equitable or appropriate to
protect the rights and interests of participants under the Plan. For the
purposes herein, if the Committee is acting as the Administrator authorized to
make the determinations provided for in this Section 17(b), the Committee shall
be appointed by the Board of Directors, two-thirds of the members of which shall
have been directors of the Corporation prior to the merger, share exchange,
reorganization or other business combinations affecting the Corporation or a
related corporation.
(c) For the purposes herein, a "change of control" shall be deemed to
have occurred on the earliest of the following dates:
(i) The date any entity or person shall have become the
beneficial owner of, or shall have obtained voting control over, thirty
percent (30%) or more of the outstanding Common Stock of the
Corporation;
(ii) The date the shareholders of the Corporation approve a
definitive agreement (A) to merge or consolidate the Corporation with
or into another corporation, in which the Corporation is not the
continuing or surviving corporation or pursuant to which any shares of
Common Stock of the Corporation would be converted into cash,
securities or other property of another corporation, other than a
merger or consolidation of the Corporation in which holders of Common
Stock immediately prior to the merger or consolidation have the same
proportionate ownership of Common Stock of the surviving corporation
immediately after the merger as immediately before, or (B) to sell or
otherwise dispose of all or substantially all the assets of the
Corporation; or
(iii) The date there shall have been a change in a majority of
the Board of Directors of the Corporation within a 12-month period
unless the nomination for election by the Corporation's shareholders of
each new director was approved by the vote of two-thirds of the
directors then still in office who were in office at the beginning of
the 12-month
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<PAGE> 12
period.
(For purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such
term is defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act, other than the Corporation, a subsidiary of the Corporation or any
employee benefit plan(s) sponsored or maintained by the Corporation or
any subsidiary thereof, and the term "beneficial owner" shall have the
meaning given the term in Rule 13d-3 under the Exchange Act.)
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<PAGE> 13
IN WITNESS WHEREOF, this Employee Stock Option Plan, as amended and
restated, has been executed in behalf of the Corporation as of the 1st day of
February, 2000.
INSTEEL INDUSTRIES, INC.
By: /s/ H. O. Woltz III
---------------------------
Chief Executive Officer
Attest:
/s/ Gary D. Kniskern
- ------------------------
Secretary
[Corporate Seal]
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