As filed with the Securities and Exchange Commission on July 30, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
REPUBLIC FIRST BANCORP, INC.
(Exact name of issuer as specified in its charter)
Pennsylvania 23-0993790
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
REPUBLIC FIRST BANCORP, INC
1608 Walnut Street
Philadelphia, PA 19103
(215) 735-4422
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
AMENDED AND RESTATED STOCK OPTION PLAN AND RESTRICTED STOCK PLAN
OF REPUBLIC FIRST BANCORP, INC.
(Full title of the plan)
George S. Rapp
Corporate Secretary
Republic First Bancorp, Inc
1608 Walnut Street
Philadelphia, PA 19103
(215) 735-4422
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Arthur E. Vossberg III, Esquire
Spector Gadon & Rosen, P.C.
1635 Market Street, 7th Floor
Philadelphia, PA 19103
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------- ---------------- ----------------------------- ---------------------------- -------------------------
Title of Securities Amount to be Proposed maximum offering Proposed maximum aggregate Amount of Registration
to be registered registered price per share offering price Fee
- --------------------------- ---------------- ----------------------------- ---------------------------- -------------------------
<S> <C> <C> <C> <C>
Common Stock 900,000 $9.50 $8,550,000 $2,590.91
$.01 par value
- --------------------------- ---------------- ----------------------------- ---------------------------- -------------------------
(1) Estimated solely for the purpose of calculating the registration fee. The
proposed maximum aggregate offering price has been computed in accordance
with Rule 457(c) based on the average of the high and low prices of the
Common Stock on the NASDAQ on July 24, 1998.
</TABLE>
Page 1 of 33 Pages
Exhibit Index Appears on Page 9
<PAGE>
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission are
incorporated by reference in this Registration Statement:
(a) The Company's annual report on Form 10-KSB for the fiscal year
ended December 31, 1997, the Company's quarterly reports on Form 10-Q for the
quarter ended March 31, 1998, the Company's report on Form 8-K filed on May 22,
1998, the Company's report on Form 8-K filed on May 8, 1998, the Company's
report on Form 8-K filed on June 23, 1998, and the information presented under
the Caption "Common Stock" in the Registration Statement on Form SB-2 filed with
the SEC on October 15, 1997 (Registration No. 333-37951).
(b) Proxy Statement dated March 26, 1998.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
prior to the filing of a post effective amendment to this registration statement
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in a document incorporated
or deemed to be incorporated by reference shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
or in any other subsequently filed document which also is, or is deemed to be,
incorporated herein by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.
Item 4. DESCRIPTION OF SECURITIES.
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 1741 through 1750 of Subchapter D of Chapter 17 of the
Pennsylvania Business Corporation Law of 1988, as amended, (the "PBCL") contain,
among other things, provisions for mandatory and discretionary indemnification
of a corporation's directors, officers, and other personnel.
Under Section 1741, unless otherwise limited by its by-laws, a
corporation has the power to indemnify directors and officers under certain
prescribed circumstances against expenses (including attorney's fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with a threatened, pending, or completed action or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the corporation) to which any of them is a
party or threatened to be made a party by reason of his being a representative,
director, or officer of the corporation or serving at the request of the
corporation as a representative of another domestic or foreign corporate for
profit or not-for-profit, partnership, joint venture, trust, or other enterprise
-2-
<PAGE>
if he acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action or proceeding by judgment, order,
settlement, or conviction or upon a plea of nolo contendere or its equivalent
does not of itself create a presumption that the person did not act in good
faith and in a manner that he reasonably believed to be in, or not opposed to,
the best interests of the corporation and, with respect to any criminal
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action or proceeding by judgment, order, settlement, or
conviction or upon a plea of nolo contendere or its equivalent does not of
itself create a presumption that the person did not act in good faith and in a
manner that he reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 1742 provides for indemnification with respect to derivative
and corporate actions similar to that provided by Section 1741. However,
indemnification is not provided under Section 1742 with respect to any claim,
issue or matter as to which a director or officer has been adjudged to be liable
to the corporation unless and only to the extent that the proper court
determines upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, a director or officer is fairly and
reasonably entitled to indemnity for the expenses that the court deems proper.
Section 1743 provides that indemnification against expenses is
mandatory to the extent that the director or officer has been successful on the
merits or otherwise in defense of any such action or proceeding referred to in
Sections 1741 or 1742.
Section 1744 provides that unless ordered by a court, any
indemnification under Sections 1741 or 1742 shall be made by the corporation as
authorized in the specific case upon a determination that indemnification of
directors and officers is proper because the director or officer met the
applicable standard of conduct, and such determination will be made by the board
of directors by a majority vote of a quorum of directors not parties to the
action or proceeding; if a quorum is not obtainable or, if obtainable, and a
majority of disinterested directors so directs, by independent legal counsel or
by the shareholders.
Section 1745 provides that expenses incurred by a director or officer
in defending any action or proceeding referred to in the Subchapter may be paid
by the corporation in advance of the final disposition of such action or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation.
Section 1746 provides generally that except in any case where the act
or failure to act giving rise to the claim for indemnification is determined by
a court to have constituted willful misconduct or recklessness, the
indemnification and advancement of expenses provided by the Subchapter shall not
be deemed exclusive of any other rights to which a director or officer seeking
indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of shareholders, or disinterested directors or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding that office.
Section 1747 also grants a corporation the power to purchase and
maintain insurance on behalf of any director or officer against any liability
incurred by him in his capacity as officer or director whether or not the
corporation would have the power to indemnify him against the liability under
the Subchapter of the PBCL.
