<PAGE>
As filed with the Securities and Exchange Commission on November 7, 1995
Registration No. 33-
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
EGGHEAD, INC.
(Exact name of Registrant as specified in its charter)
Washington 91-1296187
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
22705 East Mission
Liberty Lake, Washington 99019
(Address of principal executive offices) (Zip code)
RESTATED NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
(Full title of the plans)
BRIAN W. BENDER
Vice President and Chief Financial Officer
Egghead, Inc.
22705 East Mission
Liberty Lake, Washington 99019
(509) 922-7031
(Name, address and telephone number of agent for service)
______________________
Copy to:
CHARLES J. KATZ, JR.
PERKINS COIE
1201 Third Avenue, 40th Floor
Seattle, Washington 98101-3099
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Title of Securities Amount to Be Proposed Maximum Proposed Maximum Amount of
to Be Registered Registered Offering Price Per Share(2) Aggregate Offering Price(2) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 275,000 (1) $7.125 $1,959,375.00 $676.00
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Together with an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant to
the Restated Nonemployee Director Stock Option Plan as the result of any
future stock split, stock dividend or similar adjustment of the outstanding
Common Stock of the Registrant.
(2) Estimated pursuant to Rule 457 of the Securities Act of 1933, as amended
(the "Securities Act"), solely for the purpose of calculating the amount of
the registration fee. The price per share is estimated to be $7.125 based
on the average of the high ($7.25) and low ($7.00) trading prices for the
Common Stock in the over-the-counter market on November 3, 1995, as
reported on the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference into this
Registration Statement:
(a) The Registrant's latest Annual Report on Form 10-K for the year
ended April 1, 1995, filed with the Securities and Exchange Commission (the
"Commission") on May 25, 1995;
(b) All other reports filed by the Registrant 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 Annual Report on
Form 10-K referred to in (a) above; and
(c) The description of the Registrant's Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on May 13, 1988
under Section 12 of the Exchange Act, including any amendments or reports filed
for the purpose of updating such descriptions.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date hereof and prior to the filing of a
post-effective amendment which indicates that the securities offered hereby have
been sold or which deregisters the securities covered hereby then remaining
unsold shall also be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof commencing on the respective
dates on which such documents are filed.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
A. As permitted by Section 23B.08.320 of the Washington Business Corporation
Act, Article X of the Registrant's Articles of Incorporation limits a director's
liability to the Registrant or its shareholders for monetary damages arising
from his or her conduct as a director, except for acts or omissions that involve
intentional misconduct or a knowing violation of law, approval of distributions
or loans in violation of Section 23B.06.400 of the Washington Business
Corporation Act or any transaction from which the director will personally
receive a benefit in money, property or services to which the director is not
legally entitled.
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act authorize a court to award, or a corporation's board of
directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act. As permitted by
Section 23B.08.560 of the Washington Business Corporation Act, Article IX of the
Registrant's Bylaws provides that the Registrant shall indemnify its officers
and directors and may indemnify its employees and other agents against any and
all loss, liability, expenses (including attorneys' fees), judgments, fines,
ERISA excise taxes or penalties and amounts to be paid in settlement (each, a
"Loss") actually and reasonably incurred or suffered in connection with any
actual or threatened claim, suit or proceeding, whether civil, criminal,
administrative or investigative, except for a Loss arising out of acts or
omissions finally adjudged to be intentional misconduct or a known violation of
law, approval of distributions or loans that are finally adjudged to be in
violation of RCW 23B.06.400 or any transaction in which it is finally adjudged
that the indemnitee personally received a benefit in money, property or services
to which the indemnitee was not legally entitled. The Registrant's Bylaws also
permit it to secure insurance on behalf of any officer, director, employee or
other agent for any liability arising out of his or her actions in such
capacity, regardless of whether the Bylaws would permit indemnification, and to
enter into agreements to indemnify its officers and directors in furtherance of
Article IX of the Registrant's Bylaws. The Registrant has entered into such
agreements with certain of its officers and directors.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
<PAGE>
C. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
ITEM 8. EXHIBITS
Exhibit
Number Description
- ----------- ------------------------------------------------------------------
5.1 Opinion of Perkins Coie regarding legality of the common stock
being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie (included in its Opinion filed as Exhibit
5.1)
24.1 Power of Attorney (see Signature Page)
99.1 Restated Nonemployee Director Stock Option Plan
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this Registration
Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 that remain unsold at the termination of the
offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Liberty Lake, State of Washington, on the 7th day of
November, 1995.
