As filed with the Securities and Exchange Commission on October 29, 1999
Registration No. 333-
----
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
PENN TREATY AMERICAN CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Pennsylvania 23-1664166
------------ ----------
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NO.)
3440 Lehigh Street
Allentown, Pennsylvania 18103
----------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Penn Treaty American Corporation
1987 Employee Incentive Stock Option Plan
-----------------------------------------
(FULL TITLE OF THE PLAN)
Irving Levit, President
Penn Treaty American Corporation
3440 Lehigh Street
Allentown, Pennsylvania 18103
---------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(610) 965-2222
--------------
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
with a copy to:
Justin P. Klein, Esquire
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
(215) 665-8500
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share(1) Price(1) Fee
- --------------------------------------------------------------------------------
Common Stock,
par value $.10
per share 282,269(2) $18.4375 $5,204,335 $1,447
<PAGE>
(1) Calculated in accordance with Rule 457(c) and (h) on the basis of the
average of the high and low prices of Penn Treaty American Corporation
Common Stock on October 28, 1999, as reported on the New York Stock
Exchange.
(2) Such number represents the number of shares of Common Stock initially
issuable upon exercise of all options available for grant under the
1987 Employee Incentive Stock Option Plan.
<PAGE>
PART I - INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I of this
Registration Statement will be given or sent to all officers and other key
employees of Penn Treaty American Corporation who participate in the Penn Treaty
American Corporation 1987 Employee Incentive Stock Option Plan as specified by
Rule 428 under the Securities Act.
PART II - INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended by Penn Treaty (File
No. 0-15972) are incorporated herein by reference:
(i) Penn Treaty's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(ii) Penn Treaty's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 199 and June 30, 1999;
(iii) Penn Treaty's Current Report on Form 8-K dated January 15, 1999;
(iv) the description of Penn Treaty=s common stock contained in Penn
Treaty=s Registration Statement on Form 8-A for such securities,
including any amendments or reports filed for the purpose of updating
such description.
All documents subsequently filed by Penn Treaty after the date hereof
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and shall be part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended and Restated Bylaws of Penn Treaty provide for indemnification
of directors and officers of Penn Treaty in accordance with indemnification
provisions of the Pennsylvania Business Corporation Law of 1988. Sections
1741-50 of the Pennsylvania Business Corporation Law permit indemnification of
directors, officers, employees and agents of a corporation under certain
conditions and subject to certain limitations.
The Company has directors and officers liability insurance insuring its
directors and officers against liability incurred in their capacities as
directors and officers and providing for reimbursement of the registrant for any
indemnification payments made by it to directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Specimen copy of Common Stock Certificate (incorporated by
reference to Exhibit 4 to Registration Statement on Form S-1,
Reg. No. 33-92690).
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (contained in
Exhibit 5.1)
24.1 Power of Attorney (included on signature page of Registration
Statement)
99.1 Penn Treaty American Corporation 1987 Employee Incentive Stock
Option Plan
<PAGE>
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, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii)To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3 or Form
S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section
13 or section 15(d) of the 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 bona fide offering thereof.
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Allentown, Commonwealth of Pennsylvania on October
29, 1999.
Penn Treaty American Corporation
By : /s/ Irving Levit
-----------------------
Irving Levit, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Irving Levit and A.J. Carden and each or
any one of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his 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, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
his or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Signature Title Date
--------- ----- ----
/s/ Irving Levit Chairman of the Board, President October 29, 1999
----------- and Chief Executive Officer
Irving Levit (Principal Executive Officer)
<PAGE>
/s/ Michael F. Grill Treasurer, Controller and October 29, 1999
---------------- Director (Principal Accounting
Michael F. Grill Officer)
/s/ A.J. Carden Executive Vice President and October 29, 1999
----------- Director
A.J. Carden
/s/ Domenic P. Stangherlin Secretary and Director October 29, 1999
----------------------
Domenic P. Stangherlin
/s/ Jack D. Baum Vice President, Marketing and October 29, 1999
------------ Director
Jack D. Baum
/s/ Glen A. Levit Vice President, Sales and October 29, 1999
------------ Director
Glen A. Levit
/s/ Cameron Waite Chief Financial Officer October 29, 1999
------------- (Principal Financial Officer)
Cameron Waite
/s/ Emile G. Ilchuk Director October 29, 1999
---------------
Emile G. Ilchuk
/s/ C. Mitchell Goldman Director October 29, 1999
-------------------
C. Mitchell Goldman
/s/ David B. Trindle Director October 29, 1999
----------------
David B. Trindle
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
4.1 Specimen copy of Common Stock Certificate (incorporated by
reference to Exhibit 4 to Registration Statement on Form
S-1, Reg. No. 333-10777).
