<PAGE>
As filed with the Securities and Exchange Commission on August __, 1996
Registration No. 333-_____________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- -------------------------------------------------------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
HEALTH IMAGES, INC.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 58-1485618
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8601 DUNWOODY PLACE, BUILDING 200, ATLANTA, GEORGIA 30350
- ------------------------------------------------------------------------------
(Address of principal executive offices and zip code)
HEALTH IMAGES, INC.
1996 EMPLOYEE INCENTIVE STOCK OPTION PLAN
(Full Title of the Plan)
- ------------------------------------------------------------------------------
ROBIN EUBANKS MURRAY, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
HEALTH IMAGES, INC.
8601 DUNWOODY PLACE, BUILDING 200
ATLANTA, GEORGIA 30350
- --------------------------------------------------------------------------------
(Name and address of agent for service)
(404) 587-5084
---------------
(Telephone number, including area code, of agent for service)
Copy to:
GABRIEL DUMITRESCU, ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY
191 PEACHTREE STREET, N.E., 16TH FLOOR
ATLANTA, GEORGIA 30303
(404) 572-6600
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 Price Fee
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common
Stock, $.01 600,000 $10.00 (2) $6,000,000 (3) $2,070.00
par value shares(1)
- -------------------------------------------------------------------------------
</TABLE>
(1) Representing shares to be issued by the Registrant in connection with the
Registrant's 1996 Employee Incentive Stock Option Plan (the "Stock Option
Plan"). This Registration Statement also covers such indeterminable number
of additional shares as may become issuable to prevent dilution in the
event of a stock split, stock dividend, reclassification or other similar
transaction, as well as certain rights which are attached to each share of
stock distributed under the Stock Option Plan.
(2) The average of the high and low prices of the Registrant's Common Stock as
reported on the New York Stock Exchange for August 5, 1996.
(3) The Proposed Maximum Aggregate Offering Price is calculated solely for the
purpose of determining the registration fee pursuant to Rule 457(h)(1)
under the Securities Act of 1933, as amended.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of the
Instructions to the Registration Statement on Form S-8 will be sent or given to
employees of the Registrant as required by Rule 428(b)(1) promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
EXPERTS
The consolidated financial statements and schedules of the Company included
or incorporated by reference in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 have been audited by Joseph Decosimo and Company,
Atlanta, Georgia, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements and schedules are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated herein by reference:
(1) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (File No. 1-11654);
(2) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996 (File No. 1-11654); and
(3) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement filed on Form 8-A pursuant to Section 12 of
the Securities Exchange Act of 1934 (the "Exchange Act") on January 27, 1993
(File No. 1-11654).
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-
effective amendment that indicates that all securities offered hereby have been
sold or that deregisters all such securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing of such documents.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware empowers
the Registrant to, and the Restated Bylaws (the "Bylaws") of the Registrant
provide that it shall, 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 (other than an action, suit or proceeding by or in the right
of the Registrant) by reason of the fact that he or she is or was a director or
officer of the Registrant, or is or was serving at the request of the Registrant
as a director or officer of another corporation, partnership, joint venture,
trust or other 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 to be in or not opposed to the best interests of
the Registrant, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful; except that, in the
case of an action or a suit by or in the right of the Registrant, 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 Registrant unless and
only to the extent that the Court of Chancery of the State of Delaware or
II-1
<PAGE>
the court in which such action or suit was brought shall determine that such
person is fairly and reasonably entitled to indemnity for proper expenses.
Pursuant to Section 145 of the General Corporation Law of the State of
Delaware, the Registrant's Bylaws provide for indemnification of officers and
directors of the Registrant and persons serving at the request of the Registrant
in such capacities against certain losses, costs, liabilities and expenses
incurred by reason of their position with the Registrant or such other business
organizations.
The Registrant's Restated Certificate of Incorporation contains a provision
which eliminates, to the fullest extent permitted by law, director liability for
monetary damages for breaches of fiduciary duty of care.
The Registrant has entered into an Indemnification Agreement (the
"Indemnification Agreement") with each of its directors and officers. The
Indemnification Agreement sets forth certain procedural matters relating to
indemnification, including the manner in which an indemnified party may make a
claim and the right of an indemnified party to adjudicate his or her claim if
indemnification is denied by the Company.