EGGHEAD, INC.
By TERENCE M. STROM
----------------------------------------
Terence M. Strom
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Terence M. Strom and Brian W. Bender, and each of them, as true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
to sign in the name and on behalf of such person, individually and in each
capacity stated below, any or all amendments (including pre-effective and 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.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
the 7th day of November, 1995 in the capacities indicated.
Signature Title
--------- -----
TERENCE M. STROM President, Chief Executive Officer and
- -------------------------------- Director (Principal Executive Officer)
Terence M. Strom
BRIAN W. BENDER Vice President and Chief Financial
- -------------------------------- Officer (Principal Financial and
Brian W. Bender Accounting Officer)
Director
- --------------------------------
Paul G. Allen
RICHARD P. COOLEY Director
- --------------------------------
Richard P. Cooley
STEVEN E. LEBOW Director
- --------------------------------
Steven E. Lebow
LINDA FAYNE LEVINSON Director
- --------------------------------
Linda Fayne Levinson
GEORGE P. ORBAN Director
- --------------------------------
George P. Orban
SAMUEL N. STROUM Director
- --------------------------------
Samuel N. Stroum
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequentially
Number Description Numbered Page
- ------- -------------------------------------------------- -------------
5.1 Opinion of Perkins Coie regarding legality of the
common stock being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie (included in its Opinion
filed as Exhibit 5.1)
24.1 Power of Attorney (see Signature Page)
99.1 Restated Nonemployee Director Stock Option Plan
<PAGE>
Perkins Coie
A Law Partnership Including Professional Corporations
1201 Third Avenue, 40th Floor, Seattle, Washington 98101-3099
Telephone: (206) 583-8888, Facsimile: (206) 583-8500
November 7, 1995
Egghead, Inc.
22705 East Mission
Liberty Lake, WA 99019
RE: REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel to you in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") pursuant to
the Securities Act of 1933, as amended (the "Act"), which you are filing with
the Securities and Exchange Commission with respect to 275,000 shares of Common
Stock, $.01 par value per share (the "Shares"), which are to be issued pursuant
to the Egghead, Inc. Restated Nonemployee Director Stock Option Plan (the
"Plan"). We have examined the Registration Statement and such other documents
and records of Egghead, Inc. as we have deemed relevant and necessary for the
purposes of this opinion.
Based upon and subject to the foregoing, we are of the opinion that the
Shares that will be issued pursuant to the Plan, upon the due execution by
Egghead, Inc. and the registration by its registrar of the Shares and the
issuance thereof by Egghead, Inc. in accordance with the terms of the Plan, and
the receipt of consideration therefor in accordance with the terms of the Plan,
will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
PERKINS COIE
<PAGE>
[ARTHUR ANDERSEN LLP LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Egghead, Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated May 16, 1995
included in the Egghead, Inc. Form 10-K for the year ended April 1, 1995, and to
all references to our Firm included in this registration statement.
/s/Arthur Andersen LLP
Seattle, Washington
November 7, 1995
<PAGE>
EGGHEAD, INC
RESTATED NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
ARTICLE I. PURPOSES
The purposes of the Egghead, Inc. Restated Nonemployee Director Stock Option
Plan (the "Plan") are to attract and retain the services of experienced and
knowledgeable nonemployee directors of Egghead, Inc. (the "Corporation") and to
provide an incentive for such directors to increase their proprietary interests
in the Corporation's long-term success and progress.
ARTICLE II. SHARES SUBJECT TO THE PLAN
Subject to adjustment in accordance with Article VI hereof, the total number
of shares of the Corporation's common stock (the "Common Stock") for which
options may be granted under the Plan is 450,000 (the "Shares"). The Shares
shall be shares presently authorized but unissued or subsequently acquired by
the Corporation and shall include shares representing the unexercised portion of
any option granted under the Plan that expires or terminates without being
exercised in full.
