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As filed with the Securities and Exchange Commission on November 25, 1998 -
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)
49 West Third Street, Holland, Michigan 49423-2813
(Address of Principal Executive Offices) (Zip Code)
Donnelly Corporation 1998 Employee Stock Option Plan
(Full Title of the Plan)
Maryam Komejan, 49 West Third Street, Holland, Michigan 49423-2813
(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
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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
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<S> <C> <C> <C> <C>
Class A Common Stock
($.10 Par Value) 850,000 Shares(1) $15.1875 $12,909,375 $3,810
========================================================================================================================
</TABLE>
(1) Represents the number of shares of Common Stock authorized for issuance
under the Donnelly Corporation 1998 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 $15.1875 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, 1998, 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 27, 1998,
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 27, 1998 and June 28, 1997, and for each of the years in
the three-year period ended June 27, 1998, 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
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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-5.
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
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<PAGE>
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 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 the 16th day of
October, 1998.
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 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 16, 1998, 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, Jr.
J. Dwane Baumgardner, Director Gerald T. McNeive, Jr., Director
/s/ Arnold F. Brookstone /s/ Scott E. Reed
Arnold F. Brookstone, Director Scott E. Reed, Senior Vice
President and Chief Financial
Officer
/s/ Rudolph B. Pruden /s/ Ronald L. Winowiecki
Rudolph B. Pruden, Director Ronald L. Winowiecki, Corporate
Controller and Chief Accounting
Officer
::ODMA\PCDOCS\GRR\212671\1
S-4
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as a part of the Registration Statement:
Exhibit 4 Donnelly Corporation 1998 Employee Stock Option Plan
Exhibit 5 Opinion of Varnum, Riddering, Schmidt & Howlett LLP
Exhibit 23(a) Consent of BDO Seidman LLP
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-5
<PAGE>
EXHIBIT 4
DONNELLY CORPORATION
1998 EMPLOYEE STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
ESTABLISHMENT AND PURPOSE OF THE PLAN.................................1
1.1 Establishment of the Plan....................................1
1.2 Purpose of the Plan..........................................1
1.3 Term of Plan.................................................1
ARTICLE 2
DEFINITIONS...........................................................1
ARTICLE 3
ADMINISTRATION........................................................3
3.1 The Committee................................................3
3.2 Committee Authority..........................................3
ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN......................................4
ARTICLE 5
ELIGIBILITY...........................................................5
ARTICLE 6
STOCK OPTIONS.........................................................5
6.1 Options......................................................5
6.2 Grants.......................................................5
6.3 Incentive Stock Options......................................5
6.4 Terms of Options.............................................5
ARTICLE 7
TERMINATION OR AMENDMENT OF THE PLAN..................................8
ARTICLE 8
UNFUNDED PLAN.........................................................8
ARTICLE 9
ADJUSTMENT PROVISIONS.................................................8
9.1 Antidilution.................................................8
9.2 Change in Control............................................8
9.3 Adjustments by Committee.....................................9
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ARTICLE 10
GENERAL PROVISIONS....................................................9
10.1 Legend.......................................................9
10.2 No Right to Employment......................................10
10.3 Withholding of Taxes........................................10
10.4 No Assignment of Benefits...................................10
10.5 Governing Law...............................................10
10.6 Application of Funds........................................10
10.7 Rights as a Shareholder.....................................10
10.8 Laws of Foreign Jurisdictions...............................10
ARTICLE 11
SHAREHOLDER APPROVAL.................................................11
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<PAGE>
DONNELLY CORPORATION
1998 EMPLOYEE STOCK OPTION PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE OF THE PLAN
1.1 Establishment of the Plan. Donnelly Corporation, a Michigan corporation
(the "Company"), hereby establishes a stock option plan to be known as the
"Donnelly Corporation 1998 Employee Stock Option Plan" (the "Plan"), as set
forth in this document. The Plan permits the granting of stock options to key
employees of the Company and its subsidiaries.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
long-term success of the Company for the benefit of the Company's shareholders,
through stock-based compensation, by aligning the personal interests of the
Company's key employees with those of its shareholders. The Plan is also
designed to allow key employees to participate in the Company's future, as well
as to enable the Company to attract, retain and reward such employees.
