Filed With the Securities and Exhange Commission on August 7, 2000 Registration
No.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
ARGONAUT GROUP, INC.
(Exact name of issuer as specified in its charter)
DELAWARE 95-4057601
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 MIDDLEFIELD ROAD, MENLO PARK, CA 94025
(Address of Principal Executive Offices) (Zip Code)
ARGONAUT GROUP, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(Full title of the Plan)
JAMES B HALLIDAY Copies to:
Vice President and Treasurer Edmund M. Kaufman, Esq.
Argonaut Group, Inc. Richard C. Wirthlin, Esq.
250 Middlefield Road Irell & Manella LLP
Menlo Park, California 94025 1800 Avenue of the Stars, Ste. 900
Telephone: (650) 858-6600 Los Angeles, California 90067
(Name and address of agent for service) Telephone: (310) 277-1010
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered per Share (1) Price Fee
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Common Stock Issuable 150,000 $14.750 $ 2,212,500 $584.10
upon exercise of options
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(1) Estimated solely for the purpose of calculating the registration fee. The
fee has been calculated pursuant to Rule 457(g) based upon the closing price per
share of the Registrant's Common Stock on the NASDAQ National Market System on
August 1, 2000, a date within 15 days prior to the date of filing of this
Registration Statement.
<PAGE>
EXPLANATORY NOTE
This registration statement on Form S-8 (this "Registration Statement")
registers 150,000 shares of common stock, $0.10 par value per share ("Common
Stock"), of Argonaut Group, Inc. (the "Company") which may be acquired upon the
exercise of stock options granted to Directors of the Company who are not
regular employees.
PART I.
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Plan Annual Information.*
*Information Required by Part I of Form S-8. The document(s) setting forth the
information specified in Part I of this Form S-8 will be sent or given to
participants in the Non-Employee Director Stock Option Plan as specified by Rule
428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act").
These documents and the documents incorporated by reference into this Form S-8
pursuant to Item 3 of Part II of this Registration Statement, taken together,
constitute a prospectus that meets the requirements of Section 10(a) of the
Securities Act and are on file at the Registrant's principal executive offices
and available without charge, upon written or oral request to James B Halliday,
250 Middlefield Road, Menlo Park, California 94025. Telephone requests may be
directed to James B Halliday at (650) 858-6600.
PART II.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The documents listed in (a) through (d) below are incorporated by
reference in this Registration Statement. In addition, all documents
subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
prior to the filing of a post-effective amendment that indicates that all
securities offered have been sold or that deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be part hereof from the date of filing of such
documents:
<PAGE>
(a) The annual report on Form 10-K of the Registrant for the year ended December
31, 1999. The discussion of the Registrant's consolidated operating results on
page 7 of the Form 10-Q of the Registrant for the quarterly period ended March
31, 2000 incorporated herein by reference and the discussion of commitments and
contingencies on page 8 of the Form 10-Q of the Registrant for the quarterly
period ended June 30, 2000 incorporated herein by reference should be read in
conjunction with the audited consolidated financial statements incorporated
herein by reference.
(b) The quarterly report on Forms 10-Q of the Registrant for the quarters
ended March 31, 2000 and June 30, 2000.
(c) All other reports filed by the Registrant pursuant to Section 13(a)
or 15(d) of the Exchange Act since the end of the fiscal year covered by the
annual report referred to in (a) above.
(d) The descriptions of the Registrant's Common Stock which are
contained in the Registrant's registration statements filed under Section 12 of
the Exchange Act, including any amendments or reports filed for the purpose of
updating such descriptions.
Any statement contained herein or in a document incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act which also is incorporated
or deemed to be incorporated herein by reference modifies or supersedes such
prior statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law ("DGCL") provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is or was a director, officer, employee or agent of
the corporation or is or was serving at its request in such capacity in another
corporation or business association, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
<PAGE>
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (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) under Section 174 of the DGCL,
or (iv) for any transaction from which the director derived an improper personal
benefit.
As permitted by Section 102(b)(7) of the DGCL, Article 7 of the
Registrant's Certificate of Incorporation, as amended, provides that, to the
fullest extent permitted by the DGCL, no director of the Registrant shall be
liable to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director.
As permitted by Section 145 of the DGCL, Article 8 of the Registrant's
Certificate of Incorporation, as amended, provides that any person who was or is
involuntarily a party or is threatened to be made a party to or is involuntarily
involved in any action, suit or proceeding by reason of the fact that such
person or a person of whom such person is the legal representative is or was a
director or officer of the Registrant or is or was serving at the request of the
Registrant as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise will
be indemnified and held harmless by the Registrant to the fullest extent
permitted by the DGCL against all expenses, liability and loss reasonably
incurred or suffered by such person in connection therewith.
