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As filed with the Securities and Exchange Commission on November 25, 1997 -
Registration No. 333-
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 Fortieth Street, Holland, Michigan 49423-5368
(Address of Principal Executive Offices) (Zip Code)
Donnelly Corporation 1997 Employee Stock Option Plan
(Full Title of the Plan)
William R. Jellison, 414 East Fortieth Street, Holland, Michigan 49423-5368
(Name and address of agent for service)
Copies of Communications to:
William J. Lawrence III
Varnum, Riddering, Schmidt & Howlett LLP
333 Bridge Street, N.W., P.O. Box 352
Grand Rapids, Michigan 49501-0352
(616) 336-6000
<TABLE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities to be Amount to be Offering Price Aggregate Amount of
Registered Registered Per Share(2) Offering Price Registration Fee
<S> <C> <C> <C> <C>
Class A Common Stock
($.10 Par Value) 175,593 Shares(1) $18.35 $3,222,132 $977.00
=============================== ===================== ====================== ===================== ===================
</TABLE>
(1) Represents the number of shares of Common Stock authorized for issuance
under the Donnelly Corporation 1997 Employee Stock Option Plan (the
"Plan"). This Registration Statement also 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 $18.35 per share, the average of the high
and low sales prices for the Common Stock of Donnelly Corporation on
the New York Stock Exchange on November 20, 1997, in accordance with
Rule 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.
<PAGE>
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 June 28, 1997,
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 statements 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 June 28, 1997 and June 29, 1996, and for each of the years in
the three-year period ended June 28, 1997, 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 LLP,
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 under Section 12 of the
Exchange Act.
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 seeking 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
S-1
<PAGE>
to the corporation 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 predicted 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-6.
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,
Form S-8, or Form F-3, and the information required to be included in
a post-effective amendment by those paragraphs is contained in
periodic reports filed 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.
S-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
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 bonafide 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 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.
S-3
<PAGE>
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 17th day of October,
1997.
DONNELLY CORPORATION
By /s/ J. Dwane Baumgardner
J. Dwane Baumgardner, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints J. Dwane Baumgardner 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 or her 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 October 17, 1997, by the
following persons in the capacities indicated.
/s/ John A. Borden /s/ B. Patrick Donnelly, III
John A. Borden, Director B. Patrick Donnelly, III, Director
/s/ R. Eugene Goodson /s/ Joan E. Donnelly
R. Eugene Goodson, Director Joan E. Donnelly, Director
/s/ Donald R. Uhlmann /s/ Thomas E. Leonard
Donald R. Uhlmann, Director Thomas E. Leonard, Director
/s/ J. Dwane Baumgardner /s/ Gerald T. McNeive
J. Dwane Baumgardner, Director Gerald T. McNeive, Jr., Director
/s/ Arnold F. Brookstone /s/ William R. Jellison
Arnold F. Brookstone, Director William R. Jellison, Vice President,
Corporate Controller and Treasurer
/s/ Rudolph B. Pruden
Rudolph B. Pruden, Director
S-4
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Donnelly Corporation
Holland, Michigan
We hereby consent to the incorporation by reference in this Registration
Statement of our report dated August 1, 1997, relating to the combined
consolidated financial statements of Donnelly Corporation appearing in the
Company's Annual Report on Form 10-K for the year ended June 28, 1997, and to
the reference to us as experts included in this Registration Statement.
/s/ BDO Seidman LLP
BDO SEIDMAN LLP
Grand Rapids, Michigan
November 21, 1997
S-5
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as a part of the Registration Statement:
Exhibit 4 Donnelly Corporation 1997 Employee Stock Option Plan
Exhibit 5 Opinion of Varnum, Riddering, Schmidt & Howlett LLP
Exhibit 23(a) Consent of BDO Seidman, LLP - included on page S-5 hereof
Exhibit 23(b) Consent of Varnum, Riddering, Schmidt & Howlett LLP-included
in Exhibit 5
Exhibit 24 Power of Attorney - included on page S-4 hereof
S-6
<PAGE>
EXHIBIT 4
DONNELLY CORPORATION
1997 EMPLOYEE STOCK OPTION PLAN
1. NAME AND PURPOSE
This plan shall be called the Donnelly Corporation 1997 Employee Stock
Option Plan (the "Plan"). The Plan is intended to encourage stock ownership by
certain key employees of Donnelly Corporation (the "Company") and of its
subsidiaries, and to provide them with an additional incentive to contribute to
the success of the Company. The term "Company" when used in the Plan with
reference to employment shall include subsidiaries of the Company as defined by
Subsection 425(f) of the Internal Revenue Code of 1986, as amended (the "Code").
