As filed with the Securities and Exchange Commission on June 19, 1998
--Registration No. 333-
---------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FINET HOLDINGS CORPORATION
(Exact name of issuer specified in its charter)
DELAWARE 94-3115180
(State of incorporation) (I.R.S. Employer Identification No.)
--------------------
3021 CITRUS CIRCLE
WALNUT CREEK, CALIFORNIA 94598
(Address of Principal Executive Offices)
FINET HOLDINGS CORPORATION 1998 STOCK OPTION PLAN
(Full Title of the Plan)
JAN C. HOEFFEL
PRESIDENT
FINET HOLDINGS CORPORATION
3021 CITRUS CIRCLE
WALNUT CREEK, CALIFORNIA 94598
(510) 583-9964
(Name and Address and Telephone Number of Agent of Service)
COPIES TO:
ROGER S. MERTZ, ESQ.
SEVERSON & WERSON
ONE EMBARCADERO CENTER, 26th FLOOR
SAN FRANCISCO, CALIFORNIA 94111
(415) 398-3344
<PAGE>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price (1) Fee
- ---------- ---------- --------- --------- ------------
Common 2,000,000 $2.57 $5,140,000 $1,516
Stock, par
value $0.01
- ------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(c) solely for purposes of calculating the
amount of the registration fee, based upon the average of the high and low
sales prices of the Common Stock on June 11, 1998, as reported on the
NASDAQ SmallCap Stock Market.
<PAGE>
FINET HOLDINGS CORPORATION
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are incorporated by reference in this
Registration Statement:
(a) Registrant's Annual Report on Form 10-KSB for the fiscal
year ended April 30, 1997, filed pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended;
(b) All other reports, if any, filed by the Company pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 since the end
of the fiscal year ended April 30, 1997;
(c) The description of the Company's Common Stock contained in
the Registration Statement on Form SB-2 filed with the Commission on March 18,
1994, including any amendment or report filed for the purpose of updating such
description.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after the date of
this Registration Statement and prior to the filing of a post-effective
amendment to this Registration Statement which indicates that all securities
offered hereunder have been sold, or which deregisters all securities then
remaining unsold under this Registration Statement, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.
Item 4. DESCRIPTION OF SECURITIES.
Not applicable.
Item 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
permits indemnification of directors, officers, employees and agents of
corporations under certain conditions and subject to certain limitations.
Article VI of the Company's Bylaws provides for indemnification of the directors
and officers of the Company to the fullest extent permissible under Delaware
law. Directors and officers of the Company are insured, at the expense of the
Registrant, against certain liabilities which might arise out of their
employment and which might not be subject to indemnification under the Bylaw.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
Item 8. EXHIBITS.
Exhibit
Number Description of Document
- ------- -----------------------
4.1 Finet Holdings Corporation 1998 Stock Option Plan and forms of
Notice of Stock Option Grant and Stock Option Agreement thereunder
5.1 Opinion of Severson & Werson, A Professional Corporation
23.1 Consent of Reuben E. Price & Co., Independent Auditors
23.2 Consent of Counsel (contained in Exhibit 5.1)
24.1 Power of Attorney (see page II-5)
Item 9. UNDERTAKINGS.
A. Rule 415 Offering.
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 the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. Filings Incorporating Subsequent Exchange Act Documents B
Reference.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company'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 offering therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Regulation S-K Item 512(h) Undertaking for Registration
Statement on Form S-8.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company 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 Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company 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 Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Walnut Creek, State of California, on June 19, 1998.
FINET HOLDINGS CORPORATION
By: /s/ Jan C. Hoeffel
-----------------------------------------
Jan C. Hoeffel
President
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints L. Daniel Rawitch and Jan C. Hoeffel, and
each of them, his true and lawful attorney-in-fact and agent, each with full
power of substitution for him 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, hereby
ratifying and confirming all that each of said attorneys-in-fact or their or his
substitutes or substitute, 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.
