As filed with the Securities and Exchange Commission on September 30,
1998
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
Under the
Securities Act of 1933
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EFI ELECTRONICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2072203
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
1751 South 4800 West
Salt Lake City, Utah 84104
(Address of Principal Executive Offices,
including Zip Code)
EFI ELECTRONICS CORPORATION
1998 INCENTIVE PLAN
(Full title of the plan)
Copy to:
EFI Electronics Corporation RICHARD G. BROWN
David G. Bevan Parr Waddoups Brown Gee & Loveless
1751 South 4800 West 185 South State Street, Suite 1300
Salt Lake City, Utah 84104 Salt Lake City, Utah 84111
(801) 977-9009 (801) 532-7840
(Name, address and telephone
number, including area code,
of agent for service)
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CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------
Title of Securities to Amount to Proposed Proposed
be Registered be Maximum Maximum
Registered Offering Aggregate Amount of
Price Offering Registration
per Price(1) Fee(1)
Share(1)
- --------------------------------------------------------------------------------
Common Stock.......... 750,000 $1.69 $1,267,810.25 $371.05
shares
- --------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(h)(1) and 457(c). With respect to 304,587
shares of the 750,000 being registered, the offering price per share, aggregate
offering price and registration fee have been calculated based upon the exercise
price at which options with respect to such shares may be exercised. With
respect to the remaining 445,413 shares being registered, for which the offering
price is not known, the offering price per share, aggregate offering price and
registration fee are computed on the basis of the average of the high and low
sales prices as reported on the NASDAQ Small Cap Market on September 29, 1998.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance
with Rule 428 under the Securities Act of 1933, as amended (the
"Securities Act"), and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by EFI Electronics Corporation (the
"Registrant") with the Securities and Exchange Commission are hereby
incorporated by reference in this Registration Statement:
(1) The Registrant's Annual Report on Form 10-KSB for the year ended March
31, 1998.
(2) The Registrant's Quarterly Report on Form 10-QSB for the three months
ended June 30, 1998.
(3) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including any amendment
or report filed under the Exchange Act for the purpose of updating such
description.
In addition, all documents subsequently filed by the Registrant pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment 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 in this Registration Statement and to be
a part hereof from the date of filing of such documents. Any statement contained
in a document incorporated by reference herein shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
(or in any other subsequently filed document which also is incorporated by
reference herein) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed to constitute a part hereof except as
so modified or superseded.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
<PAGE>
Item 6. Indemnification of Directors and Officers.
Section 102(b)(7) of the Delaware General Corporation Law authorizes a
Delaware corporation to have a provision in its certificate of incorporation
eliminating or limiting the personal liability of its directors to it and its
stockholders for monetary damages for breach of a director's fiduciary duty of
care; provided that such provision shall not eliminate or limit the liability of
a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases or redemptions as
provided in Section 174 of the Delaware General Corporate Law or (iv) for any
transaction from which the director derived an improper personal benefit. The
Registrant's Certificate of Incorporation provides that the liability of a
director to the Registrant or the Registrant's stockholders for monetary damages
for breach of fiduciary duty is eliminated to the fullest extent permitted by
Section 102(b)(7).
The Registrant's Certificate of Incorporation provides that any director
or officer of the Registrant, individually or with others, may be a party to, or
may have an interest in, any transaction of the Registrant or any transaction in
which the Registrant is a party or has an interest. Each person who is now or
may become a director or officer of the Registrant is relieved from liability
that he might otherwise obtain in the event such director or officer contracts
with the Registrant for the benefit of himself or any other firm or corporation
in which he may have an interest, provided such director or officer acts in good
faith.
Section 145 of the Delaware General Corporation Law permits a corporation
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action. In an action brought to obtain a judgment in the corporation's favor,
whether by the corporation itself or derivatively by a stockholder, the
corporation may only indemnify for expenses, including attorney's fees, actually
and reasonably incurred in connection with the defense or settlement of such
action. In any such action, no indemnification may be paid in respect of any
claim, issue or matter as to which such person shall have been adjudged liable
to the corporation except as otherwise approved by the Delaware Court of
Chancery or the court in which the claim was brought. In any other type of
proceeding, the indemnification may extend to judgments, fines and amounts paid
in settlement, actually and reasonably incurred in connection with such other
proceeding, as well as to expenses.
The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation and, with
respect to any criminal actions or proceedings, the person had no reasonable
cause to believe his conduct was unlawful. The statute contains additional
limitations applicable to criminal actions and to actions brought by or in the
name of the corporation.
The Registrant's Certificate of Incorporation and Bylaws require the
Registrant to indemnify its directors and officers to the fullest extent
permitted under Delaware law. Specifically, the Registrant's Bylaws provide that
the Registrant shall, to the fullest extent permitted, and in the manner
required by the law of the State of Delaware, shall (i) indemnify any person
(and the heirs and legal representative of such person) who was or is made or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director, officer, employee or agent of
the Registrant, or is or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any applicable obligation or
liability permitted by law; and (ii) provide to any such person (and the heirs
and legal representatives of such person) advances for expenses incurred in
defending any such action, suit or proceeding, upon receipt of an undertaking by
or on behalf of such person (and the heirs and legal representatives of such
person) to repay such advances if it shall ultimately be determined that he is
not entitled to indemnification by the Registrant. The Registrant's Certificate
of Incorporation, as amended, provides that the Registrant shall indemnify any
and all persons (and the respective heirs, administrators, successors, and
assigns of such person) who may serve or who have served at any time as
<PAGE>
directors or officers, or who, at the request of the Board of Directors of the
Registrant, may serve, or at any time have served as directors or officers of
another corporation in which the Registrant at such time owned or may own shares
of stock, or which it was or may be a creditor, against any and all expenses
actually or necessarily by such persons in connection with the defense or
settlement of any claim, action, suit or proceeding in which they, or any of
them, are made parties, or a party, or which may be assessed against them or any
of them by reason of being or having been directors or officers of the
Registrant, except in relation to matters as to which any such director or
officer shall be adjudged in any action, suit or proceeding to be liable for his
own negligence or misconduct in the performance of his duties. The Registrant's
Bylaws further provide that this indemnification and advancement of expenses
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any resolution,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 145(g) of the Delaware General Corporation Law provides that
corporations have the power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability. The
Registrant's Bylaws provide the Registrant with this power. The Registrant
maintains insurance from a commercial carrier against certain liabilities that
may be incurred by its directors and officers.
The foregoing description is necessarily general and does not describe all
details regarding the indemnification of officers, directors or controlling
persons of the Registrant.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
See the Exhibit Index on page 7.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to
this Registration Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this Registration Statement;
(iii)To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<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 Salt Lake, State of Utah, on September 30, 1998.
EFI Electronics Corporation
By /s/ Richard D. Clasen
Richard D. Clasen, Chief Executive
Officer and President
POWER OF ATTORNEY
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. Each person whose signature to this
Registration Statement appears below hereby constitutes and appoints Richard D.
Clasen and David G. Bevan, and each of them, as his true and lawful
attorney-in-fact and agent, with full power of substitution, to sign on his
behalf individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all amendments and post-effective
amendments to this Registration Statement, and any and all instruments or
documents filed as part of or in connection with this Registration Statement or
the amendments thereto and each of the undersigned does hereby ratify and
confirm all that said attorney-in-fact and agent, or his substitutes, shall do
or cause to be done by virtue hereof.
Signature Title Date
/s/ Richard D. Clasen Chief Executive Officer,
Richard D. Clasen President and Director September 30, 1998
(Principal Executive Officer)
/s/ David G. Bevan Chief Financial Officer and September 30, 1998
David G. Bevan Executive Vice President
(Principal Financial Officer)
/s/ James H. Biggart Executive Vice President Sales September 30, 1998
James H. Biggart and Marketing
/s/ Gaylord K. Swim Director September 30, 1998
Gaylord K. Swim
/s/ Reino Kerttula Director September 30, 1998
Reino Kerttula
<PAGE>
EFI ELECTRONICS CORPORATION
EXHIBIT INDEX
- --------------------------------------------------------------------------------
Regulation S-K Description Sequential
Exhibit No. Page No.
- --------------------------------------------------------------------------------
4.1 Certificate of Incorporation as
Restated and Amended.
4.2* Bylaws of the Registrant as Amended and
Restated. (Incorporated by reference from
the Annual Report on Form 10-K filed by the
Registrant for the year ended March 31, 1989).
4.3 EFI Electronics Corporation 1998
Incentive Plan.
5 Opinion of Parr Waddoups Brown Gee
& Loveless, a professional
corporation, as to the legality of
the securities offered.
23.1 Consent of Grant Thornton LLP.
23.2 Consent of Parr Waddoups Brown Gee
& Loveless, a professional
corporation (included in Exhibit
No. 5).
24 Powers of Attorney (included on page 6 hereof).
- ----------------------------------
* Incorporated by reference
<PAGE>
EXHIBIT 4.1
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
EFI Electronics Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the board of Directors of EFI Electronics
Corporation resolutions were duly adapted setting forth a proposed amendment
to the Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and presenting said amendment at the annual meeting
of stockholders of said corporation for consideration thereof. The resolution
setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of the corporation be
amended by adding the Article thereof numbered "XIV" so that said Article
shall be and read as follows:
ARTICLE XIV
DIRECTORS' LIABILITY
The personal liability of the Director to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty is hereby
eliminated to the fullest extent permitted by paragraph (7) of subsection
102(b) of the Delaware General Corporation Law, as the some may be
hereafter amended from time to time. In the event such subsection is
amended to decrease or limit in any manner the protection or rights
currently available to Directors, such amendment shall not be
retroactively applied in determining the personal liability of a Director
pursuant to this Article XIV prior to the enactment of such amendment.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the annual meeting of the stockholders of said corporation was
duly called and held, upon notice in accordance with Section 222 of the
General Corporation Law of the State of Delaware at which meeting the
necessary number of shares as required by statute were voted in favor of the
amendment.
THIRD: That said amendment was duly adapted in
accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
FOURTH: That the outstanding capital of said
corporation shall not be reduced under or by reason of
said amendment.
IN WITNESS WHEREOF, said EFI Electronics Corporation has caused this
certificate to be signed by Scott H. Nelson, its President and David K.
Giles, its Secretary, this 29th day of April, 1991.