The Registrant maintains an insurance policy insuring the Registrant and
directors and officers of the Registrant against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
The above discussion of the Registrant's Bylaws, Restated Certificate of
Incorporation, the Indemnification Agreement and of Section 145 of the General
Corporation Law of the State of Delaware is not intended to be exhaustive and is
qualified in its entirety by reference to such Bylaws, Restated Certificate of
Incorporation, Indemnification Agreement and statute.
II-2
<PAGE>
ITEM 8. EXHIBITS.
The following exhibits are filed with or incorporated by reference into this
Registration Statement pursuant to Item 601 of Regulation S-K:
Exhibit
No. Description
- ------- -----------
4(a) Restated Certificate of Incorporation of the Registrant, as filed
with the Secretary of State of Delaware on March 9, 1990
(Incorporated herein by reference to Exhibit 4(a) to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989 (File No. 0-14746)).
4(b) Restated Bylaws of the Registrant. (Incorporated herein by
reference to Exhibit 4(a) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989 (File No. 0-
14746)).
4(c) Form of Indenture between the Registrant and The Provident Bank,
Cincinnati, Ohio, as trustee. (Incorporated herein by reference
to Exhibit 4(d) to Amendment No. 2 to the Registrant's
Registration Statement on form S-2 filed June 14, 1990 (Reg. No.
33-34161)).
4(d) Successor Rights Agreement between the Registrant and First Union
National Bank of North Carolina as Successor Rights Agent dated as
of September 1, 1992. (Incorporated herein by reference to
Exhibit 4(e) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992 (File No. 0-14746)).
5+ Opinion of counsel with respect to the securities being
registered.
23.1 Consent of counsel (included in Exhibit 5).
23.2+ Consent of independent auditors.
24 Power of Attorney (see signature pages to this Registration
Statement).
99+ Health Images, Inc. 1996 Employee Incentive Stock Option Plan.
__________________
+ Filed herewith.
II-3
<PAGE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 and 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 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 undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to 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.
II-4
<PAGE>
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the 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 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 Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Atlanta, State of Georgia, on this the 7th day of August, 1996.
HEALTH IMAGES, INC.
By:/S/Robert D. Carl, III
-----------------------
Robert D. Carl, III
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert D. Carl, III and Robin Eubanks Murray, or
either of them, as 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, granting unto said attorneys-in-fact and
agents, or either of them, full power and authority to do and perform each and
every act and thing required or 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 either
of them, or their substitutes or substitute, could lawfully do or cause to be
done by virtue hereof.
II-6
<PAGE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/S/Robert D. Carl, III Chairman of the Board Date: August 7, 1996
- --------------------- Chief Executive Officer --------------
Robert D. Carl, III (Principal Executive
Officer)
/S/Anthony T. Prescott Senior Executive Vice Date: August 7, 1996
- --------------------- President, --------------
Anthony T. Prescott Chief Operating Officer
and Director
/S/Ron L. Clark, Jr. Treasurer and Controller Date: August 7, 1996
- ------------------- (Principal Financial --------------
Ron L. Clark, Jr. Accounting Officer)
/S/Marc I. Raphaelson, M.D. Director Date: August 7, 1996
- -------------------------- --------------
Marc I. Raphaelson, M.D.
/S/William E. Whitesell, Ph.D. Director Date: August 7, 1996
- ------------------------------ --------------
William E. Whitesell, Ph.D.
/S/Robert L. Taylor Director Date: August 7, 1996
- ------------------ --------------
Robert L. Taylor
/S/Stuart B. Strasner, Sr. Director Date: August 7, 1996
- ------------------------- --------------
Stuart B. Strasner, Sr.
/S/Jack O. Greenberg, M.D. Director Date: August 7, 1996
- ------------------------- --------------
Jack O. Greenberg, M.D.
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit
No. Description Page No.
------- ----------- --------
<S> <C> <C>
4(a) Restated Certificate of Incorporation of the Registrant, as filed
with the Secretary of State of Delaware on March 9, 1990
(Incorporated herein by reference to Exhibit 4(a) to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989 (File No. 0-14746)).
4(b) Restated Bylaws of the Registrant. (Incorporated herein by
reference to Exhibit 4(a) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989 (File No. 0-
14746)).
4(c) Form of Indenture between the Registrant and The Provident
Bank, Cincinnati, Ohio, as trustee. (Incorporated herein by
reference to Exhibit 4(d) to Amendment No. 2 to the Registrant's
Registration Statement on form S-2 filed June 14, 1990 (Reg. No.