-3-
<PAGE>
Sections 1748 and 1749 apply to the indemnification and advancement of
expenses contained in the Subchapter to successor corporations resulting from
consolidation, merger, or division and to service as a representative of such
corporations or of employee benefit plans.
Section 1750 provides that the indemnification and advancement of
expenses granted pursuant to the Subchapter, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
representative of the corporation and shall inure to the benefit of the heirs
and personal representatives of that person.
Article V of the Company's By-Laws contains provisions allowing for
indemnification of directors and officers to the extent permitted under
Subchapter D of Chapter 17 of the PBCL.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the 1933 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.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
Item 8. EXHIBITS
The following exhibits are filed herewith or incorporated by reference.
4-1 Amended and Restated Articles of Incorporation, incorporated by
reference to exhibits 3.1 and 3.2 of Company's Form SB-2
Registration Statement filed on October 15, 1997.
4-2 By-Laws, incorporated by reference to exhibit 3.3 of Company's
Form SB-2 Registration Statement filed on October 15, 1997.
5-1 Opinion of Spector Gadon & Rosen, PC.
23-1 (a) Consent of KPMG Peat Marwick LLP.
(b) Consent of Deloitte & Touche LLP
(c) Consent of PriceWaterhouseCoopers LLP
23-2 Consent of Spector Gadon & Rosen, PC. (See Exhibit 5-1)
-4-
<PAGE>
99-1.Republic First Bancorp, Inc.'s Amended and Restated Stock Option
Plan and Restricted Stock 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 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;
(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 (a)(1)(i) and (ii) do not
apply if the registration statement is on Form S-3, and the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or
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.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Rule 3-19 of Regulation S-X at the
start of any delayed offering or throughout a continuous offering.
(b) 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
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.
-5-
<PAGE>
(h) 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.
SIGNATURES
The Registrant. 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 Philadelphia, PA, on the ___th day of July, 1998.
REPUBLIC FIRST BANCORP, INC.
(Registrant)
Date: July 17, 1998 By: /s/ Jere A. Young
JERE A. YOUNG
President
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following person in the capacities and
on the dates stated.
Date: July 17, 1998 By: /s/ Jere A. Young
JERE A. YOUNG
President
Chief Executive Officer
Date: July 17, 1998 By: /s/ George S. Rapp
GEORGE S. RAPP
Executive Vice President
Chief Financial Officer
-6-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jere A. Young and George S. Rapp, or each
of them, as 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 be done in an about the
premises, 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 their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Date: July 22, 1998 By: /s/ Harry D. Madonna
---------------------------------
HARRY D. MADONNA
Chairman of the Board
Date: July 22, 1998 By: /s/ Kenneth Adelberg
--------------------------------
KENNETH ADELBERG
Director
Date: July __, 1998 By:--------------------------------
WILLIAM BATOFF
Director
Date: July __, 1998 By:--------------------------------
DANIEL S. BERMAN
Director
Date: July __, 1998 By:--------------------------------
MICHAEL J. BRADLEY
Director
Date: July __, 1998 By:--------------------------------
JOHN F. D'APRIX
Director
-7-
<PAGE>
Date: July 22, 1998 By: /s/ Sheldon E. Goldberg
------------------------------------
SHELDON E. GOLDBERG
Director
Date: July __, 1998 By:--------------------------------
EUSTACE W. MITA
Director
Date: July __, 1998 By:--------------------------------
JAMES E. SCHLEIF
Director
Date: July 22, 1998 By: /s/ Steven J. Shotz
--------------------------------
STEVEN J. SHOTZ
Director
Date: July 22, 1998 By: /s/ Harris Wildstein
--------------------------------
HARRIS WILDSTEIN
Director
Date: July 22, 1998 By: /s/ Neal I. Rodin
-----------------------------
NEAL I. RODIN
Director
Date: July 22, 1998 By: /s/ Rolf Stensrud
-----------------------------
ROLF STENSRUD
Director
-8-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Page Number
<S> <C> <C> <C>
4-1 Amended and Restated Articles of Incorporation 10
incorporated herein by reference to exhibits 3.1 and 3.2
of Company's Form SB-2 Registration Statement filed
on October 15, 1997
4-2 By-Laws, incorporated by reference to exhibit 3.3 11
of Company's Form SB-2 Registration Statement
filed on October 15, 1997.
5-1 Opinion of Spector Gadon & Rosen PC 12
as to the legality of the shares registered
23-1 (a) Consent of KPMG Peat Marwick LLP 15
(b) Consent of Deloitte & Touche LLP 17
(c) Consent of PriceWaterhouseCoopers LLP 19
23-2 Consent of Spector Gadon & Rosen 21
(See Exhibit 5-1)
99-1 Amended and Restated Stock Option Plan 23
and Restricted Stock Plan of Republic First Bancorp, Inc.
</TABLE>
-9-
Exhibit 4-1
Amended and Restated Articles of Incorporation,
incorporated herein by reference to exhibits 3.1 and 3.2
of Company's Form SB-2 Registration Statement filed
on October 15, 1997
Exhibit 4-2
By-Laws
incorporated by reference to exhibit 3.3
of Company's Form SB-2 Registration Statement
filed on October 15, 1997.
Exhibit 5-1
Opinion of Spector Gadon & Rosen, P.C.
as to the legality of the shares registered.
<PAGE>
[SPECTOR GADON & ROSEN, P.C. LETTERHEAD]
July 22, 1998
Republic First Bancorp, Inc.