Signature Title Date
--------- ----- ----
/s/ L. Daniel Rawitch
- ------------------------ Chief Executive Officer June 19, 1998
L. Daniel Rawitch and Director (Principal
Executive Officer)
/s/ Jan C. Hoeffel
- ------------------------
Jan C. Hoeffel President and Director June 19, 1998
/s/ George P. Winkel Chief Financial Officer
- ------------------------ (Principal Financial
George P. Winkel Officer and Principal June 19, 1998
Accounting Officer)
- ------------------------ Chairman of the Board
Jose Maria Salema Garcao of Directors June ___, 1998
- ------------------------
Jose Filipe Nobre Guedes Director June ___, 1998
/s/ S. Lewis Meyer
- ------------------------
S. Lewis Meyer Director June 19, 1998
/s/ James W. Noack
- ------------------------
James W. Noack Director June 19, 1998
/s/ Stephen J. Sogin
- ------------------------
Stephen J. Sogin Director June 19, 1998
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ---------- -----------
4.1 Finet Holdings Corporation 1998 Stock Option Plan and forms of
Notice of Stock Option Grant and Stock Option Agreement thereunder
5.1 Opinion of Severson & Werson, A Professional Corporation
23.1 Consent of Reuben E. Price & Co., Independent Auditors
23.2 Consent of Counsel
(contained in Exhibit 5.1)
24.1 Power of Attorney (see pages II-5)
EXHIBIT 4.1
FINET HOLDINGS CORPORATION
1998 STOCK OPTION PLAN
1. Purpose and Scope. The purposes of this Plan are to induce persons
of outstanding ability and potential to join and remain with Finet Holdings
Corporation (the "Company"), to provide an incentive for such employees as well
as for non-employee consultants to expand and improve the profits and prosperity
of the Company by enabling such persons to acquire proprietary interests in the
Company, and to attract and retain key personnel through the grant of Options to
purchase shares of the Company's common stock. As used herein, the term "Option"
includes both Incentive Stock Options and Non-Qualified Stock Options.
2. Definitions. Each term set forth in this Section 2 shall have the
meaning set forth opposite such term for purposes of this Plan unless the
context otherwise requires, and for the purposes of such definitions, the
singular shall include the plural and the plural shall include the singular:
(a) "Affiliate" shall mean any parent corporation or
subsidiary corporation of the Company as those terms are defined in Sections
424(e) and (f) respectively of the Internal Revenue Code of 1986, as amended.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Committee" shall have the meaning set forth in Section 3
hereof.
(d) "Company" shall mean Finet Holdings Corporation, a Delaware
corporation.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) "Fair Market Value" for a share of Stock means the price that
the Board or the Committee acting in good faith determines, through any
reasonable valuation method (including but not limited to reference to prices
existing in any established market in which the Stock is traded), to be the
price at which a share of Stock might change hands between a willing buyer and a
willing seller, neither being under any compulsion to buy or to sell and both
having reasonable knowledge of the relevant facts.
(g) "Option" shall mean a right to purchase Stock granted
pursuant to the Plan.
(h) "Exercise Price" shall mean the purchase price for Stock
under an Option, as determined in Sections 7 - "Incentive Stock Options" - and 8
- - "Non-Incentive Stock Options" - below.
(i) "Participant" shall mean an employee or non-employee
consultant to the Company to whom an Option is granted under the Plan.
(j) "Plan" shall mean this Finet Holdings Corporation 1998 Stock
Option Plan.
(k) "Stock" shall mean the $0.01 par value common stock of the
Company.
(l) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
3. Administration.
The Plan shall be administered (i) with respect to
individuals who receive options under the Plan and who are or become subject to
the reporting requirements and short-swing liability provisions of Section 16 of
the Securities Exchange Act of 1934, as amended (the "1934 Act") ("Reporting
Persons") by a committee consisting of at least two members of the Board of
Directors of the Company (the "Board"), each of whom is a non-employee director
(as such term is defined under Rule 16b-3 of the 1934 Act) (the "Reporting
Persons Committee") and (ii) with respect to all individuals who receive Options
under the Plan and are who are not Reporting Persons, by a committee which
consists of at least two members of the Board (the "Stock Option Committee").
For purposes of this Plan, references to the "Committee" shall mean the
Reporting Persons Committee, the Stock Option Committee, or both, as the context
may require.
The Committee shall have full authority in its discretion,
subject to and not inconsistent with the express provisions of the Plan, to
grant Options, to determine the Exercise Price and term of each Option, the
persons to whom, and the time or times at which, Options shall be granted and
the number of shares of Stock to be covered by each Option; to interpret the
Plan; to prescribe, amend, and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the option agreements (which need
not be identical) entered into in connection with the grant of Options under the
Plan; and to make all other determinations deemed necessary or advisable for the
administration of the Plan. The Board may delegate to one or more of their
members, or to one or more agents, such administrative duties as it may deem
advisable, and the Board or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Board or such person may have under the Plan. The Board may
employ attorneys, consultants, accountants, or other persons, and the Board
shall be entitled to rely upon the advice, opinions, or valuations of such
persons. All actions taken and all interpretations and determinations made by
the Board in good faith shall be final and binding upon all Participants, the
Company, and all other interested persons. No member of the Board shall be
personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan; and all members of the Board shall be fully
protected by the Company in respect of any such action, determination, or
interpretation.