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP
23.1 Consent of PricewaterhouseCoopers, LLP
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (contained
in Exhibit 5.1)
24.1 Power of Attorney (included on signature page of Registration
Statement)
99.1 Penn Treaty American Corporation 1998 Employee Incentive Stock
Option Plan
<PAGE>
EXHIBIT 5.1
[Ballard Spahr Andrews & Ingersoll, LLP Letterhead]
October 29, 1999
Penn Treaty American Corporation
3440 Lehigh Street
Allentown, PA 18103
Re: Registration Statement on Form S-8
Gentlemen:
We have acted as special counsel to Penn Treaty American Corporation (the
"Company") in connection with the registration under the Securities Act of 1933,
as amended, of 282,269 shares of Common Stock of the Company, par value $.10 per
share (the "Shares"), issuable upon the exercise of options granted under the
Penn Treaty American Corporation 1987 Employee Incentive Stock Option Plan (the
"Plan").
In rendering our opinion, we have reviewed such certificates, documents,
corporate records and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. In giving this
opinion, we are assuming the authenticity of all instruments presented to us as
originals, the conformity with the originals of all instruments presented to us
as copies and the genuineness of all signatures.
Based on the foregoing, we are of the opinion that the Shares, when issued upon
exercise of options granted under the Plan, in accordance with the terms
thereof, will be legally issued, fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement on Form S-8 being filed with respect to the offering of the Shares.
Yours truly,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
--------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 8, 1999 relating to the
financial statements and financial statement schedules of Penn Treaty American
Corporation which appears in Penn Treaty American Corporation's Annual Report on
Form 10-K for the year ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
--------------------------
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
October 29, 1999
<PAGE>
EXHIBIT 99.1
PENN TREATY AMERICAN CORPORATION
EMPLOYEE INCENTIVE STOCK OPTION PLAN
1. PURPOSE
This Employee Incentive Stock Option Plan (the "Plan") is intended to be an
incentive and to encourage stock ownership by certain officers and key executive
employees of Penn Treaty American Corporation (the ACorporation@) or any of its
subsidiary corporations as that term is defined in Section 425 of the Internal
Revenue Code of 1985 (the ASubsidiaries@) so that such employees may acquire or
increase their proprietary interest in the success of the Corporation and
Subsidiaries, and so that they may be encouraged to remain in the employ of the
Corporation or its Subsidiaries. It is further intended that options issued
pursuant to the Plan shall constitute incentive stock options within the meaning
of Section 422A of the Internal Revenue Code of 1986.
2. ADMINISTRATION
The Plan shall be administered by a committee appointed by the Board of
Directors of the Corporation (the "Committee"). The Committee shall consist of
not less than three persons who may be, but need not be, members of the
Corporation's Board of Directors. The Board of Directors may from time to time
remove members from, or add members to, the Committee. Vacancies on the
Committee, howsoever caused, shall be filled by the Board of Directors. The
Committee shall select one of its members as Chairman and shall hold meetings at
such times and places as it may determine. Acts by a majority of the Committee
<PAGE>
at a meeting at which a quorum is present, 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. No person while a member of the Committee shall participate in
any decision affecting his right to receive an option under the Plan. The
Committee shall from time to time in its discretion make recommendations to the
Board of Directors with respect to the employees who shall be granted options
and the amount of stock to be optioned to each. The Board of Directors shall
have the final authority to determine these matters. The interpretation and
construction by the Committee of any provisions of the Plan or of any option
granted under it shall be final unless otherwise determined by the Board of
Directors. No member of the Board of Directors or the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any option granted under it.
3 ELIGIBILITY
The persons who shall be eligible to receive options shall be the key
employees (including officers whether or not they are directors) of the
Corporation or its Subsidiaries. An optionee may hold more than one option but
only on the terms and subject to the restrictions hereinafter set forth.