1513 Walnut Street
Philadelphia, PA 19102
Gentlemen:
We have acted as counsel to Republic First Bancorp, Inc., a
Pennsylvania corporation (the "Company"), in connection with the preparation of
the Company's registration statement on Form S-8 (the "Registration Statement")
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Act") on July 22, 1998. The Registration Statement
relates to the sale of an aggregate of up to 900,000 shares (the "Shares") of
the Company's common stock, par value $.01 per share (the "Common Stock").
In connection therewith, we have examined and relied upon the original
or copies of (i) the Amended and Restated Articles of Incorporation, as amended
through the date hereof, and the By-laws of the Company; (ii) minutes and
records of the corporate proceedings with respect to the issuance of the Shares
of Common Stock described above; (iii) the Company's Amended and Restated Stock
Option Plan and Restricted Stock Plan as amended (the "Stock Option Plan"); and
(iv) such other documents as we have deemed necessary as a basis for the opinion
herewith set forth.
In our examination of the foregoing documents, we have assumed (i) the
due execution, by all relevant parties, and authorization of all agreements to
which the Company or any of its subsidiaries is a party; (ii) the genuineness of
all signatures; and (iii) the authenticity of all documents submitted to us as
originals as well as the conformity to the originals of all documents submitted
to us photostatic copies.
As to various questions of fact material to this opinion, we have
relied, to the extent we deemed reasonably appropriate, upon representations or
certificates of officers or directors of the Company, without any independent
verification of their accuracy.
Based upon the foregoing and subject to the qualifications hereinafter
set forth, we are of the opinion that the aggregate of up to 900,000 Shares
included in the Registration Statement and issuable upon exercise of options in
accordance with the terms of the Stock Option Plan will, when issued, in
accordance with the terms thereof, be legally issued, fully paid and
non-assessable.
We are members of the Bar of the commonwealth of Pennsylvania and do
not express any opinion as to matters governed by laws other than the laws of
the Commonwealth of Pennsylvania and the federal laws of the United States of
America.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act, or the Rules and Regulations of the Securities and Exchange Commission
promulgated thereunder.
Very truly yours,
/s/ SPECTOR GADON & ROSEN, P.C.
Exhibit 23-1(a)
Consent of KPMG Peat Marwick LLP
<PAGE>
[KPMG PEAT MARWICK LLP LETTERHEAD]
Board of Directors
Republic First Bancorp, Inc.
1608 Walnut Street
Philadelphia, PA 19102
Ladies and Gentlemen:
We consent to the use of our reports incorporated herein by reference.
/s/ KPMG Peat Marwick LLP
July 21, 1998
Philadelphia, PA
Exhibit 23-1(b)
Consent of Deloitte & Touche LLP
<PAGE>
[DELOITTE & TOUCHE LLP LETTERHEAD]
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration Statement of
Republic First Bancorp, Inc. on Form S-8 of our report on Republic First
Bancorp, Inc. for the year ended December 31, 1995 dated March 1, 1996, except
for Note 1 related to the merger which is dated June 7, 1996, Note 2 related to
the earnings per common share which is dated January 27, 1998 and Note 17
related to the 1998 stock split efffected in the form of a dividend which is
dated February 19, 1998, which report appears in the December 31, 1997 annual
report on Form 10-KSB of Republic First Bancorp, Inc.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Philadelphia, Pennsylvania
July 21, 1998
Exhibit 23-1(c)
Consent of PriceWaterhouseCoopers LLP
<PAGE>
[PRICEWATERHOUSECOOPERS LLP LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Republic First Bancorp, Inc.
We consent to the incorporation by reference in this registration statement on
Form S-8 of our report dated January 30, 1997 (except for the information in
Note 2 related to the 1997 stock split effected in the form of a dividend, dated
March 4, 1997, the information in Note 2 related to earnings per share, dated
March 13, 1998 and the information in Note 17 related to the 1998 stock split
effected in the form of a dividend, dated March 13, 1998) on our audit of the
consolidated balance sheet of Republic First Bancorp, Inc. and subsidiary as of
December 31, 1996, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the year then ended.
/s/ PriceWaterhouseCoopers LLP
July 22, 1998
Exhibit 23-2
Consent of Spector Gadon & Rosen
(See Exhibit 5-1)
Exhibit 99-1
Amended and Restated Stock Option Plan and Restricted Stock Plan
of
Republic First Bancorp, Inc.
<PAGE>
HOLDING COMPANY
AMENDED AND RESTATED STOCK OPTION AND RESTRICTED STOCK PLAN
The purpose of the Amended and Restated Stock Option and Restricted Stock
Plan (the "Plan") of the Holding Company (the "Company") is to promote the
interests of the Company by providing incentives to (i) designated officers and
other employees of the Company or a Subsidiary Corporation (as defined herein),
(ii) non-employee members of the Company's Board of Directors (the "Board") and
(iii) independent contractors and consultants (who may be individuals or
entities) who perform services for the Company, to enable the Company to attract
and retain them and to encourage them to acquire a proprietary interest, or to
increase their proprietary interest, in the Company. The Company believes that
the Plan will cause participants to contribute materially to the growth of the
Company, thereby benefitting the Company's shareholders. For purposes of the
Plan, the terms "Parent Corporation" and "Subsidiary Corporation" shall have the
meanings set forth in subsections (e) and (f) of Section 424 of the Internal
Revenue Code of 1986, as amended (the "Code").
