<PAGE> 1
As filed with the Securities and Exchange Commission on February 19, 1998
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
RESOUND CORPORATION
(Exact name of Registrant as specified in its charter)
------------------------------
CALIFORNIA 77-0019588
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
------------------------------
220 SAGINAW DRIVE
SEAPORT CENTRE
REDWOOD CITY, CALIFORNIA 94063
(650) 780-7800
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
------------------------------
1997 STOCK PLAN
(Full title of the plan)
------------------------------
RUSSELL D. HAYS
President and Chief Executive Officer
ReSound Corporation
220 Saginaw Drive
Seaport Centre
Redwood City, California 94063
(650) 780-7800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
Copies to:
ELIAS J. BLAWIE
LAURA A. GORDON
VENTURE LAW GROUP
A PROFESSIONAL CORPORATION
2800 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
(650) 854-4488
(Calculation of Registration Fee on following page)
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Maximum Amount Maximum Maximum Amount of
to be Offering Price Aggregate Registration
Title of Securities to be Registered Registered(1) Per Share Offering Price Fee
- ---------------------------------------------- ------------------ ---------------- ------------------ --------------
<S> <C> <C> <C> <C>
1997 STOCK PLAN
Common Stock,
$0.01 par value.......................... 650,000 Shares $ 5.219(2) $ 3,392,350.00 $ 1,000.74
</TABLE>
- ----------
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under any of the Plans being
registered pursuant to this Registration Statement by reason of any
stock dividend, stock split, recapitalization or any other similar
transaction effected without the receipt of consideration which results
in an increase in the number of the Registrant's outstanding shares of
Common Stock.
(2) Estimated in accordance with Rule 457(h) under the Securities Act of
1933 (the "Securities Act") solely for the purpose of calculating the
registration fee. The computation with respect to unissued options and
stock purchase rights is based upon the average high and low sale
prices of the Common Stock as reported on the Nasdaq National Market on
February 4, 1998.
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<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") are hereby incorporated by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which contains audited
financial statements for the Registrant's latest fiscal year for which such
statements have been filed.
(b) The Registrant's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997, filed
pursuant to Section 13 of the Exchange Act.
(c) Items 1 and 2 of the Registrant's Registration Statement on
Form 8-A filed on July 7, 1994 pursuant to Section 12 of the Exchange Act. Also
Items 1 and 2 of the Registrant's Registration Statement on Form 8-A filed on
March 3, 1993 pursuant to Section 12 of the Exchange Act.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing such documents.
Item 4. DESCRIPTION OF SECURITIES. Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation reduce the liability of a
director to the corporation or its shareholders for monetary damages for
breaches of his or her fiduciary duty of care to the fullest extent permissible
under California law. The Bylaws of the Registrant further provide for
indemnification of corporate agents to the maximum extent permitted by the
California General Corporation Law. In addition, the Registrant has entered into
Indemnification Agreements with its officers and directors.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable.
Item 8. EXHIBITS.
Exhibit
Number
------
4.1 1997 Stock Plan
5.1 Opinion of Venture Law Group, A Professional
Corporation
23.1 Consent of Venture Law Group, A Professional
Corporation (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent
Auditors
24.1 Power of Attorney (see p. 6)
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<PAGE> 4
Item 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement 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.
(2) that, for purposes 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 which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act 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.
Insofar as the 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 Securities and Exchange
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 a successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Registrant will,
unless in the opinion of its counsel the question has already 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.
[Signature Pages Follow]
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<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, ReSound Corporation, a corporation organized and existing under the
laws of the State of California, 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 Redwood City, State of
California, on February 18, 1998.
ReSound Corporation
By: /s/ Russell D. Hays
-------------------------------------------
Russell D. Hays
President, Chief Executive Officer and
Director
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<PAGE> 6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Russell D. Hays and Arthur Taylor,
jointly and severally, his or her attorneys-in-fact and agents, each with the
power of substitution and resubstitution, for him or her and in his or her name,
place or stead, in any and all capacities, to sign any amendments to this
Registration Statement on Form S-8, and to file such amendments, together with
exhibits and other documents in connection therewith, with the Securities and
Exchange Commission, granting to each attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully as he or she might or could do in
person, and ratifying and confirming all that the attorneys-in-fact and agents,
or his or her substitute or substitutes, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Russell D. Hays President, Chief Executive Officer and February 18, 1998
- ------------------------------------ Director (Principal Executive Officer)
Russell D. Hays
/s/Arthur Taylor Vice President, Chief Financial Officer February 18, 1998
- ------------------------------------ (Principal Financial and Accounting
Arthur Taylor Officer)
/s/Richard L. Goode Director February 18, 1998
- ------------------------------------
Richard L. Goode
/s/Donald M. Kendall Director February 18, 1998
- ------------------------------------
Donald M. Kendall
/s/Eugene Kleiner Director February 18, 1998
- ------------------------------------
Eugene Kleiner
/s/Rodney Perkins, M.D. Director February 18, 1998
- ------------------------------------
Rodney Perkins, M.D.