4 STOCK
The stock subject to the options shall be shares of the Corporation's
authorized but unissued or reacquired common stock (hereinafter sometimes called
"Common Stock"). The aggregate number of shares which may be issued under
options shall not exceed 100,000 shares of Common Stock. The limitation
established by the preceding sentence shall be subject to adjustment as provided
in Article 5(g) of the Plan.
<PAGE>
In the event that any outstanding option under the Plan for any reason
expires or is terminated, the shares of Common Stock allocable to the
unexercised portion of such option may again be subject to an option under the
Plan.
5 TERMS AND CONDITIONS OF OPTIONS
When the Board of Directors shall have granted stock options to employees,
Notices of Grant of Stock Option shall be given to such employees in such form
as the Committee shall from time to time approve, which Notices shall comply
with and be subject to the following terms and conditions:
a Number of Shares.
Each Notice of Grant of Stock Option shall state the number of shares
to which it pertains.
b Option Price.
Each Notice of Grant of Stock Option shall state the option price,
which shall not be less than 100% of the fair market value of the shares of
Common Stock of the Corporation on the date of the granting of the option.
During such time as such stock is not listed upon an established stock
exchange or traded in the over-the-counter market, the fair market value
per share shall be determined by the Committee at least annually by relying
upon whatever evidence it deems appropriate which may include, but need not
be limited to, recent sales of the Common Stock, opinions of professional
appraisers and recent sales of comparable shares of other companies. If the
stock is traded in the over-the-counter market, such fair market value
shall be the mean between the dealer "bid" and "ask" prices of the Common
Stock in the New York over-the-counter market on the day the option is
<PAGE>
granted, as reported by the National Association of Securities Dealers,
Inc. If the stock is listed upon an established stock exchange or exchanges
such fair market value shall be deemed to be the highest closing price of
the Common Stock on such stock exchange or exchanges on the day the option
is granted or if no sale of the Corporation's Common Stock shall have been
made on any stock exchange on that day, on the next preceding day on which
there was a sale of such stock. Subject to the foregoing, the Committee in
fixing the option price shall have full authority and discretion.
c Medium and Time of Payment.
Unless otherwise specified in the option grant pursuant to Section 8
hereof, the option price shall be payable in United States dollars upon the
exercise of the option and may be paid in cash or by check.
d Term and Exercise of Options.
No option shall be exercisable either in whole or in part prior to 12
months from the date it is granted. Each Notice of Grant of Stock Option
shall state the date on which the option shall expire. No option shall be
exercisable after ten years from the date on which it is granted. Options
may only be exercised by an optionee for so long as he is employed by the
Corporation except as otherwise provided in Articles 5(e) and 5(f) of the
Plan.
The Notice of Grant of Stock Option may provide that the option shall
be exercisable in installments rather than exercisable immediately in full.
In such case, subject to the right of emulation provided in the last
sentence of this subdivision, during each twelve-month period commencing 12
months from the date of the granting of the option, each option shall be
exercisable as to not more than that percentage of the total number of
shares covered thereby as the Committee shall specify in the Notice of
Grant of Stock Option, until all shares covered by the option shall have
been purchased. The Committee may provide in the case of an option not
immediately exercisable in full, for the acceleration of the time at which
the option may be exercised.
<PAGE>
Not less than 100 shares may be purchased at any one time unless the
number purchased is the total number at the time purchasable under the
option. During the lifetime of the optionee, the option shall be
exercisable only by him and shall not be assignable or transferable by him
and no other person shall acquire any rights therein. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or in
part, in any subsequent period but not later than ten years from the date
the option is granted.
e Termination of Employment Except By Death or Disability.
In the event that the employment of an optionee by the Corporation or
Subsidiaries shall terminate for any reason other than his death or
disability, then as of the date the optionee has notice of such
termination, such optionee shall have no further right to exercise any
option. Whether authorized leave of absence or absence for military or
governmental service shall constitute termination of employment, for the
purposes of the Plan, shall be determined by the Committee, which
determination, unless overruled by the Board of Directors, shall be final
and conclusive.
f Death or Disability of Optionee and Transfer of Option.