1. Administration
(a) Except with respect to Committee Grants (as hereinafter defined), the
Plan shall be administered and interpreted by a committee of the Board (the
"Committee") consisting of not less than three persons, all of whom shall be
"outside directors" within the meaning of Section 162(m) of the Code and each of
whom shall be a "disinterested person" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (a "Committee
Member"). With respect to Eligible Participants (as hereinafter defined), the
Committee shall have the sole authority to determine (i) who is eligible to
receive Grants (as defined in Section 2 below) under the Plan, (ii) the type,
size and terms of each Grant under the Plan (subject to Section 4 below), (iii)
the time when each Grant will be made and the duration of any exercise or
restriction period; (iv) any restrictions on resale applicable to the shares to
be issued or transferred pursuant to the Grant; and (v) any other matters
arising under the Plan. The Committee may, if it so desires, base any of the
foregoing determinations upon the recommendations of management of the Company.
The Committee shall have full power and authority to administer and interpret
the Plan and to adopt or amend such rules, regulations, agreements and
instruments as it may deem appropriate for the proper administration of the
Plan. The Committee's interpretations of the Plan and all determinations made by
the Committee pursuant to the powers vested in it hereunder shall be conclusive
and binding on all persons having any interests in the Plan or in any Grants
under the Plan. No person acting under this subsection shall be held liable for
any action or determination made in good faith with respect to the Plan or any
Grant under the Plan.
(b) Each member of the Committee shall be indemnified and held harmless by
the Company against any cost or expense (including counsel fees) reasonably
incurred by him or her, or liability (including any sum paid in settlement of a
claim with the approval of the Company) arising out of any act or omission to
act in connection with the Plan, unless arising out of such member's own fraud
or bad faith, to the extent permitted by applicable law. Such indemnification
shall be in addition to any rights of indemnification the members may have as
directors or otherwise under the Articles of Incorporation or By-Laws of the
Company, any agreement of shareholders or disinterested directors or otherwise.
<PAGE>
2. Grants
(a) Grants to Eligible Participants. With respect to Eligible
Participants, incentives under the Plan shall consist of Incentive Stock Options
(as defined in Section 5(b) below), Nonqualified Stock Options (as defined in
Section 5(b) below), Restricted Stock Grants (as defined in Section 6 below) or
SARs (as defined in Section 7 below) (hereinafter collectively referred to as
"Grants"). AU Grants, except with respect to Committee Grants as specifically
provided in Section 2(b) hereof, shall be subject to the terms and conditions
set forth herein and to such other terms and conditions of any nature as long as
they are not inconsistent with the Plan as the Committee deems appropriate and
specifies in writing to the participant (the "Grant Letter"). The Committee
shall approve the form and provisions of each Grant Letter. Grants under any
section of the Plan need not be uniform as among the participants receiving the
same type of Grant, and Grants under two or more sections of the Plan may be
combined in one Grant Letter.
(b) Committee Grants. A Committee Member shall be entitled to receive a
Committee Grant in accordance with this Section 2(b).
i) Committee Members shall receive a Nonqualified Stock Option to
purchase One Thousand (1,000) shares of Common Stock (as hereinafter
defined) (subject to adjustment as provided in Section 3(b) hereof) of the
Company at an exercise price equal to the higher of the fair market value
(as defined herein) or the book value of a share of Common Stock on the
date of grant, at the commencement of and in consideration for their
service to the Company as a Committee Member and such Committee Grant
shall become exercisable, with respect to I 00% of the shares of Common
Stock underlying such Committee Grant, on the date of grant. Committee
Grants shall be exercisable for a period of ten years from the date of
grant.
ii) Upon the occurrence of (a) a Change In Control (as defined in
Section 9 hereof or (b) a sale or exchange of assets of the Company or (c)
dissolution, liquidation, merger or consolidation of the Company (in which
the Company is not the surviving corporation), all restrictions imposed
under any Committee Grant shall immediately lapse.
iii) Each Committee Member who receives a Committee Grant pursuant to
this Section 2(b) shall receive a written agreement setting forth the
terms and conditions of such grant including, but not limited to, the
restrictions set forth in this Section 2(b) (the "Committee Grant
Letter").
iv) Except as otherwise provided in this Section 2(b), Committee
Grants shall be subject to the provisions of this Plan applicable to
Nonqualified Stock Options granted to other persons.
v) Notwithstanding any other provision of the Plan, this Section 2(b)
may not be amended more than once every six months, except for amendments
necessary to conform the plan to changes in the provisions of the Code or
the Employee Retirement Income Security Act of 1974 ("ERISA"), or the
rules promulgated thereunder.
vi) The provisions of this Section 2(b) are intended to operate
automatically and not require administration. To the extent that any
administrative determinations may be required, such determination shall be
made by a member or members of the Board of Directors who is/are not
eligible to be granted Options under this Section 2(b), but in no event
shall such
<PAGE>
determinations affect the eligibility of Committee Members, the timing of
the grants or the number of shares of Common Stock subject to Committee
Grants hereunder.
3. Shares Subject to the Plan
(a) The aggregate number of shares of the Common Stock, par value $.Ol
("Common Stock"), of the Company that may be issued or transferred under the
Plan is 500,000, subject to adjustment pursuant to Section 3(b) below. Such
shares may be authorized but unissued shares or reacquired shares. If and to the
extent that options granted under the Plan terminate, expire or are canceled
without having been exercised (including shares canceled as part of an exchange
of Grants), or if any shares of restricted stock are forfeited, the shares
subject to such Grant shall again be available for subsequent Grants under the
Plan.