33-34161)).
4(d) Successor Rights Agreement between the Registrant and First
Union National Bank of North Carolina as Successor Rights Agent
dated as of September 1, 1992. (Incorporated herein by reference
to Exhibit 4(e) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992 (File No. 0-14746)).
5+ Opinion of counsel with respect to the securities being
registered.
23.1 Consent of counsel (included in Exhibit 5).
23.2+ Consent of independent auditors.
24 Power of Attorney (see signature pages to this Registration
Statement).
99+ Health Images, Inc. 1996 Employee Incentive Stock
Option Plan.
_________________
+ Filed herewith.
</TABLE>
II-8
<PAGE>
EXHIBIT 5
August 6, 1996
Health Images, Inc.
8601 Dunwoody Place
Building 200
Atlanta, Georgia 30350
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have served as counsel for Health Images, Inc., a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended, pursuant to a Registration Statement on Form S-8 (the
"Registration Statement") of an aggregate of 600,000 shares (the "Shares") of
common stock, $.01 par value, of the Company, to be offered and sold by the
Company pursuant to the 1996 Employee Incentive Stock Option Plan (the "Plan").
We have examined and are familiar with originals or copies (certified,
photostatic or otherwise identified to our satisfaction) of such documents,
corporate records and other instruments relating to the incorporation of the
Company and the adoption of the Plan as we have deemed necessary and advisable.
In all such examinations, we have assumed the genuineness of all signatures
on all originals and copies of documents we have examined, the authenticity of
all documents submitted to us as originals and the conformity to original
documents of all certified, conformed or photostatic copies. As to questions of
fact material and relevant to our opinion, we have relied upon certificates or
representations of Company officials and of appropriate state, local and federal
officials.
We express no opinion as to matters under or involving laws other than the
laws of the State of Georgia and the Delaware General Corporation Law.
<PAGE>
Based upon and subject to the foregoing and having regard for such legal
considerations as we have deemed relevant, it is our opinion that:
1. The Shares have been duly authorized; and
2. Upon the issuance and delivery of the Shares upon receipt of lawful
consideration therefor pursuant to the Plan, such Shares will be
validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
POWELL, GOLDSTEIN, FRAZER & MURPHY
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8) and related Prospectus of Health Images, Inc.
for the registration of 600,000 shares of its common stock, $.01 par value per
share, under its 1996 Employee Incentive Stock Option Plan, and incorporation by
reference therein of our report dated February 23, 1996, with respect to the
consolidated financial statements and schedules of Health Images, Inc. included
or incorporated by reference in its Annual Report (Form 10-K) for the year ended
December 31, 1995, filed with the Securities and Exchange Commission.
JOSEPH DECOSIMO AND COMPANY
Chattanooga, Tennessee
August 6, 1996
<PAGE>
EXHIBIT 99
1996
EMPLOYEE INCENTIVE STOCK OPTION PLAN
HEALTH IMAGES, INC.
1. Purpose. This Employee Incentive Stock Option Plan (the "Plan")
-------
is intended as an incentive and to encourage stock ownership by certain officers
and other key employees of Health Images, Inc. , a Delaware corporation (the
"Corporation") , or of its subsidiary corporations as that term is defined in
Section 425(f) of the Internal Revenue Code of 1986, as amended (the
"Subsidiary" or "Subsidiaries") , so that they may acquire or increase their
proprietary interest in the Corporation, and properly to reward them for
meritorious or profit producing services to the Corporation or the Subsidiaries.
It is further intended that options issued pursuant to this Plan shall
constitute incentive stock options within the meaning of Sec. 422A of the
Internal Revenue Code of 1986, as amended (the "Code").
2. Administration. The Plan shall be administered by a committee
--------------
appointed by the Board of Directors of the Corporation (the "Committee"). The
Corporation's Compensation Committee shall administer the Plan. The Committee
shall consist of not less than three members. The Board of Directors may from
time to time remove members from or add members to the Committee. Vacancies on
the Committee, howsoever caused, shall be filled by the Board of Directors. The
Committee shall select one of its members as Chairman and shall hold meetings at
such times and places as it may determine. The action of a majority of the
Committee at a meeting at which a quorum is present, or acts reduced to or
approved in
<PAGE>
writing by a majority of the members of the Committee, shall be the valid acts
of the Committee. Each Director while a member of the Committee shall meet the
definition of "disinterested person" contained in Rule 16b-3 of the Securities
and Exchange Commission. The Committee shall from time to time at its
discretion designate the key employees who shall be granted options and the
number of shares to be optioned to each.