Compensation related to Awards under the Plan is generally intended to qualify
as "performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Code").
1.3 Term of Plan. No Awards shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date ("Termination Date"), provided
that Awards granted prior to the Termination Date may extend beyond that date.
ARTICLE 2
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings set
forth below:
2.1 Act means the Securities Exchange Act of 1934.
2.2 Award means any award under this Plan of any Options.
2.3 Award Agreement means an agreement evidencing the grant of an Award
under this Plan. Awards under the Plan shall be evidenced by Award Agreements
that set forth the details, conditions and limitations for each Award, as
established by the Committee and shall be subject to the terms and conditions of
the Plan.
2.4 Award Date means the date that an Award is made, as specified in an
Award Agreement.
2.5 Board means the Board of Directors of the Company.
2.6 Change in Control is defined in Article 9.
2.7 Code means the Internal Revenue Code of 1986, as amended.
<PAGE>
2.8 Committee means the Committee, as specified in Article 3, appointed by
the Board to administer the Plan, no members of which shall be eligible to
receive an Award pursuant to the Plan.
2.9 Common Stock means the Class A Common Stock, $0.10 par value per share,
of the Company.
2.10 Disability means permanent and total disability as determined under
the rules and guidelines established by the Committee for purposes of the Plan.
2.11 Effective Date means January 1, 1999.
2.12 Employee means a salaried employee (including officers and directors
who are also employees) of the Company or a Subsidiary.
2.13 Fair Market Value If the shares are listed on a established stock
exchange or exchanges, Fair Market Value per share shall be the closing sale
price on such exchange or exchanges on the day of grant or, if no sale of the
shares shall be made on any stock exchange on that day, 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 the National Association of Securities Dealer
Automated Quotation System ("NASDAQ") on the day of grant 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.
2.14 Incentive Stock Option or ISO means an option to purchase shares of
Common Stock granted under Article 6, which is designated as an Incentive Stock
Option and is intended to meet the requirements of Section 422 of the Code.
2.15 Nonemployee Director has the meaning set forth in Rule 16b-3(b)(3)(i)
or any successor definition adopted by the Securities and Exchange Commission.
2.16 Nonqualified Stock Option or NQSO means an option to purchase shares
of Common Stock, granted under Article 6, which is not an Incentive Stock
Option.
2.17 Option means an Incentive Stock Option or a Nonqualified Stock Option.
2.18 Option Price means the price at which a share of Common Stock may be
purchased by a Participant pursuant to an Option, as determined by the
Committee.
2.19 Participant means an Employee of the Company or a Subsidiary who holds
an outstanding Award granted under the Plan.
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2.20 Permitted Transferee means (i) a spouse, a child, or a grandchild of a
Participant (each an "Immediate Family Member"), (ii) a trust for the exclusive
benefit of a Participant and/or one or more Immediate Family Members, or (iii) a
partnership or limited liability company whose only partners or members are the
Participant and/or one or more Immediate Family Members.
2.21 Retirement (including Normal, Early and Disability Retirement) means
the termination of a Participant's employment with the Company or a Subsidiary
with eligibility for normal, early or disability retirement benefits under the
terms of the Company's pension plan, as amended and in effect at the time of
such termination of employment.
2.22 Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Act, as amended from time to time, or any successor rule.
2.23 Subsidiary means any corporation in which the Company owns directly,
or indirectly through subsidiaries, at least fifty percent (50%) of the total
combined voting power of all classes of stock, or any other entity (including,
but not limited to, limited liability companies, partnerships and joint
ventures) in which the Company owns at least fifty percent (50%) of the combined
equity thereof.
2.24 Termination Date means January 1, 2004.
2.25 Termination of Employment means the termination of a Participant's
employment with the Company or a Subsidiary. A Participant employed by a
Subsidiary shall also be deemed to incur a Termination of Employment if the
Subsidiary ceases to be a Subsidiary and the Participant does not immediately
thereafter become an Employee of the Company or another Subsidiary.
