As filed with the Securities and Exchange Commission on
July 16, 1994 - Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DONNELLY CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-0493110
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
414 East 40th Street, Holland, Michigan 49423
(Address of Principal Executive Offices) (Zip Code)
Donnelly Corporation Non-Employee Director Stock Option Plan
(Full Title of the Plan)
James A. Knister, 414 East 40th Street, Holland, Michigan 49423
(Name and address of agent for service)
Copies of Communications to:
William J. Lawrence III
Varnum, Riddering, Schmidt & Howlett
P.O. Box 352
Grand Rapids, Michigan 49501-0352
(616) 336-6000
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
To be To be Price Per Offering Registration
Registered Registered Share (2) Price Fee
Class A 50,000 $17.0625 $853,125.00 $295.00
Common Stockshares (1)
($.10 Par Value)
(1) Represents the number of shares of Class A Common Stock authorized for
issuance under the Donnelly Corporation Non-Employee Director Stock
Option Plan (the "Plan"). This Registration Statement covers such
indeterminable additional number of shares as may be issuable under the
Plan by reason of adjustments in the number of shares covered thereby
as described in the Prospectus.
(2) For the purpose of computing the registration fee only, the price shown
is based upon the price of $17.0625 per share, the average ofthe high
and low sales prices for the Common Stock of Donnelly Corporation on the
American Stock Exchange on September 16, 1994, 457(h).
Pursuant to Rule 416(a) of the General Rules and Regulations under the
Securities Act of 1933, this Registration Statement shall cover such
additional securities as may be offered or issued to prevent dilution
resulting from stock splits, stock dividends or similar transactions.
DONNELLY CORPORATION
(The "Company")
50,000 Shares
Class A Common Stock
(Par Value $.10 Per Share)
DONNELLY CORPORATION
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(The "Plan")
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
These shares are to be offered from time to time by the Company pursuant
to stock options granted to non-employee directors of the Company under
the terms of the Plan described in this Prospectus. The prices for the
shares, as specified in the option agreements, are to be not the shares
on the date of each grant, as shown by transactions reported by the
American Stock Exchange ("AMEX"). The Company's Common Stock is traded
on the AMEX and reported under the symbol DON.
The directors who purchase shares under the Plan may not reoffer or
resell such shares under this Prospectus. Any reoffers or resales by any
such persons must remain in compliance with the registration requirements
of the Securities Act of 1933 or pursuant to an application exemption from
those requirements.
This document, dated September 16, 1994, constitutes part of a
prospectus covering securities that have been registered under the Securities
Act of 1933.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THE DELIVERY OF THIS PROSPECTUS AT ANYTIME DOES
NOT IMPLY THAT INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENTTO THE
DATE HEREOF.
TABLE OF CONTENTS
Page
The Company . . . . . . . . . . . . . . . . . . . . . . . 1
The Plan . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose . . . . . . . . . . . . . . . . . . . . . . . 1
Eligibility and Participation . . . . . . . . . . . . 1
Amendment and Termination of Plan . . . . . . . . . . 1
Securities Subject to Option Grants . . . . . . . . . 1
Transferability of Options and Common Stock . . . . . 2
Merger or Consolidation . . . . . . . . . . . . . . . 2
The Grant of Options and Purchase of Common Stock. . . . . 2
The Grant of Stock Options. . . . . . . . . . . . . . 2
When Options May Be Exercised . . . . . . . . . . . . 2
Termination of Director Status; Disability;
Death; Removal . . . . . . . . . . . . . . . . . . . 3
Tax Effects of Participation in the Plan . . . . . . . . . 3
Description of Capital Stock . . . . . . . . . . . . . . . 4
Class A Common Stock and Class B Common Stock . . . . 4
Voting Rights. . . . . . . . . . . . . . . . . . 4
Dividends and Distributions. . . . . . . . . . . 4
Conversion . . . . . . . . . . . . . . . . . . . 4
Transferability. . . . . . . . . . . . . . . . . 4
Future Issuances of Class B Common Stock;
Status of Class B Common Stock Upon Conversion 4
Transfer Agent. . . . . . . . . . . . . . . . . . . . 5
Series Preferred Stock. . . . . . . . . . . . . . . . 5
7.5 percent Preferred Stock . . . . . . . . . . . . . 5
General . . . . . . . . . . . . . . . . . . . . . . . 5
Appointment and Election of Directors . . . . . 5
Board of Directors' Consideration and Approval of
Tender Offers, Mergers or Consolidations . 5
Two-Thirds Majority Required to Merge, Dissolve
or Liquidate . . . . . . . . . . . . . . . . . 6
Michigan Fair Price Provisions . . . . . . . . . 6
Michigan Shareholder Equity Provisions . . . . . 6
Updating Information . . . . . . . . . . . . . . . . . . . 6
Available Information Regarding the Company and the Plan . 6
THE COMPANY
Donnelly Corporation, a Michigan corporation (the "Company"), is
offering shares of its Class A Common Stock, par value $.10 per share
("Common Stock"), to recipients of stock options granted under the
terms of the Donnelly Corporation Non-Employee Director Stock Option Plan
(the "Plan"). The Company is a manufacturing company; its principal
executive offices are located at 414 East 40th Street, Holland,
49423; telephone number (616) 786-6022. Participants may obtain additional
information about the Plan by contacting the Company at the above address or
telephone number.
THE PLAN
The Plan provides for the granting of options to non-employee directors
of the Company to purchase, in the aggregate, not more than 50,000 shares of
Common Stock of the Company. The Plan does not qualify under Section 401(a)
of the Internal Revenue Code as a qualified pension, profit sharing or stock
bonus trust, and the Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974. The Plan was adopted by the Board
of Directors of the Company on August 20, 1993, and was approved by its
shareholders on October 29, 1993.
Purpose
The purpose of the Plan is to encourage stock ownership by non-employee
directors of the Company, to provide them with additional incentive to manage
the Company effectively and to contribute to its success, and to provide a
form of compensation that will attract and retain highly qualified individuals
to serve as members of the Board of Directors of the Company.
