<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 1997
REGISTRATION NO. 333-______
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
CHILDREN'S DISCOVERY CENTERS OF AMERICA, INC.
(Exact name of Registrant as specified in its charter)
--------------------------
DELAWARE 06-1097006
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
851 IRWIN STREET, SUITE 200, SAN RAFAEL, CALIFORNIA 94901
(Address of Principal Executive Offices) (Zip Code)
CHILDREN'S DISCOVERY CENTERS OF AMERICA, INC. STOCK OPTION PLAN
NON-PLAN OPTIONS
(Full title of the plans)
RICHARD A. NIGLIO
CHILDREN'S DISCOVERY CENTERS OF AMERICA, INC.
851 IRWIN STREET, SUITE 200
SAN RAFAEL, CALIFORNIA 94901
(Name and address of agent for service)
(415) 257-4200
(Telephone number, including area code, of agent for service)
-----------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PRICE PER UNIT PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 772,464 shares (1) $4.90 (2) $3,785,074 $1,146.99
Common Stock, par value
$.01 per share 27,536 shares (3) $7.69 (4) $ 211,683 $ 64.15
Common Stock, par value
$.01 per share 83,626 shares (5) $5.42 (6) $ 453,253 $ 137.35
TOTAL: $1,348.49
</TABLE>
(1) Constitutes shares issuable upon exercise of options previously granted
under the Children's Discovery Centers of America, Inc. Stock Option Plan.
(2) Represents the weighted average of the exercise prices of the options
referred to in (1) above.
(3) Constitutes the remainder of shares available for future grants of options
under the Stock Option Plan.
(4) Estimated solely for purposes of determining the registration fee in
accordance with Rule 457(h) under the Securities Act of 1933, using the
average of the high and low prices of the Registrant's Common Stock
reported on the Nasdaq National Market on September 11, 1997.
(5) Constitutes shares issuable upon exercise of options previously granted to
employees and consultants outside the Stock Option Plan.
(6) Represents the weighted average of the exercise prices of options referred
to in (5) above.
<PAGE>
EXPLANATORY NOTE
The document(s) containing the information specified in Part I of Form S-8
will be sent or given to participants in the Children's Discovery Centers of
America, Inc. Stock Option Plan, as specified by Rule 428(b)(1) under the
Securities Act of 1933, as amended. In accordance with the rules and
regulations of the Securities and Exchange Commission (the "Commission"), such
documents are not being filed with the Commission as part of this Registration
Statement. The foregoing documents and the documents incorporated by reference
in this Registration Statement pursuant to Item 3 of Part II of this
Registration Statement, taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Act. There is also included as part of
Part I of this Registration Statement a Reoffer Prospectus relating to the
reoffer and resale of 581,337 shares of the Company's Common Stock as permitted
by General Instruction C of Form S-8.
-2-
<PAGE>
CHILDREN'S DISCOVERY CENTERS OF AMERICA, INC.
CROSS REFERENCE SHEET
ITEM AND CAPTION PROSPECTUS CAPTION
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus. . . . . . . . . . Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus . . . . . . . . . . . . . . . . . . Table of Contents;
Available Information;
Documents Incorporated by
Reference
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges . . . . . . . . . . . . Prospectus Summary; Risk
Factors
4. Use of Proceeds . . . . . . . . . . . . . . . . . Use of Proceeds
5. Determination of Offering Price . . . . . . . . . *
6. Dilution. . . . . . . . . . . . . . . . . . . . . *
7. Selling Security Holders. . . . . . . . . . . . . Selling Stockholders
8. Plan of Distribution. . . . . . . . . . . . . . . Plan of Distribution
9. Description of Securities to be Registered. . . . Incorporation of Certain
Documents by Reference
10. Interests of Named Experts and Counsel. . . . . . Experts; Legal Matters
11. Material Changes. . . . . . . . . . . . . . . . . *
12. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . Incorporation of Certain
Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities. . Disclosure of Commission
Position on
Indemnification for
Securities Act
Liabilities
- -------------------
* Not Applicable
-3-
<PAGE>
PROSPECTUS
581,337 Shares
CHILDREN'S DISCOVERY CENTERS OF AMERICA, INC.
Common Stock
(Par Value $.01 Per Share)
This Prospectus relates to the sale of up to 581,337 shares (the "Shares")
of Common Stock, par value $.01 per share (the "Common Stock"), of Children's
Discovery Centers of America, Inc. (the "Company" or "CDC") to be sold from time
to time for the account of certain stockholders of the Company (the "Selling
Stockholders") who may be deemed to be affiliates of the Company, or by
pledgees, donees, transferees or other successors in interest of the Selling
Stockholders. See "Selling Stockholders." The Shares are issuable to the
Selling Stockholders upon exercise, if any, of options granted pursuant to the
Children's Discovery Centers of America, Inc. Stock Option Plan (the "Stock
Option Plan") and options issued other than pursuant to the Stock Option Plan.
This Prospectus relates to the reoffer and resale of such Shares by the Selling
Stockholders or by pledgees, donees, transferees or other successors in interest
thereof. As none of the Selling Stockholders have advised the Company whether
or not such he or she has any current intention of exercising any such options
or of selling any of the Shares in the event of such exercise, the Company is
unable to predict whether or when any of the Selling Stockholders will determine
to exercise his or her options and, in the event of such exercise, proceed with
the sale of the Shares, as such determination will be made solely at the
discretion of each Selling Stockholder. All proceeds from any sales of such
Shares will inure to the benefit of the Selling Stockholders. The Company will
not receive any of the proceeds from the sale of any Shares, but will receive
funds upon exercise of the options at the time of exercise, which funds will be
used for working capital purposes.
The Shares may be offered by the Selling Stockholders, or by pledgees,
donees, transferees or other successors in interest thereof, from time to time,
in transactions (which may include block transactions) on the Nasdaq National
Market, the over-the-counter market, in private sales or negotiated
transactions, through the writing of options on Shares, or a combination of such
methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. See "Selling Stockholders" and "Plan of
Distribution".
The Company has agreed to bear all out-of-pocket expenses (other than
selling discounts and commissions) in connection with the registration of all of
the Shares which may be offered by the Selling Stockholders, estimated to be
approximately $12,000.
The Common Stock is registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and is traded on the
Nasdaq National Market under the trading symbol "CDCR". The last reported sale
price per share of the Common Stock on Nasdaq National Market on September 11,
1997 was $7.75.
THE SECURITIES WHICH MAY BE OFFERED HEREBY ARE SUBJECT TO CERTAIN RISKS WHICH
SHOULD BE CAREFULLY CONSIDERED BY POTENTIAL INVESTORS.
SEE "RISK FACTORS" (COMMENCING ON PAGE 4).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is September 15, 1997.
<PAGE>
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-8
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the shares of Common Stock offered
hereby, reference is hereby made to the Registration Statement. Statements
contained herein concerning the provisions of any document are not necessarily
complete, and each such statement is qualified in its entirety by reference to
the copy of such document filed with the Commission. Additional updating
information with respect to the Company may be provided in the future by means
of appendices or supplements to this Prospectus.
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy and information statements
and other information with the Commission. Such reports, proxy and information
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, as well as the following regional
offices of the Commission: Seven World Trade Center, 13th Floor, New York, New
York 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.
DOCUMENTS INCORPORATED BY REFERENCE
The Company hereby incorporates by reference into this Prospectus the
following documents filed with the Commission:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1997;
(c) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 31, 1997;
(d) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A dated March 27, 1986, as amended by
Amendment No. 1 dated March 28, 1994 and by any further amendments or reports
filed for the purpose of updating such description; and
(e) All other reports and other documents filed by the Company pursuant to
Section 13(a) or 15(d) of the Exchange Act since December 31, 1996.
All reports and other documents filed by the Company after the date of this
Prospectus pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities which may be offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such reports and other documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
-2-
<PAGE>
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner of Common Stock, to whom a copy of this
Prospectus has been delivered, upon the written or oral request of such person,
a copy of any and all of the documents referred to above that have been or may
be incorporated by reference in this Prospectus, except that exhibits to such
document shall not be provided unless they are specifically incorporated by
reference into such documents. Requests for such copies of any document should
be directed to Mr. Frank A. Devine, Secretary, Children's Discovery Centers of
America, Inc., 851 Irwin Street, Suite 200, San Rafael, California 94901,
telephone number (415) 257-4200.
-3-
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE
DETAILED INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS OR IN THE DOCUMENTS INCORPORATED HEREIN
BY REFERENCE.
THE COMPANY
Children's Discovery Centers of America, Inc. ("the Company") is the fourth
largest operator of pre-schools in the United States, providing educational
services for children of both pre-school and elementary school age. As of
December 31, 1996, the Company operated 248 pre-schools in 22 states and the
District of Columbia, with an aggregate licensed capacity of approximately
24,500 children. The Company provides programs to children primarily between 2
1/2 and six years of age, as well as after school programs for school age
children and infant care. The Company's school age programs include private
elementary programs for children in kindergarten through sixth grade, before and
after school programs and summer camps.