ARTICLE 3
ADMINISTRATION
3.1 The Committee. The Plan shall be administered by a committee designated
by the Board consisting of not less than three (3) directors who shall be
appointed from time to time by the Board, each of whom shall qualify as a
Nonemployee Director.
3.2 Committee Authority. Subject to the Company's Articles of
Incorporation, Bylaws and the provisions of this Plan, the Committee shall have
full authority to grant Awards to key Employees of the Company or a Subsidiary.
Awards may be granted singly, in combination, or in tandem. The authority of the
Committee shall include the following:
(a) To select the key Employees of the Company or a Subsidiary to whom
Awards may be granted under the Plan;
(b) To determine whether and to what extent Options are to be granted
under the Plan;
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(c) To determine the number of shares of Common Stock to be covered by
each Award;
(d) To determine the terms and conditions of any Award Agreement,
including, but not limited to, the Option Price, any vesting restriction or
limitation, any vesting schedule or acceleration thereof, or any forfeiture
restrictions or waiver thereof, regarding any Award and the shares Common
Stock relating thereto, based on such factors as the Committee shall
determine in its sole discretion;
(e) To determine whether, to what extent and under what circumstances
grants of Awards are to operate on a tandem basis and/or in conjunction
with or apart from other cash compensation arrangement made by Company
other than under the terms of this Plan;
(f) To determine under what circumstances an Award may be settled in
cash, Common Stock, or a combination thereof; and
(g) To determine to what extent and under what circumstances shares of
Common Stock and other amounts payable with respect to an Award shall be
deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award Agreement) and to
otherwise supervise the administration of the Plan. However, the Committee shall
take no action which will impair any Award previously granted under the Plan or
cause the Plan or the Award not to meet the requirements of Rule 16b-3. A
majority of the Committee shall constitute a quorum, and the acts of a majority
of a quorum at any meeting, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee. The interpretation and construction by the Committee of any
provisions of the Plan or any Award granted under the Plan shall be final and
binding upon the Company, the Board and Participants, including their respective
heirs, executors and assigns. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or an Award granted hereunder.
ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 9.1, the maximum aggregate
number of shares of Common Stock which may be issued under this Plan shall not
exceed 850,000 shares, which may be either authorized and unissued Common Stock
or issued Common Stock reacquired by the Company ("Plan Shares"). Determinations
as to the number of Plan Shares that remain available for issuance under the
Plan shall be made in accordance with such rules and procedures as the Committee
shall determine from time to time, which shall be consistent with the
requirements of Rule 16b-3 and such interpretations thereof. If an Award expires
unexercised or is forfeited, cancelled, terminated or settled in cash in lieu of
Common Stock, the shares of Common Stock that
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<PAGE>
were theretofore subject (or potentially subject) to such Award may again be
made subject to an Award Agreement.
ARTICLE 5
ELIGIBILITY
The persons eligible to receive Awards under the Plan shall be such
Employees as the Committee selects from time to time. In making such selections,
the Committee shall consider such factors as the Committee in its discretion
shall deem relevant. When granting Awards, the Committee may consider the
recommendation(s) of the Company and its officers. Participants may hold more
than one Award, but only on the terms and subject to the restrictions set forth
in the Plan and their respective Award Agreements.
ARTICLE 6
STOCK OPTIONS
6.1 Options. Each Option granted under this Plan shall be either an
Incentive Stock Option ("ISO") or a Nonqualified Stock Option ("NQSO").
6.2 Grants. The Committee shall have the authority to grant to any
Participant one or more Incentive Stock Options, Nonqualified Stock Options, or
both types of Options. To the extent that any Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does not
qualify shall constitute a separate Nonqualified Stock Option.
6.3 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422. An Incentive
Stock Option shall not be granted to an individual who, on the date of grant,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company. The aggregate Fair Market Value,
determined on the Award Date of the shares of Common Stock with respect to which
one or more Incentive Stock Options (or other incentive stock options within the
meaning of Section 422 of the Code, under all other option plans of the Company)
granted on or after January 1, 1987, that are exercisable for the first time by
a Participant during any calendar year shall not exceed the dollar limitation
imposed by the Code. Incentive Stock Options may be granted only to employees of
the Company and Subsidiaries which fit the definition of subsidiary corporation
in Section 424(f) of the Code.