By: /s/ Scott H. Nelson
Scott H. Nelson, President
ATTEST:
By: /s/ David K. Giles
David K. Giles, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
EFI Electronics Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of EFI Electronics
Corporation, resolutions were duly adapted setting forth a proposed amendment
to the Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and calling a meeting of the stockholders of said
corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "IV" so that, as
amended, said Article shall be and read as follows:
"The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is 20,000,000, all of which
shall be Common Stock having a par value of $0.0001 per share. The
9,774,251 presently issued and outstanding shares of common stock of
the Corporation shall be reverse split on the basis of one share for
each three shares outstanding, par value $0.0001 per share."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary
number of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adapted in
accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
FOURTH: That the outstanding capital of said
corporation shall not be reduced under or by reason of
said amendment.
IN WITNESS WHEREOF, said EFI Electronics Corporation has caused this
certificate to be signed by Scott H. Nelson, its President, and David K.
Giles, its Secretary, the 21st day of July, 1989.
By: /s/ Scott H. Nelson
Scott H. Nelson, President
ATTEST:
By: /s/ David K. Giles
David K. Giles, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
EFI Electronics Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of EFI Electronics
Corporation resolutions were duly adapted setting forth a proposed amendment
to the Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and calling a meeting of the stockholders of said
corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "IV" so that, as amended
said Article shall be and read as follows:
"The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is 20,000,000 all of which
shall be Common Stock having a par value of $0.0001 per share."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the state of Delaware at which meeting the necessary
number of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adapted in
accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
FOURTH: That the outstanding capital of said
corporation shall not be reduced under or by reason of
said amendment.
IN WITNESS WHEREOF, said EFI Electronics Corporation has caused this
certificate to be signed by George O. Stewart, its President, and David K.
Giles, its Secretary, this 30th day of March, 1988.
By: /s/ George O. Stewart
George O. Stewart, President
ATTEST:
By: /s/ David K. Giles
David K. Giles, Secretary
<PAGE>
CERTIFICATE OF MERGER
OF
EFI CORPORATION, a Utah Corporation
INTO
HALYX DEVELOPMENT COMPANY, INC., a Delaware Corporation
Pursuant to the provisions of Section 252 of the Delaware General
Corporation Law, the undersigned Halyx Development Company, Inc., a Delaware
corporation (sometimes herein referred to as the "Surviving Corporation"),
hereby adopts the following Certificate of
Merger:
1. The names and states of incorporation of each of the constituent
corporations are:
(a) EFI Electronics, a Utah corporation.
(b) Halyx Development Company, Inc., a
Delaware corporation.
2. An Agreement and Plan of Merger dated as of January 6, 1987 (the
"Agreement of Merger") has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with
subsection (c) of Section 252 of the Delaware General Corporation Law.
3. The name of the surviving or resulting corporation is Halyx
Development Company, Inc., a Delaware corporation, which name will be changed
by amendment to the Certificate of Incorporation referred to in Paragraph 4
below to "EFI Electronics Corporation".
4. Pursuant to the Agreement of Merger, the Certificate of
Incorporation of the Surviving Corporation will be amended and restated to
conform with the Certificate of Incorporation attached hereto as Annex "A"
and by this reference incorporated herein.
5. The executed Agreement of Merger is on file at the principal place
of business of the Surviving Corporation at the address below:
EFI Electronics
350 West 2700 South
Salt Lake City, Utah 84115
6. A copy of the Agreement of Merger will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of
either constituent corporation.
7. The authorized capital stock of EFI Electronics Corporation
existing before the Agreement of Merger is 5,000,000 shares of Common Stock,
par value $.01, constituting a total authorized capital of $50,000.
EXECUTED as of the day of 25th day of June, 1987.
SURVIVING CORPORATION:
Halyx Development
Company,
Inc., a Delaware
corporation
By /s/ Larry E. Howell
Larry E. Howell,
President
By /s/ E. James Bradley
E. James Bradley,
Secretary
<PAGE>
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
Larry E. Howell, having been first duly sworn, hereby declares, certifies
and acknowledges that (a) he executed the foregoing Certificate of Merger as
President of HALYX DEVELOPMENT COMPANY, INC. and that such execution is the
act and deed of HALYX DEVELOPMENT COMPANY, INC.; (b) he has read the
foregoing certificate and knows the contents thereof; and (c) the statements
and facts contained therein are true and correct.
EXECUTED this 25th day of June, 1987.
/s/ Larry E. Howell
Larry E. Howell
SUBSCRIBED AND SWORN to before me the 25th day of June, 1987.
/s/ Joyce A. Stopford
Notary Public
Residing at: Dallas,
Texas
My Commission Expires:
March 31, 1989
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
HALYX DEVELOPMENT COMPANY, INC.
Pursuant to the Agreement and Plan of Merger dated January 1, 1987, Halyx
Development company, Inc. ("Halyx") , a Delaware corporation, acquired EFI
Corporation ("EFI"), a Utah corporation. Halyx, the surviving corporation,
was originally incorporated under the laws of the State of Delaware on
November 12, 1985. The Restated Certificate of Incorporation, as stated
herein, was duly adapted in accordance with the provisions of Section 245 and
242 of the General Corporation Law of the State of Delaware.
ARTICLE I
NAME
The name of the Corporation hereby created shall be EFI Electronics
Corporation.
ARTICLE II
DURATION
The Corporation shall continue in existence perpetually unless sooner
dissolved according to law.
ARTICLE III
PURPOSES
The purposes for which this Corporation is organized are:
(a) To develop, design, acquire, purchase, assemble, distribute and
generally deal in and with electrical equipment of every type and kind
including circuitry, equipment, accessories, appliances and appurtenances
capable of being employed as power conditioning or power protection devices
for electronic products of every description;
(b) To seek available business opportunities which have a potential
for profit, acquire, merge with or into, or be acquired by one or more other
businesses, and to do lawful act or activity for which corporations may be
formed under the laws of the State of Delaware;
(c) To acquire by purchase or otherwise, own, hold, lease, rent,
mortgage or otherwise, to trade with and deal in real estate lands and
interest in lands and all other property of every kind and nature;
(d) To acquire, sell and otherwise, dispose of, deal in stocks,
bonds mortgages, securities, notes and commercial paper for corporations and
individuals, and to lend money and negotiate loans;
(e) To borrow money and to execute notes and obligations and
security contracts therefore, and to lend any of monies or funds of the
Corporation and to take evidence of indebtedness therefore, and also to
negotiate loans; to carry on a general mercantile and merchandise business
and to purchase, sell and deal in such goods, supplies, and merchandise as
are or may be sold in a general store;
(f) To guarantee the payment of dividends or interest on any other
contract or obligation of, any corporation whenever proper or necessary for
the business of the Corporation in the judgment of its directors;
(g) To do all and everything necessary, suitable, convenient, or
proper for the accomplishment of any of the herein enumerated, or incidental
to the powers therein named, or which shall at any time appear conclusive or
expedient for the protection or benefit of the Corporation, either as holders
of or interested in any property, or otherwise; with all the powers hereafter
conferred by the laws under which this Corporation is organized; and
<PAGE>
(h) To engage in any and all other lawful purposes, activities and
pursuits, whether similar or dissimilar to the foregoing, and the Corporation
shall have all powers allowed or permitted by the laws of the State of
Delaware.
ARTICLE IV
CAPITALIZATION
The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is 500,000,000 all of which shall
be Common Stock having a par value of $0.0001 per share.
ARTICLE V
CLASSES OF STOCK
A statement of the designations and the powers, preferences, and rights,
and the qualifications, limitations, or restrictions thereof, of the shares
of stock which the Corporation shall be authorized to issue, is as follows:
(a) General Rights. All stock of the Corporation shall be of the
same class, common, and shall have the same rights and preferences. Fully
paid stock of the Corporation shall not be liable to any call and is
nonassessable.
(b) Dividends. The holders of shares of Common Stock shall be
entitled to receive dividends when and as declared by the Board of Directors
out of funds legally available therefor.
(c) Voting. Except as otherwise expressly provided by law, in all
matters as to which the vote or consent of stockholders of the Corporation
shall be required or be taken, including, any vote to amend this Certificate
of Incorporation to increase or decrease the par value, effect a stock split
or combination of shares, or alter or change the powers, preferences or
special rights of the Common Stock, the holders of the Common Stock shall be
entitled to vote on all such matters, and the holders of the shares of Common
Stock shall each have one (1) vote per shares.
(d) Issuance of Rights and Warrants. The Corporation shall have the
power to issue, with or without any connection to the issued and sale of its
Common Stock, or other securities, rights, warrants, or options entitling the
holders thereof to purchase from the Corporation shares of its Common Stock,
or other securities, upon which terms and conditions and at such times and
for such consideration or price as the Board of Directors, in its discretion
may determine. In the absence of fraud, the judgment of the directors as to
the consideration for the issuance of such rights, warrants, or options and
the sufficiency thereof shall be conclusive.
ARTICLE VI
BY-LAWS
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter or repeal the
By-Laws of the Corporation.
ARTICLE VII
MEETINGS AND RECORDS
Meetings of the stockholders may be held within or without the State of
Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the By-Laws of the Corporation. Elections of
directors need not be written by ballot unless the By-Laws of the Corporation
shall so provide.
<PAGE>
ARTICLE VIII
NO PRE-EMPTIVE RIGHTS
Shareholders of the Corporation shall not have pre-emptive rights to
subscribe for or acquire additional shares of the Corporation, whether such
shares be hereby or hereafter authorized.
ARTICLE IX
INDEMNIFICATION OF OFFICERS
AND DIRECTORS
The Corporation shall indemnify any and all persons who may serve or who
have served at any time as directors or officers, or who, at the request of
the Board of Directors of the Corporation, may serve, or at any time have
served as directors or officers of another corporation in which the
Corporation at such time owned or may own shares of stock, or which it was or
may be a creditor, and the respective heirs, administrators, successors, and
assigns, against any and all expenses, including amounts paid upon judgment,
counsel fees, and amount paid in settlement ( before or after suit is
commenced), actually or necessarily by such persons in connection with the
defense or settlement or any claim, action, suit, or proceeding in which
they, or any of them, are made parties, or a party, or which may be assessed
against them or any of them, by reason of being or having been directors or
officers of the Corporation, or such other corporation, except in relation to
matters as to which any such director or officer of the Corporation, or such
other corporation, or former director or officer shall be adjudged in any
action, suit or proceeding to be liable for his own negligence or misconduct
in the performance of his duties. Such indemnification shall be in addition
to any other rights to which those indemnified may be entitled under any law,
by-law, agreement, vote of stockholders or otherwise.