Eligibility and Participation
Directors of the Company who are neither contractual nor common law
employees of the Company or any of its subsidiaries will receive options
under the Plan. During the term of the Plan, on the second Wednesday of each
August, each person entitled to participate in the Plan will be granted an
option to purchase 500 shares of the Company's Common Stock. Options were
first granted under the Plan on October 29, 1993. Optionees may hold more
than one option but only on the terms and subject to the restrictions in the
Plan.
Amendment and Termination of Plan
The Board of Directors of the Company may, insofar as permitted by law,
amend or terminate the Plan with respect to shares not subject to option at
the time of amendment or termination. However, the Plan may not be amended
without shareholder approval if the amendment would increase the maximum
number of shares that may be issued under the Plan, increase the maximum
number of shares that may be optioned to any one non-employee director,
materially increase the benefits accruing to option holders under the Plan,
decrease the price at which options may be granted, or permit the granting of
options under the Plan after October 29, 2003. In addition, the Board of
Directors may not amend those portions of the Plan, more than once every six
months, that establish: (1) the date on which options are to be granted; (2)
the number of shares subject to each option; (3) the option price; or
(4) the eligibility requirements for participation in the Plan. Unless
earlier terminated by the Board of Directors, the Plan will terminate on
October 29, 2003.
Securities Subject to Option Grants
The Plan authorizes the issuance of 50,000 shares of the Company's Common
Stock, par value $.10 per share, under the terms of the Plan. (Please refer
to "Description of Capital Stock" below). The Plan provides for an equitable
adjustment in the number and price of shares of Common Stock covered by
options in the event the outstanding shares of Common Stock are increased or
decreased due to any combination of shares, stock dividends or similar
changes.
Transferability of Options and Common Stock
Options granted under the terms of the Plan may be transferred only by
will, according to the laws of descent and distribution, or under Plan
provisions relating to termination of service as a director. Options may
be exercised only by an optionee during his or her lifetime. The Company may
impose such restrictions on shares acquired pursuant to the exercise of an
option as it deems advisable, including, without limitation, restrictions
under federal and state securities laws.
Merger or Consolidation
The Plan provides that if the Company is the surviving corporation in any
merger or consolidation, or if the Company is merged into a wholly-owned
subsidiary solely for purposes of changing the Company's state
of incorporation, each outstanding option will pertain to the securities
to which a holder of the number of shares of stock subject to the option
would have been entitled. The Plan provides also that upon dissolution or
liquidation of the Company, or in the event of a merger or consolidation in
which the Company is not the surviving entity, outstanding options under the
Plan will terminate. However, optionees will have the right, immediately prior
to such dissolution, liquidation, merger, or consolidation, to exercise any
unexercised options, in whole or in part.
THE GRANT OF OPTIONS AND PURCHASE OF COMMON STOCK
The Grant of Stock Options
Options granted under the Plan will not qualify as incentive stock options
as defined in Section 422 of the Internal Revenue Code of 1986, as amended.
Each option is evidenced by a written agreement, approved by the Company,
containing such terms and conditions as are included in the Plan. In
consideration of the grant of an option, the recipient agrees to continue to
serve as a director of the Company if nominated and elected to serve as a
director by the Company's shareholders. Notwithstanding this requirement,
nothing contained in the Plan or any agreement executed pursuant to the Plan
will impose upon the Company, its Board of Directors, or its shareholders,
any obligation to retain an optionee as a director for any period.
Each option agreement will state the per share purchase price at which a
share of Common Stock may be purchased. The option price must be 100 percent
of the fair market value of the shares on the date an option is granted.
The Plan provides that the fair market value per share of Common Stock will be
the closing price of such stock on an established stock exchange or exchanges
if so listed on the day the option is granted or if no sale of shares was
made on any stock exchange that day, on the preceding day there was a sale of
shares. Otherwise, if traded over the counter, the fair market value per
share shall be the closing price on the national market list, as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") on the date the option is granted, or if no sale of shares is
reflected in NASDAQ on that day, on the next preceding day in which there was
a sale of shares reflected in NASDAQ.
The option price for each share purchased pursuant to the exercise of an
option is payable in full upon exercise, and must be paid in cash, by
tendering previously acquired shares of Common Stock or a combination
of cash and previously acquired Common Stock.
When Options May Be Exercised
The term of each option granted under the Plan is ten years from the date
of grant. No option may be exercisable in whole or in part prior to the first
anniversary of the date of grant of the option except with respect
to dissolution, liquidation, merger, or consolidation of the Company or with
respect to a change in control which includes: any person becoming the
beneficial owner of securities of the Company representing 20 percent or more of
the combined voting power of the Company's then outstanding securities
without prior approval of at least two-thirds of the members of the Board of
Directors in office immediately prior to such person obtaining such
percentage interest; the Company becoming a party to a merger, consolidation,
sale of assets or other reorganization, or a proxy contest, as a consequence
of which members of the Board in office immediately prior to such transaction
or event constitute less than a majority of the Board thereafter; or any
period of two consecutive years where individuals who at the beginning of
such period constituted the Board cease for any reason to constitute at least a
majority of the Board. After the first anniversary of the date of grant of
the option, an option may be exercised at any time and from time to time
during the term of the option upon written notice to the Company of the
intent to exercise the option, as to any or all of the shares covered by the
option; however, an option may not be exercised with respect to less than 100
shares, unless the remaining shares covered by an option are fewer than
100 shares. Options may be exercised in any order regardless of the date
of grant or the existence of any other outstanding stock option.
Termination of Director Status; Disability; Death; Removal
If an optionee ceases to serve the Company as a non-employee director
for a reason other than death, disability, or removal from office, his or her
options will terminate as follows: for a non-employee director who
has served for less than five years, all exercisable options terminate as of
the 90th day following the date of the optionee's cessation of service and
options not exercisable as of the date of optionee's cessation of service will
terminate 90 days after they become exercisable; for a non-employee director
who has served for five or more years but less than ten years, all options
terminate one year following the date of the optionee's cesseation of
service; for a non-employee director who has served for ten or more years,
all options terminate two years following the date of the optionee's
cessation of service.
Upon termination of service as a non-employee director on account of
physical disability, options remain exercisable, subject to prior expiration
according to its terms and other limitations imposed by the Plan, for a
period of two years following the optionee's cessation of service as a
non-employee director of the Company.