6.4 Terms of Options. Options granted under the Plan shall be evidenced by
Award Agreements in such form as the Committee shall, from time to time approve,
which Agreement shall comply with and be subject to the following terms and
conditions:
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(a) Option Price. The Option Price per share of Common Stock
purchasable under an Option shall be determined by the Committee at the
time of grant but shall be not less than one hundred percent (100%) of the
Fair Market Value of the Common Stock at the Award Date.
(b) Option Term. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten (10) years
after the date the Option is granted.
(c) Exercisability. Except as provided in Section 9.2, no Option shall
be exercisable either in whole or in part prior to the first anniversary of
the Award Date. Thereafter, an Option shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Committee and set forth in the Award Agreement. If the Committee
provides that any Option is exercisable only in installments, the Committee
may at any time waive such installment exercise provisions, in whole or in
part, based on such factors as the Committee may determine.
(d) Method of Exercise. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Options may be
exercised in whole or in part at any time during the term of the Option, by
giving written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in full
of the purchase price in such form as the Committee may accept.
Notwithstanding the foregoing, an Option shall not be exercisable with
respect to less than 100 shares of Common Stock unless the remaining shares
covered by an Option are fewer than 100 shares. If and to the extent
determined by the Committee in its sole discretion at or after grant,
payment in full or in part may also be made in the form of Common Stock
owned for at least six months by the Participant (and for which the
Participant has good title free and clear of any liens and encumbrances) or
by reduction in the number of shares issuable upon such exercise based, in
each case, on the Fair Market Value of the Common Stock on the last trading
date preceding payment as determined by the Committee . No shares of stock
shall be issued until payment has been made. A Participant shall generally
have the rights to dividends or other rights of a shareholder with respect
to shares subject to the Option when the optionee has given written notice
of exercise, has paid for such shares as provided herein, and, if
requested, has given the representation described in Section 10.1 of the
Plan.
(e) Nontransferability of Options. No Option may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution, provided, however, a
Nonqualified Stock Option may be transferred, without consideration, to a
Permitted Transferee if the Participant satisfies such conditions to the
transfer as may be required by the Committee. A Permitted Transferee shall
succeed to all rights and benefits (except any right to further transfer of
the Option) and be subject to all obligations and limitations applicable to
the original Participant. However, such rights and benefits (except any
right to further transfer of the Option), and obligations and limitations
shall be determined as if the original Participant continued to hold the
Option,
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whereby provisions of this Plan dealing with termination of employment,
retirement, disability or death of a Participant will continue to refer to
the original Participant regardless of whether a Nonqualified Stock Option
has been transferred to a Permitted Transferee. The Company shall have no
obligation to notify a Permitted Transferee of the termination of
employment, retirement, disability, or death of a Participant. Further, all
Options shall be exercisable, during the Participant's lifetime, only by
such Participant, or, in the case of a Nonqualified Stock Option, by a
Participant or a Permitted Transferee, as the case may be. The designation
of a person entitled to exercise an Option after a person's death will not
be deemed a transfer.
(f) Termination of Employment for Reasons other than Retirement,
Disability, or Death. Upon Termination of Employment for any reason other
than Retirement or on account of Disability or death, each Option held by
the Participant shall, to the extent rights to purchase shares under such
Option have accrued at the date of such Termination of Employment and shall
not have been fully exercised, be exercisable, in whole or in part, at any
time within a period of three (3) months following Termination of
Employment, subject, however, to prior expiration of the term of such
Options and any other limitations on the exercise of such Options in effect
at the date of exercise.
(g) Termination of Employment for Retirement or Disability. Upon
Termination of Employment by reason of Retirement or Disability, each
Option held by such Participant shall, to the extent rights to purchase
shares under the Option have accrued at the date of such Retirement or
Disability and shall not have been fully exercised, remain exercisable in
whole or in part, for a period of two (2) years following such Termination
of Employment, subject, however, to prior expiration according to its terms
and other limitations imposed by the Plan. If the Participant dies after
such Retirement or Disability, the Participant's Options shall be
exercisable in accordance with Section 6.4(h) below.