4. Shares Subject to the Plan. Subject to adjustment under the
provisions of Section 14 "Effect of Change in Stock Subject to Plan" - of the
Plan, the maximum number of shares of Stock that may be optioned or sold under
the Plan is Two Million (2,000,000). Such shares may be authorized but
unissued shares of Stock of the Company, or issued shares of Stock reacquired by
the Company, or shares purchased in the open market expressly for use under the
Plan. If for any reason any shares of Stock as to which an Option has been
granted cease to be subject to purchase thereunder, then (unless the Plan shall
have been terminated) such shares shall become available for subsequent awards
under this Plan in the discretion of the Board. The Company shall, at all times
while the Plan is in force, reserve such number of common shares as will be
sufficient to satisfy the requirements of all outstanding Options granted under
the Plan.
5. Eligibility; Factors to be Considered in Granting Options.
(a) Options may be granted to: (i) any regular full-time
employee (including officers and directors) of either the Company or any
affiliate of the Company; and (ii) any non-employee consultant of the Company.
(b) In determining to whom options shall be granted and the
number of shares of Stock to be covered by each Option, the Board shall take
into account the nature the participants' duties, their present and potential
contributions to the success of the Company, and such other factors as it shall
deem relevant in connection with accomplishing the purposes of the Plan. The
Board shall also determine the time(s) of grant, the type and term of Option
granted, and the time(s) of exercise, in whole or part. A Participant who has
been granted an Option under the Plan may be granted new Options, which may be
in addition to prior Options granted under the Plan or may be in exchange for
the surrender and cancellation of prior Options having a higher or lower
Exercise Price and containing such other terms as the Board may deem
appropriate.
6. Terms and Conditions of Options.
(a) General. Options granted pursuant to the Plan shall be
authorized by the Board and shall be evidenced by agreements ("Option
Agreements") in such form as the Board from time to time shall approve. Such
Option Agreements shall comply with and be subject to the following general
terms and conditions, and shall also comply with and be subject to the
provisions of Section 7 relating to Incentive Stock Options or Section 8
relating to Non-Qualified Stock Options, as applicable, as well as such other
terms and conditions as set forth in this Plan and as the Board may deem
desirable, not inconsistent with the Plan.
(b) Employment Agreement. The Committee may, in its
discretion, include in any Option granted under the Plan a condition that the
Participant shall agree to remain in the employ of, and/or to render services
to, the Company for a period of time (specified in the Option Agreement)
following the date the Option is granted. No such Option Agreement shall impose
upon the Company any obligation to employ and/or retain the Participant for any
period of time.
(c) Manner of Exercise. A Participant may exercise an Option
by giving written notice of such exercise to the Company at its principal
office, attention to the Secretary, and paying the Exercise Price either (i) in
cash in full at the time of exercise, or (ii) in the discretion of the Board:
(i) by delivery of other previously outstanding common stock
of the Company,
(ii) by an approved deferred payment schedule or other
arrangement, which arrangement shall be contained in writing in the Option
Agreement, in which event an interest rate will be stated which is not less than
the rate then specified which will prevent any imputation of higher interest
under Section 483 of the Code,
(iii) by retention by the Company of some of the Stock as to
which the Option is then being exercised, in which case the Optionee's notice of
exercise shall include a statement (1) directing the Company to retain so many
shares that would otherwise have been delivered by the Company upon exercise of
this Option as equals the number of shares that would have been surrendered to
the Company if the purchase price had been paid with previously outstanding
stock of the Company, and (2) confirming the aggregate number of shares as to
which this Option is being thus exercised and therefore surrendered, or
(iv) in any other form of legal consideration acceptable to
the Committee at the time of grant or exercise.
(d) Time of exercise. Promptly after the exercise of an Option
and the payment of the Exercise Price, either in full or pursuant to the
approved payment schedule, the Participant shall be entitled to the issuance of
a stock certificate evidencing ownership of the appropriate number of shares of
Stock. A Participant shall have none of the rights of a shareholder until shares
are issued to him/her, and no adjustment will be made for dividends or other
rights for which the record date has occurred prior to the date such stock
certificate is issued.
(e) Number of shares. Each Option shall state the total number of
shares of Stock to which it pertains.