In the event of an optionee's death while serving as anon-employee
director, any outstanding option may thereafter be exercised by the personal
representative of the optionee's estate or by any person who acquired the
options by bequest or inheritance during the shorter of the term of the
option or two full years from the death of the optionee. An option will be
exercisable only to the extent it was exercisable at the date of death.
Upon termination of service by removal or requested resignation, all
exercisable options terminate as of the 90th day following the date of
cessation of service, and options not exercisable at the date of cessation of
service expire 90 days after they become exercisable.
TAX EFFECTS OF PARTICIPATION IN THE PLAN
The following discussion of the federal income tax consequences with
respect to the grant and exercise of options under the Plan is based on
management's understanding of the federal income tax laws in effect on
the date of this Prospectus.
An optionee will not recognize taxable income at the time an option is
granted under the Plan unless the option has a readily ascertainable market
value at the time of grant. Management understands that options
granted under the Plan do not have a readily ascertainable market value;
therefore, income will not be recognized by an optionee before the time of
exercise of an option. The difference between the fair market value of the
shares at the time an option is exercised and the option price generally will
be treated as ordinary income to the optionee. The Company is entitled to a
deduction equal to the amount of the optionee's ordinary income.
Tax consequences to an optionee will arise again at the time the shares
of Common Stock are sold. In general, if the shares have been held for more
than one year, the gain or loss will be treated as long term capital
gain or loss. Otherwise, the gain or loss will be treated as short-term
capital gain or loss. The amount of any gain or loss will be calculated
under the general principles for determining gain and loss, and will equal the
difference between the amount realized in the sale and the tax basis in the
shares of Common Stock. The tax basis will equal the cost of the shares
(the option price paid) plus any income recognized upon exercise of the
option.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 30,000,000 shares of
Class A Common Stock, $.10 par value per share; 15,000,000 shares of Class B
Common Stock, $.10 par value per share; 1,000,000 shares of Series Preferred
Stock, no par value; and 250,000 shares of 7.5 percent Preferred Stock,
$10 par value per share.
Class A Common Stock and Class B Common Stock
All shares of Class A Common Stock and Class B Common Stock currently
outstanding are, and the shares of Class A Common Stock being sold by the
Company under the terms and conditions of the Plan will be, fully paid and non-
assessable, not subject to redemption and without preemptive orother rights
to subscribe for or purchase any proportionate part of any new or additional
issues of stock of any class or of securities convertible into stock of any
class.
Voting Rights. Holders of shares of Class A Common Stock are entitled to
one vote per share on all matters submitted to shareholders. Holders of shares
of Class A Common Stock, as a class, are also entitled to elect one quarter
of the Company's directors (rounded, if necessary, to the nearest whole number
and rounded up if one quarter of the directors equals a number falling
exactly between two whole numbers) to be elected at each meeting held for
the election of directors. Holders of shares of Class B Common Stock are
entitled to ten votes per share on all matters submitted shareholders, except
that they are not entitled to vote in the election of the directors which the
holders of Class A Common Stock are entitled to elect. Holders of shares of
Class B Common Stock elect, as a class (with any Preferred Stock entitled to
vote), the directors not elected by the shares of Class A Common Stock.
Holders of shares of Class B Common Stock have cumulative voting rights
in the election directors. Both the Class A Common Stock and the Class B
Common Stock are entitled to vote separately as a class on any amendments to
the Company's Articles of Incorporation that alter the powers,
preferences or rights of the respective class so as to affect them adversely
and with respect to such other matters as may require class votes under the
Michigan Business Corporation Act.
Dividends and Distributions. Dividends on Class A Common Stock and
Class B Common Stock will be paid if, as and when declared out of funds
legally available therefor. If cash dividends are declared, the
amount paid on each share of Class A Common Stock must be equal to the
combined cash dividends paid to the holder of each share of Class B Common
Stock (i) on that stock and (ii) on the related Donnelly Export
Corporation common stock. (The shares of common stock of Donnelly Export
Corporation are held entirely by the holders of the Company's Class B Common
Stock.) Otherwise, Class A Common Stock and Class B
Common Stock rank equally, including in distributions paid in partial or
complete liquidation of the Company. The Board may declare and pay a stock
dividend only of Class A Common Stock on Class A Common Stock
and only of Class B Common Stock on Class B Common Stock. If either such
class receives a stock dividend,the other class must also receive a
comparable stock dividend.
Conversion. The Class A Common Stock is not convertible into shares of
any other equity security of the Company. Holders of Class B Common Stock
may elect at any time to convert any or all of such shares into
shares of the Class A Common Stock on a share for share basis. If the number
of outstanding shares of Class B Common Stock falls below 12.5 percent of the
aggregate number of issued and outstanding shares of Class A
Common Stock and Class B Common Stock, all the shares of Class B Common Stock
will automatically be converted into shares of Class A Common Stock.
Transferability. The Class A Common Stock is freely transferable. The
Class B Common Stock may be transferred by a shareholder only to or among his
or her spouse, certain relatives (and their spouses), trusts
established for such persons' benefit, and a corporation or partnership all
of the stock or units of which are owned by such eligible holders and
transferees. Accordingly, no trading market has developed or will develop
in the Class B Common Stock and it has not been and will not be listed or
traded on any exchange or any market.
Future Issuances of Class B Common Stock; Status of Class B Common Stock
Upon Conversion. The Company may not issue any additional shares of Class B
Common Stock, except in a stock split or stock dividend upon the Class B
Common Stock, without the approval of the holders of a majority of the out-
standing shares of Class A Common Stock who do not hold Class B Common Stock.
All shares of Class B Common Stock received by the Company upon conversion
thereof to Class A Common Stock will revert to the status of authorized but
unissued shares of Class B Common Stock.
Transfer Agent
The Company's transfer agent and registrar for the Class A Common Stock and
Class B Common Stock is The Bank of New York.
Series Preferred Stock
The authorized Series Preferred Stock consists of 1,000,000 shares, no par
value. The Series Preferred Stock may be issued by resolutions of the
Company's Board of Directors from time to time without any action
of the shareholders. Such resolutions may authorize issuances in one or
more classes or series of the Series Preferred Stock, and may fix and
determine dividend and liquidation preferences, voting rights (except as
provided below), conversion privileges, redemption terms and other privileges
and rights of the shareholders of each class or series so authorized. The
Series Preferred Stock may not be given more than one vote per share
or the right as a class to elect any directors.