ARTICLE X
OFFICERS AND DIRECTORS CONTRACTS
No contract or other transaction between this Corporation and any other
firm or corporation shall be affected by the fact that a director or officer
of this Corporation has an interest in, or is a director or officer of this
Corporation or any other corporation. Any officer or director individually or
with others, may be a party to, or may have an interest in, any transaction
of this Corporation, or any transaction in which this corporation is a party
or has an interest. Each person who is now or may become an officer or
director of this Corporation is hereby relieved from liability he might
otherwise obtain in this event such officer or director contracts with this
Corporation for the benefit of himself or any firm or other corporation in
which he may have an interest, provided such officer or director acts in good
faith.
ARTICLE XI
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is 1209
Orange Street, in the city of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
ARTICLE XII
AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation, in the
manner now or hereafter prescribed b statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
<PAGE>
ARTICLE XIII
DIRECTORS
The Corporation shall have not less the three (3) nor more than nine (9)
directors as determined, from time to time, by the Board of Directors. The
original Board of Directors shall be comprised of three (3) persons. The
names and addresses of the persons who are to serve as directors until the
first annual meeting of shareholders and until their successors are elected
and shall qualify are as follows:
Name Address
Larry E. Howell 6510 Abrams Road, Suite 570
Dallas, Texas 75231
Bradley J. Jorgensen 1918 Gunther Drive
Salt Lake City, Utah 84121
George I. Norman III 849 Coatsville Avenue
Salt Lake City, Utah 84105
IN WITHNESS WHEREOF, Halyx Development Company, Inc. has caused its
corporate seal to be hereunto affixed and this Restated Certificate of
Incorporation to be signed by Larry E. Howell, its President, and Attested by
its Secretary, the 25th day of June, 1987.
By: /s/ Larry E. Howell
President
Attest: /s/ E. James Bradley
Secretary
<PAGE>
CERTIFICATE OF INCORPORATION
OF
HALYX DEVELOPMENT COMPANY, INC.
ARTICLE I
NAME
The name of the Corporation hereby created shall be HALYX DEVELOPMENT
COMPANY, INC.
ARTICLE II
DURATION
The Corporation shall continue in existence perpetually unless sooner
dissolved according to law.
ARTICLE III
PURPOSES
The purposes for which this Corporation is organized are:
(a) To seek available business opportunities which have a potential
for profit, acquire, merge with or into, or be acquired by one or more other
businesses, and to do any lawful act or activity for which corporations may
be formed under the laws of the State of Delaware.
(b) To acquire by purchase or otherwise, own, hold, lease, rent,
mortgage or otherwise, to trade with and deal in real estate lands and
interest in lands and all other property of every kind and nature.
(c) To acquire, sell and otherwise, dispose of, deal in stocks,
bonds, mortgages, securities, notes and commercial paper for corporations and
individuals, and to lend money and negotiate loans;
(d) To borrow money and to execute notes and obligations and
security contracts therefore, and to lend any of monies or funds of the
Corporation and to take evidence of indebtedness therefore, and also to
negotiate loans; to carry on a general mercantile and merchandise business
and to purchase, sell and deal in such goods, supplies, and merchandise as
are or may be sold in a general store;
(e) To guarantee the payment of dividends or interest on any other
contract or obligation of, any corporation whenever proper or necessary for
the business of the Corporation in the judgment of its directors;
(f) To do all and everything necessary, suitable, convenient, or
proper for the accomplishment of any of the purposes of the attainment of any
one or more of the objects herein enumerated, or incidental to the powers
therein named, or which shall at any time appear conclusive or expedient for
the protection or benefit of the Corporation, either as holders of or
interested in any property, or otherwise; with all the powers hereafter
conferred by the laws under which this Corporation is organized; and
(g) To engage in any and all other lawful purposes, activities and
pursuits, whether similar or dissimilar to the foregoing, and the Corporation
shall have all powers allowed or permitted by the laws of the State of
Delaware.
<PAGE>
ARTICLE IV
CAPITALIZATION
The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is 500,000,000 all of which shall
be Common Stock having a par value of $0.0001 per share.
ARTICLE V
CLASSES OF STOCK
A statement of the designations and the powers, preferences, and rights,
and the qualifications, limitations, or restrictions thereof, of the shares
of stock which the Corporation shall be authorized to issue, is as follows:
(a) General Rights. All Stock of the Corporation shall be of the
same class, common, and shall have the same rights and preferences. Fully
paid stock of the Corporation shall not be liable to any call and is
non-assessable.
(b) Dividends. The holders of shares of Common Stock shall be
entitled to receive dividends when and as declared by the Board of Directors
out of funds legally available therefor.
(c) Voting. Except as otherwise expressly provided by law, in all
matters as to which the vote or consent of stockholders of the Corporation
shall be required or be taken, including, any vote to amend these Articles of
Incorporation to increase or decrease the par value, effect a stock split or
combination of shares, or alter or change the powers, preferences or special
rights of the Common Stock, the holders of the Common Stock shall be entitled
to vole on all such matters, and the holders of the shares of Common Stock
shall each have one (1) voter per share.
(d) Issuance of Rights and Warrants. The corporation shall have the
power to issue, with or without any connection to the issue and sale of its
Common Stock, or other securities, rights, warrants, or options entitling the
holders thereof to purchase from the Corporation shares of its Common Stock,
or other securities, upon which terms and conditions and at such times and
for such consideration or price as the Board of Directors, in its discretion
may determine. In the absence of fraud, the judgment of the directors as to
the consideration for the issuance of such rights, warrants, or options and
the sufficiency thereof shall be conclusive.
ARTICLE VI
BY-LAWS
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter or repeal the
By-Laws of the Corporation.
ARTICLE VII
MEETINGS AND RECORDS
Meetings of the stockholders may be held within or without the State of
Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the By-Laws of the Corporation. Elections of
directors need not be by written ballot unless the By-Laws of the Corporation
shall so provide.
<PAGE>
ARTICLE VIII
NO PRE-EMPTIVE RIGHTS
Shareholders of the Corporation shall not have pre-emptive rights to
subscribe for or acquire additional shares of the Corporation, whether such
shares be hereby or hereafter authorized.
ARTICLE IX
INDEMNIFICATION OF OFFICERS
AND DIRECTORS
The Corporation shall indemnify any and all persons who may serve or who
have served at any time as directors or officers, or who, at the request of
the Board of Directors of the Corporation, may serve, or at any time have
served as directors or officers of another corporation in which the
Corporation at such time owned or may own shares of stock, or which is was or
may be a creditor, and the respective heirs, administrators, successors, and
assigns, against any and all expenses, including amounts paid upon judgment,
counsel fees, and amounts paid in settlement (before or after suit is
commenced), actually or necessarily by such persons in connection with the
defense or settlement or any claim, action, suit, or proceeding in which
they, or any of them, are make parties, or a party, or which may be assessed
against them or any of them, by reason of being or having been directors or
officers of the Corporation, or such other corporation, except in relation to
matters as to which any such director or officer of the Corporation, or such
other corporation, or former Director or officer shall be adjudged in any
action, suit or proceeding to be liable for his own negligence of misconduct
in the performance of his duties. Such indemnification shall be in addition
to any other rights to which those indemnified may be entitled under any law,
by-law, agreement, vote of stockholders or otherwise.
ARTICLE X
OFFICERS AND DIRECTORS CONTRACTS
No contract or other transaction between this Corporation and any other
firm or corporation shall be affected by the fact that a director or officer
of this Corporation has an interest in, or is a director or officer of this
Corporation or any other corporation. Any officer or director individually or
with others, may be a party to, or may have an interest in, any transaction
of the Corporation, or any transaction in which this Corporation is a party
or has an interest. Each person who is not or may become an officer or
director of this Corporation is hereby relieved from liability he might
otherwise obtain in the event such officer or director contracts with this
Corporation for the benefit of himself or any firm or other corporation in
which he may have an interest, provided such officer or director acts in good
faith.
ARTICLE XI
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is 1209
Orange Street, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
ARTICLE XII
AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in the Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
<PAGE>
ARTICLE XIII
DIRECTORS
The Corporation shall have not less than three (3) nor more than nine (9)
directors as determined, from time to time, by the Board of Directors. The
original Board of Directors shall be comprised of three (3) persons. The name
and addresses of the persons who are to serve as directors until the first
annual meeting of shareholders and until their successors are elected and
shall qualify are as follows:
Name Address
Larry E. Howell 444 M Bank Building
111 South Garland Ave.
Garland, Texas 75046
Bradley J. Jorgensen 1918 Gunther Drive
Salt Lake City, Utah 84121
George I. Norman III 849 Coatsville Ave.
Salt lake City, Utah 84105
ARTICLE XII
INCORPORATOR
The name and address of the incorporator for this Corporation is as
follows:
Name Address
Bradley J. Jorgensen 1918 Gunther Drive
Salt Lake City, Utah 84121
I, THE UNDERSIGNED, being the incorporator herein before named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 6th day of November, 1985.
DATED this 6th day of November, 1985.
/s/ Bradley J. Jorgensen
Bradley J. Jorgensen
<PAGE>
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On the 6th day of November, 1985, personally appeared before me Bradley
J. Jorgensen, as incorporator of Halyx Development Company, Inc., who duly
acknowledged to me that he executed these Articles of Incorporation for the
uses and purposes therein expressed.