(f) Option Period and Limitations on Exercise. The Board may, in
its discretion, provide that an Option may not be exercised in whole or part
for any period(s) of time specified in the Option Agreement, except that the
right to exercise must be at the rate of at least 20% per year over five years
from the date the Option is granted, subject to the further conditions of the
Plan and the Option Agreement such as continued employment. However, in the case
of an Option granted to officers, directors, or non-employee consultants of the
Company or any of its affiliates, the Option may become fully exercisable,
subject to the further conditions of the Plan and the Option Agreement, at any
time or during any period established by the Company or its affiliates. The
exercise period shall be stated in the Option Agreement. No Option may be
exercised after the expiration of ten years from the Grant Date. No Option may
be exercised as to less than one hundred (100) shares at any one time, or the
remaining shares covered by the Option if less than one hundred (100).
7. Incentive Stock Options. The Board may grant Incentive Stock Options
("ISOs") which meet the requirements of Section 422 of the Code, as amended from
time to time.
(a) ISOs may be granted only to employees of the Company
or its affiliates.
(b) Each ISO granted under the Plan must be granted within 10
years from the date the Plan is adopted or is approved by the shareholders of
the Company, whichever is earlier.
(c) The purchase price shall not be less than the Fair Market
Value of the common shares at the time of grant, except that the purchase price
shall be 110% of the Fair Market Value in the case of any person who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its affiliates at the time of grant.
(d) No ISO granted under the Plan shall be exercisable more
than 10 years from the date of grant, except that in the case of any person who
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or its affiliates at the time of grant, no ISO
shall be exercisable more than five years from the date of grant.
(e) To the extent that the aggregate Fair Market Value of
stock (determined at the time of grant) with respect to which ISOs are
exercisable for the first time by any individual during any calendar year under
all plans of the Company and its subsidiaries exceeds $100,000, such options
shall be treated as Non-Qualified stock options, but only to the extent of such
excess. Should it be determined that an entire option or any portion thereof
does not qualify for treatment as an ISO by reason of exceeding such maximum, or
for any other reason, such option or portion shall be considered a Non-Qualified
stock option.
8. Non-Qualified Stock Options. The Board may grant Non-Qualified Stock
Options ("NSOs") under the Plan in addition to or in lieu of Incentive Stock
Options. NSOs are not intended to meet the requirements of Section 422 of the
Code, and shall be subject to the following terms and conditions:
(a) NSOs may be granted to any eligible Participant.
(b) The purchase price of the shares shall be determined by
the Board in its absolute discretion, but in no event shall such purchase price
be less than 85% of the Fair Market Value of the shares at the time of grant. In
the case of any person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or its affiliates
at the time of grant, the price shall be 110% of the Fair Market Value.
(c) NSOs shall not be exercisable more than ten years from the
date of grant.
9. Transferability. Options granted under this Plan shall not be
transferable other than by will or by the laws of descent and distribution, and
during a Participant's life shall be exercisable only by such Participant.
Options granted under this Plan shall not be subject to execution, attachment or
other process.
10. Termination of Employment. Options held by employees, including
directors, shall terminate three months after termination of employment with the
Company or affiliate, unless:
(a) If employment is terminated for cause, as such term is
defined by California law, the employer's contract of employment or the Option
Agreement, the Option shall immediately terminate.
(b) If termination is due to the employee's permanent and
total disability within the meaning of Section 22(e)(3) of the Code, the Option
may be exercised at any time within one year following termination.
(c) The Option Agreement by its terms specifies whether it
shall terminate later than three (3) months after termination of employment. If
the Option may be exercised later than three months following termination, any
portion exercised beyond three months shall be a non-qualified stock option.
This paragraph shall not be construed to extend the term of any Option nor to
permit anyone to exercise the Option after expiration of its term.
(d) Options granted under this Plan shall not be affected by
any change of duties or position of the Participant so long as Participant
continues to be a regular, full-time employee of the Company. Any Option, or any
rules and regulations relating to the Plan, may contain such provisions as the
Board shall approve with reference to the determination of the date employment
terminates. Nothing in the Plan or in any Option granted pursuant to the Plan
shall confer upon any Participant any right to continue in the employ of the
Company or shall interfere in any way with the right of the Company to terminate
such employment at its will at any time.
11. Rights in the Event of Death. If an employee dies during the term
of this Option, his/her legal representative or representatives, or the person
or persons entitled to do so under the employee's last will and testament or
under applicable intestate laws, shall have the right to exercise this Option,
but only for the number of shares as to which the employee was entitled to
exercise this Option on the date of his death, and such right shall expire and
this Option shall terminate six (6) months after the date of Grantee's death or
on the expiration date of this Option, whichever date is sooner. In all other
respects, this option shall terminate upon such death.
12. Leaves of Absence. For purposes of the Plan, an employee on
approved leave of absence from the Company shall be considered as currently
employed for 90 days following beginning the leave or for so long as his/her
right to reemployment is guaranteed by statute or contract, whichever is longer.