ARTICLE III. ADMINISTRATION OF THE PLAN
The administrator of the Plan (the "Plan Administrator") shall be the Board
of Directors of the Corporation (the "Board"). Subject to the terms of the Plan,
the Plan Administrator shall have the power to construe the provisions of the
Plan, to determine all questions arising thereunder, and to adopt and amend such
rules and regulations for the administration of the Plan as it may deem
desirable. No member of the Plan Administrator shall participate in any vote by
the Plan Administrator on any matter materially affecting the rights of any such
member under the Plan.
ARTICLE IV. PARTICIPATION IN THE PLAN
Each member of the Board elected or appointed who is not otherwise an
employee of the Corporation or any parent or subsidiary corporation (an
"Eligible Director") shall automatically receive the following options:
1. INITIAL GRANTS
(a) Each Eligible Director who is in office on the day the Plan is
adopted by the Board and who continues in office after the annual meeting of
shareholders to be held in 1993 (the "1993 Annual Meeting") shall
automatically receive a grant of an option to purchase 9,000 Shares on the
day this Plan is adopted by the Board.
(b) Each Eligible Director who is elected for the first time at the 1993
Annual Meeting or at any subsequent annual meeting of shareholders prior to
June 7, 1995 shall automatically receive a grant of an option to purchase
9,000 Shares on the day after such annual meeting.
(c) Each Eligible Director who is elected for the first time at an
annual meeting of shareholders after June 7, 1995 shall automatically
receive a grant of an option to purchase 22,500 Shares on the day after such
annual meeting.
(d) Each Eligible Director who is appointed or elected after June 7,
1995 other than at an annual meeting of shareholders shall, on the day of
such appointment or election, automatically receive a grant of an option to
purchase that number of Shares equal to 7,500 multiplied by a fraction, the
numerator of which is 12 minus the number of whole months which have elapsed
since the last annual meeting of shareholders and the denominator of which
is 12; provided, however, that such option shall vest in full on the day of
the first annual meeting of shareholders to occur after the grant.
A-1
<PAGE>
2. SUPPLEMENTAL INITIAL GRANTS
Each Eligible Director who is in office on June 7, 1995 shall automatically
receive a grant of an option to purchase 13,500 Shares on that date.
3. ADDITIONAL GRANTS
Each Eligible Director who holds an option granted on or after June 7, 1995
that has become fully vested shall automatically receive a grant of an option to
purchase 22,500 Shares on the day after the annual meeting of shareholders at
which such prior option has become fully vested.
If insufficient Shares remain available for issuance under the Plan to fully
fund one or more grants to be made under this Article IV on the same grant date,
then such grant or grants shall be made as follows: (i) a single Initial Grant
shall be made for the remaining number of Shares reserved under this Article IV
on that grant date; and (ii) multiple Initial and/or Additional Grants shall be
reduced ratably so that the aggregate number of Shares subject to all such
grants equals the remaining number of Shares available for issuance under this
Article IV on that grant date. If the Company's shareholders do not approve the
amendment to the Plan dated June 7, 1995, all grants made pursuant to paragraphs
1(c), 1(d), 2 and 3 above shall be deemed null and void.
ARTICLE V. OPTION TERMS
Each option granted to an Eligible Director under the Plan and the issuance
of Shares thereunder shall be subject to the following terms:
1. OPTION AGREEMENT
Each option granted under the Plan shall be evidenced by an option agreement
(an "Agreement") duly executed on behalf of the Corporation. Each Agreement
shall comply with and be subject to the terms and conditions of the Plan. Any
Agreement may contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Plan Administrator.
2. OPTION EXERCISE PRICE
The option exercise price for an option granted under the Plan shall be the
fair market value of the Shares covered by the option at the time the option is
granted. For purposes of the Plan, "fair market value" shall be the average of
the high and low sales prices at which the Common Stock was sold on such date as
reported by the Nasdaq National Market on such date or, if no Common Stock was
traded on such date, on the next preceding date on which Common Stock was so
traded.