THE OFFERING
Number of Shares Offered by
the Selling Stockholders 581,337
Shares Outstanding Prior to
the Sale of any Shares
by Selling Stockholders 6,306,958
Shares Outstanding After
the Sale of Shares by Selling
Stockholders (assuming sale
of all Shares) 6,888,295
NASDAQ Symbol CDCR
THE COMPANY
The Company is the fourth largest operator of pre-schools in the United
States, providing educational services for children of both pre-school and
elementary school age. As of December 31, 1996, the Company operated 248
pre-schools in 22 states and the District of Columbia, with an aggregate
licensed capacity of approximately 24,500 children. The Company provides
programs to children primarily between 2 1/2 and six years of age, as well as
after school programs for school age children and infant care. The Company's
school age programs include private elementary programs for children in
kindergarten through sixth grade, before and after school programs and summer
camps.
The Company's strategy is to grow through acquiring independent,
community-based pre-schools and chains, to expand in the growing
employer-sponsored pre-school market and to increase programs and services in
the growing school age market. In pursuit of this strategy, from the period
from January 1, 1994 through December 31, 1996, the Company acquired or opened a
total of 94 pre-schools (net of closings). As of December 31, 1996, 70 of the
pre-schools operated by the company are operated in conjunction with
employer-sponsors, either on a management contract basis or with one or more
types of employer subsidies, such as tuition subsidies, free or reduced rent or
through the provision of services. Also, as of December 31, 1996 the Company
operated fourteen elementary schools in conjunction with twelve of its
pre-schools, leased for operation two free-standing private elementary schools
and also operated after school programs in nine other private schools (which are
not included within the total numbers of Company centers set forth above).
-4-
<PAGE>
The Company's proprietary computerized system monitors the staff-to-child
ratio in all its pre-schools, enabling the Company to staff efficiently in
response to shifts in occupancy levels. The Company believes its "Piaget
Discovery Preschool Program" differentiates from its competitors and appeals to
both employer-sponsors and parents.
The Company's principal executive offices are located at 851 Irwin Street,
Suite 200, San Rafael, California 94901, and its telephone number (415)
257-4200.
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD GIVE CAREFUL CONSIDERATION TO THE FOLLOWING
FACTORS, AMONG OTHERS, IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE MAKING
A DECISION TO INVEST IN THE COMMON STOCK OFFERED HEREBY:
GOVERNMENT REGULATION
The child care industry is subject to various Federal, state and local
government laws and regulations which may have a material impact on the Company.
For example, each center must be licensed by the appropriate state and local
authorities before it may begin operations and, in most jurisdictions, must
renew its license periodically. Repeated failures to comply with applicable
regulations can subject it to sanctions, which might include being placed on
probation or, in more serious cases, suspension or revocation of the center's
license to operate. To date, none of the Company's centers has ever been placed
on probation or had its license suspended or revoked, and the Company believes
that each of its centers is in substantial compliance with all licensing
requirements. At the Federal level, the Company is subject to a number of laws
and regulations affecting its business, including the Americans with
Disabilities Act ("ADA"), which prohibits discrimination on the basis of
disability in public accommodations and employment. While the Company believes
that its centers are substantially in compliance with the requirements of the
ADA and has not received any complaints concerning compliance with such
requirements, the ADA has only been in effect since 1992 and, accordingly, there
still is significant uncertainty concerning the full scope and impact of the
statute. A determination that the Company is not in compliance with the ADA
could result in the imposition of fines or an award of damages to private
litigants, and could require significant expenditures by the Company to bring
the Company's centers into compliance with the ADA.
COMPETITION
The child care industry is fragmented and highly competitive. In addition
to competition from national chains, including some which are much larger than
CDC, the Company competes with local community and church-affiliated and other
non-profit child care centers, individually-owned proprietary child care
centers, licensed child care homes and in-home individual child care providers.
Some local nursery schools and day care centers charge less for their services
than the Company charges. The Company also competes with businesses that
provide child care for their employees utilizing their own personnel.
DEPENDENCE ON KEY PERSONNEL
The success of the Company depends to a large degree upon the efforts of
Richard A. Niglio, its Chairman of the Board, President and Chief Executive
Officer, the loss of whose services could have an adverse effect on the business
and prospects of the Company. Mr. Niglio is party to an employment agreement
with the Company which expired by its terms on December 31, 1996. A new
agreement is being negotiated, although there can be no assurance that the
parties will agree on the terms of and enter into such an agreement. The
Company does not currently maintain "key man" life insurance on the life of
Mr. Niglio.
-5-
<PAGE>
ADVERSE PUBLICITY; INSURANCE
As a result of adverse publicity concerning reported incidents of child
abuse, many operators of child care centers have had difficulty obtaining
liability insurance or have been able to obtain such insurance only at
substantially higher rates. There can be no assurance that such insurance
premiums will not increase in the future as a consequence of conditions in the
insurance business generally, or that continuing publicity with respect to child
abuse will not result in the Company being unable to obtain insurance. The
Company's coverage for child physical and sexual abuse claims is subject to an
annual aggregate limitation of $1,000,000.
USE OF PROCEEDS
All of the Shares which may be sold pursuant to this Prospectus will be
sold, from time to time, by the Selling Stockholders for their own accounts or
by pledgees, donees, transferees or other successors in interest thereof. None
of the proceeds from the sale of the Shares will be received by the Company but
the Company will receive funds upon the exercise of the options and at the time
of exercise, which funds will be used for working capital purposes.
SELLING STOCKHOLDERS
Set forth in the following table is the name of each of the Selling
Stockholders, the number of shares of the Common Stock owned beneficially by
each of the Selling Stockholders as of the date of this Prospectus, the number
of Shares which may be offered by each of the Selling Stockholders pursuant to
this Prospectus, and the amount and percentage of shares of Common Stock to be
owned by each of the Selling Stockholders assuming the sale of all the Shares.
The number of Shares indicated includes in each case the number of shares of
Common Stock issuable upon exercise of options, whether or not such options are
currently exercisable (which for purposes of this Prospectus means options that
may be exercised within 60 days following the date of this Prospectus).
<TABLE>
<CAPTION>
SHARES TO BE BENEFICIALLY OWNED AFTER
SALE OF SHARES OFFERED HEREBY
SHARES
BENEFICIALLY SHARES BEING PERCENT OF
NAME OWNED REGISTERED AMOUNT OUTSTANDING(1)
<S> <C> <C> <C> <C>
Richard A. Niglio 453,282(2) 415,282 92,900 1.5%
Elanna S. Yalow 106,331(3) 166,055 10,600 0.2%
</TABLE>
(1) Based on 6,306,958 shares of Common Stock outstanding.
(2) Consists of 92,900 shares held by Mr. Niglio directly, 330,984 shares
issuable upon exercise of options granted by the Company pursuant to the
Stock Option Plan and 29,398 shares issuable upon exercise of options
granted other than pursuant to the Stock Option Plan. Does not include an
additional 54,900 shares issuable upon exercise options which are not
currently exercisable. Mr. Niglio is Chairman, Chief Executive Officer and
a director of the Company.
(3) Consists of 10,600 shares held by Ms. Yalow directly, 82,976 shares
issuable upon exercise of options to purchase Common Stock granted by the
Company pursuant to the Stock Option Plan and 12,755 shares issuable upon
exercise of options granted other than pursuant to the Stock Option Plan.
The number indicated does not include an additional 70,324 shares issuable
pursuant to options to purchase Common Stock granted by the Company which
are not currently exercisable. Ms. Yalow is President, Chief Operating
Officer of the Company and a director of the Company.
-6-
<PAGE>
PLAN OF DISTRIBUTION
The Shares are being registered in order to facilitate their sale from time
to time by the Selling Stockholders, or by pledgees, donees, transferees or
other successors in interest thereof. The Selling Stockholders may be deemed to
be affiliates of the Company. The Shares are issuable to the Selling
Stockholders upon exercise, if any, of options granted by the Company under the
Stock Option Plan and other than pursuant to the Stock Option Plan. As none of
the Selling Stockholders has advised the Company whether or not he or she has
any current intention of exercising any such options or of selling any of the
Shares in the event of such exercise, the Company is unable to predict whether
or when any of the Selling Stockholders will determine to exercise such options
and, in the event of such exercise, proceed with the sale of the Shares, as such
determination will be made solely at the discretion of each Selling Stockholder.
The sale of the Shares by the Selling Stockholders, or by pledgees, donees,
transferees or other successors in interest thereof, may be effected, from time
to time, in transactions (which may include block transactions) on the Nasdaq
National Market, the over-the-counter market, in private sales or negotiated
transactions, through the writing of options on Shares or a combination of such
methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling Shares to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of Shares for
whom such broker-dealers may act as agent or to whom they sell as principal, or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions). In addition, any shares covered by this Prospectus
which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather
than pursuant to this Prospectus.