2. EFFECTIVE DATE AND TERM OF PLAN
The effective date of the Plan shall be the date the Plan is approved by
the shareholders of the Company. Options may not be granted under the Plan after
December 31, 1999; provided, however, that all options outstanding as of that
date shall remain or become exercisable pursuant to their terms and the terms of
the Plan.
3. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company, or
if a majority of the Directors are not "Disinterested Persons" (as defined
herein), by a committee appointed by the Company's Board of Directors (the
"Committee"). The administrating body shall be referred to as the
"Administrator". The Committee, if appointed, shall consist of not less than
three (3) members, all of whom are "Disinterested Persons". The Board of
Directors may from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, however caused, shall be filled by the
Board of Directors. A "Disinterested Person" is a person who qualifies as a
"nonemployee director" as such term is defined in Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Securities Act of 1934, as amended
from time to time or any successor rule.
The Administrator may establish such regulations, provisions and
procedures, within the terms of the Plan, as in the opinion of its members may
be advisable in the administration of the Plan. The Administrator shall keep
minutes of its meetings. A majority of the Administrator shall constitute a
quorum, and the acts of a majority of a quorum at any meeting, or acts approved
in writing by a majority of the members of the Administrator, shall be the valid
acts of the Administrator.
The Administrator shall determine the persons to whom options are to be
granted and the number of shares subject to each such option. The Administrator
shall also determine such other matters with respect to the options as may be
specified in the Plan.
<PAGE>
Without amending this Plan, the Administrator may grant or amend awards to
employees who are foreign nationals or employed outside the United States or
both, on such terms and conditions different from those specified in this Plan
as may, in the judgment of the Administrator, be necessary to comply with
foreign law or practice and to further the purposes of this Plan.
The interpretation and construction by the Administrator of any provisions
of the Plan or of any option granted under it shall be final and binding upon
the Company, the Board of Directors and optionees. No member of the Board of
Directors or the Administrator shall be liable for any action or determination
made in good faith with respect to the Plan or any option granted under it.
4. ELIGIBILITY
Subject to the limitations contained in this paragraph, the persons who
shall be eligible to receive options shall be such key employees (including
employee officers and directors) of the Company as the Administrator shall
select. In making such selections, the Administrator may consider the
recommendations of the Company's chief executive officer, the nature of the
services rendered by the respective employees, their present and potential
contributions to the Company's success and the success of the particular
subsidiary or division of the Company by which they are employed and such other
factors as the Administrator shall deem relevant. An optionee may hold more than
one option, but only on the terms and subject to the restrictions hereafter set
forth. No person, while a member of the Administrator, shall be eligible to
receive an option under the Plan. Subject to adjustments consistent with the
provisions of Paragraph 6(h), no one optionee may be granted options covering
more than a total of twenty-five percent (25%) of the Class A Common Stock
originally reserved for issuance under this Plan, as defined in Paragraph 5
hereof, plus such increases as may from time to time be approved by the
Company's shareholders.
5. STOCK AVAILABLE FOR OPTIONS
Subject to adjustments as provided in Paragraph 6(i), the aggregate number
of shares reserved for purposes of the Plan shall be one hundred seventy five
thousand five hundred ninety three (175,593) shares of the Company's Class A
Common Stock, par value $ .10 per share ("Class A Common Stock"), either
authorized but unissued shares or shares held in treasury. Such number shall be
reduced by the aggregate number of shares covered by the options purchased
pursuant to Paragraph 6(f). If any outstanding option under the Plan for any
reason expires or is terminated for any reason before December 31, 1999, the
shares allocable to the unexercised portion of such option may again be
subjected to an option under the Plan. A surrender of all or part of an option
pursuant to Paragraph 6(f) shall not be considered an expiration or termination,
and the shares allocable thereto may not again be subject to an option under the
Plan.
<PAGE>
6. DATE OF GRANT, TERMS AND CONDITIONS OF OPTIONS AND STOCK APPRECIATION
RIGHTS.