3. VESTING AND EXERCISABILITY
Except as set forth in paragraph 1(d) of Article IV, Initial Grants (other
than Supplemental Initial Grants) and Additional Grants shall become exercisable
in accordance with the following schedule and vested portions may be exercised
in full at one time or in part from time to time:
<TABLE>
<CAPTION>
PERIOD OF OPTIONEE'S CONTINUOUS SERVICE AS A DIRECTOR PORTION OF GRANT
WITH THE COMPANY FROM THE DATE THE OPTION IS GRANTED THAT IS EXERCISABLE
- ----------------------------------------------------------------------------------------------- -------------------
<S> <C>
Until first subsequent annual meeting of shareholders after grant.............................. 0%
Until second subsequent annual meeting of shareholders after grant............................. 33 1/3%
Until third subsequent annual meeting of shareholders after grant.............................. 66 2/3%
Thereafter..................................................................................... 100%
</TABLE>
For purposes of options granted at the time this Plan is initially adopted
by the Board, the first subsequent annual meeting of shareholders shall be the
meeting held in 1994.
A-2
<PAGE>
Supplemental Initial Grants shall become exercisable in accordance with the
following schedule and vested portions may be exercised in full at one time or
in part from time to time:
<TABLE>
<CAPTION>
PERIOD OF OPTIONEE'S CONTINUOUS SERVICE AS A DIRECTOR PORTION OF GRANT
WITH THE COMPANY FROM THE DATE THE OPTION IS GRANTED THAT IS EXERCISABLE
- ----------------------------------------------------------------------------------------------- -------------------
<S> <C>
Until first subsequent annual meeting of shareholders after grant.............................. 33 1/3%
Until second subsequent annual meeting of shareholders after grant............................. 66 2/3%
Thereafter..................................................................................... 100%
</TABLE>
4. TIME AND MANNER OF EXERCISE OF OPTION
Each option may be exercised in whole or in part at any time and from time
to time; provided, however, that no fewer than 100 Shares (or the remaining
Shares then purchasable under the option, if less than 100 Shares) may be
purchased upon any exercise of option rights hereunder and that only whole
Shares will be issued pursuant to the exercise of any option.
Any option may be exercised by given written notice, signed by the person
exercising the option, to the Corporation stating the number of Shares with
respect to which the option is being exercised, accompanied by payment in full
for such Shares, which payment may be in whole or in part (i) in cash or by
check or (ii) in shares of Common Stock already owned for at least six (6)
months by the person exercising the option, valued at fair market value at the
time of such exercise.
5. TERM OF OPTIONS
Each option shall expire ten (10) years from the date of the granting
thereof, but shall be subject to earlier termination as follows:
(a) In the event that an optionee ceases to be a director of the
Corporation for any reason other than the death of the optionee, the options
granted to such optionee may be exercised by him or her only within one (1)
year after the date such optionee ceases to be a director of the Corporation
and only as to that portion of the option that has become vested as of the
date of such cessation.
(b) In the event of the death of an optionee, whether during the
optionee's service as a director or during the one (1) year period referred
to in Section 5 (a), the options granted to such optionee shall be
exercisable, to the extent vested as provided in Section 5 (a) or as of the
date of death, as the case may be, and such options shall expire unless
exercised within one (1) year after the date of the optionee's death, by the
legal representatives or the estate of such optionee, by any person or
persons whom the optionee shall have designated in writing on forms
prescribed by and filed with the Corporation or, if no such designation has
been made, by the person or persons to whom the optionee's rights have
passed by will or the laws of descent and distribution.
6. TRANSFERABILITY
During an optionee's lifetime, an option may be exercised only by the
optionee. Options granted under the Plan and the rights and privileges conferred
thereby shall not be subject to execution, attachment or similar process and may
not be transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) other than by will or by the applicable laws of
descent and distribution except that, to the extent permitted by applicable law
and Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Plan Administrator may permit a
recipient of an option to designate in writing during the optionee's lifetime a
beneficiary to receive and exercise options in the event of the optionee's death
(as provided in Section 5 (b)). Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any option under the Plan or of any right or
privilege conferred thereby, contrary to the provisions of the Plan, or the sale
or levy or any attachment or similar process upon the rights and privileges
conferred hereby, shall be null and void.
A-3
<PAGE>
7. PARTICIPANT'S OR SUCCESSOR'S RIGHTS AS STOCKHOLDER
Neither the recipient of an option under the Plan nor the optionee's
successor(s) in interest shall have any rights as a stockholder of the
Corporation with respect to any Shares subject to an option granted to such
person until such person becomes a holder of record of such Shares.