(h) Termination of Employment for Death. Upon Termination of
Employment due to death, each Option held by such Participant 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 Participant's estate or
by any person or persons who shall have acquired the Option directly from
the Participant by bequest or inheritance only under the following
circumstances and during the following periods: (i) if the Participant dies
while employed by the Company or a Subsidiary, at any time within two (2)
years after his or her death, or (ii) if the Participant dies during the
extended exercise period following Termination of Employment specified in
Section 6.4(g), at any time within the longer of such extended period or
one (1) year after death, subject, however, in any case, to the prior
expiration of the term of the Option and any other limitation on the
exercise of such Option in effect at the date of exercise.
(i) Termination of Options. Any Option that is not exercised within
whichever of the exercise periods specified in Sections 6.4(f), (g) or (h)
is applicable shall terminate upon expiration of such exercise period.
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(j) Purchase and Settlement Provisions. The Committee may at any time
offer to purchase an Option previously granted, based on such terms and
conditions as the Committee shall establish and communicate to the
Participant at the time that such offer is made.
ARTICLE 7
TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time amend, discontinue or terminate this Plan or any
part thereof (including any amendment deemed necessary to ensure that the
Company may comply with any applicable regulatory requirement); provided,
however, that, unless otherwise required by law, the rights of a Participant
with respect to Awards granted prior to such amendment, discontinuance or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the Company's shareholders, no
amendment may be made which would (i) increase the aggregate number of shares of
Common Stock that may be issued under this Plan (except by operation of Section
9.1); (ii) change the definition of Employees eligible to receive Awards under
this Plan; (iii) decrease the option price of any Option to less than one
hundred percent (100%) of the Fair Market Value on the date of grant for an
Option; (iv) extend the maximum option period under Section 6.4(b) of the Plan;
or (v) cause the Plan not to comply with either Rule 16b-3, or any successor
rule under the Act, or Section 162(m) of the Code. The Committee may amend the
terms of any Award theretofore granted, prospectively or retroactively, but,
subject to Section 9.2, no such amendment or other action by the Committee shall
impair the rights of any Participant without the Participant's consent. Awards
may not be granted under the Plan after the Termination Date, but Awards granted
prior to such date shall remain in effect or become exercisable pursuant to
their respective terms and the terms of this Plan.
ARTICLE 8
UNFUNDED PLAN
This Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payment not yet made to a Participant
by the Company, nothing contained herein shall give any such Participant any
rights that are greater than those of a general creditor of the Company.
ARTICLE 9
ADJUSTMENT PROVISIONS
9.1 Antidilution. Subject to the provisions of this Article 9, if the
outstanding shares of Common Stock are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may
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be made in (i) the maximum number and kind of shares provided in Article 4 of
the Plan, (ii) the number and kind of shares or other securities subject to the
then outstanding Awards, and (iii) the price for each share or other unit of any
other securities subject to the then outstanding Awards.
9.2 Change in Control. Notwithstanding Section 9.1, upon the occurrence of
a Change in Control, all Awards then outstanding under the Plan will be fully
vested and exercisable and all restrictions will immediately cease, unless, in
the case of a transaction described in clause (iii) or (iv) in the following
definition of Change in Control, provisions are made in connection with such
transaction for the continuance of the Plan and the assumption of or the
substitution for such Awards with new Awards covering the stock of a successor
employer corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices. As used in this
Plan, "Change in Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Act; provided that, for
purposes of this Plan, a Change in Control shall be deemed to have occurred if:
(i) any Person (other than the Company) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company which represent 20% or more of the combined voting power of the
Company's then outstanding securities; (ii) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election, by the Company's shareholders, of
each new director is approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the period
but excluding any individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such term is used
in Rule 14a-11 of Regulation 14A promulgated under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board; (iii) there is consummated any con solidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of Common Stock are converted into cash, securities or
other property, other than a merger of the Company in which the holders of
Common Stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger; (iv) there is consummated any consolidation or merger of the Company in
which the Company is the continuing or surviving corporation in which the
holders of Common Stock immediately prior to the merger do not own at least
fifty percent (50%), or such greater percentage as shall be set in any agreement
with any Participant, or more of the stock of the surviving corporation
immediately after the merger; (v) there is consummated any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company; or (vi) the
shareholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company.