Stock options granted pursuant to the Plan shall be authorized by the Board
of Directors. The date on which an option shall be granted shall be the date of
the Board's authorization of the option or such later date as shall be
determined by the Board at the time the option is authorized. All stock options
granted pursuant to the Plan shall be either incentive stock options ("ISOs"),
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or a nonqualified stock option, not intended to qualify
under Section 422 of the Code, as determined in each case by the Committee.
Options granted under this Plan shall be evidenced by agreements in such form as
the Administrator shall approve, which agreements shall comply with and be
subject to the following terms and conditions:
(a) Number and Maximum Value of Shares. Each option shall state the
number of shares to which it pertains. The aggregate fair market value
(determined as of the time the option is granted) of shares with respect to
which ISOs are exercisable for the first time by any employee during any
calendar year (under this Plan or any other stock option plan of the
Company or of any "parent or subsidiary corporation" [as defined in
Subsections 425 (e), (f) and (g) of the Code] of the Company), shall not
exceed $100,000.
(b) Option Price. Each option shall state the option price. The option
price for ISOs will be the fair market value of the shares on the date the
option is granted; provided, however, if the optionee owns shares
representing more than ten percent (10%) of the total voting power of the
Company's Class A Common Stock at the time an ISO is granted, the option
price will be one hundred ten percent (110%) of the fair market value of
the shares on the date the option is granted. The option price for a
nonqualified option will be esta blished by the Administrator. If the
shares are listed on an established stock exchange or exchanges, the fair
market value per share shall be the closing sale price on such exchange or
exchanges 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 shares. If the shares are not listed on such a stock exchange or
exchanges, the fair market value per share shall be the closing sale price
as reported in the National Association of Securities Dealers Auto mated
Quotation System ("NASDAQ") on the day the option is granted or, if there
are no sales reported by the NASDAQ on that date, the next preceding day on
which there was a sale reported by NASDAQ. The fair market value of shares
for options granted prior to the Company's initial public offering shall be
the price to public in the initial public offering as set forth on the
cover of the Company's final prospectus.
(c) Medium of Payment. The 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 shares with a fair market value on the date of the exercise
equal to the option price provided such shares are utilized as
<PAGE>
payment to acquire at least 100 shares of optioned stock, unless the
remaining shares covered by an option are fewer than 100 shares, or (iii)
by a combination of (i) and (ii) above. Fair market value will be
determined in the manner specified in Paragraph 6(b) except as to the date
of determination.
(d) Term and Exercise of Options. The term of each ISO granted under
the Plan shall be not more than ten (10) years from the date on which the
ISO is granted; provided, however, that in the case of an employee who owns
shares representing more than ten percent (10%) of the total voting power
of the Company's Class A Common Stock at the time the ISO is granted, the
term of such option shall be not more than five (5) years from the date of
grant. The term of a nonqualified option shall be not more than ten (10)
years and one day from the date the option is granted. No option shall be
exercisable either in whole or in part prior to twelve (12) months after
the date such option is granted except as provided in Paragraphs 6(f) or
(6)(h). (Notwithstanding the preceding sentence, options shall be
exercisable immediately in the event of a "Change in Control". A Change in
Control shall be deemed to have occurred hereunder if (i) any "person" (as
such term is used in Section 13(d) and 14(d) of the Securities Exchange Act
of 1934 ("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 2/3 of the members of the Board in office immediately prior to such
person attaining 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 2/3 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.) Thereafter, an option may be
exercised at any time or from time to time during the term of the option
upon written notice to the Company of the optionee's intention to exercise
the option as to any or all full shares covered by the option.
Notwithstanding the foregoing, an option shall not be exercisable with
respect to less than 100 shares unless the remaining shares covered by an
option are fewer than 100 shares. The purchase price of the shares shall be
paid in full upon delivery to the optionee of certificates for such shares.
Excluding nonemployee directors, and except as provided in Paragraph 6(g),
an option may be exercised by the optionee only while the optionee is
employed by the Company and only during his lifetime. Options granted under
the Plan may be exercised in any order, regardless of the date of grant or
the existence of any other outstanding stock option of the Company.
<PAGE>
(e) 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 Paragraph 6(g)(iii).
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 Paragraph 6(g)(iii).