7.5 Percent Preferred Stock
The authorized 7.5 percent Preferred Stock consists of 250,000 shares,
par value $10 per share. Holders of the 7.5 percent Preferred Stock are
entitled to receive cumulative preferential dividends in cash of $.75 per
share per annum when and as declared by the Board of Directors. In the event
the Company is liquidated, dissolved or wound up, voluntarily or
involuntarily, holders of the 7.5 percent Preferred Stock are entitled to
receive in cash $10 per share plus accumulated and unpaid dividends from the
assets of the Company available for distribution to shareholders, before any
payment is made to holders of any other class of common stock or any other class
of capital stock ranking junior to the 7.5 percent Preferred Stock. The
Company may, at its option, at any time on thirty days' notice, redeem all
or some of the 7.5 percent Preferred Stock by paying $10.50 per share in cash
plus all accumulated and unpaid dividends. If less than all of the shares
are redeemed, the Company may designate by lot, in such manner as the Board
of Directors determines, the shares to be redeemed, or may effect such
redemption in any other equitable manner.
The holders of the 7.5 percent Preferred Stock do not have any voting
rights except as required by applicable law and except that if at any time
the Company is in arrears in the payment of cumulative dividends to the extent
of four quarterly dividends (whether consecutive or not), holders of the 7.5
percent Preferred Stock are entitled to one vote for each share in the election
of the directors not elected by the Class A Common Stock, and on all other
matters. The voting rights would continue until a quarterly dividend is paid
reducing the amount of arrearages to less than four quarterly dividends. The
holders of 7.5 percent Preferred Stock have no preemptive rights.
General
The Company's Articles of Incorporation and the Michigan Business
Corporation Act contain provisions which may have an effect of deterring or
impeding any efforts to acquire control of the Company including
proposed transactions that might have the support of a majority of the
Company's voting power or a majority of the Company's common equity. These
devices could also have the effect of inhibiting certain changes in
management and temporary fluctuations in the marketplace of the Company's
Class A Common Stock that could arise from actual or rumored takeover bids.
The Company's two classes of common stock may have similar effects.
Appointment and Election of Directors. The Company's Articles of
Incorporation state that any vacancy in, or newly created, directorships will
be filled only by the affirmative vote of a majority of directors continuing
in office. The Articles also provide that nominations for the election of
directors must be made as provided in the Company's Bylaws, which set forth a
procedure for shareholder nominations of directors. Notice of any
nomination must be given 30 days in advance of the Company's annual meeting
at which directors will be elected. These provisions may restrict the
ability of a shareholder to conduct a proxy contest against management.
Board of Directors' Consideration and Approval of Tender Offers,
Mergers, or Consolidations. The Articles of Incorporation also provide that
the Board of Directors shall not approve or recommend any offer for
the Company's shares, to merge or consolidate the Company or to purchase
substantially all of the assets of the Company (i) if such proposal is known
by the Board to be a possible violation of law and (ii) unless the Board
of Directors has evaluated the offer and determined that the offer is in the
best interest of the Company and its shareholders. In making the evaluation,
the Board is permitted to consider several factors, including the
adequacy and fairness of the consideration to be received and the potential
social and economic impact of the offer and its consummation on the Company,
its employees, vendors and communities.
Two-Thirds Majority Required to Merge, Dissolve or Liquidate. The
Company's Articles of Incorporation further state that the Company shall not
merge with another corporation, sell substantially all of its assets, or
voluntarily dissolve or liquidate its assets without the approval of two-
thirds of the voting power of the then outstanding shares of the classes of
stock entitled to vote. The Articles also require that any purchase
by the Company of shares of its voting stock from any person known by the
Company to be the beneficial owner of five percent or more of the voting power
of the Company for less than two years at a price in excess of the
fair market value at the time of purchase, be approved by a majority of the
votes of the outstanding voting stock of the Company. This provision is
intended to eliminate the payment of "greenmail" by discouraging purchasers
from accumulating significant blocks of the Company's stock and then offering
that stock for resale to the Company at a premium over marketprice.
Michigan Fair Price Provisions. Chapter 7A of the Michigan Business
Corporation Act impacts certain business combinations involving Michigan
corporations such as the Company. Except in cases in which certain
minimum price, form of consideration, and procedural requirements are
satisfied or for certain transactions that may be approved inadvance by the
Company's Board of Directors, higher than normal voting requirements are
imposed with respect to various transactions involving persons who own ten
percent or more of the Company's voting stock (referred to as "Interested
Shareholders"). Transactions to which the higher voting requirements
apply require an advisory statement from the Board of Directors and must be
approved by not less than 90 percent of the votes of each class of stock
entitled to vote and by not less than two-thirds of the votes, other than the
votes of Interested Shareholders who are (or whose affiliates are) a party to
the proposed transaction or an affiliate of the Interested Shareholders, of
each class entitled to vote.
Michigan Shareholder Equity Provisions. Chapter 7B of the Michigan
Business Corporation Act affects the voting rights of persons who acquire
more than 20 percent, 33.334 percent, or 50 percent of a Michigan
corporations's voting stock (referred to as "Control Shares"). Chapter 7B
denies shareholder voting rights to those persons or entities who make
purchase offers or investors who increase their holdings above any of the
Control Share levels, unless they are granted voting rights by a majority
vote of all disinterested shareholders (shareholders excluding the bidders
or owners of Control Shares and the corporation's management). If the share-
holders do not elect to grant voting rights to Control Shares, under certain
circumstances, the Control Shares may become subject to redemption.
UPDATING INFORMATION
Additional information with respect to the Company's capital stock and the
Plan will be provided in the future to Plan participants in the Company's
definitive Proxy Statements or Annual Reports.
AVAILABLE INFORMATION REGARDING THE COMPANY AND THE PLAN
Upon written or oral request, the Company will provide to any holder of an
option under the Plan, without charge, copies of the Company's latest Annual
Report on Form 10-K, its latest Quarterly Report on Form 10-Q, the
description of the Company's Common Stock contained in the Company's Registra-
tion Statement filed pursuant to Section 12 of the Securities Exchange Act of
1934, as amended ("Exchange Act"), including any amendment or reports filed
for the purpose of updating that description, and other documents filed by the
Company pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act.