/s/ Peter Riepenhausen
- ------------------------------------ Director February 18, 1998
Peter Riepenhausen
/s/Philip S. Schlein Director February 18, 1998
- ------------------------------------
Philip S. Schlein
/s/Robert C. Wilson Director February 18, 1998
- ------------------------------------
Robert C. Wilson
</TABLE>
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<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
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<S> <C>
4.1 1997 Stock Plan
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of Venture Law Group, A Professional Corporation
(included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
24.1 Power of Attorney (see p. 6)
</TABLE>
<PAGE> 1
EXHIBIT 4.1
PROSPECTUS
RESOUND CORPORATION
--------------------
1997 STOCK PLAN
---------------------
This Prospectus refers to 650,000 shares of Common Stock of ReSound
Corporation (the "Company") which are offered for sale to employees, including
officers and directors, and consultants of the Company or any subsidiary of the
Company upon exercise of options to purchase shares of Common Stock granted or
to be granted, and through the purchase of restricted Common Stock, under the
Company's 1997 Stock Plan. The terms and conditions of grants and stock
purchases under the 1997 Stock Plan, including the price of the shares of Common
Stock, are governed by the provisions of the Plan and the agreements thereunder
between the Company and the participants.
THIS DOCUMENT CONSTITUTES PART
OF A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
INTRODUCTION..................................................................1
RISK FACTORS..................................................................1
THE 1997 STOCK PLAN...........................................................2
FEDERAL INCOME TAX ASPECTS OF THE 1997 STOCK PLAN.............................7
INCORPORATION OF DOCUMENTS BY REFERENCE......................................10
</TABLE>
The date of this Prospectus is February 18, 1998
<PAGE> 2
RESOUND CORPORATION
1997 STOCK PLAN
INTRODUCTION
This Prospectus relates to 650,000 shares of Common Stock ("Common
Stock") of ReSound Corporation, a California corporation (the "Company"),
issuable upon exercise of options and stock purchase rights granted or to be
granted to optionees and purchasers under its 1997 Stock Plan (the "1997 Stock
Plan"). This Prospectus sets forth information concerning the 1997 Stock Plan
and will be distributed to participating optionees and purchasers pursuant to
the Securities Act of 1933, as amended (the "Securities Act"). Certain terms
used in this Prospectus with initial capital letters are defined in the 1997
Stock Plan.
Additional information about the 1997 Stock Plan and its administration
can be obtained by writing the Human Resources Department of the Company at its
executive offices at 220 Saginaw Drive, Seaport Centre, Redwood City, California
94063, telephone (650) 780-7800.
RISK FACTORS
For a discussion of certain factors that should be considered carefully
in evaluating the Company and its business before purchasing the shares offered
by this Prospectus, reference is made to Item 1, entitled "Business," contained
in the Company's Annual Report on Form 10-K (the "10-K") for the fiscal year
ended December 31, 1996 and which will be contained in future Annual Reports on
Form 10-K. Readers should also refer to Item 7 entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" contained in the
10-K and which will be included in the Company's Annual Report to shareholders
for future years. In addition, readers should refer to Item 2, entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contained in the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1997 and which will be contained in
subsequent Quarterly Reports on Form 10-Q.
Copies of each of the documents described above are available (or will
be available) without charge from the Company through its Human Resources
Department.
<PAGE> 3
THE 1997 STOCK PLAN
GENERAL
The 1997 Stock Plan was adopted by the Board of Directors (the "Board")
on April 16, 1997 and approved by the shareholders on May 22, 1997. A total of
650,000 shares of Common Stock has been reserved for issuance under the 1997
Stock Plan. As of the date of this Prospectus, no options or rights to purchase
shares of Common Stock were outstanding under the 1997 Stock Plan.