/s/ Karen J. Arthur
NOTARY PUBLIC
My Commission Expires: Residing At:
July 7, 1988 Salt Lake City, Utah
<PAGE>
EXHIBIT 4.3
------------------------------
EFI ELECTRONICS CORPORATION
1998 INCENTIVE PLAN
------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Background and Purpose 1
2. Definitions 1
2.1 "Adjusted Fair Market Value" 1
2.2 "Affiliate" 1
2.3 "Agreement" 1
2.4 "Award" 1
2.5 "Board" 1
2.6 "Cause" 1
2.7 "Change in Capitalization" 1
2.8 "Change in Control" 2
2.9 "Code" 3
2.10 "Committee" 3
2.11 "Company" 3
2.12 "Director" 3
2.13 "Director Option" 3
2.14 "Disability" 3
2.15 "Division" 4
2.16 "Dividend Equivalent Right" 4
2.17 "Eligible Director" 4
2.18 "Eligible Individual" 4
2.19 "Employee Option" 4
2.20 "Exchange Act" 4
2.21 "Fair Market Value" 4
2.22 "Grantee" 4
2.23 "Incentive Stock Option" 4
2.24 "Nonemployee Director" 4
2.25 "Nonqualified Stock Option" 5
2.26 "Option" 5
2.27 "Optionee" 5
2.28 "Outside Director" 5
2.29 "Parent" 5
2.30 "Performance Awards" 5
2.31 "Performance Cycle" 5
2.32 "Performance Objectives" 5
2.33 "Performance Shares" 5
2.34 "Performance Units" 5
2.35 "Plan" 5
2.36 "Pooling Transaction" 5
2.37 "Restricted Stock" 5
2.38 "Shares" 5
2.39 "Stock Appreciation Right" 5
2.40 "Subsidiary" 5
2.41 "Successor Corporation" 5
2.42 "Ten-Percent Stockholder" 6
2.43 "Termination of Employment" 6
<PAGE>
3. Administration 6
3.1 The Committee 6
3.2 The Committee Powers 6
4. Stock Subject to the Plan 7
-------------------------
4.1 Maximum Shares 7
4.2 Adjustments to Shares 7
4.3 Effect of Expiration, Cancellation or
Termination 8
5. Option Grants for Eligible Individuals 8
5.1 Authority of Committee 8
5.2 Purchase Price 8
5.3 Maximum Duration 8
5.4 Vesting 8
5.5 Modification 8
6. Option Grants for Eligible Directors 8
6.1 Grant of Options to Eligible Directors 8
6.2 Purchase Price 9
6.3 Maximum Duration 9
6.4 Vesting 9
6.5 Modification. 9
7. Terms and Conditions Applicable to All Options 9
7.1 Transferability 9
7.2 Method of Exercise 9
7.3 Rights of Optionees 10
7.4 Effect of Change in Control 10
8. Stock Appreciation Rights 10
8.1 Time of Grant 11
8.2 Stock Appreciation Right Related to an Option
11
8.3 Stock Appreciation Right Unrelated to an
Option 11
8.4 Method of Exercise 11
8.5 Form of Payment 12
8.6 Modification 12
8.7 Effect of Change in Control 12
9. Dividend Equivalent Rights 12
10. Restricted Stock 12
10.1 Grant 12
10.2 Rights of Grantee 13
10.3 Non-transferability 13
10.4 Lapse of Restrictions 13
10.5 Modification or Substitution 13
10.6 Treatment of Dividends 13
10.7 Delivery of Shares 14
<PAGE>
11. Performance Awards 14
11.1 Performance Objectives 14
11.2 Performance Units 14
11.3 Performance Shares 15
11.4 Effect of Change in Control 16
11.5 Modification or Substitution 16
12. Effect of a Termination of Employment; Forfeiture
Provisions 16
12.1 Termination of Employment 16
12.2 Forfeiture Provisions 17
13. Adjustment Upon Changes in Capitalization 18
14. Effect of Certain Transactions 18
15. Interpretation 18
16. Pooling Transactions 19
17. Effective Date, Termination and Amendment of the
Plan 19
18. Non-Exclusivity of the Plan 19
19. Limitation of Liability 19
20. Regulations and Other Approvals; Governing Law 20
20.1 Governing Law 20
20.2 Applicable Laws 20
20.3 Rules and Regulations 20
20.4 Securities Regulations 20
20.5 Restrictions on Shares 20
21. Miscellaneous 20
21.1 Multiple Agreements 20
21.2 Withholding of Taxes 21
<PAGE>
EFI ELECTRONICS CORPORATION
1998 INCENTIVE PLAN
1. Background and Purpose. The purpose of this Plan is to strengthen EFI
Electronics Corporation (the "Company"), by providing an incentive to its
employees, officers, consultants and directors and thereby encouraging them to
devote their abilities and industry to the success of the Company's business
enterprise. It is intended that this purpose be achieved by extending to
employees, officers, consultants and directors of the Company and its
Subsidiaries long-term incentives for high levels of performance and consistent
efforts through the grant of Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Dividend Equivalent Rights, Performance
Awards and Restricted Stock (as each term is herein defined).
2. Definitions. For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the sixty (60) day period ending on the date of a Change in Control.
2.2 "Affiliate" means any entity, directly or indirectly, controlled
by, controlling or under common control with the Company or any corporation or
other entity acquiring, directly or indirectly, all or substantially all the
assets and business of the Company, whether by operation of law or otherwise.
2.3 "Agreement" means the written agreement between the Company and
an Optionee or Grantee evidencing the grant of an Option or Award and setting
forth the terms and conditions thereof.
2.4 "Award" means a grant of Restricted Stock, a
Stock Appreciation Right, a Performance Award, a Dividend Equivalent Right or
any or all of them.
2.5 "Board" means the Board of Directors of the Company.
2.6 "Cause" shall mean:
(a) for purposes of Section 6.4, (i) a willful act which
constitutes gross misconduct or fraud and which is materially injurious to the
Company or (ii) conviction of, or plea of "guilty" or "no contest" to, a felony;
and
(b) in all other cases, either (1) the definition set forth in
the employment agreement between the Optionee or Grantee, or in absence thereof,
(2)(i) intentional failure to perform reasonably assigned duties, (ii)
dishonesty or willful misconduct in the performance of duties, (iii) involvement
in a transaction in connection with the performance of duties to the Company or
any of its Subsidiaries which transaction is adverse to the interests of the
Company or any of its Subsidiaries and which is engaged in for personal profit
or (iv) willful violation of any law, rule or regulation in connection with the
performance of duties (other than traffic violations or similar offenses).
<PAGE>
2.7 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants or rights or debentures, stock
dividend, stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, change in corporate
structure or otherwise.
2.8 "Change in Control" shall mean the occurrence during the term of
the Plan of any of the following events:
(1) An acquisition (other than directly from the Company or
pursuant to options granted under this Plan or otherwise by the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) immediately after which
such Person has 'Beneficial Ownership' (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty percent (20%) or more of the
combined voting power of the Company's then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has occurred,
Voting Securities which are acquired in a "Non-Control Acquisition" (as defined
below) shall not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition by (A) an
employee benefit plan (or a trust forming a part thereof) maintained by (i) the
Company or (ii) any corporation or other Person of which a majority of its
voting power or its equity securities or equity interest is owned directly or
indirectly by the Company (a "Company Subsidiary"), (B) the Company or any
Company Subsidiary, or (C) any Person in connection with a "Non-Control
Transaction" (as defined below);
(2) The individuals who, as of January 1, 1998, are members of
the Board of Directors (the "Incumbent Board"), cease for any reason to
constitute at least two-thirds of the Board of Directors; provided, however,
that if the election, or nomination for election by the Company's stockholders,
of any new director was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for purposes of the Plan, be
considered as a member of the Incumbent Board; provided, further, however, that
no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(3) Approval by stockholders of the Company
of:
(A) A merger, consolidation or
reorganization involving the Company, unless
(i) the stockholders of the
Company immediately before such merger, consolidation or reorganization own,
directly or indirectly, immediately following such merger, consolidation or
reorganization, at least seventy-five percent (75%) of the combined voting power
of the outstanding voting securities of the corporation resulting from merger or
consolidation or reorganization (the "Surviving Corporation") in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization,
<PAGE>
(ii) the individuals who were
members of the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or reorganization constitute
at least two-thirds of the members of the board of directors of the Surviving
Corporation, and
(iii)no Person (other than the
Company or any Company Subsidiary, any employee benefit plan (or any trust
forming a part thereof) maintained by the Company, the Surviving Corporation or
any Company's Subsidiary, or any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of twenty percent (20%)
or more of the then outstanding Voting Securities) has Beneficial Ownership of
twenty percent (20%) or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities.
A transaction described in clauses (i) through (iii) shall herein be referred to
as a "Non-Control Transaction;"
(B) A complete liquidation or
dissolution of the Company; or
(C) An agreement for the sale or other
disposition of all or substantially all of the assets of the Company to any
Person (other than a transfer to a Company Subsidiary).
Notwithstanding the foregoing, a Change of Control shall not be
deemed to occur solely because any person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares beneficially owned by the Subject Person;
provided, however, that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of Voting Securities
by the Company, and after such share acquisition by the Company, the Subject
Person becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities beneficially
owned by the Subject Person, then a Change in Control shall occur.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Committee" means a committee, as described in Section 3.1,
appointed by the Board from time to time to administer the Plan and to perform
the functions set forth herein.
2.11 "Company" means EFI Electronics Corporation
2.12 "Director" means a director of the Company.
2.13 "Director Option" means an Option granted pursuant to Section 6.
2.14 "Disability" means:
(a) in the case of an Optionee or Grantee whose employment with
the Company or a Subsidiary is subject to the terms of an employment agreement
between such Optionee or Grantee and the Company or Subsidiary, which employment
agreement includes a definition of "Disability," the term "Disability" as used
in this Plan or any Agreement shall have the meaning set forth in such
employment agreement during the period that such employment agreement remains in
effect; and
<PAGE>
(b) in all other cases, the term "Disability" as used in this
Plan or any Agreement shall mean a physical or mental infirmity which impairs
the Optionee's or Grantee's ability to perform substantially his or her duties
for a period of one hundred eighty (180) consecutive days.
2.15 "Division" means any of the operating units or divisions of the
Company designated as a Division by the Committee.
2.16 "Dividend Equivalent Right" means a right to receive all or some
portion of the cash dividends that are or would be payable with respect to
Shares.
2.17 "Eligible Director" means a director of the Company who is not
an employee of the Company or any subsidiary thereof.
2.18 "Eligible Individual" means any director (other than an Eligible
Director), officer or employee of the Company or a Subsidiary, or any consultant
or advisor who is receiving cash compensation from the Company or a Subsidiary,
designated by the Committee as eligible to receive Options or Awards subject to
the conditions set forth herein.
2.19 "Employee Option" means an Option granted pursuant to Section 5.
2.20 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.21 "Fair Market Value" means, as of any date, the value of a Share
determined as follows:
(i) If the Shares are listed on any established stock exchange
or a national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales
price for such Shares (or the closing bid, if no sales were reported) as quoted
on such system or exchange for the last market trading day prior to the time of
determination as reported in The Wall Street Journal or such other source as the
Committee deems reliable;
(ii) If the Shares are quoted on the NASDAQ System (but not on
the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high and low asked prices for the Shares; or
(iii)In the absence of an established market of the Shares, the
Fair Market Value thereof shall be determined in good faith by the Committee
and, in the case of an Incentive Stock Option, in accordance with Section 422 of
the Code.