The foregoing documents have been incorporated by reference in the
Registration Statement filed by the Company which, together with this
document, constitute a prospectus that meets the requirements of Section
10(a) of the Securities Act of 1933, as amended. In addition, the Company will
provide such persons, without charge and upon request, copies of
its latest annual report to shareholders. Requests for such copies should be
directed to Maryam Komejan, Vice President and Corporate Secretary, Donnelly
Corporation, 414 E. 40th Street, Holland, Michigan 49423-5368;
telephone (616) 768-6022.
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The Company's Annual Report on Form 10-K for the year ended July 3,
1993, which has been filed by the Company with the Commission (File No.
1-9716), is incorporated herein by reference. All other reports filed
by the Company pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") since the end of the fiscal year
covered by the foregoing Annual Report on Form 10-K are incorporated herein
by reference. All other reports or documents filed by the Company pursuant to
the requirements of Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
subsequent to the date of this Registration Statement and prior to the
termination of the offering of the securities offered hereby shall be
deemed to be incorporated by reference herein and to be a part hereof from
the date of filing of such reports or documents. Any statement contained in
a document incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed
document which also is incorporated herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Registration Statement.
The consolidated financial statements of Donnelly Corporation and
subsidiaries as of July 3, 1993 and 1992, and for each of the years in the
three-year period ended July 3, 1993, have been incorporated in this
Registration Statement by reference in reliance upon the report, also
incorporated in this Registration Statement by reference, of BDO Seidman,
independent certified public accountants, and upon the authority of said firm
as experts in accounting and auditing.
The description of the Company's Class A Common Stock, the class of
securities offered pursuant to this Registration Statement, is contained in
the Company's Registration Statement filed pursuant to Section 12
of the Exchange Act, and is incorporated herein by reference,including any
subsequent amendments or reports filed for the purpose of updating that
description.
Item 4. Description of Securities
The class of securities to be offered is registered underSection 12 of the
Exchange Act. In addition, a description of the Company's capital stock is
included in the Prospectus provided to Plan participants.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Articles of Incorporation of the Company provide that its directors and
officers are to be indemnified as of right to the fullest extent permitted
under the Michigan Business Corporation Act ("MBCA"). Under the MBCA,
directors, officers, employees or agents are entitled to indemnification
against expenses (including attorneys' fees) whenever they successfully defend
legal proceedings brought against them by reason of the fact that they hold
such a position with the corporation. In addition, with respect to actions not
brought by or in the right of the corporation, indemnification is permitted
under the MBCA for expenses (including attorneys' fees), judgments, fines,
penalties and reasonable settlement if it is determined that the person seek-
ing indemnification acted in a good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation or its shareholders and, with respect to criminal proceedings, he
or she had no reasonable cause to believe that his or her conduct was
unlawful. With respect to actions brought by or in
the right of the corporation, indemnification is permitted under the MBCA for
expenses (including attorneys' fees) and reasonable settlements, if it is
determined that the person seeking indemnification acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation or its shareholders; provided,
indemnification is not permitted if the person is found liable to the corpor-
ation unless the court in which the action or suit was brought has determined
that indemnification is fair and reasonable in view of all the circumstances
of the case.
The MBCA specifically provides that it is not the exclusive source of
indemnity. As a result, the Company adopted individual indemnification
agreements with its directors. Approved by the Company's shareholders, the
indemnification agreements provide a contractually enforceable right, upon
which written notice, for prompt indemnification, except that indemnification is
not required where: (i) indemnification is provided under an insurance
policy, except for amounts in excess of insurance coverage; (ii) a director is
entitled to indemnification by reason of having given notice of any
circumstance which might give rise to a claim under any policy of insurance,
the terms of which have expired prior to the effective date of the indemnity
agreement; (iii) indemnification is provided by the Company outside of the
agreement; (iv) the claim for indemnity is based upon or attributable to any
transaction involving: intentional misconduct or a knowing violation of law,
a violation of Section 551(1) or any successor provision of the MBCA, or from
which the director derived an improper personal benefit; (v) the claim
involved a violation of Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto, or similar provisions of state law; or (vi)
indemnification by the Company is otherwise prohibited by applicable law. In
the case of a derivative or other action by or in the right of the Company
where a director is found liable, indemnity is predicated on the
determination that indemnification is nevertheless appropriate, by:
majority vote of a committee of two or more disinterested directors appointed
by the Board of Directors; independent legal counsel in a written opinion;
or the court in which the claim is litigated, whichever the indemnitee
chooses. The protection provided by the indemnification agreements is
broader than that under the MBCA, where indemnification in such circumstances
is available only where specifically authorized by the court where the claim
is litigated.
In addition to the available indemnification, the Company's Articles of
Incorporation, as amended, limit the personal liability of the members of
its Board of Directors for monetary damages with respect to claims by the
Company or its shareholders resulting from certain negligent acts or
omissions.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
Reference is made to the Exhibit Index which appears on page S-7.
Item 9. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in the
registration statement;
(iii)To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the registration
statement is on Form S-3 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 Securities Exchange Act of 1934 that are incorporated by reference in
the 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.
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 bonafied offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions
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
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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 Holland, State of Michigan,
on the 19th day of August, 1994.
DONNELLY CORPORATION
By /s/ Dwane Baumgardner
__________________________
Dwane Baumgardner
Chief Executive Officer
EXHIBIT INDEX
The following exhibits are filed as a part of the Registration Statement:
Page
Item 5 Opinion of Varnum, Riddering, Schmidt & Howlett Exhibit 5
Item 24.1 Consent of BDO Seidman - included on page S-5 hereof
Item 24.2 Consent of KPMG Peat Marwick included on page S-6 hereof
Item 24.3 Consent of Varnum, Riddering, Schmidt & Howlett-included in
Exhibit 5
Item 25 Power of Attorney - included on page S-4 hereof
Item 99 Donnelly Corporation Non-Employee Director Stock Option Plan
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints James A. Knister
and Maryam Komejan, and each of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his or her name, place and stead,
in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration
Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission and any other regulatory authority, granting
unto said attorney-in-fact and agent, full power and authority to
do and perform each and every act and thing required and necessary
to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or his or
her substitute, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below on August 19,
1994, by the following persons in the capacities indicated.