The 1997 Stock Plan provides for grants to employees of the Company and
any subsidiary of the Company (including officers and employee directors) of
"incentive stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and for grants of
nonstatutory stock options ("NSOs") and stock purchase rights to employees
(including officers and employee directors) and consultants (including
non-employee directors) of the Company, any subsidiary of the Company, or any
affiliate of the Company. See "FEDERAL INCOME TAX ASPECTS OF THE 1997 STOCK
PLAN" below for information concerning the tax treatment of incentive stock
options, nonstatutory stock options and stock purchases.
The 1997 Stock Plan is not a qualified deferred compensation plan under
Section 401(a) of the Code, and is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
PURPOSE
The purposes of the 1997 Stock Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to the employees and consultants of the Company to continue
and advance in their employment and service and to promote the success of the
Company's business.
ADMINISTRATION
The 1997 Stock Plan may be administered by the Company's Board of
Directors or a committee of the Board. The 1997 Stock Plan is currently being
administered by the Human Resources Committee of the Board of Directors, except
that, with respect to executive officers of the Company (including executive
officers who are also directors), the 1997 Stock Plan is being administered
exclusively by the Stock and Option Committee of the Board of Directors. The
Board of Directors or its committee may determine the terms of the options and
stock purchase rights granted, including the exercise or purchase price, the
number of shares subject to each option or stock purchase right and the
exercisability of the option or stock purchase right. The Board of Directors or
its committee also has the full power to select the individuals to whom options
and stock purchase rights will be granted and to make any combination of grants
to any participants. The interpretation and construction of any provision of the
1997 Stock Plan by the Board of Directors or its committee are final and binding
upon all participants.
Members of the Board receive no additional compensation for their
services in connection with the administration of the 1997 Stock Plan. All
directors currently hold office until the annual meeting of shareholders of the
Company following their election, or until their successors are duly
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<PAGE> 4
elected and qualified. Directors may be removed from office by the vote or
written consent of the majority of outstanding shares pursuant to the provisions
of Section 303 of the California Corporations Code or by court order.
SECURITIES TO BE PURCHASED
The securities to be purchased upon exercise of options or purchase
rights issued under the 1997 Stock Plan are shares of Common Stock, $0.01 par
value, of the Company. Each share of such Common Stock entitles the holder to
one vote on matters submitted to a vote of the shareholders, a pro rata share of
such dividends as may be declared on the Common Stock and a pro rata share of
assets remaining available for distribution to holders of Common Stock upon a
liquidation of the Company. Such Common Stock is not convertible and has no
preemptive rights.
ELIGIBILITY
The 1997 Stock Plan provides that incentive stock options may be
granted only to employees (including officers and employee directors) of the
Company or any subsidiary of the Company, while nonstatutory stock options and
stock purchase rights may be granted not only to employees (including officers
and employee directors), but also consultants (including nonemployee directors)
of the Company, any subsidiary of the Company or its affiliates.
The 1997 Stock Plan does not set either a maximum or minimum number of
shares of Common Stock which may be granted under options or stock purchase
rights to any person, other than the annual per-employee limitation set forth in
"Limitation on Grants to Employees" below. However, no employee may be granted
incentive stock options that first become exercisable (i.e., that vest) in any
calendar year for Common Stock having a total fair market value, determined at
the time of grant, in excess of $100,000. To the extent options have been issued
to a person that exceed the $100,000 limit, such excess options are treated as
nonstatutory stock options. See "FEDERAL INCOME TAX ASPECTS OF THE 1997 STOCK
PLAN" below.
TERMS AND CONDITIONS OF OPTIONS
Each option is evidenced by a stock option agreement between the
Company and the optionee, and is subject to the following terms and conditions:
(a) EXERCISE OF THE OPTION. The Board of Directors or its
committee determines when options may be exercised. An option is exercised by
giving written notice of exercise to the Company specifying the number of full
shares of Common Stock to be purchased and by tendering of payment of the
purchase price. The purchase price of the shares purchased upon exercise of an
option shall be paid in consideration of such form as is determined by the Board
of Directors or its committee, and such form of consideration may vary for each
option. Each optionee should refer to his or her individual option agreement for
information as to the exercisability and form of consideration applicable to his
or her option.