The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted under it shall be final. No member of the
Board of Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it.
3. Eligibility. The persons who shall be eligible to receive options
-----------
shall be such employees (including officers, whether or not they are Directors)
of the Corporation or its Subsidiaries as the Committee shall select from time
to time ("Optionee" or "Optionees"). An Optionee may hold more than one option,
but only on the terms and subject to the restrictions hereafter set forth.
4. Stock. The stock subject to the options shall be shares of the
-----
Corporation's authorized and unissued or reacquired $.01 par value voting common
stock (the term "shares" as used herein shall refer to shares which are
specifically subject to an option granted under the Plan). The aggregate number
of shares which may be issued under options pursuant to the Plan shall not
exceed 600,000 shares. The limitations established by each of the preceding
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<PAGE>
sentences shall be subject to adjustment as provided in Section 6(i) of the
Plan.
In the event that any outstanding option under the Plan for any reason
expires or is terminated, the Shares allocable to the unexercised portion of
such option may again be subjected to an option under the Plan.
5. Annual Limitation. The maximum number of shares of Common Stock
-----------------
with respect to which options may be granted during any fiscal year of the
Company to any eligible optionee who is a "covered employee" within the meaning
of Section 162(m) of the Internal Revenue Code shall not exceed 100,000 shares.
6. Terms and Conditions of Option. Options granted pursuant to the
------------------------------
Plan shall be authorized by the Committee and shall be evidenced by agreements
in such form as the Committee shall from time to time approve, which agreement
shall contain specifically or be subject to the following terms and conditions:
(a) Number of Shares. Each option shall state the number of Shares to which
----------------
it pertains.
(b) Option Price. Each option shall state the option price, which shall be
------------
not less than 100% of the fair market value of the Shares subject to the option
on the date of grant. Fair market value shall be determined under the
principles of Treasury Regulations 20.2031-2 or such other regulations or
authorities as the Committee shall deem appropriate at the time. Subject to the
foregoing, the Committee, in fixing the option price, shall have full authority
and discretion and be fully protected in doing so.
-3-
<PAGE>
(c) Medium and Time of Payment. The option price shall be payable on the
--------------------------
exercise of the option and may be paid (i) in United States Dollars in cash or
by check; (ii) by transferring a number of shares, valued as provided in
Paragraph 6(b) above, as of the date of transfer; having a value equal the
option price; or (iii) by part payment in cash or by check as provided in (i)
above and by payment of the balance by transferring shares to the Corporation as
provided in (ii) above;
(d) Conditions of Exercise of Options.
---------------------------------
(1) No option granted pursuant to this Plan shall be exercised in
whole or in part more than ten years after it is granted, and such option
shall be subject to such further terms and conditions as to the time of its
exercise as the Committee may prescribe.
(2) In order to exercise an option granted hereunder, in whole or in
part, each of the following conditions must be fulfilled at the time of
exercise:
(i) The Optionee must be in the employ of the Corporation or one of
its Subsidiaries or exercise the Option within the 30 day period following
termination of employment. However, any Optionee who is totally and
permanently disabled at the time-of exercise of an option and who has
ceased to work for the Corporation or one of its Subsidiaries as a result
of such disability shall not be required to satisfy this condition if he
has been employed by the Corporation or one of its subsidiaries
-4-
<PAGE>
within one year prior to the date of exercise of such option. Permanent
and total disability for purposes of this Paragraph 6(d)(2)(i) shall mean
that such Optionee, at the time he ceased his employment by the
Corporation, was unable to engage in any substantial gainful activity by
reason of a medically determinable physical or mental impairment which
could be expected to result in death or which at such time could be
expected to last for a continuous period of not less than twelve (12)
months. Such optionee shall furnish proof of such disability in form and
substance satisfactory to the Committee.
Neither the transfer of an employee from employment by one of the
Corporation's Subsidiaries to another Subsidiary, the transfer of an
employee from the employment by one of the Subsidiaries to the Corporation
or by the Corporation to one of its Subsidiaries shall be deemed the
termination of the employment of the employee by the Corporation or any of
its Subsidiaries.