13. Effect of Change in Stock Subject to Plan.
(a) In the event that outstanding common shares are hereafter
changed by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split, combination of shares, stock dividends and the
like, the Board shall make adjustments as it deems appropriate in the aggregate
number of shares advisable under the Plan and the number and price subject to
outstanding option. Any adjustment shall apply proportionately and only to the
unexercised portion of options granted.
(b) In the event the Company dissolves or liquidates or
another entity succeeds to its assets, or in the event of a merger or
consolidation in which the Company is not the surviving entity, or in the event
of a reverse merger in which the Company survives but its common stock
immediately preceding the merger is converted into other property by virtue of
the merger, then the surviving entity shall assume the outstanding Options or
substitute similar Options for those outstanding.
14. Agreement and Representation of Employees.
(a) Acquiring stock for investment purposes. As a condition to
the exercise of any Option, the Company may require the person exercising such
ption to represent and warrant at the time of such exercise that any shares of
Stock acquired at exercise are being acquired only for investment and without
any present intention to sell or distribute such shares if, in the opinion of
Company's counsel, such representation is required or desirable under the
Securities Act of 1933 or any other applicable law, regulation, or rule of any
governmental agency.
(b) Withholding. With respect to the exercise of any Option
granted under this Plan, each Participant shall fully and completely consent to
whatever the Board directs to satisfy the federal and state tax withholding
requirements, if any, which the Board in its discretion deems applicable to such
exercise.
(c) Delivery. The Company is not obligated to deliver any
common shares until there has been qualification under or compliance with all
state or federal laws, rules and regulations deemed appropriate by the Company.
The Company will use all reasonable efforts to obtain such qualification and
compliance.
15. Amendment and Termination of Plan. The Board, by resolution, may
terminate, amend, or revise the Plan with respect to any shares as to which
Options have not been granted; provided however, that any amendment that would:
(a) increase the aggregate number of shares of common stock that may be issued
under the Plan, (b) materially increase the benefits accruing to Participants,
or (c) materially modify the requirements as to eligibility for participation in
the Plan, shall be subject to shareholder approval within 12 months before or
after adoption. It is expressly contemplated that the Board may amend the Plan
in any respect necessary to provide employees with the maximum benefits
available under and/or to satisfy the requirements of or amendments to Section
422 of the Code.
No termination, modification or amendment of the Plan may
however, alter or impair the rights conferred by an Option previously granted
without the consent of the individual to whom the Option was previously granted.
Unless sooner terminated, the Plan shall remain in effect for
a period of ten years from the date of the Plan's adoption by the Board.
Termination of the Plan shall not affect any Option previously granted.
16. Use of Proceeds. The proceeds from the sale of shares pursuant to
Options granted under the Plan shall constitute general funds of the Company.
17. Effective Date of Plan. The Effective Date of this Plan is February
18, 1998, the date it was adopted by the Board, provided the shareholders of
the Company approve this Plan within twelve (12) months after such effective
date. Any Options granted under this Plan prior to the date of shareholder
approval shall be deemed to be granted subject to such approval. Should
shareholder approval not be obtained within twelve (12) months, any Options
granted pursuant to the Plan shall be null and void.
18. Indemnification of Committee. In addition to such other rights of
indemnification as they may have and subject to limitations of applicable law,
the members of the Committee shall be indemnified by the Company against all
costs and expenses reasonably incurred by them in connection with any action,
suit or proceeding to which they or any of them may be a party by reason of any
action taken or failure to act under or in connection with the Plan or any
rights granted thereunder and against all amounts paid by them in settlement
thereof or paid by them in satisfaction of a judgment of any such action, suit
or proceeding, the Board or Committee member or members shall notify the Company
in writing, giving the Company an opportunity at its own cost to defend the same
before such Committee member or members undertake to defend the same on their
own behalf.
19. Information Requirements. The Company shall provide each
participant with annual financial statements.
20. Governing Law. The Plan shall be governed by, and all questions
arising hereunder, shall be determined in accordance with the laws of State of
California as such laws are applied to agreements between California residents
entered into and to be performed entirely within California.
Date of Board Adoption:February 18, 1998
Date of Shareholder Approval: , 1998
------------
<PAGE>
FINET HOLDINGS CORPORATION
FORM OF
STOCK OPTION AGREEMENT
PURSUANT TO
1998 STOCK OPTION PLAN
1. Grant of Option. Finet Holdings Corporation, a Delaware corporation
(the "Company"), hereby grants to the Optionee named in the Notice of Grant (the
"Optionee"), an option (the "Option") to purchase a total number of shares of
Common Stock (the "Shares") set forth in the Notice of Grant, at the exercise
price per share set forth in the Notice of Grant (the "Exercise Price") subject
to the terms, definitions and provisions of the 1998 Stock Option Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option.