As permitted by Section 145 of the DGCL, Article 8 of the Registrant's
Bylaws provides that any person who was or is involuntarily a party or is
threatened to be made a party to or is involuntarily involved in any action,
suit or proceeding by reason of the fact that such person or a person of whom
such person is the legal representative is or was a director or officer of the
Registrant or is or was serving at the request of the Registrant as a director
or officer of another corporation, or as its representative in a partnership,
joint venture, trust or other enterprise will be indemnified and held harmless
by the Registrant to the fullest extent permitted by the DGCL against all
expenses, liability and loss reasonably incurred or suffered by such person in
connection therewith.
In addition, the Registrant maintains directors and officers liability
insurance policies.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
5. Legal Opinion of Irell & Manella LLP(1)
23.1 Consent of Independent Public Accountants - Arthur Andersen LLP(1)
23.2 Consent of Irell & Manella LLP (included in legal opinion filed
as Exhibit 5)
<PAGE>
24 Power of Attorney (included on the signature pages filed herewith)
99 Argonaut Group, Inc. Non-Employee Director Stock Option Plan(1)
(1) Filed herewith
Item 9. Undertakings.
a. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act 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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Securities and Exchange Commission (the "Commission") pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective 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
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement.
(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 Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in this 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 Commission, such
indemnification is against public policy as expressed in the Securities Act
of 1933 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 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 be half by the undersigned, thereunto duly
authorized, in the City of Menlo Park, State of California, on August 3, 2000.
ARGONAUT GROUP, INC.
By /s/ Mark E. Watson, III
Mark E. Watson, III
President and Director
(Principal Executive Officer)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of Argonaut Group,
Inc., a Delaware corporation, do hereby constitute and appoint Mark E. Watson,
III and James B Halliday, and each of them, the lawful attorney-in-fact and
agent, with full power and authority to do any and all acts and things and to
execute any and all instruments which said attorney-in-fact and agent determines
to be necessary or advisable or required to enable said corporation to comply
with the Securities Act of 1933, as amended, and any rules or regulations or
requirements of the Commission in connection with this Registration Statement.
Without limiting the generality of the foregoing power and authority, the powers
granted include the power and authority to sign the names of the undersigned
officers and directors in the capacities indicated below to this Registration
Statement, to any and all amendments, both pre-effective and post-effective, and
supplements to this Registration Statement and to any and all instruments or
documents filed as part of or in connection with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby ratifies
and confirms all that said attorney-in-fact and agent shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of August 3, 2000.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons on August
3, 2000 in the capacities indicated.
SIGNATURE TITLE
--------- -----
/s/ Mark E. Watson, III President and Director
------------------------------------
Mark E. Watson, III (Principal Executive Officer)
/s/ James B Halliday Vice President and Treasurer
--------------------------------------------
James B Halliday (Principal Financial and
Accounting Officer)
/s/ Jerrold V. Jerome Director
--------------------------------------------
Jerrold V. Jerome
/s/ Judith R. Nelson Director
--------------------------------------------
Judith R. Nelson
/s/ John R. Power, Jr. Director
--------------------------------------------
John R. Power, Jr.
<PAGE>
SIGNATURE TITLE
/s/ George A. Roberts
--------------------------------------------
George A. Roberts Director
/s/ Gary V. Woods Director
--------------------------------------------
Gary V. Woods
<PAGE>
LIST OF EXHIBITS
-------------------------- ---------------------------------------------
EXHIBIT
NUMBER DESCRIPTION
-------------------------- ---------------------------------------------
-------------------------- ---------------------------------------------
5 Legal Opinion of Irell & Manella LLP(1)
-------------------------- ---------------------------------------------
-------------------------- ---------------------------------------------
23.1 Consent of Independent Public Accountants -
Arthur Andersen LLP(1)
-------------------------- ---------------------------------------------
-------------------------- ---------------------------------------------
23.2 Consent of Irell & Manella LLP (included in
legal opinion filed as Exhibit 5)
-------------------------- ---------------------------------------------
-------------------------- ---------------------------------------------
24 Power of Attorney (included on the signature
pages filed herewith)
-------------------------- ---------------------------------------------
-------------------------- ---------------------------------------------
99 Argonaut Group, Inc. Non-Employee Director
Stock Option Plan(1)
-------------------------- ---------------------------------------------
(1) Filed herewith
<PAGE>
EXHIBIT 5
LEGAL OPINION OF IRELL & MANELLA LLP
[LETTERHEAD OF IRELL & MANELLA LLP]
August 3, 2000
Argonaut Group, Inc.