The Selling Stockholders and any broker-dealers that act in connection with
the sale of the Shares hereunder might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act and any commissions received by
them and any profit on the resale of Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
All expenses incurred in connection with the registration of the Shares
being offered hereby, estimated to be approximately $12,000, will be borne by
the Company, except that commission expenses and brokerage fees, fees and
expenses of counsel to any of the Selling Stockholders and applicable transfer
taxes shall be payable individually by the Selling Stockholders.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the General Corporation Law of Delaware grants each
corporation organized thereunder the power to indemnify its officers, directors,
employees and agents on certain conditions against liabilities arising out of
any action or proceeding to which any of them is a party by reason of being such
officer, director, employee or agent. The Certificate of Incorporation also
provides for the indemnification, to the fullest extent permitted by the General
Corporation Law of Delaware, of such persons. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
-7-
<PAGE>
EXPERTS
The financial statements included in the Company's Annual Report on Form
10-K incorporated by reference in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said reports.
LEGAL MATTERS
The validity of the Shares has been passed upon by Frank A. Devine, Esq.,
General Counsel to the Company.
-8-
<PAGE>
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- ------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
- -----------------------------------
TABLE OF CONTENTS
PAGE
Available Information . . . . . . 2
Documents Incorporated by
Reference. . . . . . . . . . . 2
Prospectus Summary. . . . . . . . 4
The Company . . . . . . . . . . . 4
Risk Factors. . . . . . . . . . . 5
Use of Proceeds . . . . . . . . . 6
Selling Stockholders. . . . . . . 6
Plan of Distribution. . . . . . . 7
Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities 7
Experts . . . . . . . . . . . . . 8
Legal Matters . . . . . . . . . . 8
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
581,337 SHARES
CHILDREN'S DISCOVERY
CENTERS OF AMERICA, INC.
COMMON STOCK
--------------------
PROSPECTUS
--------------------
September 15, 1997
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<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
are incorporated into this registration statement by reference:
(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996;
(b) The description of the Registrant's Common Stock, par value $.01 per
share, contained in the Registrant's Registration Statement on Form 8-A dated
March 27, 1986, as amended by Amendment No. 1 dated March 28, 1994;
(c) All other reports filed by the Registrant pursuant to Section 13(c) or
15(d) of the Securities Exchange Act of 1934, as amended since December 31,
1996.
All reports and other documents filed by the Registrant pursuant to
sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of this Registration Statement but prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of each such report or other document.
Item 4. DESCRIPTION OF SECURITIES
Not applicable
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the securities being offered hereunder has been passed upon
by Frank A. Devine. Mr. Devine is Secretary and General Counsel of the
Registrant.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware grants each
corporation organized thereunder the power to indemnify its officers, directors,
employees and agents on certain conditions against liabilities arising out of
any action or proceeding to which any of them is a party by reason of being such
officer, director, employee or agent. Section 102(b)(7) of the General
Corporation Law permits a Delaware corporation, with the approval of its
stockholders, to include within its Certificate of Incorporation a provision
eliminating or limiting the personal liability of its directors to that
corporation or its stockholders for monetary damages resulting from certain
breaches of the directors' fiduciary duty of care, both in suits by or on behalf
of the corporation and in actions by stockholders of the corporation.
II - 1
<PAGE>
The Company's Certificate of Incorporation includes an Article which allows
the company to take advantage of Section 102(b)(7) of the Delaware General
Corporation Law. The Certificate of Incorporation also provides for the
indemnification, to the fullest extent permitted by the Delaware General
Corporation Law, of officers and directors of the Company against all expenses
(including attorneys' fees), liabilities, judgments, fines and amounts paid in
settlement, and advance to each officer and director expenses (including
attorneys' fees) incurred by such officer or director in defending a civil or
criminal action, suit or proceeding upon receipt of an undertaking by or on
behalf of such officer or director to repay such expenses if it is ultimately
determined that such officer or director is not entitled to be indemnified by
the Company.
The Company's By-Laws include an Article which provides that any person
made a party to any action, suit or proceeding, by reason of the fact that he,
his testator or intestate representative is or was a director, officer or
employee of the Company, or of any corporation in which he served as such at the
request of the Company, shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense of such action , suit or
proceedings, or in connection with any appeal therein, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding, or
in connection with any appeal therein that such officer director or employee is
liable for negligence or misconduct in the performance of his duties.
The By-Laws of the Registrant provide for indemnification of its directors
and officers to the full extent authorized by law.
The Registrant has purchased $2,000,000.00 of directors and officers
liability insurance coverage on a claims made basis.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable
Item 8. EXHIBITS
The following is a list of Exhibits required by Item 601 of Regulation S-K
filed as part of this Registration Statement.
4(a) The Children's Discovery Centers of America, Inc.'s Stock Option
Plan (the "Stock Option Plan")
4(b) Form of Stock Option Agreement (Incentive Option) under the Stock
Option Plan
4(c) Form of Stock Option Agreement (non-qualified options) under the
Stock Option Agreement
4(d)(i) Certificate of Incorporation filed on December 23, 1983, filed as
Exhibit 3(A) to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994 (the "1994 Form 10-K"), which Exhibit
is incorporated herein by reference.
II - 2
<PAGE>
4(d)(ii) Certificate of Amendment to Certificate of Incorporation filed on
July 12, 1984, filed as Exhibit 3(B) to the 1994 Form 10-K, which
Exhibit is incorporated herein by reference.
4(d)(iii) Certificate of Amendment to Certificate of Incorporation filed on
January 25, 1985, filed as Exhibit 3(C) to the 1994 Form 10-K,
which Exhibit is incorporated herein by reference.
4(d)(iv) Certificate of Amendment to Certificate of Incorporation filed on
August 19, 1985, filed as Exhibit 3(D) to the 1994 Form 10-K, which
Exhibit is incorporated herein by reference.
4(d)(v) Certificate of Amendment to Certificate of Incorporation filed on
May 27, 1987, filed as Exhibit 3(E) to the 1994 Form 10-K, which
Exhibit is incorporated herein by reference.
4(d)(vi) Certificate of Amendment to Certificate of Incorporation filed on
June 2, 1988, filed as Exhibit 3(F) to the 1994 Form 10-K, which
Exhibit is incorporated herein by reference.
4(d)(vii) Certificate of Amendment to Certificate of Incorporation filed on
March 18, 1991, filed as Exhibit 3(G) to the 1994 Form 10-K, which
Exhibit is incorporated herein by reference.
4(d)(viii) Certificate of Amendment to Certificate of Incorporation filed on
October 10, 1991, filed as Exhibit 4(A) to Form S-2 Registration
Statement No. 33-92533, which Exhibit is incorporated herein by
reference.
4(d)(ix) Certificate of Amendment to Certificate of Incorporation filed on
July 29, 1992, filed as Exhibit 3(H) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1992 ("1992
Form 10-K"), which Exhibit is incorporated herein by reference.
4(d)(x) Certificate of Designation, Preferences and Rights of Series A
Convertible Preferred Stock filed November 5, 1992 as Exhibit 4(D)
to the 1992 Form 10-K, which Exhibit is incorporated herein by
reference.
4(d)(xi) Certificate of Amendment to Certificate of Incorporation filed on
December 6, 1993, filed as Exhibit 3(a) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993, which
Exhibit is incorporated herein by reference.
4(e) By-Laws of the Registrant filed as Exhibit (3)(g) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989, which Exhibit is incorporated herein by
reference.
5 Opinion of Frank A. Devine, Esq.
24(a) Consent of Arthur Andersen LLP
II - 3
<PAGE>
24(b) Consent of Counsel, contained in the opinion filed as Exhibit 5.1
hereto
25 Power of Attorney (see page 7 of this Registration Statement)
Item 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act")
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (1) (i) and (1) (ii) do not
apply if the registration statement is on Form S-3, Form S-8 or form F-3, and
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 Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (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.
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.
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
II - 4
<PAGE>
Securities and Exchange 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 persons
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 of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Rafael, State of California, on September 12,
1997.
CHILDREN'S DISCOVERY CENTERS
OF AMERICA, INC.
By: /s/ R.A. Niglio
---------------------
R. A. Niglio
Chairman of the Board
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints each of Richard A. Niglio and Randall A.
Truelove, his true and lawful attorney-in-fact and agent 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 to this Registration
Statement, and to file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
II - 6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ R.A. Niglio Chairman of the Board September 12, 1997
- ----------------------- (principal executive officer)
R. A. Niglio
/s/ Randall J. Truelove Controller (principal September 12, 1997
- ----------------------- financial and accounting
Randall J. Truelove officer)
/s/ Mark P. Clein Director September 12, 1997
- -----------------------
Mark P. Clein
/s/ Michael J. Connelly Director September 12, 1997
- -----------------------
Michael J. Connelly
/s/ Robert E. Kaufmann Director September 12, 1997
- -----------------------
Robert E. Kaufmann
/s/ W. Wallace McDowell Director September 12, 1997
- -----------------------
W. Wallace McDowell
/s/ Richard A. Niglio Director September 12, 1997
- -----------------------
Richard A. Niglio
/s/ Myron A. Wick, III Director September 12, 1997
- -----------------------
Myron A. Wick, III
/s/ Elanna S. Yalow Director September 12, 1997
- -----------------------
Elanna S. Yalow
II - 7
<PAGE>
EXHIBIT INDEX
The following is a list of exhibits required by Item 601 of Regulation S-K
filed as part of this Registration Statement.