If the optionee shall die or become disabled while in the employ of
the Corporation or a Subsidiary, and shall not have fully exercised an
option, the option may be exercised, subject to the condition that no
option shall be exercisable after the expiration of ten years from the date
it is granted, to the extent that the optionee's right to exercise such
option had accrued pursuant to Article 5(d) of the Plan at the time of his
death and had not previously been exercised, at any time within 3 months
after the optionee=s death or disability, by the optionee, or in the case
of death, by the executors or administrators of the optionee or by any
person or persons who shall have acquired the option directly from the
optionee by bequest or inheritance. No option shall be transferable by the
optionee otherwise than by will or the laws of descent and distribution.
<PAGE>
g Recapitalization.
Subject to any required action by the stockholders, the number of
shares of Common Stock covered by each outstanding option, and the price
per share thereof in each such option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
of the Corporation resulting from a subdivision or consolidation of shares
or the payment of a stock dividend (but only on the Common Stock) or any
other increase or decrease in the number of such shares effected without
receipt of consideration by the Corporation.
Subject to any required action by the stockholders, if the Corporation
shall be the surviving corporation in any merger or consolidation, each
outstanding option shall pertain to and apply to the securities to which a
holder of the number of shares of Common Stock subject to the option would
have been entitled. A dissolution or liquidation of the Corporation or a
merger or consolidation in which the Corporation is not the surviving
corporation, shall cause each outstanding option to terminate, provided
that each optionee shall, in such event, if a period of 12 months from the
date of the granting of the option shall have expired, have the right
immediately prior to such dissolution or liquidation, or merger or
consolidation in which the Corporation is not the surviving corporation, to
exercise his option in whole or in part without regard to the installment
provisions of Article 5(d) of the Plan. Notwithstanding the above
provisions, an option will not terminate if assumed by the surviving or
acquiring corporation, or its parent, upon a merger or consolidation under
circumstances which are not deemed a modification of the option within the
meaning of Sections 425(a) and 425(h)(3)(A) of the Internal Revenue Code.
<PAGE>
In the event of a change in the Common Stock of the Corporation 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 Common Stock within the meaning of
the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive, provided that each option granted pursuant to this Plan shall
not be adjusted in a manner that causes the option to fail to continue to
qualify as an incentive stock option within the meaning of Section 422A of
the 1954 Internal Revenue Code.
Except as hereinbefore expressly provided in this Article 5(g), the
optionee shall have no rights by reason of any subdivision or consolidation
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 any class or by
reason of any dissolution, liquidation, merger or consolidation or spin-off
of assets or stock of another corporation, and any issue by the Corporation
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 Common
Stock subject to the option.
<PAGE>
The grant of an option pursuant to the Plan shall not affect in any
way the right or power of the Corporation 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.
h Rights as a Stockholder.
An optionee or a transferee of an option shall have no rights as a
stockholder with respect to any shares covered by his option until the date
of the issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary; whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided in Article 5(g) hereof
i Modification, Extension and Renewal of Options.
Subject to the terms and conditions and within the limitations of the
Plan, the Board of Directors may modify, extend or renew outstanding
options granted under the Plan, or accept the surrender of outstanding
options (to the extent not theretofore exercised). The Board of Directors
shall not, however, modify any outstanding options so as to specify a lower
price or accept the surrender of outstanding options and authorize the
granting of new options in substitution therefor specifying a lower price.
Notwithstanding the foregoing, however, 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.
j Investment Purpose.
Each option under the Plan shall be granted on the condition that the
purchases of stock thereunder shall be for investment purposes and not with
a view to resale or distribution, except that in the event the stock
subject to such option is registered under the Securities Act of 1933, as
amended, or in the event a resale of such stock without such registration
would otherwise be permissible, such condition shall be inoperative if, in
the opinion of counsel for the Corporation, such condition is not required
under the Securities Act of 1933 or any other applicable law, regulation or
rule of any governmental agency.
<PAGE>
k Optionee's Stockholder Agreement.
Each optionee shall agree, as a condition of his right to exercise an
option granted to him pursuant to the Plan, that all shares received by him
pursuant to any and every exercise of such option will be subject to all of
the provisions of the Corporation=s Stockholder Agreement, if any, in
effect at the time of any exercise of such option. Accordingly, each
optionee shall at the time of exercise of any option granted hereunder,
execute and agree to be bound by the Corporation=s Stockholder Agreement
then in effect.
l Covenant Not to Compete.