250 Middlefield Road
Menlo Park, California 94025
Ladies and Gentlemen:
We have acted as counsel for Argonaut Group, Inc., a Delaware
corporation (the "Company"), in connection with the proposed filing with the
Securities and Exchange Commission expected to be made on or about August 7,
2000 under the Securities Act of 1933, as amended, of a Registration Statement
on Form S-8 (the "Registration Statement") for the purpose of registering
150,000 shares of the Company's Common Stock, par value $0.10 per share (the
"Shares").
As your counsel in connection with this transaction, we have examined
such matters and documents as we have deemed necessary or relevant as a basis
for this opinion.
Based on these examinations, it is our opinion that the Shares, when
issued and paid for in the manner referred to in the Registration Statement,
will be legally and validly issued, fully-paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Irell & Manella LLP
Irell & Manella LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 of our report dated January
21, 2000, incorporated by reference in Argonaut Group, Inc.'s Form 10-K for the
year ended December 31, 1999, and to all references to our firm included in this
Registration Statement.
/s/ Arthur Andersen LLP
San Francisco, California
August 3, 2000
<PAGE>
EXHIBIT 99
ARGONAUT GROUP, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose.
The purpose of this Non-Employee Director Stock Option Plan (the
"Plan") of Argonaut Group, Inc., a Delaware corporation (the "Company"), is to
attract and retain qualified and competent persons to serve as members of the
board of directors of the Company by providing a means whereby such persons may
acquire stock ownership in the Company. The Plan will provide a means whereby
such directors may purchase shares of the Common Stock of the Company pursuant
to options which are not "incentive stock options" under Section 422 of the
Internal Revenue Code, as amended (the "Code").
2. Administration.
The Plan shall be administered by the Board of Directors of the Company
(the "Board of Directors") or by a Committee selected by the Board of Directors
consisting of two or more persons, to whom administration of the Plan has been
duly delegated (the "Committee"). Any action of the Board of Directors or the
Committee with respect to administration of the Plan shall be taken by a
majority vote or written consent of its members.
Subject to the provisions of the Plan, the Board of Directors or
Committee shall have authority (i) to construe and interpret the Plan, (ii) to
define the terms used therein, (iii) to prescribe, amend and rescind rules and
regulations relating to the Plan, and (iv) to make all other determinations
necessary or advisable for the administration of the Plan. All determinations
and interpretations made by the Board of Directors or Committee shall be binding
and conclusive on all participants in the Plan and their legal representatives
and beneficiaries.
The Board of Directors and the Committee shall have no discretion with
respect to the selection of directors to receive options, the number of shares
subject to the Plan or to each option granted hereunder, or the purchase price
for shares subject to option grants hereunder. The Board of Directors and the
Committee shall have no authority (absent stockholder approval) to materially
increase benefits under the Plan.
3. Shares Subject to the Plan.
Subject to adjustment as provided in paragraph 15 hereof, the shares to
be offered under the Plan shall consist of the Company's authorized but unissued
Common Stock, and the aggregate amount of such stock which may be issued upon
exercise of all options under the Plan shall not exceed 150,000 of such shares.
If any option granted under the Plan shall expire or terminate for any reason,
without having been exercised in full, the unpurchased shares subject thereto
shall again be available for options to be granted under the Plan.
4. Eligibility and Participation.
Only Directors of the Company who are not regular employees of the
Company ("Non-Employee Directors") are eligible to participate in the Plan.
5. Schedule of Option Grants.
Subject to paragraph 15, grants under the Plan shall be made in
accordance with the following schedule:
(a) Initial Grants. Each Non-Employee Director who is serving
on the date on which the stockholders of this Company approve this Plan shall
receive an option to purchase 3,000 shares of Common Stock on such date.
(b) Annual Grants. Immediately after each annual meeting of
stockholders of the Company (beginning with the Company's 2001 annual meeting),
each Non-Employee Director who is in office at such time shall be granted an
option to purchase 3,000 shares of Common Stock.
(c) Grants to New Non-Employee Directors. Upon the appointment
or election to the Board of Directors of a Non-Employee Director who was not
previously a member of the Board of Directors, such Non-Employee Director shall
be granted an option to purchase 3,000 shares of Common Stock on the date of
appointment or election; provided, however, a Non-Employee Director who is first
made a member of the Board of Directors in connection with the vote of
stockholders of the Company at its annual meeting shall not be entitled to
receive the grant described in this subparagraph (c).
6. Duration of Options.
Each option and all rights associated therewith shall expire ten (10)
years after the date on which such option is granted, and shall be subject to
earlier termination as provided herein.