If designated an Incentive Stock Option, this Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code.
2. Exercise of Option. This Option shall be exercisable during its term
in accordance with the Exercise Schedule set out in the Notice of Grant and with
the provisions of Section 6 of the Plan as follows:
(a) Right to Exercise.
(i) This Option may not be exercised for a
fraction of a share.
(ii) In the event of Optionee's death,
disability or other termination of employment, the exercisability of the
Option is governed by Sections 6, 7 and 8 below, subject to the limitation
contained in subsection 2(a)(iii).
(iii) In no event may this Option be exercised after
the date of expiration of the term of this Option as set forth in the Notice
of Grant.
(b) Method of Exercise. This Option shall be exercisable by
written notice (in the form attached as Exhibit A) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements as to
the holder's investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The written notice shall
be accompanied by payment of the exercise Price. This Option shall be deemed to
be exercised upon receipt by the Company of such written notice accompanied by
the Exercise Price.
No shares will be issued pursuant to the exercise of an
Option unless such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his investment
representations in the form attached hereto as Exhibit A, and shall read the
applicable rules of the Commissioner of Corporations attached to such Investment
Representation Statement, if any.
4. Method of Payment. Payment of the Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check; or
(c) in the discretion of the Board:
(i) by delivery of other previously outstanding
Common Stock of the Company,
(ii) by an approved deferred payment
schedule or other arrangement, which arrangement shall be contained in writing
in the Option Agreement, in which event an interest rate will be stated which
is not less than the rate then specified which will prevent any imputation of
higher interest under Section 483 of the Code,
(iii by retention by the Company of some of
the Stock as to which the Option is then being exercised, in which case the
Optionee's notice of exercise shall include a statement (1) directing the
Company to retain so many shares that would otherwise have been delivered by
the Company upon exercise of this Option as equals the number of shares that
would have been surrendered to the Company if the purchase price had been
paid with previously outstanding stock of the Company, and (2) confirming
the aggregate number of shares as to which this Option is being thus exercised
and therefore surrendered, or
(iv) in any other form of legal consideration
acceptable to the Committee at the time of grant or exercise.
5. Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
6. Termination of Relationship. In the event of termination of
Optionee's consulting relationship or status as an Employee, Optionee may, to
the extent otherwise so entitled at the date of such termination (the
"Termination Date"), exercise this Option during the Termination Period set out
in the Notice of Grant. To the extent that Optionee was not entitled to exercise
this Option at the date of such termination, or if Optionee does not exercise
this Option within the time specified herein, the Option shall terminate.
7. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of Optionee's status as an Employee as a
result of total and permanent disability (as defined in Section 22(e)(3) of the
Code), Optionee may, but only within twelve (12) months from the date of
termination of employment (but in no event later than the date of expiration of
the term of this Option as set forth in Section 10 below), exercise the Option
to the extent otherwise so entitled at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate.
8. Death of Optionee. Notwithstanding the provisions of Section 6
above, in the event of the death of Optionee, the Option may be exercised at any
time within twelve (12) months following the date of death (but in no event
later than the date of expiration of the term of this Option as set forth in
Section 10 below), by Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the
Optionee could exercise the Option at the date of death.
9. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by him. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
10. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Options designated as Incentive Stock Options
and Options granted to more than ten percent (10%) shareholders shall apply to
this Option.
11. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of some of the federal and California tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO, there
will be no regular federal income tax liability or California income tax
liability upon the exercise of the Option, although the excess, if any, of the
fair market value of the Shares on the date of exercise over the Exercise Price
will be treated as an adjustment to the alternative minimum tax for federal tax
purposes and may subject the Optionee to the alternative minimum tax in the year
of exercise.
(b) Exercise of Non-Qualified Stock Option ("NSO"). If this
Option does not qualify as an ISO, there may be a regular federal income tax
liability and a California income tax liability upon the exercise of the Option.
The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the fair market value
of the Shares on the date of exercise over the Exercise Price. If Optionee is an
employee, the Company will be required to withhold from Optionee's compensation
or collect from Optionee and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares
are held for at least one year after exercise, any gain realized on disposition
of the Shares will be treated as long-term capital gain for federal and
California income tax purposes. In the case of an ISO, if Shares transferred
pursuant to the Option are held for at least one year after exercise and are
disposed of at least two years after the Date of Grant, any gain realized on
disposition of the Shares will also be treated as long-term capital gain for
federal and California income tax purposes. If Shares purchased under an ISO are
disposed of within such one-year period or within two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the excess, if any,
of the fair market value of the Shares on the date of exercise over the Exercise
Price.