(ii) The Optionee shall have met any additional specific conditions
imposed by the Committee at the time of the granting of the option. Such
specific conditions may be in the form of achievement goals for the
individual Optionee based upon predetermined minimum increases over a
specific period or periods time, in sales, gross profits, pre-tax or after
tax earnings, productivity, or other goals or standards for the Corporation
or the Subsidiary for
-5-
<PAGE>
which the Optionee works. The imposition of such achievement goals and
conditions shall be in the sole discretion of the Committee; and such goals
and conditions may differ between individual employees of the Corporation
and/or of its Subsidiaries; and between classes of employees of the
Corporation and/or any Subsidiary; and between the employees of the
Corporation, as a class, and the employees of the Subsidiaries as a class.
(iii) Any Optionee of the Corporation or any Subsidiary shall be
entitled to accumulate and carry over any unexercised portion of an option
to any subsequent period, provided that at the time of exercise of such
portion of the option, the Optionee shall meet all conditions herein
required of the Optionee at the time of the exercise.
(f) Termination of Employment Except by Death. Subject to Paragraph
-----------------------------------------
6(d)(2)(i), in the event that an Optionee shall cease to be employed by the
Corporation or any of its Subsidiaries for any reason other than his death and
shall be no longer in the employ of any of them, such Optionee shall have thirty
(30) days from the date of termination of employment to exercise the unexercised
portion of the option after which such portion of the option shall become null
and void. Whether authorized leave of absence or absence for military or
governmental service shall constitute termination of employment, for the
purposes of the Plan, shall be
-6-
<PAGE>
determined by the Committee, whose determination shall be final and conclusive.
(g) Death of Optionee and Transfer of Option. If the Optionee shall die
----------------------------------------
while in the employ of the Corporation or a Subsidiary and shall not have fully
exercised the option, the option may be exercised, subject to the condition that
no option shall be exercisable after the expiration of ten years from the date
it is granted, to the extent that the Optionee's right to exercise such option
had accrued pursuant to this Section 6 of the Plan at the time of his death and
had not previously been exercised, at any time within twelve months after the
Optionee's death, by the executors or administrators of the Optionee or by any
person or persons who shall have acquired the option directly from the optionee
by bequest or inheritance.
No option shall be transferable by the Optionee otherwise than by will or
under the laws of descent and distribution.
(h) Recapitalization. Subject to any required action by the shareholders,
----------------
the number of shares covered by each outstanding option, and the price per Share
thereof in each such option, shall be proportionately adjusted for any increase
or decrease in the number of issued shares of the Corporation resulting from a
subdivision or consolidation of shares or the payment of a stock dividend or
stock split (but only on the shares) or any other increase or decrease in the
number of such shares affected without receipt of consideration by the
Corporation.
-7-
<PAGE>
Subject to any required action by the shareholders, if the Corporation shall
be the surviving corporation in any merger or consolidation, each outstanding
option shall pertain to and apply to the securities to which a holder of the
number of shares subject to the option would have been entitled. A dissolution
or liquidation of the Corporation or a merger or consolidation in which the
Corporation is not the surviving corporation, shall cause each outstanding
option to terminate.
In the event of a change in the shares of the Corporation as presently
constituted, which is limited to a change of all of its authorized shares
without par value into the same number of shares with a different stated value
or with par value, the shares resulting from any such change shall be deemed to
be the shares within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities
of the Corporation, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive, provided
that each option granted pursuant to this Plan shall not be adjusted in a manner
that causes the option to fail to continue to qualify as an incentive stock
option within the meaning of Sec. 422A of the Code.
Subject to any required action by the shareholders, if the Corporation is a
party to any merger, consolidation or other change in control of the
Corporation, each outstanding option shall vest in full at the time of such
merger, consolidation or change in control. Each option shall then pertain to
and apply to the
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<PAGE>
securities of the Corporation, or in a case where the Corporation is not the
surviving corporation, in the successor corporation to the Corporation to which
a holder of the number of shares subject to the option would have been entitled.
Except as hereinbefore expressly provided in this Section 6, the Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger, or consolidation or spinoff of assets or stock
of another corporation, and any issue by the Corporation of shares of stock or
any class, or securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares subject to the option.