(b) If any change is made to the Common Stock (whether by reason of merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
combination of shares, or exchange of shares or any other change in capital
structure made without receipt of consideration), then unless such event or
change results in the termination of all outstanding Grants and Committee Grants
under the Plan, the Committee shall preserve the value of the outstanding Grants
and Committee Grants by adjusting the maximum number and class of shares
issuable under the Plan to reflect the effect of such event or change in the
Company's capital structure, and by making appropriate adjustments to the number
and class of shares, the exercise price of each outstanding option and
otherwise, except that any fractional shares resulting from such adjustments
shall be eliminated by rounding any portion of a share equal to .500 or greater
up, and any portion of a share equal to less than .500 down, in each case to the
nearest whole number.
4. Eligibility for Participation
Officers and other employees of the Company or a Subsidiary Corporation,
non-employee members of the Board who are not members of the Committee, and
independent contractors and consultants who perform services for the Company
shall be eligible to participate in the Plan (hereinafter referred to
individually as an "Eligible Participant" and collectively as "Eligible
Participants"). Only Eligible Participants who are officers or other employees
of the Company or a Subsidiary Corporation shall be eligible to receive
Incentive Stock Options. All Eligible Participants shall be eligible to receive
Nonqualified Stock Options, Restricted Stock Grants and SARS. The Committee
shall select from among the Eligible Participants those who will receive Grants
(such Eligible Participants and Committee Members who receive Committee Grants
pursuant to Section 2(b) are hereinafter referred to as Grantees") and, except
in the case of Committee Grants made pursuant to Section 2(b) hereof, shall
determine the number of shares of Common Stock subject to each Grant; provided,
however, that the maximum number of shares of Common Stock which may be subject
to Grants awarded to any Grantee shall not exceed 500,000. The Committee may, if
it so desires, base any such selections or determinations upon the
recommendations of management of the Company. Nothing contained in the Plan
shall be construed to limit in any manner whatsoever the right of the Company to
grant rights or options to acquire Common Stock or awards of Common Stock
otherwise than pursuant to the Plan.
5. Stock Options
(a) Number of Shares. The Committee, in its sole discretion, shall
determine the number of
<PAGE>
shares of Common Stock that will be subject to each option.
(b) Type of Option and Option Price.
(1) The Committee may grant options qualifying as incentive stock
options within the meaning of
Section 422 of the Code ("Incentive Stock Options") and other stock options
("Nonqualifed Stock Options"), in accordance with the terms and conditions set
forth herein, or may grant any combination of Incentive Stock Options and
Nonqualified Stock Options (hereinafter referred to collectively as "Stock
Options"). The option price per share of an Incentive Stock Option shall be the
fair market value (as defined herein) of a share of Common Stock on the date of
grant. If the Grantee of an Incentive Stock Option owns Common Stock (as
determined under section 424(d) of the Code) possessing more than 10% of the
total combined voting power of all classes of stock of the Company or a Parent
Corporation or Subsidiary Corporation, the option price per share in the case of
an Incentive Stock Option shall not be less than 110% of the fair market value
of a share of Common Stock on the date of grant and such option by its terms is
not exercisable after the expiration of five (5) years from the date of grant
(2)For all valuation purposes under the Plan, the fair market value of
a share of Common Stock shall be determined in accordance with the following
provisions:
(A) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded in the over-the-counter
market (but not on the Nasdaq National Market segment of The Nasdaq
Stock Market), the fair market value shall be the mean between the last
reported bid and asked prices of one share of Common Stock on the date
in question in the over-the-counter market, as such prices are reported
by the National Association of Securities Dealers through its Nasdaq
system or any successor system. If there are no reported bid and asked
prices on the date in question, then the mean between the last reported
bid and asked prices on the next preceding date for which such
quotations exist shall be determinative of fair market value. If the
Common Stock is traded over-the-counter on the Nasdaq National Market
segment of The Nasdaq Stock Market, the fair market value shall be the
closing selling price of one share of Common Stock on the date in
question as such price is reported by the National Association of
Securities Dealers through such system or any successor system. If there
is no reported closing selling price for the Common Stock on the date in
question, then the closing selling price on the next preceding date for
which such quotation exists shall be determinative of fair market value.
(B) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, then the fair market value shall be the
closing selling price of one share of Common Stock on the date in question
on the stock exchange determined by the Committee to be the primary market
for the Common Stock, as such prices are officially quoted on such
exchange. If there is no reported closing selling price of Common Stock on
such exchange on the date in question, then the fair market value shall be
the closing selling price on the next preceding date for which such
quotation exists.
(C) If the Common Stock is at the time neither listed nor admitted to
trading on any stock exchange nor traded in the over-the-counter market
(or, the Committee determines that the value
<PAGE>
as determined pursuant to Section 5(b)(2)(A) or (B) above does not reflect
fair market value), then the Committee shall determine fair market value
after taking into account such factors as it deems appropriate.
(c) Exercise Period. The Committee shall determine the option exercise
period of each Stock Option. The exercise period shall not exceed ten years from
the date of grant. Notwithstanding any determinations by the Committee regarding
the exercise period of any Stock Option, all outstanding Stock Options shall be
immediately exercisable upon a Change of Control of the Company (as defined in
Section 9 below).
(d) Vesting of Options and Restrictions on Shares. The vesting period
for Stock Options shall commence on the date of grant and shall end on the date
or dates, determined by the Committee, that shall be specified in the Grant
Letter. The Committee may impose upon the shares of Common Stock issuable upon
the exercise of a Stock Option such restrictions as it deems appropriate and
specifies in the Grant Letter. During any period in which such restrictions
apply, the provisions of Section 6(d) below shall be applicable to such shares,
and the Committee, in such circumstances as it deems equitable, may determine
that all such restrictions shall lapse. Notwithstanding any other provision of
the Plan, all outstanding Stock Options shall become immediately exercisable
upon a Change of Control of the Company (as defined in Section 9 below).