(b) EXERCISE PRICE AND CONSIDERATION. The option exercise
price may not be less than 100% of the fair market value of the Common Stock on
the date of grant; provided, however, that
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<PAGE> 5
NSOs may be granted to persons other than the Company's Chief Executive Officer
or its other four most highly compensated officers whose compensation is
required to be reported to shareholders under the Exchange Act at exercise
prices as determined by the Board of Directors or its committee. In the case of
an ISO granted to a person who at the time of the grant owns stock representing
more than 10% of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary, the option exercise price for each share
covered by such option may not be less than 110% of the fair market value of a
share of Common Stock on the date of grant of such option.
The Board of Directors or its committee determines the fair market
value of the Common Stock. As long as the Common Stock of the Company is trading
on the National Market of the National Association of Securities Dealers, Inc.
Automated Quotation System ("Nasdaq") (as of the date of this Prospectus, the
Common Stock was traded on the Nasdaq National Market), the fair market value of
a share of Common Stock of the Company shall be the closing sales price for such
stock as quoted on such system on the date of determination (if for a given day
no sales were reported, the closing bid on that day shall be used), as such
price is reported in THE WALL STREET JOURNAL or such other source the Board of
Directors or its committee deems reliable.
The consideration to be paid for shares issued on exercise of options
granted under the 1997 Stock Plan, including the method of payment, is
determined by the Board of Directors or its committee (in the case of ISOs, such
determination shall be made at the time of grant) and may consist entirely of
cash, check, promissory note, shares of Common Stock which have been
beneficially owned by the optionee for at least six months or which were not
acquired directly or indirectly from the Company, with a fair market value on
the exercise date equal to the aggregate exercise price of the shares purchased,
authorization from the Company to retain from the total number of shares as to
which the option is exercised a number of shares having a fair market value on
the exercise date equal to the aggregate exercise price of the shares issued, or
delivery of a properly executed exercise notice and irrevocable instructions to
a broker to deliver promptly to the Company the amount of sale or loan proceeds
required to pay the exercise price. The Board of Directors or its committee may
also authorize payments by any combination of the above methods or any other
consideration and method of payment permitted by law.
(c) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the
event of termination of an optionee's employment or consulting relationship with
the Company for any reason other than death or permanent disability, the
optionee may still exercise his or her option to the extent that he or she was
entitled to exercise it at the date of termination, but such exercise must be
made within thirty days (or such other period of time as is determined on a
discretionary basis by the Board of Directors or its committee, but in no event
exceeding three months in the case of an ISO) and may not be made later than the
date of expiration of the term of the option as set out in the option agreement.
(d) DISABILITY. If an optionee is unable to continue his or
her employment or consulting relationship with the Company as a result of his or
her total and permanent disability, an option may be exercised (to the extent it
was exercisable upon the date of termination) within six months of termination
(or such other period of time as is determined on a discretionary basis by the
Board of Directors or its committee, but in no event exceeding 12 months in the
case of an ISO),
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<PAGE> 6
but an option may not be exercised later than the date of expiration of the term
of the option as set out in the option agreement.
(e) DEATH. If an optionee should die while employed or
retained as a consultant by the Company (and such optionee has been in
continuous status as an employee or consultant of the Company since the date of
the grant of the option), the optionee's estate or a person who has acquired the
right to exercise the option by bequest or inheritance may exercise the option
at any time within six months (or such other period of time as is determined on
a discretionary basis by the Board of Directors or its committee, but in no
event exceeding 12 months in the case of an ISO) after the date of death (but
not later than the date of expiration of the term of the option as set out in
the option agreement). The option shall be exercisable to the extent that the
right to exercise would have accrued had the optionee continued living and
working as an employee of or consultant to the Company for another three months
(or such other period of time as is determined by the Board of Directors or its
committee) beyond the date of death.
If an optionee should die within 30 days (or such other period of time
as is determined on a discretionary basis by the Board of Directors or its
committee, but in no event exceeding three months in the case of an ISO) after
terminating his or her employment or consulting relationship with the Company,
the optionee's estate or a person who has acquired the right to exercise the
option may likewise exercise the option at any time within six months after the
date of death, but not later than the date of expiration of the term of the
option as set out in the option agreement. However, in this case, the option
shall be exercisable only to the extent it was exercisable at the date of
termination.