(d) Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (i) the date two years after the Date of Grant, or (ii) the date one
year after transfer of such Shares to the Optionee upon exercise of the ISO, the
Optionee shall immediately notify the Company in writing of such disposition.
Optionee agrees that Optionee may be subject to income tax withholding by the
Company on the compensation income recognized by the Optionee from the early
disposition by payment in cash or out of the current earnings paid to the
Optionee.
12. Repurchase on Termination.
(a) Definitions. Except as otherwise defined in this
Agreement, for purposes of this Section 12:
"Affiliate" shall mean another company controlling, controlled by
or under common control with the Company.
"Repurchase Date" shall mean the date on which the Company
exercises a Repurchase Option.
"Repurchase Option" shall mean the Company's right in accordance
with Section 12 of this Agreement to repurchase Shares bought under this
Agreement.
"Termination Date" shall mean the date on which Optionee's
employment or consulting service contract with the Company is terminated.
(b) Repurchase Rights. If the Optionee's employment or
consulting service contract with the Company or a subsidiary of the Company is
terminated for any reason other than death or total disability, the Shares
issued or issuable to Optionee under this Agreement, may, at the sole option and
discretion of the Company, be repurchased, either in whole or in part, by the
Company within 90 days after the Termination Date in accordance with this
Agreement.
(c) Repurchase Price. The repurchase price per Share
repurchased in accordance with this Section 12 shall be the original per Share
purchase price set forth in the accompanying Notice of Stock Option Grant. Such
repurchase price shall be paid in cash in a lump sum on the Repurchase Date. The
Company's right to repurchase any and all vested Shares under the Option,
whether exercised or not, at such original per share purchase price, lapses at
the rate of 20% per year (from the date the Option is granted) of the total
number of Shares granted. To the extent the right to repurchase any Shares
issued or issuable under this Agreement at the original per Share purchase price
has lapsed, the repurchase price shall be the fair market value of the Shares on
the Termination Date. Thus, for example, if the Company grants an Option for 400
shares vesting over 4 years from the date of grant, and after one year 100
shares have vested, the Company's repurchase right is as follows: i) 20% of the
400 total shares granted will be repurchasable at their fair market value on the
Termination Date, and ii) the remaining 80% may be repurchased at the original
per share purchase price.
(d) Death or Disability. There shall be no Repurchase Right
upon the Optionee's death or total disability.
(e) Repurchase Right as to Other Shares. The Repurchase Right
of the Company shall apply as well to all shares or other securities issued in
connection with any stock split, reverse stock split, stock dividend,
recapitalization, reclassification, spin-off, split-off, merger, consolidation
or reorganization ("Other Shares") but such right shall expire on the earliest
to occur of the following: (i) the date on which shares of the same class of
stock as such Other Shares first become publicly traded; or (ii) the occurrence
of any event or transaction upon which the Option terminates.
FINET HOLDINGS CORPORATION,
a Delaware corporation
By:
------------------------------
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S 1998 STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS
EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and certain
information related thereto and represents that he is familiar with the terms
and provisions thereof, and hereby accepts this option subject to all of the
terms and provisions thereof. Optionee has reviewed the Plan and this Option in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board upon any questions arising under the Plan.
Dated:
-------------- ---------------------------
[Optionee Signature]
<PAGE>
EXHIBIT A
FORM OF
NOTICE OF EXERCISE OF STOCK OPTION
Name of Optionee: Exercise Date:
--------------------------- --------------
Address:
---------------------------------------------
---------------------------------------------
---------------------------------------------
Form(s) of payment: $ cash
---------------
$ other(attach explanation)
-----------------
* * * * * *
Instructions: Please review the option agreement (the "Agreement") under
which this option was granted to determine the authorized form(s) of payment for
your shares, and to be sure you may now exercise this option for the number of
shares you have specified. Then complete this form, sign it at the end and give
the signed form to the Company official who administers the plan, together with
your payment for the shares and a copy of your signed Agreement. Retain a copy
of this form for your records.
Note: If you are exercising an option granted to an employee who is now
deceased or no longer working for the Company, please check this blank ( ), then
modify, explain, and supplement your responses to the following questions as
appropriate, and indicate your representative status underneath your signature
below.
* * * * * *
1. Date of Agreement:
------------------------------------
2. Price per share for which the option was granted (i.e. "Option Price"):
$ .