7. Purchase Price.
The purchase price of the stock covered by each option shall be equal
to one hundred percent (100%) of the fair market value of such stock on the date
the option is granted as determined in paragraph 9. The purchase price of the
shares upon exercise of an option shall be paid in full at the time of exercise
(i) in cash or by certified, cashier's or personal check payable to the order of
the Company or (ii) by delivery of shares of Common Stock of the Company already
owned by, and in the possession of the option holder (subject to any required
holding period imposed by the Board of Directors or the Committee), or any
combination thereof. Shares of Common Stock used to satisfy the exercise price
of an option shall be valued at their fair market value determined (in
accordance with paragraph 9 hereof) as of the close of business on the date of
exercise (or if such date is not a business day, as of the close of the business
day immediately preceding such date).
8. Exercise of Options.
Subject to the other provisions of this Plan, each option granted under
this Plan shall become vested and exercisable one year after the date of grant;
provided, however, upon the occurrence of a Change of Control (as defined
below), each option shall become immediately vested and exercisable. No option
may be exercised for a fraction of a share and no partial exercise of any option
may be for less than one hundred (100) shares.
For purposes of this Plan, "Change of Control" shall mean the
occurrence of any of the following:
(i) Any "Person" or "Group" (as such terms are defined in Section 13(d)
of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations promulgated thereunder) is or becomes the "Beneficial Owner" (within
the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company, or of any entity resulting from a merger or
consolidation involving the Company, representing more than fifty percent (50%)
of the combined voting power of the then outstanding securities of the Company
or such entity.
(ii) The individuals who, as of the date that this Plan is approved by
the stockholders of the Company, are members of the Board of Directors (the
"Existing Directors"), cease, for any reason, to constitute more than fifty
percent (50%) of the number of authorized directors of the Company as determined
in the manner prescribed in the Company's Certificate of Incorporation and
Bylaws; 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 fifty percent (50%) of the Existing Directors, such new director shall be
considered an Existing Director; provided further, however, that no individual
shall be considered an Existing Director 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 by or on behalf of anyone other than the
Board (a "Proxy Contest"), including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest.
(iii) The consummation of (x) a merger, consolidation or reorganization
to which the Company is a party, whether or not the Company is the Person
surviving or resulting therefrom, or (y) a sale, assignment, lease, conveyance
or other disposition of all or substantially all of the assets of the Company,
in one transaction or a series of related transactions, to any Person other than
the Company, where any such transaction or series of related transactions as is
referred to in clause (x) or clause (y) above in this subparagraph (iii) (a
"Transaction") does not otherwise result in a "Change in Control" pursuant to
subparagraph (i) of this definition of "Change in Control"; provided, however,
that no such Transaction shall constitute a "Change in Control" under this
subparagraph (iii) if the Persons who were the stockholders of the Company
immediately before the consummation of such Transaction are the Beneficial
Owners, immediately following the consummation of such Transaction, of fifty
percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Person surviving or resulting from any merger,
consolidation or reorganization referred to in clause (x) above in this
subparagraph (iii) or the Person to whom the assets of the Company are sold,
assigned, leased, conveyed or disposed of in any transaction or series of
related transactions referred in clause (y) above in this subparagraph (iii).
9. Fair Market Value of Common Stock.
The fair market value of a share of Common Stock of the Company shall
be determined for purposes of the Plan by reference to the closing price on the
principal stock exchange on which such shares are then listed or, if such shares
are not then listed on an exchange, by reference to the closing price (if a
National Market Issue) or the mean between the bid and asked price (if other
over-the-counter issue) of a share as supplied by the National Association of
Securities Dealers through NASDAQ (or its successor in function), in each case
as reported by The Wall Street Journal, for the date on which the option is
granted or exercised, or if such date is not a business day, for the business
day immediately preceding such date (or, if for any reason no such price is
available, in such other manner as the Board of Directors or the Committee may
deem appropriate to reflect the then fair market value thereof).
10. Withholding Tax.
Upon the exercise of options, the Company shall have the right to
require the participant to pay the Company the amount of any taxes which the
Company may be required to withhold (if any) with respect to such shares.
11. Nontransferability.
An option granted under the Plan shall, by its terms, be
non-transferable by the option holder, either voluntarily or by operation of
law, otherwise than by will or the laws of descent and distribution, and shall
be exercisable during option holder's lifetime only by the option holder,
regardless of any community property interest therein of the spouse of the
option holder, or such spouse's successors in interest. If the spouse of the
option holder shall have acquired a community property interest in such option,
the option holder, or the option holder's permitted successors in interest, may
exercise the option on behalf of the spouse of the option holder or such
spouse's successors in interest.