(f) TERM OF OPTIONS. The term of an option is determined by
the specific option agreement. Incentive stock options may not have a term of
more than 10 years. Furthermore, the maximum term for an ISO granted to an
optionee who immediately before the grant of such option owns more than 10% of
the total combined voting power of all classes of stock of the Company or any
parent or subsidiary is five years. No option may be exercised by any person
after its term expires.
(g) LIMITATION ON GRANTS TO EMPLOYEES. Subject to adjustment
as provided in the 1997 Stock Plan, the maximum number of shares which may be
subject to options and stock purchase rights granted to any one employee under
the 1997 Stock Plan during any fiscal year of the Company is 650,000 shares.
(h) OTHER PROVISIONS. The option agreement may contain other
terms, provisions and conditions as may be determined by the Board of Directors
or its committee as long as they are consistent with the 1997 Stock Plan.
STOCK PURCHASE RIGHTS
Under the terms of the 1997 Stock Plan, in addition to granting both
incentive stock options and nonstatutory stock options, the Company may also
grant stock purchase rights. Such stock purchase rights may either be issued
alone, in addition to, or in tandem with, other awards granted under the 1997
Stock Plan. The 1997 Stock Plan gives the Board of Directors or its committee
the authority to set the price for any stock purchase right issued pursuant to
the 1997 Stock Plan on a discretionary basis. Unless the Board or its committee
determines otherwise, the restricted stock purchase agreement shall grant the
Company a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment with the Company for any reason
(including death or disability). The purchase price for shares repurchased
pursuant to the restricted stock purchase agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at such rate as the
Board of Directors or its committee may determine.
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<PAGE> 7
OPTIONS AND STOCK PURCHASE RIGHTS NOT TRANSFERABLE
Generally, an option or stock purchase right is nontransferable by the
optionee or purchaser other than by will or the laws of descent and
distribution, and is exercisable only by the optionee during his or her lifetime
and in the event of the optionee's or purchaser's death by a person who acquires
the right to exercise the option by bequest or inheritance or by reason of the
death. The 1997 Stock Plan gives the Board of Directors or its committee the
discretion to grant nonstatutory stock options that have limited transferability
rights (to a charitable trust, to a living trust or to the optionee's immediate
family members).
ACCELERATION OF OPTIONS AND REPURCHASE RIGHTS
In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the option shall be assumed or an equivalent option substituted by
the successor corporation (or a parent or subsidiary of such successor
corporation) unless the Board of Directors or its committee decides to
accelerate the vesting of the option to make it exercisable as to some or all of
the shares subject to the option. In the event of such acceleration of the
option, the optionee shall have 15 days from the date of notice of the option's
acceleration to exercise all or a portion of the option. All outstanding
repurchase rights held by the Company pursuant to the term of a Restricted Stock
Purchase Agreement shall be assigned to the successor corporation (or a parent
or subsidiary of such successor corporation), unless the Board of Directors or
its committee decides to terminate such rights prior to completion of the
transaction.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event any change such as a stock split or dividend is made in
the Company's capitalization that results in an increase or decrease in the
number of outstanding shares of Common Stock without receipt of consideration by
the Company, appropriate adjustment shall be made in the exercise price and in
the number of shares subject to each option and stock purchase right, in the
maximum number of shares for which options and stock purchase rights may be
granted to any Employee during a fiscal year and in the number of shares
available for issuance under the 1997 Stock Plan. In the event of the proposed
dissolution or liquidation of the
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<PAGE> 8
Company, each option and stock purchase right will terminate immediately prior
to the consummation of such proposed action unless otherwise provided by the
Board of Directors or its committee. The Board of Directors or its committee may
declare that any option or stock purchase right shall terminate as of a date
fixed by the Board of Directors or its committee and give each optionee the
right to exercise his or her option as to all or any part of the shares subject
to the option, including shares as to which the option would not otherwise be
exercisable.
RESTRICTIONS ON RESALE
The officers and directors of the Company eligible to participate in
the 1997 Stock Plan may be deemed to be "affiliates" of the Company as that term
is defined under the Securities Act. Common Stock acquired under the 1997 Stock
Plan by an affiliate may only be reoffered or resold pursuant to an effective
registration statement or pursuant to Rule 144 under the Securities Act or
another exemption from the registration requirements of the Securities Act. Such
reoffers or resales may not be made pursuant to this Prospectus. The Board of
Directors or its committee may on a discretionary basis allow securities issued
under the 1997 Stock Plan to be transferred at the request of a participant to a
charitable trust, a living trust or the participant's immediate family members.