2.22 "Grantee" means a person to whom an Award has been granted under
the Plan.
2.23 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
<PAGE>
2.24 "Nonemployee Director" means a director of the Company who is a
'nonemployee director' within the meaning of Rule 16b-3 promulgated under the
Exchange Act.
2.25 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.26 "Option" means a Nonqualified Stock Option, an Incentive Stock
Option, a Director Option, or any or all of them.
2.27 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.28 "Outside Director" means a director of the Company who is an
'outside director' within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.29 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.30 "Performance Awards" means Performance Units, Performance Shares
or either or both of them.
2.31 "Performance Cycle" means the time period specified by the
Committee at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.32 "Performance Objectives" has the meaning set forth in Section
11.
2.33 "Performance Shares" means Shares issued or transferred to an
Eligible Individual under Section 11.
2.34 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 11.
2.35 "Plan" means the EFI Electronics Corporation 1998 Incentive
Plan, as amended and restated from time to time.
2.36 "Pooling Transaction" means an acquisition of the Company in a
transaction which is intended to be treated as a 'pooling of interests' under
generally accepted accounting principles.
2.37 "Restricted Stock" means Shares issued or transferred to an
Eligible Individual pursuant to Section 10.
2.38 "Shares" means the Common Stock of the Company, $0.0001 par
value.
2.39 "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8
hereof.
2.40 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
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2.41 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.
2.42 "Ten-Percent Stockholder" means an Eligible Individual, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.
2.43 "Termination of Employment" means the later of (i) a severance
of the employer-employee relationship with the Company or (ii) the resignation,
removal or termination of an officer or director of the Company.
3. Administration.
3.1 The Committee. The Plan shall be administered by the Committee,
which shall hold meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its meetings. A
quorum shall consist of not fewer than two members of the Committee and a
majority of a quorum may authorize any action. Any decision or determination
reduced to writing and signed by a majority of all of the members of the
Committee shall be as fully effective as if made by a majority vote at a meeting
duly called and held. The Committee shall consist of at least two (2) directors
of the Company and may consist of the entire Board; provided, however, that (A)
if the Committee consists of less than the entire Board, each member shall be a
Nonemployee Director and (B) to the extent necessary for any Option or Award
intended to qualify as performance-based compensation under Section 162(m) of
the Code to so qualify, each member of the Committee, whether or not it consists
of the entire Board, shall be an Outside Director. No member of the Committee
shall be liable for any action, failure to act, determination or interpretation
made in good faith with respect to this Plan or any transaction hereunder,
except for liability arising from his or her own willful misfeasance, gross
negligence or reckless disregard of his or her duties. The Company hereby agrees
to indemnify each member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising in
connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder. Notwithstanding the
foregoing, the Committee shall have no discretion, power or authority with
respect to Director Options granted pursuant to Section 6 to Eligible Directors.
The grant of Director Options to Eligible Directors shall be administered by the
entire Board, which shall have the power and authority to grant Director Options
to Eligible Directors, on such terms and conditions as they may determine, in
their sole discretion, consistent with the provisions of Section 6.
3.2 The Committee Powers. Subject to the express terms and conditions
set forth herein, the Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Employee
Options shall be granted under the Plan and the number of such Employee Options
to be granted and to prescribe the terms and conditions (which need not be
identical) of each such Employee Option, including the purchase price per Share
subject to each Employee Option, and make any amendment or modification to any
Option Agreement consistent with the terms of the Plan;
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(b) select those Eligible Individuals to whom Awards shall be
granted under the Plan and to determine the number of Stock Appreciation Rights,
Performance Awards, Shares of Restricted Stock and/or Dividend Equivalent Rights
to be granted pursuant to each Award, the terms and conditions of each Award,
including the restrictions or Performance Objectives relating to Shares, the
maximum value of each Performance Share and make any amendment or modification
to any Award Agreement consistent with the terms of the Plan;
(c) to construe and interpret the Plan and the Options and
Awards granted hereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the extent
it shall deem necessary or advisable so that the Plan complies with applicable
law including Rule 16b-3 under the Exchange Act and the Code to the extent
applicable, and otherwise to make the Plan fully effective. All decisions and
determinations by the Committee in the exercise of this power shall be final,
binding and conclusive upon the Company, its Subsidiaries, the Optionees and
Grantees, and all other persons having any interest therein;
(d) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee or Grantee on an individual basis without
constituting a Termination of Employment or service for purposes of the Plan;
(e) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(f) generally, to exercise such powers and to perform such acts
as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
4. Stock Subject to the Plan.
4.1 Maximum Shares. The maximum number of Shares that may be made the
subject of Options and Awards granted under the Plan is 750,000; provided,
however, that in the aggregate, not more than one-third of the number of
allotted Shares may be made the subject of Restricted Stock Awards under Section
10 of the Plan; and provided, further, that during the term of the Plan (i) no
Eligible Individual may be granted Options and Awards (other than Awards
described in clause (ii) below) in the aggregate in respect of more than 100,000
Shares per calendar year, (ii) the maximum dollar amount that any Eligible
Individual may receive during the term of the Plan in respect of Performance
Units denominated in dollars may not exceed 100% of the aggregate base salary of
such Eligible Individual and (iii) the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options granted under the Plan become
exercisable for the first time by an Optionee during any calendar year shall not
exceed $100,000. Upon a Change in Capitalization, the maximum number of Shares
referred to in the preceding sentence shall be adjusted in number and kind
pursuant to Section 13. The Company shall reserve for the purposes of the Plan,
out of its authorized but unissued Shares or out of Shares held in the Company's
treasury, or partly out of each, such number of Shares as shall be determined by
the Board.
4.2 Adjustments to Shares. Upon the granting of an Option or an
Award, the number of Shares available under Section 4.1 for the granting of
further Options and Awards shall be reduced as follows:
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(a) In connection with the granting of an Option or an Award
(other than the granting of a Performance Unit denominated in dollars), the
number of Shares shall be reduced by the number of Shares in respect of which
the Option or Award is granted or denominated.
(b) In connection with the granting of a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount equal
to the quotient of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted.
4.3 Effect of Expiration, Cancellation or Termination. Whenever any
outstanding Option or Award or portion thereof expires, is canceled or is
otherwise terminated for any reason without having been exercised or payment
having been made in respect of the entire Option or Award, the Shares allocable
to the expired, canceled or otherwise terminated portion of the Option or Award
may again be the subject of Options or Awards granted hereunder.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select those Eligible
Individuals who will receive Employee Options, and the terms and conditions of
the grant to such Eligible Individuals shall be set forth in an Agreement.
5.2 Purchase Price. The purchase price (which may be not less than
80% of the Fair Market Value on the date of grant) or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Employee Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder).
5.3 Maximum Duration. Employee Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Employee Option,
extend the term thereof, but in no event shall the term as so extended exceed
the maximum term provided for in the preceding sentence.
5.4 Vesting. Subject to Section 7.4, each Employee Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than the
date the Employee Option expires. The Committee may accelerate the
exercisability of any Employee Option or portion thereof at any time.
5.5 Modification. No modification of an Employee Option shall
adversely alter or impair any rights or obligations under the Employee Option
without the Optionee's consent.
<PAGE>
6. Option Grants for Eligible Directors.
6.1 Grant of Options to Eligible Directors.
(a) Upon the conclusion of each regular
annual meeting of the Company's stockholders, each incumbent Eligible Director
who will continue serving as a member of the Board thereafter may receive a
grant of a Nonqualified Stock Option for such number of Shares as the Board
shall determine in its sole discretion; provided, however, that such grant shall
not be made in any calendar year in which the same individual receives an Option
under (b) below.
(b) New Eligible Directors may receive a one-time grant of a
Nonqualified Stock Option for a number of Shares as determined in the sole
discretion of the Board from time to time. Such Option, if any, shall be granted
on the date when such Eligible Director first joins the Board of Directors of
the Company.
6.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Director Option shall
be determined by the Board and set forth in the Agreement; provided, however,
that the purchase price per Share under each Director Option shall not be less
than 100% of the Fair Market Value of a Share on the date of grant.
6.3 Maximum Duration. Director Options granted hereunder shall be for
such term as the Board shall determine, but in no event shall the term exceed
ten years. The Board may, subsequent to the granting of any Director Option,
extend the term thereof, but in no event shall the term as so extended exceed
the maximum term provided for in the preceding sentence.
6.4 Vesting. Subject to Section 7.4, each Director Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Board and set forth in the Agreement. To the
extent not exercised, installments shall accumulate and be exercisable, in whole
or in part, at any time after becoming exercisable, but not later than the date
the Nonemployee Stock Option expires. The Board may accelerate the
exercisability of any Director Option or portion thereof at any time.
6.5 Modification. No modification of a Director Option shall
adversely alter or impair any rights or obligations under the Director Option
without the Optionee's consent.
7. Terms and Conditions Applicable to All Options.
7.1 Transferability. Incentive Stock Options may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised
during the lifetime of the Optionee, only by the Optionee. Other Options or
Awards shall not be transferrable except to the extent provided in the Option or
Award Agreement.
7.2 Method of Exercise.
(a) The exercise of an Option shall be made only by a written
notice delivered in person or by mail to the Secretary of the Company at the
Company's principal executive office, specifying the number of Shares to be
purchased and accompanied by payment therefor and otherwise in accordance with
the Agreement pursuant to which the Option was granted. The purchase price for
any Shares purchased pursuant to the exercise of an Option shall be paid, as
determined by the Committee in its discretion, in either of the following forms
(or any combination thereof): (i) cash or (ii) the transfer of Shares to the
Company upon such terms and conditions as determined by the Committee. In
<PAGE>
addition, both Employee Options and Director Options may be exercised through a
registered broker-dealer pursuant to such cashless exercise procedures (other
than Share withholding) which are, from time to time, deemed acceptable by the
Committee. Any Shares transferred to the Company (or withheld upon exercise) as
payment of the purchase price under an Option shall be valued at their Fair
Market Value on the trading day preceding the date of exercise of such Option.
The Optionee shall deliver the Agreement evidencing the Option to the Secretary
of the Company who shall endorse thereon a notation of such exercise and return
such Agreement to the Optionee. No fractional Shares (or cash in lieu thereof)
shall be issued upon exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest number of whole Shares.