(e) Manner of Exercise. A Grantee may exercise a Stock Option by
delivering a duly completed notice of exercise to the Committee, together with
payment of the option price. Such notice may include instructions authorizing
the Company to deliver the certificates representing the shares of Common Stock
issuable upon the exercise of such Stock Option to any designated registered
broker or dealer ("Designated Broker"). Such instructions shall designate the
account into which the shares are to be deposited. The Grantee may tender such
notice of exercise, which has been properly executed by the Grantee, and the
aforementioned delivery instructions to any Designated Broker.
(f) Termination of Employment, Disability or Death.
(1) If a Grantee who is an employee ceases to be an employee (in the
case of an Incentive Stock Option) or ceases to be an Eligible Participant (in
the case of a Nonqualified Stock Option) for any reason (other than, in the case
of an individual, the death of such individual) any Stock Option which is
otherwise exercisable by the Grantee shall terminate unless exercised within
three months after the date on which the Grantee ceases to be an employee or an
Eligible Participant, as the case may be (or within such other period of time,
which may be longer or shorter than three months, as may be specified in the
Grant Letter), but in any event no later than the date of expiration of the
option exercise period, except that in the case of an individual Grantee who is
disabled within the meaning of Section 22(e)(3) of the Code, such period shall
be one year rather than three months (except as otherwise provided in the Grant
Letter).
(2) In the event of the death of an individual Grantee while he or she is
an Eligible Participant or within not more than three months after the date on
which the Grantee ceases to be an Eligible Participant (or within such other
period of time, which may be longer or shorter than three months, as may be
specified in the Grant Letter), any Stock Option which was otherwise exercisable
by the Grantee at the date of death may be exercised by the Grantee's personal
representative at any time
<PAGE>
prior to the expiration of one year from the date of death, but in any event no
later than the date of expiration of the option exercise period.
(g) Satisfaction of Option Price. The Grantee shall pay the option price
in full at the time of exercise in cash, or, with the consent of the Committee
in its sole discretion, by delivering shares of Common Stock already owned by
the Grantee and having a fair market value on the date of exercise equal to the
option price or a combination of cash and shares of Common Stock provided,
however, that in lieu of payment in full in such manner, a Grantee may with the
approval of the Board in its sole discretion, be entitled to pay for the shares
purchased upon exercise of the Stock Option by payment to the Company in cash or
by certified or bank check a sum equal at least to the par value of the Common
Stock, with the remainder of the purchase price satisfied by the issuance of an
interest bearing promissory note or notes, in a form and having terms, including
rate of interest and collateral security, satisfactory to the Board in its sole
discretion. The Grantee shall also pay the amount of withholding tax due, if
any, at the time of exercise. Shares of Common Stock shall not be issued or
transferred upon any purported exercise of a Stock Option until the option price
and the withholding obligation are fully paid.
(h) Limits on Incentive Stock Options. Each Grant of an Incentive Stock
Option shall provide that:
(1) the Stock Option is not transferable by the Grantee, except, in
the case of an individual Grantee, by will or laws of descent and
distribution;
(2) the Stock Option is exercisable only by the Grantee, except as
otherwise provided herein or in the Grant Letter in the event of the death
of an individual Grantee;
(3) the aggregate fair market value of the Common Stock determined as
of the date of the Grant with respect to which Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year under
the Plan and under any other stock option plan of the Company shall not
exceed $100,000; and
(4) unless the Grantee could otherwise transfer Common Stock issued
pursuant to the Stock Option without incurring liability under Section
16(b) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), at least six months must elapse from the date of
acquisition of the Stock Option until the date of disposition of the
Common Stock issued upon exercise thereof
6. Restricted Stock Grants
The Committee may issue shares of Common Stock to an Eligible Participant
pursuant to an incentive or long range compensation plan, program or contract
approved by the Committee (a "Restricted Stock Grant"). The following provisions
are applicable to Restricted Stock Grants:
(a) General Requirements. Shares of Common Stock issued pursuant to
Restricted Stock Grants will be issued in consideration for cash or
services rendered having a value, as determined by the Board. at least
equal to the par value thereof. All conditions and restrictions imposed
under each Restricted Stock Grant, and the period of years during which
the Restricted Stock Grant will remain subject to such restrictions, shall
be set forth in the Grant Letter and
<PAGE>
designated therein as the "Restriction Period." All restrictions imposed
under any Restricted Stock Grant shall lapse on such date or dates as the
Committee may approve until the restrictions have lapsed as to 100% of the
shares, except that upon a Change of Control of the Company, all
restrictions on the transfer of the shares which have not been forfeited
prior to such date shall lapse. In addition, the Committee, in
circumstances that it deems equitable, may determine as to any or all
Restricted Stock Grants, that all the restrictions shall lapse,
notwithstanding any Restriction Period.
(b) Number of Shares. The Committee, in its sole discretion, shall
determine the number of shares of Common Stock that will be granted in
each Restricted Stock Grant.
(c) Requirement of Relationship with Company. If the Eligible
Participant's relationship with the Company (as an employee, non-employee
member of the Board, independent contractor or consultant, as the case may
be) terminates during the period designated in the Grant Letter as the
Restriction Period, the Restricted Stock Grant shall terminate as to all
shares covered by the Grant as to which restrictions on transfer have not
lapsed, and such shares shall be immediately returned to the Company. The
Committee may, in its sole discretion, provide for complete or partial
exceptions to the provisions of this Section 6(c).