Reoffers or resales of securities so transferred may not be made pursuant to
this Prospectus, but must be made pursuant to an effective registration
statement covering such securities or an exemption from the registration
requirements of the Securities Act.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend the 1997 Stock Plan at any time or from time to
time or may terminate it without approval of the shareholders, except that
shareholder approval is required for any amendment to the 1997 Stock Plan that
increases the number of shares which may be issued under the 1997 Stock Plan,
modifies the standards of eligibility, changes the limitation on grants to
employees or effects other changes which would require shareholder approval to
qualify options granted under the 1997 Stock Plan as performance-based
compensation under Section 162(m) of the Code. However, no action by the Board
or shareholders may alter or impair any option or stock purchase rights
previously granted under the 1997 Stock Plan, unless mutually agreed otherwise
between the optionee or purchaser and the Board in a writing signed by the
optionee or purchaser and the Company. The 1997 Stock Plan shall terminate in
2007. Any options or stock purchase rights outstanding at that time under the
1997 Stock Plan shall remain outstanding until they expire by their own terms.
FEDERAL INCOME TAX ASPECTS OF THE 1997 STOCK PLAN
The following is a brief summary of the United States federal income
tax consequences of transactions under the 1997 Stock Plan based on federal
securities and income tax laws in effect as of the date of this Prospectus
(which laws could change at any time hereafter). This summary is not intended to
be exhaustive and does not discuss the tax consequences of a participant's death
or provisions of the income tax laws of any municipality, state or other country
in which an optionee may reside. This summary does not purport to be complete.
The Company advises all optionees to consult their own tax advisors concerning
tax implications of option grants, exercises, the purchase of shares and the
disposition of shares acquired upon such exercise under the 1997 Stock Plan.
FEDERAL INCOME TAX ASPECTS OF OPTIONS
Options granted under the 1997 Stock Plan may be either incentive
stock options, as defined in Section 422 of the Code, or nonstatutory stock
options.
If an option granted under the 1997 Stock Plan is an incentive stock
option, the optionee will recognize no income upon grant of the incentive stock
option and incur no regular tax liability upon its exercise, although the
exercise of an incentive stock option may give rise to alternative minimum tax
(see below). The Company will not be allowed a deduction for federal income tax
purposes as result of the exercise of an incentive stock option regardless of
the applicability of the alternative minimum tax. Upon the sale or exchange of
the shares more than two years after grant of the option and more than one year
after receipt of the shares by the optionee, any gain will be treated as
long-term capital gain. If both of these holding periods are not satisfied (a
"disqualifying disposition"), the optionee will recognize ordinary income equal
to the difference
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between the exercise price and the lower of the fair market value of the stock
at the date of the option exercise or the sale price of the stock. The Company
will be entitled to a deduction in the same amount as the ordinary income
recognized by the optionee. Any gain recognized on such a disqualifying
disposition of the shares in excess of the amount treated as ordinary income
will be characterized as long-term capital gain if the sale occurs more than one
year after exercise of the option or as short-term capital gain if the sale is
made earlier. The tax rate on long-term capital gains under current federal tax
laws for federal income tax and alternative minimum tax purposes is capped at
28% for shares held more than one (1) year but not more than eighteen (18)
months after the date of exercise and at 20% for shares held more than eighteen
(18) months after the date of exercise. Capital losses are allowed in full
against capital gains plus $3,000 of other income.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory stock options. An optionee will not recognize any
taxable income under U.S. tax laws at the time he or she is granted a
nonstatutory stock option. However, upon its exercise, under U.S. tax laws the
optionee will recognize ordinary income for tax purposes measured by the excess
of the then fair market value of the shares over the exercise price. In certain
circumstances, where the shares are subject to a substantial risk of forfeiture
when acquired or where the optionee is an officer, director or 10% shareholder
of the Company, the date of taxation may be deferred unless the optionee files
an election with the Internal Revenue Service under Section 83(b) of the Code.
The income recognized by an optionee who is also an employee of the Company will
be subject to income and employment tax withholding by the Company by payment in
cash or out of the current earnings paid to the optionee. Upon sale of such
shares by the optionee, any difference between the sales price and the exercise
price, to the extent not recognized as ordinary income as provided above, will
be treated as capital gain or loss, and will qualify for long-term capital gain
or loss treatment if the shares have been held for more than one year. The
Company will be entitled to a tax deduction in the amount and at the time that
the optionee recognizes ordinary income with respect of the shares acquired upon
the exercise of a nonstatutory stock option.