(b) If the Fair Market Value of the Shares with respect to which
the Option is being exercised exceeds the exercise price of such Option, an
Optionee may, instead of exercising an Option as provided in Section 7.2(a),
request that the Committee authorize payment to the Optionee of the difference
between the Fair Market Value of part or all of the Shares which are the subject
of the Option and the exercise price of the Option, such difference to be
determined as of the date the Committee receives the request from the Optionee.
The Committee in its sole discretion may grant or deny such a request from an
Optionee with respect to part or all of the Shares as to which the Option is
then exercisable and, to the extent granted, shall direct the Company to make
the payment to the Optionee either in cash or in Shares or in any combination
thereof, provided, however, that any Share shall be distributed based upon its
Fair Market Value as of the date the Committee received the request from the
Optionee. An Option shall be deemed to have been exercised and shall be canceled
to the extent that the Committee grants a request pursuant to this Section
7.2(b).
7.3 Rights of Optionees. No Optionee shall be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the Company
shall have issued and delivered Shares to the Optionee, and (iii) the Optionee's
name shall have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.
7.4 Effect of Change in Control. In the event of a Change in Control,
all Options outstanding on the date of such Change in Control shall become
immediately and fully exercisable. In addition, to the extent set forth in an
Agreement evidencing the grant of an Employee Option, an Optionee will be
permitted to surrender to the Company for cancellation within sixty (60) days
after such Change in Control any Employee Option or portion of an Employee
Option to the extent not yet exercised and the Optionee will be entitled to
receive a cash payment in an amount equal to the excess, if any, of (x) (A) in
the case of a Nonqualified Stock Option, the greater of (1) the Fair Market
Value, on the date preceding the date of surrender, of the Shares subject to the
Employee Option or portion thereof surrendered or (2) the Adjusted Fair Market
Value of the Shares subject to the Employee Option or portion thereof
surrendered or (B) in the case of an Incentive Stock Option, the Fair Market
Value, on the date preceding the date of surrender, of the Shares subject to the
Employee Option or portion thereof surrendered, over (y) the aggregate purchase
price for such Shares under the Employee Option or portion thereof surrendered.
In the event an Optionee's employment with, or service as a Director of, the
Company is terminated by the Company following a Change in Control, each Option
held by the Optionee that was exercisable as of the date of termination of the
Optionee's employment or service shall remain exercisable for a period ending
not before the earlier of (A) the first anniversary of the termination of the
Optionee's employment or service or (B) the expiration of the stated term of the
Option.
<PAGE>
8. Stock Appreciation Rights. The Committee may in its discretion, either
alone or in connection with the grant of an Employee Option, grant Stock
Appreciation Rights in accordance with the Plan, the terms and conditions of
which shall be set forth in an Agreement. If granted in connection with an
Option, a Stock Appreciation Right shall cover the same Shares covered by the
Option (or such lesser number of Shares as the Committee may determine) and
shall, except as provided in this Section 8, be subject to the same terms and
conditions as the related Option.
8.1 Time of Grant. A Stock Appreciation Right may be granted (i) at
any time if unrelated to an Option, or (ii) if related to an Option, either at
the time of grant, or at any time thereafter during the term of the Option.
8.2 Stock Appreciation Right Related to an
Option.
(a) Subject to Section 8.7, a Stock Appreciation Right granted
in connection with an Option shall be exercisable at such time or times and only
to the extent that the related Options are exercisable, and will not be
transferable except to the extent the related Option may be transferable. A
Stock Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related Incentive Stock
Option Agreement.
(b) Upon the exercise of a Stock Appreciation Right related to
an Option, the Grantee shall be entitled to receive an amount determined by
multiplying (A) the excess of the Fair Market Value of a Share on the date
preceding the date of exercise of such Stock Appreciation Right over the per
Share purchase price under the related Option, by (B) the number of Shares as to
which such Stock Appreciation Right is being exercised. Notwithstanding the
foregoing, the Committee may limit in any manner the amount payable with respect
to any Stock Appreciation Right by including such a limit in the Agreement
evidencing the Stock Appreciation Right at the time it is granted.
(c) Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock Appreciation Right,
the Stock Appreciation Right shall be canceled to the extent of the number of
Shares as to which the Option is exercised or surrendered.
8.3 Stock Appreciation Right Unrelated to an Option. The Committee
may grant to Eligible Individuals Stock Appreciation Rights unrelated to
Options. Stock Appreciation Rights unrelated to Options shall contain such terms
and conditions as to exercisability (subject to Section 8.7), vesting and
duration as the Committee shall determine, but in no event shall they have a
term of greater than ten (10) years. Upon exercise of a Stock Appreciation Right
unrelated to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the Fair Market Value of a Share on the date the Stock Appreciation Right was
granted, by (B) the number of Shares as to which the Stock Appreciation Right is
being exercised. Notwithstanding the foregoing, the Committee may limit in any
manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock Appreciation Right
at the time it is granted.
8.4 Method of Exercise. Stock Appreciation Rights shall be exercised
by a Grantee only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office, specifying
the number of Shares with respect to which the Stock Appreciation Right is being
exercised. If requested by the Committee, the Grantee shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised and the
Agreement evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Grantee.
<PAGE>
8.5 Form of Payment. Payment of the amount determined under Sections
8.2(b) or 8.3 may be made in the discretion of the Committee solely in whole
Shares in a number determined at their Fair Market Value on the date preceding
the date of exercise of the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Shares. If the Committee decides to make full payment in
Shares and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash.
8.6 Modification. No modification of an Award shall adversely alter
or impair any rights or obligations under the Agreement without the Grantee's
consent.
8.7 Effect of Change in Control. In the event of a Change in Control,
all Stock Appreciation Rights shall become immediately and fully exercisable. In
addition, to the extent set forth in an Agreement evidencing the grant of a
Stock Appreciation Right, a Grantee will be entitled to receive a payment from
the Company in cash or stock, in either case, with a value equal to the excess,
if any, of (A) the greater of (x) the Fair Market Value, on the date preceding
the date of exercise, of the underlying Shares subject to the Stock Appreciation
Right or portion thereof exercised and (y) the Adjusted Fair Market Value, on
the date preceding the date of exercise, of the Shares over (B) the aggregate
Fair Market Value, on the date the Stock Appreciation Right was granted, of the
Shares subject to the Stock Appreciation Right or portion thereof exercised. In
the event a Grantee's employment with the Company is terminated by the Company
following a Change in Control each Stock Appreciation Right held by the Grantee
that was exercisable as of the date of termination of the Grantee's employment
shall remain exercisable for a period ending not before the earlier of the first
anniversary of (A) the termination of the Grantee's employment or (B) the
expiration of the stated term of the Stock Appreciation Right.
9. Dividend Equivalent Rights. Dividend Equivalent Rights may be granted
to Eligible Individuals in tandem with an Option or Award. The terms and
conditions applicable to each Dividend Equivalent Right shall be specified in
the Agreement under which the Dividend Equivalent Right is granted. Amounts
payable in respect of Dividend Equivalent Rights may be payable currently or
deferred until the lapsing of restrictions on such Dividend Equivalent Rights or
until the vesting, exercise, payment, settlement or other lapse of restrictions
on the Option or Award to which the Dividend Equivalent Rights relate. In the
event that the amount payable in respect of Dividend Equivalent Rights are to be
deferred, the Committee shall determine whether such amounts are to be held in
cash or reinvested in Shares or deemed (notionally) to be reinvested in Shares.
If amounts payable in respect of Dividend Equivalent Rights are to be held in
cash, there may be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year at a rate per
annum as the Committee, in its discretion, may determine. Dividend Equivalent
Rights may be settled in cash or Shares or a combination thereof, in a single
installment or multiple installments.
10. Restricted Stock.
10.1 Grant. The Committee may grant Awards to Eligible Individuals of
Restricted Stock, which shall be evidenced by an Agreement between the Company
and the Grantee. Each Agreement shall contain such restrictions, terms and
conditions as the Committee may, in its discretion, determine and (without
limiting the generality of the foregoing) such Agreements may require that an
appropriate legend be placed on Share certificates. Awards of Restricted Stock
shall be subject to the terms and provisions set forth below in this Section 10.
<PAGE>
10.2 Rights of Grantee. Shares of Restricted Stock granted pursuant
to an Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted provided that the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of such
Shares. If a Grantee shall fail to execute the Agreement evidencing a Restricted
Stock Award, the appropriate blank stock powers and, in the discretion of the
Committee, an escrow agreement and any other documents which the Committee may
require within the time period prescribed by the Committee at the time the Award
is granted, the Award shall be null and void. At the discretion of the
Committee, Shares issued in connection with a Restricted Stock Award shall be
deposited together with the stock powers with an escrow agent (which may be the
Company) designated by the Committee. Unless the Committee determines otherwise
and as set forth in the Agreement, upon delivery of the Shares to the escrow
agent, the Grantee shall have all of the rights of a stockholder with respect to
such Shares, including the right to vote the Shares and to receive all dividends
or other distributions paid or made with respect to the Shares.
10.3 Non-transferability. Until all restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 10.4, such Shares shall not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated, nor shall they
be delivered to the Grantee.
10.4 Lapse of Restrictions.
(a) Restrictions upon Shares of Restricted Stock awarded
hereunder shall lapse at such time or times and on such terms and conditions as
the Committee may determine. The Agreement evidencing the Award shall set forth
any such restrictions.
(b) Unless the Committee shall determine otherwise at the time
of the grant of an Award of Restricted Stock, the restrictions upon Shares of
Restricted Stock shall lapse upon a Change in Control. The Agreement evidencing
the Award shall set forth any such provisions.
10.5 Modification or Substitution. Subject to the terms of the Plan,
the Committee may modify outstanding Awards of Restricted Stock or accept the
surrender of outstanding Shares of Restricted Stock (to the extent the
restrictions on such Shares have not yet lapsed) and grant new Awards in
substitution for them. Notwithstanding the foregoing, no modification of an
Award shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
10.6 Treatment of Dividends. At the time an Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (i) deferred until the
lapsing of the restrictions imposed upon such Shares and (ii) held by the
Company for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in shares of Stock (which shall be held as
additional Shares of Restricted Stock) or held in cash. If deferred dividends
are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends in respect of Shares of Restricted Stock (whether
held in cash or as additional Shares of Restricted Stock), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Shares in respect of which the deferred dividends were paid, and
any dividends deferred (together with any interest accrued thereon) in respect
of any Shares of Restricted Stock shall be forfeited upon the forfeiture of such
Shares.