/s/ Dwane Baumgardner
Dwane Baumgardner, Ph.D., Director
/s/ Arnold F. Brookstone
Arnold F. Brookstone, Director
/s/ B. Patrick Donnelly, III
B. Patrick Donnelly, III, Director
/s/ Joan E. Donnelly
Joan E. Donnelly, Director
/s/ R. Eugene Goodson
R. Eugene Goodson, Ph.D., Director
/s/ James A. Knister
James A. Knister, Senior Vice President and
Chief Financial Officer
/s/ Thomas E. Leonard
Thomas E. Leonard, Director
/s/ Gerald T. McNeive
Gerald T. McNeive, Director
/s/ Rudolph B. Pruden
Rudolph B. Pruden, Director
/s/ Donald R. Uhlmann
Donald R. Uhlmann, Ph.D., Director
/s/ Glenn M. Walters
Glenn M. Walters, Director
/s/ William R. Jellison
William R. Jellison, Vice President and
Treasurer
S-4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated July 30, 1993, included in Donnelly Corporation's
Form 10-K for the year ended July 3, 1993, and to all references
to our firm included in this Registration Statement.
/s/ BDO SEIDMAN
BDO SEIDMAN
Grand Rapids, Michigan
September 14, 1994
S-5
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated July 29, 1993, included in Donnelly Corporation's
Form 10-K for the year ended July 3, 1993, and to all references
to our firm included in this Registration Statement.
/s/ KPMG PEAT MARWICK
KPMG PEAT MARWICK
Dublin, Ireland
September 14, 1994
S-6
September 15, 1994
Donnelly Corporation
414 E. 40th Street
Holland, MI 49423-5368
Re: Registration Statement on Form S-8 Relating to the
Donnelly Corporation Non-Employee Director Stock
Option Plan
Gentlemen:
With respect to the Registration Statement on Form S-8 (the
"Registration Statement") filed by Donnelly Corporation, a Michigan
corporation (the "Company"), with the Securities and Exchange
Commission for the purpose of registering under the Securities Act
of 1933, as amended, 50,000 shares of the Company's Class A common
stock, par value $.10 per share, for issuance pursuant to the
Company's Non-Employee Director Stock Option Plan (the "Plan"), we
have examined such documents and questions of law we consider
necessary or appropriate for the purpose of giving this opinion.
On the basis of such evaluation, we advise you that in our opinion
the 50,000 shares covered by the Registration Statement, upon the
exercise of stock options, at the prices described in the
Registration Statement, but not less than the par value thereof,
and upon delivery of such shares and payment therefor in accordance
with the terms stated in the Plan and the Registration Statement,
will be duly and legally authorized, issued and outstanding and
will be fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933,
as amended, or under the rules and regulations of the Securities
and Exchange Commission relating thereto.
Very truly yours,
VARNUM, RIDDERING, SCHMIDT & HOWLETT
/s/ William J. Lawrence III
William J. Lawrence III, Partner
EXHIBIT 5
DONNELLY CORPORATION
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
1. NAME AND PURPOSE.
This plan shall be called the Nonemployee Director Stock
Option Plan (the "Plan"). The Plan is intended to encourage
stock ownership by nonemployee directors of Donnelly
Corporation (the "Company"), to provide them with an
additional incentive to manage the Company effectively and to
contribute to its success, and to provide a form of
compensation that will attract and retain highly qualified
individuals to serve as members of the Board of Directors of
the Company.
2. EFFECTIVE DATE AND TERM OF THE PLAN.
The Plan shall become effective October 29, 1993, subject to
its approval by the shareholders of the Company. No options
shall be granted prior to approval of the Plan by the
shareholders of the Company. Options may not be granted under
the Plan after October 29, 2003; provided, however, that all
options outstanding as of that date shall remain or become
exercisable pursuant to their respective terms and the terms
of the Plan.
3. ADMINISTRATION.
The Board of Directors of the Company shall be responsible for
the implementation of the Plan, including the delegation of
the administration of the Plan to management of the Company.
The Board of Directors shall at no time exercise any
discretion with respect to the administration of the Plan.
4. PARTICIPATION.
Subject to the limitations set forth in this Section 4, each
director of the Company, who is neither a contractual nor
common law employee of the Company or any of its subsidiaries,
shall, as of the dates set forth in Subsection 6(b), be
granted options to purchase shares of the Company's Class A
Common Stock in accordance with the terms and conditions of
the Plan. An optionee may hold more than one option, but only
on the terms and subject to the restrictions hereafter set
forth.
5. STOCK AVAILABLE FOR OPTIONS.
Subject to adjustments as provided in Subsection 6(i), the
aggregate number of shares reserved for issuance under the
terms of the Plan shall be 50,000 shares of the Company's
Class A Common Stock, par value $.10 per share, either
authorized but unissued shares or shares repurchased by the
Company (the "Shares"). If any outstanding option under the
Plan expires or is terminated for any reason before
October 29, 2003, the Shares allocable to the unexercised
portion of such option may again be subject to options under
the Plan; provided that Shares tendered to the Company under
Subsection 6(e) or Section 10, as payment for Shares or
withholding taxes, shall not be subject to subsequent option
grants under the Plan.
6. TERMS AND CONDITIONS OF OPTIONS.
Options granted under this Plan shall be evidenced by
agreements in such form as the Company shall from time to time
approve, which agreements shall comply with and be subject to
the following conditions:
(a) Optionee's Agreement. Each optionee shall agree to
continue to serve as a director of the Company if
nominated and elected to serve as a director by the
Company's shareholders. Such agreement shall not impose
upon the Company, its Board of Directors, or its
shareholders any obligation to retain the optionee as a
director for any period.
(b) Date of Options. The options shall be granted on the
second Wednesday of each August, during the term of this
Plan, to each person entitled to participate in the Plan
under Section 4; provided that, conditioned on the
approval of this Plan by the Company's shareholders, the
initial grant of options under this Plan shall be made
on October 29, 1993.