ALTERNATIVE MINIMUM TAX ASPECTS OF INCENTIVE STOCK OPTIONS
As noted above, the exercise of an incentive stock option may subject
the optionee to the alternative minimum tax ("AMT") under Section 55 of the
Code. AMT is calculated for federal tax purposes by applying a tax rate of 26%
to alternative minimum taxable income up to $175,000 ($87,500 for married
taxpayers filing separately) and 28% to alternative minimum taxable income above
$175,000. Alternative minimum taxable income for federal tax purposes is equal
to (i) taxable income adjusted for certain items, plus (ii) items of tax
preference less (iii) an exclusion of $45,000 for joint returns and $33,750 for
individual returns (with the exclusion amount phased out for upper-income
taxpayers).
In computing alternative minimum taxable income, shares purchased upon
exercise of an incentive stock option are treated as if they had been acquired
by the optionee pursuant to a nonstatutory stock option, as described above.
Because AMT rules are complex and their effects depend upon the personal
circumstances of each taxpayer, an optionee should consult his or her own tax
advisor prior to exercising an incentive stock option.
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If an optionee pays AMT, the amount of such AMT, to the extent that it
exceeds an optionee's regular tax liability for the year of exercise, may be
carried forward as a credit against any subsequent year's regular tax in excess
of the AMT.
FEDERAL INCOME TAX ASPECTS OF STOCK PURCHASES
Stock purchases will generally be taxed in the same manner as
nonstatutory stock options as described above.
PAYMENTS IN RESPECT TO A CHANGE OF CONTROL
The 1997 Stock Plan authorizes the Administrator to accelerate the
vesting of options and repurchase rights in the event of the Company's merger
with another corporation or sale of all or substantially all of its assets. Such
acceleration or payment may cause part or all of the consideration involved to
be treated as a "parachute payment" under the Code, which may subject the
recipient thereof to a 20% excise tax and which may not be deductible by the
participant's employer.
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INCORPORATION OF DOCUMENTS BY REFERENCE
This Prospectus incorporates by reference the following documents that
have been filed by the Company with the Securities and Exchange Commission, or
portions of such documents:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, which contains audited financial statements for the Company's
latest fiscal year for which such statements have been filed.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997, filed pursuant to Section
13 of the Exchange Act.
3. Items 1 and 2 of the Company's Registration Statement on Form 8-A
filed on July 7, 1994 pursuant to Section 12 of the Exchange Act, and Items 1
and 2 of the Company's Registration Statement on Form 8-A filed on March 3, 1993
pursuant to Section 12 of the Exchange Act.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Prospectus and to be part hereof from
the date of filing such documents.
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, copies of the documents described above and all
documents subsequently filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act (including Annual Reports, Forms 10-K and 10-Q
and Proxy Statements) prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, all of which are hereby incorporated in this
Prospectus by reference, effective upon the filing date of such documents.
Requests for such copies, or additional information regarding the 1997
Stock Plan and its administration should be directed to the Company's Human
Resources Department at the Company's offices at 220 Saginaw Drive, Seaport
Centre, Redwood City, California 94063 (telephone number: (650) 780-7800).
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Exhibit 5.1
February 18, 1998
ReSound Corporation
220 Saginaw Drive, Seaport Centre
Redwood City, CA 94063
REGISTRATION STATEMENT ON FORM S-8
----------------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by you
with the Securities and Exchange Commission on or about February 18, 1998 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of 650,000 shares of your Common Stock (the
"Shares") reserved for issuance under the 1997 Stock Plan (the "Plan"). As your
legal counsel, we have examined the proceedings taken and are familiar with the
proceedings proposed to be taken by you in connection with the sale and issuance
of the Shares under the Plan.
It is our opinion that, when issued and sold in the manner referred to in
the Plan and pursuant to the respective agreement which accompanies each grant
under the Plan, the Shares will be legally and validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and any amendments to it.
Sincerely,
VENTURE LAW GROUP
A Professional Corporation
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the 1997 Stock Plan of ReSound Corporation of our report
dated January 28, 1997, with respect to the consolidated financial statements
and schedule of ReSound Corporation included in its Annual Report (Form 10-K)
for the year ended December 31, 1996, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Palo Alto, California
February 13, 1998