(d) Restrictions on Transfer and Legend on Stock Certificate. During the
Restriction Period, an Eligible Participant may not sell, assign,
transfer, pledge or otherwise dispose of the shares of Common Stock to
which such Restriction Period applies except to a Successor Grantee
pursuant to Section 8 below. Each certificate representing a share of
Common Stock issued or transferred under a Restricted Stock Grant shall
contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the
stock certificate or certificates representing any such shares as to which
all restrictions have lapsed.
7. Stock Appreciation Rights
(a) General Provisions. The Committee may grant stock appreciation rights
("SARs") to any Eligible Participant in tandem with any Stock Option, for all or
a portion of the applicable Stock Option, either at the time the Stock Option is
granted or at any time thereafter while the Stock Option remains outstanding.
(b) Number of SARS. The number of SARs granted to an Eligible Participant
which shall be exercisable during any given period of time shall not exceed the
number of shares of Common Stock which the Eligible Participant may purchase
upon the exercise of the related Stock Option during such period.
(c) Settlement Amount. Upon an Eligible Participant's exercise of some or
all of the Eligible Participant's SARS, the Eligible Participant shall receive
in settlement of such SARs an amount equal to the stock appreciation (as defined
herein) for the number of SARs exercised, payable in cash, Common Stock or a
combination thereof. The "stock appreciation" for a SAR is the difference
between the option price specified for the related Stock Option and the fair
market value of the underlying Common Stock on the date of exercise of the SAR;
provided that the maximum value of any stock appreciation right shall be limited
to the exercise price of the tandem Stock
<PAGE>
Option with respect to which it is issued.
(d) Settlement Election. Upon the exercise of any SARS, the Eligible
Participants shall have the right to elect the portions of the settlement amount
that the Eligible Participant desires to receive in cash and shares of Common
Stock, respectively. For purposes of calculating the number of shares of Common
Stock to be received upon settlement, shares of Common Stock shall be valued at
their fair market value on the date of exercise of the SARS. Notwithstanding the
foregoing, the Committee shall have the right (i) to disapprove an Eligible
Participant's election to receive such settlement in whole or in part in cash,
and to require that shares of Common Stock be delivered in lieu of cash or (ii)
to require that settlement be made in cash. If shares of Common Stock are to be
received upon exercise of an SAR, cash shall be delivered in lieu of any
fractional share.
(e) Exercise. A SAR is exercisable only during the period when the Stock
Option to which it is related is also exercisable. SARs shall be exercisable
only at the same time and to the same extent as, and shall terminate and no
longer be exercisable upon the termination or immediately after the exercise of,
the tandem Stock Options or applicable portion thereof.
8. Transferability of Options and Grants
Only a Grantee (or, in the case of an individual Grantee, his or her
authorized legal representative on behalf of Grantee) may exercise rights under
a Grant. No individual Grantee may transfer those rights except by will or by
the laws of descent and distribution or, in the case of a Grant other than an
Incentive Stock Option and to the extent permitted under Rule 16b-3 of the
Exchange Act and by the Committee in its sole discretion, (a) pursuant to a
qualified domestic relations order as defined under the Code or Title I of ERISA
or the rules thereunder and (b) to a trust for the benefit of a member of the
Grantee's immediate family. Upon the death of an individual Grantee, the
personal representative or other person entitled to succeed to the rights of the
Grantee ("Successor Grantee") may exercise such rights. A Successor Grantee
shall furnish proof satisfactory to the Company of such person's right to
receive the Grant or the Committee Grant under the Grantee's will or under the
applicable laws of descent and distribution.
9. Change of Control of the Company
As used herein used herein, a "Change of Control" shall be deemed to have
occurred when (a) any "person" (as such term is used in Section 13(d) and 14(d)
of the Exchange Act) becomes the "beneficial owner", directly or indirectly, of
securities of the Company representing thirty (30%) percent or more of the
combined voting power of the Company's then outstanding securities or (b) the
Company becomes a subsidiary of another corporation or is merged or consolidated
into another corporation or if substantially all of its assets shall have been
sold to an unaffiliated party or parties unless thereafter (1) directors of the
Company immediately prior thereto continue to constitute at least fifty (50%)
percent of the directors of the surviving entity or purchaser or (2) the
Company's securities continue to represent, or are converted into securities
which represent, more than sixty-six and two thirds (662/3%) percent of the
combined voting power of the surviving entity or purchaser, or (c) fifty (50%)
percent or more of the Board is comprised of persons who were not nominated by
the Board for election as directors, or (d) the Board adopts a plan of complete
liquidation of the Company.
<PAGE>
10. Certain Corporate Changes
(a) Sale or Exchange of assets, Dissolution or Liquidation or Merger or
Consolidation Where the Company Does Not Survive. If all or substantially all of
the assets of the Company are to be sold or exchanged, the Company is to be
dissolved or liquidated, or the Company is a party to a merger or consolidation
with another corporation in which the Company will not be the surviving
corporation, then, at least ten days prior to the effective date of such event,
the Company shall give each Grantee with any outstanding Grants (including
Committee Grants) written notice of such event. Each such Grantee shall
thereupon have the right to exercise in full any installments of such Grants
(including Committee Grants) not previously exercised (whether or not the right
to exercise such installments has accrued pursuant to such Grants (including
Committee Grants)), within ten days after such written notice is sent by the
Company. Any installments of such Grants (including Committee Grants) not so
exercised shall thereafter lapse and be of no further force or effect.