PAGE NUMBER IN RULE 403
EXHIBIT SEQUENTIAL NUMBERING SYSTEM
NUMBER DESCRIPTION OF EXHIBIT WHERE EXHIBIT CAN BE FOUND
4(a) The Children's Discovery Centers of America, Inc.'s ______
Stock Option Plan (the "Stock Option Plan")
4(b) Form of Stock Option Agreement (Incentive Option) ______
under the Stock Option Plan
4(c) Form of Stock Option Agreement (for non-qualified options) ______
under the Stock Option Agreement
5 Opinion of Frank A. Devine, Esq. ______
24(a) Consent of Arthur Andersen LLP ______
24(b) Consent of Counsel, continued in the opinion filed as
Exhibit 5 hereto ______
II - 8
<PAGE>
EXHIBIT 4(A)
CHILDREN'S DISCOVERY CENTERS OF AMERICA, INC.
STOCK OPTION PLAN
1. PURPOSE. The Children's Discovery Centers of America, Inc.
Stock Option Plan ( the "Plan") is intended to provide a method whereby key
salaried employees and other persons (including consultants) who perform
services on behalf of Children's Discovery Centers of America, Inc. (the
"Company") and its subsidiaries who are making and are expected to continue
making substantial contributions to the successful management and growth of the
Company may be offered an opportunity to acquire Common Stock, $0.01 par value
per share (the "Common Stock"), of the Company in order to increase their
proprietary interests in the Company and their incentive to remain in and
advance in the employ of, or to continue their relationship with, the Company.
Directors of the Company who are not employees of the Company shall not be
eligible to receive options under the Plan. It is also the purpose of the Plan
to strengthen the ability of the Company to attract and retain personnel of
experience and ability by granting such persons an opportunity to acquire a
proprietary interest in the Company. Accordingly, the Company may, from time to
time, grant to such employees as may be selected in the manner hereinafter
provided incentive stock options, as defined in Section 422A of the Internal
Revenues Code of 1986 as amended (the "Code"), to purchase shares of Common
Stock ("Incentive Stock Options"), or grant employees and such other persons may
be selected in the manner hereinafter provided non-incentive stock options to
purchase shares of Common Stock ("Non-Incentive Stock Options"), on the terms
and conditions hereinafter established. Incentive Stock Options and
Non-Incentive Stock Options are sometimes collectively referred to herein as
"Stock Options".
2. ADMINISTRATION. The Plan shall be administered by a committee
(the "Committee") appointed by the Board of Directors. The Committee shall
consist of from two (2) to five (5) individuals who are "outside directors"
within the meaning of Section 162(m) of the Code. In no event shall a director
serve on the Committee who is or was at any time during the year immediately
preceding such Committee membership eligible to receive Stock Options under the
Plan. Subject to the terms and conditions of the Plan, the Committee shall have
full authority in its discretion from time to time, and at any time, to select
the persons to whom Stock Options shall be granted, and to determine whether a
Stock Options shall be an Incentive Stock Option or a Non-Incentive Stock
Option, the number of shares to be covered by each Stock Options, the time at
which the Stock Options shall be granted, the terms and conditions of Option
Agreements (as defined in Paragraph 14 below), and, except as hereinafter
provided, the exercise price of any Stock Option and the term during which Stock
Options may be exercised.
The Board of Directors may at any time appoint or remove members of
the Committee and may fill vacancies, however
<PAGE>
caused, in the Committee. The Committee shall select one of its members as its
Chairman, and shall hold its meetings at such time and place as it shall deem
advisable. A majority of its members shall constitute a quorum. All actions of
the Committee shall be taken by a majority of its members and can be taken by
written consent in lieu of a meeting. The Committee shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
3. INTERPRETATION AND AMENDMENT. The interpretation, construction
or determination of any provisions of the Plan by the Committee shall be final
and conclusive. 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.
The Board of Directors may, at any time, amend, alter, suspend or
terminate the Plan; provided, however, that any such action shall not impair any
Stock Options theretofore granted under the Plan and provided further that
without the approval of the holders of at least the majority of the voting stock
of the Company present in person or by proxy at a duly held meeting: (a) the
total number of shares of Common Stock which may be purchased under the Plan
shall not be increased (except as permitted by Paragraph 11); (b) the minimum
exercise price of any Stock Option shall not be changed (except as permitted by
Paragraph 11); (c) the employees (or the class of employees) eligible to
receive Incentive Stock Options under the Plan may not be modified; and (d)
the option period during which outstanding Stock Options granted under the Plan
may be exercised shall not be extended.
4. PARTICIPANTS. Participants in the Plan who shall be eligible to
receive both Incentive Stock Options and Non-Incentive Stock Options shall be
key employees of the Company (including key employees who are also officers
and/or directors of the Company), and participants in the Plan who shall be
eligible to receive solely Non-Incentive Stock Options shall be those other
persons who perform services for the Company, including consultants, who are
selected by the Committee from time to time. Members of the Committee shall not
be eligible to participate in the Plan. No Incentive Stock Option shall be
granted to an employee, who at the time the Incentive Stock Option is granted,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of capital stock of the Company; provided, however, that
an Incentive Stock Option may be granted to such an employee if, at the time
such Incentive Stock Option is granted, the option exercise price is at least
110 percent (110%) of the fair market value of the Common Stock subject to the
Incentive Stock Option and such Incentive Stock Option is by its terms not
exercisable after the expiration of five (5) years from the date such Incentive
Stock Option is granted. No person eligible to receive Stock Options under the
Plan shall be entitled to receive Stock Options for more than 150,000 shares of
Common Stock (subject to
2
<PAGE>
adjustment pursuant to Section 11 hereof in the case of a stock dividend, stock
split or similar transaction) in any fiscal year of the Company.
For purposes of the Plan, the fair market value ("Fair Market Value")
of shares of Common Stock on any day shall be (i) in the event the Common
Stock is publicly traded, the last sale price of a share of Common Stock as
reported by the principal quotation service on which the Common Stock is listed,
if available, or, if last sales prices are not reported with respect to the
Common Stock, the mean of the high bid and low asked prices of a share of Common
Stock as reported by such principal quotation service on such day, or if there
is no report of last sale price or high bid and low asked prices (as applicable)
by such quotation service for such day, such Fair Market Value shall be the last
sale price (or, if last sale prices are not reported with respect to the Common
Stock, the mean of the high bid and low asked prices) on the day next preceding
such day for which there was a report, or (ii) in the event the Common Stock
is not publicly traded, the Fair Market Value on such day as determined in good
faith by the Committee.
5. COMMON STOCK. The Common Stock which may be issued and sold
pursuant to Stock Options granted under the Plan from time to time shall not
exceed in the aggregate eight hundred thousand (800,000) shares of Common Stock.
The Common Stock issued and sold under the Plan may be the Company's authorized
but unissued shares, or shares held in the Company's treasury.
Should any Stock Option expire or terminate for any reason without
having been exercised in full, the unsold shares covered thereby shall be added
to the shares otherwise available for option hereunder.
6. LIMITATION ON OPTION AMOUNT. Notwithstanding any provision
contained herein, the aggregate fair market value (determined as of the time
such Incentive Stock Options are granted) of the Common Stock with respect to
which Incentive Stock Option are first exercisable by any employee during any
calendar year (under all stock option plans of the employee's employer
corporation and its parent and subsidiary corporation within the meaning of
Section 425 of the Code) shall not exceed $100,000. An Incentive Stock Option
may be granted which exceeds this $100,000 limitation, as long as under then
applicable law only the portion of such Incentive Stock Option which is
exercisable for shares of Common Stock in excess of the $100,000 limitation
shall be treated as a Non-Incentive Stock Option. The limit in this paragraph
shall not apply to options which are designated as Non-Incentive Stock Options,
and, except as otherwise provided herein, there shall be no limit on the amount
of Non-Incentive Stock Options which may be first exercisable in any year.
7. TERMS AND CONDITIONS OF THE OPTION. Stock Options granted
pursuant to the Plan shall be in such form and on
3
<PAGE>
such terms as the Committee shall, from time to time, approve, but subject
nevertheless to the following terms and conditions:
(a) The Option Agreement shall state the total number of shares of
Common Stock to which it relates.
(b) The option exercise price per share shall be not less then one
hundred percent (100%), in the case of Incentive Stock Option, and
eighty-five percent (85%), in the case of Non-Incentive Stock Options, of
the fair market value of the Common Stock covered by such option at the
date such option is granted; provided, however, in the case of Incentive
Stock Option, if at the time such option is granted, the individual
optionee owns Common Stock possessing more than ten percent (10%) of the
total voting power of all classes of the Company's Common Stock, then the
option exercise price shall not be less than one hundred and ten percent
(110%) of the fair market value of the Company's Common Stock as of the
date of the grant and the option exercise period shall be limited to no
more than five (5) years from the date of grant.