(c) Number of Shares and Term of Options. Each option shall
be for five hundred (500) shares of the Class A Common
Stock of the Company. The term of each option shall be
for a period of ten (10) years from the date of grant of
the option.
(d) Option Price. Each option shall state the per share
purchase price at which a share may be purchased, which
shall be one hundred percent (100%) of the fair market
value of a share of Class A Common Stock on the date of
the grant of the option. If the Shares are listed upon
an established stock exchange or exchanges, fair market
value shall be deemed to be the closing price of the
shares on such exchange or exchanges on the day the
option is granted or if no sale of the shares shall have
been made on any stock exchange on that day, on the next
preceding day on which there was a sale of the shares.
If the Shares are not listed upon an established stock
exchange but are traded in the over-the-counter market,
the fair market value per share shall be the closing sale
price on the national market list as quoted in the
National Association of Securities Dealers Automated
Quotation System ("NASDAQ") on the day the option is
granted or if no sale of shares is reflected in NASDAQ
on that day, on the next preceding day on which there was
a sale of shares reflected in NASDAQ.
(e) Medium of Payment. The aggregate option price shall be
payable to the Company either: (i) in United States
dollars in cash or by check, bank draft, or money order
payable to the order of the Company; (ii) through the
delivery of unencumbered shares of Class A Common Stock
with a fair market value on the date of the exercise
equal to the aggregate option price provided such shares
are utilized as payment to acquire at least 100 Shares;
or (iii) by a combination of (i) and (ii) above. Fair
market value will be determined in the manner specified
in Subsection 6(d) except as to the date of
determination.
(f) Exercise of Options. No option shall be exercisable,
either in whole or in part, prior to the first
anniversary of the date of grant of the option, except
that options under this Plan shall become immediately
exercisable upon a "Change in Control" as defined below,
or as provided in Subsection 6(i) of the Plan.
Thereafter, an option shall be exercisable at any time
or from time to time during the term of the option, upon
written notice to the Company, as to any or all Shares
covered by the option, until its termination or
expiration in accordance with its terms of the Plan.
Notwithstanding the foregoing, an option shall not at any
time be exercisable with respect to less than 100 shares
unless the remaining shares covered by an option are less
than 100 shares. The purchase price of the Shares
purchased pursuant to an option shall be paid in full
upon delivery to the optionee of certificates for such
shares. Except as provided in Subsection 6(h), an option
may be exercised by an optionee only while the optionee
is a nonemployee director of the Company. A Change in
Control shall be deemed to have occurred under the terms
of this Plan if: (i) any "person" [as such term is used
in Section 13(d) and (14)(d) of the Securities Exchange
Act of 1934, as amended (the "Act")] is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting
power of the Company's then outstanding securities
(except for persons who are such beneficial owners as of
the effective date of this Plan) without the prior
approval of at least two-thirds of the members of the
Board of Directors in office immediately prior to such
person obtaining such percentage interest; (ii) the
Company is a party to a merger, consolidation, sale of
assets or other reorganization, or a proxy contest, as
a consequence of which members of the Board in office
immediately prior to such transaction or event constitute
less than a majority of the Board thereafter; or (iii)
during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board
(including for this purpose any new director whose
election or nomination for election by the Company's
shareholders was approved by a vote of at least two-
thirds of the directors still in office who were
directors at the beginning of such period) cease for any
reason to constitute at least a majority of the Board.
(g) Options not Transferable. Options may not be sold,
pledged, assigned, or transferred in any manner otherwise
than by will or the laws of descent or distribution to
the extent provided in Subsection 6(h). During the
lifetime of an optionee, the options shall be exercisable
only by the optionee. Following the death of an optionee,
the options shall be exercisable only to the extent
provided in Subsection 6(h).
(h) Termination of Service as a Director.
(i) Termination of Service For Reasons Other Than
Disability, Death or Removal. If an optionee ceases
to serve the Company as a nonemployee director for
any reason other than those set forth in Subsection
6(h)(ii)(iii) or (iv) (relating to disability, death
and removal from office as described more fully in
such subsections), each option held by the optionee
shall, subject to prior expiration according to its
terms and other limitations imposed by the Plan,
terminate as follows:
* If the nonemployee director has served as a
director for less than five (5) years, all
exercisable options held by the optionee shall
terminate as of the 90th day following the date
of the optionee's cessation of service.
Options which are not exercisable as of the
date of optionee's cessation of service shall
terminate 90 days after the date they become
exercisable.
* If the nonemployee director has served as a
director for five (5) or more years but less
than ten (10) years, all options held by the
optionee shall terminate one (1) year following
the date of the optionee's cessation of
service.
* If the nonemployee director has served as a
director for ten (10) years or more, all
options held by the optionee shall terminate
two (2) years following the date of the
optionee's cessation of service.
(ii) Termination of Service for Disability. If any
optionee ceases to be a nonemployee director on
account of physical disability, each option held by
such optionee shall remain exercisable, subject to
prior expiration according to its terms and other
limitations imposed by the Plan, for a period of two
(2) years following the optionee's cessation of
service as a nonemployee director of the Company.
If the optionee dies after such disability, the
optionee's options shall be exercisable in
accordance with Subsection 6(h)(iii) below.
(iii) Termination of Service for Death. If an
optionee ceases to be a nonemployee director
by reason of death, each option held by such
optionee shall, to the extent rights to
purchase shares under the option have been
accrued at the time of death and shall not have
been fully exercised, be exercisable, in whole
or in part, by the personal representative of
the optionee's estate or by any person or
persons who have acquired the option directly
from the optionee by bequest or inheritance
during the shorter of the following periods:
(i) the term of the option, or (ii) a period
of two (2) years from the death of such
optionee. To the extent an option is not
exercised under this Subsection 6(h)(iii)
within whichever of the specified periods is
applicable, it shall terminate.
(iv) Termination of Service for Removal. If, at any
time, an optionee ceases to serve the Company as a
nonemployee director during his or her elected term
(except for reasons of disability) because he or she
has either been removed from the Board or has been
asked to resign from the Board, all exercisable
options held by such optionee shall terminate as of
the 90th day following the date of such cessation
of service. Options which are not exercisable as of
the date the optionee's cessation of service shall
terminate 90 days after the date they become
exercisable.