(f) Stock Appreciation Rights. Any option granted under the Plan may,
if the Administrator in its discretion so determines, contain a Stock
Appreciation Right which shall be subject to the terms hereinafter set
forth and shall be exercisable by submitting notice of the optionee's
election to exercise such Stock Appreciation Right. Unless the
Administrator otherwise consents, such election may only be made during the
period commencing on the third (3rd) business day following the date on
which the Company releases for publication its quarterly or annual summary
statements of sales and earnings and ending on the twelfth (12th) business
day following such date (Election Period). A Stock Appreciation Right shall
provide that the Company shall, at the election of the optionee during the
Election Period and upon surrender of all or part of the underlying stock
option , purchase all or any part of such option to the extent that such
option is exercisable at the date of such election, for an amount (payable
in cash, shares of the Company's Class A Common Stock valued at the then
fair market value, or a combination thereof as determined by the
Administrator) equal to the excess of the fair market value per share of
Class A Common Stock over the option price per share, times the number of
shares called for by the option, or a proportion thereof, which is
surrendered. If the shares are listed on an established stock exchange or
exchanges, the fair market value per share shall be the closing sale price
on such exchange or exchanges or, if no sale of the shares shall have been
made on the date of exercise on any stock exchange, on the next preceding
day on which there was a sale of shares. If the shares are not listed on
such a stock exchange or exchanges, the fair market value per share shall
be the closing sale price as reported by NASDAQ on the date of exercise of
the Stock Appreciation Right, or if there are no sales reported by NASDAQ
on that date, the date immediately preceding the exercise on which there
was a sale reported by NASDAQ. Stock or cash or both received on surrender
of options under the Plan are not to be taken into account under any
pension, retirement, deferred profit sharing or any other employee benefit
program of any kind. Expiration or termination of any option shall also
result in the expiration or termination of the related Stock Appreciation
Right.
(g) Terminating of Employment with Respect to An Employee/Optionee
(i) Termination of Employment for Reasons Other Than Retirement,
Disability or Death. In the event an employee/ optionee shall cease to
be employed by the Company for any reason other than normal or early
retirement (as determined under the Company's retirement plan or
plans) or on account of disability or death, no option shall be
exercisable by the optionee more than ninety
<PAGE>
(90) days after termination; provided, if an optionee accepts
employment with or otherwise aids or assists any competitor of the
Company (or any of its subsidi aries), all options shall be void upon
the date such employment was accepted or such assistance was provided;
and provided further that if an optionee's employment is terminated
due to malfeasance, no option shall be exercisable by the optionee.
Whether an optionee has accepted employment with or otherwise aided or
assisted a competitor of the Company or a subsidiary of the Company
shall be the sole determination of the Administrator. Whether an
authorized leave of absence or absence because of military or
governmental service shall constitute termination of employment for
such purposes shall be determined by the Administrator, which
determination shall be final and conclusive.
(ii) Termination of Employment for Retirement or Disability. In
the event an employee/optionee ceases to be employed by the Company by
reason of normal or early retirement (as determined under the
Company's retirement plan or plans) or retirement on account of
physical disability, each option held by such optionee shall, to the
extent exercisable on the date of such retirement, remain exercisable,
in whole or in part, for a period of two (2) years following the
optionee's termination of employment; subject, however, to prior
expiration according to its terms and other limitations imposed by the
Plan. Notwithstanding the foregoing, if an optionee during the
foregoing exercise period accepts employment with a competitor of
either the Company or any subsidiary of the Company, any outstanding
options held by the optionee on the date of termination of employment
shall terminate as of the date of termination. If the optionee dies
after such retirement, the optionee's options shall be exercisable in
accordance with Paragraph 6(g) (iii) hereof.
(iii) Termination of Employment for Death. In the event of an
employee/optionee's death, each option held by such optionee shall, to
the extent rights to purchase shares under the options have accrued at
the date 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 shall have
acquired the option or options directly from the optionee by bequest
or inheritance only under the following circumstances and during the
following periods:
(a) If the optionee dies while employed by the Company, at
any time within two (2) years after his or her death, or
(b) If the optionee dies during the extended exercise period
following termination of employment specified in Paragraph
6(g)(ii), at any
<PAGE>
time within the longer time of such extended period or six (6)
months after death.
In any case, the foregoing is subject to the prior expiration of
the term of the option or options and any other limitation on the
exercise of such option or options in effect at the date of exercise.
No option shall be transferable by the optionee otherwise then by
will, or if he or she dies intestate, by the laws of descent and
distribution of the state of his or her domicile.