12. Holding of Stock After Exercise of Option.
At the discretion of the Board of Directors or Committee, any option
may provide that the option holder, by accepting such option, represents and
agrees, for the option holder and the option holder's permitted transferees (by
will or the laws of descent and distribution), that none of the shares purchased
upon exercise of the option will be acquired with a view to any sale, transfer
or distribution of said shares in violation of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder, or any applicable
state "blue sky" laws, and the person entitled to exercise the same shall
furnish evidence satisfactory to the Company (including a written and signed
representation) to that effect in form and substance satisfactory to the
Company, including an indemnification of the Company in the event of any
violation of the Securities Act of 1933 or state blue sky law by such person.
13. Termination of Status as Non-Employee Director.
If an option holder ceases to be a Non-Employee Director for any reason
any unvested options held by such option holder shall immediately become void
and of no further force or effect. Any options which are vested as of the date
of cessation ("Termination Date") shall be exercisable for a period of three (3)
months after the Termination Date to the extent exercisable on the Termination
Date and shall thereafter expire and be void and of no further force or effect;
provided, however, where such cessation occurs as a result of the option
holder's death or permanent and total disability (within the meaning of Section
22(e)(3) of the Code), the vested portion of the option shall be exercisable for
one year following the Termination Date; provided, further, in no event shall
any options be exercisable after the scheduled expiration date of such options.
14. Privileges of Stock Ownership.
No person entitled to exercise any option granted under the Plan shall
have any of the rights or privileges of a stockholder of the Company in respect
of any shares of stock issuable upon exercise of such option until certificates
representing such shares shall have been issued and delivered. No shares shall
be issued and delivered upon the exercise of any option unless and until there
shall have been full compliance with all applicable requirements of the
Securities Act of 1933 (whether by registration or satisfaction of exemption
conditions), all applicable listing requirements of any national securities
exchange on which shares of the same class are then listed and any other
requirements of law or of any regulatory bodies having jurisdiction over such
issuance and delivery.
15. Adjustments.
If the outstanding shares of the Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an appropriate and proportionate adjustment shall be made
in the maximum number and kind of shares as to which options may be granted
under this Plan pursuant to paragraph 3 and the numbers of options to be granted
pursuant to paragraph 5. A corresponding adjustment changing the number or kind
of shares allocated to unexercised options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding options shall be made without change in the
aggregate purchase price applicable to the unexercised portion of the option but
with a corresponding adjustment in the price for each shares or other unit of
any security covered by the option.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all the property or more than eighty percent
(80%) of the then outstanding stock of the Company to another corporation, the
Plan shall terminate, and all options theretofore granted hereunder shall
terminate.
Notwithstanding the foregoing, the Board of Directors or the Committee
may provide in writing in connection with such transaction for any or all of the
following alternatives (separately or in combinations): (i) for the options
theretofore granted to become immediately exercisable notwithstanding the
provisions of paragraph 8; (ii) for the assumption by the successor corporation
of the options theretofore granted or the substitution by such corporation for
such options of new options covering the stock of the successor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and prices; (iii) for the continuance of the Plan by such
successor corporation in which event the Plan and the options theretofore
granted shall continue in the manner and under the terms so provided; or (iv)
for the payment in cash or stock in lieu of and in complete satisfaction of such
options.
Adjustments under this paragraph 15 shall be made by the Board of
Directors or Committee, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of stock shall be issued under the Plan on any such
adjustment.
16. Amendment and Termination of Plan.
The Board of Directors or the Committee may at any time suspend or
terminate the Plan. The Board of Directors or the Committee may also at any time
amend or revise the terms of the Plan, provided that no such amendment or
revision shall, unless permitted under the provisions of paragraph 15 or unless
appropriate stockholder approval of such amendment or revision is obtained, (i)
increase the maximum number of shares in the aggregate which may be sold
pursuant to options granted under the Plan pursuant to paragraph 3, (ii) permit
the granting of options to anyone other than as provided in paragraph 4, (iii)
increase the number of options to be granted pursuant to paragraph 5, (iv)
increase the maximum term of stock options provided for in paragraph 6, or (v)
change the purchase price of stock options set forth in paragraph 7.
17. Effective Date of Plan.
Effectiveness of the Plan is subject to approval by the holders of the
outstanding voting stock of the Company. The Plan shall be deemed approved by
the holders of the outstanding voting stock of the Company by the affirmative
vote of the holders of a majority of the voting shares of the Company
represented and voting at a duly held meeting at which a quorum is present.