(i) Adjustment in Shares Covered by Option. The number of
Shares covered by each outstanding option, and the
purchase price per share thereof, shall be
proportionately adjusted for any increase or decrease in
the number of issued and outstanding shares resulting
from a split in or combination of Shares or the payment
of a stock dividend on the Shares or any other increase
or decrease in the number of such Shares effected without
receipt of consideration by the Company.
If the Company shall be the surviving corporation in any
merger or consolidation or if the Company is merged into
a wholly-owned subsidiary solely for purposes of changing
the Company's state of incorporation, each outstanding
option shall pertain to and apply to the securities to
which a holder of the number of Shares subject to the
option would have been entitled. A dissolution or
liquidation of the Company or a merger or consolidation
in which the Company is not the surviving corporation,
except as above provided, shall cause each outstanding
option to terminate, provided, that each optionee shall,
in that event, have the right immediately prior to such
dissolution or liquidation, or merger or consolidation
in which the Company is not the surviving corporation,
to exercise his or her option(s) in whole or in part.
In the event of a change in the Shares as presently
constituted, which is limited to a change of all of its
authorized shares with par value into the same number of
shares with a different par value or without par value,
the shares resulting from any such change shall be deemed
to be the Shares within the meaning of the Plan.
Except as provided in this Subsection 6(i), an optionee
shall have no rights by reason of: (i) any split or
combination of shares of stock of any class; (ii) the
payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class;
or (iii) by reason of any dissolution, liquidation,
merger, or consolidation or spin-off of assets or stock
of another corporation. Except as provided in Subsection
6(i), any issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of
any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or
price of Shares subject to an option. The grant of an
option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its
capital or business structure, or to merge or to
consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
j. Rights of a Shareholder. An optionee shall have no
rights as a shareholder with respect to any Shares
covered by his or her option until the date on which the
optionee becomes the holder of record of such shares or
is entitled to become the-holder of record. No adjustment
shall be made for dividends, distributions, or other
rights for which the record date is prior to the date on
which he or she shall have become the holder of record
(or become entitled to be the holder of record) thereof,
except as provided in Subsection 6(i) above.
k. Postponement of Delivery of Shares and Representations.
The Company, in its discretion, may postpone the issuance
and/or delivery of Shares upon any exercise of an option
and until completion of such stock exchange listing, or
registration, or other qualification of such Shares under
any state and/or federal law, rule or regulation as the
Company may consider appropriate, and may require any
person exercising an option to make such representations,
including a representation that it is the optionee's
intention to acquire Shares for investment and not with
a view to distribution thereof, and furnish such
information as it may consider appropriate in connection
with the issuance or delivery of the Shares in compliance
with applicable laws, rules, and regulations. In such
event no Shares shall be issued to such holder unless and
until the Company is satisfied with the accuracy of any
such representations.
7. ADJUSTMENTS IN SHARES AVAILABLE FOR OPTIONS.
The adjustments in number and kind of Shares and the
substitution of Shares affecting outstanding options in
accordance with Subsection 6(i) hereof, shall also apply to
the number and kind of Shares reserved for issuance pursuant
to the Plan, but not yet covered by options.
8. AMENDMENT OF THE PLAN.
The Board of Directors, insofar as permitted by law, shall
have the right from time to time, with respect to any Shares
at the time not subject to options (but not with respect to
Shares which are then subject to options), to suspend or
discontinue the Plan or revise or amend it in any respect
whatsoever, except that the provisions of the Plan set forth
in Section 4 and Subsections 6(b), (c), and (d) may not be
amended more than once every six months (other than to comport
with changes in the Internal Revenue Code or the rules and
regulations promulgated thereunder), and except that, without
approval of the shareholders of the Company, no such revision
or amendment shall:
(a) increase the maximum number of Shares which may be
subject to the Plan [except as contemplated in Subsection
6(i)],
(b) increase the maximum number of Shares which may be
optioned to any one nonemployee director,
(c) materially increase the benefits accruing to option
holders under the Plan,
(d) decrease the price at which options may be granted, or
(e) permit the granting of options under the Plan after
October 29, 2003.
9. RIGHT OF SHAREHOLDERS TO TERMINATE DIRECTOR'S SERVICE.
Nothing in this Plan or in the grant of any option hereunder
shall in any way limit or affect the right of the shareholders
of the Company to remove any director or otherwise terminate
his or her service as a director, pursuant to law, the
Articles of Incorporation, or Bylaws of the Company.
10. TAX WITHHOLDING.
The exercise of any option under the Plan is subject to the
satisfaction of withholding tax or other withholding
liabilities, if any, under federal, state, and local laws in
connection with such exercise. The exercise of an option shall
not be effective unless applicable withholding shall have been
effected. Each optionee may satisfy any such withholding tax
obligation by any of the following means or by a combination
of such means:
(a) Tendering a cash payment;
(b) Authorizing the Company to withhold from the Shares
otherwise issuable to the optionee as a result of the
exercise of the stock option, a number of Shares having
a fair market value (as determined under Subsection 6(d)
of this Plan) as of the date that the amount of tax to
be withheld is to be determined ("Tax Date"), which shall
be the date of exercise of the option, less than or equal
to the amount of the withholding obligation; or
(c) Delivering to the Company unencumbered shares owned by
the optionee prior to the date of exercise, having a fair
market value (as determined under Subsection 6(d) of the
Plan) as of the Tax Date, less than or equal to the
amount of the withholding tax obligation.
An optionee's election to pay the withholding tax obligation
by the latter means of payment must either: (i) be made at
least six months prior to the Tax Date and must be irrevocable
for a period at least six months prior to the Tax Date; or
(ii) the exercise of the option must be effective during the
period beginning on the third business day following the date
of release of the Company's quarterly or annual summary
statement of sales and earnings and ending on the twelfth
business day following such date.
11. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Shares
pursuant to options will be used for general corporate
purposes.
12. NO OBLIGATION TO EXERCISE OPTION.
The granting of an option shall impose no obligation upon the
optionee to exercise such option.
13. CONSTRUCTION.
This Plan shall be construed under the laws of the State of
Michigan.