8. LIMITATION AS TO DIRECTORSHIP
Neither the Plan nor the granting of an option nor any other action taken
pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that an optionee has a right to continue as a
director for any period of time or at any particular rate of compensation.
9. REGULATORY APPROVAL AND COMPLIANCE
The Corporation shall not be required to issue any certificate or
certificates for Shares upon the exercise of an option granted under the Plan,
or record as a holder of record of Shares the name of the individual exercising
an option under the Plan, without obtaining to the complete satisfaction of the
Plan Administrator the approval of all regulatory bodies deemed necessary by the
Plan Administrator, and without complying, to the Plan Administrator's complete
satisfaction, with all rules and regulations under federal, state or local law
deemed applicable by the Plan Administrator.
ARTICLE VI. CAPITAL ADJUSTMENTS
The aggregate number and class of Shares for which options may be granted
under the Plan, the number and class of Shares covered by each automatic grant
and each outstanding option and the exercise price per Share thereof (but not
the total price) shall all be proportionately adjusted for any stock dividends,
stock splits, recapitalizations, combinations or exchanges of shares, split-ups,
split-offs, spinoffs, or other similar changes in capitalization. Upon the
effective date of a dissolution or liquidation of the Corporation, or of a
reorganization, merger or consolidation of the Corporation with one or more
corporations that results in more than 20% of the outstanding voting shares of
the Corporation being owned by one or more affiliated corporations or other
affiliated entities, or of a transfer of all or substantially all the assets or
more than 20% of the then outstanding shares of the Corporation to another
corporation or other entity, this Plan and all options granted hereunder shall
terminate. In the event of such dissolution, liquidation, reorganization,
merger, consolidation, transfer of assets or transfer of stock, each optionee
shall be entitled, for a period of twenty days prior to the effective date of
such transaction, to purchase the full number of shares under his or her option
which he or she otherwise would have been entitled to purchase during the
remaining term of such option.
Adjustments under this Article VI shall be made by the Plan Administrator,
whose determination shall be final. In the event of any adjustment in the number
of Shares covered by any option, any fractional Shares resulting from such
adjustment shall be disregarded and each such option shall cover only the number
of full Shares resulting from such adjustment.
ARTICLE VII. EXPENSES OF THE PLAN
All costs and expenses of the adoption and administration of the Plan shall
be borne by the Corporation; none of such expenses shall be charged to any
optionee.
ARTICLE VIII. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan became effective on June 16, 1993. The Plan shall continue in
effect until it is terminated by action of the Board or the Corporation's
shareholders, but such termination shall not affect the then outstanding terms
of any options.
ARTICLE IX. TERMINATION AND AMENDMENT OF THE PLAN
The Board may amend, terminate or suspend the Plan at any time, in its sole
and absolute discretion; provided, however, that if required to qualify the Plan
under Rule 16b-3 promulgated
A-4
<PAGE>
under Section 16(b) of the Exchange Act, no amendment may be made more than once
every six (6) months that would change the amount, price, timing or vesting of
the options, other than to comply with changes in the Internal Revenue Code of
1986, as amended, or the rules and regulations promulgated thereunder; and
provided, further, that if required to qualify the Plan under Rule 16b-3, no
amendment that would
(a) materially increase the number of Shares that may be issued under
the Plan,
(b) materially modify the requirements as to eligibility for
participation in the Plan, or
(c) otherwise materially increase the benefits accruing to participants
under the Plan shall be made without the approval of the Corporation's
shareholders.
ARTICLE X. COMPLIANCE WITH RULE 16b-3
It is the intention of the Corporation that the Plan comply in all respects
with Rule 16b-3 promulgated under Section 16(b) of the Exchange Act and that
Plan participants remain disinterested persons ("Disinterested Persons") for
purposes of administering other employee benefit plans of the Corporation and
having such other plans be exempt from Section 16(b) of the Exchange Act.
Therefore, if any Plan provision is later found not to be in compliance with
Rule 16b-3 or if any Plan provision would disqualify Plan participants from
remaining Disinterested Persons, that provision shall be deemed null and void,
and in all events the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3.
A-5