(c) Except as provided in 7(b) above, notwithstanding any other
provisions of the Plan, the term of an Incentive Stock Option shall be for
a period of not more than ten (10) years from the date such option is
granted.
(d) An Incentive Stock Option must be granted on or before November
8, 1999.
8. SURRENDER OF OPTIONS. At the time of grant of any Stock Option
under the Plan (or from time to time thereafter as the Committee, in its sole
discretion, shall determine), the Committee in its sole discretion may grant to
an optionee the right to offer to surrender the Stock Option to the Company in
lieu of exercising all or any portion of the Stock Option and to receive in
exchange an amount, in cash or in shares of the Company's Common Stock or partly
in cash and partly in shares, equal to the excess of the fair market value of
the shares covered by the Stock Option being surrendered at the date the offer
is made by the optionee over the aggregate option price of those shares. The
Committee shall have the full authority in its discretion to accept or reject
the offer, whether in whole or in part, and if all or any portions of the offer
is accepted, the Committee shall have the full authority to choose the form of
payment. In no event shall the number of shares of the Company's Common Stock
being delivered to an optionee upon the acceptance of any offer made pursuant to
this Paragraph 8 exceed the number of shares the optionee could then purchase
upon exercise of the Stock Option. Shares subject to Stock Option or portions
thereof which have been surrendered shall not thereafter be available for option
grants under the Plan.
4
<PAGE>
9. TERMINATION OF EMPLOYMENT OF OTHER RELATIONSHIP WITH THE COMPANY.
Any Stock Option granted pursuant to the Plan shall terminate and may no longer
be exercised if the Optionee ceases to be an employee of the Company or any of
its subsidiaries, or if the Optionee's relationship (such as a consulting
relationship) terminates with the Company, except that (i) in the case of an
employee to whom an Incentive Stock Option shall have been granted, if his
employment shall have been terminated, then he may at any time within a period
of three (3) months after such termination exercise such Incentive Stock Option
to the extent that the Incentive Stock Option was exercisable by him on the date
of the termination of his employment; (ii) in the case of an employee to whom
an Incentive Stock Option shall have been granted, if the Optionee is disabled
(within the meaning of Section 22(e)(3) of the Code) while an employee of the
Company or any of its subsidiaries, then, to the extent that the Optionee was
entitled to exercise the Incentive Stock Option on the date of his disability,
the Incentive Stock Option may be exercised within one (1) year after his date
of disability; (iii) in the case of an employee to whom an Incentive Stock
Option shall have been granted, if the Optionee dies while an employee of the
Company or any of its subsidiaries, then the Stock Option may be exercised by
his estate or by the person or persons who shall have acquired the right to
exercise the Stock Option by bequest or inheritance for a maximum period of one
(1) year from the date of the Optionee's death; or (iv) in the case of an
employee or any other person to whom a Non-Incentive Stock Option shall have
been granted, as may otherwise be provided in such individual's Option
Agreement. Notwithstanding the prior sentence, no Stock Option shall be
exercisable after the expiration date of such option.
10. TERMINATION OF OPTION. In the event that the Plan or any Stock
Option granted hereunder is determined by legal proceedings (including
administrative proceedings) to be invalid as a matter of corporate law the
Company may, in its sole discretion, and without incurring any liability
therefore to the Optionee, terminate the Stock Option.
11. STOCK SPLITS, MERGERS, ETC. In case of any stock split, stock
dividend or similar transactions which increase or decrease the number of
outstanding shares of Common Stock, appropriate adjustment shall be made by the
Board of Directors, whose determination shall be final, to the number of shares
of Common Stock which may be purchased under the Plan and the number and option
exercise price per share of Common Stock which may be purchased under any
outstanding Stock Options. In the case of a merger, sale of assets or similar
transaction which results in a replacement of the Company's Common Stock with
stock of another corporation, the Company will make a reasonable effort, but
shall not be required, to replace any outstanding Stock Options granted under
the Plan with comparable options to purchase the stock of such other
corporation, or will provide for immediate maturity of all outstanding Stock
Options, with all Stock Options not being
5
<PAGE>
exercised within the time period specified by the Board of Directors being
terminated.
12. TRANSFERABILITY. Stock Options are not assignable or
transferable except by will or by the laws of descent and distribution and,
during an optionholder's lifetime, may be exercised only be him.
13. EXERCISE OF OPTIONS. An option holder electing to exercise a
Stock Option shall give written notice to the Company of such election and of
the number of shares of Common Stock that he has elected to acquire.
14. WRITTEN OPTION AGREEMENT. Agreements granting Stock Options
under the Plan ("Option Agreement") shall be in writing, duly executed and
delivered by or on behalf of the Company and the option holder and shall contain
such terms and conditions as the Committee deems advisable. If there is any
conflict between the terms and conditions of any Option Agreement and of the
Plan, the terms and conditions of the Plan shall control.
15. PAYMENT. The option exercise price shall be payable in cash,
check or in shares of Common Stock upon the exercise of the Stock Option. If
shares of Common Stock are permitted to be tendered as payment of the option
exercise price, the value for such shares shall be their fair market value as of
the date of exercise. If such tender would result in the issuance of fractional
shares of Common Stock, the Company shall instead return the difference in cash
or by check to the employee.
16. TERM OF PLAN. The Plan shall terminate on November 8, 1999, and
no Stock Options shall be granted pursuant to the Plan after that date.
17. APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of Common Stock pursuant to the exercise of Stock Options granted under
the Plan will be used for general corporate purposes.
18. OBLIGATION TO EXERCISE OPTION. The granting of a Stock Option
shall impose no obligation to the optionholder to exercise such option.
19. CONTINUANCE OF EMPLOYMENT. Neither the Plan nor the Option
Agreement shall impose any obligation on the Company to continue the employment
of, or other relationship with, any optionholder, and nothing in the Plan or in
any Option Agreement shall confer upon any optionholder any right to continue in
the employ of, or any other relationship with, the Company, or conflict with the
right of the Company to terminate such employment or relationship at any time.
6
<PAGE>
20. PRIOR GRANTS. Incentive Stock Options granted prior to the date
of any amendment of the Plan shall be governed according to the Plan and laws in
effect as of the date of such grant.
21. INSTALLMENT PAYMENT ARRANGEMENTS. Upon grant or exercise of a
Stock Option, the Committee may, in its discretion, permit the payment of any
exercise price, in whole or in part, in installments, subject to the terms of
this Paragraph 21. Each such installment payment arrangement will be evidenced
by a promissory note, the terms and conditions of which shall be determined by
the Committee subject to the following: (a) the maximum term of any note shall
be 10 years from date of the original payment obligation, (b) the minimum
interest rate with respect to amounts loaned hereunder shall be such rate as may
be determined by the Committee from time to time, but in no event shall such
rate be less than the rate required to avoid imputation of interest (or original
issue discount) under Section 483 or any similar provision of the Code, (c)
the note shall be secured as and to the extent determined by the Committee, but
the employee shall be personally liable despite any security pledged, (d) the
note may be prepaid in full or in part at any time without penalty, and (e)
the unpaid principal and interest of any note will become due and payable on the
earlier to occur of the sale of any Shares in connection with which the payment
obligation was incurred and thirty (30) days after the optionee's employment
with the Company terminates (unless the Committee, in its discretion, extends
the note for an additional period). In addition, the Committee may authorize
the Company to make, guarantee, or arrange for a loan or loans to an optionee to
enable the optionee to pay any federal, state, or local income or other taxes
due in connection with the exercise of any Stock Option. The Committee shall
have the authority to forgive repayment of, or waive rights relating to, any
note or loan authorized hereunder, including interest thereon. Any arrangement
under this Paragraph 21 entered into to permit an optionee to purchase or carry
securities shall comply with the applicable provisions of Regulation G
promulgated by the Federal Reserve Board, and arrangements shall be entered into
and continue only to the extent that such arrangements otherwise shall comply
with all applicable laws, regulations, and contractual obligations of the
Company.
22. WITHHOLDING.
A. In the event that the Company or any of its subsidiaries shall be
required to withhold any amounts by reason of any federal, state, or local
tax law, rule or regulation or by reason of the issuance or exercise of any
Stock Option, or exercise of any right granted to an optionee pursuant to
this Plan, the Company shall be entitled to deduct and withhold such
amounts from any other cash payment or payments to be made by the Company
to such person. In any such event, the optionee shall, except as otherwise
permitted by
7
<PAGE>
paragraph (B) below, make available to the Company, promptly when required,
sufficient funds to meet the Company's requirement of such withholding; and
the Company shall be entitled to take such steps as it may deem advisable
in order to have such funds available to the Company at the required time
or times, including the effectuation of an order of redelivery of any
certificate or certificates representing Shares held by such optionee and
the continuation of any stop orders that might be outstanding against such
certificate or certificates.