---------
3. Has this option already been exercised in part? If so, list
-------
dates of exercise and number of shares acquired on each exercise:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. Were you granted a stock option by the Company (or any Subsidiary) before
you were granted this option? . If so, list the date of each earlier grant
and state whether that option has been ------- exercised in full,
cancelled, or remains partially or fully outstanding:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. Are you now an employee of the Company (or its parent or subsidiary)?
. If so, has there been any break in your service since this option
-------
was granted to you (if so, state dates and reasons)?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If you are not now an employee but you qualify for a post-termination
option exercise under your option agreement, state when your employment
terminated and explain why you believe you so qualify:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* * * * * *
The undersigned Optionee hereby gives notice of exercise of this
option, tenders payment for the number of shares specified above, and
represents and warrants to the Company that the above statements are true.
- --------------------------------- -----------------------------------
Signature of Authorized Signature of Optionee
Company Official
DATED: DATED:
--------------------------- ------------------------------
<PAGE>
FINET HOLDINGS CORPORATION
FORM OF
NOTICE OF STOCK OPTION GRANT
[Optionee Name and Address]
You have been granted an option to purchase Common Stock of Finet
Holdings Corporation, a Delaware corporation (the "Company") as follows:
Grant Number
Date of Grant
Option Price Per Share $
Total Number of Shares Granted
Total Price of Shares Granted $
Type of Option Incentive Stock Option
------
Non-Qualified Stock Option
------
Term/Expiration Date Ten years from Date of Grant
Exercise Schedule:
This Option may be exercised in whole or in part, in accordance with
the following vesting schedule:
Vesting Schedule:
Date of Vesting Number of Shares Total Vested
--------------- ---------------- ------------
Termination Period:
This Option may be exercised for three months after employment with the
Company except as set out in Sections 6, 7, and 8 of the Stock Option Agreement
(but in no event later than the Expiration Date).
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Finet Holdings Corporation 1998 Stock Option
Plan and the Stock Option Agreement, all of which are attached and made a part
of this document.
OPTIONEE: FINET HOLDINGS CORPORATION
- -------------------- By:
Signature --------------------------------
Title:
-----------------------------
EXHIBIT 5.1
SEVERSON & WERSON
A PROFESSIONAL CORPORATION
ONE EMBARCADERO CENTER, 26th FLOOR
SAN FRANCISCO, CALIFORNIA 94111
FAX (415) 956-0439
TELEPHONE (415) 398-3344
June 19, 1998
Finet Holdings Corporation
3021 Citrus Circle, Suite 150
Walnut Creek, California 94104
Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the filing by Finet Holdings Corporation (the "Company") of a
registration statement on Form S-8 (the "Registration Statement") with the
Securities and Exchange Commission covering the registration of 2,000,000 shares
of the Company's Common Stock (the "Shares") pursuant to the Company's 1998
Stock Option Plan (the "Plan").
In connection with this opinion, we have examined and relied upon the
Registration Statement, the Plan, the Company's Restated Certificate of
Incorporation and Bylaws, as amended, and such other records, documents,
certificates, memoranda and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinion expressed below. We have
assumed the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.
We are admitted to practice law in the State of California. Our opinion
is rendered solely with respect to California law, Delaware General Corporation
law, and Federal law.
On the basis of the foregoing, and in reliance thereon, we are of the
opinion that the Common Stock of the Company to be issued pursuant to the terms
of the Plan is validly authorized and, assuming: (a) no change occurs in the
applicable law or the pertinent facts; (b) the pertinent provisions of such Blue
Sky and securities laws as may be applicable have been complied with; and (c)
the Common Stock is issued in accordance with the terms of the Plan, the Common
Stock issuable under the Plan will be validly issued, fully paid and
nonassessable.
This opinion is intended solely for your benefit and is not to be made
available to or be relied upon by any other person, firm or entity without our
prior written consent.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
SEVERSON & WERSON
A Professional Corporation
By: /s/ Roger S. Mertz
---------------------------
Roger S. Mertz
EXHIBIT 23.1
Consent of Reuben E. Price & Co., Independent Auditors
We consent to the incorporation by reference, in the Registration Statement
on Form S-8 pertaining to the Finet Holdings Corporation 1998 Stock Option Plan
of our report dated August 13, 1997 with respect to the consolidated financial
statements of Finet Holdings Corporation included in its Annual Report on Form
10-KSB for the fiscal year ended April 30, l1997, filed with the Securities
and Exchange Commission.
/s/ Reuben E. Price
San Francisco, California -----------------------------------
June 18, 1998 REUBEN E. PRICE & CO.