<PAGE>
10.7 Delivery of Shares. Upon the lapse of the restrictions on Shares
of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.
11. Performance Awards.
11.1 Performance Objectives.
(a) Performance Objectives for Performance Awards may be
expressed in terms of (i) earnings per Share, (ii) Share price, (iii) pre-tax
profits, (iv) net earnings, (v) return on equity or assets, (vi) revenues, (vii)
EBITDA, (viii) market share or market penetration or (ix) any combination of the
foregoing, and may be determined before or after accounting changes, special
charges, foreign currency effects, acquisitions, divestitures or other
extraordinary events. Performance Objectives may be in respect of the
performance of the Company and its Subsidiaries (which may be on a consolidated
basis), a Subsidiary or a Division. Performance Objectives may be absolute or
relative and may be expressed in terms of a progression within a specified
range. The Performance Objectives with respect to a Performance Cycle shall be
established in writing by the Committee by the earlier of (i) the date on which
a quarter of the Performance Cycle has elapsed or (ii) the date which is ninety
(90) days after the commencement of the Performance Cycle, and in any event
while the performance relating to the Performance Objectives remains,
substantially uncertain.
(b) Prior to the vesting, payment, settlement or lapsing of any
restrictions with respect to any Performance Award made to a Grantee who is
subject to Section 162(m) of the Code, the Committee shall certify in writing
that the applicable Performance Objectives have been satisfied.
11.2 Performance Units. (a) The Committee, in its discretion, may
grant Awards of Performance Units to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Performance Units shall be denominated in Shares or a specified
dollar amount and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle, represent the right to receive payment
as provided in Section 11.2(c) of the specified dollar amount or a percentage
(which may be more than 100%) thereof depending on the level of Performance
Objective attainment; provided, however, that, the Committee may at the time a
Performance Unit is granted specify a maximum amount payable in respect of a
vested Performance Unit. Each Agreement shall specify the number of Performance
Units to which it relates, the Performance Objectives which must be satisfied in
order for the Performance Units to vest and the Performance Cycle within which
such Performance Objectives must be satisfied.
(b) Subject to Sections 11.1(c) and 11.4, a Grantee shall become
vested with respect to the Performance Units to the extent that the Performance
Objectives set forth in the Agreement are satisfied for the Performance Cycle.
(c) Payment to Grantees in respect of vested Performance Units
shall be made as soon as practicable after the last day of the Performance Cycle
to which such Award relates unless the Agreement evidencing the Award provides
for the deferral of payment, in which event the terms and conditions of the
deferral shall be set forth in the Agreement. Subject to Section 11.4, such
payments may be made entirely in Shares valued at their Fair Market Value as of
the last day of the applicable Performance Cycle or such other date specified by
the Committee, entirely in cash, or in such combination of Shares and cash as
the Committee in its discretion shall determine at any time prior to such
payment; provided, however, that if the Committee in its discretion determines
to make such payment entirely or partially in Shares of Restricted Stock, the
Committee must determine the extent to which such payment will be in Shares of
Restricted Stock and the terms of such Restricted Stock at the time the Award is
granted.
<PAGE>
11.3 Performance Shares. The Committee, in its discretion, may grant
Awards of Performance Shares to Eligible Individuals, the terms and conditions
of which shall be set forth in an Agreement between the Company and the Grantee.
Each Agreement may require that an appropriate legend be placed on Share
certificates. Awards of Performance Shares shall be subject to the following
terms and provisions:
(a) The Committee shall provide at the time an Award of
Performance Shares is made the time or times at which the actual Shares
represented by such Award shall be issued in the name of the Grantee; provided,
however, that no Performance Shares shall be issued until the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of such
Performance Shares. If a Grantee shall fail to execute the Agreement evidencing
an Award of Performance Shares, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other documents which
the Committee may require within the time period prescribed by the Committee at
the time the Award is granted, the Award shall be null and void. At the
discretion of the Committee, Shares issued in connection with an Award of
Performance Shares shall be deposited together with the stock powers with an
escrow agent (which may be the Company) designated by the Committee. Except as
restricted by the terms of the Agreement, upon delivery of the Shares to the
escrow agent, the Grantee shall have, in the discretion of the Committee, all of
the rights of a stockholder with respect to such Shares, including the right to
vote the Shares and to receive all dividends or other distributions paid or made
with respect to the Shares.
(b) Until any restrictions upon the Performance Shares awarded
to a Grantee shall have lapsed in the manner set forth in Sections 11.3(c) or
11.4, such Performance Shares shall not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated, nor shall they
be delivered to the Grantee. The Committee may also impose such other
restrictions and conditions on the Performance Shares, if any, as it deems
appropriate.
(c) Subject to Sections 11.1(b) and 11.4, restrictions upon
Performance Shares awarded hereunder shall lapse and such Performance Shares
shall become vested at such time or times and on such terms, conditions and
satisfaction of Performance Objectives as the Committee may, in its discretion,
determine at the time an Award is granted.
(d) At the time the Award of Performance Shares is granted, the
Committee may, in its discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid on actual Shares
represented by such Award which have been issued by the Company to the Grantee
shall be (i) deferred until the lapsing of the restrictions imposed upon such
Performance Shares and (ii) held by the Company for the account of the Grantee
until such time. In the event that dividends are to be deferred, the Committee
shall determine whether such dividends are to be reinvested in shares of Stock
(which shall be held as additional Performance Shares) or held in cash. If
deferred dividends are to be held in cash, there may be credited at the end of
each year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its discretion,
may determine. Payment of deferred dividends in respect of Performance Shares
(whether held in cash or in additional Performance Shares), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Performance Shares in respect of which the deferred dividends
were paid, and any dividends deferred (together with any interest accrued
thereon) in respect of any Performance Shares shall be forfeited upon the
forfeiture of such Performance Shares.
<PAGE>
(e) Upon the lapse of the restrictions on Performance Shares
awarded the Committee shall cause a stock certificate to be delivered to the
Grantee, free of all restrictions hereunder.
11.4 Effect of Change in Control. In the event of a Change in
Control:
(a) With respect to Performance Units, unless otherwise
determined by the Committee, the Grantee shall (i) become vested in all
Performance Units and (ii) be entitled to receive in respect of all Performance
Units which become vested as a result of a Change in Control a cash payment
within ten (10) days after such Change in Control in an amount as determined by
the Committee at the time of the Award of such Performance Unit and as set forth
in the Agreement.
(b) With respect to Performance Shares, unless otherwise
determined by the Committee, restrictions shall lapse immediately on all
Performance Shares.
(c) The Agreements evidencing Performance Shares and Performance
Units shall provide for the treatment of such Awards (or portions thereof) which
do not become vested as the result of a Change in Control, including, but not
limited to, provisions for the adjustment of applicable Performance Objectives.
11.5 Modification or Substitution. Subject to the terms of the Plan,
the Committee may modify outstanding Performance Awards or accept the surrender
of outstanding Performance Awards and grant new Performance Awards in
substitution for them. Notwithstanding the foregoing, no modification of a
Performance Award shall adversely alter or impair any rights or obligations
under the Agreement without the Grantee's consent.
12. Effect of a Termination of Employment; Forfeiture Provisions.
12.1 Termination of Employment. An employment agreement, if
applicable, between an Optionee or Grantee and the Company shall govern with
respect to the terms and conditions applicable to such Option or Award upon a
termination or change in the status of the employment of the Optionee or
Grantee. However, in absence of an employment agreement, the following shall
apply:
(a) The Agreement evidencing the grant of each Option and each
Award shall set forth the terms and conditions applicable to such Option or
Award upon a termination or change in the status of the employment of the
Optionee or Grantee by the Company, a Subsidiary or a Division (including a
termination or change by reason of the sale of a Subsidiary or a Division),
which shall be as the Committee, or the Board in the case of Director Options,
may, in its discretion, determine at the time the Option or Award is granted or
thereafter.
<PAGE>
(b) Unless otherwise determined by the Committee at the time of
grant (and set forth in the Option Agreement) or at a later date, except in the
case of death and Disability as provided in paragraphs 12(c) and 12(d) below, if
an Optionee of an Employee Option granted under the Plan has a Termination of
Employment with the Company or a Subsidiary, any unexercised Employee Option
held by such Optionee shall expire ninety (90) days after the Optionee has a
Termination of Employment for any reason other than a termination for Cause or a
Voluntary Termination (as defined below), and such Employee Option may only be
exercised by the Optionee or his Beneficiary to the extent that the Employee
Option or a portion thereof was exercisable on the date of Termination of
Employment; provided, however, no Employee Option may be exercised after the
expiration date specified for the particular Employee Option in the Employee
Option grant. If the Optionee's Termination of Employment arises as a result of
a termination for Cause or a Voluntary Termination, then, unless the Committee
determines otherwise at the time of the Termination of Employment, any
unexercised Options held by such Optionee shall terminate and expire
concurrently with the Optionee's Termination of Employment. A "Voluntary
Termination" shall mean the voluntary Termination of Employment by an Optionee
prior to five years of total Service (as defined below) as an employee with the
Company and its Subsidiaries. "Service" shall mean total of years for which the
Optionee, prior to or after first becoming an Optionee, has 1,000 hours of
service as an employee or otherwise with, or has served as a director or officer
of, the Company or a Subsidiary.
(c) Unless otherwise determined by the Committee at the time of
grant (and set forth in the Option Agreement) or at a later date, if an Optionee
dies while still employed by the Company, the shares which the Optionee was
entitled to exercise on the date of the Optionee's death under an Option or
Options granted under the Plan may be exercised at any time after the Optionee's
death by the Optionee's beneficiary; provided, however, that no Option may be
exercised after the earlier of: (i) one (1) year after the Optionee's death or
(ii) the expiration date specified for the particular Option in the Option
Agreement.
(d) Unless otherwise determined by the Committee at the time of
grant (and set forth in the Option Agreement) or at a later date, if an Optionee
becomes disabled within the meaning of Section 2.14 hereof, any unexercised
Employee Option held by such disabled Optionee shall expire one (1) year after
the Optionee has a Termination of Employment because of such Disability and such
Option may only be exercised by the Optionee or his Beneficiary to the extent
that the Employee Option or a portion thereof was exercisable on the date of
Termination of Employment because of such Disability; provided, however, no
Employee Option may be exercised after the expiration date specified for the
particular Employee Option in the Employee Option grant.