B. If, in connection with the exercise of any Stock Option or the
exercise of any Stock Appreciation Right by an optionee, the Company is
required to withhold any amounts by reason of federal, state or local tax,
rule or regulation, the Committee may permit the optionee, subject to the
restrictions herein contained, to satisfy, in whole or in part, the
optionee's obligation to pay to the Company the amount of such tax or taxes
by electing either (i) to have the Company withhold a portion of the
shares of Common Stock which would otherwise be issuable to such optionee
upon exercise of the Stock Option or Stock Appreciation Right, or (ii) to
deliver and transfer to the Company shares of Common Stock previously owned
by the optionee, or (iii) by a combination of the means specified in
clauses (i) and (ii) above; PROVIDED HOWEVER, that the amount of federal,
state and local income taxes that may be paid by delivery or withholding of
shares of Common Stock shall not exceed the applicable maximum marginal
rate. The amount of any withholding tax not paid by delivery or
withholding of shares of Common Stock shall be paid by the optionee to the
Company in cash. Shares of Common Stock delivered or withheld shall have a
fair market value equal to the amount of tax required to be withheld, or
such part of such tax that the optionee elects to pay with shares of Common
Stock. The fair market value of the shares of Common Stock delivered to or
withheld by the Company shall be determined as of the date the amount of
tax to be withheld is determined. An election by an optionee to deliver
shares of Common Stock or to have shares of Common Stock withheld to
satisfy tax withholding requirements shall be subject to the following
restrictions: (a) The election shall be in writing, shall be delivered to
the Secretary of the Company and shall not be effective until so delivered;
(b) the election shall be irrevocable and shall so state; and (c) the
election shall be subject to such other terms and conditions as the
Committee may, in its discretion, establish.
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EXHIBIT 4(B)
CHILDREN'S DISCOVERY CENTERS OF AMERICA, INC.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT is made as of this ____ day of _____, _____ between
Children's Discovery Centers of America, Inc. (the "Company") and _____________,
who is an employee of the Company (the "Optionee"), residing
________________________________.
W I T N E S S E T H:
WHEREAS, the Company desires, by affording the Optionee an opportunity
to purchase shares of the Company's Common Stock, $0.01 par value per share (the
"Common Stock"), as hereinafter provided, to encourage the Optionee to provide
services to the Company;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto mutually
covenant and agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee an
option (the "Option") to purchase all or any part of an aggregate of __________
(_____) shares of Common Stock (such number being subject to adjustment as
provided in Paragraph (7) on the terms and conditions hereinafter set forth, for
a purchase price of $_____ per share (the "Option Price").
The Option may be exercisable by the Optionee as follows: the Optionee
shall be entitled to purchase up to __________ (_____) shares of Common Stock
subject to the Option, from the date of grant until ________ and thereafter an
additional __________ (_____) shares of Common Stock on each following _______,
until exhausted.
2. TERM OF OPTION. The term of the Option shall be for a period of
five (5) years from ___________ (the "Date of Grant"), subject to earlier
termination as provided herein, and in no event shall the Option be exercised
after the expiration of such five (5) year period.
Except as provided in Paragraph 5 hereof, the Option may not be
exercised unless, at the time the Option is exercised or within ninety (90) days
of the date of exercise, and at all times from the date it is granted, the
Optionee shall have been an employee of the Company.
3. NONTRANSFERABILITY. The Option shall not be transferable
otherwise than by will or the laws of descent and distribution to the extent
provided in Paragraph 5, and the
<PAGE>
Option may be exercised, during the lifetime of the Optionee, only by the
Optionee. Without limiting the generality of the foregoing, the Option may not
be assigned, transferred (except as provided above), pledged or hypothecated in
any way, shall not be assignable by operation of law, and shall not be subject
to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of the Option contrary to
the provisions hereof and of the Plan shall be null and void and without effect,
and, upon the levy of any execution, attachment, or similar process upon the
Option, the Option shall hereupon be canceled and thereafter null and void.
4. TERMINATION OF OPTION. The Option shall terminate and may no
longer be exercised if the Optionee ceases to be an employee of the Company or
any of its subsidiaries, except that (i) Optionee may exercise this Option
within ninety (90) days of the date the Optionee ceases employment with the
Company, except if such employment has been terminated by the Company other than
for cause (which for purposes hereof shall be the commission of any felony or a
misdemeanor of the type or classification which would prevent the Optionee from
working in a child care center) then the Optionee may at any time within a
period of three (3) months after such termination exercise the Option to the
extent that the Option was exercisable on the termination of such employment and
(ii) if the Optionee is disabled (within the meaning of Section 105(d)(4) of
the Internal Revenue Code) while an employee of the Company or any of its
subsidiaries, then, to the extent that the Optionee was entitled to exercise the
Option on the date of such disability, the Option may be exercised within one
(1) year after the date of Optionee's disability; or (iii) if the Optionee dies
while an employee of the Company or any of its subsidiaries, then, to the extent
that the Option could have been exercised by the employee immediately prior to
the date of his death, the Option may be exercised by the Optionee's estate or
by the person or persons who shall have acquired the right to exercise the
Option by bequest or inheritance for a maximum period of one (1) year from the
date of the Optionee's death. Notwithstanding the foregoing provisions of this
paragraph 4, no Option shall be exercisable after the expiration date of such
Option.
5. OTHER TERMINATION. In the event that the Option is determined by
legal proceeding (including administrative proceedings) to be invalid as a
matter of law, the Company will, immediately after such determination, grant to
the Optionee new options which are as similar as is practicable to those granted
hereunder.
6. LEGEND ON CERTIFICATES. All certificates representing shares of
Common Stock issued pursuant to the exercise of Options granted hereunder shall
bear the following legend:
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"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
transferred, pledged, hypothecated or otherwise disposed of in the absence
of (i) the effective registration statement for such securities under said
act or (ii) an opinion of company counsel that such registration is not
required."
7. STOCK SPLITS, MERGERS, ETC.. In case of any stock split, stock
dividend or similar transaction which increases or decreases the number of
outstanding shares of Common Stock, appropriate adjustment shall be made by the
Board of Directors, whose determination shall be final, to the number of shares
of Common Stock which may be purchased under the Option. In the case of a
pending merger, sale of assets or similar transaction which will result in a
replacement of the Common Stock with stock of another corporation, the period
during which such Options may be exercised shall be not less than three months,
but in no event shall any period longer than three months extend beyond the date
of merger, sale of assets or similar transactions.
8. METHOD OF EXERCISING OPTIONS. Subject to the terms and conditions
of this Agreement, the Option may be exercised by written notice (the "Exercise
Notice") from the Optionee delivered to the Company stating the election to
exercise the Option and the number of shares of Common Stock in respect of which
it is being exercised (which shall not be less than 100 or the remaining Common
Stock covered by the Option), and shall be signed by the person so exercising
the Option. The Exercise Notice shall be accompanied by the full Option Price
for the Common Stock in respect of which the Option is being exercised. In the
event the Option shall be exercised by any person or persons other than the
Optionee, pursuant to Paragraph 4 hereof, such notice shall be accompanied by
appropriate proof, reasonably satisfactory to the Company, of the right of such
person or persons to exercise the Option.
Payment of the Option Price may be made in cash, in shares of Common
Stock of the Company, or a combination of cash and shares of stock of the
Company. To the extent payment is made in cash, such payment shall be made by
certified or bank cashier's check, or the equivalent thereof, payable to the
order of the Company. In the event payment is made in Common Stock of the
company, the amount of payment tendered the Company shall be measured by the
fair market value of the average of the closing bid and ask price on the date
immediately preceding the date of the exercise notice.
The certificate or certificates for the Common Stock in respect of
which the Option shall have been exercised shall be registered in the name of
the person or persons exercising the Option, or, if the Option is exercised by
the Optionee and if the Optionee shall so request in the exercise notice, shall
be registered in the name of the Optionee and
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<PAGE>
another person jointly, with right of survivorship, and shall be delivered as
provided above to or upon the written request of the person or persons
exercising the Option. All of the common Stock purchased upon the exercise of
the Option as provided herein shall, when issued, be fully paid and
nonassessable. The Option shall not be exercisable for fractional shares.
9. UNDERTAKING. The Company may, at any time during the period in
which this Option or any part thereof remains in existence, including the period
immediately following any attempt to exercise the Option by the holder but,
prior to the delivery of the Common Stock, require the person attempting to
exercise the Option to execute one or more undertakings, in a form satisfactory
to the company, that such shares of Common Stock are being acquired for
investment and not for resale, acknowledging that no representations have been
made by the Company and that the Company is relying on Optionee's
representation.
The Company may also require the person exercising this Option to
deliver to the Company an acknowledgment that he or she has reviewed the
Company's latest financial reports, has determined independently to exercise the
Option, has carefully reviewed such material as has been made available to him
or her, is aware that the shares of Common Stock being acquired are
unregistered, that the company is not obligated to transfer the Common Stock
acquired unless the transfer is in compliance with Federal Securities Law,
pursuant to an effective registration statement.