(b) Merger or Consolidation Where the Company Survives. If the Company is
a party to a merger or consolidation in which the Company will be the surviving
corporation, then the Committee may, in its sole discretion, elect to give each
Grantee with any outstanding Grants (including Committee Grants) written notice
of such event. If such notice is given, each such Grantee shall thereupon have
the right to exercise in full any installments of such Grants (including
Committee Grants) not previously exercised (whether or not the right to exercise
such installments has accrued pursuant to such Grants (including Committee
Grants)), within ten days after such written notice is sent by the Company. Any
installments of such Grants (including Committee Grants) not so exercised shall
thereafter lapse and be of no further force or effect.
11. Shareholder Approval
This Plan is subject to and no options shall be exercisable hereunder
until after approval of this Plan by holders of a majority of the shares of the
stock of the Company present or represented by a proxy in a separate vote at a
duly held meeting of the shareholders of the Company within twelve months after
the date of the adoption of the Plan by the Board. If the Plan is not so
approved by shareholders, the Plan and all Grants (including Committee Grants)
hereunder shall terminate and be of no force or effect.
12. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any time;
provided that the approval of the shareholders of the Company shall be required
in respect of any amendment that (i) materially increases the benefits accruing
to Eligible Participants under the Plan, (ii) increases the aggregate number of
shares of Common Stock that may be issued or transferred under the Plan (other
than by operation of Section 3(b) above), (iii) materially modifies the
requirements as to eligibility for participation in the Plan; or (iv) modifies
the provisions for determining the fair market value of a share of Common Stock.
(b) Termination of Plan. The Plan shall terminate on November 14, 2005 (as
set forth in Section 19 below) unless earlier terminated by the Board or unless
extended by the Board with the approval of the shareholders.
(c) Termination and Amendment of Outstanding Grants. A termination or
amendment of the
<PAGE>
Plan that occurs after a Grant (including Committee Grants) is made shall not
result in the termination or amendment of the Grant (including Committee Grants)
unless the Grantee consents or unless the Committee acts under Section 20(b)
below. The termination of the Plan shall not impair the power and authority of
the Committee with respect to an outstanding Grant. Whether or not the Plan has
terminated, an outstanding Grant may be terminated or amended under Section
20(b) below or may be amended by agreement of the Company and the Grantee which
is consistent with the Plan.
13. Funding of the Plan
The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under the Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
14. Rights of Eligible Participants
Nothing in the Plan shall entitle any Eligible Participant or other
person to any claim or right to any Grant under the Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving any Eligible Participant
or Grantee any rights to be retained by the Company in any capacity, whether as
an employee, non-employee member of the Board, independent contractor,
consultant or otherwise.
15. Withholding of Taxes
The Company shall have the right to deduct from all Grants paid in cash
any federal, state or local taxes required by law to be withheld with respect to
such Grants paid in cash. In the case of Grants paid in Common Stock, the
Company shall have the right to require the Grantee to pay to the Company the
amount of any taxes which the Company is required to withhold in respect of such
Grants or to take whatever action it deems necessary to protect the interests of
the Company in respect of such tax liabilities, including, without limitation,
withholding a portion of the shares of Common Stock otherwise deliverable
pursuant to the Plan. The Company's obligation to issue or transfer shares of
Common Stock upon the exercise of a Stock Option or SAR or the acceptance of a
Restricted Stock Grant shall be conditioned upon the Grantee's compliance with
the requirements of this section to the satisfaction of the Committee.
16. Agreements with Grantees
Each Grant made under the Plan shall be evidenced by a Grant Letter
containing such term and conditions as the Committee shall approve.
17. Requirements for Issuance of Shares
No Common Stock shall be issued or transferred under the Plan unless and
until all applicable legal requirements have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Stock Option, Restricted Stock Grant or SAR on the Grantee's undertaking in
writing to comply with such restrictions on any subsequent disposition of the
shares of Common Stock issued or transferred thereunder as the Committee
<PAGE>
shall deem necessary or advisable as a result of any applicable law, regulation
or official interpretation thereof, and certificates representing such shares
may be legended to reflect any such restrictions.
18. Headings
The section headings of the Plan are for reference only. In the event of a
conflict between a section heading and the content of a section of the Plan, the
content of the section shall control.
19. Effective Date of the Plan
The Plan shall be effective as of November 14, 1995, subject to the
approval of the Company's shareholders within 12 months after such effective
date.
20. Miscellaneous
(a) Substitute Grants. The Committee may make a Grant to an employee, a
non-employee director, or an independent contractor or consultant of another
corporation, if such person shall become an Eligible Participant by reason of a
corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company or a Subsidiary Corporation
and such other corporation. Any such Grant shall be made in substitution for a
stock option or restricted stock grant granted by the other corporation
("Substituted Stock Incentives"), but the terms and conditions of the substitute
Grant may vary from the terms and conditions required by the Plan and from those
of the Substituted Stock Incentives. The Committee shall prescribe the
provisions of the substitute Grants.
(b) Compliance with Law. The Plan, the exercise of Grants and the
obligations of the Company to issue or transfer shares of Common Stock under
Grants shall be subject to all applicable laws and required approvals by any
governmental or regulatory agencies. The Committee (or, in the case of Committee
Grants, the Board) may revoke any Grant if it is contrary to law or modify any
Grant to bring it into compliance with any valid and mandatory government
regulations. The Committee may also adopt rules regarding the withholding of
taxes on payments to Grantees. The Committee may, in its sole discretion, agree
to limit its authority under this section.
(c) Ownership of Stock. A Grantee or Successor Grantee shall have no
rights as a shareholder with respect to any shares of Common Stock covered by a
Grant until the shares are issued or transferred to the Grantee or Successor
Grantee on the stock transfer records of the Company.