The grant of any option pursuant to the Plan shall not affect in any way the
right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets; provided, however, that if any such adjustment shall
result in a fractional share for any Optionee under any option hereunder, such
fraction shall be completely disregarded and the Optionee shall only be entitled
to the whole number of shares resulting from such adjustment.
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(i) Rights as a Shareholder.. An Optionee or a transferee of an option shall
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have no rights as a shareholder with respect to any shares covered by his option
until the date of the issuance of a stock certificate to him for such shares.
No adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
otherwise provided in this Section 6.
(j) Investment Purpose. The Company shall not be obligated to sell or issue
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any shares pursuant to any option unless the shares with respect to which the
option is being exercised are at that time effectively registered or exempt from
registration under the Securities Act of 1933, as amended.
Notwithstanding anything in the Plan to the contrary, each option under the
Plan shall be granted on the condition that the purchases of shares thereunder
shall be for investment purposes, and not with a view to resale or distribution
except that in the event the shares subject to such option are registered under
the Securities Act of 1933, as amended, and applicable state securities laws or
in the event a resale of such shares without such registration would otherwise
be permissible, such condition shall be inoperative if in the opinion of counsel
for the Corporation such condition is not required under the Securities Act of
1933 or any other applicable law, regulation, or rule of any governmental
agency.
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<PAGE>
(k) Other Provisions. Options authorized under the Plan shall contain such
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other provisions, including, without limitation, restrictions upon the exercise
of the option, as the Committee or the Board of Directors of the Corporation
shall deem advisable subject to any limitation on the discretion of the Board of
Directors required by Rule 16B-3. Any such option agreement shall contain such
limitations and restrictions upon the exercise of the option as shall be
necessary in order that such option will be an Incentive Stock Option as defined
in Sec. 422A of the Code or to conform to any change in the law and shall not
contain any provisions, restrictions or limitations which shall prevent such
option from being an Incentive Stock Option as aforesaid.
7. Term of Plan. Options may be granted pursuant to the Plan from
------------
time to time within a period of ten years from the date the Plan is adopted or
the date the Plan is approved by the shareholders, whichever is earlier.
8. Indemnification of Committee. In addition to such other rights of
----------------------------
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Corporation against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any option granted thereunder, and against all amounts paid by them in
settlement
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thereof (provided such settlement is approved by the independent legal counsel
selected by the Corporation) or paid by them in satisfaction of a judgment in
any such action, a suit or proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit or proceeding that such Committee
member is liable for negligence or misconduct in the performance of his duties;
provided that within sixty (60) days after institution of any such action, suit
or proceeding a Committee member shall in writing offer the Corporation the
opportunity, at its own expense, to handle and defend the same.
9. Amendment to the Plan. The Board of Directors of the Corporation
---------------------
may, insofar as permitted by law, from time to time, with respect to any shares
at the time not subject to options, suspend or discontinue the Plan or revise or
amend it in any respect whatsoever except that, without approval of the
shareholders, no such revision or amendment shall change the number of shares
subject to the Plan, change the designation of the class of employees eligible
to receive options, decrease the price at which options may be granted, remove
the administration of the Plan from the Committee, or render any member of the
Committee eligible to receive an option under the Plan while serving thereon.
Furthermore, the Plan may not, without the approval of the shareholders, be
amended in any manner that will cause options issued under it to fail to meet
the requirements of Incentive Stock Options as defined in Sec. 422A of the Code.
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<PAGE>
10. Application of Funds. The proceeds received by the Corporation
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from the sale of Shares pursuant to options will be used for general
corporate purposes.
11. No Obligation to Exercise Option. The granting of an option shall
--------------------------------
impose no obligation upon the Optionee to exercise such option.
12. Approval of Shareholders. The Plan shall not take effect until
------------------------
approved by the holders of a majority of the outstanding shares which approval
must occur within the period beginning twelve months before and ending twelve
months after the date the Plan is adopted by the Board of Directors.
13. Limitations on Grant of Option. No option may be granted under
------------------------------
this Plan to any person who owns, directly or indirectly under the rules of
Section 425(d) of the Code, or who, by reason of the exercise of such option
will own more than ten (10%) percent of the total combined voting power of all
classes of stock of the Corporation, its parent or subsidiary, as provided in
Section 422A(b)(6) of the Code, unless such option (i) has an exercise price
that equals at least 110% of the fair market value of the stock on the date the
option is granted, and (ii) shall not be exercisable more than five years from
the date the option is granted.
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