10. GENERAL. The Company shall at all times during the term of the
Option reserve and keep available such number of shares of Common Stock as will
be sufficient to satisfy the requirements of this Agreement, shall pay all
original issue taxes with respect to the issuance of shares of Common Stock
pursuant hereto and all other fees and expenses necessarily incurred by the
Company in connection therewith. Notwithstanding the preceding sentence, the
company shall have no obligation to pay any income tax incurred by the Optionee
or those claiming through such Optionee, with respect to the exercise of the
Option or any part thereof.
11. NOTICES. Each notice relating to this Agreement shall be in
writing and delivered in person, by overnight courier or by first class mail,
postage prepaid, to the proper address. Each notice shall be deemed to have
been given on the date it is received. Each notice to the Company shall be
addressed to it at its then principal office, currently 851 Irwin Street, Suite
200, San Rafael, California 94901. Each notice to the Optionee or other person
or persons then entitled to exercise the Option shall be addressed to the
Optionee or such other person or persons at the Optionee's address set forth in
the heading of this Agreement. Anyone to whom a notice may be given under this
Agreement may designate a new address by notice to that effect given in
accordance with this Paragraph 11.
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<PAGE>
12. ENFORCEABILITY. This Agreement shall be binding upon the
Optionee, his estate, his personal representatives and beneficiaries and shall
be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Optionee has
hereunto set his hand all as of the day and year first above written.
CHILDREN'S DISCOVERY CENTERS
OF AMERICA, INC.
By:_________________________
By:__________________________
("Optionee")
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<PAGE>
EXHIBIT 4(C)
CHILDREN'S DISCOVERY CENTERS OF AMERICA, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION AGREEMENT
NON-EMPLOYEE DIRECTORS' STOCK OPTION AGREEMENT (the "Agreement") made
as of this ____ day of _________, ____, between Children's Discovery Centers of
America, Inc. (the "Company") and ____________, who is a non-employee director
of the Company (the "Participant").
W I T N E S S E T H:
WHEREAS, the Company desires, by affording the Participant an
opportunity to purchase shares of the Company's Common Stock, $0.01 par value
per share (the "Common Stock"), as hereinafter provided, to carry out the
purpose of the Company's Non-Employee Directors' Stock Option Plan (the "Plan"),
as the same may be amended and supplemented from time to time;
WHEREAS, the Plan provides for a grant of an option to purchase an
additional 3,500 shares of the Common Stock of the Company (the "Annual Option")
upon re-election as a non-employee director following each annual meeting of the
Company's Stockholders;
WHEREAS, the participant was re-elected as a non-employee director at
the annual meeting of stockholders held June 19, 1996;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto mutually
covenant and agree as follows:
1. GRANT OF ANNUAL OPTION. This option agreement memorializes the
annual option grant to the participant as provided in the Plan, and is hereby
granted an option to purchase 3,500 shares of the Common Stock on the terms and
conditions hereof, and subject to the Plan.
2. OPTION PRICE. The option price of the shares of Common Stock
issuable upon the exercise of each Option (the "Option Price") shall be $7.625
which is the closing sale price per share of the Company's Common Stock as
reported by the NASDAQ National Market System on June 19, 1996 (Grant Date).
<PAGE>
3. VESTING OF OPTION. Options granted hereunder, shall not be
exercisable until they become vested. All Options shall vest in a Participant
as follows: (i) with respect to 30% of the shares subject to this Option, on
the date which is six months following the date of grant, (ii) with respect to
an additional 23-1/3% of the shares subject to such Option, on the first
anniversary of the date of grant, (iii) with respect to an additional 23-1/3% of
the shares subject to this Option, on the second anniversary of the date of
grant, and (iv) with respect to the final 23-1/3% of the shares subject to such
Option, on the third anniversary of the date of grant; PROVIDED, HOWEVER, that
the vesting of any portion of an Option on any particular date is conditioned on
the Participant having continuously served as a member of the Board of Directors
through such date. The number of shares as to which an Option may be exercised
shall be cumulative, so that once the Option shall become exercisable as to any
shares, it shall continue to be exercisable as to said shares until expiration
or termination of the Option as provided in this Agreement.
4. TERM AND EXERCISE OF OPTIONS. The term of the Options shall be
for a period of ten (10) years from each date of grant, subject to earlier
termination as provided in Paragraph 6 and 7 hereof and in no event shall the
Option be exercised after the expiration of such ten (10) year period. Except
to the extent necessary to govern outstanding Options issued, this Agreement
shall terminate on, and no additional Options shall be granted after June 18,
2006, unless earlier terminated by the Board of Directors in accordance with
Section 7.
Except as provided in Paragraph 6, the Options may not be exercised
unless, at the time the Options are exercised and at all times from the date
they are granted, the Participant shall then be and shall have been a
non-employee director of the Company.
5. NONTRANSFERABILITY. The Options shall not be transferable
otherwise than pursuant to a qualified domestic relations order or by will or
the laws of descent and distribution to the extent provided in Paragraph 6, and
the Options may be exercised, during the lifetime of the Participant, only by
him. Without limiting the generality of the foregoing, the Options may not be
assigned, transferred (except as provided above), pledged or hypothecated in any
way, shall not be assignable by operation of law, and shall not be subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Options contrary to the
provisions hereof and of the Plan shall be null and void and without effect,
and, upon the levy of any execution, attachment, or similar process upon the
Options, the Options shall hereupon be canceled and thereafter null and void.
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<PAGE>
6. TERMINATION OF OPTION. In the event a Participant ceases to be a
member of the Board of Directors for any reason other than cause, any then
unexercised portion of Options granted to such Participant, to the extent not
vested on the date the Participant ceases to be a director (the "Termination
Date"), will immediately terminate and become void; any portion of an Option
which is vested on the Termination Date but has not yet been exercised may be
exercised, to the extent it is vested on the Termination Date, within one year
after the Termination Date. In the event of the Participant's death, the Option
may be exercised, if and to the extent that such deceased Participant was
entitled to exercise the Option at the time of death, by the person or persons
to whom the deceased Participant's rights pass by will or by the laws of descent
and distribution of the state of his or her domicile at the time of his or her
death. In the event that a Participant ceases to serve as a director for cause,
all Options theretofore granted to such Participant under this Agreement shall,
to the extent not theretofore exercised, terminate on the Termination Date,
whether or not any portion or all of such Option is vested.
7. TERMINATION AND AMENDMENT OF AGREEMENT. This Agreement may be
terminated or amended from time to time by vote of the Board of Directors;
PROVIDED, HOWEVER, that no such termination or amendment shall materially
adversely affect or impair any then outstanding Options without the consent of
the Participants, and PROVIDED FURTHER, that the provisions of this Agreement
specified in Rule 16b-3(c)(2)(ii)(A) of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (as in
effect on the effective date of the Plan) may not be amended more than once
every six months, other than to comport with changes in the Internal Revenue
Code, the Employee Retirement Income Security Act, or the rules thereunder. In
addition to approval by the Board of Directors of any amendment to this
Agreement, if the Board further determines on advice of counsel that it is
necessary or desirable to obtain stockholder approval of any amendment to this
Agreement in order to comply with Rule 16b-3 of the Exchange Act, or any
successor rule, as it shall read as of the time of amendment, or for any other
reason, then the effectiveness of any such amendment may be conditioned upon its
approval by stockholders of the Company in accordance with the applicable laws
of the state of incorporation of the Company, or such other stockholder approval
as may be specified by the Board.
8. COMPLIANCE WITH RULE 16B-3. It is the intention of the Company
that this Agreement comply in all respects with Rule 16b-3 promulgated under the
Exchange Act and that Participants remain disinterested persons ("Disinterested
Persons") for purposes of administering other employee benefit plans of the
Company and having such other plans be exempt from Section 16(b) of the Exchange
Act. Therefore, if any provision of this Agreement is later found not to be in
compliance with
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<PAGE>
Rule 16b-3 or if any provision would disqualify Participants from remaining
Disinterested Persons, that provision shall be deemed null and void, and in all
events this Agreement shall be construed in favor of its meeting the
requirements of Rule 16b-3.
9. ADMINISTRATION. (a) The Plan shall be administered by the Board
of Directors. A majority of the members of the Board shall constitute a quorum.
All determinations of the Board shall be made by a majority of such quorum or by
a written consent signed by all members of the Board.
(b) Options shall be automatically granted to Participants in
accordance with Section 1 hereof and shall be issued upon the terms and
conditions set forth in this Agreement. Accordingly, the persons to whom
Options shall be granted, the number of shares subject thereto and the material
terms and conditions governing the Options will not be subject to the discretion
of the Board. However, if any questions of interpretation of this Agreement or
of any Options issued hereunder shall arise, they shall be determined by the
Board and such determination shall be final and binding upon all persons having
an interest in this Agreement.