12.2 Forfeiture Provisions. The Committee may, in its sole
discretion, include in the terms of any Option or Award provisions providing for
(i) the termination of an Option or Award, (ii) forfeiture of the gain on any
Option exercises or realized pursuant to any Award, (iii) the right of the
Company to repurchase any Shares acquired pursuant to an Option or Award, or
(iv) forfeiture of shares of Stock acquired pursuant to an Award (and any gain
realized on the sale of the Shares is subject to repayment to the Company), if
an Optionee or Grantee engages in any activity in competition with any activity
of the Company, or inimical, contrary or harmful to the interests of the
Company, including, but not limited to (i) conduct related to the Optionee's or
Grantee's employment for which either criminal or civil penalties may be sought,
(ii) the commission of an act of fraud or intentional misrepresentation, (iii)
embezzlement or misappropriation or conversion of assets or opportunities of the
Company, (iv) accepting employment with or serving as a consultant, adviser or
in any other capacity to an employer that is in competition with or acting
against the interest of the Company, (v) disclosing or misusing any confidential
or proprietary information of the Company, or (vi) participating in a hostile
takeover attempt of the Company. The Committee may condition any grant on the
potential Optionee's or Grantee's agreement to such terms and conditions.
<PAGE>
13. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to (i) the maximum
number and class of Shares or other stock or securities with respect to which
Options or Awards may be granted under the Plan, (ii) the maximum number and
class of Shares or other stock or securities with respect to which Options or
Awards may be granted to any Eligible Individual during the term of the Plan,
(iii) the number and class of Shares or other stock or securities which are
subject to outstanding Options or Awards granted under the Plan and the purchase
price therefor, if applicable, (iv) the number and class of Shares or other
securities in respect of which Director Options are to be granted under Section
6 and (v) the Performance Objectives.
(b) Any such adjustment in the Shares or other stock or securities
subject to outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a modification
as defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a Grantee of an
Award shall be entitled to, or an Optionee shall be entitled to exercise an
Option with respect to, new, additional or different shares of stock or
securities, such new, additional or different shares shall thereupon be subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Shares subject to the Award or Option, as the case may be,
prior to such Change in Capitalization.
14. Effect of Certain Transactions. Subject to Sections 7.4, 8.7, 10.4(b)
and 11.4 or as otherwise provided in an Agreement, in the event of (i) the
liquidation or dissolution of the Company or (ii) a merger or consolidation of
the Company (a "Transaction"), the Plan and the Options and Awards issued
hereunder shall continue in effect in accordance with their respective terms,
except that following a Transaction each Optionee and Grantee shall be entitled
to receive in respect of each Share subject to any outstanding Options or
Awards, as the case may be, upon exercise of any Option or payment or transfer
in respect of any Award, the same number and kind of stock, securities, cash,
property or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall remain subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Options and Awards prior to such Transaction.
15. Interpretation. Following the required
registration of any equity security of the Company pursuant
to Section 12 of the Exchange Act:
(a) The Plan is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and the Committee shall interpret and administer the provisions
of the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.
(b) Unless otherwise expressly stated in the relevant Agreement, each
Option, Stock Appreciation Right and Performance Award granted under the Plan is
intended to be performance-based compensation within the meaning of Section
162(m)(4)(C) of the Code. The Committee shall not be entitled to exercise any
discretion otherwise authorized hereunder with respect to such Options or Awards
if the ability to exercise such discretion or the exercise of such discretion
itself would cause the compensation attributable to such Options or Awards to
fail to qualify as performance-based compensation.
<PAGE>
16. Pooling Transactions. Notwithstanding anything contained in the Plan
or any Agreement to the contrary, in the event of a Change in Control which is
also intended to constitute a Pooling Transaction, the Committee shall take such
actions, if any, as are specifically recommended by an independent accounting
firm retained by the Company to the extent reasonably necessary in order to
assure that the Pooling Transaction will qualify as such, including but not
limited to (i) deferring the vesting, exercise, payment, settlement or lapsing
of restrictions with respect to any Option or Award, (ii) providing that the
payment or settlement in respect of any Option or Award be made in the form of
cash, Shares or securities of a successor or acquiror of the Company, or a
combination of the foregoing, and (iii) providing for the extension of the term
of any Option or Award to the extent necessary to accommodate the foregoing, but
not beyond the maximum term permitted for any Option or Award.
17. Effective Date, Termination and Amendment of the Plan. The effective
date of this Plan shall be the date the Plan is adopted by the Board, subject
only to the approval by the affirmative vote of the holders of a majority of the
securities of the Company present, or represented, and entitled to vote at a
meeting of stockholders duly held in accordance with the applicable laws of the
State of Utah within twelve (12) months of the adoption of the Plan by the
Board.
No new Awards under the Plan shall be granted after the day preceding the
fifth anniversary of the date of its adoption by the Board and no Option or
Award may be granted thereafter. The Board may sooner terminate the Plan and the
Board may at any time and from time to time amend, modify or suspend the Plan;
provided, however, that: (a) no such amendment, modification, suspension or
termination shall impair or adversely alter any Options or Awards theretofore
granted under the Plan, except with the consent of the Optionee or Grantee, nor
shall any amendment, modification, suspension or termination deprive any
Optionee or Grantee of any Shares which he or she may have acquired through or
as a result of the Plan; and (b) to the extent necessary under applicable law,
no amendment shall be effective unless approved by the stockholders of the
Company in accordance with applicable law.
18. Non-Exclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
19. Limitation of Liability. As illustrative of the limitations of
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(i) give any person any right to be granted an Option or Award other
than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
(iii)limit in any way the right of the Company to
terminate the employment of any person at any time; or
<PAGE>
(iv) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
20. Regulations and Other Approvals; Governing Law.
20.1 Governing Law. Except as to matters of federal law, the Plan and
the rights of all persons claiming hereunder shall be construed and determined
in accordance with the laws of the State of Utah without giving effect to
conflicts of laws principles thereof.
20.2 Applicable Laws. The obligation of the Company to sell or
deliver Shares with respect to Options and Awards granted under the Plan shall
be subject to all applicable laws, rules and regulations, including all
applicable federal and state securities laws, and the obtaining of all such
approvals by governmental agencies as may be deemed necessary or appropriate by
the Committee.
20.3 Rules and Regulations. The Board may make such changes as may be
necessary or appropriate to comply with the rules and regulations of any
government authority, or to obtain for Eligible Individuals granted Incentive
Stock Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.
20.4 Securities Regulations. Each Option and Award is subject to the
requirement that, if at any time the Committee determines, in its discretion,
that the listing, registration or qualification of Shares issuable pursuant to
the Plan is required by any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
20.5 Restrictions on Shares. Notwithstanding anything contained in
the Plan or any Agreement to the contrary, in the event that the disposition of
Shares acquired pursuant to the Plan is not covered by a then current
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent required by the
Securities Act and Rule 144 or other regulations thereunder. The Committee may
require any individual receiving Shares pursuant to an Option or Award granted
under the Plan, as a condition precedent to receipt of such Shares, to represent
and warrant to the Company in writing that the Shares acquired by such
individual are acquired without a view to any distribution thereof and will not
be sold or transferred other than pursuant to an effective registration thereof
under said Act or pursuant to an exemption applicable under the Securities Act
or the rules and regulations promulgated thereunder. The certificates evidencing
any of such Shares shall be appropriately amended to reflect their status as
restricted securities as aforesaid.
21. Miscellaneous.
21.1 Multiple Agreements. The terms of each Option or Award may
differ from other Options or Awards granted under the Plan at the same time, or
at some other time. The Committee may also grant more than one Option or Award
to a given Eligible Individual during the term of the Plan, either in addition
to, or in substitution for, one or more Options or Awards previously granted to
that Eligible Individual.
<PAGE>
21.2 Withholding of Taxes.
(a) At such times as an Optionee or Grantee recognizes taxable
income in connection with the receipt of Shares or cash hereunder (a "Taxable
Event"), the Optionee or Grantee shall pay to the Company an amount equal to the
federal, state and local income taxes and other amounts as may be required by
law to be withheld by the Company in connection with the Taxable Event (the
"Withholding Taxes") prior to the issuance, or release from escrow, of such
Shares or the payment of such cash. The Company shall have the right to deduct
from any payment of cash to an Optionee or Grantee an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee or Grantee may make a written election (the "Tax Election"), which may
be accepted or rejected in the discretion of the Committee, to have withheld a
portion of the Shares then issuable to him or her having an aggregate Fair
Market Value equal to the Withholding Taxes.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.
<PAGE>
EXHIBIT 5
<PAGE>
September 18, 1998
The Board of Directors
of EFI Electronics Corporation
1751 South 4800 West
Salt Lake City, Utah 84104
Re: EFI Electronics Corporation
Registration Statement on Form S-8
Gentlemen:
As counsel to EFI Electronics Corporation, a Delaware corporation (the
"Company"), in connection with the Company's Registration Statement on Form S-8
(the "Registration Statement") to be filed under the Securities Act of 1933, as
amended, for registration of 750,000 shares (the "Shares") of common stock,
$0.0001 par value, of the Company to be offered, sold and issued by the Company
pursuant to the EFI Electronics Corporation 1998 Incentive Plan (the "Plan"), we
have examined the originals or certified, conformed or reproduction copies of
all such records, agreements, instruments and documents as we have deemed
necessary as the basis for the opinion expressed herein. In all such
examinations, we have assumed the genuineness of all signatures on original or
certified copies and the conformity to original or certified copies of all
copies submitted to us as conformed or reproduction copies. As to various
questions of fact relevant to the opinion hereinafter expressed, we have relied
upon certificates of public officials and statements or certificates of officers
or representatives of the Company and others.
Based upon and subject to the foregoing, we are of the opinion that the
Shares, when issued in accordance with the terms and conditions of the Plan and
pursuant to the Registration Statement, will be legally issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Parr Waddoups Brown Gee & Loveless
PARR WADDOUPS BROWN GEE & LOVELESS
<PAGE>
EXHIBIT 23.1
<PAGE>
CONSENT
We have issued our report dated May 15, 1998, accompanying the consolidated
financial statements of EFI Electronics Corporation appearing in the 1998 Annual
Report on Form 10-KSB as of March 31, 1998 and for each of the two years then
ended which is incorporated by reference in this Registration Statement. We
consent to the incorporation by reference in the Registration Statement of the
aforementioned report.
/s/ Grant Thornton LLP
GRANT THORNTON LLP
Salt Lake City, Utah
September 30, 1998