The Notice of Grant of Stock Option may provide that, as a condition
of the employee's acceptance of the option, the employee shall agree to be
bound by a covenant not to compete with the Corporation containing such
terms as the Committee and Board of Directors shall deem advisable.
m Other Provisions.
The Notice of Grant of Stock Option shall contain such other
provisions, including, without limitation, restrictions upon the exercise
of the option or the transfer of the shares received upon an exercise, as
the Committee and the Board of Directors shall deem advisable. Any such
Notice shall contain such limitations and restrictions upon the exercise of
the option as shall be necessary in order that such option will be an
"incentive stock option" as defined in Section 422A of the Internal Revenue
Code of 1986 or to conform to any change in the law.
<PAGE>
6 OPTIONS TO CERTAIN STOCKHOLDERS
Notwithstanding any other provision herein, in any option granted to an
individual who, at the time the option is granted, possesses more than 10
percent of the total combined voting power of all classes of stock of the
Corporation or of its parent or any subsidiary corporation, the option price
must be at least 110 percent of the fair market value of the stock subject to
the option and such option by its terms must not be exercisable after the
expiration of 5 years from the date such option is granted.
7 ANNUAL LIMITATION PER EMPLOYEE
The aggregate fair market value (determined as of the time the option is
granted under the Plan) of the stock for which any employee may be granted
incentive stock options which are first exercisable in any calendar year (under
all such plans of his employer corporation and its parent and all subsidiary
corporations) shall not exceed $100,000.
8 PERMISSIBLE PROVISIONS
In addition to the other powers granted to the Committee and the Board of
Directors under this Plan, the Committee and the Board of Directors shall have
the discretion to include in any option grant the right of the optionee (i) to
pay for the stock with stock of the corporation granting the option and/or (ii)
to receive property at the time of exercise of the option if, in the case of
property other than cash, Section 83 of the Internal Revenue Code of 1986
applies to such property, and/or (iii) to receive a loan from the Corporation to
pay for the stock, with such terms as shall not cause the option to become
disqualified as an Aincentive stock option@ as defined in Section 422A of the
Internal Revenue Code of 1986 or amendments thereto, and/or (iv) to receive such
assistance from the Corporation in obtaining a loan from a financial institution
as is necessary in the sole discretion of the Committee and the Board of
Directors.
<PAGE>
9 TERM OF PLAN
Options may be granted pursuant to the Plan from time to time within a
period of ten years from the date the Plan is adopted, or the date the Plan is
approved by the Stockholders, whichever is earlier.
10 INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any option granted
thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member is liable
for negligence or misconduct in the performance of his duties; provided that
within 60 days after institution of any such action, suit or proceeding the
Committee member shall in writing offer the Corporation the opportunity, as its
own expense, to handle and defend the same.
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11 AMENDMENT OF THE PLAN
The Board of Directors of the Corporation may, insofar as permitted by law,
from time to time, with respect to any shares at the time not subject to
options, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever except that, without approval of the stockholders, no such revision
or amendment shall change the number of shares subject to the Plan, change the
designation of the class of employees eligible to receive options, decrease the
price at which options may be granted, or remove the administration of the Plan
from the Committee. Furthermore, the Plan may not, without the approval of the
stockholders, be amended in any manner that will cause options issued under it
to fail to meet the requirements of incentive stock options as defined in
Section 422A of the 1954 Internal Revenue Code.
12 APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of Common Stock
pursuant to options will be used for general corporate purposes.
13 NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon the optionee to
exercise such option.
14 APPROVAL OF STOCKHOLDERS
The Plan shall not take effect until approved by the holders of a majority
of the outstanding shares of Common Stock of the Corporation, which approval
must occur within the period beginning twelve months before and ending twelve
months after the date the Plan is adopted by the Board of Directors.
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15 CONTINUED EMPLOYMENT
The grant of an option pursuant to the Plan shall not be construed to imply
or to constitute evidence of any agreement, express or implied, on the part of
the Corporation or any subsidiary to continue to employ an employee or to alter
the responsibilities, duties or authority of any employee.