(iv) Termination of Options. Any option that is not exercised
within whichever of the exercise periods specified in this paragraph
6(g) is applicable shall terminate upon expiration of such exercise
period.
(h) Adjustment in Shares Covered by Option. The number of shares
covered by each outstanding option, and the price per share thereof, shall
be proportionately adjusted for any increase or decrease in the number of
issued shares resulting from a split in or com bination 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 of stock subject to the option would have been entitled. A sale
of all or substantially all of the Company's assets or 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 such
event, have the right immediately prior to such sale of assets, dissolution or
liquidation, or merger or consolidation in which the Company is not the
surviving corporation, to exercise his or her option 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.
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Administrator, whose
determination in that respect shall be final, binding and conclusive. Any such
adjustment may provide for the elimination of any fractional share which might
otherwise become subject to an option.
<PAGE>
Except as hereinbefore expressly provided in this Paragraph 6(h), the
optionee shall have no rights by reason of any subdivision or combination of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any sale of assets, dissolution, liquidation, merger or consolidation or
spinoff of assets or stock of another corporation, and 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 of stock subject to the
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.
(i) 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 he or she becomes the holder of record of such shares. 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 thereof, except as provided in Paragraph 6(h)
hereof. With respect to an employee/optionee, the Plan and any agreement
executed hereunder shall not impose upon the Company any obligation to
retain the optionee in its employ for any period.
(j) Modification, Extension and Renewal of Options. Subject to the
terms and conditions and within the limitations of the Plan, the
Administrator, subject to approval of the Board of Directors, may modify or
renew outstanding options granted under the Plan, or accept the surrender
of outstanding options (to the extent not theretofore exercised) and
authorize the granting of new options in substitution therefor (to the
extent not theretofore exercised). Notwithstanding the foregoing, no
modification of an option shall, without the consent of the optionee, alter
or impair any rights or obligations under any option theretofore granted
under the Plan.
(k) Postponement of Delivery of Shares and Representations. The
Company may postpone the issuance and/or delivery of shares upon any
exercise of an option until com pletion 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 appro priate,
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 correctness of any such representations.
<PAGE>
(l) Other Provisions. The option agreements authorized under the Plan
shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the option, as the Administrator and the
Board of Directors shall deem advisable.
<PAGE>
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 Paragraph 6(h), 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 of the Company, 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, to suspend or discontinue the Plan or revise or amend it in
any respect whatsoever 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; (b) increase the maximum number of
shares which may be optioned to any one employee; (c) change the designation of
the class of employees eligible to receive options; (d) materially increase the
benefits accruing to option holders under the Plan; (e) decrease the price at
which options may be granted; (f) remove the adminis tration of the Plan from
the Administrator; (g) render any member of the Administrator eligible to
receive an option under the Plan while serving thereon; or (h) permit the
granting of options under the Plan after December 31, 1999.
9. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of shares pursuant to
options will be used for general corporate purposes.
10. NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon the optionee to
exercise such option.
11. TAX WITHHOLDING
The exercise of any option under the Plan is subject to the condition that
if at any time the Administrator shall determine, in its discretion, that the
satisfaction of withholding tax or other withholding liabilities under any state
or federal law is necessary or desirable as a condition of, or in connection
with, such exercise or the delivery or purchase of shares pursuant thereto,
then, in such event, the exercise of the option right shall not be effective
unless such withholding shall have been effected or obtained in a manner
acceptable to the Administrator.
<PAGE>
12. CONSTRUCTION
This Plan shall be construed under the laws of the State of Michigan,
United States of America.
Adopted by the Board of Directors of the Company on August 22, 1997.
/s/ Maryam Komejan
Secretary
Donnelly Corporation
Approved by the Shareholders of the Company on October 17, 1997.
/s/ Maryam Komejan
Secretary
Donnelly Corporation
<PAGE>
EXHIBIT 5
November 25, 1997
Donnelly Corporation
414 East Fortieth Street
Holland, Michigan 49423-5368
Re: Registration Statement on Form S-8 Relating to the
Donnelly Corporation 1997 Employee 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, 175,593 shares of the
Company's Class A common stock, par value $0.10 per share, for issuance pursuant
to the Company's 1997 Employee 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 175,593 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.
Sincerely,
VARNUM, RIDDERING, SCHMIDT & HOWLETTLLP
William J. Lawrence III