9.3 Adjustments by Committee. Any adjustments pursuant to this Article 9
will be made by the Committee, whose determination as to what adjustments will
be made and the extent thereof will be final, binding, and conclusive. No
fractional interest will be issued under the Plan on account of any such
adjustments. Only cash payments will be made in lieu of fractional shares.
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ARTICLE 10
GENERAL PROVISIONS
10.1 Legend. The Committee may require each person purchasing shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, any applicable Federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
10.2 No Right to Employment. Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other Employee any right with respect to
continuance of employment by the Company or any Subsidiary, nor shall there be a
limitation in any way on the right of the Company or any Subsidiary by which an
Employee is employed to terminate his or her employment at any time.
10.3 Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld. Unless otherwise prohibited by the Committee,
each Participant 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 Participant a number of shares having a Fair Market Value as of the "Tax
Date", less than or equal to the amount of the withholding tax obligation; or
(c) delivering to the Company unencumbered shares owned by the Participant
having a Fair Market Value, as of the Tax Date, less than or equal to the amount
of the withholding tax obligation. The "Tax Date" shall be the date that the
amount of tax to be withheld is determined.
10.4 No Assignment of Benefits. No Option, Award or other benefit payable
under this Plan shall, except as otherwise specifically provided by law, be
subject in any manner to anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, attach, sell, transfer, assign, pledge, encumber or charge, any such
benefits shall be void, and any such benefit shall not in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or torts of any
person who shall be entitled to such benefit, nor shall it be subject to
attachment or legal process for or against such person.
10.5 Governing Law. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws and in the courts of
the state of Michigan.
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10.6 Application of Funds. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to Awards granted under this Plan will
be used for general corporate purposes.
10.7 Rights as a Shareholder. Except as otherwise provided in an Award
Agreement, a Participant shall have no rights as a shareholder of the Company
until he or she becomes the holder of record of Common Stock.
10.8 Laws of Foreign Jurisdictions. Without amending this Plan, the
Committee 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
Committee, be necessary to comply with foreign law or practice and to further
the purposes of this Plan.
ARTICLE 11
SHAREHOLDER APPROVAL
The Plan shall be effective on the Effective Date and shall be submitted
for approval by the shareholders of the Company at the Annual Meeting of
Shareholders in 1998. If the shareholders do not approve the Plan, it, and any
action taken under the Plan, shall be void and of no effect.
::ODMA\PCDOCS\GRR\212671\1
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EXHIBIT 5
November 23, 1998
Donnelly Corporation
49 West Third Street
Holland, Michigan 49423-2813
Re: Registration Statement on Form S-8 Relating to the
Donnelly Corporation 1998 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, 850,000 shares of the
Company's Class A common stock, par value $0.10 per share, for issuance pursuant
to the Company's 1998 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 850,000 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.
Sincerely,
VARNUM, RIDDERING, SCHMIDT & HOWLETTLLP
/s/ Varnum, Riddering, Schmidt & Howlett LLP
::ODMA\PCDOCS\GRR\212671\1
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EXHIBIT 23(a)
Consent of Independent Certified Public Accountants
Donnelly Corporation
Holland, Michigan
We hereby consent to the incorporation by reference in this Registration
Statement of Donnelly Corporation for its 1998 Employee Stock Option Plan, of
our reports dated August 6, 1998, relating to the combined consolidated
financial statements and schedules of Donnelly Corporation appearing in the
Company's Annual Report on Form 10-K for the year ended June 27, 1998.
We also consent to the reference to us as experts in this Registration
Statement.
/s/ BDO Seidman, LLP
Grand Rapids, Michigan
November 25, 1998