10. LEGEND ON CERTIFICATES. All certificates representing shares of
Common Stock issued pursuant to the exercise of Options granted hereunder shall
bear the following legend:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
transferred, pledged, hypothecated or otherwise disposed of in the absence
of (i) the effective registration statement for such securities under said
act or (ii) an opinion of company counsel that such registration is not
required."
11. ADJUSTMENT OF NUMBER OF SHARES. If a dividend or other
distribution shall be declared upon the Common Stock payable in shares of Common
Stock, the number of shares of Common Stock then subject to any Option granted
hereunder, and the number of shares reserved for issuance pursuant to this
Agreement but not yet covered by an Option, shall be adjusted by adding to each
of such shares the number of shares which would be distributable thereon if such
shares had been outstanding on the date fixed for determining the shareholders
entitled to receive such stock dividend or the shareholders entitled to receive
such stock dividend or distribution. If the outstanding shares of Common Stock
shall be changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company or of another corporation, whether
through reorganization, reclassification, recapitalization, stock split-
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<PAGE>
up, combination of shares, merger or consolidation, then there shall be
substituted for each share of Common Stock then subject to any such Option and
for each share of Common Stock reserved for issuance pursuant to this Agreement
but not yet covered by an Option, the number and kind of shares of stock or
other securities into which each outstanding share of Common Stock shall be so
changed or for which each such share shall be exchangeable; PROVIDED, HOWEVER,
that in the event that such change or exchange results from a merger or
consolidation, and in the judgment of the Board such substitution cannot be
effected or would be inappropriate, or if the Company shall sell all or
substantially all of its assets, the Company shall use reasonable efforts to
effect some other adjustment of each then outstanding Option which the Board, in
its sole discretion, shall deem equitable. In the event that there shall be any
change, other than as specified above in this Section 11, in the number or kind
of outstanding shares of Common Stock or of any stock or other securities into
which such shares of Common Stock shall have been changed or for which they
shall have been exchanged, then, if the Board shall determine that such change
equitably requires an adjustment in the number or kind of shares theretofore
reserved for issuance pursuant to this Agreement but not yet covered by an
Option and of the shares then subject to an Option or Options, such adjustment
shall be made by the Board and shall be effective and binding for all purposes
of this Agreement and of each stock option agreement applicable to Options
granted hereunder. In the case of any substitution or adjustment as provided
for in this Section 11, the aggregate option price in each stock option
agreement for all shares covered thereby prior to such substitution or
adjustment will be the aggregate option price for all shares of stock or other
securities (including any fraction) which shall have been substituted therefore
pursuant to this Section 11. No adjustment or substitution provided for in this
Section 11 shall require the Company, in any stock option agreement, to sell a
fractional share. Accordingly, any fraction of a share or other security which
results from any such adjustment or substitution shall be eliminated and not
carried forward to any subsequent adjustment or substitution.
12. METHOD OF EXERCISING OPTIONS. Subject to the terms and
conditions of this Agreement, the Option may be exercised by written notice to
the Company in accordance with this paragraph. Such notice shall state that the
Option is being exercised thereby and the number of shares of Common Stock in
respect of which it is being exercised. It shall be signed by the person or
persons so exercising the Option and shall be accompanied by payment (i) in full
either in cash or by check, (ii) by delivery (I.E., surrender) of shares of
Common Stock of the Company which have been owned by the Participant for at
least six months prior to the exercise of the Option with a Fair Market Value
(as defined above) at the time of the exercise of the Option equal to the
exercise price, or (iii) by a combination of (i) and (ii). In addition, to the
extent permitted by applicable law, the exercise price may be paid by one or
more brokerage
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firms pursuant to arrangements whereby such firm or firms, on behalf of a
Participant, shall pay to the Company the exercise price of the Option being
exercised, and the Company, pursuant to an irrevocable notice from the
Participant, shall deliver shares being purchased to such firm. The Company
shall issue, in the name of the person or persons exercising the Option and
deliver, a certificate or certificates representing such shares as soon as
practicable after the notice and payment shall be received.
In the event the Option shall be exercised by any person or persons
other than the Participant, pursuant to Section 6 hereof, such notice shall be
accompanied by appropriate proof, reasonably satisfactory to the Company, of the
right of such person or persons to exercise the Option.
The Participant shall have no rights of a stockholder with respect to
shares of Common Stock to be acquired by the exercise of the Option until the
issuance to him of a certificate or certificates representing said shares. All
shares of Common Stock purchased upon the exercise of the Option as provided
herein shall be fully paid and non-assessable.
13. GENERAL. The Company shall at all times during the term of the
Option reserve and keep available such number of shares of Common Stock as will
be sufficient to satisfy the requirements of this Agreement, shall pay all
original issue taxes with respect to the issuance of shares of Common Stock
pursuant hereto and all other fees and expenses necessarily incurred by the
Company in connection therewith, and shall, from time to time, use its best
efforts to comply with all federal and state securities laws and regulations
which, in the opinion of counsel for the Company, shall be applicable thereto.
14. NOTICES. Each notice relating to this Agreement shall be in
writing and delivered in person, by overnight courier or by first class mail,
postage prepaid, to the proper address. Each notice shall be deemed to have
been given on the date it is received. Each notice to the Company shall be
addressed to it at its then principal office, currently
851 Irwin Street, Suite 200
San Rafael, CA 94901
Each notice to the Participant or other person or persons then entitled to
exercise the Option shall be addressed to the Participant or such other person
or persons at the Participant's address set forth below:
_______________________
_______________________
_______________________
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Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to that effect given in accordance with this Section 14.
15. INCORPORATION OF PLAN. Notwithstanding the terms and conditions
herein, this Agreement shall be subject to and governed by all the terms and
conditions of the Plan. A copy of the Plan, which is herein incorporated by
reference has been delivered to Participant who hereby acknowledges receipt
thereof. In the event of any discrepancy or inconsistency between the terms and
conditions of the Agreement and of the Plan, the terms and conditions of the
Plan shall control.
16. CONTINUANCE AS DIRECTOR. The granting of the Option is in
consideration of the Participant's continuing relationship with the Company as a
non-employee director; however, nothing in this Agreement shall confer upon the
Participant the right to continue as a director of the Company or any of its
subsidiaries.
17. ENFORCEABILITY. This Agreement shall be binding upon the
Participant, his estate, his personal representatives and beneficiaries and
shall be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Participant has
hereunto set his hand all as of the day and year first above written.
CHILDREN'S DISCOVERY CENTERS
OF AMERICA, INC.
By:_________________________
PARTICIPANT:
____________________________
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EXHIBIT 5
September 12, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549-001
Gentlemen:
I have acted as counsel to Children's Discovery Centers of America, Inc. (the
"Company") in connection with the preparation and filing with the Securities and
Exchange Commission of its Registration Statement on Form S-8 under the
Securities Act of 1933 (the "Registration Statement") relating to 800,000 shares
of Common Stock of the Company, $.01 par value per share ("Common Stock"),
issuable upon the exercise of options granted under the Company's Stock Option
Plan ("Plan") and 83,626 shares of Common Stock issuable upon the exercise of
options granted to employees and consultants outside the Plan ("Non-Plan
Options").
In this connection, I have reviewed the Company's Certificate of Incorporation
and By-Laws, each as amended to date, Resolutions of its Board of Directors, the
Plan, agreements relating to the Non-Plan Options and such other documents and
corporate records, and have considered such questions of law, as I have deemed
appropriate in the circumstances.
Based upon and subject to the foregoing, I am of the opinion that: (i) the
issuance and sale of shares of Common Stock upon exercise of any Plan Options or
Non-Plan Options, as the case may be, in accordance with the terms and subject
to the conditions set forth in the agreements pursuant to which the Plan Options
or Non-Plan Options, as the case may be, were granted (together the "Option
Agreements") has been duly authorized and (ii) when the consideration for any
such shares of Common Stock shall have been received by the Company and shares
are issued pursuant to such Plan Options or Non-Plan Options, as the case may
be, in accordance with the terms and subject to the conditions set forth in the
Option Agreements, such shares of Common Stock will be validly issued, fully
paid and nonassessable.
<PAGE>
Securities and Exchange Commission
September 12
Page 2
I am admitted to practice in the State of California. Although I am not
admitted to the Bar of the State of Delaware, in rendering this opinion I have
considered the General Corporation Law of such State. Accordingly, the
foregoing opinion is limited solely to the effect of the laws of the State of
California and of the United States of America, and the General Corporation Law
of the State of Delaware.
I consent to the use of this opinion as an exhibit to the Registration
Statement. This does not constitute a consent under Section 7 of the Securities
Act of 1933 since I have not certified any part of such Registration Statement
and do not otherwise come within the categories of persons whose consent is
required under Section 7 or the rules and regulations of the Securities and
Exchange Commission.
Very truly yours,
Frank A. Devine
General Counsel
<PAGE>
EXHIBIT 24(A)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 21, 1997,
included (or incorporated by reference) in Children's Discovery Centers
of America, Inc.'s Form 10-K for the year ended December 31, 1996 and to all
references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
San Francisco, California
September 12, 1997
